[Federal Register Volume 89, Number 73 (Monday, April 15, 2024)]
[Notices]
[Pages 26199-26202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07840]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99923; File No. SR-EMERALD-2024-13]


Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Exchange Rule 531

April 9, 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 April 5, 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 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: (i) amend subparagraph (b)(2) of Exchange 
Rule 531, Reports, Market Data Products and Services, to adjust the 
timeframe for the Liquidity Taker Event Report--Complex Orders; and 
(ii) make a non-substantive, clarifying change to a footnote in prior 
rule filings submitted to the U.S. Securities and Exchange Commission 
(``Commission'') for approval pursuant to section 19(b)(2) of the Act 
\3\ and Rule 19b-4 \4\ to adopt the Liquidity Taker Event Report--
Simple Orders, and filings submitted for immediate effectiveness 
pursuant to section 19(b)(3)(A) of the Act \5\ and Rule 19b-4(f)(6) \6\ 
to adopt the Liquidity Taker Event Report--Complex Orders and Liquidity 
Taker Event Report--Resting Simple Orders.\7\
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    \3\ 15 U.S.C. 78s(b)(2).
    \4\ 17 CFR 240.19b-4.
    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
    \7\ The Exchange notes that it submitted the first filing to 
adopt the Liquidity Taker Event Report--Simple Orders, pursuant to 
section 19(b)(2) of the Act. 15 U.S.C. 78s(b)(2). See Securities 
Exchange Act Release Nos. 91356 (March 18, 2021), 86 FR 15759 (March 
24, 2021) (SR-EMERALD-2021-09) (Notice of Filing of a Proposed Rule 
Change To Adopt Exchange Rule 531, Reports, To Provide for the New 
``Liquidity Taker Event Report''); and 91787 (May 6, 2021), 86 FR 
26111 (May 12, 2021) (SR-EMERALD-2021-09) (Order Approving Proposed 
Rule Change To Adopt Exchange Rule 531(a), Reports, To Provide for a 
New ``Liquidity Taker Event Report'').
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    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 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 offers three versions of the Liquidity Taker Event 
Report: (1) Liquidity Taker Event Report--Simple Orders (referred to 
herein as the ``Simple Order Report''); (2) Liquidity Taker Event 
Report--Complex Orders (referred to herein as the ``Complex Order 
Report''); and (3) Liquidity Taker Event Report--Resting Simple Orders 
(referred to herein as the ``Resting Simple Order Report'').\8\ Each of 
the Reports are available for purchase by Exchange Members \9\ on a 
voluntary basis. The Exchange's prior rule filing to adopt the Simple 
Order Report was submitted to the Commission for approval pursuant to 
section 19(b)(2) of the Act \10\ and Rule 19b-4 \11\ thereunder and the 
Exchange's prior filings to adopt the Complex Order Report and Resting 
Simple Order Report were submitted to the Commission for immediate 
effectiveness pursuant to section 19(b)(3)(A) of the Act \12\ and Rule 
19b-4(f)(6) thereunder.\13\ Each Liquidity Taker Event Report is 
described under Exchange Rules 531(a)-(c).\14\
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    \8\ The Simple Order Report, Complex Order Report and Resting 
Simple Order Report are collectively referred to herein as the 
``Reports.''
    \9\ 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.
    \10\ 15 U.S.C. 78s(b)(2).
    \11\ 17 CFR 240.19b-4.
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ See Exchange Rule 531(a)-(c); see also Securities Exchange 
Act Release Nos. 91356 (March 18, 2021), 86 FR 15759 (March 24, 
2021) (SR-EMERALD-2021-09) (Notice of Filing of a Proposed Rule 
Change To Adopt Exchange Rule 531, Reports, To Provide for the New 
``Liquidity Taker Event Report''); 91787 (May 6, 2021), 86 FR 26111 
(May 12, 2021) (SR-EMERALD-2021-09) (Order Approving Proposed Rule 
Change To Adopt Exchange Rule 531(a), Reports, To Provide for a New 
``Liquidity Taker Event Report''); 94136 (February 2, 2022), 87 FR 
7223 (February 8, 2022) (SR-EMERALD-2022-02) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 531 To Provide for the New Liquidity Taker Event Report--
Complex Orders); 96762 (January 27, 2023), 88 FR 7114 (February 2, 
2023) (SR-EMERALD-2023-02) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by MIAX Emerald, LLC To 
Amend Exchange Rule 531, Reports, Market Data Products and Services, 
To Provide for the New ``Liquidity Taker Event Report--Resting 
Simple Orders'').
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    In general, each Liquidity Taker Event Report is a daily report 
that provides a Member (``Recipient Member'') with its liquidity 
response time details for executions and contra-side responses of an 
order (or Complex Order,\15\ as the case may be) resting on the Simple 
Order Book (or Strategy Book, as the case may be),\16\ where that 
Recipient

