[Federal Register Volume 87, Number 197 (Thursday, October 13, 2022)]
[Notices]
[Pages 62147-62151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22280]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96006; File No. SR-MIAX-2022-35]


Self-Regulatory Organizations: Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by Miami International 
Securities Exchange LLC To Amend Its Fee Schedule

October 7, 2022.
    Pursuant to the provisions of section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on October 4, 2022, Miami International Securities 
Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') a proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options Fee 
Schedule (the ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings, at MIAX's principal 
office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to (i) amend the 
Other Market Participant Transaction Fees table \3\ to amend the fee 
applicable to the option component of a stock-option order; and (ii) 
modify the Priority Customer Rebate Program (``PCRP'') \4\ as it 
pertains to per contract credits for PRIME Agency Orders submitted by 
Priority Customers.\5\ The Exchange initially filed this proposal on 
September 1, 2022 as SR-MIAX-2022-28. On September 20, 2022, the 
Exchange withdrew SR-MIAX-2022-28 and resubmitted the proposal as SR-
MIAX-2022-31. On September 28, 2022, the Exchange withdrew SR-MIAX-
2022-31 and resubmitted the proposal as SR-MIAX-2022-33. On October 4, 
2022, the Exchange withdrew SR-MIAX-2022-33 and resubmitted the 
proposal as SR-MIAX-2022-35. The proposed changes are immediately 
effective.
---------------------------------------------------------------------------

    \3\ See Section (1)(a)(ii) of the Exchange's Fee Schedule.
    \4\ Under the PCRP, MIAX Options credits each Member the per 
contract amount resulting from each Priority Customer order 
transmitted by that Member which is executed electronically on the 
Exchange in all multiply-listed option classes (excluding, in simple 
or complex as applicable, QCC and cQCC Orders, mini-options, 
Priority Customer-to-Priority Customer Orders, C2C and cC2C Orders, 
PRIME and cPRIME AOC Responses, PRIME and cPRIME Contra-side Orders, 
PRIME and cPRIME Orders for which both the Agency and Contra-side 
Order are Priority Customers, and executions related to contracts 
that are routed to one or more exchanges in connection with the 
Options Order Protection and Locked/Crossed Market Plan referenced 
in Exchange Rule 1400), provided the Member meets certain percentage 
thresholds in a month as described in the Priority Customer Rebate 
Program table. See Fee Schedule, Section (1)(a)(iii).
    \5\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). See Exchange Rule 
100.
---------------------------------------------------------------------------

Background
Stock-Option Orders
    A ``complex order'' is any order involving the concurrent purchase 
and/or sale of two or more different options in the same underlying 
security (the ``legs'' or ``components'' of the complex order), for the 
same account, in a ratio that is equal to or greater than one-to-three 
(.333) and less than or equal to three-to-one (3.00) and for the 
purposes

[[Page 62148]]

of executing a particular investment strategy. Mini-options may only be 
part of a complex order that includes other mini-options. Only those 
complex orders in the classes designated by the Exchange and 
communicated to Members via Regulatory Circular with no more than the 
applicable number of legs, as determined by the Exchange on a class-by-
class basis and communicated to Members via Regulatory Circular, are 
eligible for processing.
    A complex order can also be a ``stock-option order'' as described 
further, and subject to the limitations set forth, in Interpretations 
and Policies .01 of Exchange Rule 518. A stock-option order is an order 
to buy or sell a stated number of units of an underlying security 
(stock or Exchange Traded Fund Share (``ETF'')) or a security 
convertible into the underlying stock (``convertible security'') 
coupled with the purchase or sale of options contract(s) on the 
opposite side of the market representing either (i) the same number of 
units of the underlying security or convertible security, or (ii) the 
number of units of the underlying stock necessary to create a delta 
neutral position, but in no case in a ratio greater than eight-to-one 
(8.00), where the ratio represents the total number of units of the 
underlying security or convertible security in the option leg to the 
total number of units of the underlying security or convertible 
security in the stock leg. Only those stock-option orders in the 
classes designated by the Exchange and communicated to Members via 
Regulatory Circular with no more than the applicable number of legs as 
determined by the Exchange on a class-by-class basis and communicated 
to Members via Regulatory Circular, are eligible for processing.\6\
---------------------------------------------------------------------------

