82 FR 13157 - 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 82, Issue 45 (March 9, 2017)
Federal Register Volume 82, Issue 45 (March 9, 2017)
| Page Range | 13157-13161 | |
| FR Document | 2017-04600 |
[Federal Register Volume 82, Number 45 (Thursday, March 9, 2017)] [Notices] [Pages 13157-13161] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-04600] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80148; File No. SR-MIAX-2017-10] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule March 3, 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 February 24, 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Market Maker Sliding Scale (defined [[Page 13158]] below) contained in its Fee Schedule to increase certain ``taker'' fees for certain tiers assessed to MIAX Options Market Makers,\3\ as described below. --------------------------------------------------------------------------- \3\ 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. --------------------------------------------------------------------------- Section (1)(a)(i) of the Fee Schedule sets forth the Exchange's Market Maker Sliding Scale for Market Maker Transaction Fees (the ``Sliding Scale''). The Sliding Scale assesses a per contract transaction fee on a Market Maker for the execution of simple orders and quotes (collectively, ``simple orders'') and complex orders and quotes (collectively, ``complex orders''). The amount of the transaction fee is based on the Market Maker's percentage of total national market maker volume in all options classes that trade on the Exchange during a particular calendar month, and the Exchange aggregates the volume executed by Market Makers in both simple orders and complex orders for purposes of determining the applicable tier and corresponding per contract transaction fee amount.\4\ The Sliding Scale applies to all MIAX Options Market Makers for transactions in all products (except for mini-options, for which there are separate product fees), with fees established for option classes in the Penny Pilot Program \5\ (``penny option classes'') and separate fees for non-penny option classes, and further based on whether the Market Maker is acting as a ``maker'' or a ``taker'' \6\ in simple orders. Market Makers that place resting liquidity, i.e., quotes or orders on the MIAX Options System,\7\ are assessed the ``maker'' fee. Market Makers that execute against (remove) resting liquidity are assessed a higher ``taker'' fee. This is distinguished from traditional ``maker-taker'' models where ``makers'' typically receive a rebate and ``takers'' are assessed a fee; the Exchange instead assesses lower transaction fees to ``makers'' as compared to ``takers,'' similar to the manner implemented at other exchanges.\8\ --------------------------------------------------------------------------- \4\ The calculation of the volume thresholds does not include QCC Orders, 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. See Fee Schedule, page 2. For a further discussion of these exclusions, see Securities Exchange Act Release No. 78299 (July 12, 2016), 81 FR 46734 (July 18, 2016)(SR-MIAX-2016-20). \5\ See Securities Exchange Act Release No. 78080 (June 15, 2016), 81 FR 40377 (June 21, 2016) (SR-MIAX-2016-16). \6\ See Securities Exchange Act Release No. 78519 (August 9, 2016), 81 FR 54162 (August 15, 2016) (SR-MIAX-2016-21). \7\ The term ``System'' means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. \8\ The Exchange notes that similar maker-taker pricing is implemented at International Securities Exchange, LLC (``ISE''). ISE's Schedule of Fees, Section I, assesses maker fees to ISE market makers in its select symbols that are lower than its taker fees. ISE's fees are distinguished from the MIAX Options fees because the ISE fees apply to ISE market maker orders sent to ISE by ISE Electronic Access Members, whereas the Exchange's fees apply to quotes and orders submitted by Market Maker. --------------------------------------------------------------------------- Further, the Exchange provides discounted transaction fees for Members \9\ and their qualified Affiliates \10\ that achieve certain volume thresholds through the submission of Priority Customer \11\ orders under the Exchange's Priority Customer Rebate Program (``PCRP''),\12\ which is set forth on two tables: One setting forth the transaction fees applicable to Members and their Affiliates that are in PCRP Volume Tier 3 or higher; and the other setting forth the transaction fees applicable to Members and their Affiliates that are not in PCRP Volume Tier 3 or higher. The Sliding Scale also includes maker and taker fees in both tables in each tier for simple orders in penny option classes and non-penny option classes. --------------------------------------------------------------------------- \9\ 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. \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\ 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. \12\ 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 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 Exchange 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. --------------------------------------------------------------------------- The current Sliding Scale tables are as follows: Members and Their Affiliates in Priority Customer Rebate Program Volume Tier 3 or Higher -------------------------------------------------------------------------------------------------------------------------------------------------------- Simple Complex ----------------------------------------------------------------------------------------------------------------- Per