Notice2022-17668
Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Amend Certain Fees and Rebates for Transactions in SPIKES Options
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 17, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 158 (Wednesday, August 17, 2022)</title>
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[Federal Register Volume 87, Number 158 (Wednesday, August 17, 2022)]
[Notices]
[Pages 50657-50661]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-17668]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95478; File No. SR-MIAX-2022-27]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule To Amend Certain Fees
and Rebates for Transactions in SPIKES Options
August 11, 2022.
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 July 29, 2022, Miami International Securities
Exchange LLC (``MIAX'' 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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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 amend the MIAX Options Exchange Fee
Schedule (the ``Fee Schedule'') to amend certain fees and rebates for
transactions in SPIKES options (defined below).
The text of the proposed rule change is available on the Exchange's
website at <a href="http://www.miaxoptions.com/rule-filings">http://www.miaxoptions.com/rule-filings</a>, 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 Section (1)(b)(i) of the Fee
Schedule to: (1) amend certain fees and rebates for Simple and Complex
transactions in SPIKES options; \3\ (2) adopt a new ``Routing EEM
Rebate Program'' \4\ for certain SPIKES option orders routed to the
Exchange; (3) remove the Market Turner Incentive Program; and (4) amend
certain PRIME \5\ and cPRIME \6\ fees for orders in SPIKES options.
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\3\ SPIKES is a ``Proprietary Product.'' The term ``Proprietary
Product'' means a class of options that is listed exclusively on the
Exchange. See Fee Schedule, Section (1)(b)(i), note ``[xutri]'' and
Exchange Rule 100.
\4\ An ``Electronic Exchange Member'' or ``EEM'' means the
holder of a Trading Permit who is not a Market Maker. Electronic
Exchange Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\5\ The Price Improvement Mechanism (``PRIME'') is a process by
which a Member may electronically submit for execution (``Auction'')
an order it represents as agent (``Agency Order'') against principal
interest, and/or an Agency Order against solicited interest. See
Exchange Rule 515A(a).
\6\ ``cPRIME'' is the process by which a Member may
electronically submit a ``cPRIME Order'' (as defined in Rule
518(b)(7)) it represents as agent (a ``cPRIME Agency Order'')
against principal or solicited interest for execution (a ``cPRIME
Auction''), subject to the conditions set forth in Exchange Rule
515A, Interpretation and Policy .12. See Exchange Rule 515A,
Interpretation and Policy .12.
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Background
On October 12, 2018, the Exchange received approval from the
Commission to list and trade on the Exchange options on the
SPIKES[supreg] Index, a new index that measures expected 30-day
volatility of the SPDR S&P 500 ETF Trust (commonly known and referred
to by its ticker symbol, ``SPY'').\7\ The Exchange adopted its initial
SPIKES options transaction fees on February 15, 2019 and adopted a new
section of the Fee Schedule--Section 1)a)xi), SPIKES--for those
fees.\8\ SPIKES options began trading on the Exchange on February 19,
2019.
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\7\ See Securities Exchange Act Release No. 84417 (October 12,
2018), 83 FR 52865 (October 18, 2018) (SR-MIAX-2018-14) (Order
Granting Approval of a Proposed Rule Change by Miami International
Securities Exchange, LLC to List and Trade on the Exchange Options
on the SPIKES[supreg] Index).
\8\ See Securities Exchange Release No. 85283 (March 11, 2019),
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11). The Exchange
initially filed the proposal on February 15, 2019 (SR-MIAX-2019-04).
That filing was withdrawn and replaced with SR-MIAX-2019-11. On
September 30, 2020, the Exchange filed its proposal to, among other
things, reorganize the Fee Schedule to adopt new Section (1)(b),
Proprietary Products Exchange Fees, and moved the fees and rebates
for SPIKES options into new Section (1)(b)(i). See Securities
Exchange Act Release No. 90146 (October 9, 2020), 85 FR 65443
(October 15, 2020) (SR-MIAX-2020-32).
