Notice2022-19681
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule
Primary source
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Published
September 13, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 176 (Tuesday, September 13, 2022)</title>
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[Federal Register Volume 87, Number 176 (Tuesday, September 13, 2022)]
[Notices]
[Pages 56132-56136]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-19681]
[[Page 56132]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95688; File No. SR-MEMX-2022-23]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule
September 7, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 31, 2022, MEMX LLC (``MEMX'' or the ``Exchange'') filed
with the Securities and Exchange Commission (the ``Commission'') the
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 with the Commission a proposed rule change
to amend the Exchange's fee schedule applicable to Members \3\ (the
``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and (c). The
Exchange proposes to implement the changes to the Fee Schedule pursuant
to this proposal on September 1, 2022. The text of the proposed rule
change is provided in Exhibit 5.
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\3\ See Exchange Rule 1.5(p).
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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 purpose of the proposed rule change is to amend the Fee
Schedule to: (i) adopt a reduced fee for executions of Pegged Orders
\4\ with a Midpoint Peg \5\ instruction (such orders, ``Midpoint Peg
Orders'') and a time-in-force (``TIF'') instruction of IOC \6\ or FOK
\7\ that execute at the midpoint of the national best bid and offer
(``NBBO''); (ii) modify the required criteria under Liquidity Provision
Tiers 1 and 2; and (iii) allow affiliated Members to aggregate their
quoting activity for purposes of the Exchange's Displayed Liquidity
Incentive (``DLI'') Tiers with prior notice to the Exchange, each as
further described below.
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\4\ See Exchange Rule 11.6(h).
\5\ See Exchange Rule 11.6(h)(2).
\6\ See Exchange Rule 11.6(o)(1).
\7\ See Exchange Rule 11.6(o)(3).
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The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues, to
which market participants may direct their order flow. Based on
publicly available information, no single registered equities exchange
currently has more than approximately 15.5% of the total market share
of executed volume of equities trading.\8\ Thus, in such a low-
concentrated and highly competitive market, no single equities exchange
possesses significant pricing power in the execution of order flow, and
the Exchange currently represents approximately 3% of the overall
market share.\9\ The Exchange in particular operates a ``Maker-Taker''
model whereby it provides rebates to Members that add liquidity to the
Exchange and charges fees to Members that remove liquidity from the
Exchange. The Fee Schedule sets forth the standard rebates and fees
applied per share for orders that add and remove liquidity,
respectively. Additionally, in response to the competitive environment,
the Exchange also offers tiered pricing, which provides Members with
opportunities to qualify for higher rebates or lower fees where certain
volume criteria and thresholds are met. Tiered pricing provides an
incremental incentive for Members to strive for higher tier levels,
which provides increasingly higher benefits or discounts for satisfying
increasingly more stringent criteria.
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\8\ Market share percentage calculated as of August 30, 2022.
The Exchange receives and processes data made available through
consolidated data feeds (i.e., CTS and UTDF).
\9\ Id.
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Midpoint Peg IOC/FOK Orders
The Exchange currently charges a standard fee of $0.0030 per share
for executions of orders in securities priced at or above $1.00 per
share that remove liquidity from the Exchange (such orders, ``Removed
Volume''). The Exchange now proposes to adopt a reduced fee of $0.0026
per share for executions of Midpoint Peg Orders in securities priced at
or above $1.00 per share with a TIF instruction of IOC or FOK that
execute at the midpoint of the NBBO and remove liquidity from the
Exchange upon entry \10\ (such orders, ``Midpoint Peg IOC/FOK
Orders'').\11\ As proposed, executions of Midpoint Peg Orders in
securities priced below $1.00 per share with a TIF instruction of IOC
or FOK that execute at the midpoint of the NBBO and remove liquidity
from the Exchange upon entry in will be charged a fee of 0.25% of the
total dollar value of the transaction, which is the same fee that is
currently charged for all such executions.
