Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 34440-34444 [2019-15256]
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34440
Federal Register / Vol. 84, No. 138 / Thursday, July 18, 2019 / Notices
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[FR Doc. 2019–15247 Filed 7–17–19; 8:45 am]
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khammond on DSKBBV9HB2PROD with NOTICES
Date of required notice: July 18,
2019.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
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The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
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it filed with the Postal Regulatory
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Service Contract 109 to Competitive
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[FR Doc. 2019–15293 Filed 7–17–19; 8:45 am]
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17:56 Jul 17, 2019
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Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee
Schedule
July 12, 2019.
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 June 28, 2019, 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’’).
While changes to the Fee Schedule
pursuant to this proposal are effective
upon filing, the Exchange has
designated these changes to be operative
on July 1, 2019.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/emerald, at MIAX’s principal
office, and at the Commission’s Public
Reference Room.
2 17
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EMERALD–2019–25]
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SECURITIES AND EXCHANGE
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Product Change—Priority Mail and
First-Class Package Service
Negotiated Service Agreement
Alexys Stanley,
Regulatory Affairs Analyst, Office of
Personnel Management.
AGENCY:
Authorization
No.
Organization name
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U.S.C. 78s(b)(1).
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Federal Register / Vol. 84, No. 138 / Thursday, July 18, 2019 / Notices
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
Exchange Rebates/Fees set forth in
Section 1)a)i of the Fee Schedule to
provide Members 3 a higher Simple
Maker rebate of $0.50 4 per contract
executed in SPY, QQQ and IWM
options for Priority Customer 5 Origin in
Tiers 1, 2 and 3, instead of the rebate
amount otherwise set forth in such
Tiers.
Background
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
khammond on DSKBBV9HB2PROD with NOTICES
3 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.
4 The Exchange notes that rebates in the Fee
Schedule are denoted using parentheses.
5 The term ‘‘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).
The number of orders shall be counted in
accordance with the following Interpretation and
Policy .01 hereto. See the Definitions Section of the
Fee Schedule and Exchange Rule 100.
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34441
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.’’ 6
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 17% of the
market share of executed volume of
multiply-listed equity and ETF options
trades.7 Therefore, no exchange
possesses significant pricing power in
the execution of multiply-listed equity &
ETF options order flow. More
specifically, since the Exchange
launched operations on March 1, 2019,
the Exchange has had less than 1%
market share in any month of executed
volume of multiply-listed equity & ETF
options trades.8 The Exchange believes
that the ever-shifting market share
among the exchanges from month to
month demonstrates that market
participants can shift order flow, or
discontinue or reduce use of certain
categories of products, in response to fee
changes. Accordingly, competitive
forces constrain options exchange
transaction fees.
Emerald in the relevant Origins and/or
applicable liquidity, not including
Excluded Contracts,9 (as the numerator)
expressed as a percentage of (divided
by) Customer Total Consolidated
Volume (‘‘CTCV’’) (as the denominator).
CTCV means Customer Total
Consolidated Volume 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’’ 10
(solely in the option classes of the
affected Matching Engine).11 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’’).12
Proposed Rule Change
Currently, transaction rebates and fees
for Penny and Non-Penny classes are
assessed according to the following
tables:
The Exchange currently assesses
transaction rebates and fees to all
market participants which are based
upon a threshold tier structure (‘‘Tier’’)
that is applicable to transaction fees.
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
shall apply to all Origin types by the
Member. 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
6 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
7 The Options Clearing Corporation (‘‘OCC’’)
publishes options and futures volume in a variety
of formats, including daily and monthly volume by
exchange, available here: https://www.theocc.com/
market-data/volume/default.jsp.
8 See id.
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9 ‘‘Excluded Contracts’’ means any contracts
routed to an away market for execution.
10 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.
11 A ‘‘Matching Engine’’ is a part of the MIAX
Emerald electronic system that processes options
orders and trades on a symbol-by-symbol basis.
Some Matching Engines will process option classes
with multiple root symbols, and other Matching
Engines may be dedicated to one single option root
symbol (for example, options on SPY may be
processed by one single Matching Engine that is
dedicated only to SPY). A particular root symbol
may only be assigned to a single designated
Matching Engine. A particular root symbol may not
be assigned to multiple Matching Engines. See the
Definitions Section of the Fee Schedule.
