Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Transaction Fees and Rebates, 68959-68964 [2024-19264]
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Federal Register / Vol. 89, No. 167 / Wednesday, August 28, 2024 / Notices
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Intermarket Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
To the contrary, the Exchange believes
that the proposed pricing structure will
increase competition and is intended to
encourage market participants to trade
on the exchange by providing rebates
and assessing fees that are comparable
to those offered by other exchanges,
which the Exchange believes will help
to encourage Members to send orders to
the Exchange to the benefit of all
Exchange participants. As the proposed
rates are equally applicable to all market
participants, the Exchange does not
believe there is any burden on
intramarket competition.
Additionally, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 27 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. SEC, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.28 Accordingly, the
Exchange does not believe its proposed
pricing changes impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
27 See
supra note 15.
v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSE–2006–21)).
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
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 29 and Rule
19b–4(f)(2) 30 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
change 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–
MEMX–2024–32 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–MEMX–2024–32. 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–MEMX–2024–32 and should be
submitted on or before September 18,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–19266 Filed 8–27–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100807; File No. SR–
SAPPHIRE–2024–19]
Self-Regulatory Organizations; MIAX
Sapphire, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Adopt Transaction
Fees and Rebates
August 22, 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 8,
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.
28 NetCoalition
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31 17
29 15
U.S.C. 78s(b)(3)(A)(ii).
30 17 CFR 240.19b–4(f)(2).
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68959
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 89, No. 167 / Wednesday, August 28, 2024 / Notices
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/miax-sapphire/rule-filings, at
MIAX Sapphire’s principal office, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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The Exchange proposes to amend
Section (1) of the Fee Schedule to adopt
Section (1) (a) as ‘‘Electronic
Transactions,’’ and Section (1) (a) (i) as
‘‘Transaction Rebates/Fees’’ to adopt
certain fees and rebates applicable to
transactions on the Exchange. The
Exchange also proposes to adopt Section
(1) (a) (iv) of the Fee Schedule as ‘‘C2C
and cC2C Fees’’ to adopt certain fees
and rebates applicable to C2C 3 and
cC2C Orders.4 The Exchange also
proposes to adopt Section (1) (a) (v) of
the Fee Schedule as ‘‘Complex StockOption Order Fees’’ to adopt certain fees
for stock-option orders.
3 A Customer Cross Order is comprised of a
Priority Customer Order to buy and a Priority
Customer Order to sell at the same price and for the
same quantity. See Exchange Rule 516(i).
4 A Complex Customer Cross or ‘‘cC2C’’ Order is
comprised of one Priority Customer complex order
to buy and one Priority Customer complex order to
sell at the same price and for the same quantity.
Trading of cC2C Orders is governed by Rule
515(g)(3). See Exchange Rule 518(b)(4).
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Proposal To Adopt Transaction Fees
and Rebates
The Exchange proposes to adopt
Section (1) (a) (i) of the Fee Schedule as
‘‘Transaction Rebates/Fees’’ to adopt
certain fees and rebates applicable to
transactions on the Exchange. The
Exchange proposes to adopt one table
entitled ‘‘Simple’’ for transaction rebates
and fees for transactions that occur in
the Exchange’s Simple Order Book; 5
and to adopt another table entitled
‘‘Complex’’ for transactions that occur
in the Exchange’s Strategy Book.6
Under the Exchange’s proposal
transactions will be assessed a per
contract fee (or provided a credit)
dependent upon the origin of the
initiating party, the origin of the contra
party, and whether the transaction
provides liquidity (‘‘Maker’’) or removes
liquidity (‘‘Taker’’). Additionally, the
Exchange proposes to segregate rebates
and fees by class (Penny or Non-Penny)
and to also separately account for
transactions in SPDR S&P 500 ETF
(‘‘SPY’’), Invesco QQQ Trust (‘‘QQQ’’),
and iShares Russell 2000 Index Fund
(‘‘IWM’’) as these are highly liquid
symbols and are commonly treated
separately by options exchanges.7
Simple Market Fees and Rebates
Specifically, for Priority Customer 8
transactions in the Simple Order Book
the Exchange proposes to provide a
Maker Rebate of ($0.30) and a Taker
Rebate of ($0.19) for transactions in
SPY, QQQ, or IWM; a Maker Rebate of
($0.28) and a Taker Rebate of ($0.48) for
transactions in Penny Classes
(excluding SPY, QQQ, and IWM); and a
Maker Rebate of ($0.65) and a Taker
Rebate of ($0.92) for transactions in
Non-Penny Classes.
