80864 Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 

11 17 CFR 200.30–3(a)(57). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b-4. 

3The term ‘‘Trading Permit’’ means a permit 

issued by the Exchange that confers the ability to 

transact on the Exchange. See Exchange Rule 100. 

4The 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 and the Definitions Section of 

the Fee Schedule. 

5 ‘‘Electronic Exchange Member’’ or ‘‘EEM’’ 

means the holder of a Trading Permit who is not 

a Market Maker. Electronic Exchange Members are 

deemed ‘‘members’’ under the Exchange Act. See 

Exchange Rule 100 and the Definitions Section of 

the Fee Schedule. 

6The term ‘‘Market Makers’’ refers to ‘‘Lead 

Market Makers’’, ‘‘Primary Lead Market Makers’’ 

and ‘‘Registered Market Makers’’ collectively. See 

Exchange Rule 100 and the Definitions Section of 

the Fee Schedule. 

7 15 U.S.C. 78f. 

8See Securities Exchange Act Release No. 84891 

(December 20, 2018), 83 FR 67421 (December 28, 

2018) (File No. 10–233) (order approving 

application of MIAX Emerald, LLC for registration 

as a national securities exchange). 

9See Securities Exchange Act Release No. 85393 

(March 21, 2019), 84 FR 11599 (March 27, 2019) 

(SR–EMERALD–2019–15) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Establish the MIAX Emerald Fee Schedule). 

10 ‘‘Waiver Period’’ means, for each applicable 

fee, the period of time from the initial effective date 

of the MIAX Emerald Fee Schedule until such time 

that the Exchange has an effective fee filing 

establishing the applicable fee. The Exchange will 

issue a Regulatory Circular announcing the 

establishment of an applicable fee that was subject 

to a Waiver Period at least fifteen (15) days prior 

to the termination of the Waiver Period and 

effective date of any such applicable fee. See the 

Definitions Section of the Fee Schedule. 

11See MIAX Emerald Regulatory Circular 2020– 

41 available at https://www.miaxoptions.com/sites/ 

default/files/circular-files/MIAX_Emerald_RC_

2020_41.pdf. 

12See Securities Exchange Act Release Nos. 

90196 (October 15, 2020), 85 FR 67064 (October 21, 

2020) (SR–EMERALD–2020–11) (Notice of Filing 

and Immediate Effectiveness of a Proposed Rule 

Change To Amend Its Fee Schedule To Adopt OneTime Membership Application Fees and Monthly 

Trading Permit Fees) (the ‘‘First Proposed Rule 

Change’’). The Exchange notes that it will refile its 

proposal to establish the one-time membership 

application fee in a separate filing. 

13See id. 

14See Comment Letter from Joseph W. Ferraro III, 

SVP, Deputy General Counsel, the Exchange, dated 

November 20, 2020, notifying the Commission that 

the Exchange will withdraw the First Proposed Rule 

Change. 

15See the MIAX Fee Schedule, Section 3)b). 

16 ‘‘FIX Port’’ means an interface with MIAX 

Emerald systems that enables the Port user to 

submit simple and complex orders electronically to 

MIAX Emerald. See the Definitions Section of the 

Fee Schedule. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27387 Filed 12–11–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90601; File No. SR– 

EMERALD–2020–18] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Amend Its Fee 

Schedule To Adopt a Monthly Trading 

Permit Fees 

December 8, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b-4 thereunder,2

notice is hereby given that on November 

27, 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, II, and III below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

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’’) to establish 

monthly Trading Permit 3 fees for 

Exchange Members.4

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/emerald, 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 

Fee Schedule to adopt monthly Trading 

Permit fees (the ‘‘Proposed Access 

Fees’’) depending on the Member’s 

status as either an Electronic Exchange 

Member (‘‘EEM’’) 5 or as a Market 

Maker.6 MIAX Emerald commenced 

operations as a national securities 

exchange registered under Section 6 of 

the Act 7 on March 1, 2019.8 The 

Exchange adopted its transaction fees 

and certain of its non-transaction fees in 

its filing SR–EMERALD–2019–15.9 In 

that filing, the Exchange expressly 

waived, among other fees, the Proposed 

Access Fees, to provide an incentive to 

prospective EEMs and Market Makers to 

become Members of the Exchange. 

Accordingly, since the launch of the 

Exchange, all such membership fees 

have been waived for the Waiver 

Period.10 When the Exchange adopted 

the framework for its fees, it stated that 

it would provide notice to market 

participants when the Exchange 

intended to terminate the Waiver Period 

for the Proposed Access Fees. 

Accordingly, on September 15, 2020, 

the Exchange issued a Regulatory 

Circular which announced that the 

Exchange would be ending the Waiver 

Period for the Proposed Access Fees, 

among other non-transaction fees, 

beginning October 1, 2020.11

The Exchange initially filed its 

proposal to establish the Proposed 

Access Fees on October 1, 2020.12 The 

First Proposed Rule Change was 

published for comment in the Federal 

Register on October 21, 2020.13 On 

November 25, 2020, the Exchange 

withdrew the First Proposed Rule 

Change and refiled its proposal to 

establish monthly Trading Permit fees.14

Trading Permits are issued to 

Members who are either EEMs or 

Market Makers. The Exchange proposes 

to assess the Proposed Access Fees 

depending upon the category of Member 

that is issued a Trading Permit. 

