Notice2025-09396
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Options Regulatory Fee Sunset Date From May 31, 2025 to December 31, 2025
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
May 27, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 100 (Tuesday, May 27, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 100 (Tuesday, May 27, 2025)]
[Notices]
[Pages 22389-22392]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-09396]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103081; File No. SR-SAPPHIRE-2025-24]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend
the Options Regulatory Fee Sunset Date From May 31, 2025 to December
31, 2025
May 20, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 14, 2025, MIAX Sapphire, LLC (``MIAX Sapphire'' or
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
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'') relating to the
Options Regulatory Fee (``ORF'') to extend the current sunset date of
May 31, 2025 to December 31, 2025.
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.
[[Page 22390]]
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 its Fee Schedule related to the ORF
to extend the current sunset date of May 31, 2025 to December 31, 2025,
and thus continue charging the previously established ORF in the amount
of $0.0013 per contract side through December 31, 2025. As discussed
herein, the ORF sunset date of May 31, 2025 was initially proposed to
provide time for the Exchange to inform its approach to ORF and discuss
alternative ORF models with market participants, so that it may compete
on equal footing with each of the other option exchanges that charge
similar regulatory fees. However, those discussions have made clear
that there is not yet consensus among market participants on a path
forward that would address industry concerns in a manner that would
effect change broadly across all U.S. options exchanges. Thus, the
Exchange proposes to extend the automatic sunset date of May 31, 2025
until December 31, 2025 in order to provide it additional time to
inform its approach to the ORF after the sunset date while continuing
to fund a portion of its regulatory program via ORF so that it may
operate on equal footing with each of the seventeen (17) other options
exchanges that charge similar regulatory fees in amounts that far
exceed the relatively modest amounts collected by the Exchange.
As background, on August 7, 2024 the Exchange initially filed this
proposal to establish an ORF in the amount of $0.0013 per contract side
that would automatically sunset on October 31, 2024 (SR-SAPPHIRE-2024-
14). The Exchange withdrew SR-SAPPHIRE-2024-14, and on August 21, 2024
replaced it with SR-SAPPHIRE-2024-25 (the ``Initial ORF Filing'').\3\
The Initial ORF Filing was published for comment in the Federal
Register on September 3, 2024.\4\ On October 31, 2024, the Exchange
filed to extend the Initial ORF Filing sunset date of October 31, 2024
to May 31, 2025.\5\ To date, the Securities and Exchange Commission
(the ``Commission'') received no comments on the Initial ORF Filing or
its subsequent extension.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 100824 (August 27,
2024), 89 FR 71496 (September 3, 2024) (SR-SAPPHIRE-2024-25).
\4\ See Supra note 3.
\5\ See Securities Exchange Act Release No. 101589 (October 31,
2024) [sic], 89 FR 90787 (November 18, 2024) (SR-SAPPHIRE-2024-35).
---------------------------------------------------------------------------
The ORF is designed to recover a material portion of the costs to
the Exchange of the supervision and regulation of Members' \6\ customer
options business, including performing routine surveillances and
investigations, as well as policy, rulemaking, interpretive and
enforcement activities. The Exchange believes that revenue generated
from the ORF, when combined with all of the Exchange's other regulatory
fees and fines, will cover a material portion, but not all, of the
Exchange's regulatory costs. Currently, all other registered options
exchanges impose ORF on their members, and those exchanges also charge
ORF for executions occurring on the Exchange cleared by their
customers.\7\
---------------------------------------------------------------------------
\6\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of MIAX
Sapphire 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.
