[Federal Register Volume 89, Number 158 (Thursday, August 15, 2024)]
[Notices]
[Pages 66478-66480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18203]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100686; File No. SR-EMERALD-2024-19]


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

August 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 July 31, 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) of the Fee 
Schedule, Fees for Customer Orders Routed to Another Options Exchange, 
to reflect the recent addition of a new national securities exchange, 
MIAX Sapphire, LLC (``MIAX Sapphire''),\3\ to be listed in the routing 
fee table. The Exchange proposes to implement the fee change effective 
August 1, 2024.
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    \3\ See Securities Exchange Act Release No. 100539 (July 15, 
2024), 89 FR 58848 (July 19, 2024) (File No. 10-240) (order 
approving application of MIAX Sapphire, LLC for registration as a 
national securities exchange).
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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 \4\ (``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.\5\
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    \4\ See Exchange Rule 510(c).
    \5\ See Cboe U.S. Options Fee Schedules, BZX Options, effective 
July 15, 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 the anticipated launch of MIAX Sapphire in the third 
quarter

[[Page 66479]]

of 2024, the Exchange has determined to amend the exchange groupings of 
options exchanges within the routing fee table to include MIAX Sapphire 
and the anticipated associated costs of routing customer orders to MIAX 
Sapphire for execution.
    The impact of this proposed change will be increased routing 
options for Members.\6\ The Exchange notes that routing through the 
Exchange is optional and that Members will continue to be able to 
choose where to route applicable Member orders. Under this proposed 
change, the Exchange will not amend the fees associated with the 
exchange groupings. This proposal merely seeks to add MIAX Sapphire to 
the exchange groupings as described in the routing fee table below.
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    \6\ 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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    According, with the proposed change, the routing fee table will be 
as follows:

------------------------------------------------------------------------
                       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, MIAX Sapphire................
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, MIAX Sapphire........................
Routed, Priority Customer, Non-Penny Program, to: NYSE              1.00
 Arca 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,
 MIAX Sapphire..........................................
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, MIAX Sapphire.....
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......................................
------------------------------------------------------------------------

    In determining to amend its routing fee table to determine which 
category MIAX Sapphire belongs to the Exchange took into account 
anticipated transaction fees and rebates assessed by the away markets 
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\ The Cboe BZX Options fee schedule is similar to the 
Exchange's Fee Schedule in that it has exchange groupings, whereby 
several exchanges are grouped into the same category. See supra note 
5.
    \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 Exchange's Members 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.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \9\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \10\ 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 \11\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed change to add MIAX Sapphire 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 add MIAX Sapphire to the routing fee table of 
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

[[Page 66480]]

because the proposed change seeks to recoup costs that will be incurred 
by the Exchange when routing customer orders to MIAX Sapphire on behalf 
of Members and does so in the same manner to 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 and 
rebates 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 
addition of MIAX Sapphire to the exchange groupings would increase the 
routing options available to Members. The per-contract transaction fee 
amount associated with each grouping approximates the Exchange's all-in 
cost (plus an additional, non-material amount) to execute the 
corresponding contract at the corresponding exchange.
    The Exchange believes that the proposed rule change is equitable 
and not unfairly discriminatory because all Members' orders in Penny 
classes and Non-Penny classes routed to MIAX Sapphire will be uniformly 
assessed the corresponding fee.

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 does not believe 
the proposed rule change to add MIAX Sapphire to the routing fee table 
will impose any burden on intramarket competition. Rather, the Exchange 
believes that the proposal will promote competition by increasing the 
available away markets to which Members can route orders to.

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,\12\ and Rule 19b-4(f)(2) \13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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-2024-19 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-2024-19. 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-2024-19 and should 
be submitted on or before September 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-18203 Filed 8-14-24; 8:45 am]
BILLING CODE 8011-01-P