[Federal Register Volume 85, Number 227 (Tuesday, November 24, 2020)]
[Notices]
[Pages 75064-75070]
[FR Doc No: 2020-25898]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90455; File No. SR-MRX-2020-21]

Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Pricing Schedule

November 18, 2020.
    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 November 6, 2020, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I and II 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 proposes to amend its Pricing Schedule at Options 7,
Section 1, ``General Provisions,'' to permit certain affiliated market
participants to aggregate volume and qualify for certain pricing
incentives. Additionally, the Exchange proposes to amend Options 7,
Section 3, ``Regular Order Fees and Rebates;'' Options 7, Section 4,
``Complex Order Fees;'' Options 7, Section 5, ``Other Options Fees and
Rebates;'' Options 7, Section 7, ``Market Data;'' and Options 7,
Section 8, ``Connectivity Fees.''
    The Exchange originally filed the proposed pricing change on
October 26, 2020 (SR-MRX-2020-17). On November 6, 2020, the Exchange
withdrew that filing and submitted this filing.

    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, 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 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 Options 7, Section 1, ``General
Provisions''; Options 7, Section 3, ``Regular Order Fees and Rebates;''
Options 7, Section 4, ``Complex Order Fees;'' Options 7, Section 5,
``Other Options Fees and Rebates;'' Options 7, Section 7, ``Market
Data;'' and Options 7, Section 8, ``Connectivity Fees.'' Each change
will be discussed below.
Options 7, Section 1
    The Exchange proposes to replace the Appointed Member Program with
an aggregation program offered today on ISE for an Affiliated Entity.
Specifically, the Exchange proposes to permit Affiliated Entities to
aggregate certain volume for purposes of receiving discounted fees.
Nasdaq ISE, LLC (``ISE'') also permits Affiliated Entities to aggregate
volume for purposes of qualifying for certain pricing.\3\ This
replacement program is intended to harmonize MRX's program to ISE's
program for purposes of permitting the Exchange to administer both
programs in the same fashion. The Exchange notes that a key difference
in these two programs is that today a Member on MRX can benefit from
both the Appointed Member and the Affiliated Member aggregations for
purposes of achieving more favorable pricing. With the proposed
Affiliated Entity program, a Member would have to elect either the
Affiliated Entity or Affiliated Member program during the same time
period. This difference is discussed in more detail below.
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    \3\ See ISE Options 7, Section 1.
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    Today, MRX offers an Appointed Member \4\ an opportunity to lower
fees by aggregating eligible volume from an Appointed Order Flow
Provider \5\ with a designated Appointed Market Maker \6\ to determine
tier eligibility within Table 3 of Options 7, Section 3 and determine
eligibility for Market Maker Taker Fees within Options 7, Section 3, as
described in note 2 of the Pricing Schedule (``Appointed Member
Program'').
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    \4\ An ``Appointed Member'' is either an Appointed Market Maker
or Appointed Order Flow Provider. See MRX Options 7, General 1.
    \5\ An ``Appointed Order Flow Provider'' is an Electronic Access
Member who has been appointed by a Market Maker pursuant to Section
3, Table 3.
    \6\ An ``Appointed Market Maker'' is a Market Maker who has been
appointed by an Electronic Access Member pursuant to Section 3,
Table 3.
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    The concept of an Appointed Member was established in 2016 \7\ and
was intended to incentivize firms to direct their order flow to the
Exchange to the benefit of all market participants. Today, all eligible
volume from an Appointed Order Flow Provider is aggregated with its
designated Appointed Market Maker's eligible volume in determining the
Appointed Market Maker's applicable tiers, provided the Appointed
Market Maker is designated by the Appointed Order Flow Provider in
accordance with certain instructions. Today, a Market Maker appoints an
Electronic Access Member as its Appointed Order Flow Provider and an
Electronic Access Member appoints a Market Maker as its Appointed
Market Maker, for the purposes of pricing, by each sending an email.
