Notice2024-23802
Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule and Extend the SPIKES Options Market Maker Incentive Program
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
October 16, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 200 (Wednesday, October 16, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 200 (Wednesday, October 16, 2024)]
[Notices]
[Pages 83529-83535]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-23802]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101289; File No. SR-MIAX-2024-39]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule and Extend the SPIKES
Options Market Maker Incentive Program
October 9, 2024.
Pursuant to the provisions of 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 September 27, 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 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 is filing a proposal to amend the MIAX Fee Schedule
(``Fee Schedule'') to (i) amend and extend the SPIKES options Market
Maker Incentive Program (the ``Incentive Program'') until January 31,
2025; and (ii) remove waivers for certain non-transaction fees
applicable to Market Makers \3\ that trade solely in Proprietary
Products.\4\
---------------------------------------------------------------------------
\3\ The term ``Market Makers'' refers to ``Lead Market Makers'',
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
\4\ The term ``Proprietary Product'' means a class of options
that is listed exclusively on the Exchange. See Exchange Rule 100.
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/all-options-exchanges/rule-filings">https://www.miaxglobal.com/markets/us-options/all-options-exchanges/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
[[Page 83530]]
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 (i) amend and
extend the SPIKES options Market Maker Incentive Program (the
``Incentive Program'') until January 31, 2025; and (ii) remove waivers
for certain non-transaction fees applicable to Market Makers that trade
solely in Proprietary Products.
Background
On October 12, 2018, the Exchange received approval from the U.S.
Securities and Exchange Commission (``Commission'') to list and trade
on the Exchange options on the SPIKES[supreg] Index, a new index that
measures expected 30-day volatility of the SPDR S&P 500 ETF Trust
(commonly known and referred to by its ticker symbol, ``SPY'').\5\ The
Exchange adopted its initial SPIKES options transaction fees on
February 15, 2019 and adopted a new section of the Fee Schedule for
those fees.\6\ Options on the SPIKES Index began trading on the
Exchange on February 19, 2019.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 84417 (October 12,
2018), 83 FR 52865 (October 18, 2018) (SR-MIAX-2018-14) (Order
Granting Approval of a Proposed Rule Change by Miami International
Securities Exchange, LLC to List and Trade on the Exchange Options
on the SPIKES[supreg] Index).
\6\ See Securities Exchange Release No. 85283 (March 11, 2019),
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11). The Exchange
initially filed the proposal on February 15, 2019 (SR-MIAX-2019-04).
That filing was withdrawn and replaced with SR-MIAX-2019-11. On
September 30, 2020, the Exchange filed its proposal to, among other
things, reorganize the Fee Schedule to adopt new Section (1)(b),
Proprietary Products Exchange Fees, and moved the fees and rebates
for SPIKES options into new Section (1)(b)(i). See Securities
Exchange Act Release Nos. 90146 (October 9, 2020), 85 FR 65443
(October 15, 2020) (SR-MIAX-2020-32); 90814 (December 29, 2020), 86
FR 327 (January 5, 2021) (SR-MIAX-2020-39).
---------------------------------------------------------------------------
On May 31, 2019, the Exchange filed its first proposal in a series
of proposals with the Commission to amend the Fee Schedule to waive
certain non-transaction fees applicable to Market Makers that trade
solely in Proprietary Products (including options on the SPIKES Index)
beginning June 1, 2019, through September 30, 2024.\7\ In particular,
the Exchange adopted fee waivers for Membership Application fees,
monthly Market Maker Trading Permit fees, Application Programming
Interface (``API'') Testing and Certification fees for Members,\8\ and
monthly MIAX Express Interface (``MEI'') Port \9\ fees assessed to
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) throughout the entire period of June 1, 2019 through
September 30, 2024.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release Nos. 86109 (June 14,
2019), 84 FR 28860 (June 20, 2019) (SR-MIAX-2019-28); 87282 (October
10, 2019), 84 FR 55658 (October 17, 2019) (SR-MIAX-2019-43); 87897
(January 6, 2020), 85 FR 1346 (January 10, 2020) (SR-MIAX-2019-53);
89289 (July 10, 2020), 85 FR 43279 (July 16, 2020) (SR-MIAX-2020-
22); 90146 (October 9, 2020), 85 FR 65443 (October 15, 2020) (SR-
MIAX-2020-32); 90814 (December 29, 2020), 86 FR 327 (January 5,
2021) (SR-MIAX-2020-39); 91498 (April 7, 2021), 86 FR 19293 (April
13, 2021) (SR-MIAX-2021-06); 93881 (December 30, 2021), 87 FR 517
(January 5, 2022) (SR-MIAX-2021-63); 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); 97887 (July
12, 2023), 88 FR 45936 (July 18, 2023) (SR-MIAX-2023-28); 99047
(November 30, 2023), 88 FR 84861 (December 6, 2023) (SR-MIAX-2023-
46); and 100468 (July 9, 2024), 89 FR 57445 (July 15, 2024) (SR-
MIAX-2024-26).
