Notice2022-03963
Self-Regulatory Organizations; MIAX EMERALD, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule
Primary source
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Published
February 25, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 38 (Friday, February 25, 2022)</title>
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[Federal Register Volume 87, Number 38 (Friday, February 25, 2022)]
[Notices]
[Pages 10856-10860]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-03963]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94284; File No. SR-EMERALD-2022-07]
Self-Regulatory Organizations; MIAX EMERALD, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
February 18, 2022.
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 February 9, 2022, MIAX Emerald, LLC (``MIAX
Emerald'' 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the MIAX Emerald Fee
Schedule (the ``Fee Schedule'').
The text of the proposed rule change is available on the Exchange's
website at <a href="http://www.miaxoptions.com/rule-filings/emerald">http://www.miaxoptions.com/rule-filings/emerald</a>, 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 Section 1)a)i) of the Fee Schedule
to: (i) Modify the application of the per
[[Page 10857]]
contract surcharge assessed for Complex Order \3\ transactions (the
``Complex surcharge''); and (ii) increase the Complex surcharge for
Complex Order transactions in Penny and non-Penny Classes (defined
below). The Exchange originally filed this proposal on January 31, 2022
(the ``First Proposed Rule Change'').\4\ On February 9, 2022, the
Exchange withdrew the First Proposed Rule Change and submitted this
filing for immediate effectiveness.
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\3\ See Exchange Rule 518(a)(5) for the definition of Complex
Order.
\4\ See SR-EMERALD-2022-03.
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Background
The Exchange currently assesses transaction rebates and fees to all
market participants, which are based upon a threshold tier structure
(``Tier''). Tiers are determined on a monthly basis and are based on
three alternative calculation methods, as defined in Section 1)a)ii) of
the Fee Schedule. The calculation method that results in the highest
Tier achieved by the Member \5\ shall apply to all Origin types by the
Member, except the Priority Customer \6\ Origin type. For the Priority
Customer Origin calculation, the Tier applied for a Member and its
Affiliates' \7\ is solely determined by calculation Method 3, as
defined in Section 1)a)ii) of the Fee Schedule, titled ``Total Priority
Customer, Maker sides volume, based on % of CTCV (`Method 3').'' The
monthly volume thresholds for each of the methods, associated with each
Tier, are calculated as the total monthly volume executed by the Member
in all options classes on MIAX Emerald in the relevant Origins and/or
applicable liquidity, not including Excluded Contracts,\8\ (as the
numerator) expressed as a percentage of (divided by) Customer Total
Consolidated Volume (``CTCV'') (as the denominator). CTCV is calculated
as the total national volume cleared at The Options Clearing
Corporation (``OCC'') in the Customer range in those classes listed on
MIAX Emerald for the month for which fees apply, excluding volume
cleared at the OCC in the Customer range executed during the period of
time in which the Exchange experiences an ``Exchange System
Disruption'' \9\ (solely in the option classes of the affected Matching
Engine).\10\ In addition, the per contract transaction rebates and fees
shall be applied retroactively to all eligible volume once the Tier has
been reached by the Member. Members that place resting liquidity, i.e.,
orders on the MIAX Emerald System, will be assessed the specified
``maker'' rebate or fee (each a ``Maker'') and Members that execute
against resting liquidity will be assessed the specified ``taker'' fee
or rebate (each a ``Taker'').\11\ Members are also assessed lower
transaction fees and smaller rebates for order executions in standard
option classes in the Penny Interval Program \12\ (``Penny Classes'')
than for order executions in standard option classes which are not in
the Penny Program (``non-Penny Classes''), for which Members will be
assessed a higher transaction fees and larger rebates.
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\5\ ``Member'' means an individual or organization approved to
exercise the trading rights associated with a Trading Permit.
Members are deemed ``members'' under the Exchange Act. See the
Definitions Section of the Fee Schedule and Exchange Rule 100.
\6\ ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100, including Interpretation and Policy .01.
