[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)]
[Notices]
[Pages 31828-31833]
[FR Doc No: 2018-14547]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83582; File No. SR-IEX-2018-11]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
the Structure of its Fee Schedule and Make Several Conforming and
Clarifying Changes, Pursuant to IEX Rule 15.110(A) and (C)

July 2, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on June 29, 2018, the Investors Exchange LLC (``IEX'' 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 self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the
Securities and Exchange Commission (``Commission'') a proposed rule
change to modify the structure of its Fee Schedule and make several
conforming and clarifying changes, pursuant to IEX Rule 15.110(a) and
(c), in order to provide more clarity to market participants regarding
the fees assessed for executions on the Exchange. Changes to the Fee
Schedule pursuant to this proposal are effective upon filing and will
be operative on July 1, 2018.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's
website at www.iextrading.com, at the principal office of the Exchange,
and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
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 statement may be examined at
the places specified in Item IV below. The self-regulatory organization
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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify the structure of its Fee Schedule
and make minor conforming changes, pursuant to IEX Rule 15.110(a) and
(c), in order to provide more clarity to market participants regarding
the fees assessed for executions on the Exchange. The Exchange's
existing Fee Schedule requires market participants to determine which
of the Exchange's Fee Codes are applicable to any given transaction,
and then calculate the applicable fee that will be assessed depending
on the applicable Fee Code combination. After informal discussions with
various market participants, the Exchange is proposing to provide more
clarity to market participants regarding the fees assessed for
executions on the Exchange by amending the structure of its Fee
Schedule to explicitly provide each possible Fee Code combination,
along with the associated fee applicable to such transaction. The
Exchange is also proposing to make several minor substantive changes to
the Fee Schedule and related rules to enhance the consistency and
clarity of the Exchange's Fee Schedule.
Existing Fee Schedule
    In an effort to incentivize Members \6\ to submit displayed orders
to the Exchange, the Exchange currently charges a fee of $0.0003 per
share (or 0.30% of the total dollar value of the transaction for
securities priced below $1.00) to Members for executions on IEX that
provide or take resting interest with displayed priority (i.e., an
order or portion of a reserve order that is booked and ranked with
display priority on the Order Book).\7\ Furthermore, the Exchange
currently charges $0.0009 per share (or 0.30% of the total dollar value
of the transaction for securities priced below $1.00) to Members for
executions on IEX that provide or take resting interest with non-
displayed priority (i.e., an order or portion of a reserve order that
is booked and ranked with non-displayed priority on the Order Book).\8\
---------------------------------------------------------------------------

    \6\ See Rule 1.160(s).
    \7\ This pricing is referred to by the Exchange as ``Displayed
Match Fee'' with a Fee Code of `L' provided by the Exchange on
execution reports. See the Investors Exchange Fee Schedule,
available on the Exchange public website.
    \8\ This pricing is referred to by the Exchange as the ``Non-
Displayed Match Fee'' with a Fee Code of `I' provided by the
Exchange on execution reports. See the Investors Exchange Fee
Schedule, available on the Exchange public website.
---------------------------------------------------------------------------

    Moreover, in order to reduce the variability in fees to access
liquidity on the Exchange and thereby incentivize Members to route more
orders to the Exchange that are executable at the far side of the
NBBO,\9\ the Exchange assesses a deterministic Spread-Crossing Remove
Fee of $0.0003 per share to all executions at or above $1.00 that
result from removing liquidity with a buy (sell) order that is
executable at the NBO (NBB).\10\ The Exchange does not charge

any fee to Members for executions on IEX when the adding and removing
order originated from the same Exchange Member,\11\ and all executions
below $1.00 are assessed a fee equal to 0.30% of the total dollar value
of the transaction.\12\
---------------------------------------------------------------------------

    \9\ As defined by Regulation NMS Rule 600(b)(42). 17 CFR
242.600.
    \10\ This pricing is referred to by the Exchange as the
``Spread-Crossing Remove Fee'', with a Fee Code of ``N'' provided by
the Exchange on execution reports. See the Investors Exchange Fee
Schedule, available on the Exchange public website. The Exchange
notes that if an order--based on market conditions, User
instructions, applicable IEX Rules and/or the Act and the rules and
regulations thereunder--is not executable at the far side of the
NBBO, such order will not be eligible for the Spread-Crossing Remove
Fee. See Securities Exchange Act Release No. 83147 (May 1, 2018) 83
FR 20118 (May 7, 2018) (SR-IEX-2018-09).
    \11\ This pricing is referred to by the Exchange as the
``Internalization Fee'' with a Fee Code of `S' provided by the
Exchange on execution reports. Orders from different market
participant identifiers of the same broker dealer, with the same
Central Registration Depository registration number, are treated as
originating from the same Exchange Member. See the Investors
Exchange Fee Schedule, available on the Exchange public website.
    \12\ See the Investors Exchange Fee Schedule, available on the
Exchange public website.
---------------------------------------------------------------------------

    Furthermore, to incentivize additional resting liquidity on IEX,
including displayed liquidity, the Exchange charges the maximum fee
allowable pursuant to Regulation NMS for certain executions that appear
to be part of a deliberate trading strategy that targets resting
liquidity during periods of quote instability. Specifically, the
Exchange charges a Crumbling Quote Remove Fee (``CQRF'') of $0.0030 (or
0.3% of the total dollar value of the transaction for securities priced
below $1.00) to orders that remove resting liquidity during periods of
quote instability, as defined in Rule 11.190(g), if such orders
constitute at least 5% of the Member's volume executed on IEX and at
least 1 million shares, on a monthly basis, measured on a per market
participant identifier (``MPID'') basis.\13\ Orders that exceed the 5%
and 1 million share thresholds are assessed the CQRF per each
incremental share executed that exceeds the threshold.\14\
---------------------------------------------------------------------------

    \13\ This pricing is referred to by the Exchange as the
``Crumbling Quote Remove Fee Indicator'' with a Fee Code of `Q'
provided by the Exchange on execution reports. See the Investors
Exchange Fee Schedule, available on the Exchange public website. See
also 17 CFR 242.610(c).
    \14\ See Securities Exchange Act Release No. 81484 (August 25,
2017), 82 FR 41446 (August 31, 2017) (SR-IEX-2017-27).
---------------------------------------------------------------------------