contract fee for penny Per contract fee for non-penny Per contract classes classes surcharge for ---------------------------------------------------------------- removing liquidity Percentage against a Tier thresholds Per contract Per contract resting priority fee for penny fee for non- customer complex Maker Taker Maker Taker classes penny classes order on the strategy book for penny and non-penny classes -------------------------------------------------------------------------------------------------------------------------------------------------------- All MIAX Market Makers -------------------------------------------------------------------------------------------------------------------------------------------------------- 1............... $0.00-0.075......... $0.21 $0.23 $0.25 $0.30 $0.25 $0.29 $0.10 2............... Above 0.075-0.60.... 0.15 0.22 0.19 0.27 0.19 0.23 0.10 3............... Above 0.60-1.00..... 0.08 0.15 0.12 0.20 0.12 0.16 0.10 4............... Above 1.00-1.50..... 0.04 0.06 0.08 0.12 0.07 0.11 0.10 5............... Above 1.50.......... 0.02 0.04 0.06 0.10 0.05 0.09 0.10 -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 13159]] Members and Their Affiliates Not in Priority Customer Rebate Program Volume Tier 3 or Higher -------------------------------------------------------------------------------------------------------------------------------------------------------- Simple Complex ----------------------------------------------------------------------------------------------------------------- Per contract fee for penny Per contract fee for non-penny Per contract classes classes surcharge for ---------------------------------------------------------------- removing liquidity Percentage against a Tier thresholds Per contract Per contract resting priority fee for penny fee for non- customer complex Maker Taker Maker Taker classes penny classes order on the strategy book for penny and non-penny classes -------------------------------------------------------------------------------------------------------------------------------------------------------- All MIAX Market Makers -------------------------------------------------------------------------------------------------------------------------------------------------------- 1............... 0.00-0.075.......... $0.23 $0.25 $0.27 $0.32 $0.25 $0.29 $0.10 2............... Above 0.075-0.60.... 0.17 0.24 0.21 0.29 0.19 0.23 0.10 3............... Above 0.60-1.00..... 0.10 0.17 0.14 0.22 0.12 0.16 0.10 4............... Above 1.00-1.50..... 0.06 0.08 0.10 0.14 0.07 0.11 0.10 5............... Above 1.50.......... 0.04 0.06 0.08 0.12 0.05 0.09 0.10 -------------------------------------------------------------------------------------------------------------------------------------------------------- The Exchange proposes to increase the taker fees as set forth in both tables below: Members and Their Affiliates in Priority Customer Rebate Program Volume Tier 3 or Higher -------------------------------------------------------------------------------------------------------------------------------------------------------- Simple Complex ----------------------------------------------------------------------------------------------------------------- Per contract fee for penny Per contract fee for non-penny Per contract classes classes surcharge for ---------------------------------------------------------------- removing liquidity Percentage against a Tier thresholds Per contract Per contract resting priority fee for penny fee for non- customer complex Maker Taker Maker Taker classes penny classes order on the strategy book for penny and non-penny classes -------------------------------------------------------------------------------------------------------------------------------------------------------- All MIAX Market Makers -------------------------------------------------------------------------------------------------------------------------------------------------------- 1............... $0.00-0.075......... $0.21 $0.23 $0.25 $0.30 $0.25 $0.29 $0.10 2............... Above 0.075-0.60.... 0.15 0.22 0.19 0.27 0.19 0.23 0.10 3............... Above 0.60-1.00..... 0.08 0.19 0.12 0.23 0.12 0.16 0.10 4............... Above 1.00-1.50..... 0.04 0.18 0.08 0.22 0.07 0.11 0.10 5............... Above 1.50.......... 0.02 0.17 0.06 0.21 0.05 0.09 0.10 -------------------------------------------------------------------------------------------------------------------------------------------------------- Members and Their Affiliates Not in Priority Customer Rebate Program Volume Tier 3 or Higher -------------------------------------------------------------------------------------------------------------------------------------------------------- Simple Complex ----------------------------------------------------------------------------------------------------------------- Per contract fee for penny Per contract fee for non-penny Per contract classes classes surcharge for ---------------------------------------------------------------- removing liquidity Percentage against a Tier thresholds Per contract Per contract resting priority fee for penny fee for non- customer complex Maker Taker Maker Taker classes penny classes order on the strategy book for penny and non-penny classes -------------------------------------------------------------------------------------------------------------------------------------------------------- All MIAX Market Makers -------------------------------------------------------------------------------------------------------------------------------------------------------- 1............... $0.00-0.075......... $0.23 $0.25 $0.27 $0.32 $0.25 $0.29 $0.10 2............... Above 0.075-0.60.... 