Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 60498-60503 [2020-21141]
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Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89927; File No. SR–
EMERALD–2020–07]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee
Schedule
September 21, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 8, 2020, MIAX Emerald, LLC
(‘‘MIAX Emerald’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
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 principal
office, and at the Commission’s Public
Reference Room.
khammond on DSKJM1Z7X2PROD with 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
Section 1)a)i) of the Fee Schedule to
lower the Simple Maker (as defined
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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below) rebates in Tier 4 for options
transactions in Penny classes and nonPenny classes (as defined below) for
executed Priority Customers 3 orders
when the contra is an Affiliated 4 Market
Maker.5
The proposed change is scheduled to
become operative September 8, 2020.
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
shall apply to all Origin types by the
Member. The monthly volume
thresholds for each method, associated
with each Tier, are calculated as the
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 ‘‘Affiliate’’ means (i) an affiliate of a Member of
at least 75% common ownership between the firms
as reflected on each firm’s Form BD, Schedule A,
or (ii) the Appointed Market Maker of an Appointed
EEM (or, conversely, the Appointed EEM of an
Appointed Market Maker). An ‘‘Appointed Market
Maker’’ is a MIAX Emerald Market Maker (who
does not otherwise have a corporate affiliation
based upon common ownership with an EEM) that
has been appointed by an EEM and an ‘‘Appointed
EEM’’ is an EEM (who does not otherwise have a
corporate affiliation based upon common
ownership with a MIAX Emerald Market Maker)
that has been appointed by a MIAX Emerald Market
Maker, pursuant to the following process. A MIAX
Emerald Market Maker appoints an EEM and an
EEM appoints a MIAX Emerald Market Maker, for
the purposes of the Fee Schedule, by each
completing and sending an executed Volume
Aggregation Request Form by email to
membership@miaxoptions.com no later than 2
business days prior to the first business day of the
month in which the designation is to become
effective. Transmittal of a validly completed and
executed form to the Exchange along with the
Exchange’s acknowledgement of the effective
designation to each of the Market Maker and EEM
will be viewed as acceptance of the appointment.
The Exchange will only recognize one designation
per Member. A Member may make a designation
not more than once every 12 months (from the date
of its most recent designation), which designation
shall remain in effect unless or until the Exchange
receives written notice submitted 2 business days
prior to the first business day of the month from
either Member indicating that the appointment has
been terminated. Designations will become
operative on the first business day of the effective
month and may not be terminated prior to the end
of the month. Execution data and reports will be
provided to both parties. See the Definitions
Section of the Fee Schedule.
5 ‘‘Market Maker’’ refers to ‘‘Lead Market Maker’’
(‘‘LMM’’), ‘‘Primary Lead Market Maker’’ (‘‘PLMM’’)
and ‘‘Registered Market Maker’’ (‘‘RMM’’),
collectively. See the Definitions Section of the Fee
Schedule and Exchange Rule 100.
PO 00000
Frm 00083
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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
also assessed lower transaction fees and
smaller rebates for order executions in
standard option classes in the Penny
Interval Program 10 (‘‘Penny classes’’)
than for order executions in standard
option classes which are not in the
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. 88993
(June 2, 2020), 85 FR 35145 (June 8, 2020) (SR–
EMERALD–2020–05) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
To Amend Exchange Rule 510, Minimum Price
Variations and Minimum Trading Increments, To
Conform the Rule to Section 3.1 of the Plan for the
Purpose of Developing and Implementing
Procedures Designed To Facilitate the Listing and
Trading of Standardized Options).
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Penny Interval 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 * .....................
PRIME/cPRIME ◊
Complex #
Taker ∧
Maker
(contra
origins
ex priority
customer)
Maker
(contra
priority
customer
origin)
Taker
Agency
Contra
Responder
1
2
3
4
($0.35)
(0.35)
(0.35)
(0.45)
$0.50
0.50
0.50
0.50
$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 (0.43)
S (0.43)
S (0.43)
(0.53)
0.50
.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.
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# 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.
Notes Accompanying Tables Above
During the Opening Rotation and the ABBO uncrossing, the per contract rebate or fee will be waived for all Origins.
