Notice2024-15674
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule for Customer Orders Routed to Another Options Exchange
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 17, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 137 (Wednesday, July 17, 2024)</title>
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[Federal Register Volume 89, Number 137 (Wednesday, July 17, 2024)]
[Notices]
[Pages 58221-58224]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-15674]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100504; File No. SR-EMERALD-2024-17]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule for Customer Orders Routed to Another Options Exchange
July 11, 2024.
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 June 28, 2024, 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 proposes to amend the MIAX Emerald Options Exchange
Fee Schedule (the ``Fee Schedule'').
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings</a>, at the Exchange'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 exchange grouping of options
exchanges within the routing fee table in Section 1)c) [sic] of the Fee
Schedule, Fees for Customer Orders Routed to Another Options Exchange
to adjust the groupings of options exchanges.
Background
Currently, the Exchange assesses routing fees based upon (i) the
origin type of the order; (ii) whether or not it is an order for
standard option classes in the Penny Interval Program \3\ (``Penny
classes'') or an order for standard option classes which are not in the
Penny Interval Program (``Non-Penny classes'') (or other explicitly
identified classes); and (iii) to which away market it is being routed.
This assessment practice is identical to the routing fees assessment
practice currently utilized by the Exchange's affiliates, Miami
International Securities Exchange, LLC (``MIAX Options'') and MIAX
PEARL, LLC (``MIAX Pearl''). This is also similar to the methodology
utilized by the Cboe BZX Exchange, Inc. (``Cboe BZX Options''), a
competing options exchange, in assessing routing fees. Cboe BZX Options
has exchange groupings in its fee schedule, similar to those of the
Exchange, whereby several exchanges are grouped into the same category
dependent upon the order's origin type and whether it is a Penny or
Non-Penny class.\4\
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\3\ See Exchange Rule 510(c).
\4\ See Cboe U.S. Options Fee Schedules, BZX Options, effective
March 1, 2024, ``Fee Codes and Associated Fees,'' at <a href="https://www.cboe.com/us/options/membership/fee_schedule/bzx/">https://www.cboe.com/us/options/membership/fee_schedule/bzx/</a>.
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As a result of conducting a periodic review of the current
transaction fees charged by away markets the Exchange has determined to
amend the exchange groupings of options exchanges within the routing
fee table to better reflect the associated costs and fees of routing
customer orders to certain away markets for execution.
Proposal
The Exchange proposes to amend the table in Section 1)b) of the
Exchange's Fee Schedule, Fees for Customer Orders Routed to Another
Options Exchange.
Under this proposed change, the Exchange will not amend the fees
[[Page 58222]]
associated with the exchange groupings. This proposal merely seeks to
amend the exchange groupings as described in the routing fee table
below.
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Description Fees
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Routed, Priority Customer, Penny Program, to: NYSE $0.15
American, Cboe, Cboe EDGX Options, MIAX, Nasdaq PHLX
(except SPY), Nasdaq MRX..................................
Routed, Priority Customer, Penny Program, to: BOX.......... 0.30
Routed, Priority Customer, Penny Program, to: NYSE Arca 0.65
Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq
ISE, NOM, Nasdaq PHLX (SPY only), MIAX Pearl, Nasdaq BX
Options, MEMX.............................................
Routed, Priority Customer, Non-Penny Program, to: NYSE 0.15
American, BOX, Cboe, Cboe EDGX Options, MIAX, Nasdaq PHLX,
Nasdaq MRX................................................
Routed, Priority Customer, Non-Penny Program, to: NYSE Arca 1.00
Options, Cboe BZX Options, Cboe C2, MIAX Pearl, Nasdaq
GEMX, NOM, Nasdaq BX Options, Nasdaq ISE, MEMX............
Routed, Public Customer that is not a Priority Customer, 0.65
Penny Program, to: NYSE American, NYSE Arca Options, Cboe
BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX Options, Nasdaq
GEMX, Nasdaq ISE, Nasdaq MRX, MIAX, MIAX Pearl, NOM,
Nasdaq PHLX, Nasdaq BX Options, MEMX......................
Routed, Public Customer that is not a Priority Customer, 1.00
Non-Penny Program, to: MIAX, NYSE American, Cboe, Nasdaq
PHLX, Cboe EDGX Options, NOM..............................
