[Federal Register Volume 89, Number 60 (Wednesday, March 27, 2024)]
[Notices]
[Pages 21299-21302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06456]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99829; File No. SR-EMERALD-2024-10]


Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the MIAX Emerald Fee Schedule

March 21, 2024.
    Pursuant to the provisions of 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 March 8, 2024, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 MIAX Emerald Fee 
Schedule (``Fee Schedule'').
    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 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

[[Page 21300]]

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 exchange grouping of options 
exchanges within the routing fee table in Section (1)(b) of the Fee 
Schedule, Fees for Customer Orders Routed to Another Options Exchange, 
to (i) adjust the groupings of options exchanges; and (ii) adopt a new 
routing tier. The Exchange originally filed this proposal on January 
31, 2024 (SR-EMERALD-2024-04). On February 14, 2024, the Exchange 
withdrew SR-EMERALD-2024-04 and resubmitted the proposal as SR-EMERALD-
2024-07. On February 26, 2024, SR-EMERALD-2024-07, was rejected due to 
a technical issue with the filing. On February 26, 2024, the Exchange 
resubmitted a corrected proposal as SR-EMERALD-2024-08. On March 8, 
2024, the Exchange withdrew SR-EMERALD-2024-08 and resubmitted this 
proposal.
Background
    Currently, the Exchange assesses routing fees based upon (i) the 
origin type of the order; (ii) whether or not it is an order for 
standard option classes in the Penny Interval Program \3\ (``Penny 
classes'') or an order for standard option classes which are not in the 
Penny Interval Program (``Non-Penny classes'') (or other explicitly 
identified classes); and (iii) to which away market it is being routed. 
This assessment practice is identical to the routing fees assessment 
practice currently utilized by the Exchange's affiliates, Miami 
International Securities Exchange, LLC (``MIAX Options'') and MIAX 
PEARL, LLC (``MIAX Pearl''). This is also similar to the methodology 
utilized by the Cboe BZX Exchange, Inc. (``Cboe BZX Options''), a 
competing options exchange, in assessing routing fees. Cboe BZX Options 
has exchange groupings in its fee schedule, similar to those of the 
Exchange, whereby several exchanges are grouped into the same category 
dependent upon the order's origin type and whether it is a Penny or 
Non-Penny class.\4\
---------------------------------------------------------------------------

    \3\ See Exchange Rule 510(c).
    \4\ See Cboe U.S. Options Fee Schedules, BZX Options, effective 
March 1, 2024, ``Fee Codes and Associated Fees,'' at https://www.cboe.com/us/options/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    As a result of conducting a periodic review of the current 
transaction fees charged by away markets, the Exchange has determined 
to amend the exchange groupings of options exchanges within the routing 
fee table, and to add another fee tier, to account for fees assessed at 
away markets and to better reflect the associated costs and fees of 
routing customer orders to certain away markets for execution.
Proposal
    The Exchange proposes to amend the table in Section (1)(b) of the 
Exchange's Fee Schedule, Fees for Customer Orders Routed to Another 
Options Exchange.
    The purpose of the proposed change is to adjust the routing fee 
groups for orders routed to other exchanges to better reflect the 
associated costs for that routed execution in Penny and Non-Penny 
Classes as determined by the fees assessed at the executing exchange. 
In determining to amend its routing fees the Exchange took into account 
transaction fees assessed by the away market to which the Exchange 
routes orders, as well as the Exchange's clearing costs, 
administrative, regulatory, and technical costs associated with routing 
orders to an away market. The Exchange uses unaffiliated routing 
brokers to route orders to the away markets; the costs associated with 
the use of these services are included in the routing fees specified in 
the Fee Schedule. This routing fee structure is not only similar to the 
Exchange's affiliates, MIAX Options and MIAX Pearl, but is also 
comparable to the structure in place on at least one other competing 
options exchange, Cboe BZX Options.\5\ The Exchange's routing fee 
structure approximates the Exchange's costs associated with routing 
orders to away markets. The per-contract transaction fee amount 
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) \6\ to execute that 
corresponding contract at that corresponding exchange.
---------------------------------------------------------------------------

    \5\ See supra note 4. The Cboe BZX Options fee schedule has 
exchange groupings, whereby several exchanges are grouped into the 
same category, dependent on the order's Origin type and whether it 
is a Penny or Non-Penny class. For example, Cboe BZX Options fee 
code RR covers routed customer orders in Non-Penny classes to NYSE 
Arca, Nasdaq BX, Cboe C2, Nasdaq ISE, Nasdaq Gemini, MIAX Emerald, 
MIAX Pearl, NOM, or MEMX with a single fee of $1.25 per contract.
    \6\ This amount is to cover de minimis differences/changes to 
away market fees (i.e., minor increases or decreases) that would not 
necessitate a fee filing by the Exchange to re-categorize the away 
exchange into a different grouping. Routing fees are not intended to 
be a profit center for the Exchange and the Exchange's goal 
regarding routing fees and expenses is to be as close as possible to 
net neutral.
---------------------------------------------------------------------------

