Notice2025-10875
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule Concerning Equities Transaction Pricing
Primary source
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Published
June 16, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 114 (Monday, June 16, 2025)</title>
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[Federal Register Volume 90, Number 114 (Monday, June 16, 2025)]
[Notices]
[Pages 25390-25393]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10875]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103220; File No. SR-MEMX-2025-16]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule Concerning Equities Transaction Pricing
June 10, 2025.
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 May 29, 2025, 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 applicable to Members \3\ (the
``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and (c). As is
further described below, the Exchange proposes to adopt a new tier
under the Non-Display Add Tiers, Non-Display Add Tier 3. The Exchange
proposes to implement the changes to the Fee Schedule pursuant to this
proposal on June 2, 2025. 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.
[[Page 25391]]
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 adopt a new tier under the Non-Display Add Tiers.
The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 18 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues, to
which market participants may direct their order flow. Based on
publicly available information, no single registered equities exchange
currently has more than approximately 12.9% of the total market share
of executed volume of equities trading.\4\ Thus, in such a low-
concentrated and highly competitive market, no single equities exchange
possesses significant pricing power in the execution of order flow, and
the Exchange currently represents approximately 2.4% of the overall
market share.\5\ The Exchange in particular operates a ``Maker-Taker''
model whereby it provides rebates to Members that add liquidity to the
Exchange and charges fees to Members that remove liquidity from the
Exchange. The Fee Schedule sets forth the standard rebates and fees
applied per share for orders that add and remove liquidity,
respectively. Additionally, in response to the competitive environment,
the Exchange also offers tiered pricing, which provides Members with
opportunities to qualify for higher rebates or lower fees where certain
volume criteria and thresholds are met. Tiered pricing provides an
incremental incentive for Members to strive for higher tier levels,
which provides increasingly higher benefits or discounts for satisfying
increasingly more stringent criteria.
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\4\ Market share percentage calculated as of May 29, 2025. The
Exchange receives and processes data made available through
consolidated data feeds (i.e., CTS and UTDF).
\5\ Id.
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Adoption of Non-Display Add Tier 3
The Exchange currently provides a base rebate of $0.0008 per share
for executions of non-displayed orders in securities priced at or above
$1.00 per share that add liquidity to the Exchange (such orders,
``Added Non-Displayed Volume'').\6\ The Exchange also currently offers
Non-Display Add Tiers 1-2 under which a Member may receive an enhanced
rebate for executions of Added Non-Displayed Volume by achieving the
corresponding required volume criteria for each such tier. The Exchange
now proposes to adopt a new tier under the Non-Display Add Tiers, Non-
Display Add Tier 3. The applicable rebates and required criteria under
Non-Display Add Tiers 1 and 2 will remain unchanged.
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\6\ The base rebate for executions of Added Non-Displayed Volume
is referred to by the Exchange on the Fee Schedule under the
existing description ``Added non-displayed volume'' with a Fee Code
of ``H'', ``M'' or ``P'', as applicable, on execution reports.
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Under the proposed new Non-Display Add Tier 3, the Exchange will
provide an enhanced rebate of $0.0018 per share for executions of Added
Non-Displayed Volume for Members that qualify for such tier by
achieving a Non-Displayed ADAV \7\ that is equal to or greater than
1,000,000 shares.\8\ The Exchange proposes to provide Members that
qualify for the proposed new Non-Display Add Tier 3 a rebate of 0.075%
of the total dollar value of the transaction for executions of non-
displayed orders in securities priced below $1.00 per share that add
liquidity to the Exchange, which is the same rebate that is currently
applicable to such executions for all Members.
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\7\ As set forth on the Fee Schedule, ``ADAV'' means the average
daily added volume calculated as the number of shares added per day,
which is calculated on a monthly basis, and ``Non-Displayed ADAV''
means ADAV with respect to non-displayed orders (including Midpoint
Peg orders).