\8\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\9\ Full Service MEI Ports provide Market Makers with the
ability to send Market Maker simple and complex quotes, eQuotes, and
quote purge messages to the MIAX System. Full Service MEI Ports are
also capable of receiving administrative information. Market Makers
are limited to two Full Service MEI Ports per matching engine. See
Fee Schedule, Section 5)d)ii), footnote 28.
---------------------------------------------------------------------------
On September 30, 2021, the Exchange filed its initial proposal (SR-
MIAX-2021-45) to implement the Incentive Program for SPIKES options to
incentivize Market Makers to improve liquidity, available volume, and
the quote spread width of SPIKES options beginning October 1, 2021, and
ending December 31, 2021.\10\ Technical details regarding the Incentive
Program were published in a Regulatory Circular on September 30,
2021.\11\ On October 12, 2021, the Exchange withdrew SR-MIAX-2021-45
and refiled its proposal to implement the Incentive Program to provide
additional details.\12\ 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).\13\
---------------------------------------------------------------------------
\10\ See SR-MIAX-2021-45.
\11\ 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>.
\12\ See Securities Exchange Act Release No. 93424 (October 26,
2021), 86 FR 60322 (November 1, 2021) (SR-MIAX-2021-49).
\13\ See id.
---------------------------------------------------------------------------
Between December 23, 2021, and June 28, 2024, the Exchange filed
several proposals to extend the Incentive Program, with the last
extension period ending September 30, 2024.\14\ 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).\15\
---------------------------------------------------------------------------
\14\ 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); 99040 (November 29, 2023), 88 FR 84374
(December 5, 2023) (SR-MIAX-2023-47); 99902 (April 3, 2024), 89 FR
24883 (April 9, 2024) (SR-MIAX-2024-17); and 100468 (July 9, 2024),
89 FR 57445 (July 15, 2024) (SR-MIAX-2024-26).
\15\ See id.
---------------------------------------------------------------------------
Proposal To Amend and Extend the Incentive Program
The Exchange now proposes to amend and extend the Incentive Program
for SPIKES options to continue to incentivize Market Makers to improve
liquidity and available volume in SPIKES options by amending the quotes
spread width requirements and the amounts of the incentive compensation
pools.
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.\16\ The Exchange has devised a methodology where
each qualifying Market Maker's ITM/OTM market width for eligible
Incentive Program options is calculated. Eligible ITM options require a
maximum quote spread width of 150 basis points (``bps'') and each
eligible OTM option requires a maximum quote spread width of 100
bps.\17\ 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
[[Page 83531]]
satisfy and/or exceed the criteria pursuant to the Incentive Program.
---------------------------------------------------------------------------
\16\ See supra note 11.
\17\ Calculation of bps is described in Regulatory Circular
2021-56. See supra note 11.
