Notice2024-18789
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish a Pass-Through of External Connectivity Fees and Establish MPID Fees and a Technical Support Request Fee
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
August 22, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 163 (Thursday, August 22, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 163 (Thursday, August 22, 2024)]
[Notices]
[Pages 68005-68007]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-18789]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100750; File No. SR-SAPPHIRE-2024-16]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Establish a Pass-Through of External Connectivity Fees and Establish
MPID Fees and a Technical Support Request Fee
August 16, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 7, 2024, MIAX Sapphire, LLC (``MIAX Sapphire'' or
``Exchange'') filed with the Securities and Exchange Commission
(``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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the MIAX Sapphire
Options Exchange Fee Schedule (the ``Fee Schedule'').
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on August 12, 2024.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/all-options-exchanges/rule-filings">https://www.miaxglobal.com/markets/us-options/all-options-exchanges/rule-filings</a>, at MIAX Sapphire'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
On July 15, 2024, the U.S. Securities and Exchange Commission
(``Commission'') approved the Exchange's Form 1 application to register
as a national securities exchange under Section 6 of the Exchange
Act.\3\ As previously announced, the Exchange anticipates that it will
commence electronic operations on August 12, 2024.\4\ In anticipation
of the launch of electronic equity options trading, the Exchange
proposes to establish the following sections of the Fee Schedule,
including proposed fee structures and amounts: (1) pass-through of
external connectivity fees for Members \5\ and non-Members; (2) Member
Participant Identifier fees (``MPID''); and (3) a technical support
request fee.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 100539 (July 15,
2024), 89 FR 58848 (July 19, 2024) (File No. 10-240) (the ``Approval
Order'').
\4\ See MIAX Sapphire Alert, dated March 6, 2024, available at
<a href="https://www.miaxglobal.com/alert/2024/03/06/miax-sapphire-options-exchange-rescheduled-launch-date-august-12-2024">https://www.miaxglobal.com/alert/2024/03/06/miax-sapphire-options-exchange-rescheduled-launch-date-august-12-2024</a>.
\5\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of the
Exchange's Rules for purposes of trading on the Exchange as an
``Electronic Exchange Member'' or ``Market Maker.'' Members are
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
---------------------------------------------------------------------------
The Exchange first proposes to establish Section 5), System
Connectivity Fees, which will contain sections for various connectivity
and port-related fees. The Exchange will file separate rule filings to
establish fees for connectivity and ports for Members and non-Members.
Accordingly, the Exchange proposes to establish Sections 5)a), 5)b),
and 5)d), which will be marked as ``Reserved'' for those types of fees.
Pass-Through of External Connectivity Fees
The Exchange proposes to establish Section 5)c), Pass-Through of
External Connectivity Fees, which provides for the pass through of
external connectivity fees to Members and non-Members that establish
connections with MIAX Sapphire through a third-party. Fees assessed to
MIAX Sapphire by third-party external vendors on behalf of a Member or
non-Member connecting to MIAX Sapphire (including cross-connects), will
be passed through to the Member or non-Member. The external
connectivity fees passed through can include one-time set-up fees,
monthly charges, and other fees charged to MIAX Sapphire by a third-
party for the benefit of a Member or non-Member. The Exchange notes
that its affiliated options markets, MIAX,\6\ MIAX Pearl \7\ and MIAX
Emerald,\8\ provide for the same pass-through of external connectivity
fees to their members and non-members.\9\ As such, this proposed fee is
not new or novel.
---------------------------------------------------------------------------
\6\ The term ``MIAX'' means Miami International Securities
Exchange, LLC. See Exchange Rule 100.
\7\ The term ``MIAX Pearl'' means MIAX PEARL, LLC. See Exchange
Rule 100. All references to ``MIAX Pearl'' in this filing are to the
options trading facility of MIAX PEARL, LLC. References to the
equities trading facility of MIAX PEARL, LLC, will be to ``MIAX
Pearl Equities.''
\8\ The term ``MIAX Emerald'' means MIAX Emerald, LLC. See
Exchange Rule 100.
\9\ See MIAX Fee Schedule, Section 5)c); MIAX Pearl Fee
Schedule, Section 5)c); and MIAX Emerald Fee Schedule, Section 5)c).