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\10\ The Exchange notes that all Midpoint Peg Orders with a TIF
instruction of IOC or FOK, if executed on the Exchange, would remove
liquidity from the Exchange upon entry, as orders with a TIF
instruction of IOC or FOK do not post on the MEMX Book. The Exchange
further notes that a Midpoint Peg Order with a TIF instruction of
IOC may be eligible for routing away pursuant to Exchange Rule
11.11, and that if any such order is routed to and executed at an
away market it would be charged the current standard fee of $0.0030
per share for orders that are routed to, and remove liquidity from,
another market. See Exchange Rules 11.6(o)(1) and 11.6(o)(3).
\11\ The proposed pricing for executions of Midpoint Peg IOC/FOK
Orders is referred to by the Exchange on the Fee Schedule under the
new description ``Removed volume from MEMX Book, Midpoint Peg (IOC/
FOK)'' and such orders will receive a Fee Code of ``Rm'' assigned by
the Exchange.
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The purpose of reducing the fee for executions of Midpoint Peg IOC/
FOK Orders is to incentivize Members to submit additional liquidity-
removing orders designed to execute at the midpoint upon entry (i.e.,
in the form of Midpoint Peg IOC/FOK Orders) to the Exchange, as the
cost of such executions would be lower than it is today. In turn, the
Exchange believes the submission of additional Midpoint Peg IOC/FOK
Orders would encourage firms that post liquidity at the midpoint to
submit additional liquidity-providing orders designed to execute at the
midpoint to
[[Page 56133]]
the Exchange, as such orders would have a greater chance of being
executed as a result of additional contra-side liquidity-removing
Midpoint Peg IOC/FOK Orders to interact with. Thus, the Exchange's
proposal to reduce the fee for executions of Midpoint Peg IOC/FOK
Orders is designed to deepen liquidity and increase execution
opportunities at the midpoint on the Exchange, thereby improving the
Exchange's market quality to the benefit of all Members and enhancing
its attractiveness as a trading venue.
Liquidity Provision Tiers 1 and 2
The Exchange currently provides a standard rebate of $0.0020 per
share for executions of orders in securities priced at or above $1.00
per share that add displayed liquidity to the Exchange (such orders,
``Added Displayed Volume''). The Exchange also currently offers the
Liquidity Provision Tiers under which a Member may receive an enhanced
rebate for executions of Added Displayed Volume by achieving the
corresponding required volume criteria for each tier. The Exchange now
proposes to modify the required criteria under Liquidity Provision
Tiers 1 and 2, as further described below, but the Exchange does not
propose to change the rebates provided under such tiers.
With respect to Liquidity Provision Tier 1, a Member currently
qualifies for such tier by achieving: (1) a Displayed ADAV \12\ that is
equal to or greater than 0.40% of the TCV; \13\ or (2) a Remove ADV
\14\ that is equal to or greater than 0.25% of the TCV and a Step-Up
ADAV \15\ from June 2022 that is equal to or greater than 0.05% of the
TCV. Now, the Exchange proposes to modify the required criteria under
such tier such that a Member would now qualify for Liquidity Provision
Tier 1 by achieving: (1) a Displayed ADAV that is equal to or greater
than 0.40% of the TCV; or (2) a Remove ADV that is equal to or greater
than 0.20% of the TCV and a Step-Up ADAV from June 2022 that is equal
to or greater than 0.05% of the TCV. Thus, such proposed change would
lower the Remove ADV threshold in one of the two alternative criteria
under such tier.
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\12\ As set forth on the Fee Schedule, ``ADAV'' means the
average daily added volume calculated as the number of shares added
per day, which is calculated on a monthly basis, and ``Displayed
ADAV'' means ADAV with respect to displayed orders.
\13\ As set forth on the Fee Schedule, ``TCV'' means total
consolidated volume calculated as the volume reported by all
exchanges and trade reporting facilities to a consolidated
transaction reporting plan for the month for which the fees apply.