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Proposed Changes to the Table of Fees for Simple and Complex Orders in
SPIKES Options
The Exchange proposes to amend Section (1)(b)(i) of the Fee
Schedule to amend the table of Simple and Complex Fees for transactions
in SPIKES options. The Exchange charges Simple and Complex fees by
origin type to each market participant that places resting liquidity in
SPIKES options, i.e., quotes or orders on the MIAX System,\9\ which are
assessed the ``maker'' fee (each a ``Maker''). The Exchange also
charges Simple and Complex fees by origin type to each market
participant that executes against (remove) resting liquidity in SPIKES
options, which are assessed a higher ``taker'' fee (each a ``Taker'').
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\9\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
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Currently, with respect to Simple and Complex Maker fees, the
Exchange charges the following, regardless of the contra-side origin:
(i) $0.00 per contract for SPIKES options orders for Priority
Customers,\10\ Market Makers,\11\ and Firm Proprietary quotes or
orders; and (ii) $0.10 per contract for SPIKES options orders for Non-
MIAX Market Makers, Broker-Dealers, and Public Customers that are not
Priority
[[Page 50658]]
Customers.\12\ Currently, with respect to Simple and Complex Taker
fees, the Exchange charges the following, regardless of the contra-side
origin: (i) $0.00 per contract for SPIKES options orders for Priority
Customers; (ii) $0.20 per contract for SPIKES options orders for Market
Makers and Firm Proprietary orders; and (iii) $0.25 per contract for
SPIKES options orders for Non-MIAX Market Makers, Broker-Dealers, and
Public Customers that are not Priority Customers.\13\ The Exchange
notes that it charges Simple and Complex Taker fees of $0.05 per
contract for SPIKES options with a premium price of $0.10 or less for
Market Makers and Firm Proprietary quotes or orders, which is denoted
by the symbol ``*''.
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\10\ A ``Priority Customer'' means a person or entity that (i)
is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial accounts(s). A ``Priority
Customer Order'' means an order for the account of a Priority
Customer. See Exchange Rule 100.
\11\ The term ``Market Makers'' refers to ``Lead Market
Makers'', ``Primary Lead Market Makers'' and ``Registered Market
Makers'' collectively. See Exchange Rule 100.
\12\ See Fee Schedule, Section (1)(b)(i).
\13\ See id.
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The Exchange proposes to add two new columns to the table of Simple
and Complex Fees to provide for different Maker and Taker fees
depending on whether the contra-side origin is a Priority Customer or
not. The Exchange proposes that the first fee column in the table of
Simple and Complex Fees will now be titled ``Simple/
Complex<SUP>[yen]</SUP> Maker when trading contra to origins Not
Priority Customer.'' The Exchange proposes to keep the current Maker
fee rates in place for that column. Accordingly, with the proposed
changes, the Exchange will charge Simple and Complex Maker fees when
trading contra to origins not Priority Customer as follows: (i) $0.00
per contract for SPIKES options orders for Priority Customers, Market
Makers, and Firm Proprietary orders; and (ii) $0.10 per contract for
SPIKES options orders for Non-MIAX Market Makers, Broker-Dealers, and
Public Customers that are not Priority Customers.
Next, the Exchange proposes to add a new second fee column titled
``Simple/Complex<SUP>[yen]</SUP> Maker when trading contra to Priority
Customer.'' The Exchange proposes to charge the following Simple and
Complex Maker fees when trading contra to Priority Customer orders: (i)
$0.00 per contract for SPIKES options orders for Priority Customers;
(ii) $0.10 per contract for SPIKES options orders for Market Makers and
Firm Proprietary orders; and (iii) $0.25 per contract for SPIKES
options orders for Non-MIAX Market Makers, Broker-Dealers, and Public
Customers that are not Priority Customers.
The Exchange proposes that the third fee column in the table of
Simple and Complex Fees will now be titled ``Simple/
Complex<SUP>[yen]</SUP> Taker when trading contra to origins Not
Priority Customer.'' The Exchange proposes to keep the current Taker
fee rates in place for that column. Accordingly, with the proposed
changes, the Exchange will charge Simple and Complex Taker fees when
trading contra to origins not Priority Customer as follows: (i) $0.00
per contract for SPIKES options orders for Priority Customers; (ii)
$0.20 per contract for SPIKES options orders for Market Makers and Firm
Proprietary orders; and (iii) $0.25 per contract for SPIKES options
orders for Non-MIAX Market Makers, Broker-Dealers, and Public Customers
that are not Priority Customers.
