8011-01p
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100469; File No. SR-MEMX-2024-26]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness
of a Proposed Rule Change to Amend the Exchange’s Fee Schedule Concerning
Transaction Pricing
July 9, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),1 and
Rule 19b-4 thereunder,2 notice is hereby given that, on June 28, 2024, MEMX LLC (“MEMX”
or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the
proposed rule change as described in Items I, II, and III below, which Items have been prepared
by the Exchange. The Commission is publishing this notice to solicit comments on the proposed
rule change from interested persons.
I.

Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed
Rule Change
The Exchange is filing with the Commission a proposed rule change to amend the

Exchange’s fee schedule applicable to Members3 (the “Fee Schedule”) pursuant to Exchange
Rules 15.1(a) and (c). The Exchange proposes to implement the changes to the Fee Schedule
pursuant to this proposal on July 1, 2024. The text of the proposed rule change is provided in
Exhibit 5.
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

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

See Exchange Rule 1.5(p).

proposed rule change. The text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below,
of the most significant aspects of such statements.
A.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1.

Purpose

The purpose of the proposed rule change is to amend the Fee Schedule to: (1) adopt a
new tier under the Liquidity Provision Tiers; (2) modify the required criteria under Liquidity
Provision Tiers 2, 3, and 4; (3) modify NBBO Setter Tier 1 by modifying the required criteria
under such tier; and (4) eliminate the DLI Additive Rebate, each as further described below.
The Exchange first notes that it operates in a highly competitive market in which market
participants can readily direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange
is only one of 16 registered equities exchanges, as well as a number of alternative trading
systems and other off-exchange venues, to which market participants may direct their order flow.
Based on publicly available information, no single registered equities exchange currently has
more than approximately 16.1% of the total market share of executed volume of equities
trading.4 Thus, in such a low-concentrated and highly competitive market, no single equities
exchange possesses significant pricing power in the execution of order flow, and the Exchange
currently represents approximately 2.1% of the overall market share.5 The Exchange in
particular operates a “Maker-Taker” model whereby it provides rebates to Members that add
liquidity to the Exchange and charges fees to Members that remove liquidity from the Exchange.
The Fee Schedule sets forth the standard rebates and fees applied per share for orders that add
and remove liquidity, respectively. Additionally, in response to the competitive environment, the

Market share percentage calculated as of June 26, 2024. The Exchange receives and processes data made
available through consolidated data feeds (i.e., CTS and UTDF).

Id.

Exchange also offers tiered pricing, which provides Members with opportunities to qualify for
higher rebates or lower fees where certain volume criteria and thresholds are met. Tiered pricing
provides an incremental incentive for Members to strive for higher tier levels, which provides
increasingly higher benefits or discounts for satisfying increasingly more stringent criteria.
Adoption of New Liquidity Provision Tier
The Exchange currently provides a standard rebate of $0.0015 per share for executions of
orders in securities priced at or above $1.00 per share that add displayed liquidity to the
Exchange (such orders, “Added Displayed Volume”). The Exchange also currently offers
Liquidity Provision Tiers 1-5, under which a Member may receive an enhanced rebate for
executions of Added Displayed Volume by achieving the corresponding required volume criteria
for each tier. The Exchange now proposes to adopt a new tier under the Liquidity Provision
Tiers, which, as proposed, would be the new Liquidity Provision Tier 1, and the current
Liquidity Provision Tiers 1, 2, 3, 4 and 5 would be renumbered as Liquidity Provision Tiers 2, 3,
4, 5 and 6 (hereinafter referred to as such). The applicable rebates and required criteria under
Liquidity Provision Tiers 2, 3, 4, 5 and 6, would remain unchanged, except for the required
criteria under Liquidity Provision Tiers 2, 3, and 4, which the Exchange is proposing to modify,
as further described below.
Under the proposed new Liquidity Provision Tier 1, the Exchange will provide an
enhanced rebate of $0.0034 per share for executions of Added Displayed Volume for Members
that qualify for such tier by achieving either: (1) an ADAV6 (excluding Retail Orders) that is

