Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Emerald Fee Schedule To Adopt Fees for a New Data Product Called the Liquidity Taker Event Report-Complex Orders, 14603-14607 [2022-05374]
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Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices
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–MIAX–2022–11. 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–MIAX–2022–11, and
should be submitted on or before April
5, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–05373 Filed 3–14–22; 8:45 am]
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94386; File No. SR–
EMERALD–2022–08]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the MIAX
Emerald Fee Schedule To Adopt Fees
for a New Data Product Called the
Liquidity Taker Event Report—
Complex Orders
March 9, 2022.
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 February
25, 2022, MIAX Emerald, LLC (‘‘MIAX
Emerald’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the 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’’) to adopt fees for a
new data product known as the
Liquidity Taker Event Report—Complex
Orders.3
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.
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.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See, generally, Exchange Rule 531(b).
2 17
32
17 CFR 200.30–3(a)(12).
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14603
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange recently established a
new data product known as the
Liquidity Taker Event Report—Complex
Orders (the ‘‘Complex Order Report’’),4
which will be available for purchase by
Exchange Members 5 on a voluntary
basis. The Exchange now proposes to
adopt fees for the Complex Order
Report, which is described under
Exchange Rule 531(b).6 The Complex
Order Report is an optional product
available to Members. The Exchange
notes that the proposed fees for the
Complex Order Report are identical to
the fees the Exchange recently
established for subscribers to a similar
report known as the Liquidity Taker
Event Report—Simple Orders (the
‘‘Simple Order Report’’).7 As further
described below, the Exchange proposes
to also offer a discounted combined fee
for Members who purchase annual
subscriptions to both the Simple Order
Report and Complex Order Report.
By way of background, the Complex
Order Report is a daily report that
provides a Member (‘‘Recipient
Member’’) with its liquidity response
time details for executions of a Complex
Order resting on the Strategy Book,8
where that Recipient Member attempted
to execute against such resting Complex
Order 9 within a certain timeframe. It is
important to note that the content of the
Complex Order Report is specific to the
Recipient Member and the Complex
4 See Securities Exchange Act Release No. 94136
(February 2, 2022), 87 FR 7223 (February 8, 2022)
(SR–EMERALD–2022–02).
5 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
the Definitions Section of the Fee Schedule and
Exchange Rule 100.
6 See Exchange Rule 531(b).
7 See Securities Exchange Act Release Nos. 91787
(May 6, 2021), 86 FR 26111 (May 12, 2021) (SR–
EMERALD–2021–09) (Order Approving Proposed
Rule Change To Adopt Exchange Rule 531(a),
Reports, To Provide for a New ‘‘Liquidity Taker
Event Report’’); 92028 (May 26, 2021), 86 FR 29608
(June 2, 2021) (SR–EMERALD–2021–19) (Notice of
Filing and Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee Schedule To Adopt
Fees for a New Data Product Known as the
Liquidity Taker Event Report). See Exchange Rule
531(a) for the rule text of the Simple Order Report.
See also Fee Schedule, Section 7), Reports, for the
fees for the Simple Order Report.
8 The term ‘‘Strategy Book’’ means the Exchange’s
electronic book of complex orders and complex
quotes. See Exchange Rule 518(a)(17).
9 Only displayed orders will be included in the
Complex Order Report. The Exchange notes that it
does not currently offer any non-displayed orders
types on its options trading platform.
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Order Report will not include any
information related to any Member
other than the Recipient Member.
The following information is included
in the Complex Order Report regarding
the resting order: (A) The time the
resting order was received by the
Exchange; (B) symbol; (C) order
reference number, which is a unique
reference number assigned to a new
Complex Order at the time of receipt;
(D) whether the Recipient Member is an
Affiliate 10 of the Member that entered
the resting order; 11 (E) origin type (e.g.,
Priority Customer,12 Market Maker 13);
(F) side (buy or sell); and (G) displayed
price and size of the resting order.14
The following information is included
in the Complex Order Report regarding
the execution of the resting order: (A)
The Complex EBBO 15 at the time of
execution; 16 (B) the Complex ABBO 17
10 The term ‘‘affiliate’’ of or person ‘‘affiliated
with’’ another person means a person who, directly,
or indirectly, controls, is controlled by, or is under
common control with, such other person. See
Exchange Rule 100.
11 The Report will simply indicate whether the
Recipient Member is Affiliate of the Member that
entered the resting order and not include any other
information that may indicate the identity of the
Member that entered the resting order.
12 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
The number of orders shall be counted in
accordance with Interpretation and Policy .01 to
Exchange Rule 100. See Exchange Rule 100.
13 The term ‘‘Market Maker’’ refers to ‘‘Lead
Market Makers’’, ‘‘Primary Lead Market Makers’’
and ‘‘Registered Market Makers’’ collectively. See
Exchange Rule 100.
14 This is the same type of information included
in the Simple Order Report, with the only
difference being the information is for Complex
Orders on the Strategy Book. The Exchange notes
that the displayed price and size are also
disseminated via the Exchange’s proprietary data
feeds. The Exchange also notes that the displayed
price of the resting order may be different than the
ultimate execution price. This may occur when a
resting order is displayed and ranked at different
prices upon entry to avoid a locked or crossed
market.
15 The term ‘‘EBBO’’ means the Exchange’s best
bid or offer. See Exchange Rule 100. The Complex
EBBO is calculated using the Implied Complex
MIAX Emerald Best Bid or Offer (‘‘icEBBO’’)
combined with the best price currently available on
the Strategy Book to establish the Exchange’s best
net bid and offer for a Complex Strategy. The
icEBBO is calculated using the best price from the
Simple Order Book for each component of a
Complex Strategy including displayed and nondisplayed trading interest. For stock-option orders,
the icEBBO for a Complex Strategy is calculated
using the best price (whether displayed or nondisplayed) on the Simple Order Book in the
individual option component(s), and the NBBO in
the stock component. See Exchange Rule 518(a)(12).
