[Federal Register Volume 88, Number 57 (Friday, March 24, 2023)]
[Notices]
[Pages 17902-17907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06055]



[[Page 17902]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97167; File No. SR-MIAX-2023-12]


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

March 20, 2023.
    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 March 9, 2023, 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 Fee Schedule 
(``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) modify the 
volume thresholds for the volume criteria in all tiers (described 
below) set forth in the Exchange's Market Maker \3\ Sliding Scale for 
Market Maker transaction fees (the ``Sliding Scale''); and (ii) modify 
the volume thresholds for the volume criteria for tiers 2, 3, and 4 for 
Priority Customer \4\ orders in the Priority Customer Rebate Program 
(the ``PCRP,'' described below).\5\ The Exchange originally filed this 
proposal on February 28, 2023 (SR-MIAX-2023-10). On March 9, 2023, the 
Exchange withdrew SR-MIAX-2023-10 and resubmitted this proposal.
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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 ``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.
    \5\ See Fee Schedule, Section 1)a)iii.
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Background
    In general, the Exchange assesses transaction fees to all Market 
Makers, which are based upon a threshold tier structure. Section 1)a)i) 
of the Fee Schedule sets forth the Market Maker Sliding Scale for 
Market Maker transaction fees. Pursuant to the Sliding Scale, the 
Exchange assesses a per contract transaction fee on a Market Maker for 
the execution of simple orders and quotes (collectively, ``simple 
orders'') and complex orders and quotes (collectively, ``complex 
orders'') based on the tier achieved. For Market Makers, the percentage 
threshold by tier is based on the Market Maker's percentage of total 
national Market Maker volume in all multiply-listed options classes 
that trade on the Exchange during a particular calendar month, or total 
aggregated volume (``TAV''), and the Exchange aggregates the volume 
executed by Market Makers in both simple and complex orders for 
purposes of determining the applicable tier and corresponding per 
contract transaction fee amount.\6\ The Sliding Scale applies to all 
MIAX Market Makers for transactions in all multiply-listed products 
(except for mini-options), with fees established for standard option 
classes in the Penny Interval Program \7\ (``Penny Classes'') and 
separate fees for standard option classes which are not in the Penny 
Program (``non-Penny Classes''), and further based on whether the 
Market Maker is acting as a ``Maker'' or a ``Taker'' in simple 
orders.\8\ Market Makers that place resting liquidity, i.e., quotes or 
orders on the MIAX System,\9\ are assessed the ``maker'' fee (each a 
``Maker''). Market Makers that execute against (remove) resting 
liquidity are generally assessed a higher ``taker'' fee (each a 
``Taker'').
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    \6\ The calculation of the volume thresholds does not include 
QCC and cQCC Orders, PRIME and cPRIME AOC Responses, and unrelated 
MIAX Market Maker quotes or unrelated MIAX Market Maker orders that 
are received during the Response Time Interval and executed against 
the PRIME Order (``PRIME Participating Quotes or Orders'') and 
unrelated MIAX Market Maker complex quotes or unrelated MIAX Market 
Maker complex orders that are received during the Response Time 
Interval and executed against a cPRIME Order (``cPRIME Participating 
Quote or Order'') (herein ``Excluded Contracts''). See Fee Schedule, 
page 2.
    \7\ See Securities Exchange Act Release No. 88988 (June 2, 
2020), 85 FR 35153 (June 8, 2020) (SR-MIAX-2020-13). See also 
Exchange Rule 510(c).
    \8\ See Securities Exchange Act Release No. 78519 (August 9, 
2016), 81 FR 54162 (August 15, 2016) (SR-MIAX-2016-21).
    \9\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
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    Further, the Exchange provides certain discounted Market Maker 
transaction fees for Members \10\ and their qualified Affiliates \11\ 
that achieve certain volume thresholds through the submission of 
Priority Customer orders under the Exchange's PCRP. Market Maker 
transaction fees are set forth in two tables in Section 1)a)i) of the 
Fee

[[Page 17903]]

Schedule: the first table sets forth the transaction fees applicable to 
Members and their Affiliates that are in PCRP volume tier 3 or higher; 
and the second table sets forth the transaction fees applicable to 
Members and their Affiliates that are not in PCRP volume tier 3 or 
higher. The Sliding Scale also includes Maker and Taker fees in both 
tables in each tier for simple orders in Penny Classes and non-Penny 
Classes, where the fees are discounted/differentiated between the 
tables.
