[Federal Register Volume 88, Number 137 (Wednesday, July 19, 2023)]
[Notices]
[Pages 46202-46204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15269]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97901; File No. SR-EMERALD-2023-15]


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

July 13, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on June 29, 2023, MIAX Emerald, LLC (``MIAX Emerald'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Emerald Fee 
Schedule (``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/emerald-options/rule-filings, at MIAX's principal office, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the exchange groupings of options 
exchanges within the routing fee table in Section 1)b) of the Fee 
Schedule, Fees for Customer Orders Routed to Another Options Exchange, 
to adjust the groupings of options exchanges and to adopt new routing 
fees.
    Currently, the Exchange assesses routing fees based upon (i) the 
origin type of the order, (ii) whether or not it is an order for 
standard option classes in the Penny Interval Program \4\ (``Penny 
classes'') or an order for standard option classes which are not in the 
Penny Interval Program (``Non-Penny classes'') (or other explicitly 
identified classes), and (iii) to which away market it is being routed. 
This assessment practice is identical to the routing fees assessment 
practice currently utilized by the Exchange's affiliates, Miami 
International Securities Exchange, LLC (``MIAX Options'') and MIAX 
PEARL, LLC (``MIAX Pearl''). This is also similar to the methodology 
utilized by the Cboe BZX Exchange, Inc. (``Cboe BZX Options''), a 
competing options exchange, in assessing routing fees. Cboe BZX Options 
has exchange groupings in its fee schedule, similar to those of the 
Exchange, whereby several exchanges are grouped into the same category, 
dependent upon the order's origin type and whether it is a Penny or 
Non-Penny class.\5\
---------------------------------------------------------------------------

    \4\ See Exchange Rule 510(c).
    \5\ See Cboe U.S. Options Fee Schedules, BZX Options, effective 
May 15, 2023, ``Fee Codes and Associated Fees,'' at https://www.cboe.com/us/options/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    As a result of conducting a periodic review of the current 
transaction fees and rebates charged by away markets, the Exchange has 
determined to amend the exchange groupings of options exchanges within 
the routing fee table to better reflect the associated costs of routing 
customer orders to those options exchanges for execution. Specifically, 
the Exchange is proposing to create a separate group for Nasdaq MRX as 
a result of a recent proposal by that exchange to amend its fee 
schedule.\6\
---------------------------------------------------------------------------

    \6\ The Nasdaq MRX proposal (SR-MRX-2023-11) amends their fee 
schedule to change the Taker Fee in Penny symbols in Tier 1 from 
$0.00 to $0.15 for Priority Customer Orders and from $0.00 in Tier 1 
for Priority Customer Orders in Non-Penny symbols to $0.35.
---------------------------------------------------------------------------

    The Exchange now proposes to adopt a new row for ``Routed, Priority 
Customer, Penny Program,'' and to adopt a new associated fee of $0.30. 
Additionally, the Exchange proposes to adopt new row for, ``Routed, 
Priority Customer, Non-Penny Program,'' and to adopt a new associated 
fee of $0.50.
    The Exchange also proposes to amend the first row in the first 
column of the table identified as, ``Routed, Priority Customer, Penny 
Program,'' to relocate Nasdaq MRX from the first row of the table to 
the new proposed row also identified as ``Routed, Priority Customer, 
Penny Program.'' The impact of this proposed change will be that the 
routing fee for Priority Customer Orders \7\ in the Penny Program that 
are routed to Nasdaq MRX, will increase from $0.15 to $0.30.
---------------------------------------------------------------------------

    \7\ The term ``Priority Customer Order'' means an order for the 
account of a Priority Customer. See Exchange Rule 100. 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.
---------------------------------------------------------------------------

    The Exchange also proposes to amend the exchange groupings in the 
third row of the table, identified as ``Routed, Priority Customer, Non-
Penny Program,'' to relocate Nasdaq MRX Options from the third row of 
the table to the new proposed row, also identified as ``Routed, 
Priority Customer, Non-Penny Program.'' The impact of this proposed 
change will be that the routing fee for Priority Customer Orders in the 
Non-Penny Program that are routed to Nasdaq MRX Options will increase 
from $0.15 to $0.50. The purpose of the proposed rule change is to 
adjust the routing fee for Priority Customer Orders routed to the 
Nasdaq MRX options exchange to reflect the associated costs for that 
routed execution in Penny and Non-Penny Classes as a result of the 
recent fee schedule change made by Nasdaq MRX.
    Accordingly, with the proposed changes, the routing fee table will 
be:

[[Page 46203]]



------------------------------------------------------------------------
                       Description                             Fees
------------------------------------------------------------------------
Routed, Priority Customer, Penny Program, to: NYSE                 $0.15
 American, BOX, Cboe, Cboe EDGX Options, MIAX, Nasdaq
 PHLX (except SPY)......................................
Routed, Priority Customer, Penny Program, to: Nasdaq MRX            0.30
Routed, Priority Customer, Penny Program, to: NYSE Arca             0.65
 Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq
 ISE, NOM, Nasdaq PHLX (SPY only), MIAX Pearl, Nasdaq BX
 Options................................................
Routed, Priority Customer, Non-Penny Program, to: NYSE              0.15
 American, BOX, Cboe, Cboe EDGX Options, MIAX, Nasdaq
 ISE, Nasdaq PHLX.......................................
Routed, Priority Customer, Non-Penny Program, to: Nasdaq            0.50
 MRX....................................................
Routed, Priority Customer, Non-Penny Program, to: NYSE              1.00
 Arca Options, Cboe BZX Options, Cboe C2, MIAX Pearl,
 Nasdaq GEMX, NOM, Nasdaq BX Options....................
Routed, Public Customer that is not a Priority Customer,            0.65
 Penny Program, to: NYSE American, NYSE Arca Options,
 Cboe BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX
 Options, Nasdaq GEMX, Nasdaq ISE, Nasdaq MRX, MIAX,
 MIAX Pearl, NOM, Nasdaq PHLX, Nasdaq BX Options........
Routed, Public Customer that is not a Priority Customer,            1.00
 Non-Penny Program, to: MIAX, NYSE American, Cboe,
 Nasdaq PHLX, Cboe EDGX Options.........................
Routed, Public Customer that is not a Priority Customer,            1.15
 Non-Penny Program, to: Cboe C2, BOX, NOM, Nasdaq ISE...
Routed, Public Customer that is not a Priority Customer,            1.25
 Non-Penny Program, to: Cboe BZX Options, NYSE Arca
 Options, Nasdaq GEMX, Nasdaq MRX, Nasdaq BX Options,
 MIAX Pearl.............................................
------------------------------------------------------------------------