12 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.
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Federal Register / Vol. 84, No. 138 / Thursday, July 18, 2019 / Notices
MEMBERS AND THEIR AFFILIATES IN PENNY CLASSES
[Simple/Complex/PRIME/cPRIME]
Simple
Origin
Tier
Market Maker ..............................................
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
Non-MIAX Emerald Market Maker ..............
Firm Proprietary/Broker-Dealer ...................
Non-Priority Customer .................................
Priority Customer * ......................................
Maker
(contra
origins
ex priority
customer)
Taker ∧
Maker
($0.35)
(0.35)
(0.35)
(0.45)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.48)
(0.48)
(0.48)
(0.53)
PRIME/cPRIME ◊
Complex #
$0.50
0.50
0.50
0.48
0.50
0.50
0.50
0.48
0.50
0.50
0.50
0.49
0.50
0.50
0.50
0.49
0.47
0.47
0.47
0.45
Maker
(contra
priority
customer
origin)
$0.10
0.10
0.10
0.10
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
(0.25)
(0.40)
(0.45)
(0.50)
Taker
$0.47
0.47
0.47
0.47
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
(0.25)
(0.40)
(0.45)
(0.50)
$0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
0.50
(0.25)
(0.40)
(0.45)
(0.50)
Agency
Contra
$0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.00
0.00
0.00
0.00
$0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
Responder
$0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
MEMBERS AND THEIR AFFILIATES IN NON-PENNY CLASSES
[Simple/Complex/PRIME/cPRIME]
Simple
Origin
Tier
Maker
Market Maker ..............................................
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
Non-MIAX Emerald Market Maker ..............
Firm Proprietary/Broker-Dealer ...................
Non-Priority Customer .................................
Priority Customer* .......................................
($0.45)
(0.45)
(0.45)
(0.75)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.85)
(0.85)
(0.85)
(1.05)
PRIME/cPRIME ◊
Complex #
Maker
(contra
origins
ex priority
customer)
Taker ∧
$0.99
0.99
0.99
0.94
0.99
0.99
0.99
0.94
0.99
0.99
0.99
0.94
0.99
0.99
0.99
0.94
0.85
0.85
0.85
0.82
$0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
0.20
(0.40)
(0.60)
(0.70)
(0.87)
Maker
(contra
priority
customer
origin)
Taker ∼
$0.86
0.86
0.86
0.86
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
(0.40)
(0.60)
(0.70)
(0.87)
$0.88
0.88
0.86
0.86
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
0.88
(0.40)
(0.60)
(0.75)
(0.85)
Agency
$0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.00
0.00
0.00
0.00
Contra
$0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
Responder
$0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
khammond on DSKBBV9HB2PROD with NOTICES
∧ Contra to Priority Customer Simple Orders, Origins ex Priority Customer Simple Orders will be charged $0.50 and Priority Customer Simple Orders will be
charged $0.49 in Penny classes, and Origins ex Priority Customer Simple Orders will be charged $1.10 and Priority Customer Simple Orders will be charged $0.85 in
Non-Penny classes.
* 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.
∼ A $0.05 Complex surcharge for Origins ex Priority Customer for Complex Orders that take liquidity from the Complex Order Book in Non-Penny classes.
# For orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Taker rebate based on the tier achieved when contra to an Origin
that is not a Priority Customer. Origins that are not a Priority Customer will be charged the applicable Maker fee depending on the contra, based on the tier achieved.
◊ For PRIME and cPRIME, the per contract rebate or fee for the preexisting contra-side interest that trades with the Agency side will be waived. PRIME/cPRIME
Responder side interest that trades with unrelated Agency side interest trades as Taker will be subject to Simple or Complex rates, as applicable.
Notes Accompanying Tables Above
During the Opening Rotation and the
ABBO uncrossing, the per contract
rebate or fee will be waived for all
Origins.
The Exchange proposes to amend the
Exchange Rebates/Fees set forth in
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17:56 Jul 17, 2019
Jkt 247001
Section 1)a)i of the Fee Schedule to
provide Members a higher Simple
Maker rebate in Penny classes of $0.50
per contract executed in SPY, QQQ and
IWM options for Priority Customer
Origin in Tiers 1, 2 and 3, instead of the
rebate amount otherwise set forth in
such Tiers.