Members issued Trading Permits during 

a calendar month will be assessed 

monthly Trading Permit Fees. The 

Exchange notes that the Exchange’s 

affiliate, Miami International Securities 

Exchange, LLC (‘‘MIAX’’), charges a 

similar, fixed trading permit fee to its 

EEMs, and a similar, varying trading 

permit fee to its Market Makers, based 

upon the number of assignments of 

option classes or the percentage of 

volume in option classes.15

The Exchange proposes that monthly 

Trading Permit fees will be assessed, 

with respect to the calculation of such 

fee to EEMs (other than clearing firms), 

in any month the EEM is certified in the 

membership system and is credentialed 

to use one or more Financial 

Information Exchange (‘‘FIX’’) 16 ports 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 80865 

17The MEI is a connection to the MIAX Emerald 

System that enables Market Makers to submit 

simple and complex electronic quotes to MIAX 

Emerald. The Exchange offers Full Service MEI 

Ports, which provide Market Makers with the 

ability to send Market Maker simple and complex 

quotes, eQuotes, and quote purge messages to the 

MIAX Emerald System. Full Service MEI Ports are 

also capable of receiving administrative 

information. Market Makers are limited to two Full 

Service MEI Ports per Matching Engine. The 

Exchange also offers Limited Service MEI Ports, 

which provide Market Makers with the ability to 

send simple and complex eQuotes and quote purge 

messages only, but not Market Maker Quotes, to the 

MIAX Emerald System. Limited Service MEI Ports 

are also capable of receiving administrative 

information. Market Makers initially receive two 

Limited Service MEI Ports per Matching Engine. 

See the Definitions Section of the Fee Schedule. 

in the production environment. Further, 

the Exchange proposes that monthly 

Trading Permit fees will be assessed 

with respect to EEM clearing firms in 

any month the clearing firm is certified 

in the membership system to clear 

transactions on the Exchange. 

The Exchange proposes to assess 

EEMs a monthly fee of $1,000 for each 

Trading Permit. Below is the proposed 

table showing the Trading Permit fees 

for EEMs: 

Type of trading permit 

Monthly MIAX 

Emerald trading 

permit fee 

Electronic Exchange Member ................................. $1,000.00 

The Exchange proposes to assess 

monthly Trading Permit fees for Market 

Makers in any month the Market Maker 

(including a Registered Market Maker, 

Lead Market Maker, and Primary Lead 

Market Maker) is certified in the 

membership system, is credentialed to 

use one or more MIAX Emerald Express 

Interface (‘‘MEI’’) 17 ports in the 

production environment and is assigned 

to quote in one or more classes. 

Specifically, the Exchange proposes to 

adopt the following Trading Permit fees 

for Market Makers: (i) $7,000 for Market 

Maker Assignments in up to 10 option 

classes or up to 20% of option classes 

by national average daily volume 

(‘‘ADV’’); (ii) $12,000 for Market Maker 

Assignments in up to 40 option classes 

or up to 35% of option classes by ADV; 

(iii) $17,000 for Market Maker 

Assignments in up to 100 option classes 

or up to 50% of option classes by ADV; 

and (iv) $22,000 for Market Maker 

Assignments in over 100 option classes 

or over 50% of option classes by ADV 

up to all option classes listed on MIAX 

Emerald. 

The Exchange also proposes to adopt 

an alternative lower Trading Permit fee 

for Market Makers who fall within the 

following Trading Permit fee levels, 

which represent the 3rd and 4th levels 

of the Market Maker Trading Permit fee 

table: (i) Market Maker Assignments in 

up to 100 option classes or up to 50% 

of option classes by volume; and (ii) 

Market Maker Assignments in over 100 

option classes or over 50% of option 

classes by volume up to all option 

classes listed on MIAX Emerald. 

Specifically, the Exchange proposes to 

adopt footnote ‘‘D’’ following the Market 

Maker Trading Permit fee table for these 

Monthly Trading Permit tier levels, if 

the Market Maker’s total monthly 

executed volume during the relevant 

month is less than 0.025% of the total 

monthly executed volume reported by 

OCC in the customer account type for 

MIAX Emerald—listed option classes 

for that month, then the fee will be 

$15,500 instead of the fee otherwise 

applicable to such level. 

Below is the proposed table showing 

the Trading Permit fees for Market 

Makers: 

Type of trading permit 

Monthly MIAX 

Emerald trading 

permit fee 

Market maker assignments (the lesser of the applicable measurements 

below) 

Per class Percent of national average daily volume 

Market Maker (includes RMM, LMM, PLMM) ..... $7,000.00 Up to 10 Classes ......... Up to 20% of Classes by volume. 

12,000.00 Up to 40 Classes ......... Up to 35% of Classes by volume. 

D 17,000.00 Up to 100 Classes ....... Up to 50% of Classes by volume. 

D 22,000.00 Over 100 Classes ........ Over 50% of Classes by volume up to all 

Classes listed on MIAX Emerald. 

D For these Monthly MIAX Emerald Trading Permit tier levels, if the Market Maker’s total monthly executed volume during the relevant month is 

less than 0.025% of the total monthly executed volume reported by OCC in the customer account type for MIAX Emerald-listed option classes for 

that month, then the fee will be $15,500 instead of the fee otherwise applicable to such level. 

For the calculation of the monthly 

Market Maker Trading Permit fees, the 

number of classes is defined as the 

greatest number of classes the Market 

Maker was assigned to quote in on any 

given day within the calendar month 

and the class volume percentage is 

based on the total national ADV in 

classes listed on MIAX Emerald in the 

prior calendar quarter. Newly listed 

option classes are excluded from the 

calculation of the monthly Market 

Maker Trading Permit fee until the 

calendar quarter following their listing, 

at which time the newly listed option 

classes will be included in both the per 

class count and the percentage of total 

national average daily volume. The 

Exchange proposes to assess MIAX 

Emerald Market Makers the monthly 

Market Maker Trading Permit fee based 

on the greatest number of classes listed 

on MIAX Emerald that the Market 

Maker was assigned to quote in on any 

given day within a calendar month and 

the applicable fee rate that is the lesser 

of either the per class basis or 

percentage of total national ADV 

measurement. 

