[Federal Register Volume 86, Number 113 (Tuesday, June 15, 2021)]
[Notices]
[Pages 31769-31772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12479]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92138; File No. SR-EMERALD-2021-20]


Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule To Adopt Fees for the Open-Close Report

June 9, 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 May 28, 2021, MIAX Emerald, LLC (``MIAX Emerald'' 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 is filing a proposal to amend the Exchange's Fee 
Schedule (``Fee Schedule'') to adopt fees for a new data product to be 
known as the Open-Close Report.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX'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 recently adopted a new data product known as the Open-
Close Report, which will be available for purchase to Exchange Members 
\3\ and non-Members.\4\ The Exchange now proposes to adopt fees for the 
Open-Close Report. The Open-Close Report is described under Exchange 
Rule 531(b)(1).
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    \3\ 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.
    \4\ See Securities Exchange Act Release No. 91963 (May 21, 
2021), 86 FR 28662 (May 27, 2021) (SR-EMERALD-2021-18) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Adopt a New Historical Market Data Product To Be Known as the Open-
Close Report).
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    By way of background, the Exchange will offer two versions of the 
Open-Close Report, an end of day summary and intra-day report. The end-
of-day version is a volume summary of trading activity on the Exchange 
at the option level by origin (Priority Customer, Non-Priority 
Customer, Firm, Broker-Dealer, and Market Maker \5\), side of the 
market (buy or sell), contract volume, and transaction type (opening or 
closing). The customer and professional customer volume is further 
broken down into trade size buckets (less than 100 contracts, 100-199 
contracts, greater than 199 contracts). The Open-Close Data is 
proprietary Exchange trade data and does not include trade data from 
any other exchange. It is also a historical data product and not a 
real-time data feed.
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    \5\ See Exchange Rule 100.
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    The intraday Open-Close Report will provide similar information to 
that of Open-Close Data but will be produced and updated every 10 
minutes during the trading day. Data is captured in ``snapshots'' taken 
every 10 minutes throughout the trading day and is available to 
subscribers within five minutes of the conclusion of each 10-minute 
period. For example, subscribers to the intraday product will receive 
the first calculation of intraday data by no later than 9:45 a.m. ET, 
which represents data captured from 9:30 a.m. to 9:40 a.m. Subscribers 
will receive the next update by 9:55 a.m., representing the data 
previously provided together with data captured from 9:40 a.m. through 
9:50 a.m., and so forth. Each update will represent the aggregate data 
captured from the current ``snapshot'' and all previous ``snapshots.'' 
The intraday Open-Close Data will provide a volume summary of trading 
activity on the Exchange at the option level by origin (Priority 
Customer, Non-Priority Customer, Firm, Broker-Dealer, and Market 
Maker), side of the market (buy or sell), and transaction type (opening 
or closing). All volume will be further broken down into trade size 
buckets (less than 100 contracts, 100-199 contracts, greater than 199 
contracts).
    The Exchange anticipates a wide variety of market participants to 
purchase the Open-Close Report, including, but not limited to, 
individual customers, buy-side investors, and investment banks. The 
Exchange believes the Open-Close Report product may also provide 
helpful trading information regarding investor sentiment that may allow 
market participants to make better trading decisions throughout the day 
and may be used to create and test trading models and analytical 
strategies and provides comprehensive insight into trading on the 
Exchange. For example, intraday open data may allow a market 
participant to identify new interest or possible risks throughout the 
trading day, while intraday closing data may allow a market participant 
to identify fading interests in a security. The product is a completely 
voluntary product, in that the Exchange is not required by any rule or 
regulation to make this data available and that potential subscribers 
may purchase it only if they voluntarily choose to do so. The Exchange 
notes that other exchanges offer a similar data product.\6\
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    \6\ See Securities Exchange Act Release Nos. 89497 (August 6, 
2020), 85 FR 48747 (August 12, 2020) (SR-CboeBZX-2020-059); 89498 
(August 6, 2020), 85 FR 48735 (August 12, 2020) (SR-Cboe-EDGX-2020-
36); 85817 (May 9, 2019), 84 FR 21863 (May 15, 2019) (SR-CBOE-2019-
026); 89496 (August 6, 2020), 85 FR 48743 (August 12, 2020) (SR-C2-
2020-010); 89596 [sic] (August 17, 2020), 85 FR 51833 (August 21, 
2020) (SR-C2-2020-012); 62887 (September 10, 2010), 75 FR 57092 
(September 17, 2010) (SR-Phlx-2010-121); 65587 (October 18, 2011), 
76 FR 65765 (October 24, 2011) (SR-NASDAQ-2011-144); 61317 (January 
8, 2010), 75 FR 2915 (January 19, 2010) (SR-ISE-2009-103); 62887 
(September 10, 2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-
2010- 121); 65587 (October 18, 2011), 76 FR 65765 (October 24, 2011) 
(SR-NASDAQ-2011-144); and 81632 (September 15, 2017), 82 FR 44235 
(September 21, 2017) (SR-GEMX-2017-42).