0.17 0.24 0.21 0.29 0.19 0.23 0.10 3............... Above 0.60-1.00..... 0.10 0.21 0.14 0.25 0.12 0.16 0.10 4............... Above 1.00-1.50..... 0.06 0.20 0.10 0.24 0.07 0.11 0.10 5............... Above 1.50.......... 0.04 0.19 0.08 0.23 0.05 0.09 0.10 -------------------------------------------------------------------------------------------------------------------------------------------------------- The Exchange has determined to substantially reduce the magnitude of volume discounts that Market Makers achieve in Tiers 3, 4, and 5, as a taker for Members who are in the Priority Customer Rebate Program Volume Tier 3 or Higher and for Members who are not in the Priority Customer Rebate Program Volume Tier 3 or Higher. This significant, volume-based discount was designed to incentivize Market Makers to act as a taker on the Exchange.\13\ For business and competitive reasons, the Exchange now believes it is appropriate to reduce the magnitude of discounts. The Exchange is not eliminating the discounts entirely, but narrowing the ranges between the highest fee (assessed for Tier 1) and fees assessed in Tiers 3, 4, and 5) in each of the two tables. The proposed Market Maker taker fees are [[Page 13160]] generally in line with the Market Maker taker fees charged by other exchanges for executing simple orders at similar volume levels, including Exchanges that don't offer a volume discount for market maker taker volume.\14\ --------------------------------------------------------------------------- \13\ See Securities Exchange Act Release No. 78519 (August 9, 2016), 81 FR 54162 (August 15, 2016)(SR-MIAX-2016-21). \14\ See ISE Schedule of Fees, Section I (ISE assesses Market Makers a taker fee of .44 per contract in Select Symbols); see also ISE Gemini (``Gemini'') Schedule of Fees, Section I (Gemini assesses Market Makers a taker fee of $.49 per contract in penny option classes and SPY for Tiers 1 through 3, with Tier 1 being total affiliated member ADV of up to 99,999 contracts, Tier 2 being total affiliated member ADV of between 100,00 [sic] and 224,999 contracts and Tier 3 being total affiliated member ADV of between 225,000 and 349,999 contracts and $.48 per contact in penny options classes and SPY for Tier 4, which is total affiliated member ADV of 350,000 contracts or more); see further Bats BZX Options Exchange (``BATS'') Fee Schedule, p. 1 (BATS assesses Market Maker a taker fee of $.50 per contract in penny option classes and 1.07 per contract in non- penny option classes). --------------------------------------------------------------------------- The proposed rule change is scheduled to become operative March 1, 2017. 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act \15\ in general, and furthers the objectives of Sections 6(b)(4) of the Act,\16\ in that it is an equitable allocation of reasonable fees and other charges among Exchange Members and other persons using its facilities, and Section 6(b)(5) of the Act,\17\ 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. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b). \16\ 15 U.S.C. 78f(b)(4). \17\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The proposed taker fee increase for the various tiers is equitable and not unfairly discriminatory because all similarly situated Market Makers are subject to the same fees and access to the Exchange is offered on terms that are not unfairly discriminatory. The Exchange initially set its taker fees at the various volume levels based upon business determinations and an analysis of current taker fees and volume levels at other exchanges. When the Exchange initially adopted taker fees,\18\ it set its higher tier taker fees much lower than other exchanges in order to encourage its Market Makers to reach for higher volume levels in order to achieve greater discounts. For competitive and business reasons, the Exchange believes that it no longer needs to offer such deep discounts in the higher tiers and desires to narrow the range between the lower and higher tiers with respect to the taker fees. The Exchange also believes that it is appropriate to increase taker fees to be more in line with competing exchanges. The Exchange notes that the increased taker fees are comparable to those assessed by other exchanges and that even with the increase, the Exchange's taker fees are still less than those assessed by such exchanges.\19\ --------------------------------------------------------------------------- \18\ See supra note 13. \19\ See supra note 14. --------------------------------------------------------------------------- The Exchange's proposal to assess a higher fee to Market Makers that take liquidity in penny option and non-penny option classes is also reasonable, equitable and not unfairly discriminatory under the Act. While distinguished from the traditional ``maker-taker'' fee model under which an exchange pays a per-contract rebate to their members to encourage them to place resting liquidity by providing quotes and orders (``maker'') on their trading systems and assessing a fee that executes against a resting order (``taker''), the Exchange assesses a reduced fee for ``makers'' as compared to ``takers'' rather than giving the ``maker'' a rebate. The Exchange believes that the maker-taker pricing model is an important competitive tool for exchanges and directly or indirectly can provide better prices for investors. Such pricing models may narrow the MIAX Options Bid and Offer (``MBBO'') because the reduced