    Specifically, the Exchange proposes to amend the ``Routed, Priority 
Customer, Penny Program'' $0.15 fee tier and the ``Routed, Priority 
Customer, Penny Program'' $0.30 fee tier to segregate routing fees for 
SPY orders executed on Nasdaq MRX. Currently, the Exchange assesses a 
$0.30 fee for any Priority Customer order in a Penny Program symbol, 
routed to Nasdaq MRX. The Exchange now proposes to amend the ``Routed, 
Priority Customer, Penny Program'' $0.15 fee tier to include Nasdaq MRX 
(SPY Only) and to amend the ``Routed Priority Customer, Penny Program'' 
$0.30 fee tier to amend Nasdaq MRX to Nasdaq MRX (except SPY). This 
change is being made as Nasdaq MRX assesses a $0.20 per contract taker 
fee for Priority Customer orders in Penny Program symbols,\7\ but does 
not assess a taker fee for Priority Customer SPY orders.\8\ The 
proposed changes to the Exchange's fee schedule better reflect the 
taker fees charged by Nasdaq MRX for Priority Customer SPY orders.
---------------------------------------------------------------------------

    \7\ See Nasdaq MRX Rules, Options 7, Pricing Schedule, Section 
3, Regular Order Fees and Rebates, Table 1. The Exchange notes that 
on March 1, 2024, Nasdaq MRX increased the taker fee from $0.15 to 
$0.20 for Priority Customer orders in penny classes and increased 
the taker fee to $0.40 for Priority Customer orders in non-penny 
classes.
    \8\ See footnote 6 of Nasdaq MRX Rules, Options 7, Pricing 
Schedule, Section 3, Regular Order Fees and Rebates, which provides, 
``Market Maker Tier 1 through Tier 4 Maker Fees/Rebates and Priority 
Customer Tier 1 through Tier 4 Taker Fees will be $0.00 per 
contract, in Penny Symbols, for the following options symbols: SPY, 
QQQ and IWM. See also Securities Exchange Release No. 98129 (August 
14, 2023), 88 FR 56672 (August 18, 2023) (SR-MRX-2023-12).
---------------------------------------------------------------------------

    Additionally, the Exchange proposes to similarly segregate Routed, 
Priority Customer SPY orders to the BOX Exchange (``BOX''). 
Specifically, the Exchange proposes to amend the ``Routed, Priority 
Customer, Penny Program'' $0.15 fee tier to specify that orders in this 
segment routed to BOX will be assessed a $0.15 fee except for SPY 
orders. Additionally, the Exchange proposes to amend the ``Routed, 
Priority Customer, Penny Program'' $0.30 fee tier to specify that SPY 
orders in this segment routed to BOX will be assessed a $0.30 fee. This 
change is being made as BOX does not assess a taker fee for 
Professional Customer orders in any Penny or Non-Penny classes \9\ 
except for SPY orders where BOX assesses a $0.10 per contract taker 
fee.\10\ The proposed changes are being made to better reflect the 
costs and fees associated with executing Priority Customer SPY orders 
on BOX.\11\
---------------------------------------------------------------------------

    \9\ See BOX Exchange Fee Schedule, Section IV, Electronic 
Transaction Fees, A, Non-Auction Transactions.
    \10\ See id.
    \11\ BOX Exchange charges a $0.10 Taker fee for executions 
against Professional Customers/Broker Dealers, and Market Makers. 
See BOX Exchange Fee Schedule as of January 2, 2024, Section IV. 
Electronic Transaction Fees, A. Non-Auction Transactions, available 
online at https://boxoptions.com/fee-schedule/.

---------------------------------------------------------------------------

[[Page 21301]]

    The Exchange proposes to amend the ``Routed, Priority Customer, 
Non-Penny Program'' $0.15 fee tier to remove Nasdaq ISE and to amend 
the ``Routed, Priority Customer, Non-Penny Program'' $1.00 fee tier to 
add Nasdaq ISE. This proposed change reflects fees charged by Nasdaq 
ISE when a Priority Customer trades against a Priority Customer.\12\ 
This change is being made to better reflect the costs and fees 
associated with executing orders in this segment on Nasdaq ISE.
---------------------------------------------------------------------------

    \12\ See Nasdaq ISE Rules, Options 7 Pricing Schedule, Section 
3. Regular Order Fees and Rebates, footnote 3 which provides in 
pertinent part that, ``Priority Customer orders will be charged a 
taker fee of $1.00 per contract for trades executed against a 
Priority Customer.''
---------------------------------------------------------------------------

