Federal Register / Vol. 87, No. 108 / Monday, June 6, 2022 / Notices 34321 

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

2 17 CFR 240.19b–4. 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–536, OMB Control No. 

3235–0596] 

Submission for OMB Review; 

Comment Request; Extension: Rule 

204A–1 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

The title for the collection of 

information is ‘‘Rule 204A–1 (17 CFR 

275.204A–1) under the Investment 

Advisers Act of 1940.’’ (15 U.S.C. 80b– 

1 et seq.) Rule 204A–1 (the ‘‘Code of 

Ethics Rule’’) requires investment 

advisers registered with the SEC to (i) 

set forth standards of conduct expected 

of advisory personnel (including 

compliance with the federal securities 

laws); (ii) safeguard material nonpublic 

information about client transactions; 

and (iii) require the adviser’s ‘‘access 

persons’’ to report their personal 

securities transactions, including 

transactions in any mutual fund 

managed by the adviser. The Code of 

Ethics Rule requires access persons to 

obtain the adviser’s approval before 

investing in an initial public offering 

(‘‘IPO’’) or private placement. The Code 

of Ethics Rule also requires prompt 

reporting, to the adviser’s chief 

compliance officer or another person 

designated in the code of ethics, of any 

violations of the code. Finally, the Code 

of Ethics Rule requires the adviser to 

provide each supervised person with a 

copy of the code of ethics and any 

amendments, and require the 

supervised persons to acknowledge, in 

writing, their receipt of these copies. 

The purposes of the information 

collection requirements are to (i) ensure 

that advisers maintain codes of ethics 

applicable to their supervised persons; 

(ii) provide advisers with information 

about the personal securities 

transactions of their access persons for 

purposes of monitoring such 

transactions; (iii) provide advisory 

clients with information with which to 

evaluate advisers’ codes of ethics; and 

(iv) assist the Commission’s 

examination staff in assessing the 

adequacy of advisers’ codes of ethics 

and assessing personal trading activity 

by advisers’ supervised persons. 

The respondents to this information 

collection are investment advisers 

registered with the Commission. The 

Commission has estimated that 

compliance with rule 204A–1 imposes a 

burden of approximately 87 hours per 

adviser annually based on an average 

adviser having 60 access persons. Our 

latest data indicate that there were 

14,705 advisers registered with the 

Commission. Based on this figure, the 

Commission estimates a total annual 

burden of 1,275,659 hours for this 

collection of information. 

Rule 204A–1 does not require 

recordkeeping or record retention. The 

collection of information requirements 

under the rule is mandatory. The 

information collected pursuant to the 

rule is not filed with the Commission, 

but rather takes the form of 

communications between advisers and 

their supervised persons. Investment 

advisers use the information collected to 

control and assess the personal trading 

activities of their supervised persons. 

Responses to the reporting requirements 

will be kept confidential to the extent 

each investment adviser provides 

confidentiality under its particular 

practices and procedures. An agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless it 

displays a currently valid control 

number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice by July 6, 2022 to (i) 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, 

c/o John Pezzullo, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: May 31, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–12022 Filed 6–3–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95005; File No. SR– 

EMERALD–2022–21] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fee 

Schedule 

May 31, 2022. 

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 May 18, 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’’). 

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)a)i) of the Fee Schedule to 

amend the Simple Maker (defined 


lotter on DSK11XQN23PROD with NOTICES1
34322 Federal Register / Vol. 87, No. 108 / Monday, June 6, 2022 / Notices 

3 ‘‘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. 

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. 

5 ‘‘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 Fee Schedule. 

6The term ‘‘Excluded Contracts’’ means any 

contracts routed to an away market for execution. 

See the Definitions Section of the Fee Schedule. 

7The 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. 

8A ‘‘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. 

9For 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. 

10See 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’’). 11The 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. 

below) rebates in all Tiers (defined 

below) for options transactions in Penny 

Classes (defined below) for executed 

Priority Customer 3 Origin orders. The 

Exchange originally filed this proposal 

on April 28, 2022 (SR–EMERALD– 

2022–17). On May 10, 2022, the 

Exchange withdrew SR–EMERALD– 

2022–17 and resubmitted this proposal 

(SR–EMERALD–2022–20). On May 18, 

2022, the Exchange withdrew SR– 

EMERALD–2022–20 and resubmitted 

this proposal. 