\7\ See Securities Exchange Act Release Nos. 58817 (October 20,
2008), 73 FR 63744 (October 27, 2008) (SR-CBOE-2008-05) (notice of
filing and immediate effectiveness of Cboe adopting an ORF
applicable to transactions across all options exchanges); 61133
(December 9, 2009), 74 FR 66715 (December 16, 2009) (SR-Phlx-2009-
100) (notice of filing and immediate effectiveness of Phlx adopting
an ORF applicable to transactions across all options exchanges);
61154 (December 11, 2009), 74 FR 67278 (December 18, 2009) (SR-ISE-
2009-105) (notice of filing and immediate effectiveness of ISE
adopting an ORF applicable to transactions across all options
exchanges); 61388 (January 20, 2010), 75 FR 4431 (January 27, 2010)
(SR-BX-2010-001) (notice of filing and immediate effectiveness of
Nasdaq OMX BX, Inc. (``BX'') adopting an ORF applicable to
transactions across all options exchanges); 70200 (August 14, 2013)
78 FR 51242 (August 20, 2013) (SR-Topaz-2013-01)) (notice of filing
and immediate effectiveness of GEMX, formerly known as ISE Gemini
and Topaz Exchange, adopting an ORF applicable to transactions
across all options exchanges); 64400 (May 4, 2011), 76 FR 27118 (May
10, 2011) (SR-NYSEAmex-2011-27) (notice of filing and immediate
effectiveness of NYSE AMEX adopting an ORF applicable to
transactions across all options exchanges); 64399 (May 4, 2011), 76
FR 27114 (May 10, 2011) (SR-NYSEArca-2011-20) (notice of filing and
immediate effectiveness of NYSE Arca adopting an ORF applicable to
transactions across all options exchanges); 65913 (December 8,
2011), 76 FR 77883 (December 14, 2011) (SR-NASDAQ-2011-163) (notice
of filing and immediate effectiveness of Nasdaq Options Market
(``NOM'') adopting an ORF applicable to transactions across all
options exchanges); 66979 (May 14, 2012), 77 FR 29740 (May 18, 2012)
(SR-BOX-2012-002) (notice of filing and immediate effectiveness of
BOX adopting an ORF applicable to transactions across all options
exchanges); 67596 (August 6, 2012), 77 FR 47902 (August 10, 2012)
(SR-C2-2012-023) (notice of filing and immediate effectiveness of C2
Options Exchange, Inc. (``C2'') adopting an ORF applicable to
transactions across all options exchanges); 68711 (January 23, 2013)
78 FR 6155 (January 29, 2013) (SR-MIAX-2013-01) (notice of filing
and immediate effectiveness of MIAX Options adopting an ORF
applicable to transactions across all options exchanges); 74214
(February 5, 2015), 80 FR 7665 (February 11, 2015) (SR-BATS-2015-08)
(notice of filing and immediate effectiveness of BZX formerly known
as BATS, adopting an ORF applicable to transactions across all
options exchanges); 80025 (February 13, 2017) 82 FR 11081 (February
17, 2017) (SR-BatsEDGX-2017-04) (notice of filing and immediate
effectiveness of EDGX formerly known as Bats EDGX Exchange, Inc.,
adopting an ORF applicable to transactions across all options
exchanges); 80875 (June 7, 2017) 82 FR 27096 (June 13, 2017) (SR-
PEARL-2017-26) (notice of filing and immediate effectiveness of MIAX
PEARL adopting an ORF applicable to transactions across all options
exchanges); 85127 (February 13, 2019) 84 FR 5173 (February 20, 2019)
(SR-MRX-2019-03) (notice of filing and immediate effectiveness of
Nasdaq MRX, LLC (``MRX'') adopting an ORF applicable to transactions
across all options exchanges); 85251 (March 6, 2019) 84 FR 8931
(March 12, 2019) (SR-EMERALD-2019-01) (notice of filing and
immediate effectiveness of MIAX Emerald adopting an ORF applicable
to transactions across all options exchanges).