\14\ As set forth on the Fee Schedule, ``ADV'' means average
daily volume calculated as the number of shares added or removed,
combined, per day, which is calculated on a monthly basis, and the
term ``Remove ADV'' means ADV with respect to orders that remove
liquidity.
\15\ As set forth on the Fee Schedule, ``Step-Up ADAV'' means
ADV in the relevant baseline month subtracted from current ADAV.
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With respect to Liquidity Provision Tier 2, a Member currently
qualifies for such tier by achieving an ADAV \16\ that is equal to or
greater than 0.25% of the TCV.\17\ Now, the Exchange proposes to modify
the required criteria under such tier such that a Member would now
qualify for Liquidity Provision Tier 2 by achieving an ADAV that is
equal to or greater than 0.20% of the TCV. Thus, such proposed change
would lower the ADAV threshold under such tier.
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\16\ As set forth on the Fee Schedule, ``ADAV'' means the
average daily added volume calculated as the number of shares added
per day, which is calculated on a monthly basis.
\17\ As set forth on the Fee Schedule, ``TCV'' means total
consolidated volume calculated as the volume reported by all
exchanges and trade reporting facilities to a consolidated
transaction reporting plan for the month for which the fees apply.
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The Exchange believes that lowering the Remove ADV threshold under
Liquidity Provision Tier 1 and the ADAV threshold under Liquidity
Provision Tier 2, as proposed, would make such tiers easier for Members
to achieve, and, in turn, while the Exchange has no way of predicting
with certainty how the proposed new criteria will impact Member
activity, the Exchange anticipates that more Members will strive to
qualify for such tiers than currently do, resulting in the submission
of additional order flow to the Exchange.
Aggregation of Affiliated Members' DLI Quoting Activity
Lastly, the Exchange proposes to add a note to the Fee Schedule to
allow affiliated Members to aggregate the quoting activity of such
affiliated Members' MPIDs for purposes of DLI Tier qualification if
such Members provide prior notice to the Exchange. As proposed, to the
extent that two or more affiliated companies maintain separate
memberships with the Exchange and can demonstrate their affiliation by
showing they control, are controlled by, or are under common control
with each other, the Exchange would permit such Members to aggregate
the quoting activity (but not the NBBO Time \18\) of such affiliated
Members' MPIDs in a manner that is consistent with the DLI Tier
calculation methodologies currently set forth on the Fee Schedule.\19\
More specifically, the Exchange would use the same calculation
methodologies currently applicable to the aggregation of the quoting
activity (but not the NBBO Time) of multiple MPIDs of one Member to
aggregate the quoting activity (but not the NBBO Time) of all MPIDs
associated with the affiliated Members.
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\18\ As set forth on the Fee Schedule, ``NBBO Time'' means the
aggregate of the percentage of time during regular trading hours
during which one of a Member's MPIDs has a displayed order of at
least one round lot at the national best bid or the national best
offer.
\19\ See the Exchange's Fee Schedule (available at <a href="https://info.memxtrading.com/fee-schedule/">https://info.memxtrading.com/fee-schedule/</a>) and the Exchange's initial
proposal to adopt the DLI (Securities Exchange Act Release No. 92150
(June 10, 2021), 86 FR 32090 (June 16, 2021) (SR-MEMX-2021-07)) for
additional details regarding the Exchange's calculation
methodologies for the DLI Tiers.
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As proposed, the Exchange will verify such affiliation using a
Member's Form BD, which lists control affiliates. The purpose of this
proposed change is to avoid disparate treatment of firms that have
divided their various business activities between separate corporate
entities as compared to firms that operate those business activities
within a single corporate entity, as allowing affiliated Member firms
to count their aggregate quoting activity as proposed would produce the
same result for purposes of the Exchange's DLI Tier pricing as if such
affiliated Member firms were instead organized as a single corporate
entity. The Exchange notes that the proposed aggregation of affiliated
Member firms' quoting activity for purposes of DLI Tier qualification,
as described above, is consistent with the current practice of the
Exchange and other exchanges with respect to the aggregation of
affiliated Member firms' volumes for purposes of ADAV and ADV
calculations with respect to pricing tiers.\20\
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\20\ See, e.g., the Cboe EDGX Exchange, Inc. equities trading
fee schedule on its public website (available at <a href="https://www.cboe.com/us/equities/membership/fee_schedule/edgx/">https://www.cboe.com/us/equities/membership/fee_schedule/edgx/</a>).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\21\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\22\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among its Members and other persons using its facilities
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\21\ 15 U.S.C. 78f.
