82 FR 10519 - Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by Miami International Securities Exchange LLC To Amend Its Fee Schedule To Modify Its Market Maker and Other Market Participant Transaction Fees
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 28 (February 13, 2017)
Federal Register Volume 82, Issue 28 (February 13, 2017)
| Page Range | 10519-10521 | |
| FR Document | 2017-02838 |
[Federal Register Volume 82, Number 28 (Monday, February 13, 2017)] [Notices] [Pages 10519-10521] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-02838] [[Page 10519]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79983; File No. SR-MIAX-2017-02] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by Miami International Securities Exchange LLC To Amend Its Fee Schedule To Modify Its Market Maker and Other Market Participant Transaction Fees February 7, 2017. 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 January 27, 2017, 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. --------------------------------------------------------------------------- \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/rule-filings, at MIAX's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule to increase the per contract surcharge assessed for transactions by all market participants, except for Priority Customers,\3\ which remove liquidity against a resting Priority Customer complex order \4\ on the strategy book for standard option classes in the Penny Pilot Program \5\ (``Penny classes'') and for standard option classes which are not in the Penny Pilot Program (``Non-Penny classes''). --------------------------------------------------------------------------- \3\ ``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\ A ``complex order'' is any order involving the concurrent purchase and/or sale of two or more different options in the same underlying security (the ``legs'' or ``components'' of the complex order), for the same account, in a ratio that is equal to or greater than one-to-three (.333) and less than or equal to three-to-one (3.00) and for the purposes of executing a particular investment strategy. A complex order can also be a ``stock-option'' order, which is an order to buy or sell a stated number of units of an underlying security coupled with the purchase or sale of options contract(s) on the opposite side of the market, subject to certain contingencies set forth in the proposed rules governing complex orders. See Securities Exchange Act Release No. 78620 (August 18, 2016), 81 FR 58770 (August 25, 2016) (SR-MIAX-2016-26). \5\ 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). --------------------------------------------------------------------------- Market Maker Transaction Fees Section 1)a)i) of the Fee Schedule sets forth the Exchange's Market Maker \6\ Transaction Fees (the ``Sliding Scale''). The Exchange assesses a per contract transaction fee on a Market Maker for the execution of simple orders and quotes and complex orders. The amount of the transaction fee is based on the Market Maker's percentage of total national market maker volume that trades on the Exchange during a particular calendar month and the Exchange aggregates the volume executed by the Members in both simple orders and quotes and complex orders for purposes of determining the applicable tier and corresponding per contract transaction fee amount.\7\ In addition, the amount of the transaction fee is also based on which tier the Members and their affiliates reach in the Priority Customer Rebate Program. Members who reach Tier 3 or higher are charged a different set of rates than those who don't for simple orders and quotes and complex orders. The transaction fees are assessable to all Market Makers for transactions in all products (except for mini-options, for which there are separate product fees), in both Penny classes and Non-Penny classes. --------------------------------------------------------------------------- \6\ 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. \7\ The calculation of the volume thresholds does not include QCC Orders, PRIME AOC Responses, and PRIME Participating Quotes or Orders. For a discussion of these exclusions, see Securities Exchange Act Release No. 78299 (July 12, 2016), 81 FR 46734 (July 18, 2016) (SR-MIAX-2016-20). --------------------------------------------------------------------------- Additionally, the Exchange assesses one per contract fee for complex orders in each tier for Penny classes, and one per contract fee for complex orders in Non-Penny classes, with a surcharge for removing liquidity in a specific scenario, as described below. For simple orders and quotes, the Sliding Scale assesses a per contract transaction fee, which is based upon whether the Market Maker is a ``maker'' or a ``taker.'' \8\ As an incentive for Market Makers to provide liquidity on the Exchange, the Exchange's ``maker'' fees are lower than the ``taker'' fees. The Exchange does not distinguish between a ``maker'' and a ``taker'' for complex order executions as it does in the traditional construct for simple orders and quotes and instead assesses the per contract transaction fee for all executions and a surcharge of $0.08 per executed contract for executions in complex orders assessed to a Market Maker (and all other market participants except Priority Customers) when it removes liquidity by trading against a Priority Customer order that is resting on the Strategy Book \9\ (each a ``Taker Surcharge''). The purpose of the Taker Surcharge is to encourage Members to add liquidity to the Strategy Book, and to recoup costs associated with the execution of complex orders on the Strategy Book. The Exchange believes that assessing the Taker Surcharge only on participants removing liquidity effectively subsidizes, and thus encourages the posting of liquidity, which benefits investors and the public in the form of a deeper, more liquid marketplace. This Taker Surcharge is [[Page 10520]] substantially similar in structure and amount to a CBOE surcharge of the same type.