---------------------------------------------------------------------------
The Exchange now proposes to double the maximum quote spread width
parameters for both ITM options and OTM options. Specifically, the
Exchange proposes to increase the maximum quote spread width from 150
bps to 300 bps for a Market Maker quoting ITM options to be eligible to
participate in the Incentive Program. The Exchange also proposes to
increase the maximum quote spread width from 100 bps to 200 bps for a
Market Maker quoting OTM options to be eligible to participate in the
Incentive Program. The Exchange will communicate the new requirements
of the Incentive Program to Members via Regulatory Circular.\18\
---------------------------------------------------------------------------
\18\ See MIAX Options Exchange Regulatory Circular 2024-54,
Updated SPIKES Options Market Maker Incentive Program (September 26,
2024), available at <a href="https://www.miaxglobal.com/markets/us-options/miax-options/regulatory-circulars">https://www.miaxglobal.com/markets/us-options/miax-options/regulatory-circulars</a>.
---------------------------------------------------------------------------
Currently, the first pool (Incentive 1) is capped at $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.\19\ 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.\20\ 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 contracts.\21\ 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.
---------------------------------------------------------------------------
\19\ See supra note 11.
\20\ See id.
\21\ In the event there is only one monthly expiration listed,
the requirements are only applicable to that single month.
---------------------------------------------------------------------------
The Exchange now proposes to amend the terms of Incentive 1.
Specifically, the Exchange proposes to reduce the total compensation
pool of Incentive 1 from $40,000 per month to $10,000 per month. The
Exchange also proposes to reduce the maximum amount available to each
individual Market Maker for satisfying the minimum requirements of the
Incentive Program from $10,000 per month to $5,000 per month. The
Exchange proposes that, in the event that more than two Market Makers
meet the requirements of Incentive 1, each qualifying Market Maker is
entitled to receive a pro-rated share of the $10,000 monthly
compensation pool dependent upon the number of qualifying Market Makers
in that particular month.
Currently, the second pool (Incentive 2) 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 with the total compensation pool amount
based on qualifying Market Makers' improvement value over the minimum
requirement score. 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,\22\ are eligible to receive a pro-rated share of
the compensation pool not to exceed $25,000 per Member per month.
Qualifying Market Makers are ranked relative to each other based on 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.
---------------------------------------------------------------------------
\22\ See supra note 11.
---------------------------------------------------------------------------
The Exchange now proposes to amend the terms of Incentive 2.
Specifically, the Exchange proposes to reduce the total compensation
pool of Incentive 2 from a maximum of $100,000 per month to a maximum
of $25,000 per month. The Exchange also proposes to reduce the maximum
amount available to each individual Market Maker for satisfying the
requirements of Incentive 2 from $25,000 per month to $12,500 per
month.
The purpose of the proposed changes is for business reasons. The
Exchange proposes to lower the quoting requirements because the
Exchange is no longer listing new expiration months in SPIKES options.
The Exchange anticipates that there will be no expiration months
available for trading following the expiration of the January 2025
SPIKES options. The Exchange believes that it is appropriate to lower
the threshold of the quoting standards for the Incentive Program to
further encourage more SPIKES Market Makers to participate in the
Incentive Program. The Exchange also proposes to reduce the
compensation pools and the maximum amount available to each individual
Market Maker for satisfying and/or exceeding the minimum requirements
of the Incentive Program because the Exchange proposes to lower the
quoting requirements for the Incentive Program.
In addition, the Exchange proposes to extend the Incentive Program
until January 31, 2025. The purpose of this extension is to continue to
incentivize Market Makers to provide quotes in SPIKES options and to
improve liquidity and available volume.
The Exchange will announce the amendment and extension of the
Incentive Program to all Members via a Regulatory Circular.\23\
---------------------------------------------------------------------------
\23\ See supra note 18. 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.
---------------------------------------------------------------------------
Proposal To Remove the Fee Waivers for Market Markets That Trade Solely
in Proprietary Products (Including SPIKES Options)
Currently, the Exchange offers fee waivers for (i) Membership
Application fees, (ii) monthly Market Maker Trading Permit fees, (iii)
Member API Testing and Certification fees, and (iv) monthly MEI Port
fees, to Market Makers that trade solely in Proprietary Products
(including options on SPIKES). The fee waivers for the aforementioned
fees will end on September 30, 2024. The Exchange now proposes to
remove the aforementioned fee waivers from the Fee Schedule once they
expire on September 30, 2024.