Next, the Exchange proposes to add a new fourth fee column titled
``Simple/Complex<SUP>[yen]</SUP> Taker when trading contra to Priority
Customer.'' The Exchange proposes to charge the following Simple and
Complex Taker fees when trading contra to Priority Customer orders: (i)
$0.00 per contract for SPIKES options orders for Priority Customers;
(ii) $0.30 per contract for SPIKES options orders for Market Makers and
Firm Proprietary orders; and (iii) $0.35 per contract for SPIKES
options orders for Non-MIAX Market Makers, Broker-Dealers, and Public
Customers that are not Priority Customers. The Exchange notes that it
will continue charge Simple and Complex Taker fees of $0.05 per
contract for SPIKES options with a premium price of $0.10 or less for
Market Makers and Firm Proprietary orders, which will be denoted by the
symbol ``*'' in the new column of Taker fees for trading contra to
Priority Customer orders.
Next, the Exchange proposes to amend the fee for Simple Opening
orders in SPIKES options listed in the table of Simple and Complex Fees
in Section (1)(b)(i) of the Fee Schedule. Currently, the Exchange
charges the following Simple Opening fees: (i) $0.00 per contract for
SPIKES options orders for Priority Customers; and (ii) $0.15 per
contract for SPIKES options orders for Market Makers, Non-MIAX Market
Makers, Broker-Dealers, Firm Proprietary quotes or orders, and Public
Customers that are not Priority Customers. The Exchange now proposes to
increase the fee for Simple Opening orders in SPIKES options from $0.15
per contract to $0.25 per contract for all market participants except
Priority Customers.
The Exchange does not propose any changes to the fees for
Combination Orders,\14\ the Simple Large Trade Discount Threshold or
the Complex Large Trade Discount Threshold.
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\14\ A ``SPIKES Combination'' is a purchase (sale) of a SPIKES
call option and sale (purchase) of a SPIKES put option having the
same expiration date and strike price. See Fee Schedule, Section
(1)(b)(i), note ``~''.
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The purpose of all these changes is for business and competitive
reasons.
Proposal To Adopt the Routing EEM Rebate Program
Next, the Exchange proposes to adopt the ``Routing EEM Rebate
Program'' following the footnotes for the table of Simple and Complex
Fees for SPIKES options in Section (1)(b)(i) of the Fee Schedule.
Pursuant to this program, the Exchange proposes to provide a ($0.25)
rebate per executed Priority Customer origin SPIKES options contract to
the EEM that routed the order to the Exchange. The Exchange proposes
that the following Priority Customer SPIKES options orders would be
eligible to participate in the Routing EEM Rebate Program: (a) Simple
Orders of 250 contracts or less (including during the Opening Process);
(b) for Complex Orders, the lesser of (i) 250 strategies or less, or
(ii) orders for a total of 1,000 contracts or less; (c) PRIME Agency
Orders of 250 contracts or less; and (d) for cPRIME Agency Orders, the
lesser of (i) 250 strategies or less, or (ii) orders for a total of
1,000 contracts or less. The Exchange proposes that the following
Priority Customer SPIKES options orders would not be eligible to
participate in the Routing EEM Rebate Program: (a) PRIME contra-side
orders; (b) cPRIME contra-side orders; and (c) for Combination Orders,
(i) a Combination Order, (ii) Combination Orders as part of a larger
strategy, and (iii) Combination Orders as part of a cPRIME order. The
Exchange also proposes to exclude from the Routing EEM Rebate Program
orders that are broken up in order to qualify for the 250 contracts
(strategies) size limit described above. The purpose of the change to
adopt the Routing EEM Rebate Program is to attract more Priority
Customer order flow in SPIKES options, thereby improving the overall
marketplace for SPIKES options on the Exchange.