    In addition to the fees assessed for trading on the continuous
market, the Exchange also assesses fees for orders that execute in an
IEX Auction for securities listed on the Exchange pursuant to Rule
11.350, as well as for orders that execute in the Opening Process for
non-IEX-listed securities pursuant to Rule 11.231.\15\ For orders that
execute in an IEX Auction for securities listed on the Exchange:
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 82127 (November 20,
2017), 82 FR 56089 (November 27, 2017) (SR-IEX-2017-40), and
Securities Exchange Act Release No. 81502 (August 30, 2017), 82 FR
42141 (September 6, 2017) (SR-IEX-2017-28), respectively. The
Exchange does not yet have any IEX-listed securities, but intends on
launching a listings program for corporate issuers.
---------------------------------------------------------------------------

     Executions in the Opening Auction \16\ receive Fee Code
``O'', and are assessed a fee of $0.0003 per share, unless the order
was displayed on the Continuous Book during the Pre-Market Session,\17\
in which case the execution also receives Fee Code ``L'', and is not
charged a fee.
---------------------------------------------------------------------------

    \16\ See Rule 11.350(c).
    \17\ See Rule 1.160(z).
---------------------------------------------------------------------------

     Executions in the Closing Auction \18\ receive Fee Code
``C'', and are assessed a fee of $0.0003 per share, unless the order
was displayed on the Continuous Book during the Regular Market
Session,\19\ in which case the execution also receives Fee Code ``L'',
and is not charged a fee.
---------------------------------------------------------------------------

    \18\ See Rule 11.350(d).
    \19\ See Rule 1.160(gg).
---------------------------------------------------------------------------

     Executions in a Halt Auction \20\ or Volatility Auction
\21\ receive Fee Code ``H'', and are assessed a fee of $0.0003 per
share; \22\ and
---------------------------------------------------------------------------

    \20\ See Rule 11.350(e).
    \21\ See Rule 11.350(f).
    \22\ The Exchange also notes that there is no Continuous Book
prior to a Halt, Volatility, or IPO auction, and thus no opportunity
for a Member to have a displayed order on the Continuous Book that
is executed in such auctions.
---------------------------------------------------------------------------

     Executions in an IPO Auction \23\ receive Fee Code ``P'',
and are assessed a fee of $0.0003 per share.\24\
---------------------------------------------------------------------------

    \23\ See Rule 11.350(e).
    \24\ See supra note 13.
---------------------------------------------------------------------------

    For orders that execute in the Opening Process for non-IEX-listed
securities pursuant to Rule 11.231:
     Orders resting on the Cross Book \25\ that execute in the
Opening Process receive Fee Code ``X'', and are assessed a fee of
$0.0009 per share;
---------------------------------------------------------------------------

    \25\ See Rule 11.231(a).
---------------------------------------------------------------------------

     Non-displayed orders resting on the Continuous Book that
execute in the Opening Process receive Fee Code ``X'', and are assessed
a fee of $0.0009 per share; and
     Displayed orders resting on the Continuous Book that
execute in the Opening Process receive Fee Codes ``X'' and ``L'', and
are assessed a fee of $0.0003 per share.
    In addition to the fees described above, the Exchange also offers a
Market Quality Incentive Program that offers certain fee-based
incentives for Members that provide meaningful and consistent support
to market quality and price discovery by extensive quoting at and/or
near the NBBO in IEX-listed securities for a significant portion of the
day.\26\ Specifically, a Member that satisfies the quoting criteria for
one or more of the following tiers in each security listed on IEX over
the course of the month that the security is listed on IEX may be
designated as an ``IEMM'':
---------------------------------------------------------------------------

    \26\ See Rule 11.170(a).
---------------------------------------------------------------------------

     Inside Tier IEMM: One or more of its MPIDs has a displayed
order entered in a principal capacity of at least one round lot resting
on the Exchange at the NBB and/or the NBO for an average of at least
20% of Regular Market Hours (the ``NBBO Quoting Percentage''); and/or
     Depth Tier IEMM: One or more of its MPIDs has a displayed
order entered in a principal capacity of at least one round lot resting
on the Exchange at the greater of 1 minimum price variation (``MPV'')
or 0.03% (i.e., 3 basis points) away from the NBBO (or more aggressive)
for an average of at least 75% of Regular Market Hours (the ``Depth
Quoting Percentage'').
    Members that are designated as an IEMM qualify for the Displayed
Match Fee Discount as well as the Non-Displayed Match Fee Discount.
Specifically, for Inside Tier IEMMs, the Displayed Match Fee Discount
and the Non-Displayed Match Fee Discount results in a $0.0001 discount
for each execution subject to the Displayed Match Fee and the Non-
Displayed Match Fee, respectively, with no cap on aggregate monthly
savings. Furthermore, Depth Tier IEMMs will receive a $0.0001 discount
for each execution subject to the Displayed Match Fee and the Non-
Displayed Match Fee, up to $20,000.00 in aggregate savings per
month.\27\
---------------------------------------------------------------------------

    \27\ See Securities Exchange Act Release No. 82636 (February 6,
2018), 83 FR 6059 (February 12, 2018) (SR-IEX-2018-02). See also the
Investors Exchange Fee Schedule, available on the Exchange public
website.
---------------------------------------------------------------------------

Proposed Changes
    After informal discussions with various market participants, the
Exchange is proposing to provide more clarity to market participants
regarding the fees assessed for executions on the Exchange by amending
the structure of its Fee Schedule to provide an overarching framework
for interpreting the Exchange's Fee Codes, as well as explicitly
enumerating each possible Fee Code combination, along with the
associated fee applicable to such transaction. The Exchange is also
proposing to make several conforming changes to the Fee Schedule and
related rules to account for the updated structure.
    The Exchange proposes to continue utilizing standard FIX tag 9730
(Trade Liquidity Indicator) to populate the applicable Fee Codes for
executions on

the Exchange.\28\ Furthermore, the Exchange is proposing to divide the
Exchange's Fee Codes into ``Base Fee Codes'', one of which shall be
supplied on every execution report, and ``Additional Fee Codes'', one
or more of which may be provided on an execution report, as applicable.
The first position in the Last Liquidity Indictor tag would always
contain a Base Fee Code. The second through fourth positions would
contain one or more Additional Fee Codes, as applicable, that serve to
modify the Base Fee Code in the first position.
---------------------------------------------------------------------------

    \28\ See the Investors Exchange FIX Specification, available on
the Exchange's public website.
---------------------------------------------------------------------------