\10\ --------------------------------------------------------------------------- \8\ See Securities Exchange Act Release Nos. 78519 (August 9, 2016), 81 FR 54162 (August 15, 2016) (SR-MIAX-2016-21); 79157 (October 26, 2016), 81 FR 75885 (November 1, 2016 (SR-MIAX-2016-38). \9\ The ``Strategy Book'' is the Exchange's electronic book of complex orders and complex quotes. See Exchange Rule 518(a)(17). \10\ See CBOE Fees Schedule, Complex Taker Fee, and note 35. --------------------------------------------------------------------------- The Exchange proposes to increase the Taker Surcharge assessable to Market Makers from $0.08 to $0.10. The increase in the Taker Surcharge is similar to the increase that was recently made by CBOE with regard to its taker surcharge.\11\ --------------------------------------------------------------------------- \11\ See SR-CBOE-2017-008, filed on January 17, 2017, posted on the CBOE Web site (www.cboe.com). --------------------------------------------------------------------------- Other Market Participant Transaction Fees Section (1)(a)(ii) of the Fee Schedule sets forth transaction fees for Other Market Participants, including Priority Customers, Public Customers \12\ that are not Priority Customers, non-MIAX Options Market Makers, non-Member Broker-Dealers, and Firms.\13\ The Exchange currently assesses on these market participants, except for Priority Customers, a per contract transaction fee for simple and complex order executions. The transaction fees apply to the listed participants for transactions in all products (except mini-options, for which there are separate product fees), with fees established for Penny classes and separate fees for Non-Penny classes. --------------------------------------------------------------------------- \12\ The term ``Public Customer'' means a person that is not a broker or dealer in securities. See Exchange Rule 100. \13\ A ``Firm'' fee is assessed on a MIAX 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). --------------------------------------------------------------------------- The Exchange also assesses the same $0.08 per contract Taker Surcharge that it assesses on Market Makers for removing liquidity against a resting Priority Customer on the Strategy Book on the above- indicated other market participants, specifically: (i) Public Customers that are not Priority Customers; (ii) non-MIAX Options Market Makers; (iii) non-Member Broker-Dealers; and (iv) Firms. The Exchange proposes to also increase the $0.08 per contract Taker Surcharge assessable to all of the other market participants indicated above to $0.10 per contract. As stated above, the Exchange believes that assessing the Take Surcharge only on participants removing liquidity effectively subsidizes, and thus encourages the posting of liquidity, which benefits investors and the public in the form of a deeper, more liquid marketplace. All other aspects of the transaction fees assessable to Market Makers and to the other indicated market participants other than Priority Customers by the Exchange will remain unchanged. Transaction fees for Priority Customers will remain unchanged. The proposed rule changes are scheduled to become operative February 1, 2017. 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 that it is an equitable allocation of reasonable fees and other charges among Exchange members and issuers and other persons using its facilities, and 6(b)(5) of the Act,\16\ 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 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. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(4). \16\ 15 U.S.C. 78f(b)(1) [sic] and (b)(5). --------------------------------------------------------------------------- The Exchange's proposal to increase the Taker Surcharge for Market Makers and other participants for removing liquidity by trading against a Priority Customer order on the Strategy Book is consistent with Section 6(b)(4) of the Act \17\ because it applies equally to all participants that remove Priority Customer liquidity from the Strategy Book, and does not apply to participants whose orders or quotes resting on the Strategy Book are executed against Priority Customer complex orders on the Strategy Book. Assessing the Taker Surcharge to market participants who take liquidity from Priority Customers is reasonable and not unfairly discriminatory because it will provide MIAX Options Market Makers and other participants with equal surcharges for removing liquidity, and no surcharge for resting liquidity. As stated above, this is substantially similar to a surcharge assessed on another exchange.\18\ The Exchange notes that, although this represents a slight fee increase, the Exchange believes that this increase is fair and equitable because the Exchange offers technology with unique risk mitigation features not available elsewhere, such as the Implied Away Best Bid or Offer (``ixABBO'') Price Protection, and the increase will help offset the credits given to complex orders under the Exchange's Priority Customer Rebate Program (``PCRP'') \19\ and the Professional Rebate Program (``PRP'').