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49See id. 

50See 15 U.S.C. 78f(b)(4), (5), and (8). 

51 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act 

grants the Commission flexibility to determine what 

type of proceeding—either oral or notice and 

opportunity for written comments—is appropriate 

for consideration of a particular proposal by an 

SRO. See Securities Acts Amendments of 1975, 

Report of the Senate Committee on Banking, 

Housing and Urban Affairs to Accompany S. 249, 

S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 52 15 U.S.C. 78s(b)(3)(C). 

53 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

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

4See Securities Exchange Act Release No. 98176 

(August 21, 2023), 88 FR 58342 (SR–EMERALD– 

2023–19) (‘‘Notice’’). Comment on the proposed 

rule change can be found at: https://www.sec.gov/ 

comments/sr-emerald-2023-19/sremerald202319.

htm. 

5 15 U.S.C. 78s(b)(3)(C). 

any failure of an SRO to provide this 

information may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Act and the applicable rules 

and regulations.49

The Commission is instituting 

proceedings to allow for additional 

consideration and comment on the 

issues raised herein, including as to 

whether the proposed fees are 

consistent with the Act, and 

specifically, with its requirements that 

exchange fees be reasonable and 

equitably allocated, not be unfairly 

discriminatory, and not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act.50

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. Such 

comments should be submitted by 

October 25, 2023. Rebuttal comments 

should be submitted by November 8, 

2023. Although there do not appear to 

be any issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.51

The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

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 rule-comments@

sec.gov. Please include file number SR– 

CboeEDGA–2023–015 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–CboeEDGA–2023–015. 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–CboeEDGA–2023–015 and should 

be submitted on or before October 25, 

2023. Rebuttal comments should be 

submitted by November 8, 2023. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,52 that File 

No. SR–CboeEDGA–2023–015, be and 

hereby is, temporarily suspended. In 

addition, the Commission is instituting 

proceedings to determine whether the 

proposed rule change should be 

approved or disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.53

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22015 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98656; File No. SR– 

EMERALD–2023–19] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Suspension of and 

Order Instituting Proceedings To 

Determine Whether To Approve or 

Disapprove Proposed Rule Change To 

Amend the Fee Schedule To Modify 

Certain Connectivity and Port Fees 

September 29, 2023. 

I. Introduction 

On August 8, 2023, MIAX Emerald, 

LLC (‘‘MIAX Emerald’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’),1 and 

Rule 19b–4 thereunder,2 a proposed rule 

change (File No. SR–EMERALD–2023– 

19) to amend certain connectivity and 

port fees. The proposed rule change was 

immediately effective upon filing with 

the Commission pursuant to Section 

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

rule change was published for comment 

in the Federal Register on August 25, 

2023.4 Pursuant to Section 19(b)(3)(C) of 

the Act,5 the Commission is hereby: (1) 

temporarily suspending the proposed 

rule change; and (2) instituting 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change. 

II. Background and Description of the 

Proposed Rule Change 

As described in more detail in the 

Notice, the Exchange proposes to: (1) 

increase fees for a 10 gigabit (‘‘Gb’’) 

ultra-low latency (‘‘ULL’’) fiber 


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6The 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. 

7See Notice, supra note 4, at 58346. 

8The MIAX Emerald Express Interface (‘‘MEI’’) is 

a connection to the MIAX Emerald System that 

enables Market Makers to submit simple and 

complex electronic quotes to MIAX Emerald. See 

the Definitions Section of the Fee Schedule. 

9The term ‘‘Market Makers’’ refers to Lead Market 

Makers (‘‘LMMs’’), Primary Lead Market Makers 

(‘‘PLMMs’’), and Registered Market Makers 

(‘‘RMMs’’) collectively. See the Definitions Section 

of the Fee Schedule and Exchange Rule 100. For 

purposes of Limit Service MEI Ports, Market Makers 

also include firms that engage in other types of 

liquidity activity, such as seeking to remove resting 

liquidity from the Exchange’s Book. The Exchange 

states that the Limited Service MEI Ports 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. See Notice, 

supra note 4, at 58346, n.57. 

