[Federal Register Volume 87, Number 240 (Thursday, December 15, 2022)]
[Notices]
[Pages 76648-76657]
[FR Doc No: 2022-27161]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96471; File No. SR-MEMX-2022-33]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule

December 9, 2022.
    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 1, 2022, 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). The
Exchange proposes to implement the changes to the Fee Schedule pursuant
to this proposal on December 1, 2022. 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 Fee
Schedule to: (i) modify the Liquidity Provision Tiers; (ii) modify the
Displayed Liquidity Incentive (``DLI'') Tiers; (iii) modify the NBBO
Setter Tier to become the NBBO Setter/Joiner Tiers; (iv) reduce the
rebates for executions of orders in securities priced at or above $1.00
per share that add non-displayed liquidity to the Exchange (such
orders, ``Added Non-Displayed Volume''); (v) modify the Non-Display Add
Tiers; (vi) adopt the Sub-Dollar Rebate Tier; (vii) add a note to the
Fee Schedule stating that to the extent a single execution qualifies
for one or more additive rebates, the maximum combined rebate per share
provided by the Exchange shall be $0.0036; and (viii) eliminate the
Step-Up Additive Rebate, each as further described below.
    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 16 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 16% 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 3% 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 November 30, 2022.
The Exchange receives and processes data made available through
consolidated data feeds (i.e., CTS and UTDF).
    \5\ Id.
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Liquidity Provision Tiers
    The Exchange currently provides a standard rebate of $0.0020 per
share for executions of orders in securities priced at or above $1.00
per share that add displayed liquidity to the Exchange (such orders,
``Added Displayed Volume''). The Exchange also currently offers
Liquidity Provision Tiers 1-5 under which a Member may receive an
enhanced rebate for executions of Added Displayed Volume by achieving
the corresponding required volume criteria for each such tier. The
Exchange now proposes to modify the Liquidity Provision Tiers by
modifying the rebates and required criteria under Liquidity Provision
Tiers 1, 3 and 5, and keeping Liquidity Provision Tiers 2 and 4 intact
with no changes, as further described below.
    First, with respect to Liquidity Provision Tier 1, the Exchange
currently provides an enhanced rebate of $0.0033 per share for
executions of Added Displayed Volume for Members that qualify for such
tier by achieving: (1) a Displayed ADAV \6\ that is equal to or greater
than 0.40% of the TCV; \7\ or (2) a Remove ADV \8\ that is equal to or
greater than 0.20% of the TCV and a Step-Up ADAV \9\ from June 2022
that is equal to or greater than 0.05% of the TCV. The Exchange now
proposes to modify Liquidity Provision Tier 1 such that the Exchange
would provide an enhanced rebate of $0.0034 per share for executions of
Added Displayed Volume for Members that qualify for such tier by
achieving: (1) a Displayed ADAV that is equal to or greater than 0.40%
of the TCV; or (2) an ADAV that is equal to or greater than 0.30% of
the TCV and a Step-Up ADAV from November 2022 that is equal to or
greater than 0.10% of the TCV.\10\ Thus, such proposed changes would
increase the rebate for executions of Added Displayed Volume by $0.0001
per share and keep the first of the two existing alternative criteria
(based on an overall Displayed ADAV threshold) intact, eliminate the
second of the two existing alternative criteria (based on a Remove ADV
threshold and a Step-Up ADAV from June 2022 threshold), and add a new
second alternative criteria (based on an overall ADAV threshold and a
Step-Up ADAV from November 2022 threshold). The Exchange is not
proposing to change the rebate for executions of orders in securities
priced below $1.00 per share under this tier.
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    \6\ 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 ``Displayed ADAV'' means
ADAV with respect to displayed orders.
    \7\ As set forth on the Fee Schedule, ``TCV'' means total
consolidated volume calculated as the volume reported by all
exchanges and trade reporting facilities to a consolidated
transaction reporting plan for the month for which the fees apply.
    \8\ As set forth on the Fee Schedule, ``ADV'' means average
daily volume calculated as the number of shares added or removed,
combined, per day, which is calculated on a monthly basis, and
``Remove ADV'' means ADV with respect to orders that remove
liquidity.
    \9\ As set forth on the Fee Schedule, ``Step-Up ADAV'' means
ADAV in the relevant baseline month subtracted from current ADAV.
    \10\ The pricing for Liquidity Provision Tier 1 is referred to
by the Exchange on the Fee Schedule under the existing description
``Added displayed volume, Liquidity Provision Tier 1'' with a Fee
Code of B1, D1 or J1, as applicable, to be provided by the Exchange
on the monthly invoices provided to Members. The Exchange notes that
because the determination of whether a Member qualifies for a
certain pricing tier for a particular month will not be made until
after the month-end, the Exchange will provide the Fee Codes
otherwise applicable to such transactions on the execution reports
provided to Members during the month and will only designate the Fee
Codes applicable to the achieved pricing tier on the monthly
invoices, which are provided after such determination has been made,
as the Exchange does for its tier-based pricing today.
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    Second, with respect to Liquidity Provision Tier 3, the Exchange
currently provides an enhanced rebate of $0.0029 per share for
executions of Added Displayed Volume for Members that qualify for such
tier by achieving: (1) an ADAV that is equal to or greater than 0.12%
of the TCV; or (2) a Step-Up ADAV from April 2022 that is equal to or
greater than 0.04% of the TCV; or (3) a Step-Up Non-Displayed ADAV \11\
from April 2022 that is equal to or greater than 2,000,000 shares. The
Exchange now proposes to modify Liquidity Provision Tier 3 such that
the Exchange would provide an enhanced rebate of $0.0030 per share for
executions of Added Displayed Volume for Members that qualify for such
tier by achieving: (1) an ADAV that is equal to or greater than 0.15%
of the TCV; or (2) an ADAV that is equal to or greater than 15,000,000
shares.\12\ Thus, such proposed changes would increase the rebate for
executions of Added Displayed Volume by $0.0001 per share and would
increase the overall ADAV threshold that is expressed as a percentage
of the TCV in the first of the three existing alternative criteria,
eliminate the second and third of the three existing alternative
criteria (based on a Step-Up ADAV from April 2022 threshold and a Step-
Up Non-Displayed ADAV from April 2022 threshold), and add a new
alternative criteria based on an overall ADAV threshold that is
expressed as a number of shares. The Exchange is not proposing to
change the rebate for executions of orders in securities priced below
$1.00 per share under such tier.
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    \11\ As set forth on the Fee Schedule, ``Non-Displayed ADAV''
means ADAV with respect to non-displayed orders (including Midpoint
Peg orders), and ``Step-Up Non-Displayed ADAV'' means Non-Displayed
ADAV in the relevant baseline month subtracted from current Non-
Displayed ADAV.
    \12\ The pricing for Liquidity Provision Tier 3 is referred to
by the Exchange on the Fee Schedule under the existing description
``Added displayed volume, Liquidity Provision Tier 3'' with a Fee
Code of B3, D3 or J3, as applicable, to be provided by the Exchange
on the monthly invoices provided to Members.
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    Third, with respect to Liquidity Provision Tier 5, the Exchange
currently provides an enhanced rebate of $0.0026 per share for
executions of Added Displayed Volume for Members that qualify for such
tier by achieving: (1) an ADAV that is equal to or greater than 0.075%
of the TCV; or (2) a Step-Up Displayed ADAV \13\ from April 2022 that
is equal to or greater than 0.02% of the TCV; or (3) a Midpoint ADAV
\14\ that is equal to or greater than 1,000,000 shares. The Exchange
now proposes to modify Liquidity Provision Tier 5 such that the
Exchange would provide an enhanced rebate of $0.0025 per share for
executions of Added Displayed Volume for Members that qualify for such
tier by