    \6\ See Exchange Rule 518(a)(5).
---------------------------------------------------------------------------

    Currently, under the Other Market Participant Transaction Fees 
table, the Exchange charges Public Customers that are not Priority 
Customers a fee of $0.47 per contract for executions of simple and 
complex orders in Penny Classes and $0.75 per contract for executions 
of simple and complex orders in Non-Penny Classes, and assesses a $0.12 
per contract surcharge for trading against a Priority Customer complex 
order in Penny and Non-Penny Classes.
    The Exchange now proposes to adopt new note ``!!'' which will be 
applicable to the option component of a stock-option order and which 
will provide that, any Member whose Affiliate qualifies for Priority 
Customer Rebate Program volume tier 4 in the relevant month will be 
assessed a total of $0.10 per contract on the option component of a 
stock-option order for executions in Penny or Non-Penny Classes, and 
the per contract surcharge for trading against a Priority Customer 
complex order will not apply.\7\ Therefore, a qualifying Member will be 
charged $0.10 per contract for executions in Penny or Non-Penny 
Classes, and the $0.12 per contract surcharge for trading against a 
Priority Customer Order in Penny or Non-Penny Classes will not be 
assessed.
---------------------------------------------------------------------------

    \7\ The Exchange charges a stock-handling fee of $0.0010 per 
share (capped at $50 per order, per day) for the stock leg of stock-
option orders (including stock-option eQuotes) executed against 
other stock-option orders in the complex order book, which the 
Exchange must route to an outside venue. In addition, the Exchange 
will pass through to the Member any fees assess by the routing 
broker-dealer utilized by the Exchange with respect to the execution 
of the stock leg of any such order (with such fees to be passed 
through at cost). The Exchange notes that this fee is not changing 
under this proposal. See the Exchange's Fee Schedule, Section 
(1)(a)(x) on its public website (available at https://www.miaxoptions.com/fees).
---------------------------------------------------------------------------

PRIME Agency Orders
    PRIME is a process by which a Member may electronically submit for 
execution (``Auction'') an order it represents as agent (``Agency 
Order'') against principal interest, and/or an Agency Order against 
solicited interest.\8\ The Member that submits the Agency Order 
(``Initiating Member'') agrees to guarantee the execution of the Agency 
Order by submitting a contra-side order representing principal interest 
or solicited interest.\9\ Currently, the Exchange provides a per 
contract credit for PRIME Agency Orders of $0.10 for Priority Customer 
Agency Orders in Tier 1, and a per contract credit of $0.11 for 
Priority Customer Agency Orders in Tiers 2 through 4.\10\
---------------------------------------------------------------------------

    \8\ See Exchange Rule 515A(a).
    \9\ See Exchange Rule 51A(a)(ii).
    \10\ See the Exchange's Fee Schedule, Section (1)(a)(iii), on 
its public website (available at https://www.miaxoptions.com/fees).
---------------------------------------------------------------------------

