
[Federal Register Volume 88, Number 222 (Monday, November 20, 2023)]
[Notices]
[Pages 80796-80803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25549]



[[Page 80796]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98938; File No. SR-MEMX-2023-30]


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule Concerning Transaction Fees

November 14, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 1, 2023, MEMX LLC (``MEMX'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
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 with the Commission a proposed rule change 
to amend the Exchange's fee schedule applicable to Members \3\ (the 
``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and (c). The 
Exchange proposes to implement the changes to the Fee Schedule pursuant 
to this proposal on November 1, 2023. The text of the proposed rule 
change is provided in Exhibit 5.
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    \3\ See Exchange Rule 1.5(p).
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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 purpose of the proposed rule change is to amend the Fee 
Schedule to (i) reduce the base rebate for executions of Retail Orders 
\4\ in securities priced at or above $1.00 per share that add displayed 
liquidity to the Exchange (such orders, ``Added Displayed Retail 
Volume''); (ii) modify the Liquidity Provision Tiers by: modifying the 
required criteria under Liquidity Provision Tiers 1, 2, 3, 4, and 5; 
decreasing the rebate for executions of orders in securities priced at 
or above $1.00 per share that add displayed liquidity to the Exchange 
(such orders, ``Added Displayed Volume'') under Liquidity Provision 
Tiers 2, 3, and 5; modifying the method by which the Exchange provides 
the rebate under Liquidity Provision Tiers 4 and 5; and eliminating 
Liquidity Provision Tier 6; (iii) adopt a new Retail Tier that provides 
an enhanced rebate for executions of Added Displayed Retail Volume 
priced at or above $1.00 per share; (iv) modify the required criteria 
under Liquidity Removal Tier 1; (v) modify the required criteria under 
Non-Display Add Tier 1; (vi) modify the NBBO Setter/Joiner Tiers by 
reducing the additive rebate per share under NBBO Setter/Joiner Tier 1, 
renaming such tier to ``NBBO Setter Tier 1'' and eliminating NBBO 
Setter/Joiner Tier 2; (vii) adopt a new Tape B Volume Tier that 
provides an additive rebate for executions of Added Displayed Volume in 
Tape B securities priced at or above $1.00 per share and add a 
corresponding relevant defined term to the ``Definitions'' section of 
the Fee Schedule; and (viii) adopt a new additive rebate for executions 
of Added Displayed Volume applicable to Displayed Liquidity Incentive 
(``DLI'') Tier 1 and Liquidity Provision Tier 1 or Liquidity Provision 
Tier 2; as further described below.
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    \4\ A ``Retail Order'' means an agency or riskless principal 
order that meets the criteria of FINRA Rule 5320.03 that originates 
from a natural person and is submitted to the Exchange by a Retail 
Member Organization (``RMO''), provided that no change is made to 
the terms of the order with respect to price or side of market and 
the order does not originate from a trading algorithm or any other 
computerized methodology. See Exchange Rule 11.21(a).
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    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 16 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues, to 
which market participants may direct their order flow. Based on 
publicly available information, no single registered equities exchange 
currently has more than approximately 15.5% of the total market share 
of executed volume of equities trading.\5\ Thus, in such a low-
concentrated and highly competitive market, no single equities exchange 
possesses significant pricing power in the execution of order flow, and 
the Exchange currently represents approximately 3% of the overall 
market share.\6\ The Exchange in particular operates a ``Maker-Taker'' 
model whereby it provides rebates to Members that add liquidity to the 
Exchange and charges fees to Members that remove liquidity from the 
Exchange. The Fee Schedule sets forth the standard rebates and fees 
applied per share for orders that add and remove liquidity, 
respectively. Additionally, in response to the competitive environment, 
the Exchange also offers tiered pricing, which provides Members with 
opportunities to qualify for higher rebates or lower fees where certain 
volume criteria and thresholds are met. Tiered pricing provides an 
incremental incentive for Members to strive for higher tier levels, 
which provides increasingly higher benefits or discounts for satisfying 
increasingly more stringent criteria.
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    \5\ Market share percentage calculated as of October 31, 2023. 
The Exchange receives and processes data made available through 
consolidated data feeds (i.e., CTS and UTDF).
    \6\ Id.
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Reduce Base Rebate for Added Displayed Retail Volume
    Currently, the Exchange provides a base rebate of $0.0034 per share 
for executions of Added Displayed Retail Volume. The Exchange now 
proposes to reduce the base rebate for executions of Added Displayed 
Retail Volume to $0.0032 per share.\7\ The purpose of reducing the base 
rebate for executions of Added Displayed Retail Volume is for business 
and competitive reasons, as the Exchange believes that reducing such 
rebate as proposed would decrease the Exchange's expenditures with 
respect to its transaction pricing in a manner that is still consistent 
with the Exchange's overall pricing philosophy of

[[Page 80797]]