16 Exchange Rule 531(b)(1)(ii)(A) provides that if
the resting order executes against multiple contraside responses, only the Complex EBBO at the time
of the execution against the first response will be
included.
17 The term ‘‘ABBO’’ or ‘‘Away Best Bid or Offer’’
means the best bid(s) or offer(s) disseminated by
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at the time of execution; 18 (C) the time
first response that executes against the
resting order was received by the
Exchange and the size of the execution
and type of the response; 19 (D) the time
difference between the time the resting
order was received by the Exchange and
the time the first response that executes
against the resting order was received by
the Exchange; 20 and (E) whether the
response was entered by the Recipient
Member. If the resting order executes
against multiple contra-side responses,
only the Complex EBBO and Complex
ABBO at the time of the execution
against the first response will be
included.
The following information is included
in the Complex Order Report regarding
response(s) sent by the Recipient
Member: (A) Recipient Member
identifier; (B) the time difference
between the time the first response that
executes against the resting order was
received by the Exchange and the time
of each Complex Order sent by the
Recipient Member, regardless of
whether it executed or not; 21 (C) size
and type of each Complex Order
submitted by Recipient Member; and (D)
response reference number, which is a
unique reference number attached to the
response by the Recipient Member.
The Complex Order Report includes
the data set for executions and contraside responses that occurred within 200
microseconds of the time the resting
order was received by the Exchange.
The Complex Order Report contains
historical data from the prior trading
day and will be available after the end
of the trading day, generally on a T+1
basis. The Complex Order Report does
not include real-time data.
The Exchange believes the additional
data points from the matching engine
other Eligible Exchanges (defined in Exchange Rule
1400(g)) and calculated by the Exchange based on
market information received by the Exchange from
the Options Price Reporting Authority (‘‘OPRA’’).
See Exchange Rule 100. The Complex ABBO is
calculated using the ABBO for each component of
a Complex Strategy to establish the best net bid and
offer for a Complex Strategy.
18 Exchange Rule 531(b)(1)(ii)(B) further provides
that if the resting order executes against multiple
contra-side responses, only the Complex ABBO at
the time of the execution against the first response
will be included.
19 The time the Exchange received the response
order would be in nanoseconds and would be the
time the response was received by the Exchange’s
network, which is before the time the response
would be received by the System.
20 The time difference would be provided in
nanoseconds.
21 For purposes of calculating this duration of
time, the Exchange will use the time the resting
order and the Recipient Member’s response(s) is
received by the Exchange’s network, both of which
would be before the order and response(s) would
be received by the System. This time difference
would be provided in nanoseconds.
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outlined above may help Members gain
a better understanding about their own
interactions with the Exchange. The
Exchange believes the Complex Order
Report will provide Members with an
opportunity to learn more about better
opportunities to access liquidity and
receive better execution rates. The
Complex Order Report will increase
transparency and democratize
information so that all firms that
subscribe to the Complex Order Report
have access to the same information on
an equal basis, even for firms that do not
have the appropriate resources to
generate a similar report regarding
interactions with the Exchange.
Members generally would use a
liquidity accessing Complex Order if
there is a high probability that it will
execute against an order resting on the
Exchange’s Strategy Book. The Complex
Order Report identifies by how much
time an order that may have been
marketable missed an execution. The
Complex Order Report will provide
greater visibility into the missed trading
execution, which will allow Members to
optimize their models and trading
patterns to yield better execution
results.
The Complex Order Report will be a
Member-specific report and will help
Members to better understand by how
much time a particular order missed
executing against a specific resting
order, thus allowing that Member to
determine whether it wants to invest in
the necessary resources and technology
to mitigate missed executions against
certain resting orders on the Exchange’s
Strategy Book.
The Exchange proposes to provide the
Complex Order Report in response to
Member demand for data concerning the
timeliness of their incoming Complex
Orders and executions against resting
Complex Orders. Members have
periodically requested from the
Exchange’s trading operations personnel
information concerning the timeliness
of their incoming orders and efficacy of
their attempts to execute against resting
liquidity on the Exchange’s Strategy
Book. The purpose of the Complex
Order Report is to provide Members the
necessary data in a standardized format
on a T+1 basis to those that subscribe to
the Complex Order Report on an equal
basis.
The product is offered to Members on
a completely voluntary basis in that the
Exchange is not required by any rule or
regulation to make this data available
and potential subscribers may purchase
the Complex Order Report only if they
voluntarily choose to do so. It is a
business decision of each Member
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whether to subscribe to the Complex
Order Report or not.
The Exchange proposes to assess the
same fees that it currently charges for
Members that subscribe to the similar
Simple Order Report. As such, the
Exchange proposes to amend Section 7),
Reports, of the Fee Schedule to provide
that Members may purchase the
Complex Order Report on a monthly or
annual (12 month) basis. In particular,
the Exchange proposes to assess
Members a fee of $4,000 per month or
$24,000 per year for a 12 month
subscription to the Complex Order
Report. Members may cancel their
subscription at any time. Just as it does
for the Simple Order Report, the
Exchange proposes to specify that for
mid-month subscriptions to the
Complex Order Report, new subscribers
will be charged for the full calendar
month for which they subscribe and
will be provided Complex Order Report
data for each trading day of the calendar
month prior to the day on which they
subscribed.
