83 FR 12063 - 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 83, Issue 53 (March 19, 2018)
Federal Register Volume 83, Issue 53 (March 19, 2018)
| Page Range | 12063-12066 | |
| FR Document | 2018-05453 |
[Federal Register Volume 83, Number 53 (Monday, March 19, 2018)] [Notices] [Pages 12063-12066] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-05453] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82868; File No. SR-MIAX-2018-08] 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 13, 2018. 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 28, 2018, 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 website 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 Fee Schedule to modify certain aspects of the following fees that apply to MIAX Options Market Makers: (i) The Monthly Trading Permit fees; and (ii) the MEI Port fees. The Exchange issues Trading Permits that confer the ability to transact on the Exchange.\3\ Currently, the Exchange assesses the following monthly fees for MIAX Options Market Maker Trading Permits: (i) $7,000 for Market Maker Assignments in up to 10 option classes or up to 20% of option classes by volume; (ii) $12,000 for Market Maker Assignments in up to 40 option classes or up to 35% of option classes by volume; (iii) $17,000 for Market Maker Assignments in up to 100 option classes or up to 50% of option classes by volume; and (iv) $22,000.00 for Market Maker Assignments in over 100 option classes or over 50% of option classes by volume up to all option classes listed on MIAX Options.\4\ For the calculation of these monthly Trading Permit fees, the number of classes is defined as the greatest number of classes the Market Maker was assigned to quote in on any given day within the calendar month and the class volume percentage is based on the total national average daily volume in classes listed on MIAX Options in the prior calendar quarter.\5\ Newly listed option classes are excluded from the calculation of the monthly Market Maker Trading Permit fee until the calendar quarter following their listing, at which time the newly listed option classes will be included in both the per class count and the percentage of total national average daily volume. --------------------------------------------------------------------------- \3\ There is no limit on the number of Trading Permits that may be issued by the Exchange; however, the Exchange has the authority to limit or decrease the number of Trading Permits it has determined to issue provided it complies with the provisions set forth in Rule 200(a) and Section 6(c)(4) of the Exchange Act. See 15 U.S.C. 78(f)(c)(4). For a complete description of MIAX Options Trading Permits, see MIAX Rule 200. \4\ See the Fee Schedule, Section 3(b). \5\ The Exchange will use the following formula to calculate the percentage of total national average daily volume that the Market Maker assignment is for purposes of the Market Maker trading permit fee for a given month: Market Maker assignment percentage of national average daily volume = [total volume during the prior calendar quarter in a class in which the Market Maker was assigned]/[total national volume in classes listed on MIAX Options in the prior calendar quarter]. --------------------------------------------------------------------------- The Exchange assesses Market Makers the monthly Trading Permit fee based on the greatest number of classes listed on MIAX Options that the Market Maker was assigned to quote on any given day within a calendar month and the applicable fee rate that is the lesser of either the per class basis or percentage of total national average daily volume measurement. Members receiving Trading Permits during the month will be assessed Trading Permit fees according to this schedule, except that the calculation of the Trading Permit fee for the first month in which the Trading Permit is issued will be pro-rated based on the number of trading days occurring after the date on which the Trading Permit was in effect during that first month divided by the total number of trading days in such month multiplied by the monthly rate. The Exchange now proposes to modify its Trading Permit fees that apply to the Market Makers who fall within the following Trading Permit fee levels, which represent the 3rd and 4th levels of the fee table: (i) Market Maker Assignments in up to 100 option classes or up to 50% of option classes by volume; and (ii) Market Maker Assignments in over 100 option classes or over 50% of option classes by volume up to all option classes listed on MIAX Options. Specifically, the Exchange proposes for these Monthly Trading Permit Fee levels, if the Market Maker's total monthly executed volume during the relevant month is less than 0.075% of the total monthly executed volume reported by OCC in the market maker account type for MIAX-listed option classes for that month, then the fee will be $15,500 instead of the fee otherwise applicable to such level. The purpose of this proposed change is to provide a lower fixed cost to those Market Makers who are willing to quote the entire Exchange market (or substantial amount of the Exchange market), as objectively measured by either number of classes assigned or national ADV, but who do not otherwise execute a significant amount of volume on the Exchange. The Exchange believes that, by offering lower fixed costs to Market Makers that execute less volume, the Exchange will retain and attract smaller-scale Market Makers, which are an integral component of the option marketplace, but have been decreasing in number in recent years, due to industry consolidation and