Document Headings

                    Document headings vary by document type but may contain                    the following:                  
                -                       the agency or agencies that issued and signed a document                    
                -                       the number of the CFR title and the number of each part                      the document amends, proposes to amend, or is directly                      related to                    
                -                       the agency docket number / agency internal file number                    
                -                       the RIN which identifies each regulatory action listed in                      the Unified Agenda of Federal Regulatory and Deregulatory                      Actions                    

                    See the                                          Document Drafting Handbook                                        for more details.                  

###### Securities and Exchange Commission

          - [Release No. 34-93967; File No. SR-EMERALD-2021-45]

                    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 30, 2021, 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”).

                    The text of the proposed rule change is available on the Exchange's website at                     *http://www.miaxoptions.com/​rule-filings/​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 Section 1(a)(i) of the Fee Schedule to: (i) Decrease Simple Maker (as defined below) rebates in certain Tiers for options transactions in Penny classes (as defined below) for the Market Maker Origin [3]                                         ; and (ii) make several non-substantive formatting changes to the Exchange Rebates/Fees tables in Section 1(a)(i) of the Fee Schedule.                

#### Background

                    The Exchange currently assesses transaction rebates and fees to all market participants, which are based upon a threshold tier structure (“Tier”). Tiers are determined on a monthly basis and are based on three alternative calculation methods, as defined in Section 1(a)(ii) of the Fee Schedule. The calculation method that results in the highest Tier achieved by the Member [4]                                          shall apply to all Origin types by the Member, except the Priority Customer [5]                                          Origin type (calculation of Tiers discussed below). The monthly volume thresholds for each method, associated with each Tier, are calculated as the total monthly volume executed by the Member in all options classes on MIAX Emerald in the relevant Origins and/or applicable liquidity, not including Excluded Contracts,[6]                                          (as the numerator) expressed as a percentage of (divided by) Customer Total Consolidated Volume (“CTCV”) (as the denominator). CTCV is calculated as the total national volume cleared at The Options Clearing Corporation (“OCC”) in the Customer range in those classes listed on MIAX Emerald for the month for which fees apply, excluding volume cleared at the OCC in the Customer range executed during the period of time in which the Exchange experiences an “Exchange System Disruption” [7]                                          (solely in the option classes of the affected Matching Engine).[8]                                          In addition, the per contract transaction rebates and fees shall be applied retroactively to all eligible volume once the Tier has been reached by the Member. Members that place resting liquidity,                     *i.e.,*                     orders on the MIAX Emerald System, will be assessed the specified “maker” rebate or fee (each a “Maker”) and Members that execute against resting liquidity will be assessed the specified “taker” fee or rebate (each a “Taker”).[9]                                          Members are also assessed lower transaction fees and smaller rebates for order executions in standard option classes in the Penny Interval Program [10]                                          (“Penny classes”) than for order executions in standard option classes which are not in the Penny Program (“non-Penny classes”), for which Members will be assessed a higher transaction fees and larger rebates.                

                    For the Priority Customer Origin type, the Tier applied for a Member and its Affiliates' [11]                                          is solely determined by                           ( print page 2969)                        calculation Method 3, as defined in Section 1(a)(ii) of the Fee Schedule, titled “Total Priority Customer, Maker sides volume, based on % of CTCV (`Method 3').”                

#### Decrease to Simple Maker Rebates in Certain Tiers for Options in Penny Classes for the Market Maker Origin

The Exchange proposes to amend Section 1(a)(i) of the Fee Schedule to decrease certain Simple Maker rebates in Tiers 1 and 2 for options in Penny Classes for the Market Maker Origin. Currently, the Exchange provides a Simple Maker rebate of ($0.35) for Members that achieve Tiers 1 and 2 for options transactions in Penny Classes for the Market Maker Origin. The Exchange now proposes to decrease these rebates. In particular, the Exchange proposes to provide Simple Maker rebates of ($0.30) and ($0.33) for Members that achieve Tiers 1 and 2, respectively, for options transactions in Penny Classes for the Market Maker Origin.