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    \10\ 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.
    \11\ The term ``Affiliate'' means (i) an affiliate of a Member 
of at least 75% common ownership between the firms as reflected on 
each firm's Form BD, Schedule A, (``Affiliate''), or (ii) the 
Appointed Market Maker of an Appointed EEM (or, conversely, the 
Appointed EEM of an Appointed Market Maker). An ``Appointed Market 
Maker'' is a MIAX Market Maker (who does not otherwise have a 
corporate affiliation based upon common ownership with an EEM) that 
has been appointed by an EEM and an ``Appointed EEM'' is an EEM (who 
does not otherwise have a corporate affiliation based upon common 
ownership with a MIAX Market Maker) that has been appointed by a 
MIAX Market Maker, pursuant to the following process. A MIAX Market 
Maker appoints an EEM and an EEM appoints a MIAX Market Maker, for 
the purposes of the Fee Schedule, by each completing and sending an 
executed Volume Aggregation Request Form by email to 
[email protected] no later than 2 business days prior to 
the first business day of the month in which the designation is to 
become effective. Transmittal of a validly completed and executed 
form to the Exchange along with the Exchange's acknowledgement of 
the effective designation to each of the Market Maker and EEM will 
be viewed as acceptance of the appointment. The Exchange will only 
recognize one designation per Member. A Member may make a 
designation not more than once every 12 months (from the date of its 
most recent designation), which designation shall remain in effect 
unless or until the Exchange receives written notice submitted 2 
business days prior to the first business day of the month from 
either Member indicating that the appointment has been terminated. 
Designations will become operative on the first business day of the 
effective month and may not be terminated prior to the end of the 
month. Execution data and reports will be provided to both parties. 
See Fee Schedule, note 1.
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    Section 1)a)iii) of the Fee Schedule describes the PCRP. Pursuant 
to the PCRP, the Exchange credits each Member the per contract amount 
set forth in the PCRP table \12\ resulting from each Priority Customer 
order transmitted by that Member which is executed electronically on 
the Exchange in all multiply-listed option classes, provided the Member 
meets certain percentage thresholds in a month as described in the PCRP 
table. However, the Exchange excludes the following orders from 
participating in the PCRP: in simple or complex, as applicable, QCC 
\13\ and cQCC Orders,\14\ mini-options, Priority Customer-to-Priority 
Customer Orders, C2C,\15\ cC2C Orders,\16\ PRIME and cPRIME AOC 
Responses, PRIME and cPRIME contra-side orders, PRIME \17\ and cPRIME 
Orders,\18\ 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 MIAX Rule 
1400).
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    \12\ The Exchange notes an exception for broken up cPRIME Agency 
Orders in the PCRP, which are subject to the per contract credits 
described in the cPRIME Agency Order Break-up Table in Section 
1)a)iii) of the Fee Schedule, below the PCRP table.
    \13\ A Qualified Contingent Cross Order is comprised of an 
originating order to buy or sell at least 1,000 contracts, or 10,000 
mini-option contracts, that is identified as being part of a 
qualified contingent trade, as that term is defined in 
Interpretations and Policies .01 below, coupled with a contra-side 
order or orders totaling an equal number of contracts. See Exchange 
Rule 516(j).
    \14\ A Complex Qualified Contingent Cross or ``cQCC'' Order is 
comprised of an originating complex order to buy or sell where each 
component is at least 1,000 contracts that is identified as being 
part of a qualified contingent trade, as defined in Rule 516, 
Interpretations and Policies .01, coupled with a contra-side complex 
order or orders totaling an equal number of contracts. Trading of 
cQCC Orders is governed by Rule 515(h)(4). See Exchange Rule 
518(b)(6).
    \15\ A Customer Cross Order is comprised of a Priority Customer 
Order to buy and a Priority Customer Order to sell at the same price 
and for the same quantity. See Exchange Rule 516(i).