\7\ ``Affiliate'' means (i) an affiliate of a Member of at least
75% common ownership between the firms as reflected on each firm's
Form BD, Schedule A, or (ii) the Appointed Market Maker of an
Appointed EEM (or, conversely, the Appointed EEM of an Appointed
Market Maker). An ``Appointed Market Maker'' is a MIAX Emerald
Market Maker (who does not otherwise have a corporate affiliation
based upon common ownership with an EEM) that has been appointed by
an EEM and an ``Appointed EEM'' is an EEM (who does not otherwise
have a corporate affiliation based upon common ownership with a MIAX
Emerald Market Maker) that has been appointed by a MIAX Emerald
Market Maker, pursuant to the following process. A MIAX Emerald
Market Maker appoints an EEM and an EEM appoints a MIAX Emerald
Market Maker, for the purposes of the Fee Schedule, by each
completing and sending an executed Volume Aggregation Request Form
by email to <a href="/cdn-cgi/l/email-protection#462b232b242334352e2f36062b2f273e2936322f2928356825292b"><span class="__cf_email__" data-cfemail="97faf2faf5f2e5e4fffee7d7fafef6eff8e7e3fef8f9e4b9f4f8fa">[email protected]</span></a> no later than 2 business days
prior to the first business day of the month in which the
designation is to become effective. Transmittal of a validly
completed and executed form to the Exchange along with the
Exchange's acknowledgement of the effective designation to each of
the Market Maker and EEM will be viewed as acceptance of the
appointment. The Exchange will only recognize one designation per
Member. A Member may make a designation not more than once every 12
months (from the date of its most recent designation), which
designation shall remain in effect unless or until the Exchange
receives written notice submitted 2 business days prior to the first
business day of the month from either Member indicating that the
appointment has been terminated. Designations will become operative
on the first business day of the effective month and may not be
terminated prior to the end of the month. Execution data and reports
will be provided to both parties. See the Definitions Section of the
MIAX Emerald Fee Schedule.
\8\ ``Excluded Contracts'' means any contracts routed to an away
market for execution. See the Definitions Section of the Fee
Schedule.
\9\ The term ``Exchange System Disruption'' means an outage of a
Matching Engine or collective Matching Engines for a period of two
consecutive hour or more, during trading hours. See the Definitions
Section of the Fee Schedule.
\10\ A ``Matching Engine'' is a part of the MIAX Emerald
electronic system that processes options orders and trades on a
symbol-by-symbol basis. See the Definitions Section of the Fee
Schedule.
\11\ For a Priority Customer complex order taking liquidity in
both a Penny class and non-Penny class against Origins other than
Priority Customer, the Priority Customer order will receive a rebate
based on the Tier achieved.
\12\ See Securities Exchange Act Release No. 88993 (June 2,
2020), 85 FR 35145 (June 8, 2020) (SR-EMERALD-2020-05) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Exchange Rule 510, Minimum Price Variations and Minimum
Trading Increments, To Conform the Rule to Section 3.1 of the Plan
for the Purpose of Developing and Implementing Procedures Designed
To Facilitate the Listing and Trading of Standardized Options) (the
``Penny Program'').
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Proposal To Modify the Application of, and Increase, the Complex
Surcharge
The Exchange proposes to amend Section 1)a)i) of the Fee Schedule
to: (i) Modify the application of the Complex surcharge; and (ii)
increase the Complex surcharge for Complex Order transactions in Penny
and non-Penny Classes. Currently, the Exchange assesses a fee of $0.86
or $0.88 per contract for all Origins other than Priority Customer for
Complex Orders that remove liquidity from the Exchange's Strategy Book
\13\ in non-Penny Classes, depending on the Origin and Tier achieved.
The Exchange also assesses a Complex surcharge of $0.05 per contract
for all Origins other than Priority Customer for Complex Orders that
remove liquidity from the Strategy Book in non-Penny Classes, which is
denoted by footnote ``~'' following the tables in Section 1)a)i) of the
Fee Schedule. Currently, the Exchange does not assess a Complex
surcharge for Complex Orders that remove liquidity from the Strategy
Book in Penny Classes for any Origin.
