[Federal Register Volume 89, Number 167 (Wednesday, August 28, 2024)]
[Notices]
[Pages 68959-68964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19264]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100807; File No. SR-SAPPHIRE-2024-19]


Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt 
Transaction Fees and Rebates

August 22, 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 8, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 68960]]

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/miax-sapphire/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
    The Exchange proposes to amend Section (1) of the Fee Schedule to 
adopt Section (1) (a) as ``Electronic Transactions,'' and Section (1) 
(a) (i) as ``Transaction Rebates/Fees'' to adopt certain fees and 
rebates applicable to transactions on the Exchange. The Exchange also 
proposes to adopt Section (1) (a) (iv) of the Fee Schedule as ``C2C and 
cC2C Fees'' to adopt certain fees and rebates applicable to C2C \3\ and 
cC2C Orders.\4\ The Exchange also proposes to adopt Section (1) (a) (v) 
of the Fee Schedule as ``Complex Stock-Option Order Fees'' to adopt 
certain fees for stock-option orders.
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    \3\ A Customer Cross Order is comprised of a Priority Customer 
Order to buy and a Priority Customer Order to sell at the same price 
and for the same quantity. See Exchange Rule 516(i).
    \4\ A Complex Customer Cross or ``cC2C'' Order is comprised of 
one Priority Customer complex order to buy and one Priority Customer 
complex order to sell at the same price and for the same quantity. 
Trading of cC2C Orders is governed by Rule 515(g)(3). See Exchange 
Rule 518(b)(4).
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Proposal To Adopt Transaction Fees and Rebates
    The Exchange proposes to adopt Section (1) (a) (i) of the Fee 
Schedule as ``Transaction Rebates/Fees'' to adopt certain fees and 
rebates applicable to transactions on the Exchange. The Exchange 
proposes to adopt one table entitled ``Simple'' for transaction rebates 
and fees for transactions that occur in the Exchange's Simple Order 
Book; \5\ and to adopt another table entitled ``Complex'' for 
transactions that occur in the Exchange's Strategy Book.\6\
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    \5\ The ``Simple Order Book'' is the Exchange's regular 
electronic book of orders and quotes. See Exchange Rule 100.
    \6\ The ``Strategy Book'' is the Exchange's electronic book of 
complex orders. See Exchange Rule 100.
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    Under the Exchange's proposal transactions will be assessed a per 
contract fee (or provided a credit) dependent upon the origin of the 
initiating party, the origin of the contra party, and whether the 
transaction provides liquidity (``Maker'') or removes liquidity 
(``Taker''). Additionally, the Exchange proposes to segregate rebates 
and fees by class (Penny or Non-Penny) and to also separately account 
for transactions in SPDR S&P 500 ETF (``SPY''), Invesco QQQ Trust 
(``QQQ''), and iShares Russell 2000 Index Fund (``IWM'') as these are 
highly liquid symbols and are commonly treated separately by options 
exchanges.\7\
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    \7\ See BOX Options Exchange Fee Schedule, Section IV, A, 
available online at https://boxoptions.com/resources/fee-schedule/. 
See also Nasdaq BX, Options 7, Pricing Schedule, Section 2, BX 