    As in the existing Fee Schedule, all proposed fees identify cost
per share executed unless otherwise specified, and footnotes provide
further explanatory text or indicate variable rate changes, provided
the conditions in the footnote are met. The rates listed in the
proposed Base Rates table apply unless a Member's transaction is
assigned an Additional Fee Code. If a Member's transaction is assigned
an Additional Fee Code, the rates listed in the Fee Code Combinations
and Associated Fees table will apply. Executions below $1.00 are
assessed a fee of 0.30% of TDV unless the Fee Code Combination results
in a FREE execution. For executions on routable orders, the Exchange
passes-through in full any fees charged by/rebates received from away
venues (``Cost'') to the Member and adds the IEX fee (i.e., a $0.0001
charge per share).
    The Exchange also proposes to adopt the following definitions that
are substantially like the Exchange's existing definitions governing
transaction fees:
     ``Fee Code'' is identified on each execution report
message from the Exchange in the Trade Liquidity Indicator (FIX tag
9730) field.
     ``MPID'' means a market participant identifier.
     ``TDV'' means the total dollar value of the execution
calculated as the execution price multiplied by the number of shares
executed in the transaction.
     ``Quote instability'' is defined in IEX Rule
11.190(g).\29\
---------------------------------------------------------------------------

    \29\ The Exchange notes the proposed definition of ``Quote
instability'' is a new definition, and is simply a cross reference
to Rule 11.190(g). See Rule 11.190(g).
---------------------------------------------------------------------------

     ``CQRF Threshold'' means the Crumbling Quote Remove Fee
Threshold. The threshold is equal to 5% of the sum of a Member's total
monthly executions on IEX if at least 1,000,000 shares during the
calendar month, measured on an MPID basis.
     ``Spread-crossing eligible order'' means a buy order that
is executable at the NBO or a sell order that is executable at the NBB
after accounting for the order's limit (if any), peg instruction (if
any), market conditions, and all applicable rules and regulations.\30\
---------------------------------------------------------------------------

    \30\ The Exchange notes that the proposed definition of
``Spread-crossing eligible order'' is a new definition, and is
intended to provide market participants further clarity regarding
the conditions associated with the Spread-Crossing Remove Fee. See
Securities Exchange Act Release No. 83147 (May 1, 2018) 83 FR 20118
(May 7, 2018) (SR-IEX-2018-09).

The proposed Base Fee Codes and Additional Fee Codes, as well as the
corresponding fees, are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                     Executions at
           Base fee codes                      Description          or above $1.00     Executions below $1.00
----------------------------------------------------------------------------------------------------------------
I, X................................  Standard Match Fee..........         $0.0009  0.30% of TDV.
L...................................  Reduced Match Fee...........          0.0003  0.30% of TDV.
O, C, H, P..........................  Auction Match Fee...........          0.0003  0.30% of TDV.
                                                                   ---------------------------------------------
Alpha...............................  Routing and removing                         Cost + $0.0001
                                       liquidity (all routing
                                       options).
----------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------
   Additional fee codes             Description                 Fee
------------------------------------------------------------------------
S........................  Internalization Fee: Member              FREE
                            executes against resting
                            liquidity provided by such
                            Member.
Q........................  Crumbling Quote Remove Fee:           $0.0030
                            Removes liquidity during
                            periods of quote instability
                            at or within the NBBO above
                            the CQRF Threshold, measured
                            on an MPID basis.
N........................  Spread-Crossing Eligible              $0.0003
                            Remove Fee: Removes
                            liquidity with a spread-
                            crossing eligible order.
D........................  Discounted Single-Price Cross            FREE
                            Fee: Displayed interest
                            resting on the Continuous
                            Book executes in a cross or
                            auction.
------------------------------------------------------------------------

    Fee Codes ``I'' and ``X'' are currently identified as the Non-
Displayed Match Fee and the Opening Match Fee, respectively, and would
both be referred to as the Standard Match Fee, as proposed.
Furthermore, Fee Code ``L'' is currently identified as the Displayed
Match Fee, and would be referred to as the Reduced Match Fee, as
proposed. The Exchanges notes these amendments reflect only changes in
nomenclature, and do not represent substantive changes to the fees
assessed for execution on the Exchange. Moreover, similar to the
existing Fee Schedule, the Exchange proposes to append footnote 1 to
each Fee Code combination that includes Fee Code ``Q''. Footnote 1
states that executions with Fee Code Q that exceed the CQRF Threshold
are subject to the Crumbling Quote Remove Fee identified in the Fee
Code Modifiers table. Executions with Fee Code Q that do not exceed the
CQRF Threshold are subject to the fees identified in the Fee Code
Combinations and Associated Fees table.
    The Exchange is proposing to make one minor conforming change to
the fees assessed for displayed order's resting on the Continuous Book
that are executed in the Opening Process for non-IEX-listed securities
pursuant to Rule 11.231 in order to enhance the consistency and clarity
of the Exchange's Fee Schedule. Specifically, as described above, a
displayed order resting on the Continuous Book that is executed in the
Opening Process for non-IEX-listed securities is currently charged the
Displayed Match Fee (or the Reduced Match Fee, as proposed). In
contrast, a displayed order resting on the Continuous Book that is
executed in an Opening or Closing Auction for IEX-listed securities is
not charged a fee. However, as proposed, the Opening Process utilizes
the Base Fee Code of ``X'', which would conflict with the Base Fee Code
of ``L'' for displayed executions. Thus, the Exchange is

proposing to harmonize the fees charged to displayed orders resting on
the Continuous Book that are executed in the Opening Process or the
Opening or Closing Auction, by introducing Additional Fee Code ``D''
(Discounted Single-Price Cross Fee), representing displayed interest
resting on the Continuous Book that executes in a single price cross
(i.e., in Opening Process, or an IEX Auction), and is not charged a
fee.\31\
---------------------------------------------------------------------------

    \31\ See proposed Additional Fee Code ``D'', Discounted Single-
Price Cross: displayed interest resting on the Continuous Book
executes in a cross or auction.
---------------------------------------------------------------------------

    The Exchange believes that offering such displayed orders resting
on the Continuous Book free execution in the Opening Process is
consistent with the protection of investors and the public interest in
that it may have the effect of incentivizing Members that seek
execution in the Opening Process to enter displayed interest, thereby
contributing to the public price discovery process to the benefit of
all market participants. Furthermore, the proposed change creates
consistency in the Exchange's fee for similarly situated orders in that
displayed orders resting on the Continuous Book that are executed as
part of a single-priced cross will receive the same free execution.
    In addition to the Base Fee Code and Additional Fee Code framework
described above, the Exchange is also proposing to provide a table of
all possible Fee Code combinations and their associated fees, which
explicitly sets forth each of the fees associated with each Fee Code
combination. This table is designed to provide market participants an
authoritative source on how to interpret the Fee Code's assigned by the
Exchange on each execution report. Consistent with the foregoing, the
proposed Fee Code combinations and associated fees are as follows: \32\
---------------------------------------------------------------------------

    \32\ The Exchange has included an asterisk to denote a Fee Code
combination that will have proposed footnote 1 appended. As
described above, Footnote 1 states that executions with Fee Code Q
that exceed the CQRF Threshold are subject to the Crumbling Quote
Remove Fee of $0.0030, as identified in the Fee Code Modifiers
table. Executions with Fee Code Q that do not exceed the CQRF
Threshold are subject to the fees identified in the Fee Code
Combinations and Associated Fees table.