As set forth on the Fee Schedule, “ADAV” means the average daily added volume calculated as the
number of shares added per day, which is calculated on a monthly basis, and “Displayed ADAV” means
ADAV with respect to displayed orders.

equal to or greater than 0.50% of the TCV7, or (2) a Step-Up ADAV8 June 2024 (excluding
Retail Orders) that is equal to or greater than 0.07% of the TCV in securities priced at or above
$1.00 per share and an ADAV that is equal to or greater than 0.20% of the TCV in securities
priced at or above $1.00 per share.9 Additionally, the Exchange is proposing that criteria (2) of
Liquidity Provision Tier 1 will expire no later than December 31, 2024, and the Exchange will
indicate this in a note under the Liquidity Provision Tiers pricing table on the Fee Schedule.
Finally, the Exchange proposes to provide Members that qualify for the proposed new Liquidity
Provision Tier 1 a rebate of 0.075% of the total dollar value of the transaction for executions of
orders in securities priced below $1.00 per share that add displayed liquidity to the Exchange,
which is the same rebate that is currently applicable to such executions for all Members.
The proposed new Liquidity Provision Tier 1 is designed to encourage Members to
maintain or increase their order flow that adds displayed liquidity to the Exchange in order to
qualify for the proposed enhanced rebate for executions of Added Displayed Volume, thereby
promoting price discovery and contributing to a deeper and more liquid market to the benefit of
all market participants.
Modify Liquidity Provision Tiers 2-4
The Exchange is also proposing to modify the required criteria under Liquidity Provision

As set forth on the Fee Schedule, “TCV” means total consolidated volume calculated as the volume
reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the
month for which the fees apply. The pricing for the proposed new Liquidity Provision Tier 1 is referred to
by the Exchange on the Fee Schedule under the existing description “Added displayed volume, Liquidity
Provision Tier 1” with a Fee Code of “B1”, “D1”, “J1”, or “I1”, as applicable, to be provided by the
Exchange on the monthly invoices provided to Members. The Exchange also notes that the pricing for
Liquidity Provision Tiers 2-5 will be referred to under the existing applicable descriptions and Fee Codes,
and the pricing for Liquidity Provision Tier 6 will be referred to by the Exchange under the new description
“Added displayed volume, Liquidity Provision Tier 6” with a Fee Code of “B6”, “D6”, “J6”, or “I6” as
applicable, to be provided by the Exchange on the monthly invoices provided to Members.

As set forth on the Fee Schedule, “Step-Up ADAV” means ADAV in the relevant baseline month
subtracted from current ADAV.

The Exchange is also proposing to include a new note under the Notes section of the Fee Schedule that
clarifies to the extent any tiers have required criteria that applies only to securities priced at or above $1.00
per share (as seen in criteria (2) of the proposed Liquidity Provision Tier 1), the Exchange determines
whether a security should be included in the calculation of the ADV, ADAV, or TCV, as applicable, in
securities priced at or above $1.00 per share by utilizing the closing price of the security on the date of
execution.

