[Federal Register Volume 88, Number 214 (Tuesday, November 7, 2023)]
[Notices]
[Pages 76867-76870]
[FR Doc No: 2023-24522]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98843; File No. SR-NASDAQ-2023-025]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Approving a Proposed Rule Change Related to Notification and Disclosure
of Reverse Stock Splits

November 1, 2023.

I. Introduction

    On June 21, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change related to notification and disclosure of reverse
stock splits. The proposed rule change was published for comment in the
Federal Register on August 3, 2023.\3\ On September 14,

2023, the Commission extended the time period within which to approve
the proposed rule change, disapprove the proposed rule change, or
institute proceedings to determine whether to approve or disapprove the
proposed rule change to November 1, 2023.\4\ This order approves the
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 98014 (July 28,
2023), 88 FR 51376 (``Notice''). Comment received by the Commission
on the proposed rule change is available on the Commission's website
at: https://www.sec.gov/comments/sr-nasdaq-2023-025/srnasdaq2023025.htm. The Commission received two comment letters in
support of the proposed rule change. See Letter from Thomas M.
Merritt, Deputy General Counsel, Virtu Financial, Inc., dated August
23, 2023 (``Virtu Letter''); Letter from Imran Javaid, Director and
Association General Counsel, Robinhood Markets, Inc., dated October
24, 2023 (``Robinhood Letter'').
    \4\ See Securities Exchange Act Release No. 98386, 88 FR 64936
(Sept. 20, 2023).
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II. Description of the Proposed Rule Change

    Nasdaq is proposing to amend its rules regarding the notification
and disclosure of reverse stock splits in light of recent increased
volume in reverse stock split activity.\5\ Currently, a reverse stock
split is considered a ``Substitution Listing Event'' under Nasdaq Rule
5005(a)(44).\6\ Nasdaq Rule 5250(e)(4) requires a company to notify
Nasdaq about any ``Substitution Listing Event (other than a re-
incorporation or a change to a company's place of organization) no
later than 15 calendar days prior to the implementation of such event
by filing the appropriate form as designated by Nasdaq.'' While public
disclosure of a reverse stock split is not specifically addressed under
Nasdaq's current rules, Nasdaq Rule 5250(b)(1) requires a company to
make ``prompt disclosure'' of ``any material information that would
reasonably be expected to affect the value of its securities or
influence investors' decisions,'' which Nasdaq interprets to include
details on reverse stock splits.\7\ While ``prompt'' disclosure is not
expressly defined in the Exchange's rules, Nasdaq states that it has
published an FAQ stating that ``[t]his disclosure should be
disseminated prior to, or in conjunction with, the announcements that
Corporate Data Operations will make on the day prior to the market
effective date at approximately 1:00 p.m.'' \8\
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    \5\ Nasdaq states that in 2022, Nasdaq processed 196 reverse
stock splits, compared to 31 in 2021 and 94 in 2020. See Notice,
supra note 3, at 51376. As of June 23, 2023, Nasdaq states that it
has processed 164 reverse stock splits, and projects significantly
more throughout 2023. See id. In most cases, Nasdaq observes,
companies are conducting reverse stock splits to achieve compliance
with Nasdaq's $1 bid price requirement to remain on the Capital
Market tier. See id. Nasdaq Rule 5550(a)(2) states that a company
that has its Primary Equity Security listed on the Capital Market
must have a minimum bid price of at least $1 per share. See also
Nasdaq Rule 5450(a)(1) (Global and Global Select Markets).
    \6\ Nasdaq Rule 5505(a)(44) states, in part, that a
``Substitution Listing Event'' means: ``a reverse stock split, re-
incorporation or a change in the Company's place of organization,
the formation of a holding company that replaces a listed Company,
reclassification or exchange of a Company's listed shares for
another security, the listing of a new class of securities in
substitution for a previously-listed class of securities, a business
combination described in IM-5101-2, a change in the obligor of a
listed debt security, or any technical change whereby the
Shareholders of the original Company receive a share-for-share
interest in the new Company without any change in their equity
position or rights.''
    \7\ See Notice, supra note 3, at 51376.
    \8\ See Nasdaq FAQs-Listings #317, available at https://listingcenter.nasdaq.com/Material_search.aspx?materials=317&mcd=LQ&criteria=2&cid=120%2C1%2C145%2C108%2C157%2C14%2C22%2C126%2C142%2C29%2C107%2C34%2C37%2C38%2C45%2C16%2C110%2C52%2C71%2C156%2C69%0A%0A. Nasdaq states that these
announcements are published as Equity Corporate Action Alerts on
https://www.nasdaqtrader.com/ (the ``Nasdaq Trader website'') on the
day prior to the reverse stock split. See Notice, supra note 3, at
51377, n.7. See also infra note 12.
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    Accordingly, Nasdaq proposes to amend its rules to require a
company conducting a reverse stock split to notify Nasdaq about certain
details of the reverse stock split no later than 12 p.m. ET five
business days prior to the anticipated market effective date, and to
expressly require in its rules a company to make public disclosure
about the reverse stock split at least two business days (no later than
12:00 p.m. ET) prior to the anticipated market effective date.\9\
Specifically, Nasdaq proposes to add new Rules 5250(b)(4), 5250(e)(7),
and IM-5250-3, as discussed in more detail below, as well as update the
information that a company must disclose about a reverse stock split to
the Exchange on the Company Event Notification Form.\10\ Nasdaq also
proposes to amend Rule 5250(b)(1) concerning disclosure of material
information to specify that a company should refer to Rules 5250(b)(4)
and 5250(e)(7) for the disclosure and notification requirements related
to reverse stock splits.\11\
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    \9\ For example, Nasdaq states that if a company desires to
effect a reverse stock split with a market effective date of Monday,
July 24, the company would have to provide Nasdaq with a draft of
the disclosure required by proposed Nasdaq Rule 5250(b)(4) and a
complete Company Event Notification Form by 12:00 p.m. ET on Monday,
July 17, and provide the public disclosure by 12:00 p.m. ET by
Thursday, July 20 (assuming there are no holidays during these
dates). See id. at 51376, n.5.
    \10\ Nasdaq also proposes to delete the existing reference to a
reverse stock split in Nasdaq Rule 5005(a)(44) that currently
defines a ``Substitution Listing Event'' to include a reverse stock
split. See supra note 6 and accompanying text.
    \11\ Nasdaq also proposes clarifying edits in Nasdaq Rule
5250(b)(1) to specify that the time deadlines refer to Eastern Time.
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    Proposed Nasdaq Rule 5250(b)(4) will specify that a company must
provide public notice about a reverse stock split using a Regulation FD
compliant method no later than 12:00 p.m. ET at least two business days
prior to the proposed market effective date.\12\ In addition, the
company shall, prior to the release of this information, provide notice
of such disclosure to Nasdaq's MarketWatch Department, at least ten
minutes prior to public announcement if the public release of the
material information is made between 7:00 a.m. to 8:00 p.m. ET.\13\ If
the public release of this information is made outside the hours of
7:00 a.m. to 8:00 p.m. ET, Nasdaq companies must notify MarketWatch of
the material information prior to 6:50 a.m. ET.\14\ The prior notice of
this disclosure must be made to the MarketWatch Department through the
electronic disclosure submission system available at https://www.nasdaq.net, except in emergency situations, when notification may
instead be provided by telephone or facsimile.\15\
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    \12\ Currently, the Nasdaq Trader website announcement and the
company's press release are published the day prior to a reverse
split, and includes material information such as the CUSIP number
and split ratio. Nasdaq states that if a market participant
inadvertently misses the announcement, they may continue to accept
orders at the pre-split price, rather than the post-split adjusted
price, which could lead to volatility in the stock price and trading
inaccurate share amounts. See id. at 51378. Accordingly, proposed
Nasdaq Rule 5250(b)(4) would provide market participants with at
least one additional business day to review the company's public
disclosure about the reverse stock split and update their systems.
See id.
    \13\ See proposed Nasdaq Rule 5250(b)(4). The timing for
notifying Nasdaq about disclosure of material news before the public
announcement of a reverse stock split in the proposed rule mirrors
the timing for notifying Nasdaq's MarketWatch Department about the
disclosure of other material news in current Nasdaq Rule 5250(b)(1).
    \14\ See id.
    \15\ See id. See also IM-5250-1, which states that examples of
an emergency situation include: lack of computer or internet access;
technical problems on either the company or Nasdaq system or an
incompatibility between those systems; and a material development
such that no draft disclosure document exists, but immediate
notification to MarketWatch is important based on the material
event.
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    Proposed Nasdaq Rule 5250(e)(7) will specify that, for a reverse
stock split, the company must notify Nasdaq by submitting a complete
Company Event Notification Form \16\ no later than 12:00

