Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Fees for the Liquidity Taker Event Report-Simple Orders, the Liquidity Taker Event Report-Complex Orders, and the Liquidity Taker Event Report-Resting Simple Orders, 67999-68005 [2024-18784]
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Federal Register / Vol. 89, No. 163 / Thursday, August 22, 2024 / Notices
IV. Solicitation of Comments
environment, the Exchange must
continually adjust its fees and fee
waivers to remain competitive with
other exchanges and to attract order
flow to the facility.
API and Network Connectivity Testing
and Certification Fees
The Exchange believes the proposed
API Testing and Certification fees and
Network Connectivity Testing and
Certification fees do not place an undue
burden on competition on other SROs
that is not necessary or appropriate. The
Exchange believes that the proposed
fees do not impose a burden on
competition or on other exchanges that
is not necessary or appropriate because
of the availability of numerous
substitute options exchanges. There are
17 other options exchanges where
market participants can become
members.
Finally, the Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing venues. In such
an environment, the Exchange must
continually review, and consider
adjusting, its fees and credits to remain
competitive with other exchanges. For
the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
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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,69 and Rule
19b–4(f)(2) 70 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.
69 15
70 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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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:
• 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–
SAPPHIRE–2024–20 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–SAPPHIRE–2024–20. 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–SAPPHIRE–2024–20 and should be
submitted on or before September 12,
2024.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.71
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–18790 Filed 8–21–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
PO 00000
67999
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[Release No. 34–100749; File No. SR–
SAPPHIRE–2024–08]
Self-Regulatory Organizations; MIAX
Sapphire, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Adopt Fees for the
Liquidity Taker Event Report—Simple
Orders, the Liquidity Taker Event
Report—Complex Orders, and the
Liquidity Taker Event Report—Resting
Simple Orders
August 16, 2024.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on August 6, 2024, MIAX Sapphire, LLC
(‘‘MIAX Sapphire’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
adopt fees for three data products: (i) the
Liquidity Taker Event Report—Simple
Orders; (ii) Liquidity Taker Event
Report—Complex Orders; and (iii)
Liquidity Taker Event Report—Resting
Simple Orders.3
While changes to the Fee Schedule
pursuant to this proposal are effective
upon filing, the Exchange has
designated these changes to be operative
on August 12, 2024.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-options/miax-sapphire/rule-filings, at
the Exchange’s principal office, and at
the Commission’s Public Reference
Room.
71 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Exchange Rules 531(a)–(c).
1 15
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Federal Register / Vol. 89, No. 163 / Thursday, August 22, 2024 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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The Exchange offers three Member 4specific reports: (1) the Liquidity Taker
Event Report—Simple Orders (referred
to herein as the ‘‘Simple Order Report’’);
(2) the Liquidity Taker Event Report—
Complex Orders (the ‘‘Complex Order
Report’’); and (3) the Liquidity Taker
Event Report—Resting Simple Orders
(the ‘‘Resting Simple Order Report’’),
which are available for purchase by
Exchange Members on a voluntary basis.
The Exchange proposes to adopt fees
for these three reports. The Exchange
reports are described under Exchange
Rules 531(a)–(c).5 The reports are
optional products available to Members.
As further described below, the
Exchange also proposes to offer a
discounted combined fee for Members
who purchase annual subscriptions to
both the Simple Order Report and
Complex Order Report. The Exchange
notes that the proposed fees and
proposed discount are identical to the
fees and discounts currently provided
by the Exchange’s affiliated options
exchanges, Miami International
Securities Exchange, LLC (‘‘MIAX’’),
MIAX PEARL, LLC (‘‘MIAX Pearl’’),6
and MIAX Emerald, LLC (‘‘MIAX
Emerald’’), for the same liquidity taker
event reports available on those
4 The term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of the Exchange’s Rules for
purposes of trading on the Exchange as an
‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’
Members are deemed ‘‘members’’ under the
Exchange Act. See Exchange Rule 100.
5 See supra note 3; see also Securities Exchange
Act Release Nos. 100539 (July 15, 2024), 89 FR
58848 (July 19, 2024) (File No. 10–240) and 100642
(August 2, 2024) (SR–SAPPHIRE–2024–05).
6 All references to ‘‘MIAX Pearl’’ in this filing are
to the options trading facility of MIAX Pearl, and
not the equities trading facility, which is referred
to as ‘‘MIAX Pearl Equities.’’
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exchanges.7 The proposed fees are also
identical to the fees charged by a
competing options exchange, BOX
Exchange, LLC (‘‘BOX’’), for BOX’s
version of the Simple Order Report and
Complex Order Report.8
By way of background, the reports are
daily reports that provide a Member
(‘‘Recipient Member’’) with its liquidity
response time details for executions of
an order (or complex order,9 as the case
may be) resting on the Electronic
Book,10 where that Recipient Member
attempted to execute against such
resting order 11 within a certain
timeframe. It is important to note that
the content of each report is specific to
the Recipient Member and each report
will not include any information related
to any Member other than the Recipient
Member.
Report Content
The content of the Simple Order
Report, Complex Order Report, and
Resting Simple Order Report are
substantially similar to one another. The
following paragraphs explain the
content of three reports by delineating
which information would be provided
regarding the resting order, the response
that successfully executed against the
resting order, and the response
submitted by the Recipient Member that
missed executing against the resting
order.
Resting Order Information. The
following information is included in the
Simple Order Report, Complex Order
Report, and Resting Simple Order
Report regarding the resting order: (A)
the time the resting order was received
by the Exchange; 12 (B) symbol; (C) order
7 See MIAX Fee Schedule, Section 7); MIAX Pearl
Fee Schedule, Section 7); and MIAX Emerald Fee
Schedule, Section 7). The Exchange notes that
MIAX Pearl does not offer complex order
functionality; accordingly, it only offers its version
of the Simple Order Report and Resting Simple
Order Report.
8 See BOX Fee Schedule, Section III.C.2. At the
time of this filing, BOX does not offer a version of
the Resting Simple Order Report.
9 In sum, a ‘‘complex order’’ is ‘‘any order
involving the concurrent purchase and/or sale of
two or more different options in the same
underlying security (the ‘legs’ or ‘components’ of
the complex order), for the same account, in a
conforming or non-conforming ratio . . . .’’ See
Exchange Rule 518(a).
10 The term ‘‘Electronic Book’’ means the
Exchange’s Simple Order Book and Strategy Book.
See Exchange Rule 100. The ‘‘Simple Order Book’’
is the Exchange’s regular electronic book of orders
and quotes. Id. The ‘‘Strategy Book’’ is the
Exchange’s electronic book of complex orders. Id.