The purpose of the alternative lower 

fee designated in proposed footnote ‘‘D’’ 

is to provide a lower fixed cost to those 

Market Makers who are willing to quote 

the entire Exchange market (or 

substantial amount of the Exchange 

market), as objectively measured by 

either number of classes assigned or 

national ADV, but who do not otherwise 

execute a significant amount of volume 

on the Exchange. The Exchange believes 

that, by offering lower fixed costs to 

Market Makers that execute less volume, 

the Exchange will retain and attract 

smaller-scale Market Makers, which are 

an integral component of the option 

marketplace, but have been decreasing 

in number in recent years, due to 

industry consolidation and lower 

market maker profitability. Since these 

smaller-scale Market Makers utilize less 

Exchange capacity due to lower overall 

volume executed, the Exchange believes 

it is reasonable and equitable to offer 

such Market Makers a lower fixed cost. 

The Exchange notes that the Exchange’s 

affiliate, MIAX, provides a similar 

alternative lower Trading Permit fee for 

Market Makers who quote the entire 

MIAX market (or substantial amount of 

the MIAX market), as objectively 

measured by either number of classes 

assigned or national ADV, but who do 

not otherwise execute a significant 


jbell on DSKJLSW7X2PROD with NOTICES
80866 Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 

18See supra note 15. 19See e.g., NYSE Arca Options Fees and Charges, 

p.1 (assessing market makers $6,000 for up to 175 

option issues, an additional $5,000 for up to 350 

option issues, an additional $4,000 for up to 1,000 

option issues, an additional $3,000 for all option 

issues on the exchange, and an additional $1,000 

for the fifth trading permit and for each trading 

permit thereafter); NYSE American Options Fee 

Schedule, p. 23 (assessing market makers $8,000 for 

up to 60 plus the bottom 45% of option issues, an 

additional $6,000 for up to 150 plus the bottom 

45% of option issues, an additional $5,000 for up 

to 500 plus the bottom 45% of option issues, and 

additional $4,000 for up to 1,100 plus the bottom 

45% of option issues, an additional $3,000 for all 

issues traded on the exchange, and an additional 

$2,000 for 6th to 9th ATPs; plus an addition fee for 

premium products). See also Cboe BZX Options 

Exchange (‘‘BZX Options’’) assesses the Participant 

Fee, which is a membership fee, according to a 

member’s ADV. See Cboe BZX Options Exchange 

Fee Schedule under ‘‘Membership Fees’’. The 

Participant Fee is $500 if the member ADV is less 

than 5000 contracts and $1,000 if the member ADV 

is equal to or greater than 5000 contracts. Id. 

20See Securities Exchange Act Release No. 85459 

(March 29, 2019), 84 FR 13363 (April 4, 2019) (SR– 

BOX–2018–24, SR–BOX–2018–37, and SR–BOX– 

2019–04). 

21See Staff Guidance on SRO Rule Filings 

Relating to Fees (May 21, 2019), at https://

www.sec.gov/tm/staff-guidance-sro-rule-filings-fees 

(the ‘‘Guidance’’). 

22 15 U.S.C. 78f(b). 

23 15 U.S.C. 78f(b)(4) and (5). 

amount of volume on MIAX.18 The 

Exchange also notes that other options 

exchanges assess certain of their 

membership fees at different rates, 

based upon a member’s participation on 

that exchange,19 and, as such, this 

concept is not new or novel. The 

proposed changes to the Trading Permit 

fees for Market Makers who fall within 

the 3rd and 4th levels of the fee table 

are based upon a business 

determination of current Market Maker 

assignments and trading volume. 

MIAX Emerald believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee increase meets the 

requirements of the Act that fees be 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

members and markets. MIAX Emerald 

believes this high standard is especially 

important when an exchange imposes 

various access fees for market 

participants to access an exchange’s 

marketplace. MIAX Emerald deems 

Trading Permit fees to be access fees. 

The Exchange believes that it is 

important to demonstrate that these fees 

are based on its costs and reasonable 

business needs. Accordingly, the 

Exchange believes the Proposed Access 

Fees will allow the Exchange to offset 

expense the Exchange has and will 

incur, and that the Exchange is 

providing sufficient transparency (as 

described below) into how the Exchange 

determined to charge such fees. 

Accordingly, the Exchange is providing 

an analysis of its revenues, costs, and 

profitability (before the proposed 

changes), and the Exchange’s revenues, 

costs, and profitability (following the 

proposed changes) for the Proposed 

Access Fees. This analysis includes 

information regarding its methodology 

for determining the costs and revenues 

associated with the Proposed Access 

Fees. 

In order to determine the Exchange’s 

costs associated with providing the 

Proposed Access Fees, the Exchange 

conducted an extensive cost review in 

which the Exchange analyzed every 

expense item in the Exchange’s general 

expense ledger to determine whether 

each such expense relates to the 

Proposed Access Fees, and, if such 

expense did so relate, what portion (or 

percentage) of such expense actually 

supports the services included in the 

Proposed Access Fees. The sum of all 

such portions of expenses represents the 

total cost of the Exchange to provide the 

Proposed Access Fees. For the 

avoidance of doubt, no expense amount 

was allocated twice. The Exchange is 

also providing detailed information 

regarding the Exchange’s cost allocation 

methodology—namely, information that 

explains the Exchange’s rationale for 

determining that it was reasonable to 

allocate certain expenses described in 

this filing towards the total cost to the 

Exchange to provide the Proposed 

Access Fees. 

In order to determine the Exchange’s 

projected revenues associated with 

providing the Proposed Access Fees, the 

Exchange analyzed the number of 

Members currently utilizing the 

Exchange’s services associated with the 

Proposed Access Fees during 2020, and, 

utilizing a recently completed monthly 

billing cycle, extrapolated annualized 

revenue on a going-forward basis. 