p.m. ET five business days prior to the proposed market effective date.
The submission must include all information required by the form and a
draft of the disclosure required by proposed Nasdaq Rule
5250(b)(4).\17\ Nasdaq will not process a reverse stock split unless
the requirements set forth in proposed Rules 5250(b)(4) and 5250(e)(7)
have been timely satisfied.\18\ Additionally, if a company takes legal
action to effect a reverse stock split notwithstanding its failure to
timely satisfy these requirements, or provides incomplete or inaccurate
information about the timing or ratio of the reverse stock split in its
public disclosure,\19\ Nasdaq will halt the stock in accordance with
the procedure set forth in Nasdaq Equity 4, Rule 4120, that provides
Nasdaq with the authority to halt trading to permit the dissemination
of material news.\20\
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    \16\ Nasdaq filed the text of the proposed Company Event
Notification Form (``Form'') as Exhibit 3 to Nasdaq's rule filing.
See Notice, supra note 3, at 51377, n.9. The proposed Company Event
Notification Form to be used for reverse mergers is being modified,
in conjunction with the rule changes being approved in this order,
to require a company to provide additional information to Nasdaq on
the reverse merger than is currently required in the Company Event
Notification Form. See Exhibit 3 to Nasdaq's rule filing. The Form
will indicate the requirements for the company's notification to the
Exchange and public under the newly adopted rules herein as well as
require the company to provide information including: (1) split
ratio; (2) new CUSIP number; (3) dates of board approval,
shareholder approval, and DTC eligibility; and (4) the effective
date of the reverse stock split.
    \17\ See proposed Nasdaq Rule 5250(e)(7).
    \18\ See id.
    \19\ For example, Nasdaq states that it will not process a
proposed reverse stock split if the Company Event Notification Form
does not include the new CUSIP number or a split ratio if the press
release contains a split ratio or market effective date that is
inconsistent with the draft submission previously provided to
Nasdaq. See Notice, supra note 3, at 51377, n.12.
    \20\ See proposed Nasdaq Rule 4120(a)(1) and 5250(e)(7). Nasdaq
has submitted a separate rule filing to adopt a new regulatory halt
procedure specific to the pre-market trading and opening of a
Nasdaq-listed security undergoing a reverse stock split. See
Securities Exchange Act Release No. 98489 (September 22, 2023), 88
FR 66913 (September 28, 2023) (Notice of Filing of Proposed Rule
Change to Amend Rule 4120 and Rule 4753).
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    Proposed Nasdaq IM-5250-3 repeats the requirements of both proposed
Nasdaq Rules 5250(b)(4) and (e)(7). According to Nasdaq this will
provide issuers and market participants with additional transparency by
having all information related to the reverse split process in one
location in the Nasdaq rulebook.\21\
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    \21\ See id. at 51377.
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    Nasdaq believes the proposed amendments will provide additional
transparency and clarity to companies and market participants by
specifying the notification and disclosure requirements related to
reverse stock splits.\22\ Nasdaq states that the requirement for
companies to submit a completed Company Event Notification Form no
later than 12:00 p.m. ET five business days prior to the market
effective date will help ensure that Nasdaq has timely and complete
information to process the reverse stock split prior to the effective
date.\23\ Nasdaq also states that by shortening the deadline for the
notification from 15 calendar days to five business days, Nasdaq
believes that companies will be able to provide complete information in
a single submission of the form, which they often cannot do today.\24\
As such, Nasdaq states the shorter time frame will simplify a company's
ability to submit a completed Company Event Notification Form because
all relevant information can be provided in one submission closer to
the market effective date and thereby improve Nasdaq's processing of
the forms and reduce the possibility of errors to the forms.\25\
Additionally, Nasdaq states the requirement under proposed Nasdaq Rule
5250(e)(7) for companies to submit a draft of the Regulation FD
disclosure required by proposed Rule 5250(b)(4) will help ensure that
the information disseminated to the market by the company aligns with
Nasdaq's announcement, including the split ratio and market effective
date.\26\ Nasdaq also states that it would publish an announcement
through the Nasdaq Trader website one and two business days prior to
the market effective date.\27\ Furthermore, Nasdaq states that the
requirement under proposed Nasdaq Rule 5250(b)(4) for a company to make
public disclosure about a reverse stock split no later than 12:00 p.m.
ET two business days prior to the market effective date will help
ensure that sufficient notice is provided to market participants,
thereby allowing them to process the event in their systems.\28\
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    \22\ See id.
    \23\ See id.
    \24\ See id. For example, Nasdaq states that currently some
companies may submit a form without CUSIP information, and then will
email the CUSIP information to Nasdaq a few days later. See id.
Additionally, some companies may not have received confirmation of
DTC eligibility, and receive it closer to the market effective date
of the reverse stock split. See id. Nasdaq also indicated that where
a company is conducting a reverse stock split to demonstrate
compliance with the minimum $1 bid price requirement, as many
companies are doing to remain on Nasdaq's Capital Market tier, as
described above in note 5, supra, the company may need to modify the
ratio of the reverse stock split after providing initial notice due
to changes in market conditions and the company's stock price. See
id.
    \25\ See id. Nasdaq represents that the five business day
timeframe still provides sufficient time for Nasdaq to process the
notification. See id. at 51377, n.13.
    \26\ See id. at 51377.
    \27\ See id. at 51378. Nasdaq states that a company may publish
a press release earlier than two business days prior to the market
effective date of the reverse stock split. See id. at 51377, n. 15.
However, Nasdaq states that it will only publish an announcement
through the Nasdaq Trader website one and two business days prior to
the reverse stock split. See id. As an example, Nasdaq states that
if a company publishes a press release on Monday announcing a
reverse stock split with a market effective date on Friday, Nasdaq
will only publish an announcement through the Nasdaq Trader website
on Wednesday and Thursday. See id.
    \28\ See id. See also supra note 12.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\29\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\30\ which
requires, among other things, that a national securities exchange have
rules designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest;
and are not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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    \29\ 15 U.S.C. 78f(b). In approving this proposed rule change,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \30\ 15 U.S.C. 78f(b)(5).
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    As noted above, current Nasdaq Rule 5250(b)(1) requires a company
to make ``prompt disclosure'' of ``any material information that would
reasonably be expected to affect the value of its securities or
influence investors' decisions,'' which Nasdaq interprets to include
details on reverse stock splits.\31\ In light of recent increased
volume in reverse stock split activity, Nasdaq proposes to expressly
set forth new notification and disclosure requirements for reverse
stock splits in Nasdaq Rules 5250(b)(4), 5250(e)(7), and IM-5250-3.\32\
The Exchange's proposal is reasonably designed to address this recent
market activity, including for companies that are listed on the Nasdaq
Capital Market tier, by providing additional transparency of reverse
stock splits to investors through public disclosure of material
information about such splits,\33\ thus allowing them to better manage
investment decisions.
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    \31\ See supra notes 7 and 8.
    \32\ See supra notes 10 and 11 and accompanying text.
    \33\ See supra note 16.
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    Further, the Exchange has represented that the requirement for
companies to