fee for ``makers'' effectively subsidizes, and thus encourages, the posting of liquidity, while the assessment of lower fees in higher tiers to ``takers'' encourages Market Makers to provide order flow. The Exchange believes that this pricing model provides Market Makers with greater incentive to either match or improve upon the best price displayed on MIAX Options, all to the benefit of investors and the public in the form of improved execution prices. Further, the Exchange's assessment of a higher fee to Market Makers who remove liquidity is reasonable, equitable and not unfairly discriminatory and follows a similar line of reasoning. It is common practice among options exchanges to differentiate between fees for adding liquidity and fees for removing liquidity, and such differentiation has been accepted as not unfairly discriminatory under the Act.\20\ The Exchange believes that the differentiation in pricing between ``makers'' and ``takers'' is appropriate, because ``takers'' remove liquidity and benefit disproportionately from their executions as compared to ``makers,'' without assuming the obligations that ``makers'' assume in making continuous, two-sided markets, and without engaging in competitive price discovery and improvement in the same manner as ``makers.'' Liquidity removers benefit from the price and size discovery function that liquidity providers have performed in posting their quotations and orders, and when executing against resting liquidity, a ``taker'' is not taking the risk of an order or quote sitting unexecuted on the Book. The Exchange believes for these reasons that assessing a higher ``taker'' fee for the various tiers for simple orders is equitable, reasonable and not unfairly discriminatory, and thus consistent with the Act. --------------------------------------------------------------------------- \20\ Id. --------------------------------------------------------------------------- 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 proposed fee structure is intended to promote narrower spreads and encourage the posting of liquidity (instead of taking liquidity), and thus should promote better prices. The proposed rule change should enable the Exchange to attract, and compete for, order flow with other exchanges and the higher fees for removing liquidity will encourage Market Makers to submit order flow that adds liquidity, not removes it. 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 changes reflect 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 rather than remove liquidity from the market place. 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. [[Page 13161]] 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. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(3)(A)(ii). \22\ 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-2017-10 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-2017-10. 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-2017-10, and should be submitted on or before March 30, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-04600 Filed 3-8-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices 13157
proposed amendment simply gives • Send an email to rule-comments@ SECURITIES AND EXCHANGE
TPHs initiating AIM auctions the sec.gov. Please include File Number SR– COMMISSION
ability, when utilizing the auto-match CBOE–2017–018 on the subject line.
[Release No. 34–80148; File No. SR–MIAX–
feature, to guarantee price improvement 2017–10]
beyond the NBBO (if 50 standard option Paper Comments
contracts or 500 mini-option contracts • Send paper comments in triplicate Self-Regulatory Organizations; Miami
or greater) or beyond one cent/one to Secretary, Securities and Exchange International Securities Exchange LLC;
minimum increment better than the Notice of Filing and Immediate
Commission, 100 F Street NE.,
NBBO (if less than 50 standard option Effectiveness of a Proposed Rule
Washington, DC 20549–1090.
contracts or 500 mini-option contracts, Change To Amend Its Fee Schedule
which generally protects investors and All submissions should refer to File
the public interest by giving Agency Number SR–CBOE–2017–018. This file March 3, 2017.
Orders the possibility of receiving better number should be included on the Pursuant to the provisions of Section
execution prices. subject line if email is used. To help the 19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b–4
C. Self-Regulatory Organization’s Commission process and review your
thereunder,2 notice is hereby given that
Statement on Comments on the comments more efficiently, please use
on February 24, 2017, Miami
Proposed Rule Change Received From only one method. The Commission will International Securities Exchange LLC
Members, Participants, or Others post all comments on the Commission’s (‘‘MIAX Options’’ or ‘‘Exchange’’) filed
Internet Web site (http://www.sec.gov/ with the Securities and Exchange
The Exchange neither solicited nor
rules/sro.shtml). Copies of the Commission (‘‘Commission’’) a
received comments on the proposed
rule change. submission, all subsequent proposed rule change as described in
amendments, all written statements Items I, II, and III below, which Items
III. Date of Effectiveness of the with respect to the proposed rule have been prepared by the Exchange.
Proposed Rule Change and Timing for change that are filed with the The Commission is publishing this
Commission Action Commission, and all written notice to solicit comments on the
Because the foregoing proposed rule communications relating to the proposed rule change from interested
change does not: proposed rule change between the persons.