The Exchange is presenting its 

revenue and expense associated with 

the Proposed Access Fees in this filing 

in a manner that is consistent with how 

the Exchange presents its revenue and 

expense in its Audited Unconsolidated 

Financial Statements. The Exchange’s 

most recent Audited Unconsolidated 

Financial Statement is for 2019. 

However, since the revenue and 

expense associated with the Proposed 

Access Fees were not in place in 2019 

or for the first three quarters of 2020, the 

Exchange believes its 2019 Audited 

Unconsolidated Financial Statement is 

not useful for analyzing the 

reasonableness of the total annual 

revenue and costs associated with the 

Proposed Access Fees. Accordingly, the 

Exchange believes it is more appropriate 

to analyze the Proposed Access Fees 

utilizing its 2020 actual (for the first 9 

months) and projected (for the final 3 

months) revenue and costs, as described 

herein, which utilize the same 

presentation methodology as set forth in 

the Exchange’s previously-issued 

Audited Unconsolidated Financial 

Statements. Based on this analysis, the 

Exchange believes that the Proposed 

Access Fees are fair and reasonable 

because they will not result in excessive 

pricing or supra-competitive profit 

when comparing the Exchange’s total 

annual expense associated with 

providing the services associated with 

the Proposed Access Fees versus the 

total projected annual revenue the 

Exchange will collect for providing 

those services. 

* * * * * 

On March 29, 2019, the Commission 

issued its Order Disapproving Proposed 

Rule Changes to Amend the Fee 

Schedule on the BOX Market LLC 

Options Facility to Establish BOX 

Connectivity Fees for Participants and 

Non-Participants Who Connect to the 

BOX Network (the ‘‘BOX Order’’).20 On 

May 21, 2019, the Commission issued 

the Staff Guidance on SRO Rule Filings 

Relating to Fees.21 Accordingly, the 

Exchange believes that the Proposed 

Access Fees are consistent with the Act 

because they (i) are reasonable, 

equitably allocated, not unfairly 

discriminatory, and not an undue 

burden on competition; (ii) comply with 

the BOX Order and the Guidance; (iii) 

are supported by evidence (including 

comprehensive revenue and cost data 

and analysis) that they are fair and 

reasonable because they not result in 

excessive pricing or supra-competitive 

profit; and (iv) utilize a cost-based 

justification framework that is 

substantially similar to a framework 

previously used by the Exchange to 

establish other non-transaction fees. 

Accordingly, the Exchange believes that 

the Commission should find that the 

Proposed Access Fees are consistent 

with the Act. 

The proposed rule change is 

immediately effective upon filing with 

the Commission pursuant to Section 

19(b)(3)(A) of the Act. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 22

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 23 in 

particular, in that it is an equitable 

allocation of reasonable dues, fees and 

other charges among its members and 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 80867 

24For example, the Exchange previously noted 

that all third-party expense described in its prior fee 

filing was contained in the information technology 

and communication costs line item under the 

section titled ‘‘Operating Expenses Incurred 

Directly or Allocated From Parent,’’ in the 

Exchange’s 2019 Form 1 Amendment containing its 

financial statements for 2018. See Securities 

Exchange Act Release No. 87877 (December 31, 

2019), 85 FR 738 (January 7, 2020) (SR–EMERALD– 

2019–39). Accordingly, the third-part expense 

described in this filing is attributed to the same line 

item for the Exchange’s 2020 Form 1 Amendment, 

which will be filed in 2021. 

25 In fact, on October 22, 2019, the Exchange was 

notified by SFTI that it is again raising its fees 

charged to the Exchange by approximately 11%, 

without having to show that such fee change 

complies with the Act by being reasonable, 

equitably allocated, and not unfairly 

discriminatory. It is unfathomable to the Exchange 

that, given the critical nature of the infrastructure 

services provided by SFTI, that its fees are not 

required to be rule-filed with the Commission 

pursuant to Section 19(b)(1) of the Act and Rule 

19b–4 thereunder. See 15 U.S.C. 78s(b)(1) and 17 

CFR 240.19b–4, respectively. 

issuers and other persons using its 

facilities. The Exchange also believes 

the proposal furthers the objectives of 

Section 6(b)(5) of the Act 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. 

The Exchange only has four primary 

sources of revenue: transaction fees, 

access fees (which includes the 

Proposed Access Fees), regulatory fees, 

and market data fees. Accordingly, the 

Exchange must cover all of its expenses 

from these four primary sources of 

revenue. 

The Exchange believes that the 

Proposed Access Fees are fair and 

reasonable because they will not result 

in excessive pricing or supracompetitive profit, when comparing the 

total annual expense of MIAX Emerald 

associated with providing these services 

versus the total projected annual 

revenue that the Exchange projects to 

collect. For 2020, the total annual 

expense for providing the services 

associated with the Proposed Access 

Fees for MIAX Emerald is projected to 

be approximately $2.5 million. The $2.5 

million in projected total annual 

expense is comprised of the following, 

all of which are directly related to the 

services associated with the Proposed 

Access Fees: (1) Third-party expense, 

relating to fees paid by MIAX Emerald 

to third-parties for certain products and 

services; and (2) internal expense, 

relating to the internal costs of MIAX 

Emerald to provide the services 

associated with the Proposed Access 

Fees. As noted above, the Exchange 

believes it is more appropriate to 

analyze the Proposed Access Fees 

utilizing its 2020 actual (for the first 9 

months) and projected (for the final 3 

months) revenue and costs, which 

utilize the same presentation 

methodology as set forth in the 

Exchange’s previously-issued Audited 

Unconsolidated Financial Statements.24

The $2.5 million in projected total 

annual expense is directly related to the 

services associated with the Proposed 

Access Fees, and not any other product 

or service offered by the Exchange. It 

does not include general costs of 

operating matching systems and other 

trading technology, and no expense 

amount was allocated twice. 

