Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Related to the Options Regulatory Fee, 71904-71907 [2023-22923]

Download as PDF ddrumheller on DSK120RN23PROD with NOTICES1 71904 Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices thereunder.4 Under the rule, fair value as determined in good faith requires assessing and managing material risks associated with fair value determinations; selecting, applying, and testing fair value methodologies; and overseeing and evaluating any pricing services used. The rule also permits a fund’s board to designate a ‘‘valuation designee’’ to perform fair value determinations. The valuation designee can be the adviser of the fund or an officer of an internally managed fund.5 When a board designates the performance of determinations of fair value to a valuation designee for some or all of the fund’s investments under the rule, the rule requires the board to oversee the valuation designee’s performance of fair value determinations. To facilitate the board’s oversight, the rule also includes certain reporting and other requirements in the case of designation to a valuation designee.6 As relevant here, the rule requires, if the board designates performance of fair value determinations to a valuation designee, that the valuation designee report to the board in both periodic and as needed reports on a per-fund basis. Specifically, on a periodic basis, the valuation designee must provide to the board: • Quarterly Reports. At least quarterly, in writing, (1) any reports or materials requested by the board related to the fair value of designated investments or the valuation designee’s process for fair valuing fund investments and (2) a summary or description of material fair value matters that occurred in the prior quarter. This summary or description must include (1) any material changes in the assessment and management of valuation risks, including any material changes in conflicts of interest of the valuation designee (and any other service provider), (2) any material changes to, or material deviations from, the fair value methodologies, and (3) any material changes to the valuation designee’s process for selecting and overseeing pricing services, as well as any material events related to the valuation designee’s oversight of pricing services. • Annual Reports. At least annually, in writing, an assessment of the adequacy and effectiveness of the valuation designee’s process for determining the fair value of the 4 See Good Faith Determinations of Fair Value, Investment Company Act Release No. 34128 (Dec. 7, 2020) (‘‘Adopting Release’’). 5 Rule 2a–5(e)(4). 6 Rule 2a–5(b). VerDate Sep<11>2014 18:01 Oct 17, 2023 Jkt 262001 designated portfolio of investments. At a minimum, this annual report must include a summary of the results of the testing of fair value methodologies required under the rule and an assessment of the adequacy of resources allocated to the process for determining the fair value of designated investments, including any material changes to the roles or functions of the persons responsible for determining fair value. Further, the rule requires the valuation designee to provide a written notification to the board of the occurrence of matters that materially affect the fair value of the designated portfolio of investments (defined as ‘‘material matters’’) within a time period determined by the board, but in no event later than five business days after the valuation designee becomes aware of the material matter. Material matters in this instance include, as examples, a significant deficiency or material weakness in the design or effectiveness of the valuation designee’s fair value determination process or of material errors in the calculation of net asset value. The valuation designee must also provide such timely follow-on reports as the board may reasonably determine are appropriate.7 The Commission staff estimates that 9,800 funds are subject to rule 2a–5. The internal annual burden estimate is 34 hours for a fund. Based on these estimates, the total annual burden hours associated with the rule is estimated to be 333,200 hours. The estimated burden hours associated with rule 2a–5 have increased by 15,810 hours from the current allocation of 317,390 hours. The external cost associated with this collection of information is approximately $3,674 per fund, and the total annual external cost burden is $36,005,200. The estimated external cost has increased by $6,319,900 from the current estimate of $29,685,300. These increases are due to an increase in the estimated number of affected entities, as well as in the estimated hourly burden and the external cost associated with the information collection requirements. The estimate of average burden hours is made solely for purposes of the Paperwork Reduction Act and is not derived from a comprehensive or even a representative survey or study of the cost of Commission rules. The collection of information required by rule 2a–5 is necessary to obtain the benefits of the rule. Other information provided to the Commission in connection with staff examinations or investigations is kept confidential subject to the provisions of applicable law. If information collected pursuant to rule 2a–5 is reviewed by the Commission’s examination staff, it is accorded the same level of confidentiality accorded to other responses provided to the Commission in the context of its examination and oversight program. Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by December 18, 2023. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. Please direct your written comments to: David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to: PRA_ Mailbox@sec.gov. Dated: October 13, 2023. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–22970 Filed 10–17–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98728; File No. SR– EMERALD–2023–28] Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Related to the Options Regulatory Fee October 12, 2023. 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 October 5, 2023, MIAX Emerald, LLC (‘‘MIAX Emerald’’ or ‘‘Exchange’’) filed with the 1 15 7 Rule PO 00000 2a–5(b). Frm 00088 2 17 Fmt 4703 Sfmt 4703 E:\FR\FM\18OCN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 18OCN1 Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the MIAX Emerald Options Exchange Fee Schedule (the ‘‘Fee Schedule’’) related to the Options Regulatory Fee. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxglobal.com/markets/ us-options/emerald-options/rule-filings, at MIAX’s [sic] principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change ddrumheller on DSK120RN23PROD with NOTICES1 1. Purpose The Exchange proposes to amend the Fee Schedule, to harmonize the language and processes relating to the Options Regulatory Fee (‘‘ORF’’) with the language and processes used by other options exchanges.3 By way of background, the ORF is designed to recover a material portion of the costs to 3 See Securities and Exchange Act Release Nos. 98108 (August 10, 2023), 88 FR 55809 (August 16, 2023) (SR–CboeEDGX–2023–054) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend its Fee Schedule Related to the Options Regulatory Fee); 98109 (August 10, 2023), 88 FR 55801 (August 16, 2023) (SR–CboeBZX– 2023–061) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend its Fee Schedule Related to the Options Regulatory Fee); 98446 (September 20, 2023), 88 FR 66100 (September 26, 2023) (SR–BOX–2023–24) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule for Trading on the BOX Options Market LLC Facility To Amend the Language and Process Related to the Options Regulatory Fee). VerDate Sep<11>2014 18:01 Oct 17, 2023 Jkt 262001 the Exchange of the supervision and regulation of Member 4 customer options business, including performing routine surveillances, investigations, examinations, financial monitoring, as well as policy, rulemaking, interpretive and enforcement activities. The revenue generated from the ORF covers a material portion and when combined with all of the Exchange’s other regulatory fees and fines will cover a material portion of the Exchange’s regulatory costs. The Exchange monitors the amount of revenue collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed the Exchange’s total regulatory costs. The Exchange monitors its regulatory costs and revenues at a minimum on a semiannual basis. If the Exchange determines regulatory revenues exceed or are insufficient to cover a material portion of its regulatory costs, the Exchange will adjust the ORF by submitting a fee change filing to the Securities and Exchange Commission (the ‘‘Commission’’). The Exchange notifies Members of adjustments to the ORF via a Regulatory Circular. The Exchange provides Members with such notice at least 30 calendar days prior to the effective date of the change. The Regulatory Fee section of the Fee Schedule sets forth the details and description of how and when the ORF is assessed. For example, the Fee Schedule explicitly specifies that the Exchange may only increase or decrease the ORF semi-annually, and any such fee change will be effective on the first business day of February or August. The Fee Schedule further states that the Exchange will notify participants of any change in the amount of the fee at least 30 calendar days prior to the effective date of the change. The Exchange proposes to update the Fee Schedule language relating to the timing of ORF changes. Particularly, the Exchange proposes to eliminate the strict requirement that the ORF may only be modified on the first business day of February or August, and also the explicit requirement that it must provide at least 30 calendar days prior notice to the effective date. The Exchange first proposes to eliminate the requirement that ORF may only be modified on the first business day of February or August to afford the Exchange increased flexibility in amending the ORF. As noted above, the ORF is based in part on options 4 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 Exchange Rule 100. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 71905 transactions volume, and as such the amount of ORF collected is variable. If options transactions reported to OCC in a given month increase, the ORF collected from Members may increase as well. Similarly, if options transactions reported to OCC in a given month decrease, the ORF collected from Members may decrease as well. Accordingly, the Exchange monitors the amount of ORF collected to ensure that it does not exceed a material portion of the Exchange’s total regulatory costs. If the Exchange determines that the amount of ORF collected exceeds costs, the proposed rule change allows the Exchange to adjust the ORF by submitting a fee change filing to the Commission in a month other than just February or August. Although the Exchange proposes to eliminate the explicit language in the fee schedule that provides the Exchange will adjust the ORF only semi-annually, and only on the first business day of February or August, it would continue to monitor its regulatory costs and revenues at a minimum on a semi-annual basis and submit a proposed rule change for each modification of the ORF as needed. The Exchange also proposes to eliminate the explicit language in the Fee Schedule that it will notify participants of any change in the amount of the fee at least 30 calendar days prior to the effective date of the change. Although the Exchange proposes to eliminate this language from the Fee Schedule, it notes that it will endeavor to notify Members of any planned change to the ORF by Regulatory Circular at least 30 calendar days prior to the effective date of such change. The Exchange believes this proposed change also provides the Exchange additional flexibility. For example, the Exchange often provides fee change notices on the first business day of the month. It may be the case that such date is less than 30 days from the effective date of proposed change (e.g., if the Exchange wished to amend the ORF, effective August 1, 2023, the Exchange would not have met the 30day notice requirement if it had announced on the first business day of July, as it has been historic practice, since the first business day falls on July 3, 2023). As such, the proposed rule changes provide added flexibility while still committing to provide notice on the timing of any changes to the ORF and ensuring that Members are prepared to configure their systems to properly account for the ORF. The Exchange notes that the proposed changes will result in ORF processes and fee schedule language that will align with those of its affiliated E:\FR\FM\18OCN1.SGM 18OCN1 71906 Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices exchanges, Miami International Securities Exchange, LLC (‘‘MIAX Options’’) and MIAX PEARL, LLC (‘‘MIAX Pearl’’).5 Moreover, other options exchanges recently amended their fees to allow for flexibility to adjust ORF during months other than February or August.6 The Exchange believes the proposed change provides uniformity across its affiliated options exchanges and reduces potential confusion. It also provides the Exchange added flexibility as to when modifications to the ORF may occur. ddrumheller on DSK120RN23PROD with NOTICES1 Implementation Date The Exchange will announce the effective date of the proposed changes by Regulatory Circular distributed to all Members. 2. Statutory Basis The Exchange believes that the proposal is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of section 6(b) of the Act.7 Specifically, the Exchange believes that the proposal is consistent with the section 6(b)(5) 8 requirements that the rules of an exchange be 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Additionally, the Exchange believes that the proposal is consistent with the section 6(b)(5) 9 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange also believes that the proposal is consistent with section 6(b)(4) of the Act,10 which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among its Members and other persons using its facilities. The Exchange believes the proposed changes to the Fees Schedule are appropriate as it provides the Exchange with more flexibility in its assessment of 5 The Exchange intends to submit an identical proposal for its affiliates MIAX Options and MIAX Pearl. 6 See supra note 3. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). 9 Id. 10 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 18:01 Oct 17, 2023 Jkt 262001 ORF based on its periodic monitoring of ORF rates. The Exchange also represents that it will continue to monitor its regulatory costs and revenues at a minimum on a semi-annual basis, just as it, and its affiliated options exchanges (including MIAX Pearl and MIAX) do today. The Exchange believes that the proposed elimination of language specifying that the Exchange may only increase or decrease the ORF on the first business day February or August is reasonable because it is designed to afford the Exchange increased flexibility in making necessary adjustments to the ORF, as the Exchange is required to monitor the amount collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed total regulatory costs. The Exchange also represents that it will endeavor to provide notice of any changes at least 30 days in advance of the effective date of such change, thereby providing Members with adequate time to make any necessary adjustments to accommodate any proposed changes. Taking out the strict requirements from the Fee Schedule, however, will provide the Exchange flexibility in modifying ORF and being able to adjust ORF even if it doesn’t meet the strict 30-day deadline in the event extenuating circumstances prevent the Exchange from meeting this deadline or in the event such notice is a day or two less than 30 days due to when the first business days of the month fall. For example, as noted above, the Exchange often provides