The corresponding emails are viewed as acceptance of the
appointment.\8\ Today, an Appointed Market Maker is eligible to receive
and aggregate volume credit from both their Affiliated Members \9\ and
their Appointed Order Flow Provider. An Appointed Order Flow Provider
does not receive volume credit from its Appointed Market Maker or the
Appointed Market Maker's Affiliated Members in determining its
applicable tiers.\10\
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    \7\ See Securities Exchange Act Release No. 77841 (May 20,
2016), 81 FR 31986 (May 16, 2016) (SR-ISEMercury-2016-11). ISE
Mercury was the prior name of MRX.
    \8\ The Exchange recognizes one such designation for each party.
A party may make a designation not more than once every 6 months,
which designation remains in effect until the Exchange receives an
email from either party indicating that the appointment has been
terminated.
    \9\ An ``Affiliated Member'' is a Member that shares at least
75% common ownership with a particular Member as reflected on the
Member's Form BD, Schedule A. See Options 7, Section 1.
    \10\ See Options 7, Section 3 within Table 3.
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    The Exchange proposes to replace the Appointed Member Program with
an aggregation program offered today on ISE for an Affiliated Entity to
permit the Exchange to administer both programs in the same fashion.
Specifically, the Exchange proposes to adopt the term ``Affiliated
Entity'' within Options 7, Section 1. An ``Affiliated Entity'' would be
a relationship between an Appointed Market Maker and an Appointed OFP
for purposes of qualifying for certain pricing specified in the Pricing
Schedule. An Appointed Market Maker would be re-defined similar to ISE
as a Market Maker who has been appointed by an OFP for purposes of
qualifying as an Affiliated Entity. An ``Order Flow Provider'' or
``OFP'' is proposed to be defined within Options 7, Section 1 as any
Member, other than a Market Maker,\11\ that submits orders, as agent or
principal, to the Exchange. Finally, an Appointed Order Flow Provider
would be re-defined within Options 7, Section 1 as an OFP who has been
appointed by a Market Maker for purposes of qualifying as an Affiliated
Entity. The Exchange would remove the term ``Appointed Member'' in
connection with eliminating the Appointed Member Program. As noted
above, the Affiliated Entity program would be similar to ISE's
program.\12\
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    \11\ Market Makers shall not be considered Appointed OFPs for
the purpose of becoming an Affiliated Entity.
    \12\ A Member on ISE and a Member on MRX may affiliate with
different Members on each market.
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    In order to become an Affiliated Entity, Market Makers and OFPs
will be required to send an email to the Exchange to appoint their
counterpart, at least 3 business days prior to the last day of the
month to qualify for the next month.\13\ For example, with this
proposal, market participants may submit emails \14\ to the Exchange to
become Affiliated Entities to qualify for discounted pricing starting
November 1, 2020, provided the emails are sent at least 3 business days
prior to the first business day of November 2020. The Exchange will
acknowledge receipt of the emails and specify the date the Affiliated
Entity would qualify for applicable pricing, as specified in the
Pricing Schedule. Each Affiliated Entity relationship will commence on
the 1st of a month and may not be terminated prior to the end of any
month. An Affiliated Entity relationship will terminate after a one (1)
year period, unless either party terminates earlier in

writing by sending an email \15\ to the Exchange at least 3 business
days prior to the last day of the month to terminate for the next
month. Affiliated Entity relationships must be renewed annually. For
example, if the start date of the Affiliated Entity relationship is
November 1, 2020, the counterparties may determine to commence a new
relationship as of November 1, 2021 by requiring each party to send a
new email 3 business days prior to the end of November 2021. Affiliated
Members may not qualify as a counterparty comprising an Affiliated
Entity. Each Member may qualify for only one (1) Affiliated Entity
relationship at any given time. As proposed, an Affiliated Entity shall
be eligible to aggregate their volume for purposes of qualifying for
certain pricing specified in the Pricing Schedule, as described below.
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    \13\ The Exchange shall issue an Options Trader Alert specifying
the email address and details required to apply to become an
Affiliated Entity.
    \14\ Emails shall be submitted to<EMAIL_ADDRESS>    \15\ Id.
