Notice2026-17909
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Fees and Rebates for Professional Customer Orders for QCC and cQCC Transactions and Establish a Tiered Fee Structure for Away Market Maker Facilitation of Customer QFOs or cQFOs
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 2, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 169 (Wednesday, September 2, 2026)</title>
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[Federal Register Volume 91, Number 169 (Wednesday, September 2, 2026)]
[Notices]
[Pages 56518-56524]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17909]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106232; File No. SR-SAPPHIRE-2026-34]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Fees and Rebates for Professional Customer Orders for QCC and cQCC
Transactions and Establish a Tiered Fee Structure for Away Market Maker
Facilitation of Customer QFOs or cQFOs
August 28, 2026.
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 August 17, 2026, MIAX Sapphire, LLC (``MIAX Sapphire'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the MIAX Sapphire Options Exchange
Fee Schedule (``Fee Schedule'') to: (1) reduce the initiating and
contra-side fees applicable to Professional Customer orders for QCC and
cQCC transactions on the Exchange's Electronic Book and Trading Floor;
(2) reduce the rebates applicable to Professional Customer orders for
QCC and cQCC transactions on the Exchange's Electronic Book and Trading
Floor; and (3) establish a tiered fee structure applicable to Trading
Floor transactions where a Member firm directs a paired order to the
Trading Floor, the agency order is a customer of the Member firm, and
the contra-side of the transaction is the Away Market Maker of the
Member firm, depending on certain breakup percentages and minimum sizes
(all terms described below).
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.
[[Page 56519]]
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 to: (1) reduce the
initiating and contra-side fees applicable to Professional Customer \3\
orders for QCC \4\ and cQCC \5\ transactions on the Exchange's
Electronic Book \6\ and Trading Floor; \7\ (2) reduce the rebates
applicable to Professional Customer orders for QCC and cQCC
transactions on the Exchange's Electronic Book and Trading Floor; and
(3) establish a tiered fee structure applicable to Trading Floor
transactions where a Member \8\ firm directs a paired QFO \9\ or cQFO
\10\ to the Trading Floor, the agency order is a customer of the Member
firm, and the contra-side of the transaction is the Away Market Maker
\11\ of the Member firm, depending on certain breakup percentages and
minimum sizes. The Exchange initially filed this proposal on July 31,
2026.\12\ On August 17, 2026, the Exchange withdrew SR-SAPPHIRE-2026-31
and refiled this proposed rule change.
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\3\ ``Professional Customer'' for the purposes of the Fee
Schedule shall mean a Public Customer that is not a Priority
Customer. See the Definitions section of the Fee Schedule. ``Public
Customer'' means a person that is not a broker or dealer in
securities. Id.
\4\ 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. See Fee Schedule, Sections
1)a)ii) and 1)c)ii).
\5\ A cQCC transaction 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 stock handling fee for the
stock leg of cQCC transactions is described in Section 1)a)v) of the
Fee Schedule for electronic transactions. The stock handling fee for
the stock leg of cQCC transactions is described in Section 1)c)vi)
of the Fee Schedule for Trading Floor transactions. See Fee
Schedule, Sections 1)a)iii) and 1)c)iii).
\6\ ``Electronic Book'' means the Exchange's Simple Order Book
and Strategy Book. See the Definitions section of the Fee Schedule
and 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. Id.
\7\ ``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 the Definitions section of the Fee Schedule
and Exchange Rule 100.
\8\ See Exchange Rule 100.
\9\ ``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 the
Definitions section of the Fee Schedule and Exchange Rule 2040.
\10\ ``Complex Qualified Floor Order'' or ``cQFO'' has the
meaning ascribed to such term in the Exchange Rules. See the
Definitions section of the Fee Schedule and Exchange Rule 2040.
\11\ ``Away Market Maker'' for the purposes of the Fee Schedule
shall mean a non MIAX Sapphire Market Maker. See the Definitions
section of the Fee Schedule.
