80 FR 55158 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 177 (September 14, 2015)

[Federal Register Volume 80, Number 177 (Monday, September 14, 2015)]
[Notices]
[Pages 55158-55162]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-22977]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75856; File No. SR-MIAX-2015-53]


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

September 8, 2015.
    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 August 28, 2015, 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'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, 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.

[[Page 55159]]

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 its Fee Schedule to increase the 
transaction fee rebate for Priority Customer \3\ orders submitted by 
Members that meet certain percentage thresholds of national customer 
volume in multiply-listed option classes listed on MIAX in the Priority 
Customer Rebate Program (the ``Program'').\4\
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    \3\ 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 accounts(s). See Exchange Rule 
100.
    \4\ See Securities Exchange Act Release Nos. 75631 (August 5 
[sic], 2015), 80 FR 48382 (August 6 [sic], 2015) (SR-MIAX-2015-51); 
74758 (April 17, 2015), 80 FR 22756 (April 23, 2015) (SR-MIAX-2015-
27); 74007 (January 9 [sic], 2015), 80 FR 1537 (January 12, 2015) 
(SR-MIAX-2014-69); 72799 (August 8, 2014), 79 FR 47698 (August 14, 
2014) (SR-MIAX-2014-40); 72355 (June 10, 2014), 79 FR 34368 (June 
16, 2014) (SR-MIAX-2014-25); 71698 (March 12, 2014), 79 FR 15185 
(March 18, 2014) (SR-MIAX-2014-12); 71283 (January 10, 2014), 79 FR 
2914 (January 16, 2014) (SR-MIAX-2013-63); 71009 (December 6, 2013), 
78 FR 75629 (December 12, 2013) (SR-MIAX-2013-56).
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Priority Customer Rebate Program
    Currently, the Exchange credits each Member the per contract amount 
resulting from each Priority Customer order transmitted by that Member 
that is executed electronically on the Exchange in all multiply-listed 
option classes (excluding Qualified Contingent Cross Orders,\5\ mini-
options,\6\ Priority Customer-to-Priority Customer Orders, PRIME 
Auction Or Cancel Responses, PRIME Contra-side Orders, PRIME Orders for 
which both the Agency and Contra-side Order are Priority Customers,\7\ 
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), provided the Member 
meets certain tiered percentage thresholds in a month as described in 
the Priority Customer Rebate Program table.\8\ For each Priority 
Customer order transmitted by that Member and executed electronically 
on the Exchange, MIAX will continue to credit each member at the per 
contract rate for option classes that are not in MIAX Select Symbols 
(as defined below). For each Priority Customer order transmitted by 
that Member and executed electronically on the Exchange in MIAX Select 
Symbols (as defined below), MIAX will continue to credit each Member at 
the separate per contract rate for MIAX Select Symbols.\9\ For each 
Priority Customer order submitted into the PRIME Auction as a PRIME 
Agency Order, MIAX will continue to credit each member at the separate 
per contract rate for PRIME Agency Orders.\10\ The volume thresholds 
are calculated based on the customer volume over the course of the 
month. Volume will be recorded for and credits will be delivered to the 
Member Firm that submits the order to the Exchange.
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    \5\ 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. A Qualified 
Contingent Cross Order is not valid during the opening rotation 
process described in Rule 503. See Exchange Rule 516(j).
    \6\ A mini-option is a series of option contracts with a 10 
share deliverable on a stock, Exchange Traded Fund share, Trust 
Issued Receipt, or other Equity Index-Linked Security. See Exchange 
Rule 404, Interpretations and Policies .08.
    \7\ The MIAX 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. For a complete description of PRIME and of PRIME order 
types and responses, see Exchange Rule 515A.
    \8\ See Fee Schedule Section (1)(a)(iii).
    \9\ See Securities Exchange [sic] Release Nos. 75631 (August 5 
[sic], 2015), 80 FR 48382 (August 6 [sic], 2015) (SR-MIAX-2015-51); 
74291 (February 18, 2015), 80 FR 9841 (February 24, 2015) (SR-MIAX-
2015-09); 74288 (February 18, 2015), 80 FR 9837 (February 24, 2015) 
(SR-MIAX-2015-08); 71700 (March 12, 2014), 79 FR 15188 (March 18, 
2014) (SR-MIAX-2014-13); 72356 (June 10, 2014), 79 FR 34384 (June 
16, 2014) (SR-MIAX-2014-26); 72567 (July 8, 2014), 79 FR 40818 (July 
14, 2014) (SR-MIAX-2014-34); 73328 (October 9, 2014), 79 FR 62230 
(October 16, 2014) (SR-MIAX-2014-50).
    \10\ See Securities Exchange [sic] Release No. 72943 (August 28, 
2014), 79 FR 52785 (September 4, 2014) (SR-MIAX-2014-45).
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    The amount of the rebate is calculated beginning with the first 
executed contract at the applicable threshold per contract credit with 
rebate payments made at the highest achieved volume tier for each 
contract traded in that month. For example, under the current Program, 
a Member that executes a number of Priority Customer contracts above 
1.75% of the national customer volume in multiply-listed options during 
a particular calendar month currently receives a credit of $0.17 for 
each Priority Customer contract (other than Select Symbols) executed 
during that month, even though there are lower incremental percentages 
for lower volume tiers leading up to the 1.75% volume threshold. In 
addition, all contracts (other than Select Symbols) traded in a 
particular month in excess of 1.75% of the national volume receive a 
supplemental rebate of $0.03 per contract.
    The current Priority Customer Rebate Program table designates the 
following monthly volume tiers and corresponding per contract credits:

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                                                                   Per contract                    Per contract
 Percentage thresholds of national customer volume in multiply-    credit (non-    Per contract     credit for
         listed options classes listed on MIAX (monthly)              select      credit in MIAX   PRIME agency
                                                                     symbols)     select symbols       order
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Tier 1--0.00%-0.50%.............................................           $0.00           $0.00           $0.10
Tier 2--Above 0.50%-1.00%.......................................            0.10            0.10            0.10
Tier 3--Above 1.00%-1.75%-1.75% [sic]...........................            0.15            0.20            0.10
Tier 4--Above 1.75%.............................................            0.17            0.20            0.10
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    The $0.17 per contract credit described in Tier 4 is applied to 
each contract traded in non-Select Symbols in that month, beginning 
with the first contract executed in a particular month if the Tier 4 
volume threshold is achieved. In addition to the $0.17 rebate, a 
supplemental rebate of $0.03 per contract is applied to contracts 
executed in excess of 1.75% of the monthly national volume in non-
Select Symbols.
Proposal
    The Exchange proposes to increase the per contract credit for 
transactions in non-Select Symbols for Tier 4. As stated above, all 
contracts (other than Select Symbols) traded in a particular month when 
the Tier 4 volume threshold of 1.75% of the national monthly customer 
volume is exceeded receive a credit of $0.17 per contract for 
qualifying Priority Customer transactions on MIAX. The Exchange

[[Page 55160]]

proposes to increase this per contract credit for Priority Customer 
transactions in non-Select Symbols in Tier 4 to $0.21. Contracts 
executed in non-Select Symbols in excess of 1.75% of national monthly 
customer volume currently receive a supplemental rebate of $0.03 per 
contract. The Exchange proposes to eliminate this additional $0.03 
rebate per contract.
    The Exchange also proposes to increase the per contract credit for 
transactions in MIAX Select Symbols for tiers 3 and 4. Currently, the 
Exchange credits $0.20 per contract for qualifying Priority Customer 
transactions in MIAX Select Symbols in tiers 3 and 4. The Exchange 
proposes to increase the per contract credit for transactions in MIAX 
Select Symbols to $0.21 for the tier 3 and 4 volume thresholds.
    Specifically, the new per contract credits will be as set forth in 
the following table:

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                                                                   Per contract                    Per contract
 Percentage thresholds of national customer volume in multiply-    credit (non-    Per contract     credit for
         listed options classes listed on MIAX (monthly)              select      credit in MIAX   PRIME agency
                                                                     symbols)     select symbols       order
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Tier 1--0.00%-0.50%.............................................           $0.00           $0.00           $0.10
Tier 2--Above 0.50%-1.00%.......................................            0.10            0.10            0.10
Tier 3--Above 1.00%-1.75%.......................................            0.15            0.21            0.10
Tier 4--Above 1.75%.............................................            0.21            0.21            0.10
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    The Exchange believes that the proposed new monthly credits should 
provide incentives for Members to direct greater Priority Customer 
trade volume to the Exchange.
MIAX Select Symbols
    The proposed new monthly per contract credits will apply to MIAX 
Select Symbols,\11\ with the per contract credit increasing for certain 
monthly volume thresholds. The monthly per contract rebate will 
increase to $0.21 for all contracts executed in Select Symbols in tiers 
3 and 4.
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    \11\ The term ``MIAX Select Symbols'' means options overlying 
AA, AAL, AAPL, AIG, AMAT, AMD, AMZN, BA, BABA, BBRY, BIDU, BP, C, 
CAT, CBS, CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE, GILD, GLD, 
GM, GOOGL, GPRO, HAL, HTZ, INTC, IWM, JCP, JNJ, JPM, KMI, KO, MO, 
MRK, NFLX, NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG, S, SPY, 
SUNE, T, TSLA, USO, VALE, VXX, WBA, WFC, WMB, WY, X, XHB, XLE, XLF, 
XLP, XOM, XOP and YHOO. See Fee Schedule, note 13.
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MIAX Non-Select Symbols
    Proposed new monthly per contract credits will apply to non-Select 
Symbols with the per contract credit increasing for certain monthly 
volume thresholds. The monthly per contract credit will increase to 
$0.21 for all contracts executed in non-Select Symbols in tier 4. The 
Exchange also proposes to eliminate the current additional rebate of 
$0.03 per contract for non-Select Symbol contracts executed in excess 
of the Tier 4 monthly volume of 1.75% of the national customer volume. 
Under the proposal, all contracts (other than Select Symbols) traded in 
a particular month when the Tier 4 volume threshold of 1.75% of the 
national monthly customer volume is exceeded will receive a credit of 
$0.21, and contracts executed in non-Select Symbols in excess of 1.75% 
of national monthly customer volume will no longer receive a 
supplemental rebate of $0.03 per contract. The Exchange believes that 
this new, increased rebate which is calculated beginning with the first 
executed contract at the applicable threshold per contract credit with 
rebate payments made at $0.21 for each contract trade or [sic] that 
month obviates the need for the supplemental rebate.
    All other aspects of the Program will remain unchanged. The 
Exchange is not proposing any change to the per contract credit for 
PRIME Agency Orders. Consistent with the current Fee Schedule, the 
Exchange will continue to aggregate the contracts resulting from 
Priority Customer orders transmitted and executed electronically on the 
Exchange from affiliated Members for purposes of the thresholds above, 
provided there is at least 75% common ownership between the firms as 
reflected on each firm's Form BD, Schedule A. In the event of a MIAX 
System outage or other interruption of electronic trading on MIAX, the 
Exchange will adjust the national customer volume in multiply-listed 
options for the duration of the outage. A Member may request to receive 
its credit under the Priority Customer Rebate Program as a separate 
direct payment.
    The purpose of the proposed rule change is to encourage Members to 
direct greater Priority Customer trade volume to the Exchange and to 
compete with other options exchanges that have a similar rebate.\12\ 
The Exchange believes that increased Priority Customer volume will 
attract more liquidity to the Exchange, which benefits all market 
participants. Increased retail customer order flow should attract 
professional liquidity providers (Market Makers), which in turn should 
make the MIAX marketplace an attractive venue where Market Makers will 
submit narrow quotations with greater size, deepening and enhancing the 
quality of the MIAX marketplace. This should provide more trading 
opportunities and tighter spreads for other market participants and 
result in a corresponding increase in order flow from such other market 
participants.
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    \12\ See, e.g., Securities Exchange Act Release No. 75702 
(August 14, 2015), 80 FR 50685 (August 20, 2015) (SR-PHLX-2015-68).
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    The specific volume thresholds of the Program's tiers are set based 
upon business determinations and an analysis of current volume levels. 
The volume thresholds are intended to incentivize firms to increase the 
number of Priority Customer orders they send to the Exchange so that 
they can achieve the next threshold, and to encourage new participants 
to send Priority Customer orders as well. Increasing the number of 
orders sent to the Exchange will in turn provide tighter and more 
liquid markets, and therefore attract more business overall. Similarly, 
the different credit rates at the different tier levels are based on an 
analysis of current revenue and volume levels and are intended to 
provide increasing ``rewards'' to MIAX participants for increasing the 
volume of Priority Customer orders sent to, and Priority Customer 
contracts executed on, the Exchange. The specific amounts of the tiers 
and rates are set in order to encourage suppliers of Priority Customer 
order flow to reach for higher tiers.
    The credits paid out as part of the program will be drawn from the 
general revenues of the Exchange.\13\ The Exchange calculates volume 
thresholds on a monthly basis.
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    \13\ Despite providing credits under the Program, the Exchange 
represents that it will continue to have adequate resources to fund 
its regulatory program and fulfill its responsibilities as a self-
regulatory organization while the Program is in effect.