------------------------------------------------------------------------
        Fee Codes                   Description                 Fee
------------------------------------------------------------------------
I........................  Adds or removes non-displayed         $0.0009
                            liquidity.
L........................  Adds or removes displayed             $0.0003
                            liquidity.
IS.......................  Member executes against                  FREE
                            resting non-displayed
                            liquidity provided by such
                            Member.
IQ *.....................  Removes non-displayed                 $0.0009
                            liquidity during periods of
                            quote instability.
IN.......................  Removes non-displayed                 $0.0003
                            liquidity with a spread-
                            crossing eligible order.
LS.......................  Member executes against                  FREE
                            resting displayed liquidity
                            provided by such Member.
LQ *.....................  Removes displayed liquidity           $0.0003
                            during periods of quote
                            instability.
LN.......................  Removes displayed liquidity           $0.0003
                            with a spread-crossing
                            eligible order.
ISQ *....................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability.
ISN......................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member with a spread-
                            crossing eligible order.
IQN *....................  Removes non-displayed                 $0.0003
                            liquidity during periods of
                            quote instability with a
                            spread-crossing eligible
                            order.
LSQ *....................  Member removes displayed                 FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability.
LSN......................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member with a spread-
                            crossing eligible order.
LQN *....................  Removes displayed liquidity           $0.0003
                            during periods of quote
                            instability with a spread-
                            crossing eligible order.
ISQN *...................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability with a
                            spread-crossing eligible
                            order.
LSQN *...................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability with a
                            spread-crossing eligible
                            order.
X........................  Opening Process for Non-              $0.0009
                            Listed Securities (``Opening
                            Process'').
XD.......................  Displayed interest resting on            FREE
                            the Continuous Book executes
                            in the Opening Process.
O........................  Opening Auction, IEX-listed           $0.0003
                            security.
OD.......................  Displayed interest resting on            FREE
                            the Continuous Book executes
                            in the Opening Auction.
C........................  Closing Auction, IEX-listed           $0.0003
                            security.
CD.......................  Displayed interest resting on            FREE
                            the Continuous Book executes
                            in the Closing Auction.
H........................  Halt or Volatility Auction,           $0.0003
                            IEX-listed security.
P........................  IPO Auction, IEX-listed               $0.0003
                            security.
------------------------------------------------------------------------

    Lastly, in order to enhance the consistency and clarity of the
Exchange's Fee Schedule, IEX proposes to make conforming changes to the
description of the IEMM Program in both the Fee Schedule and Rule
11.170(a)(3) to account for the changes described above, as well as to
clarify the application of the Spread-Crossing Eligible Remove Fee.
Specifically, the Exchange is changing the name of the Non-Displayed
Match Fee Discount and the Displayed Match Fee Discount to the Standard
Match Fee Discount and Reduced Match Fee Discount, respectively, which
conforms to the nomenclature of the proposed Base Rate's. Furthermore,
the Exchange is clarifying that Members that qualify as IEMMs will
receive a $0.0001 discount on executions that receive the Spread-
Crossing Eligible Remove Fee, subject to any applicable Depth Tier
aggregate monthly savings cap. The Spread-Crossing Eligible Remove Fee
Code of ``N'' is an additional Fee Code applied to execution that
remove resting liquidity (either displayed, or non-displayed), and
thus, such executions would also receive the applicable Base Fee Code,
but would be subject to the Spread-Crossing Eligible Remove Fee as set
forth in the proposed table of Fee Code combinations and associated
fees.
    The Exchange believes the proposed changes do not substantively
change the IEMM Program, as executions qualifying for the Spread-
Crossing Eligible Remove Fee are a logical subset of executions that
satisfy the conditions of the Standard Match Fee (when removing non-
displayed liquidity) or the Reduced Match Fee (when removing displayed
liquidity). Thus, to provide clarity regarding the application of the
Spread-Crossing Eligible Remove Fee, the Exchange proposes to amend the
Fee Schedule to explicitly enumerate the Spread-Crossing Eligible
Remove Fee Discount for Members that qualify as an IEMM. Accordingly,
as proposed, unless an IEMM otherwise qualifies for a lower rate, IEMMs
will receive the following rates for executions during continuous
trading in securities priced at or above $1.00.

----------------------------------------------------------------------------------------------------------------
                                                                                Spread-
                                                                                crossing
                            IEMM Tier                             Standard match   Reduced match     eligible
                                                                   fee discount    fee discount     remove fee
                                                                                discount
----------------------------------------------------------------------------------------------------------------
Inside Tier.....................................................         $0.0001         $0.0001         $0.0001
Depth Tier......................................................          0.0001          0.0001          0.0001
----------------------------------------------------------------------------------------------------------------