\12\ See Securities Exchange Act Release No. 106093 (August 12,
2026), 91 FR 53311 (August 17, 2026) (SR-SAPPHIRE-2026-31).
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Proposal To Reduce Initiating and Contra-Side Fees for Professional
Customer Orders for QCC and cQCC Transactions
First, the Exchange proposes to amend Sections 1)a)ii)-iii) and
1)c)ii)-iii) of the Fee Schedule to reduce the initiating and contra-
side fees applicable to Professional Customer orders for QCC and cQCC
transactions on the Exchange's Electronic Book and Trading Floor.
Currently, the Exchange assesses Professional Customers the same
initiating and contra-side fee of $0.12 per contract side for QCC and
cQCC transactions that occur either on the Exchange's Electronic Book
or on the Trading Floor. The Exchange now proposes to reduce this fee
such that the Exchange will assess Professional Customers the same
initiating and contra-side fee of $0.00 per contract side for QCC and
cQCC transactions that occur either on the Exchange's Electronic Book
or on the Trading Floor. The purpose of these changes is for business
and competitive reasons. The proposed changes will also align the
Exchange's fee for such transactions with the similar fee structures in
place at other exchanges for both electronic and trading floor QCC
(and/or cQCC) transactions for professional customer orders.\13\
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\13\ See, e.g., BOX Exchange LLC (``BOX'') Fee Schedule, Section
IV.D. (assessing professional customers $0.00 per contract for both
the agency side and contra-side of QCC transactions); Nasdaq PHLX
LLC (``PHLX''), Options 7: Pricing Schedule, Section 4, QCC
Transaction Fee (providing that customers and professionals are not
assessed a QCC transaction fee and that the QCC transactions fees
apply to both electronic and floor QCC orders).
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Proposal To Reduce Rebates Applicable to Professional Customer Orders
for QCC and cQCC Transactions
Next, the Exchange proposes to amend Sections 1)a)ii)-iii) of the
Fee Schedule to reduce the rebates applicable to Professional Customer
orders for QCC and cQCC transactions on the Exchange's Electronic Book.
Currently, for EEMs \14\ entering Professional Customer orders for both
QCC and cQCC electronic transactions, the Exchange provides EEMs the
following rebates: ($0.07) per contract when the contra-side is a
Priority Customer; \15\ ($0.17) per contract when the contra-side is a
Professional Customer; and ($0.25) per contract when the contra-side is
all other market participants (i.e., MIAX Sapphire Market Maker,\16\
Away Market Maker, Non-Member Broker-Dealer, and Firm). The Exchange
now proposes to reduce these rebates. In particular, the Exchange
proposes that for EEMs entering Professional Customer orders for both
QCC and cQCC electronic transactions, the Exchange will provide EEMs
the following rebates: ($0.00) per contract when the contra-side is a
Priority Customer; ($0.00) per contract when the contra-side is a
Professional Customer; and ($0.17) per contract when the contra-side is
all other market participants (i.e., MIAX Sapphire
[[Page 56520]]
Market Maker, Away Market Maker, Non-Member Broker-Dealer, and Firm).
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\14\ ``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
the Definitions section of the Fee Schedule and Exchange Rule 100.
\15\ ``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 accounts(s). The number of
orders shall be counted in accordance with Interpretation and Policy
.01 of Exchange Rule 100. See Exchange Rule 100, including
Interpretation and Policy .01, and the Definitions section of the
Fee Schedule.
\16\ ``Market Maker'' 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 Exchange Rules. See the
Definitions section of the Fee Schedule and Exchange Rule 100.
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Next, the Exchange proposes to amend Sections 1)c)ii)-iii) of the
Fee Schedule to reduce the rebates applicable to Professional Customer
orders for QCC and cQCC transactions on the Exchange's Trading Floor.