\8\ The pricing for Non-Display Add Tier 3 will be referred to
by the Exchange on the Fee Schedule under the description ``Added
non-displayed volume, Non-Display Add Tier 3'' with a Fee Code of
``H3'', ``M3'' or ``P3'', as applicable, to be provided by the
Exchange on the monthly invoices provided to Members.
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The Exchange is also proposing that Members that qualify for Non-
Display Add Tier 3 based on activity in a given month will also receive
that associated Non-Display Add Tier 3 rebate during the following
month, which will be noted under the Non-Display Add Tiers pricing
table on the Fee Schedule. This procedure is currently applicable to
Non-Display Add Tier 2, and as such, if a Member meets the criteria to
receive the enhanced rebate under Non-Display Add Tier 2 or 3 in June
2025, the Exchange will provide the applicable enhanced rebate for that
Member's qualifying executions in June 2025 and July 2025, regardless
of whether the Member meets the applicable criteria in July 2025.
The tiered pricing structure for executions of Added Non-Displayed
Volume under the Non-Display Add Tiers provides an incremental
incentive for Members to strive for higher volume thresholds to receive
higher enhanced rebates for such executions and, as such, is intended
to encourage Members to maintain or increase their order flow,
particularly in the form of liquidity-adding non-displayed volume, to
the Exchange, thereby contributing to a deeper and more robust and
well-balanced market ecosystem to the benefit of all Members and market
participants.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\9\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4) and (5).
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As discussed above, the Exchange operates in a highly fragmented
and competitive market in which market participants can readily direct
order flow to competing venues if they deem fee levels at a particular
venue to be excessive or incentives to be insufficient, and the
Exchange represents only a small percentage of the overall market. The
Commission and the courts have repeatedly expressed their preference
for competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market forces in
determining prices and SRO revenues and also recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \11\
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\11\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005).
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue use of certain categories of products,
in response to new or different pricing structures being introduced
into the market. Accordingly, competitive forces constrain the
Exchange's transaction fees and rebates, and market participants can
readily trade on
[[Page 25392]]
competing venues if they deem pricing levels at those other venues to
be more favorable. The Exchange believes the proposal reflects a
reasonable and competitive pricing structure designed to incentivize
market participants to direct additional order flow, including non-
displayed, liquidity-adding orders to the Exchange, which the Exchange
believes would promote price discovery and enhance liquidity and market
quality on the Exchange to the benefit of all Members and market
participants.
The Exchange notes that volume and quoting-based incentives (such
as tiers) have been widely adopted by exchanges, including the
Exchange, and are reasonable, equitable and not unfairly discriminatory
because they are open to all members on an equal basis and provide
additional benefits that are reasonably related to the value to an
exchange's market quality associated with higher levels of market
activity, such as higher levels of liquidity provision and/or growth
patterns, and the introduction of higher volumes of orders into the
price and volume discovery process. The Exchange believes that the
proposed new Non-Display Add Tier 3 is reasonable, equitable and not
unfairly discriminatory for these same reasons, as it would provide
Members with an incremental incentive to achieve certain volume
thresholds on the Exchange, is available to all Members on an equal
basis, and, as described above, is designed to encourage Members to
maintain or increase their order flow, including in the form of non-
displayed, liquidity-adding orders to the Exchange in order to qualify
for an enhanced rebate for executions of Added Non-Displayed Volume,
thereby contributing to a deeper, more liquid and well balanced market
ecosystem on the Exchange to the benefit of all Members and market
participants. The Exchange also believes that such tier reflects a
reasonable and equitable allocation of fees and rebates, as the
Exchange believes that the enhanced rebate for executions of Added Non-
Displayed Volume under the newly proposed Non-Display Add Tier 3
remains commensurate with the corresponding required criteria under
such tier and is reasonably related to the market quality benefits that
the tier is designed to achieve, as described above.
For the reasons discussed above, the Exchange submits that the
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of
the Act \12\ 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 unfairly
discriminate between customers, issuers, brokers, or dealers. As
described more fully below in the Exchange's statement regarding the
burden on competition, the Exchange believes that its transaction
pricing is subject to significant competitive forces, and that the
proposed additive rebate described herein is appropriate to address
such forces.
