Notice2025-20543
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Sapphire Fee Schedule To Establish Fees and Rebates for the Trading Floor of the MIAX Sapphire Exchange
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
November 21, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 223 (Friday, November 21, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 223 (Friday, November 21, 2025)]
[Notices]
[Pages 52732-52740]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-20543]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104198; File No. SR-SAPPHIRE-2025-39]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the MIAX Sapphire Fee Schedule To Establish Fees and Rebates for the
Trading Floor of the MIAX Sapphire Exchange
November 18, 2025.
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 25, 2025, 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.
---------------------------------------------------------------------------
\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 proposes to amend the MIAX Sapphire Options Exchange
Fee Schedule (``Fee Schedule'') to amend the MIAX Sapphire Options
Exchange Fee Schedule (the ``Fee Schedule'') to establish fees and
rebates for the Trading Floor \3\ of the MIAX Sapphire Exchange.
Additionally, the Exchange proposes to adopt new definitions to the Fee
Schedule and to make minor non-substantive changes to harmonize the
formatting of the existing QCC and cQCC Fees tables for electronic
transactions with the proposed QCC and cQCC Fees tables for Trading
Floor transactions. Finally, the Exchange proposes to replace the
phrase ``complex order book'' located in the paragraph below the
Complex Stock Option Fees in Section 1)a)v) with the defined term,
``Strategy Book.'' \4\
---------------------------------------------------------------------------
\3\ The term ``Trading Floor'' or ``Floor'' means the physical
trading floor of the Exchange located in Miami, Florida. The Trading
Floor shall consist of one ``Crowd Area'' or ``Pit'' where Floor
Participants will be located and option contracts will be traded.
The Crowd Area or Put shall be marked with specific visible
boundaries on the Trading Floor, as determined by the Exchange. A
Floor Broker must represent all orders in an ``open outcry'' fashion
in the Crowd Area. See Exchange Rule 100.
\4\ The ``Strategy Book'' is the Exchange's electronic book of
complex orders. See Exchange Rule 100.
---------------------------------------------------------------------------
MIAX Sapphire received its approval to operate as a national
securities exchange on July 15, 2024,\5\ and began electronic trading
on August 12, 2024. The MIAX Sapphire Trading Floor began operations on
September 12, 2025.
---------------------------------------------------------------------------
\5\ 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).
---------------------------------------------------------------------------
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>, and at MIAX Sapphire's principal office.
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 Fee Schedule for trading on MIAX
Sapphire to create a new fee and rebate structure for transactions
occurring on the MIAX Sapphire Trading Floor. The Exchange began
trading on the Trading Floor on September 12, 2025, and is submitting
this filing to describe the fees and rebates that will be applicable to
transactions on the Trading Floor. The Exchange also proposes to adopt
definitions to the Fee Schedule to provide additional detail and
clarity. Additionally, the Exchange proposes to make minor non-
substantive changes to the Fee Schedule to harmonize the existing QCC
and cQCC Fees tables for electronic transactions to that of the
proposed QCC and cQCC Fees tables for Trading Floor transactions.
Finally, the Exchange proposes to replace the phrase ``complex order
book'' located in the paragraph below the Complex Stock Option Fees in
Section 1)a)v) with the defined term, ``Strategy Book.''
The Exchange initially filed this proposal on September 11, 2025,
(SR-
[[Page 52733]]
SAPPHIRE-2025-36). On September 25, 2025, the Exchange withdrew SR-
SAPPHIRE-2025-36 and refiled this proposal in its stead.
Proposed QFO and cQFO Fees and Rebates
The Exchange propose to adopt new paragraph c), Trading Floor
Transactions, to Section 1), Transaction Rebates/Fees, of the Fee
Schedule. Further, the Exchange proposes to adopt subsection i), ``QFO
and cQFO Fees and Rebates,'' to describe the fees and rebates
applicable to Qualified Floor Orders (``QFOs'') \6\ and Complex
Qualified Floor Orders (``cQFOs'').\7\ A QFO or cQFO must be entered as
a two-sided order, with an initiating side and a contra side,\8\ and
the QFO and cQFO fees, rebates, and applicable fee and rebate caps will
apply to both sides of the order.
---------------------------------------------------------------------------
\6\ See Exchange Rule 2040.
\7\ See Exchange Rule 2040(a)(4).
\8\ See Exchange Rule 2040(a)(1).
---------------------------------------------------------------------------
Similar to the fees assessed for transactions in the Exchange's
electronic market, the Exchange proposes to assess fees for
transactions on the Trading Floor based on origin. For Priority
Customers \9\ and Professional Customers \10\ the Exchange proposes to
assess a $0.00 per contract fee for transactions in SPY/QQQ/IWM, Penny
Classes (excluding SPY/QQQ/IWM), and Non-Penny Classes.
---------------------------------------------------------------------------
\9\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100.
\10\ The term ``Professional Customer'' for the purposes of the
Fee Schedule, shall mean a Public Customer that is not a Priority
Customer.
---------------------------------------------------------------------------
The Exchange proposes to assess a $0.25 per contract fee for
transactions in SPY/QQQ/IWM, Penny Classes (excluding SPY/QQQ/IWM), and
Non-Penny Classes, for Away Market Maker,\11\ Firm, and Broker-Dealer
origins.
---------------------------------------------------------------------------
\11\ The term ``Away Market Maker'' for the purposes of the Fee
Schedule, shall mean a non MIAX Sapphire Market Maker.
---------------------------------------------------------------------------
The Exchange proposes to assess a $0.00 per contract fee for
transactions in SPY/QQQ/IWM, Penny Classes (excluding SPY/QQQ/IWM), and
Non-Penny Classes, for Firm and Broker-Dealer origins facilitating a
Priority Customer or Professional Customer.
The Exchange proposes to assess a $0.50 per contract fee for
transactions in SPY/QQQ/IWM, Penny Classes (excluding SPY/QQQ/IWM), and
Non-Penny Classes, for Floor Market Maker \12\ origins.
---------------------------------------------------------------------------
\12\ A Floor Market Maker is a Floor Participant of the Exchange
located on the Trading Floor who has received permission from the
Exchange to trade in options for his own account. See Exchange Rule
2105(b).
---------------------------------------------------------------------------
The Exchange proposes to provide a ($0.10) rebate for transactions
in SPY/QQQ/IWM, Penny Classes (excluding SPY/QQQ/IWM), and Non-Penny
Classes, for Floor Broker \13\ origins on both the Agency and contra
sides, if applicable.
---------------------------------------------------------------------------
\13\ A Floor Broker is an individual who is registered with the
Exchange for the purpose, while on the Trading Floor, of accepting
and handling options orders. See Exchange Rule 2015.