[[Page 26200]]

Member attempted to execute against such resting order \17\ within a 
certain timeframe.\18\ The content of each of the Reports is specific 
to the Recipient Member and each Liquidity Taker Event Report does not 
include any information related to any Member other than the Recipient 
Member.
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    \15\ In sum, a ``Complex Order'' is ``any order involving the 
concurrent purchase and/or sale of two or more different options in 
the same underlying security (the `legs' or `components' of the 
complex order), for the same account, in a conforming or non-
conforming ratio. . . .'' See Exchange Rule 518(a)(5).
    \16\ The ``Simple Order Book'' is the Exchange's regular 
electronic book of orders and quotes. See Exchange Rule 518(a)(17). 
The ``Strategy Book'' is the Exchange's electronic book of complex 
orders and complex quotes. See Exchange Rule 518(a)(19). The 
Strategy Book is organized by Complex Strategy in that individual 
orders for a defined Complex Strategy are organized together in a 
book that is separate from the orders for a different Complex 
Strategy. The term ``Complex Strategy'' means ``a particular 
combination of components and their ratios to one another. New 
complex strategies can be created as the result of the receipt of a 
complex order or by the Exchange for a complex strategy that is not 
currently in the System. The Exchange may limit the number of new 
complex strategies that may be in the System at a particular time 
and will communicate this limitation to Members via Regulatory 
Circular.'' See Exchange Rule 518(a)(6).
    \17\ Only displayed orders are included in the Reports. The 
Exchange notes that it does not currently offer any non-displayed 
orders on its options trading platform.
    \18\ A complete description of each of the Reports can be found 
in the prior rule filings to adopt the Reports. See supra note 14.
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    The Exchange now proposes to: (i) amend the subparagraph (b)(2) of 
Exchange Rule 531 to adjust the timeframe from 200 microseconds to 400 
microseconds for the Complex Order Report; and (ii) make a clarifying 
change to one of the footnotes in the prior filings that adopted the 
Simple Order Report, Complex Order Report, and Resting Simple Order 
Report.
Proposal To Amend Subparagraph (b)(2) of Exchange Rule 531 for the 
Complex Order Report To Adjust the Timeframe
    The Exchange proposes to amend the subparagraph (b)(2) of Exchange 
Rule 531 to adjust the timeframe for the Complex Order Report. 
Currently, subparagraph (b)(2) provides that the Complex Order Report 
will include data set forth under Exchange Rule 531(b)(1) \19\ for 
executions and contra-side responses that occurred within 200 
microseconds of the time the resting order was received by the 
Exchange. The Exchange now proposes to amend subparagraph (b)(2) to 
adjust the timeframe from 200 microseconds to 400 microseconds. 
Accordingly, with the proposed change, subparagraph (b)(2) of Exchange 
Rule 531 will provide as follows:
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    \19\ In general, subparagraph (b)(1) of Exchange Rule 531 
includes information regarding (i) the resting order; (ii) execution 
of the resting order; and (iii) response(s) sent by the Recipient 
Member. See Exchange Rule 531(b)(1)(i)-(iii).

    (2) Timeframe. The Liquidity Taker Event Report-Complex Orders 
will include data listed in paragraph (b)(1) of this Rule 531(b) for 
executions and contra-side responses that occurred within 400 
microseconds of the time the resting order was received by the 
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Exchange.