lower market maker profitability. Since these [[Page 12064]] smaller-scale Market Makers utilize less Exchange capacity due to lower overall volume executed, the Exchange believes it is reasonable and equitable to offer such Market Makers a lower fixed cost. The Exchange notes that other options exchanges assess certain of their membership fees at different rates, based upon a member's participation on that exchange,\6\ and, as such, this concept is not novel. The proposed changes to the Trading Permit fees for Market Makers who fall within the 3rd and 4th levels of the fee table are based upon a business determination of current Market Maker assignments and trading volume. --------------------------------------------------------------------------- \6\ Cboe BZX Options Exchange (``BZX Options'') assesses the Participant Fee, which is a membership fee, according to a member's ADV. See Cboe BZX Options Exchange Fee Schedule under ``Membership Fees''. The Participant Fee is $500 if the member ADV is under 5000 and $1,000 if the member ADV is equal to or over 5000. Id. --------------------------------------------------------------------------- The Exchange also proposes to modify its MEI Port fees assessable to certain Market Makers. Currently, MIAX Options assesses monthly MEI Port fees on Market Makers based upon the number of classes or class volume accessed by the Market Maker. Market Makers are allocated two (2) Full Service MEI Ports \7\ and two (2) Limited Service MEI Ports per matching engine \8\ to which they connect. The Exchange currently assesses the following MEI Port fees: (a) $5,000 for Market Maker Assignments in up to 5 option classes or up to 10% of option classes by volume; (b) $10,000 for Market Maker Assignments in up to 10 option classes or up to 20% of option classes by volume; (c) $14,000 for Market Maker Assignments in up to 40 option classes or up to 35% of option classes by volume; (d) $17,500 for Market Maker Assignments in up to 100 option classes or up to 50% of option classes by volume; and (e) $20,500 for Market Maker Assignments in over 100 option classes or over 50% of option classes by volume up to all option classes listed on MIAX Options.\9\ The Exchange also currently charges $100 per month for each additional Limited Service MEI Port per matching engine for Market Makers over and above the two (2) Limited Service MEI Ports per matching engine that are allocated with the Full Service MEI Ports. The Full Service MEI Ports, Limited Service MEI Ports and the additional Limited Service MEI Ports all include access to the Exchange's Primary and Secondary data centers and its Disaster Recovery center. For the calculation of the monthly MEI Port fees that apply to Market Makers, the number of classes is defined as the greatest number of classes the Market Maker was assigned to quote in on any given day within the calendar month and the class volume percentage is based on the total national average daily volume in classes listed on MIAX Options in the prior calendar quarter.\10\ Newly listed option classes are excluded from the calculation of the monthly MEI Port fee until the calendar quarter following their listing, at which time the newly listed option classes will be included in both the per class count and the percentage of total national average daily volume. --------------------------------------------------------------------------- \7\ Full Service MEI Ports provide Market Makers with the ability to send Market Maker quotes, eQuotes, and quote purge messages to the MIAX Options System. Full Service MEI Ports are also capable of receiving administrative information. Market Makers are limited to two Full Service MEI Ports per matching engine. \8\ A ``matching engine'' is a part of the MIAX Options electronic system that processes options quotes and trades on a symbol-by-symbol basis. Some matching engines will process option classes with multiple root symbols, and other matching engines will be dedicated to one single option root symbol (for example, options on SPY will be processed by one single matching engine that is dedicated only to SPY). A particular root symbol may only be assigned to a single designated matching engine. A particular root symbol may not be assigned to multiple matching engines. \9\ See the Fee Schedule, Section 5(d)(ii). \10\ The Exchange will use the following formula to calculate the percentage of total national average daily volume that the Market Maker assignment is for purposes of the MEI Port fee for a given month: Market Maker assignment percentage of national average daily volume = [total volume during the prior calendar quarter in a class in which the Market Maker was assigned]/[total national volume in classes listed on MIAX Options in the prior calendar quarter]. --------------------------------------------------------------------------- The Exchange assesses Market Makers the monthly MEI Port fees based on the greatest number of classes listed on MIAX Options that the Market Maker was assigned to quote on any given day within a calendar month and the applicable fee rate that is the lesser of either the per class basis or percentage of total national average daily volume measurement. The Exchange now proposes to modify its MEI Port fees that apply to the Market Makers who fall within the following MEI Port fee levels, which represent the 4th and 5th levels of the fee table: Market Makers who have (i) Assignments in up to 100 option classes or up to 50% of option classes by volume and (ii) Assignments in over 100 option classes or over 50% of option classes by volume up to all option classes