82 FR 50171 - 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 208 (October 30, 2017)
Federal Register Volume 82, Issue 208 (October 30, 2017)
| Page Range | 50171-50175 | |
| FR Document | 2017-23482 |
[Federal Register Volume 82, Number 208 (Monday, October 30, 2017)] [Notices] [Pages 50171-50175] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-23482] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81933; File No. SR-MIAX-2017-42] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule October 24, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on October 11, 2017, Miami International Securities Exchange LLC (``MIAX Options'' or ``Exchange'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II 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'') to adopt a fee for the sale of certain historical market data. 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 its Fee Schedule to adopt a fee for the sale of certain historical market data. The historical market data that the Exchange proposes to sell provides information about the past activity of all option products traded on the Exchange for each trading session conducted during a particular calendar month. The data is intended to enhance the user's ability to analyze option trade and volume data, evaluate historical trends in the trading activity of a particular option product, and enable the testing of trading models and analytical strategies. Specifically, the historical market data that the Exchange proposes to sell includes all data that is captured and disseminated on the following proprietary MIAX Options data feeds, on a T+1 basis: MIAX Top of Market data feed (``ToM''); MIAX Order Feed (``MOR''); MIAX Administrative Information Subscriber Feed (``AIS''); and MIAX Complex Top of Market data feed (``cToM'') (``Historical Market Data''). All such proprietary MIAX Options data feeds that, on a T+1 basis, comprise the Historical Market Data are described on the Exchange's Fee Schedule.\3\ --------------------------------------------------------------------------- \3\ See MIAX Fee Schedule, Section 6. --------------------------------------------------------------------------- ToM provides real-time updates of the MIAX Best Bid or Offer, or MBBO,\4\ price with aggregate orders and quote size of contracts that can be displayed, display of Public Customer \5\ interest at the MBBO, display of Priority Customer \6\ interest at the MBBO, and MIAX Options last sale.\7\ MOR provides real-time updates of options orders, products traded on MIAX Options, MIAX Options System \8\ status, and MIAX Options underlying trading status.\9\ AIS provides real-time updates of products traded on MIAX Options, trading status for MIAX Options and products traded on MIAX Options, and liquidity seeking event notifications.\10\ cToM provides real-time updates of MIAX Options strategy best bid or offer, or cMBBO,\11\ price with aggregated complex order sizes of a strategy that can be displayed at that price, and MIAX Options strategy last sale.\12\ --------------------------------------------------------------------------- \4\ The term ``MBBO'' means the best bid or offer on the Exchange. See Exchange Rule 100. See also Exchange Rule 506(c)(2). \5\ The term ``Public Customer'' means a person that is not a broker or dealer in securities. See Exchange Rule 100. \6\ The term ``Priority Customer'' means a person or entity that (i) is not a broker or dealer in securities, and (ii) does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). See Exchange Rule 100. \7\ See Securities Exchange Act Release No. 69007 (February 28, 2013), 78FR 14617 (March 6, 2013) (SR-MIAX-2013-05). \8\ The term ``System'' means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. \9\ See Securities Exchange Act Release No. 74759 (April 17, 2015), 80 FR 22749 (April 23, 2015) (SR-MIAX-2015-28). \10\ See Securities Exchange Act Release No. 73326 (October 9, 2014), 79 FR 62233 (October 16, 2014) (SR-MIAX-2014-51). \11\ See Exchange Rule 506(c)(2). \12\ See Securities Exchange Act Release No. 79146 (October 24, 2016), 81 FR 75171(October 28, 2016) (SR-MIAX-2016-36). --------------------------------------------------------------------------- MIAX Options will only assess the fee for Historical Market Data on a user (whether Member or Non-Member) that specifically requests such Historical Market Data. Historical Market Data will be uploaded onto an Exchange-provided device. The amount of the fee is $500, and it will be assessed on a per device basis. Each device shall have a maximum storage capacity of 8 Terabytes and will be configured to include data for both MIAX Options and MIAX PEARL. Users may request up to six months of Historical Market Data per device, subject to the device's storage capacity. Historical Market Data is available from August 1, 2017 to the present (always on a T+1 basis), [[Page 50172]] however only the most recent six months of Historical Market Data shall be available for purchase from the request date. Historical Market Data usage is restricted to internal use only, and thus may not be distributed to any third-party. The Exchange notes that this filing is substantially similar to a companion MIAX PEARL filing establishing a fee for historical market data on its exchange.\13\ --------------------------------------------------------------------------- \13\ See SR-PEARL-2017-35 (filed on October 11, 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 particular, in that it is an equitable allocation of reasonable dues, fees and other charges among Exchange members and issuers and other persons using its facilities. The proposal provides for the equitable allocation of reasonable fees and other charges among Exchange members and other persons using its facilities because all persons and entities will have equal access to Historical Market Data. