Notice2025-22867
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a New Selective Liquidity Auto Purge (“SLAP”) Feature
Primary source
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Published
December 16, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 239 (Tuesday, December 16, 2025)</title>
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[Federal Register Volume 90, Number 239 (Tuesday, December 16, 2025)]
[Notices]
[Pages 58316-58319]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-22867]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104372; File No. SR-SAPPHIRE-2025-42]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a
New Selective Liquidity Auto Purge (``SLAP'') Feature
December 11, 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 December 1, 2025, MIAX Sapphire, LLC (``MIAX Sapphire'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``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
[[Page 58317]]
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 519C, Mass
Cancellation of Trading Interest, to adopt new selective mass order
cancellation functionality that will be available via the MEO
Interface.\3\
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\3\ The MIAX Express Order (MEO) Interface a messaging interface
that MIAX Sapphire Members use to submit binary orders for trading
on the Sapphire Options Market. See MIAX Express Orders, Binary
Orders for Trading Options, MEO Interface Specification, version
1.1e (8/13/2024), available online at <a href="https://www.miaxglobal.com/sites/default/files/job-files/Sapphire_MIAX_Express_Orders_MEO_v1.1e_0.pdf">https://www.miaxglobal.com/sites/default/files/job-files/Sapphire_MIAX_Express_Orders_MEO_v1.1e_0.pdf</a>.
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The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/miax-sapphire/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-sapphire/rule-filings</a>, and at the Exchange'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 Rule 519C, Mass Cancellation of
Trading Interest, to adopt a new Selective Liquidity Auto Purge
(``SLAP'') feature, which provides more granular mass cancellation
functionality. Currently, Members \4\ may submit a mass cancellation
request via the MEO Interface using the Liquidity Mass Cancel Request
message. The Liquidity Mass Cancel Request message contains a Mass
Cancel Scope field which allows the Member to determine the behavior
following the mass cancellation of orders. For example, populating the
Mass Cancel Scope field with an ``A'' will instruct the System \5\ to
cancel all open binary orders and block all subsequent binary orders
(including immediate orders); populating the field with a ``D'' will
instruct the System to cancel all open binary orders and block all
subsequent binary orders (excluding immediate orders).\6\
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\4\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of the MIAX
Sapphire Options Exchange Rulebook 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.
\5\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\6\ See Section 4.1.5, Liquidity Mass Cancel Request, in the
MIAX Express Orders, Binary Orders for Trading Options, MEO
Interface Specification, version 1.1e (8/13/2024), available online
at <a href="https://www.miaxglobal.com/sites/default/files/job-files/Sapphire_MIAX_Express_Orders_MEO_v1.1e_0.pdf">https://www.miaxglobal.com/sites/default/files/job-files/Sapphire_MIAX_Express_Orders_MEO_v1.1e_0.pdf</a>.
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The Exchange now proposes to adopt new paragraph (e) to Exchange
Rule 519C, to adopt the SLAP feature. The SLAP feature, the use of
which is optional, will provide more granular mass cancellation
functionality by allowing users to mass cancel specific groups of
orders as determined by the Member on an order-by-order basis. Orders
submitted via the MEO Interface may optionally contain one or more SLAP
codes from 1 through 8.\7\ Each individual order can be part of eight
(8) unique SLAP groups identified by their SLAP code (numbered 1
through 8).\8\
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\7\ Orders may contain multiple SLAP codes.
\8\ The Exchange notes that there is no limit on the number of
orders that may be included in a SLAP group.
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To remove orders with a SLAP code, a SLAP request is sent to the
System containing the MPID,\9\ underlying, and SLAP code of the orders
to be removed from the System. Following completion of processing the
SLAP request all new inbound orders with matching criteria submitted to
the System will be blocked. The System will provide a notification to
the requestor upon receipt of the SLAP request and another upon
completion of the SLAP request. A SLAP reset request must be submitted
to the System to resume entry of orders for the same MPID, underlying,
and SLAP code. Orders received for the same MPID, underlying, and SLAP
code prior to a SLAP reset will be rejected. Intermarket Sweep Orders
\10\ and orders with a time in force of immediate-or-cancel (``IOC'')
\11\ will not be eligible to receive a SLAP code.
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\9\ The term ``MPID'' means unique market participant
identifier. See Exchange Rule 100.
\10\ An Intermarket Sweep Order or ``ISO'', as defined in Rule
1400(i), is a limit order that is designated by a Member as an ISO
in the manner prescribed by the Exchange, and is executed within the
System by Members without respect to Protected Quotations of other
Eligible Exchanges as defined in Rule 1400(q) and (g). ISOs are
immediately executable within the System and shall not be eligible
for routing. ISOs that are not designated as immediate or cancel
will be cancelled by the System if not executed upon receipt.