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    As stated above, one difference between the Appointed Member
Program and the Affiliated Entity Program is that, today, a MRX Member
may aggregate volume both as an Affiliated Member and as an Appointed
Member for purposes of achieving favorable pricing. With this proposal,
a MRX Member may aggregate volume either as an Affiliated Member or as
an Affiliated Entity, but may not aggregate under both programs
combined during the same time period. Moreover, unlike the Appointed
Member Program, with the Affiliated Entity Program, an Affiliated
Member may not qualify as a counterparty comprising an Affiliated
Entity.
Options 7, Section 3
    The note 2 Market Maker Taker Fee is the only fee within Options 7,
Section 3 which is currently subject to the Appointed Member Program.
Qualifying Tier Thresholds for the Market Maker Taker Fee are
determined by Table 3 of Options 7, Section 3. The Exchange proposes to
similarly permit Affiliated Entities to aggregate their volume to
obtain the note 2 Market Maker Taker Fee within Options 7, Section 3.
The note 2 Market Maker Taker Fee will remain the only fee within
Options 7, Section 3 which would be subject to the Affiliated Entity
Program.
    The Exchange proposes to amend note 2 within Options 3, Section 7
to remove references to ``Appointed Member''. The Exchange is adding
references within note 2 to ``Affiliated Entity.'' As proposed, note 2
to Options 7, Section 3 would provide,

    A Taker Fee of $0.05 per contract applies instead when trading
with Priority Customer orders entered by an Affiliated Member or
Affiliated Entity if the Member has a Total Affiliated Member or
Affiliated Entity Priority Customer ADV of 5,000 contracts or more.
A Taker Fee of $0.00 per contract applies instead when trading with
Priority Customer orders entered by an Affiliated Member or
Affiliated Entity if the Member has a Total Affiliated Member or
Affiliated Entity Priority Customer ADV of 50,000 contracts or more.

    As is the case today for an Affiliated Member, an Appointed Market
Maker would be able to obtain the benefit of the reduced Market Maker
Taker Fee if, in the aggregate, the Affiliated Entity meets the Average
Daily Volume (``ADV'') requirements.
    Similarly, with respect to Table 3 within Options 7, Section 3,
references to ``Appointed Member'' would be removed and ``Affiliated
Entity'' would be added. Also any details concerning the Appointed
Member Program within the notes below Table 3 within Options 7, Section
3 would be removed. Specifically, the bullet points within Table 3 of
Options 7, Section 3 that relate to the Appointed Member are being
removed because the detail does not relate to the Affiliated Entity
program. Finally, other bullets are being removed because they are
redundant and not applicable. The Table 3, Options 7, Section 3 tiers,
as proposed, would be as follows:

                       Qualifying Tier Thresholds
------------------------------------------------------------------------
                                            Total affiliated member or
                 Tiers                        affiliated entity ADV
------------------------------------------------------------------------
Tier 1.................................  executes 0.00%-0.7499% of
                                          Customer Total Consolidated
                                          Volume
Tier 2.................................  executes 0.75% or more of
                                          Customer Total Consolidated
                                          Volume
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    Finally, the Exchange proposes to capitalize the term ``Taker Fee''
within note 2 of Options 7, Section 3 and update a cross reference
within Options 7, Section 3 within note 1 of Table 1 to Options 7,
Section 5.E., as the Exchange is relocating the referenced text within
this proposal as noted below.
    As noted above, with this proposed change, a MRX Member may
aggregate either as an Affiliated Member or an Affiliated Entity during
the same time period, but may not aggregate under both programs during
the same time period for purposes of achieving the lower Market Maker
Taker Fee in note 2.
    With this proposal, the Exchange proposes to continue to
incentivize certain Members, who are not Affiliated Members, to enter
into an Affiliated Entity relationship for the purpose of aggregating
volume executed on the Exchange to qualify to reduce their Market Maker
Taker Fees. By aggregating volume, the Affiliated Entity, that submits
certain requisite volume, offers the Appointed Market Maker an
opportunity to lower Taker Fees and encourages Market Makers to submit
additional liquidity on MRX.