\20\ --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b)(4). \18\ See supra notes 10 and 11. \19\ Under the PCRP, MIAX Options 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 (excluding, in simple or complex as applicable, QCC Orders, mini-options, Priority Customer-to-Priority Customer Orders, PRIME AOC Responses, PRIME Contra-side Orders, PRIME Orders for which both the Agency and Contra-side Order are Priority Customers, 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 percentage thresholds in a month as described in the Priority Customer Rebate Program table. See Fee Schedule, Section (1)(a)(iii). \20\ Under the PRP, MIAX Options credits each Member the per contract amount resulting from contracts executed from an order submitted by that Member for the account(s) of a (i) Public Customer that is not a Priority Customer; (ii) Non-MIAX Market Maker; (iii) Non-Member Broker-Dealer; or (iv) Firm (for purposes of the Professional Rebate Program, ``Professional'') which is executed electronically on the Exchange in all multiply-listed option classes (excluding, in simple or complex as applicable, mini-options, Non- Priority Customer-to-Non-Priority Customer Orders, QCC Orders, PRIME Orders, PRIME AOC Responses, PRIME Contra-side Orders, 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 achieves certain Professional volume increase percentage thresholds in the month relative to the fourth quarter of 2015, as described in the table above [sic]. See Fee Schedule, Section (1)(a)(iv). --------------------------------------------------------------------------- The Exchange's proposal to increase the Taker Surcharge is also consistent with Section 6(b)(5) of the Act \21\ because it perfects the mechanisms of a free and open market and a national market system and protect investors and the public interest by encouraging participants to provide liquidity on the Strategy Book, which the Exchange believes is an important competitive tool that directly or indirectly can provide better prices for investors. The Exchange believes that assessing the Taker Surcharge only on participants removing liquidity effectively subsidizes, and thus encourages the posting of liquidity, which benefits investors and the public in the form of a deeper, more liquid marketplace. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78f(b)(1) [sic] and (b)(5). --------------------------------------------------------------------------- Public Customers that are not Priority Customers, non-MIAX Options Market Makers, non-Member Broker-Dealers and Firms that use sophisticated trading systems will be able to remove liquidity from the Strategy Book, and thus the Exchange believes that assessing the Taker Surcharge to participants who remove liquidity, and not assessing the Taker Surcharge to participants with complex orders resting on the Strategy Book, is reasonable and not unfairly discriminatory. Moreover, the proposed [[Page 10521]] Taker Surcharge increase is substantially similar to the surcharge increase on CBOE.\22\ The Exchange believes for these reasons that the Taker Surcharge for complex orders is equitable, reasonable and not unfairly discriminatory, and thus consistent with the Act. --------------------------------------------------------------------------- \22\ See supra notes 10 and 11. --------------------------------------------------------------------------- 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 believes that the proposed increase in the Taker Surcharge for complex transactions is intended to promote narrower spreads and greater liquidity at the best prices. The fee-based incentives for market participants to provide liquidity by submitting complex orders to the Exchange, and thereby improve the MBBO to ensure participation, should enable the Exchange to attract order flow and compete with other exchanges which also provide such incentives to their market participants for similar transactions. The Exchange believes that increased complex order flow will bring greater volume and liquidity which in turn benefits all market participants by providing more trading opportunities and tighter spreads. Therefore, any potential effects that the increased Taker Surcharge for complex transactions may have on intra-market competition are justifiable due to the reasons stated above. 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 they modify the Exchange's fees in a manner that encourages market participants to provide liquidity and to send order flow to the Exchange. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,\23\ and Rule 19b-4(f)(2) \24\ 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. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(3)(A)(ii). \24\ 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-2017-02 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-2017-02. 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 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-2017-02, and should be submitted on or before March 6, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\25\ --------------------------------------------------------------------------- \25\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-02838 Filed 2-10-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 28 / Monday, February 13, 2017 / Notices 10519
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s contract transaction fee amount.7 In
COMMISSION Statement of the Purpose of, and the addition, the amount of the transaction
Statutory Basis for, the Proposed Rule fee is also based on which tier the
[Release No. 34–79983; File No. SR–MIAX– Change Members and their affiliates reach in the
2017–02] Priority Customer Rebate Program.