11 Only displayed orders will be included in the
reports. The Exchange notes that it does not
currently offer any non-displayed orders.
12 The time the Exchange received the resting
order would be in nanoseconds and is the time the
resting order was received by the Exchange’s
System. The term ‘‘System’’ means the automated
PO 00000
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reference number, which is a unique
reference number assigned to a new
order at the time of receipt; (D) whether
the Recipient Member is an affiliate 13 of
the Member that entered the resting
order 14; (E) origin type (e.g., Priority
Customer,15 Market Maker 16); (F) side
(buy or sell); and (G) displayed price
and size of the resting order.17 The
Simple Order Report and Resting
Simple Order Report include the same
information about incoming orders
seeking to remove resting orders from
the Simple Order Book. Meanwhile, the
content of the Complex Order Report
includes the same information about
incoming complex orders that seek to
remove liquidity from the Exchange’s
Strategy Book.18
Execution Information. The following
information is included in the Simple
Order Report regarding the execution of
the resting order: (A) the SBBO 19 at the
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
13 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.
14 Each report will simply indicate whether the
Recipient Member is an Affiliate of the Member that
entered the resting order and will not include any
other information that may indicate the identity of
the Member that entered the resting order.
15 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.
16 The term ‘‘Market Maker’’ or ‘‘MM’’ means a
Member registered with the Exchange for the
purpose of making markets in options contracts
traded on the Exchange and that is vested with the
rights and responsibilities specified in Chapter VI
of the Exchange’s Rules. See Exchange Rule 100.
17 The Exchange notes that the displayed price
and size are also disseminated via the Exchange’s
proprietary data feeds and the Options Price
Reporting Authority (‘‘OPRA’’). 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.
18 The term ‘‘complex strategy’’ means a
particular combination of components and their
ratios to one another. New complex strategies can
be created as the result of the receipt of a complex
order or by the Exchange for a complex strategy that
is not currently in the System. The Exchange may
limit the number of new complex strategies that
may be in the System at a particular time and will
communicate this limitation to Members via
Regulatory Circular. See Exchange Rule 518(a). The
Strategy Book is organized by complex strategy in
that individual orders for a defined complex
strategy are organized together in a book that is
separate from the orders for a different complex
strategy.
19 The term ‘‘SBBO’’ means the best bid or offer
on the Simple Order Book of the Exchange. See
Exchange Rule 100.
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time of execution; 20 (B) the ABBO 21 at
the time of execution; 22 (C) the time the
first response that executes against the
resting order was received by the
Exchange and the size of the execution
and type of the response; 23 (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; 24 and (E) whether the
response was entered by the Recipient
Member. If the resting order executes
against multiple contra-side responses,
only the SBBO and ABBO at the time of
the execution against the first response
will be included.
The Simple Order Report and Resting
Simple Order Report include the SBBO,
which is the Exchange’s best bid or
offer, and the ABBO, which is the best
bid or offer of away exchanges. The
content of the Complex Order Report is
identical to the content of the Simple
Order Report with three minor
differences. The Complex Order Report
includes the Complex SBBO 25 in place
of the SBBO and Complex ABBO 26 in
place of the ABBO. The Complex SBBO
is calculated using the SBBO for each
20 Exchange Rule 531(a)(1)(ii)(B) [sic] provides
that if the resting order executes against multiple
contra-side responses, only the ABBO [sic] at the
time of the execution against the first response will
be included.
21 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
OPRA. See Exchange Rule 100.
22 Exchange Rule 531(a)(1)(ii)(A) [sic] further
provides that if the resting order executes against
multiple contra-side responses, only the ABBO at
the time of the execution against the first response
will be included.
23 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.
24 The time difference would be provided in
nanoseconds.
25 The Complex SBBO for a particular complex
strategy is calculated using the Implied Complex
Sapphire Best Bid or Offer (‘‘icSBBO’’) combined
with the best price currently available for that
particular complex strategy on the Strategy Book to
establish the Exchange’s best net bid or offer for that
complex strategy. The icSBBO 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 icSBBO 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). The term ‘‘NBBO’’ means the national
best bid or offer as calculated by the Exchange
based on market information received by the
Exchange from OPRA. See Exchange Rule 100.
26 The Complex ABBO is calculated using the
ABBO for each component of a complex strategy to
establish the away markets’ best net bid or offer for
a complex strategy.
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component of a complex strategy to
establish the Exchange’s best net bid or
offer for a complex strategy. The
Complex SBBO is calculated using the
icSBBO combined with the best price
currently available on the Strategy Book
to establish the Exchange’s best net bid
or offer for a complex strategy.27 The
Complex ABBO is calculated using the
ABBO for each component of a complex
strategy to establish the away markets’
best net bid or offer for a complex
strategy using OPRA data. The Exchange
is providing the Complex SBBO and
Complex ABBO because both are
relevant and tailored to a Member that
is entering a complex order to remove
liquidity as part of a complex strategy
and, therefore, more germane to the
purpose of the Complex Order Report.
The third difference is that the Complex
Order Report includes the data listed in
Exchange Rule 531(b)(1) for executions
and contra-side responses that occurred
within 400 microseconds of the time the
resting order was received by the
Exchange, rather than 200
microseconds, which is the timeframe
utilized by the Simple Order Report.
But for the timeframe and one
difference described below, the Resting
Simple Order Report would include the
same data as the Simple Order Report
currently described under Exchange
Rule 531(a), except that the Resting
Simple Order Report will focus on
executions and contra-side responses
that occurred after 200 microseconds of
the time the resting order was received
by the Exchange and within 200
microseconds of receipt of any
Member’s first attempt to execute
against the resting order after the initial
200 microsecond time period under
subparagraph (c)(2)(i) of Exchange Rule
531 has expired. The Simple Order
Report includes 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. The Resting Simple Order
Report does not include the same
information because that timeframe
could be for an extended period of time
since the proposed Resting Simple
Order Report focuses on orders that
have been resting on the Simple Order
Book for longer than 200 microseconds
and, therefore, the Exchange believes is
less likely to be valuable to the
Recipient Member. The Simple Order
Report and Resting Simple Order Report
focus on 200 microsecond windows
with the Simple Order Report’s window
starting at the time of receipt of the
resting order and the Resting Simple
27 See
PO 00000
supra note 25.
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68001
Order Report’s window starting with the
first attempt to execute against the
resting order after the order was resting
on the Simple Order Book for at least
200 microseconds.