---------------------------------------------------------------------------
MPID Fees
The Exchange proposes to establish Section 5)e), MPID Fees,
pursuant to which the Exchange proposes to assess monthly MPID fees to
Members based upon the type of MPID, either FIX \10\
[[Page 68006]]
MPID or MEO \11\ MPID. MPIDs allow the Exchange to provide additional
services to its Members, including customer reporting, monitoring and
risk protection services, down at the MPID level. MPIDs provide Members
the ability to segment their business operations in a manner that can
be tailored to their business needs, as well as receive certain
additional administrative and operational services provided by the
Exchange. MPID fees are assessed for providing these services. The
Exchange proposes to provide MPIDs to Members for free. Even though the
Exchange proposes to provide MPIDs for free, the Exchange believes that
is appropriate to provide market participants with the overall
structure of the fees by outlining the structure in the Fee Schedule,
so that there is general awareness that the Exchange intends to assess
such fees in the future. The Exchange will issue an alert to Members in
the future when it plans to establish fee amounts for MPIDs.
---------------------------------------------------------------------------
\10\ The term ``FIX Interface'' means the Financial Information
Exchange interface used for submitting certain order types (as set
forth in Rule 516) to the MIAX Sapphire System. See Exchange Rule
100.
\11\ The term ``MEO Interface'' means a binary order interface
used for submitting certain order types (as set forth in Rule 516
and Rule 518) to the MIAX Sapphire System. See Exchange Rule 100.
---------------------------------------------------------------------------
Technical Support Request Fee
The Exchange proposes to establish Section 5)f), Member and Non-
Member Technical Support Request Fee, which describes the technical
support request fee to be charged to both Members and non-Members that
request technical support at any of the MIAX Sapphire data centers.
MIAX Sapphire proposes to charge a fee of $250 per hour for requested
technical support. The Exchange intends to provide Members and non-
Members access to the Exchange's on-site data center personnel for
technical support as a convenience to Members and non-Members to test
or otherwise assess their connectivity to the Exchange. The Exchange's
affiliated markets, MIAX, MIAX Pearl, and MIAX Emerald, charge a
slightly lower technical support request fee of $200 per hour to their
members and non-members.\12\ The Exchange notes that its affiliated
markets established their respective hourly rate for the technical
support request fee over five years ago and the hourly fee for
employees to provide technical support has increased since that time.
---------------------------------------------------------------------------
\12\ See MIAX Fee Schedule, Section 5)f); MIAX Pearl Options Fee
Schedule, Section 5)f); and MIAX Emerald Fee Schedule, Section 5)f).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed fees are consistent with
Section 6(b) of the Act \13\ in general, and furthers the objectives of
Section 6(b)(4) of the Act \14\ in particular, in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among Members and other persons using any facility or system which the
Exchange operates or controls. The Exchange also believes the proposed
fees further the objectives of Section 6(b)(5) of the Act \15\ in that
they are designed to promote just and equitable principles of trade,
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general protect investors
and the public interest and are not designed to permit unfair
discrimination between customers, issuers, brokers and dealers.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
\15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Pass-Through of External Connectivity Fees
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to pass-through external connectivity fees to Members
and non-Members that establish connections with MIAX Sapphire through a
third-party. MIAX Sapphire will only pass-through the actual costs it
is charged by third-party external vendors. The Exchange's affiliated
markets all pass-through external connectivity fee charges to their
members and non-members.\16\ Additionally, at least one competing
options exchange also passes along connectivity fee charges assessed to
that exchange by third-party external vendors on behalf of its market
participants.\17\ Accordingly, the Exchange believes the proposed pass-
through of external connectivity fees is reasonable, equitable and not
unfairly discriminatory.
---------------------------------------------------------------------------
\16\ See supra note 9.
\17\ See BOX Exchange LLC (``BOX'') Fee Schedule, Section
III.A.1. (``BOX will pass-through any connectivity fees to
Participants and non-Participants that are assessed to BOX by these
third-party external vendors on behalf of a Participant or non-
Participant. Connectivity fees can include one-time set-up fees,
monthly charges, and other fees charged by the third-party vendor in
exchange for the services provided to the market participant.'').
---------------------------------------------------------------------------
MPID Fees
The Exchange believes that its proposal to establish an overall fee
structure for MPIDs, without proposing fee amounts at this time, is
reasonable, equitable and not unfairly discriminatory because it will
provide notice to Members that the Exchange intends to assess such fees
in the future. The Exchange will announce in advance any change to
establish MPID fees so that Members have time to adjust their MPIDs as
necessary based upon the proposed fees. The Exchange believes it is
reasonable and equitable to waive MPID fees as an incentive for market
participants to register and become Members of the Exchange prior to
launch. This in turn should provide the Exchange with potential order
flow and liquidity providers as it begins operations.