    \16\ A Complex Customer Cross or ``cC2C'' Order is comprised of 
one Priority Customer complex order to buy and one Priority Customer 
complex order to sell at the same price and for the same quantity. 
Trading of cC2C Orders is governed by Rule 515(h)(3). See Exchange 
Rule 518(b)(5).
    \17\ The Price Improvement Mechanism (``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. See 
Exchange Rule 515A(a).
    \18\ Members may use PRIME to execute complex orders at a net 
price. ``cPRIME'' is the process by which a Member may 
electronically submit a ``cPRIME Order'' (as defined in Exchange 
Rule 518(b)(7)) it represents as agent (a ``cPRIME Agency Order'') 
against principal or solicited interest for execution (a ``cPRIME 
Auction''), pursuant to the provisions of Exchange Rule 515A. See 
Exchange Rule 515A, Interpretation and Policy .12(a).
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    Volume for transactions in both simple and complex and in 
applicable PRIME and cPRIME orders in the PCRP are aggregated to 
determine the appropriate volume tier threshold applicable to each 
transaction. Volume is recorded for, and credits are delivered to, the 
Member that submits the order to MIAX. MIAX aggregates the contracts 
resulting from Priority Customer orders transmitted and executed 
electronically on MIAX from Members and their Affiliates for purposes 
of the volume thresholds described in the PCRP table.
Modifications to Volume Criteria Percentage Thresholds in all Tiers for 
the Market Maker Origin Applicable to Members and Affiliates in PCRP 
Volume Tier 3 or Higher
    Currently, the Market Maker Sliding Scale volume thresholds 
applicable to Members and their Affiliates that are in PCRP volume tier 
3 or higher are as follows: (i) 0.00% to 0.075% in tier 1; (ii) above 
0.075% to 0.70% in tier 2; (iii) above 0.70% to 1.10% in tier 3; (iv) 
above 1.10% to 1.50% in tier 4; and (v) above 1.50% in tier 5.\19\ For 
these types of transactions where the Market Maker is a Maker in Penny 
Classes for simple orders, the Exchange assesses per contract fees as 
follows: $0.21 in tier 1, $0.16 in tier 2, $0.10 in tier 3, $0.05 in 
tier 4, and $0.03 in tier 5. For these types of transactions where the 
Market Maker is a Taker in Penny Classes for simple orders, the 
Exchange assesses per contract fees as follows: $0.23 in tier 1, $0.22 
in tier 2, $0.19 in tier 3, $0.18 in tier 4, and $0.17 in tier 5. For 
these types of transactions where the Market Maker is a Maker in non-
Penny Classes for simple orders, the Exchange assesses per contract 
fees as follows: $0.25 in tier 1, $0.19 in tier 2, $0.12 in tier 3, 
$0.08 in tier 4, and $0.06 in tier 5. For these types of transactions 
where the Market Maker is a Taker in non-Penny Classes for simple 
orders, the Exchange assesses per contract fees as follows: $0.30 in 
tier 1, $0.27 in tier 2, $0.23 in tier 3, $0.22 in tier 4, and $0.21 in 
tier 5. For these types of transactions where the Market Maker is a 
Maker or Taker in Penny Classes for complex orders, the Exchange 
assesses per contract fees as follows: $0.25 in tier 1, $0.24 in tier 
2, $0.21 in tier 3, $0.20 in tier 4, and $0.19 in tier 5. For these 
types of transactions where the Market Maker is a Maker or Taker in 
non-Penny Classes for complex orders, the Exchange assesses per 
contract fees as follows: $0.32 in tier 1, $0.29 in tier 2, $0.25 in 
tier 3, $0.24 in tier 4, and $0.23 in tier 5. The Exchange also 
assesses a surcharge of $0.12 per contract in all tiers for Market 
Maker transactions in complex orders when the Market Maker is trading 
against a Priority Customer complex order in Penny and non-Penny 
Classes.
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    \19\ See Fee Schedule, Section 1)a)i), page 1.
