81 FR 96550 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Modify the Exchange's Other Market Participant Transaction Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 251 (December 30, 2016)

[Federal Register Volume 81, Number 251 (Friday, December 30, 2016)]
[Notices]
[Pages 96550-96552]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-31677]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79685; File No. SR-MIAX-2016-48]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Its Fee Schedule To Modify the Exchange's 
Other Market Participant Transaction Fees

December 23, 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 December 15, 2016, Miami International 
Securities Exchange LLC (``MIAX Options'' 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to increase the 
fees charged to Exchange Members \3\ for simple and complex order 
executions in standard options classes in the Penny Pilot Program \4\ 
(``Penny Pilot'') for Firms.\5\ Specifically, the Exchange proposes to 
increase the fees charged to Members for simple and complex order 
executions in standard options in the Penny Pilot for Firms from $0.45 
to $0.47 per contract executed. The Exchange believes that this 
proposed fee increase is reasonable, equitable and not unfairly 
discriminatory because it makes the transaction fee consistent among 
the Exchange's market participants who are not Priority Customers \6\ 
or MIAX Options Market Makers \7\ by charging all such participants the 
same rate for transactions for simple and complex order executions in 
standard options in the Penny Pilot. The Exchange has historically kept 
the Firm transaction fee at a lower rate than the transaction fee for 
other market participants who are not Priority Customers or MIAX 
Options Market Makers, primarily as a competitive measure to attract 
Firm order flow. The Exchange believes that this measure is no longer 
necessary, and thus believes it is appropriate to increase the Firm 
transaction fee rate to the same rate charged for other market 
participants who are not Priority Customers or MIAX Options Market 
Makers. This proposed change brings the Exchange's Firm transaction fee 
in line and comparable with similar fees of other competing options 
exchanges.\8\
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    \3\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \4\ See Securities Exchange Act Release Nos. 78080 (June 15, 
2016), 81 FR 40377 (June 21, 2016) (SR-MIAX-2016-16); 79432 
(November 30, 2016), 81 FR 87990 (December 6, 2016) (SR-MIAX-2016-
45).
    \5\ A ``Firm'' transaction fee is assessed on a MIAX Options 
Electronic Exchange Member ``EEM'' that enters an order that is 
executed for an account identified by the EEM for clearing in the 
Options Clearing Corporation (``OCC'') ``Firm'' range. See Fee 
Schedule, Section 1)a)ii.
    \6\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). A ``Priority 
Customer Order'' means an order for the account of a Priority 
Customer. See Exchange Rule 100.
    \7\ The term ``Market Makers'' refers to Lead Market Makers 
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered 
Market Makers (``RMMs'') collectively. See Exchange Rule 100. A 
Directed Order Lead Market Maker (``DLMM'') and Directed Primary 
Lead Market Maker (``DPLMM'') is a party to a transaction being 
allocated to the LMM or PLMM and is the result of an order that has 
been directed to the LMM or PLMM. See Fee Schedule note 2.
    \8\ See, for example, NASDAQ PHLX LLC Pricing Schedule, Section 
II.
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    In addition, the Exchange proposes to continue to offer Members the 
opportunity to reduce their Firm transaction fees by $0.02 per executed 
contract resulting from simple order executions in standard options in 
the Penny Pilot.\9\ In order to accomplish this reduction, any Member, 
including any Affiliate \10\ of the Member, that qualifies for the 
Priority Customer Rebate Program (``PCRP'') volume tiers 3 or 
higher,\11\ will be assessed a reduced Firm transaction fee of $0.45 
per contract resulting from simple order executions in standard options 
in the Penny Pilot. The Exchange believes that this continuing 
incentive will encourage Members to send their Firm order flow to the 
Exchange.
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    \9\ See Securities Exchange Release Nos. 72988 (September 4, 
2014), 79 FR 53808 (September 10, 2014) (SR-MIAX-2014-46); 72989 
(September 4, 2014), 79 FR 53792 (September 10, 2014) (SR-MIAX-2014-
47); 74478 (March 11, 2015), 80 FR 13938 (March 17, 2015) (SR-MIAX-
2015-16); 76674 (December 17, 2015), 80 FR 79986 (December 23, 2015) 
(SR-MIAX-2015-70); 79157 (October 28, 2016), 81 FR 75885 (November 
1, 2016) (SR-MIAX-2016-38).
    \10\ For purposes of the MIAX Options Fee Schedule, the term 
``Affiliate'' means an affiliate of a Member of at least 75% common 
ownership between the firms as reflected on each firm's Form BD, 
Schedule A (``Affiliate''). See Fee Schedule note 1.
    \11\ Under the PCRP, a Member receives certain transaction fee 
discounts provided the Member meets certain percentage thresholds in 
a month as described in the PCRP table. See Fee Schedule, Section 
(1)(a)(iii).
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    The Exchange proposes to implement the proposed change to the Fee 
Schedule effective as of January 1, 2017.
2. Statutory Basis
    The Exchange proposes to amend its Fee Schedule to increase the 
fees charged to Exchange Members \12\ for simple and complex order 
executions in standard options classes in the Penny Pilot Program \13\ 
(``Penny Pilot'') for

[[Page 96551]]