As discussed, the Exchange 

conducted an extensive cost review in 

which the Exchange analyzed every 

expense item in the Exchange’s general 

expense ledger (this includes over 150 

separate and distinct expense items) to 

determine whether each such expense 

relates to the services associated with 

the Proposed Access Fees, and, if such 

expense did so relate, what portion (or 

percentage) of such expense actually 

supports those services, and thus bears 

a relationship that is, ‘‘in nature and 

closeness,’’ directly related to those 

services. The sum of all such portions 

of expenses represents the total cost of 

the Exchange to provide services 

associated with the Proposed Access 

Fees. 

For 2020, total third-party expense, 

relating to fees paid by MIAX Emerald 

to third-parties for certain products and 

services for the Exchange to be able to 

provide the services associated with the 

Proposed Access Fees, is projected to be 

$190,621. This includes, but is not 

limited to, a portion of the fees paid to: 

(1) Equinix, for data center services, for 

the primary, secondary, and disaster 

recovery locations of the MIAX Emerald 

trading system infrastructure; (2) Zayo 

Group Holdings, Inc. (‘‘Zayo’’) for 

network services (fiber and bandwidth 

products and services) linking MIAX 

Emerald’s office locations in Princeton, 

NJ and Miami, FL to all data center 

locations; (3) Secure Financial 

Transaction Infrastructure (‘‘SFTI’’) 25, 

which supports connectivity and feeds 

for the entire U.S. options industry; (4) 

various other services providers 

(including Thompson Reuters, NYSE, 

Nasdaq, and Internap), which provide 

content, connectivity services, and 

infrastructure services for critical 

components of options connectivity and 

network services; and (5) various other 

hardware and software providers 

(including Dell and Cisco, which 

support the production environment in 

which Members connect to the network 

to trade, receive market data, etc.). 

For clarity, only a portion of all fees 

paid to such third-parties is included in 

the third-party expense herein, and no 

expense amount is allocated twice. 

Accordingly, MIAX Emerald does not 

allocate its entire information 

technology and communication costs to 

the services associated with the 

Proposed Access Fees. 

The Exchange believes it is reasonable 

to allocate such third-party expense 

described above towards the total cost to 

the Exchange to provide the services 

associated with the Proposed Access 

Fees. In particular, the Exchange 

believes it is reasonable to allocate the 

identified portion of the Equinix 

expense because Equinix operates the 

data centers (primary, secondary, and 

disaster recovery) that host the 

Exchange’s network infrastructure. This 

includes, among other things, the 

necessary storage space, which 

continues to expand and increase in 

cost, power to operate the network 

infrastructure, and cooling apparatuses 

to ensure the Exchange’s network 

infrastructure maintains stability. 

Without these services from Equinix, 

the Exchange would not be able to 

operate and support the network and 

provide the services associated with the 

Proposed Access Fees to its Members 

and their customers. The Exchange did 

not allocate all of the Equinix expense 

toward the cost of providing the services 

associated with the Proposed Access 

Fees, only that portion which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access Fees, approximately 10% of the 

total Equinix expense. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

actual cost to provide the services 

associated with the Proposed Access 

Fees, and not any other service, as 

supported by its cost review. 

The Exchange believes it is reasonable 

to allocate the identified portion of the 

Zayo expense because Zayo provides 

the internet, fiber and bandwidth 

connections with respect to the 

network, linking MIAX Emerald with its 

affiliates, MIAX and MIAX PEARL, as 

well as the data center and disaster 

recovery locations. As such, all of the 

trade data, including the billions of 

messages each day per exchange, flow 

through Zayo’s infrastructure over the 

Exchange’s network. Without these 

services from Zayo, the Exchange would 

not be able to operate and support the 

network and provide the services 


jbell on DSKJLSW7X2PROD with NOTICES
80868 Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 

associated with the Proposed Access 

Fees. The Exchange did not allocate all 

of the Zayo expense toward the cost of 

providing the services associated with 

the Proposed Access Fees, only the 

portion which the Exchange identified 

as being specifically mapped to 

providing the Proposed Access Fees, 

approximately 1% of the total Zayo 

expense. The Exchange believes this 

allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review. 

The Exchange believes it is reasonable 

to allocate the identified portions of the 

SFTI expense and various other service 

providers’ (including Thompson 

Reuters, NYSE, Nasdaq, and Internap) 

expense because those entities provide 

connectivity and feeds for the entire 

U.S. options industry, as well as the 

content, connectivity services, and 

infrastructure services for critical 

components of the network. Without 

these services from SFTI and various 

other service providers, the Exchange 

would not be able to operate and 

support the network and provide access 

to its Members and their customers. The 

Exchange did not allocate all of the SFTI 

and other service providers’ expense 

toward the cost of providing the services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access Fees, approximately 1% of the 

total SFTI and other service providers’ 

expense. The Exchange believes this 

allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

Proposed Access Fees. 

The Exchange believes it is reasonable 

to allocate the identified portion of the 

other hardware and software provider 

expense because this includes costs for 

dedicated hardware licenses for 

switches and servers, as well as 

dedicated software licenses for security 

monitoring and reporting across the 

network. Without this hardware and 

software, the Exchange would not be 

able to operate and support the network 

and provide access to its Members and 

their customers. The Exchange did not 

allocate all of the hardware and software 

provider expense toward the cost of 

providing the services associated with 

the Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 

providing the services associated with 

the Proposed Access Fees, 

approximately 10% of the total 

hardware and software provider 

expense. The Exchange believes this 

allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

Proposed Access Fees. 

