81 FR 46734 - 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 81, Issue 137 (July 18, 2016)
Federal Register Volume 81, Issue 137 (July 18, 2016)
| Page Range | 46734-46737 | |
| FR Document | 2016-16858 |
[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)] [Notices] [Pages 46734-46737] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16858] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78299; File No. SR-MIAX-2016-20] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule July 12, 2016. 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 June 30, 2016, 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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. 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 assess certain existing transaction fees, provide certain existing credits, and to afford certain existing discounts, concerning executions stemming from unrelated MIAX Market Maker quotes and unrelated MIAX Market Maker orders that participate in the MIAX PRIME Auction, as described more fully below. The Exchange proposes to amend section (1)(a)(i) of the Fee Schedule concerning Market Maker \3\ Transaction Fees to exclude volume related to certain transaction fees and rebates for Members that participate in the price improvement auction (``PRIME Auction'' or ``PRIME'') pursuant to Exchange Rule 515A,\4\ and to state [[Page 46735]] specifically in section (1)(i)(v) of the Fee Schedule that MIAX will assess the Responder to PRIME Auction Fee to: (i) A PRIME AOC Response that executes against a PRIME Order, and (ii) a PRIME Participating Quote or Order (defined below). The Exchange also proposes to amend section (1)(a)(v) to afford the same discounted fee to Prime Participating Quotes or Orders (defined below) that already applies to PRIME AOC Responses, as described more fully below. Under the proposal, MIAX will apply the PRIME Break-up credit (defined below) to the Electronic Exchange Member (``EEM'') \5\ that submitted the initiating PRIME Order for agency contracts that are submitted to the PRIME Auction that trade with a PRIME AOC Response or with a PRIME Participating Quote or Order (defined below). The Exchange also proposes to amend section (1)(b) of the Fee Schedule to state that MIAX will not assess a Marketing Fee to Market Makers for contracts executed as a PRIME Participating Quote or Order (defined below). --------------------------------------------------------------------------- \3\ The term ``Market Makers'' refers to ``Lead Market Makers'', ``Primary Lead Market Makers'' and ``Registered Market Makers'' collectively. The term ``Lead Market Maker'' means a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange and that is vested with the rights and responsibilities specified in chapter VI of the Exchange's Rules with respect to Lead Market Makers. When a Lead Market Maker is appointed to act in the capacity of a Primary Lead Market Maker, the additional rights and responsibilities of a Primary Lead Market Maker specified in chapter VI of the Exchange's Rules will apply. The term ``Primary Lead Market Maker'' means a Lead Market Maker appointed by the Exchange to act as the Primary Lead Market Maker for the purpose of making markets in securities traded on the Exchange. The Primary Lead Market Maker is vested with the rights and responsibilities specified in chapter VI of the Exchange's Rules with respect to Primary Lead Market Makers. The term ``Registered Market Maker'' means a Member registered with the Exchange for the purpose of making markets in securities traded on the Exchange, who is not a Lead Market Maker and is vested with the rights and responsibilities specified in chapter VI of the Exchange's Rules with respect to Registered Market Makers. See Exchange Rule 100. \4\ See Exchange Rule 515A. See also Securities Exchange Act Release Nos. 71640 (March 4, 2014), 79 FR 13334 (March 10, 2014) (SR-MIAX-2014-09) (``Notice''); 72009 (April 23, 2014), 79 FR 24032 (April 29, 2014) (SR-MIAX-2014-09). \5\ The term ``Electronic Exchange Member'' means the holder of a Trading Permit who is not a Market Maker. Electronic Exchange Members are deemed ``members'' under the Exchange Act. See Exchange Rule 100. --------------------------------------------------------------------------- PRIME is a process by which a Member may electronically submit for execution an order it represents as agent (``Agency Order'') against principal interest and/or an Agency Order against solicited interest. The Agency Order is referred to as a ``PRIME Agency Order'' for purposes of Section 1(b) of the Fee Schedule. The Member that submits the PRIME Agency Order (the ``Initiating Member'') agrees to guarantee the execution of the PRIME Agency Order by submitting a contra-side order representing principal interest or solicited interest (``Contra- side Order'').\6\ When the Exchange receives a properly designated Agency Order for Auction processing, a Request for Responses (``RFR'') detailing the option, side, size, and initiating price will be sent to all subscribers of the Exchange's data feeds. Members may submit responses to the RFR (specifying prices and sizes). RFR responses can be either an Auction or Cancel (``AOC'') order or an AOC eQuote.