achieving: (1) an ADAV that is equal to or greater than 0.075% of the
TCV; or (2) a Midpoint ADAV \15\ that is equal to or greater than
1,000,000 shares.\16\ Thus, such proposed changes would decrease the
rebate for executions of Added Displayed Volume by $0.0001 per share
and would eliminate the second of the three existing alternative
criteria (based on a Step-Up Displayed ADAV from April 2022 threshold).
The Exchange is not proposing to change the rebate for executions of
orders in securities priced below $1.00 per share under such tier.
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    \13\ As set forth on the Fee Schedule, ``Step-Up Displayed
ADAV'' means Displayed ADAV in the relevant baseline month
subtracted from current Displayed ADAV.
    \14\ As set forth on the Fee Schedule, ``Midpoint ADAV'' means
ADAV with respect to Midpoint Peg orders.
    \15\ As set forth on the Fee Schedule, ``Midpoint ADAV'' means
ADAV with respect to Midpoint Peg orders.
    \16\ The pricing for Liquidity Provision Tier 5 is referred to
by the Exchange on the Fee Schedule under the existing description
``Added displayed volume, Liquidity Provision Tier 5'' with a Fee
Code of B5, D5 or J5, as applicable, to be provided by the Exchange
on the monthly invoices provided to Members.
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    As noted above, Liquidity Provision Tiers 2 and 4 would remain
intact with no changes under this proposal.
    The tiered pricing structure for executions of Added Displayed
Volume under the Liquidity Provision 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,
primarily in the form of liquidity-adding volume, to the Exchange,
thereby contributing to a deeper and more liquid market to the benefit
of all Members and market participants. The Exchange believes that the
Liquidity Provision Tiers, as modified by the proposed changes
described above, reflect a reasonable and competitive pricing structure
that is right-sized, updated to reference more recent baseline months
with respect to the applicable Step-Up ADAV thresholds, and consistent
with the Exchange's overall pricing philosophy of encouraging added
and/or displayed liquidity. Specifically, the Exchange believes that,
after giving effect to the proposed changes described above, the rebate
for executions of Added Displayed Volume provided under each of the
Liquidity Provision Tiers remains commensurate with the corresponding
required criteria under each such tier and is reasonably related to the
market quality benefits that each such tier is designed to achieve.
DLI Tiers
    The Exchange currently offers DLI Tiers 1 and 2 under which a
Member may receive an enhanced rebate for executions of Added Displayed
Volume by achieving the corresponding required criteria for each such
tier. The DLI Tiers are designed to encourage Members, through the
provision of an enhanced rebate for executions of Added Displayed
Volume, to promote price discovery and market quality by quoting at the
NBBO for a significant portion of each day (i.e., through the
applicable quoting requirement \17\) in a broad base of securities
(i.e., through the applicable securities requirements \18\), thereby
benefitting the Exchange and investors by providing improved trading
conditions for all market participants through narrower bid-ask spreads
and increased depth of liquidity available at the NBBO in a broad base
of securities and committing capital to support the execution of
orders.\19\ Now, the Exchange proposes to modify DLI Tiers 1 and 2 by
reducing the rebates for executions of Added Displayed Volume under
such tiers and modifying the required criteria under DLI Tier 1.
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    \17\ As set forth on the Fee Schedule, the term ``quoting
requirement'' means the requirement that a Member's NBBO Time be at
least 25%, and the term ``NBBO Time'' means the aggregate of the
percentage of time during regular trading hours during which one of
a Member's market participant identifiers (``MPIDs'') has a
displayed order of at least one round lot at the national best bid
or the national best offer.
    \18\ As set forth on the Fee Schedule, the term ``securities
requirement'' means the requirement that a Member meets the quoting
requirement in the applicable number of securities per day.
Currently, each of DLI Tiers 1 and 2 has a securities requirement
that may be achieved by a Member meeting the quoting requirement in
the specified number of securities traded on the Exchange.
    \19\ See the Exchange's Fee Schedule (available at https://info.memxtrading.com/fee-schedule/) for additional details regarding
the Exchange's DLI Tiers. See also Securities Exchange Act Release
No. 92150 (June 10, 2021), 86 FR 32090 (June 16, 2021) (SR-MEMX-
2021-07) (notice of filing and immediate effectiveness of fee
changes adopted by the Exchange, including the adoption of DLI).
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    Currently, a Member qualifies for DLI Tier 1 by achieving an NBBO
Time of at least 25% in an average of at least 1,000 securities per
trading day during the month. The Exchange now proposes to modify the
required criteria under DLI Tier 1 such that a Member would now qualify
for such tier by achieving: (1) an NBBO Time of at least 25% in an
average of at least 1,000 securities per trading day during the month;
and (2) an ADAV that is equal to or greater than 0.05% of the TCV.
Thus, such proposed change would add an overall ADAV threshold into the
required criteria, which is intended to encourage Members to maintain
or increase their overall order flow that adds liquidity to the
Exchange, thereby contributing to a deeper and more liquid market to
the benefit of all Members and market participants, in addition to the
existing quoting requirement designed to promote price discovery and
market quality in a broad base of securities on the Exchange.
    The Exchange also proposes to reduce the rebates for executions of
Added Displayed Volume under DLI Tiers 1 and 2. Currently, the Exchange
provides enhanced rebates of $0.0032 per share under DLI Tier 1 and
$0.0029 per share under DLI Tier 2 for a qualifying Member's executions
of Added Displayed Volume. Now, the Exchange proposes to reduce such
rebate provided under DLI Tier 1 to $0.0031 per share and reduce such
rebate provided under DLI Tier 2 to $0.0028 per share.\20\ The Exchange
believes that the proposed reduction of such rebates (i.e., by $0.0001
per share in each case) represents a modest reduction in each case and
that each of the proposed rebates under DLI Tiers 1 and 2 remains
commensurate with the required criteria under each such tier. The
purpose of reducing the rebates for executions of Added Displayed
Volume provided under DLI Tiers 1 and 2, as proposed, is for business
and competitive reasons, as the Exchange believes the reduction of such
rebates would decrease the Exchange's expenditures with respect to its
transaction pricing in a manner that is still consistent with the
Exchange's overall pricing philosophy of encouraging added and/or
displayed liquidity and promoting the price discovery and market
quality objectives of the DLI Tiers described above. The Exchange is
not proposing to change the rebates provided under such tiers for
executions of orders in securities priced below $1.00 per share.
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    \20\ The pricing for DLI Tier 1 is referred to by the Exchange
on the Fee Schedule under the existing description ``Added displayed
volume, DLI Tier 1'' with a Fee Code of Bq1, Bq1 or Jq1, as
applicable, and the pricing for DLI Tier 2 is referred to by the
Exchange on the Fee Schedule under the existing description ``Added
displayed volume, DLI Tier 2'' with a Fee Code of Bq2, Dq2 or Jq2,
as applicable.
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NBBO Setter/Joiner Tiers
    The Exchange currently offers the NBBO Setter Tier under which a
Member may receive an additive rebate of $0.0003 per share for
executions of Added Displayed Volume (other than Retail Orders) that
establish the NBBO (such orders, ``Setter Volume'') by achieving an
ADAV with respect to orders with Fee Code B \21\ that is equal to or
greater than 0.10% of the TCV. The Exchange now proposes to modify the
NBBO Setter Tier to become the NBBO Setter/Joiner Tiers by renaming the
existing NBBO Setter Tier as NBBO Setter/Joiner Tier 1, increasing the
additive rebate under such tier, making