    The Exchange proposes to amend the ``Routed, Public Customer that 
is not a Priority Customer, Non-Penny Program'' $1.15 fee tier to 
remove NOM and Nasdaq ISE. The Exchange proposes to amend the ``Routed, 
Public Customer that is not a Priority Customer, Non-Penny Program'' 
$1.00 fee tier to add NOM.\13\ This change is being made to better 
reflect the associated costs and fees of routing these customer orders 
to certain away markets for execution.
---------------------------------------------------------------------------

    \13\ NOM assesses an $0.85 taker fee for Customer and 
Professional orders in Non-Penny classes. See Nasdaq Stock Market 
Rules, Options 7, Pricing Schedule, Section 2, Nasdaq Options 
Market--Fees and Rebates, Fees to Remove Liquidity in Penny and Non-
Penny Symbols.
---------------------------------------------------------------------------

    The Exchange proposes to amend the ``Routed, Public Customer that 
is not a Priority Customer, Non-Penny Program'' $1.25 fee tier to 
remove Cboe BZX Options and Nasdaq BX Options. The Exchange now 
proposes to adopt a new ``Routed, Public Customer that is not a 
Priority Customer, Non-Penny Program'' $1.40 fee tier to include Nasdaq 
ISE, Cboe BZX Options, and Nasdaq BX Options. This change is being made 
to better reflect the fees assessed for executions that occur on Cboe 
BZX Options,\14\ Nasdaq ISE,\15\ and Nasdaq BX Options \16\ and the 
associated costs of routing customer orders to these away markets for 
execution.
---------------------------------------------------------------------------

    \14\ See Cboe U.S. Options Fee Schedules, BZX Options, effective 
March 1, 2024, ``Fee Codes and Associated Fees,'' which assesses a 
$1.15 fee for Non-Customer orders, and an $0.85 fee for Customer 
orders, that remove liquidity in Non-Penny classes, available online 
at https://www.cboe.com/us/options/membership/fee_schedule/bzx/.
    \15\ See Nasdaq ISE Rules, Options 7 Pricing Schedule, Section 
3, Regular Order Fees and Rebates, footnote 3 which provides in 
pertinent part that, ``Non-Priority Customer orders will be charged 
a taker fee of $1.25 per contract for trades executed against a 
Priority Customer.'' See also Securities Exchange Act Release No. 
99024 (November 28, 2023), 88 FR 84014 (December 1, 2023) (SR-ISE-
2023-28).
    \16\ See Nasdaq BX Rules, Options 7 Pricing Schedule, Section 2, 
BX Options Market-Fees and Rebates, paragraph (1) Fees and Rebates 
for Execution of Contracts on the BX Options Markets, which assesses 
a $1.25 Taker Fee for Non-Penny Symbols. See also Securities 
Exchange Act Release No. 99008 (November 21, 2023), 88 FR 83189 
(November 28, 2023) (SR-BX-2023-31).
---------------------------------------------------------------------------

    As discussed above the Exchange uses unaffiliated routing brokers 
to route orders to the away markets; the costs associated with the use 
of these services are included in the routing fees specified in the Fee 
Schedule. The per-contract transaction fee amount associated with each 
grouping, including the proposed ``Routed, Public Customer that is not 
a Priority Customer, Non-Penny Program'' $1.40 fee tier closely 
approximates the Exchange's all-in cost (plus an additional, non-
material amount) \17\ to execute that corresponding contract at that 
corresponding exchange.
---------------------------------------------------------------------------

    \17\ See supra note 6.
---------------------------------------------------------------------------

    The Exchange notes that in determining whether to adjust certain 
groupings of options exchanges in the routing fee table, the Exchange 
considered the transaction fees assessed by away markets, and 
determined to amend the grouping of exchanges that assess transaction 
fees for routed orders within a similar range. This same logic and 
structure applies to all of the groupings in the routing fee table. By 
utilizing the same structure that is utilized by the Exchange's 
affiliates, MIAX Options and MIAX Pearl, the Exchange's Members \18\ 
will be assessed routing fees in a similar manner. The Exchange 
believes that this structure will minimize any confusion as to the 
method of assessing routing fees between the three exchanges. The 
Exchange notes that its affiliates, MIAX Options and MIAX Pearl, will 
file to make the same proposed routing fee changes contained herein.
---------------------------------------------------------------------------

    \18\ 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.
---------------------------------------------------------------------------