Tiers 2, 3, and 4. First, with respect to Liquidity Provision Tier 2 (previously named Liquidity
Provision Tier 1, as described above), the Exchange currently provides an enhanced rebate of
$0.0033 per share for executions of Added Displayed Volume in securities priced at or above
$1.00 per share for Members that qualify for such tier by achieving: (1) an ADAV (excluding
Retail Orders) that is equal to or greater than 0.45% of the TCV; or (2) an ADAV that is equal to
or greater than 0.30% of the TCV and a Non-Displayed ADAV10 that is equal to or greater than
6,000,000 shares. The Exchange now proposes to modify the required criteria under Liquidity
Provision Tier 2 such that a Member would qualify for such tier by achieving: (1) an ADAV
(excluding Retail Orders) that is equal to or greater than 0.40% of the TCV; or (2) an ADAV that
is equal to or greater than 0.30% of the TCV in securities priced at or above $1.00 per share and
a Non-Displayed ADAV that is equal to or greater than 6,000,000 shares. Thus, such proposed
change would decrease the ADAV requirement in criteria (1) and modify alternative criteria (2)
by excluding securities priced below $1.00 from the TCV calculation. In other words,
previously, a Member qualified for criteria (2) of the tier by achieving an ADAV of 0.30% of the
total TCV (as well as a Non-Displayed ADAV of at least 6,000,000 shares), and now the
Exchange is proposing that a Member would qualify for such criteria (2) by achieving an ADAV
of 0.30% of the TCV only in securities priced at or above $1.00 per share (again, as well as a
Non-Displayed ADAV of at least 6,000,000 shares).11 The Exchange is not proposing to change
the rebate provided under such tier.
With respect to Liquidity Provision Tier 3 (previously named Liquidity Provision Tier 2,
as described above), the Exchange currently provides an enhanced rebate of $0.0032 per share
for executions of Added Displayed Volume in securities priced at or above $1.00 per share for
Members that qualify for such tier by achieving an ADAV that is equal to or greater than 0.20%

As set forth on the Fee Schedule, “Non-Displayed ADAV” means ADAV with respect to non-displayed
orders (including orders subject to Display-Price Sliding that receive price improvement when executed
and Midpoint Peg orders).

To clarify, in calculating a Member’s ADAV for purposes of achieving criteria (2) of Liquidity Provision
Tier 2, the Exchange will include executions in securities priced below $1.00.

of the TCV and an ADV12 that is equal to or greater than 0.35% of the TCV. Now, the Exchange
proposes to modify the required criteria under Liquidity Provision Tier 3 such that Members
qualify for such tier by achieving: (1) an ADAV that is equal to or greater than 0.20% of the
TCV in securities priced at or above $1.00 per share and an ADV that is equal to or greater than
0.40% of the TCV in securities priced at or above $1.00 per share; or (2) a Step-Up ADAV from
June 2024 (excluding Retail Orders) that is equal to or greater than 0.05% of the TCV in
securities priced at or above $1.00 per share and an ADAV (excluding Retail Orders) that is
equal to or greater than 0.20% of the TCV in securities priced at or above $1.00 per share; or (3)
an ADAV that is equal to or greater than 0.30% of the TCV. Thus, such proposed change would
modify the existing criteria as well as add two alternative criteria. First, the Exchange is
proposing to modify the existing criteria (now alternative criteria (1)) by excluding securities
priced below $1.00 from the TCV calculation in the ADAV requirement, and increasing the
ADV requirement from 0.35% to 0.40% of the TCV, again excluding securities priced below
$1.00 from the TCV calculation. The two additional alternative criteria are proposed criteria (2),
which includes a combined Step-Up ADAV and ADAV requirement, and proposed criteria (3),
which includes an ADAV requirement. The Exchange is not proposing to change the rebate
provided under such tier. Additionally, the Exchange is proposing that criteria (2) of Liquidity
Provision Tier 3 will expire no later than December 31, 2024, and the Exchange will indicate this
in a note under the Liquidity Provision Tiers pricing table on the Fee Schedule.
With respect to Liquidity Provision Tier 4 (previously named Liquidity Provision Tier 3,
as described above), the Exchange currently provides an enhanced rebate of $0.0030 per share
for executions of Added Displayed Volume in securities priced at or above $1.00 per share for
Members that qualify for such tier by achieving an ADAV that is equal to or greater than 0.175%
of the TCV. Now, the Exchange proposes to modify the required criteria under Liquidity

As set forth on the Fee Schedule, “ADV” means average daily volume calculated as the number of shares
added or removed, combined, per day, which is calculated on a monthly basis.

