Federal Register / Vol. 87, No. 48 / Friday, March 11, 2022 / Notices 14051 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 91406 

(March 24, 2021), 86 FR 16795 (March 31, 2021) 

(SR–EMERALD–2021–10) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend the MIAX Emerald Fee Schedule To 

Adopt an Excessive Quoting Fee). 

4The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

5The 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. 

6The term ‘‘quote’’ or ‘‘quotation’’ means a bid or 

offer entered by a Market Maker that is firm and 

may update the Market Maker’s previous quote, if 

any. The Rules of the Exchange provide for the use 

of different types of quotes, including Standard 

quotes and eQuotes, as more fully described in Rule 

517. A Market Maker may, at times, choose to have 

multiple types of quotes active in an individual 

option. See the Definitions Section of the Fee 

Schedule. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94368; File No. SR– 

EMERALD–2022–09] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX 

Emerald Fee Schedule To Amend the 

Excessive Quoting Fee 

March 7, 2022. 

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 February 

24, 2022, MIAX Emerald, LLC (‘‘MIAX 

Emerald’’ or ‘‘Exchange’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I, II, and III below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Emerald Fee Schedule 

(the ‘‘Fee Schedule’’) to amend Section 

1)c), Excessive Quoting Fee, to increase 

in the inbound quote limit. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/emerald, at MIAX’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Section 1)c), Excessive Quoting Fee, to 

increase the inbound quote limit for the 

Excessive Quoting Fee. The Exchange 

does not propose to amend the fee 

amount or how the quotes are counted. 

The proposed rule change is 

immediately effective as of February 24, 

2022. 

Background 

On February 22, 2021, the Exchange 

filed its proposal to amend the Fee 

Schedule to adopt the Excessive 

Quoting Fee.3 The Exchange adopted 

the Excessive Quoting Fee as a result of 

a significant upgrade to the MIAX 

Emerald System’s 4 network 

architecture, based on customer 

demand, which resulted in the 

Exchange’s network environment 

becoming more transparent and 

deterministic. Pursuant to the Excessive 

Quoting Fee, the Exchange will assess a 

fee of $10,000 per day to any Market 

Maker 5 that exceeds 2.5 billion inbound 

quotes 6 sent to the Exchange on that 

particular day. In counting the total 

number of quotes for the purposes of the 

Excessive Quoting Fee, the Exchange 

excludes messages that are generated as 

a result of sending a mass purge 

message to the Exchange. The 2.5 billion 

inbound quote limit for the Excessive 

Quoting Fee resets each trading day. 

Proposal 

The Exchange now proposes to amend 

the Excessive Quoting Fee to increase 

the inbound quote limit before the 

Exchange will assess the Excessive 

Quoting Fee. In particular, the Exchange 

proposes to increase the inbound quote 

limit from 2.5 billion to 3.5 billion for 

inbound quotes sent to the Exchange on 

a particular trading day. In counting the 

total number of quotes for the purposes 

of the Excessive Quoting Fee, the 

Exchange will continue to exclude 

messages that are generated as a result 

of sending a mass purge message to the 

Exchange and the proposed 3.5 billion 

inbound quote limit will continue to 

reset each trading day. 

The purpose of the proposed change 

is to continue to ensure that Market 

Makers do not over utilize the 

Exchange’s System by sending excessive 

quotes to the Exchange, to the detriment 

of all other Members of the Exchange, 

while balancing the interests of Market 

Makers sending quotes to the System in 

light of the recent significant increase in 

market volatility. Market Makers that 

send an excessive number of quotes to 

the Exchange on any particular day have 

the potential residual effect of 

exhausting System resources, 

bandwidth, and capacity. In turn, this 

may create latency and impact other 

Members’ and non-Members’ ability to 

send messages to the Exchange and 

receive timely executions. The 

Exchange believes that due to 

significant increases in market 

volatility, it is appropriate to increase 

the inbound quote limit for Market 

Markers. 

The Exchange’s high performance 

network provides unparalleled system 

throughput and the capacity to handle 

approximately 38 million messages per 

second. On an average day, the 

Exchange handles over approximately 

11 billion total messages. These billions 

of messages per day consume the 

Exchange’s resources, particularly 

storage capabilities. The combination of 

(i) Member quoting behavior, (ii) 

increased volatility in the marketplace, 

and (iii) increased number of options 

products quoted on the Exchange has a 

significant impact on the total number 

of quotes sent each trading day, 

resulting in additional storage capacity. 

The Exchange believes this proposal 

will continue to reduce the potential for 

market participants to engage in 

excessive quoting behavior that would 

require the Exchange to increase its 

storage capacity and will encourage 

quotes to be made in good faith, while 

balancing the interests of Market Makers 

facing increased market volatility in 

recent days. 