5 The ‘‘Simple Order Book’’ is the Exchange’s
regular electronic book of orders and quotes. See
Exchange Rule 100.
6 The ‘‘Strategy Book’’ is the Exchange’s
electronic book of complex orders. See Exchange
Rule 100.
7 See BOX Options Exchange Fee Schedule,
Section IV, A, available online at https://
boxoptions.com/resources/fee-schedule/. See also
Nasdaq BX, Options 7, Pricing Schedule, Section 2,
BX Options Market-Fees Rebates (1), footnote 1 and
4.
8 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).
See Exchange Rule 100.
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Frm 00112
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For Market Maker 9 and Non Priority
Customer/Non Market Maker 10
transactions in the Simple Order Book
the Exchange proposes to assess a Maker
Fee of $0.20 and a Taker Fee of $0.50
for transactions in SPY, QQQ, or IWM;
a Maker Fee of $0.50 and a Taker Fee
of $0.50 for transactions in Penny
Classes (excluding SPY, QQQ, and
IWM); and a Maker Fee of $0.95 and a
Taker Fee of $0.94 for transactions in
Non-Penny Classes.
For Non Priority Customer/Non
Market Maker transactions in the
Simple Order Book the Exchange
proposes to assess a Maker Fee of $0.20
and a Taker Fee of $0.50 for transactions
in SPY, QQQ, or IWM; a Maker Fee of
$0.50 and a Taker Fee of $0.50 for
transactions in Penny Classes
(excluding SPY, QQQ, and IWM); and a
Maker Fee of $0.95 and a Taker Fee of
$0.94 for transactions in Non-Penny
Classes.
Additionally, the Exchange proposes
to add a note to the table that states,
‘‘Priority Customer simple orders contra
to Priority Customer simple orders are
neither charged nor rebated.’’
Complex Market Fees and Rebates
For Priority Customer transactions
that occur in the Strategy Book the
Exchange proposes to provide a Maker
Rebate of ($0.36) and a Taker Rebate of
($0.25) for transactions in SPY, QQQ, or
IWM; a Maker Rebate of ($0.34) and a
Taker Rebate of ($0.54) for transactions
in Penny Classes (excluding SPY, QQQ,
and IWM); and a Maker Rebate of
($0.71) and a Taker Rebate of ($0.98) for
transactions in Non-Penny Classes.
For Market Maker transactions in the
Strategy Book the Exchange proposes to
assess a Maker Fee of $0.20 and a Taker
Fee of $0.50 for transactions in SPY,
QQQ, or IWM; a Maker Fee of $0.50 and
a Taker Fee of $0.50 for transactions in
Penny Classes (excluding SPY, QQQ,
and IWM); and a Maker Fee of $0.95 and
a Taker Fee of $0.94 for transactions in
Non-Penny Classes.
For Non Priority Customer/Non
Market Maker transactions in the
Strategy Book the Exchange proposes to
assess a Maker Fee of $0.20 and a Taker
Fee of $0.50 for transactions in SPY,
QQQ, or IWM; a Maker Fee of $0.50 and
a Taker Fee of $0.50 for transactions in
Penny Classes (excluding SPY, QQQ,
9 The term ‘‘Market Makers’’ means a Member
registered with the Exchange for the purposes of
making markets in options contracts traded on the
Exchange and that is vested with the rights and
responsibilities specified in Chapter VI of MIAX
Sapphire Rules. See Exchange Rule 100.
10 For the purposes of this filing, the origins
comprising Non Priority Customer and Non Market
Maker are all origins other than Priority Customer
and Market Maker.
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and IWM); and a Maker Fee of $0.95 and
a Taker Fee of $0.94 for transactions in
Non-Penny Classes.
The Exchange proposes to adopt the
following notes to the Complex table.
Note (1) to the Complex table that will
provide, ‘‘Priority Customer complex
orders contra to Priority Customer
complex orders are neither charged nor
rebated.’’ Note (2) to the Complex table
will provide that, ‘‘Fees and Rebates are
per contract leg.’’ Finally, note (3) to the
Complex table will provide, ‘‘a per
contract surcharge of $0.12 will be
assessed for trading against a Priority
Customer complex order in all classes
and will apply to all origins except
Priority Customer when trading against
a Priority Customer on the Strategy
Book.’’
