[Federal Register Volume 89, Number 137 (Wednesday, July 17, 2024)]
[Notices]
[Pages 58221-58224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15674]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100504; File No. SR-EMERALD-2024-17]


Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule for Customer Orders Routed to Another Options Exchange

July 11, 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 June 28, 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.
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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'').
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings, at the Exchange's principal office, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the exchange grouping of options 
exchanges within the routing fee table in Section 1)c) [sic] of the Fee 
Schedule, Fees for Customer Orders Routed to Another Options Exchange 
to adjust the groupings of options exchanges.
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\
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    \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/.
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    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 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.
    Under this proposed change, the Exchange will not amend the fees

[[Page 58222]]

associated with the exchange groupings. This proposal merely seeks to 
amend the exchange groupings as described in the routing fee table 
below.

------------------------------------------------------------------------
                        Description                              Fees
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Routed, Priority Customer, Penny Program, to: NYSE                 $0.15
 American, Cboe, Cboe EDGX Options, MIAX, Nasdaq PHLX
 (except SPY), Nasdaq MRX..................................
Routed, Priority Customer, Penny Program, to: BOX..........         0.30
Routed, Priority Customer, Penny Program, to: NYSE Arca             0.65
 Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq
 ISE, NOM, Nasdaq PHLX (SPY only), MIAX Pearl, Nasdaq BX
 Options, MEMX.............................................
Routed, Priority Customer, Non-Penny Program, to: NYSE              0.15
 American, BOX, Cboe, Cboe EDGX Options, MIAX, Nasdaq PHLX,
 Nasdaq MRX................................................
Routed, Priority Customer, Non-Penny Program, to: NYSE Arca         1.00
 Options, Cboe BZX Options, Cboe C2, MIAX Pearl, Nasdaq
 GEMX, NOM, Nasdaq BX Options, Nasdaq ISE, MEMX............
Routed, Public Customer that is not a Priority Customer,            0.65
 Penny Program, to: NYSE American, NYSE Arca Options, Cboe
 BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX Options, Nasdaq
 GEMX, Nasdaq ISE, Nasdaq MRX, MIAX, MIAX Pearl, NOM,
 Nasdaq PHLX, Nasdaq BX Options, MEMX......................
Routed, Public Customer that is not a Priority Customer,            1.00
 Non-Penny Program, to: MIAX, NYSE American, Cboe, Nasdaq
 PHLX, Cboe EDGX Options, NOM..............................
Routed, Public Customer that is not a Priority Customer,            1.15
 Non-Penny Program, to: Cboe C2, BOX.......................
Routed, Public Customer that is not a Priority Customer,            1.25
 Non-Penny Program, to: NYSE Arca Options, Nasdaq GEMX,
 Nasdaq MRX, MIAX Pearl, MEMX..............................
Routed, Public Customer that is not a Priority Customer,            1.40
 Non-Penny Program, to: Cboe BZX Options, Nasdaq ISE,
 Nasdaq BX Options.........................................
------------------------------------------------------------------------

Nasdaq MRX
    Nasdaq MRX recently amended its fee structure to ``no longer offer 
Maker Rebates for adding liquidity and instead offer Taker Rebates for 
removing liquidity. With this new structure, the Exchange [Nasdaq MRX] 
would continue to assess Priority Customers no Maker Fees for Penny and 
Non-Penny Symbols to continue to encourage Members to send Priority 
Customer order flow that adds liquidity to MRX and rests on the order 
book. The Exchange proposes to begin offering Priority Customer Taker 
Rebates in Penny and Non-Penny Symbols . . .'' \5\ In response to 
Nasdaq MRX's filing, the Exchange proposes to adjust the grouping of 
Nasdaq MRX in both the Penny and Non-Penny tiers in the Exchange's 
routing fee table.
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    \5\ See Nasdaq MRX proposal (SR-MRX-2024-16).
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    Specifically, the Exchange proposes to amend the ``Routed, Priority 
Customer, Penny Program'' $0.15 fee tier to remove the ``SPY only'' 
qualification for orders routed to Nasdaq MRX, so that all Priority 
Customer orders for Penny Program symbols routed to Nasdaq MRX will be 
assessed the same $0.15 fee. The Exchange also proposes to amend the 
``Routed, Priority Customer, Penny Program'' $0.30 fee tier to remove 
Nasdaq MRX from the tier completely, as all Priority Customer orders in 
the Penny Program are now eligible for the $0.15 tier under this 
proposal. The Exchange also proposes to amend the ``Routed, Priority 
Customer, Non-Penny Program'' $0.15 tier to add Nasdaq MRX. Finally, 
the Exchange proposes to eliminate the ``Routed, Priority Customer, 
Non-Penny Program'' $0.50 tier in its entirety as Nasdaq MRX was the 
only destination exchange in this tier, and given Nasdaq MRX's recent 
fee schedule change this tier is now obsolete.
BOX
    The Exchange proposes to remove ``BOX (except SPY)'' from the 
``Routed, Priority Customer, Penny Program'' $0.15 tier. The Exchange 
also proposes to amend the ``Routed, Priority Customer, Penny Program'' 
$0.30 tier to remove the qualification of ``SPY only'' so that all 
Priority Customer orders for Penny Program symbols routed to BOX will 
similarly be assessed a $0.30 fee. This change is being made as BOX 
recently amended its fee schedule and now assesses a $0.10 Taker fee 
for Public Customer orders that remove liquidity in SPY, QQQ, and 
IWM.\6\
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    \6\ See BOX Exchange Fee Schedule, Section IV, Electronic 
Transaction Fees, A, Non-Auction Transactions.
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    The purpose of the proposal 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 and rebates assessed at the executing exchange. In 
determining to amend its groupings 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.\7\ 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) \8\ to execute that 
corresponding contract at that corresponding exchange.
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    \7\ 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.
    \8\ 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.
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    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

[[Page 58223]]

Exchange's Members \9\ will be assessed routing fees in a similar 
manner. The Exchange notes that its affiliates, MIAX Options and MIAX 
Pearl, will file to make the same proposed routing fee changes 
contained herein.
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    \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.
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Implementation
    The proposed rule changes will become effective on July 1, 2024.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
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 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 \12\ 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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed changes 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 changes 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 changes seek 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 would 
enable the Exchange to better reflect the costs and fees associated 
with routing orders to other exchanges for execution.
    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) \13\ to execute the 
corresponding contract at the corresponding exchange. 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.
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    \13\ See supra note 8.
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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. 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. 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.\14\
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    \14\ See supra note 4.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or 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,\15\ and Rule 19b-4(f)(2) \16\ 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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 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, 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-2024-17 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-2024-17. 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

[[Page 58224]]

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-2024-17 and should be submitted 
on or before August 7, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15674 Filed 7-16-24; 8:45 am]
BILLING CODE 8011-01-P