1. Purpose
Members who reach Tier 3 or higher are
The Exchange proposes to amend its charged a different set of rates than
Self-Regulatory Organizations; Notice
Fee Schedule to increase the per those who don’t for simple orders and
of Filing and Immediate Effectiveness
contract surcharge assessed for quotes and complex orders. The
of a Proposed Rule Change by Miami transactions by all market participants, transaction fees are assessable to all
International Securities Exchange LLC except for Priority Customers,3 which Market Makers for transactions in all
To Amend Its Fee Schedule To Modify remove liquidity against a resting products (except for mini-options, for
Its Market Maker and Other Market Priority Customer complex order 4 on which there are separate product fees),
Participant Transaction Fees the strategy book for standard option in both Penny classes and Non-Penny
classes in the Penny Pilot Program 5 classes.
February 7, 2017.
(‘‘Penny classes’’) and for standard Additionally, the Exchange assesses
Pursuant to the provisions of Section option classes which are not in the one per contract fee for complex orders
19(b)(1) of the Securities Exchange Act Penny Pilot Program (‘‘Non-Penny in each tier for Penny classes, and one
of 1934 (‘‘Act’’),1 and Rule 19b–4 classes’’). per contract fee for complex orders in
thereunder,2 notice is hereby given that Market Maker Transaction Fees Non-Penny classes, with a surcharge for
on January 27, 2017, Miami removing liquidity in a specific
International Securities Exchange LLC Section 1)a)i) of the Fee Schedule sets scenario, as described below. For simple
(‘‘MIAX Options’’ or ‘‘Exchange’’) filed forth the Exchange’s Market Maker 6 orders and quotes, the Sliding Scale
with the Securities and Exchange Transaction Fees (the ‘‘Sliding Scale’’). assesses a per contract transaction fee,
The Exchange assesses a per contract which is based upon whether the
Commission (‘‘Commission’’) a
transaction fee on a Market Maker for Market Maker is a ‘‘maker’’ or a
proposed rule change as described in
the execution of simple orders and ‘‘taker.’’ 8 As an incentive for Market
Items I, II, and III below, which Items quotes and complex orders. The amount
have been prepared by the Exchange. Makers to provide liquidity on the
of the transaction fee is based on the Exchange, the Exchange’s ‘‘maker’’ fees
The Commission is publishing this Market Maker’s percentage of total are lower than the ‘‘taker’’ fees. The
notice to solicit comments on the national market maker volume that Exchange does not distinguish between
proposed rule change from interested trades on the Exchange during a a ‘‘maker’’ and a ‘‘taker’’ for complex
persons. particular calendar month and the order executions as it does in the
I. Self-Regulatory Organization’s Exchange aggregates the volume traditional construct for simple orders
executed by the Members in both simple and quotes and instead assesses the per
Statement of the Terms of Substance of
orders and quotes and complex orders contract transaction fee for all
the Proposed Rule Change
for purposes of determining the executions and a surcharge of $0.08 per
The Exchange is filing a proposal to applicable tier and corresponding per executed contract for executions in
amend the MIAX Options Fee Schedule complex orders assessed to a Market
3 ‘‘Priority Customer’’ means a person or entity
(the ‘‘Fee Schedule’’). Maker (and all other market participants
that (i) is not a broker or dealer in securities, and
The text of the proposed rule change (ii) does not place more than 390 orders in listed except Priority Customers) when it
options per day on average during a calendar month removes liquidity by trading against a
is available on the Exchange’s Web site for its own beneficial accounts(s). See Exchange Priority Customer order that is resting
at http://www.miaxoptions.com/rule- Rule 100. on the Strategy Book 9 (each a ‘‘Taker
filings, at MIAX’s principal office, and 4 A ‘‘complex order’’ is any order involving the
Surcharge’’). The purpose of the Taker
at the Commission’s Public Reference concurrent purchase and/or sale of two or more
different options in the same underlying security Surcharge is to encourage Members to
Room. (the ‘‘legs’’ or ‘‘components’’ of the complex order), add liquidity to the Strategy Book, and
for the same account, in a ratio that is equal to or to recoup costs associated with the
II. Self-Regulatory Organization’s greater than one-to-three (.333) and less than or
Statement of the Purpose of, and equal to three-to-one (3.00) and for the purposes of
execution of complex orders on the
Statutory Basis for, the Proposed Rule executing a particular investment strategy. A Strategy Book. The Exchange believes
Change
