Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Fee Schedule, 20006-20012 [2020-07435]
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20006
Federal Register / Vol. 85, No. 69 / Thursday, April 9, 2020 / Notices
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–NYSE–2020–29, and
should be submitted on or before April
30, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07433 Filed 4–8–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88560; File No. SR–
EMERALD–2020–04]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Fee Schedule
khammond on DSKJM1Z7X2PROD with NOTICES
April 3, 2020.
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 March 31, 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 and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
18 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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
https://www.miaxoptions.com/rulefilings/emerald, at MIAX’s [sic]
principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Section (1)(a)(i) of the Fee Schedule to:
(i) Decrease Simple Maker (as defined
below) rebates in certain Tiers for
options transactions in Penny classes (as
defined below) (including SPY, QQQ,
and IWM options classes) for Priority
Customers; 3 and (ii) increase Simple
Taker (as defined below) fees in certain
Tiers for options transactions in Penny
classes and non-Penny classes for
Priority Customers, Market Makers,4
and Non-MIAX Emerald Market Makers,
Firms, Broker-Dealers, and Non-Priority
Customers.
Background
The Exchange currently assesses
transaction rebates and fees to all
market participants which are based
upon a threshold tier structure (‘‘Tier’’)
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 ‘‘Market Maker’’ means a Member registered
with the Exchange for the purpose of making
markets in options contracts traded on the
Exchange. See the Definitions Section of the Fee
Schedule and Exchange Rule 100.
PO 00000
Frm 00087
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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 5 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,6 (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’’ 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
5 ‘‘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.
6 ‘‘Excluded Contracts’’ means any contracts
routed to an away market for execution. See the
Definitions Section of the Fee Schedule.
7 The term ‘‘Exchange System Disruption’’ means
an outage of a Matching Engine or collective
Matching Engines for a period of two consecutive
hour or more, during trading hours. See the
Definitions Section of the Fee Schedule.
8 A ‘‘Matching Engine’’ is a part of the MIAX
Emerald electronic system that processes options
orders and trades on a symbol-by-symbol basis.
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.
9 For a Priority Customer complex order taking
liquidity in both a Penny class and non-Penny class
against Origins other than Priority Customer, the
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also assessed lower transaction fees and
smaller rebates for order executions in
standard option classes in the Penny
Pilot Program 10 (‘‘Penny classes’’) than
for order executions in standard option
classes which are not in the Penny Pilot
Program (‘‘non-Penny classes’’), for
which Members will be assessed a
higher transaction fees and larger
rebates.
Currently, transaction rebates and fees
for Penny and Non-Penny classes are
assessed according to the following
tables:
MEMBERS AND THEIR AFFILIATES IN PENNY CLASSES SIMPLE/COMPLEX/PRIME/CPRIME
Simple
Origin
Tier
Maker
Market Maker .............................
Non-MIAX Emerald Market
Maker ......................................
Firm Proprietary/Broker-Dealer ..
Non-Priority Customer ................
Priority Customer * .....................
Complex #
Taker ∧
Maker
(contra
origins
ex priority
customer)
Maker
(contra
priority
customer
origin)
PRIME/cPRIME◊
Taker
Agency
Contra
Responder
1
2
3
4
($0.35)
(0.35)
(0.35)
(0.45)
$0.50
0.50
0.50
0.48
$0.10
0.10
0.10
0.10
$0.47
0.47
0.47
0.47
$0.50
0.50
0.50
0.50
$0.05
0.05
0.05
0.05
$0.05
0.05
0.05
0.05
$0.05
0.05
0.05
0.05
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
S (0.48)
S (0.48)
S (0.48)
(0.53)
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
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)
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
(0.25)
(0.40)
(0.45)
(0.50)
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
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 .............................
Non-MIAX Emerald Market
Maker ......................................
Firm Proprietary/Broker-Dealer ..
Non-Priority Customer ................
khammond on DSKJM1Z7X2PROD with NOTICES
Priority Customer * .....................
Complex #
Taker ∧
Maker
(contra
origins
ex priority
customer)
Maker
(contra
priority
customer
origin)
PRIME/cPRIME◊
Taker ∼
Agency
Contra
Responder
1
2
3
4
($0.45)
(0.45)
(0.45)
(0.75)
$0.99
0.99
0.99
0.94
$0.20
0.20
0.20
0.20
$0.86
0.86
0.86
0.86
$0.88
0.88
0.86
0.86
$0.05
0.05
0.05
0.05
$0.05
0.05
0.05
0.05
$0.05
0.05
0.05
0.05
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
(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)
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
(0.40)
(0.60)
(0.70)
(0.87)
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
0.88
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)
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
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
∧ 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 order will receive a rebate based
on the Tier achieved.
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10 See Securities Exchange Act Release No. 85225
(March 1, 2019), 84 FR 68353 (March 7, 2019) (SR–
EMERALD–2019–06).
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Federal Register / Vol. 85, No. 69 / Thursday, April 9, 2020 / Notices
* 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 NonPenny 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.
S Simple Maker rebate in SPY, QQQ and IWM is ($0.50) for Priority Customer Origin in Tiers 1, 2 and 3.