Proposal To Adopt C2C and cC2C Order
Fees and Rebates
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The Exchange proposes to adopt
Section 1) a) iv) to the Fee Schedule as
‘‘C2C and cC2C Fees’’ to establish fees
and rebates applicable to C2C and cC2C
Orders.
Types of market participants
C2C and cC2C
order per contract
fee/rebate
Priority Customer ......................
$0.00
Customer to Customer Cross Orders
are comprised entirely of Priority
Customer orders, therefore the Exchange
assesses a $0.00 per contract transaction
fee and provides a $0.00 rebate to such
orders, pursuant to Section 1) a) i) of the
Fee Schedule. However, the Exchange
desires to clarify and make explicit that
C2C Orders are assessed a $0.00 per
contract transaction fee and are paid a
$0.00 per contract rebate. The Exchange
is also proposing to assess cC2C Orders
a $0.00 per contract transaction fee and
to pay a $0.00 per contract rebate. The
Exchange also proposes to adopt certain
explanatory text relating to the C2C and
cC2C Fees table. The text provides that
all fees and rebates are per contract per
leg. Also, a C2C Order is comprised of
a Priority Customer Order to buy and a
Priority Customer Order to sell at the
same price and for the same quantity. A
cC2C Order is comprised of one Priority
Customer complex order to buy and one
Priority Customer complex order to sell
at the same price and for the same
quantity.
Proposal To Adopt Complex StockOption Order Fees
The Exchange proposes to adopt
Section (1) (a) (v) of the Fee Schedule
as ‘‘Complex Stock-Option Order Fees’’
to adopt certain fees for stock-option
orders.
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The Exchange proposes to adopt a
stock handling fee applicable to stockoption orders executed against other
stock-option orders in the complex
order book, which the Exchange must
route to an outside venue. Specifically,
the Exchange proposes to adopt a stock
handling fee of $0.0010 per share for the
stock leg of stock-option orders
executed against other stock-option
orders in the complex order book,
which are routed to an outside venue.
This stock handling fee to be assessed
by the Exchange will cover all fees
charged by the outside venue that prints
the trade, and it is also intended to
compensate the Exchange for matching
these stock-option orders against other
stock-option orders on the complex
order book. A maximum of $50 per
order, per day, will be assessed under
this fee. The cap is intended to give
market participants assurance that they
will not pay more than the capped
amount for the execution of the stock
leg of their stock-option orders. The
Exchange believes that by limiting this
fee to a maximum of $50 per order, per
day, the Exchange addresses the
possibility that a GTC order could be
executed over multiple days. For
example, if such an order was partiallyexecuted on a Monday, and then the
remainder was fully-executed on a
Tuesday, the total maximum fee charged
to the market participant would be $100
($50 per day). In addition to the
Exchange’s fee, the Exchange will also
pass through to the Member any fees
assessed by the routing broker-dealer
utilized by the Exchange with respect to
the execution of the stock leg of any
such order (with such fees to be passed
through at cost). For example, the
Exchange anticipates that the routing
broker-dealer will bill the Exchange for
Section 31 fees and FINRA Trading
Activity Fees with respect to the
execution of the stock leg of any such
order. The Exchange will pass such fees
through to the Member, at cost (that is,
without any additional mark-up).
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 11
in general, and furthers the objectives of
Section 6(b)(4) of the Act 12 in
particular, in that it is an equitable
allocation of reasonable dues, fees, and
other charges among its members and
issuers and other persons using its
facilities. The Exchange also believes
the proposal furthers the objectives of
11 15
12 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(4).
Frm 00113
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68961
Section 6(b)(5) of the Act 13 in that it is
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general to protect investors and the
public interest and is not designed to
permit unfair discrimination between
customers, issuers, brokers and dealers.
The proposed changes are reasonable
in several respects. As a threshold
matter, the Exchange is subject to
significant competitive forces in the
market for options securities transaction
services that constrain its pricing
determinations in that market. The fact
that this market is competitive has long
been recognized by the courts. In
NetCoalition v. Securities and Exchange
Commission, the D.C. Circuit stated as
follows’’ ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, [i]n the U.S.
national market system, buyers and
sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . .’’ 14
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, 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.’’ 15
The Exchange is a new entrant to the
market and will be one of eighteen
options exchanges to which market
participants may direct their order flow.