    The Exchange also proposes to clarify in the Fee Schedule that
IEMMs qualifying for the Depth Tier can receive up to $20,000.00 in
aggregate savings, per month, before the discounted rates above no
longer apply, and the IEMM is subject to the Base Rates. Furthermore,
the Exchange proposed to clarify in both the Fee Schedule and Rule
11.170(a)(3) that if a Member qualifies under both the Inside Tier and
the Depth Tier, any earned Standard Match Fee Discount, Reduced Match
Fee Discount, and Spread-Crossing Eligible Remove Fee Discount will be
aggregated and applied to such Members' executions that are subject to
the Standard Match Fee, Reduced Match Fee, or Spread-Crossing Eligible
Remove Fee in securities priced at or above $1.00, subject to the
applicable Depth Tier aggregate monthly savings cap of $20,000.00.
    Finally, the Exchange is proposing to make conforming changes to
Rule 11.170(a)(3) in order to explicitly state that for Members that
qualify as an IEMM, executions that take liquidity in securities priced
at or above $1.00 with a buy order that is executable at the NBO or a
sell order that is executable at the NBB after accounting for the
order's limit (if any), peg instruction (if any), market conditions,
and all applicable rules and regulations (i.e., orders that receive the
Spread-Crossing Eligible Remove Fee) will receive a $0.0001 fee
reduction, up to $20,000.00 in aggregate savings, per month, inclusive
of Reduced Standard Match Fee and Reduced Discounted Match Fee savings.
The Exchange believes that these changes do not represent a substantive
change to the IEMM Program, but are simply meant to conform to the
Exchange's proposed Fee Schedule as discussed above.
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \33\ of the Act in general, and furthers the
objectives of Sections 6(b)(4) \34\ of the Act, in particular, in that
it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities. The Exchange believes that the proposed fee change is
reasonable, fair and equitable, and non-discriminatory.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f.
    \34\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The proposed changes are designed to provide more clarity to market
participants regarding the fees assessed for executions on the Exchange
by amending the structure of its Fee Schedule to explicitly provide
each possible Fee Code combination, along with the associated fee
applicable to such transaction, therefore making the Exchange's Fee
Schedule more clear and deterministic to the benefit of all market
participants. The Exchange believes the proposed changes enhance the
consistency and clarity of the Exchange's Fee Schedule, and do not
represent a significant departure from pricing currently offered by the
Exchange. As described in the Purpose section, the Exchange is
proposing to primarily make formatting changes, and certain conforming
edits designed to make the Exchange's rules clearer and more precise.
    As described above, as part of the proposed restructuring of the
Fee Schedule, the Exchange is proposing to not charge any fee for
displayed order's resting on the Continuous Book that are executed in
the Opening Process for non-IEX-listed securities pursuant to Rule
11.231. The Exchange believes that offering displayed orders resting on
the Continuous Book free execution in the Opening Process is consistent
with the protection of investors and the public interest in that it may
have the effect of incentivizing Members that seek execution in the
Opening Process to enter displayed interest, thereby contributing to
the public price discovery process to the benefit of all market
participants. Furthermore, the proposed change creates consistency in
the Exchange's fees for similarly situated orders in that displayed
orders resting on the Continuous Book that are executed as part of a
single-priced cross (i.e., the Opening Process or an IEX Auction) will
receive the same free execution.
    In addition, as described above, the Exchange is also proposing to
make conforming changes to the description of the IEMM Program in both
the Fee Schedule and Rule 11.170(a)(3) to account for the modified Fee
Schedule, as well as to clarify the application of the Spread-Crossing
Eligible Remove Fee. The Exchange believes these proposed changes are
reasonable, fair and equitable, and non-discriminatory because they do
not substantively change the IEMM Program, as executions qualifying for
the Spread-Crossing Eligible Remove Fee are a logical subset of
executions that satisfy the conditions of the Standard Match Fee (when
removing non-displayed liquidity) or the Reduced Match Fee (when
removing displayed liquidity). Thus, the proposed changes are primarily
designed to provide clarity regarding the application of the Spread-
Crossing Eligible Remove Fee in the context of the IEMM program by
explicitly enumerating the Spread-Crossing Eligible Remove Fee Discount
for Members that qualify as an IEMM.
    Furthermore, the Exchange notes that the proposed structure of the
Fee Schedule is substantially like the Fee Schedule of other market
centers, and therefore does not present any new or novel issues not
already considered by the Commission.\35\
---------------------------------------------------------------------------

    \35\ See, e.g., the Fee Schedule of Cboe BZX Exchange, Inc.,
available at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    Finally, the Exchange believes that the proposed fees are
nondiscriminatory because they will continue to apply uniformly to all
Members.

B. Self-Regulatory Organization's Statement on Burden on Competition

    IEX does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. 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, as discussed above, the Exchange is not
materially altering the fees assessed for executions on the Exchange.
Moreover, the Exchange operates in a highly competitive market in which
market participants can readily favor competing venues if fee

schedules at other venues are viewed as more favorable. Consequently,
the Exchange believes that the degree to which IEX fees could impose
any burden on competition is extremely limited and does not believe
that such fees would burden competition between Members or competing
venues in a manner that is not necessary or appropriate in furtherance
of the purposes of the Act. Moreover, as noted in the Statutory Basis
section, the Exchange does not believe that the proposed changes
represent a significant departure from its current fee schedule.
    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 because the
Exchange is not materially altering the fees assessed for executions on
the Exchange. Furthermore, as noted above, the Exchange notes that the
proposed structure of the Fee Schedule is substantially similar to the
Fee Schedule of other market centers, and therefore does not present
any new intermarket competitive burdens that do not already exist.\36\
---------------------------------------------------------------------------

    \36\ See supra note 30.
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) \37\ of the Act.
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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 under
Section 19(b)(2)(B) \38\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-IEX-2018-11 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-IEX-2018-11. This file
number should be included in 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 Section, 100 F Street NE, Washington,
DC 20549-1090, on official business days between the hours of 10:00
a.m. and 3:00 p.m. Copies of the filing will also be available for
inspection and copying at the IEX's principal office and on its
internet website at www.iextrading.com. 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-IEX-2018-11 and should be
submitted on or before July 30, 2018. For the Commission, by the
Division of Trading and Markets, pursuant to delegated authority.\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 200.30-3(a)(12).

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14547 Filed 7-6-18; 8:45 am]
 BILLING CODE 8011-01-P


New Topic Index Comment Response No. Topic 1 Coverage of General Permit 1a Applicability 1b Common Plan of Development 1c Oil and Gas Activities 1d Mining Activities 1e Oversight Authority 1f Non Storm Water Requirements 1g Routine Maintenance 1h Date of Coverage 2 Endangered and Threatened Species 3 Historic Properties 4 Waivers 5 SWPPPs 5a Inspector Qualifications 5b Inspections, Recordkeeping, and Reporting Requirements 5c Monitoring 5d BMPs and Control Measures 6 NOI 7 Definitions 8 Inconsistencies/ Corrections 9 Site Stabilization and Revegetation 9a Specific for Oil and Gas Industry 9b Arid and Semi arid Locations 9c Alternative Requirements 10 Environmental Impacts 11 Burden 11a Paperwork 11b Proportionate to Small/ Large Activities 11c Costs/ Delays 11d Overlapping Regulatory Requirements 12 Water Quality Standards, TMDLs, and Impaired Waters 12a Enforceable Language 12b Pollutants 12c Non attainment Determination 12d TMDL Implementation 12e Guidance 13 Public Notice of Draft Permit 1


[Federal Register Volume 80, Number 88 (Thursday, May 7, 2015)]
[Notices]
[Pages 26306-26310]
[FR Doc No: 2015-10957]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74857; File No. SR-MIAX-2015-32]

Self-Regulatory Organizations: Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule

May 1, 2015.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 28, 2015, Miami International Securities Exchange LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options Fee
Schedule.
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at
MIAX's principal office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to establish
monthly fees for Internal Distributors and External Distributors of
MIAX Order Feed

(``MOR'') data product. The proposed fees are similar to those of
another options exchange.\3\
---------------------------------------------------------------------------