encouraging added displayed liquidity. The Exchange notes that despite 
the reduction proposed herein, the proposed base rebate for executions 
of Added Displayed Retail Volume remains competitive with the base 
rebates provided by other exchanges for executions of Retail Orders in 
securities priced at or above $1.00 per share that add displayed 
liquidity.\8\
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    \7\ The proposed base rebate for executions of Added Displayed 
Retail Volume is referred to by the Exchange on the Fee Schedule 
under the existing description ``Added displayed volume, Retail 
Order'' with a Fee Code of ``Br'', ``Dr'' or ``Jr'', as applicable, 
on execution reports.
    \8\ See, e.g., the Cboe BZX equities trading fee schedule on its 
public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/), which reflects a base rebate of 
$0.0032 per share for executions of attested retail orders in 
securities priced at or above $1.00 per share that add displayed 
liquidity, and the Cboe EDGX Exchange, Inc. (``Cboe EDGX'') equities 
trading fee schedule on its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/), which 
reflects a base rebate of $0.0032 per share for executions of 
attested retail orders in securities priced at or above $1.00 per 
share that add displayed liquidity.
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Liquidity Provision Tiers
    The Exchange currently provides a base rebate of $0.0015 per share 
for executions of Added Displayed Volume.\9\ The Exchange also 
currently offers Liquidity Provision Tiers 1-6 under which a Member may 
receive an enhanced rebate for executions of Added Displayed Volume by 
achieving the corresponding required volume criteria for each such 
tier. The Exchange now proposes to modify the Liquidity Provision Tiers 
by modifying the required criteria under Liquidity Provision Tier 1 and 
Liquidity Provision Tier 4, reducing the rebate for executions of Added 
Displayed Volume and modifying the required criteria under Liquidity 
Provision Tier 2, Liquidity Provision Tier 3, and Liquidity Provision 
Tier 5, and eliminating Liquidity Provision Tier 6, as further 
described below.
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    \9\ The base rebate for executions of Added Displayed Volume is 
referred to by the Exchange on the Fee Schedule under the existing 
description ``Added displayed volume'' with a Fee Code of ``B'', 
``D'' or ``J'', as applicable, on execution reports.
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    First, with respect to Liquidity Provision Tier 1, the Exchange 
currently provides an enhanced rebate of $0.0033 per share for 
executions of Added Displayed Volume for Members that qualify for such 
tier by achieving an ADAV \10\ (excluding Retail Orders) that is equal 
to or greater than 0.45% of the TCV.\11\ Now, the Exchange proposes to 
modify the required criteria such that Member would now qualify for 
Liquidity Provision Tier 1 by achieving: (1) an ADAV (excluding Retail 
Orders) that is equal to or greater than 0.45% of the TCV; or (2) a 
Step-Up ADAV \12\ (excluding Retail Orders) of the TCV from September 
2023 that is equal to or greater than .05%, an ADV \13\ that is equal 
to or greater than 0.50% of the TCV, and a Non-Displayed ADAV \14\ that 
is equal to or greater than 5,000,000 shares; or (3) an ADAV that is 
equal to or greater than 0.30% of the TCV and a Non-Displayed ADAV that 
is equal to or greater than 7,000,000 shares. Thus, such proposed 
changes would keep the existing criteria intact as the first 
alternative, and add two additional alternative criteria, the first 
involving a combination of Step-Up ADAV, ADV, and Non-Displayed ADAV 
thresholds, and the second involving a combination of ADAV and Non-
Displayed ADAV thresholds, all of which are designed to encourage the 
submission of additional liquidity-adding order flow to the 
Exchange.\15\ Additionally, the Exchange is proposing that criteria (2) 
of Liquidity Provision Tier 1 will expire no later than March 31, 2024, 
and the Exchange will indicate this in a note under the Liquidity 
Provision Tiers pricing table on the Fee Schedule. The Exchange is not 
proposing to change the rebate provided under such tier.
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    \10\ As set forth on the Fee Schedule, ``ADAV'' means the 
average daily added volume calculated as the number of shares added 
per day, which is calculated on a monthly basis, and ``Displayed 
ADAV'' means ADAV with respect to displayed orders.
    \11\ As set forth on the Fee Schedule, ``TCV'' means total 
consolidated volume calculated as the volume reported by all 
exchanges and trade reporting facilities to a consolidated 
transaction reporting plan for the month for which the fees apply.
    \12\ As set forth on the Fee Schedule, ``Step-Up ADAV'' means 
ADAV in the relevant baseline month subtracted from current ADAV.
    \13\ As set forth on the Fee Schedule, ``ADV'' means average 
daily volume calculated as the number of shares added or removed, 
combined, per day. ADV is calculated on a monthly basis.
    \14\ As set forth on the Fee Schedule, ``Non-Displayed ADAV'' 
means ADAV with respect to non-displayed orders (including orders 
subject to Display-Price Sliding that receive price improvement when 
executed and Midpoint Peg orders).
    \15\ The pricing for Liquidity Provision Tier 1 is referred to 
by the Exchange on the Fee Schedule under the existing description 
``Added displayed volume, Liquidity Provision Tier 1'' with a Fee 
Code of ``B1'', ``D1'' or ``J1'', as applicable, to be provided by 
the Exchange on the monthly invoices provided to Members.
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    With respect to Liquidity Provision Tier 2, the Exchange currently 
provides an enhanced rebate of $0.00325 per share for executions of 
Added Displayed Volume for Members that qualify for such tier by 
achieving: (1) an ADAV that is equal to or greater than 0.25% of the 
TCV; and (2) a Non-Displayed ADAV that is equal to or greater than 
4,000,000 shares. The Exchange now proposes to reduce the rebate for 
executions of Added Displayed Volume under Liquidity Provision Tier 2 
to $0.0032 per share and to modify the required criteria such that a 
Member would qualify for such tier by achieving: (1) an ADAV that is 
equal to or greater than 0.25% of the TCV and a Non-Displayed ADAV that 
is equal to or greater than 4,000,000 shares; or (2) a Step-Up 
Displayed ADAV of the TCV from September 2023 that is equal to or 
greater than 0.10% and a Displayed ADAV (excluding Retail Orders) that 
is equal to or greater than 0.20% of the TCV.\16\ Thus, such proposed 
changes would keep the existing criteria intact and add an alternative 
criteria (2) that includes a Step-Up Displayed ADAV threshold and a 
Displayed ADAV (excluding Retail Orders) threshold, which is designed 
to encourage the submission of additional liquidity-adding order flow 
to the Exchange. Additionally, the Exchange is proposing that criteria 
(2) of Liquidity Provision Tier 2 will expire no later than March 31, 
2024, and the Exchange will indicate this in a note under the Liquidity 
Provision Tiers pricing table on the Fee Schedule.
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    \16\ The proposed pricing for Liquidity Provision Tier 2 is 
referred to by the Exchange on the Fee Schedule under the existing 
description ``Added displayed volume, Liquidity Provision Tier 2'' 
with a Fee Code of ``B2'', ``D2'' or ``J2'', as applicable, to be 
provided by the Exchange on the monthly invoices provided to 
Members.
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    With respect to Liquidity Provision Tier 3, the Exchange currently 
provides an enhanced rebate of $0.0031 per share for executions of 
Added Displayed Volume for Members that qualify for such tier by 
achieving an ADAV that is equal to or greater than 0.20% of the TCV. 
The Exchange now proposes to reduce the rebate for executions of Added 
Displayed Volume under Liquidity Provision Tier 3 to $0.0030 per share 
and to modify the required criteria such that a Member would now 
qualify for such tier by achieving an ADAV that is equal to or greater 
than 0.175% of the TCV.\17\ Thus, such proposed change reduces the TCV 
threshold as well as the applicable rebate.
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    \17\ The proposed pricing for Liquidity Provision Tier 3 is 
referred to by the Exchange on the Fee Schedule under the existing 
description ``Added displayed volume, Liquidity Provision Tier 3'' 
with a Fee Code of ``B3'', ``D3'' or ``J3'', as applicable, to be 
provided by the Exchange on the monthly invoices provided to 
Members.
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    With respect to Liquidity Provision Tier 4, the Exchange currently 
provides an enhanced rebate of $0.0029 per share for executions of 
Added Displayed Volume for Members that qualify for such tier by 
achieving: (1) an ADAV that is equal to or greater than 0.15% of the 
TCV; or (2) a Displayed ADAV that is equal to or greater than 0.02% of 
the TCV and a Step-Up Displayed ADAV of the TCV from April 2023 that is 
equal