---------------------------------------------------------------------------
The Exchange proposes to provide a ($0.20) rebate for Floor Broker
Breakup credit for transactions in SPY/QQQ/IWM, Penny Classes
(excluding SPY/QQQ/IWM), and Non-Penny Classes.
The Exchange proposes to adopt a paragraph below the ``QFO and cQFO
Fees and Rebates'' table, to provide that, ``[f]ees and rebates will
apply to both executed sides of the paired QFO or cQFO. cQFO fees and
rebates are per executed side per leg. Floor Broker rebates are only
payable on the Floor Brokers' billable sides. The rebates will not
apply to Priority Customer, Professional Customer, Firm/Broker-Dealer
Facilitating a Priority Customer or Professional Customer, competing
Floor Broker orders, and Floor Market Maker (sides) executions. Fees
for Floor Market Maker volume executed via a Floor Broker are assessed
to the Floor Market Maker. Fees and rebates for Floor Broker volume,
other than the executing Floor Broker's own orders, entered on behalf
of a competing Floor Broker, are assessed to the competing Floor
Broker.''
The Exchange proposes to adopt a second paragraph below the ``QFO
and cQFO Fees and Rebates'' table, to provide that, ``[t]he initiating
side of the QFO or cQFO executed against an order on the MIAX Sapphire
Electronic Book \14\ will be treated as a Floor \15\ transaction for
purposes of the MIAX Sapphire Fee Schedule. The corresponding order on
the MIAX Sapphire Electronic Book will be treated as an electronic
transaction and will be subject to the fees and rebates in Section
1)a)i) of the MIAX Sapphire Fee Schedule. The Floor Broker Breakup
Credit will apply to the Floor Broker that submits the QFO or cQFO
instead of the Floor Broker rebate for executions that trade with a
Floor Market Maker.''
---------------------------------------------------------------------------
\14\ The term ``Electronic Book'' means the Exchange's Simple
Order Book and Strategy Book. See Exchange Rule 100. The ``Simple
Order Book'' is the Exchange's regular electronic book of orders and
quotes. See Exchange Rule 100. The term ``Strategy Book'' is the
Exchange's electronic book of complex orders. See Exchange Rule 100.
\15\ See supra note 3.
---------------------------------------------------------------------------
The Exchange proposes to adopt a third paragraph below the ``QFO
and cQFO Fees and Rebates'' table to provide that, ``[t]he rates for
Firm/Broker-Dealer Facilitating a Priority Customer or Professional
Customer will apply to any Trading Floor transaction involving a Firm
proprietary trading account that has a Priority Customer or
Professional Customer of the same Firm on the contra side of the
transaction, or a Broker-Dealer facilitating a Priority Customer or
Professional Customer order where the Broker-Dealer and the Priority
Customer or Professional Customer both clear through the same clearing
firm and the Broker-Dealer clears in the customer range.''
Proposed QCC Order Fees and Rebates
The Exchange proposes to adopt Section 1)c)ii) of the Fee Schedule
as, ``QCC Fees and Rebates.'' A QCC Order is comprised of an
originating order to buy or sell at least 1,000 contracts that is
identified as being part of a qualified contingent trade, coupled with
a contra side order or orders totaling an equal number of
contracts.\16\ A ``qualified contingent trade'' is a transaction
consisting of two or more component orders, executed as agent or
principal, where: (a) at least one component is an NMS Stock, as
defined in Rule 600 of Regulation NMS under the Exchange Act; (b) all
components are effected with a product or price contingency that either
has been agreed to by all the respective counterparties or arranged for
by a broker-dealer as principal or agent; (c) the execution of one
component is contingent upon the execution of all other components at
or near the same time; (d) the specific relationship between the
component orders (e.g., the spread between the prices of the component
orders) is determined by the time the contingent order is placed; (e)
the component orders bear a derivative relationship to one another,
represent different classes of shares of the same issuer, or involve
the securities of participants in mergers or with intentions to merge
that have been announced or cancelled; and (f) the transaction is fully
hedged (without regard to any prior existing position) as a result of
other components of the contingent trade.\17\
---------------------------------------------------------------------------
\16\ See Exchange Rule 516(j).
\17\ See Interpretation and Policy .01 of Exchange Rule 516.
---------------------------------------------------------------------------
The Exchange proposes to adopt a per contract fee for the
initiating side of the order based on origin code. Specifically, the
Exchange proposes to assess a $0.00 per contract fee for Priority
Customer origin; a $0.12 per contract fee for
[[Page 52734]]
Professional Customer origin; and a $0.20 per contract fee for all
other market participant origins (i.e., Floor Market Maker, Away Market
Maker, Broker-Dealer, and Firm).
The Exchange proposes to adopt a per contract fee for the contra
side of the order based on origin code. Specifically, the Exchange
proposes to assess a $0.00 per contract fee for Priority Customer
contra side origins; a $0.12 per contract fee for Professional Customer
contra side origins; and a $0.20 per contract fee for all other market
participant contra side origins (i.e., Floor Market Maker, Away Market
Maker, Broker-Dealer, and Firm).
The Exchange proposes to establish that rebates are paid to the
Floor Broker that entered the QCC Order, depending upon both the origin
type of the initiating order and the origin type of the contra side of
the order. Specifically, the Exchange proposes to provide the following
rebates to the following initiating origins when the contra side is a
Priority Customer: ($0.00) per contract for Priority Customer origin;
($0.07) per contract for Professional Customer origin; and ($0.17) per
contract for all other origins (i.e., Floor Market Maker, Away Market
Maker, Broker-Dealer, and Firm).
The Exchange proposes to provide the following rebates for the
following initiating origins when the contra side is a Professional
Customer: ($0.07) per contract for Priority Customer origin; ($0.17)
per contract for Professional Customer origin; and ($0.25) per contract
for all other origins (i.e., Floor Market Maker, Away Market Maker,
Broker-Dealer, and Firm).
Finally, the Exchange proposes to provide the following rebates for
the following initiating origins when the contra side is any other
origin (i.e., neither a Priority Customer nor a Professional Customer):
($0.17) per contract for Priority Customer origin; ($0.25) per contract
for Professional Customer origin; and ($0.30) per contract for all
other origins (i.e., Floor Market Maker, Away Market Maker, Broker-
Dealer, and Firm).
The Exchange also proposes to adopt a note below the ``QCC Fees and
Rebates'' table that will specify, ``[p]er contract rebates will be
paid to the Floor Broker that enters the QCC Order into the MIAX
Sapphire System.\18\ Additionally, the Exchange proposes to include a
definition of a QCC order in the note which will provide that, ``[a]
QCC transaction is comprised of an `initiating order' to buy (sell) at
least 1,000 contracts that is identified as being part of a qualified
contingent trade, coupled with a contra side order to sell (buy) an
equal number of contracts.'' The Exchange notes that with regard to
order entry, the first order submitted into the System is marked as the
initiating side and the second order is marked as the contra side.