Provision Tier 4 such that Members qualify for such tier by achieving: (1) an ADAV that is
equal to or greater than 0.20% of the TCV in securities priced at or above $1.00 per share; or (2)
an ADAV that is equal to or greater than 0.175% of the TCV. Thus, such proposed change would
add alternative criteria (1) and keep the existing criteria intact as alternative criteria (2). The
Exchange is not proposing to change the rebate provided under such tier.
The Exchange believes that the tiered pricing structure for executions of Added
Displayed Volume under the proposed modified Liquidity Provision Tiers 2, 3, and 4 provides an
incremental incentive for Members to strive for higher volume thresholds to receive higher
enhanced rebates for such executions and, as such, is intended to encourage Members to
maintain or increase their order flow, primarily in the form of liquidity-adding volume, to the
Exchange, thereby contributing to a deeper and more liquid market to the benefit of all Members
and market participants. Specifically, the Exchange believes that, after giving effect to the
proposed changes described above, the rebate for executions of Added Displayed Volume
provided under each of the Liquidity Provision Tiers remains commensurate with the
corresponding required criteria under each such tier and is reasonably related to the market
quality benefits that each such tier is designed to achieve.
NBBO Setter Tier
The Exchange currently offers NBBO Setter Tier 1 under which a Member may receive
an additive rebate of $0.0002 per share for a qualifying Member’s executions of Added
Displayed Volume (other than Retail Orders) in securities priced at or above $1.00 per share that
establish the NBBO and have a Fee Code B13 (such orders, “Setter Volume”), and an additive
rebate of $0.0001 per share for executions of Added Displayed Volume (other than Retail
Orders) that do not establish the NBBO (i.e., Fee Codes D and J)14 by achieving: (1) an ADAV

The Exchange notes that orders with Fee Code B include orders, other than Retail Orders, that establish the
NBBO.

The Exchange notes that orders with Fee Code J include orders, other than Retail Orders, that establish a
new BBO on the Exchange that matches the NBBO first established on an away market. Orders with Fee
Code D include orders that add displayed liquidity to the Exchange but that are not Fee Code B or J, and

with respect to orders with Fee Code B that is equal to or greater than 5,000,000 shares; or (2) an
ADAV in securities priced at or above $1.00 per share (excluding Retail Orders) that is equal to
or greater than 0.30% of the TCV in securities priced at or above over $1.00 per share.15 Now,
the Exchange proposes to modify the required criteria under NBBO Setter Tier 1 such that a
Member would now qualify for such tier by achieving: (1) an ADAV with respect to orders with
Fee Code B that is equal to or greater than 5,000,000 shares; or (2) an ADAV with respect to
orders with Fee Code B that is equal to or greater than 2,000,000 shares and an ADAV in
securities priced at or above $1.00 per share (excluding Retail Orders) that is equal to or greater
than 0.30% of the TCV in securities priced at or above over $1.00 per share. Thus, such
proposed change keeps the first alternative criteria intact with no changes but modifies the
second alternative criteria by adding a requirement that a Member also achieve an ADAV with
respect to orders with Fee Code B that is equal to or greater than 2,000,000 shares.16 The
Exchange is not proposing to change the amount of the additive rebates provided under the
NBBO Setter Tier 1.
The Exchange believes that the proposed modified criteria provides an incremental
incentive for Members to strive for higher ADAV in NBBO setting orders (i.e. Fee Code B) on
the Exchange to receive the additive rebate for qualifying executions of Added Displayed
Volume under such tier, and thus, it is designed to encourage Members that do not currently
qualify for such tier to increase their overall orders that add liquidity to the Exchange. The

thus, orders with Fee Code B, D or J include all orders, other than Retail Orders, that add displayed
liquidity to the Exchange.
The pricing is referred to by the Exchange on the Fee Schedule under the existing description “NBBO
Setter Tier” with a Fee Code of “S1” to be appended to the otherwise applicable Fee Code for qualifying
executions.

