Notice2024-23658
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule
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
October 15, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 199 (Tuesday, October 15, 2024)</title>
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[Federal Register Volume 89, Number 199 (Tuesday, October 15, 2024)]
[Notices]
[Pages 83065-83067]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-23658]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101281; File No. SR-SAPPHIRE-2024-30]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Fee Schedule
October 8, 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 September 27, 2024, MIAX Sapphire, LLC (``MIAX Sapphire'' 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 Sapphire Fee
Schedule (the ``Fee Schedule'') to waive transaction rebates/fees
applicable to transactions executed during the opening and transactions
that uncross the Away Best Bid or Offer (``ABBO'').\3\
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\3\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the
best bid(s) or offer(s) disseminated by other Eligible Exchange
(defined in Rule 1400(g)) and calculated by the Exchange based on
market information received by the Exchanges from OPRA. See Exchange
Rule 100.
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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-sapphire/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-sapphire/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 purpose of this proposed rule change is to amend the Exchange's
Fee Schedule to waive transaction rebates/fees applicable to executions
that occur as part of the Exchange's Opening Process \4\ as described
in Rule 503 (``Openings on the Exchange'') or that uncross the ABBO, as
described in Rule 515 (``Execution of Orders'').
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\4\ ``Opening Process'' shall mean the process for opening or
resuming trading pursuant to Exchange Rule 503 and shall include the
process for determining the price at which Eligible Interest shall
be executed at the open of trading for the day, or the open of
trading for a halted option, and the process for executing that
Eligible Interest. See Exchange Rule 503(a)(1).
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Under Rule 503, Openings on the Exchange, the Exchange will accept
orders for queuing prior to the opening of trading in that series of
options.\5\ While orders are queued prior to the Opening Process it is
not possible to identify the order as either Maker or Taker, therefore
the Exchange now proposes to add additional detail to its Fee Schedule
by adopting new note (2), to clarify that, the per contract transaction
rebates and fees shall be waived for transactions executed during the
opening and for transactions that uncross the ABBO.\6\ Additionally,
the Exchange notes other competing option exchanges do not assess
transaction rebates/fees at the open.\7\
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\5\ See Exchange Rule 503(a)(2).
\6\ The Exchange notes that its affiliate exchanges, MIAX Pearl
Options and MIAX Emerald, have similar language in their fee
schedules.
\7\ See Cboe U.S. Options Fee Schedules, C2 Options, Transaction
Fees, Trades at the Open, available online at <a href="https://www.cboe.com/us/options/membership/fee_schedule/ctwo/">https://www.cboe.com/us/options/membership/fee_schedule/ctwo/</a>; and EDGX Options,
Transaction Fees, Fee Codes and Associated Fees, Fee Code ``OO,''
available online at <a href="https://www.cboe.com/us/options/membership/fee_schedule/edgx/">https://www.cboe.com/us/options/membership/fee_schedule/edgx/</a>.
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Implementation
The proposed change will become effective on October 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 \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ 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 \10\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
\10\ 15 U.S.C. 78f(b)(5).
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The proposal provides that executions that occur as part of the
Exchange's Opening Process will not incur any fees or receive any
rebates. The Exchange believes that its proposal to waive transaction
rebates/fees that occur as part of the Exchange's Opening Process is
reasonable, fair and equitable because it will incentivize Members \11\
to send order flow to the Exchange, potentially providing greater
liquidity on the Exchange. In addition, the Exchange believes that the
foregoing is fair and equitable because it provides certainty for
Members with respect to execution costs occurring as part of the
Exchange's Opening Process. Lastly, the Exchange also believes that the
proposed pricing for executions occurring as part of the Opening on the
Exchange is nondiscriminatory because it will apply equally to all
Members.
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\11\ The term ``Member'' means an individual or organization
that is registered with the Exchange pursuant to Chapter II of the
Exchange 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.
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The proposal further provides that executions that uncross the ABBO
will not be assessed any fees or receive any rebates. The Exchange
believes that its proposal to waive transaction rebates/fees that
uncross the ABBO is reasonable, fair and equitable because it will
incentivize Members to send greater order flow to the Exchange in
[[Page 83066]]
this scenario, potentially providing greater liquidity on the Exchange.
In addition, the Exchange believes that the foregoing is fair and
equitable because it provides certainty for Members with respect to
execution costs across all trades which uncross the ABBO. Lastly, the
Exchange also believes that the proposed pricing for executions
occurring in this scenario is nondiscriminatory because it will apply
equally to all Members.
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.
Intra-Market Competition
The proposal does not impose an undue burden on intra-market
competition as transaction rebates and fees will be waived for
transactions executed during the opening and for transactions that
uncross the ABBO uniformly for all Members. The Exchange believes its
proposal will encourage Members to submit orders to the Exchange which
will increase liquidity and benefit all market participants by
providing more trading opportunities and better execution prices.
Accordingly, the Exchange believes that the proposed changes will not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act because it will continue to
encourage order flow, which provides greater volume and liquidity,
benefiting all market participants by providing more trading
opportunities and better execution prices.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice on where to route their orders for execution. The
Exchange notes that it 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 18
registered options exchanges competing for order flow. For the month of
August 2024, based on publicly-available information, and excluding
index-based options, no single exchange exceeded approximately 14-15%
of the market share of executed volume of multiply-listed equity and
exchange-traded fund (``ETF'') options.\12\ 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 propose transaction fees and rebates to be competitive with other
exchanges and to attract order flow. The Exchange believes that the
Exchange's proposal reflects this competitive environment, to the
extent this is achieved, all of the Exchange's market participants
should benefit from the quality of the Exchange's market.
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\12\ See ``Market Share, MTD Average'' on the Exchange's
website, available at <a href="https://www.miaxglobal.com/">https://www.miaxglobal.com/</a>.
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The Exchange notes that this rule change is being proposed at a
time when other options exchanges are offering similar pricing for
similar market scenarios.\13\ As a result of the competitive
environment, Members will have various pricing and execution models to
choose from in making determinations on where to enter orders prior to
the opening of trading or which may potentially uncross the ABBO. The
Exchange notes that it operates in a highly competitive market in which
Members can readily direct order flow to competing venues if they deem
fee levels to be excessive.
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\13\ See supra note 7.
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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,\14\ and Rule 19b-4(f)(2) \15\ 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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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 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#abd9dec7ce86c8c4c6c6cec5dfd8ebd8cec885ccc4dd"><span class="__cf_email__" data-cfemail="e89a9d848dc58b8785858d869c9ba89b8d8bc68f879e">[email protected]</span></a>. Please include
file number
SR-SAPPHIRE-2024-30 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-2024-30. 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-2024-30 and should
be submitted on or before November 5, 2024.
[[Page 83067]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-23658 Filed 10-11-24; 8:45 am]
BILLING CODE 8011-01-P
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