[Federal Register Volume 89, Number 163 (Thursday, August 22, 2024)]
[Notices]
[Pages 68005-68007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18789]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100750; File No. SR-SAPPHIRE-2024-16]


Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Establish a Pass-Through of External Connectivity Fees and Establish 
MPID Fees and a Technical Support Request Fee

August 16, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 7, 2024, MIAX Sapphire, LLC (``MIAX Sapphire'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the 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 Sapphire 
Options Exchange Fee Schedule (the ``Fee Schedule'').
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on August 12, 2024.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/all-options-exchanges/rule-filings, at MIAX Sapphire'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
    On July 15, 2024, the U.S. Securities and Exchange Commission 
(``Commission'') approved the Exchange's Form 1 application to register 
as a national securities exchange under Section 6 of the Exchange 
Act.\3\ As previously announced, the Exchange anticipates that it will 
commence electronic operations on August 12, 2024.\4\ In anticipation 
of the launch of electronic equity options trading, the Exchange 
proposes to establish the following sections of the Fee Schedule, 
including proposed fee structures and amounts: (1) pass-through of 
external connectivity fees for Members \5\ and non-Members; (2) Member 
Participant Identifier fees (``MPID''); and (3) a technical support 
request fee.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 100539 (July 15, 
2024), 89 FR 58848 (July 19, 2024) (File No. 10-240) (the ``Approval 
Order'').
    \4\ See MIAX Sapphire Alert, dated March 6, 2024, available at 
https://www.miaxglobal.com/alert/2024/03/06/miax-sapphire-options-exchange-rescheduled-launch-date-august-12-2024.
    \5\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of the 
Exchange's Rules for purposes of trading on the Exchange as an 
``Electronic Exchange Member'' or ``Market Maker.'' Members are 
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
---------------------------------------------------------------------------

    The Exchange first proposes to establish Section 5), System 
Connectivity Fees, which will contain sections for various connectivity 
and port-related fees. The Exchange will file separate rule filings to 
establish fees for connectivity and ports for Members and non-Members. 
Accordingly, the Exchange proposes to establish Sections 5)a), 5)b), 
and 5)d), which will be marked as ``Reserved'' for those types of fees.
Pass-Through of External Connectivity Fees
    The Exchange proposes to establish Section 5)c), Pass-Through of 
External Connectivity Fees, which provides for the pass through of 
external connectivity fees to Members and non-Members that establish 
connections with MIAX Sapphire through a third-party. Fees assessed to 
MIAX Sapphire by third-party external vendors on behalf of a Member or 
non-Member connecting to MIAX Sapphire (including cross-connects), will 
be passed through to the Member or non-Member. The external 
connectivity fees passed through can include one-time set-up fees, 
monthly charges, and other fees charged to MIAX Sapphire by a third-
party for the benefit of a Member or non-Member. The Exchange notes 
that its affiliated options markets, MIAX,\6\ MIAX Pearl \7\ and MIAX 
Emerald,\8\ provide for the same pass-through of external connectivity 
fees to their members and non-members.\9\ As such, this proposed fee is 
not new or novel.
---------------------------------------------------------------------------

    \6\ The term ``MIAX'' means Miami International Securities 
Exchange, LLC. See Exchange Rule 100.
    \7\ The term ``MIAX Pearl'' means MIAX PEARL, LLC. See Exchange 
Rule 100. All references to ``MIAX Pearl'' in this filing are to the 
options trading facility of MIAX PEARL, LLC. References to the 
equities trading facility of MIAX PEARL, LLC, will be to ``MIAX 
Pearl Equities.''
    \8\ The term ``MIAX Emerald'' means MIAX Emerald, LLC. See 
Exchange Rule 100.
    \9\ See MIAX Fee Schedule, Section 5)c); MIAX Pearl Fee 
Schedule, Section 5)c); and MIAX Emerald Fee Schedule, Section 5)c).
---------------------------------------------------------------------------

MPID Fees
    The Exchange proposes to establish Section 5)e), MPID Fees, 
pursuant to which the Exchange proposes to assess monthly MPID fees to 
Members based upon the type of MPID, either FIX \10\

[[Page 68006]]