Options 7, Section 4
    Today, a Complex Order Market Maker fee of $0.00 per contract
applies, instead of the $0.15 per contract Complex Order fee, when the
Market Maker trades against Priority Customer orders that originate
from an Affiliated Member or an Appointed Member. MRX proposes to
replace the one reference to ``Appointed Member'' within note 2 of
Options 7, Section 4 with ``Affiliated Entity.''
    With the proposed change, as is the case under the current pricing,
a MRX Member may aggregate either as an Affiliated Member or an
Affiliated Entity during the same time period, but may not aggregate
under both programs during the same time period for purposes of not
paying a Complex Order Market Maker fee. With this proposal, the
Exchange proposes to continue to incentivize certain Members, who are
not Affiliated Members, to enter into an Affiliated Entity relationship
for the purpose of aggregating volume executed on the Exchange to
qualify to reduce their Complex Order Market Maker fee from $0.15 to
$0.00 per contract. By aggregating volume, the Affiliated Entity, who
submits certain requisite volume, offers the Appointed Market Maker an
opportunity to not pay Complex Order Market Maker fees and encourages
Market Makers to submit additional liquidity on MRX.
    Finally, the Exchange proposes to update a cross reference to
Options 7, Section 5.E. within Options 7, Section 4, as the Exchange is
relocating that related text within this proposal as noted below.
Options 7, Section 5
    The Exchange proposes to amend Options 7, Section 5.C., Options
Regulatory Fee, to remove the date of the last ORF change because it is
a past date that is no longer relevant.
    The Exchange proposes to relocate Options 7, Section 5.E., PIM
Pricing for Regular and Complex Orders, to new Options 7, Section 3.A.
in order that PIM pricing appear with other transactional pricing.
Options 7, Section 8
    The Exchange proposes to relocate Options 7, Section 8.E., Exchange

Testing Facilities, to the end of Options 7, Section 7, Market Data.
The Exchange proposes to delete Options 7, Section 8, Connectivity
Fees, as the remainder of the sections are reserved.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\16\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\17\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees, and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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    \16\ 15 U.S.C. 78 f(b).
    \17\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposed changes to its Pricing Schedule are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for options
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \18\
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    \18\ NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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    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, while adopting a series of steps to improve the current market
model, 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.'' \19\
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    \19\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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    Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options security transaction services. The Exchange is only one of
sixteen options exchanges to which market participants may direct their
order flow. Within this environment, market participants can freely and
often do shift their order flow among the Exchange and competing venues
in response to changes in their respective pricing schedules. As such,
the proposal represents a reasonable attempt by the Exchange to
increase its liquidity and market share relative to its competitors.
Options 7, Section 1
    The Exchange's proposal to replace the Appointed Member Program
with an Affiliated Entity program, similar to ISE, is reasonable
because the Exchange proposes to continue to incentivize certain
Members, who are not Affiliated Members, to enter into an Affiliated
Entity relationship for the purpose of aggregating volume executed on
the Exchange to qualify for certain lower Market Maker fees. By
aggregating volume for purposes of Table 3 of Options 7, Section 3, the
Appointed Market Maker, who submits certain requisite volume along with
an Appointed OFP, will continue to benefit from lower Market Maker
fees. This proposal will harmonize MRX's program with ISE's program.
The Exchange notes that a Member that registers for an Affiliated
Entity will not be able to aggregate as an Affiliated Member.\20\ While
a MRX Member may not utilize both the Affiliated Member and the
Affiliated Entity program to aggregate volume for purposes of achieving
lower Market Maker fees, the Exchange believes that continuing to
permit aggregation individually under each program, Affiliated Member
and the Affiliated Entity program, will encourage Market Makers to
continue to submit additional liquidity on MRX if they chose to enter
into this relationship.
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    \20\ As proposed, Affiliated Members may not qualify as a
counterparty comprising an Affiliated Entity.