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\13\ The ``Strategy Book'' is the Exchange's electronic book of
complex orders and complex quotes. See Exchange Rule 518(a)(17).
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The Exchange proposes to modify the application of the Complex
surcharge in several ways. First, the Exchange proposes that the
Complex surcharge will now apply to both Penny and non-Penny Classes,
which the Exchange will denote in both the Penny and non-Penny Class
tables of transaction fees and rebates in Section 1)a)i) of the Fee
Schedule (described further below). Prior to the First Proposed Rule
Change, the Complex surcharge applied only to non-Penny Classes.
Second, the Exchange proposes that the Complex surcharge will now apply
to both liquidity adding (Maker) and liquidity removing (Taker) Complex
Orders for all Origins, except the Priority Customer Origin. Prior to
the First Proposed Rule Change, the Complex surcharge applied only to
liquidity removing (Taker) Complex Orders. Third, the Exchange proposes
that the Complex surcharge will apply to Complex Orders submitted as a
Response or unrelated quote or
[[Page 10858]]
order in a Complex Order Auction.\14\ Prior to the First Proposed Rule
Change, the Complex surcharge applied only to liquidity removing
Complex Orders that were not part of a Complex Order Auction. Fourth,
the Exchange proposes that the Complex surcharge will apply to Complex
Orders that are contra to the Priority Customer Origin only. Prior to
the First Proposed Rule Change, the Complex surcharge applied to
Complex Orders that were contra to any Origin. Fifth, the Exchange
proposes to increase the Complex surcharge from $0.05 per contract to
$0.12 per contract. The Exchange notes that the Complex surcharge will
continue to not apply to transactions that are Linkage Trades.\15\
Additionally, the Exchange notes that the Complex surcharge will not
apply to transactions that are paired trades, such as transactions in
cPRIME, which the Exchange proposes to explicitly exclude from the
Complex surcharge (denoted in a footnote described below). Accordingly,
with all of the proposed changes, the proposed Complex surcharge of
$0.12 per contract will apply to Complex Orders for all Origins except
Priority Customer that add (Maker) or remove (Taker) liquidity in Penny
and non-Penny Classes when trading against a Priority Customer on the
Strategy Book. The Complex surcharge would continue to not apply to the
Priority Customer Origin. The Complex surcharge would also apply to all
Origins except Priority Customer when trading against a Priority
Customer as a Response or unrelated quote or order in a Complex Order
Auction,\16\ other than a cPRIME auction.\17\ The Exchange notes that
the proposed application and amount of the Complex surcharge subject to
this filing is the same application and amount of the Complex surcharge
that is currently assessed by the Exchange's affiliate, Miami
International Securities Exchange, LLC (``MIAX'').\18\ For example,
assuming a Firm Origin Complex Order taking liquidity against (contra)
a Priority Customer Origin Complex Order resting liquidity in a Penny
Class, MIAX will charge a standard fee of $0.47 and a Complex surcharge
of $0.12.\19\ Similarly, under the proposed fee application and
proposed Complex surcharge rate increase, MIAX Emerald would now charge
a standard (taker) fee of $0.50 and a Complex surcharge of $0.12.
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\14\ See Exchange Rule 518(d) (describing the Complex Order
Auction process). The Exchange notes that the Complex surcharge will
not apply to Complex Orders submitted as part of a cPRIME auction. A
Complex PRIME or ``cPRIME'' Order is a complex order (as defined in
Rule 518(a)(5)) that is submitted for participation in a cPRIME
Auction. Trading of cPRIME Orders is governed by Rule 515A,
Interpretation and Policy .12. See Exchange Rule 518(b)(7).
``cPRIME'' is the process by which a Member may electronically
submit a ``cPRIME Order'' (as defined in Exchange Rule 518(b)(7)) it
represents as agent (a ``cPRIME Agency Order'') against principal or
solicited interest for execution (a ``cPRIME Auction''), subject to
the requirements in Exchange Rule 515A, Interpretation and Policy
.12(a). See, generally, Exchange Rule 515A.
