Notice2024-00079
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule To Extend the Membership Fee Waiver
Primary source
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Published
January 8, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 5 (Monday, January 8, 2024)</title>
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[Federal Register Volume 89, Number 5 (Monday, January 8, 2024)]
[Notices]
[Pages 972-975]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-00079]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99261; File No. SR-MEMX-2023-42]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule To Extend the Membership Fee Waiver
January 2, 2024.
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 December 28, 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\ 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 (the ``Fee Schedule'') pursuant to
Exchange Rules 15.1(a) and (c). The Exchange proposes to extend the
waiver (the ``Membership Fee Waiver'') of membership fees (``Membership
Fees'') which is currently in place for all new Members \3\ of the
Exchange, for an additional month beyond the program's current
expiration on December 31, 2023. The Exchange will continue to waive
Membership Fees for new Members who join the Exchange through January
31, 2024. 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 Exchange proposes to extend the time period for the waiver of
Membership Fees until January 31, 2024. The Exchange will continue to
implement the Membership Fee Waiver (as defined above) for all new
Members who join the Exchange prior to and including January 31, 2024.
The Exchange notes that the proposed change does not amend any existing
fee or rebate for equities transactions, market data or connectivity
fees. The sole change proposed herein is to extend the timeframe during
which the Exchange will waive Membership Fees for new Members of the
Exchange.
Currently, MEMX applies a Membership Fee Waiver to all new Members
of the Exchange which is set to expire on December 31, 2023. Under the
current Membership Fee Waiver, new Members who join the Exchange after
December 31, 2023, would be assessed Membership Fees of $200 per month
to maintain active membership, and new Members whose Membership Fees
were waived during the Waiver Period would be assessed Membership Fees
of $200 per month beginning January 1, 2024. In addition, in September
of 2023 the Exchange adopted specific fees applicable to participation
on the Exchange's platform for trading equity options (``MEMX
Options'').\4\ The current Membership Fee Waiver has also been applied
to new Members of MEMX Options, and thus such fees have not been
imposed on such Members to date.
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\4\ See Securities Exchange Act Release No. 98648 (September 29,
2023), 88 FR 68762 (October 4, 2023) (SR-MEMX-2023-26).
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The Exchange believes that the existing Membership Fee Waiver has
been effective in incentivizing options market participants to join
MEMX Options. MEMX Options launched in September of 2023, and has been
conducting a staged rollout of options available for trading on the
Exchange since that time. The Exchange believes that its rollout will
be complete in January of 2024 and would like to extend the Membership
Fee Waiver until after its rollout is complete in the event there are
options firms that are waiting to join the Exchange until after such
rollout is complete. In addition, the Exchange believes the Membership
Fee Waiver is a proper incentive for new participants on MEMX Options
to continue to increase their participation as they become accustomed
to the new trading platform.
Accordingly, the Exchange proposes to extend the time period of the
Membership Fee Waiver to expire on January 31, 2024. The Exchange
proposes to continue to waive Membership Fees for all new Members who
join the exchange on or before January 31, 2024. Under the proposed
Membership Fee Waiver, new Members who join the Exchange after January
31, 2024, will be assessed Membership Fees to maintain active
membership and if applicable, Members who participate on MEMX Options
will be assessed the specific Additional Fees applicable to such
participation. Similarly, new Members whose Membership Fees have been
waived since joining the Exchange will be assessed Membership Fees,
including Additional Fees applicable to participation on MEMX Options,
if applicable, beginning February 1, 2024. In addition, new Members of
MEMX Options who join after January 31, 2024, will be assessed
Membership Fees of $200 per month to maintain active membership, and
new Members whose Membership Fees were waived will be assessed
Membership Fees of $200 per month beginning February 1, 2024.
Specifically, the Exchange is proposing to amend the description under
``Membership'' in the Exchange's Fee Schedule, noting that Membership
Fees will be waived for new Members of the Exchange until February 1,
2024.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 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 its facilities and does not unfairly discriminate
between customers, issuers, brokers or dealers.