                    The purpose of adjusting the specified Simple Maker rebates is for business and competitive reasons. In order to attract order flow, the Exchange initially set its Maker rebates so that they were meaningfully higher than other options exchanges that operate comparable maker/taker pricing models.[12]                                          The Exchange now believes that it is appropriate to adjust these specified Maker rebates so that they are more in line with other exchanges, but will still remain highly competitive such that they should enable the Exchange to continue to attract order flow and maintain market share.[13] 

#### Formatting Changes to Tables of Exchange Rebates/Fees

                    Next, the Exchange proposes to amend tables in Section 1(a)(i) of the Fee Schedule for the Exchange's rebates and fees for Penny Classes and non-Penny Classes to make non-substantive formatting changes to several Tiers for the Priority Customer Origin. The Exchange proposes to amend the Complex [14]                                          Maker rebates in Tiers 1-4 for the Priority Customer Origin when contra to Priority Customer Origin for Penny and non-Penny Classes to align the rebates with footnote “*”. When the Exchange established the initial Fee Schedule, it adopted footnote “*”, which provides as follows: “Priority Customer Complex Orders contra to Priority Customer Complex Orders are neither charged nor rebated. Priority Customer Complex Orders that leg into the Simple book are neither charged nor rebated.” [15]                                          Accordingly, the Exchange proposes to amend the Complex Maker rebates in Tiers 1-4 for the Priority Customer Origin when contra to Priority Customer Origin for Penny and non-Penny Classes so that all these rebates will be listed in the tables as “($0.00)” to align with footnote “*”. The purpose of these proposed changes is to reconcile Complex Maker rebates for the Priority Customer Origin in Tiers 1-4 when contra to Priority Customer Origin with footnote “*” to eliminate potential confusion between the tables and the footnotes below the tables. The Exchange notes that these proposed changes will have no impact on the application of the tiers to the Priority Customer Origin or the footnote “*”.                

#### Implementation

The proposed changes are scheduled to become operative January 1, 2022.

#### 2. Statutory Basis

                    The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act [16]                                          in general, and furthers the objectives of Section 6(b)(4) of the Act,[17]                                          in that it is an equitable allocation of reasonable dues, fees and other charges among Exchange members and issuers and other persons using its facilities, and 6(b)(5) of the Act,[18]                                          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 facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest.                

                    The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” [19] 

                    There are currently 16 registered options exchanges competing for order flow. Based on publicly-available information, and excluding index-based options, no single exchange has more than approximately 15% market share.[20]                                          Therefore, no exchange possesses significant pricing power. More specifically, as of December 13, 2021, the Exchange had a market share of approximately 5.03% of executed volume of multiply-listed equity and exchange traded fund (“ETF”) options for the month of December 2021.[21] 

                    The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can discontinue or reduce use of certain categories of products and services, terminate an existing membership or determine to not become a new member, and/or shift order flow, in response to transaction fee changes. For example, on February 28, 2019, the Exchange's affiliate, MIAX PEARL, LLC (“MIAX Pearl”) filed with the Commission a proposal to increase Taker fees in certain Tiers for options transactions in certain Penny classes for Priority Customers and decrease Maker rebates in certain Tiers for options transactions in Penny classes for Priority Customers (which fee was to be effective March 1, 2019).[22]                                          MIAX Pearl experienced a decrease in total market share for the month of March 2019, after the proposal                           ( print page 2970)                        went into effect. Accordingly, the Exchange believes that the MIAX Pearl March 1, 2019 fee change, to increase certain transaction fees and decrease certain transaction rebates, may have contributed to the decrease in MIAX Pearl's market share and, as such, the Exchange believes competitive forces constrain the Exchange's, and other options exchanges, ability to set transaction fees and market participants can shift order flow based on fee changes instituted by the exchanges.                

                    The Exchange believes its proposal to decrease Simple Maker rebates in certain Tiers for options transactions in Penny Classes for Market Makers is reasonable, equitable and not unfairly discriminatory because all similarly situated market participants in the same Origin type are subject to the same tiered Maker rebates and access to the Exchange is offered on terms that are not unfairly discriminatory. The Exchange believes it is equitable and not unfairly discriminatory to reduce the Simple Maker rebates for Market Maker quotes or orders in Penny Classes for business and competitive business reasons. The Exchange initially set its Simple Maker rebates for such orders higher than certain other options exchanges that operate comparable maker/taker pricing models. The Exchange now believes that it is appropriate to further decrease those specified Simple Maker rebates so that they are more in line with other exchanges, and will still remain highly competitive such that they should enable the Exchange to continue to attract order flow and maintain market share.[23]                                          The Exchange believes that the amount of such rebates, as proposed, will continue to encourage those market participants to send quotes or orders to the Exchange.                