Membership Application Fees
The Exchange currently assesses a one-time Membership Application
fee for applications of potential Members. The Exchange assesses a one-
time Membership Application fee on the earlier of (i) the date the
applicant is certified in the membership system, or (ii) once an
application for MIAX membership is finally denied. The one-time
application fee is based upon the
[[Page 83532]]
applicant's status as either a Market Maker or an Electronic Exchange
Member (``EEM'').\24\ A Market Maker is assessed a one-time Membership
Application fee of $3,000. However, the Exchange currently offers a
waiver of the Membership Application fee for Market Makers that will
trade solely in Proprietary Products. This waiver is set to expire on
September 30, 2024.
---------------------------------------------------------------------------
\24\ The term ``Electronic Exchange Member'' or ``EEM'' means
the holder of a Trading Permit who is not a Market Maker. Electronic
Exchange Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
---------------------------------------------------------------------------
The Exchange now proposes to remove the waiver for the one-time
Membership Application fee of $3,000 for Market Makers that trade
solely in Proprietary Products (including options on SPIKES) once it
expires on September 30, 2024. The Exchange notes that the only
Proprietary Product offered by the Exchange is SPIKES options. The
Exchange initially waived the Membership Application fee for Market
Makers that trade solely in Proprietary Products in order to attract
new market participants to trade SPIKES options. Since the Exchange is
no longer listing new expiration months in SPIKES options, and the
Exchange anticipates that there will be no expiration months available
for trading following the expiration of the January 2025 SPIKES
options, the Exchange will no longer waive the Membership Application
fee to attract market participants to trade SPIKES options.
Trading Permit Fees
The Exchange issues Trading Permits that confer the ability to
transact on the Exchange. MIAX Trading Permits are issued to Market
Makers and EEMs. Members receiving Trading Permits during a particular
calendar month are assessed monthly Trading Permit fees as set forth in
the Fee Schedule. As it relates to Market Makers, the Exchange
currently assesses a monthly Trading Permit fee in any month the Market
Maker is certified in the membership system, is credentialed to use one
or more MIAX MEI Ports in the production environment and is assigned to
quote in one or more classes. The Exchange assesses the monthly Market
Maker Trading Permit fee for its Market Makers based on the greatest
number of classes listed on the Exchange that the Market Maker was
assigned to quote in on any given day within a calendar month and the
applicable fee rate is the lesser of either the per class basis or
percentage of total national average daily volume measurements. A
Market Maker is assessed a monthly Trading Permit fee according to the
following table: \25\
---------------------------------------------------------------------------
\25\ See Fee Schedule, Section (3)(b).
----------------------------------------------------------------------------------------------------------------
Market Maker assignments (the lesser of the applicable
Monthly MIAX measurements below) [Omega]
Type of trading permit trading permit ---------------------------------------------------------
fee % of national average daily
Per class volume
----------------------------------------------------------------------------------------------------------------
Market Maker (includes RMM, LMM, PLMM) $7,000.00 Up to 10 Classes......... Up to 20% of Classes by
volume.
12,000.00 Up to 40 Classes......... Up to 35% of Classes by
volume.
* 17,000.00 Up to 100 Classes........ Up to 50% of Classes by
volume.
* 22,000.00 Over 100 Classes......... Over 50% of Classes by volume
up to all Classes listed on
MIAX.
----------------------------------------------------------------------------------------------------------------
[Omega] Excludes Proprietary Products.
* For these Monthly MIAX Trading Permit Fee levels, if the Market Maker's total monthly executed volume during
the relevant month is less than 0.060% of the total monthly executed volume reported by OCC in the market
maker account type for MIAX-listed option classes for that month, then the fee will be $15,500 instead of the
fee otherwise applicable to such level.
However, the Exchange currently offers a waiver of the Trading
Permit fee for Market Makers that will trade solely in Proprietary
Products. This waiver is set to expire on September 30, 2024.