Proposed Changes
The Exchange now proposes to lower
the Simple Maker rebates in Tier 4 for
options transactions in Penny classes
and non-Penny classes for executed
Priority Customers orders when the
contra is an Affiliated Market Maker.
Specifically, the Exchange proposes to
lower the Simple Maker rebate for
executed Priority Customer orders in
options in Penny classes in Tier 4 from
($0.53) to ($0.49) when the contra is an
Affiliated Market Maker. The Exchange
also proposes to lower the Simple
Maker rebate for executed Priority
Customer orders in options in nonPenny classes in Tier 4 from ($1.05) to
($0.95) when the contra is an Affiliated
Market Maker.
In order to differentiate between the
proposed lower Tier 4 Simple Maker
rebate in Penny and non-Penny classes
when the contra is an Affiliated Market
Maker, the Exchange proposes to insert
two new symbols after the symbol
‘‘S’’ 11 immediately following the table
of rebates and fees in Section 1)a)i of the
Fee Schedule. In particular, the
Exchange proposes to adopt new symbol
‘‘b,’’ for the Penny classes table and the
following explanatory sentences: ‘‘This
Maker rebate is for executed Priority
Customer Simple Orders when the
contra is not an Affiliated Market
Maker. When the contra is an Affiliated
Market Maker, this Maker rebate for
executed Priority Customer Simple
Orders will be ($0.49).’’ The Exchange
also proposes to adopt new symbol ‘‘■,’’
for the non-Penny classes table and the
following explanatory sentences: ‘‘This
Maker rebate is for executed Priority
Customer Simple Orders when the
contra is not an Affiliated Market
Maker. When the contra is an Affiliated
Market Maker, this Maker rebate for
executed Priority Customer Simple
Orders will be ($0.95).’’ Accordingly,
the Exchange proposes to insert the new
symbols ‘‘b’’ and ‘‘■’’ as footnotes for
the current Simple Maker rebates for
Priority Customer orders in options in
Penny and non-Penny classes in Tier 4
of ($0.53) and ($1.05), respectively.
The purpose of adjusting 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.12 The Exchange now believes
that it is appropriate to further adjust
these specified Maker rebates so that
they are more in line with other
exchanges, but will still remain highly
competitive such that they should
enable the Exchange to continue to
attract order flow and maintain market
share.13
With the proposed changes, Section
1)a)i) of the Fee Schedule will be as
follows:
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 ..
khammond on DSKJM1Z7X2PROD with NOTICES
Non-Priority Customer ................
11 See
Fee Schedule, Section 1)a)i.
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Taker ∧
Maker
(contra
origins
ex priority
customer)
Maker
(contra
priority
customer
origin)
Agency
Contra
Responder
($0.35)
(0.35)
(0.35)
(0.45)
$0.50
0.50
0.50
0.50
$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
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
(0.25)
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
0.50
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
0.50
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
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
(0.25)
0.50
0.50
0.50
0.50
0.50
0.20
(0.25)
(0.40)
(0.45)
(0.50)
0.50
(0.25)
(0.40)
(0.45)
(0.50)
0.50
(0.25)
(0.40)
(0.45)
(0.50)
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
S (0.43)
S (0.43)
S (0.43)
b (0.53)
12 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
1
2
3
4
4
1
2
3
4
Priority Customer * .....................
PRIME/cPRIME ◊
Complex #
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13 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees.’’
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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 ................
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
khammond on DSKJM1Z7X2PROD 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 $0.50 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.
b This Maker rebate is for executed Priority Customer Simple Orders when contra is not an Affiliated Market Maker. When the contra is an Affiliated Market Maker, this Maker rebate for executed Priority Customer Simple Orders will be ($0.49).
■ This Maker rebate is for executed Priority Customer Simple Orders when the contra is not an Affiliated Market Maker. When the contra is an
Affiliated Market Maker, this Maker rebate for executed Priority Customer Simple Orders will be ($0.95).
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.’’ 14
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
14 See
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
VerDate Sep<11>2014
18:25 Sep 24, 2020
Jkt 250001
than approximately 16% market
share.15 Therefore, no exchange
possesses significant pricing power.
More specifically, for the month of
August, the Exchange had a market
share of approximately 3.24% of
executed volume of multiply-listed
equity options.16
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can discontinue or reduce use of certain
categories of products and services,
terminate an existing membership or
determine to not become a new member,
15 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.