submit a completed Company Event Notification Form no later than 12:00
p.m. ET five business days prior to the market effective date will help
ensure that Nasdaq has timely, complete, and accurate information to
process the reverse stock split prior to the effective date.\34\ While
Nasdaq currently is required to receive notification and certain
information about a reverse stock split no later than 15 calendar days
before it is scheduled to occur, Nasdaq has represented in its proposal
that this longer time frame creates issues because some of the terms of
the reverse stock split may not be set or available at that time or may
change before the reverse stock split is to occur. As Nasdaq has
stated, shortening the timeframe for notifying the Exchange about a
reverse stock split to five business days should help to reduce the
possibility of errors and allow companies to provide more complete and
accurate information about a reverse stock split in a single submission
to Nasdaq. This can also inure to the benefit of investors by
ultimately providing the marketplace with improved and timely
information about a reverse stock split.
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    \34\ See supra note 23.
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    The Commission also believes that the other changes in proposed
Nasdaq Rule 5250(e)(7) and to the Company Notification Form appear to
be reasonable additions to address Nasdaq's and market participants'
concerns about having adequate, accurate, and complete information in a
timely manner about reverse stock splits. As described above, these
changes include, among others, requiring companies to submit a draft of
its public disclosure of the reverse stock split no later than 12 p.m.
ET five business days prior to the market effective date so that the
Exchange can ensure the disclosure aligns with the announcement Nasdaq
will be making, including on the split ratio and effective date of the
reverse split. In addition, as described above, new Nasdaq Rule
5250(e)(7) will specifically indicate that in certain circumstances
such as when a company takes action to effect a reverse stock split but
has failed to satisfy the rule's requirements or a company provides
incomplete or inaccurate information about the timing or ratio of the
reverse stock split in its public disclosure, Nasdaq will halt the
trading in the stock in accordance with its provisions on material news
halts in Equity Rule 4, Rule 4120(a)(1).
    The proposal will also provide the investing public and other
market participants with at least one additional business day of public
notice to help reduce the risk that investors and brokers inadvertently
miss the public announcement of the reverse stock split or fail to
process the event in their systems, helping to maintain fair and
orderly markets, and protecting investors and the public interest.\35\
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    \35\ See supra note 12 (noting concerns about market volatility
in stock prices if a market participant misses the current one
business day announcement and continues to accept orders at pre-
split prices and trading inaccurate share amounts). The Exchange
also state that it believes the changes to both the notification and
disclosure requirements should help to address these concerns about
trading volatility and potential price mistakes. See Notice, supra
note 3, at 51378. See also proposed Nasdaq Rule 5250(b)(4).
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    The Commission also finds that the other changes in proposed Nasdaq
Rule 5250(b)(1) and the addition of Nasdaq Rule 5250(b)(4) and IM-5250-
3 will enhance the transparency of the reverse stock split disclosure
process to issuers and investors. Finally, the Commission notes that
the two comment letters received on the proposal were supportive.\36\
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    \36\ See Virtu Letter, supra note 3 (stating that, among other
things, (i) shortening the notice requirement to Nasdaq from 15
calendar days to five business days before the planned reverse stock
split would ``provide issuers with additional time to obtain more
complete data and thorough information before reporting the planned
corporate action to Nasdaq,'' and ``result in Nasdaq having more
complete information in advance of the planned reverse split date to
ensure that all of the technical requirements have been satisfied'';
and (ii) increasing the public notice requirement to two business
days ``will enable market participants to plan more effectively for
a reverse stock split, which will contribute to the maintenance of
fair, orderly, and efficient markets''); Robinhood Letter, supra
note 3 (expressing general support for the proposal and, in
particular, the requirement to increase the public notice
requirement to two business days).
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    For the reasons discussed above, the Commission finds that the
proposed rule change is consistent with section 6(b)(5) of the Act \37\
and the rules and regulations thereunder applicable to a national
securities exchange.
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    \37\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\38\ that the proposed rule change (SR-NASDAQ-2023-025), be, and
hereby is, approved.
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    \38\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-24522 Filed 11-6-23; 8:45 am]
BILLING CODE 8011-01-P