The Exchange also proposes to
provide a discounted rate of $40,000 per
year to Members that purchase 12
month annual subscriptions to both the
Simple and Complex Order Reports (as
compared to the 12 month subscription
rate of $24,000 for each report on an
individual subscription basis). The
Exchange also proposes to pro-rate the
discounted 12 month subscription fee
for Members that seek to add either their
Simple Order Report or the Complex
Order Report to an existing
subscription. In particular, the Exchange
proposes that for those Members with
an existing 12 month subscription to
either the Simple Order Report or
Complex Order Report, but not both,
may add a subscription to the Simple
Order Report or Complex Order Report
during their current 12 month
subscription. In such case, the fee for
the added report will be pro-rated based
on the $40,000 combined rate for the 12
month subscription discount for the
remainder of the subscriber’s current 12
month subscription, and the number of
months remaining in the existing
subscription until the Member’s renewal
date. Members would then receive the
12 month discount ($40,000 annually)
for subscribing to both reports on the
renewal date of their original
subscription. For example, assume
‘‘Member A’’ previously subscribed to
the Simple Order Report on September
1, 2021 and paid $24,000 for a 12 month
subscription to the Simple Order
Report. ‘‘Member A’s’’ current
subscription expires on August 31, 2022
for the Simple Order Report. Before
‘‘Member A’s’’ subscription to the
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Simple Order Report expires, ‘‘Member
A’’ decides to subscribe to the Complex
Order Report, beginning March 1, 2022.
Rather than being immediately charged
$40,000 for the 12 month subscription
discount for subscribing to both reports
(‘‘Member A’’ already paid $24,000
upfront for the Simple Order Report 12
month subscription), ‘‘Member A’’
would only be charged an additional
$8,000 to add the Complex Order Report
for the remaining months of ‘‘Member
A’s’’ current 12 month subscription to
the Simple Order Report. On September
1, 2022, assuming ‘‘Member A’’ decided
to keep both reports, ‘‘Member A’’
would then be charged the 12 month
discounted rate of $40,000 for both
reports for the next year.
The Exchange proposes to determine
the pro-rated fee described above as
follows: on the date that ‘‘Member A’’
wanted to begin subscribing to the
Complex Order Report (March 1, 2022),
there were six months remaining on
‘‘Member A’s’’ existing 12 month
subscription to the Simple Order Report
(March, April, May, June, July and
August). The added cost would be
calculated as ((6 months remaining/12
months total) * ($40,000 discounted
annual subscription for both
reports¥$24,000 for annual
subscription to each report individually)
= $8,000 for remaining 6 months.
Beginning September 1, 2022 (the
original renewal date for the Simple
Order Report), ‘‘Member A’’ would then
be charged the discounted 12 month
subscription rate of $40,000, assuming
‘‘Member A’’ renews their subscriptions
to both the Simple Order Report and the
Complex Order Report.
The Exchange intends to begin to offer
the Complex Order Report and charge
the proposed fees on March 1, 2022.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,22 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,23 in particular, in that it is
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 to protect investors and the
public interest, and that it is not
designed to permit unfair
discrimination among customers,
brokers, or dealers. The Exchange also
believes that its proposal to adopt fees
for the Complex Order Report is
22 15
23 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00166
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14605
consistent with Section 6(b) of the Act 24
in general, and furthers the objectives of
Section 6(b)(4) of the Act 25 in
particular, in that it is an equitable
allocation of dues, fees and other
charges among its Members and other
recipients of Exchange data.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations (‘‘SROs’’) and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. It was
believed that this authority would
expand the amount of data available to
consumers, and also spur innovation
and competition for the provision of
market data. The Exchange believes that
the Report further broadens the
availability of U.S. option market data to
investors consistent with the principles
of Regulation NMS. The Complex Order
Report also promotes increased
transparency through the dissemination
of the Complex Order Report.
Particularly, the Complex Order Report
will benefit investors by facilitating
their prompt access to the value added
information that is included in the
Complex Order Report. The Complex
Order Report will allow Members to
access information regarding their
trading activity that they may utilize to
evaluate their own trading behavior and
order interactions.
The Exchange operates in a highly
competitive environment. Indeed, there
are currently 16 registered options
exchanges that trade options. Based on
publicly available information, no single
options exchange has more than 12–
13% of the equity options market share
and currently the Exchange represents
only approximately 4.23% of the market
share.26 The Commission has repeatedly
expressed its preference for competition
over regulatory intervention in
determining prices, products, and
services in the securities markets.
Particularly, 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.’’ 27
Making similar data products available
to market participants fosters
competition in the marketplace, and
24 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
26 See ‘‘The Market at a Glance,’’ (last visited
January 11, 2022), available at https://
www.miaxoptions.com/.
27 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
25 15
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constrains the ability of exchanges to
charge supra-competitive fees. In the
event that a market participant views
one exchange’s data product as more
attractive than the competition, that
market participant can, and often does,
switch between similar products. The
proposed fees are a result of the
competitive environment of the U.S.
options industry as the Exchange seeks
to adopt fees to attract purchasers of the
recently introduced Complex Order
Report.
The Exchange believes the proposed
fees are reasonable as the proposed fees
are both modest and identical to the fees
assessed by the Exchange for its
substantially similar Simple Order
Report.28 Indeed, if the Exchange
proposed fees that market participants
viewed as excessively high, then the
proposed fees would simply serve to
reduce demand for the Exchange’s data
product, which as noted, is entirely
optional. Other options exchanges are
also free to introduce their own
comparable data products with lower
prices to better compete with the
Exchange’s offering. As such, the
Exchange believes that the proposed
fees are reasonable and set at a level to
compete with other options exchanges
that may choose to offer similar reports.
Moreover, if a market participant views
another exchange’s potential report as
more attractive, then such market
participant can merely choose not to
purchase the Exchange’s Complex Order
Report and instead purchase another
exchange’s similar data product, which
may offer similar data points, albeit
based on that other market’s trading
activity.
The Exchange also believes providing
an annual subscription for an overall
lower fee than a monthly subscription is
equitable and reasonable because it
would enable the Exchange to gauge
long-term interest in the Complex Order
Report. A lower annual subscription fee
would also incentivize Members to
subscribe to the Complex Order Report
on a long-term basis, thereby improving
the efficiency by which the Exchange
may deliver the Complex Order Report
by doing so on a regular basis over a
prolonged and set period of time. The
Exchange notes it provides an identical
annual subscription for its Simple Order
Report data and that other exchanges
provide annual subscriptions for reports
concerning their data product
offerings.29
28 See
supra note 7.