    \3\ See NASDAQ OMX PHLX LLC Pricing Schedule, section IX. The
Exchange notes that while the proposed fees for Distributors is
similar to the distributor fees for PHLX Orders; the Exchange does
not at this time propose to establish the additional $1 per month
for Non-Professional Subscribers and the $40 per month for
Professional Subscribers that PHLX charges for PHLX Orders.
---------------------------------------------------------------------------

    MOR provides real-time information to enable users to keep track of
the simple order book for all symbols listed on MIAX.\4\ MOR provides
real-time data including the limit price, origin, and size of each
order for the entire order book to its users. It is a compilation of
data for orders residing on the Exchange's order book for options
traded on the Exchange that the Exchange provides through a real-time
data feed. The Exchange updates the information upon receipt of each
order or change in status to any order resting on the book (e.g.,
routing, trading, or cancelling of the order).
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 74759 (April 17,
2015), 80 FR 22749 (April 23, 2015) (SR-MIAX-2015-28).
---------------------------------------------------------------------------

    The Exchange proposes to establish monthly fees to Distributors of
the MOR market data product that receive a feed of data either directly
from MIAX or indirectly through another entity and then distributes it
either internally (within that entity) or externally (outside that
entity). The monthly Distributor Fee charged depends on whether the
Distributor is an ``Internal Distributor'' \5\ or an ``External
Distributor''.\6\ The Exchange notes that all Distributors are required
to execute a MIAX Distributor Agreement. Specifically, the Exchange
proposes to assess Internal Distributors of MOR $3,000 per month and
External Distributors of MOR from $3,500 per month. Market Data Fees
for MOR will be reduced for new Distributors for the first month during
which they subscribe to MOR, based on the number of trading days that
have been held during the month prior to the date on which they
subscribe. Such new Distributors will be assessed a pro-rata percentage
of the fees described above, which is the percentage of the number of
trading days remaining in the affected calendar month as of the date on
which they begin to receive the MOR feed, divided by the total number
of trading days in the affected calendar month. The proposed fees for
the MOR data feed are in the range of similar fees found on another
exchange.\7\
---------------------------------------------------------------------------

    \5\ An Internal Distributor is an organization that subscribes
to the Exchange for the use of MOR, and is permitted by agreement
with the Exchange to provide MOR data to internal users (i.e., users
within their own organization).
    \6\ An External Distributor is an organization that subscribes
to the Exchange for the use of MOR, and is permitted by agreement
with the Exchange to provide MOR data to both internal users and to
external users (i.e., users outside of their own organization).
    \7\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section IX.
---------------------------------------------------------------------------

    In addition, the Exchange notes that it is making non-substantive
technical changes to the Fee Schedule to consolidate the market data
fees in one section and to make corresponding changes to the outline
numbering.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule
is consistent with section 6(b) of the Act \8\ in general, and furthers
the objectives of section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes the proposed fees are a reasonable allocation
of its costs and expenses among its Members and other persons using its
facilities since it is recovering not only the costs of the data
distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. Access to the Exchange is
provided on fair and non-discriminatory terms. The proposed fees for
MOR are reasonable since they are in the range of similar fees charged
by another exchange.\10\ The Exchange believes the proposed fees are
equitable and not unfairly discriminatory because the fee level results
in a reasonable and equitable allocation of fees amongst External
Distributors and Internal Distributors for similar services. Moreover,
the decision as to whether or not to subscribe to MOR is entirely
optional to all parties. Potential subscribers are not required to
purchase the MOR market data feed, and the Exchange is not required to
make the MOR market data feeds available. Subscribers can discontinue
their use at any time and for any reason, including due to their
assessment of the reasonableness of fees charged. The allocation of
fees among subscribers is fair and reasonable because, if the market
deems the proposed fees to be unfair or inequitable, firms can diminish
or discontinue their use of this data.
---------------------------------------------------------------------------

    \10\ See supra note 3.
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to the public. It was believed that
this authority would expand the amount of data available to consumers,
and also spur innovation and competition for the provision of market
data:

    [E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to
receive (and pay for) such data [sic] when broker-dealers may choose
to receive (and pay for) additional market data based on their own
internal analysis of the need for such data.\11\
---------------------------------------------------------------------------

    \11\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496 (June 29, 2005).

    By removing ``unnecessary regulatory restrictions'' on the ability
of exchanges to sell their own data, Regulation NMS advanced the goals
of the Act and the principles reflected in its legislative history. If
the free market should determine whether proprietary data is sold to
broker-dealers at all, it follows that the price at which such data is
sold should be set by the market as well.
    In July, 2010, Congress adopted H.R. 4173, the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act''),
which amended section 19 of the Act. Among other things, section 916 of
the Dodd-Frank Act amended paragraph (A) of section 19(b)(3) of the Act
by inserting the phrase ``on any person, whether or not the person is a
member of the self-regulatory organization'' after ``due, fee or other
charge imposed by the self-regulatory organization.'' As a result, all
SRO rule proposals establishing or changing dues, fees or other charges
are immediately effective upon filing regardless of whether such dues,
fees or other charges are imposed on members of the SRO, non-members,
or both. Section 916 further amended paragraph (C) of section 19(b)(3)
of the Act to read, in pertinent part, ``At any time within the 60-day
period beginning on the date of filing of such a proposed rule change
in accordance with the provisions of paragraph (1) [of Section 19(b)],
the Commission summarily may temporarily suspend the change in the
rules of the self-regulatory organization made thereby, 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 this title. If the Commission takes such
action, the Commission shall institute proceedings under paragraph
(2)(B) [of Section 19(b)] to determine

whether the proposed rule should be approved or disapproved.''
    The Exchange believes that these amendments to section 19 of the
Act reflect Congress's intent to allow the Commission to rely upon the
forces of competition to ensure that fees for market data are
reasonable and equitably allocated. Although section 19(b) had formerly
authorized immediate effectiveness for a ``due, fee or other charge
imposed by the self-regulatory organization,'' the Commission adopted a
policy and subsequently a rule stating that fees for data and other
products available to persons that are not members of the self-
regulatory organization must be approved by the Commission after first
being published for comment. At the time, the Commission supported the
adoption of the policy and the rule by pointing out that unlike
members, whose representation in self-regulatory organization
governance was mandated by the Act, non-members should be given the
opportunity to comment on fees before being required to pay them, and
that the Commission should specifically approve all such fees. The
Exchange believes that the amendment to section 19 reflects Congress's
conclusion that the evolution of self-regulatory organization
governance and competitive market structure have rendered the
Commission's prior policy on non-member fees obsolete. Specifically,
many exchanges have evolved from member-owned, not-for-profit
corporations into for-profit, investor-owned corporations (or
subsidiaries of investor-owned corporations). Accordingly, exchanges no
longer have narrow incentives to manage their affairs for the exclusive
benefit of their members, but rather have incentives to maximize the
appeal of their products to all customers, whether members or non-
members, so as to broaden distribution and grow revenues. Moreover, the
Exchange believes that the change also reflects an endorsement of the
Commission's determinations that reliance on competitive markets is an
appropriate means to ensure equitable and reasonable prices. Simply
put, the change reflects a presumption that all fee changes should be
permitted to take effect immediately, since the level of all fees are
constrained by competitive forces. The Exchange therefore believes that
the fees for MOR are properly assessed on non-member Distributors.
    The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoalition v. SEC, No. 09-1042 (D.C. Cir.
2010), although reviewing a Commission decision made prior to the
effective date of the Dodd-Frank Act, upheld the Commission's reliance
upon competitive markets to set reasonable and equitably allocated fees
for market data:

    In fact, the legislative history indicates that the Congress
intended that the market system `evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.' \12\
---------------------------------------------------------------------------

    \12\ NetCoalition, at 15 (quoting H.R. Rep. No. 94-229, at 92
(1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323).

    The court's conclusions about Congressional intent are therefore
reinforced by the Dodd-Frank Act amendments, which create a presumption
that exchange fees, including market data fees, may take effect
immediately, without prior Commission approval, and that the Commission
should take action to suspend a fee change and institute a proceeding
to determine whether the fee change should be approved or disapproved
only where the Commission has concerns that the change may not be
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Notwithstanding
its determination that the Commission may rely upon competition to
establish fair and equitably allocated fees for market data, the
NetCoalition Court found that the Commission had not, in that case,
compiled a record that adequately supported its conclusion that the
market for the data at issue in the case was competitive. The Exchange
believes that a record may readily be established to demonstrate the
competitive nature of the market in question.
    There is intense competition between trading platforms that provide
transaction execution and routing services and proprietary data
products. Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, market data and trade execution are a
representative example of joint products with joint costs. The decision
whether and on which platform to post an order will depend on the
attributes of the platform where the order can be posted, including the
execution fees, data quality and price and distribution of its data
products. Without the prospect of a taking order seeing and reacting to
a posted order on a particular platform, the posting of the order would
accomplish little.
    Without trade executions, exchange data products cannot exist. Data
products are valuable to many end subscribers only insofar as they
provide information that end subscribers expect will assist them or
their customers in making trading decisions. The costs of producing
market data include not only the costs of the data distribution
infrastructure, but also the costs of designing, maintaining, and
operating the exchange's transaction execution platform and the cost of
regulating the exchange to ensure its fair operation and maintain
investor confidence. The total return that a trading platform earns
reflects the revenues it receives from both products and the joint
costs it incurs. Moreover, an exchange's customers view the costs of
transaction executions and of data as a unified cost of doing business
with the exchange. A broker-dealer will direct orders to a particular
exchange only if the expected revenues from executing trades on the
exchange exceed net transaction execution costs and the cost of data
that the broker-dealer chooses to buy to support its trading decisions
(or those of its customers). The choice of data products is, in turn, a
product of the value of the products in making profitable trading
decisions. If the cost of the product exceeds its expected value, the
broker-dealer will choose not to buy it.
    Moreover, as a broker-dealer chooses to direct fewer orders to a
particular exchange, the value of the product to the broker-dealer
decreases, for two reasons. First, the product will contain less
information, because executions of the broker-dealer's orders will not
be reflected in it. Second, and perhaps more important, the product
will be less valuable to that broker-dealer because it does not provide
information about the venue to which it is directing its orders. Data
from the competing venue to which the broker-dealer is directing orders
will become correspondingly more valuable.
    Thus, a super-competitive increase in the fees charged for either
transactions or data has the potential to impair revenues from both
products. ``No one disputes that competition for order flow is
`fierce'.'' \13\ However, the existence of fierce competition for order
flow

implies a high degree of price sensitivity on the part of broker-
dealers with order flow, since they may readily reduce costs by
directing orders toward the lowest-cost trading venues. A broker-dealer
that shifted its order flow from one platform to another in response to
order execution price differentials would both reduce the value of that
platform's market data and reduce its own need to consume data from the
disfavored platform. Similarly, if a platform increases its market data
fees, the change will affect the overall cost of doing business with
the platform, and affected broker-dealers will assess whether they can
lower their trading costs by directing orders elsewhere and thereby
lessening the need for the more expensive data.
---------------------------------------------------------------------------

    \13\ NetCoalition at 24.
---------------------------------------------------------------------------

