Document ID: SEC-2020-2014-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX Emerald, LLC
Posted Date: 2020-12-17T05:00Z

[Federal Register Volume 85, Number 243 (Thursday, December 17, 2020)]
[Notices]
[Pages 81964-81966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27720]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90639; File No. SR-EMERALD-2020-19]

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

December 11, 2020.
    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 December 1, 2020, 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.
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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 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 
Emerald's principal office, and at the Commission's Public Reference 
Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to amend the 
exchange groupings of options exchanges within the routing fee table in 
Section 1)b) of the Fee Schedule.
    Currently, the Exchange assesses routing fees based upon (i) the 
origin type of the order, (ii) whether or not it is an order for 
standard option classes in the Penny Interval Program \3\ (``Penny 
classes'') or an order for standard option classes which are not in the 
Penny Interval Program (``Non-Penny classes'') (or other explicitly 
identified classes), and (iii) to which away market it is being routed. 
This assessment practice is identical to the routing fees assessment 
practice currently utilized by the Exchange's affiliates, Miami 
International Securities Exchange, LLC (``MIAX'') and MIAX PEARL, LLC 
(``MIAX PEARL''). This is also similar to the methodologies utilized by 
other competing options exchanges, such as the Cboe BZX Exchange, Inc. 
(``Cboe BZX''), in assessing routing fees. Cboe BZX has exchange 
groupings in its fee schedule, similar to those of the Exchange, 
whereby several exchanges are grouped into the same category, dependent 
on the order's origin type and whether it is a Penny or Non-Penny 
class.\4\
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    \3\ 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).
    \4\ See Cboe BZX Fee Schedule under ``Fee Codes and Associated 
Fees.''
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    As a result of conducting a periodic review of the current 
transaction fees and rebates charged by away markets, the Exchange has 
determined to amend the exchange groupings of options exchanges within 
the routing fee table to better reflect the associated costs of routing 
customer orders to those options exchanges for execution. In 
particular, the Exchange proposes to amend the seventh ``Routed, Public 
Customer that

[[Page 81965]]

is not a Priority Customer, Non-Penny Program'' exchange grouping to 
move Nasdaq MRX from the seventh exchange grouping into the eighth 
``Routed, Public Customer that is not a Priority Customer, Non-Penny 
Program'' exchange grouping. The impact of this proposed change will be 
that the routing fee for Public Customer orders that are not Priority 
Customer orders in the Penny Program, that are routed to Nasdaq MRX, 
LLC (``Nasdaq MRX''), will increase from $1.15 to $1.25. The Exchange 
notes that no options exchanges were removed from the routing fee table 
entirely, with the only change being the change in categorization for 
Nasdaq MRX. The purpose of the proposed rule change is to adjust the 
routing fee for certain orders routed to Nasdaq MRX to reflect the 
associated costs for that routed execution.
    Accordingly, with the proposed change, the routing fee table will 
be as follows:

------------------------------------------------------------------------
                         Description                              Fees
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Routed, Priority Customer, Penny Program, to: NYSE American,       $0.15
 BOX, Cboe, Cboe EDGX Options, MIAX, Nasdaq MRX, Nasdaq PHLX
 (except SPY), Nasdaq BX Options.............................
Routed, Priority Customer, Penny Program, to: NYSE Arca             0.65
 Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq ISE,
 NOM, Nasdaq PHLX (SPY only), MIAX PEARL.....................
Routed, Priority Customer, Non-Penny Program, to: NYSE              0.15
 American, BOX, Cboe, Cboe EDGX Options, MIAX, Nasdaq ISE,
 Nasdaq MRX, Nasdaq PHLX, Nasdaq BX Options..................
Routed, Priority Customer, Non-Penny Program, to: NYSE Arca         1.00
 Options, Cboe BZX Options, Cboe C2, MIAX PEARL, Nasdaq GEMX,
 NOM.........................................................
Routed, Public Customer that is not a Priority Customer,            0.65
 Penny Program, to: NYSE American, NYSE Arca Options, Cboe
 BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX Options, Nasdaq
 GEMX, Nasdaq ISE, Nasdaq MRX, MIAX, MIAX PEARL, NOM, Nasdaq
 PHLX, Nasdaq BX Options.....................................
Routed, Public Customer that is not a Priority Customer, Non-       1.00
 Penny Program, to: MIAX, NYSE American, Cboe, Nasdaq PHLX,
 Nasdaq ISE, Cboe EDGX Options...............................
Routed, Public Customer that is not a Priority Customer, Non-       1.15
 Penny Program, to: Cboe C2, BOX, Nasdaq BX Options, NOM,
 MIAX PEARL..................................................
Routed, Public Customer that is not a Priority Customer, Non-       1.25
 Penny Program, to: Cboe BZX Options, NYSE Arca Options,
 Nasdaq GEMX, Nasdaq MRX.....................................
------------------------------------------------------------------------