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The Exchange proposes to insert the
new symbol ‘‘S’’ following the
‘‘($0.48)’’ rebate listed in Tiers 1, 2 and
3 for Simple Maker rebates in Penny
classes in Section 1)a)i) of the Fee
Schedule to designate a new footnote
representing the proposed higher rebate
of $0.50 for SPY, QQQ, and IWM. The
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Federal Register / Vol. 84, No. 138 / Thursday, July 18, 2019 / Notices
khammond on DSKBBV9HB2PROD with NOTICES
Exchange proposes that, following the
fee table for Non-Penny classes in
Section 1(a)(i) of the Fee Schedule, the
Exchange will insert text describing the
proposed higher rebate with new
footnote ‘‘S’’ as follows: ‘‘Simple Maker
rebate in SPY, QQQ and IWM is ($0.50)
for Priority Customer Origin in Tiers 1,
2 and 3.’’ The Exchanges notes that
Simple Maker rebates in Penny classes
for Priority Customer Origin in all
options classes other than SPY, QQQ,
and IWM will remain at $0.48 for Tiers
1 through 3. Further, Simple Maker
rebates in Penny classes for all options
classes, including options in SPY, QQQ
and IWM, will remain at $0.53 for Tier
4.
The purpose of the proposed change
is to incentivize Members to send
Priority Customer Origin orders to the
Exchange in SPY, QQQ and IWM
options. The Exchange believes that the
proposal to increase the Simple Maker
rebate in SPY, QQQ and IWM to $0.50
for Priority Customer Origin in Tiers 1,
2 and 3 may increase the volume of
Priority Customer order flow in those
classes. The Exchange believes that the
increased order flow will result in
increased liquidity, which benefits all
Exchange participants by providing
more trading opportunities and tighter
spreads. The proposed rebates do not
apply differently to different sizes of
market participants based on Tier
achieved.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 13
in general, and furthers the objectives of
Section 6(b)(4) of the Act 14 in
particular, in that it is an equitable
allocation of reasonable 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 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.
The proposal to offer higher Simple
Maker rebates in SPY, QQQ and IWM
options for Priority Customer Origin in
Tiers 1, 2 and 3 provides for the
equitable allocation of reasonable dues
and fees and is not unfairly
13 15
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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17:56 Jul 17, 2019
Jkt 247001
discriminatory for the following
reasons. First, the Exchange operates in
a highly competitive market. 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.’’ 15
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 17% of the
market share of executed volume of
multiply-listed equity and ETF options
trades.16 Therefore, no exchange
possesses significant pricing power in
the execution of multiply-listed equity &
ETF options order flow. More
specifically, since the Exchange
launched operations on March 1, 2019,
the Exchange has had less than 1%
market share in any month of executed
volume of multiply-listed equity & ETF
options trades.17 The Exchange believes
that the ever-shifting market share
among the exchanges from month to
month demonstrates that market
participants can shift order flow, or
discontinue or reduce use of certain
categories of products, in response to fee
changes. Accordingly, competitive
forces constrain options exchange
transaction fees.
Second, the Exchange believes that
the proposed higher Simple Maker
rebate in SPY, QQQ and IWM options
for Priority Customer Origin in Tiers 1,
2 and 3 is consistent with Section
6(b)(4) of the Act in that it is reasonable,
equitable and not unfairly
discriminatory because it applies
equally to all Members for their Priority
Customer Origin order flow in those
options.
The Exchange operates in highly
competitive market. In particular, since
the Exchange launched trading on
March 1, 2019, the Exchange has had
less than a 1% market share in any
month. Therefore, the Exchange does
not possess significant pricing power in
the execution of options order flow. The
Exchange believes that the ever-shifting
15 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
16 See supra note 7.
17 See supra note 7.
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34443
market share among the exchanges from
month to month demonstrates that
market participants can shift order flow,
or discontinue to reduce use of certain
categories of products, in response to fee
changes. Accordingly, competitive
forces constrain exchange transaction
fees. Stated otherwise, changes to
exchange transaction fees can have a
direct effect on the ability of an
exchange to compete for order flow.
