89738 Federal Register / Vol. 88, No. 248 / Thursday, December 28, 2023 / Notices 

31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A Standard quote is a quote submitted by a 

Market Maker that cancels and replaces the Market 

Maker’s previous Standard quote, if any. See 

Exchange Rule 517(a)(1). 

4The term ‘‘Market Makers’’ refers to ‘‘Lead 

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

and ‘‘Registered Market Makers’’ collectively. See 

Exchange Rule 100. 

5The term ‘‘bid’’ means a limit order or quote to 

buy one or more option contracts. See Exchange 

Rule 100. 6The term ‘‘offer’’ means a limit order or quote 

to sell one or more option contracts. See Exchange 

Rule 100. 7See Exchange Rule 603(a). 8See Exchange Rule 604(a). 9See Exchange Rule 604(b). 10See Exchange Rule 604(c). 11See supra note 4. 12See Exchange Rule 604(e)(1)(i). 13See Exchange Rule 604(e)(1)(ii). 14See Exchange Rule 604(e)(2)(i). 15See Exchange Rule 604(e)(2)(ii). 

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–CboeBZX–2023–104 and should be 

submitted on or before January 18, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–28603 Filed 12–27–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99232; File No. SR– 

EMERALD–2023–31] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 517, Quote Types Defined 

December 22, 2023. 

Pursuant to the provisions of Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on December 13, 2023, MIAX Emerald, 

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

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend Exchange Rule 517, Quote Types 

Defined. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/emerald-options/rule-filings, 

at MIAX Emerald’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 

Rule 517, Quote Types Defined. 

Specifically, the Exchange proposes to 

adopt new Interpretations and Policies 

.02 to Rule 517 to adopt new risk 

protection behavior for replacement 

Standard quotes 3 that are rejected. 

Background 

Market Makers 4 on the Exchange 

have heightened obligations separate 

from other market participants. 

Transactions of a Market Maker should 

constitute a course of dealings 

reasonably calculated to contribute to 

the maintenance of a fair and orderly 

market, and Market Makers should not 

make bids 5 or offers 6 or enter into 

transactions that are inconsistent with 

such a course of dealings.7 A quotation 

may only be entered by a Market Maker, 

and only in the options classes to which 

the Market Maker is appointed under 

Rule 602.8 A Market Maker’s bid and 

offer for a series of option contracts 

shall state a price accompanied by the 

number of contracts at that price the 

Market Maker is willing to buy or sell 

upon receipt of an order or upon 

interaction with a quotation entered by 

another Market Maker on the 

Exchange.9 Additionally, a Market 

Maker that enters a bid (offer) on the 

Exchange must enter an offer (bid) 

within the spread allowable under Rule 

603(b)(4).10

The Exchange has three classes of 

Market Makers; Primary Lead Market 

Makers, Lead Market Makers, and 

Registered Market Makers.11 Further, 

each class of Market Maker has its own 

separate and distinct quoting 

obligations. A Primary Lead Market 

Maker must provide continuous twosided Standard quotes, which for the 

purpose of paragraph (e)(1)(i) of Rule 

604 shall mean 90% of the time, for the 

options classes to which it is 

appointed.12 A Primary Lead Market 

Maker must provide continuous twosided Standard quotes in at least the 

lesser of 99% of the non-adjusted option 

series, or 100% of the non-adjusted 

option series minus one put-call pair, in 

each class in which the Primary Lead 

Market Maker is assigned.13 A Lead 

Market Maker must provide continuous 

two-sided Standard quotes, which for 

the purpose of paragraph (e)(2)(i) of 

Rule 604 shall mean 90% of the time, 

for the options classes to which it is 

appointed.14 A Lead Market Maker must 

provide continuous two-sided Standard 

quotes in at least 90% of the nonadjusted option series in each of its 

appointed classes. Such quotations must 

meet the bid/ask differential 

requirements of Rule 603(b)(4).15 A 

Registered Market Maker must provide 

continuous two-sided Standard quotes 

throughout the trading day in 60% of 

the non-adjusted series that have a time 


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Federal Register / Vol. 88, No. 248 / Thursday, December 28, 2023 / Notices 89739 

16See Exchange Rule 604(e)(3)(i). 

17The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

18See Exchange Rule 612. 

19See Exchange Rule 612(b)(1). 

20See Exchange Rule 532(b)(8). 