listed on MIAX Options. Specifically, the Exchange proposes for these Monthly MEI Port Fee levels, if the Market Maker's total monthly executed volume during the relevant month is less than 0.075% of the total monthly executed volume reported by OCC in the market maker account type for MIAX-listed option classes for that month, then the fee will be $14,500 instead of the fee otherwise applicable to such level. The purpose of this proposed change is to provide a lower fixed cost to those Market Makers who are willing to quote the entire Exchange market (or substantial amount of the Exchange market), as objectively measured by either number of classes assigned or national ADV, but who do not otherwise execute a significant amount of volume on the Exchange. The Exchange believes that, by offering lower fixed costs to Market Makers that execute less volume, the Exchange will retain and attract smaller-scale Market Makers, which are an integral component of the option industry marketplace, but have been decreasing in number in recent years, due to industry consolidation and lower market maker profitability. Since these smaller-scale Market Makers utilize less Exchange capacity due to lower overall volume executed, the Exchange believes it is reasonable and appropriate to offer such Market Makers a lower fixed cost. The Exchange notes that other options exchanges assess certain of their membership fees at different rates, based upon a member's participation on that exchange,\11\ and, as such, this concept is not novel. The proposed changes to the MEI Port fees for Market Makers who fall within the 4th and 5th levels of the fee table are based upon a business determination of current Market Maker assignments and trading volume. --------------------------------------------------------------------------- \11\ See supra note 6. Also, regarding port fees specifically, Nasdaq Phlx LLC (``Phlx'') capped its Active SQF Port fee at $500 per month for smaller member organizations that they defined as ``Phlx Only Members'' and that had ``50 or less SQT assignments affiliated with their member organizations'' so that ``the Exchange may provide an equal opportunity to all members to access the Specialized Quote Fee (``SQF'') data at a lower cost.'' See Securities Exchange Act Release No. 64381 (May 3, 2011), 76 FR 26777 (May 9, 2011) (SR-Phlx-2011-57). Phlx currently caps all Active SQF Port fees assessed to members at $42,000 per month. See the Nasdaq Phlx LLC Pricing Schedule, Article VII, Section B. Phlx more recently capped the total fees assessable to PSX Participants at $30,000 per month and stated as reasoning that ``[t]he Exchange believes that the proposed fee cap will make PSX a more attractive venue for Participants, and help PSX both retain and attract new Participants.'' See Securities Exchange Act Release No. 78665 (August 24, 2016), 81 FR 59693 (August 30, 2016) (SR-Phlx-2016-85). See the Nasdaq Phlx LLC Pricing Schedule, Article VIII. --------------------------------------------------------------------------- The proposed rule changes are scheduled to become operative on March 1, 2018. 2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act \12\ [[Page 12065]] in general, and furthers the objectives of Section 6(b)(4) of the Act \13\ in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among Exchange members and issuers and other persons using any facility or system which the Exchange operates or controls. The Exchange also believes the proposal furthers the objectives of Section 6(b)(5) of the Act \14\ in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest and is not designed to permit unfair discrimination between customer, issuers, brokers and dealers. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(4). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed amendments to the Trading Permit fees are consistent with Section 6(b)(4) of the Act in that they are reasonable, equitable and not unfairly discriminatory. The proposed amendments to the Trading Permit fees are reasonable in that, by offering lower fixed costs to Market Makers that execute less volume, the Exchange will retain and attract smaller-scale Market Makers, which are an integral component of the option industry marketplace, but have been decreasing in number in recent years, due to industry consolidation and lower market maker profitability. Since these smaller-scale Market Makers utilize less Exchange capacity due to lower overall volume executed, the Exchange believes it is reasonable and appropriate to offer such Market Makers a lower fixed cost who are willing to quote the majority or entirety of the market. The Exchange also believes that its proposal is consistent with Section 6(b)(5) of the Act \15\ because it will be uniformly applied to all Market Makers that execute less volume on the Exchange, as determined and measured by a uniform, objective, quantitative volume amount. The proposed Trading Permit fees are fair and equitable and not unreasonably discriminatory because they apply equally to all similarly situated Market Makers regardless of type and access to the Exchange is offered on terms that are not unfairly discriminatory. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed amendments to the MEI Port fees are consistent with Section 6(b)(4) of the Act in that they are reasonable, equitable and not unfairly discriminatory. The proposed amendments to the MEI Port fees are reasonable in that, by offering lower fixed costs to Market Makers that execute less volume, the Exchange will retain and attract smaller-scale Market Makers, which are an integral component of the option industry marketplace, but have been decreasing in number in recent years, due to industry consolidation and lower market maker profitability. Since these smaller-scale Market Makers utilize less Exchange capacity due to lower overall volume executed, the Exchange believes it is reasonable and appropriate to offer such Market Makers (who are willing to quote the majority or entirety of the market) a lower fixed cost. The Exchange also believes that its proposal is consistent with Section 6(b)(5) of the Act \16\ because it will be uniformly applied to all Market Makers that execute less volume on the Exchange, as determined and measured by a uniform, objective, quantitative volume amount. The proposed MEI Port fees are fair and equitable and not unreasonably discriminatory because they apply equally to all similarly situated Market Makers regardless of type and access to the Exchange is offered on terms that are not unfairly discriminatory. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed rule changes will increase both intermarket and intramarket competition by enabling smaller-scale Market Makers who are willing to quote the entire marketplace (or a substantial amount of the entire marketplace) to access the Exchange at a lower fixed cost. By offering lower fixed costs to Market Makers that execute less volume, the Exchange believes that it will retain and attract smaller-scale Market Makers, which are an integral component of the option industry marketplace, but have been decreasing in number in recent years, due to industry consolidation and lower market maker profitability. Since these smaller-scale Market Makers utilize less Exchange capacity due to lower overall volume executed, the Exchange believes it is reasonable and appropriate to offer such Market Makers a lower fixed cost. 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 to the Exchange. The Exchange believes that the proposed rule changes reflect this competitive environment because they modify the Exchange's fees in a manner that continues to encourage market participants to register as Market Makers on the Exchange, to provide liquidity and to attract order flow. To the extent that this purpose is achieved, all the Exchange's market participants should benefit from the improved market liquidity. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,\17\ and Rule 19b-4(f)(2) \18\ 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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A)(ii). \18\ 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-2018-08 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. [[Page 12066]] All submissions should refer to File Number SR-MIAX-2018-08. 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 website (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 website 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-2018-08 and should be submitted on or before April 9, 2018. --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-05453 Filed 3-16-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 53 / Monday, March 19, 2018 / Notices 12063
Dyson, Director/Chief Information statements may be examined at the their listing, at which time the newly
Officer, Securities and Exchange places specified in Item IV below. The listed option classes will be included in
Commission, c/o Remi Pavlik-Simon, Exchange has prepared summaries, set both the per class count and the
100 F Street NE, Washington, DC 20549 forth in sections A, B, and C below, of percentage of total national average
or send an email to: PRA_Mailbox@ the most significant aspects of such daily volume.
sec.gov. Comments must be submitted to statements. The Exchange assesses Market Makers
OMB within 30 days of this notice. the monthly Trading Permit fee based
A. Self-Regulatory Organization’s on the greatest number of classes listed
Dated: March 14, 2018. Statement of the Purpose of, and on MIAX Options that the Market Maker
Eduardo A. Aleman, Statutory Basis for, the Proposed Rule was assigned to quote on any given day
Assistant Secretary. Change within a calendar month and the
[FR Doc. 2018–05525 Filed 3–16–18; 8:45 am] applicable fee rate that is the lesser of
1. Purpose
BILLING CODE 8011–01–P either the per class basis or percentage
The Exchange proposes to amend the
Fee Schedule to modify certain aspects of total national average daily volume
of the following fees that apply to MIAX measurement. Members receiving
SECURITIES AND EXCHANGE Trading Permits during the month will
COMMISSION Options Market Makers: (i) The Monthly
Trading Permit fees; and (ii) the MEI be assessed Trading Permit fees
[Release No. 34–82868; File No. SR–MIAX– Port fees. according to this schedule, except that
2018–08] The Exchange issues Trading Permits the calculation of the Trading Permit fee
that confer the ability to transact on the for the first month in which the Trading
Self-Regulatory Organizations; Miami Permit is issued will be pro-rated based
International Securities Exchange LLC; Exchange.3 Currently, the Exchange
assesses the following monthly fees for on the number of trading days occurring
Notice of Filing and Immediate after the date on which the Trading
Effectiveness of a Proposed Rule MIAX Options Market Maker Trading
Permits: (i) $7,000 for Market Maker Permit was in effect during that first
Change To Amend Its Fee Schedule month divided by the total number of
Assignments in up to 10 option classes
March 13, 2018. or up to 20% of option classes by trading days in such month multiplied
Pursuant to the provisions of Section volume; (ii) $12,000 for Market Maker by the monthly rate.