Options Market-Fees Rebates (1), footnote 1 and 4.
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Simple Market Fees and Rebates
    Specifically, for Priority Customer \8\ transactions in the Simple 
Order Book the Exchange proposes to provide a Maker Rebate of ($0.30) 
and a Taker Rebate of ($0.19) for transactions in SPY, QQQ, or IWM; a 
Maker Rebate of ($0.28) and a Taker Rebate of ($0.48) for transactions 
in Penny Classes (excluding SPY, QQQ, and IWM); and a Maker Rebate of 
($0.65) and a Taker Rebate of ($0.92) for transactions in Non-Penny 
Classes.
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    \8\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). See Exchange Rule 
100.
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    For Market Maker \9\ and Non Priority Customer/Non Market Maker 
\10\ transactions in the Simple Order Book the Exchange proposes to 
assess a Maker Fee of $0.20 and a Taker Fee of $0.50 for transactions 
in SPY, QQQ, or IWM; a Maker Fee of $0.50 and a Taker Fee of $0.50 for 
transactions in Penny Classes (excluding SPY, QQQ, and IWM); and a 
Maker Fee of $0.95 and a Taker Fee of $0.94 for transactions in Non-
Penny Classes.
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    \9\ The term ``Market Makers'' means a Member registered with 
the Exchange for the purposes of making markets in options contracts 
traded on the Exchange and that is vested with the rights and 
responsibilities specified in Chapter VI of MIAX Sapphire Rules. See 
Exchange Rule 100.
    \10\ For the purposes of this filing, the origins comprising Non 
Priority Customer and Non Market Maker are all origins other than 
Priority Customer and Market Maker.
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    For Non Priority Customer/Non Market Maker transactions in the 
Simple Order Book the Exchange proposes to assess a Maker Fee of $0.20 
and a Taker Fee of $0.50 for transactions in SPY, QQQ, or IWM; a Maker 
Fee of $0.50 and a Taker Fee of $0.50 for transactions in Penny Classes 
(excluding SPY, QQQ, and IWM); and a Maker Fee of $0.95 and a Taker Fee 
of $0.94 for transactions in Non-Penny Classes.
    Additionally, the Exchange proposes to add a note to the table that 
states, ``Priority Customer simple orders contra to Priority Customer 
simple orders are neither charged nor rebated.''
Complex Market Fees and Rebates
    For Priority Customer transactions that occur in the Strategy Book 
the Exchange proposes to provide a Maker Rebate of ($0.36) and a Taker 
Rebate of ($0.25) for transactions in SPY, QQQ, or IWM; a Maker Rebate 
of ($0.34) and a Taker Rebate of ($0.54) for transactions in Penny 
Classes (excluding SPY, QQQ, and IWM); and a Maker Rebate of ($0.71) 
and a Taker Rebate of ($0.98) for transactions in Non-Penny Classes.
    For Market Maker transactions in the Strategy Book the Exchange 
proposes to assess a Maker Fee of $0.20 and a Taker Fee of $0.50 for 
transactions in SPY, QQQ, or IWM; a Maker Fee of $0.50 and a Taker Fee 
of $0.50 for transactions in Penny Classes (excluding SPY, QQQ, and 
IWM); and a Maker Fee of $0.95 and a Taker Fee of $0.94 for 
transactions in Non-Penny Classes.
    For Non Priority Customer/Non Market Maker transactions in the 
Strategy Book the Exchange proposes to assess a Maker Fee of $0.20 and 
a Taker Fee of $0.50 for transactions in SPY, QQQ, or IWM; a Maker Fee 
of $0.50 and a Taker Fee of $0.50 for transactions in Penny Classes 
(excluding SPY, QQQ,

