[Federal Register Volume 88, Number 2 (Wednesday, January 4, 2023)]
[Notices]
[Pages 381-387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28545]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96588; File No. SR-MIAX-2022-47]


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

December 28, 2022.
    Pursuant to 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 December 20, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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'') to: (1) extend the waiver period for 
certain non-transaction fees applicable to Market Makers \3\ that trade 
solely in Proprietary Products \4\ until June 30, 2023; and (2) extend 
the SPIKES Options Market Maker Incentive Program (the ``Incentive 
Program'') until March 31, 2023.
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    \3\ The term ``Market Makers'' refers to ``Lead Market Makers'', 
``Primary Lead Market Makers'' and ``Registered Market Makers'' 
collectively. See Exchange Rule 100.
    \4\ The term ``Proprietary Product'' means a class of options 
that is listed exclusively on the Exchange. See Exchange Rule 100.
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    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: (1) extend the 
waiver period for certain non-transaction fees applicable to Market 
Makers that trade solely in Proprietary Products until June 30, 2023; 
and (2) extend the Incentive Program until March 31, 2023.
Background
    On October 12, 2018, the Exchange received approval from the 
Commission to list and trade on the Exchange options on the 
SPIKES[supreg] Index, a new index that measures expected 30-day 
volatility of the SPDR S&P 500 ETF Trust (commonly known and referred 
to by its ticker symbol, ``SPY'').\5\ The Exchange adopted its initial 
SPIKES options transaction fees on February 15, 2019 and adopted a new 
section of the Fee Schedule--Section (1)(a)(xi), SPIKES--for those 
fees.\6\ Options on the

[[Page 382]]

