[Federal Register Volume 85, Number 69 (Thursday, April 9, 2020)]
[Notices]
[Pages 20006-20012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07435]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88560; File No. SR-EMERALD-2020-04]


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

April 3, 2020.
    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 March 31, 2020, MIAX Emerald, LLC (``MIAX 
Emerald'' 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 is filing a proposal to amend the MIAX Emerald Fee 
Schedule (the ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX's 
[sic] 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)(a)(i) of the Fee 
Schedule to: (i) Decrease Simple Maker (as defined below) rebates in 
certain Tiers for options transactions in Penny classes (as defined 
below) (including SPY, QQQ, and IWM options classes) for Priority 
Customers; \3\ and (ii) increase Simple Taker (as defined below) fees 
in certain Tiers for options transactions in Penny classes and non-
Penny classes for Priority Customers, Market Makers,\4\ and Non-MIAX 
Emerald Market Makers, Firms, Broker-Dealers, and Non-Priority 
Customers.
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    \3\ ``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, including Interpretation and Policy .01.
    \4\ ``Market Maker'' means a Member registered with the Exchange 
for the purpose of making markets in options contracts traded on the 
Exchange. See the Definitions Section of the Fee Schedule and 
Exchange Rule 100.
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Background
    The Exchange currently assesses transaction rebates and fees to all 
market participants which are based upon a threshold tier structure 
(``Tier'') that is applicable to transaction fees. Tiers are determined 
on a monthly basis and are based on three alternative calculation 
methods, as defined in Section (1)(a)(ii) of the Fee Schedule. The 
calculation method that results in the highest Tier achieved by the 
Member \5\ shall apply to all Origin types by the Member. The monthly 
volume thresholds for each method, associated with each Tier, are 
calculated as the total monthly volume executed by the Member in all 
options classes on MIAX Emerald in the relevant Origins and/or 
applicable liquidity, not including Excluded Contracts,\6\ (as the 
numerator) expressed as a percentage of (divided by) Customer Total 
Consolidated Volume (``CTCV'') (as the denominator). CTCV means 
Customer Total Consolidated Volume calculated as the total national 
volume cleared at The Options Clearing Corporation (``OCC'') in the 
Customer range in those classes listed on MIAX Emerald for the month 
for which fees apply, excluding volume cleared at the OCC in the 
Customer range executed during the period of time in which the Exchange 
experiences an ``Exchange System Disruption'' \7\ (solely in the option 
classes of the affected Matching Engine).\8\ In addition, the per 
contract transaction rebates and fees shall be applied retroactively to 
all eligible volume once the Tier has been reached by the Member. 
Members that place resting liquidity, i.e., orders on the MIAX Emerald 
System, will be assessed the specified ``maker'' rebate or fee (each a 
``Maker'') and Members that execute against resting liquidity will be 
assessed the specified ``taker'' fee or rebate (each a ``Taker'').\9\ 
Members are

[[Page 20007]]

also assessed lower transaction fees and smaller rebates for order 
executions in standard option classes in the Penny Pilot Program \10\ 
(``Penny classes'') than for order executions in standard option 
classes which are not in the Penny Pilot Program (``non-Penny 
classes''), for which Members will be assessed a higher transaction 
fees and larger rebates.
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    \5\ ``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 the 
Definitions Section of the Fee Schedule and Exchange Rule 100.
    \6\ ``Excluded Contracts'' means any contracts routed to an away 
market for execution. See the Definitions Section of the Fee 
Schedule.
    \7\ The term ``Exchange System Disruption'' means an outage of a 
Matching Engine or collective Matching Engines for a period of two 
consecutive hour or more, during trading hours. See the Definitions 
Section of the Fee Schedule.
    \8\ A ``Matching Engine'' is a part of the MIAX Emerald 
electronic system that processes options orders and trades on a 
symbol-by-symbol basis. Some Matching Engines will process option 
classes with multiple root symbols, and other Matching Engines may 
be dedicated to one single option root symbol (for example, options 
on SPY may be processed by one single Matching Engine that is 
dedicated only to SPY). A particular root symbol may only be 
assigned to a single designated Matching Engine. A particular root 
symbol may not be assigned to multiple Matching Engines. See the 
Definitions Section of the Fee Schedule.
    \9\ For a Priority Customer complex order taking liquidity in 
both a Penny class and non-Penny class against Origins other than 
Priority Customer, the Priority Customer order will receive a rebate 
based on the Tier achieved.
    \10\ See Securities Exchange Act Release No. 85225 (March 1, 
2019), 84 FR 68353 (March 7, 2019) (SR-EMERALD-2019-06).
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    Currently, transaction rebates and fees for Penny and Non-Penny 
classes are assessed according to the following tables:

                                        Members and Their Affiliates in Penny Classes Simple/Complex/PRIME/cPRIME
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Simple                    Complex                     PRIME/cPRIME[diam]
                                                               -----------------------------------------------------------------------------------------
                                                                                         Maker
                                                                                        (contra     Maker
                       Origin                           Tier                  Taker     origins    (contra
                                                                  Maker    [supcaret]      ex      priority    Taker      Agency     Contra    Responder
                                                                                        priority   customer
                                                                                       customer)   origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker.......................................          1    ($0.35)       $0.50      $0.10      $0.47      $0.50      $0.05      $0.05       $0.05
                                                             2     (0.35)        0.50       0.10       0.47       0.50       0.05       0.05        0.05
                                                             3     (0.35)        0.50       0.10       0.47       0.50       0.05       0.05        0.05
                                                             4     (0.45)        0.48       0.10       0.47       0.50       0.05       0.05        0.05
Non-MIAX Emerald Market Maker......................          1     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             2     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             3     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             4     (0.25)        0.48       0.20       0.50       0.50       0.05       0.05        0.05
Firm Proprietary/Broker-Dealer.....................          1     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             2     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             3     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             4     (0.25)        0.49       0.20       0.50       0.50       0.05       0.05        0.05
Non-Priority Customer..............................          1     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             2     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             3     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             4     (0.25)        0.49       0.20       0.50       0.50       0.05       0.05        0.05
Priority Customer *................................          1    [sdtri]        0.47     (0.25)     (0.25)     (0.25)       0.00       0.05        0.05
                                                                   (0.48)
                                                             2    [sdtri]        0.47     (0.40)     (0.40)     (0.40)       0.00       0.05        0.05
                                                                   (0.48)
                                                             3    [sdtri]        0.47     (0.45)     (0.45)     (0.45)       0.00       0.05        0.05
                                                                   (0.48)
                                                             4     (0.53)        0.45     (0.50)     (0.50)     (0.50)       0.00       0.05        0.05
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                                      Members and Their Affiliates In Non-Penny Classes Simple/Complex/PRIME/cPRIME
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Simple                    Complex                     PRIME/cPRIME[diam]
                                                               -----------------------------------------------------------------------------------------
                                                                                         Maker
                                                                                        (contra     Maker
                       Origin                           Tier                  Taker     origins    (contra    Taker ~
                                                                  Maker    [supcaret]      ex      priority               Agency     Contra    Responder
                                                                                        priority   customer
                                                                                       customer)   origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker.......................................          1    ($0.45)       $0.99      $0.20      $0.86      $0.88      $0.05      $0.05       $0.05
                                                             2     (0.45)        0.99       0.20       0.86       0.88       0.05       0.05        0.05
                                                             3     (0.45)        0.99       0.20       0.86       0.86       0.05       0.05        0.05
                                                             4     (0.75)        0.94       0.20       0.86       0.86       0.05       0.05        0.05
Non-MIAX Emerald Market Maker......................          1     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             2     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             3     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             4     (0.25)        0.94       0.20       0.88       0.88       0.05       0.05        0.05
Firm Proprietary/Broker-Dealer.....................          1     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             2     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             3     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             4     (0.25)        0.94       0.20       0.88       0.88       0.05       0.05        0.05
Non-Priority Customer..............................          1     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             2     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             3     (0.25)        0.99       0.20       0.88       0.88       0.05       0.05        0.05
                                                             4     (0.25)        0.94       0.20       0.88       0.88       0.05       0.05        0.05
Priority Customer *................................          1     (0.85)        0.85     (0.40)     (0.40)     (0.40)       0.00       0.05        0.05
                                                             2     (0.85)        0.85     (0.60)     (0.60)     (0.60)       0.00       0.05        0.05
                                                             3     (0.85)        0.85     (0.70)     (0.70)     (0.75)       0.00       0.05        0.05
                                                             4     (1.05)        0.82     (0.87)     (0.87)     (0.85)       0.00       0.05        0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
[supcaret] Contra to Priority Customer Simple Orders, Origins ex Priority Customer Simple Orders will be charged $0.50 and Priority Customer Simple
  Orders will be charged $0.49 in Penny classes, and Origins ex Priority Customer Simple Orders will be charged $1.10 and Priority Customer Simple
  Orders will be charged $0.85 in Non-Penny classes.