Finally, the Exchange notes that these fees and rebates are identical
to the fees and rebates for electronic trading on the MIAX Sapphire
Exchange.\19\
---------------------------------------------------------------------------
\18\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\19\ See Section 1)a)ii), QCC Fees, of the Exchange's Fee
Schedule.
---------------------------------------------------------------------------
Proposed cQCC Fees and Rebates
The Exchange proposes to adopt Section 1)c)iii) of the Fee Schedule
as, ``cQCC Fees and Rebates,'' to adopt fees and rebates applicable to
cQCC Orders, which are assessed per contract per leg. A cQCC Order is
comprised of an originating complex order \20\ to buy or sell where
each component is at least 1,000 contracts that is identified as being
part of a qualified contingent trade \21\ coupled with a contra side
complex order or orders totaling an equal number of contracts.\22\
---------------------------------------------------------------------------
\20\ In sum, a ``complex order'' is any order involving the
concurrent purchase and/or sale of two or more different options in
the same underlying security (the ``legs'' or ``components'' of the
complex order), for the same account, in a conforming or non-
conforming ratio for the purposes of executing a particular
investment strategy. See Exchange Rule 518(a). A complex order can
also be a ``stock-option order'' with a conforming or non-conforming
ratio as defined in Exchange Rule 518(a).
\21\ See supra note 17.
\22\ Trading of cQCC Orders is governed by Exchange Rule
515(g)(4).
---------------------------------------------------------------------------
The Exchange proposes to adopt a per contract fee for the
initiating side of the order based on origin code. Specifically, the
Exchange proposes to assess a $0.00 per contract fee for Priority
Customer origin; a $0.12 per contract fee for Professional Customer
origin; and a $0.20 per contract fee for all other market participant
origins (i.e., Floor Market Maker, Away Market Maker, Broker-Dealer,
and Firm).
The Exchange proposes to adopt a per contract fee for the contra
side of the order based on origin code. Specifically, the Exchange
proposes to assess a $0.00 per contract fee for Priority Customer
contra side origins; a $0.12 per contract fee for Professional Customer
contra side origins; and a $0.20 per contract fee for all other market
participant contra side origins (i.e., Floor Market Maker, Away Market
Maker, Broker-Dealer, and Firm).
The Exchange proposes to establish that rebates are paid to the
Floor Broker that entered the cQCC Order, depending upon both the
origin type of the initiating order and the origin type of the contra
side of the order. Specifically, the Exchange proposes to provide the
following rebates to the following initiating origins when the contra
side is a Priority Customer: ($0.00) per contract for Priority Customer
origin; ($0.07) per contract for Professional Customer origin; and
($0.17) per contract for all other origins (i.e., Floor Market Maker,
Away Market Maker, Broker-Dealer, and Firm).
The Exchange proposes to provide the following rebates for the
following initiating origins when the contra side is a Professional
Customer: ($0.07) per contract for Priority Customer origin; ($0.17)
per contract for Professional Customer origin; and ($0.25) per contract
for all other origins (i.e., Floor Market Maker, Away Market Maker,
Broker-Dealer, and Firm).
Finally, the Exchange proposes to provide the following rebates for
the following initiating origins when the contra side is any other
origin (i.e., neither a Priority Customer nor a Professional Customer):
($0.17) per contract for Priority Customer origins; ($0.25) per
contract for Professional Customer origins; and ($0.30) per contract
for all other origins (i.e., Floor Market Maker, Away Market Maker,
Broker-Dealer, and Firm).
The Exchange also proposes to adopt a note below the ``cQCC Fees
and Rebates'' table to specify that, ``[p]er contract rebates will be
paid to the Floor Broker that enters the cQCC Order into the MIAX
Sapphire System.'' Additionally, the note will provide that, ``[a]ll
fees and rebates are per contract leg.'' Finally, the note will provide
the definition of a cQCC transaction as one that, ``is comprised of an
`initiating complex order' to buy (sell) where each component is at
least 1,000 contracts that is identified as being part of a qualified
contingent trade, coupled with a contra side complex order or orders to
sell (buy) an equal number of contracts.'' The Exchange also proposes
to add the following reference sentence at the end of the notes
section, ``[t]he stock handling fee for the stock leg of cQCC
transactions is described in Section 1)c)vi) of the Fee Schedule.''
This will provide clarity to the Exchange's Fee Schedule and help
signal to market participants that the stock handling fees for the
stock leg of cQCC transactions is located in a separate section of the
Fee Schedule. Finally, the Exchange notes that these fees and rebates
(excluding stock handling fees) are identical to the fees
[[Page 52735]]
and rebates for electronic trading on the MIAX Sapphire Exchange.\23\
---------------------------------------------------------------------------
\23\ See Section 1)a)iii), cQCC Fees, of the Exchange's Fee
Schedule.
---------------------------------------------------------------------------
Proposed C2C and cC2C Fees and Rebates
The Exchange proposes to adopt Section 1)c)iv) of the Fee Schedule
as, ``C2C and cC2C Fees and Rebates.'' Customer to Customer Cross
Orders (``C2C'') and complex Customer to Customer Cross Orders
(``cC2C'') are comprised entirely of Priority Customer orders, and the
Exchange proposes to assess $0.00 per contract transaction fees and
provide ($0.00) per contract rebates to such orders, pursuant to
Section 1)a)i) of the Fee Schedule. The Exchange also proposes to adopt
certain explanatory text relating to the C2C and cC2C Fees table. The
proposed text will provide that, ``[a]ll fees and rebates are per
contract per leg.'' Also, that ``[a] C2C Order is comprised of a
Priority Customer Order to buy and a Priority Customer Order to sell at
the same price and for the same quantity. A cC2C Order is comprised of
one Priority Customer complex order to buy and one Priority Customer
complex order to sell at the same price and for the same quantity.''
Proposed Strategy QFO Fees, Rebates, and Fee Cap
The Exchange proposes to adopt Section 1)c)v) of the Fee Schedule
as, ``Strategy QFO Fees, Rebates, and Fee Cap,'' to establish monthly
and daily fee caps for certain transactions on the Trading Floor.
Specifically, the Exchange proposes that Trading Floor transaction fees
assessed at Section 1)c)i) rates for the following strategy QFOs will
be capped separately from each other on a daily basis per Firm, per
underlying. As proposed, Box Spread,\24\ Jelly Roll Strategy,\25\
Short/Long Stock Interest Spread,\26\ Merger Spread,\27\ and Reversal/
Conversion Spread \28\ strategies executed on the same trading day will
each be capped at $500 per day, per Firm, and per underlying. Further,
on each trading day, all fees collected as the result of the strategy
trades described above are fully rebated back to the executing Floor
Broker. Proposed subsection v) will also provide that, ``Trading Floor
transaction fees assessed at Section 1)c)i) rates for Dividend strategy
QFOs will be capped separately from each other on a daily basis per
Firm, per underlying.'' As proposed, ``Dividend strategy QFOs executed
on the same trading day in the same options class will be capped
separately from each other at $500 per day,'' and ``[o]n each trading
day, all fees collected as the result of Dividend strategy trades are
fully rebated back to the executing Floor Broker.''