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 

Origin type. For the Priority Customer 

Origin calculation, the Tier applied for 

a Member and its Affiliates’ 5 is solely 

determined by 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’).’’ The 

monthly volume thresholds for each of 

the methods, 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. 

Proposal 

First, the Exchange proposes to 

amend Section 1)a)i) of the Fee 

Schedule to amend the Simple Maker 

rebates in Tiers 1, 2 and 3 for options 

transactions in Penny Classes for 

executed Priority Customer Origin 

orders. Currently, the Exchange 

provides a Simple Maker rebate of 

($0.43) per contract for options 

transactions in most Penny Classes 

(excluding SPY, QQQ, and IWM) for 

executed Priority Customer Origin 

orders in Tiers 1, 2 and 3 per the rate 

table. The Exchange also provides a 

higher Simple Maker rebate of ($0.45) 

per contract for options transactions in 

Penny Classes for SPY, QQQ and IWM, 

which is noted by the symbol ‘‘S’’ 

following the tables of rebates and fees 

in Section 1)a)i) of the Fee Schedule. 

The Exchange now proposes to amend 

symbol ‘‘S’’ to modify the Simple 

Maker rebate for all options in Penny 

Classes for executed Priority Customer 

Origin orders in Tiers 1, 2 and 3 

depending on whether the contra is an 

Affiliated Market Maker.11 In particular, 

the Exchange proposes to provide a 

lower Simple Maker rebate of ($0.37) 

per contract for options in all Penny 

Classes for executed Priority Customer 

Origin orders in Tiers 1, 2 and 3 when 

the contra is an Affiliated Market Maker. 

To show the difference in rebates 

depending on whether the contra is an 

Affiliated Market Maker, the Exchange 

proposes to amend the text in symbol 

‘‘S’’ to now read as follows: ‘‘The 

Simple Maker rebate in SPY, QQQ and 

IWM is ($0.45) for Priority Customer 

Origin in Tiers 1, 2 and 3 when the 

contra is not an Affiliated Market 

Maker. The Simple Maker rebate in all 

Penny Classes is ($0.37) for Priority 

Customer Origin in Tiers 1, 2 and 3 

when the contra is an Affiliated Market 

Maker.’’ In summary, with the proposed 

changes, Priority Customer Origin 

orders in Tiers 1, 2 and 3 will receive 

(a) the current ($0.43) per contract 

rebate for most Penny Classes 

(excluding SPY, QQQ, and IWM classes) 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 87, No. 108 / Monday, June 6, 2022 / Notices 34323 

12See Fee Schedule, Section 1)a)i), note ‘‘b’’. See 

Securities Exchange Act Release Nos. 94406 (March 

14, 2022), 87 FR 15460 (March 18, 2022) (SR– 

EMERALD–2022–10) (lowering Simple Maker 

rebate in Tier 4 for options transactions in Penny 

Classes for executed Priority Customer orders when 

the contra is an Affiliated Market Maker from 

($0.49) to ($0.43) and 89927 (September 21, 2020), 

85 FR 60498 (September 25, 2020) (SR–EMERALD– 

2020–07) (establishing lower Priority Customer Tier 

4 Simple Maker rebates in Penny Classes when the 

contra is an Affiliated Market Maker). 

13See Securities Exchange Act Release No. 85393 

(March 21, 2019), 84 FR 11599 (March 27, 2019) 

(SR–EMERALD–2019–15). 

14See Cboe BZX Options Exchange Fee Schedule, 

under ‘‘Transaction Fees’’ (providing Customer 

rebates for Penny Program Securities ranging from 

$0.25 to $0.53); see also Nasdaq Stock Market, 

Options 7, Pricing Schedule, Section 2 Nasdaq 

Options Market—Fees and Rebates, note 2 

(providing lower rates when the Participant is both 

the buyer and seller). 

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

16 15 U.S.C. 78f(b)(4). 

17 15 U.S.C. 78f(b)(1) and (b)(5). 

18See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496 (June 29, 2005). 

19See ‘‘The Market at a Glance,’’ (last visited May 

17, 2022), available at https://

www.miaxoptions.com/. 

20See id. 