Exchange, Inc. (‘‘Cboe’’) assesses a
$24,000 annual fee for an intra-day subscription to
Open-Close Data. See https://datashop.cboe.com/
options-summary-subscription.
29 Cboe
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The Exchange also believes the
proposed fees are reasonable as they
would support the introduction of a
new market data product to Members
that are interested in gaining insight
into latency in connection with
Complex Orders that failed to execute
against a Complex Order resting on the
Exchange’s Strategy Book. The Complex
Order Report accomplishes this by
providing those Members data to
analyze by how much time their order
may have missed an execution against a
contra-side order resting on the Strategy
Book. Members may use this data to
optimize their models and trading
patterns in an effort to yield better
execution results by calculating by how
much time their order may have missed
an execution.
Selling market data, such as the
Complex Order Report, is also a means
by which exchanges compete to attract
business. To the extent that the
Exchange is successful in attracting
subscribers for the Complex Order
Report, it may earn trading revenues
and further enhance the value of its data
products. If the market deems the
proposed fees to be unfair or
inequitable, firms can diminish or
discontinue their use of the data. The
Exchange therefore believes that the
proposed fees for the Complex Order
Report reflect the competitive
environment and would be properly
assessed on Member users. The
Exchange also believes the proposed
fees are equitable and not unfairly
discriminatory as the fees would apply
equally to all users who choose to
purchase such data. It is a business
decision of each Member that chooses to
purchase the Complex Order Report.
The Exchange’s proposed fees would
not differentiate between subscribers
that purchase the Complex Order Report
and are set at a modest level that would
allow any interested Member to
purchase such data based on their
business needs.
The Exchange reiterates that the
decision as to whether or not to
purchase the Complex Order Report is
entirely optional for all potential
subscribers. Indeed, no market
participant is required to purchase the
Complex Order Report, and the
Exchange is not required to make the
Complex Order Report available to all
investors. It is entirely a business
decision of each Member to subscribe to
the Complex Order Report. The
Exchange offers the Complex Order
Report as a convenience to Members to
provide them with additional
information regarding trading activity
on the Exchange on a delayed basis after
the close of regular trading hours. A
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Member that chooses to subscribe to the
Complex Order Report may discontinue
receiving the Complex Order Report at
any time if that Member determines that
the information contained in the
Complex Order Report is no longer
useful.
The Exchange also believes providing
a 12 month discounted fee for
subscribers of both the Simple and
Complex Order Reports is equitable and
reasonable because it would enable the
Exchange to gauge long-term interest in
both reports. The Exchange believes that
a lower annual combined subscription
fee may incentivize Members to
subscribe to both reports on a long-term
basis, thereby allowing the Exchange to
better gauge demand for both reports
over a longer period of time. Doing so
will enable the Exchange to better
predict the future demand for both
reports. This will allow the Exchange to
better prepare and adjust resources for
the production and delivery of both
reports to Members, improving the
efficiency by which the Exchange may
deliver both reports over a prolonged
and set period of time. The Exchange
also believes that it is reasonable,
equitable and not unfairly
discriminatory to offer a 12 month
discounted fee for Members that
subscribe to both reports because all
Members may subscribe to both reports
and receive the discounted rate.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange made the Complex Order
Report available in order to keep pace
with changes in the industry and
evolving customer needs and demands,
and believes the data product will
contribute to robust competition among
national securities exchanges. As a
result, the Exchange believes this
proposed rule change permits fair
competition among national securities
exchanges.
The Exchange believes the proposed
fees would not cause any unnecessary
or inappropriate burden on intermarket
competition as other exchanges are free
to introduce their own comparable data
product with lower prices to better
compete with the Exchange’s offering.
The Exchange operates in a highly
competitive environment, and its ability
to price the Complex Order Report is
constrained by competition among
exchanges who choose to adopt a
similar product. The Exchange must
consider this in its pricing discipline in
E:\FR\FM\15MRN1.SGM
15MRN1
Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices
order to compete for the market data.
For example, proposing fees that are
excessively higher than fees for
potentially similar data products would
simply serve to reduce demand for the
Exchange’s data product, which as
discussed, market participants are under
no obligation to utilize. In this
competitive environment, potential
purchasers are free to choose which, if
any, similar product to purchase to
satisfy their need for market
information. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
The Exchange also believes that the
proposed fees do not cause any
unnecessary or inappropriate burden on
intermarket competition because the
latency information that would be
provided in the Complex Order Report
would enhance competition between
exchanges that offer complex order
functionality. Members that subscribe to
the Complex Order Report could use the
information in the report to recalibrate
their models and trading strategies to
improve their overall trading experience
on the Exchange. This may improve the
Exchange’s overall trading environment
resulting in increased liquidity and
order flow on the Exchange. In
response, other exchanges may similarly
seek ways to provide latency related
data in an effort to improve their own
market quality for complex orders.
The Exchange does not believe the
proposed rule change would cause any
unnecessary or inappropriate burden on
intramarket competition. Particularly,
the proposed product and fees apply
uniformly to any purchaser in that the
Exchange does not differentiate between
subscribers that purchase the Complex
Order Report. The proposed fees are set
at a modest level that would allow any
interested Member to purchase such
data based on their business needs.
khammond on DSKJM1Z7X2PROD with NOTICES
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
30 15
31 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
21:10 Mar 14, 2022
Jkt 256001
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.
14607
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–EMERALD–2022–08, and
should be submitted on or before April
5, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
J. Matthew DeLesDernier,
Assistant Secretary.
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:
[FR Doc. 2022–05374 Filed 3–14–22; 8:45 am]
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–2022–08 on the subject line.
AGENCY:
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–EMERALD–2022–08. 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
PO 00000
Frm 00168
Fmt 4703
Sfmt 4703
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
[Docket No. SSA–2021–0031]
Privacy Act of 1974; Matching Program
Social Security Administration
(SSA).