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The Exchange believes the proposed fees are a reasonable allocation of its costs and expenses among its Members and other persons using its facilities since it is recovering the costs associated with distributing such data. Access to the Exchange is provided on fair and non-discriminatory terms. The Exchange believes the proposed fees are equitable and not unfairly discriminatory because the fee level results in a reasonable and equitable allocation of fees amongst users for similar services. Moreover, the decision as to whether or not to purchase Historical Market Data is entirely optional to all users. Potential purchasers are not required to purchase the Historical Market Data, and the Exchange is not required to make the Historical Market Data available. Purchasers may request the data at any time or may decline to purchase such data. The allocation of fees among users is fair and reasonable because, if the market deems the proposed fees to be unfair or inequitable, firms can diminish or discontinue their use of this data. In adopting Regulation NMS, the Commission granted self-regulatory organizations and broker-dealers increased authority and flexibility to offer new and unique market data to the public. It was believed that this authority would expand the amount of data available to consumers, and also spur innovation and competition for the provision of market data: ``[E]fficiency is promoted when broker-dealers who do not need the data beyond the prices, sizes, market center identifications of the NBBO and consolidated last sale information are not required to receive (and pay for) such data when broker-dealers may choose to receive (and pay for) additional market data based on their own internal analysis of the need for such data.'' \16\ --------------------------------------------------------------------------- \16\ See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005). By removing ``unnecessary regulatory restrictions'' on the ability of exchanges to sell their own data, Regulation NMS advanced the goals of the Act and the principles reflected in its legislative history. If the free market should determine whether proprietary data is sold to broker-dealers at all, it follows that the price at which such data is sold should be set by the market as well. In July, 2010, Congress adopted H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act''), which amended Section 19 of the Act. Among other things, Section 916 of the Dodd-Frank Act amended paragraph (A) of Section 19(b)(3) of the Act by inserting the phrase ``on any person, whether or not the person is a member of the self-regulatory organization'' after ``due, fee or other charge imposed by the self-regulatory organization.'' As a result, all SRO rule proposals establishing or changing dues, fees or other charges are immediately effective upon filing regardless of whether such dues, fees or other charges are imposed on members of the SRO, non-members, or both. Section 916 further amended paragraph (C) of Section 19(b)(3) of the Act to read, in pertinent part, ``At any time within the 60-day period beginning on the date of filing of such a proposed rule change in accordance with the provisions of paragraph (1) [of Section 19(b)], the Commission summarily may temporarily suspend the change in the rules of the self-regulatory organization made thereby, 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 this title. If the Commission takes such action, the Commission shall institute proceedings under paragraph (2)(B) [of Section 19(b)] to determine whether the proposed rule should be approved or disapproved.'' The Exchange believes that these amendments to Section 19 of the Act reflect Congress's intent to allow the Commission to rely upon the forces of competition to ensure that fees for market data are reasonable and equitably allocated. Although Section 19(b) had formerly authorized immediate effectiveness for a ``due, fee or other charge imposed by the self-regulatory organization,'' the Commission adopted a policy and subsequently a rule stating that fees for data and other products available to persons that are not members of the self- regulatory organization must be approved by the Commission after first being published for comment. At the time, the Commission supported the adoption of the policy and the rule by pointing out that unlike members, whose representation in self-regulatory organization governance was mandated by the Act, non-members should be given the opportunity to comment on fees before being required to pay them, and that the Commission should specifically approve all such fees. The Exchange believes that the amendment to Section 19 reflects Congress's conclusion that the evolution of self-regulatory organization governance and competitive market structure have rendered the Commission's prior policy on non-member fees obsolete. Specifically, many exchanges have evolved from member-owned, not-for-profit corporations into for-profit, investor-owned corporations (or subsidiaries of investor-owned corporations). Accordingly, exchanges no longer have narrow incentives to manage their affairs for the exclusive benefit of their members, but rather have incentives to maximize the appeal of their products to all customers, whether members or non- members, so as to broaden distribution and grow revenues. Moreover, the Exchange believes that the change also reflects an endorsement of the Commission's determinations that reliance on competitive markets is an appropriate means to ensure equitable and reasonable prices. Simply put, the change reflects a presumption that all fee changes should be permitted to take effect immediately, since the level of all fees are constrained by competitive forces. Selling proprietary market data, such as Historical Market Data, is a means by which exchanges compete to attract business. To the extent that exchanges are successful in such competition, they earn trading revenues and also enhance the value of their data products by increasing the amount of data they provide. The need to compete for business places substantial pressure [[Page 50173]] upon exchanges to keep their fees for both executions and data reasonable.