fee change notices on the first business day of the month. It may be the case that such date is less than 30 days from the effective date of proposed change (e.g., if the Exchange wished to amend the ORF, effective, August 1, 2023, the Exchange would not have met the 30-day notice requirement if it had announced on the first business day of July, as it has been historic practice, since the first business day falls on July 3, 2023). The Exchange believes that the proposal is reasonable, equitable and not unfairly discriminatory because it conforms to the process and fee schedule language used by two of its affiliated options exchanges, thereby providing consistency across the MIAX family options exchanges and reducing potential confusion. The proposed changes also apply uniformly to all Members subject to ORF. As noted above, other options exchanges are also not confined to making ORF changes on the first business day of February or August or required to provide 30 day notice.11 11 See PO 00000 supra note 3. Frm 00090 Fmt 4703 Sfmt 4703 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposal will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In this regard and as indicated above, the Exchange notes that the proposal is substantially similar in all material respects to filings submitted by Cboe EDGX Exchange, Inc. (‘‘EDGX’’), Cboe BZX Exchange, Inc. (‘‘BZX’’), and BOX Options Market LLC (‘‘BOX’’).12 This proposal does not create an unnecessary or inappropriate inter-market burden on competition because it merely amends the Fee Schedule to modify the timing and notice requirements relating to the modification of the ORF and conforms to the timing and notice requirements used by other options exchanges within their fee schedules.13 Further, ORF is a regulatory fee that supports regulation in furtherance of the purposes of the Act. The Exchange is obligated to ensure that the amount of regulatory revenue collected from the ORF, in combination with its other regulatory fees and fines, does not exceed regulatory costs and the proposed rule change does not seek to change that. 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 Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to section 19(b)(3)(A) of the Act 14 and Rule 19b–4(f)(6) 15 thereunder. 12 Id. 13 Id. 14 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 15 17 E:\FR\FM\18OCN1.SGM 18OCN1 Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices A proposed rule change filed under Rule 19b–4(f)(6) 16 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),17 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposed rule change may become operative upon filing. The Exchange is requesting the waiver because it will allow the Exchange to exercise more flexibility with respect to timing of changes to its assessment of ORF based on its periodic monitoring of ORF rates and allow the Exchange to mirror similar provisions already in place on other exchanges. Finally, the Exchange states that the proposed change would not introduce any novel regulatory issues. For these reasons, and because the proposed rule change does not raise any novel legal or regulatory issues, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.18 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: ddrumheller on DSK120RN23PROD with NOTICES1 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–2023–28 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–2023–28. 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 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–EMERALD–2023–28 and should be submitted on or before November 8, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–22923 Filed 10–17–23; 8:45 am] BILLING CODE 8011–01–P 16 17 CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 18 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 17 17 VerDate Sep<11>2014 18:01 Oct 17, 2023 Jkt 262001 19 17 PO 00000 CFR 200.30–3(a)(12) and (a)(59). Frm 00091 Fmt 4703 Sfmt 4703 71907 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98733; File No. SR– PEARL–2023–52] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the MIAX Pearl Options Fee Schedule for Purge Ports October 12, 2023. 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 29, 2023, MIAX PEARL, LLC (‘‘MIAX Pearl’’ 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 proposes to amend the MIAX Pearl Options Exchange Fee Schedule (the ‘‘Fee Schedule’’) to amend fees for MIAX Express Network (‘‘MEO’’) 3 Purge Ports (‘‘Purge Ports’’).4 The text of the proposed rule change is available on the Exchange’s website at https://www.miaxglobal.com/markets/ us-options/pearl-options/rule-filings at MIAX Pearl’s principal office, and at the Commission’s Public Reference Room. I. 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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 ‘‘MEO Interface’’ or ‘‘MEO’’ means a binary order interface for certain order types as set forth in Rule 516 into the MIAX Pearl System. See the Definitions Section of the Fee Schedule and Exchange Rule 100. 4 The proposed fee change is based on a recent proposal by Nasdaq Phlx LLC (‘‘Phlx’’) to adopt fees for purge ports. See Securities Exchange Act Release No. 97825 (June 30, 2023), 88 FR 43405 (July 7, 2023) (SR–Phlx–2023–28). 2 17 E:\FR\FM\18OCN1.SGM 18OCN1