21See MIAX Emerald Options Exchange, Express 

Interface for Quoting and Trading Options, MEI 

Interface Specification, version 2.2 (7/28/2023), 

available at: https://www.miaxglobal.com/markets/ 

us-options/emerald-options/interfacespecifications. 

22The price of Market Maker quotes shall be in 

the minimum trading increments applicable to the 

security under Rule 510. See Exchange Rule 

604(b)(1). 

23The terms ‘‘class of options’’ or ‘‘option class’’ 

mean all option contracts covering the same 

underlying security. See Exchange Rule 100. 

24Exchange Rule 604(b)(2) provides that, the 

initial size of a Market Maker incoming Standard 

Quote and all other types of eQuotes must be for 

the minimum number of contracts, which minimum 

number shall be at least one (1) contract. The 

minimum number of contracts, which can vary 

according to type of quote or eQuote, shall be at 

least one (1) contract, will be determined by the 

Exchange on a class-by-class basis and announced 

to the Members through a Regulatory Circular. 

25 15 U.S.C. 78f(b). 

26 15 U.S.C. 78f(b)(5). 

27See id. 

to expiration of less than nine months 

in each of its appointed classes. For the 

purpose of paragraph (e)(3)(i) of Rule 

604, continuous two-sided quoting shall 

mean 90% of the time, for the options 

classes to which the Registered Market 

Maker is appointed.16

The Exchange offers several features 

to Market Makers designed to mitigate 

potential risks unique to Market Makers 

given their obligations on the Exchange. 

For example, the Exchange offers an 

Aggregate Risk Manager (‘‘ARM’’) 

protection which provides that the 

MIAX System 17 will maintain a 

counting program (‘‘counting program’’) 

for each Market Maker who is required 

to submit continuous two-sided 

quotations pursuant to Rule 604 in each 

of their appointed option classes.18 The 

System will engage the Aggregate Risk 

Manager in a particular option class 

when the counting program has 

determined that a Market Maker has 

traded during the specified time period 

a number of contracts equal to or above 

their Allowable Engagement Percentage. 

The Aggregate Risk Manager will then 

automatically remove the Market 

Maker’s Standard quotations from the 

Exchange’s disseminated quotation in 

all series of that particular option class 

until the Market Maker sends a 

notification to the System of the intent 

to reengage quoting and submits a new 

revised quotation.19

Additionally, the Exchange offers 

Market Makers Single Side Protection 

(‘‘SSP’’) functionality which provides 

that, if the full remaining size of a 

Market Maker’s complex Standard quote 

or cIOC eQuote in a strategy is 

exhausted by a trade, the System will 

trigger the SSP for the traded side of the 

strategy. When triggered, the System 

will cancel all complex Standard quotes 

and block all new inbound complex 

Standard quotes and cIOC eQuotes for 

that particular side of that strategy for 

that MPID.20

Proposal 

The Exchange now proposes to cancel 

a Market Maker’s Standard quote in 

certain scenarios when a replacement 

Standard quote submitted by the Market 

Maker is rejected. Specifically, the 

Exchange proposes to adopt new 

Interpretations and Policies .02 to 

Exchange Rule 517 which will provide 

that a replacement Standard quote that 

is rejected for a technical reason (as 

described below) will still cancel the 

target Standard quote. 

A Standard quote is submitted by the 

Market Maker to the Exchange using the 

MIAX Express Interface (‘‘MEI’’). MEI is 

a messaging interface that MIAX 

members that are approved as Market 

Makers use to submit quotes for trading 

on the MIAX Options market. Market 

Makers are only allowed to submit 

quotes in the products of underlying 

instruments to which they are 

assigned.21 Each message submitted to 

the Exchange via the MEI must pass a 

number of validity checks that are 

performed by the System. These 

include, but are not limited to, price and 

size checks. Specifically, Standard 

quote prices must not (i) be less than 

zero; (ii) exceed the maximum price; 

and (iii) must comply with the 

minimum trade increment 22 for that 

class.23 Additionally, Standard quote 

sizes must not be less than zero and 

must not be less than the minimum 

quote size as defined in Rule 

604(b)(2).24 Collectively, these 

requirements constitute the technical 

reasons for which a replacement 

Standard quote may be rejected, but 

which will still result in the 

cancellation of the target Standard quote 

under the Exchange’s proposal. 

The Exchange believes that removing 

the Standard quote that the Market 

Maker was attempting to alter promotes 

the quality of the Exchange’s market as 

removing a Standard quote that was 

targeted for replacement but was not 

replaced due to a technical reason 

maintains the integrity of quotes 

available in the market by ensuring that 

all available quotes accurately represent 

Market Maker interest. 