10See Notice, supra note 4, 58342. The Exchange 

initially filed the proposed fee change (SR– 

EMERALD–2022–38) on December 30, 2022, with 

an effective date of January 1, 2023, and, on January 

9, 2023, the Exchange withdrew SR–EMERALD– 

2022–38 and resubmitted this proposal as SR– 

EMERALD–2023–01. See Securities Exchange Act 

Release No. 96628 (January 10, 2023), 88 FR 2651 

(January 17, 2023). That filing was withdrawn by 

the Exchange and the Exchange filed a new 

proposed fee change with additional justification 

(SR–EMERALD–2023–05) on February 23, 2023. 

See Securities Exchange Act Release No. 97079 

(March 8, 2023), 88 FR 15764 (March 14, 2023). The 

Exchange subsequently withdrew that filing and 

replaced it with SR–EMERALD–2023–12 on April 

20, 2023. See Securities Exchange Act Release No. 

97422 (May 2, 2023), 88 FR 29750 (May 8, 2023). 

The Exchange subsequently withdrew that filing 

and replaced it with SR–EMERALD–2023–14 on 

June 16, 2023. See Securities Exchange Act Release 

No. 97813 (June 27, 2023), 88 FR 42785 (July 3, 

2023). The Exchange subsequently withdrew that 

filing and replaced it with the instant filing to 

provide additional information and a revised 

justification for the proposal, which is discussed 

herein. See Notice, supra note 4, at 58342. 

11The term ‘‘Matching Engine’’ means a part of 

the MIAX Emerald electronic system that processes 

options orders and trades on a symbol-by-symbol 

basis. Some Matching Engines will process option 

classes with multiple root symbols, and other 

Matching Engines may be dedicated to one single 

option root symbol (for example, options on SPY 

may be processed by one single Matching Engine 

that is dedicated only to SPY). A particular root 

symbol may only be assigned to a single designated 

Matching Engine. A particular root symbol may not 

be assigned to multiple Matching Engines. See 

Notice, supra note 4, at 58346 (citing Definitions 

Section of the Fee Schedule). 

12See Notice, supra note 4, at 58346. 

13See id. 

14See id. 

15See Exchange Fee Schedule Section 5(d)(ii). 

16 15 U.S.C. 78s(b)(3)(C). 

17 15 U.S.C. 78s(b)(1). 

18See Notice, supra note 4, at 58348. 

19See id. at 58359–60. 

20See id. at 58352–53, 58356. The Exchange 

states that its cost analysis is based on the 

Exchange’s 2023 fiscal year of operations and 

projections. See id. at 58359. 

21See id. at 58352. 

22The Exchange defines ‘‘cost drivers’’ within the 

filing as the costs necessary to deliver each of the 

core services, including infrastructure, software, 

human resources (i.e., personnel), and certain 

general and administrative expenses. See Notice, 

supra note 4, at 58351. 

23See Notice, supra note 4, at 58351–52. The 

Exchange states that because the Exchange’s parent 

company currently owns and operates four separate 

and distinct marketplaces, the Exchange’s parent 

company determines an accurate cost for each 

marketplace, which results in different allocations 

and amounts across exchanges for the same cost 

drivers. See id. at 58352. According to the 

Exchange, its allocation methodology ensures that 

no cost would be allocated twice or double-counted 

between the Exchange and its affiliated markets. 

See id. 

24See id. The Exchange describes ‘‘core services’’ 

as services provided by the Exchange, including 

transaction execution, market data, membership 

services, physical connectivity, and port access 

(which provides order entry, cancellation and 

modification functionality, risk functionality, the 

ability to receive drop copies, and other 

functionality). See id. at 58351. 

