Notice2024-18203
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
August 15, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 158 (Thursday, August 15, 2024)</title>
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[Federal Register Volume 89, Number 158 (Thursday, August 15, 2024)]
[Notices]
[Pages 66478-66480]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-18203]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100686; File No. SR-EMERALD-2024-19]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
August 9, 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 July 31, 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) of the Fee
Schedule, Fees for Customer Orders Routed to Another Options Exchange,
to reflect the recent addition of a new national securities exchange,
MIAX Sapphire, LLC (``MIAX Sapphire''),\3\ to be listed in the routing
fee table. The Exchange proposes to implement the fee change effective
August 1, 2024.
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\3\ See Securities Exchange Act Release No. 100539 (July 15,
2024), 89 FR 58848 (July 19, 2024) (File No. 10-240) (order
approving application of MIAX Sapphire, LLC for registration as a
national securities exchange).
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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 \4\ (``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.\5\
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\4\ See Exchange Rule 510(c).
\5\ See Cboe U.S. Options Fee Schedules, BZX Options, effective
July 15, 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 the anticipated launch of MIAX Sapphire in the third
quarter
[[Page 66479]]
of 2024, the Exchange has determined to amend the exchange groupings of
options exchanges within the routing fee table to include MIAX Sapphire
and the anticipated associated costs of routing customer orders to MIAX
Sapphire for execution.
The impact of this proposed change will be increased routing
options for Members.\6\ The Exchange notes that routing through the
Exchange is optional and that Members will continue to be able to
choose where to route applicable Member orders. Under this proposed
change, the Exchange will not amend the fees associated with the
exchange groupings. This proposal merely seeks to add MIAX Sapphire to
the exchange groupings as described in the routing fee table below.
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\6\ 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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According, with the proposed change, the routing fee table will be
as follows:
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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, MIAX Sapphire................
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, MIAX Sapphire........................
Routed, Priority Customer, Non-Penny Program, to: NYSE 1.00
Arca 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,
MIAX Sapphire..........................................
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, MIAX Sapphire.....
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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In determining to amend its routing fee table to determine which
category MIAX Sapphire belongs to the Exchange took into account
anticipated transaction fees and rebates assessed by the away markets
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\ The Cboe BZX Options fee schedule is similar to the
Exchange's Fee Schedule in that it has exchange groupings, whereby
several exchanges are grouped into the same category. See supra note
5.
\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 Exchange's Members 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.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \9\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \10\ 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 \11\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed change to add MIAX Sapphire 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 change to add MIAX Sapphire to the routing fee table of
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
[[Page 66480]]
because the proposed change seeks to recoup costs that will be incurred
by the Exchange when routing customer orders to MIAX Sapphire on behalf
of Members and does so in the same manner to 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 and
rebates 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
addition of MIAX Sapphire to the exchange groupings would increase the
routing options available to Members. The per-contract transaction fee
amount associated with each grouping approximates the Exchange's all-in
cost (plus an additional, non-material amount) to execute the
corresponding contract at the corresponding exchange.
The Exchange believes that the proposed rule change is equitable
and not unfairly discriminatory because all Members' orders in Penny
classes and Non-Penny classes routed to MIAX Sapphire will be uniformly
assessed the corresponding fee.
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 does not believe
the proposed rule change to add MIAX Sapphire to the routing fee table
will impose any burden on intramarket competition. Rather, the Exchange
believes that the proposal will promote competition by increasing the
available away markets to which Members can route orders to.
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,\12\ and Rule 19b-4(f)(2) \13\ 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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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 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#ea989f868fc7898587878f849e99aa998f89c48d859c"><span class="__cf_email__" data-cfemail="9defe8f1f8b0fef2f0f0f8f3e9eeddeef8feb3faf2eb">[email protected]</span></a>. Please include
file number SR-EMERALD-2024-19 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-2024-19. 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 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-2024-19 and should
be submitted on or before September 5, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-18203 Filed 8-14-24; 8:45 am]
BILLING CODE 8011-01-P
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