\17\ The Exchange therefore believes that the fees for Historical Market Data are properly assessed on Members and Non-Member users. --------------------------------------------------------------------------- \17\ See Sec. Indus. Fin. Mkts. Ass'n (SIFMA), Initial Decision Release No. 1015, 2016 SEC LEXIS 2278 (ALJ June 1, 2016) (finding the existence of vigorous competition with respect to non-core market data). --------------------------------------------------------------------------- The decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC, No. 09-1042 (D.C. Cir. 2010), although reviewing a Commission decision made prior to the effective date of the Dodd-Frank Act, upheld the Commission's reliance upon competitive markets to set reasonable and equitably allocated fees for market data: ``In fact, the legislative history indicates that the Congress intended that the market system `evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed' and that the SEC wield its regulatory power `in those situations where competition may not be sufficient,' such as in the creation of a `consolidated transactional reporting system.' '' \18\ --------------------------------------------------------------------------- \18\ NetCoalition, at 15 (quoting H.R. Rep. No. 94-229, at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323). The court's conclusions about Congressional intent are therefore reinforced by the Dodd-Frank Act amendments, which create a presumption that exchange fees, including market data fees, may take effect immediately, without prior Commission approval, and that the Commission should take action to suspend a fee change and institute a proceeding to determine whether the fee change should be approved or disapproved only where the Commission has concerns that the change may not be consistent with the Act. 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. Indeed, the Exchange believes that offering certain Historical Market Data will enhance competition by encouraging sales, which will make analytical data more readily available to investors. Notwithstanding its determination that the Commission may rely upon competition to establish fair and equitably allocated fees for market data, the NetCoalition Court found that the Commission had not, in that case, compiled a record that adequately supported its conclusion that the market for the data at issue in the case was competitive. The Exchange believes that a record may readily be established to demonstrate the competitive nature of the market in question. The market for data products is extremely competitive and users may freely choose alternative venues and data vendors based on the aggregate fees assessed, the data offered, and the value provided. Numerous exchanges compete with each other for listings, trades, and market data itself, providing virtually limitless opportunities for entrepreneurs who wish to produce and distribute their own market data. Transaction execution and proprietary data products are complementary in that market data is both an input and a byproduct of the execution service. In fact, market data and trade execution are a paradigmatic example of joint products with joint costs. The decision whether and on which platform to post an order will depend on the attributes of the platform where the order can be posted, including the execution fees, data quality and price, and distribution of its data products. Without trade executions, exchange data products cannot exist. Moreover, data products are valuable to many end users only insofar as they provide information that end users expect will assist them or their customers in making trading decisions. The costs of producing market data include not only the costs of the data distribution infrastructure, but also the costs of designing, maintaining, and operating the exchange's transaction execution platform and the cost of regulating the exchange to ensure its fair operation and maintain investor confidence. The total return that a trading platform earns reflects the revenues it receives from both products and the joint costs it incurs. Moreover, the operation of the Exchange is characterized by high fixed costs and low marginal costs. This cost structure is common in content distribution industries such as software, where developing new software typically requires a large initial investment (and continuing large investments to upgrade software), but once the software is developed, the incremental cost of providing that software to an additional user is typically small, or even zero (e.g., if the software can be downloaded over the internet after being purchased).\19\ In the case of any exchange, it is costly to build and maintain a trading platform, but the incremental cost of trading each additional share on an existing platform, or distributing an additional instance of data, is very low. Market information and executions are each produced jointly (in the sense that the activities of trading and placing orders are the source of the information that is distributed) and are each subject to significant scale economies. --------------------------------------------------------------------------- \19\ See William J. Baumol and Daniel G. Swanson, ``The New Economy and Ubiquitous Competitive Price Discrimination: Identifying Defensible Criteria of Market Power,'' Antitrust Law Journal, Vol. 70, No. 3 (2003). --------------------------------------------------------------------------- Competition among trading platforms can be expected to constrain the aggregate return each platform earns from the sale of its joint products. The level of competition and contestability in the market is evidence in the numerous alternative venues that compete for order flow, including SRO markets, as well as internalizing BDs and various forms of alternative trading systems (``ATSs''), including dark pools and electronic communication networks (``ECNs''). Each SRO market competes to produce transaction reports via trade executions. It is common for BDs to further and exploit this competition by sending their order flow and transaction reports to multiple markets, rather than providing them all to a single market. Competitive markets for order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products. The large number of SROs, TRFs, BDs, and ATSs that currently produce