Notice2026-00515
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule Concerning Options Routing Fees
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
January 14, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 9 (Wednesday, January 14, 2026)</title>
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[Federal Register Volume 91, Number 9 (Wednesday, January 14, 2026)]
[Notices]
[Pages 1573-1576]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-00515]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104571; File No. SR-MEMX-2025-35]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule Concerning Options Routing Fees
January 9, 2026.
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 December 30, 2026, MEMX LLC (``MEMX'' or the ``Exchange'')
filed with the Securities
[[Page 1574]]
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 amend the Options Fee
Schedule to increase the routing fees for executions of orders that are
routed to one or more exchanges in connection with the Options Order
Protection and Locked/Crossed Market Plan. The Exchange proposes to
increase this fee for both executions where the underlying security of
the applicable option is in the Penny Interval program and executions
of contracts where the underlying security of the applicable option is
not in the Penny Interval Program, where either type of option is
routed to and executed on an away market. The Exchange proposes to
implement the changes to the MEMX Options Fee Schedule (the ``Options
Fee Schedule'') pursuant to this proposal on January 1, 2026. 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.
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 Options Fee
Schedule to increase the routing fees for executions of orders that are
routed to one or more exchanges in connection with the Options Order
Protection and Locked/Crossed Market Plan. The Exchange proposes to
increase this fee for both executions where the underlying security of
the applicable option is in the Penny Interval program (``Penny
options'') \4\ and executions of contracts where the underlying
security of the applicable option is not in the Penny Interval Program
(``Non-Penny options'') \5\ that are routed to and executed on an away
market.
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\4\ MEMX Options provides Fee Code ``P'' for transactions in
Penny options. Fee Codes are provided by the Exchange on the monthly
invoices provided to Options Members.
\5\ MEMX Options provides Fee Code ``N'' for transactions in
Non-Penny options.
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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. The Exchange is one of only
18 options venues to which market participants may direct their order
flow. Based on publicly available information, no single options
exchange has more than approximately 15.6% of the market share and
currently the Exchange represents only approximately 3.3% of the market
share.\6\ In such a low-concentrated and highly competitive market, no
single options exchange, including the Exchange, possesses significant
pricing power in the execution of option order flow. The Exchange
believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order
flow, discontinue, or reduce use of certain categories of products in
response to fee changes. Accordingly, competitive forces constrain the
Exchange's transaction fees, and market participants can readily trade
on competing venues if they deem pricing levels at those other venues
to be more favorable. The Exchange's Fee Schedule sets forth standard
rebates and rates applied per contract.
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\6\ Market share percentage calculated as of December 26, 2025.
The Exchange receives and processes data made available through the
consolidated data feeds (i.e., OPRA).
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Currently, the Exchange assesses a routing fee of $0.60 per
contract for Penny options routed to another options exchange and $1.20
per contract for Non-Penny options routed to another exchange. Now, the
Exchange proposes to increase the routing fee to $1.20 per contract for
Penny options and $1.63 per contract for Non-Penny options. The purpose
of increasing the routing fees is to recoup costs incurred by the
Exchange when routing orders to other options exchanges on behalf of
Options Members. The Exchange will continue to use its affiliated
broker-dealer, MEMX Execution Services LLC, to route orders to other
options exchanges. Routing services offered by the Exchange are
completely optional and market participants can readily select between
various providers of routing services, including other exchanges and
broker-dealers. Also, the Exchange notes that market participants may
elect to mark their orders as ``Book Only'' \7\ or ``Post Only'' \8\ to
avoid any routing fees. Additionally, the proposed modified routing
fees are in line with those charged by at least one other options
exchange.\9\
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\7\ See Exchange Rule 11.6(l)(1).
\8\ See Exchange Rule 11.6(l)(2).
\9\ See the Cboe C2 Options Fee Schedule, available at: <a href="https://www.cboe.com/us/options/membership/fee_schedule/ctwo/">https://www.cboe.com/us/options/membership/fee_schedule/ctwo/</a>, noting
Linkage Routing Fees for Penny Options ranging from $1.19 per
contract to $1.20 per contract, depending on capacity, and for Non-
Penny options ranging from $1.55 per contract to $1.63 per contract,
depending on capacity.
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2. Statutory Basis
The Exchange believes that its proposal to amend its Options Fee
Schedule is consistent with the provisions of Section 6 of the Act,\10\
in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,\11\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Options Members 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, or dealers.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(4) and (5).
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MEMX Options 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,
[[Page 1575]]
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.'' \12\
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\12\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005).
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Accordingly, competitive forces constrain the Exchange's
transaction fees and rebates, and market participants can readily trade
on 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 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 believes that the proposed change to
increase the routing fee for executions of Penny and Non-Penny options
that are routed to and execute on away markets is reasonable because
the proposed routing fees would enable the Exchange to recover the
costs it incurs to route orders to away markets after taking into
account the other costs associated with routing orders to other options
exchanges. Routing services offered by the Exchange are completely
optional and market participants can readily select between various
providers of routing services, including other exchanges and broker-
dealers. Also, the Exchange notes that market participants may elect to
mark their orders as ``Post Only'' or ``Book Only'' to avoid any
routing fees. The Exchange believes the proposed increased routing fees
are reasonable because they are comparable to the routing fees charged
to market participants on another options market.\13\
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\13\ See supra note 9.
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Further, the Exchange's proposal to amend its routing fees such
that all Members would pay a $1.20 per contract Penny option routing
fee and a $1.63 per contract Non-Penny option routing fee to route to
another options exchange is equitable and not unfairly discriminatory
because these uniform routing fees will apply equally to all Options
Members.
For the reasons discussed above, the Exchange submits that its
proposed change to the Options Transaction Fee Schedule satisfies the
requirements of Sections 6(b)(4) and 6(b)(5) of the Act \14\ 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 burden on competition, the Exchange
believes that its transaction pricing is subject to significant
competitive forces, and that the proposed fees described herein are
appropriate to address such forces.
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\14\ 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. Rather, the Exchange's proposal
would allow it to compete with other routing and execution venues by
providing competitive pricing for routed orders that is in line with
the routing fees assessed by at least one other options exchange.\15\
As a result, 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.'' \16\
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\15\ See supra note 9.
\16\ See supra note 12.
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Intramarket Competition
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed increase routing fees will apply equally to all Options
Members. The proposed routing fees are intended to generate additional
revenue with respect to its transaction pricing, in a manner that is
comparable with the fees assessed by at least on other options
exchange.
Intermarket Competition
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including 16 other options exchanges and
off-exchange venues. Therefore, no exchange possesses significant
pricing power in the execution of option order flow. To the contrary,
the Exchange believes that the proposal will increase competition and
is intended to encourage market participants to trade on the Exchange
by assessing routing fees that are comparable to those offered by
another exchange, which the Exchange believes will help to encourage
Members to send orders to the Exchange to the benefit of all Exchange
participants.
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.'' \17\ 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' . . . .''.\18\ 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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\17\ Id.
\18\ 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
[[Page 1576]]
19(b)(3)(A)(ii) of the Act \19\ and Rule 19b-4(f)(2) \20\ thereunder.
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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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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#f587809990d8969a9898909b8186b5869096db929a83"><span class="__cf_email__" data-cfemail="344641585119575b5959515a4047744751571a535b42">[email protected]</span></a>. Please include
file number
SR-MEMX-2025-35 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-2025-35. 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 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-2025-35 and should be submitted on
or before February 4, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-00515 Filed 1-13-26; 8:45 am]
BILLING CODE 8011-01-P
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