connection for Members 6 and nonMembers from $10,000 to $13,500 per 

month; 7 and (2) increase fees for 

Limited Service MIAX Emerald Express 

Interface 8 (‘‘MEI’’) Ports available to 

Market Makers 9 through implementing 

a tiered-pricing structure.10

With respect to Limited Service MEI 

Ports, the Exchange will continue to 

provide two Limited Service MEI Ports 

for each matching engine 11 to which a 

Market Maker connects free of charge.12

Prior to the proposed fee change, Market 

Makers were assessed a $100 monthly 

fee for each additional Limited Service 

MEI Port for each matching engine 

above the first two Limited Service MEI 

Ports that were included for free.13 Now, 

the Exchange proposes to establish a 

tiered-pricing structure for the Limited 

Service MEI Ports pursuant to which: (i) 

the third and fourth Limited Service 

MEI Ports for each matching engine will 

increase to $200 a month per port; (ii) 

the fifth and sixth Limited Service MEI 

Ports for each matching engine will 

increase to $300 a month per port; and 

(iii) the seventh or more Limited Service 

MEI Ports will increase to $400 a month 

per port.14 Market Makers are limited to 

twelve additional Limited Service MEI 

Ports per matching engine, for a total of 

fourteen Limited Service MEI Ports per 

matching engine.15

III. Suspension of the Proposed Rule 

Change 

Pursuant to Section 19(b)(3)(C) of the 

Act,16 at any time within 60 days of the 

date of filing of an immediately effective 

proposed rule change pursuant to 

Section 19(b)(1) of the Act,17 the 

Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) 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. The Commission believes a 

temporary suspension of the proposed 

rule change is necessary and 

appropriate to allow for additional 

analysis of the proposed rule change’s 

consistency with the Act and the rules 

thereunder. 

In support of the proposal, the 

Exchange states its belief that the 

proposed fees overall are reasonable 

because they promote parity among 

exchange pricing for access, which 

promotes competition, while allowing 

the Exchange to recover its costs to 

provide dedicated access via 10Gb ULL 

connectivity and Limited Service MEI 

Ports.18 The Exchange further states that 

the proposed fees are fair and 

reasonable because they will not result 

in pricing that deviates from that of 

other exchanges or a ‘‘supra-competitive 

profit,’’ when comparing the total 

expense of the Exchange associated with 

providing 10Gb ULL connectivity and 

Limited Service MEI Port services 

versus the total projected revenue of the 

Exchange associated with these 

services.19 According to the Exchange, 

employing a methodology that is the 

‘‘result of an extensive review and 

analysis,’’ it estimates the total projected 

annual cost of providing 10Gb ULL 

connectivity to be $11,361,586 and for 

providing Limited Service MEI Ports to 

be $1,779,066.20

To arrive at these figures, the 

Exchange states that it undertook an 

extensive cost analysis to analyze every 

expense in the Exchange’s general 

expense ledger to determine whether 

each such expense related to the 

provision of connectivity and port 

services, and, if such expense did so 

relate, what portion (or percentage) of 

such expense supported the provision of 

connectivity and port services.21 The 

Exchange states that it determined the 

total cost for the Exchange and its 

affiliated markets for each cost driver 22

through a company-wide process that 

included discussions with senior 

management, Exchange department 

heads, and the Finance Team.23 The 

Exchange further states that it 

determined what portion of the cost 

allocated to the Exchange pursuant to 

this methodology is to be allocated to 

each core service, including the 

appropriate allocation to connectivity 

and ports.24 The Exchange states that 

through this allocation methodology, 

the Exchange ‘‘applied an allocation of 

each cost driver to each core service’’ 

and ‘‘[e]ach of the [resulting] cost 

allocations is unique to the Exchange 


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25 Id. at 58352. 

26See id. at 58353. 

27See id. at 58359. 

28See id. at 58356. 

29See Notice, supra note 4, at 58359. 

30 Id. at 58360. 

31See id. 

32See id. at 58361. 

33 Id. 

34 Id. 

35 Id. at 58363. 

36See id. at 58362. 

37See Letter from Gerald D. O’Connell, Executive 

Director, Susquehanna International Group, LLP, to 

Vanessa Countryman, Secretary, Commission, dated 

September 18, 2023 (‘‘SIG Letter’’). 

38 Id. 

39See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

40See id. 

41 15 U.S.C. 78f(b)(4). 

42 15 U.S.C. 78f(b)(5). 

43 15 U.S.C. 78f(b)(8). 