For 2020, total projected internal 

expense, relating to the internal costs of 

MIAX Emerald to provide the services 

associated with the Proposed Access 

Fees, is projected to be $2,046,137. This 

includes, but is not limited to, costs 

associated with: (1) Employee 

compensation and benefits for full-time 

employees that support the services 

associated with the Proposed Access 

Fees, including staff in network 

operations, trading operations, 

development, system operations, 

business, as well as staff in general 

corporate departments (such as legal, 

regulatory, and finance) that support 

those employees and functions 

(including an increase as a result of the 

higher determinism project); (2) 

depreciation and amortization of 

hardware and software used to provide 

the services associated with the 

Proposed Access Fees, including 

equipment, servers, cabling, purchased 

software and internally developed 

software used in the production 

environment to support the network for 

trading; and (3) occupancy costs for 

leased office space for staff that provide 

the services associated with the 

Proposed Access Fees. The breakdown 

of these costs is more fully-described 

below. For clarity, only a portion of all 

such internal expenses are included in 

the internal expense herein, and no 

expense amount is allocated twice. 

Accordingly, MIAX Emerald does not 

allocate its entire costs contained in 

those items to the services associated 

with the Proposed Access Fees. 

The Exchange believes it is reasonable 

to allocate such internal expense 

described above towards the total cost to 

the Exchange to provide the services 

associated with the Proposed Access 

Fees. In particular, MIAX Emerald’s 

employee compensation and benefits 

expense relating to providing the 

services associated with the Proposed 

Access Fees is projected to be 

$1,403,101, which is only a portion of 

the $9,354,009 total projected expense 

for employee compensation and 

benefits. The Exchange believes it is 

reasonable to allocate the identified 

portion of such expense because this 

includes the time spent by employees of 

several departments, including 

Technology, Back Office, Systems 

Operations, Networking, Business 

Strategy Development (who create the 

business requirement documents that 

the Technology staff use to develop 

network features and enhancements), 

Trade Operations, Finance (who provide 

billing and accounting services relating 

to the network), and Legal (who provide 

legal services relating to the network, 

such as rule filings and various license 

agreements and other contracts). As part 

of the extensive cost review conducted 

by the Exchange, the Exchange reviewed 

the amount of time spent by each 

employee on matters relating to the 

provision of services associated with the 

Proposed Access Fees. Without these 

employees, the Exchange would not be 

able to provide the services associated 

with the Proposed Access Fees to its 

Members and their customers. The 

Exchange did not allocate all of the 

employee compensation and benefits 

expense toward the cost of the services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access Fees, approximately 15% of the 

total employee compensation and 

benefits expense. The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review. 

MIAX Emerald’s depreciation and 

amortization expense relating to 

providing the services associated with 

the Proposed Access Fees is projected to 

be $571,888, which is only a portion of 

the $3,812,590 total projected expense 

for depreciation and amortization. The 

Exchange believes it is reasonable to 

allocate the identified portion of such 

expense because such expense includes 

the actual cost of the computer 

equipment, such as dedicated servers, 

computers, laptops, monitors, 

information security appliances and 

storage, and network switching 

infrastructure equipment, including 

switches and taps that were purchased 

to operate and support the network and 

provide the services associated with the 

Proposed Access Fees. Without this 

equipment, the Exchange would not be 

able to operate the network and provide 

the services associated with the 

Proposed Access Fees to its Members 

and their customers. The Exchange did 

not allocate all of the depreciation and 

amortization expense toward the cost of 

providing the services associated with 

the Proposed Access Fees, only the 

portion which the Exchange identified 

as being specifically mapped to 

providing the services associated with 

the Proposed Access Fees, 

approximately 15% of the total 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 80869 

26See supra note 15. 

27See supra note 19. 

depreciation and amortization expense, 

as these services would not be possible 

without relying on such. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

actual cost to provide the services 

associated with the Proposed Access 

Fees, and not any other service, as 

supported by its cost review. 

MIAX Emerald’s occupancy expense 

relating to providing the services 

associated with the Proposed Access 

Fees is projected to be $71,148, which 

is only a portion of the $474,323 total 

projected expense for occupancy. The 

Exchange believes it is reasonable to 

allocate the identified portion of such 

expense because such expense 

represents the portion of the Exchange’s 

cost to rent and maintain a physical 

location for the Exchange’s staff who 

operate and support the network, 

including providing the services 

associated with the Proposed Access 

Fees. This amount consists primarily of 

rent for the Exchange’s Princeton, NJ 

office, as well as various related costs, 

such as physical security, property 

management fees, property taxes, and 

utilities. The Exchange operates its 

Network Operations Center (‘‘NOC’’) 

and Security Operations Center (‘‘SOC’’) 

from its Princeton, New Jersey office 

location. A centralized office space is 

required to house the staff that operates 

and supports the network. The 

Exchange currently has approximately 

150 employees. Approximately twothirds of the Exchange’s staff are in the 

Technology department, and the 

majority of those staff have some role in 

the operation and performance of the 

services associated with the proposed 

Trading Permit fees. Without this office 

space, the Exchange would not be able 

to operate and support the network and 

provide the services associated with the 

Proposed Access Fees to its Members 

and their customers. Accordingly, the 

Exchange believes it is reasonable to 

allocate the identified portion of its 

occupancy expense because such 

amount represents the Exchange’s actual 

cost to house the equipment and 

personnel who operate and support the 

Exchange’s network infrastructure and 

the services associated with the 

Proposed Access Fees. The Exchange 

did not allocate all of the occupancy 

expense toward the cost of providing 

the services associated with the 

Proposed Access Fees, only the portion 

which the Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

15% of the total occupancy expense. 

The Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s cost to provide the services 

associated with the Proposed Access 

Fees, and not any other service, as 

supported by its cost review [sic] 

Accordingly, based on the facts and 

circumstances presented, the Exchange 

believes that its provision of the services 

associated with the Proposed Access 

Fees will not result in excessive pricing 

or supra-competitive profit. To 

illustrate, for 2020, the Exchange’s total 

projected revenue associated with the 

Proposed Access Fees for the remaining 

three months of 2020 is approximately 

$625,000. Total projected expense for 

the Exchange for 2020 for the provision 

of the Proposed Access Fees is 

approximately $2,236,758. Accordingly, 

the provision of the services associated 

with the Proposed Access Fees will not 

result in excessive pricing or supracompetitive profit (rather, it will result 

in a loss of $1,611,758 for 2020). 

