83 FR 40110 - 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 156 (August 13, 2018)

[Federal Register Volume 83, Number 156 (Monday, August 13, 2018)]
[Notices]
[Pages 40110-40112]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-17253]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83788; File No. SR-MIAX-2018-18]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Its Fee Schedule

August 7, 2018.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4

[[Page 40111]]

thereunder,\2\ notice is hereby given that on July 31, 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 adopt a stock 
handling fee for stock-option orders (including stock-option eQuotes) 
executed against other stock-option orders in the complex order book, 
which the Exchange must route to an outside venue.
    The Exchange recently amended Exchange Rule 518, Complex Orders, to 
update its rule text regarding stock-option orders, in connection with 
the upcoming launch of such orders on the Exchange.\3\ Complex orders 
began trading on the Exchange on October 24, 2016.\4\ In its rule 
filing to establish the trading of complex orders, the Exchange adopted 
rules for handling stock-option orders.\5\ The Exchange also indicated 
that it would determine when stock-option orders would be made 
available for trading in the System \6\ and would communicate such 
determination to Members \7\ via Regulatory Circular.\8\ The Exchange 
made certain changes to its rule text, in connection with the upcoming 
launch of such orders on the Exchange, which is scheduled for Q3 2018.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 83726 (July 27, 
2018) (SR-MIAX-2018-16) Notice of Filing and Immediate Effectiveness 
of a Proposed Rule Change to Amend Exchange Rule 518, Complex 
Orders.
    \4\ See MIAX Regulatory Circular 2016-43, October 20, 2016.
    \5\ See Securities Exchange Act Release No. 79072 (October 7, 
2014), 81 FR 71131 (October 14, 2016) (SR-MIAX-2016-26).
    \6\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \7\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \8\ See supra note 3.
---------------------------------------------------------------------------

    The Exchange proposes to adopt a stock handling fee applicable to 
stock-option orders (including stock-option eQuotes) executed against 
other stock-option orders in the complex order book, which the Exchange 
must route to an outside venue. Specifically, the Exchange proposes to 
adopt a stock handling fee of $0.0010 per share for the stock leg of 
stock-option orders executed against other stock-option orders in the 
complex order book, which are routed to an outside venue. This stock 
handling fee to be assessed by the Exchange will cover all fees charged 
by the outside venue that prints the trade, and it is also intended to 
compensate the Exchange for matching these stock-option orders against 
other stock-option orders on the complex order book. A maximum of $50 
per order, per day, will be assessed under this fee. The cap is 
intended to give market participants assurance that they will not pay 
more than the capped amount for the execution of the stock leg of their 
stock-option orders. The Exchange believes that by limiting this fee to 
a maximum of $50 per order, per day, the Exchange addresses the 
possibility that a GTC order could be executed over multiple days. For 
example, if such an order was partially-executed on a Monday, and then 
the remainder was fully-executed on a Tuesday, the total maximum fee 
charged to the market participant would be $100 ($50 per day). In 
addition to the Exchange's fee, the Exchange will also pass through to 
the Member any fees assessed by the routing broker-dealer utilized by 
the Exchange with respect to the execution of the stock leg of any such 
order (with such fees to be passed through at cost). For example, the 
Exchange anticipates that the routing broker-dealer will bill the 
Exchange for Section 31 fees and FINRA Trading Activity Fees with 
respect to the execution of the stock leg of any such order. The 
Exchange will pass such fees through to the Member, at cost (that is, 
without any additional mark-up).
    Separately, the Exchange also notes that it currently charges fees 
to Members who subscribe to an Exchange-provided data feed that 
contains real-time clearing trade updates, which includes trades in its 
complex order book. Specifically, through the Exchange's Clearing Trade 
Drop (``CTD'') port, it provides updates, including the Member's 
clearing trade messages, on a low latency, real-time basis.\9\ With 
respect to stock-option orders, the Exchange notes that while such CTD 
port will now include information relating to the execution of both the 
option leg(s) and the stock leg(s) of a stock-option order, the 
Exchange will not charge an additional CTD fee for the stock leg(s) of 
a stock-option order.
---------------------------------------------------------------------------

    \9\ See Fee Schedule 5)d)iii).
---------------------------------------------------------------------------

    The proposed rule change is scheduled to become operative on August 
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 \10\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \11\ 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 its facilities The Exchange also 
believes the proposal furthers the objectives of Section 6(b)(5) of the 
Act \12\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed stock handling fee for 
stock-option orders (including stock-option eQuotes) is consistent with 
Section 6(b)(4) of the Act in that it is reasonable, equitable and not 
unfairly discriminatory. The Exchange believes the proposed stock 
handling fee for

[[Page 40112]]

stock-option orders is reasonable and equitable as the proposed fee 
will cover the costs of developing and maintaining the systems that 
allow for the matching and processing of the stock legs of stock-option 
orders executed in the complex order book, as well as all fees charged 
by the outside venue that prints the trade. The Exchange also believes 
it is reasonable and equitable to pass through to the Member any fees 
assessed by the routing broker-dealer utilized by the Exchange with 
respect to the execution of the stock leg of any such order (with such 
fees to be passed through at cost). The Exchange notes that another 
exchange has a comparable fee for the handling of the stock leg of 
stock-option orders. Specifically, Nasdaq ISE (``ISE'') charges a stock 
handling fee of $0.0010 per share which is capped at $50 per order.\13\ 
The Exchange also believes that its proposal is consistent with Section 
6(b)(5) of the Act \14\ because it will be uniformly applied to all 
Members that execute stock-option orders in the complex order book on 
the Exchange.
---------------------------------------------------------------------------

    \13\ See ISE Schedule of Fees, Section II; see also Securities 
Exchange Act Release No. 74117 (January 22, 2015), 80 FR 4600 
(January 28, 2015) (SR-ISE-2015-03).
    \14\ 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 proposed fee is similar to 
and within the range of fees charged by the Exchange's competitor.\15\ 
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. For the reasons stated above, the Exchange believes that the 
proposed rule change reflects this competitive environment.
---------------------------------------------------------------------------

    \15\ See supra note 13.
---------------------------------------------------------------------------

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,\16\ and Rule 19b-4(f)(2)\17\ 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.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 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 Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MIAX-2018-18 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-2018-18. 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-2018-18 and should be submitted on 
or before September 4, 2018.
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17253 Filed 8-10-18; 8:45 am]
 BILLING CODE 8011-01-P