Within this environment, market
participants can freely shift their order
flow among exchanges in response to
changes in their respective pricing
schedules. As such, this proposal
13 15
U.S.C. 78f(b)(5).
v. SEC, 615F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
15 See Securities Exchange Act Release No. 51808
(June 9, 2005, 70 FR 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
14 NetCoalition
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Federal Register / Vol. 89, No. 167 / Wednesday, August 28, 2024 / Notices
represents a reasonable attempt by the
Exchange to attract liquidity.
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Transaction Fees and Rebates (Simple
Market)
The Exchange believes the proposed
fee structure is equitable and not
unfairly discriminatory because all
similarly situated market participants
are subject to the same fee and rebate
structure for order transactions in the
Simple Market. The Exchange’s
proposal to offer Maker and Taker
Rebates to Priority Customers is
reasonable because the Exchange desires
to attract Priority Customers to the
Exchange. Priority Customers are being
paid Maker Rebates and Taker Rebates
in all classes, as compared to other
origins which are not rebated at all, as
Priority Customer activity enhances
liquidity on the Exchange for the benefit
of all market participants by providing
more trading opportunities, which
attracts market makers. An increase in
the activity of these market participants
in turn facilitates tighter spreads, which
may cause an additional corresponding
increase in order flow from other market
participants.
The Exchange believes its Maker
Rebate of ($0.30) in SPY, QQQ, and
IWM; its Maker Rebate of ($0.28) in
Penny Classes (excluding SPY, QQQ,
and IWM); and its Maker Rebate of
($0.65) in Non-Penny classes is
reasonable as it is in line with current
rebates provided by at least one other
competing options exchange.16 Further,
the Exchange believes its Taker Rebate
of ($0.19) in SPY, QQQ, and IWM; its
Taker Rebate of ($0.48) in Penny Classes
(excluding SPY, QQQ, and IWM); and
its Taker Rebate of ($0.92) in Non-Penny
classes is reasonable as it is designed to
attract Priority Customer order flow to
the Exchange for the aforementioned
mentioned reasons. Additionally, other
competing exchanges similarly provide
Taker Rebates to Priority Customer
Orders in Penny and Non-Penny Classes
that exceed the Maker Rebate.17
The Exchange believes its Market
Maker and Non Priority Customer/Non
Market Maker Maker/Taker Fees to be
reasonable as the Exchange proposes to
assess a $0.20 Maker Fee and a $0.50
16 See Nasdaq BX Options 7, Section 2, BX
Options Market-Fees and Rebates, which provides
a ($0.30) rebate to Customer orders in Penny
Symbols and a ($1.10) rebate to Customer orders in
Non-Penny Symbols.
17 See Nasdaq MRX Options 7, Section 3, Fees
and Rebates for Regular Orders and all Crossing
Orders, which provides for a $0.00 Maker Fee/
Rebate and a ($0.44) Taker Rebate to Priority
Customer orders in Penny Symbols; and provides
for a $0.00 Maker Fee/Rebate and a ($1.10) Taker
rebate for Priority Customer orders in Non-Penny
Symbols.
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Taker Fee for orders in SPY, QQQ, and
IWM. The Exchange believes this fee
structure will encourage Market Makers,
Non Priority Customers, and Non
Market Makers to submit orders in SPY,
QQQ, and IWM. Additionally, the
Exchange believes its Market Maker and
Non Priority Customer/Non Market
Maker Maker Fee of $0.50 and its Taker
Fee of $0.50 in Penny Classes
(excluding SPY, QQQ, and IWM) is
reasonable as at least one other
competing options exchange assesses a
similar fee for Market Maker and Non
Priority Customer/Non Market Maker
orders in Penny Symbols.18 The
Exchange believes that its Market Maker
and Non Priority Customer/Non Market
Maker Taker Fee of $0.50 is reasonable
as it is equal to its Maker Fee, which is
a common pricing strategy used by at
least one other options exchange.19
Finally, the Exchange believes that its
Market Maker and Non Priority
Customer/Non Market Maker Maker Fee
of $0.95 and its Taker Fee of $0.94 is
reasonable as it is competitively priced
in regard to the Maker and Taker Fees
of other options exchanges for
transactions in Non-Penny Classes.20
Additionally, the Exchange believes
its proposal regarding Maker/Taker Fees
for the Simple Market is equitable and
not unfairly discriminatory. The
Exchange will uniformly apply the
proposed fees and rebates to each origin
in accordance to the Simple table.