Currently, for Floor Brokers \17\ entering Professional Customer orders
for both QCC and cQCC transactions on the Trading Floor, the Exchange
provides Floor Brokers the following rebates: ($0.07) per contract when
the contra-side is a Priority Customer or where the Firm met the Firm
Fee Cap; \18\ ($0.17) per contract when the contra-side is a
Professional Customer; and ($0.25) per contract when the contra-side is
all other market participants (i.e., Floor Market Maker, Away Market
Maker, Broker-Dealer, and Firm), except for Firm origin orders where
that Firm met the Firm Fee Cap. The Exchange now proposes to reduce
these rebates. In particular, the Exchange proposes that for Floor
Brokers entering Professional Customer orders for both QCC and cQCC
transactions on the Trading Floor, the Exchange will provide Floor
Brokers the following rebates: ($0.00) per contract when the contra-
side is a Priority Customer or where the Firm met the Firm Fee Cap;
($0.00) per contract when the contra-side is a Professional Customer;
and ($0.17) per contract when the contra-side is all other market
participants (i.e., Floor Market Maker, Away Market Maker, Broker-
Dealer, and Firm), except for Firm origin orders where that Firm met
the Firm Fee Cap.
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\17\ ``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, and
subsequently liquidate, any position that results from an error made
while attempting to execute, as Floor Broker, an order. See the
Definitions section of the Fee Schedule and Exchange Rule 2015.
``Floor Participant'' means Floor Brokers as defined in Rule 2015
and Floor Market Makers as defined in Rule 2105(b). See the
Definitions section of the Fee Schedule and Exchange Rule 100.
\18\ See Fee Schedule Section 1)c)vii) for a description of the
Firm Fee Cap.
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The purpose of these changes is for business and competitive
reasons. The Exchange believes that even with the proposal to remove
the rebate payable to an EEM (or Floor Broker) entering a Professional
Customer order as part of a QCC or cQCC transaction (electronic or on
the Trading Floor) where the contra-side is a Priority Customer or
Professional Customer, the Exchange's QCC and cQCC rebates remain
competitive with those of other exchanges for Professional Customer
orders.\19\ The Exchange believes these changes will also align the
Exchange's QCC and cQCC rebates with those of other exchanges for
Professional Customer orders where the contra-side is a Priority
Customer or Professional Customer.\20\
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\19\ See, e.g., NYSE American LLC (``NYSE American'') Options
Fee Schedule, Section I.F. (providing no fee or rebate for customer
and professional customer orders where the contra-side is a customer
or professional customer in a QCC transaction and providing a rebate
of ($0.12) per contract where a floor broker executes a customer or
professional customer order where the contra-side is a market maker,
firm or broker dealer in a QCC transaction); NYSE Arca Inc. (``NYSE
Arca'') Options Fees and Charges, page 7 (providing no fee or rebate
for QCC transactions involving all customers and providing a rebate
of ($0.16) per contract when a customer order trades against a non-
customer).
\20\ Id.
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Proposal To Establish a Tiered Fee Structure for Away Market Makers
Facilitation of Customer QFOs or cQFOs on the Trading Floor
Next, the Exchange proposes to amend Section 1)c)i) of the Fee
Schedule to establish a tiered fee structure applicable to Trading
Floor transactions where a Member firm directs a paired QFO or cQFO to
the Trading Floor, the agency order is a customer of the Member firm,
and the contra-side of the transaction is the Away Market Maker of the
Member firm, depending on certain breakup percentages and minimum
sizes.
For background, the Exchange assesses fees and applies rebates to
both executed sides of the paired QFO or cQFO on the Trading Floor.
cQFO fees and rebates are per executed side per leg. Floor Broker
rebates are only payable on the Floor Brokers' billable sides. The
rebates do not apply to Priority Customer, Professional Customer, Firm/
Broker-Dealer Facilitating a Priority Customer or Professional
Customer, competing Floor Broker orders, Floor Market Maker (sides)
executions, and Firm (sides) executions where the Firm Fee Cap
threshold has been met for the relevant Clearing Corporation \21\
account in the relevant month. 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.