[[Page 68961]]

and IWM); and a Maker Fee of $0.95 and a Taker Fee of $0.94 for 
transactions in Non-Penny Classes.
    The Exchange proposes to adopt the following notes to the Complex 
table. Note (1) to the Complex table that will provide, ``Priority 
Customer complex orders contra to Priority Customer complex orders are 
neither charged nor rebated.'' Note (2) to the Complex table will 
provide that, ``Fees and Rebates are per contract leg.'' Finally, note 
(3) to the Complex table will provide, ``a per contract surcharge of 
$0.12 will be assessed for trading against a Priority Customer complex 
order in all classes and will apply to all origins except Priority 
Customer when trading against a Priority Customer on the Strategy 
Book.''
Proposal To Adopt C2C and cC2C Order Fees and Rebates
    The Exchange proposes to adopt Section 1) a) iv) to the Fee 
Schedule as ``C2C and cC2C Fees'' to establish fees and rebates 
applicable to C2C and cC2C Orders.

------------------------------------------------------------------------
                                                      C2C and cC2C order
            Types of market participants               per contract fee/
                                                            rebate
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Priority Customer...................................              $0.00
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    Customer to Customer Cross Orders are comprised entirely of 
Priority Customer orders, therefore the Exchange assesses a $0.00 per 
contract transaction fee and provides a $0.00 rebate to such orders, 
pursuant to Section 1) a) i) of the Fee Schedule. However, the Exchange 
desires to clarify and make explicit that C2C Orders are assessed a 
$0.00 per contract transaction fee and are paid a $0.00 per contract 
rebate. The Exchange is also proposing to assess cC2C Orders a $0.00 
per contract transaction fee and to pay a $0.00 per contract rebate. 
The Exchange also proposes to adopt certain explanatory text relating 
to the C2C and cC2C Fees table. The text provides that all fees and 
rebates are per contract per leg. Also, a C2C Order is comprised of a 
Priority Customer Order to buy and a Priority Customer Order to sell at 
the same price and for the same quantity. A cC2C Order is comprised of 
one Priority Customer complex order to buy and one Priority Customer 
complex order to sell at the same price and for the same quantity.
Proposal To Adopt Complex Stock-Option Order Fees
    The Exchange proposes to adopt Section (1) (a) (v) of the Fee 
Schedule as ``Complex Stock-Option Order Fees'' to adopt certain fees 
for stock-option orders.
    The Exchange proposes to adopt a stock handling fee applicable to 
stock-option orders executed against other stock-option orders in the 
complex order book, which the Exchange must route to an outside venue. 
Specifically, the Exchange proposes to adopt a stock handling fee of 
$0.0010 per share for the stock leg of stock-option orders executed 
against other stock-option orders in the complex order book, which are 
routed to an outside venue. This stock handling fee to be assessed by 
the Exchange will cover all fees charged by the outside venue that 
prints the trade, and it is also intended to compensate the Exchange 
for matching these stock-option orders against other stock-option 
orders on the complex order book. A maximum of $50 per order, per day, 
will be assessed under this fee. The cap is intended to give market 
participants assurance that they will not pay more than the capped 
amount for the execution of the stock leg of their stock-option orders. 
The Exchange believes that by limiting this fee to a maximum of $50 per 
order, per day, the Exchange addresses the possibility that a GTC order 
could be executed over multiple days. For example, if such an order was 
partially-executed on a Monday, and then the remainder was fully-
executed on a Tuesday, the total maximum fee charged to the market 
participant would be $100 ($50 per day). In addition to the Exchange's 
fee, the Exchange will also pass through to the Member any fees 
assessed by the routing broker-dealer utilized by the Exchange with 
respect to the execution of the stock leg of any such order (with such 
fees to be passed through at cost). For example, the Exchange 
anticipates that the routing broker-dealer will bill the Exchange for 
Section 31 fees and FINRA Trading Activity Fees with respect to the 
execution of the stock leg of any such order. The Exchange will pass 
such fees through to the Member, at cost (that is, without any 
additional mark-up).
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \11\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \12\ 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 \13\ 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
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    The proposed changes are reasonable in several respects. As a 
threshold matter, the Exchange is subject to significant competitive 
forces in the market for options securities transaction services that 
constrain its pricing determinations in that market. The fact that this 
market is competitive has long been recognized by the courts. In 
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit 
stated as follows'' ``[n]o one disputes that competition for order flow 
is `fierce.' . . . As the SEC explained, [i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their order-routing agents, have a wide range of choices of 
where to route orders for execution'; [and] `no exchange can afford to 
take its market share percentages for granted' because `no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers' . . .'' \14\
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    \14\ NetCoalition v. SEC, 615F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \15\
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    \15\ See Securities Exchange Act Release No. 51808 (June 9, 
2005, 70 FR 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange is a new entrant to the market and will be one of 
eighteen options exchanges to which market participants may direct 
their order flow. Within this environment, market participants can 
freely shift their order flow among exchanges in response to changes in 
their respective pricing schedules. As such, this proposal

[[Page 68962]]