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    The Exchange's proposal to replace the Appointed Member Program
with an Affiliated Entity program, similar to ISE, is equitable and not
unfairly discriminatory as all market participants may enter into an
Affiliated Entity relationship, provided they have not elected to
aggregate as an Affiliated Member. The Exchange believes that market
participants that, today, utilize the Appointed Member Program would be
able to utilize the Affiliated Entity program to continue to aggregate
volume for purposes of obtaining lower fees. As proposed, Affiliated
Members, who are eligible to aggregate volume today, are not eligible
to also enter into an Affiliated Entity relationship. The Exchange's
proposal to exclude Affiliated Members from qualifying as an Affiliated
Entity is equitable and not unfairly discriminatory because, today,
Affiliated Members may aggregate volume for purposes of lowering fees
on MRX. Also, as proposed no MRX Member may utilize both the Affiliated
Member and the Affiliated Entity program to aggregate volume for
purposes of achieving lower Market Maker Taker Fees.
    The Exchange's proposal to exclude Affiliated Members from
qualifying as an Affiliated Entity is reasonable, equitable and not
unfairly discriminatory because, today, Affiliated Members may
aggregate volume for purposes of lowering fees on MRX. Also, the
Exchange will apply all qualifications in a uniform manner when
approving Affiliated Entities. While a MRX Member may not utilize both
the Affiliated Member and the Affiliated Entity program to aggregate
volume for purposes of achieving lower Market Maker fees, the Exchange
believes that continuing to permit aggregation individually under each
program, Affiliated Member and the Affiliated Entity program, will
encourage Market Makers to continue to submit additional liquidity on
MRX if they chose to enter into this relationship.
Options 7, Section 3
    The Exchange's proposal to amend note 2 within Options 7, Section 3
to remove references to ``Appointed Member'' and add references within
note 2 to ``Affiliated Entity'' is reasonable. As is the case today for
an Affiliated Member, an Appointed Market Maker would be able to obtain
the benefit of the reduced Market Maker Taker Fee \21\ if in the
aggregate the

Affiliated Entity meets the Average Daily Volume (``ADV'')
requirements. The Exchange believes the opportunity to aggregate volume
for purposes of lowering the Market Maker Taker Fee will encourages
Market Makers to continue to submit additional liquidity on MRX if they
chose to enter into this relationship. While a MRX Member may not
utilize both the Affiliated Member and the Affiliated Entity program to
aggregate volume for purposes of achieving lower Market Maker fees, the
Exchange believes that continuing to permit aggregation individually
under each program, Affiliated Member and the Affiliated Entity
program, will encourage Market Makers to continue to submit additional
liquidity on MRX if they chose to enter into this relationship.
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    \21\ As proposed, a Market Maker Taker Fee of $0.05 per contract
applies instead when trading with Priority Customer orders entered
by an Affiliated Member or Affiliated Entity if the Member has a
Total Affiliated Member or Affiliated Entity Priority Customer ADV
of 5,000 contracts or more. A Market Maker Taker Fee of $0.00 per
contract applies instead when trading with Priority Customer orders
entered by an Affiliated Member or Affiliated Entity if the Member
has a Total Affiliated Member or Affiliated Entity Priority Customer
ADV of 50,000 contracts or more.
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    The Exchange's proposal to amend note 2 within Options 7, Section 3
to remove references to ``Appointed Member'' and add references within
note 2 to ``Affiliated Entity'' is equitable and not unfairly
discriminatory as all market participants may enter into an Affiliated
Entity relationship, provided they have not elected to aggregate as an
Affiliated Member. The Exchange believes that market participants that,
today, utilize the Appointed Member Program would be able to utilize
the Affiliated Entity program to continue to aggregate volume for
purposes of obtaining lower Market Maker fees. As proposed, Affiliated
Members, who are eligible to aggregate volume today, are not eligible
to also enter into an Affiliated Entity relationship. Priority Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts Market Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. Permitting Members to aggregate
volume for purposes of qualifying the Appointed Market Maker for
reduced Market Maker Taker Fees would continue to encourage the
counterparties that comprise the Affiliated Entities to incentivize
each other to attract and seek to execute more Priority Customer volume
on MRX.