Proposal
    The Exchange proposes to adopt a new table under the PCRP for PRIME 
Agency Orders for Priority Customers Origins that will provide an 
adjustment to the credit provided for PRIME Agency Orders to Priority 
Customers in a tiered structure dependent upon the break-up percentage 
of the order. The Exchange proposes to adopt new note ``!!!'' to state 
that, for Priority Customer PRIME Agency Orders the Exchange will apply 
the per contract adjustment to the PRIME Agency rebate provided under 
the Priority Customer Rebate Program dependent upon the order break-up 
percentage as described in the table above, (the Per Contract 
Adjustment for PRIME Agency Order table).
    The proposed Per Contract Adjustment for PRIME Agency Order table 
will provide that if the PRIME Agency Order has a break-up percentage 
of 0-20% the per contract credit provided for PRIME Agency Orders will 
be reduced by $0.02. If the PRIME Agency Order has a break-up 
percentage greater than 20% and up to 40% the per contract credit 
provided for PRIME Agency Orders will be reduced by $0.01. If the PRIME 
Agency Order has a break-up percentage greater than 40% and up to 60% 
no adjustment will be applied to the per contract credit provided for 
PRIME Agency Orders. If the PRIME Agency Order has a break-up 
percentage greater than 60% and up to 80% the per contract credit 
provided for PRIME Agency Orders will be increased by $0.01. If the 
PRIME Agency Order has a break-up percentage greater than 80% and up to 
100% the per contract credit provided for PRIME Agency Orders will be 
increased by $0.02. Current break-up and other credits remain unchanged 
and will continue to apply.
    The Exchange currently provides a PRIME Break-up credit of $0.25 
per contract in Penny Classes and $0.60 per contract in Non-Penny 
Classes. Additionally, the Exchange provides an enhanced PRIME break-up 
credit of $0.69 per contract to the EEM that submitted a PRIME Order in 
a Non-Penny Class that trades with PRIME AOC Responses and/or PRIME 
participating quotes or orders, if the PRIME Order experiences a break-
up of greater than 40%, which is not changing under this proposal.\11\
---------------------------------------------------------------------------

    \11\ See the Exchange's Fee schedule, footnote ``*'' of Section 
(1)(a)(v), on its public website (available at https://www.miaxoptions.com/fees).
---------------------------------------------------------------------------

    The following examples are provided to illustrate how the base 
agency (unchanged under this proposal), proposed adjustment, and break-
up credits (unchanged under this proposal), will apply. For example, as 
proposed if an Electronic Exchange Member (``EEM'') \12\ in Tier 1 
submits a Priority Customer PRIME Agency Order in a Penny Class that 
trades 100% with the contra side order, the EEM will receive the Agency 
Rebate of $0.10 with the appropriate $0.02 adjustment applied ($0.02 
credit reduction) for a net credit of $0.08. If an EEM in Tier 1 
submits a Priority Customer PRIME Agency Order in a Penny Class that is 
100% broken

[[Page 62149]]

up, the EEM will receive the Agency Rebate of $0.10 with the 
appropriate $0.02 adjustment applied ($0.02 additional credit) for a 
net credit of $0.12, in addition to a break-up credit of $0.25 (which 
is not changing under this proposal) \13\ for a total credit of $0.37. 
Similarly if the order had been 70% broken up, the EEM would receive 
the Agency Rebate of $0.10 with the appropriate $0.01 adjustment 
applied ($0.01 additional credit) for a net credit of $0.11, in 
addition to a break-up credit of $0.25 for a total credit of $0.36. If 
the order had been 30% broken up, the EEM would receive the Agency 
Rebate of $0.10 with the appropriate $0.01 adjustment applied ($0.01 
credit reduction) for a net credit of $0.09, in addition to a break-up 
credit of $0.25 for a total credit of $0.34. The break-up credit and 
its application remains unchanged under the Exchange's proposal.
---------------------------------------------------------------------------

    \12\ The term ``Electronic Exchange Member'' or ``EEM'' means 
the holder of Trading Permit who is not a Market Maker. Electronic 
Exchange Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \13\ See the Exchange's Fee Schedule, Section (1)(a)(v), on its 
public website (available at https://www.miaxoptions.com/fees).
---------------------------------------------------------------------------