---------------------------------------------------------------------------
\24\ As proposed herein a ``Box Spread Strategy'' is a strategy
that synthesizes long and short stock positions to create a profit.
Specifically, a long call and short put at one strike is combined
with a short call and long put at a different strike to create
synthetic long and synthetic short stock positions, respectively.
\25\ As proposed herein a ``Jelly Roll Strategy'' is created by
entering into two separate positions simultaneously. One position
involves buying a put and selling a call with the same strike price
and expiration. The second position involves selling a put and
buying a call, with the same strike price, but with a different
expiration from the first position.
\26\ As proposed herein a ``Short Stock Interest Strategy'' is
defined as a transaction done to achieve a short stock interest
arbitrage involving the purchase, sale, and exercise of in-the-money
options of the same class. A ``Long Stock Interest Strategy'' is
defined as a transaction done to achieve long stock involving the
purchase, sale, and exercise of in-the-money options of the same
class.
\27\ As proposed herein a ``Merger Strategy'' is defined as
transactions done to achieve a merger arbitrage involving the
purchase, sale, and exercise of options of the same class and
expiration date, each executed prior to the date on which
shareholders of record are required to elect their respective form
of consideration, i.e., cash or stock.
\28\ As proposed herein ``Reversal'' and ``Conversion''
strategies are transactions that employ calls and puts of the same
strike price and the underlying stock. ``Reversals'' are established
by combining a short stock position with a short put and a long call
position that shares the same strike and expiration. ``Conversions''
employ long positions in the underlying stock that accompany long
puts and short calls sharing the same strike and expiration.
---------------------------------------------------------------------------
Proposed Complex Stock-Option Order Fees
The Exchange proposes to adopt Section 1)c)vi) of the Fee Schedule
as ``Complex Stock-Option Order Fees'' to detail the fee structure for
stock-option orders originating on the Trading Floor. The Exchange
proposes to pass through to the Member any stock handling fee
applicable to stock-option orders executed against other stock-option
orders in the Strategy Book, which the Exchange must route to an
outside venue. Specifically, the Exchange proposes that stock handling
fees for the stock leg of stock-option orders executed against other
stock-option orders in the Strategy Book, which the Exchange must route
to an outside venue, that are assessed by the routing broker-dealer
utilized by the Exchange with respect to the execution of the stock leg
of such order, will be passed through to the Member. For example, the
Exchange anticipates that the routing broker-dealer will bill the
Exchange for Section 31 fees and FINRA Trading Activity Fees with
respect to the execution of the stock leg of any such order. The
Exchange will pass such fees through to the Member, without any
additional mark-up.
Definitions
The Exchange currently has a Definitions section at the beginning
of its Fee Schedule. The purpose of the Definitions section is to
streamline the Fee Schedule by placing many of the defined terms used
in the Fee Schedule in one location at the beginning of the Fee
Schedule. Many of the defined terms are also defined in the Exchange's
Rulebook, particularly in Exchange Rule 100. Any defined terms that are
also defined or otherwise explained in the Exchange's Rules contain a
cross reference to the relevant Exchange Rule.
The Exchange proposes to include the following terms and
definitions in the Definitions section of its Fee Schedule.
<bullet> ``Away Market Maker'' for the purposes of this Fee
Schedule shall mean a non MIAX Sapphire Market Maker.
<bullet> ``Box Spread Strategy'' is a strategy that synthesizes
long and short stock positions to create a profit. Specifically, a long
call and short put at one strike is combined with a short call and long
put at a different strike to create synthetic long and synthetic short
stock positions, respectively.
<bullet> ``Clerk'' means any registered on-Floor person employed by
or associated with a Floor Broker or Floor Market Maker and who is not
eligible to effect transactions on the Trading Floor as a Floor Market
Maker or Floor Broker. See Exchange Rule 2055.
<bullet> ``Complex Qualified Floor Order'' or ``cQFO'' has the
meaning ascribed to such term in the Exchange Rules. See Exchange Rule
2040.
<bullet> ``Dividend Strategy'' is defined as transactions done to
achieve a dividend arbitrage involving the purchase, sale and exercise
of in-the-money options of the same class, executed the first business
day prior to the date on which the underlying stock goes ex-dividend.
<bullet> ``Electronic Book'' means the Exchange's Simple Order Book
and Strategy Book. See Exchange Rule 100.
<bullet> ``Floor Broker'' means an individual who is registered
with the Exchange for the purpose, while on the Trading Floor, of
accepting and handling options orders. A Floor Broker must be
registered as a Floor Participant prior to registering as a Floor
Broker. A Floor Broker may take into his own account,
[[Page 52736]]
and subsequently liquidate, any position that results from an error
made while attempting to execute, as Floor Broker, an order. See
Exchange Rule 2015.
<bullet> ``Floor Market Maker'' means a Floor Participant of the
Exchange located on the Trading Floor who has received permission from
the Exchange to trade in options for his own account. See Exchange Rule
2105.
<bullet> ``Floor Participant'' means Floor Brokers as defined in
Rule 2015 and Floor Market Makers as defined in Rule 2105(b). See
Exchange Rule 100.
<bullet> ``Initial Waiver Period'' means for each applicable fee
the period of time from the initial effectiveness of the fee for the
remainder of the partial month once the Trading Floor begins to
operate, plus an additional five (5) full calendar months after the
completion of the partial month, if applicable, of the launch of
Trading Floor operations.
<bullet> ``Jelly Roll Strategy'' is created by entering into two
separate positions simultaneously. One position involves buying a put
and selling a call with the same strike price and expiration. The
second position involves selling a put and buying a call, with the same
strike price, but with a different expiration from the first position.
<bullet> ``Long Stock Interest Strategy'' is defined as a
transaction done to achieve long stock involving the purchase, sale,
and exercise of in-the-money options of the same class.
<bullet> ``Merger Strategy'' is defined as transactions done to
achieve a merger arbitrage involving the purchase, sale and exercise of
options of the same class and expiration date, each executed prior to
the date on which shareholders of record are required to elect their
respective form of consideration, i.e., cash or stock.
<bullet> ``Professional Customer'' for the purposes of this Fee
Schedule shall mean a Public Customer that is not a Priority Customer.