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\21\ The term ``Clearing Corporation'' means The Options
Clearing Corporation. See Exchange Rule 100.
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Currently, the Exchange assesses a $0.25 per contract fee for QFO
and cQFO transactions in SPY/QQQ/IWM, Penny classes (excluding SPY/QQQ/
IWM), and non-Penny classes, for Away Market Maker, Firm, and Broker-
Dealer origins. The Exchange does not assess a fee (or provide a
rebate) for QFO and cQFO transactions in SPY/QQQ/IWM, Penny classes
(excluding SPY/QQQ/IWM), and non-Penny classes, for Firm and Broker-
Dealer origins that are facilitating a Priority Customer or
Professional Customer order.
The Exchange now proposes to establish a new row in the table in
Section 1)c)i) of the Fee Schedule that will apply to transactions for
Away Market Maker facilitation of customer orders for the same Member
firm. The Exchange proposes to specify in third explanatory paragraph
below the table of fees in Section 1)c)i) of the Fee Schedule that the
rates for Away Market Maker Facilitation will apply to any Trading
Floor transaction where a Member firm directs a paired order to the
Trading Floor, where the agency order is a customer of the Member firm,
and where the contra-side of the transaction is the Away Market Maker
of the Member firm. Further, the Away Market Maker firm must notify the
Exchange for participation in the Away Market Maker Facilitation
program.
The Exchange proposes to establish a new table at the end of the
explanatory text in Section 1)c)i) of the Fee Schedule, which will be
titled ``Away Market Maker Facilitation Breakup Table'' (referred to
herein as the ``Breakup Table''). The Breakup Table \22\ will provide
the proposed tiered reduced fees (instead of the $0.25 per contract fee
that would otherwise apply to an Away Market Maker Floor transaction)
for transactions where a Member firm directs a paired QFO or cQFO to
the Trading Floor, the agency order is a customer of the Member firm,
and the contra-side of the transaction is the Away Market Maker of the
Member firm, depending on the following breakup percentages: 0 to 5%
breakup
[[Page 56521]]
will be assessed a per contract fee of $0.10; greater than 5% to 15%
breakup will be assessed a per contract fee of $0.09; greater than 15%
to 25% breakup will be assessed a per contract fee of $0.08; greater
than 25% to 35% breakup will be assessed a per contract fee of $0.07;
greater than 35% to 40% breakup will be assessed a per contract fee of
$0.06; and greater than 40% breakup will be assessed a per contract fee
of $0.05.
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\22\ A breakup of a QFO or cQFO generally refers to the scenario
where a paired order is interacted with by a Floor Market Maker.
Similarly, using the Away Market Maker facilitation as example, a
breakup of a QFO or cQFO refers to the scenario where a paired
customer order is facilitated for execution on the Trading Floor
with the Away Market Maker being the contra-side of the transaction
and having the order interacted with by a Floor Market Maker. For
purposes of determining the breakup percentage for the Away Market
Maker facilitation, the Exchange proposes to aggregate each month
all QFOs with at least 1,000 initiating sides per order, and all
cQFOs where the smallest leg is at least 1,000 contracts per order.
The Exchange proposes to exclude from the breakup percentage
calculation non-eligible QFOs with less than 1,000 initiating sides
per order and non-eligible cQFOs where the smallest leg is less than
1,000 contracts per order.
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The Exchange also proposes to add the new note ``*'' to the Breakup
Table and the corresponding note below table, which will provide as
follows:
* These rates only apply to QFO or cQFO orders that are not part
of a QCC, cQCC or Strategy transaction. For QFO volume to count
towards the calculation to qualify for these rates, the Away Market
Maker must facilitate at least 1,000 initiating sides per order. For
cQFO volume to count towards the calculation to qualify for these
rates, the smallest leg must be at least 1,000 initiating sides per
order. The order breakup percentage is calculated on a monthly
basis.