Recipient Member’s Response
Information. The following information
is included in the Simple Order Report,
Complex Order Report, and Resting
Simple 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 response sent by the Recipient
Member, regardless of whether it
executed or not; 28 (C) size and type of
each response submitted by Recipient
Member; and (D) response reference
number, which is a unique reference
number attached to the response by the
Recipient Member.
Timeframe
The Simple Order Report provides
data 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 provides
data for executions and contra-side
responses that occurred within 400
microseconds of the time the resting
order was received by the Exchange.
The minor difference in timeframes for
the Simple Order Report and Complex
Order Report is to allow sufficient time
for the System to develop new complex
strategies, which generally takes longer
than 200 microseconds. Accordingly,
the Complex Order Report provides for
a timeframe of 400 microseconds to
allow for the intended information to be
captured by the Complex Order Report.
The Resting Simple Order Report
includes the same data as the Simple
Order Report and Complex Order Report
but focuses on executions and contraside responses that occurred after 200
microseconds of the time the resting
order was received by the Exchange,
and within 200 microseconds of receipt
of any Member’s first attempt to execute
against the resting order after the initial
200 microsecond time period has
expired. More specifically, the resting
order must rest on the Simple Order
Book for at least 200 microseconds and
once that initial 200 microsecond period
28 For purposes of calculating this duration of
time, the Exchange will use the time the first
response that executes against 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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has passed, a Member must then submit
an order to attempt to execute against
that resting order. This event starts a
second 200 microsecond period within
which the Resting Simple Order Report
would include data on executions and
contra-side responses submitted by the
Recipient Member to execute against
that resting order.
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Scope of Data Included in the Reports
The Simple Order Report, Complex
Order Report, and Resting Simple Order
Report include trading data related to
the Recipient Member and subject to the
historical data requirement described
below, and do not include information
related to any other Member’s trading
data other than resting order
information and execution information
described above.
Historical Data
The Simple Order Report, Complex
Order Report, and Resting Simple Order
Report contain historical data from the
prior trading day and will be available
after the end of the trading day,
generally on a T+1 basis. These reports
do 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 Simple Order
Report, Complex Order Report, and
Resting Simple Order Report will
provide Members with an opportunity
to learn more about better opportunities
to access liquidity and receive better
execution rates. The Simple Order
Report, Complex Order Report, and
Resting Simple Order Report will
increase transparency and democratize
information so that all firms that
subscribe to these reports 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 order if there is a
high probability that it will execute
against an order resting on the Simple
Order Book or Strategy Book. The
Simple Order Report, Complex Order
Report, and Resting Simple Order
Report identify by how much time an
order that may have been marketable
missed an execution. The Simple Order
Report, Complex Order Report, and
Resting Simple 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.
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The Simple Order Report, Complex
Order Report, and Resting Simple Order
Report will be Member-specific reports
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 Electronic
Book.
The reports are being 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 any report
only if they voluntarily choose to do so.
It is a business decision of each Member
whether to subscribe to each report or
not.
The Exchange proposes to adopt new
Section 7), Reports, in its Fee Schedule,
which will provide that Members may
purchase each report on a monthly or
annual (12-month) basis. The Exchange
proposes to assess a monthly fee of
$4,000 per month and a fee of $24,000
per year for a 12-month subscription for
each of the Simple Order Report and
Complex Order Report. The Exchange
proposes to assess a monthly fee of
$2,000 per month and a fee of $12,000
per year for a 12-month subscription for
the Resting Simple Order Report. The
proposed fees are identical to the fees
currently charged by the Exchange’s
affiliates, MIAX, MIAX Pearl (for the
Simple Order Report and Resting
Simple Order Report), and MIAX
Emerald, for the same reports available
on those exchanges.29 The proposed
fees for the Simple Order Report and
Complex Order Report are identical to
the fees charged by a competing options
exchange, BOX, for its version of the
Simple Order Report and Complex
Order Report.30
Members may cancel their
subscription to any report at any time.
The Exchange also proposes to specify
that for mid-month subscriptions, new
subscribers will be charged for the full
calendar month for which they
subscribe and will be provided report
data for each trading day of the calendar
month prior to the day on which they
subscribed to any of the reports. The
Exchange proposes to waive the
monthly fees for the Simple Order
Report, Complex Order Report and
Resting Simple Order Report for the
29 See
supra note 7.
supra note 8. At the time of this filing, BOX
does not offer a version of the Resting Simple Order
Report.
30 See
PO 00000
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Initial Waiver Period.31 Even though the
Exchange proposes to waive these
particular fees during the Initial Waiver
Period, the Exchange believes that it is
appropriate to provide market
participants with the overall structure of
the fees by outlining the structure and
amounts in the Fee Schedule so that
there is general awareness that the
Exchange intends to assess such fees
upon expiration of the defined term of
the Initial Waiver Period.
The Exchange also proposes to
provide a discounted rate of $40,000 per
year to Members that purchase 12month subscriptions to both the Simple
Order Report and Complex Order Report
(as compared to a total of $48,000 for
each 12-month subscription at a rate of
$24,000 for each report on an individual
subscription basis). The Exchange also
proposes to prorate the discounted 12month 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 12month 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 12month subscription. In such case, the
fee for the added report will be prorated
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, 2024, and
paid $24,000 for a 12 month
subscription to the Simple Order
Report. ‘‘Member A’s’’ current
subscription expires on August 31,
2025, 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, 2025. Rather than being
immediately charged $40,000 for the 12
month subscription discount for
subscribing to both reports (‘‘Member
31 The term ‘‘Initial Waiver Period’’ means, for
each applicable fee, the period of time from the
initial effective date of the MIAX Sapphire Fee
Schedule plus an additional six (6) full calendar
months after the completion of the partial month of
the Exchange launch. See the Definitions Section of
the Fee Schedule.
E:\FR\FM\22AUN1.SGM
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Federal Register / Vol. 89, No. 163 / Thursday, August 22, 2024 / Notices
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,
2025, 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 prorated fee described above as
follows: on the date that ‘‘Member A’’
wanted to begin subscribing to the
Complex Order Report (March 1, 2025),
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, 2025 (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 reports on August 12, 2024.
ddrumheller on DSK120RN23PROD with NOTICES1
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,32 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,33 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices,
promote just and equitable principles of
trade, remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and protect investors and the
public interest, and is not designed to
permit unfair discrimination among
customers, brokers, or dealers. The
Exchange also believes that its proposal
to adopt fees for the reports is consistent
with Section 6(b) of the Act 34 in
general, and furthers the objectives of
Section 6(b)(4) of the Act 35 in
particular, in that it is an equitable
allocation of dues, fees and other
36 See the ‘‘Market Share’’ section of the
Exchange’s website, available at https://
www.miaxglobal.com/ (last visited July 25, 2024).