proprietary data or are currently capable of producing it provides further pricing discipline for proprietary data products. Each SRO, TRF, ATS, and BD is currently permitted to produce proprietary data products, and many currently do or have announced plans to do so, including the Nasdaq exchanges, NYSE exchanges, and CBOE/Bats exchanges. In this competitive environment, an ``excessive'' price for one product will have to be reflected in lower prices for other products sold by the Exchange, or otherwise the Exchange may experience a loss in sales that may adversely affect its profitability. In this case, the proposed rule change enhances competition by providing Historical Market Data at a fixed price. As such, the Exchange believes that the proposed changes will enhance, not impair, competition in the financial markets. The market for market data products is competitive and inherently contestable because there is fierce competition for the inputs necessary to the creation of proprietary data and strict pricing discipline for the [[Page 50174]] proprietary products themselves. Numerous exchanges compete with each other for listings, trades, and market data itself, providing virtually limitless opportunities for entrepreneurs who wish to produce and distribute their own market data. This proprietary data is produced by each individual exchange, as well as other entities, in a vigorously competitive market. Broker-dealers currently have numerous alternative venues for their order flow, including fifteen existing options markets. Each SRO market competes to produce transaction reports via trade executions. Competitive markets for order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products. The large number of SROs that currently produce proprietary data or are currently capable of producing it provides further pricing discipline for proprietary data products. Each SRO is currently permitted to produce proprietary data products, and many in addition to MIAX Options currently do, including NASDAQ, CBOE, Nasdaq ISE, NYSE American, and NYSE Arca. Additionally, order routers and market data vendors can facilitate single or multiple broker-dealers' production of proprietary data products. The potential sources of proprietary products are virtually limitless. Market data vendors provide another form of price discipline for proprietary data products because they control the primary means of access to end subscribers. Vendors impose price restraints based upon their business models. For example, vendors such as Bloomberg and Thomson Reuters that assess a surcharge on data they sell may refuse to offer proprietary products that end subscribers will not purchase in sufficient numbers. Internet portals, such as Google, impose a discipline by providing only data that will enable them to attract ``eyeballs'' that contribute to their advertising revenue. Retail broker-dealers, such as Schwab and Fidelity, offer their customers proprietary data only if it promotes trading and generates sufficient commission revenue. Although the business models may differ, these vendors' pricing discipline is the same: they can simply refuse to purchase any proprietary data product that fails to provide sufficient value. The Exchange and other producers of proprietary data products must understand and respond to these varying business models and pricing disciplines in order to market proprietary data products successfully. In addition to the competition and price discipline described above, the market for proprietary data products is also highly contestable because market entry is rapid, inexpensive, and profitable. The history of electronic trading is replete with examples of entrants that swiftly grew into some of the largest electronic trading platforms and proprietary data producers: Archipelago, BATS Trading and Direct Edge. Regulation NMS, by deregulating the market for proprietary data, has increased the contestability of that market. While broker-dealers have previously published their proprietary data individually, Regulation NMS encourages market data vendors and broker-dealers to produce proprietary products cooperatively in a manner never before possible. Multiple market data vendors already have the capability to aggregate data and disseminate it on a profitable scale, including Bloomberg, and Thomson Reuters. The Court in NetCoalition concluded that the Commission had failed to demonstrate that the market for market data was competitive based on the reasoning of the Commission's NetCoalition order because, in the Court's view, the Commission had not adequately demonstrated that the proprietary data at issue in the case is used to attract order flow. The Exchange believes, however, that evidence not then before the court clearly demonstrates that availability of data attracts order flow. Due to competition among platforms, the Exchange intends to improve its platform data offerings on a continuing basis, and to respond promptly to customers' data needs. The intensity of competition for proprietary information is significant and the Exchange believes that this proposal itself clearly evidences such competition. The Exchange is offering Historical Market Data in order to keep pace with changes in the industry and evolving customer needs. It is entirely optional and is geared towards attracting new order flow. MIAX Options competitors continue to create new market data products and innovative pricing in this space. In all cases, the Exchange expects firms and other parties to make decisions on how much and what types of data to consume on the basis of the total cost of interacting with MIAX Options or other exchanges. Of course, the explicit data fees are only one factor in a total platform analysis. Some competitors have lower transactions fees and higher data fees, and others are vice versa. The market for this proprietary information is highly competitive and continually evolves as products develop and change. 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 is effective pursuant to Section 19(b)(3)(A)(ii) of the Act,\20\ and subparagraph (f)(2) of Rule 19b-4 \21\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such 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 under Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A)(ii). \21\ 17 CFR 240.19b-4(f)(2). \22\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- 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-2017-42 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-2017-42. 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 [[Page 50175]] 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-MIAX-2017-42 and should be submitted on or before November 20, 2017. --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ Robert W. Errett, Deputy Secretary. [FR Doc. 2017-23482 Filed 10-27-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Notices 50171