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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes it is reasonable to extend the timeframe of
the Membership Fee Waiver for new Members of the Exchange, primarily to
continue to provide an incentive for options trading firms to continue
to apply for Exchange membership during the current phase of the
rollout of MEMX Options. The options markets are quote-driven markets
and are dependent on liquidity providers for liquidity and price
discovery. Extending the timeframe of the Membership Fee Waiver will
continue to encourage additional liquidity providers to become members
of the Exchange, which may result in more trading opportunities,
enhanced competition, and improved overall market quality on the
Exchange. Although the proposed extension of the Membership Fee Waiver
timeframe is intended primarily to encourage new participants to join
the Exchange in order to participate on the MEMX Options market and the
Exchange believes the participants that will benefit from this waiver
are firms that will do so, the Exchange also believes that it is
reasonable to continue applying the Membership Fee Waiver broadly to
all new participants on the Exchange during the timeframe extension,
including firms that would trade only on the Exchange's market for
equity securities or on both the Exchange's market for equity
securities and MEMX Options.
In addition, the Exchange believes that the proposed extension of
the Membership Fee Waiver is equitable and not unfairly discriminatory
in that it will apply uniformly to all new
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Members of the Exchange. Further, the Exchange believes that the
proposed extension of the waiver is reasonable, equitable and not
unfairly discriminatory to current Members of the Exchange because the
majority of the Exchange's existing Members joined at a time when the
Exchange did not impose membership fees (also to incentivize such
participants to join), and thus have already received this benefit.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change 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 Exchange believes that the proposed change would
encourage market participants who have not already done so to join the
Exchange. As a result, if such participants do join the Exchange and
route their orders to the Exchange or support other Members that route
orders (i.e., clearing firms) the Exchange believes the proposal would
further enhance its competitiveness as a market. Encouraging additional
participants to join the Exchange will enable a greater number of
participants to participate on MEMX Options during the continued
rollout of the platform. Further, the Exchange believes that by
continuing to make the Membership Fee Waiver applicable to both the
Exchange's options platform and the Exchange's equity platform for an
extended time period, the proposal will enhance the competitiveness of
both platforms. Attracting a greater number of participants will foster
greater competition on the Exchange, particularly in the case of MEMX
Options which is a quote-driven market. 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.'' \7\
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\7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Intramarket Competition
As discussed above, the Exchange believes that the proposal would
encourage new participants to apply for Exchange membership, thereby
enhancing liquidity and market quality on the Exchange, 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.
The Exchange does not believe that the proposed changes would
impose any burden on intramarket competition because such changes will
incentivize new participants to join the Exchange and the majority of
the Exchange's current members joined at a time when the Exchange did
not impose membership fees (also to incentivize such participants to
join), and thus have already received this benefit. The options markets
are quote-driven markets and are dependent on liquidity providers for
liquidity and price discovery. The proposal will be of particular
importance in encouraging additional liquidity providers to become
members of the Exchange, which may result in more trading
opportunities, enhanced competition, and improved overall market
quality on the Exchange. 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 described above, the proposed extension of the Membership Fee
Waiver timeframe will incent market participants to join the Exchange
during the extended Membership Fee Waiver period. Accordingly, the
Exchange believes the proposal would not burden, but rather promote,
intermarket competition by enabling it to better compete with other
options exchanges during the continued rollout of MEMX Options. In
addition, as noted above, the Exchange has intentionally proposed to
apply the waiver broadly so that it continues to be applicable to new
Members that will participate on the Exchange's market for equity
securities or that will participate on such market as well as MEMX
Options, and thus, the proposal may also better enable the Exchange to
compete with other options exchanges and equities exchanges.
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 \8\ and Rule 19b-4(f)(2) \9\ thereunder.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 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#7604031a135b15191b1b131802053605131558111900"><span class="__cf_email__" data-cfemail="1062657c753d737f7d7d757e6463506375733e777f66">[email protected]</span></a>. Please include
file number SR-MEMX-2023-42 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-2023-42. 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
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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-2023-42
and should be submitted on or before January 29, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00079 Filed 1-5-24; 8:45 am]
BILLING CODE 8011-01-P
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