When a Market Maker’s replacement 

Standard quote is rejected because of a 

technical reason the existing Standard 

quote will be cancelled by the 

Exchange. In addition to maintaining 

the integrity of the Exchange’s market, 

the Exchange believes this functionality 

also provides an additional level of risk 

protection to Market Makers that are 

attempting to replace an existing 

Standard quote but are unable to as a 

result of a technical reason with the 

replacement Standard quote. 

2. Statutory Basis

The Exchange believes that its

proposed rule change is consistent with 

the Act and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.25 Specifically, 

the Exchange believes that its proposed 

rule change is consistent with Section 

6(b)(5) 26 requirements in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in, securities, 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. Additionally, the 

Exchange believes the proposed rule 

change is consistent with the Section 

(6)(b)(5) 27 requirement that the rules of 

an exchange not be designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers as 

the proposed rule will be uniformly 

applied to all Standard quote messages 

submitted by Market Makers on the 

Exchange. 

The Exchange believes its proposal 

promotes just and equitable principles 

of trade and removes impediments to 

and perfects the mechanisms of a free 

and open market and a national market 

system as removing a Market Maker’s 

Standard quote that the Market Maker 

has targeted for replacement, but failed 

to replace due to a technical reason with 

the replacement Standard quote 

message, promotes the quality of the 

Exchange’s market by ensuring that all 

available quotes accurately represent 

Market Maker interest. When a Market 

Maker enters a replacement Standard 

quote a Market Maker has an 

expectation that the existing Standard 

quote will be cancelled, currently the 

existing Standard quote that the Market 

Maker intended to cancel may be 

executed if the replacement Standard 

quote is rejected which is contrary to 

the Market Maker’s intent. 


khammond on DSKJM1Z7X2PROD with NOTICES
89740 Federal Register / Vol. 88, No. 248 / Thursday, December 28, 2023 / Notices 

28 15 U.S.C. 78s(b)(3)(A). 

29 17 CFR 240.19b 4(f)(6). In addition, Rule 

19b 4(f)(6) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

30 17 CFR 240.19b–4(f)(6). 

31 17 CFR 240.19b–4(f)(6)(iii). 

32See Securities Exchange Act Release No. 99041 

(November 29, 2023), 88 FR 84376 (December 5, 

2023) (SR–MIAX–2023–45); see also Interpretations 

and Policies .02 of MIAX Options Exchange Rule 

517. 

33For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

34 17 CFR 200.30–3(a)(12), (59). 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

The Exchange does not believe that its 

proposed rule change will impose any 

burden on intra-market competition as 

the Rules of the Exchange apply equally 

to all Market Makers of the Exchange 

and all Market Makers that submit a 

replacement Standard quote that is 

rejected as a result of a technical reason 

will have the existing target Standard 

quote removed by the Exchange. 

The Exchange does not believe that its 

proposed rule change will impose any 

burden on inter-market competition, as 

the Exchange’s proposal is not a 

competitive filing. Rather the Exchange 

believes that its proposal may promote 

inter-market competition, as the 

Exchange’s proposal will improve 

market quality on the Exchange which 

may improve competition for orders 

across all exchanges. 

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 

Because the foregoing proposed rule 

change does not: (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 28 and 

subparagraph (f)(6) of Rule 19b 4 

thereunder.29

A proposed rule change filed under 

Rule 19b–4(f)(6) 30 normally does not 

become operative prior to 30 days after 

the date of filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),31 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. The 

Exchange has asked the Commission to 

waive the 30-day operative delay so that 

the proposed rule change may become 

operative immediately upon filing. The 

Exchange requested the waiver because 

it would ensure the integrity of quotes 

available in the market. The Exchange 

stated that the Exchange provides risk 

protection functionality specifically for 

Market Makers due to the heightened 

obligations that Market Makers have on 

the Exchange and that the proposed rule 

change would ensure that the quotes 

available in the marketplace accurately 

represent Market Maker interest. In 

addition, the Commission notes that the 

proposed rule change is substantively 

identical to a recent proposed rule 

change filed by another national 

securities exchange that is now 

operative.32 For these reasons, the 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposal operative upon filing.33

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 

change 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

EMERALD–2023–31 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–2023–31. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–EMERALD–2023–31 and should be 

submitted on or before January 18, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–28705 Filed 12–27–23; 8:45 am] 

BILLING CODE 8011–01–P 


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