On a going-forward, fully-annualized 

basis, the Exchange projects that its 

annualized revenue for providing the 

services associated with the Proposed 

Access Fees would be approximately 

$2.5 million per annum, based on a 

most recently completed billing cycle. 

The Exchange projects that its 

annualized expense for providing the 

services associated with the Proposed 

Access Fees would be approximately 

$2,236,758 per annum. Accordingly, on 

a fully-annualized basis, the Exchange 

believes its total projected revenue for 

the providing the services associated 

with the Proposed Access Fees will not 

result in excessive pricing or supracompetitive profit, as the Exchange will 

make only a 10% profit margin on the 

Proposed Access Fees ($2.5 million ¥ 

$2,236,758 = $263,242 per annum). 

For the avoidance of doubt, none of 

the expenses included herein relating to 

the services associated with the 

Proposed Access Fees relate to the 

provision of any other services offered 

by MIAX Emerald. Stated differently, no 

expense amount of the Exchange is 

allocated twice. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to allocate the respective 

percentages of each expense category 

described above towards the total cost to 

the Exchange of operating and 

supporting the network, including 

providing the services associated with 

the Proposed Access Fees because the 

Exchange performed a line-by-line item 

analysis of all the expenses of the 

Exchange, and has determined the 

expenses that directly relate to 

operation and support of the network. 

Further, the Exchange notes that, 

without the specific third-party and 

internal items listed above, the 

Exchange would not be able to operate 

and support the network, including 

providing the services associated with 

the Proposed Access Fees to its 

Members and their customers. Each of 

these expense items, including physical 

hardware, software, employee 

compensation and benefits, occupancy 

costs, and the depreciation and 

amortization of equipment, have been 

identified through a line-by-line item 

analysis to be integral to the operation 

and support of the network. The 

Proposed Access Fees are intended to 

recover the Exchange’s costs of 

operating and supporting the network. 

Accordingly, the Exchange believes that 

the Proposed Access Fees are fair and 

reasonable because they do not result in 

excessive pricing or supra-competitive 

profit, when comparing the actual 

network operation and support costs to 

the Exchange versus the projected 

annual revenue from the Proposed 

Access Fees. 

Further, the Exchange no longer 

believes it is necessary to waive these 

fees to attract market participants to the 

MIAX Emerald market since this market 

is now established and MIAX Emerald 

no longer needs to rely on such waivers 

to attract market participants. The 

Exchange believes that the proposal is 

equitable and not unfairly 

discriminatory because the elimination 

of the fee waiver for the Proposed 

Access Fees will uniformly apply to all 

EEMs and Market Makers seeking to 

become Members of the Exchange. The 

Exchange also notes that the Exchange’s 

affiliate, MIAX, charges a similar, fixed 

trading permit fee to its EEMs, and a 

similar, varying trading permit fee to its 

Market Makers, based upon the number 

of assignments of option classes or the 

percentage of volume in option 

classes.26

The Exchange believes that the 

Proposed Access Fees are reasonable, 

equitable and not unfairly 

discriminatory because they are within 

the range of comparable fees at other 

competing options exchanges.27 The 

Proposed Access Fees are fair and 

equitable and not unreasonably 

discriminatory because they apply 

equally to all Market Makers regardless 

of type and access to the Exchange is 

offered on terms that are not unfairly 

discriminatory. The Exchange designed 

the fee rates in order to provide 

objective criteria for Market Makers of 

different sizes and business models that 

best matches their quoting activity on 

the Exchange. The Exchange notes that 

trading volume and quoting activity in 


jbell on DSKJLSW7X2PROD with NOTICES
80870 Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 

28See 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. 

29 15 U.S.C. 78s(b)(3)(A)(ii). 

30 17 CFR 240.19b–4(f)(2). 

the options market tends to be 

concentrated in the top ranked options 

classes; with the vast majority of options 

classes being thinly quoted and traded. 

The Exchange believes that the 

proposed fee rates and criteria provide 

an objective and flexible framework that 

will encourage Market Makers to be 

assigned and quote in option classes 

with lower total national average daily 

volume while also equitably allocating 

the fees in a reasonable manner amongst 

Market Maker assignments to account 

for quoting and trading activity. 

Finally, 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 

fees for services and products, in 

addition to order flow, to remain 

competitive with other exchanges. The 

Exchange believes that the proposed 

changes reflect this competitive 

environment. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intra-Market Competition 

The Exchange believes that the 

Proposed Access Fees do not place 

certain market participants at a relative 

disadvantage to other market 

participants because the Proposed 

Access Fees do not favor certain 

categories of market participants in a 

manner that would impose a burden on 

competition; rather, the fee rates are 

designed in order to provide objective 

criteria for Market Makers of different 

sizes and business models that best 

matches their quoting activity on the 

Exchange. The Exchange notes that 

trading volume and quoting activity in 

the options market tends to be 

concentrated in the top ranked options 

classes; with the vast majority of options 

classes being thinly quoted and traded. 

The Exchange believes that the 

proposed fee rates and criteria provide 

an objective and flexible framework that 

will encourage Market Makers to be 

assigned and quote in option classes 

with lower total national average daily 

volume while also equitably allocating 

the fees in a reasonable manner amongst 

Market Maker assignments to account 

for quoting and trading activity. 