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    The Exchange proposes to modify the volume thresholds for the 
volume criteria for the Market Maker Sliding Scale applicable to 
Members and their Affiliates that are in PCRP volume tier 3 or higher 
as follows: (i) tier 1 will be amended from 0.00% to 0.075% to now be 
0.00% to 0.40%; (ii) tier 2 will be amended from above 0.075% to 0.70% 
to now be above 0.40% to 0.80%; (iii) tier 3 will be amended from above 
0.70% to 1.10% to now be above 0.80% to 1.20%; (iv) tier 4 will be 
amended from above 1.10% to 1.50% to now be above 1.20% to 1.60%; and 
(v) tier 5 will be amended from above 1.50% to now be above 1.60%. The 
Exchange does not proposes to amend any of the Maker or Taker fee 
amounts pursuant to this proposal.
Modifications to Volume Criteria Percentage Thresholds in all Tiers for 
the Market Maker Origin Applicable to Members and Affiliates That Are 
Not in PCRP Volume Tier 3 or Higher
    Currently, the Market Maker Sliding Scale volume thresholds 
applicable to Members and their Affiliates that are not in PCRP volume 
tier 3 or higher are as follows: (i) 0.00% to 0.075% in tier 1; (ii) 
above 0.075% to 0.70% in tier 2; (iii) above 0.70% to 1.10% in tier 3; 
(iv) above 1.10% to 1.50% in tier 4; and (v) above 1.50% in tier 5.\20\ 
For these types of transactions where the Market Maker is a Maker in 
Penny Classes for simple orders, the Exchange assesses per contract 
fees as follows: $0.23 in tier 1, $0.18 in tier 2, $0.12 in tier 3, 
$0.07 in tier 4, and $0.05 in tier 5. For these types of transactions 
where the Market Maker is a Taker in Penny Classes for simple orders, 
the Exchange assesses per contract fees as follows: $0.25 in tier 1, 
$0.24 in tier 2, $0.21 in tier 3, $0.20 in tier 4, and $0.19 in tier 5. 
For these types of transactions where the Market Maker is a Maker in 
non-Penny Classes

[[Page 17904]]

for simple orders, the Exchange assesses per contract fees as follows: 
$0.27 in tier 1, $0.21 in tier 2, $0.14 in tier 3, $0.10 in tier 4, and 
$0.08 in tier 5. For these types of transactions where the Market Maker 
is a Taker in non-Penny Classes for simple orders, the Exchange 
assesses per contract fees as follows: $0.32 in tier 1, $0.29 in tier 
2, $0.25 in tier 3, $0.24 in tier 4, and $0.23 in tier 5. For these 
types of transactions where the Market Maker is a Maker or Taker in 
Penny Classes for complex orders, the Exchange assesses per contract 
fees as follows: $0.25 in tier 1, $0.24 in tier 2, $0.21 in tier 3, 
$0.20 in tier 4, and $0.19 in tier 5. For these types of transactions 
where the Market Maker is a Maker or Taker in non-Penny Classes for 
complex orders, the Exchange assesses per contract fees as follows: 
$0.32 in tier 1, $0.29 in tier 2, $0.25 in tier 3, $0.24 in tier 4, and 
$0.23 in tier 5. The Exchange also assesses a surcharge of $0.12 per 
contract in all tiers for Market Maker transactions in complex orders 
when the Market Maker is trading against a Priority Customer complex 
order in Penny and non-Penny Classes.
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    \20\ See Fee Schedule, Section 1)a)i), page 2.
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    The Exchange proposes to modify the volume thresholds for the 
volume criteria for the Market Maker Sliding Scale applicable to 
Members and their Affiliates that are not in PCRP volume tier 3 or 
higher as follows: (i) tier 1 will be amended from 0.00% to 0.075% to 
now be 0.00% to 0.40%; (ii) tier 2 will be amended from above 0.075% to 
0.70% to now be above 0.40% to 0.80%; (iii) tier 3 will be amended from 
above 0.70% to 1.10% to now be above 0.80% to 1.20%; (iv) tier 4 will 
be amended from above 1.10% to 1.50% to now be above 1.20% to 1.60%; 
and (v) tier 5 will be amended from above 1.50% to now be above 1.60%. 
The Exchange does not proposes to amend any of the Maker or Taker fee 
amounts pursuant to this proposal.