Notes Accompanying Tables Above
During the Opening Rotation and the
ABBO uncrossing, the per contract
rebate or fee will be waived for all
Origins.
Simple Maker Rebates for Priority
Customers
First, the Exchange proposes to
decrease the Simple Maker rebates in
certain Tiers for options transactions in
Penny classes (including SPY, QQQ,
and IWM options classes) for Priority
Customers. Specifically, the Exchange
proposes to decrease the Simple Maker
rebates for Priority Customer orders in
options in certain Penny classes
(excluding SPY, QQQ, and IWM) in Tier
1 from (0.48) to (0.43), in Tier 2 from
(0.48) to (0.43), and in Tier 3 from (0.48)
to (0.43). The Exchange next proposes to
amend footnote ‘‘S’’ in Section (1)(a)(i)
of the Fee Schedule to decrease the
Simple Maker rebate for Priority
Customer orders in SPY, QQQ and IWM
options classes in Tiers 1, 2 and 3 from
(0.50) to (0.45).
Simple Taker Fees for Priority
Customers, Market Makers, Non-MIAX
Emerald Market Makers, Firm, BrokerDealers, and Non-Priority Customers in
Penny Classes
The Exchange next proposes to
increase the Simple Taker fees in certain
Tiers for options transactions in Penny
classes for Priority Customers, Market
Makers, Non-MIAX Emerald Market
Makers, Firms, Broker-Dealers, and
Non-Priority Customers. Specifically,
the Exchange proposes to increase the
Simple Taker fees for Market Maker
orders in options in all Penny classes in
Tier 4 from 0.48 to 0.50. The Exchange
next proposes to increase the Simple
Taker fees for Non-MIAX Emerald
Market Maker orders in options in all
Penny classes in Tier 4 from 0.48 to
0.50. The Exchange next proposes to
increase the Simple Taker fees for Firm
Proprietary and Broker-Dealer orders in
options in all Penny classes in Tier 4
from 0.49 to 0.50. The Exchange next
proposes to increase the Simple Taker
fees for Non-Priority Customer orders in
options in all Penny classes in Tier 4
from 0.49 to 0.50. The Exchange next
proposes to increase the Simple Taker
fees for Priority Customer orders contra
Origins ex Priority Customer in options
in all Penny classes in Tiers 1–3 from
0.47 to 0.50, and in Tier 4 from 0.45 to
0.50. The Exchange next proposes to
amend footnote ‘‘∧’’ in Section (1)(a)(i)
of the Fee Schedule to increase the
Taker fees for Simple Priority Customer
orders contra Priority Customer in
options in Penny classes from 0.49 to
0.50.
Simple Taker Fees for Priority
Customers, Market Makers, Non-MIAX
Emerald Market Makers, Firms, BrokerDealers, and Non-Priority Customers in
Non-Penny Classes
The Exchange next proposes to
increase the Simple Taker fees in certain
Tiers for options transactions in nonPenny classes for Priority Customers,
Market Makers, Non-MIAX Emerald
Market Makers, Firms, Broker-Dealers
and Non-Priority Customers.
Specifically, the Exchange proposes to
increase the Simple Taker fees for
Market Maker orders in options in nonPenny classes in Tiers 1–3 from 0.99 to
1.05, and in Tier 4 from 0.94 to 1.05.
The Exchange next proposes to increase
the Simple Taker fees for Non-MIAX
Emerald Market Maker orders in options
in non-Penny classes in Tiers 1–3 from
0.99 to 1.05, and in Tier 4 from 0.94 to
1.05. The Exchange next proposes to
increase the Simple Taker fees for Firm
Proprietary and Broker-Dealer orders in
options in non-Penny classes in Tiers 1–
3 from 0.99 to 1.05, and in Tier 4 from
0.94 to 1.05. The Exchange next
proposes to increase the Simple Taker
fees for Non-Priority Customer orders in
options in non-Penny classes in Tiers 1–
3 from 0.99 to 1.05, and in Tier 4 from
0.94 to 1.05. Finally, the Exchange
proposes to increase the Simple Taker
fees for Priority Customer orders contra
Origins ex Priority Customer in options
in non-Penny classes in Tier 4 from 0.82
to 0.85.
The purpose of adjusting the specified
Simple Taker fees and the specified
Simple Maker rebates 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.11 The Exchange now believes
that it is appropriate to further adjust
these specified Maker rebates and Taker
fees 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.12
With all the proposed changes,
Section (1)(a)(i) of the Fee Schedule
shall be the following:
MEMBERS AND THEIR AFFILIATES IN PENNY CLASSES SIMPLE/COMPLEX/PRIME/CPRIME
Simple
khammond on DSKJM1Z7X2PROD with NOTICES
Origin
Tier
Maker
Market Maker .............................
1
11 See Securities Exchange Act Release No. 85393
(March 21, 2019), 84 FR 11599 (March 27, 2019)
(SR–EMERALD–2019–15).
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Taker ∧
($0.35)
PRIME/cPRIME ◊
Complex #
$0.50
Maker
(contra
origins
ex priority
customer)
Maker
(contra
priority
customer
origin)
$0.10
$0.47
Taker
Agency
$0.50
12 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees.’’