16 See id.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
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).17 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
17 See Securities Exchange Act Release No. 85304
(March 13, 2019), 84 FR 10144 (March 19, 2019)
(SR–PEARL–2019–07).
E:\FR\FM\25SEN1.SGM
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Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Notices
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 also notes that at least
one other competing exchange similarly
provides for different pricing dependent
upon whether the executing buyer and
seller are the same market participant or
have some form of common
ownership.18
khammond on DSKJM1Z7X2PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 19
in general, and furthers the objectives of
Section 6(b)(4) of the Act,20 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,21 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
18 See Nasdaq Options Pricing Schedule, Options
7, Section 2(1), note 2 (Participants that add 1.30%
of Customer, Professional, Firm, Broker-Dealer or
Non-NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total
industry customer equity and ETF option ADV
contracts per day in a month will be subject to the
following pricing applicable to executions: A $0.48
per contract Penny Pilot Options Fee for Removing
Liquidity when the Participant is (i) both the buyer
and the seller or (ii) the Participant removes
liquidity from another Participant under Common
Ownership. Participants that add 1.50% of
Customer, Professional, Firm, Broker-Dealer or NonNOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total
industry customer equity and ETF option ADV
contracts per day in a month and meet or exceed
the cap for The Nasdaq Stock Market Opening Cross
during the month will be subject to the following
pricing applicable to executions less than 10,000
contracts: A $0.32 per contract Penny Pilot Options
Fee for Removing Liquidity when the Participant is
(i) both the buyer and seller or (ii) the Participant
removes liquidity from another Participant under
Common Ownership. Participants that add 1.75%
of Customer, Professional, Firm, Broker-Dealer or
Non-NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total
industry customer equity and ETF option ADV
contracts per day in a month will be subject to the
following pricing applicable to executions less than
10,000 contracts: A $0.32 per contract Penny Pilot
Options Fee for Removing Liquidity when the
Participant is (i) both the buyer and seller or (ii) the
Participant removes liquidity from another
Participant under Common Ownership.).
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(4).
21 15 U.S.C. 78f(b)(1) and (b)(5).
VerDate Sep<11>2014
18:25 Sep 24, 2020
Jkt 250001
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 its Simple Maker rebates in
Tier 4 for options transactions in Penny
and non-Penny classes for Priority
Customers orders when trading contra
to an Affiliated Market Maker 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.’’ 22
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 16% of the market
share of executed volume of multiplylisted equity and ETF options trades
based on the reported trade volumes for
the month of August.23 Therefore, no
exchange possesses significant pricing
power in the execution of multiplylisted equity and ETF options order
flow. More specifically, for the month of
August, the Exchange had a market
share of approximately 3.24% of
executed volume of multiply-listed
equity options.24 The Exchange cannot
predict with certainty the number of
market participants that would qualify
for the lower Simple Maker rebates as
Members 25 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
22 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
23 See supra note 15.
24 See id.
25 ‘‘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.
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
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).26 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 the Simple Maker rebates in
Tier 4 for options transactions in Penny
and non-Penny classes for 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 rebates to Priority Customer
orders in Penny and non-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.27 The
Exchange now believes that it is
appropriate to further decrease the
specified Simple Maker rebates so that
they are more in line with other
exchanges, and will still remain highly
competitive such that they should
enable the Exchange to continue to
attract order flow and maintain market
share.28
Furthermore, the proposed decrease
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,
26 See
supra note 17.
supra note 12.
28 See supra note 13.
27 See
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Federal Register / Vol. 85, No. 187 / Friday, September 25, 2020 / Notices
and protects investors and the public
interest, because even with the decrease,
the Exchange’s proposed Simple Maker
rebates for such orders still remain
highly competitive with certain other
options exchanges offering comparable
pricing models, and should enable the
Exchange to continue to attract order
flow and maintain market share.29 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.
khammond on DSKJM1Z7X2PROD with NOTICES
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 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 decreases for certain
Simple Maker rebates 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,30 and Rule
19b–4(f)(2) 31 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–2020–07 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–2020–07. 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
30 15
29 See
id.