The Exchange also proposes to amend the second sentence in the
first paragraph of explanatory text below the tables in Section 1)c)i)
of the Fee Schedule to specify that Floor Brokers will not be entitled
to receive rebates from Away Market Maker Facilitation transactions.
This reduced fee structure is similar in concept to another program
offered by the Exchange, where the Exchange assesses a lower fee for a
Firm or Broker-Dealer that facilitates a Priority Customer or
Professional Customer QFO or cQFO (in that case, $0.00 per contract),
and subsequently does not provide a rebate to the executing Floor
Broker.\23\
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\23\ See Fee Schedule, Section 1)c)i).
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The purpose of these changes is for business and competitive
reasons. The proposed Breakup Table provides the lower tiered fees that
the Away Market Maker may be assessed instead of the fee that would
otherwise apply to such Floor transactions, i.e., $0.25 per contract.
The Exchange believes that the proposed changes may encourage Away
Market Makers to send their affiliate customer orders to Floor Brokers
for execution on the Trading Floor where that Away Market Maker acts as
the contra-side of the transaction. The Exchange believes that this
may, in turn, increase open outcry participation, which may promote
increased executions on the Trading Floor to the benefit of all Floor
Participants that can interact with larger sized orders being sent to
the Floor that were facilitated by Away Market Makers.
The Exchange believes that the Breakup Table is similar in concept
to a table that is currently in place at the Exchange's affiliate,
Miami International Securities Exchange, LLC (``MIAX''), related to
agency credits provided to Priority Customer orders entered into MIAX's
cPRIME \24\ auction. Whereas the proposed Breakup Table provides the
opportunity for Away Market Makers to earn discounted fees for
facilitating customer orders on the MIAX Sapphire Trading Floor based
on the monthly percentage breakup of the order that meets the minimum
size requirements, MIAX provides its members the opportunity to receive
increasing tiered agency credits for cPRIME Agency Orders for Priority
Customers dependent upon the breakup percentage of the order, with
certain exceptions.\25\
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\24\ See, generally, MIAX Rule 515A, and Interpretation and
Policy .12 for a description of the cPRIME auction process.
\25\ See MIAX Fee Schedule, Section 1)a)iii), cPRIME Agency
Order Break-up Table.
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The Exchange also believes the concept of offering discounted or
tiered fees for the contra-side of the transaction is not new or novel.
For example, BOX assesses discounted fees for certain contra-side
orders submitted in the BOX Price Improvement Period (``PIP'') or
Complex Order Price Improvement Period (``COPIP'') auctions.\26\ In
addition, the Exchange offers a similar fee program for Firms and
Broker-Dealers that facilitate certain customer orders. In particular,
the Exchange offers Firms and Broker-Dealers the opportunity to not be
assessed a fee when a Firm or Broker-Dealer facilitates a Priority
Customer or Professional Customer QFO or cQFO on the Trading Floor.\27\
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\26\ BOX assesses a discounted per contract execution fee based
upon the tiered rates in Section IV.B.1 of the BOX Fee Schedule for
Primary Improvement Order executions where the corresponding PIP or
COPIP Order is from the account of a BOX Public Customer. A Primary
Improvement Order is the matching contra order submitted to the PIP
or COPIP on the opposite side of the PIP or COPIP order. BOX
calculates percentage thresholds on a monthly basis by totaling the
Initiating Participant's Primary Improvement Order volume submitted
to BOX, relative to the total national Customer volume in multiply-
listed options classes. See BOX Fee Schedule, Section IV.B.1 and
footnote 24.
\27\ See Fee Schedule, Section 1)c)i).
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The proposed changes are immediately effective.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\28\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\29\ 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 \30\ because it represents
an equitable allocation of reasonable dues, fees and other charges
among its Members or issuers using its facilities.
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\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
\30\ 15 U.S.C. 78f(b)(4).