Simultaneously with the routing of an ISO to the System, one or more
additional limit orders, as necessary, are routed by the entering
Member to execute against the full displayed size of any Protected
Bid or Protected Offer, as defined in Rule 1400(p), in the case of a
limit order to sell or buy with a price that is superior to the
limit price of the limit order identified as an ISO. These
additional routed orders must be identified as ISOs. An ISO is not
valid during the Opening Process described in Rule 503. See Exchange
Rule 516(f).
\11\ An immediate-or-cancel order is an order that is to be
executed in whole or in part upon receipt. Any portion not so
executed is cancelled. An immediate-or-cancel order is not valid
during the Opening Process described in Rule 503. See Exchange Rule
516(e).
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To facilitate SLAP processing the Exchange has amended and enhanced
existing MEO messages. Specifically, Members will use the Standard
Order--New message in MEO to send an order to the System. A new field,
``SLAP Codes,'' has been added to the message, which will allow the
Member to identify the order with a SLAP Code of 1 through 8, as
desired. A Member will use the Liquidity Mass Cancel Request message in
MEO to remove orders with the designated SLAP Code. The Mass Cancel
Scope field of the Liquidity Mass Cancel Request message has been
enhanced to include new value ``S'' to indicate that the Liquidity Mass
Cancel Request is a Selective Liquidity Auto Purge (``SLAP request'').
The Liquidity Mass Cancel Request message also includes the
corresponding field, ``SLAP Codes,'' for Members to identify the SLAP
Codes of the orders that are being cancelled.
The System will notify the Member that the SLAP request has been
received by providing the Member with a new SLAP Protection Trigger
Notification message. The System will then notify the Member that the
SLAP request has been processed using the existing Liquidity Mass
Cancel Response message. Additionally, the Liquidity Mass Cancel
Response message has been modified to include new responses
specifically related to SLAP requests to provide Members with more
specific information regarding the status of their SLAP request should
it not be successfully executed.
The Member will submit the existing Liquidity Protection Reset
Request message to re-enable the System to process orders with a SLAP
code. The Liquidity Protection Reset Request message has been enhanced
to include a ``Scope'' field where a value of ``S'' indicates the reset
is for SLAP. Additionally, the Liquidity Protect Reset Request message
includes a SLAP Codes
[[Page 58318]]
field to allow a reset for specific SLAP code groups.
The SLAP code is an additional, optional, field in the Standard
Order--New message and as such Members may (i) include a SLAP code on
an order; (ii) modify an order that does not contain a SLAP code to
assign a SLAP code; (iii) modify an order that has a SLAP code to
change it to a different SLAP code; or (iv) modify an order that
contains a SLAP code to remove it.
To implement the SLAP feature the Exchange proposes to adopt new
paragraph (e) to Rule 519C, Mass Cancellation of Trading Interest, to
provide that a Member may use the Selective Liquidity Auto Purge
(``SLAP'') feature for orders delivered via the MEO Interface. Orders
submitted to the System may optionally contain one or more SLAP codes
numbered 1 through 8. When a Member submits a SLAP request, orders with
the corresponding MPID, underlying, and SLAP code will be removed from
the System and new inbound orders with matching criteria will be
blocked. The System will provide notification messages to the Member
regarding the status of the SLAP request. A Member must submit a SLAP
reset request to the System to enable new incoming orders for the same
MPID, underlying, and SLAP code. Intermarket Sweep Orders and orders
with a time in force of IOC are not eligible to receive a SLAP code.
The Exchange has analyzed its capacity and represents that it has
the necessary systems capacity to handle the potential additional
message traffic that may arise from the cancellation of open orders as
a result of a SLAP request being received.
Implementation
The Exchange proposes to implement this functionality in Q1 of 2026
and will announce the implementation date of the proposed rule change
to Members via Regulatory Circular.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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.
The Exchange also believes the proposed rule change is consistent with
the Section 6(b)(5) \14\ requirement that the rules of an exchange not
be designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ Id.
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The Exchange believes the proposed changes remove 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 providing Members with a customizable mass cancellation
mechanism.
The ability of a Member to engage the SLAP feature is a valuable
tool in assisting Members in risk management. Without adequate risk
management tools Members could reduce the size of their quotations and
orders which could undermine the quality of the markets available to
customers and other market participants. The proposed rule change
removes impediments to and is designed to perfect the mechanisms of a
free and open market by giving Members the ability to further refine
their risk protections from an option class level to a specific subset
of Member defined groups. Accordingly, the SLAP feature is designed to
provide Members with greater control over their orders in the market,
thereby removing impediments to and helping to perfect the mechanisms
of a free and open market and a national market system and, in general,
protecting investors and the public interest. In addition, providing
Members with more tools for managing risk will facilitate transactions
in securities because, as noted above, Members will have more
confidence that protections are in place that reduce the risks from
market events. As a result, the new functionality has the potential to
promote just and equitable principles of trade.