MPID or MEO \11\ MPID. MPIDs allow the Exchange to provide additional 
services to its Members, including customer reporting, monitoring and 
risk protection services, down at the MPID level. MPIDs provide Members 
the ability to segment their business operations in a manner that can 
be tailored to their business needs, as well as receive certain 
additional administrative and operational services provided by the 
Exchange. MPID fees are assessed for providing these services. The 
Exchange proposes to provide MPIDs to Members for free. Even though the 
Exchange proposes to provide MPIDs for free, the Exchange believes that 
is appropriate to provide market participants with the overall 
structure of the fees by outlining the structure in the Fee Schedule, 
so that there is general awareness that the Exchange intends to assess 
such fees in the future. The Exchange will issue an alert to Members in 
the future when it plans to establish fee amounts for MPIDs.
---------------------------------------------------------------------------

    \10\ The term ``FIX Interface'' means the Financial Information 
Exchange interface used for submitting certain order types (as set 
forth in Rule 516) to the MIAX Sapphire System. See Exchange Rule 
100.
    \11\ The term ``MEO Interface'' means a binary order interface 
used for submitting certain order types (as set forth in Rule 516 
and Rule 518) to the MIAX Sapphire System. See Exchange Rule 100.
---------------------------------------------------------------------------

Technical Support Request Fee
    The Exchange proposes to establish Section 5)f), Member and Non-
Member Technical Support Request Fee, which describes the technical 
support request fee to be charged to both Members and non-Members that 
request technical support at any of the MIAX Sapphire data centers. 
MIAX Sapphire proposes to charge a fee of $250 per hour for requested 
technical support. The Exchange intends to provide Members and non-
Members access to the Exchange's on-site data center personnel for 
technical support as a convenience to Members and non-Members to test 
or otherwise assess their connectivity to the Exchange. The Exchange's 
affiliated markets, MIAX, MIAX Pearl, and MIAX Emerald, charge a 
slightly lower technical support request fee of $200 per hour to their 
members and non-members.\12\ The Exchange notes that its affiliated 
markets established their respective hourly rate for the technical 
support request fee over five years ago and the hourly fee for 
employees to provide technical support has increased since that time.
---------------------------------------------------------------------------

    \12\ See MIAX Fee Schedule, Section 5)f); MIAX Pearl Options Fee 
Schedule, Section 5)f); and MIAX Emerald Fee Schedule, Section 5)f).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed fees are consistent with 
Section 6(b) of the Act \13\ in general, and furthers the objectives of 
Section 6(b)(4) of the Act \14\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among Members and other persons using any facility or system which the 
Exchange operates or controls. The Exchange also believes the proposed 
fees further the objectives of Section 6(b)(5) of the Act \15\ in that 
they are designed to promote just and equitable principles of trade, 
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 and are not designed to permit unfair 
discrimination between customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Pass-Through of External Connectivity Fees
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to pass-through external connectivity fees to Members 
and non-Members that establish connections with MIAX Sapphire through a 
third-party. MIAX Sapphire will only pass-through the actual costs it 
is charged by third-party external vendors. The Exchange's affiliated 
markets all pass-through external connectivity fee charges to their 
members and non-members.\16\ Additionally, at least one competing 
options exchange also passes along connectivity fee charges assessed to 
that exchange by third-party external vendors on behalf of its market 
participants.\17\ Accordingly, the Exchange believes the proposed pass-
through of external connectivity fees is reasonable, equitable and not 
unfairly discriminatory.
---------------------------------------------------------------------------

    \16\ See supra note 9.
    \17\ See BOX Exchange LLC (``BOX'') Fee Schedule, Section 
III.A.1. (``BOX will pass-through any connectivity fees to 
Participants and non-Participants that are assessed to BOX by these 
third-party external vendors on behalf of a Participant or non-
Participant. Connectivity fees can include one-time set-up fees, 
monthly charges, and other fees charged by the third-party vendor in 
exchange for the services provided to the market participant.'').
---------------------------------------------------------------------------