Implementation
    The proposed rule changes are immediately effective.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \19\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \20\ in 
particular, in that it is an equitable allocation of reasonable dues, 
fees, and other charges among its members and issuers and other persons 
using its facilities. The Exchange also believes the proposal furthers 
the objectives of Section 6(b)(5) of the Act \21\ in that it is 
designed 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, in general to protect investors and the 
public interest and is not designed to permit unfair discrimination 
between customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4).
    \21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed change to the exchange groupings 
of options exchanges within the routing fee table furthers the 
objectives of Section 6(b)(4) of the Act and is reasonable, equitable 
and not unfairly discriminatory because the proposed change will 
continue to apply in the same manner to all Members that are subject to 
routing fees. The Exchange believes the proposed change to the routing 
fee table exchange groupings furthers the objectives of Section 6(b)(5) 
of the Act and is designed to promote just and equitable principles of 
trade and is not unfairly discriminatory because the proposed change 
seeks to recoup costs that are incurred by the Exchange when routing 
Priority and Public Customer Orders to away markets on behalf of 
Members and does so in the same manner for all Members that are subject 
to routing fees. The costs to the Exchange to route orders to away 
markets for execution primarily includes transaction fees assessed by 
the away markets to which the Exchange routes orders, in addition to 
the Exchange's clearing costs, administrative, regulatory and technical 
costs. The Exchange believes that the proposed re-categorization of 
certain exchange groupings and the introduction of an additional fee 
tier would enable the Exchange to better reflect the costs it and fees 
associated with routing orders to other exchanges for execution. 
Further, the new proposed fee tier is in line with at least one other 
exchange that assesses a fee to similarly route customer orders for 
Non-Penny Classes to away markets for execution.\22\
---------------------------------------------------------------------------

    \22\ See C2 Options Fee Schedule, as of February 9, 2024, 
Linkage Routing Fees, which assesses a $1.55 fee for orders marked 
with fee code ``RD'' Routed (Customer), Non-Penny. The term 
``Customer'' means a Public Customer or a broker-dealer. See Rules 
of Cboe C2 Exchange, Rule 1.1. ``Public Customer'' means a person 
that is not a broker or dealer in securities. See Rules of Cboe C2 
Exchange, Rule 1.1. The Exchange similarly defines ``Public 
Customer'' as a person that is not a broker or dealer in securities. 
See Exchange Rule 100.

---------------------------------------------------------------------------

[[Page 21302]]

    The Exchange places away markets in the fee tier grouping that best 
approximates the Exchange's costs and fees to route the orders in that 
segment to that away market. The per-contract transaction fee amount 
associated with each grouping approximates the Exchange's all-in cost 
(plus an additional, non-material amount) \23\ to execute the 
corresponding contract at the corresponding exchange. Other exchanges 
employ more simplistic models that provide for even fewer tiers than 
the Exchange (e.g., two tiers on MEMX,\24\ and five tiers on Cboe BZX) 
\25\ in their attempt to reflect the costs and fees associated with 
routing and executing orders on other exchanges. The Exchange believes 
its tier structure represents the best approach to reflect the costs 
and fees associated with routing and executing orders on other 
exchanges.
---------------------------------------------------------------------------

    \23\ See supra note 6.
    \24\ See MEMX Options Fee Schedule, as of February 15, 2024, 
Routing Fees, which assesses a fee of $0.60 for orders in penny 
classes routed to other exchanges and $1.20 for orders in non-penny 
classes routed to other exchanges, available at https://info.memxtrading.com/us-options-trading-resources/us-options-fee-schedule/.
    \25\ See Cboe BZX Options Fee Schedule, as of March 1, 2024, Fee 
Codes and Associated Fees, which assesses a $0.90 fee for non-
customer orders in penny classes routed to other exchanges and a 
$1.25 fee for non-customer orders in non-penny classes routed to 
other exchanges, and additionally provides for three additional fee 
tiers for customer orders routed to other exchanges, available at 
https://www.cboe.com/us/options/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange's proposed re-
categorization of certain exchange groupings is intended to enable the 
Exchange to recover the costs it incurs to route orders to away 
markets, while the introduction of a new fee tier is designed to allow 
the Exchange to better approximate the costs it incurs to route orders 
to Cboe BZX Options, Nasdaq ISE, and Nasdaq BX. The costs to the 
Exchange to route orders to away markets for execution primarily 
includes the transaction fees assessed by the away markets to which the 
Exchange routes orders, in addition to the Exchange's clearing costs, 
administrative, regulatory and technical costs. This new tier is 
reflective of the fees assessed on the away markets and the Exchange's 
cost to route orders to these away markets on behalf of Members. The 
Exchange does not believe that this proposal imposes any unnecessary 
burden on competition because it seeks to better reflect the costs and 
fees incurred by the Exchange when routing orders to away markets on 
behalf of Members and notes that at least one other options exchange 
has a similar routing fee structure.\26\
---------------------------------------------------------------------------

    \26\ See supra note 4.
---------------------------------------------------------------------------

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,\27\ and Rule 19b-4(f)(2) \28\ 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.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \28\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2024-10 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-2024-10. 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-2024-10 and should 
be submitted on or before April 17, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-06456 Filed 3-26-24; 8:45 am]
BILLING CODE 8011-01-P