Removal of the Market Turner Incentive Program
Next, the Exchange proposes to amend Section (1)(b)(i) of the Fee
Schedule to remove the Market Turner \15\ Incentive Program. The
Exchange adopted the Market Turner Incentive Program beginning June 1,
[[Page 50659]]
2019.\16\ Pursuant to the Market Turner Incentive Program, the Exchange
provides a per contract rebate to the Market Turner for each SPIKES
options contract that executes as the MBB (MBO). The amount of the
rebate is as follows: (i) $0.20 per executed contract, for options
having a premium price greater than $0.10, or (ii) $0.05 per executed
contract, for options having a premium price of $0.10 or less.\17\ The
Market Turner Incentive Program was adopted to incentivize Market
Makers to quote aggressively in SPIKES options on the Exchange, which
the Exchange believed would strengthen its market quality for all
market participants in SPIKES options. The Market Turner Incentive
Program was also designed to attract additional market makers (both
existing MIAX Market Makers as well as non-members to join MIAX) to
quote in SPIKES options. The Exchange believes that the Market Turner
Incentive Program has fulfilled its intended purpose and that the
Exchange's other fee changes related to SPIKES options, including the
changes described herein, will continue to strengthen the market
quality for all market participants in SPIKES options. Accordingly, the
Exchange proposes to remove the text for the Market Turner Incentive
Program from the Fee Schedule.
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\15\ The term ``Market Turner'' means a Market Maker simple
quote (not eQuote) that establishes and maintains the new MIAX best
bid (the ``MBB'') or the MIAX best offer (``MBO'') in a SPIKES
option. See Fee Schedule, Section (1)(b)(i).
\16\ See Securities Exchange Act Release No. 86110 (June 14,
2019), 84 FR 28864 (June 20, 2019) (SR-MIAX-2019-29).
\17\ See Fee Schedule, Section (1)(b)(i).
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Proposed Changes to PRIME and cPRIME Fees for SPIKES Options
Next, the Exchange proposes to amend the table of PRIME and cPRIME
fees for SPIKES options in Section (1)(b)(i) of the Fee Schedule.
Currently, for SPIKES options orders entered into PRIME or cPRIME, the
Exchange charges a contra-side fee for all origin types in the amount
of $0.20 and a responder fee in the amount of $0.25. The Exchange now
proposes to increase the contra-side and responder fees for SPIKES
options orders entered into PRIME or cPRIME for all origin types. In
particular, the Exchange proposes to charge a contra-side fee for all
origin types in the amount of $0.25 and a responder fee in the amount
of $0.50. The purpose of these changes is for business and competitive
reasons.
The proposed changes described in this filing will become effective
August 1, 2022.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \18\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \19\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among its members and issuers and other persons using
its facilities.
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(4) and (5).
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Simple and Complex Fee Changes
The Exchange believes the proposed changes to the Simple and
Complex fees for transactions in SPIKES option are reasonable,
equitable and not unfairly discriminatory because the Exchange will
continue to assess lower transaction fees to its Makers as compared to
its Takers as an incentive for market participants to provide liquidity
on the Exchange. The Exchange believes this will encourage greater
order flow from all market participants, which will in turn bring
greater volume and liquidity to the Exchange, which benefits all market
participants by providing more trading opportunities and tighter
spreads. The Exchange believes it is reasonable, equitable and not
unfairly discriminatory to charge slightly higher fees for market
participants trading contra to Priority Customer SPIKES options orders
because there is a history in the options markets of providing
preferential treatment to Priority Customers and Priority Customer
order flow attracts additional liquidity to the Exchange. The Exchange
believes the added Priority Customer SPIKES options order flow will
provide all market participants with more trading opportunities and
encourage an increase in Market Maker activity, which facilitates
tighter spreads. This may cause an additional corresponding increase in
order flow from other market participants, contributing overall towards
a robust and well-balanced market ecosystem, particularly in a newer
product such as SPIKES options.
The Exchange believes that it is equitable and not unfairly
discriminatory that Firm Proprietary orders will continue to be
assessed lower Maker and Taker fees for Simple and Complex orders than
other origin types because the Exchange believes that Firm Proprietary
order flow enhances liquidity on the Exchange for the benefit of all
market participants. Firm Proprietary order flow liquidity benefits all
market participants by providing more robust trading opportunities,
which attract Market Makers. An increase in the activity of those
market participants in turn facilitates tighter spreads, which may
cause an additional corresponding increase in order flow from other
market participants. The Maker and Taker fees offered to Firm
Proprietary orders are intended to attract more Firm Proprietary order
volume to the Exchange.