hours is made solely for the purposes of comments on the proposed rule change described on the Exchange’s Fee
the Paperwork Reduction Act, and is not from interested persons. Schedule.3
derived from a comprehensive or even ToM provides real-time updates of the
I. Self-Regulatory Organization’s
a representative survey or study of the MIAX Best Bid or Offer, or MBBO,4
Statement of the Terms of Substance of
costs of Commission rules. price with aggregate orders and quote
the Proposed Rule Change
Compliance with the collection of size of contracts that can be displayed,
information required by Form 24F–2 is The Exchange is filing a proposal to display of Public Customer 5 interest at
mandatory. The Form 24F–2 filing that amend the MIAX Options Fee Schedule the MBBO, display of Priority
must be made to the Commission is (the ‘‘Fee Schedule’’) to adopt a fee for Customer 6 interest at the MBBO, and
available to the public. An agency may the sale of certain historical market data. MIAX Options last sale.7 MOR provides
not conduct or sponsor, and a person is The text of the proposed rule change real-time updates of options orders,
not required to respond to, a collection is available on the Exchange’s Web site products traded on MIAX Options,
of information unless it displays a at http://www.miaxoptions.com/rule- MIAX Options System 8 status, and
currently valid control number. filings, at MIAX’s principal office, and MIAX Options underlying trading
The public may view the background at the Commission’s Public Reference status.9 AIS provides real-time updates
documentation for this information Room. of products traded on MIAX Options,
collection at the following Web site, II. Self-Regulatory Organization’s trading status for MIAX Options and
www.reginfo.gov. Comments should be Statement of the Purpose of, and products traded on MIAX Options, and
directed to: (i) Desk Officer for the Statutory Basis for, the Proposed Rule liquidity seeking event notifications.10
Securities and Exchange Commission, Change cToM provides real-time updates of
Office of Information and Regulatory MIAX Options strategy best bid or offer,
Affairs, Office of Management and In its filing with the Commission, the or cMBBO,11 price with aggregated
Budget, Room 10102, New Executive Exchange included statements complex order sizes of a strategy that
Office Building, Washington, DC 20503, concerning the purpose of and basis for can be displayed at that price, and
or by sending an email to: Shagufta_ the proposed rule change and discussed MIAX Options strategy last sale.12
Ahmed@omb.eop.gov; and (ii) Pamela any comments it received on the MIAX Options will only assess the fee
Dyson, Director/Chief Information proposed rule change. The text of these for Historical Market Data on a user
Officer, Securities and Exchange statements may be examined at the (whether Member or Non-Member) that
Commission, c/o Remi Pavlik-Simon, places specified in Item IV below. The specifically requests such Historical
100 F Street NE., Washington, DC 20549 Exchange has prepared summaries, set Market Data. Historical Market Data will
or send an email to: PRA_Mailbox@ forth in sections A, B, and C below, of be uploaded onto an Exchange-provided
sec.gov. Comments must be submitted to the most significant aspects of such device. The amount of the fee is $500,
OMB within 30 days of this notice. statements. and it will be assessed on a per device
October 24, 2017. A. Self-Regulatory Organization’s basis. Each device shall have a
Eduardo A. Aleman, Statement of the Purpose of, and maximum storage capacity of 8
Statutory Basis for, the Proposed Rule Terabytes and will be configured to
Assistant Secretary.
Change include data for both MIAX Options and
[FR Doc. 2017–23471 Filed 10–27–17; 8:45 am]
MIAX PEARL. Users may request up to
BILLING CODE 8011–01–P 1. Purpose six months of Historical Market Data per
The Exchange proposes to amend its device, subject to the device’s storage
Fee Schedule to adopt a fee for the sale capacity. Historical Market Data is
SECURITIES AND EXCHANGE
of certain historical market data. available from August 1, 2017 to the
COMMISSION
The historical market data that the present (always on a T+1 basis),
[Release No. 34–81933; File No. SR–MIAX– Exchange proposes to sell provides
2017–42] information about the past activity of all
3 See MIAX Fee Schedule, Section 6.
4 The term ‘‘MBBO’’ means the best bid or offer
option products traded on the Exchange
Self-Regulatory Organizations; Miami on the Exchange. See Exchange Rule 100. See also
for each trading session conducted Exchange Rule 506(c)(2).
International Securities Exchange LLC;
during a particular calendar month. The 5 The term ‘‘Public Customer’’ means a person
Notice of Filing and Immediate
data is intended to enhance the user’s that is not a broker or dealer in securities. See
Effectiveness of a Proposed Rule Exchange Rule 100.
ability to analyze option trade and
Change To Amend Its Fee Schedule 6 The term ‘‘Priority Customer’’ means a person
volume data, evaluate historical trends or entity that (i) is not a broker or dealer in
October 24, 2017. in the trading activity of a particular securities, and (ii) does not place more than 390
Pursuant to Section 19(b)(1) of the option product, and enable the testing of orders in listed options per day on average during
trading models and analytical strategies. a calendar month for its own beneficial account(s).