complex order can also be a ‘‘stock-option’’ order, that assessing the Taker Surcharge only
which is an order to buy or sell a stated number on participants removing liquidity
of units of an underlying security coupled with the
In its filing with the Commission, the purchase or sale of options contract(s) on the effectively subsidizes, and thus
Exchange included statements opposite side of the market, subject to certain encourages the posting of liquidity,
concerning the purpose of and basis for contingencies set forth in the proposed rules which benefits investors and the public
governing complex orders. See Securities Exchange in the form of a deeper, more liquid
the proposed rule change and discussed Act Release No. 78620 (August 18, 2016), 81 FR
any comments it received on the 58770 (August 25, 2016) (SR–MIAX–2016–26). marketplace. This Taker Surcharge is
proposed rule change. The text of these 5 See Securities Exchange Act Release Nos. 78080
7 The calculation of the volume thresholds does
statements may be examined at the (June 15, 2016), 81 FR 40377 (June 21, 2016)(SR–
MIAX–2016–16); 79432 (November 30, 2016), 81 FR not include QCC Orders, PRIME AOC Responses,
places specified in Item IV below. The 87990 (December 6, 2016) (SR–MIAX–2016–45). and PRIME Participating Quotes or Orders. For a
Exchange has prepared summaries, set 6 The term ‘‘Market Makers’’ refers to Lead Market discussion of these exclusions, see Securities
jstallworth on DSK7TPTVN1PROD with NOTICES
Makers (‘‘LMMs’’), Primary Lead Market Makers Exchange Act Release No. 78299 (July 12, 2016), 81
forth in sections A, B, and C below, of FR 46734 (July 18, 2016) (SR–MIAX–2016–20).
(‘‘PLMMs’’), and Registered Market Makers
the most significant aspects of such (‘‘RMMs’’) collectively. See Exchange Rule 100. A 8 See Securities Exchange Act Release Nos. 78519
statements. Directed Order Lead Market Maker (‘‘DLMM’’) and (August 9, 2016), 81 FR 54162 (August 15, 2016)
Directed Primary Lead Market Maker (‘‘DPLMM’’) is (SR–MIAX–2016–21); 79157 (October 26, 2016), 81
a party to a transaction being allocated to the LMM FR 75885 (November 1, 2016 (SR–MIAX–2016–38).
or PLMM and is the result of an order that has been 9 The ‘‘Strategy Book’’ is the Exchange’s
1 15 U.S.C. 78s(b)(1). directed to the LMM or PLMM. See Fee Schedule electronic book of complex orders and complex
2 17 CFR 240.19b–4. note 2. quotes. See Exchange Rule 518(a)(17).
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![10520 Federal Register / Vol. 82, No. 28 / Monday, February 13, 2017 / Notices
substantially similar in structure and other than Priority Customers by the Customer Rebate Program (‘‘PCRP’’) 19
amount to a CBOE surcharge of the same Exchange will remain unchanged. and the Professional Rebate Program
type.10 Transaction fees for Priority Customers (‘‘PRP’’).20
The Exchange proposes to increase will remain unchanged. The proposed The Exchange’s proposal to increase
the Taker Surcharge assessable to rule changes are scheduled to become the Taker Surcharge is also consistent
Market Makers from $0.08 to $0.10. The operative February 1, 2017. with Section 6(b)(5) of the Act 21
increase in the Taker Surcharge is because it perfects the mechanisms of a
2. Statutory Basis free and open market and a national
similar to the increase that was recently
made by CBOE with regard to its taker The Exchange believes that its market system and protect investors and
surcharge.11 proposal to amend its fee schedule is the public interest by encouraging
consistent with Section 6(b) of the Act 14 participants to provide liquidity on the
Other Market Participant Transaction in general, and furthers the objectives of Strategy Book, which the Exchange
Fees Section 6(b)(4) of the Act,15 in that it is believes is an important competitive
Section (1)(a)(ii) of the Fee Schedule an equitable allocation of reasonable tool that directly or indirectly can
sets forth transaction fees for Other fees and other charges among Exchange provide better prices for investors. The
Market Participants, including Priority members and issuers and other persons Exchange believes that assessing the
Customers, Public Customers 12 that are using its facilities, and 6(b)(5) of the Taker Surcharge only on participants
not Priority Customers, non-MIAX Act,16 in that it is designed to prevent removing liquidity effectively
Options Market Makers, non-Member fraudulent and manipulative acts and subsidizes, and thus encourages the
Broker-Dealers, and Firms.13 The practices, to promote just and equitable posting of liquidity, which benefits
Exchange currently assesses on these principles of trade, to foster cooperation investors and the public in the form of
market participants, except for Priority and coordination with persons engaged a deeper, more liquid marketplace.