\7\ --------------------------------------------------------------------------- \6\ The paired order submitted to PRIME that includes both the PRIME Agency Order and the Contra-side Order is referred to as the PRIME Order for purposes of the Fee Schedule. \7\ See Exchange Rules 515A(a)(2)(i)(D), 516(b)(4), 517(a)(2)(ii). --------------------------------------------------------------------------- The Exchange proposes to amend section (1) of the Fee Schedule to exclude from the volume determinations in the Market Maker Sliding Scale \8\ both PRIME AOC Responses and unrelated MIAX Market Maker quotes or unrelated MIAX Market Maker orders that are received during the Response Time Interval and executed against the PRIME Order. Such unrelated MIAX Market Maker quotes or unrelated MIAX Market Maker orders will be referred to as ``PRIME Participating Quotes or Orders'' in the Fee Schedule. The Exchange believes that PRIME AOC Responses should be excluded from the volume threshold determinations with regards to non-PRIME transaction fees because the PRIME Fees set forth in section (1)(a)(v) of the Fee Schedule and discussed below are distinct from the Market Maker Transaction Fees described in Section (1)(a)(i). The volume threshold tiers included in the Market Maker Sliding Scale in Section (1)(a) are intended to provide incentive for Market Makers to quote aggressively outside of the PRIME Auction and to reward volume generated from such quotes, whereas the PRIME Fees do not have a sliding scale and are not dependent on percentage volume tiers. Instead, transactions by PRIME Responders already are assessed fees based upon responses to an Auction notification and are distinguished from regular transaction fees that result from different quoting behavior. Thus, the Exchange believes that it is appropriate to exclude PRIME AOC Responses from the calculation of the volume tier thresholds in the Market Maker Sliding Scale. --------------------------------------------------------------------------- \8\ The MIAX Market Maker Sliding Scale for transaction fees reduces a MIAX Market Maker's per contract transaction fee based on percentages of total national Market Maker volume of any options classes that trade on the exchange during the calendar month. The Market Maker Sliding Scale applies to all MIAX Market Makers for transactions in all products except mini-options. See Fee Schedule, section (1)(a)(i). --------------------------------------------------------------------------- Similarly, the Exchange believes that PRIME Participating Quotes or Orders should also be excluded from the section (1)(a)(i) volume determinations in the Market Maker Sliding Scale because a PRIME Participating Quote or Order has the same effect as a PRIME AOC Response (i.e., it is received during the Response Time Interval and executed against the PRIME Order). As described more fully below, PRIME Participating Quotes or Orders will be assessed the same Responder to PRIME Auction Fees and credits that are assessed and credited to PRIME AOC Responses. The Exchange proposes to amend section (1)(i)(v) of the Fee Schedule to state clearly that MIAX will assess the Responder to PRIME Auction Fee to: (i) A PRIME AOC Response that executes against a PRIME Order, and (ii) a PRIME Participating Quote or Order. Currently, the Exchange assesses PRIME AOC Responses a Responder to PRIME Auction Fee of $0.50 per contract for standard options in Penny Pilot classes and $0.99 per contract in non-Penny Pilot classes. The Exchange is not proposing to amend these fees; the Exchange is simply proposing to add clarifying language to section (1)(a)(v) to state that MIAX will assess the Responder to PRIME Auction Fee to a PRIME AOC Response that executes against a PRIME Order, and add that the Responder to PRIME Auction Fee will also apply to a PRIME Participating Quote or Order. The Exchange believes it is appropriate to assess the same fees to PRIME Participating Quotes or Orders that are assessed to Market Maker responders to the PRIME Auction because PRIME Participating Quotes or Orders receive the same benefit of trading against the PRIME Order. PRIME Participating Quotes or Orders interact in the same manner in the PRIME Auction and receive the same Market Maker trade allocation as MIAX Market Maker responders to the PRIME Auction \9\ despite being submitted outside of the PRIME Auction. The Exchange believes that it is fair and reasonable to assess the same fees to MIAX Market Makers for all quotes or orders that benefit equally from interaction with the PRIME Order, regardless of whether they are submitted as PRIME Auction Responses or as PRIME Participating Orders or Quotes. The Exchange notes that, while Market Maker Transaction Fees described in section (1)(a)(i) may be subject to Marketing Fees (as set forth in section (1)(b) of the Fee Schedule and discussed below), PRIME AOC Responses and PRIME Participating Quotes or Orders will not be subject to Marketing Fees. This treatment of the Marketing Fees is consistent with the Exchange's current Fee Schedule since the Responder to Prime Auction Fee of $.50 is not subject to Marketing Fees. --------------------------------------------------------------------------- \9\ See Exchange Rule 515A(a)(2)(iii). --------------------------------------------------------------------------- The Exchange also proposes to include PRIME Participating Quotes or Orders in the determination of the Prime Break-up Credit. The PRIME Break-up Credit is currently credited on a per contract basis to the Initiating EEM for each PRIME Order contract that trades with a PRIME AOC Response. The Exchange currently applies a per contract PRIME Break-up Credit of $0.25 for Penny Classes, and $0.60 for non- [[Page 46736]] Penny Classes, to MIAX Market Makers. The Exchange is not proposing to amend these credits; the Exchange is simply proposing that in addition to trades with PRIME AOC Responses, MIAX will apply the PRIME Break-up Credit to the EEM that submitted the PRIME Order for agency \10\ contracts that are submitted to the PRIME Auction that trade with a PRIME Participating Quote or Order. The Exchange believes that, just as with respect to the PRIME Auction Responder Fees described above, the PRIME Break-up Credit should apply to PRIME Participating Quotes or Orders because a PRIME Participating Quote or Order serves the same function as a PRIME AOC Response (i.e., it is received during the Response Time Interval and executed against the PRIME Order). The Exchange does not currently apply the PRIME Break-up Credit to the