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[[Page 31770]]

    The Exchange proposes to provide in its Fee Schedule that Members 
and non-Members may purchase the Open-Close Report on a monthly basis. 
The Exchange proposes to assess a monthly fee of $600 per month for 
subscribing to the end-of-day summary Open-Close Report and $2,000 per 
month for subscribing to the intra-day Open-Close Report. The Exchange 
also proposes to specify that for mid-month subscriptions, new 
subscribers will be charged for the full calendar month for which they 
subscribe and will be provided Open-Close Report data for each trading 
day of the calendar month from the day on which they subscribed. The 
proposed monthly fees will apply both to Members or non-Members. The 
Exchange notes that other exchanges provide similar data products that 
may be purchased on a monthly basis and are similarly priced.\7\
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    \7\ See Price List--U.S. Derivatives Data for Nasdaq PHLX, LLC 
(``PHLX''), The Nasdaq Stock Market, LLC (``Nasdaq''), Nasdaq ISE, 
LLC (``ISE''), and Nasdaq GEMX, LLC (``GEMX''), available at http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#web. 
Particularly, PHLX offers ``Nasdaq PHLX Options Trade Outline 
(PHOTO)'' and assesses $1,500 per month for an intra-day 
subscription and $500 per month for end of day subscription; Nasdaq 
offers the ``Nasdaq Options Trade Outline (NOTO)'' and assesses $750 
per month for an intra-day subscription and $500 per month for end 
of day subscription; ISE offers the ``Nasdaq ISE Open/Close Trade 
Profile'' and assesses $2,000 per month for an intra-day 
subscription and $750 per month for end of day subscription; and 
GEMX offers the ``Nasdaq GEMX Open/Close Trade Profile'' and 
assesses $1,000 per month for an intra-day subscription and $500 per 
month for end of day subscription. Cboe EDGX Exchange, Inc. 
(``EDGX'') assesses $1,000 per month for an intra-day subscription 
and $500 per month for end of day subscription and Cboe BZX 
Exchange, Inc. (``BZX'') assess $1,500 per month for an intra-day 
subscription and $500 per month for end of day subscription. See the 
EDGX fee schedule available at http://markets.cboe.com/us/options/membership/fee_schedule/edgx/ and the BZX fee schedule available at 
http://markets.cboe.com/us/options/membership/fee_schedule/bzx/. See 
also Securities Exchange Act Release nos. 89879 [sic] (August 17, 
2020), 85 FR 51796 (August 21, 2020) (SR-CboeEDGX-2020-040); and 
89583 (August 17, 2020), 85 FR 51825 (August 21, 2020) (SR-CboeBZX-
2020-063).
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    The Exchange intends to begin to offer the Open-Close Report and 
charge the proposed fees on June 1, 2021.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\9\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
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 to protect investors and the public 
interest, and that it is not designed to permit unfair discrimination 
among customers, brokers, or dealers. The Exchange also believes that 
its proposal to adopt fees for the Open-Close Report is consistent with 
Section 6(b) of the Act \10\ in general, and furthers the objectives of 
Section 6(b)(4) of the Act \11\ in particular, in that it is an 
equitable allocation of dues, fees and other charges among its members 