<bullet> ``Qualified Floor Order'' or ``QFO'' is a two-sided order
with an initiating side and a contra side. QFOs may also be complex
orders as defined in Rule 518(a) (``cQFO'') with no more than the
applicable number of legs as determined by the Exchange and
communicated to Participants via Regulatory Circular. See Exchange Rule
2040.
<bullet> ``Reversal'' and ``Conversion'' strategies are
transactions that employ calls and puts of the same strike price and
the underlying stock. ``Reversals'' are established by combining a
short stock position with a short put and a long call position that
shares the same strike and expiration. ``Conversions'' employ long
positions in the underlying stock that accompany long puts and short
calls sharing the same strike and expiration.
<bullet> ``Short Stock Interest Strategy'' is defined as a
transaction done to achieve a short stock interest arbitrage involving
the purchase, sale, and exercise of in-the-money options of the same
class.
<bullet> ``Trading Floor'' or ``Floor'' means the physical trading
floor of the Exchange located in Miami, Florida. The Trading Floor
shall consist of one ``Crowd Area'' or ``Pit'' where Floor Participants
will be located and option contracts will be traded. The Crowd Area or
Pit shall be marked with specific visible boundaries on the Trading
Floor, as determined by the Exchange. A Floor Broker must represent all
orders in an ``open outcry'' fashion in the Crowd Area. See Exchange
Rule 100.
Harmonizing Changes
The Exchange proposes to amend the QCC and cQCC Fees and Rebates
tables located in the Fee Schedule at Section 1)a)ii) and 1)a)iii)
respectively to harmonize the language and formatting of the table to
match the language and formatting of the proposed QCC and cQCC Fees and
Rebates tables to be located in Section 1)c)ii) and 1)c)iii)
respectively.
Specifically, the Exchange proposes to amend the row label,
``Public Customer that is Not a Priority Customer,'' under the column
heading, ``Types of Market Participants,'' to reflect the proposed
definition of Professional Customer. As proposed the amended row label
would simply be, ``Professional Customer.'' Additionally, the Exchange
proposes to amend the row label, ``Non-Sapphire Market Maker,'' under
the same column heading, to reflect the proposed definition of Away
Market Maker. As proposed the amended row label would simply be, ``Away
Market Maker.'' Further, the Exchange proposes to amend the column
heading, ``Per Contract Rebate for EEM when Contra is a Public Customer
that is not a Priority Customer,'' to reflect the proposed definition
of Professional Customer. As proposed the amended column heading would
be, ``Per Contract Rebate for EEM when Contra is a Professional
Customer.''
The Exchange also proposes to make minor non-substantive formatting
changes to the values displayed in (i) the ``Per Contract Rebate for
EEM when Contra is a Priority Customer'' column; (ii) the ``Per
Contract Rebate for EEM when Contra is a Professional Customer''
column; and (iii) the ``Per Contract Rebate for EEM when Contra is all
Other Origins'' column. Throughout the Fee Schedule the Exchange
differentiates rebates from fees by placing parenthesis around the
rebate value while not using parenthesis for fees, (e.g., ($0.07) would
indicate a $0.07 rebate, while $0.12 would indicate a $0.12 fee).
Currently, the rebates listed in the aforementioned columns do not use
the standard convention of placing rebates in parentheses. Therefore,
the Exchange now proposes to amend the formatting of the aforementioned
columns in both the QCC and cQCC Fee and Rebates tables to place the
rebates in parentheses in order to harmonize the tables to the proposed
QCC and cQCC Fee and Rebates tables for Trading Floor transactions, and
to also generally harmonize the formatting of the tables to the Fee
Schedule's convention of differentiating fees and rebates.
Finally, the Exchange proposes to make a minor non-substantive edit
to Section 1)a)v), ``Complex Stock-Option Order Fees,'' to replace the
phrase ``complex order book'' with the defined term, ``Strategy Book,''
which is defined the Exchange's Rulebook as the Exchange's electronic
book of complex orders.\29\
---------------------------------------------------------------------------
\29\ See supra note 14.
---------------------------------------------------------------------------
Implementation
The proposed changes will become immediately effective.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\30\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\31\ in particular, in that it
is not designed to permit unfair discrimination among customers,
brokers, or dealers. The Exchange also believes that its proposal is
consistent with Section 6(b)(4) of the Act \32\ because it represents
an equitable allocation of reasonable dues, fees and other charges
among market participants using any facility or system which the
Exchange operates or controls.
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78f(b).
\31\ 15 U.S.C. 78f(b)(5).
\32\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Proposed QFO and cQFO Fees and Rebates
The Exchange believes the proposed QFO and cQFO Fees and Rebates
for transactions on the Trading Floor are reasonable. Furthermore,
several other competing option exchanges have open outcry trading
floors and market participants can readily direct order flow to any of
these venues if they deem
[[Page 52737]]
MIAX Sapphire's Trading Floor fees to be excessive.\33\
---------------------------------------------------------------------------
\33\ See BOX Exchange Fee Schedule; PHLX Pricing Schedule; NYSE
Arca Options Fees and Charges; and NYSE America Options Fee
Schedule.
---------------------------------------------------------------------------
The Exchange believes that not assessing a fee for Priority
Customer and Professional Customer Floor transactions is appropriate,
equitable and not unfairly discriminatory. The Exchange believes it
promotes the best interests of investors to have lower transaction
costs for Priority Customers and Professional Customers, and having no
fee for QFOs and cQFOs will attract Priority Customer and Professional
Customer order flow to the Trading Floor. Additionally, the Exchange
notes that at least one other options exchange with an open outcry
trading floor does not assess a fee for customer orders.\34\ The
Exchange believes that its Priority Customer and Professional Customer
transaction fees are reasonable and not unfairly discriminatory and
will incentivize customer order flow to the Trading Floor and market
participants will increasingly compete for the opportunity to trade
with these orders by sending more orders and providing narrower and
larger sized quotations. The Exchange also believes it is necessary to
offer these fees from a competitive perspective as at least one other
options exchange with open outcry trading offers similar fees for
customer orders.\35\
---------------------------------------------------------------------------
\34\ See Section V. Manual Transaction Fees, A. QOO and FOO
Order Fees, of the BOX Exchange Fee Schedule which has a $0.00 fee
for Public Customer transactions in both Penny Interval and Non-
Penny Interval Classes.
\35\ See Section V. Manual Transaction Fees, A. QOO and FOO
Order Fees, of the BOX Exchange Fee Schedule, where Public Customers
are assessed a $0.00 fee and Professional Customers are assessed a
$0.10 fee for transactions in both Penny Interval Classes and Non-
Penny Interval Classes.
