[Federal Register Volume 86, Number 85 (Wednesday, May 5, 2021)]
[Notices]
[Pages 24117-24119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09431]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91701; File No. SR-EMERALD-2021-14]


Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Exchange Rule 515, Execution of Orders and Quotes; Rule 516, Order 
Types Defined; Rule 517, Quote Types Defined; Rule 605, Market Maker 
Orders; and Rule 612, Aggregate Risk Manager To Eliminate Fill-or-Kill 
(FOK) Orders and FOK eQuotes

April 29, 2021.
    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 April 19, 2021, MIAX Emerald, LLC (``MIAX Emerald'' or ``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 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 515, Execution of 
Orders and Quotes; Rule 516, Order Types Defined; Rule 517 Quote Types 
Defined; Rule 605, Market Maker Orders; and Rule 612 Aggregate Risk 
Manager to eliminate Fill-or-Kill (FOK) Orders and FOK eQuotes from the 
rulebook and to delete references to same.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/emerald at MIAX 
Emerald's principal office, and at the Commission's Public Reference 
Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its rules to eliminate Fill-or-Kill 
Orders and Fill-or-Kill eQuotes. A Fill-or-Kill (``FOK'') Order is 
described by the Exchange as a limit order that is to be executed in 
its entirety at a single price as soon as it is received and, if not so 
executed is cancelled.\3\ A Fill-or-Kill (``FOK'') eQuote is described 
by the Exchange as an eQuote submitted by a Market Maker \4\ that must 
be matched with another quote or order for an execution in its entirety 
at a single price upon receipt into the System \5\ or will be 
immediately cancelled.\6\
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    \3\ See Exchange Rule 516(b)(2).
    \4\ The term ``Market Makers'' refers to ``Lead Market Makers'', 
``Primary Lead Market Makers'' and ``Registered Market Makers'' 
collectively. 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 Exchange Rule 517(a)(2)(iv).
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    Specifically, the Exchange now proposes to amend paragraph (c)(1) 
of Exchange Rule 515 to remove the

[[Page 24118]]

reference regarding Fill-or-Kill Orders. The Exchange proposes to 
remove the text in paragraph (f) in its entirety, but to leave 
paragraph (f) in place and mark it as reserved for future use. The 
Exchange proposes to remove subparagraph (2) of paragraph (b) of 
Exchange Rule 516 in its entirety, and to renumber current subparagraph 
(3) to new subparagraph (2). The Exchange proposes to remove 
subparagraph (iv) of paragraph (a)(2) from Rule 517 in its entirety, 
and to renumber current subparagraph (v) to new subparagraph (iv). 
Additionally, the Exchange proposes to remove subparagraph (4) of 
paragraph (d) from Rule 517 in its entirety, and to renumber current 
subparagraph (5) to new subparagraph (4). The Exchange proposes to 
amend paragraph (a) of Exchange Rule 605 to remove a reference to Fill-
or-Kill Orders. The Exchange proposes to amend subparagraph (c) of 
Policy .02 of Exchange Rule 612 to remove a reference to FOK eQuotes 
and to make minor non substantive edits to the rule text.
    MIAX Emerald is an affiliate exchange of the MIAX Options Exchange 
and offers similar functionality and similar order types as MIAX 
Options. MIAX Options Exchange Rule 516 states,

It should be noted that some of the order types defined below are valid 
only during certain portions of the trading day (e.g., Opening Orders) 
or during certain events (e.g., Auction or Cancel Orders). If a Member 
submits an order type during a time period when the order type is not 
valid, the System will reject the order. It should also be noted that 
not all of the order types listed and described in this rule will be 
initially available for use on the Exchange. The Exchange will issue a 
Regulatory Circular listing which order types, among the order types 
set forth below, are available. Additional Regulatory Circulars will be 
issued as additional order types, among those order types set forth 
below, become available for use on the Exchange. Regulatory Circulars 
will also be issued when an order type that had been in usage on the 
Exchange will no longer be available for use.