[[Page 20008]]

 
* Priority Customer Complex Orders contra to Priority Customer Complex Orders are neither charged nor rebated. Priority Customer Complex Orders that leg
  into the Simple book are neither charged nor rebated.
~ A $0.05 Complex surcharge for Origins ex Priority Customer for Complex Orders that take liquidity from the Complex Order Book in Non-Penny classes.
 For orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Taker rebate based on the tier achieved when contra to an
  Origin that is not a Priority Customer. Origins that are not a Priority Customer will be charged the applicable Maker fee depending on the contra,
  based on the tier achieved.
[diam] For PRIME and cPRIME, the per contract rebate or fee for the preexisting contra-side interest that trades with the Agency side will be waived.
  PRIME/cPRIME Responder side interest that trades with unrelated Agency side interest trades as Taker will be subject to Simple or Complex rates, as
  applicable.
[sdtri] Simple Maker rebate in SPY, QQQ and IWM is ($0.50) for Priority Customer Origin in Tiers 1, 2 and 3.

Notes Accompanying Tables Above
    During the Opening Rotation and the ABBO uncrossing, the per 
contract rebate or fee will be waived for all Origins.
Simple Maker Rebates for Priority Customers
    First, the Exchange proposes to decrease the Simple Maker rebates 
in certain Tiers for options transactions in Penny classes (including 
SPY, QQQ, and IWM options classes) for Priority Customers. 
Specifically, the Exchange proposes to decrease the Simple Maker 
rebates for Priority Customer orders in options in certain Penny 
classes (excluding SPY, QQQ, and IWM) in Tier 1 from (0.48) to (0.43), 
in Tier 2 from (0.48) to (0.43), and in Tier 3 from (0.48) to (0.43). 
The Exchange next proposes to amend footnote ``[dtri]'' in Section 
(1)(a)(i) of the Fee Schedule to decrease the Simple Maker rebate for 
Priority Customer orders in SPY, QQQ and IWM options classes in Tiers 
1, 2 and 3 from (0.50) to (0.45).
Simple Taker Fees for Priority Customers, Market Makers, Non-MIAX 
Emerald Market Makers, Firm, Broker-Dealers, and Non-Priority Customers 
in Penny Classes
    The Exchange next proposes to increase the Simple Taker fees in 
certain Tiers for options transactions in Penny classes for Priority 
Customers, Market Makers, Non-MIAX Emerald Market Makers, Firms, 
Broker-Dealers, and Non-Priority Customers. Specifically, the Exchange 
proposes to increase the Simple Taker fees for Market Maker orders in 
options in all Penny classes in Tier 4 from 0.48 to 0.50. The Exchange 
next proposes to increase the Simple Taker fees for Non-MIAX Emerald 
Market Maker orders in options in all Penny classes in Tier 4 from 0.48 
to 0.50. The Exchange next proposes to increase the Simple Taker fees 
for Firm Proprietary and Broker-Dealer orders in options in all Penny 
classes in Tier 4 from 0.49 to 0.50. The Exchange next proposes to 
increase the Simple Taker fees for Non-Priority Customer orders in 
