[Federal Register Volume 88, Number 200 (Wednesday, October 18, 2023)]
[Notices]
[Pages 71904-71907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22923]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98728; File No. SR-EMERALD-2023-28]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule Related to the Options Regulatory Fee
October 12, 2023.
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 October 5, 2023, MIAX Emerald, LLC (``MIAX Emerald'' or
``Exchange'') filed with the
[[Page 71905]]
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 the MIAX Emerald Options Exchange
Fee Schedule (the ``Fee Schedule'') related to the Options Regulatory
Fee.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxglobal.com/markets/us-options/emerald-options/rule-filings, at MIAX's [sic] 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 the Fee Schedule, to harmonize the
language and processes relating to the Options Regulatory Fee (``ORF'')
with the language and processes used by other options exchanges.\3\ By
way of background, the ORF is designed to recover a material portion of
the costs to the Exchange of the supervision and regulation of Member
\4\ customer options business, including performing routine
surveillances, investigations, examinations, financial monitoring, as
well as policy, rulemaking, interpretive and enforcement activities.
The revenue generated from the ORF covers a material portion and when
combined with all of the Exchange's other regulatory fees and fines
will cover a material portion of the Exchange's regulatory costs. The
Exchange monitors the amount of revenue collected from the ORF to
ensure that it, in combination with its other regulatory fees and
fines, does not exceed the Exchange's total regulatory costs. The
Exchange monitors its regulatory costs and revenues at a minimum on a
semi-annual basis. If the Exchange determines regulatory revenues
exceed or are insufficient to cover a material portion of its
regulatory costs, the Exchange will adjust the ORF by submitting a fee
change filing to the Securities and Exchange Commission (the
``Commission''). The Exchange notifies Members of adjustments to the
ORF via a Regulatory Circular. The Exchange provides Members with such
notice at least 30 calendar days prior to the effective date of the
change.
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\3\ See Securities and Exchange Act Release Nos. 98108 (August
10, 2023), 88 FR 55809 (August 16, 2023) (SR-CboeEDGX-2023-054)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change to Amend its Fee Schedule Related to the Options Regulatory
Fee); 98109 (August 10, 2023), 88 FR 55801 (August 16, 2023) (SR-
CboeBZX-2023-061) (Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Amend its Fee Schedule Related to the
Options Regulatory Fee); 98446 (September 20, 2023), 88 FR 66100
(September 26, 2023) (SR-BOX-2023-24) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule for Trading on the BOX Options Market LLC Facility To Amend
the Language and Process Related to the Options Regulatory Fee).
\4\ 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.
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The Regulatory Fee section of the Fee Schedule sets forth the
details and description of how and when the ORF is assessed. For
example, the Fee Schedule explicitly specifies that the Exchange may
only increase or decrease the ORF semi-annually, and any such fee
change will be effective on the first business day of February or
August. The Fee Schedule further states that the Exchange will notify
participants of any change in the amount of the fee at least 30
calendar days prior to the effective date of the change.
The Exchange proposes to update the Fee Schedule language relating
to the timing of ORF changes. Particularly, the Exchange proposes to
eliminate the strict requirement that the ORF may only be modified on
the first business day of February or August, and also the explicit
requirement that it must provide at least 30 calendar days prior notice
to the effective date.
The Exchange first proposes to eliminate the requirement that ORF
may only be modified on the first business day of February or August to
afford the Exchange increased flexibility in amending the ORF. As noted
above, the ORF is based in part on options transactions volume, and as
such the amount of ORF collected is variable. If options transactions
reported to OCC in a given month increase, the ORF collected from
Members may increase as well. Similarly, if options transactions
reported to OCC in a given month decrease, the ORF collected from
Members may decrease as well. Accordingly, the Exchange monitors the
amount of ORF collected to ensure that it does not exceed a material
portion of the Exchange's total regulatory costs. If the Exchange
determines that the amount of ORF collected exceeds costs, the proposed
rule change allows the Exchange to adjust the ORF by submitting a fee
change filing to the Commission in a month other than just February or
August. Although the Exchange proposes to eliminate the explicit
language in the fee schedule that provides the Exchange will adjust the
ORF only semi-annually, and only on the first business day of February
or August, it would continue to monitor its regulatory costs and
revenues at a minimum on a semi-annual basis and submit a proposed rule
change for each modification of the ORF as needed.
The Exchange also proposes to eliminate the explicit language in
the Fee Schedule that it will notify participants of any change in the
amount of the fee at least 30 calendar days prior to the effective date
of the change. Although the Exchange proposes to eliminate this
language from the Fee Schedule, it notes that it will endeavor to
notify Members of any planned change to the ORF by Regulatory Circular
at least 30 calendar days prior to the effective date of such change.
The Exchange believes this proposed change also provides the Exchange
additional flexibility. For example, the Exchange often provides fee
change notices on the first business day of the month. It may be the
case that such date is less than 30 days from the effective date of
proposed change (e.g., if the Exchange wished to amend the ORF,
effective August 1, 2023, the Exchange would not have met the 30-day
notice requirement if it had announced on the first business day of
July, as it has been historic practice, since the first business day
falls on July 3, 2023). As such, the proposed rule changes provide
added flexibility while still committing to provide notice on the
timing of any changes to the ORF and ensuring that Members are prepared
to configure their systems to properly account for the ORF.