Member and Non-Member Technical Support Request Fee
The Exchange believes that the proposed technical support request
fee is reasonable, equitable and not unfairly discriminatory because it
will be assessed equally to all Members and non-Members who request
technical support at the proposed hourly rate. Furthermore, Members and
non-Members are not required to use the service; instead, the Exchange
proposes to offer this services as a convenience to all Members and
non-Members. The Exchange believes the proposed fee is reasonable
because it will permit both Members and non-Members to request the use
of the Exchange's on-site data center personnel as technical support
and as a convenience in order to test or otherwise assess the user's
connectivity to the Exchange via its data centers. The proposed fee is
reasonable because it is within the range of the fee charged by the
Exchange's affiliated markets.\18\
---------------------------------------------------------------------------
\18\ See supra note 12.
---------------------------------------------------------------------------
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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
Intra-Market Competition
The Exchange believes the proposed pass-through of external
connectivity fees will not result in any burden on intra-market
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because MIAX Sapphire will only pass-through the
actual costs it is charged by third-party external vendors. The
Exchange's affiliated markets all pass-through external connectivity
fee charges to their members and non-members,\19\ and at least one
competing options exchange also passes along connectivity fee charges
assessed to that exchange by third-party external vendors on behalf of
its market participants.\20\
---------------------------------------------------------------------------
\19\ See supra note 9.
\20\ See BOX Exchange LLC (``BOX'') Fee Schedule, Section
III.A.1. (``BOX will pass-through any connectivity fees to
Participants and non-Participants that are assessed to BOX by these
third-party external vendors on behalf of a Participant or non-
Participant. Connectivity fees can include one-time set-up fees,
monthly charges, and other fees charged by the third-party vendor in
exchange for the services provided to the market participant.'').
---------------------------------------------------------------------------
[[Page 68007]]
The Exchange believes the proposed MPID fee structure, including
waiver of the MPID fees, will not result in any burden on intra-market
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because there will be no cost for Members to
utilize MPIDs across their firm and business lines. The Exchange
believes waiving such fees will not impose any burden on intra-market
competition because this will provide an incentive for market
participants to register and become Members of the Exchange prior to
launch. This in turn should provide the Exchange with potential order
flow and liquidity providers as it begins operations, which may benefit
all market participants of the Exchange.
The Exchange believes the proposed technical support request fee
will not result in any burden on intra-market competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because it will be assessed equally to all Members and non-Members who
request technical support at the proposed hourly rate. Furthermore,
Members and non-Members are not required to use the service; instead,
the Exchange proposes to offer this services as a convenience to all
Members and non-Members. The Exchange believes the proposed fee will
not impose any burden on intra-market competition because it will
permit both Members and non-Members to request the use of the
Exchange's on-site data center personnel as technical support and as a
convenience in order to test or otherwise assess the user's
connectivity to the Exchange via its data centers. The proposed fee is
within the range of the fee charged by the Exchange's affiliated
markets for the same service.\21\
---------------------------------------------------------------------------
\21\ See supra note 12.
---------------------------------------------------------------------------
Inter-Market Competition
The Exchange believes that the proposed changes will not result in
any burden on inter-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As discussed
above, market participants are not forced to connect to and trade on
all exchanges. The Exchange believes that the proposed pass-through of
external connectivity fees, MPID fee structure, and technical support
request fee will not cause any burden on inter-market competition
because none of these changes impact other exchanges' ability to
compete.
Accordingly, the Exchange does not believe its proposed fee 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
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,\22\ and Rule 19b-4(f)(2) \23\ 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.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(3)(A)(ii).
\23\ 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
<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#fa888f969fd7999597979f948e89ba899f99d49d958c"><span class="__cf_email__" data-cfemail="2351564f460e404c4e4e464d5750635046400d444c55">[email protected]</span></a>. Please include
file number SR-SAPPHIRE-2024-16 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-SAPPHIRE-2024-16. 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-SAPPHIRE-2024-16 and should
be submitted on or before September 12, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------
\24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-18789 Filed 8-21-24; 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 August 22, 2024.
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.