options in all Penny classes in Tier 4 from 0.49 to 0.50. The Exchange 
next proposes to increase the Simple Taker fees for Priority Customer 
orders contra Origins ex Priority Customer in options in all Penny 
classes in Tiers 1-3 from 0.47 to 0.50, and in Tier 4 from 0.45 to 
0.50. The Exchange next proposes to amend footnote ``[caret]'' in 
Section (1)(a)(i) of the Fee Schedule to increase the Taker fees for 
Simple Priority Customer orders contra Priority Customer in options in 
Penny classes from 0.49 to 0.50.
Simple Taker Fees for Priority Customers, Market Makers, Non-MIAX 
Emerald Market Makers, Firms, Broker-Dealers, and Non-Priority 
Customers in Non-Penny Classes
    The Exchange next proposes to increase the Simple Taker fees in 
certain Tiers for options transactions in non-Penny classes for 
Priority Customers, Market Makers, Non-MIAX Emerald Market Makers, 
Firms, Broker-Dealers and Non-Priority Customers. Specifically, the 
Exchange proposes to increase the Simple Taker fees for Market Maker 
orders in options in non-Penny classes in Tiers 1-3 from 0.99 to 1.05, 
and in Tier 4 from 0.94 to 1.05. The Exchange next proposes to increase 
the Simple Taker fees for Non-MIAX Emerald Market Maker orders in 
options in non-Penny classes in Tiers 1-3 from 0.99 to 1.05, and in 
Tier 4 from 0.94 to 1.05. The Exchange next proposes to increase the 
Simple Taker fees for Firm Proprietary and Broker-Dealer orders in 
options in non-Penny classes in Tiers 1-3 from 0.99 to 1.05, and in 
Tier 4 from 0.94 to 1.05. The Exchange next proposes to increase the 
Simple Taker fees for Non-Priority Customer orders in options in non-
Penny classes in Tiers 1-3 from 0.99 to 1.05, and in Tier 4 from 0.94 
to 1.05. Finally, the Exchange proposes to increase the Simple Taker 
fees for Priority Customer orders contra Origins ex Priority Customer 
in options in non-Penny classes in Tier 4 from 0.82 to 0.85.
    The purpose of adjusting the specified Simple Taker fees and the 
specified Simple Maker rebates is for business and competitive reasons. 
In order to attract order flow, the Exchange initially set its Maker 
rebates and Taker fees so that they were meaningfully higher/lower than 
other options exchanges that operate comparable maker/taker pricing 
models.\11\ The Exchange now believes that it is appropriate to further 
adjust these specified Maker rebates and Taker fees so that they are 
more in line with other exchanges, but will still remain highly 
competitive such that they should enable the Exchange to continue to 
attract order flow and maintain market share.\12\
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    \11\ See Securities Exchange Act Release No. 85393 (March 21, 
2019), 84 FR 11599 (March 27, 2019) (SR-EMERALD-2019-15).
    \12\ See Cboe BZX Options Exchange Fee Schedule, under 
``Transaction Fees.''
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    With all the proposed changes, Section (1)(a)(i) of the Fee 
Schedule shall be the following:

                                        Members and Their Affiliates In Penny Classes Simple/Complex/PRIME/cPRIME
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Simple                    Complex                     PRIME/cPRIME [diam]
                                                               -----------------------------------------------------------------------------------------
                                                                                         Maker
                                                                                        (contra     Maker
                       Origin                           Tier                  Taker     origins    (contra
                                                                  Maker    [supcaret]      ex      priority    Taker      Agency     Contra    Responder
                                                                                        priority   customer
                                                                                       customer)   origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker.......................................          1    ($0.35)       $0.50      $0.10      $0.47      $0.50      $0.05      $0.05       $0.05

[[Page 20009]]

 
                                                             2     (0.35)        0.50       0.10       0.47       0.50       0.05       0.05        0.05
                                                             3     (0.35)        0.50       0.10       0.47       0.50       0.05       0.05        0.05
                                                             4     (0.45)        0.50       0.10       0.47       0.50       0.05       0.05        0.05
Non-MIAX Emerald Market Maker......................          1     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             2     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             3     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             4     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
Firm Proprietary/Broker-Dealer.....................          1     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             2     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             3     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             4     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
Non-Priority Customer..............................          1     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             2     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             3     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
                                                             4     (0.25)        0.50       0.20       0.50       0.50       0.05       0.05        0.05
Priority Customer *................................          1    [sdtri]        0.50     (0.25)     (0.25)     (0.25)       0.00       0.05        0.05
                                                                   (0.43)
                                                             2    [sdtri]        0.50     (0.40)     (0.40)     (0.40)       0.00       0.05        0.05
                                                                   (0.43)
                                                             3    [sdtri]        0.50     (0.45)     (0.45)     (0.45)       0.00       0.05        0.05
                                                                   (0.43)
                                                             4     (0.53)        0.50     (0.50)     (0.50)     (0.50)       0.00       0.05        0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                      Members and Their Affiliates In Non-Penny Classes Simple/Complex/PRIME/cPRIME
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Simple                    Complex                     PRIME/cPRIME [diam]
                                                               -----------------------------------------------------------------------------------------
                                                                                         Maker
                                                                                        (contra     Maker
                       Origin                           Tier                  Taker     origins    (contra    Taker ~
                                                                  Maker    [supcaret]      ex      priority               Agency     Contra    Responder
                                                                                        priority   customer
                                                                                       customer)   origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker.......................................          1     (0.45)        1.05       0.20       0.86       0.88       0.05       0.05        0.05
                                                             2     (0.45)        1.05       0.20       0.86       0.88       0.05       0.05        0.05
                                                             3     (0.45)        1.05       0.20       0.86       0.86       0.05       0.05        0.05
                                                             4     (0.75)        1.05       0.20       0.86       0.86       0.05       0.05        0.05
Non-MIAX Emerald Market Maker......................          1     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             2     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             3     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             4     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
Firm Proprietary/Broker-Dealer.....................          1     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             2     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             3     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             4     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
Non-Priority Customer..............................          1     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             2     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             3     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
                                                             4     (0.25)        1.05       0.20       0.88       0.88       0.05       0.05        0.05
Priority Customer *................................          1     (0.85)        0.85     (0.40)     (0.40)     (0.40)       0.00       0.05        0.05
                                                             2     (0.85)        0.85     (0.60)     (0.60)     (0.60)       0.00       0.05        0.05
                                                             3     (0.85)        0.85     (0.70)     (0.70)     (0.75)       0.00       0.05        0.05
                                                             4     (1.05)        0.85     (0.87)     (0.87)     (0.85)       0.00       0.05        0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
[supcaret] Contra to Priority Customer Simple Orders, Origins ex Priority Customer Simple Orders will be charged 0.50 and Priority Customer Simple
  Orders will be charged 0.50 in Penny classes, and Origins ex Priority Customer Simple Orders will be charged 1.10 and Priority Customer Simple Orders
  will be charged 0.85 in Non-Penny classes.
* Priority Customer Complex Orders contra to Priority Customer Complex Orders are neither charged nor rebated. Priority Customer Complex Orders that leg
  into the Simple book are neither charged nor rebated.
~ A 0.05 Complex surcharge for Origins ex Priority Customer for Complex Orders that take liquidity from the Complex Order Book in Non-Penny classes.
 For orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Taker rebate based on the tier achieved when contra to an
  Origin that is not a Priority Customer. Origins that are not a Priority Customer will be charged the applicable Maker fee depending on the contra,
  based on the tier achieved.
[diam] For PRIME and cPRIME, the per contract rebate or fee for the preexisting contra-side interest that trades with the Agency side will be waived.
  PRIME/cPRIME Responder side interest that trades with unrelated Agency side interest trades as Taker will be subject to Simple or Complex rates, as
  applicable.
[sdtri] Simple Maker rebate in SPY, QQQ and IWM is (0.45) for Priority Customer Origin in Tiers 1, 2 and 3.


[[Page 20010]]