Transaction Fees and Rebates (Complex
Market)
The Exchange believes the proposed
fee structure is equitable and not
unfairly discriminatory because all
similarly situated market participants
are subject to the same fee and rebate
structure for complex order transactions
in the Complex Market. The Exchange’s
proposal to offer Maker and Taker
Rebates to Priority Customers is
reasonable because the Exchange desires
to attract Priority Customers to the
Exchange. Priority Customers are being
paid Maker Rebates and Taker Rebates
in all classes, as compared to other
origins which are not rebated at all, as
18 See Nasdaq MRX Options 7, Section 3, Fees
and Rebates for Regular Orders and all Crossing
Orders, Table 1, Penny Symbols, which provides for
a $0.50 Maker Fee for Market Maker and
Professional orders.
19 See BOX Options Fee Schedule, Section A,
which assesses a $0.50 Maker Fee and a $0.50 Taker
Fee for Market Maker and Professional Customer or
Broker Dealer orders that trade contra to a Public
Customer.
20 See Nasdaq MRX Options 7, Section 3, Fees
and Rebates for Regular Orders and all Crossing
Orders, Table 1, Non-Penny Symbols, which
provides for a $1.25 Maker Fee and a $1.10 Taker
Fee for Market Maker, Firm Proprietary/Broker
Dealer, and Professional Customer orders.
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
Priority Customer activity enhances
liquidity on the Exchange for the benefit
of all market participants by providing
more trading opportunities, which
attracts market makers. Additionally,
the Exchange believes that its Priority
Customer Maker Rebate of ($0.36) and
Taker Rebate of ($0.25) in SPY, QQQ,
and IWM; its ($0.34) Maker Rebate and
($0.54) Taker Rebate in Penny Classes
(excluding SPY, QQQ, and IWM); and
its ($0.71) Maker Rebate and ($0.98)
Taker Rebate in Non-Penny Classes is
reasonable as it is designed to attract
Priority Customer complex order flow to
the Exchange.
The Exchange believes its Market
Maker and Non Priority Customer/Non
Market Maker Maker/Taker Fees to be
reasonable as the Exchange proposes to
assess a $0.20 Maker Fee and a $0.50
Taker Fee for orders in SPY, QQQ, and
IWM. The Exchange believes this fee
structure will encourage Market Makers,
Non Priority Customers, and Non
Market Makers to submit orders in SPY,
QQQ, and IWM. Additionally, the
Exchange believes its Market Maker and
Non Priority Customer/Non Market
Maker Maker Fee of $0.50 and its Taker
Fee of $0.50 in Penny Classes
(excluding SPY, QQQ, and IWM) is
reasonable as it provides a standard fee
for both Maker and Taker activity.
Finally, the Exchange believes its
Market Maker and Non Priority
Customer/Non Market Maker Maker Fee
of $0.95 and its Taker Fee of $0.94 in
Non-Penny Classes is reasonable as at
least one other exchange charges a
similar Maker Fee 21 and Taker Fee.22
Complex Market per Contract Surcharge
The Exchange’s proposal to establish
and assess a surcharge of $0.12 per
contract for all origins (excluding
Priority Customer) that add or remove
liquidity in Penny Classes (including
SPY, QQQ, and IWM) and non-Penny
Classes when trading against a Priority
Customer on the Strategy Book. The
Exchange believes this surcharge is
consistent with Section 6(b)(4) of the
Act 23 because it applies equally to all
participants (with the exception of
Priority Customers). This surcharge is
similar in structure and amount to one
applied on the NYSE American Options
Exchange (‘‘NYSE American’’),24 and
21 See Nasdaq MRX, Options 7, Section 4,
Complex Order Fees, which assesses an $0.85 fee
per contract in Non-Penny Symbols.
22 See Nasdaq ISE, Options 7, Section 4, Complex
Order Fees and Rebates, which assesses a $1.15
Taker Fee for Market Makers and Firm Proprietary/
Broker Dealer orders in Non-Penny Symbols.
23 15 U.S.C. 78f(b)(4).
24 See NYSE American Options Exchange Fee
Schedule, Section I. Options Transaction Fees and
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identical to the surcharge assessed and
applied on the Exchange’s affiliate
exchanges, Miami International
Securities, LLC (‘‘MIAX Options’’),25
and MIAX Emerald, LLC (‘‘MIAX
Emerald’’).26 The Exchange believes that
this surcharge is fair and equitable
because it is in line with the amount of
surcharges assessed on other options
exchanges when trading against Priority
Customer complex orders.27
C2C and cC2C Order Fees and Rebates
The Exchange believes that adding the
C2C fee to the Fee Schedule is
reasonable since it is clarifying the
Exchange’s existing practice and by
adding such C2C Order fee to the Fee
Schedule the Exchange believes that it
will make it more transparent as to how
the Exchange assesses such fee and
avoid any confusion as to how such fee
is assessed for simple (C2C) and
complex (cC2C) orders. The Exchange
believes that the proposed transaction
fee for cC2C Orders is reasonable
because the proposed amount is
identical to the fee assessed for C2C
transactions, which is currently $0.00.
