Notice2025-13801
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.3, To Adopt Rule 2.12 (MEMX Execution Services as Inbound Router), To Make a Corresponding Update in Rule 2.11 (MEMX Execution Services as Outbound Router), and To Remove Obsolete Rule Text in Rule 2.4(c)
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
July 23, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 139 (Wednesday, July 23, 2025)</title>
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[Federal Register Volume 90, Number 139 (Wednesday, July 23, 2025)]
[Notices]
[Pages 34697-34700]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13801]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103496; File No. SR-MEMX-2025-22]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.3, To
Adopt Rule 2.12 (MEMX Execution Services as Inbound Router), To Make a
Corresponding Update in Rule 2.11 (MEMX Execution Services as Outbound
Router), and To Remove Obsolete Rule Text in Rule 2.4(c)
July 18, 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 July 15, 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 and II below, which Items
have been prepared by the Exchange. The Exchange filed the proposal as
a ``non-controversial'' proposed rule change pursuant to
[[Page 34698]]
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6)
thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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 proposal to amend Rule
2.3 to clarify that a broker or dealer must be a member of another
national securities exchange or association other than MX2 LLC
(``MX2'') in order become or remain a Member of the Exchange, to adopt
Rule 2.12 (MEMX Execution Services LLC as Inbound Router), and to make
a relevant corresponding update in Rule 2.11 (MEMX Execution Services
LLC as Outbound Router). The Exchange also proposes to remove the text
of Rule 2.4(c) because this section of the Rule is now obsolete given
it references a calendar year that has passed. The text of the proposed
rule change is provided in Exhibit 5 and is available on the Exchange's
website at <a href="https://info.memxtrading.com/regulation/rules-and-filings/">https://info.memxtrading.com/regulation/rules-and-filings/</a>.
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
On March 13, 2025, the Commission approved the application of MX2,
an affiliate of the Exchange, to register as a national securities
exchange.\5\ Included in the approved rules of MX2 are: (1) MX2 Rule
2.3, which notes that a broker or dealer must be a member of another
national securities exchange or association other than or in addition
to MEMX in order to become or remain a Member of MX2, and (2) MX2 Rule
2.12, which governs the routing of orders by MX2's (and the Exchange's)
affiliated broker-dealer, MEMX Execution Services LLC (``MEMX Execution
Services'') to MX2 as inbound router in its capacity as a routing
facility of the Exchange. Accordingly, the Exchange is proposing: (1)
to amend its Rule 2.3 to clarify that a broker or dealer must be a
member of another national securities exchange or association other
than or in addition to MX2 in order to become or remain a Member of the
Exchange, and (2) to adopt the same inbound routing rule, also numbered
Rule 2.12, which will govern MEMX Execution Services' status as an
inbound router that sends orders to the Exchange in its capacity as a
routing facility of MX2, and to make a relevant corresponding update in
Rule 2.11 (MEMX Execution Services LLC as Outbound Router). Lastly, the
Exchange proposes to remove the text of Rule 2.4(c) because this
section of the Rule is now obsolete given it references a calendar year
that has passed.
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\5\ See Securities Exchange Act Release No. 102650 (March 13,
2025) 90 FR 12590 (March 18, 2025) (File No.10-247) (order approving
application of MX2, LLC for registration as a national securities
exchange).
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Amend Rule 2.3 To Reflect Existence of MX2
As noted above, pursuant to Rule 2.3, the Exchange requires all of
its Members to be a member of at least one other national securities
association or national securities exchange in order to become and
remain a Member of the Exchange. Given the recent approval of the
Exchange's affiliate, MX2, the Exchange is now proposing to make clear
that this requirement is not satisfied simply by joining MX2. Rather,
as the proposed language indicates, each Member that is a registered
broker or dealer must be a member of another registered national
securities exchange or association other than or in addition to MX2.
The Exchange notes that this language aligns with that of MX2's Rule
2.3, which indicates that each Member of MX2 must be a member of
another registered national securities exchange or association other
than or in addition to MEMX.
Adoption of Rule 2.12 and Corresponding Edit to Rule 2.11
Also in light of the approval of MX2, the Exchange is proposing to
adopt Rule 2.12, which is substantively identical to the same MX2 rule
and which will govern MEMX Execution Services' status as an inbound
router that sends orders to the Exchange in its capacity as a routing
facility of MX2. Pursuant to proposed Rule 2.12, MEMX Execution
Services' inbound routing services from MX2 to the Exchange would be
subject to the following conditions and limitations:
(1) The Exchange must enter into (1) a plan pursuant to Rule 17d-2
under the Act with a non-affiliated self-regulatory organization
(``SRO'') to relieve the Exchange of regulatory responsibilities for
MEMX Execution Services with respect to rules that are common rules
between the Exchange and the non-affiliated SRO, and (2) a regulatory
services contract with a non-affiliated SRO to perform regulatory
responsibilities for MEMX Execution Services for unique Exchange rules.