A. Significantly affect the protection Commission and any person, other than I. Self-Regulatory Organization’s
of investors or the public interest; those that may be withheld from the Statement of the Terms of Substance of
B. impose any significant burden on public in accordance with the the Proposed Rule Change
competition; and provisions of 5 U.S.C. 552, will be
C. become operative for 30 days from The Exchange is filing a proposal to
available for Web site viewing and
the date on which it was filed, or such amend the MIAX Options Fee Schedule
printing in the Commission’s Public
shorter time as the Commission may (the ‘‘Fee Schedule’’).
Reference Room, 100 F Street NE., The text of the proposed rule change
designate, it has become effective Washington, DC 20549 on official
pursuant to Section 19(b)(3)(A) of the is available on the Exchange’s Web site
business days between the hours of at http://www.miaxoptions.com/rule-
Act 9 and Rule 19b–4(f)(6) 10 thereunder.
10:00 a.m. and 3:00 p.m. Copies of such filings, at MIAX’s principal office, and
At any time within 60 days of the filing
filing also will be available for at the Commission’s Public Reference
of the proposed rule change, the
inspection and copying at the principal Room.
Commission summarily may
temporarily suspend such rule change if office of the Exchange. All comments
II. Self-Regulatory Organization’s
it appears to the Commission that such received will be posted without change;
Statement of the Purpose of, and
action is necessary or appropriate in the the Commission does not edit personal
Statutory Basis for, the Proposed Rule
public interest, for the protection of identifying information from Change
investors, or otherwise in furtherance of submissions. You should submit only
information that you wish to make In its filing with the Commission, the
the purposes of the Act. If the
available publicly. All submissions Exchange included statements
Commission takes such action, the
should refer to File Number SR–CBOE– concerning the purpose of and basis for
Commission will institute proceedings
2017–018, and should be submitted on the proposed rule change and discussed
to determine whether the proposed rule
any comments it received on the
change should be approved or or before March 30, 2017.
proposed rule change. The text of these
disapproved. For the Commission, by the Division of statements may be examined at the
IV. Solicitation of Comments Trading and Markets, pursuant to delegated places specified in Item IV below. The
authority.11 Exchange has prepared summaries, set
Interested persons are invited to
submit written data, views, and Eduardo A. Aleman, forth in sections A, B, and C below, of
arguments concerning the foregoing, Assistant Secretary. the most significant aspects of such
including whether the proposed rule [FR Doc. 2017–04604 Filed 3–8–17; 8:45 am] statements.
change is consistent with the Act. BILLING CODE 8011–01–P A. Self-Regulatory Organization’s
Comments may be submitted by any of Statement of the Purpose of, and
asabaliauskas on DSK3SPTVN1PROD with NOTICES
the following methods: Statutory Basis for, the Proposed Rule
Electronic Comments Change
• Use the Commission’s Internet 1. Purpose
comment form (http://www.sec.gov/ The Exchange proposes to amend the
rules/sro.shtml); or Market Maker Sliding Scale (defined
9 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
10 17 CFR 240.19b–4(f)(6). 11 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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![13160 Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices
generally in line with the Market Maker reasons, the Exchange believes that it no because ‘‘takers’’ remove liquidity and
taker fees charged by other exchanges longer needs to offer such deep benefit disproportionately from their
for executing simple orders at similar discounts in the higher tiers and desires executions as compared to ‘‘makers,’’
volume levels, including Exchanges that to narrow the range between the lower without assuming the obligations that
don’t offer a volume discount for market and higher tiers with respect to the taker ‘‘makers’’ assume in making continuous,
maker taker volume.14 fees. The Exchange also believes that it two-sided markets, and without
The proposed rule change is is appropriate to increase taker fees to engaging in competitive price discovery
scheduled to become operative March 1, be more in line with competing and improvement in the same manner
2017. exchanges. The Exchange notes that the as ‘‘makers.’’ Liquidity removers benefit
2. Statutory Basis increased taker fees are comparable to from the price and size discovery
those assessed by other exchanges and function that liquidity providers have
The Exchange believes that its that even with the increase, the
proposed rule change is consistent with performed in posting their quotations
Exchange’s taker fees are still less than
Section 6(b) of the Act 15 in general, and and orders, and when executing against
those assessed by such exchanges.19
furthers the objectives of Sections The Exchange’s proposal to assess a resting liquidity, a ‘‘taker’’ is not taking
6(b)(4) of the Act,16 in that it is an higher fee to Market Makers that take the risk of an order or quote sitting
equitable allocation of reasonable fees liquidity in penny option and non- unexecuted on the Book. The Exchange
and other charges among Exchange penny option classes is also reasonable, believes for these reasons that assessing
Members and other persons using its equitable and not unfairly a higher ‘‘taker’’ fee for the various tiers
facilities, and Section 6(b)(5) of the discriminatory under the Act. While for simple orders is equitable,
Act,17 in that it is designed to prevent distinguished from the traditional reasonable and not unfairly
fraudulent and manipulative acts and ‘‘maker-taker’’ fee model under which discriminatory, and thus consistent with
practices, to promote just and equitable an exchange pays a per-contract rebate the Act.