21See Securities Exchange Act Release No. 85304 

(March 13, 2019), 84 FR 10144 (March 19, 2019) 

(SR–PEARL–2019–07). 

when the contra is not an Affiliated 

Market Maker; (b) will continue to 

receive the current ($0.45) per contract 

rebate for SPY, QQQ, and IWM classes 

when the contra is not an affiliated 

Market Maker; and (c) will receive the 

($0.37) per contract rebate in all Penny 

Classes when the contra is an affiliated 

Market Maker. 

Next, the Exchange proposes to 

amend Section 1)a)i) of the Fee 

Schedule to amend the Simple Maker 

rebate in Tier 4 for options transactions 

in Penny Classes for executed Priority 

Customer Origin orders. Currently, the 

Exchange provides a Simple Maker 

rebate of ($0.53) for executed Priority 

Customer Origin orders in Tier 4 in 

options in Penny Classes if the contra is 

not an Affiliated Market Maker. If the 

contra is an Affiliated Market Maker, the 

Exchange provides a lower Simple 

Maker rebate of ($0.43) for executed 

Priority Customer Origin orders in Tier 

4 in options in Penny Classes.12 Both 

the lower Simple Maker rebate of 

($0.43) and the rate table rebate of 

($0.53) depending on whether the 

contra is or is not an Affiliated Market 

Maker for executed Priority Customer 

Origin orders in Tier 4 in Penny Classes 

is denoted by the symbol ‘‘b’’ following 

the table of fees and rebates in Section 

1)a)i) of the Fee Schedule. 

The Exchange now proposes to lower 

the Simple Maker rebate in Tier 4 for 

options transactions in Penny Classes 

for executed Priority Customer orders 

when the contra is an Affiliated Market 

Maker. Specifically, the Exchange 

proposes to lower the Simple Maker 

rebate for executed Priority Customer 

orders in options in Penny Classes in 

Tier 4 from ($0.43) to ($0.37) when the 

contra is an Affiliated Market Maker. To 

be clear, executed Priority Customer 

Origin order in options in Penny Classes 

in Tier 4 will continue to receive the 

current ($0.53) per contract rebate when 

the contra is not an Affiliated Market 

Maker. The proposed change would be 

reflected in current footnote ‘‘b’’ for 

Penny Classes. Accordingly, the 

Exchange proposes to update footnote 

‘‘b’’ to now read: ‘‘This Maker rebate is 

for executed Priority Customer Simple 

Orders when the contra is not an 

Affiliated Market Maker. When the 

contra is an Affiliated Market Maker, 

this Maker rebate for executed Priority 

Customer Simple Orders will be 

($0.37).’’ 

The purpose of adjusting the specified 

Simple Maker rebate is for business and 

competitive reasons. In order to attract 

order flow, the Exchange initially set its 

Maker rebates and Taker fees so that 

they were meaningfully higher/lower 

than other options exchanges that 

operate comparable maker/taker pricing 

models.13 The Exchange now believes 

that it is appropriate to further 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.14

Implementation 

The proposed changes are 

immediately effective. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 15

in general, and furthers the objectives of 

Section 6(b)(4) of the Act,16 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,17 in that it is designed 

to prevent fraudulent and manipulative 

acts and practices, promote just and 

equitable principles of trade, foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, 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.’’ 18

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 a 

market share of more than 

approximately 13–14% of the equity 

options market.19 Therefore, no 

exchange possesses significant pricing 

power. More specifically, as of May 17, 

2022, the Exchange had a market share 

of approximately 3.68% of executed 

volume of multiply-listed equity options 

for the month of May 2022.20

The Exchange believes that the evershifting 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).21 MIAX Pearl experienced a 

decrease in total market share for the 

month of March 2019, after the proposal 

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 

amend the Simple Maker rebates for 

options transactions in Penny Classes 

for Priority Customers is reasonable, 


lotter on DSK11XQN23PROD with NOTICES1
34324 Federal Register / Vol. 87, No. 108 / Monday, June 6, 2022 / Notices 

22See supra note 13. 

23See supra note 14. 

24See supra note 3. 

25See, e.g., Nasdaq Stock Market, Options 7, 

Pricing Schedule, Section 2 Nasdaq Options 

Market—Fees and Rebates, note 2 (providing lower 

rates when the Participant is both the buyer and 

seller). 