The Exchange believes the proposed
change is reasonable because, as noted
above, the Exchange operates in a highly
competitive environment, particularly
for attracting order flow that provides
liquidity on the Exchange. The
Exchange believes it is reasonable to
provide a higher rebate for Members
that trade in SPY, QQQ and IWM
options in Priority Customer Origin for
Tiers 1 through 3 because, to date, no
Members have reached Tier 4 using the
Priority Customer Maker method only
(which may be different than their
effective tier), and, additionally the
Simple fees and rebates are essentially
the same for the Priority Customer Tiers
1 through 3. The Exchange believes the
proposed higher rebate is reasonable as
it would provide an additional incentive
for Members to provide liquidity in
SPY, QQQ and IWM options, and
provide meaningful added levels of
liquidity, thereby contributing to the
depth and market quality on the
Exchange.
The Exchange believes that defining
the proposed increased rebate with the
new symbol ‘‘S’’ on the Fee Schedule
promotes just and equitable principles
of trade, removes impediments to and
perfects the mechanism of a free and
open market and a national market
system, and, in general protects
investors and the public interest by
creating a clear understanding of the
increased rebate.
The proposed increased rebate is
reasonable, equitable, and not unfairly
discriminatory because it will apply
similarly to all market participants who
provide liquidity on the Simple Order
Book for their Priority Customer Origin
in SPY, QQQ and IWM options in Tiers
1, 2 and 3. All similarly situated market
participants are subject to the same
transaction rebate schedule, and access
to the Exchange is offered on terms that
are not unfairly discriminatory.
The Exchange believes that the
proposal is reasonable because it will
incentivize providers of SPY, QQQ, and
IWM Priority Customer order flow to
send that Priority Customer order flow
to the Exchange in order to obtain the
highest volume threshold and receive a
Simple Maker rebate in a manner that
enables the Exchange to improve its
E:\FR\FM\18JYN1.SGM
18JYN1
34444
Federal Register / Vol. 84, No. 138 / Thursday, July 18, 2019 / Notices
overall competitiveness and strengthen
its market quality for all market
participants.
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. As described
above, the Exchange believes that the
proposed change would encourage the
submission of additional orders in SPY,
QQQ and IWM options, thereby
promoting market depth, price
discovery and transparency and
enhancing order execution
opportunities for Members.
Intra-Market Competition
The Exchange does not believe that
the proposed rule change would place
other market participants at the
Exchange at a relative disadvantage
compared to providers of SPY, QQQ,
and IWM Priority Customer order flow.
The Exchange believes that establishing
higher rebates for these select products
for Priority Customers is reasonable,
equitable, and not unfairly
discriminatory because these select
products are generally more liquid than
other option classes and the Exchange
believes that the proposed change is
designed to attract additional order flow
to the Exchange. The Exchange believes
that the proposed increased rebates
would continue to incentivize market
participants to provide order flow to the
Exchange. Greater liquidity benefits all
market participants on the Exchange by
providing more trading opportunities
and encourages Members to send orders
thereby contributing to robust levels of
liquidity, which benefits all market
participants. The proposed higher
rebates would be available to all
similarly-situated market participants,
and, as such, the proposed change
would not impose a disparate burden on
competition among market participants
on the Exchange.
khammond on DSKBBV9HB2PROD with NOTICES
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges and to attract order flow to
the Exchange. The Exchange notes that
17:56 Jul 17, 2019
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,18 and Rule
19b–4(f)(2) 19 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
Inter-Market Competition
VerDate Sep<11>2014
since the Exchange launched operations
on March 1, 2019, the Exchange’s
market share has been less than 1% in
any month. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges and with offexchange venues. Because competitors
are free to modify their own fees and
credits in response, and because market
participants may readily adjust their
order routing, the Exchange does not
believe its proposed increased rebate
can impose any burden on competition.
The Exchange believes that the
proposed change could promote
competition between the Exchange and
other execution venues, including those
that currently offer similar order types
and comparable transaction pricing, by
encouraging additional orders to be sent
to the Exchange for execution. The
Exchange also believes that the
proposed change is designed to provide
the public and investors with a
Schedule of Fees and Rebates that is
clear and consistent, thereby reducing
burdens on the marketplace and
facilitating investor protection.