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The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \31\
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\31\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
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There are currently 18 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based and singly-listed options, no single exchange had more than
approximately 11-12% of the multiply-listed equity options market share
for the month of July 2026.\32\ Therefore, no exchange possesses
significant pricing power. More specifically, the Exchange had a market
share of approximately 3.79% of executed volume of multiply-listed
equity options for the month of July 2026.\33\
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\32\ See the ``Market Share'' section of the Exchange's website,
available at <a href="https://www.miaxglobal.com/">https://www.miaxglobal.com/</a> (last visited August 12,
2026).
\33\ See id.
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Proposal To Reduce Initiating and Contra-Side Fees for Professional
Customer Orders for QCC and cQCC Transactions
The Exchange believes its proposal to reduce the initiating and
contra-side fees applicable to Professional Customer orders for QCC and
cQCC transactions on the Exchange's Electronic Book and Trading Floor
is reasonable, equitable and not unfairly discriminatory because it may
further incentivize Professional Customer orders to be submitted as QCC
and cQCC transactions. The Exchange believes that this may, in turn,
encourage Members to submit more Professional Customer orders, leading
to increased liquidity on the Exchange to the benefit of all market
participants by providing more trading opportunities and tighter
spreads. The Exchange believes the proposed changes are
[[Page 56522]]
equitable and not unfairly discriminatory because the reduced fees will
apply equally to all market participants who provide Professional
Customer orders as part of QCC and cQCC transactions either
electronically or via the Exchange's Trading Floor. The Exchange also
believes the proposed changes are reasonable because the changes will
align the Exchange's fee for such transactions with the similar fee
structures in place at other exchanges for both electronic and trading
floor QCC (and/or cQCC) transactions for professional customer
orders.\34\
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\34\ See supra note 13.
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Proposal To Reduce Rebates Applicable to Professional Customer Orders
for QCC and cQCC Transactions
The Exchange believes its proposal to reduce the rebates applicable
to Professional Customer orders for QCC and cQCC transactions on the
Exchange's Electronic Book and Trading Floor is reasonable, equitable
and not unfairly discriminatory because the changes are for business
and competitive reasons. The Exchange believes that even with the
proposal to remove the rebate payable to an EEM (or Floor Broker)
entering a Professional Customer order as part of a QCC or cQCC
transaction (electronic or on the Trading Floor) where the contra-side
is a Priority Customer or Professional Customer, the Exchange's QCC and
cQCC rebates remain competitive with those of other exchanges.\35\ The
Exchange believes these changes are reasonable because they will align
the Exchange's QCC and cQCC rebates with those of other exchanges for
Professional Customer orders where the contra-side is a Priority
Customer or Professional Customer.
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\35\ See supra note 19.
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Proposal To Establish a Tiered Fee Structure for Trading Floor
Transactions for Away Market Makers Facilitation of Customer Orders
The Exchange believes its proposal to establish a tiered fee
structure where a Member firm directs a paired QFO or cQFO to the
Trading Floor, the agency order is a customer of the Member firm, and
the contra-side of the transaction is the Away Market Maker of the
Member firm, depending on certain breakup percentages and minimum sizes
is reasonable, equitable and not unfairly discriminatory because these
changes are for business and competitive reasons. The Exchange believes
that the proposed changes may encourage Members to submit more customer
orders to the Trading Floor where the contra-side is the Away Market
Maker of the Member firm in order to be assessed the lower tiered fees
than would otherwise apply to such transactions. The Exchange believes
that this may, in turn, increase open outcry participation, which may
promote increased executions on the Trading Floor to the benefit of all
Floor Participants.
The Exchange believes this proposal is equitably allocated and not
unfairly discriminatory because it is open to all Members that submit
paired QFOs or cQFOs where the contra-side is an Away Market Maker of
that Member firm, so long as the minimum size threshold is met. The
Exchange believes the proposal to offer tiered reduced fees applicable
to qualifying Away Market Maker transactions is equitable and not
unfairly discriminatory because all Away Market Makers are eligible for
the reduced fees each month so long as they facilitate qualifying
customer QFO or cQFO volume to the Floor and take the contra-side of
the transaction.