44See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 

45For purposes of temporarily suspending the 

proposed rule change, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

and represents a percentage of overall 

cost that was allocation to the Exchange 

pursuant to the initial allocation.’’ 25

The Exchange states that the 

$11,361,586 aggregate annual costs for 

providing physical dedicated 10Gb ULL 

connectivity via an unshared network is 

the sum of the following individual 

line-item costs: (1) Human Resources at 

$3,520,856; (2) Connectivity (external 

fees, cabling, switches, etc.) at $71,675; 

(3) Internet Services and External 

Market Data at $373,249; (4) Data Center 

at $752,545; (5) Hardware and Software 

Maintenance and Licenses at $666,208; 

(6) Depreciation at $1,929,118; and (7) 

Allocated Shared Expenses at 

$4,407,935.26 The Exchange represents 

that it estimates that the proposed fees 

will result in an annual revenue of 

approximately $16,524,000, which is a 

potential profit margin of 31% over the 

cost of providing 10Gb ULL 

connectivity services.27

The Exchange states that the 

$1,779,066 aggregate annual costs for 

offering Limited Service MEI Ports is the 

sum of the following individual lineitem costs: (1) Human Resources at 

$737,784; (2) Connectivity (external 

fees, cabling, switches, etc.) at $3,713; 

(3) Internet Services and External 

Market Data at $14,102; (4) Data Center 

at $55,686; (5) Hardware and Software 

Maintenance and Licenses at $41,951; 

(6) Depreciation at $112,694; and (7) 

Allocated Shared Expenses at 

$813,136.28 The Exchange represents 

that it estimates that the proposed fees 

will result in an annual revenue of 

approximately $2,809,200, which is a 

potential profit margin of 37% over the 

cost of providing Limited Service MEI 

Ports.29

The Exchange states its belief that the 

proposed fees are reasonable because 

they allow the Exchange to ‘‘recoup the 

Exchange’s costs of providing dedicated 

10Gb ULL connectivity and Limited 

Service MEI Ports’’ and that the cost 

analysis and related projections 

demonstrate that the Exchange is not 

earning ‘‘supra-competitive profits.’’ 30

In addition, the Exchange states that the 

proposed fees are comparable to or 

lower than the fees charged by 

competing options exchanges for similar 

products.31

In further support of the proposal, the 

Exchange states its belief that the 

proposed fees are reasonable, fair, 

equitable, and not unfairly 

discriminatory, because they are 

designed to align fees with services 

provided and will apply equally to all 

subscribers.32 Moreover, the Exchange 

asserts that the proposed fees are 

equitably allocated among users of the 

network connectivity and port 

alternatives, as the ‘‘users of 10Gb ULL 

connections consume substantially 

more bandwidth and network resources 

than the users of 1Gb ULL 

connection.’’ 33 The Exchange also states 

that with respect to Limited Service MEI 

Ports, the tiered-pricing structure is 

‘‘explicitly designed to link fees to 

related costs imposed on the 

[E]xchange’’ and that ‘‘Market Makers 

that purchase more connections cause 

significantly greater costs and expenses 

to the Exchange.’’ 34

Finally, the Exchange asserts that the 

proposed fees would not cause any 

unnecessary or inappropriate burden on 

inter-market competition because if the 

fee is set too high it would make it 

easier for other exchanges to compete 

with the Exchange, and only if the 

proposed fees were a ‘‘substantial fee 

decrease could this be considered a 

form of predatory pricing.’’ 35 The 

Exchange also asserts that the proposed 

rule change would not cause any 

unnecessary or inappropriate burden on 

intra-market competition because the 

proposed fees will allow the Exchange 

to recoup some of its costs in providing 

10Gb ULL connectivity and Limited 

Service MEI Ports at below market rates 

since the Exchange launched 

operations.36

To date, the Commission has received 

one comment letter on the revised 

justifications for the proposed increase 

in fees for 10Gb ULL connectivity and 

Limited Service MEI Ports.37 This 

commenter states that the revisions 

reflected in the Exchange’s instant 

proposal as compared to its earlier 

filings ‘‘do[ ] not fundamentally redress 

the valid critiques that SIG raised in its 

prior letters objecting to the subject fee 

increases.’’ 38

When exchanges file their proposed 

rule changes with the Commission, 

including fee filings like the Exchange’s 

present proposal, they are required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.39 The 