\22\ 15 U.S.C. 78f(b)(4) and (5).
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As discussed above, the Exchange operates in a highly fragmented
and competitive market in which market participants can readily direct
order flow to competing venues if they deem fee levels at a particular
venue to be
[[Page 56134]]
excessive or incentives to be insufficient, and the Exchange represents
only a small percentage of the overall market. The Commission and the
courts have repeatedly expressed their preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. In Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and also recognized that current regulation of the market
system ``has been remarkably successful in promoting market competition
in its broader forms that are most important to investors and listed
companies.'' \23\
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\23\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005).
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue to reduce use of certain categories of
products, in response to new or different pricing structures being
introduced into the market. Accordingly, competitive forces constrain
the Exchange's transaction fees and rebates, and market participants
can readily trade on competing venues if they deem pricing levels at
those other venues to be more favorable. The Exchange believes the
proposal reflects a reasonable and competitive pricing structure
designed to incentivize market participants to direct additional order
flow, including liquidity-adding and liquidity-removing orders designed
to execute at the midpoint, to the Exchange, which the Exchange
believes would enhance liquidity and market quality on the Exchange to
the benefit of all Members.
The Exchange believes that its proposal to charge a reduced fee for
executions of Midpoint Peg IOC/FOK Orders is reasonable, equitable, and
not unfairly discriminatory. Specifically, the Exchange believes such
proposal is reasonable, as it is reasonably designed to incentivize
Members to submit additional Midpoint Peg IOC/FOK Orders to the
Exchange, which, in turn, the Exchange believes would encourage firms
that post midpoint liquidity to submit additional liquidity-adding
orders designed to execute at the midpoint to the Exchange in order to
interact with such Midpoint Peg IOC/FOK Orders, as described above.
Thus, the Exchange believes the proposal reflects a reasonable attempt
to deepen liquidity and increase execution opportunities at the
midpoint on the Exchange, thereby improving the Exchange's market
quality to the benefit of all Members and enhancing its attractiveness
as a trading venue, particularly as the Exchange believes the proposed
reduction in the fee for executions of Midpoint Peg IOC/FOK Orders
(i.e., $0.0004 per share lower than the standard fee for Removed
Volume) is not excessive and is instead reasonably related to the
market quality benefits it is intended to achieve. The Exchange also
believes that the proposed fee for executions of Midpoint Peg IOC/FOK
Orders is equitable and not unfairly discriminatory, as such fee would
be charged uniformly to all executions of such orders for all Members.
With respect to Liquidity Provision Tiers 1 and 2, the Exchange
notes that volume-based incentives and discounts have been widely
adopted by exchanges, including the Exchange, and are reasonable,
equitable and not unfairly discriminatory because they are open to all
members on an equal basis and provide additional benefits or discounts
that are reasonably related to the value to an exchange's market
quality associated with higher levels of market activity, such as
higher levels of liquidity provision and/or growth patterns, and the
introduction of higher volumes of orders into the price and volume
discovery process. The Exchange believes that Liquidity Provision Tiers
1 and 2, as modified by the proposed changes to the required criteria
under such tiers, are reasonable, equitable and not unfairly
discriminatory for these same reasons, as such tiers would continue to
provide Members with incremental incentives to achieve certain volume
thresholds on the Exchange, are available to all Members on an equal
basis, and, as described above, are designed to encourage Members to
increase their order flow to the Exchange in order to qualify for the
corresponding enhanced rebate for executions of Added Displayed Volume,
thereby contributing to a deeper and more liquid market to the benefit
of all Members. The Exchange also believes that the proposed changes to
the required criteria under Liquidity Provision Tiers 1 and 2 reflect a
reasonable and equitable allocation of fees and rebates, as the
Exchange believes the enhanced rebate for executions of Added Displayed
Volume under each such tier remains commensurate with the corresponding
required criteria under the applicable tier and reasonably related to
the market quality benefits the applicable tier is designed to achieve.