The Exchange believes this proposed change is reasonable because it
is based on similar fee and/or rebate structures already in place at
the Exchange, its affiliate MIAX, as well as at least one other equity
options exchange (i.e., BOX). First, the reduced fee structure for Away
Market Maker facilitation transactions, as contemplated herein, is
similar in concept to another program offered by the Exchange. In
particular, the Exchange assesses a lower fee for a Firm or Broker-
Dealer that facilitates a Priority Customer or Professional Customer
QFO or cQFO (in that case, $0.00 per contract), and subsequently does
not provide a rebate to the executing Floor Broker.\36\ Next, the
Exchange believes the proposed Breakup Table is similar in concept to a
rebate structure in place at the Exchange's affiliate, MIAX, related to
agency credits provided to Priority Customer orders entered into MIAX's
cPRIME auction.\37\ Whereas the MIAX structure provides the opportunity
for members to receive increasing tiered agency credits for cPRIME
Agency Orders for Priority Customers instead of reduced fees, the
Exchange believes the structure and concept are similar to the proposed
Breakup Table for Away Market Maker facilitation transactions. Finally,
the Exchange believes the proposed change to offer tiered reduced fees
for these transactions is similar to a fee structure in place at BOX,
where BOX assesses discounted fees for certain contra-side orders
submitted to the PIP or COPIP auctions.\38\
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\36\ See Fee Schedule, Section 1)c)i).
\37\ See MIAX Fee Schedule, Section 1)a)iii), cPRIME Agency
Order Break-up Table.
\38\ See supra note 26.
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In addition, the Exchange believes that the proposal, which applies
only to Away Market Makers facilitating eligible customer trades of
certain sizes executed on the Trading Floor, is not unfairly
discriminatory to other market participants because its purpose is to
attract large order flow to the Trading Floor, where such orders can be
better handled in comparison with electronic orders that are not
negotiable. To the extent that this purpose is achieved, all of the
Exchange's Floor Participants should benefit from the improved market
liquidity, particularly as the Trading Floor continues to ramp up
operations since its launch in September 2025.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule changes will not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Inter-Market Competition
The proposed changes do not impose an undue burden on inter-market
competition. The Exchange believes the proposed changes to reduce the
fees and rebates applicable to initiating and contra-side Professional
Customer orders entered as part of a QCC or cQCC transaction do not
impose any burden on inter-market competition because other exchanges
have similar fee structures for similar transactions.\39\ The Exchange
believes the proposed changes to establish a tiered fee structure where
a Member firm directs a paired QFO or cQFO to the Trading Floor, the
agency order is a customer of the Member firm, and the contra-side of
the transaction is the Away Market Maker of the Member firm, depending
on certain breakup percentages and minimum sizes does not impose any
burden on inter-market competition because other exchanges that offer
trading floors can offer similar incentives to their market
participants.
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\39\ See supra notes 13 and 19.
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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, or rebate
opportunities available at other venues to be more favorable. In such
an environment, the Exchange must continually adjust its fees to remain
competitive with other exchanges. Because competitors are free to
modify their own fees in response,
[[Page 56523]]
and because market participants may readily adjust their order routing
practices, the Exchange believes that the degree to which fee changes
in this market may impose any burden on competition is extremely
limited.
The Exchange believes that the proposed changes reflect this
competitive environment because the changes modify the Exchange's fees
and rebates in a manner designed to continue to incent participants to
direct trading interest to the Exchange (both electronically and on the
Trading Floor), to provide liquidity and to attract additional order
flow. To the extent that Away Market Makers are encouraged to
facilitate more Priority Customer and Professional Customer QFOs and
cQFOs, all Exchange market participants stand to benefit from the
improved market quality and increased opportunities for price
improvement. For the reasons described above, the Exchange believes
that the proposed rule change reflects this competitive environment.