---------------------------------------------------------------------------
The Exchange believes the $0.25 fee for Away Market Maker, Firm,
and Broker-Dealer origins is reasonable, equitable, and not unfairly
discriminatory. The proposed fees for these transactions have been
designed to be comparable to the fees that such orders would be charged
at a competing venue.\36\
---------------------------------------------------------------------------
\36\ The Exchange notes that the BOX Exchange similarly does not
charge a fee to Public Customers for Qualified Open Orders in either
Penny or Non-Penny Interval Classes on its trading floor. The BOX
Exchange similarly charges Broker Dealers a fee of $0.25 and Market
Makers $0.50 for Qualified Open Orders in either Penny or Non-Penny
Interval Classes on its trading floor. See the BOX Exchange Fee
Schedule available online at <a href="https://boxexchange.com/regulatory/fees/">https://boxexchange.com/regulatory/fees/</a>.
---------------------------------------------------------------------------
The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to not charge a fee for a Firm/Broker-Dealer
facilitating a Priority Customer or Professional Customer as this
proposal will encourage Firms and Broker-Dealers to facilitate customer
orders on the Trading Floor and will increase open outcry
participation, which will in turn promote increased executions on the
Exchange's Trading Floor will benefit all Exchange Participants.\37\
Further, the Exchange believes that this proposal is reasonable and
appropriate as the proposed fees are in line with fees assessed on at
least one other options exchange with an open outcry trading floor.\38\
The Exchange also believes it is necessary to offer these fees from a
competitive perspective as at least one other options exchange with
open outcry trading offers similar fees for customer orders.\39\
---------------------------------------------------------------------------
\37\ The term ``Participant' means a firm, or organization that
is registered with the Exchange pursuant to Chapter II of the MIAX
Sapphire Rulebook for purposes of participating in trading on a
facility of the Exchange and includes a Floor Participant. See
Exchange Rule 100.
\38\ See BOX Exchange Fee Schedule, Section V, Paragraph A,
establishing a $0.00 fee for a Broker Dealer Facilitating a Public
Customer in Penny Interval and Non-Penny Interval Classes.
\39\ See Section V. Manual Transaction Fees, A. QOO and FOO
Order Fees, of the BOX Exchange Fee Schedule, where a Broker Dealer
facilitating a Public Customer Order is assessed $0.00 in both Penny
Interval Classes and Non-Penny Interval Classes.
---------------------------------------------------------------------------
The Exchange believes its $0.50 fee for Floor Market Maker QFOs and
cQFOs is equitable and not unfairly discriminatory, although it is
higher than fees assessed for other origins. Floor Market Makers trade
for their own accounts and benefit from having access to interact with
orders that are made available in open outcry on the Trading Floor. As
such, the Exchange believes that it has set its fees for Floor Market
Maker transactions in such a way that Floor Market Makers will not be
discouraged from executing transactions on the Trading Floor, but
rather will quote aggressively, so that they may interact with such
orders and participate in transactions on the Trading Floor. The
Exchange believes further that the liquidity and price discovery
provided by Floor Market Makers will attract other market participants'
orders to the Trading Floor and promote a robust Trading Floor.
Further, the Exchange believes it is not unreasonable to assess this
fee as it is comparable to the fee assessed to Market Makers on the
trading floor of another option exchange with open outcry trading.\40\
---------------------------------------------------------------------------
\40\ See Section V. Manual Transaction Fees, A. QOO and FOO
Order Fees, of the BOX Exchange Fee Schedule that provides for a
$0.50 fee to be assessed to Market Makers in both Penny Interval
Classes and Non-Penny Interval Classes.
---------------------------------------------------------------------------
The Exchange believes it is equitable and not unfairly
discriminatory to provide Floor Broker rebates of ($0.10) for the
Agency and contra sides of orders, if applicable. The Exchange believes
that offering this rebate to Floor Brokers will encourage Floor Brokers
to bring liquidity to the Trading Floor which will benefit all market
participants because it will attract additional liquidity to the
Exchange by providing more trading opportunities. Further, additional
liquidity will contribute to a robust trading environment on the
Exchange's Trading Floor. Further, the Exchange believes it is
necessary to offer this rebate from a competitive perspective as at
least one other option exchange with open outcry trading offers a
similar rebate for Floor Broker orders presented on the trading
floor.\41\
---------------------------------------------------------------------------
\41\ See Section V. Manual Transaction Fees, C. QOO and FOO
Order Rebate, of the BOX Exchange Fee Schedule that provides a $0.10
per contract rebate to Floor Brokers for all Broker Dealer and
Market Maker QOO and FOO Orders presented on the Trading Floor and a
$0.05 per contract for all Professional Customer QOO and FOO Order
presented on the Trading Floor.
---------------------------------------------------------------------------
Floor Broker Breakup Credit
The Exchange believes its proposal to offer Floor Brokers a Breakup
credit of ($0.20) in SPY/QQQ/IWM, Penny Classes (excluding SPY/QQQ/
IWM), and Non-Penny Classes is reasonable, equitably allocated and not
unfairly discriminatory as this proposal applies equally to all Floor
Brokers. The Exchange believes that its proposal will encourage Floor
Broker liquidity in SPY/QQQ/IWM, Penny Classes (excluding SPY/QQQ/IWM),
and Non-Penny Classes. Additional liquidity benefits all market
participants because it will attract additional liquidity to the
Exchange by providing more trading opportunities. Further, additional
liquidity will contribute to a robust trading environment on the
Exchange's Trading Floor.
The Exchange's proposal to pay Floor Brokers a Breakup Credit is
consistent with Section 6(b)(4) of the Act \42\ because it will
encourage market participants to execute orders on the Trading Floor.
The Exchange believes that the Breakup Credit could improve liquidity
on the Exchange to the benefit of all market participants. The Exchange
notes that Breakup Credits are not new or novel and are similarly used
on its affiliate exchange, MIAX Options, to encourage participants to
participate in PRIME and cPRIME Auctions.\43\ In addition, the proposal
is also consistent
[[Page 52738]]
with Section 6(b)(5) of the Act \44\ because it perfects the mechanisms
of a free and open market and a national market system and protects
investors and the public interest because it applies equally to all
Floor Broker QFOs and cQFOs which are subject to a break-up and access
to the Exchange is offered on terms that are not unfairly
discriminatory.
---------------------------------------------------------------------------
\42\ 15 U.S.C. 78f(b)(4).
\43\ See Section 1)a)vi) of the MIAX Options Fee Schedule.