The Exchange further believes that it is equitable and not unfairly
discriminatory to continue to assess lower Maker and Taker fees to
Market Makers for Simple and Complex orders as compared to other market
participants because Market Makers, unlike other market participants,
take on a number of obligations, including quoting obligations that
other market participants do not have.\20\ Further, Market Makers have
added market making and regulatory requirements, which normally do not
apply to other market participants. For example, Market Makers have
obligations to maintain continuous markets, engage in a course of
dealings reasonably calculated to contribute to the maintenance of a
fair and orderly market, and to not make bids or offers or enter into
transactions that are inconsistent with a course of dealing. Further,
the proposed lower Maker and Taker fees offered to Market Makers are
intended to incent Market Makers to quote and trade more in SPIKES
options on the Exchange, thereby providing more liquidity and trading
opportunities for all market participants in SPIKES options.
Additionally, the proposed Maker and Taker fees for Market Makers will
be applied equally to all Market Makers in SPIKES options.
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\20\ See, generally, Chapter VI of the Exchange's Rulebook.
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Moreover, the Exchange believes that assessing all other market
participants that are not Priority Customers a higher transaction fee
for orders in SPIKES options, including for Simple Opening orders, is
reasonable, equitable, and not unfairly discriminatory because these
types of market participants are more sophisticated and have higher
levels of order flow activity and system usage. This level of trading
activity draws on a greater amount of system resources than that of
Priority Customers. Further, the Exchange believes it is equitable and
not unfairly discriminatory to assess all other market participants
that are not Priority Customers, Market Makers, or Firm Proprietary
orders higher Simple and Complex Maker fees for orders in SPIKES
options (including Simple Opening orders) because Priority Customers,
Market Makers, and Firm Proprietary orders bring valuable liquidity to
the market. An increase in the activity of these market participants in
turn facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market
[[Page 50660]]
participants, which in turn benefits the market as a whole.
The Exchange also believes the proposed changes for SPIKES options
Simple and Complex transaction fees are reasonably designed because the
proposed fees are within the range of fees assessed by other exchanges
employing similar fee structures for singly-listed competing options
products. For example, Cboe Exchange, Inc. (``Cboe'') assesses
Customers VIX \21\ simple order fees based on tiered premium price
which ranges from base prices of $0.10 to $0.45 per contract and
complex order fees based on tiered premium price which ranges from base
prices $0.05 to $0.45 per contract.\22\ Further, a Clearing Trading
Permit Holder Proprietary is assessed a VIX fee based on a VIX sliding
scale which ranges from $0.25 to $0.01 per contract.\23\ A Cboe Options
Market-Maker/DPM/LMM are assessed fees based on tiered premium price
which ranges from $0.05 to $0.23 per contract. Joint Back Office, Non-
Trading Permit Holder Market Makers, and Professionals are assessed a
VIX $0.40 per contract fee.\24\ VIX transactions are assessed a
Surcharge Fee/Index License of $0.10 ($0.00 for capacity codes F and L
for VIX transactions where the VIX Premium is <= $0.10 and the related
series has an expiration of seven (7) calendar days or less).\25\
Similarly, Nasdaq ISE, LLC (``ISE'') charges all market participants,
except priority customers, a $0.75 per contract fee for all regular
orders in NDX Index options.\26\ For complex orders in NDX Index
options, ISE, similar to the Exchange, charges a different Maker fee
depending on whether the contra-side is a priority customer or not. For
complex orders in NDX Index options, ISE charges a Maker fee of $0.20
per contract for all market participants, except priority customers,
when trading contra to origins that are not priority customer.\27\ For
complex orders in NDX Index options when trading contra to priority
customer, ISE charges a Maker fee of $0.86 per contract to market
makers and $0.88 per contract to all other market participants, except
priority customers.\28\ Further, for complex orders in NDX Index
options, ISE charges a Taker fee of $0.86 per contract for market
makers and $0.88 per contract for all other market participants, except
priority customers.\29\
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\21\ ``VIX'' refers to options on the The Cboe Volatility Index
(the ``VIX Index''). The VIX Index is an up-to-the-minute market
estimate of expected volatility that is calculated by using real-
time S&P 500[supreg] Index (``SPX'') option bid/ask quotes. See VIX
Options Product Specifications, available at <a href="https://www.cboe.com/tradable_products/vix/vix_options/specifications/">https://www.cboe.com/tradable_products/vix/vix_options/specifications/</a> (last visited July
25, 2022).