Securities Exchange Act of 1934 (the See Exchange Rule 100.
‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Specifically, the historical market data 7 See Securities Exchange Act Release No. 69007
notice is hereby given that on October that the Exchange proposes to sell (February 28, 2013), 78FR 14617 (March 6, 2013)
11, 2017, Miami International Securities includes all data that is captured and (SR–MIAX–2013–05).
Exchange LLC (‘‘MIAX Options’’ or disseminated on the following 8 The term ‘‘System’’ means the automated
proprietary MIAX Options data feeds, trading system used by the Exchange for the trading
‘‘Exchange’’) filed with the Securities of securities. See Exchange Rule 100.
and Exchange Commission (the on a T+1 basis: MIAX Top of Market 9 See Securities Exchange Act Release No. 74759
data feed (‘‘ToM’’); MIAX Order Feed
sradovich on DSK3GMQ082PROD with NOTICES
‘‘Commission’’) the proposed rule (April 17, 2015), 80 FR 22749 (April 23, 2015) (SR–
change as described in Items I and II (‘‘MOR’’); MIAX Administrative MIAX–2015–28).
below, which Items have been prepared Information Subscriber Feed (‘‘AIS’’); 10 See Securities Exchange Act Release No. 73326
and MIAX Complex Top of Market data (October 9, 2014), 79 FR 62233 (October 16, 2014)
by the Exchange. The Commission is (SR–MIAX–2014–51).
publishing this notice to solicit feed (‘‘cToM’’) (‘‘Historical Market 11 See Exchange Rule 506(c)(2).
Data’’). All such proprietary MIAX 12 See Securities Exchange Act Release No. 79146
1 15 U.S.C. 78s(b)(1). Options data feeds that, on a T+1 basis, (October 24, 2016), 81 FR 75171(October 28, 2016)
2 17 CFR 240.19b–4. comprise the Historical Market Data are (SR–MIAX–2016–36).
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![50172 Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Notices
however only the most recent six public. It was believed that this reflect Congress’s intent to allow the
months of Historical Market Data shall authority would expand the amount of Commission to rely upon the forces of
be available for purchase from the data available to consumers, and also competition to ensure that fees for
request date. Historical Market Data spur innovation and competition for the market data are reasonable and
usage is restricted to internal use only, provision of market data: equitably allocated. Although Section
and thus may not be distributed to any ‘‘[E]fficiency is promoted when broker- 19(b) had formerly authorized
third-party. dealers who do not need the data beyond the immediate effectiveness for a ‘‘due, fee
The Exchange notes that this filing is prices, sizes, market center identifications of or other charge imposed by the self-
substantially similar to a companion the NBBO and consolidated last sale regulatory organization,’’ the
MIAX PEARL filing establishing a fee information are not required to receive (and Commission adopted a policy and
for historical market data on its pay for) such data when broker-dealers may subsequently a rule stating that fees for
exchange.13 choose to receive (and pay for) additional
market data based on their own internal
data and other products available to
2. Statutory Basis analysis of the need for such data.’’ 16 persons that are not members of the self-
regulatory organization must be
The Exchange believes that its By removing ‘‘unnecessary regulatory approved by the Commission after first
proposal to amend its fee schedule is restrictions’’ on the ability of exchanges being published for comment. At the
consistent with Section 6(b) of the Act 14 to sell their own data, Regulation NMS time, the Commission supported the
in general, and furthers the objectives of advanced the goals of the Act and the adoption of the policy and the rule by
Section 6(b)(4) of the Act 15 in principles reflected in its legislative pointing out that unlike members,
particular, in that it is an equitable history. If the free market should whose representation in self-regulatory
allocation of reasonable dues, fees and determine whether proprietary data is organization governance was mandated
other charges among Exchange members sold to broker-dealers at all, it follows by the Act, non-members should be
and issuers and other persons using its that the price at which such data is sold given the opportunity to comment on
facilities. The proposal provides for the should be set by the market as well. fees before being required to pay them,
equitable allocation of reasonable fees In July, 2010, Congress adopted H.R.
and that the Commission should
and other charges among Exchange 4173, the Dodd-Frank Wall Street
specifically approve all such fees. The
members and other persons using its Reform and Consumer Protection Act of
Exchange believes that the amendment
facilities because all persons and 2010 (‘‘Dodd-Frank Act’’), which
to Section 19 reflects Congress’s
entities will have equal access to amended Section 19 of the Act. Among
conclusion that the evolution of self-
Historical Market Data. other things, Section 916 of the Dodd-
regulatory organization governance and
The Exchange believes the proposed Frank Act amended paragraph (A) of
competitive market structure have
fees are a reasonable allocation of its Section 19(b)(3) of the Act by inserting
rendered the Commission’s prior policy
costs and expenses among its Members the phrase ‘‘on any person, whether or
on non-member fees obsolete.
