
[Federal Register Volume 88, Number 179 (Monday, September 18, 2023)]
[Notices]
[Pages 64008-64010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20083]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98362; File No. SR-EMERALD-2023-23]


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

September 12, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on September 6, 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.
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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 (``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 grouping 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 add applicable Member \3\ orders routed to MEMX LLC (``MEMX''), in 
anticipation of the launch of MEMX Options, the new options trading 
facility of MEMX.\4\ The Exchange originally filed this proposal on 
August 31, 2023 (SR-EMERALD-2023-22). On September 6, 2023, the 
Exchange withdrew SR-EMERALD-2023-22 and refiled this proposal. The 
proposed changes are immediately effective.
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    \3\ 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.
    \4\ See Securities Exchange Act Release No. 95445 (August 8, 
2022), 87 FR 49894 (August 12, 2022) (SR-MEMX-2022-10) (Notice of 
Filing of Amendment No. 1 and Order Granting Accelerated Approval of 
a Proposed Rule Change, as Modified by Amendment No. 1, to Adopt 
Rules to Govern the Trading of Options on the Exchange for a New 
Facility Called MEMX Options).
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    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 \5\ (``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.\6\
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    \5\ See Exchange Rule 510(c).
    \6\ See Cboe U.S. Options Fee Schedules, BZX Options, ``Fee 
Codes and Associated Fees,'' at https://www.cboe.com/us/options/membership/fee_schedule/bzx/ (last visited September 6, 2023).
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    As a result of the anticipated launch of the options trading 
facility of MEMX in the third quarter of 2023, the Exchange has 
determined to amend the exchange groupings of options exchanges within 
the routing fee table to include MEMX and the anticipated associated 
costs of routing customer orders to MEMX for execution. The impact of 
this proposed change will be increased routing options for Members. The 
Exchange notes that routing through the Exchange is optional and that 
Members will continue to be able to choose where to route applicable 
Member orders. Under this proposed change, the Exchange will not amend 
the fees associated with the exchange groupings. This proposal merely 
seeks to add MEMX to the exchange groupings as described in the routing 
fee table below.
    According, with the proposed change, the routing fee table will be 
as follows:

------------------------------------------------------------------------
                       Description                             Fees
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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, MEMX..........................................
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, MEMX..............
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, MEMX..

[[Page 64009]]

 
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, MEMX.......................................
------------------------------------------------------------------------

    In determining to amend its routing fee table to determine which 
category MEMX belongs to the Exchange took into account anticipated 
transaction fees and rebates assessed by the away markets 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,\7\ 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) \8\ to execute that corresponding 
contract(s) at that corresponding exchange. The Exchange notes that in 
determining whether to include certain exchanges in a 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 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.
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    \7\ The Cboe BZX Options fee schedule is similar to the 
Exchange's Fee Schedule in that it has exchange groupings, whereby 
several exchanges are grouped into the same category. See supra note 
6. Furthermore, Cboe BZX Options recently filed with the Commission 
a proposal to amend fee codes RQ and RR to include MEMX in those 
exchange groupings. See Securities Exchange Act Release No. 98126 
(August 14, 2023), 88 FR 56681 (August 18, 2023) (SR-CboeBZX-2023-
056) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change To Amend Its Fee Schedule).
    \8\ 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.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \9\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \10\ 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 \11\ in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest and is not designed to permit unfair discrimination between 
customers, issuers, brokers and dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed change to add the new options 
facility of MEMX 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 add the new options facility of MEMX to the 
routing fee table of 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 will be incurred 
by the Exchange when routing customer orders to MEMX on behalf of 
Members and does so in the same manner to 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 addition 
of MEMX to the exchange groupings would increase the routing options 
available to Members. The per-contract transaction fee amount 
associated with each grouping approximates the Exchange's all-in cost 
(plus an additional, non-material amount) to execute the corresponding 
contract at the corresponding exchange.
    The Exchange believes that the proposed rule change is equitable 
and not unfairly discriminatory because all Members' orders in Penny 
classes and Non-Penny classes routed to MEMX will be uniformly assessed 
the corresponding fee.

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 does not believe 
the proposed rule change to add MEMX to the routing fee table will 
impose any burden on intramarket competition. Rather, the Exchange 
believes that the proposal will promote competition by increasing the 
available away markets to which Members can route orders to. The 
Exchange notes that another options exchange recently added MEMX to its 
routing fee tables.\12\
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    \12\ See supra note 7.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

[[Page 64010]]

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,\13\ and Rule 19b-4(f)(2) \14\ 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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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-EMERALD-2023-23 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-2023-23. 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-2023-23 and should 
be submitted on or before October 10, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-20083 Filed 9-15-23; 8:45 am]
BILLING CODE 8011-01-P


