[Federal Register Volume 91, Number 81 (Tuesday, April 28, 2026)]
[Notices]
[Pages 22876-22878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-08185]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105300; File No. SR-SAPPHIRE-2026-12]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt
Rule 2050, Trading Floor Order Price Protection Mechanisms and Risk
Controls
April 23, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on April 13, 2026, MIAX Sapphire, LLC (``MIAX
Sapphire'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Exchange Rule 2050, to establish a
Trading Floor Order Price Protection Mechanisms and Risk Controls rule,
and within proposed Rule 2050, adopt the Trading Floor Price Collar
Protection (``TFPCP'') feature.
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, and at the Exchange's principal office.
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\ At that time, the Exchange adopted its Rulebook which
established rules for the physical Trading Floor.\4\ The Trading Floor
supports Qualified Floor Orders (``QFOs'') and complex Qualified Floor
Orders (``cQFOs'').\5\ The Exchange provides a price protection feature
for these order types, the Trading Floor Price Collar Protection
(``TFPCP'') feature, and is proposing to harmonize the Exchange's
Rulebook with the operation of the Exchange's System \6\ by describing
the operation of the TFPCP feature in detail. The price protection
feature is designed to help maintain a fair and orderly market by
helping to mitigate the potential risk of validating trades at prices
that are extreme and potentially erroneous.
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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). (Exhibit B) (establishing rules for
the physical Trading Floor).
\4\ The term ``Trading Floor'' or ``Floor'' means the physical
trading floor of the Exchange located in Miami, Florida. The Trading
Floor shall consist of one ``Crowd Area'' or ``Pit'' where Floor
Participants will be located and option contracts will be traded.
The Crowd Area or Pit shall be marked with specific visible
boundaries on the Trading Floor, as determined by the Exchange. A
Floor Broker must represent all orders in an ``open outcry'' fashion
in the Crowd Area. See Exchange Rule 100.
\5\ See Exchange Rule 2040.
\6\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
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The TFPCP feature prevents QFOs and cQFOs from trading at extreme
and potentially erroneous prices by establishing a price range outside
of which the order will not be validated and instead will be
invalidated and returned to the Floor Broker \7\ by the System.
Accordingly, the Exchange proposes to adopt new Rule 2050, Trading
Floor Order Price Protection Mechanisms and Risk Controls, and to adopt
new paragraph (a), Trading Floor Price Collar Protection (``TFPCP'') to
the Rule.
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\7\ A Floor Broker is an individual who is registered with the
Exchange for the purpose, while on the Trading Floor, of accepting
and handling options orders. A Floor Broker must be registered as a
Floor Participant prior to registering as a Floor Broker. See
Exchange Rule 2015.
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Trading Floor Price Collar Protection
The Exchange has established default TFPCP settings and the TFPCP
feature is applied to all QFOs and cQFOs, unless an instruction to
ignore the TFPCP is provided in the order. If the price of a QFO or
cQFO is greater (less) than the opposite side NBO (NBB) or cNBO (cNBB)
plus (minus) the TFPCP value when the QFO or cQFO is received by the
System, the TFPCP feature will be triggered and the QFO or cQFO will be
invalidated and returned to the Floor Broker by the System. Each Floor
Broker may establish TFPCP values to be applied to all QFOs or cQFOs by
MPID, which will override the default Exchange settings. The Exchange
has developed a form for Floor Brokers to use in order to communicate
their desired TFPCP settings to the Exchange. A Floor Broker may
populate the form with their TFPCP settings and return the form to the
Exchange's Help Desk.\8\ The Help Desk will then configure the Floor
Broker's TFPCP settings into the System by MPID.
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\8\ The term ``Help Desk'' means the Exchange's control room
consisting of Exchange staff authorized to make certain trading
determinations on behalf of the Exchange. The Help Desk shall report
to and be supervised by a senior executive officer at the Exchange.
See Exchange Rule 100.