Agencies

[Federal Register Volume 88, Number 200 (Wednesday, October 18, 2023)]
[Notices]
[Pages 71904-71907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22923]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98728; File No. SR-EMERALD-2023-28]


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

October 12, 2023.
    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 October 5, 2023, MIAX Emerald, LLC (``MIAX Emerald'' or 
``Exchange'') filed with the

[[Page 71905]]

Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the MIAX Emerald Options Exchange 
Fee Schedule (the ``Fee Schedule'') related to the Options Regulatory 
Fee.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/emerald-options/rule-filings, at MIAX's [sic] principal office, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule, to harmonize the 
language and processes relating to the Options Regulatory Fee (``ORF'') 
with the language and processes used by other options exchanges.\3\ By 
way of background, the ORF is designed to recover a material portion of 
the costs to the Exchange of the supervision and regulation of Member 
\4\ customer options business, including performing routine 
surveillances, investigations, examinations, financial monitoring, as 
well as policy, rulemaking, interpretive and enforcement activities. 
The revenue generated from the ORF covers a material portion and when 
combined with all of the Exchange's other regulatory fees and fines 
will cover a material portion of the Exchange's regulatory costs. The 
Exchange monitors the amount of revenue collected from the ORF to 
ensure that it, in combination with its other regulatory fees and 
fines, does not exceed the Exchange's total regulatory costs. The 
Exchange monitors its regulatory costs and revenues at a minimum on a 
semi-annual basis. If the Exchange determines regulatory revenues 
exceed or are insufficient to cover a material portion of its 
regulatory costs, the Exchange will adjust the ORF by submitting a fee 
change filing to the Securities and Exchange Commission (the 
``Commission''). The Exchange notifies Members of adjustments to the 
ORF via a Regulatory Circular. The Exchange provides Members with such 
notice at least 30 calendar days prior to the effective date of the 
change.
---------------------------------------------------------------------------

    \3\ See Securities and Exchange Act Release Nos. 98108 (August 
10, 2023), 88 FR 55809 (August 16, 2023) (SR-CboeEDGX-2023-054) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change to Amend its Fee Schedule Related to the Options Regulatory 
Fee); 98109 (August 10, 2023), 88 FR 55801 (August 16, 2023) (SR-
CboeBZX-2023-061) (Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change to Amend its Fee Schedule Related to the 
Options Regulatory Fee); 98446 (September 20, 2023), 88 FR 66100 
(September 26, 2023) (SR-BOX-2023-24) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the Fee 
Schedule for Trading on the BOX Options Market LLC Facility To Amend 
the Language and Process Related to the Options Regulatory Fee).
    \4\ 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 
Exchange Rule 100.
---------------------------------------------------------------------------