    The Exchange is making the proposed change for business and 
competitive reasons, as the Exchange believes that adjusting its 
rebates will allow the Exchange to remain competitive and will continue 
to incentivize EEMs to submit Priority Customer PRIME Agency Orders to 
the Exchange.
b. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \14\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \15\ in 
particular, in that it is an equitable allocation of reasonable dues, 
fees, and other charges among its members and issuers and other persons 
using its facilities. The Exchange also believes the proposal furthers 
the objectives of Section 6(b)(5) of the Act \16\ in that it is 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest and is not designed to permit unfair discrimination 
between customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes its proposal provides for the equitable 
allocation of reasonable dues and fees and is not unfairly 
discriminatory for the following reasons. The Exchange operates in a 
highly competitive market in which market participants can readily 
direct order flow to competing venues if they deem fee levels at a 
particular venue to be excessive or incentives to be insufficient. More 
specifically, the Exchange is one of 16 registered options exchanges 
competing for order flow. Based on publicly-available information, and 
excluding index-based options, no single exchange has more than 
approximately 12% of the market share of executed volume of multiply-
listed equity and exchange-traded fund (``ETF'') options trades as of 
August 29, 2022, for the month of August 2022.\17\ Therefore, no 
exchange possesses significant pricing power in the execution of 
multiply-listed equity and ETF options order flow. More specifically, 
as of August 29, 2022, the Exchange has a total market share of 5.67% 
of all equity options volume, for the month of August 2022.\18\
---------------------------------------------------------------------------

    \17\ See MIAX's ``The market at a glance/MTD AVERAGE'', 
available at https://www.miaxoptions.com/ (last visited August 29, 
2022).
    \18\ See id.
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, or discontinue use of certain categories of products, 
in response to fee changes. For example, on March 1, 2019, the Exchange 
filed with the Commission an immediately effective filing to decrease 
certain credits assessable to Members pursuant to the PCRP.\19\ The 
Exchange experienced a decrease in total market share between the 
months of February and March of 2019. Accordingly, the Exchange 
believes that the March 1, 2019, fee change may have contributed to the 
decrease in the Exchange's market share and, as such, the Exchange 
believes competitive forces constrain options exchange transaction and 
non-transaction fees.
---------------------------------------------------------------------------

    \19\ See Securities Exchange Act Release No. 85301 (March 13, 
2019), 84 FR 10166 (March 19, 2019) (SR-MIAX-2019-09).
---------------------------------------------------------------------------

    Accordingly, competitive forces constrain the Exchange's 
transaction fees, and market participants can readily trade on 
competing venues if they deem pricing levels at those other venues to 
be more favorable. In response to the competitive environment, the 
Exchange offers specific rates and credits in its fees schedule, like 
those of other options exchanges' fees schedules, which the Exchange 
believes provides incentives to Members to increase order flow of 
certain qualifying orders.
    The Exchange believes that its proposal to modify the Other Market 
Participant Transaction Fees table to provide for a total per contract 
fee of $0.10 on the option component of a stock-option order for 
qualifying participants is consistent with Section 6(b)(4) of the Act 
\20\ because it is equitable and not unfairly discriminatory as the fee 
is assessed uniformly to all Public Customers that are not Priority 
Customers that have an Affiliate in Tier 4 of the PCRP for the relevant 
month, that execute stock-option orders on the Exchange.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange also believes that this proposal is consistent with 
Section 6(b)(5) of the Act \21\ because it perfects the mechanisms of a 
free and open market and a national market system and protects 
investors and the public interest because it provides an additional 
incentive for Members to increase Priority Customer order flow to the 
Exchange in order to obtain the highest volume threshold, which 
benefits all market participants by providing more trading 
opportunities and tighter spreads. Additionally, the proposed discount 
encourages Members to submit Priority Customer Orders to the Exchange 
which will continue to result in increased volume which benefits all 
Exchange participants by providing more trading opportunities.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------