Customers, a per contract transaction fee in facilitating transactions in securities, Public Customers that are not Priority
for simple and complex order to remove impediments to and perfect Customers, non-MIAX Options Market
executions. The transaction fees apply the mechanisms of a free and open Makers, non-Member Broker-Dealers
to the listed participants for transactions market and a national market system and Firms that use sophisticated trading
in all products (except mini-options, for and, in general, to protect investors and systems will be able to remove liquidity
which there are separate product fees), the public interest. from the Strategy Book, and thus the
with fees established for Penny classes The Exchange’s proposal to increase Exchange believes that assessing the
and separate fees for Non-Penny classes. the Taker Surcharge for Market Makers Taker Surcharge to participants who
The Exchange also assesses the same and other participants for removing remove liquidity, and not assessing the
$0.08 per contract Taker Surcharge that liquidity by trading against a Priority Taker Surcharge to participants with
it assesses on Market Makers for Customer order on the Strategy Book is complex orders resting on the Strategy
removing liquidity against a resting consistent with Section 6(b)(4) of the Book, is reasonable and not unfairly
Priority Customer on the Strategy Book Act 17 because it applies equally to all discriminatory. Moreover, the proposed
on the above-indicated other market participants that remove Priority
19 Under the PCRP, MIAX Options credits each
participants, specifically: (i) Public Customer liquidity from the Strategy
Member the per contract amount resulting from
Customers that are not Priority Book, and does not apply to participants each Priority Customer order transmitted by that
Customers; (ii) non-MIAX Options whose orders or quotes resting on the Member which is executed electronically on the
Market Makers; (iii) non-Member Strategy Book are executed against Exchange in all multiply-listed option classes
Broker-Dealers; and (iv) Firms. Priority Customer complex orders on (excluding, in simple or complex as applicable,
QCC Orders, mini-options, Priority Customer-to-
The Exchange proposes to also the Strategy Book. Assessing the Taker Priority Customer Orders, PRIME AOC Responses,
increase the $0.08 per contract Taker Surcharge to market participants who PRIME Contra-side Orders, PRIME Orders for which
Surcharge assessable to all of the other take liquidity from Priority Customers is both the Agency and Contra-side Order are Priority
market participants indicated above to Customers, and executions related to contracts that
reasonable and not unfairly are routed to one or more exchanges in connection
$0.10 per contract. As stated above, the discriminatory because it will provide with the Options Order Protection and Locked/
Exchange believes that assessing the MIAX Options Market Makers and other Crossed Market Plan referenced in MIAX Rule
Take Surcharge only on participants participants with equal surcharges for 1400), provided the Member meets certain
percentage thresholds in a month as described in
removing liquidity effectively removing liquidity, and no surcharge for the Priority Customer Rebate Program table. See Fee
subsidizes, and thus encourages the resting liquidity. As stated above, this is Schedule, Section (1)(a)(iii).
posting of liquidity, which benefits substantially similar to a surcharge 20 Under the PRP, MIAX Options credits each
investors and the public in the form of assessed on another exchange.18 The Member the per contract amount resulting from
a deeper, more liquid marketplace. contracts executed from an order submitted by that
Exchange notes that, although this Member for the account(s) of a (i) Public Customer
All other aspects of the transaction represents a slight fee increase, the that is not a Priority Customer; (ii) Non-MIAX
fees assessable to Market Makers and to Exchange believes that this increase is Market Maker; (iii) Non-Member Broker-Dealer; or
the other indicated market participants fair and equitable because the Exchange (iv) Firm (for purposes of the Professional Rebate
Program, ‘‘Professional’’) which is executed
offers technology with unique risk electronically on the Exchange in all multiply-listed
10 See CBOE Fees Schedule, Complex Taker Fee,
mitigation features not available option classes (excluding, in simple or complex as
and note 35.