principles of trade, to foster cooperation to their members to encourage them to
and coordination with persons engaged B. Self-Regulatory Organization’s
place resting liquidity by providing Statement on Burden on Competition
in facilitating transactions in securities, quotes and orders (‘‘maker’’) on their
to remove impediments to and perfect trading systems and assessing a fee that The Exchange does not believe that
the mechanisms of a free and open executes against a resting order the proposed rule change will result in
market and a national market system (‘‘taker’’), the Exchange assesses a any burden on competition that is not
and, in general, to protect investors and reduced fee for ‘‘makers’’ as compared necessary or appropriate in furtherance
the public interest. to ‘‘takers’’ rather than giving the
The proposed taker fee increase for of the purposes of the Act. The
‘‘maker’’ a rebate. proposed fee structure is intended to
the various tiers is equitable and not The Exchange believes that the maker-
unfairly discriminatory because all promote narrower spreads and
taker pricing model is an important
similarly situated Market Makers are encourage the posting of liquidity
competitive tool for exchanges and
subject to the same fees and access to (instead of taking liquidity), and thus
directly or indirectly can provide better
the Exchange is offered on terms that are should promote better prices. The
prices for investors. Such pricing
not unfairly discriminatory. The models may narrow the MIAX Options proposed rule change should enable the
Exchange initially set its taker fees at Bid and Offer (‘‘MBBO’’) because the Exchange to attract, and compete for,
the various volume levels based upon reduced fee for ‘‘makers’’ effectively order flow with other exchanges and the
business determinations and an analysis subsidizes, and thus encourages, the higher fees for removing liquidity will
of current taker fees and volume levels posting of liquidity, while the encourage Market Makers to submit
at other exchanges. When the Exchange assessment of lower fees in higher tiers order flow that adds liquidity, not
initially adopted taker fees,18 it set its to ‘‘takers’’ encourages Market Makers to removes it.
higher tier taker fees much lower than provide order flow. The Exchange The Exchange notes that it operates in
other exchanges in order to encourage believes that this pricing model a highly competitive market in which
its Market Makers to reach for higher provides Market Makers with greater market participants can readily favor
volume levels in order to achieve greater incentive to either match or improve competing venues if they deem fee
discounts. For competitive and business upon the best price displayed on MIAX levels at a particular venue to be
Options, all to the benefit of investors excessive. In such an environment, the
14 See ISE Schedule of Fees, Section I (ISE
and the public in the form of improved Exchange must continually adjust its
assesses Market Makers a taker fee of .44 per
contract in Select Symbols); see also ISE Gemini
execution prices. fees to remain competitive with other
(‘‘Gemini’’) Schedule of Fees, Section I (Gemini Further, the Exchange’s assessment of exchanges and to attract order flow. The
assesses Market Makers a taker fee of $.49 per a higher fee to Market Makers who Exchange believes that the proposed
contract in penny option classes and SPY for Tiers remove liquidity is reasonable, equitable
1 through 3, with Tier 1 being total affiliated rule changes reflect this competitive
member ADV of up to 99,999 contracts, Tier 2 being
and not unfairly discriminatory and environment because they modify the
total affiliated member ADV of between 100,00 [sic] follows a similar line of reasoning. It is Exchange’s fees in a manner that
and 224,999 contracts and Tier 3 being total common practice among options encourages market participants to
affiliated member ADV of between 225,000 and exchanges to differentiate between fees
349,999 contracts and $.48 per contact in penny provide liquidity and to send order flow
options classes and SPY for Tier 4, which is total
for adding liquidity and fees for to the Exchange rather than remove
asabaliauskas on DSK3SPTVN1PROD with NOTICES
affiliated member ADV of 350,000 contracts or removing liquidity, and such
liquidity from the market place.