    The Exchange believes that its proposal to adopt a tiered 
adjustment table for per contract credits applied to PRIME Agency 
Orders based upon break-up percentage is consistent with Section 
6(b)(4) of the Act \22\ in that the proposal is reasonable, equitable 
and not unfairly discriminatory as it applies uniformly to all 
similarly situated Members.
---------------------------------------------------------------------------

    \22\ Id.
---------------------------------------------------------------------------

    The Exchange believes that the proposed incentive structure is 
fair, equitable and not unreasonably discriminatory. The PCRP is 
reasonably designed because it will continue to provide an incentive to 
providers of Priority Customer order flow to send that Priority 
Customer order flow to the Exchange to receive a credit in a manner 
that enables the Exchange to improve its overall competitiveness and 
strengthen its market quality for all participants.
    The Exchange believes that its proposed Per Contract Adjustment for 
PRIME Agency Order table will continue to incentivize EEMs to submit 
Priority Customer PRIME Agency Orders to the Exchange, and that the 
reduction of the rebate when the break-up percentage is less than 40%, 
is not so significant that it will disincentivize EEMs from submitting 
Priority Customer PRIME Agency Orders to the Exchange. The Exchange 
believes that adjusting its rebates and providing an

[[Page 62150]]

additional credit of $0.01 (when the order break-up percentage is 
greater than 60%) and an additional credit of $0.02 (when the order 
break-up percentage is greater than 80%) will both incentivize EEMs to 
submit Priority Customer PRIME Agency Orders to the Exchange and will 
also contribute to more robust PRIME Auctions and potentially lead to 
greater liquidity and price improvement for orders submitted to the 
Exchange's PRIME. The decision to implement the Per Contract Adjustment 
for PRIME Agency Order table is based on an analysis of current revenue 
and volume levels and is designed to encourage Priority Customer order 
flow to PRIME Auctions.
    In addition, The Exchange believes that its proposal is consistent 
with Section 6(b)(5) of the Act \23\ because it perfects the mechanisms 
of a free and open market and a national market system and protects 
investors and the public interest because Priority Customer order flow 
will bring greater volume and liquidity to the Exchange, which benefits 
all market participants by providing more trading opportunities and 
tighter spreads. To the extent Priority Customer order flow is 
increased by this proposal, market participants will increasingly 
compete for the opportunity to trade on the Exchange including sending 
more orders and provided narrower and larger-sized quotations in the 
effort to trade with such Priority Customer order flow.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed Per Contract Adjustment for 
PRIME Agency Order table that provides a tiered incentive structure for 
Priority Customer PRIME Agency Orders based upon order break-up 
percentage is equitable and not unfairly discriminatory because the 
proposed incentive table will apply equally to all similarly situated 
EEMs that submit Priority Customer PRIME Agency Orders to the Exchange.
    The Exchange believes that providing an adjustment to the rebate 
provided to EEMs that submit Priority Customer PRIME Agency Orders that 
are broken-up by a certain percentage is equitable and not unfairly 
discriminatory because the proposed Per Contract Adjustment for PRIME 
Agency Order table will apply equally to all Priority Customer PRIME 
Agency Orders. The Exchange does not believe the reduction of the 
rebate will serve to disincentivize EEMs from submitting Priority 
Customer PRIME Agency Orders to the Exchange, and believes that the 
enhanced rebate may further incentivize EEMs to submit Priority 
Customer PRIME Agency Orders to the Exchange. Further, the Exchange 
believes that the application of the Per Contract Adjustment for PRIME 
Agency Order table is equitable and not unfairly discriminatory because 
Priority Customer order flow enhances liquidity on the Exchange, in 
turn providing more trading opportunities and attracting other market 
participants, thus improving liquidity and facilitating tighter 
spreads, to the benefit of all market participants.
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and self-regulatory organization (``SRO'') revenues 
and, also, recognized that current regulation of the market system 
``has been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \24\
---------------------------------------------------------------------------