Initiating EEM for those PRIME Order contracts that trade with unrelated quotes and orders. Other than the proposed change with regard to PRIME Participating Quotes or Orders discussed above, the Exchange is not proposing any additional change to the application of PRIME Break-up Credits. The Exchange will continue its current practice of not applying the PRIME Break-up Credit to Initiating EEMs for those PRIME Order contracts that trade with unrelated (i.e., non-MIAX Market Maker) orders. --------------------------------------------------------------------------- \10\ The Exchange is proposing to add the word ``agency'' to this provision for clarity. --------------------------------------------------------------------------- The Exchange is also proposing to amend section (1)(a)(v) of the Fee Schedule to include PRIME Participating Quotes or Orders in certain discounted fees that apply to qualifying Members and affiliates, which will be known as the Discounted PRIME Response Fee. The Discounted PRIME Response Fee is $0.46 per contract for standard options in Penny Pilot classes, and $0.95 per contract for standard options in non-Penny Pilot classes. The Discounted PRIME Response Fee, which already applies to PRIME AOC Responses (currently known as the PRIME AOC Response Fee), would apply to any Member or its affiliates of at least 75% common ownership between the firms as reflected on each firm's Form BD, Schedule A, that qualifies for the Priority Customer Rebate Program \11\ volume tiers 3 or 4 and submits a PRIME Participating Quote or Order that is received during the Response Time Interval and executed against the PRIME Order. Members and their affiliates that meet the above criteria qualify for the Discounted PRIME Response Fee through activity that falls outside of the PRIME Auction (i.e., submitting Priority Customer Orders for execution on the Exchange). The Exchange believes that a Member that submits a sufficient number Priority Customer Orders to qualify for Priority Customer Rebate Program volume tiers 3 or 4 should receive the benefit of the Discounted PRIME Response Fee, and the Exchange proposes to reward such Members and their qualified affiliates equally for PRIME AOC Responses and PRIME Participating Quotes or Orders. --------------------------------------------------------------------------- \11\ MIAX credits each Member the per contract amount resulting from each Priority Customer order transmitted by that Member which is executed electronically on the Exchange in all multiply-listed option classes (with certain exclusions) provided the Member meets certain percentage thresholds in a month as described in the Priority Customer Rebate Program table. See Fee Schedule Section (1)(a)(iii). --------------------------------------------------------------------------- The Exchange believes that assessing the Discounted PRIME Response Fee to PRIME Participating Quotes or Orders is a fair treatment of PRIME Participating Quotes or Orders because it puts them on equal footing with PRIME AOC Responses, which serve the same function (i.e., execution against PRIME Orders) during the Response Time Interval, and qualifying Members and affiliates submitting [sic] The Exchange will continue its current practice of not applying the PRIME Break-up Credit to Initiating EEMs for those PRIME Order contracts that trade with unrelated (non-MIAX Market Maker) orders. should be entitled to the same discount [sic]. The Exchange is also proposing to exclude PRIME Participating Quotes or Orders from the Marketing Fees described in section (1)(b) of the Fee Schedule. Currently, MIAX assesses a Marketing Fee to all Market Makers for contracts, including mini options, they execute in their assigned classes when the contra-party to the execution is a Priority Customer. MIAX will not assess a Marketing Fee to Market Makers for contracts executed as a PRIME Agency Order, Contra-side Order, Qualified Contingent Cross Order, or a PRIME AOC Response in the PRIME Auction; unless it executes against an unrelated order. The Exchange proposes to amend section (1)(b) to exclude PRIME Participating Quotes or Orders from the Marketing Fees as well. The Exchange believes that this treatment of the PRIME Participating Quote, on an equal basis with a PRIME AOC Response, is consistent with the proposed fees and credits described above. Finally, the Exchange is proposing to exclude PRIME Participating Quotes or Orders from the Posted Liquidity Marketing Fee described in section (1)(b). MIAX currently assesses an additional $0.12 per contract Posted Liquidity Marketing Fee to all Market Makers for any standard options overlying EEM, GLD, IWM, QQQ, and SPY that Market Makers execute in their assigned class when the contra-party to the execution is a Priority Customer and the Priority Customer order was posted on the MIAX Book at the time of the execution. MIAX does not assess the additional Posted Liquidity Marketing Fee to Market Makers for contracts executed as a PRIME Agency Order, Contra-side Order, Qualified Contingent Cross Order, or a PRIME AOC Response in the PRIME Auction. In order to ensure the same treatment afforded to PRIME AOC Responses, the Exchange is proposing to exclude contracts executed as PRIME Participating Quotes from the Posted Liquidity Marketing Fee. The proposed changes to the Fee Schedule will become operative on July 1, 2016. 2. Statutory Basis The Exchange believes that its proposal to amend its fee schedule is consistent with section 6(b) of the Act \12\ in general, and furthers the objectives of section 6(b)(4) of the Act \13\ and section 6(b)(5) of the Act \14\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in, securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest, and in that it is an equitable allocation of reasonable fees and other charges among Exchange members. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(4). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange's proposal to exclude from the volume threshold determination volume related to PRIME AOC Responses and PRIME Participating Quotes or Orders is reasonable because the Exchange already assesses a separate fee for such transactions from the same Market Makers that receive the benefit of interaction with the PRIME Order in the PRIME Auction. The Exchange's proposal to exclude PRIME Auction-related volume from the non-PRIME Auction-related volume threshold determination for Market Maker Transaction Fees is equitable and not unfairly discriminatory because the exclusion will apply to all Market Makers. [[Page 46737]] The Exchange's determination not to apply the PRIME Auction-related volume to the section (1)(a)(i) tiers reflects the Exchange's belief that these volume tiers are related to quoting and trading activity that falls outside of the PRIME Auction, and that discounted per contract fees for non-PRIME Auction activity should be earned by achieving certain volume thresholds in the Market Maker Sliding Scale through non-PRIME Auction activity. The Exchange believes that a Member that submits a sufficient number of Priority Customer Orders to qualify for the Priority Customer Rebate Program volume tiers 3 or 4 should receive the benefit of the Discounted PRIME Response Fee, and the Exchange proposes to reward such Members and their qualified affiliates equally for PRIME AOC Responses and PRIME Participating Quotes or Orders. Such a reward should provide incentive to Members to submit a greater number of Priority Customer Orders to the Exchange, thus removing impediments to and perfecting the mechanisms of a free and open market and a national market system by providing more opportunities for the execution of Priority Customer Orders on the Exchange. Additionally, the Discounted PRIME Response Fee is fair and reasonable because it will apply equally to PRIME AOC Responses, as it does today, and to PRIME Participating Quotes or Orders, both of which result in executions against the PRIME Order regardless of whether they are submitted as an Auction Response or as an unrelated quote or order. Additionally, the proposed amendments to the Fee Schedule represent the equitable allocation of reasonable fees and other charges among Exchange members, because the proposed fees and credits applicable to Market Makers and EEMs relating to PRIME Participating Quotes or Orders are identical to the fees and credits applicable to PRIME AOC Responses, which function in the same manner as PRIME Participating Quotes or Orders. Moreover, the proposed amendments are equitable and reasonable because the same fees and credits apply equally to all participants in each category (Market Makers or EEMs) respectively. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 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 to remain competitive with other exchanges and to attract order flow. The Exchange believes that the proposed rule change reflects this competitive environment because it modifies the Exchange's Market Maker transaction fees in a manner that encourages market participants to provide liquidity and to send order flow to the Exchange both in the PRIME Auction and outside the PRIME Auction. The Exchange believes that the proposal enhances competition by providing incentives such as the Discounted PRIME Response Fee to Members and their qualified affiliates that submit Priority Customer Orders to the Exchange, which deepens liquidity on the Exchange and thus provides more opportunities to execute transactions on MIAX. 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,\15\ and Rule 19b-4(f)(2) \16\ 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. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A)(ii). \16\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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 CommentsUse 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-2016-20 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-2016-20. 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-2016-20, and should be submitted on or before August 8, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-16858 Filed 7-15-16; 8:45 am] BILLING CODE 8011-01-P
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designates the proposed rule change to 10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s
be operative on July 18, 2016.15 filing also will be available for Statement of the Purpose of, and
At any time within 60 days of the inspection and copying at the principal Statutory Basis for, the Proposed Rule
filing of the proposed rule change, the office of the Exchange. All comments Change
Commission summarily may received will be posted without change; In its filing with the Commission, the
temporarily suspend such rule change if the Commission does not edit personal Exchange included statements
it appears to the Commission that such identifying information from concerning the purpose of and basis for
action is necessary or appropriate in the submissions. You should submit only the proposed rule change and discussed
public interest, for the protection of information that you wish to make any comments it received on the
investors, or otherwise in furtherance of available publicly. All submissions proposed rule change. The text of these
the purposes of the Act. If the should refer to File Number SR–Phlx– statements may be examined at the
Commission takes such action, the 2016–75 and should be submitted on or places specified in Item IV below. The
Commission shall institute proceedings before August 8, 2016. Exchange has prepared summaries, set
to determine whether the proposed rule For the Commission, by the Division of forth in sections A, B, and C below, of
should be approved or disapproved. Trading and Markets, pursuant to delegated the most significant aspects of such