instructions to Form 19b–4, on which 

exchanges file their proposed rule 

changes, specify that such statement 

‘‘should be sufficiently detailed and 

specific to support a finding that the 

proposed rule change is consistent with 

[those] requirements.’’ 40

Section 6 of the Act, including 

Sections 6(b)(4), (5), and (8), require the 

rules of an exchange to: (1) provide for 

the equitable allocation of reasonable 

fees among members, issuers, and other 

persons using the exchange’s 

facilities; 41 (2) perfect the mechanism of 

a free and open market and a national 

market system, protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers; 42 and (3) not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.43

In temporarily suspending the 

Exchange’s proposed rule change, the 

Commission intends to further consider 

whether the proposal to increase fees for 

10Gb ULL connectivity and adopt a 

tired-pricing structure for Limited 

Service MEI Ports is consistent with the 

statutory requirements applicable to a 

national securities exchange under the 

Act. In particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; not permit unfair 

discrimination between customers, 

issuers, brokers or dealers; and do not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act.44

Therefore, the Commission finds that 

it is appropriate in the public interest, 

for the protection of investors, and 

otherwise in furtherance of the purposes 

of the Act, to temporarily suspend the 

proposed rule change.45


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46 15 U.S.C. 78s(b)(3)(C). Once the Commission 

temporarily suspends a proposed rule change, 

Section 19(b)(3)(C) of the Act requires that the 

Commission institute proceedings under Section 

19(b)(2)(B) to determine whether a proposed rule 

change should be approved or disapproved. 

47 15 U.S.C. 78s(b)(2)(B). 

48 Id. Section 19(b)(2)(B) of the Act also provides 

that proceedings to determine whether to 

disapprove a proposed rule change must be 

concluded within 180 days of the date of 

publication of notice of the filing of the proposed 

rule change. See id. The time for conclusion of the 

proceedings may be extended for up to 60 days if 

the Commission finds good cause for such 

extension and publishes its reasons for so finding, 

or if the exchange consents to the longer period. See 

id. 

49 15 U.S.C. 78f(b)(4). 

50 15 U.S.C. 78f(b)(5). 

51 15 U.S.C. 78f(b)(8). 

52 17 CFR 201.700(b)(3). 

53See id. 

54See id. 

55See 15 U.S.C. 78f(b)(4), (5), and (8). 

56 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act 

grants the Commission flexibility to determine what 

type of proceeding—either oral or notice and 

opportunity for written comments—is appropriate 

for consideration of a particular proposal by an 

SRO. See Securities Acts Amendments of 1975, 

Report of the Senate Committee on Banking, 

Housing and Urban Affairs to Accompany S. 249, 

S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 

IV. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Rule Change 

In addition to temporarily suspending 

the proposal, the Commission also 

hereby institutes proceedings pursuant 

to Sections 19(b)(3)(C) 46 and 19(b)(2)(B) 

of the Act 47 to determine whether the 

Exchange’s proposed rule change 

should be approved or disapproved. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, the 

Commission seeks and encourages 

interested persons to provide additional 

comment on the proposed rule change 

to inform the Commission’s analysis of 

whether to approve or disapprove the 

proposed rule change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,48 the Commission is providing 

notice of the grounds for possible 

disapproval under consideration: 

• Whether the Exchange has 

demonstrated how the proposed fees are 

consistent with Section 6(b)(4) of the 

Act, which requires that the rules of a 

national securities exchange ‘‘provide 

for the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other persons 

using its facilities;’’ 49

• Whether the Exchange has 

demonstrated how the proposed fees are 

consistent with Section 6(b)(5) of the 

Act, which requires, among other 

things, that the rules of a national 

securities exchange not be ‘‘designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers;’’ 50 and 