represents a reasonable attempt by the Exchange to attract liquidity.
Transaction Fees and Rebates (Simple Market)
    The Exchange believes the proposed fee structure is equitable and 
not unfairly discriminatory because all similarly situated market 
participants are subject to the same fee and rebate structure for order 
transactions in the Simple Market. The Exchange's proposal to offer 
Maker and Taker Rebates to Priority Customers is reasonable because the 
Exchange desires to attract Priority Customers to the Exchange. 
Priority Customers are being paid Maker Rebates and Taker Rebates in 
all classes, as compared to other origins which are not rebated at all, 
as Priority Customer activity enhances liquidity on the Exchange for 
the benefit of all market participants by providing more trading 
opportunities, which attracts market makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow from other market participants.
    The Exchange believes its Maker Rebate of ($0.30) in SPY, QQQ, and 
IWM; its Maker Rebate of ($0.28) in Penny Classes (excluding SPY, QQQ, 
and IWM); and its Maker Rebate of ($0.65) in Non-Penny classes is 
reasonable as it is in line with current rebates provided by at least 
one other competing options exchange.\16\ Further, the Exchange 
believes its Taker Rebate of ($0.19) in SPY, QQQ, and IWM; its Taker 
Rebate of ($0.48) in Penny Classes (excluding SPY, QQQ, and IWM); and 
its Taker Rebate of ($0.92) in Non-Penny classes is reasonable as it is 
designed to attract Priority Customer order flow to the Exchange for 
the aforementioned mentioned reasons. Additionally, other competing 
exchanges similarly provide Taker Rebates to Priority Customer Orders 
in Penny and Non-Penny Classes that exceed the Maker Rebate.\17\
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    \16\ See Nasdaq BX Options 7, Section 2, BX Options Market-Fees 
and Rebates, which provides a ($0.30) rebate to Customer orders in 
Penny Symbols and a ($1.10) rebate to Customer orders in Non-Penny 
Symbols.
    \17\ See Nasdaq MRX Options 7, Section 3, Fees and Rebates for 
Regular Orders and all Crossing Orders, which provides for a $0.00 
Maker Fee/Rebate and a ($0.44) Taker Rebate to Priority Customer 
orders in Penny Symbols; and provides for a $0.00 Maker Fee/Rebate 
and a ($1.10) Taker rebate for Priority Customer orders in Non-Penny 
Symbols.
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    The Exchange believes its Market Maker and Non Priority Customer/
Non Market Maker Maker/Taker Fees to be reasonable as the Exchange 
proposes to assess a $0.20 Maker Fee and a $0.50 Taker Fee for orders 
in SPY, QQQ, and IWM. The Exchange believes this fee structure will 
encourage Market Makers, Non Priority Customers, and Non Market Makers 
to submit orders in SPY, QQQ, and IWM. Additionally, the Exchange 
believes its Market Maker and Non Priority Customer/Non Market Maker 
Maker Fee of $0.50 and its Taker Fee of $0.50 in Penny Classes 
(excluding SPY, QQQ, and IWM) is reasonable as at least one other 
competing options exchange assesses a similar fee for Market Maker and 
Non Priority Customer/Non Market Maker orders in Penny Symbols.\18\ The 
Exchange believes that its Market Maker and Non Priority Customer/Non 
Market Maker Taker Fee of $0.50 is reasonable as it is equal to its 
Maker Fee, which is a common pricing strategy used by at least one 
other options exchange.\19\ Finally, the Exchange believes that its 
Market Maker and Non Priority Customer/Non Market Maker Maker Fee of 
$0.95 and its Taker Fee of $0.94 is reasonable as it is competitively 
priced in regard to the Maker and Taker Fees of other options exchanges 
for transactions in Non-Penny Classes.\20\
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    \18\ See Nasdaq MRX Options 7, Section 3, Fees and Rebates for 
Regular Orders and all Crossing Orders, Table 1, Penny Symbols, 
which provides for a $0.50 Maker Fee for Market Maker and 
Professional orders.