The Exchange now proposes to remove the waiver for the monthly
Trading Permit fee for Market Makers that trade solely in Proprietary
Products (including options on SPIKES) once it expires on September 30,
2024. The Exchange notes that the only Proprietary Products offered by
the Exchange is SPIKES options. The Exchange initially waived the
monthly Trading Permit fee for Market Makers that trade solely in
Proprietary Products in order to attract new market participants to
trade SPIKES options. Since the Exchange is no longer listing new
expiration months in SPIKES options, and the Exchange anticipates that
there will be no expiration months available for trading following the
expiration of the January 2025 SPIKES options, the Exchange will no
longer waive the monthly Trading Permit fee to attract market
participants to trade SPIKES options. The Exchange also notes that
there are no Market Makers trading solely in SPIKES options, thus the
Exchange believes that removing the waiver for the monthly Trading
Permit fee for Market Makers that trade solely in Proprietary Products
(including options on SPIKES) would have no impact on Members or the
public.
API Testing and Certification Fees
The Exchange assesses an API Testing and Certification fee to all
Members depending upon Membership type. An API makes it possible for
Members' software to communicate with MIAX software applications, and
is subject to Members testing with, and certification by, MIAX. The
Exchange offers four types of interfaces: (i) the Financial Information
Exchange Port (``FIX Port''),\26\ which enables the FIX Port user
(typically an EEM or a Market Maker) to submit simple and complex
orders electronically to MIAX; (ii) the MEI Port, which enables Market
Makers to submit simple and complex electronic quotes to MIAX; (iii)
the Clearing Trade Drop Port (``CTD Port''),\27\ which provides real-
time trade clearing information to the participants to a trade on MIAX
and to the participants' respective clearing firms;
[[Page 83533]]
and (iv) the FIX Drop Copy Port (``FXD Port''),\28\ which provides a
copy of real-time trade execution, correction and cancellation
information through a FIX Port to any number of FIX Ports designated by
an EEM to receive such messages.
---------------------------------------------------------------------------
\26\ A FIX Port is an interface with MIAX systems that enables
the Port user (typically an Electronic Exchange Member or a Market
Maker) to submit simple and complex orders electronically to MIAX.
See Fee Schedule, Section 5)d)i).
\27\ Clearing Trade Drop (``CTD'') provides Exchange members
with real-time clearing trade updates. The updates include the
Member's clearing trade messages on a low latency, real-time basis.
The trade messages are routed to a Member's connection containing
certain information. The information includes, among other things,
the following: (i) trade date and time; (ii) symbol information;
(iii) trade price/size information; (iv) Member type (for example,
and without limitation, Market Maker, Electronic Exchange Member,
Broker-Dealer); (v) Exchange Member Participant Identifier
(``MPID'') for each side of the transaction, including Clearing
Member MPID; and (vi) strategy specific information for complex
transactions. CTD Port Fees will be assessed in any month the Member
is credentialed to use the CTD Port in the production environment.
See Fee Schedule, Section 5)d)iii.
\28\ The FIX Drop Copy Port (``FXD'') is a messaging interface
that will provide a copy of real-time trade execution, trade
correction and trade cancellation information for simple and complex
orders to FIX Drop Copy Port users who subscribe to the service. FIX
Drop Copy Port users are those users who are designated by an EEM to
receive the information and the information is restricted for use by
the EEM only. FXD Port Fees will be assessed in any month the Member
is credentialed to use the FXD Port in the production environment.
See Fee Schedule, Section 5)d)iv).
---------------------------------------------------------------------------
API Testing and Certification fees for Market Makers are assessed
(i) initially per API for CTD and MEI ports in the month the Market
Maker has been credentialed to use one or more ports in the production
environment for the tested API and the Market Maker has been assigned
to quote in one or more classes, and (ii) each time a Market Maker
initiates a change to its system that requires testing and
certification. API Testing and Certification fees will not be assessed
in situations where the Exchange initiates a mandatory change to the
Exchange's system that requires testing and certification. The Exchange
currently assesses a Market Maker an API Testing and Certification fee
of $2,500. The API Testing and Certification fees represent costs
incurred by the Exchange as it works with each Member for testing and
certifying that the Member's software systems communicate properly with
the Exchange's interfaces. However, the Exchange currently offers a
waiver of the API Testing and Certification Fee for Market Makers that
will trade solely in Proprietary Products. This waiver is set to expire
on September 30, 2024.