the additive rebate under such tier also applicable to a qualifying
Member's executions of Added Displayed Volume (other than Retail
Orders) that establish a new best bid or offer (``BBO'') on the
Exchange that matches the NBBO first established on an away market
(such orders, ``Joiner Volume''), and establishing an NBBO Setter/
Joiner Tier 2.\22\ The additive rebate under each of the NBBO Setter/
Joiner Tiers will apply to a qualifying Member's executions of Setter
Volume, as it does today with respect to the NBBO Setter Tier, as well
as Joiner Volume, and the Exchange will indicate this in the note under
the NBBO Setter/Joiner Tiers pricing table on the Fee Schedule.
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    \21\ The Exchange notes that orders with Fee Code B include
orders, other than Retail Orders, that establish the NBBO.
    \22\ In connection with the proposed changes to this tier, the
Exchange is proposing to rename the relevant heading on the Fee
Schedule from ``NBBO Setter Tier'' to ``NBBO Setter/Joiner Tiers''
and revise the note under the NBBO Setter/Joiner Tiers pricing table
to reflect that the additive rebate under each such tier is
applicable to executions of Setter Volume and Joiner Volume rather
than being limited to Fee Codes associated with Setter Volume.
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    First, with respect to NBBO Setter/Joiner Tier 1, the Exchange
proposes to increase the additive rebate from $0.0003 per share to
$0.0004 per share for a qualifying Member's executions of Setter Volume
and Joiner Volume.\23\ As noted above, the additive rebate under such
tier will now be provided in addition to the otherwise applicable
rebate for a qualifying Member's executions of Setter Volume and Joiner
Volume, which the Exchange will indicate in the note under the NBBO
Setter/Joiner Tier pricing table on the Fee Schedule. The Exchange is
not proposing to modify the required criteria under such tier.
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    \23\ The pricing for NBBO Setter/Joiner Tier 1 is referred to by
the Exchange on the Fee Schedule under the new description ``NBBO
Setter/Joiner Tier 1'' with a Fee Code of S1 to be appended to the
otherwise applicable Fee Code assigned by the Exchange on the
monthly invoices for qualifying executions.
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    Second, the Exchange proposes to establish the NBBO Setter/Joiner
Tier 2 under which the Exchange will provide an additive rebate of
$0.0003 per share for executions of Setter Volume and Joiner Volume for
Members that qualify for such tier by achieving an ADAV that is equal
to or greater than 0.05% of the TCV and a Displayed ADAV with respect
to orders with Fee Code B or J \24\ that is equal to or greater than
40% of the Member's Displayed ADAV with respect to orders with Fee Code
B, D or J.\25\ The additive rebate under such tier will not apply to
executions of orders in securities priced below $1.00 per share. The
Exchange notes that the inclusion in the required criteria of a
threshold based on the amount of a Member's orders that establish the
NBBO or establish a new BBO on the Exchange that matches the NBBO first
established on an away market (i.e., order with Fee Code B or J), as a
percentage of all such Member's orders that add displayed liquidity to
the Exchange (i.e., orders with Fee Code B, D or J), is intended to
incentivize Members to submit such aggressively priced displayed
liquidity to the Exchange.
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    \24\ The Exchange notes that orders with Fee Code J include
orders, other than Retail Orders, that establish a new BBO on the
Exchange that matches the NBBO first established on an away market.
    \25\ The Exchange notes that orders with Fee Code D include
orders that add displayed liquidity to the Exchange but that are not
Fee Code B or J, and thus, orders with Fee Code B, D or J include
all orders, other than Retail Orders, that add displayed liquidity
to the Exchange. The pricing for NBBO Setter/Joiner Tier 2 is
referred to by the Exchange on the Fee Schedule under the new
description ``NBBO Setter/Joiner Tier 2'' with a Fee Code of S2 to
be appended to the otherwise applicable Fee Code assigned by the
Exchange on the monthly invoices for qualifying executions.
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    The purpose of making the additive rebate under the NBBO Setter/
Joiner Tiers applicable to a qualifying Member's executions of Joiner
Volume (in addition to Setter Volume) is, like the original purpose of
the NBBO Setter Tier, to attract aggressively priced displayed
liquidity to the Exchange. Specifically, the Exchange believes that
such change will encourage the submission of orders that establish a
new BBO on the Exchange that matches the NBBO first established on an
away market, both in order to receive the additive rebate on such
executions under each of the NBBO Setter/Joiner Tiers and, with respect
to Members seeking to qualify for NBBO Setter/Joiner Tier 2, to meet
the required criteria under such tier, and the Exchange believes that
the resulting increased submission of such aggressively priced
displayed liquidity would enhance market quality by increasing
execution opportunities, tightening spreads, and promoting price
discovery on the Exchange. Additionally, the Exchange believes that the
additive rebate for executions of Setter Volume and Joiner Volume
provided under each of the NBBO Setter/Joiner Tiers is commensurate
with the corresponding required criteria under each such tier and is
reasonably related to such market quality benefits that each such tier
is designed to achieve. The Exchange notes that the NBBO Setter/Joiner
Tiers, as modified by the changes proposed herein, are comparable to
other volume-based incentives and discounts, which have been widely
adopted by exchanges (including the Exchange), and that the Exchange's
proposal to provide an additive rebate for a qualifying Member's
executions of Joiner Volume, in addition to Setter Volume, under such
tiers is similar in construct to pricing incentives that have been
adopted by other exchanges.\26\
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    \26\ See, e.g., Securities Exchange Act Release No. 70664
(October 11, 2013), 78 FR 62804 (October 22, 2013) (SR-BATS-2013-
054) (notice of filing and immediate effectiveness of fee changes
adopted by BATS, including the adoption of an ``NBBO Joiner''
additive rebate provided for executions of orders that join the NBBO
when BATS is not already at the NBBO to members that qualify for
such incentive by achieving a specified volume threshold).
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Standard Rebates for Added Non-Displayed Volume
    The Exchange proposes to reduce the standard rebates for executions
of Added Non-Displayed Volume. Added Non-Displayed Volume includes: (i)
Pegged Orders \27\ with a Midpoint Peg \28\ instruction (such orders,
``Midpoint Peg orders'') in securities priced at or above $1.00 per
share that add liquidity to the Exchange (such orders, ``Added Midpoint
Peg Volume''); and (ii) orders in securities priced at or above $1.00
per share that add non-displayed liquidity to the Exchange, which are
not Midpoint Peg orders (such orders, ``Added Non-Midpoint Peg Hidden
Volume'').
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    \27\ Pegged Orders are described in Exchange Rules 11.6(h) and
11.8(c) and generally defined as an order that is pegged to a
reference price and automatically re-prices in response to changes
in the NBBO.
    \28\ A Midpoint Peg instruction is an instruction that may be
placed on a Pegged Order that instructs the Exchange to peg the
order to midpoint of the NBBO. See Exchange Rule 11.6(h)(2).
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    Currently, the Exchange provides standard rebates of $0.0018 per
share for executions of Added Midpoint Peg Volume and Added Non-
Midpoint Peg Hidden Volume. The Exchange now proposes to reduce each of
these standard rebates to $0.0015 per share.\29\ The purpose of
reducing the standard rebates for executions of Added Midpoint Peg
Volume and Add Non-Midpoint Peg Hidden Volume is for business and
competitive reasons, as the Exchange believes reducing such rebates as
proposed would decrease the Exchange's expenditures with respect to its
transaction pricing in a manner that is still consistent with the
Exchange's overall pricing philosophy of