The Exchange believes the proposed formatting changes are consistent with Section 6(b)(4) of the Act in that they are reasonable, equitable, and not unfairly discriminatory because they are non-substantive, clarifying changes regarding the Exchange's Complex Maker rebates in Tiers 1-4 for the Priority Customer Origin when contra to Priority Customer Origin for Penny and non-Penny Classes. The Exchange believes that the proposed formatting changes will reduce the risk of confusion to market participants. The proposed changes promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general protect investors and the public interest by reconciling the Complex Maker rebates listed in Tiers 1-4 for the Priority Customer Origin when contra to Priority Customer Origin for Penny and non-Penny Classes and the description of the rebates for that type of transaction in footnote “ * ”, below the tables. The Exchange believes that these proposed changes will provide greater clarity to Members and the public regarding the Exchange's Fee Schedule and that it is in the public interest for the Fee Schedule to be accurate and concise so as to eliminate the potential for confusion.

### B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule changes 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 changes in the specified Simple Maker rebates for the applicable market participants should continue to encourage the provision of liquidity that enhances the quality of the Exchange's market and increases the number of trading opportunities on the Exchange for all participants who will be able to compete for such opportunities. The proposed rule changes should enable the Exchange to continue to attract and compete for order flow with other exchanges. However, this competition does not create an undue burden on competition but rather offers all market participants the opportunity to receive the benefit of competitive pricing.

#### Inter-Market Competition

                    The Exchange 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 16 registered options exchanges competing for order flow. Based on publicly-available information, and excluding index-based options, no single exchange has exceeded approximately 15% of the market share of executed volume of multiply-listed equity and ETF options trades as of December 13, 2021, for the month of December 2021.[24]                                          Therefore, no exchange possesses significant pricing power in the execution of multiply-listed equity and ETF options order flow. More specifically, as of December 13, 2021, the Exchange had a market share of approximately 5.03% of executed volume of multiply-listed equity and ETF options for the month of December 2021.[25]                                          In such an environment, the Exchange must continually adjust its transaction and non-transaction fees to remain competitive with other exchanges and to attract order flow. The Exchange believes that the proposed rule changes reflect this competitive environment because they modify the Exchange's rebates in a manner that will allow the Exchange to remain competition for Market Maker volume. To the extent this is achieved, all the Exchange's market participants should benefit from the improved market quality.                

#### Formatting Changes

The Exchange believes the proposed formatting changes will not impose any burden on intra-market competition as the proposed rule change will have no impact on competition as it is not designed to address any competitive issue but rather is designed to remedy minor non-substantive issues and provide added clarity to the Fee Schedule. In addition, the Exchange does not believe the proposal will impose any burden on inter-market competition as the proposal does not address any competitive issues and is intended to protect investors by providing further transparency regarding the Exchange's Fee Schedule.

### 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,[26]                                          and Rule 19b-4(f)(2) [27]                                          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.                
      ( print page 2971)    

## 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-2021-45 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-2021-45. 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 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-2021-45, and should be submitted on or before February                                         9, 2022.                

                        For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28

J. Matthew DeLesDernier,

Assistant Secretary.

# Footnotes

1.                             15 U.S.C. 78s(b)(1).                    
        Back to Citation      

2.                             17 CFR 240.19b-4.                    
        Back to Citation      

3.                             The term “Market Maker” refers to “Lead Market Maker” (“LMM”), “Primary Lead Market Maker” (“PLMM”) and “Registered Market Maker” (“RMM”), collectively.                         *See*                         the Definitions Section of the Fee Schedule and Exchange Rule 100.                    
        Back to Citation      

4.                             “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*                         the Definitions Section of the Fee Schedule and Exchange Rule 100.                    
        Back to Citation      

5.                             “Priority Customer” means a person or entity that (i) is not a broker or dealer in securities, and (ii) does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s).                         *See*                         Exchange Rule 100, including Interpretation and Policy .01.                    
        Back to Citation      

6.                             “Excluded Contracts” means any contracts routed to an away market for execution.                         *See*                         the Definitions Section of the Fee Schedule.                    
        Back to Citation      

7.                             The term “Exchange System Disruption” means an outage of a Matching Engine or collective Matching Engines for a period of two consecutive hour or more, during trading hours.                         *See*                         the Definitions Section of the Fee Schedule.                    
        Back to Citation      

8.                             A “Matching Engine” is a part of the MIAX Emerald electronic system that processes options orders and trades on a symbol-by-symbol basis.                         *See*                         the Definitions Section of the Fee Schedule.                    
        Back to Citation      