Firms.\14\ Specifically, the Exchange proposes to increase the fees 
charged to Members for simple and complex order executions in standard 
options in the Penny Pilot for Firms from $0.45 to $0.47 per contract 
executed. The Exchange believes that this proposed fee increase is 
reasonable, equitable and not unfairly discriminatory because it makes 
the transaction fee consistent among the Exchange's market participants 
who are not Priority Customers \15\ or MIAX Options Market Makers \16\ 
by charging all such participants the same rate for transactions for 
simple and complex order executions in standard options in the Penny 
Pilot. The Exchange has historically kept the Firm transaction fee at a 
lower rate than the transaction fee for other market participants who 
are not Priority Customers or MIAX Options Market Makers, primarily as 
a competitive measure to attract Firm order flow. The Exchange believes 
that this measure is no longer necessary, and thus believes it is 
appropriate to increase the Firm transaction fee rate to the same rate 
charged for other market participants who are not Priority Customers or 
MIAX Options Market Makers. This proposed change brings the Exchange's 
Firm transaction fee in line and comparable with similar fees of other 
competing options exchanges.\17\
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    \12\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \13\ See Securities Exchange Act Release Nos. 78080 (June 15, 
2016), 81 FR 40377 (June 21, 2016) (SR-MIAX-2016-16); 79432 
(November 30, 2016), 81 FR 87990 (December 6, 2016) (SR-MIAX-2016-
45).
    \14\ A ``Firm'' transaction fee is assessed on a MIAX Options 
Electronic Exchange Member ``EEM'' that enters an order that is 
executed for an account identified by the EEM for clearing in the 
Options Clearing Corporation (``OCC'') ``Firm'' range. See Fee 
Schedule, Section 1)a)ii.
    \15\ The term ``Priority Customer'' means a person or entity 
that (i) is not a broker or dealer in securities, and (ii) does not 
place more than 390 orders in listed options per day on average 
during a calendar month for its own beneficial account(s). A 
``Priority Customer Order'' means an order for the account of a 
Priority Customer. See Exchange Rule 100.
    \16\ The term ``Market Makers'' refers to Lead Market Makers 
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered 
Market Makers (``RMMs'') collectively. See Exchange Rule 100. A 
Directed Order Lead Market Maker (``DLMM'') and Directed Primary 
Lead Market Maker (``DPLMM'') is a party to a transaction being 
allocated to the LMM or PLMM and is the result of an order that has 
been directed to the LMM or PLMM. See Fee Schedule note 2.
    \17\ See, for example, NASDAQ PHLX LLC Pricing Schedule, Section 
II.
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    In addition, the Exchange proposes to continue to offer Members the 
opportunity to reduce their Firm transaction fees by $0.02 per executed 
contract resulting from simple order executions in standard options in 
the Penny Pilot.\18\ In order to accomplish this reduction, any Member, 
including any Affiliate \19\ of the Member, that qualifies for the 
Priority Customer Rebate Program (``PCRP'') volume tiers 3 or 
higher,\20\ will be assessed a reduced Firm transaction fee of $0.45 
per contract resulting from simple order executions in standard options 
in the Penny Pilot. The Exchange believes that this continuing 
incentive will encourage Members to send their Firm order flow to the 
Exchange.
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    \18\ See Securities Exchange Release Nos. 72988 (September 4, 
2014), 79 FR 53808 (September 10, 2014) (SR-MIAX-2014-46); 72989 
(September 4, 2014), 79 FR 53792 (September 10, 2014) (SR-MIAX-2014-
47); 74478 (March 11, 2015), 80 FR 13938 (March 17, 2015) (SR-MIAX-
2015-16); 76674 (December 17, 2015), 80 FR 79986 (December 23, 2015) 
(SR-MIAX-2015-70); 79157 (October 28, 2016), 81 FR 75885 (November 
1, 2016) (SR-MIAX-2016-38).
    \19\ For purposes of the MIAX Options Fee Schedule, the term 
``Affiliate'' means an affiliate of a Member of at least 75% common 
ownership between the firms as reflected on each firm's Form BD, 
Schedule A (``Affiliate''). See Fee Schedule note 1.
    \20\ Under the PCRP, a Member receives certain transaction fee 
discounts provided the Member meets certain percentage thresholds in 
a month as described in the PCRP table. See Fee Schedule, Section 
(1)(a)(iii).
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    The Exchange proposes to implement the proposed change to the Fee 
Schedule effective as of January 1, 2017.

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 proposal is 
similar to the transaction fees found on other options exchanges; 
therefore, the Exchange believes the proposal is consistent with robust 
competition by increasing the intermarket competition for order flow 
from market participants. The proposal aligns the fees of market 
participants who are not Priority Customers or MIAX Options Market 
Makers on the Exchange, as well as aligns such fees assessable to 
Members to those charged by other exchanges for the same market 
participant type. Enhanced market quality and increased transaction 
volume that results from the anticipated increase in order flow 
directed to the Exchange will 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 to remain 
competitive with other exchanges and to attract order flow. The 
Exchange believes that the proposal reflects this competitive 
environment.

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,\21\ and Rule 19b-4(f)(2) \22\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \22\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MIAX-2016-48 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MIAX-2016-48. 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

[[Page 96552]]

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 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; 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-2016-48, and should be submitted on or before 
January 20, 2017.
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    \23\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-31677 Filed 12-29-16; 8:45 am]
 BILLING CODE 8011-01-P