26See MIAX Fee Schedule, Section 1)a)iii), notes 

‘‘’’ and ‘‘D’’. 

27See supra note 14. 28See supra notes 12, 25 and 26. 

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 Taker fees. The 

Exchange believes it is equitable and not 

unfairly discriminatory to reduce the 

Simple Maker rebates for Priority 

Customer orders in Penny Classes when 

the contra is an Affiliated Market Maker 

for business and competitive reasons 

because the Exchange initially set its 

Simple Maker rebates for such orders 

higher than certain other options 

exchanges that operate comparable 

maker/taker pricing models.22 The 

Exchange now believes that it is 

appropriate to further decrease the 

specified Simple Maker rebates so that 

they are more in line with other 

exchanges, but will 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 it is 

equitable and not unfairly 

discriminatory to continue to provide 

higher rebates for Priority Customer 

orders (even with the proposed changes) 

than to orders from origin types that are 

not Priority Customer. A Priority 

Customer is by definition not a broker 

or dealer in securities, and does not 

place more than 390 orders in listed 

options per day on average during a 

calendar month for its own beneficial 

account(s).24 This limitation does not 

apply to participants on the Exchange 

whose behavior is substantially similar 

to that of market professionals, 

including orders from Non-MIAX 

Emerald Market Makers, Firm 

Proprietary/Broker-Dealer Origins, and 

Non-Priority Customers, who will 

generally submit a higher number of 

orders (many of which do not result in 

executions) than Priority Customers. 

Furthermore, the Exchange believes that 

even with the proposed changes, the 

rebates for Priority Customers will 

continue to encourage Members to send 

Priority Customer orders to the 

Exchange, which benefits all Exchange 

participants by providing more trading 

opportunities and tighter spreads. 

The Exchange believes it is reasonable 

and equitable to reduce the Simple 

Maker rebates for Priority Customer 

orders in Penny Classes when the contra 

is an Affiliated Market Maker (versus 

when the contra is not an Affiliated 

Market Maker) because the Exchange 

already offers certain potential fee 

benefits to Members and their Affiliates 

from their aggregated volume. For 

example, pursuant to Section 1)a)ii) of 

the Fee Schedule, the Tier applied for 

a Member and its Affiliates’ Priority 

Customer Origin is solely determined by 

Method 3 (Priority Customer Maker 

volume). However, the Market Maker 

Origin receives the highest Tier based 

on any of the three application methods, 

including based on Tier achieved by 

their Affiliated Priority Customer Maker 

order flow. Thus, for example, if a 

Market Maker and its Affiliates 

naturally achieved Tier 1 from Market 

Maker Volume, the Exchange will also 

look at their Priority Customer order 

flow and if that Priority Customer order 

flow achieved higher Tiers (i.e., Tier 4), 

the Market Maker and its Affiliates will 

receive the benefit of the Tier 4 rates 

based on their Priority Customer order 

flow. The Exchange also believes it is 

equitable and not unfairly 

discriminatory to continue to provide 

different rebates depending on whether 

the contra is or is not an Affiliated 

Market Maker for executed Priority 

Customer Origin orders because 

competing exchanges also provide 

different rates depending on whether 

the executing buyer and seller are 

affiliated.25 Further, the Exchange’s 

affiliate, Miami International Securities 

Exchange, LLC (‘‘MIAX’’), provides a 

similar pricing structure for certain 

complex order transactions for MIAX 

Members and their Affiliates that 

aggregate their order flow.26

Accordingly, the Exchange believes it is 

reasonable, equitable, and not unfairly 

discriminatory to provide a lower rebate 

for certain Priority Customer Origin 

orders when the executing buyer and 

seller are the same Member or Affiliates. 

Furthermore, the proposed decrease 

to the Simple Maker rebates for Priority 

Customers when the contra is an 

Affiliated Market Maker promotes just 

and equitable principles of trade, fosters 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and protects 

investors and the public interest, 

because even with the decrease, the 

Exchange’s proposed Simple Maker 

rebates for such orders still remain 

highly competitive with certain other 

options exchanges offering comparable 

pricing models, and should enable the 

Exchange to continue to attract order 

flow and maintain market share.27 The 

Exchange believes that the amount of 

such rebates, with the proposed 

decrease, will continue to encourage 

those market participants to send 

Priority Customer orders to the 

Exchange. 