    Analyzing the cost of market data distribution in isolation from
the cost of all of the inputs supporting the creation of market data
will inevitably underestimate the cost of the data. Thus, because it is
impossible to create data without a fast, technologically robust, and
well-regulated execution system, system costs and regulatory costs
affect the price of market data. It would be equally misleading,
however, to attribute all of the exchange's costs to the market data
portion of an exchange's joint product. Rather, all of the exchange's
costs are incurred for the unified purposes of attracting order flow,
executing and/or routing orders, and generating and selling data about
market activity. The total return that an exchange earns reflects the
revenues it receives from the joint products and the total costs of the
joint products.
    Competition among trading platforms can be expected to constrain
the aggregate return each platform earns from the sale of its joint
products, but different platforms may choose from a range of possible,
and equally reasonable, pricing strategies as the means of recovering
total costs. For example, some platforms may choose to pay rebates to
attract orders, charge relatively low prices for market information (or
provide information free of charge) and charge relatively high prices
for accessing posted liquidity. Other platforms may choose a strategy
of paying lower rebates (or no rebates) to attract orders, setting
relatively high prices for market information, and setting relatively
low prices for accessing posted liquidity. In this environment, there
is no economic basis for regulating maximum prices for one of the joint
products in an industry in which suppliers face competitive constraints
with regard to the joint offering. This would be akin to strictly
regulating the price that an automobile manufacturer can charge for car
sound systems despite the existence of a highly competitive market for
cars and the availability of aftermarket alternatives to the
manufacturer-supplied system.
    The market for market data products is competitive and inherently
contestable because there is fierce competition for the inputs
necessary to the creation of proprietary data and strict pricing
discipline for the proprietary products themselves. Numerous exchanges
compete with each other for listings, trades, and market data itself,
providing virtually limitless opportunities for entrepreneurs who wish
to produce and distribute their own market data. This proprietary data
is produced by each individual exchange, as well as other entities, in
a vigorously competitive market.
    Broker-dealers currently have numerous alternative venues for their
order flow, including eleven existing options markets. Each SRO market
competes to produce transaction reports via trade executions.
Competitive markets for order flow, executions, and transaction reports
provide pricing discipline for the inputs of proprietary data products.
The large number of SROs that currently produce proprietary data or are
currently capable of producing it provides further pricing discipline
for proprietary data products. Each SRO is currently permitted to
produce proprietary data products, and many in addition to MIAX
currently do, including NASDAQ, CBOE, ISE, NYSE Amex, and NYSEArca.
Additionally, order routers and market data vendors can facilitate
single or multiple broker-dealers' production of proprietary data
products. The potential sources of proprietary products are virtually
limitless.
    Market data vendors provide another form of price discipline for
proprietary data products because they control the primary means of
access to end subscribers. Vendors impose price restraints based upon
their business models. For example, vendors such as Bloomberg and
Thomson Reuters that assess a surcharge on data they sell may refuse to
offer proprietary products that end subscribers will not purchase in
sufficient numbers. Internet portals, such as Google, impose a
discipline by providing only data that will enable them to attract
``eyeballs'' that contribute to their advertising revenue. Retail
broker-dealers, such as Schwab and Fidelity, offer their customers
proprietary data only if it promotes trading and generates sufficient
commission revenue. Although the business models may differ, these
vendors' pricing discipline is the same: They can simply refuse to
purchase any proprietary data product that fails to provide sufficient
value. The Exchange and other producers of proprietary data products
must understand and respond to these varying business models and
pricing disciplines in order to market proprietary data products
successfully.
    In addition to the competition and price discipline described
above, the market for proprietary data products is also highly
contestable because market entry is rapid, inexpensive, and profitable.
The history of electronic trading is replete with examples of entrants
that swiftly grew into some of the largest electronic trading platforms
and proprietary data producers: Archipelago, BATS Trading and Direct
Edge. Regulation NMS, by deregulating the market for proprietary data,
has increased the contestability of that market. While broker-dealers
have previously published their proprietary data individually,
Regulation NMS encourages market data vendors and broker-dealers to
produce proprietary products cooperatively in a manner never before
possible. Multiple market data vendors already have the capability to
aggregate data and disseminate it on a profitable scale, including
Bloomberg, and Thomson Reuters.
    The Court in NetCoalition concluded that the Commission had failed
to demonstrate that the market for market data was competitive based on
the reasoning of the Commission's NetCoalition order because, in the
Court's view, the Commission had not adequately demonstrated that the
proprietary data at issue in the case is used to attract order flow.
The Exchange believes, however, that evidence not then before the court
clearly demonstrates that availability of data attracts order flow. Due
to competition among platforms, the Exchange intends to improve its
platform data offerings on a continuing basis, and to respond promptly
to customers' data needs.
    The intensity of competition for proprietary information is
significant and the Exchange believes that this proposal itself clearly
evidences such competition. The Exchange is offering MOR in order to
keep pace with changes in the industry and evolving customer needs. It
is entirely optional and is geared towards attracting new Member
Applicants and customers. MIAX competitors continue to create new
market data products and innovative pricing in this space. The Exchange
expects to see firms challenge its pricing on the basis of the
Exchange's explicit fees being higher than the zero-priced fees from
other competitors such as BATS. In all cases, the Exchange

expects firms to make decisions on how much and what types of data to
consume on the basis of the total cost of interacting with MIAX or
other exchanges. Of course, the explicit data fees are only one factor
in a total platform analysis. Some competitors have lower transactions
fees and higher data fees, and others are vice versa. The market for
this proprietary information is highly competitive and continually
evolves as products develop and change.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act.\14\ 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 should be approved or disapproved.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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_ADDRESS>Please include
File Number SR-MIAX-2015-32 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-MIAX-2015-32. 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 Web site (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 Web site 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 such filing also will be available
for inspection and copying at the principal offices of the Exchange.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-MIAX-2015-32,
and should be submitted on or before May 28, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-10957 Filed 5-6-15; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 102 (Friday, May 25, 2012)]
[Notices]
[Pages 31429-31430]
[FR Doc No: 2012-12784]

-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket Number FRA-2012-0032]

Petition for Waiver of Compliance

    In accordance with Part 211 of Title 49 Code of Federal Regulations
(CFR), notice is hereby given that the Federal Railroad Administration
(FRA) has

received a request for a waiver of compliance from certain requirements
of its safety standards. The South Carolina Railroad Museum (SCRM) has
petitioned the Federal Railroad Administration (FRA) for a waiver of
compliance from certain provisions of the Federal railroad safety
regulations contained at 49 CFR Part 213. FRA assigned the petition
Docket Number FRA-2012-0032.
    In its waiver request, SCRM petitioned FRA for a waiver from 49 CFR
Section 213.233(c), which requires twice-weekly track inspections with
at least 1 calendar day interval between inspections if the track
carries passenger trains or more than 10 million gross tons of traffic
during the preceding calendar year.
    The petitioner is a volunteer, nonprofit 501(c)(3) Class III
railroad museum that is located in Fairfield County near Winnsboro, SC,
and is listed on the National Register of Historic Places. SCRM
operates passenger trains on approximately 5 miles of the 11\1/2\-mile
former Rockton and Rion Railroad. The passenger trains operate from the
Norfolk Southern junction, generally westward from Rockton, SC, through
the community of Rion, SC, to the Anderson Quarry. SCRM states that it
schedules two passenger excursions each Saturday from Memorial Day
through Labor Day; for a total of 30 roundtrips. Additionally, SCRM
states that it charters passenger trains on an as-needed basis;
usually, no more than three passenger trains are operated overall per
week. The petitioner seeks relief from the twice weekly track
inspections and requests to conduct one track inspection each week.
SCRM states, ``* * * one track inspection each week would allow the
museum to insure the safety of the track for the average of 3 trips or
less that are operated during our summer and fall operating seasons.''
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested party
desires an opportunity for oral comment, they should notify FRA, in
writing, before the end of the comment period and specify the basis for
their request.
    All communications concerning these proceedings should identify the
appropriate docket number and may be submitted by any of the following
methods:
     Web site: http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Avenue SE., Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
    Communications received by July 9, 2012 will be considered by FRA
before final action is taken. Comments received after that date will be
considered as far as practicable.
    Anyone is able to search the electronic form of any written
communications and comments received into any of our dockets by the
name of the individual submitting the comment (or signing the comment,
if submitted on behalf of an association, business, labor union, etc.).
You may review DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (Volume 65, Number 70; Pages
19477-78), or online at http://www.dot.gov/privacy.html.

    Issued in Washington, DC, on May 21, 2012.
Ron Hynes,
Acting Deputy Associate Administrator for Regulatory and Legislative
Operations.
[FR Doc. 2012-12784 Filed 5-24-12; 8:45 am]
BILLING CODE 4910-06-P