\44\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------
Proposed QCC/cQCC Fees and Rebates
The Exchange believes the proposed fees and rebates for QCC and
cQCC Orders are reasonable because the Exchange believes the proposal
will increase competition and potentially attract additional QCC and
cQCC Order flow from various origins to the Exchange's Trading Floor,
which will grow the Exchange's market share in this segment. The
Exchange also believes it is reasonable and not unfairly discriminatory
to provide higher rebates for QCC and cQCC Orders for Floor Brokers for
executions against origins other than Priority Customer or Professional
Customer because Priority Customer and Professional Customer QCC and
cQCC Orders are already incentivized with reduced fees for the
initiator and contra-side of such orders. The Exchange believes that it
is equitable and not unfairly discriminatory to assess lower fees to
Priority Customer and Professional Customer QCC and cQCC Orders than to
other origins because the securities markets generally, and MIAX
Sapphire in particular, have historically aimed to improve markets for
investors and for customer benefit.\45\ As such, the Exchange believes
that not assessing a fee for a Priority Customer and assessing a lower
fee for Professional Customer versus other Professional origins is
equitable and not unfairly discriminatory. The Exchange believes that
it is equitable and not unfairly discriminatory that Priority Customer
and Professional Customer origins be treated differently than
Professional origins (i.e., Floor Market Maker, Away Market Maker,
Broker-Dealer, and Firm) who are assessed higher fees for QCC and cQCC
Orders. Priority Customer and Professional Customer liquidity benefits
all market participants by providing more trading opportunities. An
increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
The Exchange also believes its proposed fee and rebate structure is
reasonable, equitably allocated and not unfairly discriminatory because
the rebate and fee structure for QCC and cQCC Orders is similar to the
rebate and fee structure on the Exchange's electronic market.\46\
---------------------------------------------------------------------------
\45\ See Section 1)a)i) of the MIAX Sapphire Fee Schedule, which
provides a rebate to Priority Customer orders and assesses a fee for
Market Maker and Non Priority Customer/Non Market Maker orders.
\46\ See supra note 19 and 23.
---------------------------------------------------------------------------
Further, the Exchange believes its proposal provides for the
equitable allocation of reasonable dues and fees and is not unfairly
discriminatory since the Exchange has different net transaction
revenues based on different combinations of origins and contra-side
orders. For example, when a Priority Customer is both the initiator and
contra-side, no rebates are paid (for both QCC and cQCC transactions).
The Exchange notes that Priority Customers are generally assessed a
$0.00 transaction fee. Accordingly, the Exchange believes that it is
reasonable, equitable, and not unfairly discriminatory to provide the
proposed higher Floor Broker rebates for QCC and cQCC Orders for
Professional Customer and other origins when they trade against an
origin other than Priority Customer, in order to increase competition
and potentially attract different combinations of additional QCC and
cQCC Order flow to the Exchange. The Exchange also believes it is
reasonable, equitable, and not unfairly discriminatory to continue to
provide higher rebates for Floor Brokers for QCC and cQCC Orders for
professionals when they trade against origins other than Priority
Customers or Professional Customers because Priority Customers and
Professional Customers are already incentivized by reduced fees for
submitting QCC and cQCC Orders, as compared to professionals (i.e.,
Floor Market Makers, Away Market Makers, Broker-Dealers, and Firms)
that submit QCC and cQCC Orders. The Exchange notes that its proposed
fee and rebate structure is identical to the fee and rebate structure
for electronic transactions on the Exchange.\47\
---------------------------------------------------------------------------
\47\ See Section 1)a)ii) and 1)a)iii) of the MIAX Sapphire Fee
Schedule.
---------------------------------------------------------------------------
Proposed C2C and cC2C Fees and Rebates
The Exchange believes that adding the C2C and cC2C Fees and Rebates
for the Trading Floor to the Fee Schedule is reasonable because the
proposed amount is identical to the fee assessed for C2C and cC2C
electronic transactions, which is currently $0.00.\48\ The proposed
fees would be charged to all Priority Customers alike and the Exchange
believes that assessing a $0.00 fee to Priority Customers is equitable
and not unfairly discriminatory. By assessing a $0.00 fee to Priority
Customer orders, the C2C and cC2C transaction fees will not discourage
the sending of Priority Customer orders. Further, the Exchange notes
that the proposed C2C and cC2C fees are identical to those assessed in
the Exchange's electronic market.
---------------------------------------------------------------------------
\48\ See MIAX Sapphire Fee Schedule, Section a)1)iv).
---------------------------------------------------------------------------
Proposed Strategy QFO Fees, Rebates, and Fee Cap
The Exchange believes that the proposed Strategy QFO fee cap is
reasonable and appropriate. The proposed fee cap of $500 per day for
certain strategies executed on the same trading day in the same
underlying is similar to a fee cap at a competing options exchange with
an open outcry trading floor.\49\ Further, the Exchange believes that
this proposed fee cap is equitable and not unfairly discriminatory
because it provides incentives for all Participants to submit certain
strategy orders from the MIAX Sapphire Trading Floor, which brings
increased liquidity and order flow to the Floor for the benefit of all
market participants. Finally, the Exchange believes it is reasonable,
equitable, and not unfairly discriminatory to provide that Floor
Brokers are eligible to be rebated all fees assessed for strategy
trades on each trading day.
---------------------------------------------------------------------------
\49\ See BOX Exchange Fee Schedule, Section V, Paragraph D,
establishing a $500 fee cap for strategy orders other than dividend
strategies, and establishing a $1,000 cap for dividend strategies.
---------------------------------------------------------------------------
While the $500 fee cap for Dividend strategy QFOs is the same as
the fee cap for other strategy QFOs described in section 1)c)v) of the
Fee Schedule, the Exchange believes that adopting a separate section
for Dividend strategy QFOs gives the Exchange flexibility in the future
to adjust the fee cap for Dividend strategies without changing the
format of the Fee Schedule. The Exchange believes that separating
dividend strategies from non-dividend strategies in proposed Section v)
of the Fee Schedule is reasonable, as other exchanges segregate fee
caps for dividend strategies.\50\
---------------------------------------------------------------------------
\50\ See Section V. Manual Transactions, D. Strategy QOO Order
Fee Cap and Rebate & Strategy FOO Order Fee Cap and Rebate,
paragraph 2., of the BOX Exchange Fee Schedule.
---------------------------------------------------------------------------
Proposed Complex Stock-Option Order Fees
The Exchange believes that the proposed stock handling fee for
stock-option orders is consistent with Section
[[Page 52739]]
6(b)(4) of the Act in that it is reasonable, equitable and not unfairly
discriminatory. The Exchange believes the proposed stock handling fee
for stock-option orders is reasonable and equitable as the Exchange
proposes to pass through to the Member at cost any fees assessed by the
routing broker-dealer utilized by the Exchange with respect to the
execution of the stock leg of any such order. The Exchange also
believes that its proposal is consistent with Section 6(b)(5) of the
Act \51\ because all stock-option orders that originate from the MIAX
Sapphire Trading Floor will be treated equally.