SPIKES Index began trading on the Exchange on February 19, 2019.
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    \5\ See Securities Exchange Act Release No. 84417 (October 12, 
2018), 83 FR 52865 (October 18, 2018) (SR-MIAX-2018-14) (Order 
Granting Approval of a Proposed Rule Change by Miami International 
Securities Exchange, LLC to List and Trade on the Exchange Options 
on the SPIKES[supreg] Index).
    \6\ See Securities Exchange Release No. 85283 (March 11, 2019), 
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11). The Exchange 
initially filed the proposal on February 15, 2019 (SR-MIAX-2019-04). 
That filing was withdrawn and replaced with SR-MIAX-2019-11. On 
September 30, 2020, the Exchange filed its proposal to, among other 
things, reorganize the Fee Schedule to adopt new Section (1)(b), 
Proprietary Products Exchange Fees, and moved the fees and rebates 
for SPIKES options into new Section (1)(b)(i). See Securities 
Exchange Act Release Nos. 90146 (October 9, 2020), 85 FR 65443 
(October 15, 2020) (SR-MIAX-2020-32) and 90814 (December 29, 2020), 
86 FR 327 (January 5, 2021) (SR-MIAX-2020-39).
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    On May 31, 2019, the Exchange filed its first proposal in a series 
of proposals with the Commission to amend the Fee Schedule to waive 
certain non-transaction fees applicable to Market Makers that trade 
solely in Proprietary Products (including options on the SPIKES Index) 
beginning September 30, 2019, through December 31, 2022.\7\ In 
particular, the Exchange adopted fee waivers for Membership Application 
fees, monthly Market Maker Trading Permit fees, Application Programming 
Interface (``API'') Testing and Certification fees for Members,\8\ and 
monthly MIAX Express Interface (``MEI'') Port \9\ fees assessed to 
Market Makers that trade solely in Proprietary Products (including 
options on SPIKES) throughout the entire period of September 30, 2019 
through December 31, 2022. The Exchange now proposes to extend the 
waiver period for the same non-transaction fees applicable to Market 
Makers that trade solely in Proprietary Products (including options on 
SPIKES) until June 30, 2023. In particular, the Exchange proposes to 
waive Membership Application fees, monthly Market Maker Trading Permit 
fees, Member API Testing and Certification fees, and monthly MEI Port 
fees assessed to Market Makers that trade solely in Proprietary 
Products (including options on SPIKES) until June 30, 2023.
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    \7\ See Securities Exchange Act Release Nos. 86109 (June 14, 
2019), 84 FR 28860 (June 20, 2019) (SR-MIAX-2019-28); 87282 (October 
10, 2019), 84 FR 55658 (October 17, 2019) (SR-MIAX-2019-43); 87897 
(January 6, 2020), 85 FR 1346 (January 10, 2020) (SR-MIAX-2019-53); 
89289 (July 10, 2020), 85 FR 43279 (July 16, 2020) (SR-MIAX-2020-
22); 90146 (October 9, 2020), 85 FR 65443 (October 15, 2020) (SR-
MIAX-2020-32); 90814 (December 29, 2020), 86 FR 327 (January 5, 
2021) (SR-MIAX-2020-39); 91498 (April 7, 2021), 86 FR 19293 (April 
13, 2021) (SR-MIAX-2021-06); 93881 (December 30, 2021), 87 FR 517 
(January 5, 2022) (SR-MIAX-2021-63); 95259 (July 12, 2022), 87 FR 
42754 (July 17, 2022) (SR-MIAX-2022-24); and 96007 (October 7, 
2022), 87 FR 62151 (October 13, 2022) (SR-MIAX-2022-32).
    \8\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \9\ Full Service MEI Ports provide Market Makers with the 
ability to send Market Maker simple and complex quotes, eQuotes, and 
quote purge messages to the MIAX System. Full Service MEI Ports are 
also capable of receiving administrative information. Market Makers 
are limited to two Full Service MEI Ports per matching engine. See 
Fee Schedule, note 15.
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Membership Application Fees
    The Exchange currently assesses a one-time Membership Application 
fee for applications of potential Members. The Exchange assesses a one-
time Membership Application fee on the earlier of (i) the date the 
applicant is certified in the membership system, or (ii) once an 
application for MIAX membership is finally denied. The one-time 
application fee is based upon the applicant's status as either a Market 
Maker or an Electronic Exchange Member (``EEM'').\10\ A Market Maker is 
assessed a one-time Membership Application fee of $3,000.
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    \10\ The term ``Electronic Exchange Member'' or ``EEM'' means 
the holder of a Trading Permit who is not a Market Maker. Electronic 
Exchange Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
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    The Exchange proposes that the waiver for the one-time Membership 
Application fee of $3,000 for Market Makers that trade solely in 
Proprietary Products (including options on SPIKES) will be extended 
from December 31, 2022 until June 30, 2023, which the Exchange proposes 
to state in the Fee Schedule. The purpose of this proposed change is to 
continue to provide an incentive for potential Market Makers to submit 
membership applications, which should result in an increase of 
potential liquidity in Proprietary Products, including options on 
SPIKES. Even though the Exchange proposes to extend the waiver of this 
particular fee, the overall structure of the fee is outlined in the Fee 
Schedule so that there is general awareness that the Exchange intends 
to assess such a fee after June 30, 2023.
Trading Permit Fees
    The Exchange issues Trading Permits that confer the ability to 
transact on the Exchange. MIAX Trading Permits are issued to Market 
Makers and EEMs. Members receiving Trading Permits during a particular 
calendar month are assessed monthly Trading Permit fees as set forth in 
the Fee Schedule. As it relates to Market Makers, MIAX currently 
assesses a monthly Trading Permit fee in any month the Market Maker is 
certified in the membership system, is credentialed to use one or more 
MIAX MEI Ports in the production environment and is assigned to quote 
in one or more classes. MIAX assesses the monthly Market Maker Trading 
Permit fee for its Market Makers based on the greatest number of 
classes listed on MIAX that the MIAX Market Maker was assigned to quote 
in on any given day within a calendar month and the applicable fee rate 
is the lesser of either the per class basis or percentage of total 
national average daily volume measurements. A MIAX Market Maker is 
assessed a monthly Trading Permit fee according to the following table: 
\11\
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    \11\ See Fee Schedule, Section (3)(b).

----------------------------------------------------------------------------------------------------------------
                                                         Market Maker assignments (the lesser of the applicable
                                       Monthly MIAX                   measurements below) [Omega]
       Type of trading permit         trading permit  ----------------------------------------------------------
                                            fee                                            % of National average
                                                                   Per class                   daily volume
----------------------------------------------------------------------------------------------------------------
Market Maker (includes RMM, LMM,            $7,000.00  Up to 10 Classes.................  Up to 20% of Classes
 PLMM).                                     12,000.00  Up to 40 Classes.................   by volume.
                                                                                          Up to 35% of Classes
                                                                                           by volume.
                                          * 17,000.00  Up to 100 Classes................  Up to 50% of Classes
                                                                                           by volume.
                                          * 22,000.00  Over 100 Classes.................  Over 50% of Classes by
                                                                                           volume up to all
                                                                                           Classes listed on
                                                                                           MIAX.
----------------------------------------------------------------------------------------------------------------
[Omega] Excludes Proprietary Products.
* For these Monthly MIAX Trading Permit Fee levels, if the Market Maker's total monthly executed volume during
  the relevant month is less than 0.060% of the total monthly executed volume reported by OCC in the market
  maker account type for MIAX-listed option classes for that month, then the fee will be $15,500 instead of the
  fee otherwise applicable to such level.