37 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
32 15
U.S.C. 78f(b).
33 15 U.S.C. 78f(b)(5).
34 15 U.S.C. 78f(b).
35 15 U.S.C. 78f(b)(4).
VerDate Sep<11>2014
17:28 Aug 21, 2024
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 reports further broaden the
availability of U.S. option market data to
investors consistent with the principles
of Regulation NMS. The reports also
promote increased transparency through
the dissemination of the data contained
in each report. Particularly, the reports
will benefit investors by facilitating
their prompt access to the value added
information that is included in each
report. The reports 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, with
the launch of MIAX Sapphire, there are
17 registered exchanges that trade
options. For the month of June 2024,
based on publicly available information,
no single options exchange had more
than approximately 14–15% of the
equity options market share.36 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.’’ 37
Making similar data products available
to market participants fosters
competition in the marketplace, and
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.
Jkt 262001
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
68003
options industry as the Exchange seeks
to adopt fees to attract purchasers of the
recently introduced reports.
The Exchange believes the proposed
fees are reasonable as the proposed fees
are both modest and identical to fees
charged by MIAX, MIAX Pearl, and
MIAX Emerald for similar reports.38
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 products, which
as noted, are 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
offerings.39 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 reports and
instead purchase another exchange’s
similar data product(s), 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 each of the reports.
A lower annual subscription fee would
also incentivize Members to subscribe to
the reports on a long-term basis, thereby
improving the efficiency by which the
Exchange may deliver the reports by
doing so on a regular basis over a
prolonged and set period of time.
The Exchange also believes the
proposed fees are reasonable as they
would support the introduction of new
market data products to Members that
are interested in gaining insight into
latency in connection with orders that
failed to execute against an order resting
on the Exchange’s Simple Order Book or
Strategy Book, as the case may be. The
reports accomplish 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 Simple Order Book or
Strategy Book. Members may use this
data to optimize their models and
38 See supra note 7. See MIAX Rules 531(a)–(c)
and MIAX Emerald Rules 531(a)–(c).
39 This is supported by BOX introducing two
nearly identical reports. See supra note 8; see also
Securities Exchange Act Release Nos. 94563 (March
31, 2022), 87 FR 19985 (April 6, 2022) (SR–BOX–
2022–10); and 94920 (May 16, 2022), 87 FR 31013
(May 20, 2022) (SR–BOX–2022–18).
E:\FR\FM\22AUN1.SGM
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ddrumheller on DSK120RN23PROD with NOTICES1
68004
Federal Register / Vol. 89, No. 163 / Thursday, August 22, 2024 / Notices
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 one of the
reports, is also a means by which
exchanges compete to attract business.
To the extent that the Exchange is
successful in attracting subscribers for
the reports, 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 decrease or
discontinue their use of the data and/or
avail themselves of similar products that
may be offered by other exchanges.40
The Exchange, therefore, believes that
the proposed fees for the reports 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 any of the reports.
The Exchange’s proposed fees would
not differentiate between subscribers
that purchase the reports and are set at
modest levels 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 reports is entirely optional
for all potential subscribers. Indeed, no
market participant is required to
purchase the reports, and the Exchange
is not required to make the reports
available to all investors. It is entirely a
business decision of each Member to
subscribe to the reports. The Exchange
offers the reports 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 reports may discontinue
receiving the reports at any time if that
Member determines that the information
contained in the reports is no longer
useful.
Further, the Exchange proposes to
waive the fees for the reports for the
Initial Waiver Period in order to
encourage market participants to
subscribe to the reports. The Exchange
believes it is reasonable to waive the
fees for the reports for the Initial Waiver
Period in order for Members to
determine whether they realize value
from the reports prior to the expiration
of the Initial Waiver Period. The
believes that it is reasonable to provide
40 See
supra note 8.
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17:28 Aug 21, 2024
Jkt 262001
market participants with the overall
structure of the fees by outlining the
structure and amounts in the Fee
Schedule so that there is general
awareness that the Exchange intends to
assess such fees upon expiration of the
defined term of the Initial Waiver
Period.
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 proposes to make the reports
available in order to keep pace with
changes in the industry and evolving
customer needs and demands, and
believes the reports 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 also does not believe
the proposed fees would cause any
unnecessary or inappropriate burden on
intermarket competition as other
exchanges are free to introduce their
own comparable reports with lower
prices to better compete with the
Exchange’s offerings. The Exchange
operates in a highly competitive
environment, and its ability to price the
reports is constrained by competition
among exchanges who choose to adopt
similar products. The Exchange must
consider this in its pricing discipline in
order to compete for subscribers of the
Exchange’s market data via the reports.
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 reports, 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 does not believe the
proposed rule change would cause any
unnecessary or inappropriate burden on
intramarket competition. Particularly,
the proposed fees apply uniformly to
any purchaser in that the Exchange does
not differentiate between subscribers
that purchase the reports. The proposed
fees are set at a modest level that would
allow any interested Member to
purchase such data based on their
business needs.
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
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,41 and Rule
19b–4(f)(2) 42 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
SAPPHIRE–2024–08 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–SAPPHIRE–2024–08. 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
41 15
42 17
E:\FR\FM\22AUN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
22AUN1
Federal Register / Vol. 89, No. 163 / Thursday, August 22, 2024 / Notices
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–SAPPHIRE–2024–08 and should be
submitted on or before September 12,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.43
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–18784 Filed 8–21–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; MIAX
Sapphire, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Establish a PassThrough of External Connectivity Fees
and Establish MPID Fees and a
Technical Support Request Fee
ddrumheller on DSK120RN23PROD with NOTICES1
August 16, 2024.
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 August 7,
2024, MIAX Sapphire, LLC (‘‘MIAX
Sapphire’’ 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.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
17:28 Aug 21, 2024
Jkt 262001
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
[Release No. 34–100750; File No. SR–
SAPPHIRE–2024–16]
43 17
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 Sapphire Options
Exchange Fee Schedule (the ‘‘Fee
Schedule’’).
While changes to the Fee Schedule
pursuant to this proposal are effective
upon filing, the Exchange has
designated these changes to be operative
on August 12, 2024.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-options/all-options-exchanges/rulefilings, at MIAX Sapphire’s principal
office, and at the Commission’s Public
Reference Room.
