Notice2023-25542
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend MRX Options 7, Section 5 To Amend Route-Out Fees
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
November 20, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 222 (Monday, November 20, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 222 (Monday, November 20, 2023)]
[Notices]
[Pages 80786-80788]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25542]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98925; File No. SR-MRX-2023-20]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to Amend MRX
Options 7, Section 5 To Amend Route-Out Fees
November 14, 2023.
Pursuant to 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 November 1, 2023, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I and II below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's Pricing Schedule at
Options 7, Section 5, Other Options Fees and Rebates.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/mrx/rules">https://listingcenter.nasdaq.com/rulebook/mrx/rules</a>, at the
principal office of the Exchange, 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 purpose of the proposed rule change is to amend the Exchange's
Pricing Schedule at Options 7, Section 5, Other Options Fees and
Rebates. Specifically, the Exchange proposes to amend Part A, Route-Out
Fees. The Routing Fees apply to executions of orders that are routed to
one or more exchanges in connection with the Options Order Protection
and Locked/Crossed Market Plan.
Today, the Exchange assesses all Members a $0.55 per contract Penny
Symbol Routing Fee and a $1.09 Non-Penny Symbol Routing Fee to route to
another options exchange. The Exchange proposes to instead assess a
$0.60 per contract Penny Symbol Routing Fee and a $1.20 Non-Penny
Symbol Routing Fee to route to another options exchange regardless of
the capacity of the order. The purpose of the proposed Routing Fees is
to recoup costs incurred by the Exchange when routing orders to other
options exchanges on behalf of options Members. In determining its
proposed Routing Fees, the Exchange took into account transaction fees
assessed by other options exchanges, the Exchange's projected clearing
costs, and the projected administrative, regulatory, and technical
costs associated with routing orders to other options exchanges. The
Exchange will continue to use its affiliated broker-dealer, Nasdaq
Execution Services, to route orders to other options exchanges. Routing
services offered by the Exchange are completely optional and market
participants can readily select between various providers of routing
services, including other exchanges and broker-dealers. Also, the
Exchange notes that market participants may elect to mark their orders
as ``Do Not Route'' to avoid any Routing Fees.\3\ The proposed
structure for Routing Fees is similar to another options market.\4\ The
Exchange believes that the proposed Routing Fees would enable the
Exchange to recover the costs it incurs to route orders to away markets
after taking into account the other costs associated with routing
orders to other options exchanges.
---------------------------------------------------------------------------
\3\ See Supplementary Material .04 to MRX Options 3, Section 7.
\4\ See MEMX's Options Fee Schedule at <a href="https://info.memxtrading.com/us-options-trading-resources/us-options-fee-schedule/">https://info.memxtrading.com/us-options-trading-resources/us-options-fee-schedule/</a>. MEMX assesses a $0.60 per contract Penny Symbol routing
fee and a $1.20 Non-Penny Symbol routing fee.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\5\ in general, and furthers the objectives of sections
6(b)(4) and 6(b)(5) of the Act,\6\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among members and issuers and other persons using any facility,
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange's proposed changes to its Routing Fees are reasonable
in several respects. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for options securities
transaction services that constrain its pricing determinations in that
market. The fact that this market is competitive has long been
recognized by the courts. In NetCoalition v. Securities and Exchange
Commission, 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 the execution of order flow from broker
dealers'. . . .'' \7\
---------------------------------------------------------------------------
\7\ 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-NYSEArca-2006-
21)).
---------------------------------------------------------------------------
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, while adopting a series of steps to improve the current market
model, the Commission
[[Page 80787]]
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.'' \8\
---------------------------------------------------------------------------
\8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options security transaction services. The Exchange is only one of
seventeen options exchanges to which market participants may direct
their order flow. Within this environment, market participants can
freely and often do shift their order flow among the Exchange and
competing venues in response to changes in their respective pricing
schedules. As such, the proposal represents a reasonable attempt by the
Exchange to increase its liquidity and market.
The Exchange's proposal to amend its Routing Fees such that all
Members would pay a $0.60 per contract Penny Symbol Routing Fee and a
$1.20 Non-Penny Symbol Routing Fee to route to another options exchange
is reasonable because the proposed Routing Fees would enable the
Exchange to recover the costs it incurs to route orders to away markets
after taking into account the other costs associated with routing
orders to other options exchanges. Routing services offered by the
Exchange are completely optional and market participants can readily
select between various providers of routing services, including other
exchanges and broker-dealers. Also, the Exchange notes that market
participants may elect to mark their orders as ``Do Not Route'' to
avoid any Routing Fees.\9\ The proposed structure for Routing Fees is
similar to another options market.\10\
---------------------------------------------------------------------------
\9\ See Supplementary Material .04 to MRX Options 3, Section 7.
\10\ See MEMX's Options Fee Schedule at <a href="https://info.memxtrading.com/us-options-trading-resources/us-options-fee-schedule/">https://info.memxtrading.com/us-options-trading-resources/us-options-fee-schedule/</a>. MEMX assesses a $0.60 per contract Penny Symbol routing
fee and a $1.20 Non-Penny Symbol routing fee.
---------------------------------------------------------------------------
The Exchange's proposal to amend its Routing Fees such that all
Members would pay a $0.60 per contract Penny Symbol Routing Fee and a
$1.20 Non-Penny Symbol Routing Fee to route to another options exchange
is equitable and not unfairly discriminatory because these Routing Fees
will apply equally to all options Members.
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.
In terms of intra-market competition, the Exchange's proposal to
amend its Routing Fees such that all Members would pay a $0.60 per
contract Penny Symbol Routing Fee and a $1.20 Non-Penny Symbol Routing
Fee to route to another options exchange does not impose an undue
burden on competition because these fees will apply equally to all
options Members.
In terms of inter-market competition, 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, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
options exchanges. Because competitors are free to modify their own
fees in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which fee changes in this market may impose any burden on competition
is extremely limited.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or 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 \11\ and Rule 19b-4(f)(2) \12\ 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: (i) necessary or
appropriate in the public interest; (ii) for the protection of
investors; or (iii) 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<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#7d0f081118501e1210101813090e3d0e181e531a120b"><span class="__cf_email__" data-cfemail="1260677e773f717d7f7f777c6661526177713c757d64">[email protected]</span></a>. Please include
file number SR-MRX-2023-20 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-MRX-2023-20. 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-MRX-2023-20 and should be
submitted on or before December 11, 2023.
[[Page 80788]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25542 Filed 11-17-23; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on November 20, 2023.
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.