Options 7, Section 4
    Amending Options 7, Section 4, regarding Complex Orders, within
note 2 to remove a reference to ``Appointed Member'' and replace it
with a reference to ``Affiliated Entity'' is reasonable. As is the case
today for an Appointed Member, an Affiliated Entity would aggregate its
volume to permit an Appointed Market Maker to pay no Complex Order
Market Maker fee \22\ when the Market Maker trades against Priority
Customer orders that originate from an Affiliated Member or an
Affiliated Entity. With the proposed change, as is the case under the
current pricing, a MRX Member may aggregate either as an Affiliated
Member or an Affiliated Entity during the same time period, but may not
aggregate under both programs during the same time period for purposes
of not paying a Complex Order Market Maker fee.
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    \22\ With this proposed change a Complex Order Market Maker fee
of $0.00 per contract applies instead of the above-referenced $0.15
per contract Complex Order fee, when the Market Maker trades against
Priority Customer orders that originate from an Affiliated Member or
an Affiliated Entity.
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    Amending Options 7, Section 4, regarding Complex Orders, within
note 2 to remove a reference to ``Appointed Member'' and replace it
with a reference to ``Affiliated Entity'' is equitable and not unfairly
discriminatory as all market participants may enter into an Affiliated
Entity relationship, provided they have not elected to aggregate as an
Affiliated Member. The Exchange believes that market participants that,
today, utilize the Appointed Member Program would be able to utilize
the Affiliated Entity program to continue to aggregate volume for
purposes of obtaining lower fees. As proposed, Affiliated Members, who
are eligible to aggregate volume today, are not eligible to also enter
into an Affiliated Entity relationship. Priority Customer liquidity
benefits all market participants by providing more trading
opportunities, which attracts Market Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. Permitting Members to aggregate
volume from an Affiliated Entity would continue to encourage the
counterparties that comprise the Affiliated Entities to incentivize
each other to attract and seek to execute more Priority Customer volume
on MRX.
Options 7, Section 5
    The Exchange's proposal to amend Options 7, Section 5.C., Options
Regulatory Fee, to remove the date of the last ORF change is
reasonable, equitable and not unfairly discriminatory as the date is a
past date that is not relevant and this non-substantive change does not
impact pricing.
    The Exchange's proposal to relocate Options 7, Section 5.E., PIM
Pricing for Regular and Complex Orders, to new Options 7, Section 3.A.
is reasonable, equitable and not unfairly discriminatory as this non-
substantive change does not impact pricing.
Options 7, Section 8
    The Exchange's proposal to relocate Options 7, Section 8.E.,
Exchange Testing Facilities, to the end of Options 7, Section 7, Market
Data, is reasonable, equitable and not unfairly discriminatory as this
non-substantive change does not impact pricing. The deletion of Options
7, Section 8, Connectivity Fees, is reasonable, equitable and not
unfairly discriminatory as this non-substantive change does not impact
pricing.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Inter-Market Competition
    The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants another
choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges that have been exempted from compliance with the statutory
standards applicable to exchanges. Because competitors are free to
modify their own fees in response, and because market participants may
readily adjust their order routing practices, the Exchange believes
that the degree to which fee changes in this market may impose any
burden on competition is extremely limited.
Intra-Market Competition
    The proposed amendments do not impose an undue burden on intra-
market competition.
Options 7, Section 1
    The Exchange's proposal to replace the Appointed Member Program
with an Affiliated Entity program, similar to ISE, does not impose an
undue burden on competition as all market participants

may enter into an Affiliated Entity relationship, provided they have
not elected to aggregate as an Affiliated Member. The Exchange believes
that market participants that, today, utilize the Appointed Member
Program would be able to utilize the Affiliated Entity program to
continue to aggregate volume for purposes of obtaining lower fees. As
proposed, Affiliated Members, who are eligible to aggregate volume
today, are not eligible to also enter into an Affiliated Entity
relationship. The Exchange's proposal to exclude Affiliated Members
from qualifying as an Affiliated Entity is equitable and not unfairly
discriminatory because, today, Affiliated Members may aggregate volume
for purposes of lowering fees on MRX. Also, as proposed no MRX Member
may utilize both the Affiliated Member and the Affiliated Entity
program to aggregate volume for purposes of achieving lower Market
Maker Taker Fees.