(2) The regulatory services contract must require the Exchange to
provide the non-affiliated SRO with information, in an easily
accessible manner, regarding all exception reports, alerts, complaints,
trading errors, cancellations, investigations, and enforcement matters
(collectively ``Exceptions'') in which MEMX Execution Services is
identified as a participant that has potentially violated Exchange or
Commission Rules, and requires that non-affiliated SRO provide a
report, at least quarterly, to the Exchange quantifying all Exceptions
in which MEMX Execution Services is identified as a participant that
has potentially violated Exchange or Commission rules.
(3) The Exchange, on behalf of the holding company owning the
Exchange and MEMX Execution Services, must establish and maintain
procedures and internal controls reasonably designed to ensure that
MEMX Execution Services does not develop or implement changes to its
system based on non-public information obtained as a result of its
affiliation with the Exchange, until such information is available
generally to similarly situated members of the Exchange in connection
with the provision of inbound order routing to the Exchange.
(4) The Exchange may furnish to MEMX Execution Services the same
information on the same terms that the Exchange makes available in the
normal course of business to any other User.
Proposed Rule 2.12(b) also notes that provided the above conditions
are complied with, and provided further that MEMX Execution Services
operates as an outbound router on behalf of MX2 on the same terms and
conditions it does for the Exchange, and in accordance with the rules
of MX2, MEMX Execution Services may provide inbound routing services to
the Exchange from MX2.
In addition to the adoption of an inbound routing rule, the
Exchange proposes minor modifications to its existing rule applicable
to MEMX
[[Page 34699]]
Execution Services' status as an outbound router. Specifically, Rule
2.11 currently states that MEMX Execution Services will not engage in
any business other than its outbound router function and any other
activities it may engage in as approved by the Commission. The Exchange
proposes to add acting as inbound router to the list of activities in
which MEMX Execution Services will engage.
Deletion of Obsolete Rule 2.4(c)
Lastly, the Exchange is proposing to delete section (c) under Rule
2.4, Mandatory Participation in Testing of Backup Systems. This
provision specifies the Exchange's procedure for testing MEMX Options'
backup systems during the calendar year 2023, which has passed, and as
such, this provision is obsolete. Accordingly, the Exchange proposes to
delete this provision under Rule 2.4.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\6\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \7\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \8\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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In particular, the Exchange believes that the proposed rule change
will 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 by aligning the Exchange's rules with
the same rules in the rulebook of MX2, which is affiliated with the
Exchange. Specifically, the adoption of Rule 2.3 provides clarity to
Members regarding the requirement that each Member that is a registered
broker or dealer must be a member of another registered national
securities exchange or association other than or in addition to MX2.
With respect to the adoption of Rule 2.12 and the associated added
reference in Rule 2.11, the proposed rule change will allow the
Exchange to receive inbound routed orders from MEMX Execution Services
acting in its capacity as a facility of MX2 in a manner consistent with
prior approvals and established protections. The proposed deletion of
Rule 2.4(c) is to help avoid any potential confusion resulting from
retaining outdated provisions in the Exchange's rulebook. For these
reasons, the Exchange believes such amendments would enable the
Exchange to be so organized as to have the capacity to carry out the
purposes of the Act and to comply with the provisions of the Act, the
rules and regulations thereunder, and the rules of the Exchange,
promote just and equitable principles of trade, remove impediments to
and perfect the mechanism of a free and open market, and protect
investors and the public interest.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed changes are not
designed to address any competitive issues, but rather to update the
Exchange's rules in light of the recent approval of MX2's application
for registration as a national securities exchange, including
clarification under Rule 2.3 that a Member must be registered with
another national securities exchange other than MX2 in order to retain
its membership or become a Member the Exchange, as well as the adoption
of relevant rule text regarding the routing of orders from MX2 via MEMX
Execution Services. As noted above, MX2 has the same rules in place,
and those rules ensure that MEMX Execution Services cannot use any
information that it may have because of its affiliation with the
Exchange to its advantage, thus preventing an unfair burden on
competition.
The Exchange does not believe that the proposed rule change to
delete obsolete rule text in Rule 2.4 imposes any burden on
competition, as it is a non-substantive change concerned solely with
the removal of rule text that is no longer applicable.
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 proposed rule change is filed for immediate effectiveness
pursuant to Section 19(b)(3)(A) of Act \9\ and Rule 19b-4(f)(6) \10\
thereunder. Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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 will 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#97e5e2fbf2baf4f8fafaf2f9e3e4d7e4f2f4b9f0f8e1"><span class="__cf_email__" data-cfemail="c0b2b5aca5eda3afadada5aeb4b380b3a5a3eea7afb6">[email protected]</span></a>. Please include
file number SR-MEMX-2025-22 on the subject line.
[[Page 34700]]
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-2025-22. 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 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-2025-22 and should be submitted on
or before August 13, 2025.
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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13801 Filed 7-22-25; 8:45 am]
BILLING CODE 8011-01-P
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