19(b)(1) of the Securities Exchange Act Assignments in up to 40 option classes The Exchange now proposes to
of 1934 (‘‘Act’’) 1 and Rule 19b–4 or up to 35% of option classes by modify its Trading Permit fees that
thereunder,2 notice is hereby given that volume; (iii) $17,000 for Market Maker apply to the Market Makers who fall
on February 28, 2018, Miami Assignments in up to 100 option classes within the following Trading Permit fee
International Securities Exchange LLC or up to 50% of option classes by levels, which represent the 3rd and 4th
(‘‘MIAX Options’’ or ‘‘Exchange’’) filed volume; and (iv) $22,000.00 for Market levels of the fee table: (i) Market Maker
with the Securities and Exchange Maker Assignments in over 100 option Assignments in up to 100 option classes
Commission (‘‘Commission’’) a classes or over 50% of option classes by or up to 50% of option classes by
proposed rule change as described in volume up to all option classes listed on volume; and (ii) Market Maker
Items I, II, and III below, which Items Assignments in over 100 option classes
MIAX Options.4 For the calculation of
have been prepared by the Exchange. or over 50% of option classes by volume
these monthly Trading Permit fees, the
The Commission is publishing this up to all option classes listed on MIAX
number of classes is defined as the
notice to solicit comments on the Options. Specifically, the Exchange
greatest number of classes the Market
proposed rule change from interested proposes for these Monthly Trading
Maker was assigned to quote in on any
persons. Permit Fee levels, if the Market Maker’s
given day within the calendar month
total monthly executed volume during
I. Self-Regulatory Organization’s and the class volume percentage is
the relevant month is less than 0.075%
Statement of the Terms of Substance of based on the total national average daily
of the total monthly executed volume
the Proposed Rule Change volume in classes listed on MIAX
reported by OCC in the market maker
Options in the prior calendar quarter.5
The Exchange is filing a proposal to account type for MIAX-listed option
Newly listed option classes are classes for that month, then the fee will
amend the MIAX Options Fee Schedule excluded from the calculation of the
(the ‘‘Fee Schedule’’). be $15,500 instead of the fee otherwise
monthly Market Maker Trading Permit applicable to such level.
The text of the proposed rule change fee until the calendar quarter following
is available on the Exchange’s website at The purpose of this proposed change
http://www.miaxoptions.com/rule- 3 There is no limit on the number of Trading
is to provide a lower fixed cost to those
filings, at MIAX’s principal office, and Permits that may be issued by the Exchange;
Market Makers who are willing to quote
at the Commission’s Public Reference however, the Exchange has the authority to limit or the entire Exchange market (or
Room. decrease the number of Trading Permits it has substantial amount of the Exchange
determined to issue provided it complies with the market), as objectively measured by
II. Self-Regulatory Organization’s provisions set forth in Rule 200(a) and Section either number of classes assigned or
Statement of the Purpose of, and 6(c)(4) of the Exchange Act. See 15 U.S.C.
78(f)(c)(4). For a complete description of MIAX national ADV, but who do not otherwise
Statutory Basis for, the Proposed Rule Options Trading Permits, see MIAX Rule 200. execute a significant amount of volume
Change 4 See the Fee Schedule, Section 3(b). on the Exchange. The Exchange believes
In its filing with the Commission, the 5 The Exchange will use the following formula to
that, by offering lower fixed costs to
calculate the percentage of total national average Market Makers that execute less volume,
sradovich on DSK3GMQ082PROD with NOTICES
Exchange included statements daily volume that the Market Maker assignment is
concerning the purpose of and basis for for purposes of the Market Maker trading permit fee the Exchange will retain and attract
the proposed rule change and discussed for a given month: smaller-scale Market Makers, which are
any comments it received on the Market Maker assignment percentage of national an integral component of the option
average daily volume = [total volume during the marketplace, but have been decreasing
proposed rule change. The text of these prior calendar quarter in a class in which the
Market Maker was assigned]/[total national volume
in number in recent years, due to
1 15 U.S.C. 78s(b)(1). in classes listed on MIAX Options in the prior industry consolidation and lower
2 17 CFR 240.19b–4. calendar quarter]. market maker profitability. Since these
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![12064 Federal Register / Vol. 83, No. 53 / Monday, March 19, 2018 / Notices
smaller-scale Market Makers utilize less currently charges $100 per month for for MIAX-listed option classes for that
Exchange capacity due to lower overall each additional Limited Service MEI month, then the fee will be $14,500
volume executed, the Exchange believes Port per matching engine for Market instead of the fee otherwise applicable
it is reasonable and equitable to offer Makers over and above the two (2) to such level.