Without having a view of activity on other markets and off-exchange
venues, the Exchange has no way of knowing whether these proposed
changes would definitely result in any Members qualifying for the
proposed Liquidity Provision Tiers 1 and 2. While the Exchange has no
way of predicting with certainty how the proposed changes will impact
Member activity, the Exchange believes that the proposed changes to
lower the Remove ADV threshold and the ADAV threshold under Liquidity
Provision Tiers 1 and 2, respectively, would make such tiers easier to
achieve, and the Exchange anticipates that more Members will strive to
qualify for such tiers than currently do, resulting in the submission
of additional order flow to the Exchange.
As described above, the proposed language on the Fee Schedule
permitting aggregation of quoting activity (but not NBBO Time) amongst
affiliated Members for purposes of DLI Tier qualification is intended
to avoid disparate treatment of firms that have divided their various
business activities between separate corporate entities as compared to
firms that operate those business activities within a single corporate
entity, as allowing affiliated Member firms to count their aggregate
quoting activity in determining DLI Tier qualification would produce
the same result for purposes of the Exchange's DLI Tier pricing as if
such affiliated Member firms were instead organized as a single
corporate entity. Accordingly, the Exchange believes that its proposed
policy is fair and equitable, and not unreasonably discriminatory. In
addition to ensuring fair and equal treatment of its Members, the
Exchange does not want to create incentives for its Members to
restructure their business operations or compliance functions simply
due to the Exchange's pricing structure. Moreover, as noted above, this
proposed policy is consistent with the practice of the Exchange and
other exchanges with respect to the aggregation of affiliated Members'
volumes for purposes of determining ADAV and ADV with respect to
pricing tiers, and therefore, it does not raise any new or novel issues
that have not previously been considered by the Commission.\24\
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\24\ See supra note 20.
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For the reasons discussed above, the Exchange submits that the
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of
the Act \25\ in that it provides for the equitable allocation of
reasonable dues, fees and other charges among its Members and other
persons using its facilities and is not designed to unfairly
discriminate
[[Page 56135]]
between customers, issuers, brokers, or dealers. As described more
fully below in the Exchange's statement regarding the burden on
competition, the Exchange believes that its transaction pricing is
subject to significant competitive forces, and that the proposed fees
and rebates described herein are appropriate to address such forces.
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\25\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will result in any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Instead, as discussed above,
the proposal is intended to incentivize market participants to direct
additional order flow, including in the form of orders designed to
execute at the midpoint of the NBBO, to the Exchange, thereby enhancing
liquidity and market quality on the Exchange to the benefit of all
Members. As a result, the Exchange believes the proposal would enhance
its competitiveness as a market that attracts actionable orders,
thereby making it a more desirable destination venue for its customers.
For these reasons, the Exchange believes that the proposal furthers the
Commission's goal in adopting Regulation NMS of fostering competition
among orders, which promotes ``more efficient pricing of individual
stocks for all types of orders, large and small.'' \26\
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\26\ See supra note 23.