July 24, 2007

August 16-17, 2007 Panel Member List

FIFRA SCIENTIFIC ADVISORY PANEL

OPEN MEETING – August 16-17, 2007

FIFRA SAP Web Site:    HYPERLINK "http://www.epa.gov/scipoly/sap/"
http://www.epa.gov/scipoly/sap/

Docket Number:  EPA-HQ-OPP-2007-0388

OPP Docket Telephone:<PHONE_NUMBER>

Assessing Approaches for the Development of PBPK Models of Pyrethroid
Pesticides

 Environmental Protection Agency Conference Center – Lobby Level

One Potomac Yard (South Building), 2777 South Crystal Drive

Arlington, Virginia 22202

FIFRA SAP Session Chair:

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l
"chambers#chambers"  Janice Elaine Chambers, Ph.D. , D.A.B.T.

William L. Giles Distinguished Professor

Director, Center for Environmental Health Sciences

College of Veterinary Medicine

Mississippi State University

Mississippi State, MS  39762-6100

Designated Federal Official:

Steven Knott

U.S. Environmental Protection Agency

Office of Science Coordination and Policy

FIFRA Scientific Advisory Panel

EPA East Building

1200 Pennsylvania Avenue, NW

Washington, DC  20460

Tel:<PHONE_NUMBER>, Fax:<PHONE_NUMBER>

  HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>
FIFRA Scientific Advisory Panel Members:

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l
"handwerger#handwerger"  Stuart Handwerger, M.D.

Professor of Pediatrics

Children's Hospital Medical Center

University of Cincinnati

Cincinnati, OH  45229-3039

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l
"portier#portier"  Kenneth M. Portier, Ph.D.

 Program Director, Statistics

American Cancer Society

Atlanta, GA  30303-1002

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l
"schlenk#schlenk"  Daniel Schlenk, Ph.D.

Professor of Aquatic Toxicology

Department of Environmental Sciences

University of California

Riverside, CA  92521

FQPA Science Review Board Members:

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l "edler#edler"
Lutz Edler, Ph.D.

Head of the Biostatistics Unit

German Cancer Research Center

D-69120 Heidelberg

GERMANY

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l "gammon#gammon"
Derek W. Gammon, Ph.D., D.A.B.T.

Staff Toxicologist

Medical Toxicology Branch

California Environmental Protection Agency

Sacramento, CA  95812

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l
"greenwood#greenwood"  Richard Greenwood, Ph.D.

Head of School

School of Biological Sciences

University of Portsmouth

Portsmouth PO1 2DY

UNITED KINGDOM

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l "hattis#hattis"
Dale Hattis, Ph.D.

Research Professor

Center for Technology, Environment and Development (CENTED)

George Perkins Marsh Institute

Clark University

Worcester, MA  01610

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l "hayton#hayton"
William L. Hayton, Ph.D.

Professor, Division of Pharmaceutics

Associate Dean for Graduate Studies and Research

The Ohio State University

Columbus, OH  43210-1291

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l
"bernays#bernays"  Wendy J. Heiger-Bernays, Ph.D.

Associate Professor

Department of Environmental Health

Boston University School of Public Health

Boston, MA  02118

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l
"isukapalli#isukapalli"  Sastry S. Isukapalli, Ph.D.

Assistant Professor

Department of Environmental and Occupational Medicine

University of Medicine and Dentistry of New Jersey

 - Robert Wood Johnson Medical School

Piscataway, NJ  08854

Nu-may   HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l "reed#reed"
Ruby Reed, Ph.D., D.A.B.T.

Staff Toxicologist

California EPA

Sacramento, CA  95812

  HYPERLINK
"file:///C:\\Documents%20and%20Settings\\keley\\My%20Documents\\Aug%2014
-17,2007\\PBPK%20Panel%20Members%20&%20bios.doc" \l "ross#ross"
Matthew K. Ross, Ph.D.