\22\ See Cboe Fee Schedule, Rate Table--Underlying Symbol List
A, Page 2, available at <a href="https://www.cboe.com/us/options/membership/fee_schedule/cone/">https://www.cboe.com/us/options/membership/fee_schedule/cone/</a> (last visited July 25, 2022).
\23\ See id.
\24\ See id.
\25\ See id. The Exchange notes that it is continuing to waive
the ``Index License Surcharge'' for SPIKES options of $0.075 per
contract. See Fee Schedule, Section (1)(b)(i), note ``#''.
\26\ See ISE Fee Schedule, Options 7 Pricing schedule, Section
5. Index Options Fees and Rebates, Section A, NDX Index Options Fees
for Regular Orders, available at <a href="https://listingcenter.nasdaq.com/rulebook/ise/rules/ISE%20Options%207">https://listingcenter.nasdaq.com/rulebook/ise/rules/ISE%20Options%207</a> (last visited July 25, 2022).
\27\ See id., Section 4. Complex Order Fees and Rebates.
\28\ See id.
\29\ See id.
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Routing EEM Rebate Program
The Exchange believes the proposal to adopt the Routing EEM Rebate
Program is reasonable, equitably allocated and not unfairly
discriminatory because it would apply equally to all of the Exchange's
EEMs that send Priority Customer SPIKES options orders to the Exchange.
The Exchange believes the Routing EEM Rebate Program is reasonable
because it is designed to incentivize increased SPIKES options order
flow, which should strengthen the market quality for SPIKES options for
all market participants, leading to more trading opportunities and
tighter spreads. To the extent Priority Customer SPIKES options order
flow is increased by the proposal, market participants will
increasingly compete for the opportunity to trade on the Exchange
including sending more orders and providing narrower and larger-sized
quotations in the effort to trade with such Priority Customer order
flow.
Removal of Market Turner Incentive Program
The Exchange believes that the proposed change to discontinue the
Market Turner Incentive Program and remove that language from the Fee
Schedule is reasonable, equitable and not unfairly discriminatory
because the elimination of the Market Turner Incentive Program will
uniformly apply to all Market Makers in SPIKES options. The Exchange
initially adopted the Market Turner Incentive Program to attract
additional market makers (both existing MIAX Market Makers as well as
non-members to join MIAX) to quote in SPIKES options. The Exchange
believes that the Market Turner Incentive Program is no longer
necessary and that the Exchange's fees and rebates for transactions in
SPIKES options will continue to strengthen the market quality for all
market participants in SPIKES options.
Contra-Side and Responder Fee Increases in PRIME and cPRIME Auctions
for SPIKES Options
The Exchange believes that the proposed increases to contra-side
and responder fees for SPIKES options in PRIME and cPRIME are equitable
and not unfairly discriminatory because the proposed fees will apply
equally to all origins. The Exchange believes that the application of
these fees are equitable and not unfairly discriminatory because the
fees are identical for all market participants for contra-side orders
or for market participants that respond to PRIME and cPRIME Auctions
for SPIKES options orders.
The Exchange believes its proposal to amend its contra-side and
responder fees for all origins in PRIME and cPRIME Auctions for SPIKES
options is reasonable, equitably allocated and not unfairly
discriminatory because these changes are for business and competitive
reasons. In order to attract SPIKES options order flow, the Exchange
initially set low fees for contra-side and responders for its PRIME and
cPRIME Auctions for SPIKES options. The Exchange now believes that it
is appropriate to increase these fees but believes they will remain
competitive and should enable the Exchange to continue to attract
SPIKES options order flow to PRIME and cPRIME Auctions.