    In determining to amend its routing fees the Exchange took into 
account transaction fees and rebates assessed by the away market to 
which the Exchange routes orders, as well as the Exchange's clearing 
costs, administrative, regulatory, and technical costs associated with 
routing orders to an away market. The Exchange uses unaffiliated 
routing brokers to route orders to the away markets; the costs 
associated with the use of these services are included in the routing 
fees specified in the Fee Schedule. This routing fees structure is not 
only similar to the Exchange's affiliates, MIAX Pearl and MIAX Options, 
but is also comparable to the structure in place at Cboe BZX 
Options,\8\ a competing options exchange. The Exchange's routing fee 
structure approximates the Exchange's costs associated with routing 
orders to away markets. The per-contract transaction fee amount 
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) \9\ to execute that 
corresponding contract at that corresponding exchange. The Exchange 
notes that in determining whether to adjust certain groupings of 
options exchanges in the routing fee table, the Exchange considered the 
transaction fees and rebates assessed by away markets, and determined 
to amend the grouping of exchanges that assess transaction fees for 
routed orders within a similar range. This same logic and structure 
applies to all of the groupings in the routing fee table. By utilizing 
the same structure that is utilized by the Exchange's affiliates, MIAX 
Pearl and MIAX Options, the Exchange's Members \10\ will be assessed 
routing fees in a similar manner. The Exchange believes that this 
structure will minimize any confusion as to the method of assessing 
routing fees between the three exchanges. The Exchange notes that its 
affiliates, MIAX Pearl and MIAX Options, will file to make the same 
proposed routing fee changes contained herein.
---------------------------------------------------------------------------

    \8\ See supra note 4. The Cboe BZX Options fee schedule has 
exchange groupings, whereby several exchanges are grouped into the 
same category, dependent on the order's Origin type and whether it 
is a Penny or Non-Penny class. For example, Cboe BZX Options fee 
code RR covers routed customer orders in Non-Penny classes to NYSE 
Arca, Cboe C2, Nasdaq ISE, Nasdaq Gemini, MIAX Emerald, MIAX Pearl, 
or NOM, with a single fee of $1.25 per contract.
    \9\ This amount is to cover de minimis differences/changes to 
away market fees (i.e., minor increases or decreases) that would not 
necessitate a fee filing by the Exchange to re-categorize the away 
exchange into a different grouping. Routing fees are not intended to 
be a profit center for the Exchange and the Exchange's target 
regarding routing fees and expenses is to be as close as possible to 
net neutral.
    \10\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
---------------------------------------------------------------------------

Implementation
    The proposed rule change will become operative on July 1, 2023.
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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed change to the exchange groupings 
of options exchanges within the routing fee table furthers the 
objectives of Section 6(b)(4) of the Act and is reasonable, equitable 
and not unfairly discriminatory because the proposed change will 
continue to apply in the same manner to all Members that are subject to 
routing fees. The Exchange believes the proposed change to the routing 
fee table exchange groupings furthers the objectives of Section 6(b)(5) 
of the Act and is designed to promote just and equitable principles of 
trade and is not unfairly discriminatory because the proposed change 
seeks to recoup costs that are incurred by the Exchange when routing 
Priority Customer Orders to away markets on behalf of Members and does 
so in the same manner for all Members that are subject to routing fees. 
The costs to the Exchange to route orders to away markets for execution 
primarily includes transaction fees and rebates assessed by the away 
markets to which the Exchange routes orders, in addition to the 
Exchange's clearing costs, administrative, regulatory and technical 
costs. The Exchange believes that the proposed re-categorization of 
certain exchange groupings would enable the Exchange to recover the 
costs it incurs to route orders to the Nasdaq MRX options exchange. The 
per-contract transaction fee amount associated with each grouping 
approximates the Exchange's all-in cost (plus an additional, non-
material amount) to

[[Page 46204]]

execute the corresponding contract at the corresponding exchange.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange's proposed re-
categorization of certain exchange groupings is intended to enable the 
Exchange to recover the costs it incurs to route orders to away 
markets, particularly Nasdaq MRX. The Exchange does not believe that 
this proposal imposes any unnecessary burden on competition because it 
seeks to recoup costs incurred by the Exchange when routing orders to 
away markets on behalf of Members and notes that at least one other 
options exchange has a similar routing fee structure.\14\
---------------------------------------------------------------------------

    \14\ See supra note 4.
---------------------------------------------------------------------------

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,\15\ and Rule 19b-4(f)(2) \16\ 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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-EMERALD-2023-15 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-2023-15. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-EMERALD-2023-15 and should 
be submitted on or before August 9, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-15269 Filed 7-18-23; 8:45 am]
BILLING CODE 8011-01-P