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\12\ 15 U.S.C. 78f(b)(4) and (5).
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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 proposal is intended to incentivize market participants to direct
additional order flow to the Exchange, thereby enhancing liquidity and
market quality on the Exchange to the benefit of all Members and market
participants. As a result, the Exchange believes the proposal would
enhance its competitiveness as a market that attracts actionable
orders, thereby making it a more desirable destination venue for its
customers. 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.'' \13\
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\13\ See supra note 11.
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Intramarket Competition
As discussed above, the Exchange believes that the proposal would
maintain a tiered pricing structure that is still consistent with the
Exchange's overall pricing philosophy of encouraging added non-
displayed liquidity and would incentivize market participants to direct
additional order flow to the Exchange through volume-based tiers,
thereby enhancing liquidity and market quality on the Exchange to the
benefit of all Members, 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. Greater liquidity benefits all Members by
providing more trading opportunities and encourages Members to send
additional orders to the Exchange, thereby contributing to robust
levels of liquidity, which benefits all market participants.
The Exchange does not believe that the proposed change would impose
any burden on intramarket competition because such change will
incentivize members to submit additional order flow, thereby
contributing to a more robust and well-balanced market ecosystem on the
Exchange to the benefit of all Members 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 opportunity to
qualify for newly proposed Non-Display Add Tier 3, and thus receive the
corresponding enhanced rebate for executions of Added Non-Displayed
Volume, would be available to all Members that meet the associated
volume requirements in any month. As described above, the Exchange
believes that the required criteria under the tier is commensurate with
the corresponding rebate under the tier and is reasonably related to
the enhanced liquidity and market quality that such tier is designed to
promote. 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 noted above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. Members have numerous
alternative venues that they may participate on and direct their order
flow to, including 17 other equities exchanges and numerous alternative
trading systems and other off-exchange venues. As noted above, no
single registered equities exchange currently has more than
approximately 12.9% of the total market share of executed volume of
equities trading. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. Moreover, the Exchange
believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order
flow or discontinue to reduce use of certain categories of products, in
response to new or different pricing structures being introduced into
the market. Accordingly, competitive forces constrain the Exchange's
transaction fees and rebates, including with respect
[[Page 25393]]
to executions of Added Non-Displayed Volume, and market participants
can readily choose to send their orders to other exchange and off-
exchange venues if they deem fee levels at those other venues to be
more favorable. As described above, the proposed change is a
competitive proposal through which the Exchange is seeking to generate
additional revenue with respect to its transaction pricing and to
encourage the submission of additional order flow to the Exchange
through volume-based tiers which have been widely adopted by exchanges,
including the Exchange. Accordingly, the Exchange believes the proposal
would not burden, but rather promote, intermarket competition by
enabling it to better compete with other exchanges that offer similar
incentives to market participants that enhance market quality and/or
achieve certain quoting requirements.
Additionally, the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \14\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. SEC, the D.C. Circuit stated as follows:
``[n]o one disputes that competition for order flow is `fierce.' . . .
As the SEC explained, `[i]n the U.S. national market system, buyers and
sellers of securities, and the broker-dealers that act as their order-
routing agents, have a wide range of choices of where to route orders
for execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers' . . . .''.\15\ Accordingly, the Exchange does not believe its
proposed pricing changes impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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\14\ See supra note 11.
\15\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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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 \16\ and Rule 19b-4(f)(2) \17\ thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
\17\ 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#780a0d141d551b1715151d160c0b380b1d1b561f170e"><span class="__cf_email__" data-cfemail="c0b2b5aca5eda3afadada5aeb4b380b3a5a3eea7afb6">[email protected]</span></a>. Please include
file number SR-MEMX-2025-16 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-2025-16. 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-2025-16 and should be
submitted on or before July 7, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-10875 Filed 6-13-25; 8:45 am]
BILLING CODE 8011-01-P
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