VerDate Sep<11>2014
31 17
18:25 Sep 24, 2020
Jkt 250001
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
Frm 00088
Fmt 4703
Sfmt 4703
60503
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–2020–07 and
should be submitted on or before
October 16, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–21141 Filed 9–24–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–485, OMB Control No.
3235–0547]
Submission for OMB Review;
Comment Request
Extension:
‘‘Investor Form’’
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request to approve the
collection of information discussed
below.
Each year the Commission receives
several thousand contacts from
investors who have complaints or
questions on a wide range of
investment-related issues. To make it
easier for the public to contact the
agency electronically, the Commission’s
Office of Investor Education and
Advocacy (‘‘OIEA’’) created an
electronic form (the Investor Form) that
provides drop down options to choose
from in order to categorize the investor’s
complaint or question, and may also
32 17
E:\FR\FM\25SEN1.SGM
CFR 200.30–3(a)(12).
25SEN1
]]>Agencies
[Federal Register Volume 85, Number 187 (Friday, September 25, 2020)]
[Notices]
[Pages 60498-60503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21141]
[[Page 60498]]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89927; File No. SR-EMERALD-2020-07]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
September 21, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 8, 2020, MIAX Emerald, LLC (``MIAX Emerald'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\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
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 lower the Simple Maker (as defined below) rebates in Tier 4 for
options transactions in Penny classes and non-Penny classes (as defined
below) for executed Priority Customers \3\ orders when the contra is an
Affiliated \4\ Market Maker.\5\
---------------------------------------------------------------------------
\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\ ``Affiliate'' means (i) an affiliate of a Member of at least
75% common ownership between the firms as reflected on each firm's
Form BD, Schedule A, or (ii) the Appointed Market Maker of an
Appointed EEM (or, conversely, the Appointed EEM of an Appointed
Market Maker). An ``Appointed Market Maker'' is a MIAX Emerald
Market Maker (who does not otherwise have a corporate affiliation
based upon common ownership with an EEM) that has been appointed by
an EEM and an ``Appointed EEM'' is an EEM (who does not otherwise
have a corporate affiliation based upon common ownership with a MIAX
Emerald Market Maker) that has been appointed by a MIAX Emerald
Market Maker, pursuant to the following process. A MIAX Emerald
Market Maker appoints an EEM and an EEM appoints a MIAX Emerald
Market Maker, for the purposes of the Fee Schedule, by each
completing and sending an executed Volume Aggregation Request Form
by email to [email protected] no later than 2 business days
prior to the first business day of the month in which the
designation is to become effective. Transmittal of a validly
completed and executed form to the Exchange along with the
Exchange's acknowledgement of the effective designation to each of
the Market Maker and EEM will be viewed as acceptance of the
appointment. The Exchange will only recognize one designation per
Member. A Member may make a designation not more than once every 12
months (from the date of its most recent designation), which
designation shall remain in effect unless or until the Exchange
receives written notice submitted 2 business days prior to the first
business day of the month from either Member indicating that the
appointment has been terminated. Designations will become operative
on the first business day of the effective month and may not be
terminated prior to the end of the month. Execution data and reports
will be provided to both parties. See the Definitions Section of the
Fee Schedule.
\5\ ``Market Maker'' refers to ``Lead Market Maker'' (``LMM''),
``Primary Lead Market Maker'' (``PLMM'') and ``Registered Market
Maker'' (``RMM''), collectively. See the Definitions Section of the
Fee Schedule and Exchange Rule 100.
---------------------------------------------------------------------------
The proposed change is scheduled to become operative September 8,
2020.
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 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 also assessed lower transaction fees and smaller rebates
for order executions in standard option classes in the Penny Interval
Program \10\ (``Penny classes'') than for order executions in standard
option classes which are not in the
[[Page 60499]]
Penny Interval Program (``non-Penny classes''), for which Members will
be assessed a higher transaction fees and larger rebates.
---------------------------------------------------------------------------
\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. 88993 (June 2,
2020), 85 FR 35145 (June 8, 2020) (SR-EMERALD-2020-05) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Exchange Rule 510, Minimum Price Variations and Minimum
Trading Increments, To Conform the Rule to Section 3.1 of the Plan
for the Purpose of Developing and Implementing Procedures Designed
To Facilitate the Listing and Trading of Standardized Options).