    MIAX proposes that the waiver for the monthly Trading Permit fee 
for Market Makers that trade solely in Proprietary Products (including 
options on SPIKES) will be extended from December 31, 2022, to June 30, 
2023, which the Exchange proposes to state in the Fee Schedule. The 
purpose of this proposed change is to continue to provide an incentive 
for Market Makers to provide liquidity in Proprietary Products on the 
Exchange, which should result in increasing potential order flow and 
volume in Proprietary Products, including options on SPIKES. Even 
though the Exchange proposes to extend the waiver of this particular 
fee, the overall structure of the fee is outlined in the Fee Schedule 
so that there is general awareness to potential Members seeking a 
Trading Permit that the Exchange intends to assess such a fee after 
June 30, 2023.

[[Page 383]]

    The Exchange also proposes that Market Makers who trade Proprietary 
Products (including options on SPIKES) along with multi-listed classes 
will continue to not have Proprietary Products (including SPIKES) 
counted toward those Market Makers' class assignment count or 
percentage of total national average daily volume. This exclusion is 
noted with the symbol ``[Omega]'' following the table that shows the 
monthly Trading Permit fees currently assessed to Market Makers in 
Section (3)(b) of the Fee Schedule.

API Testing and Certification Fee

    The Exchange assesses an API Testing and Certification fee to all 
Members depending upon Membership type. An API makes it possible for 
Members' software to communicate with MIAX software applications, and 
is subject to Members testing with, and certification by, MIAX. The 
Exchange offers four types of interfaces: (i) the Financial Information 
Exchange Port (``FIX Port''),\12\ which enables the FIX Port user 
(typically an EEM or a Market Maker) to submit simple and complex 
orders electronically to MIAX; (ii) the MEI Port, which enables Market 
Makers to submit simple and complex electronic quotes to MIAX; (iii) 
the Clearing Trade Drop Port (``CTD Port''),\13\ which provides real-
time trade clearing information to the participants to a trade on MIAX 
and to the participants' respective clearing firms; and (iv) the FIX 
Drop Copy Port (``FXD Port''),\14\ which provides a copy of real-time 
trade execution, correction and cancellation information through a FIX 
Port to any number of FIX Ports designated by an EEM to receive such 
messages.
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    \12\ A FIX Port is an interface with MIAX systems that enables 
the Port user (typically an Electronic Exchange Member or a Market 
Maker) to submit simple and complex orders electronically to MIAX. 
See Fee Schedule, Section (5)(d)(i).
    \13\ Clearing Trade Drop (``CTD'') provides Exchange members 
with real-time clearing trade updates. The updates include the 
Member's clearing trade messages on a low latency, real-time basis. 
The trade messages are routed to a Member's connection containing 
certain information. The information includes, among other things, 
the following: (i) trade date and time; (ii) symbol information; 
(iii) trade price/size information; (iv) Member type (for example, 
and without limitation, Market Maker, Electronic Exchange Member, 
Broker-Dealer); (v) Exchange Member Participant Identifier 
(``MPID'') for each side of the transaction, including Clearing 
Member MPID; and (vi) strategy specific information for complex 
transactions. CTD Port Fees will be assessed in any month the Member 
is credentialed to use the CTD Port in the production environment. 
See Fee Schedule, Section (5)(d)iii.
    \14\ The FIX Drop Copy Port (``FXD'') is a messaging interface 
that will provide a copy of real-time trade execution, trade 
correction and trade cancellation information for simple and complex 
orders to FIX Drop Copy Port users who subscribe to the service. FIX 
Drop Copy Port users are those users who are designated by an EEM to 
receive the information and the information is restricted for use by 
the EEM only. FXD Port Fees will be assessed in any month the Member 
is credentialed to use the FXD Port in the production environment. 
See Fee Schedule, Section (5)(d)iv.
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    API Testing and Certification fees for Market Makers are assessed 
(i) initially per API for CTD and MEI ports in the month the Market 
Maker has been credentialed to use one or more ports in the production 
environment for the tested API and the Market Maker has been assigned 
to quote in one or more classes, and (ii) each time a Market Maker 
initiates a change to its system that requires testing and 
certification. API Testing and Certification fees will not be assessed 
in situations where the Exchange initiates a mandatory change to the 
Exchange's system that requires testing and certification. The Exchange 
currently assesses a Market Maker an API Testing and Certification fee 
of $2,500. The API Testing and Certification fees represent costs 
incurred by the Exchange as it works with each Member for testing and 
certifying that the Member's software systems communicate properly with 
MIAX's interfaces.
    MIAX proposes to extend the waiver of the API Testing and 
Certification fee for Market Makers that trade solely in Proprietary 
Products (including options on SPIKES) from December 31, 2022 until 
June 30, 2023, which the Exchange proposes to state in the Fee 
Schedule. The purpose of this proposed change is to continue to provide 
an incentive for potential Market Makers to develop software 
applications to trade in Proprietary Products, including options on 
SPIKES. Even though the Exchange proposes to extend the waiver of this 
particular fee, the overall structure of the fee is outlined in the Fee 
Schedule so that there is general awareness that the Exchange intends 
to assess such a fee after June 30, 2023.
MEI Port Fees
    MIAX assesses monthly MEI Port fees to Market Makers in each month 
the Member has been credentialed to use the MEI Port in the production 
environment and has been assigned to quote in at least one class. The 
amount of the monthly MEI Port fee is based upon the number of classes 
in which the Market Maker was assigned to quote on any given day within 
the calendar month, and upon the class volume percentages set forth in 
the Fee Schedule. The class volume percentage is based on the total 
national average daily volume in classes listed on MIAX in the prior 
calendar quarter. Newly listed option classes are excluded from the 
calculation of the monthly MEI Port fee until the calendar quarter 
following their listing, at which time the newly listed option classes 
will be included in both the per class count and the percentage of 
total national average daily volume. The Exchange assesses MIAX Market 
Makers the monthly MEI Port fee based on the greatest number of classes 
listed on MIAX that the MIAX Market Maker was assigned to quote in on 
any given day within a calendar month and the applicable fee rate that 
is the lesser of either the per class basis or percentage of total 
national average daily volume measurement. MIAX assesses MEI Port fees 
on Market Makers according to the following table: \15\
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    \15\ See Fee Schedule (5)(d)(ii).