11 See SR–CBOE–2017–008, filed on January 17,
elsewhere, such as the Implied Away applicable, mini-options, Non-Priority Customer-to-
Best Bid or Offer (‘‘ixABBO’’) Price Non-Priority Customer Orders, QCC Orders, PRIME
2017, posted on the CBOE Web site Orders, PRIME AOC Responses, PRIME Contra-side
(www.cboe.com). Protection, and the increase will help Orders, and executions related to contracts that are
jstallworth on DSK7TPTVN1PROD with NOTICES
12 The term ‘‘Public Customer’’ means a person offset the credits given to complex routed to one or more exchanges in connection with
that is not a broker or dealer in securities. See orders under the Exchange’s Priority the Options Order Protection and Locked/Crossed
Exchange Rule 100. Market Plan referenced in MIAX Rule 1400),
13 A ‘‘Firm’’ fee is assessed on a MIAX Electronic
14 15
provided the Member achieves certain Professional
U.S.C. 78f(b). volume increase percentage thresholds in the
Exchange Member ‘‘EEM’’ that enters an order that 15 15
is executed for an account identified by the EEM U.S.C. 78f(b)(4). month relative to the fourth quarter of 2015, as
16 15 U.S.C. 78f(b)(1) [sic] and (b)(5).
for clearing in the Options Clearing Corporation described in the table above [sic]. See Fee Schedule,
17 15 U.S.C. 78f(b)(4). Section (1)(a)(iv).
(‘‘OCC’’) ‘‘Firm’’ range. See Fee Schedule, Section
(1)(a)(ii). 18 See supra notes 10 and 11. 21 15 U.S.C. 78f(b)(1) [sic] and (b)(5).
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![Federal Register / Vol. 82, No. 28 / Monday, February 13, 2017 / Notices 10521
Taker Surcharge increase is III. Date of Effectiveness of the Reference Room, 100 F Street NE.,
substantially similar to the surcharge Proposed Rule Change and Timing for Washington, DC 20549, on official
increase on CBOE.22 The Exchange Commission Action business days between the hours of
believes for these reasons that the Taker The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of the
Surcharge for complex orders is effective pursuant to Section filing also will be available for
equitable, reasonable and not unfairly 19(b)(3)(A)(ii) of the Act,23 and Rule inspection and copying at the principal
discriminatory, and thus consistent with 19b–4(f)(2) 24 thereunder. At any time office of the Exchange. All comments
the Act. within 60 days of the filing of the received will be posted without change;
proposed rule change, the Commission the Commission does not edit personal
B. Self-Regulatory Organization’s
summarily may temporarily suspend identifying information from
Statement on Burden on Competition
such rule change if it appears to the submissions. You should submit only
The Exchange does not believe that Commission that such action is information that you wish to make
the proposed rule change will result in necessary or appropriate in the public available publicly. All submissions
any burden on competition that is not interest, for the protection of investors, should refer to File Number SR–MIAX–
necessary or appropriate in furtherance or otherwise in furtherance of the 2017–02, and should be submitted on or
of the purposes of the Act. The purposes of the Act. If the Commission before March 6, 2017.