---------------------------------------------------------------------------
\51\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Definitions
The Exchange also believes the proposal furthers the objectives of
Section 6(b)(5) of the Act \52\ 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. The Exchange believes providing a Definitions
section in its Fee Schedule protects investors and the public interest
by clarifying terms and locating them in a dedicated section of the Fee
Schedule for ease of reference, thereby reducing the chance of
confusion. The Exchange notes that the proposed definitions for ``Box
Spread Strategy,'' ``Jelly Roll Strategy,'' ``Long Stock Interest
Strategy,'' ``Merger Strategy,'' and ``Short Stock Interest Strategy''
are substantially similar to the definitions used in the fee schedule
of another options exchange that operates a trading floor.\53\
Additionally, the Exchange notes that the proposed definitions for
``Dividend Strategy,'' and ``Reversal and Conversion Strategies'' are
substantially similar to the definitions used in the pricing schedule
of another options exchange that operates a trading floor.\54\
---------------------------------------------------------------------------
\52\ 15 U.S.C 78f(b)(5).
\53\ See BOX Exchange Fee Schedule.
\54\ See Nasdaq Phlx Options 7 Pricing Schedule, Section 4.
---------------------------------------------------------------------------
Harmonizing Changes
The Exchange believes its proposal to harmonize the language and
formatting of the current Fee Schedule to that of the proposed
additions to the Fee Schedule promotes just and equitable principles of
trade, removes impediments to and perfects the mechanisms of a free and
open market and a national market system, and in general, protects
investors and the public interest by promoting clarity and consistency
in the Exchange's Fee Schedule.
The Exchange believes that the proposed changes to its Fee Schedule
add additional detail and provide further clarification to Members,
investors, and the public, regarding the Exchange's Fee Schedule.
Transparency and clarity are consistent with the Act because it removes
impediments to and helps perfect the mechanism of a free and open
market and a national market system, and, in general, protects
investors and the public interest by accurately describing the fees and
rebates of the Exchange. The Exchange believes it is in the public
interest for its Fee Schedule to be accurate and consistent so as to
eliminate the potential for confusion.
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.
Intra-Market Competition
QFO and cQFO Fees and Rebates
The proposal does not impose an undue burden on intra-market
competition as its fees will be applied uniformly to each respective
origin in accordance to the type of transaction being executed on the
Trading Floor. The Exchange believes its proposal will encourage
Members to submit Priority Customer and Professional Customer Orders to
the Exchange which will increase liquidity and benefit market
participants by providing more trading opportunities and tighter
spreads. 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 tighter spreads. Additionally, the Exchange does not
believe its fees and rebates will impose a burden on intra-market
competition as the fees and rebates will be applied in a uniform manner
to similarly situated participants in accordance to the order type (QFO
or cQFO), origin, and class.
The Exchange does not believe that Floor Market Makers will be
discouraged from transacting on the Trading Floor as Floor Market
Makers trade for their own accounts and benefit from having access to
interact with orders that are made available in open outcry on the
Trading Floor. The Exchange also believes that Floor Market Maker fees
relative to other market participants do not impose an undue burden on
competition because Floor Market Makers are not obligated to engage in
transactions on the Trading Floor.
The Exchange does not believe that offering a rebate to Floor
Brokers will impose an undue burden on competition because all Floor
Brokers are eligible to transact QFOs and cQFOs and receive a rebate,
if applicable. Further, the Exchange believes that the rebate will
promote competition by allowing Floor Brokers to competitively price
their services and for the Exchange to remain competitive with other
exchanges with open outcry trading floors.
The Exchange does not believe that offering a Floor Broker Breakup
Credit will impose an undue burden on competition because all Floor
Brokers are eligible to transact QFOs and cQFOs and thus may improve
intra-market competition.
QCC and cQCC Fees and Rebates
The Exchange believes that the proposed QCC and cQCC fees and
rebates do not impose an undue burden on intra-market competition
because the Exchange does not believe that its proposal will place any
category of market participant at a competitive disadvantage. The
Exchange believes that the proposed changes will encourage market
participants to send their QCC and cQCC Orders to the Exchange's
Trading Floor for execution in order to obtain greater rebates and
lower their costs. The Exchange believes the proposed fees and rebates
for QCC and cQCC Orders will not impose an undue burden on intra-market
competition because the proposed changes will increase competition and
potentially attract different combinations of additional QCC and cQCC
order flow to the Exchange, which will grow the Exchange's market share
in this segment. The Exchange's proposal to provide higher rebates for
QCC and cQCC Orders for Floor Brokers that trade against origins other
than Priority Customer or Professional Customer does not impose an
undue burden on intra-market competition because Priority Customer and
Professional Customer QCC and cQCC Orders are already incentivized with
reduced fees for such orders. The Exchange's proposed fee and rebate
structure is similar to the fee and rebate
[[Page 52740]]
structure for electronic transactions on the Exchange.\55\
---------------------------------------------------------------------------
\55\ See supra note 47.
---------------------------------------------------------------------------
C2C and cC2C Fees and Rebates
The Exchange believes that the proposed C2C and cC2C fee of $0.00
and proposed rebate of ($0.00) does not impose an undue burden on
intra-market competition because the proposed fee and rebate is
identical to the fee/rebate structure of the Exchange's electronic
market.\56\ The Exchange believes that the proposal will encourage
market participants to send their Priority Customer orders to the
Exchange.
---------------------------------------------------------------------------
\56\ See supra note 48.
---------------------------------------------------------------------------
Strategy QFO Fees, Rebates, and Fee Cap
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. Further, the Exchange does not
believe that capping the fees for certain Strategy Qualified Floor
Orders will impose an undue burned on intra-market competition because
all Floor Participants are eligible for the fee cap. Further, the
Exchange believes that the fee cap will promote competition by allowing
the Exchange to remain competitive with other exchanges with open
outcry trading floors.\57\
---------------------------------------------------------------------------
\57\ See supra note 49.
---------------------------------------------------------------------------
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 that operate open outcry trading floors. 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.\58\ The Exchange believes
that the Exchange's proposal reflects this competitive environment, and
to the extent it successfully attracts order flow to its Trading Floor,
all of the Exchange's market participants should benefit from the
quality of the Exchange's market.
---------------------------------------------------------------------------
\58\ See supra note 33.
---------------------------------------------------------------------------
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,\59\ and Rule 19b-4(f)(2) \60\ 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.
---------------------------------------------------------------------------
\59\ 15 U.S.C. 78s(b)(3)(A)(ii).
\60\ 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="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3"><span class="__cf_email__" data-cfemail="295b5c454c044a4644444c475d5a695a4c4a074e465f">[email protected]</span></a>. Please include
File Number SR-SAPPHIRE-2025-39 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Vanessa Countryman,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to file number SR-SAPPHIRE-2025-39. 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 filing 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-2025-39 and should be submitted
on or before December 12, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\61\
---------------------------------------------------------------------------
\61\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-20543 Filed 11-20-25; 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 November 21, 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.