    \19\ See BOX Options Fee Schedule, Section A, which assesses a 
$0.50 Maker Fee and a $0.50 Taker Fee for Market Maker and 
Professional Customer or Broker Dealer orders that trade contra to a 
Public Customer.
    \20\ See Nasdaq MRX Options 7, Section 3, Fees and Rebates for 
Regular Orders and all Crossing Orders, Table 1, Non-Penny Symbols, 
which provides for a $1.25 Maker Fee and a $1.10 Taker Fee for 
Market Maker, Firm Proprietary/Broker Dealer, and Professional 
Customer orders.
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    Additionally, the Exchange believes its proposal regarding Maker/
Taker Fees for the Simple Market is equitable and not unfairly 
discriminatory. The Exchange will uniformly apply the proposed fees and 
rebates to each origin in accordance to the Simple table.
Transaction Fees and Rebates (Complex Market)
    The Exchange believes the proposed fee structure is equitable and 
not unfairly discriminatory because all similarly situated market 
participants are subject to the same fee and rebate structure for 
complex order transactions in the Complex Market. The Exchange's 
proposal to offer Maker and Taker Rebates to Priority Customers is 
reasonable because the Exchange desires to attract Priority Customers 
to the Exchange. Priority Customers are being paid Maker Rebates and 
Taker Rebates in all classes, as compared to other origins which are 
not rebated at all, as Priority Customer activity enhances liquidity on 
the Exchange for the benefit of all market participants by providing 
more trading opportunities, which attracts market makers. Additionally, 
the Exchange believes that its Priority Customer Maker Rebate of 
($0.36) and Taker Rebate of ($0.25) in SPY, QQQ, and IWM; its ($0.34) 
Maker Rebate and ($0.54) Taker Rebate in Penny Classes (excluding SPY, 
QQQ, and IWM); and its ($0.71) Maker Rebate and ($0.98) Taker Rebate in 
Non-Penny Classes is reasonable as it is designed to attract Priority 
Customer complex order flow to the Exchange.
    The Exchange believes its Market Maker and Non Priority Customer/
Non Market Maker Maker/Taker Fees to be reasonable as the Exchange 
proposes to assess a $0.20 Maker Fee and a $0.50 Taker Fee for orders 
in SPY, QQQ, and IWM. The Exchange believes this fee structure will 
encourage Market Makers, Non Priority Customers, and Non Market Makers 
to submit orders in SPY, QQQ, and IWM. Additionally, the Exchange 
believes its Market Maker and Non Priority Customer/Non Market Maker 
Maker Fee of $0.50 and its Taker Fee of $0.50 in Penny Classes 
(excluding SPY, QQQ, and IWM) is reasonable as it provides a standard 
fee for both Maker and Taker activity. Finally, the Exchange believes 
its Market Maker and Non Priority Customer/Non Market Maker Maker Fee 
of $0.95 and its Taker Fee of $0.94 in Non-Penny Classes is reasonable 
as at least one other exchange charges a similar Maker Fee \21\ and 
Taker Fee.\22\
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    \21\ See Nasdaq MRX, Options 7, Section 4, Complex Order Fees, 
which assesses an $0.85 fee per contract in Non-Penny Symbols.
    \22\ See Nasdaq ISE, Options 7, Section 4, Complex Order Fees 
and Rebates, which assesses a $1.15 Taker Fee for Market Makers and 
Firm Proprietary/Broker Dealer orders in Non-Penny Symbols.
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Complex Market per Contract Surcharge
    The Exchange's proposal to establish and assess a surcharge of 
$0.12 per contract for all origins (excluding Priority Customer) that 
add or remove liquidity in Penny Classes (including SPY, QQQ, and IWM) 
and non-Penny Classes when trading against a Priority Customer on the 
Strategy Book. The Exchange believes this surcharge is consistent with 
Section 6(b)(4) of the Act \23\ because it applies equally to all 
participants (with the exception of Priority Customers). This surcharge 
is similar in structure and amount to one applied on the NYSE American 
Options Exchange (``NYSE American''),\24\ and