Routed, Public Customer that is not a Priority Customer, 1.15
Non-Penny Program, to: Cboe C2, BOX.......................
Routed, Public Customer that is not a Priority Customer, 1.25
Non-Penny Program, to: NYSE Arca Options, Nasdaq GEMX,
Nasdaq MRX, MIAX Pearl, MEMX..............................
Routed, Public Customer that is not a Priority Customer, 1.40
Non-Penny Program, to: Cboe BZX Options, Nasdaq ISE,
Nasdaq BX Options.........................................
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Nasdaq MRX
Nasdaq MRX recently amended its fee structure to ``no longer offer
Maker Rebates for adding liquidity and instead offer Taker Rebates for
removing liquidity. With this new structure, the Exchange [Nasdaq MRX]
would continue to assess Priority Customers no Maker Fees for Penny and
Non-Penny Symbols to continue to encourage Members to send Priority
Customer order flow that adds liquidity to MRX and rests on the order
book. The Exchange proposes to begin offering Priority Customer Taker
Rebates in Penny and Non-Penny Symbols . . .'' \5\ In response to
Nasdaq MRX's filing, the Exchange proposes to adjust the grouping of
Nasdaq MRX in both the Penny and Non-Penny tiers in the Exchange's
routing fee table.
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\5\ See Nasdaq MRX proposal (SR-MRX-2024-16).
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Specifically, the Exchange proposes to amend the ``Routed, Priority
Customer, Penny Program'' $0.15 fee tier to remove the ``SPY only''
qualification for orders routed to Nasdaq MRX, so that all Priority
Customer orders for Penny Program symbols routed to Nasdaq MRX will be
assessed the same $0.15 fee. The Exchange also proposes to amend the
``Routed, Priority Customer, Penny Program'' $0.30 fee tier to remove
Nasdaq MRX from the tier completely, as all Priority Customer orders in
the Penny Program are now eligible for the $0.15 tier under this
proposal. The Exchange also proposes to amend the ``Routed, Priority
Customer, Non-Penny Program'' $0.15 tier to add Nasdaq MRX. Finally,
the Exchange proposes to eliminate the ``Routed, Priority Customer,
Non-Penny Program'' $0.50 tier in its entirety as Nasdaq MRX was the
only destination exchange in this tier, and given Nasdaq MRX's recent
fee schedule change this tier is now obsolete.
BOX
The Exchange proposes to remove ``BOX (except SPY)'' from the
``Routed, Priority Customer, Penny Program'' $0.15 tier. The Exchange
also proposes to amend the ``Routed, Priority Customer, Penny Program''
$0.30 tier to remove the qualification of ``SPY only'' so that all
Priority Customer orders for Penny Program symbols routed to BOX will
similarly be assessed a $0.30 fee. This change is being made as BOX
recently amended its fee schedule and now assesses a $0.10 Taker fee
for Public Customer orders that remove liquidity in SPY, QQQ, and
IWM.\6\
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\6\ See BOX Exchange Fee Schedule, Section IV, Electronic
Transaction Fees, A, Non-Auction Transactions.
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The purpose of the proposal is to adjust the routing fee groups for
orders routed to other exchanges to better reflect the associated costs
for that routed execution in Penny and Non-Penny Classes as determined
by the fees and rebates assessed at the executing exchange. In
determining to amend its groupings the Exchange took into account
transaction fees assessed by the away market to which the Exchange
routes orders, as well as the Exchange's clearing costs,
administrative, regulatory, and technical costs associated with routing
orders to an away market. The Exchange uses unaffiliated routing
brokers to route orders to the away markets; the costs associated with
the use of these services are included in the routing fees specified in
the Fee Schedule. This routing fee structure is not only similar to the
Exchange's affiliates, MIAX Options and MIAX Pearl, but is also
comparable to the structure in place on at least one other competing
options exchange, Cboe BZX Options.\7\ The Exchange's routing fee
structure approximates the Exchange's costs associated with routing
orders to away markets. The per-contract transaction fee amount
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) \8\ to execute that
corresponding contract at that corresponding exchange.