---------------------------------------------------------------------------
The Exchange recognizes that in 2019, the Commission issued
suspensions of and orders instituting proceedings to determine whether
to approve or disapprove a proposed rule change to modify the Options
Regulatory Fee of NYSE American, NYSE Arca, MIAX Options, MIAX PEARL,
MIAX Emerald, Cboe, Cboe EDGX Options, and C2.\8\ Each of those
exchanges had filed to increase their ORF, and the Commission indicated
that each of those filings lacked detail and specificity, signaling
that more information was needed to speak to whether the proposed
increased ORFs were reasonable, equitably allocated and not unfairly
discriminatory, particularly given that the ORF is assessed on
transactions that clear in the ``customer'' range and regardless of the
exchange on which the transaction occurs. The Commission also noted
that the filings provided only broad general statements regarding
options transaction volume and did not provide any information on those
exchanges' historic or projected options regulatory costs (including
the costs of regulating activity that cleared in the ``customer'' range
and the costs of regulating activity that occurred off exchange), the
amount of regulatory revenue they had generated and expected to
generate from the ORF as
[[Page 22391]]
well as other sources, or the ``material portion'' of options
regulatory expenses that they sought to recover from the ORF. Each of
those exchanges withdrew their filings, but continue charging ORF today
as discussed above. The Exchange would be at an unfair competitive
disadvantage if it were not allowed to charge the ORF to recover a
material portion, but not all, of the Exchange's regulatory costs for
the supervision and regulation of activity of its Members which as
noted above, is charged by all currently operating options exchanges.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 87168 (September 30,
2019), 84 FR 53210 (October 4, 2019) (SR-Emerald-2019-29);
Securities Exchange Act Release No. 87167 (September 30, 2019), 84
FR 53189 (October 4, 2019) (SR-PEARL-2019-23); Securities Exchange
Act Release No. 87169 (September 30, 2019), 84 FR 53195 (October 4,
2019) (SR-MIAX-2019-35); Securities Exchange Act Release No. 87170
(September 30, 2019), 84 FR 53213 (October 4, 2019) (SRCBOE-2019-
040); Securities Exchange Act Release No. 87172 (September 30, 2019)
84 FR 53192 (October 4, 2019) (SR-CboeEDGX-2019-051); Securities
Exchange Act Release No 87171 (September 30, 2019), 84 FR 53200
(October 4, 2019) (SR-C2-2019-018); Securities Exchange Act Release
No. 86832 (August 30, 2019), 84 FR 46980 (September 6, 2019) (SR-
NYSEArca-2019-49); Securities Exchange Act Release No. 86833 (August
30, 2019) 84 FR 47029 (September 6, 2019) (SR-NYSEAMER-2019-27).
---------------------------------------------------------------------------
The Exchange recognizes that an alternative model is being pursued
among industry participants but that a consensus has not yet been
reached. As such, the Exchange proposes additional time to work towards
a permanent ORF solution by gathering relevant data internally as well
from other industry participants, while continuing to charge as other
options exchanges currently do, until December 31, 2025, at which time
its ORF will automatically sunset.
The Exchange notes that if, during the proposed sunset period of
May 31, 2025 through December 31, 2025, a viable alternative
methodology for the ORF presents itself, the Exchange would endeavor to
implement said alternative prior to the proposed sunset date. In other
words, the existence of the sunset date of December 31, 2025 to the
Exchange's current ORF would not preclude it from filing to modify its
ORF methodology prior to that date, if applicable.
As a new exchange, not having the opportunity to fund its
regulatory program through the same regulatory fee charged by every
other options exchange would place an undue competitive disadvantage
upon the Exchange's regulatory program and options business as a whole.
Further, the Exchange emphasizes that other exchanges will be charging
ORF for transactions occurring on MIAX Sapphire, and as such, it
follows that the exchange that is primarily responsible for monitoring
those transactions should also be able to charge the ORF for activity
occurring on its own market, as well as transactions it surveils on
away markets. Again, the Exchange is committed to facilitating and
joining efforts to revamp the ORF, however, it must be afforded
additional time to do so while recouping a portion of its regulatory
costs via the ORF as all other options exchanges do.