IV. Solicitation of Comments authority.16 statements.
Robert W. Errett, A. Self-Regulatory Organization’s
Interested persons are invited to
submit written data, views, and Deputy Secretary. Statement of the Purpose of, and
arguments concerning the foregoing, [FR Doc. 2016–16859 Filed 7–15–16; 8:45 am] Statutory Basis for, the Proposed Rule
including whether the proposed rule BILLING CODE 8011–01–P Change
change is consistent with the Act. 1. Purpose
Comments may be submitted by any of
the following methods: SECURITIES AND EXCHANGE The Exchange proposes to amend its
COMMISSION Fee Schedule to assess certain existing
Electronic Comments transaction fees, provide certain existing
• Use the Commission’s Internet [Release No. 34–78299; File No. SR–MIAX–
credits, and to afford certain existing
comment form (http://www.sec.gov/ 2016–20] discounts, concerning executions
rules/sro.shtml); or stemming from unrelated MIAX Market
• Send an email to rule-comments@ Self-Regulatory Organizations; Miami Maker quotes and unrelated MIAX
sec.gov. Please include File Number SR– International Securities Exchange LLC; Market Maker orders that participate in
Phlx–2016–75 on the subject line. Notice of Filing and Immediate the MIAX PRIME Auction, as described
Effectiveness of a Proposed Rule more fully below.
Paper Comments Change To Amend Its Fee Schedule The Exchange proposes to amend
• Send paper comments in triplicate section (1)(a)(i) of the Fee Schedule
to Brent J. Fields, Secretary, Securities July 12, 2016. concerning Market Maker 3 Transaction
and Exchange Commission, 100 F Street Pursuant to the provisions of section Fees to exclude volume related to
NE., Washington, DC 20549–1090. 19(b)(1) of the Securities Exchange Act certain transaction fees and rebates for
of 1934 (‘‘Act’’),1 and Rule 19b–4 Members that participate in the price
All submissions should refer to File
thereunder,2 notice is hereby given that improvement auction (‘‘PRIME
Number SR–Phlx–2016–75. This file
on June 30, 2016, Miami International Auction’’ or ‘‘PRIME’’) pursuant to
number should be included on the
Securities Exchange LLC (‘‘MIAX’’ or Exchange Rule 515A,4 and to state
subject line if email is used. To help the
Commission process and review your ‘‘Exchange’’) filed with the Securities 3 The term ‘‘Market Makers’’ refers to ‘‘Lead
comments more efficiently, please use and Exchange Commission Market Makers’’, ‘‘Primary Lead Market Makers’’
only one method. The Commission will (‘‘Commission’’) a proposed rule change and ‘‘Registered Market Makers’’ collectively. The
post all comments on the Commission’s as described in Items I, II, and III below, term ‘‘Lead Market Maker’’ means a Member
which Items have been prepared by the registered with the Exchange for the purpose of
Internet Web site (http://www.sec.gov/ making markets in securities traded on the
rules/sro.shtml). Copies of the Exchange. The Commission is Exchange and that is vested with the rights and
submission, all subsequent publishing this notice to solicit responsibilities specified in chapter VI of the
amendments, all written statements comments on the proposed rule change Exchange’s Rules with respect to Lead Market
from interested persons. Makers. When a Lead Market Maker is appointed
with respect to the proposed rule to act in the capacity of a Primary Lead Market
change that are filed with the I. Self-Regulatory Organization’s Maker, the additional rights and responsibilities of
Commission, and all written Statement of the Terms of Substance of a Primary Lead Market Maker specified in chapter
communications relating to the VI of the Exchange’s Rules will apply. The term
the Proposed Rule Change ‘‘Primary Lead Market Maker’’ means a Lead Market
proposed rule change between the Maker appointed by the Exchange to act as the
Commission and any person, other than The Exchange is filing a proposal to Primary Lead Market Maker for the purpose of
those that may be withheld from the amend the MIAX Options Fee Schedule making markets in securities traded on the
public in accordance with the (the ‘‘Fee Schedule’’). Exchange. The Primary Lead Market Maker is
vested with the rights and responsibilities specified
provisions of 5 U.S.C. 552, will be The text of the proposed rule change in chapter VI of the Exchange’s Rules with respect
available for Web site viewing and to Primary Lead Market Makers. The term
asabaliauskas on DSK3SPTVN1PROD with NOTICES
is available on the Exchange’s Web site
printing in the Commission’s Public at http://www.miaxoptions.com/filter/ ‘‘Registered Market Maker’’ means a Member
Reference Room, 100 F Street NE., registered with the Exchange for the purpose of
wotitle/rule_filing, at MIAX’s principal making markets in securities traded on the
Washington, DC 20549, on official office, and at the Commission’s Public Exchange, who is not a Lead Market Maker and is
business days between the hours of Reference Room. vested with the rights and responsibilities specified
in chapter VI of the Exchange’s Rules with respect
15 For purposes only of waiving the operative to Registered Market Makers. See Exchange Rule
16 17 CFR 200.30–3(a)(12).