Notice of a new matching
program.
ACTION:
In accordance with the
provisions of the Privacy Act, as
amended, this notice announces a new
matching program with the Department
of Veterans Affairs (VA), Veterans
Benefits Administration. Under this
matching program, VA will provide SSA
with VA compensation and pension
payment data. SSA will use the data to
determine the eligibility or amount of
payment for Supplemental Security
Income (SSI) or Special Veterans Benefit
(SVB) recipients. SSA will also identify
the income of individuals who may be
eligible for Medicare cost-sharing
assistance through the Medicare Savings
Programs (MSP) as part of the agency’s
Medicare outreach efforts.
DATES: The deadline to submit
comments on the proposed matching
program is April 14, 2022. The matching
program will be applicable on May 11,
2022, or once a minimum of 30 days
after publication of this notice has
elapsed, whichever is later. The
matching program will be in effect for
a period of 18 months.
ADDRESSES: You may submit comments
by any one of three methods—internet,
fax, or mail. Do not submit the same
comments multiple times or by more
than one method. Regardless of which
method you choose, please state that
your comments refer to Docket No.
SSA–2021–0031 so that we may
associate your comments with the
correct regulation. CAUTION: You
should be careful to include in your
comments only information that you
wish to make publicly available. We
strongly urge you not to include in your
SUMMARY:
32 17
E:\FR\FM\15MRN1.SGM
CFR 200.30–3(a)(12).
15MRN1
]]>Agencies
[Federal Register Volume 87, Number 50 (Tuesday, March 15, 2022)]
[Notices]
[Pages 14603-14607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05374]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94386; File No. SR-EMERALD-2022-08]
Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the MIAX Emerald Fee Schedule To Adopt Fees for a New Data Product
Called the Liquidity Taker Event Report--Complex Orders
March 9, 2022.
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 February 25, 2022, MIAX Emerald, LLC (``MIAX Emerald'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the 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'') to adopt fees for a new data product
known as the Liquidity Taker Event Report--Complex Orders.\3\
---------------------------------------------------------------------------
\3\ See, generally, Exchange Rule 531(b).
---------------------------------------------------------------------------
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 recently established a new data product known as the
Liquidity Taker Event Report--Complex Orders (the ``Complex Order
Report''),\4\ which will be available for purchase by Exchange Members
\5\ on a voluntary basis. The Exchange now proposes to adopt fees for
the Complex Order Report, which is described under Exchange Rule
531(b).\6\ The Complex Order Report is an optional product available to
Members. The Exchange notes that the proposed fees for the Complex
Order Report are identical to the fees the Exchange recently
established for subscribers to a similar report known as the Liquidity
Taker Event Report--Simple Orders (the ``Simple Order Report'').\7\ As
further described below, the Exchange proposes to also offer a
discounted combined fee for Members who purchase annual subscriptions
to both the Simple Order Report and Complex Order Report.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 94136 (February 2,
2022), 87 FR 7223 (February 8, 2022) (SR-EMERALD-2022-02).
\5\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
the Definitions Section of the Fee Schedule and Exchange Rule 100.
\6\ See Exchange Rule 531(b).
\7\ See Securities Exchange Act Release Nos. 91787 (May 6,
2021), 86 FR 26111 (May 12, 2021) (SR-EMERALD-2021-09) (Order
Approving Proposed Rule Change To Adopt Exchange Rule 531(a),
Reports, To Provide for a New ``Liquidity Taker Event Report'');
92028 (May 26, 2021), 86 FR 29608 (June 2, 2021) (SR-EMERALD-2021-
19) (Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule To Adopt Fees for a New Data
Product Known as the Liquidity Taker Event Report). See Exchange
Rule 531(a) for the rule text of the Simple Order Report. See also
Fee Schedule, Section 7), Reports, for the fees for the Simple Order
Report.
---------------------------------------------------------------------------
By way of background, the Complex Order Report is a daily report
that provides a Member (``Recipient Member'') with its liquidity
response time details for executions of a Complex Order resting on the
Strategy Book,\8\ where that Recipient Member attempted to execute
against such resting Complex Order \9\ within a certain timeframe. It
is important to note that the content of the Complex Order Report is
specific to the Recipient Member and the Complex
[[Page 14604]]
Order Report will not include any information related to any Member
other than the Recipient Member.
---------------------------------------------------------------------------
\8\ The term ``Strategy Book'' means the Exchange's electronic
book of complex orders and complex quotes. See Exchange Rule
518(a)(17).
\9\ Only displayed orders will be included in the Complex Order
Report. The Exchange notes that it does not currently offer any non-
displayed orders types on its options trading platform.
---------------------------------------------------------------------------
The following information is included in the Complex Order Report
regarding the resting order: (A) The time the resting order was
received by the Exchange; (B) symbol; (C) order reference number, which
is a unique reference number assigned to a new Complex Order at the
time of receipt; (D) whether the Recipient Member is an Affiliate \10\
of the Member that entered the resting order; \11\ (E) origin type
(e.g., Priority Customer,\12\ Market Maker \13\); (F) side (buy or
sell); and (G) displayed price and size of the resting order.\14\
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\10\ The term ``affiliate'' of or person ``affiliated with''
another person means a person who, directly, or indirectly,
controls, is controlled by, or is under common control with, such
other person. See Exchange Rule 100.
\11\ The Report will simply indicate whether the Recipient
Member is Affiliate of the Member that entered the resting order and
not include any other information that may indicate the identity of
the Member that entered the resting order.
\12\ The term ``Priority Customer'' means a person or entity
that (i) is not a broker or dealer in securities, and (ii) does not
place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s). The
number of orders shall be counted in accordance with Interpretation
and Policy .01 to Exchange Rule 100. See Exchange Rule 100.