The Exchange now proposes to remove the waiver of the API Testing
and Certification fee for Market Makers that trade solely in
Proprietary Products (including options on SPIKES) from the Fee
Schedule once it expires on September 30, 2024. The Exchange notes that
the only Proprietary Products offered by the Exchange is SPIKES
options. The Exchange initially waived the API Testing and
Certification fee for Market Makers that trade solely in Proprietary
Products in order to attract new market participants to trade SPIKES
options. Since the Exchange is no longer listing new expiration months
in SPIKES options, and the Exchange anticipates that there will be no
expiration months available for trading following the expiration of the
January 2025 SPIKES options, the Exchange will no longer waive the API
Testing and Certification fee to attract market participants to trade
SPIKES options. The Exchange also notes that there is no Market Makers
trading solely in SPIKES options, thus the Exchange believes that
removing the waiver for the API Testing and Certification fee for
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) would have no impact on Members or the public.
MEI Port Fees
The Exchange assesses monthly MEI Port fees to Market Makers in
each month the Member has been credentialed to use the MEI Port in the
production environment and has been assigned to quote in at least one
class. The amount of the monthly MEI Port fee is based upon the number
of classes in which the Market Maker was assigned to quote on any given
day within the calendar month, and upon the class volume percentages
set forth in the Fee Schedule. The class volume percentage is based on
the total national average daily volume in classes listed on the
Exchange in the prior calendar quarter. Newly listed option classes are
excluded from the calculation of the monthly MEI Port fee until the
calendar quarter following their listing, at which time the newly
listed option classes will be included in both the per class count and
the percentage of total national average daily volume. The Exchange
assesses Market Makers the monthly MEI Port fee based on the greatest
number of classes listed on the Exchange that the Market Maker was
assigned to quote in on any given day within a calendar month and the
applicable fee rate that is the lesser of either the per class basis or
percentage of total national average daily volume measurement. The
Exchange assesses MEI Port fees on Market Makers according to the
following table: \29\ However, the Exchange currently offers a waiver
of the MEI Port Fee for Market Makers that trade solely in Proprietary
Products. This waiver is set to expire on September 30, 2024.
---------------------------------------------------------------------------
\29\ See Fee Schedule 5)d)ii).
------------------------------------------------------------------------
Market maker assignments (the lesser of
the applicable measurements below)
[Omega]
Monthly MIAX MEI fees -----------------------------------------
% of national average
Per class daily volume
------------------------------------------------------------------------
$5,000.00..................... Up to 5 Classes.. Up to 10% of Classes
by volume.
10,000.00..................... Up to 10 Classes. Up to 20% of Classes
by volume.
14,000.00..................... Up to 40 Classes. Up to 35% of Classes
by volume.
17,500.00 *................... Up to 100 Classes Up to 50% of Classes
by volume.
20,500.00 *................... Over 100 Classes. Over 50% of Classes
by volume up to all
Classes listed on
MIAX.
------------------------------------------------------------------------
[Omega] Excludes Proprietary Products.
* For these Monthly MIAX MEI Fees levels, if the Market Maker's total
monthly executed volume during the relevant month is less than 0.060%
of the total monthly executed volume reported by OCC in the market
maker account type for MIAX-listed option classes for that month, then
the fee will be $14,500 instead of the fee otherwise applicable to
such level.
The Exchange now proposes to remove the waiver of the monthly MEI
Port fee for Market Makers that trade solely in Proprietary Products
(including options on SPIKES) once it expires on September 30, 2024.
The Exchange notes that the only Proprietary Product offered by the
Exchange is SPIKES options. The Exchange initially waived the monthly
MEI Port fee for Market Makers that trade solely in Proprietary
Products in order to attract new market participants to trade SPIKES
options. Since the Exchange is no longer listing new expiration months
in SPIKES options, and the Exchange anticipates that there will be no
expiration months available for trading following the expiration of the
January 2025 SPIKES options, the Exchange will no longer waive the
monthly MEI Port fee to attract market participants to trade SPIKES
options. The Exchange also notes that there is no Market Makers trading
solely in SPIKES options, thus the Exchange believes that removing the
waiver for the monthly MEI Port fee for
[[Page 83534]]
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) would have no impact on Members or the public.