    The purpose of adjusting the percentage thresholds for the volume 
criteria in all tiers of the Market Maker Sliding Scale for both tables 
is for business and competitive reasons. In order to attract order 
flow, the Exchange initially set its volume thresholds so that they 
were meaningfully lower than other options exchanges. The Exchange now 
believes that it is appropriate to adjust the volume thresholds so that 
they are more in line with other exchanges, but will still remain 
highly competitive such that it should enable the Exchange to continue 
to attract order flow and maintain market share.
    For example, NYSE American, LLC (``NYSE American'') provides a 
similar sliding scale for NYSE American Options Market Maker 
transactions. Pursuant to the NYSE American Options Market Maker 
sliding scale, the NYSE American Market Maker's tier for transaction 
fees is calculated based on that Market Maker's average daily volume 
(``ADV'') as a percentage of TCADV.\21\ Similar to the Exchange's 
Market Maker Sliding Scale, the NYSE American Options Market Maker 
sliding scale tiers are as follows (including applicable fees for 
``non-take volume'' and ``take volume''): \22\ (i) 0.00% to 0.25% in 
tier 1 (per contract fee of $0.25 regardless of non-take or take 
volume); (ii) above 0.25% to 0.70% in tier 2 (per contract fees of 
$0.22 for non-take volume and $0.24 for take volume); (iii) above 0.70% 
to 1.50% in tier 3 (per contract fees of $0.12 for non-take volume and 
$0.17 for take volume); and (iv) above 1.50% in tier 4 (per contract 
fees of $0.09 for non-take volume and $0.14 for take volume).\23\
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    \21\ ``TCADV'' refers to Total Industry Customer equity and ETF 
option average daily volume. TCADV includes OCC calculated Customer 
volume of all types, including Complex Order transactions and QCC 
transactions, in equity and ETF options. See NYSE American Options 
Fee Schedule, Key Terms and Definitions.
    \22\ For the purposes of the Sliding Scale transaction charges, 
all eligible volume that does not remove liquidity will be 
considered ``non-take volume''; whereas all volume that removes 
liquidity will be considered ``take volume.'' See NYSE American 
Options Fee Schedule, Section I.C. NYSE American Options Market 
Maker Sliding Scale--Electronic, page 9-10.
    \23\ See id.
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Modifications to Volume Criteria Percentage Thresholds in PCRP Tiers 2, 
3 and 4
    Currently, the volume thresholds applicable to Priority Customer 
orders in PCRP tiers 2, 3 and 4 are as follows: (i) above 0.50% to 
1.20% in tier 2; (ii) above 1.20% to 1.75% in tier 3; and (iii) above 
1.75% in tier 4.\24\ For Priority Customer orders in the PCRP, the 
Exchange provides a per contract credit for simple orders in non-MIAX 
Select Symbols \25\ as follows: $0.00 in tier 1, $0.10 in tier 2, $0.15 
in tier 3, and $0.21 in tier 4. For Priority Customer orders in the 
PCRP, the Exchange provides a per contract credit for simple orders in 
MIAX Select Symbols as follows: $0.00 in tier 1, $0.10 in tier 2, $0.18 
in tier 3, and $0.24 in tier 4. For Priority Customer orders in the 
PCRP, the Exchange provides a per contract credit for PRIME Agency 
Orders as follows: $0.10 in tier 1, $0.11 in tier 2, $0.11 in tier 3, 
and $0.11 in tier 4. For Priority Customer orders in the PCRP, the 
Exchange provides a per contract credit for cPRIME Agency orders based 
on the order break-up percentage, described in the cPRIME Agency Order 
Break-up Table in Section 1)a)iii) of the Fee Schedule.\26\ For 
Priority Customer orders in the PCRP, the Exchange provides a per 
contract credit for complex orders as follows: $0.20 in tier 1, $0.21 
in tier 2, $0.26 or $0.27 in tier 3 (depending on whether the executing 
buyer and seller are the same Member and Affiliate or not),\27\ and 
$0.27 or $0.28 in tier 4 (depending on whether the executing buyer and 
seller are the same Member and Affiliate or not).\28\
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    \24\ See Fee Schedule, Section 1)a)iii), page 5.