[[Page 80798]]

to or greater than 50% of the Member's April 2023 Displayed ADAV of the 
TCV. The Exchange now proposes modify the required criteria such that a 
Member would now qualify for such tier by achieving (1) an ADAV 
(excluding Retail Orders) that is equal to or greater than 0.09% of the 
TCV; or (2) an ADAV that is equal to or greater than 0.06% of the TCV 
and a Step-Up ADAV from June 2023 that is equal to or greater than 40% 
of the Member's June 2023 Displayed ADAV.\18\ Thus, such proposed 
change would lower the ADAV threshold in the first alternative criteria 
(and exclude Retail Orders), and modify the alternative ADAV and Step-
Up ADAV thresholds in criteria (2). Additionally, the Exchange is 
proposing that criteria (2) of Liquidity Provision Tier 4 will expire 
no later than December 31, 2023. The Exchange is not proposing to 
change the rebate provided under such tier.
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    \18\ The proposed pricing for Liquidity Provision Tier 4 is 
referred to by the Exchange on the Fee Schedule under the existing 
description ``Added displayed volume, Liquidity Provision Tier 4'' 
with a Fee Code of ``B4'', ``D4'' or ``J4'', as applicable, to be 
provided by the Exchange on the monthly invoices provided to 
Members.
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    With respect to Liquidity Provision Tier 5, the Exchange currently 
provides an enhanced rebate of $0.0027 per share for executions of 
Added Displayed Volume for Members that qualify for such tier by 
achieving an ADAV that is equal to or greater than 0.075% of the TCV. 
The Exchange now proposes to reduce the rebate for executions of Added 
Displayed Volume under Liquidity Provision Tier 5 to $0.0025 per share 
and to modify the required criteria such that a Member would now 
qualify for such tier by achieving: (1) an ADAV that is equal to or 
greater than 0.06% of the TCV; or (2) a Displayed ADAV that is equal to 
or greater than 0.007% of the TCV and a Step-Up Displayed ADAV from May 
2023 that is equal to or greater than 50% of the Member's May 2023 
Displayed ADAV of the TCV.\19\ Thus, such proposed change would lower 
the ADAV threshold in the existing criteria and add an alternative 
criteria (2) that includes a Displayed ADAV and a Step-Up Displayed 
ADAV threshold. Additionally, the Exchange is proposing that criteria 
(2) of Liquidity Provision Tier 5 will expire no later than November 
30, 2023, and the Exchange will indicate this in a note under the 
Liquidity Provision Tiers pricing table on the Fee Schedule.
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    \19\ The proposed pricing for Liquidity Provision Tier 5 is 
referred to by the Exchange on the Fee Schedule under the existing 
description ``Added displayed volume, Liquidity Provision Tier 5'' 
with a Fee Code of ``B5'', ``D5'' or ``J5'', as applicable, to be 
provided by the Exchange on the monthly invoices provided to 
Members.
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    With respect to Liquidity Provision Tier 6, the Exchange currently 
provides an enhanced rebate of $0.0024 per share for executions of 
Added Displayed Volume for Members that qualify for such tier by 
achieving a Displayed ADAV that is equal to or greater than 0.007% of 
the TCV and a Step-Up Displayed ADAV of the TCV from May 2023 that is 
equal to or greater than 50% of the Member's May 2023 Displayed ADAV of 
the TCV. As noted above, the criteria under this Tier has been shifted 
into criteria (2) of Liquidity Provision Tier 5. As such, the Exchange 
now proposes to eliminate Liquidity Provision Tier 6, as the Exchange 
no longer wishes to, nor is it required to, maintain such tier.
    Lastly, the Exchange is proposing to delete the language on the Fee 
Schedule that indicates Members that qualify for Liquidity Provision 
Tiers 4, 5, or 6 based on activity in a given month will also receive 
the associated Tier 4, 5 or 6 rebate during the following month. This 
method of providing the rebate under such Tiers was implemented on June 
1, 2023,\20\ and differed from the previous practice applicable to 
those tiers (and current practice with respect to all incentives and 
pricing tiers on the Exchange's Fee Schedule) whereby a Member receives 
the applicable rebate at the end of the month if it achieved the 
applicable criteria during that month. The Exchange implemented this 
method on a trial basis in an effort to encourage Members to increase 
their liquidity-adding order flow with an added layer of certainty in 
the rebate they would receive the next month, if applicable. However, 
the Exchange does not believe that the revised method incentivized 
Members to achieve Liquidity Provisions 4, 5, or 6 in a manner that was 
material enough to continue the trial further, and it would rather 
redirect the associated resources into other programs and tiers 
intended to incentivize increased order flow or enhance market quality. 
As such, the Exchange proposes to discontinue this method and provide 
the applicable rebate under Liquidity Provision Tiers 4 and 5 (as noted 
above, it is proposing to eliminate Liquidity Provision Tier 6) in the 
same manner in which it provides rebates under all other pricing tiers.
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    \20\ See Securities Exchange Act Release No. 97724 (June 14, 
2023), 88 FR 40361 (June 21, 2023) (SR-MEMX-2023-10).
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    The purpose of reducing the rebates for executions of Added 
Displayed Volume under Liquidity Provision Tiers 2, 3 and 5 as 
proposed, which the Exchange believes in each case represents a modest 
reduction and remains commensurate with the required criteria as 
modified, and eliminating Liquidity Provision Tier 6 is for business 
and competitive reasons, as the Exchange believes that such rebate 
reductions and tier elimination would decrease the Exchange's 
expenditures with respect to its transaction pricing in a manner that 
is still consistent with the Exchange's overall pricing philosophy of 
encouraging added liquidity. The purpose of modifying the required 
criteria under Liquidity Provision Tiers 1-5 provides an incremental 
incentive for Members to strive for higher volume thresholds to receive 
higher enhanced rebates for such executions and, as such, is intended 
to encourage Members to maintain or increase their order flow, 
primarily in the form of liquidity-adding volume, to the Exchange, 
thereby contributing to a deeper and more liquid market to the benefit 
of all Members and market participants. The Exchange believes that the 
Liquidity Provision Tiers, as modified by the proposed changes 
described above, reflect a reasonable and competitive pricing structure 
that is right-sized and consistent with the Exchange's overall pricing 
philosophy of encouraging added and/or displayed liquidity. 
Specifically, the Exchange believes that, after giving effect to the 
proposed changes described above, the rebate for executions of Added 
Displayed Volume provided under each of the Liquidity Provision Tiers 
1-5 and the manner in which it is provided remains commensurate with 
the corresponding required criteria under each such tier and is 
reasonably related to the market quality benefits that each such tier 
is designed to achieve.
Retail Tier
    As described above, the Exchange is proposing to provide a base 
rebate of $0.0032 per share for executions of Added Displayed Retail 
Volume. In addition, the Exchange is proposing to adopt a new tiered 
pricing structure applicable to the rebate provided for executions of 
Added Displayed Retail Volume. Specifically, the Exchange proposes to 
adopt a new volume-based tier, referred to by the Exchange as the 
Retail Tier, in which the Exchange will provide an enhanced rebate for 
executions of Added Displayed Retail Volume that meet a certain 
specified volume threshold on the Exchange. Under the proposed Retail 
Tier 1, the Exchange will provide an enhanced rebate of $0.0034 per 
share for executions of Added Displayed Retail Volume for a Member that 
qualifies for