\13\ The term ``Market Maker'' refers to ``Lead Market Makers'',
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
\14\ This is the same type of information included in the Simple
Order Report, with the only difference being the information is for
Complex Orders on the Strategy Book. The Exchange notes that the
displayed price and size are also disseminated via the Exchange's
proprietary data feeds. The Exchange also notes that the displayed
price of the resting order may be different than the ultimate
execution price. This may occur when a resting order is displayed
and ranked at different prices upon entry to avoid a locked or
crossed market.
---------------------------------------------------------------------------
The following information is included in the Complex Order Report
regarding the execution of the resting order: (A) The Complex EBBO \15\
at the time of execution; \16\ (B) the Complex ABBO \17\ at the time of
execution; \18\ (C) the time first response that executes against the
resting order was received by the Exchange and the size of the
execution and type of the response; \19\ (D) the time difference
between the time the resting order was received by the Exchange and the
time the first response that executes against the resting order was
received by the Exchange; \20\ and (E) whether the response was entered
by the Recipient Member. If the resting order executes against multiple
contra-side responses, only the Complex EBBO and Complex ABBO at the
time of the execution against the first response will be included.
---------------------------------------------------------------------------
\15\ The term ``EBBO'' means the Exchange's best bid or offer.
See Exchange Rule 100. The Complex EBBO is calculated using the
Implied Complex MIAX Emerald Best Bid or Offer (``icEBBO'') combined
with the best price currently available on the Strategy Book to
establish the Exchange's best net bid and offer for a Complex
Strategy. The icEBBO is calculated using the best price from the
Simple Order Book for each component of a Complex Strategy including
displayed and non-displayed trading interest. For stock-option
orders, the icEBBO for a Complex Strategy is calculated using the
best price (whether displayed or non-displayed) on the Simple Order
Book in the individual option component(s), and the NBBO in the
stock component. See Exchange Rule 518(a)(12).
\16\ Exchange Rule 531(b)(1)(ii)(A) provides that if the resting
order executes against multiple contra-side responses, only the
Complex EBBO at the time of the execution against the first response
will be included.
\17\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the
best bid(s) or offer(s) disseminated by other Eligible Exchanges
(defined in Exchange Rule 1400(g)) and calculated by the Exchange
based on market information received by the Exchange from the
Options Price Reporting Authority (``OPRA''). See Exchange Rule 100.
The Complex ABBO is calculated using the ABBO for each component of
a Complex Strategy to establish the best net bid and offer for a
Complex Strategy.
\18\ Exchange Rule 531(b)(1)(ii)(B) further provides that if the
resting order executes against multiple contra-side responses, only
the Complex ABBO at the time of the execution against the first
response will be included.
\19\ The time the Exchange received the response order would be
in nanoseconds and would be the time the response was received by
the Exchange's network, which is before the time the response would
be received by the System.
\20\ The time difference would be provided in nanoseconds.
---------------------------------------------------------------------------
The following information is included in the Complex Order Report
regarding response(s) sent by the Recipient Member: (A) Recipient
Member identifier; (B) the time difference between the time the first
response that executes against the resting order was received by the
Exchange and the time of each Complex Order sent by the Recipient
Member, regardless of whether it executed or not; \21\ (C) size and
type of each Complex Order submitted by Recipient Member; and (D)
response reference number, which is a unique reference number attached
to the response by the Recipient Member.
---------------------------------------------------------------------------
\21\ For purposes of calculating this duration of time, the
Exchange will use the time the resting order and the Recipient
Member's response(s) is received by the Exchange's network, both of
which would be before the order and response(s) would be received by
the System. This time difference would be provided in nanoseconds.
---------------------------------------------------------------------------
The Complex Order Report includes the data set for executions and
contra-side responses that occurred within 200 microseconds of the time
the resting order was received by the Exchange. The Complex Order
Report contains historical data from the prior trading day and will be
available after the end of the trading day, generally on a T+1 basis.
The Complex Order Report does not include real-time data.
The Exchange believes the additional data points from the matching
engine outlined above may help Members gain a better understanding
about their own interactions with the Exchange. The Exchange believes
the Complex Order Report will provide Members with an opportunity to
learn more about better opportunities to access liquidity and receive
better execution rates. The Complex Order Report will increase
transparency and democratize information so that all firms that
subscribe to the Complex Order Report have access to the same
information on an equal basis, even for firms that do not have the
appropriate resources to generate a similar report regarding
interactions with the Exchange.
Members generally would use a liquidity accessing Complex Order if
there is a high probability that it will execute against an order
resting on the Exchange's Strategy Book. The Complex Order Report
identifies by how much time an order that may have been marketable
missed an execution. The Complex Order Report will provide greater
visibility into the missed trading execution, which will allow Members
to optimize their models and trading patterns to yield better execution
results.
The Complex Order Report will be a Member-specific report and will
help Members to better understand by how much time a particular order
missed executing against a specific resting order, thus allowing that
Member to determine whether it wants to invest in the necessary
resources and technology to mitigate missed executions against certain
resting orders on the Exchange's Strategy Book.
The Exchange proposes to provide the Complex Order Report in
response to Member demand for data concerning the timeliness of their
incoming Complex Orders and executions against resting Complex Orders.
Members have periodically requested from the Exchange's trading
operations personnel information concerning the timeliness of their
incoming orders and efficacy of their attempts to execute against
resting liquidity on the Exchange's Strategy Book. The purpose of the
Complex Order Report is to provide Members the necessary data in a
standardized format on a T+1 basis to those that subscribe to the
Complex Order Report on an equal basis.
The product is offered to Members on a completely voluntary basis
in that the Exchange is not required by any rule or regulation to make
this data available and potential subscribers may purchase the Complex
Order Report only if they voluntarily choose to do so. It is a business
decision of each Member
[[Page 14605]]
whether to subscribe to the Complex Order Report or not.
The Exchange proposes to assess the same fees that it currently
charges for Members that subscribe to the similar Simple Order Report.