encouraging added and/or displayed liquidity. The Exchange notes that
the proposed standard rebate for executions of Added Midpoint Peg
Volume remains higher than, and competitive with, the standard rebates
provided by at least one other exchange for executions of similar
orders.\30\ The Exchange also notes that the proposed standard rebate
for executions of Added Non-Midpoint Peg Hidden Volume remains higher
than, and competitive with, the standard rebates provided by at least
one other exchange for executions of similar orders.\31\
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    \29\ The standard pricing for executions of Added Midpoint Peg
Volume is referred to by the Exchange on the Fee Schedule under the
existing description ``Added non-displayed volume, Midpoint Peg''
and such orders will continue to receive a Fee Code of M on
execution reports. The standard pricing for executions of Added Non-
Midpoint Peg Hidden Volume is referred to by the Exchange on the Fee
Schedule under the existing description ``Added non-displayed
volume'' and such orders will continue to receive a Fee Code of H on
execution reports.
    \30\ See, e.g., the Nasdaq Price List--Trading Connectivity
(available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2), which reflects a standard rebate
of $0.0014 per share for executions of orders in Tape A and Tape B
securities priced at or above $1.00 per share that add non-displayed
midpoint liquidity and a standard rebate of $0.0010 per share for
executions of orders in Tape C securities priced at or above $1.00
per share that add non-displayed midpoint liquidity.
    \31\ See, e.g., the Cboe BZX Exchange, Inc. equities trading fee
schedule on its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/), which reflects a standard
rebate of $0.0010 per share for executions of orders in securities
priced at or above $1.00 per share that add non-displayed liquidity.
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Non-Display Add Tiers
    As noted above, the Exchange currently provides a standard rebate
of $0.0018 per share for executions of Added Non-Displayed Volume
(including both Added Midpoint Peg Volume and Added Non-Midpoint Peg
Hidden Volume), which the Exchange is proposing to reduce to $0.0015
per share, as described above. The Exchange also currently offers Non-
Display Add Tiers 1 and 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 modify the Non-Display Add Tiers by modifying the
required criteria under Non-Display Add Tiers 1 and 2, and establishing
a new Non-Display Add Tier 3, as further described below.
    First, with respect to Non-Display Add Tier 1, the Exchange
currently provides an enhanced rebate of $0.0027 per share for
executions of Added Non-Displayed Volume for Members that qualify for
such tier by achieving a Non-Displayed ADAV that is equal to or greater
than 3,000,000 shares.\32\ The Exchange now proposes to modify Non-
Display Add Tier 1 such that a Member would now qualify for such tier
by achieving a Non-Displayed ADAV that is equal to or greater than
5,000,000 shares. Thus, such proposed change would increase the Non-
Displayed ADAV threshold in the required criteria, which is designed to
encourage Members to maintain or increase their liquidity-adding non-
displayed order flow to the Exchange in order to qualify for the
enhanced rebate for executions of Added Non-Displayed Volume provided
under such tier. The Exchange is not proposing to change the rebates
provided under this tier.
---------------------------------------------------------------------------

    \32\ The pricing for Non-Display Add Tier 1 is referred to by
the Exchange on the Fee Schedule under the existing description
``Added non-displayed volume, Non-Display Add Tier 1'' with a Fee
Code of H1 or M1, as applicable, to be provided by the Exchange on
the monthly invoices provided to Members.
---------------------------------------------------------------------------

    Second, with respect to Non-Display Add Tier 2, the Exchange
currently provides an enhanced rebate of $0.0024 per share for
executions of Added Non-Displayed Volume for Members that qualify for
such tier by achieving a Non-Displayed ADAV that is equal to or greater
than 1,000,000 shares.\33\ The Exchange now proposes to modify Non-
Display Add Tier 2 such that a Member would now qualify for such tier
by achieving a Non-Displayed ADAV that is equal to or greater than
2,000,000 shares. Thus, such proposed change would increase the Non-
Displayed ADAV threshold in the required criteria, which is designed to
encourage Members to maintain or increase their liquidity-adding non-
displayed order flow to the Exchange in order to qualify for the
enhanced rebate for executions of Added Non-Displayed Volume provided
under such tier. The Exchange is not proposing to change the rebates
provided under this tier.
---------------------------------------------------------------------------