Intra-Market Competition
In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed changes would encourage the submission of additional
QCC and cQCC liquidity from Professional Customers (both electronically
and on the Trading Floor), thereby promoting market depth, price
discovery and transparency and enhancing order execution opportunities
for all market participants. As a result, the Exchange believes that
the proposed changes further the Commission's goal in adopting
Regulation NMS of fostering integrated competition among orders.
The proposed change to establish a tiered fee structure where a
Member firm directs a paired QFO or cQFO to the Trading Floor, the
agency order is a customer of the Member firm, and the contra-side of
the transaction is the Away Market Maker of the Member firm, depending
on certain breakup percentages and minimum sizes is designed to attract
additional customer order flow to the Trading Floor. Greater liquidity
benefits all market participants on the Exchange and increased order
flow would increase opportunities for execution of other trading
interest.
The Exchange believes the proposal to offer tiered reduced fees
applicable to qualifying Away Market Maker transactions does not impose
any burden on intra-market competition because all Away Market Makers
are eligible for the reduced fees each month so long as they facilitate
qualifying customer QFO or cQFO volume to the Floor and take the
contra-side of the transaction.
The Exchange believes this proposed change does not place any
burden on intra-market competition that is not necessary or appropriate
in furtherance of the purposes of the Act because it is based on
similar fee and/or rebate structures already in place at the Exchange,
its affiliate MIAX, as well as at least one other equity options
exchange (i.e., BOX). First, the reduced fee structure for Away Market
Maker facilitation transactions, as contemplated herein, is similar in
concept to another program offered by the Exchange. In particular, the
Exchange assesses a lower fee for a Firm or Broker-Dealer that
facilitates a Priority Customer or Professional Customer QFO or cQFO
(in that case, $0.00 per contract), and subsequently does not provide a
rebate to the executing Floor Broker.\40\ Next, the Exchange believes
the proposed Breakup Table is similar in concept to a rebate structure
in place at the Exchange's affiliate, MIAX, related to agency credits
provided to Priority Customer orders entered into MIAX's cPRIME
auction.\41\ Whereas the MIAX structure provides the opportunity for
members to receive increasing tiered agency credits for cPRIME Agency
Orders for Priority Customers instead of reduced fees, the Exchange
believes the structure and concept are similar to the proposed Breakup
Table for Away Market Maker facilitation transactions. Finally, the
Exchange believes the proposed change to offer tiered reduced fees for
these transactions is similar to a fee structure in place at BOX, where
BOX assesses discounted fees for certain contra-side orders submitted
to the PIP or COPIP auctions.\42\
---------------------------------------------------------------------------
\40\ See Fee Schedule, Section 1)c)i).
\41\ See MIAX Fee Schedule, Section 1)a)iii), cPRIME Agency
Order Break-up Table.
\42\ See supra note 26.
---------------------------------------------------------------------------
In addition, the Exchange believes that the proposal, which applies
only to Away Market Makers facilitating customer trades of certain
sizes executed on the Trading Floor, may enhance competition by
attracting large order flow to the Trading Floor, where such orders can
be better handled in comparison with electronic orders that are not
negotiable. To the extent that this purpose is achieved, all of the
Exchange's Floor Participants should benefit from the improved market
liquidity, particularly as the Trading Floor continues to ramp up
operations since its launch in September 2025.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or 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,\43\ and Rule 19b-4(f)(2) \44\ thereunder.
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 to determine whether
the proposed rule should be approved or disapproved.
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\43\ 15 U.S.C. 78s(b)(3)(A)(ii).
\44\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#e391968f86ce808c8e8e868d9790a3908680cd848c95"><span class="__cf_email__" data-cfemail="f587809990d8969a9898909b8186b5869096db929a83">[email protected]</span></a>. Please include
file number SR-SAPPHIRE-2026-34 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-2026-34. 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.
[[Page 56524]]
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-2026-34 and
should be submitted on or before September 23, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
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\45\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17909 Filed 9-1-26; 8:45 am]
BILLING CODE 8011-01-P
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