Implementation
The proposed fee changes are effective beginning October 1, 2024.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \30\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \31\ 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.
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78f(b).
\31\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to modify the Incentive Program for Market
Makers in SPIKES options. The amendment to the Incentive Program is
reasonably designed because the Exchange is no longer listing new
expiration months in SPIKES options. The Exchange anticipates that
there will be no expiration months available for trading following the
expiration of the January 2025 SPIKES options. Lowering the quoting
requirements for the Incentive Program would encourage more Market
Makers to participate in the Incentive Program. Given that the Exchange
proposes to lower the threshold of the quoting standards for the
Incentive Program, accordingly the Exchange proposes to reduce the
compensation pools and the maximum amount available to each individual
Market Maker for satisfying and/or exceeding the minimum requirements
of the Incentive Program. The Incentive Program is equitably allocated
and not unfairly discriminatory because the amendment to the Incentive
Program applies to all SPIKES Market Makers. Additionally, if a SPIKES
Market Maker does not satisfy the requirements of Incentive 1 or 2,
then that Market Maker 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 extend the Incentive Program for Market
Makers in SPIKES options until January 31, 2025. 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 tight 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 SPIKES
options liquidity, which may increase 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.
Additionally, the Exchange believes that the proposal to remove the
fee waivers for certain non-transaction fees for Market Makers that
trade solely in Proprietary Products is reasonable. The Exchange
initially waived certain non-transaction fees for Market Makers that
trade solely in Proprietary Products in order to attract new market
participants to trade SPIKES options. Since the Exchange is no longer
listing new expiration months in SPIKES options, and the Exchange
anticipates that there will be no expiration months available for
trading following the expiration of the January 2025 SPIKES options,
the Exchange will no longer waive these non-transaction fees to attract
market participants to trade SPIKES options. The Exchange also notes
that there is no Market Makers trading solely in SPIKES options, thus
the Exchange believes that removing the fee waivers for certain non-
transaction fees for Market Makers that trade solely in Proprietary
Products (including options on SPIKES) would have no impact on Members
or the public. The Exchange believes the proposed removal of the fee
waivers is fair and equitable and not unreasonably discriminatory
because it applies to all current and future market participants on the
Exchange.
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 modification and extension
of the Incentive Program to January 31, 2025, 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.
Additionally, the Exchange believes that the proposal to remove
certain of the non-transaction fee waivers for Market Makers that trade
solely in Proprietary Products would have no impact on intra-market
competition because it applies to all new potential Market Makers to
quote in Proprietary Products. The Exchange also notes that there are
no Market Makers trading solely in SPIKES options, thus the Exchange
believes that removing the waiver for the monthly MEI Port fee for
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) would have no impact on intra-market competition.
The Exchange does not believe that the proposed rule changes will
impose any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed changes for each separate type of market participant (new
Market Makers and existing Market Makers) will be assessed equally to
all such market participants.
Inter-Market Competition
The Exchange does not believe that the proposed rule changes will
impose
[[Page 83535]]
any burden on inter-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed modification and extension of the Incentive Program applies
only to the Market Makers in SPIKES options, which are traded
exclusively on the Exchange.
Additionally, 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 removal of the fee waivers applies only to the
Exchange's Proprietary Products (including options on SPIKES), 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
Written comments were neither solicited nor 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,\32\ and Rule 19b-4(f)(2) \33\ thereunder.
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78s(b)(3)(A)(ii).
\33\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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#d9abacb5bcf4bab6b4b4bcb7adaa99aabcbaf7beb6af"><span class="__cf_email__" data-cfemail="7002051c155d131f1d1d151e0403300315135e171f06">[email protected]</span></a>. Please include
file number SR-MIAX-2024-39 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-MIAX-2024-39. 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-2024-39 and should be
submitted on or before November 6, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
---------------------------------------------------------------------------
\34\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-23802 Filed 10-15-24; 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 October 16, 2024.
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.