The Exchange notes that the proposed changes will result in ORF
processes and fee schedule language that will align with those of its
affiliated
[[Page 71906]]
exchanges, Miami International Securities Exchange, LLC (``MIAX
Options'') and MIAX PEARL, LLC (``MIAX Pearl'').\5\ Moreover, other
options exchanges recently amended their fees to allow for flexibility
to adjust ORF during months other than February or August.\6\ The
Exchange believes the proposed change provides uniformity across its
affiliated options exchanges and reduces potential confusion. It also
provides the Exchange added flexibility as to when modifications to the
ORF may occur.
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\5\ The Exchange intends to submit an identical proposal for its
affiliates MIAX Options and MIAX Pearl.
\6\ See supra note 3.
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Implementation Date
The Exchange will announce the effective date of the proposed
changes by Regulatory Circular distributed to all Members.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the Act
and the rules and regulations thereunder applicable to the Exchange
and, in particular, the requirements of section 6(b) of the Act.\7\
Specifically, the Exchange believes that the proposal is consistent
with the section 6(b)(5) \8\ requirements that the rules of an exchange
be 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.
Additionally, the Exchange believes that the proposal is consistent
with the section 6(b)(5) \9\ requirement that the rules of an exchange
not be designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The Exchange also believes that the
proposal is consistent with section 6(b)(4) of the Act,\10\ which
requires that Exchange rules provide for the equitable allocation of
reasonable dues, fees, and other charges among its Members and other
persons using its facilities.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
\10\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed changes to the Fees Schedule are
appropriate as it provides the Exchange with more flexibility in its
assessment of ORF based on its periodic monitoring of ORF rates. The
Exchange also represents that it will continue to monitor its
regulatory costs and revenues at a minimum on a semi-annual basis, just
as it, and its affiliated options exchanges (including MIAX Pearl and
MIAX) do today. The Exchange believes that the proposed elimination of
language specifying that the Exchange may only increase or decrease the
ORF on the first business day February or August is reasonable because
it is designed to afford the Exchange increased flexibility in making
necessary adjustments to the ORF, as the Exchange is required to
monitor the amount collected from the ORF to ensure that it, in
combination with its other regulatory fees and fines, does not exceed
total regulatory costs.
The Exchange also represents that it will endeavor to provide
notice of any changes at least 30 days in advance of the effective date
of such change, thereby providing Members with adequate time to make
any necessary adjustments to accommodate any proposed changes. Taking
out the strict requirements from the Fee Schedule, however, will
provide the Exchange flexibility in modifying ORF and being able to
adjust ORF even if it doesn't meet the strict 30-day deadline in the
event extenuating circumstances prevent the Exchange from meeting this
deadline or in the event such notice is a day or two less than 30 days
due to when the first business days of the month fall. For example, as
noted above, the Exchange often provides fee change notices on the
first business day of the month. It may be the case that such date is
less than 30 days from the effective date of proposed change (e.g., if
the Exchange wished to amend the ORF, effective, August 1, 2023, the
Exchange would not have met the 30-day notice requirement if it had
announced on the first business day of July, as it has been historic
practice, since the first business day falls on July 3, 2023).
The Exchange believes that the proposal is reasonable, equitable
and not unfairly discriminatory because it conforms to the process and
fee schedule language used by two of its affiliated options exchanges,
thereby providing consistency across the MIAX family options exchanges
and reducing potential confusion. The proposed changes also apply
uniformly to all Members subject to ORF. As noted above, other options
exchanges are also not confined to making ORF changes on the first
business day of February or August or required to provide 30 day
notice.\11\
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\11\ See supra note 3.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. In this regard and as indicated above, the
Exchange notes that the proposal is substantially similar in all
material respects to filings submitted by Cboe EDGX Exchange, Inc.
(``EDGX''), Cboe BZX Exchange, Inc. (``BZX''), and BOX Options Market
LLC (``BOX'').\12\ This proposal does not create an unnecessary or
inappropriate inter-market burden on competition because it merely
amends the Fee Schedule to modify the timing and notice requirements
relating to the modification of the ORF and conforms to the timing and
notice requirements used by other options exchanges within their fee
schedules.\13\ Further, ORF is a regulatory fee that supports
regulation in furtherance of the purposes of the Act. The Exchange is
obligated to ensure that the amount of regulatory revenue collected
from the ORF, in combination with its other regulatory fees and fines,
does not exceed regulatory costs and the proposed rule change does not
seek to change that.
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\12\ Id.
\13\ Id.
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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 after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest, it has become
effective pursuant to section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) \15\ thereunder.
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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, 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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[[Page 71907]]
A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative upon filing. The Exchange is
requesting the waiver because it will allow the Exchange to exercise
more flexibility with respect to timing of changes to its assessment of
ORF based on its periodic monitoring of ORF rates and allow the
Exchange to mirror similar provisions already in place on other
exchanges. Finally, the Exchange states that the proposed change would
not introduce any novel regulatory issues. For these reasons, and
because the proposed rule change does not raise any novel legal or
regulatory issues, the Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest. Therefore, the Commission hereby waives the 30-day
operative delay and designates the proposal operative upon filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ 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 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-EMERALD-2023-28 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-2023-28. 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 (https://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
a.m. and 3 p.m. Copies of the filing also 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-EMERALD-2023-28 and should
be submitted on or before November 8, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12) and (a)(59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22923 Filed 10-17-23; 8:45 am]
BILLING CODE 8011-01-P