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09APN1
$0.05
Contra
$0.05
Responder
$0.05
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MEMBERS AND THEIR AFFILIATES IN PENNY CLASSES SIMPLE/COMPLEX/PRIME/CPRIME—Continued
Simple
Origin
Tier
Maker
Non-MIAX Emerald Market
Maker ......................................
Firm Proprietary/Broker-Dealer ..
Non-Priority Customer ................
Priority Customer * .....................
PRIME/cPRIME ◊
Complex #
Taker ∧
Maker
(contra
origins
ex priority
customer)
Maker
(contra
priority
customer
origin)
Taker
Agency
Contra
Responder
2
3
4
(0.35)
(0.35)
(0.45)
0.50
0.50
0.50
0.10
0.10
0.10
0.47
0.47
0.47
0.50
0.50
0.50
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
S (0.43)
S (0.43)
S (0.43)
(0.53)
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
0.20
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)
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
(0.25)
(0.40)
(0.45)
(0.50)
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
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 .............................
Non-MIAX Emerald Market
Maker ......................................
Firm Proprietary/Broker-Dealer ..
Non-Priority Customer ................
khammond on DSKJM1Z7X2PROD with NOTICES
Priority Customer * .....................
PRIME/cPRIME ◊
Complex #
Taker ∧
Maker
(contra
origins
ex priority
customer)
Maker
(contra
priority
customer
origin)
Taker ∼
Agency
Contra
Responder
1
2
3
4
(0.45)
(0.45)
(0.45)
(0.75)
1.05
1.05
1.05
1.05
0.20
0.20
0.20
0.20
0.86
0.86
0.86
0.86
0.88
0.88
0.86
0.86
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
(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)
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
1.05
0.85
0.85
0.85
0.85
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)
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
0.88
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)
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
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
∧ 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 0.50 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 NonPenny 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.
S Simple Maker rebate in SPY, QQQ and IWM is (0.45) for Priority Customer Origin in Tiers 1, 2 and 3.
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khammond on DSKJM1Z7X2PROD with NOTICES
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 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.’’ 13
There are currently 16 registered
options exchanges competing for order
flow. Based on publicly-available
information, and excluding index-based
options, no single exchange has more
than approximately 15% market
share.14 Therefore, no exchange
possesses significant pricing power.
More specifically, as of March 24, 2020,
the Exchange had an approximately
3.42% market share of executed volume
of multiply-listed equity and exchange
traded fund (‘‘ETF’’) options for the
month of March 2020.15 The Exchange
believes that the ever-shifting market
share among the exchanges from month
to month demonstrates that market
participants can discontinue or reduce
use of certain categories of products and
services, terminate an existing
membership or determine to not become
a new member, and/or shift order flow,
in response to transaction fee changes.
For example, on February 28, 2019, the
Exchange’s affiliate, MIAX PEARL, LLC
(‘‘MIAX PEARL’’) filed with the
Commission a proposal to increase
Taker fees in certain Tiers for options
transactions in certain Penny classes for
Priority Customers and decrease Maker
rebates in certain Tiers for options
transactions in Penny classes for
Priority Customers (which fee was to be
effective March 1, 2019).16 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
13 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
14 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.
15 See id.
16 See Securities Exchange Act Release No. 85304
(March 13, 2019), 84 FR 10144 (March 19, 2019)
(SR–PEARL–2019–07).
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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 proposed changes are scheduled
to become operative April 1, 2020.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 17
in general, and furthers the objectives of
Section 6(b)(4) of the Act,18 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,19 in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Exchange believes its proposal to
decrease Simple Maker rebates in
certain Tiers for options transactions in
Penny classes for Priority Customers
and increase Simple Taker fees in
certain Tiers for options transactions in
Penny classes and non-Penny classes for
Priority Customers, Market Makers,
Non-MIAX Emerald Market Makers,
Firms, Broker-Dealers and Non-Priority
Customers provides for the equitable
allocation of reasonable dues and fees
and is not unfairly discriminatory for
the following reasons. 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
17 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
19 15 U.S.C. 78f(b)(1) and (b)(5).
18 15
PO 00000
Frm 00091
Fmt 4703
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investors and listed companies.’’ 20
There are currently 16 registered
options exchanges competing for order
flow. Based on publicly-available
information, and excluding index-based
options, no single exchange has more
than approximately 15% of the market
share of executed volume of multiplylisted equity and ETF options trades as
of March 24, 2020, for the month of
March 2020.21 Therefore, no exchange
possesses significant pricing power in
the execution of multiply-listed equity
and ETF options order flow. More
specifically, as of March 24, 2020, the
Exchange had an approximately 3.42%
market share of executed volume of
multiply-listed equity and ETF options
for the month of March 2020.22 The
Exchange cannot predict with certainty
the number of market participants that
would qualify for the higher Simple
Taker fees or lower Simple Maker
rebates for each of the proposed changes
as Members may continually shift
among the different Tiers from month to
month.