Notes Accompanying Tables Above
    During the Opening Rotation and the ABBO uncrossing, the per 
contract rebate or fee will be waived for all Origins
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
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.'' \13\
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    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
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    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than approximately 15% 
market share.\14\ Therefore, no exchange possesses significant pricing 
power. More specifically, as of March 24, 2020, the Exchange had an 
approximately 3.42% market share of executed volume of multiply-listed 
equity and exchange traded fund (``ETF'') options for the month of 
March 2020.\15\ The Exchange believes that the ever-shifting market 
share among the exchanges from month to month demonstrates that market 
participants can discontinue or reduce use of certain categories of 
products and services, terminate an existing membership or determine to 
not become a new member, and/or shift order flow, in response to 
transaction fee changes. For example, on February 28, 2019, the 
Exchange's affiliate, MIAX PEARL, LLC (``MIAX PEARL'') filed with the 
Commission a proposal to increase Taker fees in certain Tiers for 
options transactions in certain Penny classes for Priority Customers 
and decrease Maker rebates in certain Tiers for options transactions in 
Penny classes for Priority Customers (which fee was to be effective 
March 1, 2019).\16\ MIAX PEARL experienced a decrease in total market 
share for the month of March 2019, after the proposal went into effect. 
Accordingly, the Exchange believes that the MIAX PEARL March 1, 2019 
fee change, to increase certain transaction fees and decrease certain 
transaction rebates, may have contributed to the decrease in MIAX 
PEARL's market share and, as such, the Exchange believes competitive 
forces constrain the Exchange's, and other options exchanges, ability 
to set transaction fees and market participants can shift order flow 
based on fee changes instituted by the exchanges.
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    \14\ The Options Clearing Corporation (``OCC'') publishes 
options and futures volume in a variety of formats, including daily 
and monthly volume by exchange, available here: https://www.theocc.com/market-data/volume/default.jsp.
    \15\ See id.
    \16\ See Securities Exchange Act Release No. 85304 (March 13, 
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
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    The proposed changes are scheduled to become operative April 1, 
2020.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \17\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\18\ in that it 
is an equitable allocation of reasonable dues, fees and other charges 
among Exchange members and issuers and other persons using its 
facilities, and 6(b)(5) of the Act,\19\ 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 facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4).
    \19\ 15 U.S.C. 78f(b)(1) and (b)(5).
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    The Exchange believes its proposal to decrease Simple Maker rebates 
in certain Tiers for options transactions in Penny classes for Priority 
Customers and increase Simple Taker fees in certain Tiers for options 
transactions in Penny classes and non-Penny classes for Priority 
Customers, Market Makers, Non-MIAX Emerald Market Makers, Firms, 
Broker-Dealers and Non-Priority Customers provides for the equitable 
allocation of reasonable dues and fees and is not unfairly 
discriminatory for the following reasons. The Exchange operates in a 
highly competitive market. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, 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.'' \20\ There are currently 
16 registered options exchanges competing for order flow. Based on 
publicly-available information, and excluding index-based options, no 
single exchange has more than approximately 15% of the market share of 
executed volume of multiply-listed equity and ETF options trades as of 
March 24, 2020, for the month of March 2020.\21\ Therefore, no exchange 
possesses significant pricing power in the execution of multiply-listed 
equity and ETF options order flow. More specifically, as of March 24, 
2020, the Exchange had an approximately 3.42% market share of executed 
volume of multiply-listed equity and ETF options for the month of March 
2020.\22\ The Exchange cannot predict with certainty the number of 
market participants that would qualify for the higher Simple Taker fees 
or lower Simple Maker rebates for each of the proposed changes as 
Members may continually shift among the different Tiers from month to 
month.
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    \20\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
    \21\ See supra note 14.
    \22\ See id.
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    The Exchange believes that the ever-shifting market shares among 
the exchanges from month to month demonstrates that market participants 
can shift order flow, or discontinue or reduce use of certain 
categories of products, in response to transaction and/or non-
transaction fee changes. For example, on February 28, 2019, the 
Exchange's affiliate, MIAX PEARL, filed with the Commission a proposal 
to increase Taker fees in certain Tiers for options transactions in 
certain Penny classes for Priority Customers and decrease Maker rebates 
in certain Tiers for options transactions in Penny classes for Priority 
Customers (which fee was to be effective March 1, 2019).\23\ MIAX PEARL 
experienced a decrease in total market share for the month of March 
2019, after the proposal went into effect. Accordingly, the Exchange 
believes that the MIAX PEARL March 1, 2019 fee change, to increase 
certain transaction fees and decrease certain transaction rebates, may 
have contributed to the decrease in MIAX PEARL's market share and, as 
such, the Exchange believes competitive forces constrain the 
Exchange's, and other options exchanges, ability to set transaction 
fees and market participants can shift order flow based on fee changes 
instituted by the exchanges.
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    \23\ See supra note 16.
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    The Exchange believes its proposal to decrease Simple Maker rebates 
in