Inter-Market Competition 

The Exchange believes the Proposed 

Access Fees do not place an undue 

burden on competition on other SROs 

that is not necessary or appropriate. In 

particular, options market participants 

are not forced to become members of all 

options exchanges. The Exchange notes 

that it has far less Members as compared 

to the much greater number of members 

at other options exchanges. There are a 

number of large market makers and 

broker-dealers that are members of other 

options exchange but not Members of 

MIAX Emerald. The Exchange is also 

unaware of any assertion that its 

existing fee levels or the Proposed 

Access Fees would somehow unduly 

impair its competition with other 

options exchanges. To the contrary, if 

the fees charged are deemed too high by 

market participants, they can simply 

discontinue their membership with the 

Exchange. 

The Exchange operates in a highly 

competitive market in which market 

participants can readily favor one of the 

15 competing options venues if they 

deem fee levels at a particular venue to 

be excessive. Based on publiclyavailable information, and excluding 

index-based options, no single exchange 

has more than 16% market share. 

Therefore, no exchange possesses 

significant pricing power in the 

execution of multiply-listed equity and 

ETF options order flow. For the month 

of October 2020, the Exchange had a 

market share of approximately 3.60% of 

executed multiply-listed equity 

options 28 and the Exchange believes 

that the ever-shifting market share 

among exchanges from month to month 

demonstrates that market participants 

can discontinue or reduce use of certain 

categories of products, or shift order 

flow, in response to fee changes. In such 

an environment, the Exchange must 

continually adjust its fees and fee 

waivers to remain competitive with 

other exchanges and to attract 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,29 and Rule 

19b–4(f)(2) 30 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. 

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–2020–18 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–2020–18. 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 (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 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 80871 

31 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

changes on December 1, 2020 (SR–CboeEDGX– 

2020–059). On December 3, 2020, the Exchange 

withdrew that filing and submitted this proposal. 

4See Cboe Global Markets, U.S. Equities Market 

Volume Summary, Month-to-Date (November 27, 

2020), available at https://markets.cboe.com/us/ 

equities/market_statistics/. 

5A ‘‘Retail Member Organization’’ or ‘‘RMO’’ is 

a Member (or a division thereof) that has been 

approved by the Exchange under this Rule to 

submit Retail Orders. See EDGX Rule 11.21(a)(1). 

6A ‘‘Retail Order’’ is an agency or riskless 

principal order that meets the criteria of FINRA 

Rule 5320.03 that originates from a natural person 

and is submitted to the Exchange by a Retail 

Member Organization, provided that no change is 

made to the terms of the order with respect to price 

or side of market and the order does not originate 

from a trading algorithm or any other computerized 

methodology. See EDGX Rule 11.21(a)(2). 

7Appended to Retail Orders that add liquidity to 

EDGX and offered a rebate of $0.0032 per share. 

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–2020–18 and 

should be submitted on or before 

January 4, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27393 Filed 12–11–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90604; File No. SR– 

CboeEDGX–2020–060] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend its 

Fees Schedule 

December 8, 2020. 

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 December 

3, 2020, Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) 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 Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) is filing with 

the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change to amend the fee 

schedule. The text of the proposed rule 

change is provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

options/regulation/rule_filings/edgx/), 

at the Exchange’s Office of the 

Secretary, 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 its 

fee schedule applicable to its equities 

trading platform (‘‘EDGX Equities’’) by 

amending (1) Retail Volume Tiers, (2) 

modifying Fee Codes EA and ER and (3) 

eliminating unused fee codes.3

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues 

that do not have similar self-regulatory 

responsibilities under the Exchange Act, 

to which market participants may direct 

their order flow. Based on publicly 

available information,4 no single 

registered equities exchange has more 

than 16% of the market share. Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow. 

The Exchange in particular operates a 

‘‘Maker-Taker’’ model whereby it pays 

credits to members that provide 

liquidity and assesses fees to those that 

remove liquidity. The Exchange’s fee 

schedule sets forth the standard rebates 

and rates applied per share for orders 

that provide and remove liquidity, 

respectively. Currently, for orders 

priced at or above $1.00, the Exchange 

provides a standard rebate of $0.00160 

per share for orders that add liquidity, 

assesses a standard fee of $0.00270 per 

share for orders that remove liquidity 

and assesses a standard fee of $0.0030 

for orders that are routed. For orders 

priced below $1.00, the Exchange a 

standard rebate of $0.00009 per share 

for orders that add liquidity, assesses a 

fee of 0.30% of Dollar Value for orders 

that remove liquidity and for orders that 

are routed. Additionally, in response to 

the competitive environment, the 

Exchange also offers tiered pricing 

which provides Members opportunities 

to qualify for higher rebates or reduced 

fees where certain volume criteria and 

thresholds are met. Tiered pricing 

provides an incremental incentive for 

Members to strive for higher tier levels, 

which provides increasingly higher 

benefits or discounts for satisfying 

increasingly more stringent criteria. 

Retail Volume Tiers 

Pursuant to footnote 3 of the fee 

schedule, the Exchange currently offers 

Retail Volume Tiers which provide 

Retail Member Organizations 

(‘‘RMOs’’) 5 an opportunity to receive an 

enhanced rebate from the standard 

rebate for Retail Orders 6 that add 

liquidity (i.e., yielding fee code ‘‘ZA’’ 7). 

Currently, the Retail Volume Tiers offer 

three levels of criteria difficulty and 

incentive opportunities in which RMOs 

may qualify for enhanced rebates for 

Retail Orders. The tier structure is 

designed to encourage RMOs to increase 

their order flow in order to receive an 

enhanced rebate on their liquidity 

adding orders, and the Exchange now 

proposes to amend existing Retail 

Volume Tiers 1, 2 and 3. The current 

Retail Volume Tiers are as follows: 

• Tier 1 provides an enhanced rebate 

of $0.0034 for a Member’s qualifying 

orders (i.e., yielding fee code ZA) where 


jbell on DSKJLSW7X2PROD with NOTICES