    \25\ The term ``MIAX Select Symbols'' means options overlying 
AAL, AAPL, AMAT, AMD, AMZN, BA, BABA, BB, BIDU, BP, C, CAT, CLF, 
CVX, DAL, EBAY, EEM, FCX, GE, GILD, GLD, GM, GOOGL, GPRO, HAL, INTC, 
IWM, JNJ, JPM, KMI, KO, META, MO, MRK, NFLX, NOK, ORCL, PBR, PFE, 
PG, QCOM, QQQ, RIG, SPY, T, TSLA, USO, VALE, WBA, WFC, WMB, X, XHB, 
XLE, XLF, XLP, XOM and XOP. See Fee Schedule, Section 1)a)iii), note 
14.
    \26\ See Fee Schedule, Section 1)a)iii), cPRIME Agency Order 
Break-up Table.
    \27\ See Fee Schedule, Section 1)a)iii), notes K and [ssquf].
    \28\ See id.
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    The Exchange proposes to modify the volume thresholds for the 
volume criteria for Priority Customer orders in PCRP tiers 2, 3 and 4 
as follows: (i) tier 2 will be amended from above 0.50% to 1.20% to now 
be above 0.50% to 1.50%; (ii) tier 3 will be amended from above 1.20% 
to 1.75% to now be above 1.50% to 2.00%; and (iv) tier 4 will be 
amended from above 1.75% to now be above 2.00%. The Exchange does not 
propose to amend any of the credit amounts in the PCRP pursuant to this 
proposal.
    The purpose of adjusting the percentage thresholds for the volume 
criteria in tiers 2, 3 and 4 of the PCRP is for business and 
competitive reasons. In order to attract order flow, the Exchange 
initially set its volume thresholds so that they were meaningfully 
lower than other options exchanges. The Exchange now believes that it 
is appropriate to adjust the volume thresholds so that they are more in 
line with other exchanges, but will still remain highly competitive 
such that it should enable the Exchange to continue to attract order 
flow and maintain market share.
    For example, NYSE American provides a similar range of volume 
thresholds for its American Customer Engagement (``ACE'') Program. 
Pursuant to the ACE Program, NYSE American Customer tiers for credits 
are calculated utilizing two different methods: (1) based on the 
Customer's electronic ADV as a percentage of TCADV; or (2) based on the 
total electronic ADV (of which 20% or greater of the minimum qualifying 
volume for each tier must be

[[Page 17905]]

Customer) as a percentage of TCADV.\29\ The ACE Program provides 
similar volume thresholds as the PCRP, which are as follows: (i) less 
than 0.40% in the Base tier; (ii) 0.40% to 0.75% in tier 1; (iii) above 
0.75% to 1.00% in tier 2; (iv) above 1.00% to 1.25% in tier 3; (v) 
above 1.25% to 1.75% in tier 4; and (vi) above 1.75% in tier 5.\30\
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    \29\ See NYSE American Options Fee Schedule, Section I.E.
    \30\ See id.
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Implementation
    The proposed changes are immediately effective.
2. Statutory Basis
    The Exchange believes that its proposed changes to the Fee Schedule 
are consistent with Section 6(b) of the Act \31\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\32\ in that it 
is an equitable allocation of reasonable dues, fees and other charges 
among Exchange Members and issuers and other persons using its 
facilities, and 6(b)(5) of the Act,\33\ in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \31\ 15 U.S.C. 78f(b).
    \32\ 15 U.S.C. 78f(b)(4).
    \33\ 15 U.S.C. 78f(b)(1) and (b)(5).
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    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. 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 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.'' \34\ There are currently 
16 registered options exchanges competing for order flow. Based on 
publicly-available information, and excluding index-based options, no 
single exchange had more than 12.93% of the market share of executed 
volume of multiply-listed equity and exchange-traded fund (``ETF'') 
options trades for the month of February 2023.\35\ Therefore, no 
exchange possesses significant pricing power in the execution of 
multiply-listed equity and ETF options order flow. More specifically, 
the Exchange had a market share of 6.82% of executed volume of 
multiply-listed equity and ETF options for the month of February 
2023.\36\
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    \34\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
    \35\ See ``The Market at a Glance,'' available at https://www.miaxoptions.com/ (last visited March 9, 2023).
    \36\ See id.