• Whether the Exchange has 

demonstrated how the proposed fees are 

consistent with Section 6(b)(8) of the 

Act, which requires that the rules of a 

national securities exchange ‘‘not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of [the Act].’’ 51

As discussed in Section III above, the 

Exchange made various arguments in 

support of its proposal. The 

Commission believes that there are 

questions as to whether the Exchange 

has provided sufficient information to 

demonstrate that the proposed fees are 

consistent with the Act and the rules 

thereunder. 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the [Act] and the rules 

and regulations issued thereunder . . . 

is on the [SRO] that proposed the rule 

change.’’ 52 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,53 and 

any failure of an SRO to provide this 

information may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Act and the applicable rules 

and regulations.54

The Commission is instituting 

proceedings to allow for additional 

consideration and comment on the 

issues raised herein, including as to 

whether the proposed fees are 

consistent with the Act, and 

specifically, with its requirements that 

exchange fees be reasonable and 

equitably allocated, not be unfairly 

discriminatory, and not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act.55

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. Such 

comments should be submitted by 

October 25, 2023. Rebuttal comments 

should be submitted by November 8, 

2023. Although there do not appear to 

be any issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.56

The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

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 rule-comments@

sec.gov. Please include file number SR– 

EMERALD–2023–19 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–2023–19. 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 


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68684 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

57 15 U.S.C. 78s(b)(3)(C). 

58 17 CFR 200.30–3(a)(57). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 89185 

(June 29, 2020), 85 FR 40328 (July 6, 2020) (SR– 

NYSEArca–2019–95). Rule 8.601–E(c)(1) provides 

that ‘‘[t]he term ‘‘Active Proxy Portfolio Share’’ 

means a security that (a) is issued by an investment 

company registered under the Investment Company 

Act of 1940 (‘‘Investment Company’’) organized as 

an open-end management investment company that 

invests in a portfolio of securities selected by the 

Investment Company’s investment adviser 

consistent with the Investment Company’s 

investment objectives and policies; (b) is issued in 

a specified minimum number of shares, or 

multiples thereof, in return for a deposit by the 

purchaser of the Proxy Portfolio or Custom Basket, 

as applicable, and/or cash with a value equal to the 

next determined net asset value (‘‘NAV’’); (c) when 

aggregated in the same specified minimum number 

of Active Proxy Portfolio Shares, or multiples 

thereof, may be redeemed at a holder’s request in 

return for the Proxy Portfolio or Custom Basket, as 

applicable, and/or cash to the holder by the issuer 

with a value equal to the next determined NAV; and 

(d) the portfolio holdings for which are disclosed 

within at least 60 days following the end of every 

fiscal quarter.’’ Rule 8.601–E(c)(2) provides that 

‘‘[t]he term ‘‘Actual Portfolio’’ means the identities 

and quantities of the securities and other assets 

held by the Investment Company that shall form the 

basis for the Investment Company’s calculation of 

NAV at the end of the business day.’’ Rule 8.601– 

E(c)(3) provides that ‘‘[t]he term ‘‘Proxy Portfolio’’ 

means a specified portfolio of securities, other 

financial instruments and/or cash designed to track 

closely the daily performance of the Actual 

Portfolio of a series of Active Proxy Portfolio Shares 

as provided in the exemptive relief pursuant to the 

Investment Company Act of 1940 applicable to such 

series.’’ Rule 8.601–E(c)(4) provides that the term 

‘‘Custom Basket’’ means a portfolio of securities 

that is different from the Proxy Portfolio and is 

otherwise consistent with the exemptive relief 

issued pursuant to the Investment Company Act of 

1940 applicable to a series of Active Proxy Portfolio 

Shares. 

5Pursuant to Commission approval, the Funds 

are currently listed on Cboe BZX Exchange, Inc. 

(‘‘BZX’’) and utilize the Precidian ActiveShares 

methodology (the ‘‘Precidian Model’’). See 

Securities Exchange Act Release No. 88175 

(February 12, 2020), 85 FR 9494 (February 19, 2020) 

(SR–CboeBZX–2019–057) (Notice of Filing of 

Amendment No. 2 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 2 thereto, To List and Trade 

Shares of the American Century Focused Dynamic 

Growth ETF and American Century Focused Large 

Cap Value ETF Under BZX Rule 14.11(k)). 