Assistant Professor

Department of Basic Sciences

Mississippi State University

Mississippi State, MS  39762


[Federal Register Volume 83, Number 161 (Monday, August 20, 2018)]
[Notices]
[Pages 42178-42183]
[FR Doc No: 2018-17849]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83847; File No. SR-MIAX-2018-23]

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

August 14, 2018.
    Pursuant to the provisions of 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 August 7, 2018, Miami International Securities
Exchange LLC (``MIAX Options'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a 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 ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's
website at

http://www.miaxoptions.com/rule-filings, 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 the Fee Schedule to modify certain
aspects of the following fees that apply to MIAX Options Market Makers:
\3\ (i) The Monthly Trading Permit fees; and (ii) the MEI Port fees.
The Exchange also proposes to amend the list of MIAX Select Symbols \4\
contained in the Priority Customer Rebate Program \5\ of the Exchange's
Fee Schedule to delete an obsolete reference.
---------------------------------------------------------------------------

    \3\ The term ``Market Makers'' refers to ``Lead Market Makers,''
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
    \4\ The term ``MIAX Select Symbols'' means options overlying
AAL, AAPL, AIG, AMAT, AMD, AMZN, BA, BABA, BB, BIDU, BP, C, CAT,
CBS, CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE, GILD, GLD, GM,
GOOGL, GPRO, HAL, HTZ, INTC, IWM, JCP, JNJ, JPM, KMI, KO, MO, MRK,
NFLX, NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG, S, SPY, T, TSLA,
USO, VALE, VXX, WBA, WFC, WMB, WY, X, XHB, XLE, XLF, XLP, XOM, and
XOP.
    \5\ See Section 1(a)(iii) of the Fee Schedule for a complete
description of the Program.
---------------------------------------------------------------------------

    The Exchange issues Trading Permits that confer the ability to
transact on the Exchange.\6\ Currently, the Exchange assesses the
following monthly fees for MIAX Options Market Maker Trading Permits:
(i) $7,000 for Market Maker Assignments in up to 10 option classes or
up to 20% of option classes by volume; (ii) $12,000 for Market Maker
Assignments in up to 40 option classes or up to 35% of option classes
by volume; (iii) $17,000 for Market Maker Assignments in up to 100
option classes or up to 50% of option classes by volume; and (iv)
$22,000.00 for Market Maker Assignments in over 100 option classes or
over 50% of option classes by volume up to all option classes listed on
MIAX Options.\7\ For the calculation of these monthly Trading Permit
fees, the number of classes is defined as the greatest number of
classes the Market Maker was assigned to quote in on any given day
within the calendar month and the class volume percentage is based on
the total national average daily volume in classes listed on MIAX
Options in the prior calendar quarter.\8\ Newly listed option classes
are excluded from the calculation of the monthly Market Maker Trading
Permit fee until the calendar quarter following their listing, at which
time the newly listed option classes will be included in both the per
class count and the percentage of total national average daily volume.
---------------------------------------------------------------------------

    \6\ There is no limit on the number of Trading Permits that may
be issued by the Exchange; however, the Exchange has the authority
to limit or decrease the number of Trading Permits it has determined
to issue provided it complies with the provisions set forth in Rule
200(a) and Section 6(c)(4) of the Exchange Act. See 15 U.S.C.
78(f)(c)(4). For a complete description of MIAX Options Trading
Permits, see MIAX Rule 200.
    \7\ See the Fee Schedule, Section 3(b).
    \8\ The Exchange will use the following formula to calculate the
percentage of total national average daily volume that the Market
Maker assignment is for purposes of the Market Maker trading permit
fee for a given month:
    Market Maker assignment percentage of national average daily
volume = [total volume during the prior calendar quarter in a class
in which the Market Maker was assigned]/[total national volume in
classes listed on MIAX Options in the prior calendar quarter].
---------------------------------------------------------------------------

    The Exchange assesses Market Makers the monthly Trading Permit fee
based on the greatest number of classes listed on MIAX Options that the
Market Maker was assigned to quote on any given day within a calendar
month and the applicable fee rate that is the lesser of either the per
class basis or percentage of total national average daily volume
measurement. Members receiving Trading Permits during the month will be
assessed Trading Permit fees according to this schedule, except that
the calculation of the Trading Permit fee for the first month in which
the Trading Permit is issued will be pro-rated based on the number of
trading days occurring after the date on which the Trading Permit was
in effect during that first month divided by the total number of
trading days in such month multiplied by the monthly rate.
    The Exchange recently modified the Trading Permit fees to provide
lower fees to Market Makers that execute less volume than a certain
volume threshold in certain Trading Permit Tier levels.\9\ In
particular, for Market Makers that fall within the following Trading
Permit fee levels, which represent the 3rd or 4th levels of the fee
table: (i) Market Maker Assignments in up to 100 option classes or up
to 50% of option classes by volume, or (ii) Market Maker Assignments in
over 100 option classes or over 50% of option classes by volume up to
all option classes listed on MIAX Options; and whose total monthly
Market Maker executed volume during the relevant month is less than
0.075% of the total monthly executed volume reported by OCC in the
market maker account type for MIAX-listed option classes for that
month, the Exchange assesses a Trading Permit fee of $15,500 instead of
the fee otherwise applicable to such level.\10\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 82868 (March 13,
2018), 83 FR 12063 (March 19, 2018) (SR-MIAX-2018-08).
    \10\ For example, if Market Maker 1 elects to quote the top 40
option classes which consist of 58% of the total national average
daily volume in the prior calendar quarter, the Exchange would
assess $12,000 to Market Maker 1 for the month which is the lesser
of `up to 40 classes' and `over 50% of classes by volume up to all
classes listed on MIAX.' If Market Maker 2 elects to quote the
bottom 1000 option classes which consist of 10% of the total
national average daily volume in the prior quarter, the Exchange
would assess $7,000 to Market Maker 2 for the month which is the
lesser of `over 100 classes' and `up to 20% of classes by volume.'
---------------------------------------------------------------------------