The Exchange notes that the remainder of alternative criteria (2) under NBBO Setter Tier 1 was
implemented on June 3, 2024. See Securities Exchange Act Release No. 100320 (June 12, 2024), 89 FR
51576 (June 18, 2024) (SR-MEMX-2024-24). In that filing, the Exchange indicated that it would determine
whether a security meets the “priced at or above $1.00 per share” threshold for purposes of calculating the
ADAV and TCV by using the prior day’s closing price. The Exchange is proposing herein, however, to
clarify with a note in the Notes section on the Fee Schedule, as described above, that it will determine
whether a security is “priced at or above $1.00 per share” by using the closing price of the security on the
date of execution.

Exchange also believes that the criteria change reflects a reasonable and competitive pricing
structure that is right-sized and consistent with the Exchange’s overall pricing philosophy of
encouraging added and/or displayed liquidity. The Exchange believes that the proposed modified
criteria would further incentivize increased order flow to the Exchange, thereby contributing to a
deeper and more liquid market to the benefit of all Members.
DLI Additive Rebate
Lastly, the Exchange proposes to eliminate the DLI Additive Rebate. Currently, the
Exchange offers a DLI Additive Rebate incentive that is applicable to DLI Tier 1, which
provides an additive rebate of $0.0005 per share for executions of Added Displayed Volume for
a Member that qualifies for DLI Tier 1 as well as either the criteria under the previous Liquidity
Provision Tier 1 or Liquidity Provision Tier 2. The Exchange now proposes to eliminate such
DLI Additive Rebate. The purpose of eliminating the DLI Additive Rebate is for business and
competitive reasons, as the Exchange believes the elimination of such additive rebate would
decrease the Exchange’s expenditures with respect to the Exchange’s transaction pricing, which
would enable the Exchange to redirect future resources and funding into other incentives and
tiers intended to incentivize increased order flow. For these reasons, the Exchange no longer
wishes to, nor is it required to, maintain such tier.
2.

Statutory Basis

The Exchange believes that the proposed rule change is consistent with the provisions of
Section 6 of the Act,17 in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,18 in
particular, in that it provides for the equitable allocation of reasonable dues, fees and other
charges among its Members and other persons using its facilities and is not designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
As discussed above, the Exchange operates in a highly fragmented and competitive

15 U.S.C. 78f.

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

market in which market participants can readily direct order flow to competing venues if they
deem fee levels at a particular venue to be excessive or incentives to be insufficient, and the
Exchange represents only a small percentage of the overall market. The Commission and the
courts have repeatedly expressed their preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets. In Regulation NMS, the
Commission highlighted the importance of market forces in determining prices and SRO
revenues and also recognized that current regulation of the market system “has been remarkably
successful in promoting market competition in its broader forms that are most important to
investors and listed companies.”19
The Exchange believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order flow or discontinue to
reduce use of certain categories of products, in response to new or different pricing structures
being introduced into the market. Accordingly, competitive forces constrain the Exchange’s
transaction fees and rebates, and market participants can readily trade on competing venues if
they deem pricing levels at those other venues to be more favorable. The Exchange believes the
proposal reflects a reasonable and competitive pricing structure designed to incentivize market
participants to direct additional order flow to the Exchange, which the Exchange believes would
promote price discovery and enhance liquidity and market quality on the Exchange to the benefit
of all Members and market participants.
The Exchange notes that volume-based incentives and discounts have been widely
adopted by exchanges, including the Exchange, and are reasonable, equitable and not unfairly
discriminatory because they are open to all members on an equal basis and provide additional
benefits or discounts that are reasonably related to the value to an exchange’s market quality
associated with higher levels of market activity, such as higher levels of liquidity provision