    At the time the Exchange adopted the Complex Order Report, the 
Exchange believed that 200 microseconds was the appropriate timeframe 
as it was in line with the previously adopted timeframe for the Simple 
Order Report. In the Exchange's experience, 200 microseconds has not 
provided a sufficient amount of time for the System \20\ to develop new 
Complex Strategies, which has resulted in the Complex Order Report 
missing some of a Recipient Member's Complex Order executions and 
contra-side responses. Accordingly, expanding the timeframe to 400 
microseconds should allow for the intended information to be captured 
by the Complex Order Report.
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    \20\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
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Proposal To Amend a Footnote in Each of the Filings To Adopt the 
Reports (SR-EMERALD-2021-09, SR-EMERALD-2022-02, and SR-EMERALD-2023-
02)
    The Exchange proposes to make a clarifying change to one of the 
footnotes in each of the filings to adopt each Liquidity Taker Event 
Report. Each of the filings to adopt each Liquidity Taker Event Report 
contains a section that describes information in each report that 
corresponds to the Recipient Member. Each of the prior filings states 
that the ``following information would be included in the [Simple Order 
Report, Complex Order Report, or Resting Simple Order Report] regarding 
response(s) [Complex Orders] \21\ sent by the Recipient Member: (A) 
Recipient Member identifier; (B) the time difference between the time 
the first response that executes against the resting order was received 
by the Exchange and the time of each response [Complex Order] \22\ sent 
by the Recipient Member, regardless of whether it executed or not; (C) 
size and type of each response [Complex Order] \23\ submitted by 
Recipient Member; and (D) response reference number, which is a unique 
reference number attached to the response by the Recipient Member.\24\ 
Further, each of the filings includes a footnote at the end of 
romanette ``(B)'' in the paragraph described above, which states as 
follows:
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    \21\ For the Complex Order Report.
    \22\ For the Complex Order Report.
    \23\ For the Complex Order Report.
    \24\ See supra note 14. For the Simple Order Report, see 
Exchange Rule 531(a)(1)(iii); for the Complex Order Report, see 
Exchange Rule 531(b)(1)(iii); for the Resting Simple Order Report, 
see Exchange Rule 531(c)(1)(iii).

    For purposes of calculating this duration of time, the Exchange 
will use the time the resting order and the Recipient Member's 
response(s) is received by the Exchange's network, both of which 
would be before the order and response(s) would be received by the 
System. This time difference would be provided in nanoseconds.\25\
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    \25\ See supra note 14, 86 FR 15759, at 15760, footnote 23; 87 
FR 7223, at 7226, footnote 30; and 88 FR 7114, at 7116, footnote 20. 
The Exchange notes that footnote 30 in the Complex Order Report 
filing contains an additional sentence that states that the same 
information is included in the Simple Order Report filing. The 
remainder of that footnote is the same as the Simple Order Report 
and Resting Simple Order Report filings.

    The Exchange proposes to clarify the above footnote. Specifically, 
the Exchange proposes to replace ``the resting order'' with ``the first 
response that executes against the resting order.'' Accordingly, with 
the proposed change, the referenced footnotes in each of the filings to 
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adopt the Reports would read as follows:

    For purposes of calculating this duration of time, the Exchange 
will use the time the first response that executes against the 
resting order and the Recipient Member's response(s) is received by 
the Exchange's network, both of which would be before the order and 
response(s) would be received by the System. This time difference 
would be provided in nanoseconds.

    The purpose of the proposed change is to correct a non-substantive 
error in a footnote of each rule filing to adopt the Reports. The 
Exchange notes that the rule text in Exchange Rule 531 that describes 
each of the Reports was correctly adopted and does not require any 
change; only the footnote described above needs to be clarified. This 
change does not impact or alter the information provided to any 
Recipient Member.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\26\ in general, and furthers the 
objectives of section 6(b)(5),\27\ in particular, because it is 
designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, 
protect investors and the public interest.
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    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal to expand the timeframe for 
the Complex Order Report would remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because it should provide enough time to the ensure that the Complex 
Order Report