and other recipients of Exchange data.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. Particularly, the Open-Close Report further 
broadens the availability of U.S. option market data to investors 
consistent with the principles of Regulation NMS. The data product also 
promotes increased transparency through the dissemination of the Open-
Close Report. Particularly, information regarding opening and closing 
activity across different option series during the trading day may 
indicate investor sentiment, which may allow market participants to 
make better informed trading decisions throughout the day. Subscribers 
to the data may also be able to enhance their ability to analyze option 
trade and volume data and create and test trading models and analytical 
strategies. The Exchange believes the Open-Close Report provides a 
valuable tool that subscribers can use to gain comprehensive insight 
into the trading activity in a particular series, but also emphasizes 
such data is not necessary for trading. Moreover, other exchanges offer 
a similar data product.\12\
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    \12\ See supra note 6.
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    The Exchange operates in a highly competitive environment. Indeed, 
there are currently 16 registered options exchanges that trade options. 
Based on publicly available information, no single options exchange has 
more than 15% of the market share and currently the Exchange represents 
only approximately 3.13% of the market share.\13\ The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. Particularly, 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.'' \14\ Making similar data products available to 
market participants fosters competition in the marketplace, and 
constrains the ability of exchanges to charge supra-competitive fees. 
In the event that a market participant views one exchange's data 
product as more or less attractive than the competition they can and do 
switch between similar products. The proposed fees are a result of the 
competitive environment, as the Exchange seeks to adopt fees to attract 
purchasers of the recently introduced Open-Close Data product.
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    \13\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (May 26, 2021), available at https://markets.cboe.com/us/options/market_statistics/.
    \14\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange believes the proposed fees are reasonable as the 
proposed fees are both modest and similar to, or even lower than, the 
fees assessed by other exchanges that provide similar data 
products.\15\ Indeed, proposing fees that are excessively higher than 
established fees for similar data products would simply serve to reduce 
demand for the Exchange's data product, which as noted, is entirely 
optional. Like the Exchange's Open-Close Report, other exchanges offer 
similar data products that each provide insight into trading on those 
markets and may likewise aid in assessing investor sentiment. Although 
each of these similar Open-Close data products provide only proprietary 
trade data and not trade data from other exchanges, it is possible 
investors are still able to gauge overall investor sentiment across 
different option series based on open and closing interest on any one 
exchange.\16\ Similarly, market participants may be able to analyze 
option trade and volume data, and create and test trading models and