Exchange believes that the proposed takes such action, the Commission shall For the Commission, by the Division of
increase in the Taker Surcharge for institute proceedings to determine Trading and Markets, pursuant to delegated
complex transactions is intended to whether the proposed rule should be authority.25
promote narrower spreads and greater approved or disapproved. Eduardo A. Aleman,
liquidity at the best prices. The fee- IV. Solicitation of Comments Assistant Secretary.
based incentives for market participants [FR Doc. 2017–02838 Filed 2–10–17; 8:45 am]
to provide liquidity by submitting Interested persons are invited to
BILLING CODE 8011–01–P
complex orders to the Exchange, and submit written data, views, and
thereby improve the MBBO to ensure arguments concerning the foregoing,
participation, should enable the including whether the proposed rule SECURITIES AND EXCHANGE
Exchange to attract order flow and change is consistent with the Act. COMMISSION
compete with other exchanges which Comments may be submitted by any of
also provide such incentives to their the following methods: [Release No. 34–79984; SR–CHX–2016–16]
market participants for similar Electronic Comments
transactions. Self-Regulatory Organizations;
• Use the Commission’s Internet Chicago Stock Exchange, Inc.; Notice
The Exchange believes that increased comment form (http://www.sec.gov/
complex order flow will bring greater of Withdrawal of a Proposed Rule
rules/sro.shtml); or Change To Adopt the CHX Liquidity
volume and liquidity which in turn • Send an email to rule-comments@
benefits all market participants by Taking Access Delay
sec.gov. Please include File Number SR–
providing more trading opportunities MIAX–2017–02 on the subject line. February 7, 2017.
and tighter spreads. Therefore, any On September 6, 2016, the Chicago
Paper Comments
potential effects that the increased Taker Stock Exchange, Inc. (‘‘CHX’’ or
Surcharge for complex transactions may • Send paper comments in triplicate ‘‘Exchange’’) filed with the Securities
have on intra-market competition are to Secretary, Securities and Exchange
and Exchange Commission
justifiable due to the reasons stated Commission, 100 F Street NE.,
(‘‘Commission’’), pursuant to Section
above. Washington, DC 20549–1090.
19(b)(1) of the Securities Exchange Act
The Exchange notes that it operates in All submissions should refer to File of 1934 (‘‘Exchange Act’’) 1 and Rule
a highly competitive market in which Number SR–MIAX–2017–02. This file 19b–4 thereunder,2 a proposed rule
market participants can readily favor number should be included on the change to adopt the CHX Liquidity
competing venues if they deem fee subject line if email is used. To help the Taking Access Delay (‘‘LTAD’’). The
Commission process and review your proposed rule change was published for
levels at a particular venue to be
comments more efficiently, please use comment in the Federal Register on
excessive. In such an environment, the
only one method. The Commission will September 22, 2016.3 On November 1,
Exchange must continually adjust its
post all comments on the Commission’s 2016, pursuant to Section 19(b)(2) of the
fees to remain competitive with other
Internet Web site (http://www.sec.gov/ Exchange Act,4 the Commission
exchanges and to attract order flow. The
rules/sro.shtml). Copies of the designated a longer period within which
Exchange believes that the proposed
submission, all subsequent
rule change reflects this competitive to approve the proposed rule change,
amendments, all written statements
environment because they modify the disapprove the proposed rule change, or
with respect to the proposed rule
Exchange’s fees in a manner that institute proceedings to determine
change that are filed with the
encourages market participants to whether to disapprove the proposed
Commission, and all written
provide liquidity and to send order flow rule change.5 On December 20, 2016,
communications relating to the
to the Exchange.
proposed rule change between the 25 17 CFR 200.30–3(a)(12).
C. Self-Regulatory Organization’s Commission and any person, other than 1 15 U.S.C. 78s(b)(1).
jstallworth on DSK7TPTVN1PROD with NOTICES
Statement on Comments on the those that may be withheld from the 2 17 CFR 240.19b–4.
Proposed Rule Change Received From public in accordance with the 3 See Securities Exchange Act Release No. 78860
Members, Participants, or Others provisions of 5 U.S.C. 552, will be (September 16, 2016), 81 FR 65442 (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
available for Web site viewing and
Written comments were neither printing in the Commission’s Public
5 See Securities Exchange Act Release No. 79216,
solicited nor received. 81 FR 78228 (November 7, 2016). The Commission
designated December 21, 2016, as the date by which
23 15 U.S.C. 78s(b)(3)(A)(ii). the Commission shall either approve or disapprove,
22 See supra notes 10 and 11. 24 17 CFR 240.19b–4(f)(2). Continued
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Document Created: 2017-02-11 00:59:03
Document Modified: 2017-02-11 00:59:03
| 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 | 82 FR 10519 |
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