    In determining to amend its Routing Fees, the Exchange took into 
account transaction fees and rebates assessed by the away markets to 
which the Exchange routes orders, as well as the Exchange's clearing 
costs,\5\ administrative, regulatory, and technical costs associated 
with routing orders to an away market. The Exchange uses unaffiliated 
routing brokers to route orders to the away markets; the costs 
associated with the use of these services are included in the routing 
fees specified in the Fee Schedule. This routing fees structure is not 
only similar to the Exchange's affiliates, MIAX and MIAX PEARL, but is 
also comparable to the structures in place at other competing options 
exchanges, such as Cboe BZX.\6\ The Exchange's routing fee structure 
approximates the Exchange's costs associated with routing orders to 
away markets. The per-contract transaction fee amount associated with 
each grouping closely approximates the Exchange's all-in cost (plus an 
additional, non-material amount) to execute that corresponding contract 
at that corresponding exchange. The Exchange notes that in determining 
whether to adjust certain groupings of options exchanges in the routing 
fee table, the Exchange considered the transaction fees and rebates 
assessed by away markets, and determined to amend the grouping of 
exchanges that assess transaction fees for routed orders within a 
similar range. This same logic and structure applies to all of the 
groupings in the routing fees table. By utilizing the same structure 
that is utilized by the Exchange's affiliates, MIAX and MIAX PEARL, the 
Exchange's Members \7\ will be assessed routing fees in a similar 
manner. The Exchange believes that this structure will minimize any 
confusion as to the method of assessing routing fees between the three 
exchanges. The Exchange notes that its affiliates, MIAX and MIAX PEARL, 
will file to make the same proposed routing fee change for Nasdaq MRX.
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    \5\ The OCC amended its clearing fee from $0.01 per contract 
side to $0.02 per contract side. See Securities Exchange Act Release 
No. 71769 (March 21, 2014), 79 FR 17214 (March 27, 2014) (SR-OCC-
2014-05).
    \6\ See supra note 4. The Cboe BZX fee schedule has exchange 
groupings, whereby several exchanges are grouped into the same 
category, dependent on the order's Origin type and whether it is a 
Penny or Non-Penny class. For example, Cboe BZX fee code RR covers 
routed customer orders in Non-Penny classes to NYSE Arca, Cboe C2, 
Nasdaq ISE, Nasdaq Gemini, MIAX Emerald, MIAX PEARL, or NOM, with a 
single fee of $1.25 per contract. Id.
    \7\ The term ``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.
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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 Exchange believes the proposed change to the exchange groupings 
of options exchanges within the routing fee table furthers the 
objectives of Section 6(b)(4) of the Act and is reasonable, equitable 
and not unfairly discriminatory because the proposed change will 
continue to apply in the same manner to all Members that are subject to 
routing fees. The Exchange believes the proposed change to the routing 
fee table exchange groupings furthers the objectives of Section 6(b)(5) 
of the Act and is designed to promote just and equitable principles of 
trade and is not unfairly discriminatory because the proposed change 
seeks to recoup costs that are incurred by the Exchange when routing 
customer orders

[[Page 81966]]

to away markets on behalf of Members and does so in the same manner to 
all Members that are subject to routing fees. The costs to the Exchange 
to route orders to away markets for execution primarily includes 
transaction fees and rebates assessed by the away markets to which the 
Exchange routes orders, in addition to the Exchange's clearing costs, 
administrative, regulatory and technical costs. The Exchange believes 
that the proposed re-categorization of certain exchange groupings would 
enable the Exchange to recover the costs it incurs to route orders to 
Nasdaq MRX. The per-contract transaction fee amount associated with 
each grouping approximates the Exchange's all-in cost (plus an 
additional, non-material amount) to execute the corresponding contract 
at the corresponding exchange.

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. The Exchange believes its 
proposed re-categorization of certain exchange groupings is intended to 
enable the Exchange to recover the costs it incurs to route orders to 
away markets, particularly Nasdaq MRX. The Exchange does not believe 
that this proposal imposes any unnecessary burden on competition 
because it seeks to recoup costs incurred by the Exchange when routing 
orders to away markets on behalf of Members and other exchanges have 
similar routing fee structures.\11\
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    \11\ See supra note 4.
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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,\12\ and Rule 19b-4(f)(2) \13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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

     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-2020-19 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-2020-19. 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-2020-19 and should be submitted 
on or before January 7, 2021.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27720 Filed 12-16-20; 8:45 am]
BILLING CODE 8011-01-P