Notice2024-19765
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Describe the Access Methods to the Exchange's Testing Systems Environment and Discontinue One Access Method
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
September 4, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 171 (Wednesday, September 4, 2024)</title>
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[Federal Register Volume 89, Number 171 (Wednesday, September 4, 2024)]
[Notices]
[Pages 71941-71944]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-19765]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100855; File No. SR-EMERALD-2024-25]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Describe the Access Methods to the Exchange's Testing Systems
Environment and Discontinue One Access Method
August 28, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\
[[Page 71942]]
notice is hereby given that on August 22, 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 is filing a proposal to describe the two methods to
access the Exchange's optional testing systems environment, establish a
third method to access the testing systems environment, and establish
the timeline and process by which one of the three access methods would
be discontinued.
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 Emerald'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 submits this filing to describe the two methods to
access the Exchange's optional testing systems environment, establish a
third method to access the testing systems environment, and establish
the timeline and process by which the 1 Gigabit (``Gb'') or 10Gb ultra-
low latency (``ULL'') production (i.e., live trading) connection access
method described below would be discontinued.
The testing systems environment is a virtual trading system
environment for Members \3\ and non-Members to test (i) upcoming
Exchange software and code releases, (ii) product enhancements, and
(iii) firm-developed software, prior to implementation in the
Exchange's production (e.g., live trading) environment. Further, the
testing systems environment allows unlimited testing of existing
functionality, such as order types, order entry, order management,
order throughput, acknowledgements, risk settings, mass cancelations,
and purge requests. The testing systems environment is built to closely
approximate the production environment to enable users the ability to
test their systems and mimics the real life trading environment.\4\
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\3\ 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.
\4\ Business continuity and disaster recovery testing is
performed separately and not within the testing systems environment
that is the subject of this filing.
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Existing Two Access Methods
There are two methods by which Members and non-Members may access
the Exchange's testing systems environment. One, Members and non-
Members may access the Exchange's testing systems environment via a
virtual private network (``VPN'') that operates over the internet and
provides site-to-site access. VPN access is provided for free to all
Members and non-Members. Two, access is also provided through the
production connections for each 1Gb \5\ or 10Gb ULL connection for the
applicable fee \6\ for such connection and no additional charge. These
1Gb and 10Gb ULL connections provide access to the Exchange's
production environment (i.e., live trading) and allow the receipt of
proprietary real-time market data.
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\5\ Like VPN access, the 1Gb connection will allow Members and
non-Members to reach all testing systems environments of the
Exchange's affiliated options markets.
\6\ See MIAX Emerald Fee Schedule, Sections (5)(a)-(b) for the
fees for 1Gb and 10Gb ULL production connectivity.
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Members and non-Members that utilize a VPN or 1Gb production
connection to access the testing systems environment of the Exchange
are also able to access the testing systems environments of each of the
Exchange's affiliated options markets--MIAX Sapphire, LLC (``MIAX
Sapphire''), MIAX PEARL, LLC \7\ (``MIAX Pearl Options''), and Miami
International Securities Exchange, LLC (``MIAX''). Also, unlike VPN and
1Gb, 10Gb ULL connections only provide access the Exchange's testing
systems environment and not those of its affiliated options markets.
This is because of the nature of those connections, which are utilized
to access the Exchange only, not just for testing, but for other
Exchange specific items, such as access the Exchange's production
environment and for the receipt of proprietary Exchange market data.
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\7\ All references to ``MIAX PEARL'' in this filing are to the
options trading facility of MIAX PEARL, LLC, referred to herein as
``MIAX Pearl Options.'' Members and non-Members that choose to
utilize the testing systems environment of MIAX Pearl Equities, the
equities trading facility of MIAX PEARL, LLC, must utilize a
separate dedicated cross connect as MIAX Pearl Equities' testing
systems environment operates on a separate network from the
affiliated options markets.
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Proposed Third Access Method
The Exchange proposes to establish a third method by which Members
and non-Members may access the options testing systems environment.
This third method is via a dedicated cross connection that will allow
Members and non-Members to access the testing systems environment and
would be available as either a 1Gb or 10Gb connection.\8\ Like access
via a VPN and a 1Gb production connection, the dedicated cross
connection would also provide access to the testing systems environment
of the Exchange's affiliated options markets--MIAX Sapphire, MIAX
PEARL, LLC, and MIAX. The proposed dedicated cross connect to the
testing systems environment would not, however, provide access to any
of the production environments (i.e., live trading) of the Exchange or
its affiliates, or allow the receipt of proprietary real-time market
data for which each Member or non-Member may subscribe.
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\8\ The Exchange notes that other exchange families offer a
similar dedicated connection to their testing environment for their
members and non-members. See, e.g., Nasdaq Options Test Facility
(NTF) Abstract, Version 1.4.4 (March 2024), available at <a href="https://www.nasdaq.com/Nasdaq_Test_Facility_NTF_Guide">https://www.nasdaq.com/Nasdaq_Test_Facility_NTF_Guide</a> (last visited July 16,
2024) (``. . . the Nasdaq Test Facility . . . where market
participants can test their trading applications with the INET
trading system. The NTF environment allows members to test sending
and executing quotes and orders offered by our six options
exchanges. . . .''); see also Securities Exchange Act Release No.
100442 (June 27, 2024), 89 FR 55296 (July 3, 2024) (SR-CboeBZX-2024-
058) (``. . . the Exchange also offers corresponding ports which
provide Members and non-Members access to the Exchange's
certification environment to test proprietary systems and
applications . . . The certification environment facilitates testing
using replicas of the Exchange's production environment process
configurations which provide for a robust and realistic testing
experience. . . .'').