[[Page 20011]]

certain Tiers for options transactions in Penny classes for Priority 
Customers and increase Simple Taker fees in certain Tiers for options 
transactions in Penny classes and non-Penny classes for Priority 
Customers, Market Makers, Non-MIAX Emerald Market Makers, Firms, 
Broker-Dealers and Non-Priority Customers is reasonable, equitable and 
not unfairly discriminatory because all similarly situated market 
participants in the same Origin type are subject to the same tiered 
Maker rebates and Taker fees and access to the Exchange is offered on 
terms that are not unfairly discriminatory. The Exchange believes it is 
equitable and not unfairly discriminatory to reduce the Simple Maker 
rebate to Priority Customer orders in Penny classes for competitive and 
business reasons because the Exchange initially set its Simple Maker 
rebates for such orders higher than certain other options exchanges 
that operate comparable maker/taker pricing models.\24\ The Exchange 
now believes that it is appropriate to further decrease those specified 
Simple Maker rebates so that they are more in line with other 
exchanges, and will still remain highly competitive such that they 
should enable the Exchange to continue to attract order flow and 
maintain market share.\25\
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    \24\ See supra note 11.
    \25\ See supra note 12.
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    Furthermore, the proposed decreases to the Simple Maker rebates for 
Priority Customers promotes just and equitable principles of trade, 
fosters cooperation and coordination with persons engaged in 
facilitating transactions in securities, and protects investors and the 
public interest, because even with the decreases, the Exchange's 
proposed Simple Maker rebates for such orders still remain highly 
competitive with certain other options exchanges offering comparable 
pricing models, and should enable the Exchange to continue to attract 
order flow and maintain market share.\26\ The Exchange believes that 
the amount of such fees, as proposed to be decreased, will continue to 
encourage those market participants to send orders to the Exchange. The 
Exchange further believes that it is appropriate to decrease the Simple 
Maker rebates for Priority Customers in SPY, QQQ and IWM options 
classes because these select products are generally more liquid than 
other options classes.
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    \26\ See id.
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    The proposed Simple Taker fee adjustments in certain specified 
Tiers applicable to certain orders submitted by Priority Customers, 
Market Makers, Non-MIAX Emerald Market Makers, Firms, Broker-Dealers 
and Non-Priority Customers in Penny and non-Penny classes are 
reasonable, equitable and not unfairly discriminatory because all 
similarly situated market participants in the same Origin type are 
subject to the same tiered Taker fees and access to the Exchange is 
offered on terms that are not unfairly discriminatory. For competitive 
and business reasons, the Exchange initially set its Simple Taker fees 
for such orders generally lower than certain other options exchanges 
that operate comparable maker/taker pricing models.\27\ The Exchange 
now believes that it is appropriate to further increase those specified 
Simple Taker fees so that they are more in line with other exchanges, 
and will still remain highly competitive such that they should enable 
the Exchange to continue to attract order flow and maintain market 
share. The Exchange believes for these reasons that increasing certain 
Simple Taker fees for transactions in the specified Tiers is equitable, 
reasonable and not unfairly discriminatory, and thus consistent with 
the Act.
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    \27\ See supra notes 11 and 12.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
proposed changes in the specified Simple Maker rebates and Simple Taker 
fees for the applicable market participants should continue to 
encourage the provision of liquidity that enhances the quality of the 
Exchange's market and increases the number of trading opportunities on 
the Exchange for all participants who will be able to compete for such 
opportunities. The proposed rule changes should enable the Exchange to 
continue to attract and compete for order flow with other exchanges. 
However, this competition does not create an undue burden on 
competition but rather offers all market participants the opportunity 
to receive the benefit of competitive pricing.
    The proposed Simple Maker rebate decreases and Simple Taker fee 
adjustments are intended to keep the Exchange's fees highly competitive 
with those of other exchanges, and to encourage liquidity and should 
enable the Exchange to continue to attract and compete for order flow 
with other exchanges. 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. In such an environment, the Exchange must continually adjust 
its rebates and fees to remain competitive with other exchanges and to 
attract order flow. The Exchange believes that the proposed rule 
changes reflect this competitive environment because they modify the 
Exchange's fees in a manner that encourages market participants to 
continue to provide liquidity and to send order flow to the Exchange.

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,\28\ and Rule 19b-4(f)(2) \29\ 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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    \28\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \29\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-EMERALD-2020-04 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-2020-04. This 
file number should be included on the

[[Page 20012]]

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 
(http://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 10:00 a.m. and 3:00 p.m. Copies of 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
EMERALD-2020-04, and should be submitted on or before April 30, 2020.
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    \30\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07435 Filed 4-8-20; 8:45 am]
 BILLING CODE 8011-01-P