As such, the Exchange proposes to amend Section 7), Reports, of the Fee
Schedule to provide that Members may purchase the Complex Order Report
on a monthly or annual (12 month) basis. In particular, the Exchange
proposes to assess Members a fee of $4,000 per month or $24,000 per
year for a 12 month subscription to the Complex Order Report. Members
may cancel their subscription at any time. Just as it does for the
Simple Order Report, the Exchange proposes to specify that for mid-
month subscriptions to the Complex Order Report, new subscribers will
be charged for the full calendar month for which they subscribe and
will be provided Complex Order Report data for each trading day of the
calendar month prior to the day on which they subscribed.
The Exchange also proposes to provide a discounted rate of $40,000
per year to Members that purchase 12 month annual subscriptions to both
the Simple and Complex Order Reports (as compared to the 12 month
subscription rate of $24,000 for each report on an individual
subscription basis). The Exchange also proposes to pro-rate the
discounted 12 month subscription fee for Members that seek to add
either their Simple Order Report or the Complex Order Report to an
existing subscription. In particular, the Exchange proposes that for
those Members with an existing 12 month subscription to either the
Simple Order Report or Complex Order Report, but not both, may add a
subscription to the Simple Order Report or Complex Order Report during
their current 12 month subscription. In such case, the fee for the
added report will be pro-rated based on the $40,000 combined rate for
the 12 month subscription discount for the remainder of the
subscriber's current 12 month subscription, and the number of months
remaining in the existing subscription until the Member's renewal date.
Members would then receive the 12 month discount ($40,000 annually) for
subscribing to both reports on the renewal date of their original
subscription. For example, assume ``Member A'' previously subscribed to
the Simple Order Report on September 1, 2021 and paid $24,000 for a 12
month subscription to the Simple Order Report. ``Member A's'' current
subscription expires on August 31, 2022 for the Simple Order Report.
Before ``Member A's'' subscription to the Simple Order Report expires,
``Member A'' decides to subscribe to the Complex Order Report,
beginning March 1, 2022. Rather than being immediately charged $40,000
for the 12 month subscription discount for subscribing to both reports
(``Member A'' already paid $24,000 upfront for the Simple Order Report
12 month subscription), ``Member A'' would only be charged an
additional $8,000 to add the Complex Order Report for the remaining
months of ``Member A's'' current 12 month subscription to the Simple
Order Report. On September 1, 2022, assuming ``Member A'' decided to
keep both reports, ``Member A'' would then be charged the 12 month
discounted rate of $40,000 for both reports for the next year.
The Exchange proposes to determine the pro-rated fee described
above as follows: on the date that ``Member A'' wanted to begin
subscribing to the Complex Order Report (March 1, 2022), there were six
months remaining on ``Member A's'' existing 12 month subscription to
the Simple Order Report (March, April, May, June, July and August). The
added cost would be calculated as ((6 months remaining/12 months total)
* ($40,000 discounted annual subscription for both reports-$24,000 for
annual subscription to each report individually) = $8,000 for remaining
6 months. Beginning September 1, 2022 (the original renewal date for
the Simple Order Report), ``Member A'' would then be charged the
discounted 12 month subscription rate of $40,000, assuming ``Member A''
renews their subscriptions to both the Simple Order Report and the
Complex Order Report.
The Exchange intends to begin to offer the Complex Order Report and
charge the proposed fees on March 1, 2022.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\22\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\23\ in particular, in that it
is 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 to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes that
its proposal to adopt fees for the Complex Order Report is consistent
with Section 6(b) of the Act \24\ in general, and furthers the
objectives of Section 6(b)(4) of the Act \25\ in particular, in that it
is an equitable allocation of dues, fees and other charges among its
Members and other recipients of Exchange data.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(5).
\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Exchange believes that the Report further
broadens the availability of U.S. option market data to investors
consistent with the principles of Regulation NMS. The Complex Order
Report also promotes increased transparency through the dissemination
of the Complex Order Report. Particularly, the Complex Order Report
will benefit investors by facilitating their prompt access to the value
added information that is included in the Complex Order Report. The
Complex Order Report will allow Members to access information regarding
their trading activity that they may utilize to evaluate their own
trading behavior and order interactions.
The Exchange operates in a highly competitive environment. Indeed,
there are currently 16 registered options exchanges that trade options.
Based on publicly available information, no single options exchange has
more than 12-13% of the equity options market share and currently the
Exchange represents only approximately 4.23% of the market share.\26\
The Commission has repeatedly expressed its preference for competition
over regulatory intervention in determining prices, products, and
services in the securities markets. Particularly, 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.'' \27\ Making similar data
products available to market participants fosters competition in the
marketplace, and
[[Page 14606]]
constrains the ability of exchanges to charge supra-competitive fees.
In the event that a market participant views one exchange's data
product as more attractive than the competition, that market
participant can, and often does, switch between similar products. The
proposed fees are a result of the competitive environment of the U.S.
options industry as the Exchange seeks to adopt fees to attract
purchasers of the recently introduced Complex Order Report.
---------------------------------------------------------------------------
\26\ See ``The Market at a Glance,'' (last visited January 11,
2022), available at https://www.miaxoptions.com/.
\27\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
The Exchange believes the proposed fees are reasonable as the
proposed fees are both modest and identical to the fees assessed by the
Exchange for its substantially similar Simple Order Report.\28\ Indeed,
if the Exchange proposed fees that market participants viewed as
excessively high, then the proposed fees would simply serve to reduce
demand for the Exchange's data product, which as noted, is entirely
optional. Other options exchanges are also free to introduce their own
comparable data products with lower prices to better compete with the
Exchange's offering. As such, the Exchange believes that the proposed
fees are reasonable and set at a level to compete with other options
exchanges that may choose to offer similar reports. Moreover, if a
market participant views another exchange's potential report as more
attractive, then such market participant can merely choose not to
purchase the Exchange's Complex Order Report and instead purchase
another exchange's similar data product, which may offer similar data
points, albeit based on that other market's trading activity.