    The Exchange now proposes to further modify its Trading Permit fees
by lowering the monthly Market Maker executed volume threshold
requirement from less than 0.075% to less than 0.060% of total monthly
executed volume reported by OCC in the Market Maker account type for
MIAX-listed option classes for that month, and which fall within the
3rd or 4th levels of the fee table. Accordingly, the Exchange proposes
for these Monthly Trading Permit Fee levels, if the Market Maker's
total monthly executed volume during the relevant month is less than
0.060% of the total monthly executed volume reported by OCC in the
Market Maker account type for MIAX-listed option classes for that
month, then the fee will be $15,500 instead of the fee otherwise
applicable to such level. This is a proposed change to the Trading
Permit fees for Market Makers that fall within the 3rd or 4th levels of
the fee table.
    The proposed adjustment to the threshold is based on an assessment
of recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange

believes that it is reasonable, equitable, and not unfairly
discriminatory to adjust the monthly Market Maker executed volume
threshold requirement from less than 0.075% to less than 0.060% of
total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply to only smaller-scale Market
Makers. The Exchange believes that by continuing to offer lower fees to
Market Makers that execute less volume than a certain volume threshold
in certain Trading Permit Tier levels, the Exchange will retain and
attract smaller-scale Market Makers, which are an integral component of
the option industry marketplace, but have been decreasing in number in
recent years, due to industry consolidation and lower market maker
profitability. Since these smaller-scale Market Makers execute less
volume overall, the Exchange believes it is reasonable and appropriate
to offer such Market Makers (that are willing to quote the majority or
entirety of the market) lower fees.
    Similarly, the Exchange also proposes to modify its MEI Port fees
assessable to Market Makers. Currently, MIAX Options assesses monthly
MEI Port fees on Market Makers based upon the number of classes or
class volume accessed by the Market Maker. Market Makers are allocated
two (2) Full Service MEI Ports \11\ and two (2) Limited Service MEI
Ports per matching engine \12\ to which they connect. The Exchange
currently assesses the following MEI Port fees: (a) $5,000 for Market
Maker Assignments in up to 5 option classes or up to 10% of option
classes by volume; (b) $10,000 for Market Maker Assignments in up to 10
option classes or up to 20% of option classes by volume; (c) $14,000
for Market Maker Assignments in up to 40 option classes or up to 35% of
option classes by volume; (d) $17,500 for Market Maker Assignments in
up to 100 option classes or up to 50% of option classes by volume; and
(e) $20,500 for Market Maker Assignments in over 100 option classes or
over 50% of option classes by volume up to all option classes listed on
MIAX Options.\13\ The Exchange also currently charges $100 per month
for each additional Limited Service MEI Port per matching engine for
Market Makers over and above the two (2) Limited Service MEI Ports per
matching engine that are allocated with the Full Service MEI Ports. The
Full Service MEI Ports, Limited Service MEI Ports and the additional
Limited Service MEI Ports all include access to the Exchange's Primary
and Secondary data centers and its Disaster Recovery center. For the
calculation of the monthly MEI Port fees that apply to Market Makers,
the number of classes is defined as the greatest number of classes the
Market Maker was assigned to quote in on any given day within the
calendar month and the class volume percentage is based on the total
national average daily volume in classes listed on MIAX Options in the
prior calendar quarter.\14\ Newly listed option classes are excluded
from the calculation of the monthly MEI Port fee until the calendar
quarter following their listing, at which time the newly listed option
classes will be included in both the per class count and the percentage
of total national average daily volume.
---------------------------------------------------------------------------

    \11\ Full Service MEI Ports provide Market Makers with the
ability to send Market Maker quotes, eQuotes, and quote purge
messages to the MIAX Options System. Full Service MEI Ports are also
capable of receiving administrative information. Market Makers are
limited to two Full Service MEI Ports per matching engine.
    \12\ A ``matching engine'' is a part of the MIAX Options
electronic system that processes options quotes and trades on a
symbol-by-symbol basis. Some matching engines will process option
classes with multiple root symbols, and other matching engines will
be dedicated to one single option root symbol (for example, options
on SPY will be processed by one single matching engine that is
dedicated only to SPY). A particular root symbol may only be
assigned to a single designated matching engine. A particular root
symbol may not be assigned to multiple matching engines.
    \13\ See the Fee Schedule, Section 5(d)(ii).
    \14\ The Exchange will use the following formula to calculate
the percentage of total national average daily volume that the
Market Maker assignment is for purposes of the MEI Port fee for a
given month:
    Market Maker assignment percentage of national average daily
volume = [total volume during the prior calendar quarter in a class
in which the Market Maker was assigned]/[total national volume in
classes listed on MIAX Options in the prior calendar quarter].
---------------------------------------------------------------------------

    The Exchange assesses Market Makers the monthly MEI Port fees based
on the greatest number of classes listed on MIAX Options that the
Market Maker was assigned to quote on any given day within a calendar
month and the applicable fee rate that is the lesser of either the per
class basis or percentage of total national average daily volume
measurement.
    The Exchange recently modified the MEI Port fees to provide lower
fees to Market Makers that execute less volume than a certain volume
threshold in certain MEI Port fee levels.\15\ In particular, for Market
Makers that fall within the following MEI Port fee levels, which
represent the 4th or 5th levels of the fee table: Market Makers that
have (i) Assignments in up to 100 option classes or up to 50% of option
classes by volume, or (ii) Assignments in over 100 option classes or
over 50% of option classes by volume up to all option classes listed on
MIAX Options; and whose total monthly Market Maker executed volume
during the relevant month is less than 0.075% of the total monthly
executed volume reported by OCC in the market maker account type for
MIAX-listed option classes for that month, the Exchange assesses a fee
of $14,500 instead of the fee otherwise applicable to such level.\16\
---------------------------------------------------------------------------

    \15\ See supra note 9.
    \16\ For example, if Market Maker 1 elects to quote the top 40
option classes which consist of 58% of the total national average
daily volume in the prior calendar quarter, the Exchange would
assess $14,000 to Market Maker 1 for the month which is the lesser
of `up to 40 classes' and `over 50% of classes by volume up to all
classes listed on MIAX.' If Market Maker 2 elects to quote the
bottom 1000 option classes which consist of 10% of the total
national average daily volume in the prior quarter, the Exchange
would assess $5,000 to Market Maker 2 for the month which is the
lesser of `over 100 classes' and `up to 10% of classes by volume.'
---------------------------------------------------------------------------