Recognizing that orders and 

executions often occur in large numbers, 

the purpose of this proposal is to 

continue to focus on activity that is 

truly disproportionate while fairly 

allocating costs. The proposal 


lotter on DSK11XQN23PROD with NOTICES1
14052 Federal Register / Vol. 87, No. 48 / Friday, March 11, 2022 / Notices 

7See Securities Exchange Act Release No. 60117 

(June 16, 2009), 74 FR 30190 (June 24, 2009) (SR– 

AMEX–2009–25) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change Amending 

the Schedule of Fees and Charges for Exchange 

Services by Adding a Ratio Threshold Fee); 64655 

(June 13, 2011), 76 FR 35495 (June 17, 2011) (SR– 

AMEX–2011–37) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change Amending 

the NYSE Amex Options Fee Schedule To Establish 

a New Fee Designed To Encourage Efficient Use of 

Bandwidth by ATP Firms and To Rename a Related 

Existing Fee); 53522 (March 20, 2006), 71 FR 14975 

(March 24, 2006) (SR–ISE–2006–09) (Notice of 

Filing and Immediate Effectiveness of Proposed 

Rule Change and Amendment No. 1 Thereto 

Relating to Session/API Fees); 55941 (June 21, 

2007), 72 FR 35535 (June 28, 2007) (SR–ISE–2007– 

36) (Notice of Filing and Immediate Effectiveness of 

a Proposed Rule Change as Modified by 

Amendment No. 1 Thereto Relating to API Fees); 

84963 (December 26, 2018), 84 FR 830 (January 31, 

2019) (SR–CboeBZX–2018–095) (Notice of Filing 

and Immediate Effectiveness of a Proposed Rule 

Change To Amend the BZX Equities Fee Schedule). 

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

9 15 U.S.C. 78f(b)(4). 10 15 U.S.C. 78f(b)(5). 

11See supra note 7. 

12See Securities Exchange Act Release No. 73639 

(November 19, 2014), 79 FR 72251 (December 5, 

2014) (File No. S7–01–13) (Regulation SCI Adopting 

Release). 

contemplates that a Market Maker 

would have to exceed the high 

threshold of 3.5 billion inbound quotes 

before that Market Maker would be 

charged the proposed fee on that 

particular trading day. The Exchange 

believes that it is in the interests of all 

Members and market participants who 

access the Exchange to not allow other 

market participants to exhaust System 

resources, but to encourage efficient 

usage of network capacity. 

The Exchange notes that this concept 

is not new or novel.7 The Exchange’s 

proposal is not intended to raise 

revenue; rather, it is intended to 

encourage efficient quoting behavior so 

that market participants do not exhaust 

System resources while balancing the 

increase in quotes as a result of current 

market volatility. 

The Exchange believes the proposal 

will continue to protect the integrity of 

the MIAX Emerald market and benefit 

all market participants of MIAX 

Emerald by ensuring that the Exchange’s 

System is not overloaded from excessive 

quotes being sent to it each day. The 

Exchange notes that it provides Market 

Makers with daily reports, free of 

charge, which detail their quoting 

activity in order for those firms to be 

fully aware of the number of quotes they 

are sending to the Exchange. This 

allows firms to monitor if their quoting 

behavior is approaching the proposed 

3.5 billion inbound quote limit. 

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, remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general protects 

investors and the public interest and is 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers and dealers. 

The Exchange believes that its 

proposal is designed to 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 to protect investors and the 

public interest and is not designed to 

permit unfair discrimination between 

customers, issuers, brokers and dealers 

because it will continue to encourage 

efficient utilization of the Exchange’s 

highly deterministic and transparent 

network architecture. The Exchange also 

believes the proposal will balance the 

interests of Market Makers sending 

quotes to the Exchange in light of 

extreme market volatility. The Exchange 

believes that unfettered usage of System 

capacity and network resource 

consumption can have a detrimental 

effect on all market participants who are 

potentially compelled to send quote 

messages to the Exchange on an 

unlimited basis, to the detriment of all 

other market participants who access 

and use the Exchange. Further, the 

proposed increase to the inbound quote 

limit will apply equally to all Market 

Makers who send quotes to the 

Exchange in excess of 3.5 billion 

inbound quotes on any particular 

trading day. 

The Exchange believes that the 

proposal is not unfairly discriminatory 

due to the substantial quote limit that 

the proposal contemplates before the 

Excessive Quoting Fee is applied, as 

well as the normal Market Maker quote 

traffic that the Exchange has 

experienced since it began operations in 

March of 2019 and in light of recent 

extreme market volatility that has 

resulted in above average number of 

quotes being sent to the Exchange. The 

Exchange does not anticipate that any 

Market Maker will exceed the proposed 

3.5 billion inbound quote limit and 

become subject to the proposed fee. 