    \33\ The pricing for Non-Display Add Tier 2 is referred to by
the Exchange on the Fee Schedule under the existing description
``Added non-displayed volume, Non-Display Add Tier 2'' with a Fee
Code of H2 or M2, as applicable, to be provided by the Exchange on
the monthly invoices provided to Members.
---------------------------------------------------------------------------

    Third, the Exchange is proposing to establish a new tier under the
Non-Display Add Tiers, which, as proposed, would be referred to by the
Exchange as Non-Display Add Tier 3. Under the proposed new Non-Display
Add Tier 3, the Exchange would provide an enhanced rebate of $0.0020
per share for executions of Added Non-Displayed Volume for Members that
qualify for such tier by achieving a Non-Displayed ADAV that is equal
to or greater than 1,000,000 shares.\34\ The Exchange proposes to
provide Members that qualify for the proposed new Non-Display Add Tier
3 free executions of orders in securities priced below $1.00 per share
that add non-displayed liquidity to the Exchange, which is the same
rebate that is currently applicable to such executions for all Members.
---------------------------------------------------------------------------

    \34\ The pricing for the proposed new Non-Display Add Tier 3 is
referred to by the Exchange on the Fee Schedule under the new
description ``Added non-displayed volume, Non-Display Add Tier 3''
with a Fee Code of H3 or M3, as applicable, to be provided by the
Exchange on the monthly invoices provided to Members.
---------------------------------------------------------------------------

    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 orders, to
the Exchange, thereby contributing to a deeper and more liquid market
to the benefit of all Members and market participants. The Exchange
believes that the Non-Display Add Tiers, as modified by the proposed
changes described above, reflect a reasonable and competitive pricing
structure that is right-sized and consistent with the Exchange's
overall pricing philosophy of encouraging added and/or displayed
liquidity. Specifically, the Exchange believes that, after giving
effect to the proposed changes described above, the rebate for
executions of Added Non-Displayed Volume provided under each of the
Non-Display Add Tiers is commensurate with the corresponding required
criteria under each such tier and is reasonably related to the market
quality benefits that each such tier is designed to achieve.
Sub-Dollar Rebate Tier
    The Exchange proposes to adopt a new volume-based tier, referred to
by the Exchange as the Sub-Dollar Rebate Tier, under which the Exchange
will provide an enhanced rebate for executions of orders in securities
priced below $1.00 per share that add displayed liquidity to the
Exchange (such orders, ``Added Displayed Sub-Dollar Volume'').
Currently, the Exchange provides a standard rebate of 0.075% of the
total dollar value of the transaction for executions of Added Displayed
Sub-Dollar Volume, and this standard rebate is applicable to all such
executions for all Members (including those that qualify for any of the
Exchange's existing volume tiers). Now, under the proposed Sub-Dollar
Rebate Tier, the Exchange will provide an enhanced rebate of 0.15% of
the total dollar value of the transaction for executions of Added
Displayed Sub-Dollar Volume for Members that qualify for such tier by
achieving an ADAV that is equal to or greater than 0.15% of the

TCV.\35\ The Exchange notes that the Sub-Dollar Rebate Tier will not
apply to executions of orders in securities priced at or above $1.00
per share.
---------------------------------------------------------------------------

    \35\ The pricing for the proposed new Sub-Dollar Rebate Tier is
referred to by the Exchange on the Fee Schedule under the new
description ``Sub-Dollar Rebate Tier'' with a Fee Code of ``L'' to
be appended to the otherwise applicable Fee Code assigned by the
Exchange on the monthly invoices for qualifying executions.
---------------------------------------------------------------------------

    The Exchange believes that the proposed Sub-Dollar Rebate Tier
provides an incremental incentive for Members to maintain or strive for
higher ADAV on the Exchange in order to receive the proposed enhanced
rebate for executions of Added Displayed Sub-Dollar Volume. As such,
the proposed Sub-Dollar Rebate Tier is designed to incentivize Members
that provide liquidity on the Exchange to increase their orders that
add liquidity to the Exchange in order to qualify for the enhanced
rebate for executions of Added Displayed Sub-Dollar Volume, which, in
turn, the Exchange believes would also encourage the submission by
qualifying Members of additional Added Displayed Sub-Dollar Volume to
the Exchange, thereby promoting price discovery and contributing to a
deeper and more liquid market, including with respect to sub-dollar
securities. The Exchange believes that this resulting additional
liquidity-adding volume, including in the form of displayed volume in
sub-dollar securities, would contribute to a more robust and well-
balanced market ecosystem on the Exchange to the benefit of all Members
and market participants and, in turn, enhance the attractiveness of the
Exchange as a trading venue. The Exchange notes that the proposed new
Sub-Dollar Rebate Tier is comparable to other volume-based incentives
and discounts, which have been widely adopted by exchanges (including
the Exchange), including pricing incentives that provide an enhanced
rebate for executions of liquidity-adding orders in securities priced
below $1.00 per share for firms that achieve a specified volume
threshold that have been adopted by other exchanges.\36\
---------------------------------------------------------------------------

    \36\ See, e.g., the NYSE Arca Equities Fees and Charges
(available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf), which reflects a standard
credit of 0.0% of the total dollar value for executions of
securities priced below $1.00 per share, as well as the ``Sub-Dollar
Adding Step Up Tier'' pricing structure under which NYSE Arca
provides higher credits (ranging from 0.05% to 0.15% of the total
dollar value) for executions of orders in securities priced below
$1.00 per share for firms that qualify for any such tier by
achieving certain specified volume thresholds.
---------------------------------------------------------------------------

Maximum Rebate per Share
    As noted above, in response to the competitive environment with
respect to order execution, the Exchange offers tiered pricing, which
provides Members with opportunities to qualify for higher rebates or
lower fees where certain volume criteria and thresholds are met. In
this regard, the Exchange offers various volume-based tiers that
provide qualifying Members an enhanced rebate or an additive rebate
(which applies in addition to the otherwise applicable rebate) with
respect to qualifying executions. Under the Exchange's current pricing,
the highest rebate per share applicable to any execution is $0.0036,
and for business and competitive reasons the Exchange does not wish to
introduce a higher rebate per share with this proposal despite the fact
that a higher rebate for certain executions would be possible after
giving effect to the pricing changes described above. Thus, in order to
maintain the same maximum rebate per share provided under the
Exchange's current pricing, the Exchange proposes to add a note on the
Fee Schedule stating that to the extent a single execution qualifies
for one or more additive rebates, the maximum combined rebate per share
provided by the Exchange shall be $0.0036. The Exchange notes that
since $0.0036 is the highest rebate per share currently provided by the
Exchange, this proposed change, by itself, will not result in any
Member receiving a lower maximum rebate per share than it is currently
provided for any execution. The Exchange also notes that other
exchanges limit the maximum rebate per share in connection with the
provision of enhanced and/or additive rebates.\37\
---------------------------------------------------------------------------