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

and/or growth patterns, and the introduction of higher volumes of orders into the price and
volume discovery process. The Exchange believes that the proposed new Liquidity Provision
Tier 1 is reasonable, equitable and not unfairly discriminatory for these same reasons, as it would
provide Members with an additional incentive to achieve a certain volume threshold on the
Exchange, is available to all Members on an equal basis, and, as noted above, is designed to
encourage Members to maintain or increase their orders that add displayed liquidity to the
Exchange in order to qualify for the enhanced rebate for executions of Added Displayed
Volume, thereby promoting price discovery and contributing to a deeper and more liquid market
to the benefit of all market participants. The Exchange also believes the enhanced rebate for
executions of Added Displayed Volume under the proposed new Liquidity Provision Tier 1
reflects a reasonable and equitable allocation of fees and rebates because it is higher than the
rebates provided for such executions under Liquidity Provision Tiers 2-6, which have lower
volume thresholds as their required criteria, and is commensurate with its required criteria and
the market quality benefits it is designed to achieve, as described above.
The Exchange believes that Liquidity Provisions Tier 2, 3, and 4, and NBBO Setter Tier
1, each as modified by the proposed changes to the required criteria under each tier as described
above, are reasonable, equitable and not unfairly discriminatory for these same reasons. Such
tiers would provide Members with an incremental incentive to achieve certain volume thresholds
on the Exchange, are available to all Members on an equal basis, and, as described above, are
designed to encourage Members to maintain or increase their order flow, including in the form of
displayed, liquidity-adding, and/or NBBO-setting orders to the Exchange in order to qualify for
an enhanced rebate, as applicable, thereby contributing to a deeper, more liquid and well
balanced market ecosystem on the Exchange to the benefit of all Members and market
participants.
The Exchange believes the proposed change to eliminate the DLI Additive Rebate is
reasonable because, as noted above, it would enable the Exchange to redirect the associated

resources and funding into other incentives and tiers, and the Exchange is not required to
maintain such incentive or provide Members any opportunities to receive additive rebates. The
Exchange believes the proposal to eliminate such incentive is also equitable and not unfairly
discriminatory because it applies equally to all Members, in that the incentive would no longer
be available for any Member.
For the reasons discussed above, the Exchange submits that the proposal satisfies the
requirements of Sections 6(b)(4) and 6(b)(5) of the Act20 in that it provides for the equitable
allocation of reasonable dues, fees and other charges among its Members and other persons using
its facilities and is not designed to unfairly discriminate between customers, issuers, brokers, or
dealers. As described more fully below in the Exchange’s statement regarding the burden on
competition, the Exchange believes that its transaction pricing is subject to significant
competitive forces, and that the proposed fees and rebates described herein are appropriate to
address such forces.
B.

Self-Regulatory Organization’s Statement on Burden on Competition

The Exchange does not believe that the proposal will result in any burden on competition
that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as
discussed above, the proposal is intended to incentivize market participants to direct additional
order flow to the Exchange, thereby enhancing liquidity and market quality on the Exchange to
the benefit of all Members and market participants. As a result, the Exchange believes the
proposal would enhance its competitiveness as a market that attracts actionable orders, thereby
making it a more desirable destination venue for its customers. For these reasons, the Exchange
believes that the proposal furthers the Commission’s goal in adopting Regulation NMS of
fostering competition among orders, which promotes “more efficient pricing of individual stocks
for all types of orders, large and small.”21

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

See supra note 19.

Intramarket Competition
As discussed above, the Exchange believes that the proposal would incentivize Members
to submit additional order flow, including displayed, liquidity-adding, and/or NBBO setting
orders to the Exchange,, thereby enhancing liquidity and market quality on the Exchange to the
benefit of all Members, as well as enhancing the attractiveness of the Exchange as a trading
venue, which the Exchange believes, in turn, would continue to encourage market participants to
direct additional order flow to the Exchange. Greater liquidity benefits all Members by
providing more trading opportunities and encourages Members to send additional orders to the
Exchange, thereby contributing to robust levels of liquidity, which benefits all market
participants. The opportunity to qualify for the proposed new Liquidity Provision Tier 1 and the
modified Liquidity Provision Tiers 2, 3, and 4 and NBBO Setter Tier 1 and thus receive the
corresponding enhanced rebate for executions of Added Displayed Volume, as applicable, would
be available to all Members that meet the associated volume requirements in any month. As
described above, the Exchange believes that the proposed new required criteria under each such
tier are commensurate with the corresponding rebate under such tier and are reasonably related to
the enhanced liquidity and market quality that such tier is designed to promote. Additionally, as
noted above, the elimination of the DLI Additive Rebate will apply to all Members equally. For
the foregoing reasons, the Exchange believes the proposed changes would not impose any
burden on intramarket competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
Intermarket Competition
As noted above, the Exchange operates in a highly competitive market in which market
participants can readily direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive or incentives to be insufficient. Members have numerous
alternative venues that they may participate on and direct their order flow to, including 15 other
equities exchanges and numerous alternative trading systems and other off-exchange venues. As