The Exchange also believes the proposed contra-side and responder
fees are similar to fees charged by competing options exchanges in
singly-listed products. The Exchange notes that Cboe assesses Automated
Improvement Mechanism (``AIM'') \30\ contra-side fees to Customers for
VIX transactions based on tiered premium price, which ranges from base
prices of $0.10 to $0.45 per contract and complex order fees based on
tiered premium price which ranges from base prices of $0.05 to $0.45
per contract.\31\ Cboe Options Market-Makers/DPMs/LMMs are assessed VIX
AIM contra-side fees based on tiered premium price, which ranges from
$0.05 to $0.23 per contract. Joint Back Office, Non-Trading Permit
Holder Market Makers, and Professionals are assessed a VIX AIM contra-
side fee $0.40 per contract fee.\32\ In addition, Cboe assesses a
variety of surcharges for VIX transactions, including an AIM Agency/
Primary Surcharge fee of $0.04
[[Page 50661]]
per contract.\33\ Similarly, ISE charges all market participants,
except priority customers, a $0.75 per contract fee for all originating
and contra side of Crossing Orders and Responses to Crossing Orders in
NDX Index options.\34\ Accordingly, the Exchange believes the proposed
changes to contra-side and responder fees for transactions in SPIKES
options in PRIME and cPRIME are similar to fees charged by competing
options exchanges in singly-listed competing products.
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\30\ See Cboe Rule 5.37.
\31\ See supra note 22.
\32\ See id.
\33\ See id.
\34\ See supra note 26.
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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.
Intra-Market Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that the proposed changes will enhance the competitiveness of
the Exchange relative to other exchanges that offer their own singly-
listed products. The Exchange notes that there are other volatility
products available today on other options markets, such as VIX and
VOLQ,\35\ which allow investors to gauge volatility. As noted above,
the Exchange believes that the proposed pricing for transactions in
SPIKES options is comparable to and within the range of fees and
rebates charged by the Exchange's competitors offering singly-listed
products.\36\ In sum, if the changes proposed herein are unattractive
to market participants, it is likely that the Exchange will receive no
market share as a result. The Exchange believes that the proposed
changes to the fees and rebates for transactions in SPIKES options are
not going to have an impact on intra-market competition based on the
total cost for participants to transact in such order types versus the
cost for participants to transact in other order types available for
trading on the Exchange.
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\35\ ``VOLQ'' refers to options on the Nasdaq-100[supreg]
volatility Index (the ``VOLQ Index''). The VOLQ Index measures
changes in 30-day implied volatility as expressed by options on the
Nasdaq-100[supreg] Index (``NDX''), a modified market
capitalization- weighted index composed of securities issued by 100
of the largest non-financial companies listed on The Nasdaq Stock
Market LLC. See Nasdaq-100[supreg] Volatility Index Option
Description, available at <a href="https://indexes.nasdaqomx.com/Index/Overview/VOLQ">https://indexes.nasdaqomx.com/Index/Overview/VOLQ</a> (last visited July 25, 2022).
\36\ See supra notes 22 and 26.
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Inter-Market Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on inter-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act. 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 change reflects this competitive
environment because it is adjusting its fees in a manner that
encourages market participants to provide liquidity in SPIKES options,
and to attract additional transaction volume to the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\37\ and Rule 19b-4(f)(2) \38\ 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.
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\37\ 15 U.S.C. 78s(b)(3)(A)(ii).
\38\ 17 CFR 240.19b-4(f)(2).
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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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#fc8e899099d19f9391919992888fbc8f999fd29b938a"><span class="__cf_email__" data-cfemail="d1a3a4bdb4fcb2bebcbcb4bfa5a291a2b4b2ffb6bea7">[email protected]</span></a>. Please include
File Number SR-MIAX-2022-27 on the subject line.
Paper Comments
<bullet> 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-2022-27. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-2022-27 and should be submitted on
or before September 7, 2022.
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\39\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17668 Filed 8-16-22; 8:45 am]
BILLING CODE 8011-01-P
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