[[Page 68963]]

identical to the surcharge assessed and applied on the Exchange's 
affiliate exchanges, Miami International Securities, LLC (``MIAX 
Options''),\25\ and MIAX Emerald, LLC (``MIAX Emerald'').\26\ The 
Exchange believes that this surcharge is fair and equitable because it 
is in line with the amount of surcharges assessed on other options 
exchanges when trading against Priority Customer complex orders.\27\
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    \23\ 15 U.S.C. 78f(b)(4).
    \24\ See NYSE American Options Exchange Fee Schedule, Section I. 
Options Transaction Fees and Credits, footnote 5, which similarly 
assesses a complex surcharge of $0.12 for any Non-Customer Complex 
Order that executes against a Customer Complex Order.
    \25\ See MIAX Options Fee Schedule, Section 1)a)i), available 
online at https://www.miaxglobal.com/markets/us-options/miax-options/fees.
    \26\ See MIAX Emerald Options Fee Schedule, Section 1)a)i) 
available online at https://www.miaxglobal.com/markets/us-options/emerald-options/fees.
    \27\ See supra note 24, 25, and 26.
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C2C and cC2C Order Fees and Rebates
    The Exchange believes that adding the C2C fee to the Fee Schedule 
is reasonable since it is clarifying the Exchange's existing practice 
and by adding such C2C Order fee to the Fee Schedule the Exchange 
believes that it will make it more transparent as to how the Exchange 
assesses such fee and avoid any confusion as to how such fee is 
assessed for simple (C2C) and complex (cC2C) orders. The Exchange 
believes that the proposed transaction fee for cC2C Orders is 
reasonable because the proposed amount is identical to the fee assessed 
for C2C transactions, which is currently $0.00. The proposed fees would 
be charged to all Priority Customers alike and the Exchange believes 
that assessing a $0.00 fee to Priority Customers is equitable and not 
unfairly discriminatory. By assessing a $0.00 fee to Priority Customer 
orders, the C2C and cC2C transaction fees will not discourage the 
sending of Priority Customer orders.
Complex Stock-Option Order Fees
    The Exchange believes that the proposed stock handling fee for 
stock-option orders is consistent with Section 6(b)(4) of the Act in 
that it is reasonable, equitable and not unfairly discriminatory. The 
Exchange believes the proposed stock handling fee for stock-option 
orders is reasonable and equitable as the proposed fee will cover the 
costs of developing and maintaining the systems that allow for the 
matching and processing of the stock legs of stock-option orders 
executed in the complex order book, as well as all fees charged by the 
outside venue that prints the trade. The Exchange also believes it is 
reasonable and equitable to pass through to the Member any fees 
assessed by the routing broker-dealer utilized by the Exchange with 
respect to the execution of the stock leg of any such order (with such 
fees to be passed through at cost). The Exchange notes that another 
exchange has a comparable fee for the handling of the stock leg of 
stock-option orders. Specifically, Nasdaq ISE (``ISE'') charges a stock 
handling fee of $0.0010 per share which is capped at $50 per order.\28\ 
The Exchange also believes that its proposal is consistent with Section 
6(b)(5) of the Act \29\ because it will be uniformly applied to all 
Members that execute stock-option orders in the Strategy Book on the 
Exchange.
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    \28\ See Nasdaq ISE, Options 7, Pricing Schedule, Section 4, 
Complex Order Fees and Rebates, Note 12; see also Securities 
Exchange Act Release No. 74117 (January 22, 2015), 80 FR 4600 
(January 28, 2015) (SR-ISE-2015-03).
    \29\ 15 U.S.C. 78f(b)(5).
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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.
Intra-Market Competition
    The proposal does not impose an undue burden on intra-market 
competition as its fees will be applied uniformly to each respective 
origin in accordance to either the Simple Market or Complex Market 
table. The Exchange believes its proposal will encourage Members \30\ 
to submit Priority Customer Orders \31\ to the Exchange which will 
increase liquidity and benefit all market participants by providing 
more trading opportunities and tighter spreads. Accordingly, the 
Exchange believes that the proposed changes will not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of the Act because it will continue to encourage order 
flow, which provides greater volume and liquidity, benefiting all 
market participants by providing more trading opportunities and tighter 
spreads.
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    \30\ The term ``Member'' means an individual or organization 
that is registered with the Exchange pursuant to Chapter II of MIAX 
Sapphire 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.
    \31\ The term ``Priority Customer Order'' means an order for the 
account of a Priority Customer. See Exchange Rule 100.
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    Additionally, the Exchange does not believe its Maker/Taker Fees 
for Market Makers and Non Priority Customers/Non Market Makers will 
impose a burden on competition as the fees will be applied in a uniform 
manner to similarly situated participants in accordance to either the 
Simple or Complex table.
Inter-Market Competition
    The proposal does not impose an undue burden on inter-market 
competition. The Exchange believes its proposal remains competitive 
with other options markets and will offer market participants with 
another choice on where to route their orders for execution. The 
Exchange notes that it operates in a highly competitive market in which 
market participants can readily favor competing venues if they deem fee 
levels at a particular venue to be excessive. With the addition of MIAX 
Sapphire, there are currently 18 registered options exchanges competing 
for order flow. For the month of July 2024, based on publicly-available 
information, and excluding index-based options, no single exchange 
(MIAX Sapphire excluded) exceeded approximately 13-14% of the market 
share of executed volume of multiply-listed equity and exchange-traded 
fund (``ETF'') options.\32\ Therefore, no exchange possesses 
significant pricing power in the execution of multiply-listed equity 
and ETF options order flow. In such an environment, the Exchange must 
propose transaction fees and rebates to be competitive with other 
exchanges and to attract order flow. The Exchange believes that the 
Exchange's proposal reflects this competitive environment, to the 
extent this is achieved, all of the Exchange's market participants 
should benefit from the quality of the Exchange's market.
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    \32\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/.
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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,\33\ and Rule 19b-4(f)(2) \34\ 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,

[[Page 68964]]

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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    \33\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \34\ 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-SAPPHIRE-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-SAPPHIRE-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-SAPPHIRE-2024-19 and should 
be submitted on or before September 18, 2024.
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    \35\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-19264 Filed 8-27-24; 8:45 am]
BILLING CODE 8011-01-P