    The Exchange now proposes to further modify its MEI Port fees by
lowering the monthly volume threshold requirement from less than 0.075%
to less than 0.060% of total monthly Market Maker executed volume
reported by OCC in the Market Maker account type for MIAX-listed option
classes for that month, and which fall within the 4th or 5th levels of
the fee table. Accordingly, the Exchange proposes for these MEI Port
Fee levels, if the Market Maker's total monthly executed volume during
the relevant month is less than 0.060% of the total monthly executed
volume reported by OCC in the Market Maker account type for MIAX-listed
option classes for that month, then the fee will be $14,500 instead of
the fee otherwise applicable to such level. This is a proposed change
to the MEI Port fees for Market Makers that fall within the 4th or 5th
levels of the fee table.
    The proposed adjustment to the threshold is based on an assessment
of recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange believes that it is reasonable, equitable, and
not unfairly discriminatory to adjust the monthly Market Maker executed
volume threshold requirement from less than 0.075% to less than 0.060%
of total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply

to only smaller-scale Market Makers. The Exchange believes that by
continuing to offer lower fees to Market Makers that execute less
volume than a certain volume threshold in certain MEI Port fee levels,
the Exchange will retain and attract smaller-scale Market Makers, which
are an integral component of the option industry marketplace, but have
been decreasing in number in recent years, due to industry
consolidation and lower market maker profitability. Since these
smaller-scale Market Makers execute less volume overall, the Exchange
believes it is reasonable and appropriate to offer such Market Makers
(that are willing to quote the majority or entirety of the market)
lower fees.
    The Exchange also proposes to amend the list of MIAX Select Symbols
contained in the Priority Customer Rebate Program of the Exchange's Fee
Schedule to delete an obsolete reference. Specifically, the Exchange
proposes to delete the symbol ``NQ'' associated with NQ Mobile Inc. The
Exchange notes that, as a result of a recent corporate action, NQ
changed its name, trading symbol, CUSIP, and business model. The
company is now known as Link Motion Inc. (``LKM'').\17\ The Exchange
determined not to replace NQ with LKM, for business reasons. Therefore,
NQ should be removed from the list of MIAX Select Symbols. By removing
NQ from the list of MIAX Select Symbols, it will help to ensure that
there is no confusion amongst market participants and will clarify that
LKM is not a MIAX Select Symbol.
---------------------------------------------------------------------------

    \17\ The change became effective on March 14, 2018.
---------------------------------------------------------------------------

    The Exchange initially filed the proposal on July 31, 2018 (SR-
MIAX-2018-17). That filing was withdrawn and replaced with the current
filing (SR-MIAX-2018-23).
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \18\ in general, and
furthers the objectives of Section 6(b)(4) and 6(b)(5) of the Act \19\
in particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Exchange Members and
issuers and other persons using any facility or system which the
Exchange operates or controls. The Exchange also believes the proposal
furthers the objectives of Section 6(b)(5) of the Act \20\ in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general to protect
investors and the public interest and is not designed to permit unfair
discrimination between customer, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4)(5).
    \20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed modification to the Trading
Permit fees is consistent with Section 6(b)(4) of the Act in that it is
reasonable, equitable and not unfairly discriminatory. The proposed
modification to the Trading Permit fees is reasonable in that, by
continuing to offer lower fees to Market Makers that execute less
volume than a certain volume threshold in certain Trading Permit Tier
levels, the Exchange will retain and attract smaller-scale Market
Makers, which are an integral component of the option industry
marketplace, but have been decreasing in number in recent years, due to
industry consolidation and lower market maker profitability. Since
these smaller-scale Market Makers execute less volume overall, the
Exchange believes it is reasonable and appropriate to offer such Market
Makers (that are willing to quote the majority or entirety of the
market) lower fees. The Exchange also believes that its proposal is
consistent with Section 6(b)(5) of the Act because it will be uniformly
applied to all Market Makers that execute less volume on the Exchange,
as determined and measured by a uniform, objective, quantitative volume
amount. The Exchange notes that the proposed changes to Trading Permit
fees apply only to the two highest tiers on the Fee Schedule. The
Exchange believes that this is consistent with Section 6(b)(5) of the
Act because it will allow for smaller-scale Market Makers, that execute
less volume overall, to still be incentivized to quote the majority or
entirety of the market, without paying the higher fees, which would be
assessed to a Market Maker with a total monthly executed volume during
the relevant month of greater than the proposed 0.060% of the total
monthly executed volume reported by OCC in the market maker account
type for MIAX-listed option classes for that month. The proposed
Trading Permit fees are fair and equitable and not unreasonably
discriminatory because they apply equally to all similarly situated
Market Makers regardless of type and access to the Exchange is offered
on terms that are not unfairly discriminatory.
    The Exchange also believes that the proposed modification to the
Trading Permit fees is reasonable in that it is based on an assessment
of recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange believes that it is reasonable, equitable, and
not unfairly discriminatory to adjust the monthly Market Maker executed
volume threshold requirement from less than 0.075% to less than 0.060%
of total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply to only smaller-scale Market
Makers. The Exchange believes that by continuing to offer lower fees to
Market Makers that execute less volume than a certain volume threshold
in certain Trading Permit Tier levels, the Exchange will retain and
attract smaller-scale Market Makers, which are an integral component of
the option industry marketplace, but have been decreasing in number in
recent years, due to industry consolidation and lower market maker
profitability. Since these smaller-scale Market Makers execute less
volume overall, the Exchange believes it is reasonable and appropriate
to offer such Market Makers (that are willing to quote the majority or
entirety of the market) lower fees.
    The Exchange believes that the proposed modification to the MEI
Port fees is consistent with Section 6(b)(4) of the Act in that it is
reasonable, equitable and not unfairly discriminatory. The proposed
modification to the MEI Port fees is reasonable in that, by continuing
to offer lower fees to Market Makers that execute less volume than a
certain volume threshold in certain MEI Port fee levels, the Exchange
will retain and attract smaller-scale Market Makers, which are an
integral component of the option industry marketplace, but have been
decreasing in number in recent years, due to industry consolidation and
lower market maker profitability. Since these smaller-scale Market
Makers execute less volume overall, the Exchange believes it is
reasonable and appropriate to offer such Market Makers (who are willing
to quote the majority or entirety of the market) lower fees. The
Exchange also believes that its proposal is consistent with Section
6(b)(5) of the Act because it will be uniformly applied to all Market
Makers that execute less volume on the Exchange, as determined and
measured by a uniform, objective, quantitative volume amount. The
Exchange notes