The Exchange believes that the evershifting market shares 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 transaction
and/or non-transaction fee changes. For
example, on February 28, 2019, the
Exchange’s affiliate, 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).23 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
decrease Simple Maker rebates in
20 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
21 See supra note 14.
22 See id.
23 See supra note 16.
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certain Tiers for options transactions in
Penny classes for Priority Customers
and increase Simple Taker fees in
certain Tiers for options transactions in
Penny classes and non-Penny classes for
Priority Customers, Market Makers,
Non-MIAX Emerald Market Makers,
Firms, Broker-Dealers and Non-Priority
Customers is reasonable, equitable and
not unfairly discriminatory because all
similarly situated market participants in
the same Origin type are subject to the
same tiered Maker rebates and Taker
fees and access to the Exchange is
offered on terms that are not unfairly
discriminatory. The Exchange believes
it is equitable and not unfairly
discriminatory to reduce the Simple
Maker rebate to Priority Customer
orders in Penny classes for competitive
and business 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.24 The Exchange now believes
that it is appropriate to further decrease
those specified Simple Maker rebates so
that they are more in line with other
exchanges, and will still remain highly
competitive such that they should
enable the Exchange to continue to
attract order flow and maintain market
share.25
Furthermore, the proposed decreases
to the Simple Maker rebates for Priority
Customers 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
decreases, 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.26 The Exchange believes that the
amount of such fees, as proposed to be
decreased, will continue to encourage
those market participants to send orders
to the Exchange. The Exchange further
believes that it is appropriate to
decrease the Simple Maker rebates for
Priority Customers in SPY, QQQ and
IWM options classes because these
select products are generally more
liquid than other options classes.
The proposed Simple Taker fee
adjustments in certain specified Tiers
applicable to certain orders submitted
by Priority Customers, Market Makers,
Non-MIAX Emerald Market Makers,
24 See
supra note 11.
supra note 12.
26 See id.
Firms, Broker-Dealers and Non-Priority
Customers in Penny and non-Penny
classes are reasonable, equitable and not
unfairly discriminatory because all
similarly situated market participants in
the same Origin type are subject to the
same tiered Taker fees and access to the
Exchange is offered on terms that are
not unfairly discriminatory. For
competitive and business reasons, the
Exchange initially set its Simple Taker
fees for such orders generally lower than
certain other options exchanges that
operate comparable maker/taker pricing
models.27 The Exchange now believes
that it is appropriate to further increase
those specified Simple Taker fees so
that they are more in line with other
exchanges, and will still remain highly
competitive such that they should
enable the Exchange to continue to
attract order flow and maintain market
share. The Exchange believes for these
reasons that increasing certain Simple
Taker fees for transactions in the
specified Tiers is equitable, reasonable
and not unfairly discriminatory, and
thus consistent with the Act.
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. The
Exchange believes that the proposed
changes in the specified Simple Maker
rebates and Simple Taker fees for the
applicable market participants should
continue to encourage the provision of
liquidity that enhances the quality of
the Exchange’s market and increases the
number of trading opportunities on the
Exchange for all participants who will
be able to compete for such
opportunities. The proposed rule
changes should enable the Exchange to
continue to attract and compete for
order flow with other exchanges.
However, this competition does not
create an undue burden on competition
but rather offers all market participants
the opportunity to receive the benefit of
competitive pricing.
The proposed Simple Maker rebate
decreases and Simple Taker fee
adjustments are intended to keep the
Exchange’s fees highly competitive with
those of other exchanges, and to
encourage liquidity and should enable
the Exchange to continue to attract and
compete for order flow with other
exchanges. The Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing venues if they
25 See
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16:28 Apr 08, 2020
deem fee levels at a particular venue to
be excessive. In such an environment,
the Exchange must continually adjust its
rebates and fees to remain competitive
with other exchanges and to attract
order flow. The Exchange believes that
the proposed rule changes reflect this
competitive environment because they
modify the Exchange’s fees in a manner
that encourages market participants to
continue to provide liquidity and to
send order flow to the Exchange.
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,28 and Rule
19b–4(f)(2) 29 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
EMERALD–2020–04 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–2020–04. This
file number should be included on the
28 15
27 See
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29 17
E:\FR\FM\09APN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
09APN1
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Federal Register / Vol. 85, No. 69 / Thursday, April 9, 2020 / Notices
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–2020–04, and
should be submitted on or before April
30, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07435 Filed 4–8–20; 8:45 am]
khammond on DSKJM1Z7X2PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88558; File No. SR–
CboeBZX–2020–007]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Order Approving
a Proposed Rule Change, as Modified
by Amendment No. 1, To Eliminate the
Requirement That an Intraday
Indicative Value Be Disseminated as
Set Forth Under Rule 14.11(c) for
Certain Series of Index Fund Shares
and Under Rule 14.11(i) for All Series
of Managed Fund Shares
April 3, 2020.
I. Introduction
On February 14, 2020, Cboe BZX
Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to eliminate the requirements
that an intraday indicative value be
disseminated under Rule 14.11(c) (Index
Fund Shares) for certain series of Index
Fund Shares and under Rule 14.11(i)
(Managed Fund Shares) for all series of
Managed Fund Shares. The proposed
rule change was published for comment
in the Federal Register on February 27,
2020.3 On March 18, 2020, the Exchange
filed Amendment No. 1 to the proposed
rule change.4 The Commission has
received no comments on the proposal.
This order approves the proposed rule
change, as modified by Amendment No.
1.