The Exchange further believes that its 

proposal is reasonable, equitably 

allocated and not unfairly 

discriminatory because it is not 

intended to raise revenue for the 

Exchange; rather, it is intended to 

ensure that Market Makers are using 

their quoting methodologies in the most 

efficient manner possible in light of the 

Exchange’s highly deterministic and 

transparent infrastructure and in light of 

the recent increase in market volatility, 

resulting in more quotes being sent to 

the Exchange. The Exchange believes 

that the proposed increased quote limit 

is reasonable, equitably allocated and 

not unfairly discriminatory because this 

proposal will continue to reduce the 

potential for market participants to 

engage in excessive quoting behavior 

that would require the Exchange to 

increase its storage capacity and will 

continue to encourage quotes to be 

made in good faith. The Exchange notes 

that other exchanges have implemented 

similar fees and capacity type-limits in 

order to deter their firms from overutilizing their trading systems and 

exhausting system resources, while 

encouraging the efficient usage of 

system resources.11

The Exchange therefore believes that 

the proposed increased inbound quote 

limit for the Excessive Quoting Fee 

appropriately reflects the benefits to 

different firms of being able to send 

quotes into the Exchange’s System and 

facilitates the Commission’s goal of 

ensuring that critical market 

infrastructure has ‘‘levels of capacity, 

integrity, resiliency, availability, and 

security adequate to maintain their 

operational capability and promote the 

maintenance of fair and orderly 

markets.’’ 12

The Exchange will continue to review 

the quoting behavior of all firms on a 

regular basis to ensure that the inbound 

quote limit remains significantly higher 

than the average firm quoting behavior, 

while taking into account varying 

market conditions. The Exchange will 

continue to regularly monitor prevailing 

market conditions to ensure that the 

inbound quote limit is sufficiently 

flexible and could not inadvertently 

result in higher than anticipated fees 

being charged to firms that are 

providing liquidity in volatile, high 

volume markets. The Exchange does not 

want to discourage such liquidity 

provision and believes that it should be 

able to adjust the inbound quote limit 

on a monthly basis if need be. 


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Federal Register / Vol. 87, No. 48 / Friday, March 11, 2022 / Notices 14053 

13 15 U.S.C. 78s(b)(3)(A)(ii). 

14 17 CFR 240.19b–4(f)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intra-Market Competition 

The Exchange believes that the 

proposal does not put any market 

participants at a relative disadvantage 

compared to other market participants 

because the proposed increased quote 

limit will apply equally to all Market 

Makers who send quotes to the 

Exchange in excess of 3.5 billion 

inbound quotes on any particular 

trading day. The Exchange also believes 

that the proposed change neither favors 

nor penalizes one or more categories of 

market participants in a manner that 

would impose an undue burden on 

competition. Rather, the proposal seeks 

to benefit all market participants by 

encouraging the efficient utilization of 

the Exchange’s highly deterministic and 

transparent network architecture while 

taking into account increased market 

volatility that may impact the number of 

quotes being sent to the Exchange by 

Market Makers. The Exchange does not 

anticipate that any Market Maker will 

exceed the proposed 3.5 billion inbound 

quote limit and become subject to the 

proposed fee. Accordingly, the 

Exchange believes that the proposed 

Excessive Quoting Fee does not favor 

certain categories of market participants 

in a manner that would impose a 

burden on competition. 

Inter-Market Competition 

The Exchange believes the proposal 

does not place an undue burden on 

competition on other self-regulatory 

organizations that is not necessary or 

appropriate because of the availability 

of numerous substitute options 

exchanges. There are 15 other options 

exchanges where market participants 

can become members and send quotes if 

they deem the 3.5 billion inbound quote 

limit to be too restrictive for their 

quoting behavior. 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; rather, 

it is intended to protect all market 

participants of MIAX Emerald by 

ensuring that the Exchange’s System is 

not overloaded from excessive quotes 

being sent to it each day. 

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,13 and Rule 

19b–4(f)(2) 14 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

EMERALD–2022–09 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–2022–09. 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–2022–09 and 

should be submitted on or before April 

1, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05145 Filed 3–10–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94372; File No. SR– 

CboeBZX–2021–078] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change To Introduce a New Data 

Product To Be Known as the Short 

Volume Report 

March 7, 2022. 

I. Introduction 

On November 17, 2021, Cboe BZX 

Exchange, Inc. (‘‘BZX’’ 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 to amend Exchange Rule 11.22(f) 

to introduce a new data product to be 

known as the Short Volume Report. The 

proposed rule change was published for 

comment in the Federal Register on 


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