    \24\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market shares among 
the exchanges from month to month demonstrates that market participants 
can shift order flow or discontinue or reduce use of certain categories 
of products, in response to transaction and non-transaction fee 
changes. Accordingly, competitive forces constrain the Exchange's 
transaction fees and rebates, and market participants can readily trade 
on competing venues if they deem pricing levels at those other venues 
to be more favorable. The Exchange believes the proposal reflects a 
reasonable and competitive pricing structure which will continue to 
incentivize market participants to direct liquidity adding orders to 
the Exchange, which the Exchange believes would enhance liquidity and 
market quality on the exchange to the benefit of all Members.
    For the reasons discussed above, the Exchange submits that the 
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act \25\ in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its Members and other 
persons using its facilities and is not designed to unfairly 
discriminate between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed change in connection with stock-option orders or 
Priority Customer PRIME Agency Orders will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the changes apply 
uniformly to all similarly situated Members in a uniform manner.
    The Exchange believes that its proposal to modify the Other Market 
Participant Transaction Fees table to provide for a total per contract 
fee of $0.10 on the option component of a stock-option order for 
qualifying participants provides an additional incentive for Members to 
increase Priority Customer order flow to the Exchange in order to 
obtain the highest volume threshold, which benefits all market 
participants by providing more trading opportunities and tighter 
spreads. Additionally, the proposed discount encourages Members to 
submit Priority Customer Orders to the Exchange which will continue to 
result in increased volume on the Exchange which benefits all Exchange 
participants by providing more trading opportunities.
    The Exchange believes that its proposal to adopt a tiered 
adjustment table for per contract credits applied to PRIME Agency 
Orders based upon break-up percentage will not impose a burden on 
competition as it applies uniformly to all similarly situated Members. 
Similarly, the Exchange believes the proposed Per Contract Adjustment 
for PRIME Agency Order table should continue to incentivize EEMs to 
submit Priority Customer PRIME Agency Orders to the Exchange, and that 
the reduction of the rebate when the break-up percentage is less than 
40%, is not so significant that it will disincentivize EEMs from 
submitting Priority Customer PRIME Agency Orders to the Exchange.
    These proposed changes should enable the Exchange to continue to 
attract liquidity to the Exchange and compete for order flow with other 
exchanges. However, this competition does not create an undue burden on 
competition but rather offers all market participants the opportunity 
to receive the benefit of competitive pricing. The proposed changes are 
intended to keep the Exchange's fees and rebates highly

[[Page 62151]]

competitive with those of other exchanges, and to encourage liquidity 
on the Exchange. The Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive. In such an environment, the Exchange must continually adjust 
its rebates and fees to remain competitive with other exchanges and to 
attract order flow. The Exchange believes that the proposed rule 
changes reflect this competitive environment because the proposal 
modifies the Exchange's fees and rebates in a manner that encourages 
market participants to continue to provide liquidity and to send order 
flow to the Exchange.
    Moreover, the Commission has repeatedly expressed its preference 
for competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Specifically, in 
Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \26\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. Securities and Exchange Commission, the D.C. 
Circuit stated as follows: ``[n]o one disputes that competition for 
order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. 
national market system, buyers and sellers of securities, and the 
broker-dealers that act as their order-routing agents, have a wide 
range of choices of where to route orders for execution'; [and] `no 
exchange can afford to take its market share percentages for granted' 
because `no exchange possesses a monopoly, regulatory or otherwise, in 
the execution of order flow from broker dealers'. . . .''.\27\ 
Accordingly, the Exchange does not believe its proposed fee change 
imposes any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \26\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 47396, 37499 (June 29, 2005).
    \27\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\28\ and Rule 19b-4(f)(2) \29\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \29\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File SR-MIAX-2022-35 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2022-35. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-MIAX-2022-35 and should be submitted on 
or before November 3, 2022.
---------------------------------------------------------------------------

    \30\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2022-22280 Filed 10-12-22; 8:45 am]
BILLING CODE 8011-01-P


