Notice2024-07443
Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule
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Published
April 9, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 69 (Tuesday, April 9, 2024)</title>
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[Federal Register Volume 89, Number 69 (Tuesday, April 9, 2024)]
[Notices]
[Pages 24883-24886]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-07443]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99902; File No. SR-MIAX-2024-17]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
April 3, 2024.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
[[Page 24884]]
thereunder,\2\ notice is hereby given that on March 22, 2024, Miami
International Securities Exchange, LLC (``MIAX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') a 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 proposes to amend the MIAX Options Exchange Fee
Schedule (the ``Fee Schedule'') to extend the SPIKES Options Market
Maker Incentive Program (the ``Incentive Program'') until June 30,
2024.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings</a>, at MIAX's principal office, 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 Exchange proposes to amend the Fee Schedule to extend the
Incentive Program until June 30, 2024.
On September 30, 2021, the Exchange filed its initial proposal to
implement a SPIKES Options Market Maker Incentive Program for SPIKES
options to incentivize Market Makers \3\ to improve liquidity,
available volume, and the quote spread width of SPIKES options
beginning October 1, 2021, and ending December 31, 2021.\4\ Technical
details regarding the Incentive Program were published in a Regulatory
Circular on September 30, 2021.\5\ On October 12, 2021, the Exchange
withdrew SR-MIAX-2021-45 and refiled its proposal to implement the
Incentive Program to provide additional details.\6\ In that filing, the
Exchange specifically noted that the Incentive Program would expire at
the end of the period (December 31, 2021) unless the Exchange filed
another 19b-4 Filing to amend the fees (or extend the Incentive
Program).\7\
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\3\ The term ``Market Makers'' refers to ``Lead Market Makers'',
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
\4\ See SR-MIAX-2021-45.
\5\ See MIAX Options Regulatory Circular 2021-56, SPIKES Options
Market Maker Incentive Program (September 30, 2021) available at
<a href="https://www.miaxglobal.com/sites/default/files/circular-files/MIAX_Options_RC_2021_56.pdf">https://www.miaxglobal.com/sites/default/files/circular-files/MIAX_Options_RC_2021_56.pdf</a>.
\6\ See Securities Exchange Act Release No. 93424 (October 26,
2021), 86 FR 60322 (November 1, 2021) (SR-MIAX-2021-49).
\7\ See id.
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Between December 23, 2021, and November 29, 2023, the Exchange
filed several proposals to extend the Incentive Program, with the last
extension period ending March 31, 2024.\8\ In each of those filings,
the Exchange specifically noted that the Incentive Program would expire
at the end of the then-current period unless the Exchange filed another
19b-4 Filing to amend the fees (or extend the Incentive Program).\9\
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\8\ See Securities Exchange Act Release Nos. 93881 (December 30,
2021), 87 FR 517 (January 5, 2022) (SR-MIAX-2021-63); 94574 (April
1, 2022), 87 FR 20492 (April 7, 2022) (SR-MIAX-2022-12); 95259 (July
12, 2022), 87 FR 42754 (July 17, 2022) (SR-MIAX-2022-24); 96007
(October 7, 2022), 87 FR 62151 (October 13, 2022) (SR-MIAX-2022-32);
96588 (December 28, 2022), 88 FR 381 (January 4, 2023) (SR-MIAX-
2022-47); 97239 (April 3, 2023), 88 FR 20930 (April 7, 2023) (SR-
MIAX-2023-13); 97883 (July 12, 2023), 88 FR 45941 (July 18, 2023)
(SR-MIAX-2023-26); and 99040 (November 29, 2023), 88 FR 84374
(December 5, 2023) (SR-MIAX-2023-47).
\9\ See id.
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The Exchange now proposes to extend the Incentive Program until
June 30, 2024.\10\
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\10\ The Exchange notes that at the end of the extension period,
the Incentive Program will expire unless the Exchange files another
19b-4 Filing to amend the terms or extend the Incentive Program.
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The Exchange proposes to extend the Incentive Program for SPIKES
options to continue to incentivize Market Makers to improve liquidity,
available volume, and the quote spread width of SPIKES options.
Currently, to be eligible to participate in the Incentive Program, a
Market Maker must meet certain minimum requirements related to quote
spread width in certain in-the-money (ITM) and out-of-the-money (OTM)
options as determined by the Exchange and communicated to Members via
Regulatory Circular.\11\ Market Makers must also satisfy a minimum time
in the market in the front 2 expiry months of 70%, and have an average
quote size of 25 contracts. The Exchange established two separate
incentive compensation pools that are used to compensate Market Makers
that satisfy the criteria pursuant to the Incentive Program.
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\11\ See supra note 5.
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The first pool (Incentive 1) has a total amount of $40,000 per
month, which is allocated to Market Makers that meet the minimum
requirements of the Incentive Program. Market Makers are required to
meet minimum spread width requirements in a select number of ITM and
OTM SPIKES option contracts as determined by the Exchange and
communicated to Members via Regulatory Circular.\12\ A complete
description of how the Exchange calculates the minimum spread width
requirements in ITM and OTM SPIKES options can be found in the
published Regulatory Circular.\13\ Market Makers are also required to
maintain the minimum spread width, described above, for at least 70% of
the time in the front two (2) SPIKES options contract expiry months and
maintain an average quote size of at least 25 SPIKES options contracts.