1. Purpose
On July 15, 2024, the U.S. Securities
and Exchange Commission
(‘‘Commission’’) approved the
Exchange’s Form 1 application to
register as a national securities exchange
under Section 6 of the Exchange Act.3
As previously announced, the Exchange
anticipates that it will commence
electronic operations on August 12,
2024.4 In anticipation of the launch of
electronic equity options trading, the
Exchange proposes to establish the
following sections of the Fee Schedule,
including proposed fee structures and
amounts: (1) pass-through of external
connectivity fees for Members 5 and
3 See Securities Exchange Act Release No. 100539
(July 15, 2024), 89 FR 58848 (July 19, 2024) (File
No. 10–240) (the ‘‘Approval Order’’).
4 See MIAX Sapphire Alert, dated March 6, 2024,
available at https://www.miaxglobal.com/alert/
2024/03/06/miax-sapphire-options-exchangerescheduled-launch-date-august-12-2024.
5 The term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of the Exchange’s Rules for
purposes of trading on the Exchange as an
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
68005
non-Members; (2) Member Participant
Identifier fees (‘‘MPID’’); and (3) a
technical support request fee.
The Exchange first proposes to
establish Section 5), System
Connectivity Fees, which will contain
sections for various connectivity and
port-related fees. The Exchange will file
separate rule filings to establish fees for
connectivity and ports for Members and
non-Members. Accordingly, the
Exchange proposes to establish Sections
5)a), 5)b), and 5)d), which will be
marked as ‘‘Reserved’’ for those types of
fees.
Pass-Through of External Connectivity
Fees
The Exchange proposes to establish
Section 5)c), Pass-Through of External
Connectivity Fees, which provides for
the pass through of external
connectivity fees to Members and nonMembers that establish connections
with MIAX Sapphire through a thirdparty. Fees assessed to MIAX Sapphire
by third-party external vendors on
behalf of a Member or non-Member
connecting to MIAX Sapphire
(including cross-connects), will be
passed through to the Member or nonMember. The external connectivity fees
passed through can include one-time
set-up fees, monthly charges, and other
fees charged to MIAX Sapphire by a
third-party for the benefit of a Member
or non-Member. The Exchange notes
that its affiliated options markets,
MIAX,6 MIAX Pearl 7 and MIAX
Emerald,8 provide for the same passthrough of external connectivity fees to
their members and non-members.9 As
such, this proposed fee is not new or
novel.
MPID Fees
The Exchange proposes to establish
Section 5)e), MPID Fees, pursuant to
which the Exchange proposes to assess
monthly MPID fees to Members based
upon the type of MPID, either FIX 10
‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’
Members are deemed ‘‘members’’ under the
Exchange Act. See Exchange Rule 100.
6 The term ‘‘MIAX’’ means Miami International
Securities Exchange, LLC. See Exchange Rule 100.
7 The term ‘‘MIAX Pearl’’ means MIAX PEARL,
LLC. See Exchange Rule 100. All references to
‘‘MIAX Pearl’’ in this filing are to the options
trading facility of MIAX PEARL, LLC. References to
the equities trading facility of MIAX PEARL, LLC,
will be to ‘‘MIAX Pearl Equities.’’
8 The term ‘‘MIAX Emerald’’ means MIAX
Emerald, LLC. See Exchange Rule 100.
9 See MIAX Fee Schedule, Section 5)c); MIAX
Pearl Fee Schedule, Section 5)c); and MIAX
Emerald Fee Schedule, Section 5)c).
10 The term ‘‘FIX Interface’’ means the Financial
Information Exchange interface used for submitting
certain order types (as set forth in Rule 516) to the
MIAX Sapphire System. See Exchange Rule 100.
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]]>Agencies
[Federal Register Volume 89, Number 163 (Thursday, August 22, 2024)]
[Notices]
[Pages 67999-68005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18784]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100749; File No. SR-SAPPHIRE-2024-08]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt
Fees for the Liquidity Taker Event Report--Simple Orders, the Liquidity
Taker Event Report--Complex Orders, and the Liquidity Taker Event
Report--Resting Simple Orders
August 16, 2024.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on August 6, 2024, MIAX Sapphire, LLC (``MIAX
Sapphire'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to adopt fees for three data
products: (i) the Liquidity Taker Event Report--Simple Orders; (ii)
Liquidity Taker Event Report--Complex Orders; and (iii) Liquidity Taker
Event Report--Resting Simple Orders.\3\
---------------------------------------------------------------------------
\3\ See Exchange Rules 531(a)-(c).
---------------------------------------------------------------------------
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on August 12, 2024.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxglobal.com/markets/us-options/miax-sapphire/rule-filings, at the Exchange's principal office, and at the
Commission's Public Reference Room.
[[Page 68000]]
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 offers three Member \4\-specific reports: (1) the
Liquidity Taker Event Report--Simple Orders (referred to herein as the
``Simple Order Report''); (2) the Liquidity Taker Event Report--Complex
Orders (the ``Complex Order Report''); and (3) the Liquidity Taker
Event Report--Resting Simple Orders (the ``Resting Simple Order
Report''), which are available for purchase by Exchange Members on a
voluntary basis.
---------------------------------------------------------------------------
\4\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of the
Exchange's Rules for purposes of trading on the Exchange as an
``Electronic Exchange Member'' or ``Market Maker.'' Members are
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
---------------------------------------------------------------------------
The Exchange proposes to adopt fees for these three reports. The
Exchange reports are described under Exchange Rules 531(a)-(c).\5\ The
reports are optional products available to Members. As further
described below, the Exchange also proposes to offer a discounted
combined fee for Members who purchase annual subscriptions to both the
Simple Order Report and Complex Order Report. The Exchange notes that
the proposed fees and proposed discount are identical to the fees and
discounts currently provided by the Exchange's affiliated options
exchanges, Miami International Securities Exchange, LLC (``MIAX''),
MIAX PEARL, LLC (``MIAX Pearl''),\6\ and MIAX Emerald, LLC (``MIAX
Emerald''), for the same liquidity taker event reports available on
those exchanges.\7\ The proposed fees are also identical to the fees
charged by a competing options exchange, BOX Exchange, LLC (``BOX''),
for BOX's version of the Simple Order Report and Complex Order
Report.\8\
---------------------------------------------------------------------------
\5\ See supra note 3; see also Securities Exchange Act Release
Nos. 100539 (July 15, 2024), 89 FR 58848 (July 19, 2024) (File No.
10-240) and 100642 (August 2, 2024) (SR-SAPPHIRE-2024-05).
\6\ All references to ``MIAX Pearl'' in this filing are to the
options trading facility of MIAX Pearl, and not the equities trading
facility, which is referred to as ``MIAX Pearl Equities.''