delay, the Commission has considered the proposed 100.
1 15 U.S.C. 78s(b)(1).
rule’s impact on efficiency, competition, and capital 4 See Exchange Rule 515A. See also Securities
formation. See 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. Exchange Act Release Nos. 71640 (March 4, 2014),
VerDate Sep<11>2014 17:52 Jul 15, 2016 Jkt 238001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\18JYN1.SGM 18JYN1](https://thefederalregister.org/doc/81_FR_46871/page/1.svg)
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Penny Classes, to MIAX Market Makers. Quote or Order that is received during Makers for any standard options
The Exchange is not proposing to the Response Time Interval and overlying EEM, GLD, IWM, QQQ, and
amend these credits; the Exchange is executed against the PRIME Order. SPY that Market Makers execute in their
simply proposing that in addition to Members and their affiliates that meet assigned class when the contra-party to
trades with PRIME AOC Responses, the above criteria qualify for the the execution is a Priority Customer and
MIAX will apply the PRIME Break-up Discounted PRIME Response Fee the Priority Customer order was posted
Credit to the EEM that submitted the through activity that falls outside of the on the MIAX Book at the time of the
PRIME Order for agency 10 contracts that PRIME Auction (i.e., submitting Priority execution. MIAX does not assess the
are submitted to the PRIME Auction that Customer Orders for execution on the additional Posted Liquidity Marketing
trade with a PRIME Participating Quote Exchange). The Exchange believes that a Fee to Market Makers for contracts
or Order. The Exchange believes that, Member that submits a sufficient executed as a PRIME Agency Order,
just as with respect to the PRIME number Priority Customer Orders to Contra-side Order, Qualified Contingent
Auction Responder Fees described qualify for Priority Customer Rebate Cross Order, or a PRIME AOC Response
above, the PRIME Break-up Credit Program volume tiers 3 or 4 should in the PRIME Auction. In order to
should apply to PRIME Participating receive the benefit of the Discounted ensure the same treatment afforded to
Quotes or Orders because a PRIME PRIME Response Fee, and the Exchange PRIME AOC Responses, the Exchange is
Participating Quote or Order serves the proposes to reward such Members and proposing to exclude contracts executed
same function as a PRIME AOC their qualified affiliates equally for as PRIME Participating Quotes from the
Response (i.e., it is received during the PRIME AOC Responses and PRIME Posted Liquidity Marketing Fee.
Response Time Interval and executed Participating Quotes or Orders. The proposed changes to the Fee
against the PRIME Order). The Exchange The Exchange believes that assessing Schedule will become operative on July
does not currently apply the PRIME the Discounted PRIME Response Fee to 1, 2016.