MPID Fees
    The Exchange believes that its proposal to establish an overall fee 
structure for MPIDs, without proposing fee amounts at this time, is 
reasonable, equitable and not unfairly discriminatory because it will 
provide notice to Members that the Exchange intends to assess such fees 
in the future. The Exchange will announce in advance any change to 
establish MPID fees so that Members have time to adjust their MPIDs as 
necessary based upon the proposed fees. The Exchange believes it is 
reasonable and equitable to waive MPID fees as an incentive for market 
participants to register and become Members of the Exchange prior to 
launch. This in turn should provide the Exchange with potential order 
flow and liquidity providers as it begins operations.
Member and Non-Member Technical Support Request Fee
    The Exchange believes that the proposed technical support request 
fee is reasonable, equitable and not unfairly discriminatory because it 
will be assessed equally to all Members and non-Members who request 
technical support at the proposed hourly rate. Furthermore, Members and 
non-Members are not required to use the service; instead, the Exchange 
proposes to offer this services as a convenience to all Members and 
non-Members. The Exchange believes the proposed fee is reasonable 
because it will permit both Members and non-Members to request the use 
of the Exchange's on-site data center personnel as technical support 
and as a convenience in order to test or otherwise assess the user's 
connectivity to the Exchange via its data centers. The proposed fee is 
reasonable because it is within the range of the fee charged by the 
Exchange's affiliated markets.\18\
---------------------------------------------------------------------------

    \18\ See supra note 12.
---------------------------------------------------------------------------

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.
Intra-Market Competition
    The Exchange believes the proposed pass-through of external 
connectivity fees will not result in any burden on intra-market 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because MIAX Sapphire will only pass-through the 
actual costs it is charged by third-party external vendors. The 
Exchange's affiliated markets all pass-through external connectivity 
fee charges to their members and non-members,\19\ and at least one 
competing options exchange also passes along connectivity fee charges 
assessed to that exchange by third-party external vendors on behalf of 
its market participants.\20\
---------------------------------------------------------------------------

    \19\ See supra note 9.
    \20\ See BOX Exchange LLC (``BOX'') Fee Schedule, Section 
III.A.1. (``BOX will pass-through any connectivity fees to 
Participants and non-Participants that are assessed to BOX by these 
third-party external vendors on behalf of a Participant or non-
Participant. Connectivity fees can include one-time set-up fees, 
monthly charges, and other fees charged by the third-party vendor in 
exchange for the services provided to the market participant.'').

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

[[Page 68007]]

    The Exchange believes the proposed MPID fee structure, including 
waiver of the MPID fees, will not result in any burden on intra-market 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because there will be no cost for Members to 
utilize MPIDs across their firm and business lines. The Exchange 
believes waiving such fees will not impose any burden on intra-market 
competition because this will provide an incentive for market 
participants to register and become Members of the Exchange prior to 
launch. This in turn should provide the Exchange with potential order 
flow and liquidity providers as it begins operations, which may benefit 
all market participants of the Exchange.
    The Exchange believes the proposed technical support request fee 
will not result in any burden on intra-market competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because it will be assessed equally to all Members and non-Members who 
request technical support at the proposed hourly rate. Furthermore, 
Members and non-Members are not required to use the service; instead, 
the Exchange proposes to offer this services as a convenience to all 
Members and non-Members. The Exchange believes the proposed fee will 
not impose any burden on intra-market competition because it will 
permit both Members and non-Members to request the use of the 
Exchange's on-site data center personnel as technical support and as a 
convenience in order to test or otherwise assess the user's 
connectivity to the Exchange via its data centers. The proposed fee is 
within the range of the fee charged by the Exchange's affiliated 
markets for the same service.\21\
---------------------------------------------------------------------------

    \21\ See supra note 12.
---------------------------------------------------------------------------

Inter-Market Competition
    The Exchange believes that the proposed changes will not result in 
any burden on inter-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As discussed 
above, market participants are not forced to connect to and trade on 
all exchanges. The Exchange believes that the proposed pass-through of 
external connectivity fees, MPID fee structure, and technical support 
request fee will not cause any burden on inter-market competition 
because none of these changes impact other exchanges' ability to 
compete.
    Accordingly, the Exchange does not believe its proposed fee changes 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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,\22\ and Rule 19b-4(f)(2) \23\ 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.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \23\ 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-SAPPHIRE-2024-16 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-SAPPHIRE-2024-16. 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-SAPPHIRE-2024-16 and should 
be submitted on or before September 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-18789 Filed 8-21-24; 8:45 am]
BILLING CODE 8011-01-P