[Federal Register Volume 89, Number 199 (Tuesday, October 15, 2024)]
[Notices]
[Pages 83065-83067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23658]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101281; File No. SR-SAPPHIRE-2024-30]


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

October 8, 2024.
    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 September 27, 2024, MIAX Sapphire, LLC (``MIAX Sapphire'' 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Sapphire Fee 
Schedule (the ``Fee Schedule'') to waive transaction rebates/fees 
applicable to transactions executed during the opening and transactions 
that uncross the Away Best Bid or Offer (``ABBO'').\3\
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    \3\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the 
best bid(s) or offer(s) disseminated by other Eligible Exchange 
(defined in Rule 1400(g)) and calculated by the Exchange based on 
market information received by the Exchanges from OPRA. See Exchange 
Rule 100.
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    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/miax-sapphire/rule-filings, at the Exchange'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 purpose of this proposed rule change is to amend the Exchange's 
Fee Schedule to waive transaction rebates/fees applicable to executions 
that occur as part of the Exchange's Opening Process \4\ as described 
in Rule 503 (``Openings on the Exchange'') or that uncross the ABBO, as 
described in Rule 515 (``Execution of Orders'').
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    \4\ ``Opening Process'' shall mean the process for opening or 
resuming trading pursuant to Exchange Rule 503 and shall include the 
process for determining the price at which Eligible Interest shall 
be executed at the open of trading for the day, or the open of 
trading for a halted option, and the process for executing that 
Eligible Interest. See Exchange Rule 503(a)(1).
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    Under Rule 503, Openings on the Exchange, the Exchange will accept 
orders for queuing prior to the opening of trading in that series of 
options.\5\ While orders are queued prior to the Opening Process it is 
not possible to identify the order as either Maker or Taker, therefore 
the Exchange now proposes to add additional detail to its Fee Schedule 
by adopting new note (2), to clarify that, the per contract transaction 
rebates and fees shall be waived for transactions executed during the 
opening and for transactions that uncross the ABBO.\6\ Additionally, 
the Exchange notes other competing option exchanges do not assess 
transaction rebates/fees at the open.\7\
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    \5\ See Exchange Rule 503(a)(2).
    \6\ The Exchange notes that its affiliate exchanges, MIAX Pearl 
Options and MIAX Emerald, have similar language in their fee 
schedules.
    \7\ See Cboe U.S. Options Fee Schedules, C2 Options, Transaction 
Fees, Trades at the Open, available online at https://www.cboe.com/us/options/membership/fee_schedule/ctwo/; and EDGX Options, 
Transaction Fees, Fee Codes and Associated Fees, Fee Code ``OO,'' 
available online at https://www.cboe.com/us/options/membership/fee_schedule/edgx/.
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Implementation
    The proposed change will become effective on October 1, 2024.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \8\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that 
it is an equitable allocation of reasonable dues, fees, and other 
charges among its members and issuers and other persons using its 
facilities. The Exchange also believes the proposal furthers the 
objectives of Section 6(b)(5) of the Act \10\ in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest and is not designed to permit unfair discrimination between 
customers, issuers, brokers and dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The proposal provides that executions that occur as part of the 
Exchange's Opening Process will not incur any fees or receive any 
rebates. The Exchange believes that its proposal to waive transaction 
rebates/fees that occur as part of the Exchange's Opening Process is 
reasonable, fair and equitable because it will incentivize Members \11\ 
to send order flow to the Exchange, potentially providing greater 
liquidity on the Exchange. In addition, the Exchange believes that the 
foregoing is fair and equitable because it provides certainty for 
Members with respect to execution costs occurring as part of the 
Exchange's Opening Process. Lastly, the Exchange also believes that the 
proposed pricing for executions occurring as part of the Opening on the 
Exchange is nondiscriminatory because it will apply equally to all 
Members.
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    \11\ The term ``Member'' means an individual or organization 
that is registered with the Exchange pursuant to Chapter II of the 
Exchange Rules for purposes of trading on the Exchange as an 
``Electronic Exchange Member'' or ``Market Maker.'' Members are 
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
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    The proposal further provides that executions that uncross the ABBO 
will not be assessed any fees or receive any rebates. The Exchange 
believes that its proposal to waive transaction rebates/fees that 
uncross the ABBO is reasonable, fair and equitable because it will 
incentivize Members to send greater order flow to the Exchange in

[[Page 83066]]

this scenario, potentially providing greater liquidity on the Exchange. 
In addition, the Exchange believes that the foregoing is fair and 
equitable because it provides certainty for Members with respect to 
execution costs across all trades which uncross the ABBO. Lastly, the 
Exchange also believes that the proposed pricing for executions 
occurring in this scenario is nondiscriminatory because it will apply 
equally to all Members.

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 proposal does not impose an undue burden on intra-market 
competition as transaction rebates and fees will be waived for 
transactions executed during the opening and for transactions that 
uncross the ABBO uniformly for all Members. The Exchange believes its 
proposal will encourage Members to submit orders to the Exchange which 
will increase liquidity and benefit all market participants by 
providing more trading opportunities and better execution prices. 
Accordingly, the Exchange believes that the proposed changes will not 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because it will continue to 
encourage order flow, which provides greater volume and liquidity, 
benefiting all market participants by providing more trading 
opportunities and better execution prices.
Inter-Market Competition
    The proposal does not impose an undue burden on inter-market 
competition. The Exchange believes its proposal remains competitive 
with other options markets and will offer market participants with 
another choice on where to route their orders for execution. 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. There are currently 18 
registered options exchanges competing for order flow. For the month of 
August 2024, based on publicly-available information, and excluding 
index-based options, no single exchange exceeded approximately 14-15% 
of the market share of executed volume of multiply-listed equity and 
exchange-traded fund (``ETF'') options.\12\ Therefore, no exchange 
possesses significant pricing power in the execution of multiply-listed 
equity and ETF options order flow. In such an environment, the Exchange 
must propose transaction fees and rebates to be competitive with other 
exchanges and to attract order flow. The Exchange believes that the 
Exchange's proposal reflects this competitive environment, to the 
extent this is achieved, all of the Exchange's market participants 
should benefit from the quality of the Exchange's market.
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    \12\ See ``Market Share, MTD Average'' on the Exchange's 
website, available at https://www.miaxglobal.com/.
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    The Exchange notes that this rule change is being proposed at a 
time when other options exchanges are offering similar pricing for 
similar market scenarios.\13\ As a result of the competitive 
environment, Members will have various pricing and execution models to 
choose from in making determinations on where to enter orders prior to 
the opening of trading or which may potentially uncross the ABBO. The 
Exchange notes that it operates in a highly competitive market in which 
Members can readily direct order flow to competing venues if they deem 
fee levels to be excessive.
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    \13\ See supra note 7.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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,\14\ and Rule 19b-4(f)(2) \15\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#abd9dec7ce86c8c4c6c6cec5dfd8ebd8cec885ccc4dd"><span class="__cf_email__" data-cfemail="e89a9d848dc58b8785858d869c9ba89b8d8bc68f879e">[email protected]</span></a>. Please include 
file number
    SR-SAPPHIRE-2024-30 on the subject line.

Paper Comments

    <bullet> 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-SAPPHIRE-2024-30. 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-SAPPHIRE-2024-30 and should 
be submitted on or before November 5, 2024.


[[Page 83067]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-23658 Filed 10-11-24; 8:45 am]
BILLING CODE 8011-01-P


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