Break-up Credit to the Initiating EEM for PRIME Participating Quotes or Orders is
2. Statutory Basis
those PRIME Order contracts that trade a fair treatment of PRIME Participating
with unrelated quotes and orders. Other Quotes or Orders because it puts them The Exchange believes that its
than the proposed change with regard to on equal footing with PRIME AOC proposal to amend its fee schedule is
PRIME Participating Quotes or Orders Responses, which serve the same consistent with section 6(b) of the Act 12
discussed above, the Exchange is not function (i.e., execution against PRIME in general, and furthers the objectives of
proposing any additional change to the Orders) during the Response Time section 6(b)(4) of the Act 13 and section
application of PRIME Break-up Credits. Interval, and qualifying Members and 6(b)(5) of the Act 14 in particular, in that
The Exchange will continue its current affiliates submitting [sic] The Exchange it is designed to prevent fraudulent and
practice of not applying the PRIME will continue its current practice of not manipulative acts and practices, to
Break-up Credit to Initiating EEMs for applying the PRIME Break-up Credit to promote just and equitable principles of
those PRIME Order contracts that trade Initiating EEMs for those PRIME Order trade, to foster cooperation and
with unrelated (i.e., non-MIAX Market contracts that trade with unrelated (non- coordination with persons engaged in
Maker) orders. MIAX Market Maker) orders. should be regulating, clearing, settling, processing
The Exchange is also proposing to entitled to the same discount [sic]. The information with respect to, and
amend section (1)(a)(v) of the Fee Exchange is also proposing to exclude facilitating transactions in, securities, to
Schedule to include PRIME PRIME Participating Quotes or Orders remove impediments to and perfect the
Participating Quotes or Orders in certain from the Marketing Fees described in mechanisms of a free and open market
discounted fees that apply to qualifying section (1)(b) of the Fee Schedule. and a national market system and, in
Members and affiliates, which will be Currently, MIAX assesses a Marketing general, to protect investors and the
known as the Discounted PRIME Fee to all Market Makers for contracts, public interest, and in that it is an
Response Fee. The Discounted PRIME including mini options, they execute in equitable allocation of reasonable fees
Response Fee is $0.46 per contract for their assigned classes when the contra- and other charges among Exchange
standard options in Penny Pilot classes, party to the execution is a Priority members.
and $0.95 per contract for standard Customer. MIAX will not assess a The Exchange’s proposal to exclude
options in non-Penny Pilot classes. Marketing Fee to Market Makers for from the volume threshold
The Discounted PRIME Response Fee, contracts executed as a PRIME Agency determination volume related to PRIME
which already applies to PRIME AOC Order, Contra-side Order, Qualified AOC Responses and PRIME
Responses (currently known as the Contingent Cross Order, or a PRIME Participating Quotes or Orders is
PRIME AOC Response Fee), would AOC Response in the PRIME Auction; reasonable because the Exchange
apply to any Member or its affiliates of unless it executes against an unrelated already assesses a separate fee for such
at least 75% common ownership order. The Exchange proposes to amend transactions from the same Market
between the firms as reflected on each section (1)(b) to exclude PRIME Makers that receive the benefit of
firm’s Form BD, Schedule A, that Participating Quotes or Orders from the interaction with the PRIME Order in the
qualifies for the Priority Customer Marketing Fees as well. The Exchange PRIME Auction. The Exchange’s
Rebate Program 11 volume tiers 3 or 4 believes that this treatment of the proposal to exclude PRIME Auction-
and submits a PRIME Participating PRIME Participating Quote, on an equal related volume from the non-PRIME
basis with a PRIME AOC Response, is Auction-related volume threshold
asabaliauskas on DSK3SPTVN1PROD with NOTICES
10 The Exchange is proposing to add the word
consistent with the proposed fees and determination for Market Maker
‘‘agency’’ to this provision for clarity. credits described above.
11 MIAX credits each Member the per contract
Transaction Fees is equitable and not
amount resulting from each Priority Customer order
Finally, the Exchange is proposing to unfairly discriminatory because the
transmitted by that Member which is executed exclude PRIME Participating Quotes or exclusion will apply to all Market
electronically on the Exchange in all multiply-listed Orders from the Posted Liquidity Makers.
option classes (with certain exclusions) provided Marketing Fee described in section
the Member meets certain percentage thresholds in
a month as described in the Priority Customer
(1)(b). MIAX currently assesses an 12 15 U.S.C. 78f(b).
Rebate Program table. See Fee Schedule Section additional $0.12 per contract Posted 13 15 U.S.C. 78f(b)(4).
(1)(a)(iii). Liquidity Marketing Fee to all Market 14 15 U.S.C. 78f(b)(5).
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![Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices 46737
The Exchange’s determination not to market participants can readily favor Electronic Comments
apply the PRIME Auction-related competing venues if they deem fee
volume to the section (1)(a)(i) tiers levels at a particular venue to be • Use the Commission’s Internet
reflects the Exchange’s belief that these excessive. In such an environment, the comment form (http://www.sec.gov/
volume tiers are related to quoting and Exchange must continually adjust its rules/sro.shtml); or
trading activity that falls outside of the fees to remain competitive with other • Send an email to rule-comments@
PRIME Auction, and that discounted per exchanges and to attract order flow. The sec.gov. Please include File Number SR–
contract fees for non-PRIME Auction Exchange believes that the proposed MIAX–2016–20 on the subject line.
activity should be earned by achieving rule change reflects this competitive
certain volume thresholds in the Market environment because it modifies the Paper Comments
Maker Sliding Scale through non-PRIME Exchange’s Market Maker transaction
Auction activity. • Send paper comments in triplicate
fees in a manner that encourages market to Brent J. Fields, Secretary, Securities
The Exchange believes that a Member participants to provide liquidity and to
that submits a sufficient number of and Exchange Commission, 100 F Street
send order flow to the Exchange both in NE., Washington, DC 20549–1090.