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[[Page 55161]]

2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \14\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \15\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposal is equitable and not 
unfairly discriminatory. The Program and the proposed increase in the 
per contract rebate is reasonably designed because it will encourage 
providers of Priority Customer order flow to send that Priority 
Customer order flow to the Exchange in order to receive an increasing 
per contract credit with each volume tier achieved. The Exchange 
believes that the proposed increase in the per contract rate should 
improve market quality for all market participants. The proposed 
changes to the rebate program are fair and equitable and not 
unreasonably discriminatory because they apply equally to all Priority 
Customer orders. All similarly situated Priority Customer orders are 
subject to the same rebate schedule, and access to the Exchange is 
offered on terms that are not unfairly discriminatory. Furthermore, the 
proposed increase in credits is equitable and not unfairly 
discriminatory because the proposed rates and changes encourage Members 
to direct increased amounts of Priority Customer contracts to the 
Exchange. Market participants want to trade with Priority Customer 
order flow. To the extent Priority Customer order flow is increased by 
the proposal, market participants will increasingly compete for the 
opportunity to trade on the Exchange including sending more orders and 
providing narrower and larger sized quotations in the effort to trade 
with such Priority Customer order flow. The resulting increased volume 
and liquidity will benefit all Exchange participants 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. The Exchange believes that the 
proposed change would increase both intermarket and intramarket 
competition by encouraging Members to direct their Priority Customer 
orders to the Exchange, which should enhance the quality of quoting and 
increase the volume of contracts traded on MIAX. Respecting the 
competitive position of non-Priority Customers, the Exchange believes 
that this rebate program should provide additional liquidity that 
enhances the quality of its markets and increases the number of trading 
opportunities on MIAX for all participants, including non-Priority 
Customers, who will be able to compete for such opportunities. This 
should benefit all market participants and improve competition on the 
Exchange.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive. In such an 
environment, the Exchange must continually adjust its fees and rebates 
to remain competitive with other exchanges and to attract order flow to 
the Exchange. The Exchange believes that the proposed rule change 
reflects this competitive environment because it increases rebates and 
thus encourages market participants to direct their customer order 
flow, to provide liquidity, and to attract additional transaction 
volume to the Exchange. Given the robust competition for volume among 
options markets, many of which offer the same products, enhancing the 
existing volume based customer rebate program to attract order flow is 
consistent with the goals of the Act. The Exchange believes that the 
proposal will enhance competition, because market participants will 
have another additional pricing consideration in determining where to 
execute orders and post liquidity if they factor the benefits of the 
proposed rebate program into the determination.

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.\16\ 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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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2015-53 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MIAX-2015-53. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2015-53, and should be 
submitted on or before October 5, 2015.


[[Page 55162]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-22977 Filed 9-11-15; 8:45 am]
BILLING CODE 8011-01-P