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                                           Market Maker assignments (the lesser of the applicable measurements
                                                                      below) [Omega]
         Monthly MIAX MEI fees          ------------------------------------------------------------------------
                                                 Per class               % of National average daily volume
----------------------------------------------------------------------------------------------------------------
$5,000.00..............................  Up to 5 Classes..........  Up to 10% of Classes by volume.
$10,000.00.............................  Up to 10 Classes.........  Up to 20% of Classes by volume.
$14,000.00.............................  Up to 40 Classes.........  Up to 35% of Classes by volume.
$17,500.00 *...........................  Up to 100 Classes........  Up to 50% of Classes by volume.
$20,500.00 *...........................  Over 100 Classes.........  Over 50% of Classes by volume up to all
                                                                     Classes listed on MIAX.
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[Omega] Excludes Proprietary Products.
* For these Monthly MIAX MEI Fees levels, if the Market Maker's total monthly executed volume during the
  relevant month is less than 0.060% of the total monthly executed volume reported by OCC in the market maker
  account type for MIAX-listed option classes for that month, then the fee will be $14,500 instead of the fee
  otherwise applicable to such level.


[[Page 384]]

    MIAX proposes to extend the waiver of the monthly MEI Port fee for 
Market Makers that trade solely in Proprietary Products (including 
options on SPIKES) from December 31, 2022 until June 30, 2023, which 
the Exchange proposes to state in the Fee Schedule. The purpose of this 
proposal is to continue to provide an incentive to Market Makers to 
connect to MIAX through the MEI Port such that they will be able to 
trade in MIAX Proprietary Products. Even though the Exchange proposes 
to extend the waiver of this particular fee, the overall structure of 
the fee is outlined in the Fee Schedule so that there is general 
awareness that the Exchange intends to assess such a fee after June 30, 
2023.
    The Exchange notes that for the purposes of this proposed change, 
other Market Makers who trade MIAX Proprietary Products (including 
options on SPIKES) along with multi-listed classes will continue to not 
have Proprietary Products (including SPIKES) counted toward those 
Market Makers' class assignment count or percentage of total national 
average daily volume. This exclusion is noted by the symbol ``[Omega]'' 
following the table that shows the monthly MEI Port Fees currently 
assessed for Market Makers in Section (5)(d)(ii) of the Fee Schedule.
    The proposed extension of the fee waivers are targeted at market 
participants, particularly market makers, who are not currently members 
of MIAX, who may be interested in being a Market Maker in Proprietary 
Products on the Exchange. The Exchange estimates that there are fewer 
than ten (10) such market participants that could benefit from the 
extension of these fee waivers. The proposed extension of the fee 
waivers does not apply differently to different sizes of market 
participants, however the fee waivers do only apply to Market Makers 
(and not EEMs).
    Market Makers, unlike other market participants, take on a number 
of obligations, including quoting obligations that other market 
participants do not have. Further, Market Makers have added market 
making and regulatory requirements, which normally do not apply to 
other market participants. For example, Market Makers have obligations 
to maintain continuous markets, engage in a course of dealings 
reasonably calculated to contribute to the maintenance of a fair and 
orderly market, and to not make bids or offers or enter into 
transactions that are inconsistent with a course of dealing. 
Accordingly, the Exchange believes it is reasonable and not unfairly 
discriminatory to continue to offer the fee waivers to Market Makers 
because the Exchange is seeking additional liquidity providers for 
Proprietary Products, in order to enhance liquidity and spreads in 
Proprietary Products, which is traditionally provided by Market Makers, 
as opposed to EEMs.
Incentive Program Extension
    On September 30, 2021, the Exchange filed its initial proposal to 
implement a SPIKES Options Market Maker Incentive Program for SPIKES 
options to incentivize Market Makers to improve liquidity, available 
volume, and the quote spread width of SPIKES options beginning October 
1, 2021, and ending December 31, 2021.\16\ Technical details regarding 