    MIAX Options recently issued Regulatory Circulars indicating that 
FOK Orders and FOK eQuotes will no longer be available for use on the 
MIAX Options Exchange.\7\ MIAX Emerald proposes to make both FOK Orders 
and FOK eQuotes unavailable on the MIAX Emerald Exchange so as to avoid 
confusion among Members \8\ that may be Members of both MIAX Options 
and MIAX Emerald.\9\
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    \7\ See MIAX Options Regulatory Circular 2021-20, Fill-or-Kill 
Orders will no longer be supported on the MIAX Options Exchange 
(April 8, 2021) available at https://www.miaxoptions.com/sites/default/files/circular-files/MIAX_Options_RC_2021_20.pdf; and MIAX 
Options Regulatory Circular 2021-21, Fill-or-Kill eQuotes will no 
longer be supported on the MIAX Options Exchange (April 9, 2021) 
available at: https://www.miaxoptions.com/sites/default/files/circular-files/MIAX_Options_RC_2021_21.pdf.
    \8\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \9\ The Exchange notes that FOK Orders and FOK eQuotes are not 
available on the Exchange's other affiliate exchange, MIAX Pearl 
Options Exchange.
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2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \10\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \11\ 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 mechanisms of a free and open market and a national market 
system and, in general, to protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal promotes just and equitable 
principles of trade and 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 removing an 
order type from the Exchange that is not widely used by investors. 
Removing an infrequently used order type from the Exchange's rulebook 
benefits investors by simplifying the Exchange's rulebook.
    Additionally, the Exchange believes that its proposal promotes just 
and equitable principles of trade and removes 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 
aligning functionality available on the Exchange to that of its 
affiliate exchange. Specifically, the Exchange believes that although 
MIAX Emerald rules may, in certain instances, intentionally differ from 
MIAX Options rules, the proposed change will promote uniformity with 
the MIAX Options Exchange and allow MIAX Emerald to provide 
functionality similar to MIAX Options. MIAX Emerald and MIAX Options 
may have a number of common Members, and where feasible the Exchange 
intends to provide consistency between MIAX Options and MIAX Emerald so 
as to avoid confusion among Members.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes the 
proposed rule change will not impose any burden on intra-market 
competition because the rules of the Exchange apply equally to all 
Members. Members may still receive an immediate execution on the 
Exchange by using an Immediate-or-Cancel Order.\12\
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    \12\ 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 MIAX Emerald Rule 503. See 
Exchange Rule 516(c).
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    The Exchange does not believe that the proposed rule change will 
impose any burden on inter-market competition as the Exchange's 
proposal is not designed to address any competitive issues. The 
Exchange's proposal removes an infrequently used order type from the 
Exchange and aligns its functionality to its affiliate Exchange, MIAX 
Options. Additionally, the Exchange believes the proposed rule change 
will not impose any burden on inter-market competition as option 
exchanges offer a variety of order types and not every option exchange 
offers every order type.\13\
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    \13\ BOX Options Exchange supports a Fill and Kill (FAK) order 
type but not a Fill or Kill order type. See BOX Exchange Rule 7110. 
Nasdaq Phlx supports an All-or-None Order but not a Fill or Kill 
order type. See Nasdaq Phlx Options 3, Section 7(b)(5).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section

[[Page 24119]]

19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-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 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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
asserted that the waiver would allow the Exchange to harmonize its 
functionality to that of MIAX Options Exchange and thus reduce the 
potential for confusion among its Members. The Exchange also stated 
that it does not believe that removal of the FOK order type will impact 
users as this order type is infrequently used on the Exchange. For 
these reasons, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, and will allow the Exchange to immediately align its 
functionality with MIAX Options Exchange and simplify its rulebook to 
remove an infrequently used order type. Accordingly, the Commission 
hereby waives the operative delay and designates the proposed rule 
change operative upon filing.\17\
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    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-EMERALD-2021-14 on the subject line.

Paper Comments

     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-EMERALD-2021-14. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-EMERALD-2021-14 and should be submitted 
on or before May 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09431 Filed 5-4-21; 8:45 am]
BILLING CODE 8011-01-P