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\7\ See supra note 4. The Cboe BZX Options fee schedule has
exchange groupings, whereby several exchanges are grouped into the
same category, dependent on the order's Origin type and whether it
is a Penny or Non-Penny class.
\8\ This amount is to cover de minimis differences/changes to
away market fees (i.e., minor increases or decreases) that would not
necessitate a fee filing by the Exchange to re-categorize the away
exchange into a different grouping. Routing fees are not intended to
be a profit center for the Exchange and the Exchange's goal
regarding routing fees and expenses is to be as close as possible to
net neutral.
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The Exchange notes that in determining whether to adjust certain
groupings of options exchanges in the routing fee table, the Exchange
considered the transaction fees assessed by away markets, and
determined to amend the grouping of exchanges that assess transaction
fees for routed orders within a similar range. This same logic and
structure applies to all of the groupings in the routing fee table. By
utilizing the same structure that is utilized by the Exchange's
affiliates, MIAX Options and MIAX Pearl, the
[[Page 58223]]
Exchange's Members \9\ will be assessed routing fees in a similar
manner. The Exchange notes that its affiliates, MIAX Options and MIAX
Pearl, will file to make the same proposed routing fee changes
contained herein.
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\9\ The term ``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
Exchange Rule 100.
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Implementation
The proposed rule changes will become effective on July 1, 2024.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \10\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \11\ in
particular, in that it is an equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other persons
using its facilities. The Exchange also believes the proposal furthers
the objectives of Section 6(b)(5) of the Act \12\ 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 customers, issuers, brokers and dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed changes to the exchange
groupings of options exchanges within the routing fee table furthers
the objectives of Section 6(b)(4) of the Act and is reasonable,
equitable and not unfairly discriminatory because the proposed change
will continue to apply in the same manner to all Members that are
subject to routing fees. The Exchange believes the proposed changes to
the routing fee table exchange groupings furthers the objectives of
Section 6(b)(5) of the Act and is designed to promote just and
equitable principles of trade and is not unfairly discriminatory
because the proposed changes seek to recoup costs that are incurred by
the Exchange when routing Priority and Public Customer Orders to away
markets on behalf of Members and does so in the same manner for all
Members that are subject to routing fees. The costs to the Exchange to
route orders to away markets for execution primarily includes
transaction fees assessed by the away markets to which the Exchange
routes orders, in addition to the Exchange's clearing costs,
administrative, regulatory and technical costs. The Exchange believes
that the proposed re-categorization of certain exchange groupings would
enable the Exchange to better reflect the costs and fees associated
with routing orders to other exchanges for execution.
The Exchange places away markets in the fee tier grouping that best
approximates the Exchange's costs and fees to route the orders in that
segment to that away market. The per-contract transaction fee amount
associated with each grouping approximates the Exchange's all-in cost
(plus an additional, non-material amount) \13\ to execute the
corresponding contract at the corresponding exchange. The Exchange
believes its tier structure represents the best approach to reflect the
costs and fees associated with routing and executing orders on other
exchanges.
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\13\ See supra note 8.
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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's proposed re-
categorization of certain exchange groupings is intended to enable the
Exchange to recover the costs it incurs to route orders to away
markets. The costs to the Exchange to route orders to away markets for
execution primarily includes the transaction fees assessed by the away
markets to which the Exchange routes orders, in addition to the
Exchange's clearing costs, administrative, regulatory and technical
costs. The Exchange does not believe that this proposal imposes any
unnecessary burden on competition because it seeks to better reflect
the costs and fees incurred by the Exchange when routing orders to away
markets on behalf of Members and notes that at least one other options
exchange has a similar routing fee structure.\14\
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\14\ See supra note 4.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\15\ and Rule 19b-4(f)(2) \16\ 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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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#a2d0d7cec78fc1cdcfcfc7ccd6d1e2d1c7c18cc5cdd4"><span class="__cf_email__" data-cfemail="cbb9bea7aee6a8a4a6a6aea5bfb88bb8aea8e5aca4bd">[email protected]</span></a>. Please include
file number SR-EMERALD-2024-17 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-2024-17. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and
[[Page 58224]]
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-EMERALD-2024-17 and should be submitted
on or before August 7, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15674 Filed 7-16-24; 8:45 am]
BILLING CODE 8011-01-P
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