the Incentive Program were published in a Regulatory Circular on 
September 30, 2021.\17\ On October 12, 2021, the Exchange withdrew SR-
MIAX-2021-45 and refiled its proposal to implement the Incentive 
Program to provide additional details.\18\ In that filing, the Exchange 
specifically noted that the Incentive Program would expire at the end 
of the period (December 31, 2021) unless the Exchange filed another 
19b-4 Filing to amend the fees (or extend the Incentive Program).\19\
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    \16\ See SR-MIAX-2021-45.
    \17\ See MIAX Options Regulatory Circular 2021-56, SPIKES 
Options Market Maker Incentive Program (September 30, 2021) 
available at https://www.miaxoptions.com/sites/default/files/circularfiles/MIAX_Options_RC_2021_56.pdf.
    \18\ See Securities Exchange Act Release No. 93424 (October 26, 
2021), 86 FR 60322 (November 1, 2021) (SR-MIAX-2021-49).
    \19\ See id.
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    On December 23, 2021, the Exchange filed its proposal to extend the 
Incentive Program until March 31, 2022.\20\ In that filing, the 
Exchange specifically noted that the Incentive Program would expire at 
the end of the period (March 31, 2022) unless the Exchange filed 
another 19b-4 Filing to amend the fees (or extend the Incentive 
Program).\21\ On March 23, 2022, the Exchange filed its proposal to 
extend the Incentive Program until June 30, 2022.\22\ In that filing, 
the Exchange specifically noted that the Incentive Program would expire 
at the end of the period (June 30, 2022) unless the Exchange filed 
another 19b-4 Filing to amend the fees (or extend the Incentive 
Program).\23\ On June 29, 2022, the Exchange filed its proposal to 
extend the Incentive Program until September 30, 2022.\24\ In that 
filing, the Exchange specifically noted that the Incentive Program 
would expire at the end of the period (September 30, 2022) unless the 
Exchange filed another 19b-4 Filing to amend the fees (or extend the 
Incentive Program).\25\ On September 30, 2022, the Exchange filed its 
proposal to extend the Incentive Program until December 31, 2022.\26\ 
In that filing, the Exchange specifically noted that the Incentive 
Program would expire at the end of the period (December 31, 2022) 
unless the Exchange filed another 19b-4 Filing to amend the fees (or 
extend the Incentive Program).\27\ The Exchange now proposes to extend 
the Incentive Program until March 31, 2023.\28\
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    \20\ See Securities Exchange Act Release No. 93881 (December 30, 
2021), 87 FR 517 (January 5, 2022) (SR-MIAX-2021-63).
    \21\ See id.
    \22\ See Securities Exchange Act Release No. 94574 (April 1, 
2022), 87 FR 20492 (April 7, 2022) (SR-MIAX-2022-12).
    \23\ See id.
    \24\ See Securities Exchange Act Release No. 95259 (July 12, 
2022), 87 FR 42754 (July 17, 2022) (SR-MIAX-2022-24).
    \25\ See id.
    \26\ See Securities Exchange Act Release No. 96007 (October 7, 
2022), 87 FR 62151 (October 13, 2022) (SR-MIAX-2022-32).
    \27\ See id.
    \28\ The Exchange notes that at the end of the extension period, 
the Incentive Program will expire unless the Exchange files another 
19b-4 Filing to amend the terms or extend the Incentive Program.
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    The Exchange proposes to extend the Incentive Program for SPIKES 
options to continue to incentivize Market Makers to improve liquidity, 
available volume, and the quote spread width of SPIKES options. 
Currently, to be eligible to participate in the Incentive Program, a 
Market Maker must meet certain minimum requirements related to quote 
spread width in certain in-the-money (ITM) and out-of-the-money (OTM) 
options as determined by the Exchange and communicated to Members via 
Regulatory Circular.\29\ Market Makers must also satisfy a minimum time 
in the market in the front 2 expiry months of 70%, and have an average 
quote size of 25 contracts. The Exchange established two separate 
incentive compensation pools that are used to compensate Market Makers 
that satisfy the criteria pursuant to the Incentive Program.
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    \29\ See supra note 17.
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    The first pool (Incentive 1) has a total amount of $40,000 per 
month, which is allocated to Market Makers that meet the minimum 
requirements of the Incentive Program. Market Makers are required to 
meet minimum spread width requirements in a select number of ITM and 
OTM SPIKES option contracts as determined by the Exchange and 
communicated to Members via Regulatory Circular.\30\ A complete 
description of how the Exchange calculates the minimum spread width 
requirements in ITM and OTM SPIKES options can be found in