II. Description of the Proposed Rule
Change, as Modified by Amendment
No. 1
BZX Rules 14.11(c) and 14.11(i)
govern the listing and trading of Index
Fund Shares and Managed Fund Shares,
respectively, on the Exchange. BZX
Rules 14.11(c)(3)(C), (c)(6)(A), and
(c)(9)(B)(i)(e) as well as BZX Rules
14.11(i)(4)(B)(i) and (i)(4)(B)(iii)(b)
require that an intraday estimate of the
value of a share of each series (‘‘IIV’’) be
disseminated and updated at least every
15 seconds. The Exchange proposes to
eliminate the requirement to
disseminate an IIV for all series of
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 88259
(February 21, 2020), 85 FR 11419 (‘‘Notice’’).
4 In Amendment No. 1, the Exchange made
various technical changes. Accordingly,
Amendment No. 1 is not subject to notice and
comment. Amendment No. 1 is available at: https://
www.sec.gov/comments/sr-cboebzx-2020-007/
srcboebzx2020007-6993239-214728.pdf.
2 17
30 17
CFR 200.30–3(a)(12).
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Managed Fund Shares and for each
series of Index Fund Shares that
publishes its ‘‘Portfolio Holdings’’ 5 on
its website on a daily basis. The
Exchange also proposes to make
corresponding changes to the Managed
Fund Shares listing standards to remove
the term ‘‘Intraday Indicative Value’’
from the definitional section and to
eliminate the provisions relating to
halting trading in a series of Managed
Fund Shares when there is an
interruption to the dissemination of the
shares’ IIV.
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change, as
modified by Amendment No. 1, is
consistent with the Act and rules and
regulations thereunder applicable to a
national securities exchange.6 In
particular, the Commission finds that
the proposed rule change, as modified
by Amendment No. 1, is consistent with
Section 6(b)(5) of the Act,7 which
requires, among other things, that the
Exchange’s rules be designed to prevent
fraudulent and manipulative acts and
practices, 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.
As discussed above, BZX proposes to
eliminate the IIV dissemination
requirement for all series of Managed
Fund Shares, all of which are subject to
a portfolio dissemination requirement,8
5 The Exchange is proposing to define ‘‘Portfolio
Holdings’’ as the holdings of a particular series of
Index Fund Shares that will form the basis for the
calculation of its net asset value at the end of the
business day, and includes the following
information, to the extent applicable: (i) Ticker
symbol; (ii) CUSIP or other identifier; (iii)
description of the holding; (iv) identity of the
security, commodity, index, or other asset upon
which the derivative is based; (v) the strike price
for any options; (vi) the quantity of each security
or other asset held as measured by: (a) Par value;
(b) notional value; (c) number of shares; (d) number
of contracts; and (e) number of units; (vii) maturity
date; (viii) coupon rate; (ix) effective date; (x)
market value; and (xi) percentage weighting of the
holding in the portfolio. See proposed BZX Rule
14.11(c)(1)(F).
6 In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
7 15 U.S.C. 78f(b)(5).
8 See BZX Rule 14.11(i)(4)(B)(ii)(a) (requiring that
the Disclosed Portfolio for a series of Managed Fund
Shares be disseminated at least once daily and be
made available to all market participants at the
same time; and BZX Rule 14.11(i)(4)(B)(iii)(b)
(requiring that the Exchange consider suspension of
trading in and commence delisting proceedings for
a series of Managed Fund Shares where the
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]]>Agencies
[Federal Register Volume 85, Number 69 (Thursday, April 9, 2020)]
[Notices]
[Pages 20006-20012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07435]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88560; File No. SR-EMERALD-2020-04]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Fee Schedule
April 3, 2020.
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 March 31, 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 and II 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'').
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
[sic] principal office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Section (1)(a)(i) of the Fee
Schedule to: (i) Decrease Simple Maker (as defined below) rebates in
certain Tiers for options transactions in Penny classes (as defined
below) (including SPY, QQQ, and IWM options classes) for Priority
Customers; \3\ and (ii) increase Simple Taker (as defined below) fees
in certain Tiers for options transactions in Penny classes and non-
Penny classes for Priority Customers, Market Makers,\4\ and Non-MIAX
Emerald Market Makers, Firms, Broker-Dealers, and Non-Priority
Customers.
---------------------------------------------------------------------------
\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\ ``Market Maker'' means a Member registered with the Exchange
for the purpose of making markets in options contracts traded on the
Exchange. See the Definitions Section of the Fee Schedule and
Exchange Rule 100.
---------------------------------------------------------------------------
Background
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 \5\ 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,\6\ (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'' \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
[[Page 20007]]
also assessed lower transaction fees and smaller rebates for order
executions in standard option classes in the Penny Pilot Program \10\
(``Penny classes'') than for order executions in standard option
classes which are not in the Penny Pilot Program (``non-Penny
classes''), for which Members will be assessed a higher transaction
fees and larger rebates.
---------------------------------------------------------------------------
\5\ ``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.
\6\ ``Excluded Contracts'' means any contracts routed to an away
market for execution. See the Definitions Section of the Fee
Schedule.
\7\ The term ``Exchange System Disruption'' means an outage of a
Matching Engine or collective Matching Engines for a period of two
consecutive hour or more, during trading hours. See the Definitions
Section of the Fee Schedule.