    The Exchange's proposal to exclude Affiliated Members from
qualifying as an Affiliated Entity does not impose an undue burden on
competition because, today, Affiliated Members may aggregate volume for
purposes of lowering fees on MRX. Also, the Exchange will apply all
qualifications in a uniform manner when approving Affiliated Entities.
While a MRX Member may not utilize both the Affiliated Member and the
Affiliated Entity program to aggregate volume for purposes of achieving
lower Market Maker fees, the Exchange believes that continuing to
permit aggregation individually under each program, Affiliated Member
and the Affiliated Entity program, will encourage Market Makers to
continue to submit additional liquidity on MRX if they chose to enter
into this relationship.
Options 7, Section 3
    The Exchange's proposal to amend note 2 within Options 7, Section 3
to remove references to ``Appointed Member'' and add references within
note 2 to ``Affiliated Entity'' does not impose an undue burden on
competition as all market participants may enter into an Affiliated
Entity relationship, provided they have not elected to aggregate as an
Affiliated Member. The Exchange believes that market participants that,
today, utilize the Appointed Member Program would be able to utilize
the Affiliated Entity program to continue to aggregate volume for
purposes of obtaining lower Market Maker fees. As proposed, Affiliated
Members, who are eligible to aggregate volume today, are not eligible
to also enter into an Affiliated Entity relationship. Priority Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts Market Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. Permitting Members to aggregate
volume for purposes of qualifying the Appointed Market Maker for
reduced Market Maker Taker Fees would continue to encourage the
counterparties that comprise the Affiliated Entities to incentivize
each other to attract and seek to execute more Priority Customer volume
on MRX.
Options 7, Section 4
    Amending Options 7, Section 4, regarding Complex Orders, within
note 2 to remove a reference to ``Appointed Member'' and replace it
with a reference to ``Affiliated Entity'' does not impose an undue
burden on competition as all market participants may enter into an
Affiliated Entity relationship, provided they have not elected to
aggregate as an Affiliated Member. The Exchange believes that market
participants that, today, utilize the Appointed Member Program would be
able to utilize the Affiliated Entity program to continue to aggregate
volume for purposes of obtaining lower fees. As proposed, Affiliated
Members, who are eligible to aggregate volume today, are not eligible
to also enter into an Affiliated Entity relationship. Priority Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts Market Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. Permitting Members to aggregate
volume from an Affiliated Entity would continue to encourage the
counterparties that comprise the Affiliated Entities to incentivize
each other to attract and seek to execute more Priority Customer volume
on MRX.
Options 7, Section 5
    The Exchange's proposal to amend Options 7, Section 5.C., Options
Regulatory Fee, to remove the date of the last ORF change does not
impose an undue burden on competition as this non-substantive change
does not impact pricing.
    The Exchange's proposal to relocate Options 7, Section 5.E., PIM
Pricing for Regular and Complex Orders, to new Options 7, Section 3.A.
does not impose an undue burden on competition as this non-substantive
change does not impact pricing.
Options 7, Section 8
    The Exchange's proposal to relocate Options 7, Section 8.E.,
Exchange Testing Facilities, to the end of Options 7, Section 7, Market
Data, does not impose an undue burden on competition as this non-
substantive change does not impact pricing. The deletion of Options 7,
Section 8, Connectivity Fees, does not impose an undue burden on
competition as this non-substantive change does not impact pricing.

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

    No written comments were either solicited or 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,\23\ and Rule 19b-4(f)(2) \24\ thereunder.
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: (i) Necessary or
appropriate in the public interest; (ii) for the protection of
investors; or (iii) 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.
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    \23\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \24\ 17 CFR 240.19b-4(f)(2).
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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-MRX-2020-21 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-MRX-2020-21. 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-MRX-2020-21 and should be submitted on
or before December 15, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25898 Filed 11-23-20; 8:45 am]
BILLING CODE 8011-01-P