    The Regulatory Fee section of the Fee Schedule sets forth the 
details and description of how and when the ORF is assessed. For 
example, the Fee Schedule explicitly specifies that the Exchange may 
only increase or decrease the ORF semi-annually, and any such fee 
change will be effective on the first business day of February or 
August. The Fee Schedule further states that the Exchange will notify 
participants of any change in the amount of the fee at least 30 
calendar days prior to the effective date of the change.
    The Exchange proposes to update the Fee Schedule language relating 
to the timing of ORF changes. Particularly, the Exchange proposes to 
eliminate the strict requirement that the ORF may only be modified on 
the first business day of February or August, and also the explicit 
requirement that it must provide at least 30 calendar days prior notice 
to the effective date.
    The Exchange first proposes to eliminate the requirement that ORF 
may only be modified on the first business day of February or August to 
afford the Exchange increased flexibility in amending the ORF. As noted 
above, the ORF is based in part on options transactions volume, and as 
such the amount of ORF collected is variable. If options transactions 
reported to OCC in a given month increase, the ORF collected from 
Members may increase as well. Similarly, if options transactions 
reported to OCC in a given month decrease, the ORF collected from 
Members may decrease as well. Accordingly, the Exchange monitors the 
amount of ORF collected to ensure that it does not exceed a material 
portion of the Exchange's total regulatory costs. If the Exchange 
determines that the amount of ORF collected exceeds costs, the proposed 
rule change allows the Exchange to adjust the ORF by submitting a fee 
change filing to the Commission in a month other than just February or 
August. Although the Exchange proposes to eliminate the explicit 
language in the fee schedule that provides the Exchange will adjust the 
ORF only semi-annually, and only on the first business day of February 
or August, it would continue to monitor its regulatory costs and 
revenues at a minimum on a semi-annual basis and submit a proposed rule 
change for each modification of the ORF as needed.
    The Exchange also proposes to eliminate the explicit language in 
the Fee Schedule that it will notify participants of any change in the 
amount of the fee at least 30 calendar days prior to the effective date 
of the change. Although the Exchange proposes to eliminate this 
language from the Fee Schedule, it notes that it will endeavor to 
notify Members of any planned change to the ORF by Regulatory Circular 
at least 30 calendar days prior to the effective date of such change. 
The Exchange believes this proposed change also provides the Exchange 
additional flexibility. For example, the Exchange often provides fee 
change notices on the first business day of the month. It may be the 
case that such date is less than 30 days from the effective date of 
proposed change (e.g., if the Exchange wished to amend the ORF, 
effective August 1, 2023, the Exchange would not have met the 30-day 
notice requirement if it had announced on the first business day of 
July, as it has been historic practice, since the first business day 
falls on July 3, 2023). As such, the proposed rule changes provide 
added flexibility while still committing to provide notice on the 
timing of any changes to the ORF and ensuring that Members are prepared 
to configure their systems to properly account for the ORF.
    The Exchange notes that the proposed changes will result in ORF 
processes and fee schedule language that will align with those of its 
affiliated

[[Page 71906]]

exchanges, Miami International Securities Exchange, LLC (``MIAX 
Options'') and MIAX PEARL, LLC (``MIAX Pearl'').\5\ Moreover, other 
options exchanges recently amended their fees to allow for flexibility 
to adjust ORF during months other than February or August.\6\ The 
Exchange believes the proposed change provides uniformity across its 
affiliated options exchanges and reduces potential confusion. It also 
provides the Exchange added flexibility as to when modifications to the 
ORF may occur.
---------------------------------------------------------------------------

    \5\ The Exchange intends to submit an identical proposal for its 
affiliates MIAX Options and MIAX Pearl.
    \6\ See supra note 3.
---------------------------------------------------------------------------