[[Page 80799]]

the Retail Tier 1 by achieving a Retail Order ADAV that is equal to or 
greater than 0.07% of the TCV. The $0.0003 per share additive rebate 
will be provided in addition to the rebate that is otherwise applicable 
to each of a qualifying Members' orders that constitutes Setter Volume 
(including a rebate provided under another pricing tier/incentive).\21\ 
The Exchange proposes to provide Members that qualify for the proposed 
new Retail Tier 1 a rebate of 0.075% of the total dollar volume of the 
transaction for executions of orders in securities priced below $1.00 
per share that add displayed liquidity to the Exchange, which is the 
same rebate that is currently applicable to such executions for all 
Members.
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    \21\ The proposed pricing for the Retail Tier is referred to by 
the Exchange on the Fee Schedule under the description ``Added 
displayed volume, Retail Tier 1'' with a Fee Code of ``Br1'', 
``Dr1'' or ``Jr1'', as applicable, to be provided by the Exchange on 
the monthly invoices provided to Members.
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    The proposed Retail Tier is designed to encourage growth in Retail 
Order flow to the Exchange by providing an additional rebate for 
executions of Added Displayed Retail Volume, thereby promoting 
increased liquidity and providing for overall enhanced price discovery 
and market quality on the Exchange. The Exchange notes that the 
proposed Retail Tier is comparable to other volume-based incentives and 
discounts, which have been widely adopted by exchanges (including the 
Exchange).\22\
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    \22\ See, e.g., the Retail Volume Tiers reflected on the Cboe 
BZX equities trading fee schedule (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/), and the 
Retail Volume Tiers reflected on the Cboe EDGX equities trading fee 
schedule (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/).
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Liquidity Removal Tier
    The Exchange currently charges a standard fee of $0.0030 per share 
for executions of orders in securities priced at or above $1.00 per 
share that remove liquidity from the Exchange (such orders, ``Removed 
Volume''). The Exchange also currently offers Liquidity Removal Tier 1 
under which qualifying Members are charged a discounted fee of $0.00295 
per share for executions of Removed Volume by achieving (1) an ADV that 
is equal to or greater than 0.50% of the TCV; or (2) a Remove ADV \23\ 
that is equal to or greater than 0.30% of the TCV. Now, the Exchange 
proposes to modify the required criteria under Liquidity Removal Tier 1 
such that a Member would qualify for such tier by achieving (1) an ADV 
that is equal to or greater than 0.60% of the TCV; and (2) a Remove ADV 
that is equal to or greater than 0.30% of the TCV.\24\ Thus, such 
proposed change would increase the ADV threshold in the first required 
criteria and keep the second required criteria intact with no changes 
except that, as proposed, a Member would be required to achieve both 
criteria, rather than one or the other. The Exchange is not proposing 
to change the rebate provided under such tier.
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    \23\ As set forth on the Fee Schedule, ``Remove ADV'' means ADV 
with respect to orders that remove liquidity.
    \24\ The proposed pricing for Liquidity Removal Tier 1 is 
referred to by the Exchange on the Fee Schedule under the existing 
description ``Removed volume from MEMX Book, Liquidity Removal Tier 
1'' with a Fee Code of ``R1'' assigned on the monthly invoices 
provided by the Exchange. The Exchange is not proposing to change 
the fee charged under Liquidity Removal Tier 1 for executions of 
securities priced below $1.00 per share.
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    The proposed change to the Liquidity Removal Tier 1 is designed to 
encourage Members to maintain or increase their order flow, including 
in the form of orders that remove liquidity, to the Exchange in order 
to qualify for the discounted fee for executions of Removed Volume. 
While the Exchange's overall pricing philosophy generally encourages 
adding liquidity over removing liquidity, the Exchange believes that 
providing alternative criteria that are based on different types of 
volume that Members may choose to achieve, such as the proposed new 
criteria under Liquidity Removal Tier 1, contributes to a more robust 
and well-balanced market ecosystem on the Exchange to the benefit of 
all Members.
Non-Display Add Tier 1
    The Exchange currently offers Non-Display Add Tiers 1-4 under which 
a Member may receive an enhanced rebate for executions of Added Non-
Displayed Volume by achieving the corresponding required volume 
criteria for each such tier. Currently, a Member qualifies for Non-
Display Add Tier 1, and thus receives an enhanced rebate of $0.0028 per 
share for executions of Added Non-Displayed Volume under such tier, by 
achieving: (1) a Non-Displayed ADAV that is equal to or greater than 
8,000,000 shares; or (2) an ADAV (excluding Retail Orders) that is 
equal to or greater than 0.45% of the TCV.\25\ The Exchange now 
proposes to modify Non-Display Add Tier 1 such that a Member would now 
qualify for such tier by achieving a Non-Displayed ADAV that is equal 
to or greater than 8,000,000 shares. Thus, such proposed change would 
keep the first existing criteria intact without changes and eliminate 
the second alternative criteria, which the Exchange believes would make 
the tier easier for Members to achieve, and, in turn, while the 
Exchange has no way of predicting with certainty how the proposed new 
criteria will impact Member activity, the Exchange expects that more 
Members will qualify, or strive to qualify, for such tier than 
currently do, resulting in the submission of additional order flow to 
the Exchange. The Exchange is not proposing to change the rebate 
provided under this tier.
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    \25\ The pricing for Non-Display Add Tier 1 is referred to by 
the Exchange on the Fee Schedule under the existing description 
``Added non-displayed volume, Non-Display Add Tier 1'' with a Fee 
Code of ``H1'', ``M1'' or ``P1'', as applicable, to be provided by 
the Exchange on the monthly invoices provided to Members.
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    The tiered pricing structure for executions of Added Non-Displayed 
Volume under the Non-Display Add Tiers provides an incremental 
incentive for Members to strive for higher volume thresholds to receive 
higher enhanced rebates for such executions and, as such, is intended 
to encourage Members to maintain or increase their order flow, 
particularly in the form of liquidity-adding non-displayed volume, to 
the Exchange, thereby contributing to a deeper and more robust and 
well-balanced market ecosystem to the benefit of all Members and market 
participants.
NBBO Setter/Joiner Tiers
    The Exchange currently offers NBBO Setter/Joiner Tiers 1-2 under 
which a Member may receive an additive rebate for a qualifying Member's 
executions of Added Displayed Volume (other than Retail Orders) that 
establish the NBBO (such orders, ``Setter Volume'') and executions of 
Added Displayed Volume (other than Retail Orders) that establish a new 
best bid or offer on the Exchange that matches the NBBO first 
established on an away market (such orders, ``Joiner Volume''). The 
Exchange now proposes to modify the NBBO Setter/Joiner Tiers by 
decreasing the additive rebate provided for executions of Setter and 
Joiner Volume under NBBO Setter/Joiner Tier 1 and renaming such tier 
``NBBO Setter Tier 1'' and eliminating NBBO Setter/Joiner Tier 2, as 
further described below.
    With respect to NBBO Setter/Joiner Tier 1, the Exchange currently 
provides an additive rebate of $0.0004 per share for executions of 
Setter Volume for Members that qualify for such tier by achieving an 
ADAV equal to or greater than 0.10% of the TCV with respect to orders 
with Fee Code B.\26\ Now, the Exchange proposes to reduce the rebate