more); see further Bats BZX Options Exchange differentiation has been accepted as not
(‘‘BATS’’) Fee Schedule, p. 1 (BATS assesses unfairly discriminatory under the Act.20 C. Self-Regulatory Organization’s
Market Maker a taker fee of $.50 per contract in
penny option classes and 1.07 per contract in non-
The Exchange believes that the Statement on Comments on the
penny option classes). differentiation in pricing between Proposed Rule Change Received From
15 15 U.S.C. 78f(b). ‘‘makers’’ and ‘‘takers’’ is appropriate, Members, Participants, or Others
16 15 U.S.C. 78f(b)(4).
17 15 U.S.C. 78f(b)(5). 19 See supra note 14. Written comments were neither
18 See supra note 13. 20 Id. solicited nor received.
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![Federal Register / Vol. 82, No. 45 / Thursday, March 9, 2017 / Notices 13161
III. Date of Effectiveness of the Reference Room, 100 F Street NE., to extend the time within which an
Proposed Rule Change and Timing for Washington, DC 20549 on official Options Trading Permit Holder (‘‘OTP
Commission Action business days between the hours of Holder’’) or Options Trading Permit
The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of such Firm (‘‘OTP Firm’’) must file a Form U5,
effective pursuant to Section filing also will be available for or any amendments thereto. The
19(b)(3)(A)(ii) of the Act,21 and Rule inspection and copying at the principal proposed rule change was published for
19b–4(f)(2) 22 thereunder. At any time office of the Exchange. All comments comment in the Federal Register on July
within 60 days of the filing of the received will be posted without change; 27, 2016.5 The Commission received
proposed rule change, the Commission the Commission does not edit personal two comment letters regarding the
summarily may temporarily suspend identifying information from proposals.6 NYSE responded to the
such rule change if it appears to the submissions. You should submit only NASAA Letter on August 12, 2016.7
Commission that such action is information that you wish to make On October 5, 2016, the Commission
necessary or appropriate in the public available publicly. All submissions instituted proceedings to determine
interest, for the protection of investors, should refer to File Number SR–MIAX– whether to approve or disapprove the
or otherwise in furtherance of the 2017–10, and should be submitted on or proposed rule changes.8 The
purposes of the Act. If the Commission before March 30, 2017. Commission received four additional
takes such action, the Commission shall For the Commission, by the Division of comment letters regarding the
institute proceedings to determine Trading and Markets, pursuant to delegated proposals.9 NYSE responded to the OIA
whether the proposed rule should be authority.23 Letter on October 26, 2016.10 On
approved or disapproved. Eduardo A. Aleman, December 21, 2016, the Commission
Assistant Secretary. designated a longer period of time to
IV. Solicitation of Comments determine whether to approve or
[FR Doc. 2017–04600 Filed 3–8–17; 8:45 am]
Interested persons are invited to disapprove the proposed rule changes.11
BILLING CODE 8011–01–P
submit written data, views, and Thereafter the Commission received one
arguments concerning the foregoing, additional comment letter.12 NYSE
including whether the proposed rule SECURITIES AND EXCHANGE submitted a response on January 16,
change is consistent with the Act. COMMISSION 2017.13 This order approves the
Comments may be submitted by any of proposed rule changes.
[Release No. 34–80154; File Nos. SR–
the following methods: II. Description of the Proposals
NYSEMKT–2016–52 and SR–NYSEArca–
Electronic Comments 2016–103] NYSEMKT–2016–52
• Use the Commission’s Internet Self-Regulatory Organizations; NYSE As set forth in the NYSE MKT Notice,
comment form (http://www.sec.gov/ MKT LLC; NYSE Arca Inc.; Order NYSE MKT proposes to amend its rules
rules/sro.shtml); or Approving Proposed Rule Changes To regarding when a member, member
• Send an email to rule-comments@ Extend the Time Within Which a
sec.gov. Please include File Number SR– Member, Member Organization, an ATP 5 See Securities Exchange Act Release No. 78381
MIAX–2017–10 on the subject line. Holder, OTP Holder, or OTP Firm Must (July 21, 2016), 81 FR 49286 (‘‘NYSE Arca Notice’’).