The proposed rule change removes impediments to and is designed to
perfect the mechanisms of a free and open market by giving Members more
granular control over their orders by allowing Members to create custom
groupings of orders by MPID and underlying, and additional criteria,
such as option or side of the market (buy or sell), by assigning up to
eight different SLAP codes to each order. This flexibility allows
Members to group specific subsets of their orders based on their own
risk requirements. The ability to group orders allows for the
flexibility to submit cancel requests for a subset of open orders
tailored to varying levels of risk tolerance.
The Exchange believes the proposed changes remove impediments to
and perfect the mechanisms of a free and open market and a national
market system and, in general, protect investors and the public
interest, and promote a fair and orderly market by excluding
Intermarket Sweep Orders and orders with a time in force of IOC from
SLAP functionality. Intermarket Sweep Orders are used to prevent locked
and crossed markets from occurring \15\ and it is in the public
interest for markets to remain uncrossed to promote competition and
price discovery. Orders with a time in force of IOC are executed
immediately with any remaining balance cancelled, therefore these
orders do not rest on the Electronic Book \16\ and as such do not
require risk protection that is provided to resting orders.
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\15\ See supra note 10.
\16\ 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 ``Strategy Book'' is the
Exchange's electronic book of complex orders. See Exchange Rule 100.
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The Exchange believes the proposed changes remove impediments to
and perfects the mechanism of a free and open market and a national
market system and, in general, protects investors and the public
interest by providing Members with an additional risk management tool.
Members who are Market Makers \17\ have a heightened obligation on the
Exchange and are obligated to submit continuous two-sided quotations in
a certain number of series in their appointed classes for a certain
percentage of time in each trading session,\18\ rendering them
vulnerable to risk from market conditions. Additionally, Electronic
Exchange Members \19\ may also submit a large volume of orders that
rest on the Electronic Book also rendering them vulnerable and at risk
to market conditions.
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\17\ The term ``Market Maker'' or ``MM'' means a Member
registered with the Exchange for the purpose of making markets in
options contracts traded on the Exchange and that is vested with the
rights and responsibilities specified in Chapter VI of the MIAX
Sapphire Options Exchange Rulebook. See Exchange Rule 100.
\18\ See Exchange Rule 605(d).
\19\ The term ``Electronic Exchange Member'' or ``EEM'' means
the holder of a Trading Permit who is a Member representing as agent
Public Customer Orders or Non-Customer Orders on the Exchange and
those non-Market Maker Members conducting proprietary trading.
Electronic Exchange Members are deemed ``members'' under the
Exchange Act. See Exchange Rule 100.
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The Exchange notes that the proposed rule change will not relieve
Exchange
[[Page 58319]]
Market Makers of their continuous quoting obligations under Exchange
Rule 605 \20\ or any other obligation under the Rules of the Exchange,
or any obligations arising under Reg NMS Rule 602.\21\ Nor will the
proposed rule change prohibit the Exchange from taking disciplinary
action against a Market Maker for failing to meet their continuous
quoting obligation each trading day.
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\20\ See Exchange Rule 605(d).
\21\ 17 CFR 242.602.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change will foster competition by providing Members
with the ability to specifically customize their use of the Exchange's
risk management tools in order to compete for executions and order
flow.
Additionally, the Exchange believes that the proposed rule change
should promote competition as it is designed to allow Members greater
flexibility and control of their risk exposure to protect them from
market conditions that may increase their risk exposure in the market.
The Exchange does not believe the proposed rule change will impose a
burden on intra-market competition as the optional risk protection
feature is equally available to all Members of the Exchange.
The Exchange believes that the proposed rule change should promote
inter-market competition as the proposal is designed to allow Members
greater flexibility and control over their risk exposure in order to
protect them from market risk or events that may increase their
exposure in the market. Additionally, the proposed rule change should
instill additional confidence in market participants that submit orders
to the Exchange that there are adequate risk protections in place, and
thus should encourage market participants to submit additional order
flow to the Exchange, thereby promoting inter-market competition.
For all the reasons stated, 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, and
believes the proposed change will enhance competition.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \22\ and Rule 19b-4(f)(6) thereunder.\23\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \24\ and Rule 19b-
4(f)(6) \25\ thereunder.
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\22\ 15 U.S.C. 78s(b)(3)(A)(iii).
\23\ 17 CFR 240.19b-4(f)(6).
\24\ 15 U.S.C. 78s(b)(3)(A)
\25\ Rule 19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a
self-regulatory organization to give the Commission written notice
of its intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \26\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\26\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#96e4e3faf3bbf5f9fbfbf3f8e2e5d6e5f3f5b8f1f9e0"><span class="__cf_email__" data-cfemail="5123243d347c323e3c3c343f2522112234327f363e27">[email protected]</span></a>. Please include
file number SR-SAPPHIRE-2025-42 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-2025-42. 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-2025-42 and should be submitted
on or before January 6, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-22867 Filed 12-15-25; 8:45 am]
BILLING CODE 8011-01-P
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