Notice2024-05366
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
March 14, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 51 (Thursday, March 14, 2024)</title>
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[Federal Register Volume 89, Number 51 (Thursday, March 14, 2024)]
[Notices]
[Pages 18687-18689]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-05366]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99699; File No. SR-MEMX-2024-08]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule
March 8, 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 February 29, 2024, MEMX LLC (``MEMX'' or the ``Exchange'')
filed with the Securities and Exchange Commission (the ``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.
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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\ and non-
Members \4\ of the Exchange (the ``Fee Schedule'') pursuant to Exchange
Rules 15.1(a) and (c) to implement a waiver of application session fees
solely related to participation on the Exchange's platform for trading
equity options, MEMX Options, until March 31, 2024. The Exchange
proposes to implement the changes to the Fee Schedule pursuant to this
proposal on March 1, 2024. The text of the proposed rule change is
provided in Exhibit 5.
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\3\ See Exchange Rule 1.5(p).
\4\ Types of market participants that obtain connectivity
services from the Exchange but are not Members include service
bureaus and extranets. Service bureaus offer technology-based
services to other companies for a fee, including order entry
services to Members, and thus, may access application sessions on
behalf of one or more Members. Extranets offer physical connectivity
services to Members and non-Members.
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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
[[Page 18688]]
implement a waiver of application session fees solely related to
participation on the Exchange's platform for trading equity options,
MEMX Options, until March 31, 2024. The Exchange notes that the
proposed change does not amend any existing fee or rebate for equities
or options transactions, market data or connectivity fees. The sole
change proposed herein is to extend the timeframe during which the
Exchange will waive Options application session fees for new Members
and non-Members of the Exchange, as further described below.
MEMX currently has a waiver in place, the ``Options Connectivity
Fee Waiver'', which is set to expire on February 29, 2024.\5\ Under the
current Options Connectivity Fee Waiver, fees charged to Members and
Non-Members for physical connectivity to MEMX Options \6\ and for
application sessions (otherwise known as ``logical ports'') utilized in
connection with participation on MEMX Options would not be assessed
until March 1, 2024. Specifically, the physical connectivity fees are
$6,000 per month for a physical connection in the data center where the
Exchange primarily operates under normal market conditions (``Primary
Data Center''), and $3,000 per month for a physical connection at the
geographically diverse data center, which is operated for backup and
disaster recovery purposes (``Secondary Data Center''), and the
application session fees are $450 per month for an application session
used for order entry (``Order Entry Port'') and $450 per month for an
application session for receipt of drop copies (``Drop Copy Port''), to
the extent such ports are in the Primary Data Center.
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\5\ See SR-MEMX-2024-05, available at: <a href="https://info.memxtrading.com/sr-memx-2024-05-proposed-change-to-amend-the-exchanges-fee-schedule/">https://info.memxtrading.com/sr-memx-2024-05-proposed-change-to-amend-the-exchanges-fee-schedule/</a>.
\6\ Physical connections may be used to access both MEMX
equities and options platforms, as such, the Exchange internally
verifies whether new connections are being used solely for Options
connections in order to determine whether such connection qualifies
for the Options Connectivity Fee Waiver.
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The Exchange believes that the existing Options Connectivity 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's rollout completed on February
27, 2024, and given the impending expiration of the Options
Connectivity Fee Waiver, the Exchange is proposing to implement a new
waiver, in which it will waive application session fees (but not
physical connectivity fees) until March 31, 2024 (the ``Options
Application Session Fee Waiver'').
Under the proposed Options Application Session Fee Waiver,
applicable Options application session fees of $450 per month for each
Order Entry Port and Drop Copy Port in the Exchange's Primary Data
Center will be assessed to Members and non-Members beginning April 1,
2024. The Exchange believes that it is appropriate to continue to waive
application session fees solely used for Options for an additional
month due to the recent completion of the phased underlying symbol
rollout. Given the fact that application sessions are generally added
and removed on a more fluid basis, the Exchange wishes to offer new
participants on the Exchange more time to determine the appropriate
amount of application sessions required to conduct their business on
the Exchange.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\7\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\8\ 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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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes it is reasonable to waive application session
fees solely related to participation on MEMX Options for new and
existing Members and non-Members of the Exchange because the proposal
continues to provide an incentive for options trading firms to apply
for Exchange membership. Further, the Exchange has determined that a
waiver of application session fees only is appropriate because in
general, the number of physical connections used by Members and non-
Members fluctuates less than the number of application sessions, which
are added or discontinued on a more frequent basis depending on the
participant's business model. Given that the Exchange has very recently
completed the final phase of the underlying symbol rollout on MEMX
Options, the Exchange would like to provide additional time for
participants to determine the appropriate amount of application
sessions necessary for their options trading free of charge. The
Exchange believes that providing this opportunity for a limited period
of time enables it to improve its overall competitiveness and
strengthen its market quality for all market participants.
In addition, the Exchange believes that the proposed Options
Application Session Fee Waiver is equitable and not unfairly
discriminatory in that it will apply uniformly to all Members and non-
Members of the Exchange.
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 Exchange believes that the proposed change would encourage market
participants who have not already done so to join the Exchange, in
addition to providing existing participants additional time to
potentially modify their number of application sessions in order to
optimize their activities on MEMX Options. As a result, the Exchange
believes that the Options Application Session Fee Waiver will enhance
the competitiveness of MEMX Options as a new exchange. 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.'' \9\
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\9\ 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 provide an added
benefit to Members and non-Members already connected to MEMX Options.
For the foregoing reasons, the Exchange believes the proposed changes
would not impose
[[Page 18689]]
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 Options Application Session Fee
Waiver will allow current Members and non-Members added flexibility and
time in determining the appropriate number of application sessions they
wish to purchase in order to participate on the Exchange. Accordingly,
the Exchange believes the proposal would not burden, but rather
promote, intermarket competition by enabling it to better compete with
other options exchanges following the recent completion of the final
phased rollout on MEMX Options.
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 is effective upon filing pursuant to
Section 19(b)(3)(A) \10\ of the Act and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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 under
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 15 U.S.C. 78s(b)(2)(B).
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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#80f2f5ece5ade3efedede5eef4f3c0f3e5e3aee7eff6"><span class="__cf_email__" data-cfemail="3143445d541c525e5c5c545f4542714254521f565e47">[email protected]</span></a>. Please include
file number SR-MEMX-2024-08 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-2024-08. 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-2024-08 and should be
submitted on or before April 4, 2024.
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. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-05366 Filed 3-13-24; 8:45 am]
BILLING CODE 8011-01-P
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