The proposed fees would be charged to
all Priority Customers alike and the
Exchange believes that assessing a $0.00
fee to Priority Customers is equitable
and not unfairly discriminatory. By
assessing a $0.00 fee to Priority
Customer orders, the C2C and cC2C
transaction fees will not discourage the
sending of Priority Customer orders.
khammond on DSKJM1Z7X2PROD with NOTICES
Complex Stock-Option Order Fees
The Exchange believes that the
proposed stock handling fee for stockoption orders is consistent with Section
6(b)(4) of the Act in that it is reasonable,
equitable and not unfairly
discriminatory. The Exchange believes
the proposed stock handling fee for
stock-option orders is reasonable and
equitable as the proposed fee will cover
the costs of developing and maintaining
the systems that allow for the matching
and processing of the stock legs of stockoption orders executed in the complex
order book, as well as all fees charged
by the outside venue that prints the
trade. The Exchange also believes it is
reasonable and equitable to pass
through to the Member any fees
Credits, footnote 5, which similarly assesses a
complex surcharge of $0.12 for any Non-Customer
Complex Order that executes against a Customer
Complex Order.
25 See MIAX Options Fee Schedule, Section 1)a)i),
available online at https://www.miaxglobal.com/
markets/us-options/miax-options/fees.
26 See MIAX Emerald Options Fee Schedule,
Section 1)a)i) available online at https://
www.miaxglobal.com/markets/us-options/emeraldoptions/fees.
27 See supra note 24, 25, and 26.
VerDate Sep<11>2014
18:13 Aug 27, 2024
Jkt 262001
assessed by the routing broker-dealer
utilized by the Exchange with respect to
the execution of the stock leg of any
such order (with such fees to be passed
through at cost). The Exchange notes
that another exchange has a comparable
fee for the handling of the stock leg of
stock-option orders. Specifically,
Nasdaq ISE (‘‘ISE’’) charges a stock
handling fee of $0.0010 per share which
is capped at $50 per order.28 The
Exchange also believes that its proposal
is consistent with Section 6(b)(5) of the
Act 29 because it will be uniformly
applied to all Members that execute
stock-option orders in the Strategy Book
on the Exchange.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
Intra-Market Competition
The proposal does not impose an
undue burden on intra-market
competition as its fees will be applied
uniformly to each respective origin in
accordance to either the Simple Market
or Complex Market table. The Exchange
believes its proposal will encourage
Members 30 to submit Priority Customer
Orders 31 to the Exchange which will
increase liquidity and benefit all market
participants by providing more trading
opportunities and tighter spreads.
Accordingly, the Exchange believes that
the proposed changes will not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because it
will continue to encourage order flow,
which provides greater volume and
liquidity, benefiting all market
participants by providing more trading
opportunities and tighter spreads.
Additionally, the Exchange does not
believe its Maker/Taker Fees for Market
Makers and Non Priority Customers/
Non Market Makers will impose a
burden on competition as the fees will
be applied in a uniform manner to
28 See Nasdaq ISE, Options 7, Pricing Schedule,
Section 4, Complex Order Fees and Rebates, Note
12; see also Securities Exchange Act Release No.
74117 (January 22, 2015), 80 FR 4600 (January 28,
2015) (SR–ISE–2015–03).
29 15 U.S.C. 78f(b)(5).
30 The term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of MIAX Sapphire 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.
31 The term ‘‘Priority Customer Order’’ means an
order for the account of a Priority Customer. See
Exchange Rule 100.
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
68963
similarly situated participants in
accordance to either the Simple or
Complex table.