Jkt 247001
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:
PO 00000
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
EMERALD–2019–25 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–2019–25. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 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–2019–25 and
should be submitted on or before
August 8, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–15256 Filed 7–17–19; 8:45 am]
BILLING CODE 8011–01–P
18 15
U.S.C. 78s(b)(3)(A)(ii).
19 17 CFR 240.19b–4(f)(2).
Frm 00113
Fmt 4703
Sfmt 4703
20 17
E:\FR\FM\18JYN1.SGM
CFR 200.30–3(a)(12).
18JYN1
]]>Agencies
[Federal Register Volume 84, Number 138 (Thursday, July 18, 2019)]
[Notices]
[Pages 34440-34444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15256]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86368; File No. SR-EMERALD-2019-25]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
July 12, 2019.
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 June 28, 2019, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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'').
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on July 1, 2019.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/emerald, at MIAX's
principal office, and at the Commission's Public Reference Room.
[[Page 34441]]
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 Exchange Rebates/Fees set forth
in Section 1)a)i of the Fee Schedule to provide Members \3\ a higher
Simple Maker rebate of $0.50 \4\ per contract executed in SPY, QQQ and
IWM options for Priority Customer \5\ Origin in Tiers 1, 2 and 3,
instead of the rebate amount otherwise set forth in such Tiers.
---------------------------------------------------------------------------
\3\ 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.
\4\ The Exchange notes that rebates in the Fee Schedule are
denoted using parentheses.
\5\ The term ``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). The number of
orders shall be counted in accordance with the following
Interpretation and Policy .01 hereto. See the Definitions Section of
the Fee Schedule and Exchange Rule 100.
---------------------------------------------------------------------------
Background
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.'' \6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------
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 17%
of the market share of executed volume of multiply-listed equity and
ETF options trades.\7\ Therefore, no exchange possesses significant
pricing power in the execution of multiply-listed equity & ETF options
order flow. More specifically, since the Exchange launched operations
on March 1, 2019, the Exchange has had less than 1% market share in any
month of executed volume of multiply-listed equity & ETF options
trades.\8\ The Exchange believes that the ever-shifting market share
among the exchanges from month to month demonstrates that market
participants can shift order flow, or discontinue or reduce use of
certain categories of products, in response to fee changes.
Accordingly, competitive forces constrain options exchange transaction
fees.
---------------------------------------------------------------------------
\7\ The Options Clearing Corporation (``OCC'') publishes options
and futures volume in a variety of formats, including daily and
monthly volume by exchange, available here: https://www.theocc.com/market-data/volume/default.jsp.
\8\ See id.
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange currently assesses transaction rebates and fees to all
market participants which are based upon a threshold tier structure
(``Tier'') that is applicable to transaction fees. 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 shall apply to all Origin types by the Member. 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,\9\ (as the
numerator) expressed as a percentage of (divided by) Customer Total
Consolidated Volume (``CTCV'') (as the denominator). CTCV means
Customer Total Consolidated Volume 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'' \10\ (solely in the
option classes of the affected Matching Engine).\11\ 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'').\12\
---------------------------------------------------------------------------
\9\ ``Excluded Contracts'' means any contracts routed to an away
market for execution.
\10\ 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.
\11\ A ``Matching Engine'' is a part of the MIAX Emerald
electronic system that processes options orders and trades on a
symbol-by-symbol basis. Some Matching Engines will process option
classes with multiple root symbols, and other Matching Engines may
be dedicated to one single option root symbol (for example, options
on SPY may be processed by one single Matching Engine that is
dedicated only to SPY). A particular root symbol may only be
assigned to a single designated Matching Engine. A particular root
symbol may not be assigned to multiple Matching Engines. See the
Definitions Section of the Fee Schedule.
\12\ 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.