\15\ See Exchange Rule 521(j).
\16\ See Exchange Rule 518(d).
\17\ See supra note 14.
\18\ See MIAX Fee Schedule, Sections 1)a)i)-ii) (assessing a
$0.12 per contract surcharge for trading against a Priority Customer
Complex Order for Penny and Non-Penny classes).
\19\ See MIAX Fee Schedule, Section 1)a)ii).
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To represent all the proposed changes, the Exchange proposes to add
a new column to each table for Penny and non-Penny Classes in Section
1)a)i) of the Fee Schedule, under the ``Complex'' heading. The Exchange
proposes that each new column would be titled ``Per Contract Surcharge
for Trading Against a Priority Customer Complex Order.'' \20\ In the
new column for each table, the Exchange proposes to insert the proposed
increased Complex surcharge amount of $0.12 per contract for all
Origins, except Priority Customer, which would be $0.00 per contract
for all Tiers. The Exchange also proposes to move footnote ``~'' from
the ``Taker'' column in the non-Penny Classes table and insert it at
the end of each of the newly proposed column headings for the Complex
surcharge, described above. Further, the Exchange proposes to delete
the text of footnote ``~'' in its entirety and insert the following new
text for that footnote following the tables in Section 1)a)i) of the
Fee Schedule: ``The per contract surcharge for trading against a
Priority Customer Complex Order for Penny and Non-Penny Classes applies
to all Origins except Priority Customer when trading against a Priority
Customer: (i) On the Strategy Book; or (ii) as a Response or unrelated
quote or order in a complex order auction other than a cPRIME
Auction.'' \21\
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\20\ This is similar to how the Complex surcharge is represented
in the tables of transaction fees and rebates in the MIAX Fee
Schedule. See supra note 18.
\21\ This is substantially similar language regarding the
application of the Complex surcharge that is represented by text
below the tables of transaction fees and rebates in the MIAX Fee
Schedule. See MIAX Fee Schedule, Section 1)a)ii), at page 4.
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As described above, the Exchange proposes to increase the Complex
surcharge from $0.05 per contract to $0.12 per contract. The Exchange
notes that the proposed Complex surcharge rate of $0.12 per contract is
the same amount charged by at least two competing options exchanges
with base fee amounts for complex orders of $0.50 per contract in Penny
Classes plus a $0.12 per contract complex surcharge, which has similar
application methods.\22\ Further, the proposed application and
increased amount of the Complex surcharge is the same application and
amount of the Complex surcharge that is currently assessed by the
Exchange's affiliate, MIAX.\23\
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\22\ See NYSE American Options Fee Schedule, Section I.A.,
footnote 5, page 9 (assessing $0.12 per contract surcharge to any
Electronic Non-Customer Complex Order that executes against a
Customer Complex Order, regardless of whether the execution occurs
in a Complex Order Auction); BOX Options Exchange Fee Schedule,
Section III.A. Complex Order Transaction Fees (noting that a $0.12
per contract Complex Surcharge will be applied to any electronic
non-Public Customer Complex Order that executes against an
electronic Public Customer Complex Order, including for Penny
Interval Class taker fees with a base fee amount of $0.50 per
contract).
\23\ See supra note 18.
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The purpose of the proposed changes to the Complex surcharge are
for business and competitive reasons. In order to attract order flow,
the Exchange initially set its Complex surcharge rate so that it was
similar to, or lower, than other options exchanges that operate
comparable maker/taker pricing models.\24\ The Exchange now believes
that it is appropriate to adjust this rate and application so that it
is more in line with other exchanges, but will remain highly
competitive such that it should enable the Exchange to continue to
attract order flow and maintain market share.\25\
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\24\ See Securities Exchange Act Release No. 85393 (March 21,
2019), 84 FR 11599 (March 27, 2019) (SR-EMERALD-2019-15).
\25\ See supra notes 18 and 22.