    \37\ See, e.g., the Nasdaq Price List--Trading Connectivity
(available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2), which reflects various maximum
rebates in connection with the provision of an additive rebate for
executions of certain midpoint liquidity; the NYSE Arca Equities
Fees and Charges (available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf), which provides
that in connection with the ``Tape B Additional Credit'' the credit
shall be in addition to the ETP Holder's Tiered or Standard
credit(s) and such combined credit(s) in Tape B shall not exceed
$0.0032, subject to certain exceptions for Lead Market Makers, which
are subject to a higher, but still limited, per share credit for the
applicable executions.
---------------------------------------------------------------------------

Eliminate Step-Up Additive Rebate
    Finally, the Exchange proposes to eliminate the Step-Up Additive
Rebate. The Exchange currently offers the Step-Up Additive Rebate,
which is a volume-based tier, under which the Exchange provides an
additive rebate of $0.0002 per share in addition to the otherwise
applicable rebate for executions of Added Displayed Volume (other than
orders that establish the NBBO, if such Member qualifies for the NBBO
Setter Tier, and Retail Orders) for Members that qualify for such tier
by achieving one of the two specified alternative criteria based on
Step-Up ADAV and/or ADAV thresholds. The Exchange adopted the Step-Up
Additive Rebate in May 2022 for the purpose of encouraging Members that
provide liquidity on the Exchange to increase their liquidity-adding
order flow in order to achieve the applicable volume thresholds,
thereby providing greater execution opportunities on the Exchange.\38\
However, the Exchange no longer wishes to, nor is it required to,
maintain such tier. Thus, the proposed rule change removes such tier,
as the Exchange would rather redirect future resources and funding into
other incentives and tiers designed to incentivize increased order flow
or otherwise enhance market quality on the Exchange.
---------------------------------------------------------------------------

    \38\ See Securities Exchange Act Release No. 94863 (May 6,
2022), 87 FR 29197 (May 12, 2022) (SR-MEMX-2021-11) [sic] (notice of
filing and immediate effectiveness of fee changes adopted by the
Exchange, including the adoption of the Step-Up Additive Rebate).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of section 6 of the Act,\39\ in general, and with
sections 6(b)(4) and 6(b)(5) of the Act,\40\ 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.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f.
    \40\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    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.'' \41\
---------------------------------------------------------------------------

    \41\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005).
---------------------------------------------------------------------------

    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, 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
designed to decrease the Exchange's expenditures with respect to its
transaction pricing and incentivize market participants to direct
additional order flow, including various forms of liquidity-adding
volume and aggressively priced displayed orders that establish the NBBO
or establish a new BBO on the Exchange that matches the NBBO first
established on an away market, 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-based incentives and discounts 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
or discounts 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 Liquidity Provision
Tiers 1, 3 and 5, the DLI Tiers 1 and 2, and the Non-Display Add Tiers
1 and 2, each as modified by the changes proposed herein, as well as
the proposed new Non-Display Add Tier 3 and the proposed new Sub-Dollar
Rebate Tier, are reasonable, equitable and not unfairly discriminatory
for these same reasons, as such tiers would provide Members with an
incremental incentive to achieve certain volume thresholds on the
Exchange, are available to all Members on an equal basis, and, as
described above, are reasonably designed to encourage Members to
maintain or increase their liquidity-adding order flow, including in
the forms of Added Displayed Volume, Added Non-Displayed Volume and
Added Displayed Sub-Dollar Volume, as applicable, to the Exchange,
which the Exchange believes would promote price discovery, enhance
liquidity and market quality, and contribute to a more robust and well-
balanced market ecosystem on the Exchange to the benefit of all Members
and market participants.
    The Exchange also believes that such tiers reflect a reasonable and
equitable allocation of fees and rebates, as the Exchange believes
that, after giving effect to the changes proposed herein, the enhanced
rebate for executions of Added Displayed Volume, Added Non-Displayed
Volume, and Added Displayed Sub-Dollar Volume, as applicable, under
each such tier is commensurate with the corresponding required criteria
under each such tier and is reasonably related to the market quality
benefits that each such tier is designed to achieve, as described
above. Additionally, the Exchange believes the proposed new Sub-Dollar
Rebate Tier is reasonable, in that it is comparable to pricing
incentives adopted by other exchanges that provide an enhanced rebate
for executions of liquidity-adding orders in securities priced below
$1.00 per share for firms that achieve a specified volume
threshold.\42\
---------------------------------------------------------------------------

    \42\ See supra note 36.
---------------------------------------------------------------------------

    The Exchange believes that the proposed NBBO Setter/Joiner Tiers
are a reasonable means to attract aggressively priced displayed
liquidity to the Exchange. As noted above, the proposed NBBO Setter/
Joiner Tiers are comparable to other volume-based tiers, and the
Exchange believes such tiers are reasonable, equitable and not unfairly
discriminatory for the same reasons described above with respect to
volume-based tiers, as the proposed NBBO Setter/Joiner Tiers would
provide Members with an incremental incentive to achieve certain volume
thresholds on the Exchange, are available to all Members on an equal
basis, and, as described above, are reasonably designed to incentivize
the entry of aggressively priced displayed orders that establish the
NBBO or establish a new BBO on the Exchange that matches the NBBO first
established on an away market. As such, the Exchange believes the
additive rebates for executions of Setter Volume and Joiner Volume
provided under the NBBO Setter/Joiner Tiers are reasonably related to
the market quality benefits that such tiers are designed to promote.
    Specifically, the Exchange believes that its proposal to make the
additive rebate under each of the NBBO Setter/Joiner Tiers applicable
to a qualifying Member's executions of Joiner Volume (in addition to
Setter Volume, as is the case under the NBBO Setter Tier today) is
reasonable, equitable and not unfairly discriminatory because, as
described above, the Exchange believes that doing so would incentivize
the submission of additional orders that establish a new BBO on the
Exchange that matches the NBBO first established on an away market (in
addition to orders that establish the NBBO, which are currently
incentivized under the NBBO Setter Tier and will continue to be
incentivized under the NBBO Setter/Joiner Tiers), and the Exchange
believes that the resulting increased submission of such aggressively
priced displayed liquidity would benefit all Members and market
participants, including public investors, by increasing execution
opportunities, tightening spreads, and promoting price discovery on the
Exchange. Moreover, the Exchange believes such proposal is reasonable,
in that it is similar in construct to pricing incentives that have been
adopted by other exchanges that provide an additive rebate for
executions of orders that join the NBBO for members that achieve
certain specified volume criteria.\43\
---------------------------------------------------------------------------