Implementation Date
    The Exchange will announce the effective date of the proposed 
changes by Regulatory Circular distributed to all Members.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the Act 
and the rules and regulations thereunder applicable to the Exchange 
and, in particular, the requirements of section 6(b) of the Act.\7\ 
Specifically, the Exchange believes that the proposal is consistent 
with the section 6(b)(5) \8\ requirements that the rules of an exchange 
be 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 regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes that the proposal is consistent 
with the section 6(b)(5) \9\ requirement that the rules of an exchange 
not be designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. The Exchange also believes that the 
proposal is consistent with section 6(b)(4) of the Act,\10\ which 
requires that Exchange rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among its Members and other 
persons using its facilities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed changes to the Fees Schedule are 
appropriate as it provides the Exchange with more flexibility in its 
assessment of ORF based on its periodic monitoring of ORF rates. The 
Exchange also represents that it will continue to monitor its 
regulatory costs and revenues at a minimum on a semi-annual basis, just 
as it, and its affiliated options exchanges (including MIAX Pearl and 
MIAX) do today. The Exchange believes that the proposed elimination of 
language specifying that the Exchange may only increase or decrease the 
ORF on the first business day February or August is reasonable because 
it is designed to afford the Exchange increased flexibility in making 
necessary adjustments to the ORF, as the Exchange is required to 
monitor the amount collected from the ORF to ensure that it, in 
combination with its other regulatory fees and fines, does not exceed 
total regulatory costs.
    The Exchange also represents that it will endeavor to provide 
notice of any changes at least 30 days in advance of the effective date 
of such change, thereby providing Members with adequate time to make 
any necessary adjustments to accommodate any proposed changes. Taking 
out the strict requirements from the Fee Schedule, however, will 
provide the Exchange flexibility in modifying ORF and being able to 
adjust ORF even if it doesn't meet the strict 30-day deadline in the 
event extenuating circumstances prevent the Exchange from meeting this 
deadline or in the event such notice is a day or two less than 30 days 
due to when the first business days of the month fall. For example, as 
noted above, the Exchange often provides fee change notices on the 
first business day of the month. It may be the case that such date is 
less than 30 days from the effective date of proposed change (e.g., if 
the Exchange wished to amend the ORF, effective, August 1, 2023, the 
Exchange would not have met the 30-day notice requirement if it had 
announced on the first business day of July, as it has been historic 
practice, since the first business day falls on July 3, 2023).
    The Exchange believes that the proposal is reasonable, equitable 
and not unfairly discriminatory because it conforms to the process and 
fee schedule language used by two of its affiliated options exchanges, 
thereby providing consistency across the MIAX family options exchanges 
and reducing potential confusion. The proposed changes also apply 
uniformly to all Members subject to ORF. As noted above, other options 
exchanges are also not confined to making ORF changes on the first 
business day of February or August or required to provide 30 day 
notice.\11\
---------------------------------------------------------------------------

    \11\ See supra note 3.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act. In this regard and as indicated above, the 
Exchange notes that the proposal is substantially similar in all 
material respects to filings submitted by Cboe EDGX Exchange, Inc. 
(``EDGX''), Cboe BZX Exchange, Inc. (``BZX''), and BOX Options Market 
LLC (``BOX'').\12\ This proposal does not create an unnecessary or 
inappropriate inter-market burden on competition because it merely 
amends the Fee Schedule to modify the timing and notice requirements 
relating to the modification of the ORF and conforms to the timing and 
notice requirements used by other options exchanges within their fee 
schedules.\13\ Further, ORF is a regulatory fee that supports 
regulation in furtherance of the purposes of the Act. The Exchange is 
obligated to ensure that the amount of regulatory revenue collected 
from the ORF, in combination with its other regulatory fees and fines, 
does not exceed regulatory costs and the proposed rule change does not 
seek to change that.
---------------------------------------------------------------------------

    \12\ Id.
    \13\ Id.
---------------------------------------------------------------------------

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) \15\ thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.

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[[Page 71907]]

    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative upon filing. The Exchange is 
requesting the waiver because it will allow the Exchange to exercise 
more flexibility with respect to timing of changes to its assessment of 
ORF based on its periodic monitoring of ORF rates and allow the 
Exchange to mirror similar provisions already in place on other 
exchanges. Finally, the Exchange states that the proposed change would 
not introduce any novel regulatory issues. For these reasons, and 
because the proposed rule change does not raise any novel legal or 
regulatory issues, the Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\18\
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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 [email protected]. Please include 
file number SR-EMERALD-2023-28 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-2023-28. 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-EMERALD-2023-28 and should 
be submitted on or before November 8, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12) and (a)(59).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22923 Filed 10-17-23; 8:45 am]
BILLING CODE 8011-01-P
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