Inter-Market Competition
The proposal does not impose an
undue burden on inter-market
competition. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants with another choice
on where to route their orders for
execution. The Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing venues if they
deem fee levels at a particular venue to
be excessive. With the addition of MIAX
Sapphire, there are currently 18
registered options exchanges competing
for order flow. For the month of July
2024, based on publicly-available
information, and excluding index-based
options, no single exchange (MIAX
Sapphire excluded) exceeded
approximately 13–14% of the market
share of executed volume of multiplylisted equity and exchange-traded fund
(‘‘ETF’’) options.32 Therefore, no
exchange possesses significant pricing
power in the execution of multiplylisted equity and ETF options order
flow. In such an environment, the
Exchange must propose transaction fees
and rebates to be competitive with other
exchanges and to attract order flow. The
Exchange believes that the Exchange’s
proposal reflects this competitive
environment, to the extent this is
achieved, all of the Exchange’s market
participants should benefit from the
quality of the Exchange’s market.
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,33 and Rule
19b–4(f)(2) 34 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,
32 See the ‘‘Market Share’’ section of the
Exchange’s website, available at https://
www.miaxglobal.com/.
33 15 U.S.C. 78s(b)(3)(A)(ii).
34 17 CFR 240.19b–4(f)(2).
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Federal Register / Vol. 89, No. 167 / Wednesday, August 28, 2024 / Notices
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–2024–19 on the subject line.
khammond on DSKJM1Z7X2PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–SAPPHIRE–2024–19. 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–2024–19 and should be
VerDate Sep<11>2014
18:13 Aug 27, 2024
Jkt 262001
submitted on or before September 18,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.35
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–19264 Filed 8–27–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100806; File No. SR–
SAPPHIRE–2024–18]
Self-Regulatory Organizations; MIAX
Sapphire LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Establish a Fee
Schedule for the Exchange’s
Proprietary Market Data Feeds: (i)
MIAX Sapphire Top of Market (‘‘ToM’’)
Data Feed; (ii) MIAX Sapphire Complex
Top of Market (‘‘cToM’’) Data Feed; and
(iii) MIAX Sapphire Liquidity Feed
(‘‘SLF’’)
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 8,
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.
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’’) to establish fees for the
Exchange’s proprietary market data
feeds: (i) MIAX Sapphire Top of Market
(‘‘ToM’’) data feed; (ii) MIAX Sapphire
Complex Top of Market (‘‘cToM’’) data
feed; and (iii) MIAX Sapphire Liquidity
Feed (‘‘SLF’’).
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/
35 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
Frm 00116
Fmt 4703
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
August 22, 2024.
PO 00000
us-options/all-options-exchanges/rulefilings, at MIAX Sapphire’s principal
office, and at the Commission’s Public
Reference Room.
Sfmt 4703
MIAX Sapphire plans to commence
electronic operations on August 12,
2024.3 On July 19, 2024, the Exchange
filed a proposal to establish the ToM,
cToM and SLF data feeds (collectively,
the ‘‘market data feeds’’).4 The Exchange
now proposes to amend the Fee
Schedule to establish fees for each of
these market data feeds.5 The Exchange
also proposes to waive such fees during
an Initial Waiver Period,6 which would
run for over six full calendar months
from the effective date of the proposed
fees to incentivize market participants
to subscribe and make the Exchange’s
proprietary market data more widely
available.
The ToM data feed contains top of
book quotations based on options
3 See Securities Exchange Act Release No. 100539
(July 15, 2024) (File No. 10–240) (In the Matter of
the Application of MIAX Sapphire, LLC for
Registration as a National Securities Exchange;
Findings, Opinion, and Order of the Commission).
4 See Securities Exchange Act Release No. 100588
(July 25, 2024), 89 FR 61554 (July 31, 2024) (SR–
SAPPHIRE–2024–01).
5 The Exchange established the Definitions
section of the Fee Schedule in a separate rule filing.
See SR–SAPPHIRE–2024–13 (not yet noticed by the
Commission at the time of this filing). Certain
capitalized terms used throughout this filing refer
are included in the Definitions section of the Fee
Schedule, previously adopted.
6 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\28AUN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 167 (Wednesday, August 28, 2024)]
[Notices]
[Pages 68959-68964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19264]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100807; File No. SR-SAPPHIRE-2024-19]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt
Transaction Fees and Rebates
August 22, 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 8, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 68960]]
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/miax-sapphire/rule-filings, at MIAX Sapphire's principal office, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Section (1) of the Fee Schedule to
adopt Section (1) (a) as ``Electronic Transactions,'' and Section (1)
(a) (i) as ``Transaction Rebates/Fees'' to adopt certain fees and
rebates applicable to transactions on the Exchange. The Exchange also
proposes to adopt Section (1) (a) (iv) of the Fee Schedule as ``C2C and
cC2C Fees'' to adopt certain fees and rebates applicable to C2C \3\ and
cC2C Orders.\4\ The Exchange also proposes to adopt Section (1) (a) (v)
of the Fee Schedule as ``Complex Stock-Option Order Fees'' to adopt
certain fees for stock-option orders.