6The Commission has previously approved 

listing and trading on the Exchange of a number of 

issues of Managed Fund Shares under NYSE Arca 

Rule 8.600–E. See, e.g., Securities Exchange Act 

Release Nos. 57801 (May 8, 2008), 73 FR 27878 

(May 14, 2008) (SR–NYSEArca–2008–31) (order 

approving Exchange listing and trading of twelve 

actively-managed funds of the WisdomTree Trust); 

60460 (August 7, 2009), 74 FR 41468 (August 17, 

2009) (SR–NYSEArca–2009–55) (order approving 

listing of Dent Tactical ETF); 63076 (October 12, 

2010), 75 FR 63874 (October 18, 2010) (SR– 

NYSEArca–2010–79) (order approving Exchange 

listing and trading of Cambria Global Tactical ETF); 

63802 (January 31, 2011), 76 FR 6503 (February 4, 

2011) (SR–NYSEArca–2010–118) (order approving 

Exchange listing and trading of the SiM Dynamic 

Allocation Diversified Income ETF and SiM 

Dynamic Allocation Growth Income ETF). The 

Commission also has approved a proposed rule 

change relating to generic listing standards for 

Managed Fund Shares. See Securities Exchange Act 

Release No. 78397 (July 22, 2016), 81 FR 49320 

(July 27, 2016) (SR–NYSEArca–2015–110) 

(amending NYSE Arca Equities Rule 8.600 to adopt 

generic listing standards for Managed Fund Shares). 

7NYSE Arca Rule 8.600–E(c)(2) defines the term 

‘‘Disclosed Portfolio’’ as the identities and 

submissions should refer to file number 

SR–EMERALD–2023–19 and should be 

submitted on or before October 25, 

2023. Rebuttal comments should be 

submitted by November 8, 2023. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,57 that File 

No. SR–EMERALD–2023–19, be and 

hereby is, temporarily suspended. In 

addition, the Commission is instituting 

proceedings to determine whether the 

proposed rule change should be 

approved or disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.58

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22032 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 3498663; File No. SR– 

NYSEARCA–2023–67] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To List and Trade Shares 

of the American Century Focused 

Dynamic Growth ETF and the 

American Century Focused Large Cap 

Value ETF Under NYSE Arca Rule 

8.601–E (Active Proxy Portfolio 

Shares) 

September 29, 2023. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

September 28, 2023, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade shares of the American Century 

Focused Dynamic Growth ETF and the 

American Century Focused Large Cap 

Value ETF. The proposed rule change is 

available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange has adopted NYSE 

Arca Rule 8.601–E for the purpose of 

permitting the listing and trading, or 

trading pursuant to unlisted trading 

privileges (‘‘UTP’’), of Active Proxy 

Portfolio Shares, which are securities 

issued by an actively managed open-end 

investment management company.4

Commentary .01 to Rule 8.601–E 

requires the Exchange to file separate 

proposals under Section 19(b) of the Act 

before listing and trading any series of 

Active Proxy Portfolio Shares on the 

Exchange. Therefore, the Exchange is 

submitting this proposal in order to list 

and trade shares (‘‘Shares’’) of the 

American Century Focused Dynamic 

Growth ETF and the American Century 

Focused Large Cap Value ETF (each a 

‘‘Fund’’ and, collectively, the ‘‘Funds’’) 

under Rule 8.601–E.5

Key Features of Active Proxy Portfolio 

Shares 

While funds issuing Active Proxy 

Portfolio Shares will be activelymanaged and, to that extent, will be 

similar to Managed Fund Shares, Active 

Proxy Portfolio Shares differ from 

Managed Fund Shares in the following 

important respects. First, in contrast to 

Managed Fund Shares, which are 

actively-managed funds listed and 

traded under NYSE Arca Rule 8.600–E 6

and for which a ‘‘Disclosed Portfolio’’ is 

required to be disseminated at least 

once daily,7 the portfolio for an issue of 


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