[[Page 80800]]

for NBBO Setter/Joiner Tier 1 to $0.0002 per share. The Exchange 
believes that the additive rebate remains commensurate with the 
required criteria under such tier, as modified, and is reasonably 
related to the market quality benefits that such tier is designed to 
achieve.
---------------------------------------------------------------------------

    \26\ The Exchange notes that orders with Fee Code B include 
orders, other than Retail Orders, that establish the NBBO.
---------------------------------------------------------------------------

    With respect to NBBO/Setter Joiner Tier 2, the Exchange currently 
provides an additive rebate of $0.0002 per share for executions of 
Setter Volume and Joiner Volume for Members that qualify for such tier 
by achieving an ADAV that is equal to or greater than 0.05% of the TCV 
and a Displayed ADAV with respect to orders with Fee Code B or J \27\ 
that is equal to or greater than 40% of the Member's Displayed ADAV 
with respect to orders with Fee Code B, D or J.\28\ The Exchange now 
proposes to eliminate NBBO Setter/Joiner Tier 2, as the Exchange no 
longer wishes to, nor is it required to, maintain such tier.
---------------------------------------------------------------------------

    \27\ The Exchange notes that orders with Fee Code J include 
orders, other than Retail Orders, that establish a new BBO on the 
Exchange that matches the NBBO first established on an away market.
    \28\ The Exchange notes that orders with Fee Code D include 
orders that add displayed liquidity to the Exchange but that are not 
Fee Code B or J, and thus, orders with Fee Code B, D or J include 
all orders, other than Retail Orders, that add displayed liquidity 
to the Exchange.
---------------------------------------------------------------------------

    Finally, after the proposed elimination of NBBO Setter/Joiner Tier 
2, only one relevant Tier remains, and that tier only applies to orders 
with a Fee Code B that establish the NBBO. As such, the Exchange 
proposes to rename this tier category ``NBBO Setter Tier'', and the 
relevant Tier 1 ``NBBO Setter Tier 1''.
Adoption of Tape B Volume Tier
    The Exchange proposes to adopt a new volume-based tier, referred to 
by the Exchange as the Tape B Volume Tier, in which the Exchange will 
provide an additive rebate for executions of Added Displayed Volume 
(excluding Retail Orders) in Tape B Securities (such orders, ``Tape B 
Volume''). Under the proposed Tape B Volume Tier 1, the Exchange will 
provide an additive rebate of $0.0001 per share for executions of Tape 
B Volume for a Member that qualifies for the Tape B Volume Tier 1 by 
achieving: (1) a Step-Up Tape B ADAV \29\ of the Tape B TCV from 
October 2023 that is equal to or greater than 0.10%(excluding Retail 
Orders); and (2) a Tape B ADAV that is equal to or greater than 0.25% 
of the Tape B TCV (excluding Retail Orders). The $0.0001 per share 
additive rebate will be provided in addition to the rebate that is 
otherwise applicable to each of a qualifying Members' orders that 
constitutes Tape B Volume (including a rebate provided under another 
pricing tier/incentive).\30\ Additionally, the Exchange is proposing 
Tape B Volume Tier 1 will expire no later than April 30, 2024, and the 
Exchange will indicate this in a note under the Tape B Volume Tier 
pricing table on the Fee Schedule. The Exchange notes that the additive 
rebate will not apply to executions of orders in Tape B securities 
priced below $1.00 per share.
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    \29\ The Exchange proposes to define ``Step-Up Tape B ADAV'' in 
the Fee Schedule as the ADAV in Tape B securities as a percentage of 
the TCV in the relevant baseline month subtracted from the current 
ADAV in Tape B securities as a percentage of the TCV.
    \30\ The proposed pricing for the Tape B Volume Tier is referred 
to by the Exchange on the Fee Schedule under the new description 
``Tape B Volume Tier'' with a Fee Code of ``b'' to be appended to 
the otherwise applicable Fee Code assigned by the Exchange on the 
monthly invoices for qualifying executions.
---------------------------------------------------------------------------