---------------------------------------------------------------------------
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) 0.50 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) .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
Maker [supcaret] ex priority Taker ~ 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.
[[Page 60500]]
# 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.
Notes Accompanying Tables Above
During the Opening Rotation and the ABBO uncrossing, the per contract rebate or fee will be waived for all Origins.
Proposed Changes
The Exchange now proposes to lower the Simple Maker rebates in Tier
4 for options transactions in Penny classes and non-Penny classes for
executed Priority Customers orders when the contra is an Affiliated
Market Maker. Specifically, the Exchange proposes to lower the Simple
Maker rebate for executed Priority Customer orders in options in Penny
classes in Tier 4 from ($0.53) to ($0.49) when the contra is an
Affiliated Market Maker. The Exchange also proposes to lower the Simple
Maker rebate for executed Priority Customer orders in options in non-
Penny classes in Tier 4 from ($1.05) to ($0.95) when the contra is an
Affiliated Market Maker.
In order to differentiate between the proposed lower Tier 4 Simple
Maker rebate in Penny and non-Penny classes when the contra is an
Affiliated Market Maker, the Exchange proposes to insert two new
symbols after the symbol ``[dtri]'' \11\ immediately following the
table of rebates and fees in Section 1)a)i of the Fee Schedule. In
particular, the Exchange proposes to adopt new symbol ``[squ],'' for
the Penny classes table and the following explanatory sentences: ``This
Maker rebate is for executed Priority Customer Simple Orders when the
contra is not an Affiliated Market Maker. When the contra is an
Affiliated Market Maker, this Maker rebate for executed Priority
Customer Simple Orders will be ($0.49).'' The Exchange also proposes to
adopt new symbol ``[squf],'' for the non-Penny classes table and the
following explanatory sentences: ``This Maker rebate is for executed
Priority Customer Simple Orders when the contra is not an Affiliated
Market Maker. When the contra is an Affiliated Market Maker, this Maker
rebate for executed Priority Customer Simple Orders will be ($0.95).''
Accordingly, the Exchange proposes to insert the new symbols ``[squ]''
and ``[squf]'' as footnotes for the current Simple Maker rebates for
Priority Customer orders in options in Penny and non-Penny classes in
Tier 4 of ($0.53) and ($1.05), respectively.
---------------------------------------------------------------------------
\11\ See Fee Schedule, Section 1)a)i.
---------------------------------------------------------------------------
The purpose of adjusting 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.\12\ The Exchange now
believes that it is appropriate to further adjust these specified Maker
rebates so that they are more in line with other exchanges, but will
still remain highly competitive such that they should enable the
Exchange to continue to attract order flow and maintain market
share.\13\
---------------------------------------------------------------------------
\12\ See Securities Exchange Act Release No. 85393 (March 21,
2019), 84 FR 11599 (March 27, 2019) (SR-EMERALD-2019-15).
\13\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees.''
---------------------------------------------------------------------------
With the proposed changes, Section 1)a)i) of the Fee Schedule will
be as follows:
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) 0.50 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 [supsqu] 0.50 (0.50) (0.50) (0.50) 0.00 0.05 0.05
(0.53)
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 60501]]
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
Maker [supcaret] ex priority Taker ~ 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 [squf] 0.85 (0.87) (0.87) (0.85) 0.00 0.05 0.05
(1.05)
--------------------------------------------------------------------------------------------------------------------------------------------------------
[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 $0.50 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.
[supsqu] This Maker rebate is for executed Priority Customer Simple Orders when contra is not an Affiliated Market Maker. When the contra is an
Affiliated Market Maker, this Maker rebate for executed Priority Customer Simple Orders will be ($0.49).
[squf] This Maker rebate is for executed Priority Customer Simple Orders when the contra is not an Affiliated Market Maker. When the contra is an
Affiliated Market Maker, this Maker rebate for executed Priority Customer Simple Orders will be ($0.95).
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.'' \14\
---------------------------------------------------------------------------
\14\ 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 16%
market share.\15\ Therefore, no exchange possesses significant pricing
power. More specifically, for the month of August, the Exchange had a
market share of approximately 3.24% of executed volume of multiply-
listed equity options.\16\
---------------------------------------------------------------------------
\15\ 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.
\16\ See id.