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Intramarket Competition
As discussed above, the Exchange believes that the proposal would
incentivize Members to submit additional order flow, including
liquidity-adding and liquidity-removing orders designed to execute at
the midpoint, to the Exchange, thereby enhancing liquidity and market
quality on the Exchange to the benefit of all Members, as well as
enhancing the attractiveness of the Exchange as a trading venue, which
the Exchange believes, in turn, would continue to encourage market
participants to direct additional order flow to the Exchange. Greater
liquidity benefits all Members by providing more trading opportunities
and encourages Members to send additional orders to the Exchange,
thereby contributing to robust levels of liquidity, which benefits all
market participants. The opportunity to qualify for the proposed new
criteria under Liquidity Provision Tiers 1 and 2, and thus receive the
corresponding enhanced rebates for executions of Added Displayed
Volume, would continue to be available to all Members that meet the
associated volume requirements in any month. As described above, the
Exchange believes that the proposed new required criteria under each
such tier are commensurate with the corresponding rebate under such
tier and are reasonably related to the enhanced liquidity and market
quality that such tier is designed to promote. Additionally, as noted
above, the ability for Members to aggregate quoting activity amongst
affiliated Member firms for purposes of the Exchange's determination of
DLI Tier qualification is designed to avoid disparate treatment of
firms that have divided their various business activities between
separate corporate entities as compared to firms that operate those
business activities within a single corporate entity and would apply
equally to all Members as does the Exchange's current practice with
respect to the aggregation of affiliated Members' volumes for purposes
of determining ADAV and ADV with respect to pricing tiers. For the
foregoing reasons, the Exchange believes the proposed changes would not
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
Intermarket Competition
As noted above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. Members have numerous
alternative venues that they may participate on and direct their order
flow to, including 15 other equities exchanges and numerous alternative
trading systems and other off-exchange venues. As noted above, no
single registered equities exchange currently has more than
approximately 15.5% of the total market share of executed volume of
equities trading. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. Moreover, the Exchange
believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order
flow or discontinue to reduce use of certain categories of products, in
response to new or different pricing structures being introduced into
the market. Accordingly, competitive forces constrain the Exchange's
transaction fees and rebates, including with respect to executions of
Midpoint Peg IOC/FOK Orders and Added Displayed Volume, and market
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. As described above, the proposed changes
represent a competitive proposal through which the Exchange is seeking
to encourage additional order flow to the Exchange through a reduced
fee for executions of Midpoint Peg IOC/FOK Orders and modifications to
the required criteria under certain volume-based tiers, which have been
widely adopted by exchanges, including the Exchange. Additionally, as
discussed above, the proposed change to allow affiliated Members to
aggregate their quoting activity for purposes of the Exchange's
determination of DLI Tier qualification is consistent with the practice
of the Exchange and other exchanges with respect to the aggregation of
affiliated Member firms' volumes for purposes of ADAV and ADV
calculations with respect to pricing tiers. Accordingly, the Exchange
believes the proposal would not burden, but rather promote, intermarket
competition by enabling it to better compete with other exchanges that
offer similar pricing incentives to market participants and aggregation
of trading activity amongst affiliated firms with respect to pricing
incentives.
Additionally, the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \27\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. SEC, the D.C. Circuit stated as follows:
``[n]o one disputes that competition for order flow is `fierce.' . . .
As the SEC explained, `[i]n the U.S. national market system, buyers and
sellers of securities, and the broker-dealers that act as their order-
routing agents, have a wide range of choices of where to route orders
for execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in
[[Page 56136]]
the execution of order flow from broker dealers'. . . .''.\28\
Accordingly, the Exchange does not believe its proposed pricing changes
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
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\27\ See supra note 23.
\28\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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 \29\ and Rule 19b-4(f)(2) \30\ thereunder.
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\29\ 15 U.S.C. 78s(b)(3)(A)(ii).
\30\ 17 CFR 240.19b-4(f)(2).
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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 change should be approved or
disapproved.
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#057770696028666a6868606b7176457660662b626a73"><span class="__cf_email__" data-cfemail="8ffdfae3eaa2ece0e2e2eae1fbfccffceaeca1e8e0f9">[email protected]</span></a>. Please include
File Number SR-MEMX-2022-23 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-MEMX-2022-23. 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-MEMX-2022-23 and should be submitted on
or before October 4, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19681 Filed 9-12-22; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on September 13, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.