Notice2023-22610
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule
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Published
October 13, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 197 (Friday, October 13, 2023)</title>
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[Federal Register Volume 88, Number 197 (Friday, October 13, 2023)]
[Notices]
[Pages 71063-71065]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22610]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98701; File No. SR-MEMX-2023-27]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule
October 6, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 29, 2023, 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\ 15 U.S.C. 78a.
\3\ 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 \4\ (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 immediately. The text of the proposed rule change is
provided in Exhibit 5.
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\4\ See Exchange Rule 1.5(p).
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II. Self-Regulatory Organization's Statement of the Purpose of, and the
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Fee
Schedule to add clarifying language to the MEMX Equities Liquidity
Provision Tiers. The Exchange notes that certain criteria of Liquidity
Provision Tier 4 \5\ (namely, criteria (2)),\6\ will expire no later
than
[[Page 71064]]
October 31, 2023 and Liquidity Provision Tier 6 \7\ will expire no
later than November 30, 2023. As described below, the Exchange wishes
to add language clarifying the applicability of other language on the
Fee Schedule to such Tiers in light of their expiration. The Exchange
does not propose to change the rebates offered to Members under
Liquidity Provision Tier 4 or Liquidity Provision Tier 6, nor does the
Exchange propose to change the criteria under such tiers. Rather, the
Exchange wishes to make clear which months Members are eligible for
such tiers.
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\5\ The pricing for Liquidity Provision Tier 4 is referred to by
the Exchange on the Fee Schedule under the existing description
``Added displayed volume, Liquidity Provision Tier 4'' with a Fee
Code of ``B4'', ``D4'' or ``J4'', as applicable, to be provided by
the Exchange on the monthly invoices provided to Members.
\6\ This criteria provides that a Member may qualify for
Liquidity Provision Tier 4 by achieving a Displayed ADAV that is
equal to or greater than 0.02% of the TCV and a Step-Up Displayed
ADAV of the TCV from April 2023 that is equal to or greater than 50%
of the Member's April 2023 Displayed ADAV of the TCV. As set forth
on the Fee Schedule, ``Displayed ADAV'' means ADAV with respect to
displayed orders. ``ADAV'' means the average daily added volume
calculated as the number of shares added per day, which is
calculated on a monthly basis. ``Step-Up Displayed ADAV'' means
Displayed ADAV in the relevant baseline month subtracted from
current Displayed ADAV. ``TCV'' is 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. See also the Exchange's Fee
Schedule (available at <a href="https://info.memxtrading.com/fee-schedule/">https://info.memxtrading.com/fee-schedule/</a>).
\7\ The pricing for Liquidity Provision Tier 6 is referred to by
the Exchange on the Fee Schedule under the existing description
``Added displayed volume, Liquidity Provision Tier 6'' with a Fee
Code of ``B6'', ``D6'' or ``J6'', as applicable, to be provided by
the Exchange on the monthly invoices provided to Members.
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The Liquidity Provision Tiers section of the Fee Schedule contains
the following language in the first footnote (denoted by ``*''):
``Members that qualify for Tier 4, 5, or 6 based on activity in a given
month will also receive the associated Tier 4, 5, or 6 rebate during
the following month.'' The second footnote (denoted by ``**'') of the
Liquidity Provision Tiers section of the Fee Schedule provides that
Criteria 2 of Liquidity Provision Tier 4 will expire no later than
October 31, 2023. The third footnote (denoted by ``***'') of the
Liquidity Provision Tiers section of the Fee Schedule provides that
Liquidity Provision Tier 6 will expire no later than November 30, 2023.
The Exchange now proposes to add clarifying language to the second and
third footnote of the Liquidity Provision Tiers section, in order to
make it more clear to Members that the months in which they are
eligible to qualify for either (i) Liquidity Provision Tier 4 rebates
based upon Criteria (2) of such tier, or (ii) Liquidity Provision Tier
6 rebates.