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The Exchange default setting for QFOs is $0.10. A Floor Broker may
provide a TFPCP value between $0.00 and $99.99 to use in place of the
Exchange default setting. The Exchange default setting for cQFOs is
equal to the greater of $2.50 or 1% of the cQFO price. A Floor Broker
may provide a TFPCP value between $0.01 and $99.99 to use in place of
the Exchange default setting and a percentage TFPCP value between 0.1%
and 20% to be multiplied by the cQFO price. The Exchange will use the
greater of the Floor Broker
[[Page 22877]]
provided TFPCP value, or the percentage TFPCP value multiplied by the
cQFO price, in place of the Exchange default setting.
The following examples illustrate the operation of the TFPCP
feature on QFOs and cQFOs using the Exchange's default settings.
Example 1 (QFO NBO)
Default TFPCP setting $0.10
NBBO: \9\ $1.40 x $.1.60
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\9\ The term ``NBBO'' means the national best bid or offer as
calculated by the Exchange based on market information received by
the Exchange from OPRA. See Exchange Rule 100.
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TFPCP is $1.30 x $1.70
Order #1 received: QFO Buy @$1.71
The TFPCP feature is triggered as the $1.71 limit price of the
order is greater than the TFPCP protection of $1.70 and the QFO is
invalidated and returned to the Floor Broker by the System.
Example 2 (QFO NBB)
Default TFPCP setting $0.10
NBBO: $1.40 x $.1.60
TFPCP is $1.30 x $1.70
Order #1 received: QFO Sell @$1.29
The TFPCP feature is triggered as the $1.29 limit price of the
order is less than the TFPCP protection of $1.30 and the QFO is
invalidated and returned to the Floor Broker by the System.
Example 3 (cQFO cNBO)
Default TFPCP setting = greater of either (a) $2.50; or (b) 1% of the
cQFO price
cNBBO: \10\ $300 x $325
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\10\ The cNBBO is calculated using the NBBO for each component
of a complex strategy to establish the best net bid and offer for a
complex strategy. See Exchange Rule 518(a).
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Order #1 received: cQFO Buy @$329
TFPCP setting is greater of either (a) $2.50 or (b) 1% x $329 or $3.29
TFPCP is: $296.71 x $328.29
The TFPCP feature is triggered as the $329 price of the order is
greater than the TFPCP protection of $328.29 and the cQFO is
invalidated and returned to the Floor Broker by the System.
Example 4 (cQFO cNBB)
Default TFPCP setting = greater of either (a) $2.50; or (b) 1% of the
cQFO price
cNBBO: $100 x $125
Order #1 received: cQFO Sell @$97.49
TFPCP setting is greater of either (a) $2.50 or (b) 1% x $97.49 or
$0.9749
TFPCP is: $97.50 x $127.50
The TFPCP feature is triggered as the $97.49 price is less than the
TFPCP protection of $97.50 and the cQFO is invalidated and returned to
the Floor Broker by the System.
In all the examples above when the QFO (cQFO) is invalidated and
returned to the Floor Broker, the Floor Broker may either: (i) re-
execute the QFO (cQFO) at a price at or within the TFPCP setting and
reenter the QFO (cQFO) into the System; (ii) re-execute the QFO (cQFO)
and enter it into the System with an instruction to ignore the TFPCP
feature or; (iii) not re-enter the QFO (cQFO) into the System. The
Exchange believes that invalidating the QFO (cQFO) and returning it to
the Floor Broker will afford the Floor Broker the opportunity to
evaluate and confirm the price of the QFO (cQFO).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\11\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\12\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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.
The Exchange also believes the proposed rule change is consistent with
the Section 6(b)(5) \13\ requirement that the rules of an exchange not
be designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. Additionally, the Exchange believes the proposed
rule change is consistent with the Section 6(b)(1) \14\ requirement
that it be so organized and have the capacity to be able to carry out
the purposes of the Act and to comply, and to enforce compliance by its
Members \15\ and persons associated with its Members, with the
provisions of the Act, the rules and regulations thereunder, and the
Exchange's Rules.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
\14\ 15 U.S.C. 78(b)(1).
\15\ The term ``Member'' means an individual or organization
that is registered with the Exchange pursuant to Chapter II of these
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.
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The Exchange believes that the Trading Floor Price Collar
Protection feature is consistent with the Act because it is designed 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 by avoiding the execution of
Qualified Floor Orders and complex Qualified Floor Orders at prices
that are significantly away from the NBBO or cNBBO.