[[Page 385]]

the published Regulatory Circular.\31\ Market Makers are also required 
to maintain the minimum spread width, described above, for at least 70% 
of the time in the front two (2) SPIKES options contract expiry months 
and maintain an average quote size of at least 25 SPIKES options 
contracts. The amount available to each individual Market Maker is 
capped at $10,000 per month for satisfying the minimum requirements of 
the Incentive Program. In the event that more than four Market Makers 
meet the requirements of the Incentive Program, each qualifying Market 
Maker is entitled to receive a pro-rated share of the $40,000 monthly 
compensation pool dependent upon the number of qualifying Market Makers 
in that particular month.
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    \30\ See id.
    \31\ See id.
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    The second pool (Incentive 2 Pool) is capped at a total amount of 
$100,000 per month which is used during the Incentive Program to 
further incentivize Market Makers who meet or exceed the requirements 
of Incentive 1 (``qualifying Market Makers'') to provide tighter quote 
width spreads. The Exchange ranks each qualifying Market Maker's quote 
width spread relative to each other qualifying Market Maker's quote 
width spread. Market Makers with tighter spreads in certain strikes, as 
determined by the Exchange and communicated to Members via Regulatory 
Circular,\32\ are eligible to receive a pro-rated share of the 
compensation pool as calculated by the Exchange and communicated to 
Members via Regulatory Circular,\33\ not to exceed $25,000 per Member 
per month. Qualifying Market Makers are ranked relative to each other 
based on the quality of their spread width (i.e., tighter spreads are 
ranked higher than wider spreads) and the Market Maker with the best 
quality spread width receives the highest rebate, while other eligible 
qualifying Market Makers receive a rebate relative to their quality 
spread width.
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    \32\ See id.
    \33\ See id.
---------------------------------------------------------------------------