\7\ See MIAX Fee Schedule, Section 7); MIAX Pearl Fee Schedule,
Section 7); and MIAX Emerald Fee Schedule, Section 7). The Exchange
notes that MIAX Pearl does not offer complex order functionality;
accordingly, it only offers its version of the Simple Order Report
and Resting Simple Order Report.
\8\ See BOX Fee Schedule, Section III.C.2. At the time of this
filing, BOX does not offer a version of the Resting Simple Order
Report.
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By way of background, the reports are daily reports that provide a
Member (``Recipient Member'') with its liquidity response time details
for executions of an order (or complex order,\9\ as the case may be)
resting on the Electronic Book,\10\ where that Recipient Member
attempted to execute against such resting order \11\ within a certain
timeframe. It is important to note that the content of each report is
specific to the Recipient Member and each report will not include any
information related to any Member other than the Recipient Member.
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\9\ In sum, a ``complex order'' is ``any order involving the
concurrent purchase and/or sale of two or more different options in
the same underlying security (the `legs' or `components' of the
complex order), for the same account, in a conforming or non-
conforming ratio . . . .'' See Exchange Rule 518(a).
\10\ The term ``Electronic Book'' means the Exchange's Simple
Order Book and Strategy Book. See Exchange Rule 100. The ``Simple
Order Book'' is the Exchange's regular electronic book of orders and
quotes. Id. The ``Strategy Book'' is the Exchange's electronic book
of complex orders. Id.
\11\ Only displayed orders will be included in the reports. The
Exchange notes that it does not currently offer any non-displayed
orders.
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Report Content
The content of the Simple Order Report, Complex Order Report, and
Resting Simple Order Report are substantially similar to one another.
The following paragraphs explain the content of three reports by
delineating which information would be provided regarding the resting
order, the response that successfully executed against the resting
order, and the response submitted by the Recipient Member that missed
executing against the resting order.
Resting Order Information. The following information is included in
the Simple Order Report, Complex Order Report, and Resting Simple Order
Report regarding the resting order: (A) the time the resting order was
received by the Exchange; \12\ (B) symbol; (C) order reference number,
which is a unique reference number assigned to a new order at the time
of receipt; (D) whether the Recipient Member is an affiliate \13\ of
the Member that entered the resting order \14\; (E) origin type (e.g.,
Priority Customer,\15\ Market Maker \16\); (F) side (buy or sell); and
(G) displayed price and size of the resting order.\17\ The Simple Order
Report and Resting Simple Order Report include the same information
about incoming orders seeking to remove resting orders from the Simple
Order Book. Meanwhile, the content of the Complex Order Report includes
the same information about incoming complex orders that seek to remove
liquidity from the Exchange's Strategy Book.\18\
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\12\ The time the Exchange received the resting order would be
in nanoseconds and is the time the resting order was received by the
Exchange's System. The term ``System'' means the automated trading
system used by the Exchange for the trading of securities. See
Exchange Rule 100.
\13\ 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.
\14\ Each report will simply indicate whether the Recipient
Member is an Affiliate of the Member that entered the resting order
and will not include any other information that may indicate the
identity of the Member that entered the resting order.
\15\ 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.
\16\ The term ``Market Maker'' or ``MM'' means a Member
registered with the Exchange for the purpose of making markets in
options contracts traded on the Exchange and that is vested with the
rights and responsibilities specified in Chapter VI of the
Exchange's Rules. See Exchange Rule 100.
\17\ The Exchange notes that the displayed price and size are
also disseminated via the Exchange's proprietary data feeds and the
Options Price Reporting Authority (``OPRA''). 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.
\18\ The term ``complex strategy'' means a particular
combination of components and their ratios to one another. New
complex strategies can be created as the result of the receipt of a
complex order or by the Exchange for a complex strategy that is not
currently in the System. The Exchange may limit the number of new
complex strategies that may be in the System at a particular time
and will communicate this limitation to Members via Regulatory
Circular. See Exchange Rule 518(a). The Strategy Book is organized
by complex strategy in that individual orders for a defined complex
strategy are organized together in a book that is separate from the
orders for a different complex strategy.
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Execution Information. The following information is included in the
Simple Order Report regarding the execution of the resting order: (A)
the SBBO \19\ at the
[[Page 68001]]
time of execution; \20\ (B) the ABBO \21\ at the time of execution;
\22\ (C) the time the first response that executes against the resting
order was received by the Exchange and the size of the execution and
type of the response; \23\ (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; \24\ and (E) whether the response was entered by the
Recipient Member. If the resting order executes against multiple
contra-side responses, only the SBBO and ABBO at the time of the
execution against the first response will be included.
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\19\ The term ``SBBO'' means the best bid or offer on the Simple
Order Book of the Exchange. See Exchange Rule 100.
\20\ Exchange Rule 531(a)(1)(ii)(B) [sic] provides that if the
resting order executes against multiple contra-side responses, only
the ABBO [sic] at the time of the execution against the first
response will be included.
\21\ 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 OPRA. See
Exchange Rule 100.
\22\ Exchange Rule 531(a)(1)(ii)(A) [sic] further provides that
if the resting order executes against multiple contra-side
responses, only the ABBO at the time of the execution against the
first response will be included.
\23\ 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.
\24\ The time difference would be provided in nanoseconds.
---------------------------------------------------------------------------
The Simple Order Report and Resting Simple Order Report include the
SBBO, which is the Exchange's best bid or offer, and the ABBO, which is
the best bid or offer of away exchanges. The content of the Complex
Order Report is identical to the content of the Simple Order Report
with three minor differences. The Complex Order Report includes the
Complex SBBO \25\ in place of the SBBO and Complex ABBO \26\ in place
of the ABBO. The Complex SBBO is calculated using the SBBO for each
component of a complex strategy to establish the Exchange's best net
bid or offer for a complex strategy. The Complex SBBO is calculated
using the icSBBO combined with the best price currently available on
the Strategy Book to establish the Exchange's best net bid or offer for
a complex strategy.\27\ The Complex ABBO is calculated using the ABBO
for each component of a complex strategy to establish the away markets'
best net bid or offer for a complex strategy using OPRA data. The
Exchange is providing the Complex SBBO and Complex ABBO because both
are relevant and tailored to a Member that is entering a complex order
to remove liquidity as part of a complex strategy and, therefore, more
germane to the purpose of the Complex Order Report. The third
difference is that the Complex Order Report includes the data listed in
Exchange Rule 531(b)(1) for executions and contra-side responses that
occurred within 400 microseconds of the time the resting order was
received by the Exchange, rather than 200 microseconds, which is the
timeframe utilized by the Simple Order Report.