    The proposed Tape B Volume Tier is designed to attract displayed 
liquidity to the Exchange in Tape B securities by providing an 
additional rebate for executions of Tape B Volume to Members, thereby 
promoting price discovery and market quality on the Exchange. The 
Exchange notes that the proposed Tape B Volume Tier is comparable to 
other volume-based incentives and discounts, which have been widely 
adopted by exchanges (including the Exchange), including similar 
pricing incentives applicable to Tape B securities.\31\
---------------------------------------------------------------------------

    \31\ See, e.g., Securities Exchange Act Release No. 73813 
(September 11, 2015), 80 FR 55882 (September 17, 2015) (SR-BATS-
2015-74) (notice of filing and immediate effectiveness of a proposed 
rule change related to fees to adopt a Tape B Volume Tier that 
provides an enhanced rebates for executions of orders in Tape B 
Securities to BZX (formerly BATS Exchange, Inc.) members that 
qualify for such tiers by achieving a specified Tape B ADAV 
threshold).
---------------------------------------------------------------------------

DLI Additive Rebate
    The Exchange currently offers DLI Tiers 1 and 2 in which qualifying 
Members are provided an enhanced rebate for executions of Added 
Displayed Volume. The DLI Tiers are designed to encourage Members, 
through the provision of such enhanced rebates for executions of Added 
Displayed Volume, to promote price discovery and market quality by 
quoting at the NBBO for a significant portion of each day in a large 
number of securities, thereby benefitting the Exchange and investors by 
providing improved trading conditions for all market participants 
through narrower bid-ask spreads and increased depth of liquidity 
available at the NBBO in a broad base of securities, and committing 
capital to support the execution of orders.\32\ The Exchange is not 
proposing to modify the DLI Tiers at this time, however, the Exchange 
is proposing to adopt a new additive rebate for executions of Added 
Displayed Volume applicable to DLI Tier 1 and Liquidity Provision Tier 
1 or Liquidity Provision Tier 2 (the ``DLI Additive Rebate''). 
Specifically, the proposed DLI Additive Rebate would provide an 
additive rebate of $0.0001 per share for executions of Added Displayed 
Volume that otherwise qualify for the applicable rebate under Liquidity 
Provision Tier 1 or Liquidity Provision Tier 2 as well as the 
applicable criteria under DLI Tier 1,\33\ as described more fully 
below.
---------------------------------------------------------------------------

    \32\ See the Exchange's Fee Schedule (available at: https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule) for additional details regarding the Exchange's DLI Tiers 
and DLI Target Securities.
    \33\ This proposed pricing is referred to by the Exchange on the 
Fee Schedule under the new description ``DLI Additive Rebate'' with 
a Fee Code of ``q'' to be appended to the otherwise applicable Fee 
Code for qualifying executions.
---------------------------------------------------------------------------

    First, a Member qualifies for DLI Tier 1 by having (1) an NBBO time 
of at least 25% in an average of at least 1,000 securities per trading 
day during the month; and (2) an ADAV that is equal to or greater than 
0.10% of the TCV.\34\ Under Liquidity Provision Tier 1, the Exchange is 
proposing (as described above) to provide an enhanced rebate of $0.0033 
per share for executions of Added Displayed Volume for Members that 
qualify for such tier by achieving: (1) an ADAV (excluding Retail 
Orders) that is equal to or greater than 0.45% of the TCV; or (2) a 
Step-Up ADAV from September 2023 that is equal to or greater than 0.05% 
of the TCV, an ADV that is equal to or greater than 0.50% of the TCV, 
and a Non-Displayed ADAV that is equal to or greater than 5,000,000 
shares; or (3) an ADAV that is equal to or greater than 0.30% of the 
TCV and a Non-Displayed ADAV that is equal to or greater than 7,000,000 
shares. Under Liquidity Provision Tier 2, the Exchange is proposing (as 
described above) to provide an enhanced rebate of $0.0032 for 
executions of Added Displayed Volume for Members that qualify for such 
tier by having: (1) an ADAV that is greater than or equal to 0.25% of 
the TCV and a Non-Displayed ADAV that is equal to or greater than 
4,000,000 shares; or (2) a Step-Up Displayed ADAV of the TCV from 
September 2023 that is equal to or greater than 0.10% and a Displayed 
ADAV (excluding Retail Orders) that is equal to or greater than 0.20% 
of the TCV. Members would

[[Page 80801]]

qualify for the DLI Additive rebate and by achieving both the criteria 
under DLI Tier 1 and either Liquidity Provision Tier 1 or Liquidity 
Tier 2.\35\
---------------------------------------------------------------------------

    \34\ The enhanced rebate provided under DLI Tier 1 is $0.0031 
per share for executions of Added Displayed Volume.
    \35\ Thus, a Member that qualifies for Liquidity Provision Tier 
1 and the DLI Additive Rebate (by achieving the criteria under DLI 
Tier 1) would receive a rebate of $0.0034 per share (which is the 
$0.0033 per share rebate under Liquidity Provision Tier 1, as 
described above, plus the $0.0001 per share DLI Additive Rebate) for 
executions of Added Displayed Volume, and a Member that qualifies 
for Liquidity Provision Tier 2 and the DLI Additive Rebate (by 
achieving the criteria under DLI Tier 1) would receive a rebate of 
$0.0033 per share (which is the proposed $0.0032 per share rebate 
under Liquidity Provision Tier 2, as described above, plus the 
$0.0001 per share DLI Additive Rebate) for executions of Added 
Displayed Volume.
---------------------------------------------------------------------------