---------------------------------------------------------------------------
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).\17\ 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
[[Page 60502]]
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 also notes that at least one other competing exchange
similarly provides for different pricing dependent upon whether the
executing buyer and seller are the same market participant or have some
form of common ownership.\18\
---------------------------------------------------------------------------
\17\ See Securities Exchange Act Release No. 85304 (March 13,
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
\18\ See Nasdaq Options Pricing Schedule, Options 7, Section
2(1), note 2 (Participants that add 1.30% of Customer, Professional,
Firm, Broker-Dealer or Non-NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total industry customer
equity and ETF option ADV contracts per day in a month will be
subject to the following pricing applicable to executions: A $0.48
per contract Penny Pilot Options Fee for Removing Liquidity when the
Participant is (i) both the buyer and the seller or (ii) the
Participant removes liquidity from another Participant under Common
Ownership. Participants that add 1.50% of Customer, Professional,
Firm, Broker-Dealer or Non-NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total industry customer
equity and ETF option ADV contracts per day in a month and meet or
exceed the cap for The Nasdaq Stock Market Opening Cross during the
month will be subject to the following pricing applicable to
executions less than 10,000 contracts: A $0.32 per contract Penny
Pilot Options Fee for Removing Liquidity when the Participant is (i)
both the buyer and seller or (ii) the Participant removes liquidity
from another Participant under Common Ownership. Participants that
add 1.75% of Customer, Professional, Firm, Broker-Dealer or Non-NOM
Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot
Options of total industry customer equity and ETF option ADV
contracts per day in a month will be subject to the following
pricing applicable to executions less than 10,000 contracts: A $0.32
per contract Penny Pilot Options Fee for Removing Liquidity when the
Participant is (i) both the buyer and seller or (ii) the Participant
removes liquidity from another Participant under Common Ownership.).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \19\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\20\ 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,\21\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4).
\21\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------
The Exchange believes its proposal to decrease its Simple Maker
rebates in Tier 4 for options transactions in Penny and non-Penny
classes for Priority Customers orders when trading contra to an
Affiliated Market Maker 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.'' \22\
---------------------------------------------------------------------------
\22\ 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 16%
of the market share of executed volume of multiply-listed equity and
ETF options trades based on the reported trade volumes for the month of
August.\23\ Therefore, no exchange possesses significant pricing power
in the execution of multiply-listed equity and ETF options order flow.
More specifically, for the month of August, the Exchange had a market
share of approximately 3.24% of executed volume of multiply-listed
equity options.\24\ The Exchange cannot predict with certainty the
number of market participants that would qualify for the lower Simple
Maker rebates as Members \25\ may continually shift among the different
Tiers from month to month.
---------------------------------------------------------------------------
\23\ See supra note 15.
\24\ See id.
\25\ ``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.
---------------------------------------------------------------------------
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).\26\ 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.
---------------------------------------------------------------------------
\26\ See supra note 17.
---------------------------------------------------------------------------
The Exchange believes its proposal to decrease the Simple Maker
rebates in Tier 4 for options transactions in Penny and non-Penny
classes for 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
rebates to Priority Customer orders in Penny and non-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.\27\ The
Exchange now believes that it is appropriate to further decrease the
specified Simple Maker rebates so that they are more in line with other
exchanges, and will still remain highly competitive such that they
should enable the Exchange to continue to attract order flow and
maintain market share.\28\
---------------------------------------------------------------------------
\27\ See supra note 12.
\28\ See supra note 13.
---------------------------------------------------------------------------
Furthermore, the proposed decrease 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,
[[Page 60503]]
and protects investors and the public interest, because even with the
decrease, the Exchange's proposed Simple Maker rebates for such orders
still remain highly competitive with certain other options exchanges
offering comparable pricing models, and should enable the Exchange to
continue to attract order flow and maintain market share.\29\ 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.
---------------------------------------------------------------------------
\29\ See id.
---------------------------------------------------------------------------
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 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 decreases for certain Simple Maker rebates 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,\30\ and Rule 19b-4(f)(2) \31\ 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.
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78s(b)(3)(A)(ii).
\31\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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-2020-07 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-2020-07. 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-2020-07 and should be submitted
on or before October 16, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-21141 Filed 9-24-20; 8:45 am]
BILLING CODE 8011-01-P