---------------------------------------------------------------------------
Currently, transaction rebates and fees for Penny and Non-Penny
classes are assessed according to the following tables:
[[Page 34442]]
Members and Their Affiliates In Penny Classes
[Simple/Complex/PRIME/cPRIME]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex PRIME/cPRIME [diam]
-----------------------------------------------------------------------------------------------
Maker Maker
Origin Tier (contra (contra
Maker Taker origins ex priority Taker Agency Contra Responder
[supcaret] priority customer
customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker................................ 1 ($0.35) $0.50 $0.10 $0.47 $0.50 $0.05 $0.05 $0.05
2 (0.35) 0.50 0.10 0.47 0.50 0.05 0.05 0.05
3 (0.35) 0.50 0.10 0.47 0.50 0.05 0.05 0.05
4 (0.45) 0.48 0.10 0.47 0.50 0.05 0.05 0.05
Non-MIAX Emerald Market Maker............... 1 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
2 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
3 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
4 (0.25) 0.48 0.20 0.50 0.50 0.05 0.05 0.05
Firm Proprietary/Broker-Dealer.............. 1 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
2 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
3 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
4 (0.25) 0.49 0.20 0.50 0.50 0.05 0.05 0.05
Non-Priority Customer....................... 1 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
2 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
3 (0.25) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
4 (0.25) 0.49 0.20 0.50 0.50 0.05 0.05 0.05
Priority Customer *......................... 1 (0.48) 0.47 (0.25) (0.25) (0.25) 0.00 0.05 0.05
2 (0.48) 0.47 (0.40) (0.40) (0.40) 0.00 0.05 0.05
3 (0.48) 0.47 (0.45) (0.45) (0.45) 0.00 0.05 0.05
4 (0.53) 0.45 (0.50) (0.50) (0.50) 0.00 0.05 0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
Members and Their Affiliates In Non-Penny Classes
[Simple/Complex/PRIME/cPRIME]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex PRIME/cPRIME [diam]
-----------------------------------------------------------------------------------------------
Maker Maker
Origin Tier (contra (contra
Maker Taker origins ex priority Taker ~ Agency Contra Responder
[supcaret] priority customer
customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker................................ 1 ($0.45) $0.99 $0.20 $0.86 $0.88 $0.05 $0.05 $0.05
2 (0.45) 0.99 0.20 0.86 0.88 0.05 0.05 0.05
3 (0.45) 0.99 0.20 0.86 0.86 0.05 0.05 0.05
4 (0.75) 0.94 0.20 0.86 0.86 0.05 0.05 0.05
Non-MIAX Emerald Market Maker............... 1 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
2 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
3 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
4 (0.25) 0.94 0.20 0.88 0.88 0.05 0.05 0.05
Firm Proprietary/Broker-Dealer.............. 1 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
2 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
3 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
4 (0.25) 0.94 0.20 0.88 0.88 0.05 0.05 0.05
Non-Priority Customer....................... 1 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
2 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
3 (0.25) 0.99 0.20 0.88 0.88 0.05 0.05 0.05
4 (0.25) 0.94 0.20 0.88 0.88 0.05 0.05 0.05
Priority Customer*.......................... 1 (0.85) 0.85 (0.40) (0.40) (0.40) 0.00 0.05 0.05
2 (0.85) 0.85 (0.60) (0.60) (0.60) 0.00 0.05 0.05
3 (0.85) 0.85 (0.70) (0.70) (0.75) 0.00 0.05 0.05
4 (1.05) 0.82 (0.87) (0.87) (0.85) 0.00 0.05 0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
[caret] Contra to Priority Customer Simple Orders, Origins ex Priority Customer Simple Orders will be charged $0.50 and Priority Customer Simple Orders
will be charged $0.49 in Penny classes, and Origins ex Priority Customer Simple Orders will be charged $1.10 and Priority Customer Simple Orders will
be charged $0.85 in Non-Penny classes.
* 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.
~ A $0.05 Complex surcharge for Origins ex Priority Customer for Complex Orders that take liquidity from the Complex Order Book in Non-Penny classes.
# For orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Taker rebate based on the tier achieved when contra to an
Origin that is not a Priority Customer. Origins that are not a Priority Customer will be charged the applicable Maker fee depending on the contra,
based on the tier achieved.
[diam] For PRIME and cPRIME, the per contract rebate or fee for the preexisting contra-side interest that trades with the Agency side will be waived.
PRIME/cPRIME Responder side interest that trades with unrelated Agency side interest trades as Taker will be subject to Simple or Complex rates, as
applicable.
Notes Accompanying Tables Above
During the Opening Rotation and the ABBO uncrossing, the per
contract rebate or fee will be waived for all Origins.