and other persons using its facilities not the person is a member of the self-
Specifically, many exchanges have
since it is recovering the costs regulatory organization’’ after ‘‘due, fee
evolved from member-owned, not-for-
associated with distributing such data. or other charge imposed by the self-
profit corporations into for-profit,
Access to the Exchange is provided on regulatory organization.’’ As a result, all
investor-owned corporations (or
fair and non-discriminatory terms. The SRO rule proposals establishing or
subsidiaries of investor-owned
Exchange believes the proposed fees are changing dues, fees or other charges are
corporations). Accordingly, exchanges
equitable and not unfairly immediately effective upon filing
no longer have narrow incentives to
discriminatory because the fee level regardless of whether such dues, fees or
manage their affairs for the exclusive
results in a reasonable and equitable other charges are imposed on members
benefit of their members, but rather
allocation of fees amongst users for of the SRO, non-members, or both.
have incentives to maximize the appeal
similar services. Moreover, the decision Section 916 further amended paragraph
of their products to all customers,
as to whether or not to purchase (C) of Section 19(b)(3) of the Act to read,
whether members or non-members, so
Historical Market Data is entirely in pertinent part, ‘‘At any time within
as to broaden distribution and grow
optional to all users. Potential the 60-day period beginning on the date
revenues. Moreover, the Exchange
purchasers are not required to purchase of filing of such a proposed rule change
believes that the change also reflects an
the Historical Market Data, and the in accordance with the provisions of
endorsement of the Commission’s
Exchange is not required to make the paragraph (1) [of Section 19(b)], the
determinations that reliance on
Historical Market Data available. Commission summarily may
competitive markets is an appropriate
Purchasers may request the data at any temporarily suspend the change in the
means to ensure equitable and
time or may decline to purchase such rules of the self-regulatory organization
reasonable prices. Simply put, the
data. The allocation of fees among users made thereby, if it appears to the
change reflects a presumption that all
is fair and reasonable because, if the Commission that such action is
fee changes should be permitted to take
market deems the proposed fees to be necessary or appropriate in the public
effect immediately, since the level of all
unfair or inequitable, firms can interest, for the protection of investors,
fees are constrained by competitive
diminish or discontinue their use of this or otherwise in furtherance of the
forces.
data. purposes of this title. If the Commission
takes such action, the Commission shall Selling proprietary market data, such
In adopting Regulation NMS, the
institute proceedings under paragraph as Historical Market Data, is a means by
Commission granted self-regulatory
which exchanges compete to attract
sradovich on DSK3GMQ082PROD with NOTICES
organizations and broker-dealers (2)(B) [of Section 19(b)] to determine
whether the proposed rule should be business. To the extent that exchanges
increased authority and flexibility to
approved or disapproved.’’ are successful in such competition, they
offer new and unique market data to the
The Exchange believes that these earn trading revenues and also enhance
13 See SR–PEARL–2017–35 (filed on October 11, amendments to Section 19 of the Act the value of their data products by
2017). increasing the amount of data they
14 15 U.S.C. 78f(b). 16 See Securities Exchange Act Release No. 51808 provide. The need to compete for
15 15 U.S.C. 78f(b)(4). (June 9, 2005), 70 FR 37496 (June 29, 2005). business places substantial pressure
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![Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Notices 50175
with respect to the proposed rule comments on the proposed rule change (A) Self-Regulatory Organization’s
change that are filed with the from interested persons. Statement of the Purpose of, and
Commission, and all written Statutory Basis for, the Proposed Rule
communications relating to the I. Self-Regulatory Organization’s Change
proposed rule change between the Statement of the Terms of Substance of
the Proposed Rule Change 1. Purpose
Commission and any person, other than
those that may be withheld from the EDGA recently amended its Restated
The Exchange seeks to amend its Certificate of Incorporation in
public in accordance with the Second Amended and Restated
provisions of 5 U.S.C. 552, will be connection with a corporate transaction
Certificate of Incorporation. The text of (the ‘‘Transaction’’) involving, among
available for Web site viewing and the proposed rule change is provided
printing in the Commission’s Public other things, the recent acquisition of
below. EDGA, along with Bats BYX Exchange,
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official (additions are italicized; deletions are Inc. (‘‘Bats BYX’’), Bats BZX Exchange,
business days between the hours of [bracketed]) Inc. (‘‘Bats BZX’’), and Bats EDGX
10:00 a.m. and 3:00 p.m. Copies of the Exchange, Inc. (‘‘Bats EDGX’’ and,
* * * * *
filing also will be available for together with Bats EDGA, Bats BYX, and