    The purpose of the proposed DLI Additive Rebate is to encourage 
Members that consistently quote at the NBBO on the Exchange (i.e., 
Members that qualify for DLI Tier 1) to also maintain or increase their 
orders that add liquidity on the Exchange in order to qualify for an 
additive rebate for executions of Added Displayed Volume, which, in 
turn, the Exchange believes would encourage the submission of 
additional Added Displayed Volume to the Exchange, thereby promoting 
price discovery and contributing to a deeper and more liquid market to 
the benefit of all market participants. The Exchange notes that the 
proposed DLI Additive Rebate is comparable to other volume-based 
incentives and discounts, which have been widely adopted by exchanges, 
including the Exchange, such as pricing tiers that provide a 
supplemental incentive for firms that achieve a specified volume 
threshold.\36\
---------------------------------------------------------------------------

    \36\ See Securities Exchange Act Release No. 93949 (January 11, 
2022), 87 FR 2655 (January 18, 2022) (SR-MEMX-2021-21) (Notice of 
filing and immediate effectiveness of fee changes adopted by the 
Exchange, including the adoption of a DLI Additive Rebate). The 
Exchange subsequently eliminated the DLI Additive Rebate on July 1, 
2022. See Securities Exchange Act Release No. 95211 (July 7, 2022), 
87 FR 41839 (July 13, 2022) (SR-MEMX-2022-16).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\37\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\38\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among its Members and other persons using its facilities 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78f.
    \38\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    As discussed above, the Exchange operates in a highly fragmented 
and competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive or incentives to be insufficient, and the 
Exchange represents only a small percentage of the overall market. The 
Commission and the courts have repeatedly expressed their 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.'' \39\
---------------------------------------------------------------------------

    \39\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005).
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue to reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, and market participants 
can readily trade on competing venues if they deem pricing levels at 
those other venues to be more favorable. The Exchange believes the 
proposal reflects a reasonable and competitive pricing structure 
designed to incentivize market participants to direct additional order 
flow, including displayed, non-displayed, liquidity-adding and/or 
liquidity-removing orders, to the Exchange, which the Exchange believes 
would promote price discovery and enhance liquidity and market quality 
on the Exchange to the benefit of all Members and market participants.
    The Exchange believes that the proposed change to reduce the base 
rebate provided for executions Added Displayed Retail Volume is 
reasonable because, as described above, such change is designed to 
decrease the Exchange's expenditures with respect to its transaction 
pricing in a manner that is still consistent with the Exchange's 
overall pricing philosophy of encouraging added and/or displayed 
liquidity, and the proposed new base rebate for executions of Added 
Displayed Retail Volume remains in competitive with, the base rebates 
provided by other exchanges in each case for executions of similar 
orders.\40\ The Exchange also believes the proposed base rebate for 
executions of Added Displayed Retail Volume is equitable and not 
unfairly discriminatory, as such base rebate will apply equally to all 
Members submitting Retail Orders to the Exchange.
---------------------------------------------------------------------------

    \40\ See supra note 8.
---------------------------------------------------------------------------

    The Exchange notes that volume-based incentives and discounts (such 
as tiers) have been widely adopted by exchanges, including the 
Exchange, and are reasonable, equitable and not unfairly discriminatory 
because they are open to all members on an equal basis and provide 
additional benefits or discounts that are reasonably related to the 
value to an exchange's market quality associated with higher levels of 
market activity, such as higher levels of liquidity provision and/or 
growth patterns, and the introduction of higher volumes of orders into 
the price and volume discovery process. The Exchange believes that each 
of the Liquidity Provision Tiers 1-5, Liquidity Removal Tier 1, Non-
Display Add Tier 1, NBBO Setter Tier 1, each as modified by the changes 
proposed herein, as well as the proposed new Retail Tier, Tape B Volume 
Tier, and DLI Additive Rebate, are reasonable, equitable and not 
unfairly discriminatory for these same reasons, as such tiers would 
provide Members with an incremental incentive to achieve certain volume 
thresholds on the Exchange, are available to all Members on an equal 
basis, and, as described above, are designed to encourage Members to 
maintain or increase their order flow, including in the form of 
displayed, non-displayed, liquidity-adding and/or liquidity removing 
orders under the required criteria, as applicable, to the Exchange, 
which the Exchange believes would promote price discovery, enhance 
liquidity and market quality, and contribute to a more robust and well 
balanced market ecosystem on the Exchange to the benefit of all Members 
and market participants.
    The Exchange also believes that such tiers reflect a reasonable and 
equitable allocation of fees and rebates, as the Exchange believes 
that, after giving effect to the changes proposed herein, the enhanced 
rebate for executions of Added Displayed Volume, Added Displayed Retail 
Volume, Added Non-Displayed Volume, Setter Volume, Added Tape B Volume, 
as well as the discounted fee for executions of Removed Volume under 
the modified Liquidity Removal Tier 1, each remains commensurate with 
the corresponding required criteria under each such tier and is 
reasonably related to the market quality benefits that each such tier 
is designed to achieve, as described above.

[[Page 80802]]

    With respect to the proposed changes to eliminate Liquidity 
Provision Tier 6 and NBBO Setter/Joiner Tier 2, the Exchange believes 
such changes are reasonable because, as noted above, they would enable 
the Exchange to redirect the associated resources and funding into 
other programs and tiers intended to incentivize increased order flow 
or enhance market quality, and the Exchange is not required to maintain 
such tiers or provide Members any opportunities to receive additive 
rebates. The Exchange believes the proposal to eliminate such tiers is 
also equitable and not unfairly discriminatory because it would apply 
equally to all Members, in that the incentives would no longer be 
available for any Member.
    Similarly, the Exchange believes the proposed discontinuance of the 
current method by which it is providing the enhanced rebates under 
Liquidity Provision Tiers 4 and 5 (each as modified by the proposed 
changes herein) is reasonable because, as noted above, the Exchange 
implemented this novel method on a trial basis and determined that it 
did not incentivize members to meet the applicable Liquidity Provision 
Tiers to the extent that it believes would support continuation. 
Further, the method by which the Exchange provides rebates does not 
affect any criteria or rebates provided under Liquidity Provision Tiers 
4 and 5, and as such, modifying the method again does not alter the 
Exchange's reasonable and competitive pricing structure designed to 
incentivize market participants to direct additional flow to the 
Exchange. The Exchange believes the proposal to discontinue this method 
is also equitable and not unfairly discriminatory because it would 
apply equally to Members, in that the Exchange would instead provide 
the rebates to all Members for all pricing tiers under the same 
methodology whereby a Member is awarded a rebate based on its activity 
for the current month.
    For the reasons discussed above, the Exchange submits that the 
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act \41\ in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its Members and other 
persons using its facilities and is not designed to unfairly 
discriminate between customers, issuers, brokers, or dealers. As 
described more fully below in the Exchange's statement regarding the 
burden on competition, the Exchange believes that its transaction 
pricing is subject to significant competitive forces, and that the 
proposed fees and rebates described herein are appropriate to address 
such forces.
---------------------------------------------------------------------------