    \43\ See supra note 26.
---------------------------------------------------------------------------

    The Exchange further believes that the proposed additive rebate for
executions of Setter Volume and Joiner Volume under each of the NBBO
Setter/Joiner Tiers is reasonable and consistent with an equitable
allocation of fees because, as described above, the Exchange believes
that each such rebate is commensurate with the corresponding required
criteria under each such tier and is reasonably related to such market
quality benefits that each such tier is designed to achieve.
    The Exchange believes that the proposed changes to reduce the
standard rebates provided for executions of Added Non-Displayed Volume
(i.e., both Added Midpoint Peg Volume and Added Non-Midpoint Peg Hidden
Volume) are reasonable because, as described above, such changes are
designed to decrease the Exchange's expenditures with respect to its
transaction pricing in a manner that is still consistent with the
Exchange's overall pricing philosophy of encouraging added and/or
displayed

liquidity, and the proposed new standard rebates for executions of
Added Midpoint Peg Volume and Added Non-Midpoint Peg Hidden Volume
remain higher than, and competitive with, the standard rebates provided
by at least one other exchange in each case for executions of similar
orders.\44\ The Exchange also believes the proposed standard rebates
for executions of Added Midpoint Peg Volume and Added Non-Midpoint Peg
Hidden Volume are equitable and not unfairly discriminatory, as such
standard rebates will apply equally to all Members.
---------------------------------------------------------------------------

    \44\ See supra notes 30-31.
---------------------------------------------------------------------------

    The Exchange believes that its proposal to limit the maximum
combined rebate per share provided for any execution on the Exchange
that qualifies for one or more additive rebates to $0.0036 is
reasonable, equitable and not unfairly discriminatory, as this
limitation will apply to all Members equally, in that no Member may be
eligible to receive such a rebate that is greater than $0.0036.
Moreover, the highest rebate per share applicable to any execution
under the Exchange's current pricing is $0.0036, so this proposed
change, by itself, will not result in any Member receiving a lower
maximum rebate per share than it is currently provided for any
execution. The Exchange notes that it is not required to provide
Members any opportunities to receive rebates or, to the extent that it
does provide rebates under its transaction pricing, to maintain any
specific level of rebate with respect to any type of transaction. The
Exchange further notes that other exchanges also limit the maximum
rebate per share in connection with the provision of enhanced and/or
additive rebates, and therefore, this aspect of the proposal does not
raise any new or novel issues that have not previously been considered
by the Commission.\45\
---------------------------------------------------------------------------

    \45\ See supra note 37.
---------------------------------------------------------------------------

    The Exchange believes the proposed change to eliminate the Step-Up
Additive Rebate is reasonable because, as noted above, it would enable
the Exchange to redirect the associated resources and funding into
other incentives and tiers designed to incentivize increased order flow
or otherwise enhance market quality on the Exchange, and the Exchange
is not required to maintain such incentive or provide Members any
opportunities to receive additive rebates. The Exchange believes the
proposal to eliminate such incentive is also equitable and not unfairly
discriminatory because it applies equally to all Members, in that the
incentive would no longer be available for any Member.
    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 \46\ 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 fees and rebates described herein are appropriate to address
such forces.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

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 changes to the Exchange transaction pricing under this proposal are
intended to decrease the Exchange's expenditures with respect to its
transaction pricing and attract order flow to the Exchange by
continuing to offer competitive pricing while also incentivizing market
participants to submit various forms of liquidity-adding volume and
aggressively priced displayed liquidity, thereby promoting price
discovery and 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.'' \47\
---------------------------------------------------------------------------

    \47\ See supra note 41.
---------------------------------------------------------------------------

Intramarket Competition
    As discussed above, the Exchange believes that the proposal would
incentivize Members to submit additional order flow, including various
forms of liquidity-adding volume and aggressively priced displayed
orders that establish the NBBO or establish a new BBO on the Exchange
that matches the NBBO first established on an away market, to the
Exchange, thereby promoting price discovery and 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 opportunity to qualify for the proposed new criteria under the
Liquidity Provision Tiers 1, 3 and 5, the DLI Tiers 1 and 2, and the
Non-Display Add Tiers 1 and 2, as well as the proposed new Non-Display
Add Tier 3 and the proposed new Sub-Dollar Rebate Tier, and thus
receive the corresponding rebates for executions of Added Displayed
Volume, Added Non-Displayed Volume and Added Displayed Sub-Dollar
Volume, as applicable, would be available to all Members that meet the
associated volume requirements in any month. Similarly, the opportunity
to qualify for the NBBO Setter/Joiner Tiers 1 and 2, and thus receive
the corresponding additive rebates for executions of Setter Volume and
Joiner Volume, would be available to all Members that meet the
associated volume requirements in any month. The Exchange believes its
proposal to make the additive rebate under the NBBO Setter/Joiner Tiers
applicable to a qualifying Member's executions of Joiner Volume will
benefit competition by rewarding Members that help the Exchange to join
other market centers at the NBBO. As described above, the Exchange
believes that, after giving effect to the changes proposed herein, the
required criteria under each of the tiers described above is
commensurate with the corresponding rebate under each such tier and is
reasonably related to the enhanced liquidity and market quality that
each such tier is designed to promote. Additionally, as noted above,
the proposed reduced standard rebates for executions of Added Non-
Displayed Volume (including both Added Midpoint Peg Volume and Added
Non-Midpoint Peg Hidden Volume) would continue to apply equally to all
Members in the same manner that such standard rates currently do today.
    The Exchange does not believe the proposed change to eliminate the
Step-Up Additive Rebate will impose any