The amount available to each individual Market Maker is capped at
$10,000 per month for satisfying the minimum requirements of the
Incentive Program. In the event that more than four Market Makers meet
the requirements of the Incentive Program, each qualifying Market Maker
is entitled to receive a pro-rated share of the $40,000 monthly
compensation pool dependent upon the number of qualifying Market Makers
in that particular month.
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\12\ See id.
\13\ See id.
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The second pool (Incentive 2 Pool) is capped at a total amount of
$100,000 per month which is used during the Incentive Program to
further incentivize Market Makers who meet or exceed the requirements
of Incentive 1 (``qualifying Market Makers'') to provide tighter quote
width spreads. The Exchange ranks each qualifying Market Maker's quote
width spread relative to each other qualifying Market Maker's quote
width spread. Market Makers with tighter spreads in certain strikes, as
determined by the Exchange and communicated to Members via Regulatory
Circular,\14\ are eligible to receive a pro-rated share of the
compensation pool as calculated by the Exchange and communicated to
Members via Regulatory Circular,\15\ not to exceed $25,000 per Member
per month. Qualifying Market Makers are ranked relative to each other
based on
[[Page 24885]]
the quality of their spread width (i.e., tighter spreads are ranked
higher than wider spreads) and the Market Maker with the best quality
spread width receives the highest rebate, while other eligible
qualifying Market Makers receive a rebate relative to their quality
spread width.
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\14\ See id.
\15\ See id.
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The Exchange proposes to extend the Incentive Program until June
30, 2024. The Exchange does not propose to make any amendments to how
it calculates any of the incentives provided for in Incentive Pools 1
or 2. The details of the Incentive Program can continue to be found in
the Regulatory Circular that was published on September 30, 2021, to
all Exchange Members.\16\ The purpose of this extension is to continue
to incentivize Market Makers to improve liquidity, available volume,
and the quote spread width of SPIKES options. The Exchange will
announce the extension of the Incentive Program to all Members via a
Regulatory Circular.
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\16\ See id.
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2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \17\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \18\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among its members and issuers and other persons using
its facilities. The Exchange also believes the proposal furthers the
objectives of Section 6(b)(5) of the Act in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest and is not designed to permit unfair discrimination between
customers, issuers, brokers and dealers.
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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to extend the Incentive Program for Market
Makers in SPIKES options until June 30, 2024. The Incentive Program is
reasonably designed because it will continue to incentivize Market
Makers to provide quotes and increased liquidity in select SPIKES
options contracts. The Incentive Program is reasonable, equitably
allocated and not unfairly discriminatory because all Market Makers in
SPIKES options may continue to qualify for Incentive 1 and Incentive 2,
dependent upon each Market Maker's quoting in SPIKES options in a
particular month. Additionally, if a SPIKES Market Maker does not
satisfy the requirements of Incentive Pool 1 or 2, then it simply will
not receive the rebate offered by the Incentive Program for that month.
The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to continue to offer this financial incentive
to SPIKES Market Makers because it will continue to benefit all market
participants trading in SPIKES options. SPIKES options is a Proprietary
Product on the Exchange and the continuation of the Incentive Program
encourages SPIKES Market Makers to satisfy a heightened quoting
standard, average quote size, and time in market. A continued increase
in quoting activity and tighter quotes may yield a corresponding
increase in order flow from other market participants, which benefits
all investors by deepening the Exchange's liquidity pool, potentially
providing greater execution incentives and opportunities, while
promoting market transparency and improving investor protection.
The Exchange believes that the Incentive Program is equitable and
not unfairly discriminatory because it will continue to promote an
increase in SPIKES options liquidity, which may facilitate tighter
spreads and an increase in trading opportunities to the benefit of all
market participants. The Exchange believes it is reasonable to operate
the Incentive Program for a continued limited period of time to
strengthen market quality for all market participants. The resulting
increased volume and liquidity will benefit those Members who are
eligible to participate in the Incentive Program and will also continue
to benefit those Members who are not eligible to participate in the
Incentive Program by providing more trading opportunities and tighter
spreads.
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.
Intra-Market Competition
The Exchange believes that the proposed extension of the Incentive
Program to March 31, 2024, would continue to increase intra-market
competition by incentivizing Market Makers to quote SPIKES options,
which will continue to enhance the quality of quoting and increase the
volume of contracts available to trade in SPIKES options. To the extent
that this purpose is achieved, all the Exchange's market participants
should benefit from the improved market liquidity for SPIKES options.
Enhanced market quality and increased transaction volume in SPIKES
options that results from the anticipated increase in Market Maker
activity on the Exchange will benefit all market participants and
improve competition on the Exchange.
Inter-Market Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on inter-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed extension of the Incentive Program applies only to the Market
Makers in SPIKES Options, which are traded exclusively on the Exchange.
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,\19\ and Rule 19b-4(f)(2) \20\ 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 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 should be approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(3)(A)(ii).
\20\ 17 CFR 240.19b-4(f)(2).
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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#ddafa8b1b8f0beb2b0b0b8b3a9ae9daeb8bef3bab2ab"><span class="__cf_email__" data-cfemail="0173746d642c626e6c6c646f7572417264622f666e77">[email protected]</span></a>. Please include
file number SR-MIAX-2024-17 on the subject line.
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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-MIAX-2024-17. 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-MIAX-2024-17 and should be
submitted on or before April 30, 2024.
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\21\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-07443 Filed 4-8-24; 8:45 am]
BILLING CODE 8011-01-P
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