such Market Makers a lower fixed cost. Limited Service MEI Ports per matching The purpose of this proposed change
The Exchange notes that other options engine that are allocated with the Full is to provide a lower fixed cost to those
exchanges assess certain of their Service MEI Ports. The Full Service MEI Market Makers who are willing to quote
membership fees at different rates, Ports, Limited Service MEI Ports and the the entire Exchange market (or
based upon a member’s participation on additional Limited Service MEI Ports all substantial amount of the Exchange
that exchange,6 and, as such, this include access to the Exchange’s market), as objectively measured by
concept is not novel. The proposed Primary and Secondary data centers and either number of classes assigned or
changes to the Trading Permit fees for its Disaster Recovery center. For the national ADV, but who do not otherwise
Market Makers who fall within the 3rd calculation of the monthly MEI Port fees execute a significant amount of volume
and 4th levels of the fee table are based that apply to Market Makers, the on the Exchange. The Exchange believes
upon a business determination of number of classes is defined as the that, by offering lower fixed costs to
current Market Maker assignments and greatest number of classes the Market Market Makers that execute less volume,
trading volume. Maker was assigned to quote in on any the Exchange will retain and attract
The Exchange also proposes to modify given day within the calendar month smaller-scale Market Makers, which are
its MEI Port fees assessable to certain and the class volume percentage is an integral component of the option
Market Makers. Currently, MIAX based on the total national average daily industry marketplace, but have been
Options assesses monthly MEI Port fees volume in classes listed on MIAX decreasing in number in recent years,
on Market Makers based upon the Options in the prior calendar quarter.10 due to industry consolidation and lower
number of classes or class volume Newly listed option classes are market maker profitability. Since these
accessed by the Market Maker. Market excluded from the calculation of the smaller-scale Market Makers utilize less
Makers are allocated two (2) Full monthly MEI Port fee until the calendar Exchange capacity due to lower overall
Service MEI Ports 7 and two (2) Limited quarter following their listing, at which volume executed, the Exchange believes
Service MEI Ports per matching engine 8 time the newly listed option classes will it is reasonable and appropriate to offer
to which they connect. The Exchange be included in both the per class count such Market Makers a lower fixed cost.
currently assesses the following MEI and the percentage of total national The Exchange notes that other options
Port fees: (a) $5,000 for Market Maker average daily volume. exchanges assess certain of their
Assignments in up to 5 option classes or The Exchange assesses Market Makers membership fees at different rates,
up to 10% of option classes by volume; the monthly MEI Port fees based on the based upon a member’s participation on
(b) $10,000 for Market Maker greatest number of classes listed on that exchange,11 and, as such, this
Assignments in up to 10 option classes MIAX Options that the Market Maker concept is not novel. The proposed
or up to 20% of option classes by was assigned to quote on any given day changes to the MEI Port fees for Market
volume; (c) $14,000 for Market Maker within a calendar month and the Makers who fall within the 4th and 5th
Assignments in up to 40 option classes applicable fee rate that is the lesser of levels of the fee table are based upon a
or up to 35% of option classes by either the per class basis or percentage business determination of current
volume; (d) $17,500 for Market Maker of total national average daily volume Market Maker assignments and trading
Assignments in up to 100 option classes volume.
measurement.
or up to 50% of option classes by The proposed rule changes are
The Exchange now proposes to
volume; and (e) $20,500 for Market scheduled to become operative on
modify its MEI Port fees that apply to March 1, 2018.
Maker Assignments in over 100 option
the Market Makers who fall within the
classes or over 50% of option classes by 2. Statutory Basis
following MEI Port fee levels, which
volume up to all option classes listed on
represent the 4th and 5th levels of the The Exchange believes that its
MIAX Options.9 The Exchange also
fee table: Market Makers who have (i) proposal to amend its Fee Schedule is
6 Cboe BZX Options Exchange (‘‘BZX Options’’)
Assignments in up to 100 option classes consistent with Section 6(b) of the Act 12
assesses the Participant Fee, which is a membership or up to 50% of option classes by
fee, according to a member’s ADV. See Cboe BZX volume and (ii) Assignments in over 100 11 See supra note 6. Also, regarding port fees
Options Exchange Fee Schedule under option classes or over 50% of option specifically, Nasdaq Phlx LLC (‘‘Phlx’’) capped its
‘‘Membership Fees’’. The Participant Fee is $500 if Active SQF Port fee at $500 per month for smaller
the member ADV is under 5000 and $1,000 if the classes by volume up to all option
member organizations that they defined as ‘‘Phlx
member ADV is equal to or over 5000. Id. classes listed on MIAX Options. Only Members’’ and that had ‘‘50 or less SQT
7 Full Service MEI Ports provide Market Makers Specifically, the Exchange proposes for assignments affiliated with their member
with the ability to send Market Maker quotes, these Monthly MEI Port Fee levels, if organizations’’ so that ‘‘the Exchange may provide
eQuotes, and quote purge messages to the MIAX an equal opportunity to all members to access the
Options System. Full Service MEI Ports are also
the Market Maker’s total monthly
Specialized Quote Fee (‘‘SQF’’) data at a lower
capable of receiving administrative information. executed volume during the relevant cost.’’ See Securities Exchange Act Release No.