The Exchange proposes to amend the Exchange Rebates/Fees set forth
in Section 1)a)i of the Fee Schedule to provide Members a higher Simple
Maker rebate in Penny classes of $0.50 per contract executed in SPY,
QQQ and IWM options for Priority Customer Origin in Tiers 1, 2 and 3,
instead of the rebate amount otherwise set forth in such Tiers.
The Exchange proposes to insert the new symbol ``[dtri]'' following
the ``($0.48)'' rebate listed in Tiers 1, 2 and 3 for Simple Maker
rebates in Penny classes in Section 1)a)i) of the Fee Schedule to
designate a new footnote representing the proposed higher rebate of
$0.50 for SPY, QQQ, and IWM. The
[[Page 34443]]
Exchange proposes that, following the fee table for Non-Penny classes
in Section 1(a)(i) of the Fee Schedule, the Exchange will insert text
describing the proposed higher rebate with new footnote ``[dtri]'' as
follows: ``Simple Maker rebate in SPY, QQQ and IWM is ($0.50) for
Priority Customer Origin in Tiers 1, 2 and 3.'' The Exchanges notes
that Simple Maker rebates in Penny classes for Priority Customer Origin
in all options classes other than SPY, QQQ, and IWM will remain at
$0.48 for Tiers 1 through 3. Further, Simple Maker rebates in Penny
classes for all options classes, including options in SPY, QQQ and IWM,
will remain at $0.53 for Tier 4.
The purpose of the proposed change is to incentivize Members to
send Priority Customer Origin orders to the Exchange in SPY, QQQ and
IWM options. The Exchange believes that the proposal to increase the
Simple Maker rebate in SPY, QQQ and IWM to $0.50 for Priority Customer
Origin in Tiers 1, 2 and 3 may increase the volume of Priority Customer
order flow in those classes. The Exchange believes that the increased
order flow will result in increased liquidity, which benefits all
Exchange participants by providing more trading opportunities and
tighter spreads. The proposed rebates do not apply differently to
different sizes of market participants based on Tier achieved.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \13\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \14\ in
particular, in that it is an equitable allocation of reasonable 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 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.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The proposal to offer higher Simple Maker rebates in SPY, QQQ and
IWM options for Priority Customer Origin in Tiers 1, 2 and 3 provides
for the equitable allocation of reasonable dues and fees and is not
unfairly discriminatory for the following reasons. First, the Exchange
operates in a highly competitive market. 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.'' \15\
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 17% of the
market share of executed volume of multiply-listed equity and ETF
options trades.\16\ Therefore, no exchange possesses significant
pricing power in the execution of multiply-listed equity & ETF options
order flow. More specifically, since the Exchange launched operations
on March 1, 2019, the Exchange has had less than 1% market share in any
month of executed volume of multiply-listed equity & ETF options
trades.\17\ The Exchange believes that the ever-shifting market share
among the exchanges from month to month demonstrates that market
participants can shift order flow, or discontinue or reduce use of
certain categories of products, in response to fee changes.
Accordingly, competitive forces constrain options exchange transaction
fees.
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
\16\ See supra note 7.
\17\ See supra note 7.
---------------------------------------------------------------------------
Second, the Exchange believes that the proposed higher Simple Maker
rebate in SPY, QQQ and IWM options for Priority Customer Origin in
Tiers 1, 2 and 3 is consistent with Section 6(b)(4) of the Act in that
it is reasonable, equitable and not unfairly discriminatory because it
applies equally to all Members for their Priority Customer Origin order
flow in those options.
The Exchange operates in highly competitive market. In particular,
since the Exchange launched trading on March 1, 2019, the Exchange has
had less than a 1% market share in any month. Therefore, the Exchange
does not possess significant pricing power in the execution of options
order flow. The Exchange believes that the ever-shifting market share
among the exchanges from month to month demonstrates that market
participants can shift order flow, or discontinue to reduce use of
certain categories of products, in response to fee changes.
Accordingly, competitive forces constrain exchange transaction fees.
Stated otherwise, changes to exchange transaction fees can have a
direct effect on the ability of an exchange to compete for order flow.