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 to 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 change should enable the 

Exchange to continue to attract and 

compete for Priority Customer order 

flow with other exchanges. The 

Exchange believes that even with the 

proposed changes, the rebates for 

Priority Customers will continue to 

encourage Members to send Priority 

Customer orders to the Exchange, which 

benefits all Exchange participants by 

providing more trading opportunities 

and tighter spreads. 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. 

The Exchange believes that the 

pricing structure to provide different 

rebates depending on whether the 

contra is or is not an Affiliated Market 

Maker for executed Priority Customer 

Origin orders will not impose any 

undue burden on intra-market 

competition because the different rates 

apply equally to all Members that 

aggregate their order flow on the 

Exchange. Further, this pricing structure 

is not new or novel and has been in 

place at the Exchange, its affiliate, 

MIAX, and competing exchanges for 

years.28

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. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 87, No. 108 / Monday, June 6, 2022 / Notices 34325 

29See supra note 19. 

30See id. 

31 15 U.S.C. 78s(b)(3)(A)(ii). 

32 17 CFR 240.19b–4(f)(2). 33 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 94692 

(April 12, 2022), 87 FR 22971 (April 18, 2022) (SR– 

DTC–2022–002) (‘‘Notice of Filing’’). 

4Each capitalized term not otherwise defined 

herein has its respective meaning as set forth in 

DTC’s rules, including, but not limited to, the 

Rules, By-Laws and Organization Certificate of DTC 

(‘‘Rules’’), the DTC Settlement Service Guide 

(‘‘Settlement Guide’’), and the Guide to the 2020 

DTC Fee Schedule (‘‘Fee Guide’’), available at 

http://www.dtcc.com/legal/rules-andprocedures.aspx. 

5See The Depository Trust Company, Disclosure 

Framework for Covered Clearing Agencies and 

Financial Market Infrastructures at 7, 9–10 

(December 2021) available at https://

www.dtcc.com/-/media/Files/Downloads/legal/ 

policy-and-compliance/DTC_Disclosure_

Framework.pdf. 

6See National Securities Clearing Corporation, 

Disclosure Framework for Covered Clearing 

Agencies and Financial Market Infrastructures at 7– 

10 (December 2021), available at https:// 

Continued 

Based on publicly-available 

information, and excluding index-based 

options, no single exchange has a 

market share of more than 

approximately 13–14% of the equity 

options market.29 Therefore, no 

exchange possesses significant pricing 

power. More specifically, as of May 17, 

2022, the Exchange had a market share 

of approximately 3.68% of executed 

volume of multiply-listed equity options 

for the month of May 2022.30 Therefore, 

no exchange possesses significant 

pricing power in the execution of 

multiply-listed equity options order 

flow. 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 it modifies the 

Exchange’s rebates in a manner that will 

allow the Exchange to remain 

competitive. 

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,31 and Rule 

19b–4(f)(2) 32 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–2022–21 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–2022–21. 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–2022–21, and 

should be submitted on or before June 

27, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–12013 Filed 6–3–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95012; File No. SR–DTC– 

2022–002] 

Self-Regulatory Organizations; The 

Depository Trust Company; Order 

Approving the Proposed Rule Change 

To Provide Settlement Services for 

Transactions Entered Into Under the 

Proposed Securities Financing 

Transaction Clearing Service of the 

National Securities Clearing 

Corporation 

May 31, 2022. 

I. Introduction 

On March 28, 2022, The Depository 

Trust Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) proposed rule change 

SR–DTC–2022–002 (‘‘Proposed Rule 

Change’’) pursuant to Section 19(b)(1) of 

the Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder.2

The Proposed Rule Change was 

published for comment in the Federal 

Register on April 18, 2022.3 For the 

reasons discussed below, the 

Commission is approving the Proposed 

Rule Change.4

II. Description of the Proposed Rule 

Change 

A. Background 

DTC serves as a central securities 

depository providing, in part, custodial 

services for equity securities, which 

include the safekeeping, record keeping, 

book-entry transfer, and pledge of 

securities among its Participants.5 The 

National Securities Clearing Corporation 

(‘‘NSCC’’) provides clearing and 

settlement services for trades, including 

equity securities.6 NSCC relies on an 


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