---------------------------------------------------------------------------
\25\ The Complex SBBO for a particular complex strategy is
calculated using the Implied Complex Sapphire Best Bid or Offer
(``icSBBO'') combined with the best price currently available for
that particular complex strategy on the Strategy Book to establish
the Exchange's best net bid or offer for that complex strategy. The
icSBBO 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 icSBBO
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). The term ``NBBO'' means the national best
bid or offer as calculated by the Exchange based on market
information received by the Exchange from OPRA. See Exchange Rule
100.
\26\ The Complex ABBO is calculated using the ABBO for each
component of a complex strategy to establish the away markets' best
net bid or offer for a complex strategy.
\27\ See supra note 25.
---------------------------------------------------------------------------
But for the timeframe and one difference described below, the
Resting Simple Order Report would include the same data as the Simple
Order Report currently described under Exchange Rule 531(a), except
that the Resting Simple Order Report will focus on executions and
contra-side responses that occurred after 200 microseconds of the time
the resting order was received by the Exchange and within 200
microseconds of receipt of any Member's first attempt to execute
against the resting order after the initial 200 microsecond time period
under subparagraph (c)(2)(i) of Exchange Rule 531 has expired. The
Simple Order Report includes 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. The Resting Simple Order Report does not include the same
information because that timeframe could be for an extended period of
time since the proposed Resting Simple Order Report focuses on orders
that have been resting on the Simple Order Book for longer than 200
microseconds and, therefore, the Exchange believes is less likely to be
valuable to the Recipient Member. The Simple Order Report and Resting
Simple Order Report focus on 200 microsecond windows with the Simple
Order Report's window starting at the time of receipt of the resting
order and the Resting Simple Order Report's window starting with the
first attempt to execute against the resting order after the order was
resting on the Simple Order Book for at least 200 microseconds.
Recipient Member's Response Information. The following information
is included in the Simple Order Report, Complex Order Report, and
Resting Simple 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 response sent
by the Recipient Member, regardless of whether it executed or not; \28\
(C) size and type of each response submitted by Recipient Member; and
(D) response reference number, which is a unique reference number
attached to the response by the Recipient Member.
---------------------------------------------------------------------------
\28\ For purposes of calculating this duration of time, the
Exchange will use the time the first response that executes against
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.
---------------------------------------------------------------------------
Timeframe
The Simple Order Report provides data 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
provides data for executions and contra-side responses that occurred
within 400 microseconds of the time the resting order was received by
the Exchange. The minor difference in timeframes for the Simple Order
Report and Complex Order Report is to allow sufficient time for the
System to develop new complex strategies, which generally takes longer
than 200 microseconds. Accordingly, the Complex Order Report provides
for a timeframe of 400 microseconds to allow for the intended
information to be captured by the Complex Order Report.
The Resting Simple Order Report includes the same data as the
Simple Order Report and Complex Order Report but focuses on executions
and contra-side responses that occurred after 200 microseconds of the
time the resting order was received by the Exchange, and within 200
microseconds of receipt of any Member's first attempt to execute
against the resting order after the initial 200 microsecond time period
has expired. More specifically, the resting order must rest on the
Simple Order Book for at least 200 microseconds and once that initial
200 microsecond period
[[Page 68002]]
has passed, a Member must then submit an order to attempt to execute
against that resting order. This event starts a second 200 microsecond
period within which the Resting Simple Order Report would include data
on executions and contra-side responses submitted by the Recipient
Member to execute against that resting order.
Scope of Data Included in the Reports
The Simple Order Report, Complex Order Report, and Resting Simple
Order Report include trading data related to the Recipient Member and
subject to the historical data requirement described below, and do not
include information related to any other Member's trading data other
than resting order information and execution information described
above.
Historical Data
The Simple Order Report, Complex Order Report, and Resting Simple
Order Report contain historical data from the prior trading day and
will be available after the end of the trading day, generally on a T+1
basis. These reports do 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 Simple Order Report, Complex Order Report, and Resting Simple Order
Report will provide Members with an opportunity to learn more about
better opportunities to access liquidity and receive better execution
rates. The Simple Order Report, Complex Order Report, and Resting
Simple Order Report will increase transparency and democratize
information so that all firms that subscribe to these reports 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 order if there is
a high probability that it will execute against an order resting on the
Simple Order Book or Strategy Book. The Simple Order Report, Complex
Order Report, and Resting Simple Order Report identify by how much time
an order that may have been marketable missed an execution. The Simple
Order Report, Complex Order Report, and Resting Simple 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 Simple Order Report, Complex Order Report, and Resting Simple
Order Report will be Member-specific reports 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 Electronic Book.
The reports are being 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 any
report only if they voluntarily choose to do so. It is a business
decision of each Member whether to subscribe to each report or not.
The Exchange proposes to adopt new Section 7), Reports, in its Fee
Schedule, which will provide that Members may purchase each report on a
monthly or annual (12-month) basis. The Exchange proposes to assess a
monthly fee of $4,000 per month and a fee of $24,000 per year for a 12-
month subscription for each of the Simple Order Report and Complex
Order Report. The Exchange proposes to assess a monthly fee of $2,000
per month and a fee of $12,000 per year for a 12-month subscription for
the Resting Simple Order Report. The proposed fees are identical to the
fees currently charged by the Exchange's affiliates, MIAX, MIAX Pearl
(for the Simple Order Report and Resting Simple Order Report), and MIAX
Emerald, for the same reports available on those exchanges.\29\ The
proposed fees for the Simple Order Report and Complex Order Report are
identical to the fees charged by a competing options exchange, BOX, for
its version of the Simple Order Report and Complex Order Report.\30\
---------------------------------------------------------------------------
\29\ See supra note 7.
\30\ See supra note 8. At the time of this filing, BOX does not
offer a version of the Resting Simple Order Report.
---------------------------------------------------------------------------
Members may cancel their subscription to any report at any time.
The Exchange also proposes to specify that for mid-month subscriptions,
new subscribers will be charged for the full calendar month for which
they subscribe and will be provided report data for each trading day of
the calendar month prior to the day on which they subscribed to any of
the reports. The Exchange proposes to waive the monthly fees for the
Simple Order Report, Complex Order Report and Resting Simple Order
Report for the Initial Waiver Period.\31\ Even though the Exchange
proposes to waive these particular fees during the Initial Waiver
Period, the Exchange believes that it is appropriate to provide market
participants with the overall structure of the fees by outlining the
structure and amounts in the Fee Schedule so that there is general
awareness that the Exchange intends to assess such fees upon expiration
of the defined term of the Initial Waiver Period.