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Implementation
The proposed changes are immediately effective.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \26\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\27\ in that it
is an equitable allocation of reasonable dues, fees and other charges
among Exchange members and issuers and other persons using its
facilities, and 6(b)(5) of the Act,\28\ in that it is designed to
prevent fraudulent and manipulative acts and practices, promote just
and equitable principles of trade, foster cooperation and coordination
with persons engaged in facilitating transactions in securities, remove
impediments to and perfect the mechanisms of a free and open market and
a national market system and, in
[[Page 10859]]
general, protect investors and the public interest.
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\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(4).
\28\ 15 U.S.C. 78f(b)(1) and (b)(5).
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The Commission has repeatedly expressed its 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.'' \29\
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\29\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
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There are currently 16 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based options, no single exchange has a market share of more than
approximately 12-13% of the equity options market.\30\ Therefore, no
exchange possesses significant pricing power. More specifically, as of
January 26, 2022, the Exchange had a market share of approximately
3.96% of executed volume of multiply-listed equity and exchange traded
fund (``ETF'') options for the month of January 2022.\31\
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\30\ See ``The Market at a Glance,'' (last visited January 26,
2022), available at <a href="https://www.miaxoptions.com/">https://www.miaxoptions.com/</a>.
\31\ See id.
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
discontinue or reduce use of certain categories of products and
services, terminate an existing membership or determine to not become a
new member, and/or shift order flow, in response to transaction fee
changes. For example, on February 28, 2019, the Exchange's affiliate,
MIAX PEARL, LLC (``MIAX Pearl'') filed with the Commission a proposal
to increase Taker fees in certain Tiers for options transactions in
certain Penny classes for Priority Customers and decrease Maker rebates
in certain Tiers for options transactions in Penny classes for Priority
Customers (which fee was to be effective March 1, 2019).\32\ MIAX Pearl
experienced a decrease in total market share for the month of March
2019, after the proposal went into effect. Accordingly, the Exchange
believes that the MIAX Pearl March 1, 2019 fee change, to increase
certain transaction fees and decrease certain transaction rebates, may
have contributed to the decrease in MIAX Pearl's market share and, as
such, the Exchange believes competitive forces constrain the
Exchange's, and other options exchanges, ability to set transaction
fees and market participants can shift order flow based on fee changes
instituted by the exchanges.
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\32\ See Securities Exchange Act Release No. 85304 (March 13,
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
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The Exchange believes its proposal is reasonable, equitable and not
unfairly discriminatory because all similarly situated market
participants in the same Origin type (except Priority Customers) will
now be subject to the Complex surcharge. The Exchange believes it is
equitable and not unfairly discriminatory to increase the Complex
surcharge for business and competitive business reasons. The Exchange
initially set its Complex surcharge rate similar to, or lower than, the
complex surcharges assessed by other options exchanges that operate
comparable maker/taker pricing models. The Exchange now believes that
it is appropriate to increase the Complex surcharge so that it is in
line with other exchanges, and will still remain highly competitive
such that it should enable the Exchange to continue to attract order
flow and maintain market share.\33\ The Exchange believes that the
amount of Complex surcharge, as proposed, will continue to encourage
market participants to send Complex Orders to the Exchange.
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\33\ See supra notes 18 and 22.
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The Exchange believes the proposal to increase the Complex
surcharge and broaden its application is consistent with Section
6(b)(4) of the Act \34\ because it applies equally to all market
participants (Market Makers, Non-MIAX Market Makers, Firm Proprietary/
Broker-Dealers, except Priority Customers) that would be charged such
Complex surcharge. Assessing the Complex surcharge to Market Makers and
other professional market participants (except Priority Customers), in
a broader application, similar to that of other exchanges, is
reasonable and not unfairly discriminatory because it will provide
Market Makers and other professional market participants with equal
surcharges when trading against a Priority Customer Complex Order. As
stated above, the proposed Complex surcharge is the same amount as the
surcharges assessed by NYSE American Options, BOX Options, and the
Exchange's affiliate, MIAX.\35\ The Exchange notes that, although the
increase of the Complex surcharge represents a slight fee increase, the
Exchange believes that this increase is fair and equitable because it
is in line with the amount of surcharges assessed on other options
exchanges when trading against Priority Customer Complex Orders.\36\
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\34\ 15 U.S.C. 78f(b)(4).