The Exchange believes the proposed change is reasonable because, as
noted above, the Exchange operates in a highly competitive environment,
particularly for attracting order flow that provides liquidity on the
Exchange. The Exchange believes it is reasonable to provide a higher
rebate for Members that trade in SPY, QQQ and IWM options in Priority
Customer Origin for Tiers 1 through 3 because, to date, no Members have
reached Tier 4 using the Priority Customer Maker method only (which may
be different than their effective tier), and, additionally the Simple
fees and rebates are essentially the same for the Priority Customer
Tiers 1 through 3. The Exchange believes the proposed higher rebate is
reasonable as it would provide an additional incentive for Members to
provide liquidity in SPY, QQQ and IWM options, and provide meaningful
added levels of liquidity, thereby contributing to the depth and market
quality on the Exchange.
The Exchange believes that defining the proposed increased rebate
with the new symbol ``[dtri]'' on the Fee Schedule promotes just and
equitable principles of trade, removes impediments to and perfects the
mechanism of a free and open market and a national market system, and,
in general protects investors and the public interest by creating a
clear understanding of the increased rebate.
The proposed increased rebate is reasonable, equitable, and not
unfairly discriminatory because it will apply similarly to all market
participants who provide liquidity on the Simple Order Book for their
Priority Customer Origin in SPY, QQQ and IWM options in Tiers 1, 2 and
3. All similarly situated market participants are subject to the same
transaction rebate schedule, and access to the Exchange is offered on
terms that are not unfairly discriminatory.
The Exchange believes that the proposal is reasonable because it
will incentivize providers of SPY, QQQ, and IWM Priority Customer order
flow to send that Priority Customer order flow to the Exchange in order
to obtain the highest volume threshold and receive a Simple Maker
rebate in a manner that enables the Exchange to improve its
[[Page 34444]]
overall competitiveness and strengthen its market quality for all
market participants.
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. As described above, the
Exchange believes that the proposed change would encourage the
submission of additional orders in SPY, QQQ and IWM options, thereby
promoting market depth, price discovery and transparency and enhancing
order execution opportunities for Members.
Intra-Market Competition
The Exchange does not believe that the proposed rule change would
place other market participants at the Exchange at a relative
disadvantage compared to providers of SPY, QQQ, and IWM Priority
Customer order flow. The Exchange believes that establishing higher
rebates for these select products for Priority Customers is reasonable,
equitable, and not unfairly discriminatory because these select
products are generally more liquid than other option classes and the
Exchange believes that the proposed change is designed to attract
additional order flow to the Exchange. The Exchange believes that the
proposed increased rebates would continue to incentivize market
participants to provide order flow to the Exchange. Greater liquidity
benefits all market participants on the Exchange by providing more
trading opportunities and encourages Members to send orders thereby
contributing to robust levels of liquidity, which benefits all market
participants. The proposed higher rebates would be available to all
similarly-situated market participants, and, as such, the proposed
change would not impose a disparate burden on competition among market
participants on the Exchange.
Inter-Market Competition
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its fees to remain
competitive with other exchanges and to attract order flow to the
Exchange. The Exchange notes that since the Exchange launched
operations on March 1, 2019, the Exchange's market share has been less
than 1% in any month. In such an environment, the Exchange must
continually adjust its fees and rebates to remain competitive with
other exchanges and with off-exchange venues. Because competitors are
free to modify their own fees and credits in response, and because
market participants may readily adjust their order routing, the
Exchange does not believe its proposed increased rebate can impose any
burden on competition. The Exchange believes that the proposed change
could promote competition between the Exchange and other execution
venues, including those that currently offer similar order types and
comparable transaction pricing, by encouraging additional orders to be
sent to the Exchange for execution. The Exchange also believes that the
proposed change is designed to provide the public and investors with a
Schedule of Fees and Rebates that is clear and consistent, thereby
reducing burdens on the marketplace and facilitating investor
protection.
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,\18\ and Rule 19b-4(f)(2) \19\ 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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\18\ 15 U.S.C. 78s(b)(3)(A)(ii).
\19\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-EMERALD-2019-25 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-2019-25. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 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-2019-25 and should be submitted
on or before August 8, 2019.
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\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-15256 Filed 7-17-19; 8:45 am]
BILLING CODE 8011-01-P
