Notice2022-26444
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
December 6, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 233 (Tuesday, December 6, 2022)</title>
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[Federal Register Volume 87, Number 233 (Tuesday, December 6, 2022)]
[Notices]
[Pages 74691-74693]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-26444]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96414; File No. SR-MEMX-2022-31]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule
November 30, 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 November 17, 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 November 17, 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 exclude any day with a scheduled early market close from
the volume calculations used by the Exchange for purposes of
determining a Member's qualification for the Exchange's transaction
pricing tiers. Specifically, the Exchange proposes to exclude any day
with a scheduled early market close from its calculations of ADAV,\4\
ADV \5\ and TCV,\6\ and for purposes of determining qualification for
the Displayed Liquidity Incentive.
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\4\ As set forth on the Fee Schedule, ``ADAV'' means average
daily added volume calculated as the number of shares added per day,
which is calculated on a monthly basis.
\5\ 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.
\6\ 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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Currently, the Exchange's Fee Schedule provides that the Exchange
excludes from its calculations of ADAV, ADV and TCV, and for purposes
of determining qualification for the Displayed Liquidity Incentive: (1)
any trading day that the Exchange's system experiences a disruption
that lasts for more than 60 minutes during regular trading hours; (2)
the day that Russell Investments reconstitutes its family of indexes
(i.e., the last Friday in June); (3) any day that the MSCI Equities
Indexes are rebalanced (i.e., on a quarterly basis); and (4) any day
that the S&P 400, S&P 500, and S&P 600 Indexes are rebalanced (i.e., on
a quarterly basis).
The Exchange excludes these days from such calculations in order to
avoid penalizing Members that might otherwise qualify for certain
tiered pricing but that, because of special circumstances on a
particular day, did not participate on the Exchange to the extent that
they might have otherwise participated. Similarly, the Exchange
believes that scheduled early market closes, which typically are the
day before or after a holiday, may preclude some Members from
submitting orders to the Exchange at the same level as they might
otherwise. The Exchange notes that it is not proposing to modify any of
the existing fees or rebates or the volume thresholds at which a Member
may qualify for certain fees or rebates pursuant to its tiered pricing
structure. Rather, as noted above, the Exchange is proposing to modify
its Fee Schedule by including in the list of days excluded from its
calculations of ADAV, ADV and TCV, and for purposes of determining
qualification for the Displayed Liquidity Incentive, any day with a
scheduled early market close.
The Exchange believes that excluding days with a scheduled early
market close from its calculations of ADAV, ADV and TCV, and for
purposes of determining qualification for the Displayed Liquidity
Incentive, will provide Members with increased certainty as to their
monthly cost for trades executed on the Exchange. In addition, the
Exchange notes that excluding days with a scheduled early market close
from volume calculations for purposes of determining a Member's
qualification for pricing tiers is consistent with the practice of
other exchanges.\7\
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\7\ See, e.g., Cboe BZX Exchange, Inc. equities trading fee
schedule on its public website (available at <a href="https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/">https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/</a>); see also
Securities Exchange Act Release No. 72589 (July 10, 2014), 79 FR
41618 (July 16, 2014) (SR-BATS-2014-025).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with
[[Page 74692]]
the provisions of Section 6 of the Act,\8\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\9\ 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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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes the proposed change to exclude any day with a
scheduled early market close from the volume calculations used by the
Exchange for purposes of determining a Member's qualification for the
Exchange's transaction pricing tiers is reasonable because, as
described above, it will help provide Members with a greater level of
certainty as to their level of rebates and costs for trading in any
month where there is a scheduled early market close. The Exchange is
not proposing to amend the thresholds a Member must achieve to become
eligible for, or the dollar value associated with, the tiered rebates
or fees. Eliminating the inclusion of any day with a scheduled early
market close would, in many cases, be excluding a day that would
otherwise lower a Member's ADAV and/or ADV as a percentage of the TCV,
as well as negatively impact a Member's average quoting activity for
purposes of the Displayed Liquidity Incentive Tiers. Thus, the Exchange
believes the proposed change will make the majority of Members more
likely to meet the minimum or higher tier thresholds, incentivizing
Members to increase their participation on the Exchange in order to
meet the next highest tier. Additionally, the Exchange believes that
the proposed rule change is equitable and not unfairly discriminatory
because the methodology for calculating ADAV, ADV and TCV, and for
purposes of determining qualification for the Displayed Liquidity
Incentive, will apply equally to all Members, in that each Member's
volume and quoting activities for purposes of the Exchange's
transaction pricing tiers would continue to be calculated in a uniform
manner and would now exclude any day with a scheduled early market
close. Further, the Exchange believes that a tiered pricing model not
significantly altered by a day of atypical trading behavior, which
allows Members to predictably calculate their costs associated with
trading activity on the Exchange, is reasonable, fair and equitable and
not unreasonably discriminatory, as it is uniform in application
amongst Members and should enable such participants to operate their
business without concern of unpredictable and potentially significant
changes in expenses.
In addition, as noted above, the proposed exclusion of any day with
a scheduled early market close from volume calculations for purposes of
determining a Member's qualification for pricing tiers is consistent
with the practice of other exchanges, and therefore, such proposal does
not raise any new or novel issues that have not previously been
considered by the Commission.\10\
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\10\ See supra note 7.
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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 \11\ 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 between customers, issuers, brokers, or dealers.
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\11\ 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. Rather, the Exchange believes
the proposed change will help to promote intramarket competition by
avoiding a penalty to Members for days when overall trading activity
might be significantly lower than a typical trading day. Additionally,
the Exchange believes the proposal would not impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because, as described above, the
proposed exclusion of any day with a scheduled early market close from
the relevant calculations will apply equally to all Members and in the
same manner that the Exchange currently excludes certain system
disruption and index rebalance days from such calculations. The
Exchange does not believe the proposal would impose any burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as the Exchange believes the
proposal is not concerned with such competitive issues, but rather
relates to calculation methodologies applicable to its pricing tiers.
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 \12\ and Rule 19b-4(f)(2) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 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#9ae8eff6ffb7f9f5f7f7fff4eee9dae9fff9b4fdf5ec"><span class="__cf_email__" data-cfemail="0c7e796069216f6361616962787f4c7f696f226b637a">[email protected]</span></a>. Please include
File Number SR-MEMX-2022-31 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-2022-31. 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
[[Page 74693]]
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-2022-31 and should be submitted on
or before December 27, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-26444 Filed 12-5-22; 8:45 am]
BILLING CODE 8011-01-P
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