\8\ A ``Matching Engine'' is a part of the MIAX Emerald
electronic system that processes options orders and trades on a
symbol-by-symbol basis. 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.
\9\ For a Priority Customer complex order taking liquidity in
both a Penny class and non-Penny class against Origins other than
Priority Customer, the Priority Customer order will receive a rebate
based on the Tier achieved.
\10\ See Securities Exchange Act Release No. 85225 (March 1,
2019), 84 FR 68353 (March 7, 2019) (SR-EMERALD-2019-06).
---------------------------------------------------------------------------
Currently, transaction rebates and fees for Penny and Non-Penny
classes are assessed according to the following tables:
Members and Their Affiliates in Penny Classes Simple/Complex/PRIME/cPRIME
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex PRIME/cPRIME[diam]
-----------------------------------------------------------------------------------------
Maker
(contra Maker
Origin Tier Taker origins (contra
Maker [supcaret] ex priority Taker Agency Contra Responder
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 [sdtri] 0.47 (0.25) (0.25) (0.25) 0.00 0.05 0.05
(0.48)
2 [sdtri] 0.47 (0.40) (0.40) (0.40) 0.00 0.05 0.05
(0.48)
3 [sdtri] 0.47 (0.45) (0.45) (0.45) 0.00 0.05 0.05
(0.48)
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
(contra Maker
Origin Tier Taker origins (contra Taker ~
Maker [supcaret] ex priority Agency Contra Responder
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
--------------------------------------------------------------------------------------------------------------------------------------------------------
[supcaret] 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.
[[Page 20008]]
* 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.
[sdtri] Simple Maker rebate in SPY, QQQ and IWM is ($0.50) for Priority Customer Origin in Tiers 1, 2 and 3.
Notes Accompanying Tables Above
During the Opening Rotation and the ABBO uncrossing, the per
contract rebate or fee will be waived for all Origins.
Simple Maker Rebates for Priority Customers
First, the Exchange proposes to decrease the Simple Maker rebates
in certain Tiers for options transactions in Penny classes (including
SPY, QQQ, and IWM options classes) for Priority Customers.
Specifically, the Exchange proposes to decrease the Simple Maker
rebates for Priority Customer orders in options in certain Penny
classes (excluding SPY, QQQ, and IWM) in Tier 1 from (0.48) to (0.43),
in Tier 2 from (0.48) to (0.43), and in Tier 3 from (0.48) to (0.43).
The Exchange next proposes to amend footnote ``[dtri]'' in Section
(1)(a)(i) of the Fee Schedule to decrease the Simple Maker rebate for
Priority Customer orders in SPY, QQQ and IWM options classes in Tiers
1, 2 and 3 from (0.50) to (0.45).
Simple Taker Fees for Priority Customers, Market Makers, Non-MIAX
Emerald Market Makers, Firm, Broker-Dealers, and Non-Priority Customers
in Penny Classes
The Exchange next proposes to increase the Simple Taker fees in
certain Tiers for options transactions in Penny classes for Priority
Customers, Market Makers, Non-MIAX Emerald Market Makers, Firms,
Broker-Dealers, and Non-Priority Customers. Specifically, the Exchange
proposes to increase the Simple Taker fees for Market Maker orders in
options in all Penny classes in Tier 4 from 0.48 to 0.50. The Exchange
next proposes to increase the Simple Taker fees for Non-MIAX Emerald
Market Maker orders in options in all Penny classes in Tier 4 from 0.48
to 0.50. The Exchange next proposes to increase the Simple Taker fees
for Firm Proprietary and Broker-Dealer orders in options in all Penny
classes in Tier 4 from 0.49 to 0.50. The Exchange next proposes to
increase the Simple Taker fees for Non-Priority Customer orders in
options in all Penny classes in Tier 4 from 0.49 to 0.50. The Exchange
next proposes to increase the Simple Taker fees for Priority Customer
orders contra Origins ex Priority Customer in options in all Penny
classes in Tiers 1-3 from 0.47 to 0.50, and in Tier 4 from 0.45 to
0.50. The Exchange next proposes to amend footnote ``[caret]'' in
Section (1)(a)(i) of the Fee Schedule to increase the Taker fees for
Simple Priority Customer orders contra Priority Customer in options in
Penny classes from 0.49 to 0.50.
Simple Taker Fees for Priority Customers, Market Makers, Non-MIAX
Emerald Market Makers, Firms, Broker-Dealers, and Non-Priority
Customers in Non-Penny Classes
The Exchange next proposes to increase the Simple Taker fees in
certain Tiers for options transactions in non-Penny classes for
Priority Customers, Market Makers, Non-MIAX Emerald Market Makers,
Firms, Broker-Dealers and Non-Priority Customers. Specifically, the
Exchange proposes to increase the Simple Taker fees for Market Maker
orders in options in non-Penny classes in Tiers 1-3 from 0.99 to 1.05,
and in Tier 4 from 0.94 to 1.05. The Exchange next proposes to increase
the Simple Taker fees for Non-MIAX Emerald Market Maker orders in
options in non-Penny classes in Tiers 1-3 from 0.99 to 1.05, and in
Tier 4 from 0.94 to 1.05. The Exchange next proposes to increase the
Simple Taker fees for Firm Proprietary and Broker-Dealer orders in
options in non-Penny classes in Tiers 1-3 from 0.99 to 1.05, and in
Tier 4 from 0.94 to 1.05. The Exchange next proposes to increase the
Simple Taker fees for Non-Priority Customer orders in options in non-
Penny classes in Tiers 1-3 from 0.99 to 1.05, and in Tier 4 from 0.94
to 1.05. Finally, the Exchange proposes to increase the Simple Taker
fees for Priority Customer orders contra Origins ex Priority Customer
in options in non-Penny classes in Tier 4 from 0.82 to 0.85.