Clarify Liquidity Provision Tier 4 Criteria (2)
Currently, the second footnote of the Liquidity Provision Tiers
section of the Fee Schedule states that ``Criteria (2) of Liquidity
Provision Tier 4 will expire no later than October 31, 2023''. The
Exchange wishes to clarify that, since Criteria (2) of Liquidity
Provision 4 will expire on October 31, 2023, a Member's activity during
the month of October will not qualify such Member for the Liquidity
Provision 4 rebate in the following month if the Member qualifies for
the tier based on Criteria (2). Thus, a Member qualifying based on
Criteria (2) will not qualify for the Liquidity Provision 4 rebate in
November based on October activity, because Criteria (2) expires as of
October 31. The Exchange now proposes to amend the second footnote of
the Liquidity Provision Tiers section to add the following sentence:
``Due to the expiration of Criteria (2), Members that qualify for Tier
4 based on activity meeting Criteria (2) in October 2023 will not
receive the Liquidity Provision Tier 4 rebate during the following
month.'' The Exchange wishes to make clear that, while a Member whose
October activity meets Tier 4 via Criteria (2) would be eligible to
receive Tier 4 rebates in October, such Member is not eligible to
qualify for the Tier 4 rebate in the following month (November 2023)
based on October activity. As noted above, the Exchange does not
propose to change the Tier 4 rebate, nor does the Exchange propose to
modify the criteria to achieve such rebate. The Exchange believes that
this proposed clarifying language will provide Members with additional
certainty when trading on the Exchange, which in turn, will incentivize
Members to achieve certain volume thresholds on the Exchange on an
ongoing basis.
Clarify Liquidity Provision Tier 6
Currently, the third footnote of the Liquidity Provision Tiers
section of the Fee Schedule states that ``Liquidity Provision Tier 6
will expire no later than November 30, 2023.'' The Exchange wishes to
clarify that, since Liquidity Provision 6 will expire on November 30,
2023, a Member's activity during the month of November will not qualify
such Member for the Liquidity Provision 6 rebate in the following
month. Thus, a Member's activity in November will not qualify the
Member for the Liquidity Provision 6 rebate in December based on
November activity, because Criteria (2) expires as of November 30. The
Exchange now proposes to amend the third footnote to add the following
sentence: ``Due to the expiration of Tier 6, Members that qualify for
Tier 6 based on activity in November 2023, will not receive the
Liquidity Provision Tier 6 rebate during the following month.'' The
Exchange wishes to make clear that, while a Member who qualifies for
Tier 6 rebates based upon November activity would be eligible to
receive Tier 6 rebates in November 2023, such Member would not qualify
for Tier 6 rebates in the following month (December 2023) based on
November activity. As noted above, the Exchange does not propose to
change the Tier 6 rebate, nor does the Exchange propose to modify the
criteria to achieve such rebate. The Exchange believes that this
proposed clarifying language will provide Members with additional
certainty when trading on the Exchange, which in turn, will incentivize
Members to achieve certain volume thresholds on the Exchange on an
ongoing basis.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with 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 notes that volume-based incentives (such as Liquidity
Provision Tiers) 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 discount 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 the proposed clarifying language to the
second and third footnotes in the Liquidity Provision Tiers section of
the Fee Schedule is reasonable because it is designed to avoid
confusion in reading the Fee Schedule. The Liquidity Provision Tiers
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 reasonably designed to
encourage Members to maintain or increase their order flow to the
Exchange. The Exchange believes that the proposed clarifying language
will provide Members with an added layer of certainty with respect to
the expiring Tiers, namely Liquidity Provision Tier 4 Criteria (2) and
Liquidity Provision Tier 6.
The Exchange also believes the proposed change is equitable and not
unfairly discriminatory because it will apply equally to all Members
and
[[Page 71065]]
because the opportunity to qualify for Liquidity Provision Tiers is
open to all members on an equal basis. Upon the expiration of Liquidity
Provision Tier 4 Criteria (2) for activity on the Exchange after
October 31, 2023, no Member will be able to qualify for Liquidity
Provision Tier 4 based on Criteria (2). Similarly, upon the expiration
of Liquidity Provision Tier 6 for activity on the Exchange after
November 30, 2023, no Member will be able to qualify for Liquidity
Provision Tier 6.
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 \10\ 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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\10\ 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, as described above, the
proposed change is intended to provide clear and easy-to-understand
language in its Fee Schedule related to the expiring Tiers, as
described above. The Exchange believes that providing clarifying
language enables Members to make better decisions about where to route
their orders and would enable the Exchange to better compete with other
exchanges that offer similar pricing structures and incentives to
market participants.
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 competitive issues, but rather relates
to clarifying the applicability of certain expiring Tiers, as described
above. 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 changes will apply to all Members
uniformly and in the same manner.
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 \11\ and Rule 19b-4(f)(2) \12\ thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#88fafde4eda5ebe7e5e5ede6fcfbc8fbedeba6efe7fe"><span class="__cf_email__" data-cfemail="f183849d94dc929e9c9c949f8582b1829492df969e87">[email protected]</span></a>. Please include
file number SR-MEMX-2023-27 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-MEMX-2023-27. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MEMX-2023-27 and should be
submitted on or before November 3, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2023-22610 Filed 10-12-23; 8:45 am]
BILLING CODE 8011-01-P
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