6 See letters from Judith Shaw, President, North
Paper Comments File a Uniform Termination Notice for American Securities Administrators Association,
• Send paper comments in triplicate Securities Industry Registration (‘‘Form Inc., dated August 3, 2016 (‘‘NASAA Letter’’) and
to Brent J. Fields, Secretary, Securities U5’’) Rick A. Fleming, Investor Advocate and Tracey L.
McNeil, Ombudsman, Office of the Investor
and Exchange Commission, 100 F Street March 3, 2017. Advocate, Commission, dated October 3, 2016
NE., Washington, DC 20549–1090. (‘‘OIA Letter’’), to Brent J. Fields, Secretary,
I. Introduction Securities and Exchange Commission.
All submissions should refer to File 7 See letter from Elizabeth K. King, General
Number SR–MIAX–2017–10. This file On June 16, 2016, NYSE MKT LLC Counsel and Corporate Secretary, New York Stock
number should be included on the (‘‘NYSE MKT’’) filed with the Securities Exchange LLC (‘‘NYSE’’) dated August 12, 2016
subject line if email is used. To help the and Exchange Commission (‘‘NYSE Letter I’’), to Brent J. Fields, Secretary,
(‘‘Commission’’), pursuant to Section Commission.
Commission process and review your 8 See Securities Exchange Act Release No. 79055,
comments more efficiently, please use 19(b)(1) 1 of the Securities Exchange Act
81 FR 70460 (October 12, 2016).
only one method. The Commission will of 1934 (‘‘Act’’) 2 and Rule 19b–4 9 See letters from Kevin Zambrowicz, Associate
post all comments on the Commission’s thereunder,3 a proposed rule change to General Counsel, Securities Industry and Financial
Internet Web site (http://www.sec.gov/ extend the time within which a member Markets Association, dated October 19, 2016
or member organization, or an Amex (‘‘SIFMA Letter’’), Michele Van Tassel, President,
rules/sro.shtml). Copies of the Association of Registration Management (‘‘ARM’’),
submission, all subsequent Trading Permit Holder (‘‘ATP Holder’’) dated November 4, 2016 (‘‘ARM Letter I’’), Edwin
amendments, all written statements must file a Form U5, or any L. Reed, Deputy Director, Alabama Securities
with respect to the proposed rule amendments thereto. The proposed rule Commission, dated November 14, 2016 (‘‘ASC
change was published for comment in Letter’’), and Mike Rothman, President, NASAA,
change that are filed with the dated November 16, 2016 (‘‘NASAA Response’’) to
Commission, and all written the Federal Register on July 7, 2016.4 Brent J. Fields, Secretary, Commission.
communications relating to the On July 14, 2016, NYSE Arca, Inc. 10 See letter from Elizabeth K. King, General
proposed rule change between the (‘‘NYSE Arca’’) (NYSE MKT and NYSE Counsel and Corporate Secretary, NYSE, dated
Arca, each an ‘‘Exchange’’) filed with October 26, 2016 (‘‘NYSE Letter II’’) to Brent J.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Commission and any person, other than Fields, Secretary, Commission.
those that may be withheld from the the Commission, a proposed rule change 11 See Securities Exchange Act Release No. 79645,
public in accordance with the 81 FR 95679 (December 28, 2016).
23 17 CFR 200.30–3(a)(12).
provisions of 5 U.S.C. 552, will be 1 15
12 See letter from Michele Van Tassel, President,
U.S.C. 78s(b)(1). ARM, dated January 4, 2017 (‘‘ARM Letter II’’) to
available for Web site viewing and 2 15 U.S.C. 78a.
Brent J. Fields, Secretary, Commission.
printing in the Commission’s Public 3 17 CFR 240.19b–4. 13 See letter from Elizabeth K. King, General
4 See Securities Exchange Act Release No. 78198 Counsel and Corporate Secretary, NYSE, dated
21 15 U.S.C. 78s(b)(3)(A)(ii). (June 30, 2016), 81 FR 44363 (‘‘NYSE MKT January 16, 2017 (‘‘NYSE Letter III’’) to Brent J.
22 17 CFR 240.19b–4(f)(2). Notice’’). Fields, Secretary, Commission.
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Document Created: 2017-03-09 04:59:04
Document Modified: 2017-03-09 04:59:04
| 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 13157 |
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