[[Page 26201]]

captures all intended activity due to the time it takes for the System 
to create new Complex Strategies. The Exchange believes that this 
proposal facilitates transactions in securities because it would ensure 
the Complex Order Report includes the information the Complex Order 
Report was meant to capture. The Exchange designed the Complex Order 
Report for Members that are interested in gaining insight into latency 
in connection with Complex Orders that failed to execute against an 
order resting on the Exchange's Strategy Book by providing those 
Members data to analyze by how much time their Complex Order may have 
missed an execution against a contra-side order resting on the Strategy 
Book.\28\ By providing this optional latency data to interested 
Members, it provides greater visibility into the latency of Members' 
incoming orders that they may use to optimize their models and trading 
patterns in an effort to yield better execution results by calculating 
by how much time their order may have missed an execution.\29\ In turn, 
this should benefit other market participants who may experience better 
executions on the Exchange because those that use the Complex Order 
Report may re-calibrate their trading models and then increase their 
trading on the Exchange and volume of liquidity removing orders.\30\ 
The Exchange believes that this may lead to an increase in incoming 
liquidity removing orders resulting in higher execution rates for 
Members who primarily place resting orders on the Strategy Book. The 
Exchange believes that the proposed change to adjust the timeframe from 
200 microseconds to 400 microseconds for the Complex Order Report will 
help facilitate transactions in securities by ensuring the Complex 
Order Report includes all latency data about Recipient Members' missed 
executions, as the Exchange originally intended when it adopted the 
Complex Order Report.
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    \28\ See Securities Exchange Act Release No. 94136 (February 2, 
2022), 87 FR 7223 (February 8, 2022) (SR-EMERALD-2022-02).
    \29\ Id.
    \30\ Id.
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    The Exchange believes that the proposed change to each of the 
footnotes described above for each Liquidity Taker Event Report 
protects investors and the public interest, as well as removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system because the change is designed solely to 
correct non-substantive errors in prior filings, and none which have 
any impact on the Exchange's actual rule text for each of the Reports. 
This proposed change does not impact or alter the operation of Exchange 
Rule 531 regarding the Reports.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.
Intra-Market Competition
    The Exchange believes that the proposed change to the timeframe for 
the Complex Order Report in the subparagraph (b)(2) of Exchange Rule 
531 will not impose any burden on intra-market competition because it 
will ensure that the Complex Order Report captures all intended 
activity due to the time it takes for the System to create new Complex 
Strategies. The Exchange believes that this does not impose any burden 
on intra-market competition as it simply ensures that Recipient Members 
gain insight into latency in connection with Complex Orders that failed 
to execute against an order resting on the Exchange's Strategy Book by 
providing those Members the full scope of data that was intended to be 
captured by the Complex Order Report to analyze by how much time their 
Complex Order may have missed an execution against a contra-side order 
resting on the Strategy Book. The Exchange believes this does not 
impose any burden on intra-market competition as the adjusted timeframe 
should ensure all related activity that is intended to be included for 
each Recipient Member of the Complex Order Report is actually included. 
The Exchange notes that the proposed change would not result in any 
impact on the Exchange's System.
Inter-Market Competition
    The Exchange believes the proposed rule change to adjust the 
timeframe for the Complex Order Report will not impose any burden on 
inter-market competition as the proposed change is not designed to 
address any competitive issue but rather is designed to ensure that the 
Complex Order Report captures all intended activity due to the time it 
takes for the System to create new Complex Strategies.
Non-Substantive Corrections
    The non-substantive corrections to the footnotes in prior filings 
to adopt each Liquidity Taker Event Report would not impact competition 
because such changes would not enhance or alter the Exchange's ability 
to compete, but rather, clarify a prior error which would reduce the 
potential for inadvertent investor confusion.

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 19(b)(3)(A) of the Act \31\ and Rule 19b-
4(f)(6) thereunder.\32\
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    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \33\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \34\ 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 stated that the adjusting the timeframe for the Complex Order 
Report will ensure that the Complex Order Report contains all intended 
data for Members that are interested in gaining insight into latency in 
connection with Complex Orders that failed to execute against an order 
resting on the Exchange's Strategy Book due to the time it takes for 
the System to create new Complex Strategies. The Exchange also stated 
that the proposed changes to the footnotes in the filings to adopt each 
of the Reports would correct non-substantive errors in prior filings. 
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. Accordingly, the Commission hereby waives the 30-day 
operative delay and

[[Page 26202]]

designates the proposed rule change operative upon filing.\35\
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    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 17 CFR 240.19b-4(f)(6)(iii).
    \35\ 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 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.

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-2024-13 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-2024-13. 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-2024-13 and should 
be submitted on or before May 6, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-07840 Filed 4-12-24; 8:45 am]
BILLING CODE 8011-01-P