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    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/or non-
transaction fee changes. For example, on February 28, 2019, the 
Exchange's affiliate, MIAX PEARL, LLC (``MIAX Pearl''), filed with the 
Commission a proposal to increase Taker fees in certain tiers for 
options transactions in certain Penny Classes for Priority Customers 
and decrease Maker rebates in certain tiers for options transactions in 
Penny Classes for Priority Customers (which fee was to be effective 
March 1, 2019).\37\ MIAX Pearl experienced a decrease in total market 
share between the months of February and March of 2019, after the fees 
were in effect. Accordingly, the Exchange believes that the MIAX Pearl 
March 1, 2019 fee change may have contributed to the decrease in MIAX 
Pearl's market share and, as such, the Exchange believes competitive 
forces constrain options exchange transaction fees and market 
participants can shift order flow based on fee changes instituted by 
the exchanges.
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    \37\ See Securities Exchange Act Release No. 85304 (March 13, 
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
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    The Exchange believes its proposal to modify the volume thresholds 
for the volume criteria in all Market Maker Sliding Scale tiers and in 
tiers 2, 3 and 4 for Priority Customer orders in the PCRP is 
reasonable, equitably allocated and not unfairly discriminatory because 
these changes are for business and competitive reasons. In order to 
attract order flow, the Exchange initially set its volume thresholds at 
meaningful low levels. The Exchange now believes that it is appropriate 
to adjust these volume thresholds so that they are more reflective of 
the current operating conditions and the current type and amount of 
volume (Market Maker and Priority Customer orders) executed on the 
Exchange. The Exchange believes that the proposed volume thresholds 
will still allow the Exchange to remain highly competitive such that 
the thresholds should enable the Exchange to continue to attract order 
flow and maintain market share.
    The Exchange believes its proposal to modify the volume thresholds 
for the volume criteria in all Market Maker Sliding Scale tiers and in 
tiers 2, 3 and 4 for Priority Customer orders in the PCRP is 
reasonable, equitable and not unfairly discriminatory because all 
similarly situated market participants in the same origin type are 
subject to the same volume thresholds, as proposed. With the proposed 
changes, Market Makers will have to increase their volume as a 
percentage threshold in order to achieve the lower fees afforded by the 
higher tiers of the Sliding Scale for both Market Maker transaction fee 
tables in simple and complex orders, as applicable. The Exchange cannot 
predict with certainty how many Market Makers with volume applicable to 
either table of the Sliding Scale will be impacted by the proposed 
higher volume thresholds; however, the Exchange notes that all Market 
Makers will be subject to the proposed thresholds, but based on volume 
in recent months, up to six Market Makers may be impacted by the 
proposed higher threshold volume requirements of the Sliding Scale to 
achieve lower transaction fees in simple (Penny and non-Penny Classes) 
and complex orders. However, even with the proposed volume threshold 
changes, the Exchange believes its volume thresholds will still allow 
the Exchange to remain highly competitive such that the thresholds 
should enable the Exchange to continue to attract order flow and 
maintain market share. As the amount and type of volume that is 
executed on the Exchange has shifted since it first established the 
Market Maker Sliding Scale, provided that the Market Maker and its 
Affiliates are in tier 3 of higher of the PCRP or not, the Exchange has 
determined to level-set the volume criteria threshold amounts so that 
they are more reflective of the current operating conditions and the 
current type and amount of volume executed on the Exchange.
    Similarly, with the proposed changes, market participants will need 
increased volume as a percentage threshold of Priority Customer orders 
in the PCRP in order to achieve the higher rebates afforded by the 
higher tiers of the PCRP in simple and complex orders and PRIME and 
cPRIME Agency orders, as applicable. The Exchange cannot

[[Page 17906]]

predict with certainty how many market participants will be impacted by 
the proposed higher volume thresholds of the PCRP. However, even with 
the proposed volume threshold changes, the Exchange believes its volume 
thresholds will still allow the Exchange to remain highly competitive 
such that the thresholds should enable the Exchange to continue to 
attract order flow and maintain market share. As the amount and type of 
volume that is executed on the Exchange has shifted since it first 
established the PCRP, the Exchange has determined to level-set the 
volume criteria threshold amounts so that they are more reflective of 
the current operating conditions and the current type and amount of 
volume executed on the Exchange.