[[Page 31771]]

analytical strategies using only Open-Close data relating to trading 
activity on one or more of the other markets that provide similar data 
products. As such, if a market participant views another exchange's 
Open-Close data as more attractive than its proposed Open-Close Report, 
then such market participant can merely choose not to purchase the 
Exchange's Open-Close Report and instead purchase another exchange's 
Open-Close data product, which offer similar data points, albeit based 
on that other market's trading activity.
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    \15\ See supra note 7.
    \16\ The exchange notes that its Open-Close Report data product 
does not include data on any exclusive, singly-listed option series.
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    The Exchange also believes the proposed fees are reasonable as they 
would support the introduction of a new market data product that is 
designed to aid investors by providing insight into trading on the 
Exchange. The recently adopted Open-Close Report would provide options 
market participants with valuable information about opening and closing 
transactions executed on the Exchange throughout the trading day, 
similar to other trade data products offered by competing options 
exchanges. In turn, this data would assist market participants in 
gauging investor sentiment and trading activity, resulting in 
potentially better informed trading decisions. As noted above, users 
may also use such data to create and test trading models and analytical 
strategies.
    Selling market data, such as the Open-Close Report, is also a means 
by which exchanges compete to attract business. To the extent that the 
Exchange is successful in attracting subscribers for the Open-Close 
Report, it may earn trading revenues and further enhance the value of 
its data products. If the market deems the proposed fees to be unfair 
or inequitable, firms can diminish or discontinue their use of the data 
and/or avail themselves of similar products offered by other 
exchanges.\17\ The Exchange therefore believes that the proposed fees 
for the Open-Close Report reflect the competitive environment and would 
be properly assessed on Member or non-Member users. The Exchange also 
believes the proposed fees are equitable and not unfairly 
discriminatory as the fees would apply equally to all users who choose 
to purchase such data. The Exchange's proposed fees would not 
differentiate between subscribers that purchase the Open-Close Report 
and are set at a modest level that would allow any interested Member or 
non-Member to purchase such data based on their business needs.
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    \17\ See supra note 6.
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    As noted above, the Exchange anticipates a wide variety of market 
participants to purchase the Open-Close Report, including but not 
limited to individual customers, buy-side investors and investment 
banks. The Exchange reiterates that the decision as to whether or not 
to purchase the Open-Close Report is entirely optional for all 
potential subscribers. Indeed, no market participant is required to 
purchase the Open-Close Report, and the Exchange is not required to 
make the Open-Close Report available to all investors. Rather, the 
Exchange is voluntarily making the Open-Close Report available, as 
requested by customers, and market participants may choose to receive 
(and pay for) this data based on their own business needs. Potential 
purchasers may request the data at any time if they believe it to be 
valuable or may decline to purchase such data.

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. Rather, the 
Exchange believes that the proposal will promote competition by 
permitting the Exchange to sell a data product similar to those offered 
by other competitor options exchanges.\18\ The Exchange made Open-Close 
Data available in order to keep pace with changes in the industry and 
evolving customer needs, and believes the data product will contribute 
to robust competition among national securities exchanges. At least 
eight other U.S. options exchanges offer a market data product that is 
substantially similar to the Open-Close Report. As a result, the 
Exchange believes this proposed rule change permits fair competition 
among national securities exchanges.
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    \18\ Id.
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    Furthermore, the Exchange operates in a highly competitive 
environment, and its ability to price the Open-Close Report is 
constrained by competition among exchanges that offer similar data 
products to their customers. As discussed, there are currently a number 
of similar products available to market participants and investors. At 
least eight other U.S. options exchanges offer a market data product 
that is substantially similar to the Open-Close Report, which the 
Exchange must consider in its pricing discipline in order to compete 
for the market data.\19\ For example, proposing fees that are 
excessively higher than established fees for similar data products 
would simply serve to reduce demand for the Exchange's data product, 
which as discussed, market participants are under no obligation to 
utilize. In this competitive environment, potential purchasers are free 
to choose which, if any, similar product to purchase to satisfy their 
need for market information. As a result, the Exchange believes this 
proposed rule change permits fair competition among national securities 
exchanges.
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    \19\ See, e.g., Cboe Options Fees Schedule, Livevol Fees, Open-
Close Data. See also Nasdaq ISE Options 7 Pricing Schedule, Section 
10.A and Nasdaq PHLX Options 7 Pricing Schedule, Section 10, PHLX 
Options Trade Outline (``PHOTO'').
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    The Exchange also does not believe the proposed fees would cause 
any unnecessary or in appropriate burden on intermarket competition as 
other exchanges are free to introduce their own comparable data product 
and lower their prices to better compete with the Exchange's offering. 
The Exchange does not believe the proposed rule change would cause any 
unnecessary or inappropriate burden on intramarket competition. 
Particularly, the proposed product and fees apply uniformly to any 
purchaser, in that it does not differentiate between subscribers that 
purchase the Open-Close Report. The proposed fees are set at a modest 
level that would allow any interested Member or non-Member to purchase 
such data based on their business needs.

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,\20\ and Rule 19b-4(f)(2) \21\ 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.
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    \20\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \21\ 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,

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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-2021-20 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-2021-20. 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-2021-20 and should be submitted 
on or before July 6, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12479 Filed 6-14-21; 8:45 am]
BILLING CODE 8011-01-P