[Federal Register Volume 88, Number 67 (Friday, April 7, 2023)]
[Notices]
[Pages 20930-20933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07267]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97239; File No. SR-MIAX-2023-13]


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

April 3, 2023.
    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 March 22, 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 Options Fee 
Schedule (the ``Fee Schedule'') to extend the SPIKES Options Market 
Maker Incentive Program (the ``Incentive Program'') until June 30, 
2023.
    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 extend the 
Incentive Program until June 30, 2023.
    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 \3\ to improve liquidity, 
available volume, and the quote spread width of SPIKES options 
beginning October 1, 2021, and ending December 31, 2021.\4\ Technical 
details regarding the Incentive Program were published in a Regulatory 
Circular on September 30, 2021.\5\ On October 12,

[[Page 20931]]

2021, the Exchange withdrew SR-MIAX-2021-45 and refiled its proposal to 
implement the Incentive Program to provide additional details.\6\ 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).\7\
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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\ See SR-MIAX-2021-45.
    \5\ 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.
    \6\ See Securities Exchange Act Release No. 93424 (October 26, 
2021), 86 FR 60322 (November 1, 2021) (SR-MIAX-2021-49).
    \7\ See id.
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    On December 23, 2021, the Exchange filed its proposal to extend the 
Incentive Program until March 31, 2022.\8\ 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).\9\ On March 
23, 2022, the Exchange filed its proposal to extend the Incentive 
Program until June 30, 2022.\10\ 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).\11\ On June 
29, 2022, the Exchange filed its proposal to extend the Incentive 
Program until September 30, 2022.\12\ 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).\13\ 
On September 30, 2022, the Exchange filed its proposal to extend the 
Incentive Program until December 31, 2022.\14\ 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).\15\ On December 20, 2022, the Exchange filed its proposal to 
extend the Incentive Program until March 31, 2023.\16\ In that filing, 
the Exchange specifically noted that the Incentive Program would expire 
at the end of the period (March 31, 2023) unless the Exchange filed 
another 19b-4 Filing to amend the fees (or extend the Incentive 
Program).\17\ The Exchange now proposes to extend the Incentive Program 
until June 30, 2023.\18\
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    \8\ See Securities Exchange Act Release No. 93881 (December 30, 
2021), 87 FR 517 (January 5, 2022) (SR-MIAX-2021-63).
    \9\ See id.
    \10\ See Securities Exchange Act Release No. 94574 (April 1, 
2022), 87 FR 20492 (April 7, 2022) (SR-MIAX-2022-12).
    \11\ See id.
    \12\ See Securities Exchange Act Release No. 95259 (July 12, 
2022), 87 FR 42754 (July 17, 2022) (SR-MIAX-2022-24).
    \13\ See id.
    \14\ See Securities Exchange Act Release No. 96007 (October 7, 
2022), 87 FR 62151 (October 13, 2022) (SR-MIAX-2022-32).
    \15\ See id.
    \16\ See Securities Exchange Act Release No. 96588 (December 28, 
2022), 88 FR 381 (January 4, 2023) (SR-MIAX-2022-47).
    \17\ See id.
    \18\ 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.\19\ 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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    \19\ See supra note 5.
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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.\20\ A complete 
description of how the Exchange calculates the minimum spread width 
requirements in ITM and OTM SPIKES options can be found in the 
published Regulatory Circular.\21\ 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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    \20\ See id.
    \21\ 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,\22\ are eligible to receive a pro-rated share of the 
compensation pool as calculated by the Exchange and communicated to 
Members via Regulatory Circular,\23\ 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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    \22\ See id.
    \23\ See id.
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    The Exchange proposes to extend the Incentive Program until June 
30, 2023. 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.\24\ 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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    \24\ 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 \25\ in general, and 
furthers the objectives of

[[Page 20932]]

section 6(b)(4) of the Act \26\ 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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    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to extend the Incentive Program for Market 
Makers in SPIKES options until June 30, 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 proposed extension of the Incentive 
Program to June 30, 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 Incentive Program applies only to the Market 
Makers in SPIKES Options, 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,\27\ and Rule 19b-4(f)(2) \28\ 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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    \27\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \28\ 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-2023-13 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-2023-13. 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

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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-2023-13, and should be submitted on or before April 28, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07267 Filed 4-6-23; 8:45 am]
BILLING CODE 8011-01-P