---------------------------------------------------------------------------
\28\ See supra note 7.
---------------------------------------------------------------------------
The Exchange also believes providing an annual subscription for an
overall lower fee than a monthly subscription is equitable and
reasonable because it would enable the Exchange to gauge long-term
interest in the Complex Order Report. A lower annual subscription fee
would also incentivize Members to subscribe to the Complex Order Report
on a long-term basis, thereby improving the efficiency by which the
Exchange may deliver the Complex Order Report by doing so on a regular
basis over a prolonged and set period of time. The Exchange notes it
provides an identical annual subscription for its Simple Order Report
data and that other exchanges provide annual subscriptions for reports
concerning their data product offerings.\29\
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\29\ Cboe Exchange, Inc. (``Cboe'') assesses a $24,000 annual
fee for an intra-day subscription to Open-Close Data. See https://datashop.cboe.com/options-summary-subscription.
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The Exchange also believes the proposed fees are reasonable as they
would support the introduction of a new market data product to Members
that are interested in gaining insight into latency in connection with
Complex Orders that failed to execute against a Complex Order resting
on the Exchange's Strategy Book. The Complex Order Report accomplishes
this by providing those Members data to analyze by how much time their
order may have missed an execution against a contra-side order resting
on the Strategy Book. Members may use this data to optimize their
models and trading patterns in an effort to yield better execution
results by calculating by how much time their order may have missed an
execution.
Selling market data, such as the Complex Order Report, is also a
means by which exchanges compete to attract business. To the extent
that the Exchange is successful in attracting subscribers for the
Complex Order Report, it may earn trading revenues and further enhance
the value of its data products. If the market deems the proposed fees
to be unfair or inequitable, firms can diminish or discontinue their
use of the data. The Exchange therefore believes that the proposed fees
for the Complex Order Report reflect the competitive environment and
would be properly assessed on Member users. The Exchange also believes
the proposed fees are equitable and not unfairly discriminatory as the
fees would apply equally to all users who choose to purchase such data.
It is a business decision of each Member that chooses to purchase the
Complex Order Report. The Exchange's proposed fees would not
differentiate between subscribers that purchase the Complex Order
Report and are set at a modest level that would allow any interested
Member to purchase such data based on their business needs.
The Exchange reiterates that the decision as to whether or not to
purchase the Complex Order Report is entirely optional for all
potential subscribers. Indeed, no market participant is required to
purchase the Complex Order Report, and the Exchange is not required to
make the Complex Order Report available to all investors. It is
entirely a business decision of each Member to subscribe to the Complex
Order Report. The Exchange offers the Complex Order Report as a
convenience to Members to provide them with additional information
regarding trading activity on the Exchange on a delayed basis after the
close of regular trading hours. A Member that chooses to subscribe to
the Complex Order Report may discontinue receiving the Complex Order
Report at any time if that Member determines that the information
contained in the Complex Order Report is no longer useful.
The Exchange also believes providing a 12 month discounted fee for
subscribers of both the Simple and Complex Order Reports is equitable
and reasonable because it would enable the Exchange to gauge long-term
interest in both reports. The Exchange believes that a lower annual
combined subscription fee may incentivize Members to subscribe to both
reports on a long-term basis, thereby allowing the Exchange to better
gauge demand for both reports over a longer period of time. Doing so
will enable the Exchange to better predict the future demand for both
reports. This will allow the Exchange to better prepare and adjust
resources for the production and delivery of both reports to Members,
improving the efficiency by which the Exchange may deliver both reports
over a prolonged and set period of time. The Exchange also believes
that it is reasonable, equitable and not unfairly discriminatory to
offer a 12 month discounted fee for Members that subscribe to both
reports because all Members may subscribe to both reports and receive
the discounted rate.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
made the Complex Order Report available in order to keep pace with
changes in the industry and evolving customer needs and demands, and
believes the data product will contribute to robust competition among
national securities exchanges. As a result, the Exchange believes this
proposed rule change permits fair competition among national securities
exchanges.
The Exchange believes the proposed fees would not cause any
unnecessary or inappropriate burden on intermarket competition as other
exchanges are free to introduce their own comparable data product with
lower prices to better compete with the Exchange's offering. The
Exchange operates in a highly competitive environment, and its ability
to price the Complex Order Report is constrained by competition among
exchanges who choose to adopt a similar product. The Exchange must
consider this in its pricing discipline in
[[Page 14607]]
order to compete for the market data. For example, proposing fees that
are excessively higher than fees for potentially similar data products
would simply serve to reduce demand for the Exchange's data product,
which as discussed, market participants are under no obligation to
utilize. In this competitive environment, potential purchasers are free
to choose which, if any, similar product to purchase to satisfy their
need for market information. As a result, the Exchange believes this
proposed rule change permits fair competition among national securities
exchanges.
The Exchange also believes that the proposed fees do not cause any
unnecessary or inappropriate burden on intermarket competition because
the latency information that would be provided in the Complex Order
Report would enhance competition between exchanges that offer complex
order functionality. Members that subscribe to the Complex Order Report
could use the information in the report to recalibrate their models and
trading strategies to improve their overall trading experience on the
Exchange. This may improve the Exchange's overall trading environment
resulting in increased liquidity and order flow on the Exchange. In
response, other exchanges may similarly seek ways to provide latency
related data in an effort to improve their own market quality for
complex orders.
The Exchange does not believe the proposed rule change would cause
any unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed product and fees apply uniformly to any
purchaser in that the Exchange does not differentiate between
subscribers that purchase the Complex Order Report. The proposed fees
are set at a modest level that would allow any interested Member to
purchase such data based on their business needs.
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.
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\30\ 15 U.S.C. 78s(b)(3)(A)(ii).
\31\ 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-2022-08 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-EMERALD-2022-08. 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-2022-08, and should be submitted
on or before April 5, 2022.
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. 2022-05374 Filed 3-14-22; 8:45 am]
BILLING CODE 8011-01-P