Market Makers are limited to two Full Service MEI month is less than 0.075% of the total 64381 (May 3, 2011), 76 FR 26777 (May 9, 2011)
Ports per matching engine. monthly executed volume reported by (SR–Phlx–2011–57). Phlx currently caps all Active
8 A ‘‘matching engine’’ is a part of the MIAX SQF Port fees assessed to members at $42,000 per
Options electronic system that processes options
OCC in the market maker account type month. See the Nasdaq Phlx LLC Pricing Schedule,
quotes and trades on a symbol-by-symbol basis. Article VII, Section B. Phlx more recently capped
10 The Exchange will use the following formula to
Some matching engines will process option classes the total fees assessable to PSX Participants at
sradovich on DSK3GMQ082PROD with NOTICES
with multiple root symbols, and other matching calculate the percentage of total national average $30,000 per month and stated as reasoning that
engines will be dedicated to one single option root daily volume that the Market Maker assignment is ‘‘[t]he Exchange believes that the proposed fee cap
symbol (for example, options on SPY will be for purposes of the MEI Port fee for a given month: will make PSX a more attractive venue for
processed by one single matching engine that is Market Maker assignment percentage of national Participants, and help PSX both retain and attract
dedicated only to SPY). A particular root symbol average daily volume = [total volume during the new Participants.’’ See Securities Exchange Act
may only be assigned to a single designated prior calendar quarter in a class in which the Release No. 78665 (August 24, 2016), 81 FR 59693
matching engine. A particular root symbol may not Market Maker was assigned]/[total national volume (August 30, 2016) (SR–Phlx–2016–85). See the
be assigned to multiple matching engines. in classes listed on MIAX Options in the prior Nasdaq Phlx LLC Pricing Schedule, Article VIII.
9 See the Fee Schedule, Section 5(d)(ii). calendar quarter]. 12 15 U.S.C. 78f(b).
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![12066 Federal Register / Vol. 83, No. 53 / Monday, March 19, 2018 / Notices
All submissions should refer to File 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or PSCN orders,3 other than PSKP orders,4
Number SR–MIAX–2018–08. This file ‘‘Exchange’’) filed with the Securities that execute on PSX or that are routed
number should be included on the and Exchange Commission (‘‘SEC’’ or to other venues and receive an
subject line if email is used. To help the ‘‘Commission’’) the proposed rule execution on another venue. By way of
Commission process and review your change as described in Items I, II, and comparison, for an order that executes
comments more efficiently, please use III below, which Items have been on PSX, the execution fees for non-
only one method. The Commission will prepared by the Exchange. The PSCN orders (including PSKP orders)
post all comments on the Commission’s Commission is publishing this notice to for all securities that PSX trades that are
internet website (http://www.sec.gov/ solicit comments on the proposed rule priced at $1 or more per share range
rules/sro.shtml). Copies of the from $0.0028 per share executed to
change from interested persons.
submission, all subsequent $0.0030 per share executed, depending
amendments, all written statements I. Self-Regulatory Organization’s on where that security is listed and
with respect to the proposed rule Statement of the Terms of Substance of whether the member meets certain
change that are filed with the the Proposed Rule Change established volume thresholds. For
Commission, and all written orders in securities that are priced at $1
communications relating to the The Exchange proposes to amend the or more per share that are routed to, and
proposed rule change between the Exchange’s transaction fees at Section execute on other venues, the Exchange
Commission and any person, other than VIII (NASDAQ PSX fees) of Phlx’s charges fees ranging from $0.0000 per
those that may be withheld from the Pricing Schedule to remove the current share executed to $0.0035 per share
public in accordance with the transaction fees for any PSCN order executed (including PKSP orders).