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.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The ORF is designed to recover a material portion of the costs of
supervising and regulating Members' customer options business including
performing routine surveillances and investigations, as well as policy,
rulemaking, interpretive, and enforcement activities. Extending the
current ORF sunset date to December 31, 2025 is reasonable because
continued collection of ORF will serve to balance the Exchange's
regulatory revenue against the anticipated regulatory costs, thereby
ensuring proper regulatory funding. Moreover, the Exchange's ORF rate
is lower than the amount of ORF assessed on other exchanges.\12\
---------------------------------------------------------------------------
\12\ See, e.g., NYSE Arca Options Fees and Charges, ORF and NYSE
American Options Fees Schedule, Section VII(A), which provide that
ORF is assessed at a rate of $0.0055 per contract for each
respective exchange. See also Nasdaq PHLX, Options 7 Pricing
Schedule, Section 6(D), which provides for an ORF rate of $0.0034
per contract; Cboe Options Fee Schedule, which provides an ORF rate
of $0.0017 per contract; Nasdaq Options Market, Options 7 Pricing
Schedule, Section 5, which provides an ORF rate of $0.0016 per
contract; BOX Options Fee Schedule Section II(C), which provides an
ORF rate of $0.00295 per contract; MIAX Options Fee Schedule,
Section 2(b), which provides an ORF rate of $0.0019 per contract;
MIAX Pearl Fee Schedule, Section 2(b), which provides an ORF rate of
$0.0018 per contract; and the MEMX Fee Schedule which provides an
ORF rate of $0.0015.
---------------------------------------------------------------------------
Extending the sunset date is also reasonable because doing so would
allow the Exchange additional time to inform its approach to ORF moving
forward while recouping a portion of its regulatory expenses via the
ORF as other options exchanges do. If the Exchange were not allowed to
charge an ORF during this additional time period, then after the sunset
date of May 31, 2025, it would be forced to pay for its regulatory
program solely out of business revenues while working towards an
alternative ORF solution, unlike every other competing exchange, each
of which would continue to assess an ORF, including on transactions
executed on the Exchange, indefinitely. This would impact the
Exchange's ability to assure adequate funding of its regulatory
program.
Extending the ORF sunset date to December 31, 2025 is also
equitable and not unfairly discriminatory because prior to the proposed
sunset date, the ORF would continue to be objectively allocated to
Members in a manner that is consistent with the ORF imposed by the
other seventeen (17) options exchanges. The Exchange will continue to
monitor the amount of revenue collected from the ORF to ensure that it,
in combination with its other regulatory fees and fines, does not
exceed the Exchange's total regulatory costs.
B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX Sapphire 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. This proposal will not create
an unnecessary or inappropriate intra-market burden on competition
because the ORF will apply to all customer activity, and is designed to
enable the Exchange to recover a material portion of the Exchange's
cost related to its regulatory activities. This proposal will not
create an unnecessary or inappropriate inter-market burden on
competition because it will be a regulatory fee that supports
regulation in furtherance of the purposes of the Act. The Exchange is
obligated to ensure that the amount of regulatory revenue collected
from the ORF, in combination with its other regulatory fees and fines,
does not exceed regulatory costs. MIAX Sapphire's ORF, is lower than,
or comparable to, fees charged by other options exchanges for the same
or similar services.
The Exchange notes that while it does not believe that its proposed
ORF will impose any burden on inter-market competition, the Exchange
not charging an ORF or being precluded from charging an ORF after May
31, 2025 but prior to the proposed sunset date of December 31, 2025
would, in-fact, represent a significant burden on the Exchange's
ability to assure adequate funding of its regulatory program. As noted
above, the Exchange is a new entrant in the highly competitive
environment for equity options trading. Also, as noted above, all
registered options exchanges currently impose the ORF on their members,
and such ORF fees imposed by other options
[[Page 22392]]
exchanges currently do and will continue to extend to executions
occurring on the Exchange. The Exchange believes that it is likely that
a viable ORF alternative may be presented during the proposed sunset
period. The Exchange believes that in order to compete with these
existing options exchanges, it must, in fact, impose an ORF on its
Members during this additional sunset period, and that the inability to
do so would result in an unfair competitive disadvantage to the
Exchange.
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) of the Act \13\ and paragraph (f) of Rule 19b-4 \14\
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 change should be approved or
disapproved.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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#1062657c753d737f7d7d757e6463506375733e777f66"><span class="__cf_email__" data-cfemail="8ffdfae3eaa2ece0e2e2eae1fbfccffceaeca1e8e0f9">[email protected]</span></a>. Please include
file number SR-SAPPHIRE-2025-24 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-2025-24. 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-2025-24 and should
be submitted on or before June 17, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-09396 Filed 5-23-25; 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 May 27, 2025.
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.