The purpose of adjusting the specified Simple Taker fees and the
specified Simple Maker rebates 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.\11\ The Exchange now believes that it is appropriate to further
adjust these specified Maker rebates and Taker fees 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.\12\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 85393 (March 21,
2019), 84 FR 11599 (March 27, 2019) (SR-EMERALD-2019-15).
\12\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees.''
---------------------------------------------------------------------------
With all the proposed changes, Section (1)(a)(i) of the Fee
Schedule shall be the following:
Members and Their Affiliates In Penny Classes Simple/Complex/PRIME/cPRIME
--------------------------------------------------------------------------------------------------------------------------------------------------------
Simple Complex PRIME/cPRIME [diam]
-----------------------------------------------------------------------------------------
Maker
(contra Maker
Origin Tier Taker origins (contra
Maker [supcaret] ex priority Taker Agency Contra Responder
priority customer
customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker....................................... 1 ($0.35) $0.50 $0.10 $0.47 $0.50 $0.05 $0.05 $0.05
[[Page 20009]]
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) 0.50 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) 0.50 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) 0.50 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) 0.50 0.20 0.50 0.50 0.05 0.05 0.05
Priority Customer *................................ 1 [sdtri] 0.50 (0.25) (0.25) (0.25) 0.00 0.05 0.05
(0.43)
2 [sdtri] 0.50 (0.40) (0.40) (0.40) 0.00 0.05 0.05
(0.43)
3 [sdtri] 0.50 (0.45) (0.45) (0.45) 0.00 0.05 0.05
(0.43)
4 (0.53) 0.50 (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
(contra Maker
Origin Tier Taker origins (contra Taker ~
Maker [supcaret] ex priority Agency Contra Responder
priority customer
customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Market Maker....................................... 1 (0.45) 1.05 0.20 0.86 0.88 0.05 0.05 0.05
2 (0.45) 1.05 0.20 0.86 0.88 0.05 0.05 0.05
3 (0.45) 1.05 0.20 0.86 0.86 0.05 0.05 0.05
4 (0.75) 1.05 0.20 0.86 0.86 0.05 0.05 0.05
Non-MIAX Emerald Market Maker...................... 1 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
2 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
3 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
4 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
Firm Proprietary/Broker-Dealer..................... 1 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
2 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
3 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
4 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
Non-Priority Customer.............................. 1 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
2 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
3 (0.25) 1.05 0.20 0.88 0.88 0.05 0.05 0.05
4 (0.25) 1.05 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) 0.85 (0.87) (0.87) (0.85) 0.00 0.05 0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
[supcaret] 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 0.50 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.
[sdtri] Simple Maker rebate in SPY, QQQ and IWM is (0.45) for Priority Customer Origin in Tiers 1, 2 and 3.
[[Page 20010]]
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 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.'' \13\
---------------------------------------------------------------------------
\13\ 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 more than approximately 15%
market share.\14\ Therefore, no exchange possesses significant pricing
power. More specifically, as of March 24, 2020, the Exchange had an
approximately 3.42% market share of executed volume of multiply-listed
equity and exchange traded fund (``ETF'') options for the month of
March 2020.\15\ The Exchange believes that the ever-shifting market
share among the exchanges from month to month demonstrates that market
participants can discontinue or reduce use of certain categories of
products and services, terminate an existing membership or determine to
not become a new member, and/or shift order flow, in response to
transaction fee changes. For example, on February 28, 2019, the
Exchange's affiliate, MIAX PEARL, LLC (``MIAX PEARL'') filed with the
Commission a proposal to increase Taker fees in certain Tiers for
options transactions in certain Penny classes for Priority Customers
and decrease Maker rebates in certain Tiers for options transactions in
Penny classes for Priority Customers (which fee was to be effective
March 1, 2019).\16\ 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.
---------------------------------------------------------------------------
\14\ 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.
\15\ See id.
\16\ See Securities Exchange Act Release No. 85304 (March 13,
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
---------------------------------------------------------------------------
The proposed changes are scheduled to become operative April 1,
2020.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \17\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\18\ 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,\19\ in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanisms of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(4).