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* * * * *
Members and non-Members that access the testing systems environment
through any one of the available access methods, including the proposed
dedicated cross connection, receive functionally the same testing
[[Page 71943]]
experience. Each Member or non-Member is free to decide how to access
the testing systems environment based on their own needs and trading
architecture. Again, use of the testing systems environment is entirely
optional and no Member or non-Member is required by rule or regulation
to make use of the testing systems environment.\9\ Regardless of access
method, all Members and non-Members are provided the same testing
systems environment experience and are able to perform all of the same
functions.
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\9\ See supra note 4.
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Phased Out of Production Connections
The Exchange will phase out the ability to connect to the testing
systems environment via the existing 1Gb and 10Gb ULL production
connections over the next 6 to 12 months. The Exchange will issue an
alert notifying market participants of the anticipated timeline by
which it will phase out access to the testing systems environment via
1Gb and 10Gb ULL production connections. During this phase out period,
Members and non-Members that use a 1Gb or 10Gb ULL production
connection to access the testing systems environment would continue to
be able to do so. At the end of this period, Members and non-Members
that currently elect to access the Exchange's testing systems
environment via a 1Gb or 10Gb ULL connection that seek to continue to
access the Exchange's testing systems environment would be required to
transfer their access to one of the two remaining access methods, a VPN
for free or by subscribing to a dedicated cross connection for an
amount that is expected to be less than the current fee for a 1Gb or
10Gb ULL production connection.\10\
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\10\ The Exchange will submit a separate proposed rule change
for immediate effectiveness pursuant to Section 19(b)(3)(A) of the
Act (15 U.S.C. 78s(b)(3)(A)) and Rule 19b-4(f)(2) (17 CFR 240.19b-
4(f)(2)) thereunder to establish a fee for the dedicated cross
connect to the testing systems environment. The Exchange anticipates
to waive such proposed fee for a period of time and that any
potential fees at the end of the waiver will be less than the fees
for a 1Gb and 10Gb ULL connection to the production environment.
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2. Statutory Basis
The Exchange believes the proposed change is consistent with the
requirements of Section 6(b) of the Act,\11\ in general, and Section
6(b)(5),\12\ in particular, because 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 regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, and remove impediments to and perfect the mechanism of a
free and open market and a national market system.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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This filing describes the two existing methods to access the
Exchange's optional testing systems environment, proposes to establish
a third access method, and describes the process by which one access
method would be discontinued. Doing so provides clarity to market
participants and seeks to avoid potential investor confusion.
Access to the Exchange's testing systems environment is completely
voluntary.\13\ The testing systems environment is a useful tool for
Members and non-Members to test (i) upcoming Exchange software and code
releases, (ii) product enhancements, and (iii) firm-developed software,
prior to implementation in the Exchange's production environment. In
addition, the testing systems environment allows unlimited firm-level
testing of order types, order entry, order management, order
throughput, acknowledgements, risk settings, mass cancelations, and
purge requests.
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\13\ As noted above, business continuity and disaster recovery
testing is performed separately and not within the testing systems
environment that is the subject of this filing.
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This filing also proposes to establish a third access method, a
dedicated cross connect, to the Exchange's optional testing systems
environment. The Exchange believes the proposed dedicated cross connect
access to the test environment is being proposed purely for convenience
and, again, would be entirely optional. Access to the test environment
via a dedicated cross connect would enable Members and non-Members to
connect their software to the test environment allowing their
applications to communicate directly with the test environment. Members
and non-Members that choose to access the test environment via a
dedicated cross connect are also provided access to the test
environments of the Exchange's affiliate options markets via a single
connection, and would not be required to subscribe to multiple cross
connects to test in those environments.
There is no functional difference between the two existing and
proposed third access alternative. It is simply a technical decision of
each Member or non-Member regarding how to access the testing systems
environment. The testing systems environment, whether accessed via the
proposed dedicated cross connection or otherwise, provides Members and
non-Members the same scope of abilities to test their systems and
software in the Exchange's testing systems environment, which
replicates the Exchange's anticipated production trading environment.
The testing systems environment serves to improve live trading on the
Exchange and the national market system by permitting Members and non-
Members the ability to accurately test software and code changes prior
to implementing them in their systems in the live trading environment.
This should, in turn, reduce the likelihood of a potentially disruptive
issues in the live trading environment, which has the potential to
affect all market participants.
Therefore, for the above reasons, the Exchange believes the
proposed rule change is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. There would be
no competitive advantage for Members and non-Members that access the
testing systems environment via one access method versus another. All
modes of access allow Members and non-Members to perform the same
testing functions in the same manner. As such, the Exchange does not
believe that the proposed change will impose any burden on intermarket
competition not necessary or appropriate in furtherance of the purposes
of the Act.
The Exchange believes the proposed rule change may have a positive
impact on or intramarket competition. Among other things, the proposed
rule change is intended to keep pace with technological changes in the
industry and evolving customer needs and demands, and believes the
dedicated cross connection to the testing systems environment will
contribute to robust competition among national securities exchanges.
As noted above, several exchanges already offer similar testing
environments to their members and non-members.\14\ As a result, the
Exchange believes this proposed rule change permits fair competition
among national securities exchanges.
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\14\ See supra note 8.
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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.
[[Page 71944]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) \16\
thereunder.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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.
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#afdddac3ca82ccc0c2c2cac1dbdcefdccacc81c8c0d9"><span class="__cf_email__" data-cfemail="deacabb2bbf3bdb1b3b3bbb0aaad9eadbbbdf0b9b1a8">[email protected]</span></a>. Please include
file number SR-EMERALD-2024-25 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-2024-25.
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-2024-25 and
should be submitted on or before September 25, 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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-19765 Filed 9-3-24; 8:45 am]
BILLING CODE 8011-01-P
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