The Exchange offers a number of price protections in its electronic
market that establish minimum and maximum trading ranges that similarly
prevent executions at potentially erroneous prices. Specifically, the
Exchange provides the MIAX Strategy Price Protection (``MSPP'') \16\
for complex orders and a Complex MIAX Sapphire Price Collar
Protection,\17\ in addition to Butterfly Spread Variance Price
Protection,\18\ Calendar Spread Variance Price Protection,\19\ and
Vertical Spread Variance Price Protection.\20\ The Exchange believes
that providing similar price protection parameters and mechanisms to
prevent executions on the Trading Floor from being validated at
potentially erroneous prices promotes the protection of investors and
the public interest and perfects the mechanism of a free and open
market and national market system.
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\16\ The System provides a MIAX Strategy Price Protection
(``MSPP'') for complex orders. The MSPP establishes a maximum
protected price for buy orders and a minimum protected price for
sell orders. See Exchange Rule 532(c)(5).
\17\ The System provides a Complex MIAX Price Collar (``MPC'')
price protection feature for complex orders. The MPC is an Exchange-
wide price protection mechanism under which a complex order to sell
will not be displayed or executed at a price that is lower than the
opposite side cNBBO bid at the time the MPC is assigned by the
System (i.e., upon receipt or upon opening) by more than a specific
dollar amount expressed in $0.01 increments (the ``MPC Setting''),
and under which a complex order to buy will not be displayed or
executed at a price that is higher than the opposite side cNBBO at
the time the MPC is assigned by the System by more than the MPC
Setting (each the ``MPC Price''). See Exchange Rule 532(c)(6).
\18\ See Exchange Rule 532(c)(2).
\19\ See Exchange Rule 532(c)(3).
\20\ See Exchange Rule 532(c)(4).
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The Exchange further believes that the Trading Floor Price Collar
Protection feature protects investors and the public interest in that
it is reasonably designed to provide Floor Brokers with additional
tools to assist them in managing their risk exposure. Specifically, the
Trading Floor Price Collar Protection allows Floor Brokers to mitigate
the potential risks associated with entering QFOs and cQFOs that result
in the validation of trades at prices that are extreme and potentially
erroneous. The Exchange notes that Floor Brokers may choose to ignore
the TFPCP feature on an order-by-order basis by providing an
instruction in the order message either upon submission or re-
submission of the order.
The Exchange believes the proposed changes remove impediments to
and
[[Page 22878]]
perfects the mechanism of a free and open market and a national market
system and, in general, protects investors and the public interest by
describing available risk protection functionality for Floor Brokers in
the Exchange's Rules.
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. The Exchange believes that
the proposed rule change will foster competition by clearly describing
the operation of the TFPCP feature in the Exchange's Rulebook therefore
providing Floor Brokers additional detail and clarity regarding the use
and operation of a risk management tool.
Additionally, the Exchange believes that the proposed rule change
should promote competition as it is designed to allow Floor Brokers
greater flexibility and control of their risk exposure. The Exchange
does not believe the proposed rule change will impose a burden on
intra-market competition as the TFPCP feature is equally applied to all
QFO and cQFO orders, and may be disabled by Floor Brokers on an order-
by-order basis. Thus, the Exchange does not believe that the TFPCP
feature creates any significant impact on competition.
The Exchange believes that the proposed rule change should promote
inter-market competition as the TFPCP feature is designed to allow
Floor Brokers greater flexibility and control over their risk exposure
in order to protect them from market risk or events that may increase
their exposure in the market. Additionally, the TFPCP should instill
additional confidence in market participants that submit orders to the
Exchange that there are adequate risk protections in place, and thus
should encourage market participants to submit additional order flow to
the Exchange, thereby promoting inter-market competition.
For all the reasons stated, 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, and
believes the proposed change will enhance competition.
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 Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) of the Act \21\ and Rule 19b-4(f)(6) \22\
thereunder. Because the proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \23\ and Rule 19b-
4(f)(6) \24\ thereunder.
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(6).
\23\ 15 U.S.C. 78s(b)(3)(A).
\24\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of this 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.
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-2026-12 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-2026-12. 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 filing 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-2026-12 and should be submitted
on or before May 19, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-08185 Filed 4-27-26; 8:45 am]
BILLING CODE 8011-01-P