    The Exchange proposes to extend the Incentive Program until June 
30, 2023 [sic]. The Exchange does not propose to make any amendments to 
how it calculates any of the incentives provided for in Incentive Pools 
1 or 2. The details of the Incentive Program can continue to be found 
in the Regulatory Circular that was published on September 30, 2021 to 
all Exchange Members.\34\ The purpose of this extension is to continue 
to incentivize Market Makers to improve liquidity, available volume, 
and the quote spread width of SPIKES options. The Exchange will 
announce the extension of the Incentive Program to all Members via a 
Regulatory Circular.
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    \34\ See id.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \35\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \36\ in 
particular, in that it is an equitable allocation of reasonable 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 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.
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    \35\ 15 U.S.C. 78f(b).
    \36\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposal to extend the fee waiver 
period for certain non-transaction fees for Market Makers that trade 
solely in Proprietary Products is an equitable allocation of reasonable 
fees because the proposal continues to waive non-transaction fees for a 
limited period of time in order to enable the Exchange to improve its 
overall competitiveness and strengthen its market quality for all 
market participants in MIAX's Proprietary Products, including options 
on SPIKES. The Exchange believe the proposed extension of the fee 
waivers is fair and equitable and not unreasonably discriminatory 
because it applies to all market participants not currently registered 
as Market Makers at the Exchange. Any market participant may choose to 
satisfy the additional requirements and obligations of being a Market 
Maker and trade solely in Proprietary Products in order to qualify for 
the fee waivers.
    The Exchange believes that the proposed extension of the fee 
waivers is equitable and not unfairly discriminatory for Market Makers 
as compared to EEMs because Market Makers, unlike other market 
participants, take on a number of obligations, including quoting 
obligations that other market participants do not have. Further, Market 
Makers have added market making and regulatory requirements, which 
normally do not apply to other market participants. For example, Market 
Makers have obligations to maintain continuous markets, engage in a 
course of dealings reasonably calculated to contribute to the 
maintenance of a fair and orderly market, and to not make bids or 
offers or enter into transactions that are inconsistent with a course 
of dealing.
    The Exchange believes it is reasonable and equitable to continue to 
waive the one-time Membership Application Fee, monthly Trading Permit 
Fee, API Testing and Certification Fee, and monthly MEI Port Fee for 
Market Makers that trade solely in Proprietary Products (including 
options on SPIKES) until June 30, 2023, since the waiver of such fees 
provides incentives to interested market participants to trade in 
Proprietary Products. This should result in increasing potential order 
flow and liquidity in MIAX Proprietary Products, including options on 
SPIKES.
    The Exchange believes it is reasonable and equitable to continue to 
waive the API Testing and Certification fee assessable to Market Makers 
that trade solely in Proprietary Products (including options on SPIKES) 
until June 30, 2023, since the waiver of such fees provides incentives 
to interested Members to develop and test their APIs sooner. 
Determining system operability with the Exchange's system will in turn 
provide MIAX with potential order flow and liquidity providers in 
Proprietary Products.
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory that Market Makers who trade in Proprietary Products 
along with multi-listed classes will continue to not have Proprietary 
Products counted toward those Market Makers' class assignment count or 
percentage of total national average daily volume for monthly Trading 
Permit Fees and monthly MEI Port Fees in order to incentivize existing 
Market Makers who currently trade in multi-listed classes to also trade 
in Proprietary Products, without incurring certain additional fees.
    The Exchange believes that the proposed extension of the fee 
waivers constitutes an equitable allocation of reasonable fees and 
other charges among its Members and issuers and other persons using its 
facilities. The proposed extension of the fee waivers means that all 
prospective market makers that wish to become Market Maker Members of 
the Exchange and quote solely in Proprietary Products may do so and 
have the above-mentioned fees waived until June 30, 2023. The proposed 
extension of the fee waivers will continue to not apply to

[[Page 386]]