provisions of 5 U.S.C. 552, will be (other than a PSKP order) that receives The Exchange introduced the fee for
available for website viewing and an execution on NASDAQ PSX (‘‘PSX’’) PSCN orders in 2017.5 Prior to the 2017
printing in the Commission’s Public or that is routed away from PSX and Proposal, a PSCN order that executed on
Reference Room, 100 F Street NE, receives an execution at an away PSX would be assessed a charge ranging
Washington, DC 20549, on official market. from $0.0028–$0.0030 per share
business days between the hours of executed depending on the applicability
10:00 a.m. and 3:00 p.m. Copies of the The text of the proposed rule change of other factors set forth in the Pricing
filing also will be available for is available on the Exchange’s website at Schedule, e.g., if the order was for a
inspection and copying at the principal http://nasdaqphlx.cchwallstreet.com/, security that was listed on The Nasdaq
office of the Exchange. All comments at the principal office of the Exchange, Stock Market LLC (‘‘Nasdaq’’), or if the
received will be posted without change. and at the Commission’s Public order was for a security that is listed on
Persons submitting comments are Reference Room. the New York Stock Exchange LLC
cautioned that we do not redact or edit (‘‘NYSE’’), and whether the member met
II. Self-Regulatory Organization’s the applicable volume thresholds.
personal identifying information from
comment submissions. You should Statement of the Purpose of, and Prior to the 2017 Proposal, a PSCN
submit only information that you wish Statutory Basis for, the Proposed Rule order that routed to another venue
to make available publicly. All Change would be charged $0.0030 per share
submissions should refer to File executed at NYSE, $0.0000 per share
In its filing with the Commission, the executed at Nasdaq BX, Inc. (‘‘Nasdaq
Number SR–MIAX–2018–08 and should
Exchange included statements BX’’) and $0.0030 per share executed in
be submitted on or before April 9, 2018.
concerning the purpose of and basis for other venues. Pursuant to the 2017
For the Commission, by the Division of the proposed rule change and discussed
Trading and Markets, pursuant to delegated Proposal, PSCN orders that execute on
authority.19
any comments it received on the a venue other than PSX are charged
proposed rule change. The text of these $0.0026 per share executed. PSKP
Eduardo A. Aleman,
statements may be examined at the orders continue to be charged $0.0030
Assistant Secretary.
places specified in Item IV below. The per share executed at NYSE, $0.0000 per
[FR Doc. 2018–05453 Filed 3–16–18; 8:45 am]
Exchange has prepared summaries, set share executed at Nasdaq BX, and
BILLING CODE 8011–01–P
forth in sections A, B, and C below, of $0.0030 per share executed in other
the most significant aspects of such venues.6
SECURITIES AND EXCHANGE statements.
3 PSCN is a routing option that is designed to
COMMISSION A. Self-Regulatory Organization’s attract users to PSX. An order using the PSCN
[Release No. 34–82865; File No. SR–Phlx– Statement of the Purpose of, and routing option will check the System for available
shares and simultaneously route the remaining
2018–21] Statutory Basis for, the Proposed Rule shares to destinations on the System routing table.
Change If shares remain unexecuted after routing, they are
Self-Regulatory Organizations; Nasdaq posted on the book. Once on the book, should the
PHLX LLC; Notice of Filing and 1. Purpose order subsequently be locked or crossed by another
Immediate Effectiveness of Proposed market center, the System will not route the order
Rule Change To Amend the The purpose of the proposed rule to the locking or crossing market center. See Rule
change is to amend the Exchange’s 3315(a)(1)(A)(iv).
Transaction Fees at Section VIII 4 PSKP is a form of PSCN, pursuant to which the
transaction fees at Section VIII of Phlx’s
entering firm instructs the System to bypass any
March 13, 2018. Pricing Schedule to remove the current market centers included in the PSCN System
sradovich on DSK3GMQ082PROD with NOTICES
Pursuant to Section 19(b)(1) of the transaction fee for any PSCN order routing table that are not posting Protected
Securities Exchange Act of 1934 (other than a PSKP order) that receives Quotations within the meaning of Regulation NMS.
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Id.
an execution on PSX or that is routed 5 See Securities Exchange Act Release No. 80938
notice is hereby given that on March 1, away from PSX and receives an (June 15, 2017), 82 FR 28171 (June 20, 2017) (SR–
execution at an away market. Phlx–2017–44) (‘‘2017 Proposal’’).
19 17 CFR 200.30–3(a)(12). 6 In the 2017 Proposal, the Exchange noted that
1 15 U.S.C. 78s(b)(1). Currently, the Exchange assesses a member organizations sending PSCN orders that
2 17 CFR 240.19b–4. charge of $0.0026 per share executed for executed at Nasdaq BX would pay an increased fee
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Document Created: 2018-03-17 04:24:48
Document Modified: 2018-03-17 04:24:48
| 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 | 83 FR 12063 |
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