\19\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------
The Exchange believes its proposal to decrease Simple Maker rebates
in certain Tiers for options transactions in Penny classes for Priority
Customers and increase Simple Taker fees in certain Tiers for options
transactions in Penny classes and non-Penny classes for Priority
Customers, Market Makers, Non-MIAX Emerald Market Makers, Firms,
Broker-Dealers and Non-Priority Customers provides for the equitable
allocation of reasonable dues and fees and is not unfairly
discriminatory for the following reasons. 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.'' \20\ There are currently
16 registered options exchanges competing for order flow. Based on
publicly-available information, and excluding index-based options, no
single exchange has more than approximately 15% of the market share of
executed volume of multiply-listed equity and ETF options trades as of
March 24, 2020, for the month of March 2020.\21\ Therefore, no exchange
possesses significant pricing power in the execution of multiply-listed
equity and ETF options order flow. More specifically, as of March 24,
2020, the Exchange had an approximately 3.42% market share of executed
volume of multiply-listed equity and ETF options for the month of March
2020.\22\ The Exchange cannot predict with certainty the number of
market participants that would qualify for the higher Simple Taker fees
or lower Simple Maker rebates for each of the proposed changes as
Members may continually shift among the different Tiers from month to
month.
---------------------------------------------------------------------------
\20\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
\21\ See supra note 14.
\22\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market shares 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 transaction and/or non-
transaction fee changes. For example, on February 28, 2019, the
Exchange's affiliate, 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).\23\ 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.
---------------------------------------------------------------------------
\23\ See supra note 16.
---------------------------------------------------------------------------
The Exchange believes its proposal to decrease Simple Maker rebates
in
[[Page 20011]]
certain Tiers for options transactions in Penny classes for Priority
Customers and increase Simple Taker fees in certain Tiers for options
transactions in Penny classes and non-Penny classes for Priority
Customers, Market Makers, Non-MIAX Emerald Market Makers, Firms,
Broker-Dealers and Non-Priority Customers is reasonable, equitable and
not unfairly discriminatory because all similarly situated market
participants in the same Origin type are subject to the same tiered
Maker rebates and Taker fees and access to the Exchange is offered on
terms that are not unfairly discriminatory. The Exchange believes it is
equitable and not unfairly discriminatory to reduce the Simple Maker
rebate to Priority Customer orders in Penny classes for competitive and
business 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.\24\ The Exchange
now believes that it is appropriate to further decrease those specified
Simple Maker rebates so that they are more in line with other
exchanges, and will still remain highly competitive such that they
should enable the Exchange to continue to attract order flow and
maintain market share.\25\
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\24\ See supra note 11.
\25\ See supra note 12.
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Furthermore, the proposed decreases to the Simple Maker rebates for
Priority Customers 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 decreases, 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.\26\ The Exchange believes that
the amount of such fees, as proposed to be decreased, will continue to
encourage those market participants to send orders to the Exchange. The
Exchange further believes that it is appropriate to decrease the Simple
Maker rebates for Priority Customers in SPY, QQQ and IWM options
classes because these select products are generally more liquid than
other options classes.
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\26\ See id.
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The proposed Simple Taker fee adjustments in certain specified
Tiers applicable to certain orders submitted by Priority Customers,
Market Makers, Non-MIAX Emerald Market Makers, Firms, Broker-Dealers
and Non-Priority Customers in Penny and non-Penny classes are
reasonable, equitable and not unfairly discriminatory because all
similarly situated market participants in the same Origin type are
subject to the same tiered Taker fees and access to the Exchange is
offered on terms that are not unfairly discriminatory. For competitive
and business reasons, the Exchange initially set its Simple Taker fees
for such orders generally lower than certain other options exchanges
that operate comparable maker/taker pricing models.\27\ The Exchange
now believes that it is appropriate to further increase those specified
Simple Taker fees so that they are more in line with other exchanges,
and will still remain highly competitive such that they should enable
the Exchange to continue to attract order flow and maintain market
share. The Exchange believes for these reasons that increasing certain
Simple Taker fees for transactions in the specified Tiers is equitable,
reasonable and not unfairly discriminatory, and thus consistent with
the Act.
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\27\ See supra notes 11 and 12.
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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. The Exchange believes that the
proposed changes in the specified Simple Maker rebates and Simple Taker
fees for the applicable market participants should continue to
encourage the provision of liquidity that enhances the quality of the
Exchange's market and increases the number of trading opportunities on
the Exchange for all participants who will be able to compete for such
opportunities. The proposed rule changes should enable the Exchange to
continue to attract and compete for order flow with other exchanges.
However, this competition does not create an undue burden on
competition but rather offers all market participants the opportunity
to receive the benefit of competitive pricing.
The proposed Simple Maker rebate decreases and Simple Taker fee
adjustments are intended to keep the Exchange's fees highly competitive
with those of other exchanges, and to encourage liquidity and should
enable the Exchange to continue to attract and compete for order flow
with other exchanges. 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 rebates and fees to remain competitive with other exchanges and to
attract order flow. The Exchange believes that the proposed rule
changes reflect this competitive environment because they modify the
Exchange's fees in a manner that encourages market participants to
continue to provide liquidity and to send order flow to the Exchange.
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,\28\ and Rule 19b-4(f)(2) \29\ 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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\28\ 15 U.S.C. 78s(b)(3)(A)(ii).
\29\ 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-2020-04 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-2020-04. This
file number should be included on the
[[Page 20012]]
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-2020-04, and should be submitted on or before April 30, 2020.
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\30\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07435 Filed 4-8-20; 8:45 am]
BILLING CODE 8011-01-P