noted above, no single registered equities exchange currently has more than approximately
16.1% of the total market share of executed volume of equities trading. Thus, in such a lowconcentrated and highly competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. Moreover, the Exchange believes that the evershifting market share among the exchanges from month to month demonstrates that market
participants can shift order flow or discontinue to reduce use of certain categories of products, in
response to new or different pricing structures being introduced into the market. Accordingly,
competitive forces constrain the Exchange’s transaction fees and rebates, including with respect
to executions of Added Displayed Volume, and market participants can readily choose to send
their orders to other exchange and off-exchange venues if they deem fee levels at those other
venues to be more favorable. As described above, the proposed changes represent a competitive
proposal through which the Exchange is seeking to generate additional revenue with respect to
its transaction pricing and to encourage the submission of additional order flow to the Exchange
through volume-based tiers, which have been widely adopted by exchanges, including the
Exchange. Accordingly, the Exchange believes the proposal would not burden, but rather
promote, intermarket competition by enabling it to better compete with other exchanges that
offer similar pricing incentives to market participants.
Additionally, the Commission has repeatedly expressed its preference for competition
over regulatory intervention in determining prices, products, and services in the securities
markets. Specifically, in Regulation NMS, the Commission highlighted the importance of
market forces in determining prices and SRO revenues and, also, recognized that current
regulation of the market system “has been remarkably successful in promoting market
competition in its broader forms that are most important to investors and listed companies.”22
The fact that this market is competitive has also long been recognized by the courts. In

Id.

NetCoalition v. SEC, the D.C. Circuit stated as follows: “[n]o one disputes that competition for
order flow is ‘fierce.’ … As the SEC explained, ‘[i]n the U.S. national market system, buyers
and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide
range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take
its market share percentages for granted’ because ‘no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker dealers’….”.23 Accordingly,
the Exchange does not believe its proposed pricing changes impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of the Act.
C.

Self-Regulatory Organization’s Statement on Comments on the Proposed Rule
Change Received from Members, Participants, or Others

The Exchange neither solicited nor received comments on the proposed rule change.
III.

Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the

Act24 and Rule 19b-4(f)(2)25 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 change should be
approved or disapproved.

NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).

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

17 CFR 240.19b-4(f)(2).

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 (https://www.sec.gov/rules/sro.shtml);
or

•

Send an email to rule-comments@sec.gov. Please include file number
SR-MEMX-2024-26 on the subject line.

Paper Comments:
•

Send paper comments in triplicate to Secretary, Securities and Exchange
Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-MEMX-2024-26. 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 (https://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 a.m. and 3
p.m. Copies of the filing also will be available for inspection and copying at the principal office
of the Exchange. Do not include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We may redact in part or
withhold entirely from publication submitted material that is obscene or subject to copyright

protection. All submissions should refer to file number SR-MEMX-2024-26 and should be
submitted on or before [INSERT DATE 21 DAYS AFTER DATE OF PUBLICATION IN THE
FEDERAL REGISTER].
For the Commission, by the Division of Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Deputy Secretary.

[FR Doc. 2024-15400 Filed: 7/12/2024 8:45 am; Publication Date: 7/15/2024]

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