potential EEMs because the Exchange is seeking to enhance the quality 
of its markets in Proprietary Products through introducing more 
competition among Market Makers in Proprietary Products. In order to 
increase the competition, the Exchange believes that it must continue 
to waive entry type fees for such Market Makers. EEMs do not provide 
the benefit of enhanced liquidity which is provided by Market Makers, 
therefore the Exchange believes it is reasonable and not unfairly 
discriminatory to continue to only offer the proposed fee waivers to 
Market Makers (and not EEMs). Further, the Exchange believes it is 
reasonable and not unfairly discriminatory to continue to exclude 
Proprietary Products from an existing Market Maker's permit fees and 
port fees, in order to incentive such Market Makers to quote in 
Proprietary Products. The amount of a Market Maker's permit and port 
fee is determined by the number of classes quoted and volume of the 
Market Maker. By excluding Proprietary Products from such fees, the 
Exchange is able to incentivize Market Makers to quote in Proprietary 
Products. EEMs do not pay permit and port fees based on the classes 
traded or volume, so the Exchange believes it is reasonable, equitable, 
and not unfairly discriminatory to only offer the exclusion to Market 
Makers (and not EEMs).
    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to extend the Incentive Program for Market 
Makers in SPIKES options until March 31, 2023. The Incentive Program is 
reasonably designed because it will continue to incentivize Market 
Makers to provide quotes and increased liquidity in select SPIKES 
options contracts. The Incentive Program is reasonable, equitably 
allocated and not unfairly discriminatory because all Market Makers in 
SPIKES options may continue to qualify for Incentive 1 and Incentive 2, 
dependent upon each Market Maker's quoting in SPIKES options in a 
particular month. Additionally, if a SPIKES Market Maker does not 
satisfy the requirements of Incentive Pool 1 or 2, then it simply will 
not receive the rebate offered by the Incentive Program for that month.
    The Exchange believes that it is reasonable, equitable and not 
unfairly discriminatory to continue to offer this financial incentive 
to SPIKES Market Makers because it will continue to benefit all market 
participants trading in SPIKES options. SPIKES options is a Proprietary 
Product on the Exchange and the continuation of the Incentive Program 
encourages SPIKES Market Makers to satisfy a heightened quoting 
standard, average quote size, and time in market. A continued increase 
in quoting activity and tighter quotes may yield a corresponding 
increase in order flow from other market participants, which benefits 
all investors by deepening the Exchange's liquidity pool, potentially 
providing greater execution incentives and opportunities, while 
promoting market transparency and improving investor protection.
    The Exchange believes that the Incentive Program is equitable and 
not unfairly discriminatory because it will continue to promote an 
increase in SPIKES options liquidity, which may facilitate tighter 
spreads and an increase in trading opportunities to the benefit of all 
market participants. The Exchange believes it is reasonable to operate 
the Incentive Program for a continued limited period of time to 
strengthen market quality for all market participants. The resulting 
increased volume and liquidity will benefit those Members who are 
eligible to participate in the Incentive Program and will also continue 
to benefit those Members who are not eligible to participate in the 
Incentive Program by providing more trading opportunities and tighter 
spreads.

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.
Intra-Market Competition
    The Exchange believes that the proposal to extend certain of the 
non-transaction fee waivers until June 30, 2023 for Market Makers that 
trade solely in Proprietary Products would increase intra-market 
competition by incentivizing new potential Market Makers to quote in 
Proprietary Products, which will enhance the quality of quoting and 
increase the volume of contracts in Proprietary Products traded on 
MIAX, including options on SPIKES. To the extent that this purpose is 
achieved, all the Exchange's market participants should benefit from 
the improved market liquidity for the Exchange's Proprietary Products. 
Enhanced market quality and increased transaction volume in Proprietary 
Products that results from the anticipated increase in Market Maker 
activity on the Exchange will benefit all market participants and 
improve competition on the Exchange.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intra-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed changes for each separate type of market participant (new 
Market Makers and existing Market Makers) will be assessed equally to 
all such market participants. While different fees are assessed to 
different market participants in some circumstances, these different 
market participants have different obligations and different 
circumstances as discussed above. For example, Market Makers have 
quoting obligations that other market participants (such as EEMs) do 
not have.
    The Exchange believes that the proposed extension of the Incentive 
Program to March 31, 2023 would continue to increase intra-market 
competition by incentivizing Market Makers to quote SPIKES options, 
which will continue to enhance the quality of quoting and increase the 
volume of contracts available to trade in SPIKES options. To the extent 
that this purpose is achieved, all the Exchange's market participants 
should benefit from the improved market liquidity for SPIKES options. 
Enhanced market quality and increased transaction volume in SPIKES 
options that results from the anticipated increase in Market Maker 
activity on the Exchange will benefit all market participants and 
improve competition on the Exchange.
Inter-Market Competition
    The Exchange does not believe that the proposed rule changes will 
impose any burden on inter-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed extension of the fee waivers and the extension of the 
Incentive Program apply only to the Exchange's Proprietary Products 
(including options on SPIKES), which are traded exclusively on the 
Exchange.

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,\37\ and Rule 19b-4(f)(2) \38\ thereunder. 
At any time within 60 days of the filing of the

[[Page 387]]

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.
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    \37\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \38\ 17 CFR 240.19b-4(f)(2).
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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 Number SR-MIAX-2022-47 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-2022-47. 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 the 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-2022-47 and should be submitted on 
or before January 25, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-28545 Filed 1-3-23; 8:45 am]
BILLING CODE 8011-01-P