    The Exchange believes it is equitable and not unfairly 
discriminatory to modify the volume thresholds for the volume criteria 
in all Market Maker Sliding Scale tiers and in tiers 2, 3 and 4 for 
Priority Customer orders in the PCRP for business and competitive 
reasons because the Exchange initially set its volume thresholds so 
that they were meaningfully lower than other options exchanges. The 
Exchange now believes that it is appropriate to adjust the volume 
thresholds so that they are more in line with other exchanges,\38\ but 
will still remain highly competitive such that it should enable the 
Exchange to continue to attract order flow and maintain market share. 
The Exchange cannot predict with certainty, but the Exchange notes that 
even with the proposed increase to the volume thresholds for the volume 
criteria in tiers 2, 3 and 4 for Priority Customer orders in the PCRP, 
no Affiliated Market Makers will be affected (with the determining 
factor being Market Makers in PCRP tier 3 or higher or not being in 
PCRP tier 3 or higher). Stated another way, with the proposed changes 
to the PCRP volume threshold criteria, Market Makers with Affiliates in 
PCRP tier 3 or higher will continue to remain the same respective 
Market Maker Sliding Scale table. Likewise, Market Makers with 
Affiliates not in PCRP tier 3 or higher will continue to remain in the 
same respective Market Maker Sliding Scale table. The Market Makers 
that were not in PCRP tier 3 or higher prior to the proposed changes 
will continue to remain in the same respective Market Maker Sliding 
Scale table. Accordingly, the Exchange believes the proposed changes 
are reasonable and not unfairly discriminatory because the proposed 
changes to the PCRP volume criteria thresholds will impact all Market 
Makers equally when determining which transaction fee table they are 
assessed for the Market Maker Sliding Scale.
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    \38\ See supra notes 22 and 29.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
    The Exchange believes its proposal will not impose any burden on 
intra-market competition because the Exchange believes that its 
proposal will not place any category of Exchange market participant at 
a competitive disadvantage because the changes would apply equally 
among market participants that have Priority Customer orders receive 
credits pursuant to the PCRP. As the amount and type of volume that is 
executed on the Exchange has shifted since it first established the 
PCRP and Market Maker Sliding Scale, the Exchange has determined to 
level-set the volume criteria threshold amounts so that they are more 
reflective of the current operating conditions and the current type and 
amount of volume executed on the Exchange. The proposal to modify the 
volume thresholds is intended to improve market quality. The Exchange 
believes that its proposal will continue to encourage additional Market 
Maker and Priority Customer volume to be executed on the Exchange, 
which will attract further liquidity to the Exchange and benefit all 
market participants. Accordingly, the Exchange believes that the 
proposed changes will continue to attract order flow to the Exchange, 
thereby encouraging additional volume and liquidity to the benefit of 
all market participants.
    The Exchange believes its proposal will not impose any burden on 
inter-market competition because 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, or rebate opportunities available at other venues to be 
more favorable. There are currently 16 registered options exchanges 
competing for order flow. Based on publicly-available information, and 
excluding index-based options, no single exchange had more than 12.93% 
of the market share of executed volume of multiply-listed equity and 
ETF options trades for the month of February 2023.\39\ Therefore, no 
exchange possesses significant pricing power in the execution of 
multiply-listed equity and ETF options order flow. More specifically, 
the Exchange had a market share of 6.82% of executed volume of 
multiply-listed equity and ETF options for the month of February 
2023.\40\ In such an environment, the Exchange must continually adjust 
its fees and tiers to remain competitive with other options exchanges. 
Because competitors are free to modify their own fees and tiers in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. The Exchange believes that the proposed rule changes 
reflect this competitive environment because they modify the Exchange's 
fees in a manner that encourages market participants to continue to 
provide liquidity and to send order flow to the Exchange.
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    \39\ See supra note 35.
    \40\ See id.
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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,\41\ and Rule 19b-4(f)(2) \42\ 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.
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    \41\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \42\ 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:

[[Page 17907]]

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-2023-12 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-2023-12. 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-2023-12 and should be 
submitted on or before April 14, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\43\
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    \43\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06055 Filed 3-23-23; 8:45 am]
BILLING CODE 8011-01-P