inspection and copying at the principal Second Amended and Restated Bats BZX, the ‘‘Bats Exchanges’’) by
office of the Exchange. All comments Certificate of Incorporation of Bats CBOE Holdings, Inc. (‘‘CBOE
received will be posted without change. EDGA Exchange, Inc. Holdings’’). CBOE Holdings is also the
Persons submitting comments are parent of Chicago Board Options
cautioned that we do not redact or edit The name of the corporation is Bats Exchange, Incorporated (‘‘CBOE’’) and
personal identifying information from EDGA Exchange, Inc. The corporation C2 Options Exchange, Incorporated
comment submissions. You should filed its original Certificate of (‘‘C2’’). Particularly, the filing proposed,
submit only information that you wish Incorporation with the Secretary of State among other things, to amend and
to make available publicly. All of the State of Delaware on March 9, restate the certificate of incorporation of
submissions should refer to File 2009 under the name EDGA Exchange, the Exchange based on certificates of
Number SR–MIAX–2017–42 and should Inc. This Second Amended and Restated incorporation of CBOE and C2.3 The
be submitted on or before November 20, Certificate of Incorporation of the Exchange notes that in conforming the
2017. corporation, which restates and Exchange’s Certificate to the certificates
integrates and also further amends the of CBOE and C2, it inadvertently (1) did
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
provisions of the corporation’s Restated not comply with a provision of
authority.23 Certificate of Incorporation, was duly Delaware law and (ii) referred to an
Robert W. Errett, adopted in accordance with the inaccurate version of the Certificate in
provisions of Sections 242 and 245 of the introductory paragraph. The
Deputy Secretary.
the General Corporation Law of the Exchange seeks to correct those errors.
[FR Doc. 2017–23482 Filed 10–27–17; 8:45 am] Particularly, Section 245(c) of the
State of Delaware and by the written
BILLING CODE 8011–01–P
consent of its sole stockholder in Delaware General Corporation Law
accordance with Section 228 of the (DGCL) requires that a restated
General Corporation Law of the State of certificate of incorporation ‘‘shall state,
SECURITIES AND EXCHANGE either in its heading or in an
COMMISSION Delaware. The [Second Amended and]
Restated Certificate of Incorporation of introductory paragraph, the
[Release No. 34–81936; File No. SR– the corporation is hereby amended, corporation’s present name, and, if it
BatsEDGA–2017–27] integrated and restated to read in its has been changed, the name under
entirety as follows: which it was originally incorporated,
Self-Regulatory Organizations; Bats and the date of filing of its original
EDGA Exchange, Inc.; Notice of Filing * * * * * certificate of incorporation with the
and Immediate Effectiveness of a The text of the proposed rule change secretary of state.’’ The Exchange notes
Proposed Rule Change To Make is available at the Exchange’s Web site that the conformed Certificate did not
Technical Corrections to Its Second at www.bats.com, at the principal office reference the name under which the
Amended and Restated Certificate of of the Exchange, and at the corporation was originally incorporated
Incorporation Commission’s Public Reference Room. (i.e., ‘‘EDGA Exchange, Inc.’’). In order
to comply with Section 245(c) of the
October 24, 2017. II. Self-Regulatory Organization’s DGCL, the Exchange proposes to amend
Pursuant to Section 19(b)(1) of the Statement of the Purpose of, and its Certificate to add a reference to its
Securities Exchange Act of 1934 (the Statutory Basis for, the Proposed Rule original name.
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Change The Exchange also notes that it
notice is hereby given that on October inadvertently did not reference the
13, 2017, Bats EDGA Exchange, Inc. (the In its filing with the Commission, the
Exchange included statements correct version of the Certificate in two
‘‘Exchange’’ or ‘‘EDGA’’) filed with the places in the introductory paragraph.
Securities and Exchange Commission concerning the purpose of and basis for
Particularly, the Exchange notes that the
(‘‘Commission’’) the proposed rule the proposed rule change and discussed
third sentence of the introductory
any comments it received on the
sradovich on DSK3GMQ082PROD with NOTICES
change as described in Items I, II and III paragraph provides that the Second
below, which Items have been prepared proposed rule change. The text of these
Amended and Restated Certificate of
by the Exchange. The Commission is statements may be examined at the
Incorporation of the corporation restated
publishing this notice to solicit places specified in Item IV below. The
and integrated and also further amended
Exchange has prepared summaries, set
23 17 CFR 200.30–3(a)(12). forth in Sections A, B, and C below, of 3 See Securities Exchange Act Release No. 81496
1 15 U.S.C. 78s(b)(1). the most significant parts of such (August 30, 2017), 82 FR 42206 (September 6, 2017)
2 17 CFR 240.19b–4. statements. (SR–BatsEDGA–2017–22).
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Document Created: 2017-10-28 00:29:12
Document Modified: 2017-10-28 00:29:12
| 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 50171 |
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