    \41\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposal will result in any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. Instead, as discussed above, 
the proposal is intended to incentivize market participants to direct 
additional order flow to the Exchange, thereby enhancing liquidity and 
market quality on the Exchange to the benefit of all Members and market 
participants, as well as to generate additional revenue and decrease 
the Exchange's expenditures with respect to its transaction pricing in 
a manner that is still consistent with the Exchange's overall pricing 
philosophy of encouraging added displayed liquidity. As a result, the 
Exchange believes the proposal would enhance its competitiveness as a 
market that attracts actionable orders, thereby making it a more 
desirable destination venue for its customers. For these reasons, the 
Exchange believes that the proposal furthers the Commission's goal in 
adopting Regulation NMS of fostering competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \42\
---------------------------------------------------------------------------

    \42\ See supra note 39.
---------------------------------------------------------------------------

Intramarket Competition
    As discussed above, the Exchange believes that the proposal would 
decrease the Exchange's expenditures and generate additional revenue 
with respect to its transaction pricing in a manner that is still 
consistent with the Exchange's overall pricing philosophy of 
encouraging added and/or displayed liquidity and would incentivize 
market participants to direct additional order flow to the Exchange 
through volume-based tiers, thereby enhancing liquidity and market 
quality on the Exchange to the benefit of all Members, as well as 
enhancing the attractiveness of the Exchange as a trading venue, which 
the Exchange believes, in turn, would continue to encourage market 
participants to direct additional order flow to the Exchange. Greater 
liquidity benefits all Members by providing more trading opportunities 
and encourages Members to send additional orders to the Exchange, 
thereby contributing to robust levels of liquidity, which benefits all 
market participants.
    The Exchange does not believe that the proposed change to reduce 
the base rebate for executions of Added Displayed Retail Volume would 
impose any burden on intramarket competition because such change will 
apply to all Members uniformly, in that the proposed base rebate for 
such executions would be the base rebate applicable to all Members, and 
the opportunity to qualify for enhanced rebate, as applicable, is 
available to all Members. The opportunity to qualify for each of the 
Liquidity Provision Tiers 1-5, NBBO Setter Tier 1, Non-Display Add Tier 
1, and Liquidity Removal Tier 1, each as modified by the changes 
proposed herein, as well as the proposed new Retail Tier, Tape B Volume 
Tier, and DLI Additive Rebate, and thus receive the corresponding 
enhanced rebates or discounted fees, as applicable, would be available 
to all Members that meet the associated volume and/or quoting 
requirements in any month. As described above, the Exchange believes 
that the required criteria under each such tier are commensurate with 
the corresponding rebate under such tier and are reasonably related to 
the enhanced liquidity and market quality that such tier is designed to 
promote. Additionally, the Exchange does not believe that the proposal 
to eliminate the method by which the Exchange currently provides the 
enhanced rebate under the Liquidity Provision Tiers 4 and 5 (each as 
modified by the changes proposed herein), would impose any burden on 
intramarket competition because such change will apply to all Members 
uniformly, and the methodology by which the Exchange provides rebates 
will be the same for all pricing tiers. For the foregoing reasons, the 
Exchange believes the proposed changes would not impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
Intermarket Competition
    As noted above, the Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. Members have numerous 
alternative venues that they may participate on and direct their order 
flow to, including 15 other equities exchanges and numerous alternative 
trading systems and other off-exchange venues. As noted above, no 
single registered equities exchange currently has more than 
approximately 15.5% of the total market share of

[[Page 80803]]

executed volume of equities trading. Thus, in such a low-concentrated 
and highly competitive market, no single equities exchange possesses 
significant pricing power in the execution of order flow. Moreover, the 
Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue to reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, including with respect to 
executions of Added Displayed Volume, Added Displayed Retail Volume, 
Added Non-Displayed Volume and Removed Volume, and market participants 
can readily choose to send their orders to other exchange and off-
exchange venues if they deem fee levels at those other venues to be 
more favorable. As described above, the proposed changes represent a 
competitive proposal through which the Exchange is seeking to generate 
additional revenue with respect to its transaction pricing and to 
encourage the submission of additional order flow to the Exchange 
through volume-based tiers, which have been widely adopted by 
exchanges, including the Exchange. Accordingly, the Exchange believes 
the proposal would not burden, but rather promote, intermarket 
competition by enabling it to better compete with other exchanges that 
offer similar pricing incentives to market participants.
    Additionally, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \43\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. SEC, the D.C. Circuit stated as follows: 
``[n]o one disputes that competition for order flow is ``fierce.' . . . 
As the SEC explained, ``[i]n the U.S. national market system, buyers 
and sellers of securities, and the broker-dealers that act as their 
order-routing agents, have a wide range of choices of where to route 
orders for execution'; [and] `no exchange can afford to take its market 
share percentages for granted' because `no exchange possesses a 
monopoly, regulatory or otherwise, in the execution of order flow from 
broker dealers'. . . .''.\44\ Accordingly, the Exchange does not 
believe its proposed pricing changes impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.
---------------------------------------------------------------------------

    \43\ See supra note 39.
    \44\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
---------------------------------------------------------------------------

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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 \45\ and Rule 19b-4(f)(2) \46\ thereunder.
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \46\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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 change should be approved or 
disapproved.

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MEMX-2023-30 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-MEMX-2023-30. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-MEMX-2023-30 and should be 
submitted on or before December 11, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\47\
---------------------------------------------------------------------------

    \47\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25549 Filed 11-17-23; 8:45 am]
BILLING CODE 8011-01-P