9.                             For a Priority Customer complex order taking liquidity in both a Penny class and non-Penny class against Origins other than Priority Customer, the Priority Customer order will receive a rebate based on the Tier achieved.                    
        Back to Citation      

10.                                                     *See*                         Securities Exchange Act Release No. 88993 (June 2, 2020), 85 FR 35145 (June 8, 2020) (SR-EMERALD-2020-05) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 510, Minimum Price Variations and Minimum Trading Increments, To Conform the Rule to Section 3.1 of the Plan for the Purpose of Developing and Implementing Procedures Designed To Facilitate the Listing and Trading of Standardized Options) (the “Penny Program”).                    
        Back to Citation      

11.                             “Affiliate” means (i) an affiliate of a Member of at least 75% common ownership between the firms as reflected on each firm's Form BD, Schedule A, or (ii) the Appointed Market Maker of an Appointed EEM (or, conversely, the Appointed EEM of an Appointed Market Maker). An “Appointed Market Maker” is a MIAX Emerald Market Maker (who does not otherwise have a corporate affiliation based upon common ownership with an EEM) that has been appointed by an EEM and an “Appointed EEM” is an EEM (who does not otherwise have a corporate affiliation based upon common ownership with a MIAX Emerald Market Maker) that has been appointed by a MIAX Emerald Market Maker, pursuant to the following process. A MIAX Emerald Market Maker appoints an EEM and an EEM appoints a MIAX Emerald Market Maker, for the purposes of the Fee Schedule, by each completing and sending an                                                 executed Volume Aggregation Request Form by email to                         *membership@miaxoptions.com*                         no later than 2 business days prior to the first business day of the month in which the designation is to become effective. Transmittal of a validly completed and executed form to the Exchange along with the Exchange's acknowledgement of the effective designation to each of the Market Maker and EEM will be viewed as acceptance of the appointment. The Exchange will only recognize one designation per Member. A Member may make a designation not more than once every 12 months (from the date of its most recent designation), which designation shall remain in effect unless or until the Exchange receives written notice submitted 2 business days prior to the first business day of the month from either Member indicating that the appointment has been terminated. Designations will become operative on the first business day of the effective month and may not be terminated prior to the end of the month. Execution data and reports will be provided to both parties.                         *See*                         the Definitions Section of the MIAX Emerald Fee Schedule.                    
        Back to Citation      

12.                                                     *See*                         Securities Exchange Act Release No. 85393 (March 21, 2019), 84 FR 11599 (March 27, 2019) (SR-EMERALD-2019-15).                    
        Back to Citation      

13.                                                     *See*                         NYSE Arca Options Fees and Charges, Market Maker Penny and SPY Posting Credit Tiers, page 10 (“Base” tier rebate of ($0.28) and “Select Tier” rebate of ($0.32)); Cboe BZX Options Exchange Fee Schedule, Transaction Fees, Market Maker (base tier rebate of ($0.29) and tier rebate of ($0.33)).                    
        Back to Citation      

14.                                                     *See*                         Exchange Rule 518(a)(5) for the definition of a Complex Order.                    
        Back to Citation      

15.                                                     *See supra*                         note 12.                    
        Back to Citation      

16.                             15 U.S.C. 78f(b).                    
        Back to Citation      

17.                             15 U.S.C. 78f(b)(4).                    
        Back to Citation      

18.                             15 U.S.C. 78f(b)(1) and (b)(5).                    
        Back to Citation      

19.                                                     *See*                         Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005).                    
        Back to Citation      

20.                                                     *See*                         “The Market at a Glance,” (last visited December 13, 2021), available at                         *https://www.miaxoptions.com/​.*
        Back to Citation      

21.                                                     *See id.*
        Back to Citation      

22.                                                     *See*                         Securities Exchange Act Release No. 85304 (March 13, 2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).                    
        Back to Citation      

23.                                                     *See supra*                         note 13.                    
        Back to Citation      

24.                                                     *See supra*                         note 20.                    
        Back to Citation      

25.                                                     *See id.*
        Back to Citation      

26.                             15 U.S.C. 78s(b)(3)(A)(ii).                    
        Back to Citation      

27.                             17 CFR 240.19b-4(f)(2).                    
        Back to Citation      

28.                             17 CFR 200.30-3(a)(12).                    
        Back to Citation      

[FR Doc. 2022-00880 Filed 1-18-22; 8:45 am]

BILLING CODE 8011-01-P