---------------------------------------------------------------------------
\31\ The term ``Initial Waiver Period'' means, for each
applicable fee, the period of time from the initial effective date
of the MIAX Sapphire Fee Schedule plus an additional six (6) full
calendar months after the completion of the partial month of the
Exchange launch. See the Definitions Section of the Fee Schedule.
---------------------------------------------------------------------------
The Exchange also proposes to provide a discounted rate of $40,000
per year to Members that purchase 12-month subscriptions to both the
Simple Order Report and Complex Order Report (as compared to a total of
$48,000 for each 12-month subscription at a rate of $24,000 for each
report on an individual subscription basis). The Exchange also proposes
to prorate 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 prorated 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, 2024, and paid $24,000 for a 12
month subscription to the Simple Order Report. ``Member A's'' current
subscription expires on August 31, 2025, 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, 2025. Rather than being immediately charged $40,000
for the 12 month subscription discount for subscribing to both reports
(``Member
[[Page 68003]]
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, 2025, 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 prorated fee described above
as follows: on the date that ``Member A'' wanted to begin subscribing
to the Complex Order Report (March 1, 2025), 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, 2025 (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 reports on August 12,
2024.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\32\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\33\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
promote just and equitable principles of trade, remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and protect investors and the public interest, and is
not designed to permit unfair discrimination among customers, brokers,
or dealers. The Exchange also believes that its proposal to adopt fees
for the reports is consistent with Section 6(b) of the Act \34\ in
general, and furthers the objectives of Section 6(b)(4) of the Act \35\
in particular, in that it is an equitable allocation of dues, fees and
other charges among its Members and other recipients of Exchange data.
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78f(b).
\33\ 15 U.S.C. 78f(b)(5).
\34\ 15 U.S.C. 78f(b).
\35\ 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 reports
further broaden the availability of U.S. option market data to
investors consistent with the principles of Regulation NMS. The reports
also promote increased transparency through the dissemination of the
data contained in each report. Particularly, the reports will benefit
investors by facilitating their prompt access to the value added
information that is included in each report. The reports 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,
with the launch of MIAX Sapphire, there are 17 registered exchanges
that trade options. For the month of June 2024, based on publicly
available information, no single options exchange had more than
approximately 14-15% of the equity options market share.\36\ 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.'' \37\ Making similar data products
available to market participants fosters competition in the
marketplace, and 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 reports.
---------------------------------------------------------------------------
\36\ See the ``Market Share'' section of the Exchange's website,
available at https://www.miaxglobal.com/ (last visited July 25,
2024).
\37\ 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 fees charged by MIAX,
MIAX Pearl, and MIAX Emerald for similar reports.\38\ 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 products, which as noted, are 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
offerings.\39\ 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 reports and instead purchase another exchange's
similar data product(s), which may offer similar data points, albeit
based on that other market's trading activity.
---------------------------------------------------------------------------
\38\ See supra note 7. See MIAX Rules 531(a)-(c) and MIAX
Emerald Rules 531(a)-(c).
\39\ This is supported by BOX introducing two nearly identical
reports. See supra note 8; see also Securities Exchange Act Release
Nos. 94563 (March 31, 2022), 87 FR 19985 (April 6, 2022) (SR-BOX-
2022-10); and 94920 (May 16, 2022), 87 FR 31013 (May 20, 2022) (SR-
BOX-2022-18).
---------------------------------------------------------------------------
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 each of the reports. A lower annual subscription fee would
also incentivize Members to subscribe to the reports on a long-term
basis, thereby improving the efficiency by which the Exchange may
deliver the reports by doing so on a regular basis over a prolonged and
set period of time.
The Exchange also believes the proposed fees are reasonable as they
would support the introduction of new market data products to Members
that are interested in gaining insight into latency in connection with
orders that failed to execute against an order resting on the
Exchange's Simple Order Book or Strategy Book, as the case may be. The
reports accomplish 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 Simple Order Book or Strategy Book.
Members may use this data to optimize their models and
[[Page 68004]]
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 one of the reports, is also a means by
which exchanges compete to attract business. To the extent that the
Exchange is successful in attracting subscribers for the reports, 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 decrease or discontinue their use of the data
and/or avail themselves of similar products that may be offered by
other exchanges.\40\ The Exchange, therefore, believes that the
proposed fees for the reports 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 any
of the reports. The Exchange's proposed fees would not differentiate
between subscribers that purchase the reports and are set at modest
levels that would allow any interested Member to purchase such data
based on their business needs.
---------------------------------------------------------------------------
\40\ See supra note 8.
---------------------------------------------------------------------------
The Exchange reiterates that the decision as to whether or not to
purchase the reports is entirely optional for all potential
subscribers. Indeed, no market participant is required to purchase the
reports, and the Exchange is not required to make the reports available
to all investors. It is entirely a business decision of each Member to
subscribe to the reports. The Exchange offers the reports 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 reports may discontinue receiving the reports at any time if that
Member determines that the information contained in the reports is no
longer useful.
Further, the Exchange proposes to waive the fees for the reports
for the Initial Waiver Period in order to encourage market participants
to subscribe to the reports. The Exchange believes it is reasonable to
waive the fees for the reports for the Initial Waiver Period in order
for Members to determine whether they realize value from the reports
prior to the expiration of the Initial Waiver Period. The believes that
it is reasonable to provide market participants with the overall
structure of the fees by outlining the structure and amounts in the Fee
Schedule so that there is general awareness that the Exchange intends
to assess such fees upon expiration of the defined term of the Initial
Waiver Period.
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
proposes to make the reports available in order to keep pace with
changes in the industry and evolving customer needs and demands, and
believes the reports 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 also does not believe the proposed fees would cause
any unnecessary or inappropriate burden on intermarket competition as
other exchanges are free to introduce their own comparable reports with
lower prices to better compete with the Exchange's offerings. The
Exchange operates in a highly competitive environment, and its ability
to price the reports is constrained by competition among exchanges who
choose to adopt similar products. The Exchange must consider this in
its pricing discipline in order to compete for subscribers of the
Exchange's market data via the reports. 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
reports, 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 does not believe the proposed rule change would cause
any unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed fees apply uniformly to any purchaser in
that the Exchange does not differentiate between subscribers that
purchase the reports. 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,\41\ and Rule 19b-4(f)(2) \42\ 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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\41\ 15 U.S.C. 78s(b)(3)(A)(ii).
\42\ 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-SAPPHIRE-2024-08 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-SAPPHIRE-2024-08. 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
[[Page 68005]]
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-SAPPHIRE-2024-08 and should
be submitted on or before September 12, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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\43\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-18784 Filed 8-21-24; 8:45 am]
BILLING CODE 8011-01-P