that the proposed changes to MEI Port fees apply only to the two
highest tiers of the Fee Schedule. The Exchange believes that this is
consistent with Section 6(b)(5) of the Act because it will allow for
smaller-scale Market Makers, that execute less volume overall, to still
be incentivized to quote the majority or entirety of the market,
without paying the higher fees, which would be assessed to a Market
Maker with a total monthly executed volume during the relevant month of
greater than the proposed 0.060% of the total monthly executed volume
reported by OCC in the market maker account type for MIAX-listed option
classes for that month. The proposed MEI Port fees are fair and
equitable and not unreasonably discriminatory because they apply
equally to all similarly situated Market Makers regardless of type and
access to the Exchange is offered on terms that are not unfairly
discriminatory.
    The Exchange also believes that the proposed modification to the
MEI Port fees is reasonable in that it is based on an assessment of
recent Market Maker volume trends on the Exchange. Specifically, the
Exchange determined that, due to lower total monthly executed volume
executed by certain larger-scale Market Makers, certain larger-scale
Market Markers could potentially receive the lower fees, which lower
fees were intended only to apply to smaller-scale Market Makers.
Therefore, the Exchange believes that it is reasonable, equitable, and
not unfairly discriminatory to adjust the monthly Market Maker executed
volume threshold requirement from less than 0.075% to less than 0.060%
of total monthly executed volume reported by OCC in the Market Maker
account type for MIAX-listed option classes for that month, so that
such lower fees will continue to apply to only smaller-scale Market
Makers. The Exchange believes that by continuing to offer lower fees to
Market Makers that execute less volume than a certain volume threshold
in certain MEI Port fee levels, the Exchange will retain and attract
smaller-scale Market Makers, which are an integral component of the
option industry marketplace, but have been decreasing in number in
recent years, due to industry consolidation and lower market maker
profitability. Since these smaller-scale Market Makers execute less
volume overall, the Exchange believes it is reasonable and appropriate
to offer such Market Makers (that are willing to quote the majority or
entirety of the market) lower fees.
    Furthermore, the proposal to delete the symbol NQ from the list of
MIAX Select Symbols contained in the Priority Customer Rebate Program
is consistent with Section 6(b)(4) of the Act because the proposed
change will benefit investors by providing them an accurate, up-to-date
list of MIAX Select Symbols contained in the Priority Customer Rebate
Program on the Fee Schedule. The Exchange believes that the credit for
transactions in the select symbols is reasonably designed because it
continues to incentivize providers of Priority Customer order flow to
send that Priority Customer order flow to the Exchange in order to
receive a credit in a manner that enables the Exchange to improve its
overall competitiveness and strengthen its market quality for all
market participants. Additionally, the Exchange believes that its
decision not to list the symbol LKM, which replaced NQ, is reasonably
designed to increase the competitiveness of the Exchange with other
options exchange in that the Exchange does not believe the symbol LKM
should be included as a higher volume symbol in the MAIX Select Symbol
program. The Exchange also believes that its proposal is consistent
with Section 6(b)(5) of the Act because it will apply equally to all
Priority Customer orders in the select symbols. All similarly situated
Priority Customer orders in the select symbols are subject to the same
rebate schedule, and access to the Exchange is offered on terms that
are not unfairly discriminatory. In addition, the Program is equitable
and not unfairly discriminatory because, while only Priority Customer
order flow qualifies for the Program, an increase in Priority Customer
order flow will bring greater volume and liquidity, which benefit all
market participants by providing more trading opportunities and tighter
spreads.

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. The Exchange believes that the
proposed rule changes will increase both intermarket and intramarket
competition by continuing to enable smaller-scale Market Makers that
are willing to quote the entire marketplace (or a substantial amount of
the entire marketplace) access to the Exchange at a lower fee. By
continuing to offer lower fees to Market Makers that execute less
volume than a certain volume threshold at certain fee levels, the
Exchange believes that it will retain and attract smaller-scale Market
Makers, which are an integral component of the option industry
marketplace, but have been decreasing in number in recent years, due to
industry consolidation and lower market maker profitability. Since
these smaller-scale Market Makers execute less volume overall, the
Exchange believes it is reasonable and appropriate to offer such Market
Makers lower fees. The Exchange also believes that removing the symbol
NQ from the MIAX Select Symbols and not replacing it with symbol LKM
will not impose any burden on competition not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change will increase both intermarket and intramarket
competition by providing investors an accurate, up-to-date list of MIAX
Select Symbols contained in the Priority Customer Rebate Program on the
Fee Schedule and by continuing to provide increased incentives only for
higher volume symbols that the Exchange believes will increase the
competitiveness of the Exchange with other options exchange that also
offer increased incentives to higher volume symbols.
    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. In such an
environment, the Exchange must continually adjust its fees to remain
competitive with other exchanges and to attract order flow to the
Exchange. The Exchange believes that the proposed rule changes reflect
this competitive environment because they modify the Exchange's fees in
a manner that continues to encourage market participants to register as
Market Makers on the Exchange, to provide liquidity and to attract
order flow. To the extent that this purpose is achieved, all the
Exchange's market participants should benefit from the improved market
liquidity.

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,\21\ and Rule 19b-4(f)(2) \22\ 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 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.
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    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \22\ 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 protected]. Please include
File Number SR-MIAX-2018-23 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-2018-23. 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-MIAX-2018-23, and should be submitted on
or before September 10, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2018-17849 Filed 8-17-18; 8:45 am]
 BILLING CODE 8011-01-P