burden on intramarket competition because such change will apply to all
Members uniformly, in that such incentive will no longer be available
to any Member. Additionally, the Exchange does not believe the proposed
change to limit the maximum combined rebate per share provided for any
execution on the Exchange that qualifies for one or more additive
rebates will impose any burden on intramarket competition because, as
described above, such limitation will apply to all Members equally, in
that no Member may be eligible to receive such a rebate that is greater
than $0.0036, and, as this is the highest rebate per share applicable
to any execution under the Exchange's current pricing, no Member will
receive a lower maximum rebate per share than it is currently provided
for any execution as a result of this proposed change.
    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 15 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 16% 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 to executions of
Added Displayed Volume, Added Non-Displayed Volume (including both
Added Midpoint Peg Volume and Added Non-Midpoint Peg Hidden Volume),
Added Displayed Sub-Dollar Volume, Setter Volume and Joiner 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 changes represent a competitive
proposal through which the Exchange is seeking to decrease the
Exchange's expenditures with respect to its transaction pricing and
attract additional order flow to the Exchange through the provision of
certain enhanced and additive rebates under volume-based tiers, which
have been widely adopted by exchanges, and standard pricing that is
comparable to, and competitive with, pricing for similar executions in
place at other exchanges.\48\ 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 standard pricing for executions of Added Non-Displayed Volume
(including both Added Midpoint Peg Volume and Added Non-Midpoint Peg
Hidden Volume), as well as similar pricing incentives and discounts to
market participants that achieve certain volume criteria and
thresholds. With respect to the Exchange's proposal to make the
additive rebates provided under the NBBO Setter/Joiner Tiers applicable
to executions of Joiner Volume (in addition to Setter Volume, as is the
case under the NBBO Setter Tier today), the Exchange believes that the
promotion of displayed liquidity at the NBBO, whether through orders
that establish the NBBO or establish a new BBO on the Exchange that
matches the NBBO first established on an away market, enhances market
quality for all market participants and promotes competition amongst
market centers. Additionally, as noted above, eliminating the Step-Up
Additive Rebate would allow the Exchange to redirect the associated
resources and funding into other incentives and tiers designed to
enhance market quality on the Exchange, which would ultimately enable
the Exchange to better compete with other market centers. The Exchange
does not believe that its proposal to limit the maximum combined rebate
per share provided for any execution on the Exchange that qualifies for
one or more additive rebates will impose any burden on intermarket
competition, and the Exchange notes that limiting the maximum rebate
per share in connection with similar types of incentives is consistent
with the practices of other exchanges.\49\
---------------------------------------------------------------------------

    \48\ See supra notes 30-31.
    \49\ See supra note 37.
---------------------------------------------------------------------------

    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.'' \50\ 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' . . . .''.\51\ 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.
---------------------------------------------------------------------------

    \50\ See supra note 41.
    \51\ 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 \52\ and Rule 19b-4(f)(2) \53\ thereunder.
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    \52\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \53\ 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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-MEMX-2022-33 on the subject line.

Paper Comments

     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-2022-33. 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 (http://www.sec.gov/rules/sro.shtml).
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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MEMX-2022-33 and should be submitted on
or before January 5, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\54\
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    \54\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-27161 Filed 12-14-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 238 (Wednesday, December 15, 2021)]
[Notices]
[Page 71258]
[FR Doc No: 2021-27060]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 2570-034]

AEP Generation Resources Inc.; Notice of Application Tendered for
Filing With the Commission and Establishing Procedural Schedule for
Licensing and Deadline for Submission of Final Amendments

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection.
    a. Type of Application: New Major License.
    b. Project No.: 2570-034.
    c. Date Filed: November 30, 2021.
    d. Applicant: AEP Generation Resources Inc. (AEP Generation
Resources).
    e. Name of Project: Racine Hydroelectric Project (Racine Project).
    f. Location: The Racine Project is located at the U.S. Army Corps
of Engineers' (Corps) Racine Locks and Dam on the Ohio River near the
Town of Racine in Meigs County, Ohio. The project occupies 23 acres of
federal land administered by the Corps.
    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791(a)-825(r).
    h. Applicant Contact: Jonathan Magalski, Environmental Supervisor
(Renewables), c/o American Electric Power Service Corporation, 1
Riverside Plaza, Columbus, OH 43215;<PHONE_NUMBER>, [email protected]
or Elizabeth Parcell, Process Supervisor, American Electric Power
Service Corporation, c/o AEP Generation Resources, Inc., 40 Franklin
Road SW, Roanoke, VA 24011,<PHONE_NUMBER>.
    i. FERC Contact: Jay Summers at<PHONE_NUMBER> or email at
[email protected].
    j. This application is not ready for environmental analysis at this
time.
    k. The Racine Project would use the Corps' existing Racine Locks
and Dam and consist of the following existing facilities: (1) Four
21.75-foot-wide by 60-foot-high intake openings equipped with steel
trashracks having a clear bar spacing of 5.5 inches; (2) a reinforced
concrete powerhouse located on the east end of the dam containing two
horizontal bulb generating units, with a combined capacity of 47.5
megawatts; (3) a 155-foot-long, non-overflow section of sheet pile
cells located between the powerhouse and the right abutment; (4) a
stand-alone functional replacement dam located upstream of the sheet
pile cells that consists of a drilled shaft supported concrete dam with
a drilled secant pile seepage control; (5) a 475-foot-long transmission
line; and (6) appurtenant facilities.
    The Racine Project is currently operated in a run-of-release mode
using surplus water from the Corps' Racine Locks and Dam, as directed
by the Corps, and has an estimated average annual energy production of
90,364 megawatt-hours. AEP Generation Resources does not propose any
new construction and proposes to continue operating the project in a
run-of-release mode.
    l. Locations of the Application: In addition to publishing the full
text of this document in the Federal Register, the Commission provides
all interested individuals an opportunity to view and/or print the
contents of this document and the full license application via the
internet through the Commission's website at http://www.ferc.gov using
the ``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access these documents. At this
time, the Commission has suspended access to the Commission's Public
Reference Room due to the proclamation declaring a National Emergency
concerning the Novel Coronavirus Disease (COVID-19), issued by the
President on March 13, 2020. For assistance, contact FERC at
[email protected] or call toll-free,<PHONE_NUMBER> or (202)
502-8659 (TTY).
    m. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to this or other pending projects. For assistance, contact FERC
Online Support.
    n. Procedural Schedule: The application will be processed according
to the following preliminary Hydro Licensing Schedule. Revisions to the
schedule may be made as appropriate.

----------------------------------------------------------------------------------------------------------------
                         Milestone                                               Target date
----------------------------------------------------------------------------------------------------------------
Issue Deficiency Letter (if necessary).....................  December 2021.
Request Additional Information.............................  January 2022.
Notice of Acceptance/Notice of Ready for Environmental       May 2022.
 Analysis.
----------------------------------------------------------------------------------------------------------------

    o. Final amendments to the application must be filed with the
Commission no later than 30 days from the issuance date of the notice
of ready for environmental analysis.

    Dated: December 8, 2021.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2021-27060 Filed 12-14-21; 8:45 am]
BILLING CODE 6717-01-P