Priority Customer Orders to qualify for
the PRIME Auction and outside the
the Priority Customer Rebate Program All submissions should refer to File
PRIME Auction.
volume tiers 3 or 4 should receive the Number SR–MIAX–2016–20. This file
benefit of the Discounted PRIME The Exchange believes that the
proposal enhances competition by number should be included on the
Response Fee, and the Exchange
providing incentives such as the subject line if email is used. To help the
proposes to reward such Members and
their qualified affiliates equally for Discounted PRIME Response Fee to Commission process and review your
PRIME AOC Responses and PRIME Members and their qualified affiliates comments more efficiently, please use
Participating Quotes or Orders. Such a that submit Priority Customer Orders to only one method. The Commission will
reward should provide incentive to the Exchange, which deepens liquidity post all comments on the Commission’s
Members to submit a greater number of on the Exchange and thus provides Internet Web site (http://www.sec.gov/
Priority Customer Orders to the more opportunities to execute rules/sro.shtml). Copies of the
Exchange, thus removing impediments transactions on MIAX. submission, all subsequent
to and perfecting the mechanisms of a amendments, all written statements
free and open market and a national C. Self-Regulatory Organization’s with respect to the proposed rule
market system by providing more Statement on Comments on the change that are filed with the
opportunities for the execution of Proposed Rule Change Received From Commission, and all written
Priority Customer Orders on the Members, Participants, or Others communications relating to the
Exchange. Additionally, the Discounted proposed rule change between the
Written comments were neither
PRIME Response Fee is fair and Commission and any person, other than
reasonable because it will apply equally solicited nor received.
those that may be withheld from the
to PRIME AOC Responses, as it does III. Date of Effectiveness of the public in accordance with the
today, and to PRIME Participating Proposed Rule Change and Timing for provisions of 5 U.S.C. 552, will be
Quotes or Orders, both of which result Commission Action available for Web site viewing and
in executions against the PRIME Order
printing in the Commission’s Public
regardless of whether they are submitted The foregoing rule change has become
Reference Room, 100 F Street NE.,
as an Auction Response or as an effective pursuant to section
unrelated quote or order. 19(b)(3)(A)(ii) of the Act,15 and Rule Washington, DC 20549 on official
Additionally, the proposed 19b–4(f)(2) 16 thereunder. At any time business days between the hours of
amendments to the Fee Schedule within 60 days of the filing of the 10:00 a.m. and 3:00 p.m. Copies of such
represent the equitable allocation of proposed rule change, the Commission filing also will be available for
reasonable fees and other charges among summarily may temporarily suspend inspection and copying at the principal
Exchange members, because the such rule change if it appears to the office of the Exchange. All comments
proposed fees and credits applicable to Commission that such action is received will be posted without change;
Market Makers and EEMs relating to necessary or appropriate in the public the Commission does not edit personal
PRIME Participating Quotes or Orders interest, for the protection of investors, identifying information from
are identical to the fees and credits or otherwise in furtherance of the submissions. You should submit only
applicable to PRIME AOC Responses, purposes of the Act. If the Commission information that you wish to make
which function in the same manner as takes such action, the Commission shall available publicly. All submissions
PRIME Participating Quotes or Orders. institute proceedings to determine should refer to File Number SR–MIAX–
Moreover, the proposed amendments whether the proposed rule should be 2016–20, and should be submitted on or
are equitable and reasonable because the approved or disapproved. before August 8, 2016.
same fees and credits apply equally to
all participants in each category (Market IV. Solicitation of Comments For the Commission, by the Division of
Makers or EEMs) respectively. Trading and Markets, pursuant to delegated
Interested persons are invited to authority.17
B. Self-Regulatory Organization’s submit written data, views, and Robert W. Errett,
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Statement on Burden on Competition arguments concerning the foregoing, Deputy Secretary.
The Exchange does not believe that including whether the proposed rule [FR Doc. 2016–16858 Filed 7–15–16; 8:45 am]
the proposed rule change will result in change is consistent with the Act.
BILLING CODE 8011–01–P
any burden on competition that is not Comments may be submitted by any of
necessary or appropriate in furtherance the following methods:
of the purposes of the Act. The
Exchange notes that it operates in a 15 15 U.S.C. 78s(b)(3)(A)(ii).
highly competitive market in which 16 17 CFR 240.19b–4(f)(2).
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Document Created: 2016-07-16 02:28:41
Document Modified: 2016-07-16 02:28:41
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 46734 |
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