\35\ See supra notes 18 and 22.
\36\ See id.
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The Exchange believes its proposal to apply the Complex surcharge
to all Origins, except Priority Customer, is reasonable, equitably
allocated and not unfairly discriminatory because it will continue to
encourage Priority Customer Complex Order flow. The Exchange believes
increased Priority Customer Complex Order flow benefits all market
participants by providing more trading opportunities and tighter
spreads. The Exchange also believes that increased Priority Customer
Complex Order flow may attract Market Makers and other liquidity
providers, thus, facilitating price improvement in the Complex Order
Auction process, signaling additional corresponding increase in Complex
Order flow from other market participants, and, as a result, increasing
liquidity on the Exchange.
The Exchange believes its proposal to broaden the application of
the Complex surcharge is also consistent with Section 6(b)(5) of the
Act \37\ because it perfects the mechanisms of a free and open market
and a national market system by aligning the broader application of the
Complex surcharge to that of other options exchanges,\38\ which will
help to create consistency and uniformity in the marketplace.
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\37\ 15 U.S.C. 78f(b)(1) and (b)(5).
\38\ See supra note 22.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Intra-Market Competition
The Exchange believes that the proposed changes to the Complex
surcharge should continue to encourage the provision of liquidity that
enhances the quality of the Exchange's Complex Order market and
increases the number of trading opportunities on the Exchange for all
participants who will be able to compete for such opportunities. The
proposed rule changes should enable the Exchange to continue to attract
and compete for order flow with other exchanges. The Exchange also
believes that its proposal to apply the Complex surcharge to all
Origins except Priority Customer will not impose any burden on
competition not necessary or appropriate because the
[[Page 10860]]
Exchange believes increased Priority Customer Complex Order flow
benefits all market participants by providing more trading
opportunities and tighter spreads. The Exchange also believes that
increased Priority Customer Complex Order flow may attract Market
Makers and other liquidity providers, thus, facilitating price
improvement in the Complex Order Auction process, signaling additional
corresponding increase in Complex Order flow from other market
participants, and, as a result, increasing liquidity on the Exchange.
Inter-Market Competition
The Exchange 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. There are currently 16
registered options exchanges competing for order flow. Based on
publicly-available information, and excluding index-based options, no
single exchange has a market share of more than approximately 12-13% of
the equity options market.\39\ Therefore, no exchange possesses
significant pricing power. More specifically, as of January 26, 2022,
the Exchange had a market share of approximately 3.96% of executed
volume of multiply-listed equity and ETF options for the month of
January 2022.\40\ Therefore, no exchange possesses significant pricing
power in the execution of multiply-listed equity and ETF options order
flow. In such an environment, the Exchange must continually adjust its
transaction and non-transaction fees to remain competitive with other
exchanges and to attract order flow. The Exchange believes that the
proposed rule changes reflect this competitive environment because it
modifies the Exchange's fees for Complex Order transactions in a manner
that will allow the Exchange to remain competitive.
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\39\ See supra note 30.
\40\ See id.
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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,\41\ and Rule 19b-4(f)(2) \42\ 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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\41\ 15 U.S.C. 78s(b)(3)(A)(ii).
\42\ 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#8ffdfae3eaa2ece0e2e2eae1fbfccffceaeca1e8e0f9"><span class="__cf_email__" data-cfemail="bccec9d0d991dfd3d1d1d9d2c8cffccfd9df92dbd3ca">[email protected]</span></a>. Please include
File Number SR-EMERALD-2022-07 on the subject line.
Paper Comments
<bullet> 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-EMERALD-2022-07.
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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>). 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-EMERALD-2022-07, and should
be submitted on or before March 18, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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\43\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-03963 Filed 2-24-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 25, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.