---------------------------------------------------------------------------
\3\ A Customer Cross Order is comprised of a Priority Customer
Order to buy and a Priority Customer Order to sell at the same price
and for the same quantity. See Exchange Rule 516(i).
\4\ A Complex Customer Cross or ``cC2C'' Order is comprised of
one Priority Customer complex order to buy and one Priority Customer
complex order to sell at the same price and for the same quantity.
Trading of cC2C Orders is governed by Rule 515(g)(3). See Exchange
Rule 518(b)(4).
---------------------------------------------------------------------------
Proposal To Adopt Transaction Fees and Rebates
The Exchange proposes to adopt Section (1) (a) (i) of the Fee
Schedule as ``Transaction Rebates/Fees'' to adopt certain fees and
rebates applicable to transactions on the Exchange. The Exchange
proposes to adopt one table entitled ``Simple'' for transaction rebates
and fees for transactions that occur in the Exchange's Simple Order
Book; \5\ and to adopt another table entitled ``Complex'' for
transactions that occur in the Exchange's Strategy Book.\6\
---------------------------------------------------------------------------
\5\ The ``Simple Order Book'' is the Exchange's regular
electronic book of orders and quotes. See Exchange Rule 100.
\6\ The ``Strategy Book'' is the Exchange's electronic book of
complex orders. See Exchange Rule 100.
---------------------------------------------------------------------------
Under the Exchange's proposal transactions will be assessed a per
contract fee (or provided a credit) dependent upon the origin of the
initiating party, the origin of the contra party, and whether the
transaction provides liquidity (``Maker'') or removes liquidity
(``Taker''). Additionally, the Exchange proposes to segregate rebates
and fees by class (Penny or Non-Penny) and to also separately account
for transactions in SPDR S&P 500 ETF (``SPY''), Invesco QQQ Trust
(``QQQ''), and iShares Russell 2000 Index Fund (``IWM'') as these are
highly liquid symbols and are commonly treated separately by options
exchanges.\7\
---------------------------------------------------------------------------
\7\ See BOX Options Exchange Fee Schedule, Section IV, A,
available online at https://boxoptions.com/resources/fee-schedule/.
See also Nasdaq BX, Options 7, Pricing Schedule, Section 2, BX
Options Market-Fees Rebates (1), footnote 1 and 4.
---------------------------------------------------------------------------
Simple Market Fees and Rebates
Specifically, for Priority Customer \8\ transactions in the Simple
Order Book the Exchange proposes to provide a Maker Rebate of ($0.30)
and a Taker Rebate of ($0.19) for transactions in SPY, QQQ, or IWM; a
Maker Rebate of ($0.28) and a Taker Rebate of ($0.48) for transactions
in Penny Classes (excluding SPY, QQQ, and IWM); and a Maker Rebate of
($0.65) and a Taker Rebate of ($0.92) for transactions in Non-Penny
Classes.
---------------------------------------------------------------------------
\8\ 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). See Exchange Rule
100.
---------------------------------------------------------------------------
For Market Maker \9\ and Non Priority Customer/Non Market Maker
\10\ transactions in the Simple Order Book the Exchange proposes to
assess a Maker Fee of $0.20 and a Taker Fee of $0.50 for transactions
in SPY, QQQ, or IWM; a Maker Fee of $0.50 and a Taker Fee of $0.50 for
transactions in Penny Classes (excluding SPY, QQQ, and IWM); and a
Maker Fee of $0.95 and a Taker Fee of $0.94 for transactions in Non-
Penny Classes.
---------------------------------------------------------------------------
\9\ The term ``Market Makers'' means a Member registered with
the Exchange for the purposes of making markets in options contracts
traded on the Exchange and that is vested with the rights and
responsibilities specified in Chapter VI of MIAX Sapphire Rules. See
Exchange Rule 100.
\10\ For the purposes of this filing, the origins comprising Non
Priority Customer and Non Market Maker are all origins other than
Priority Customer and Market Maker.
---------------------------------------------------------------------------
For Non Priority Customer/Non Market Maker transactions in the
Simple Order Book the Exchange proposes to assess a Maker Fee of $0.20
and a Taker Fee of $0.50 for transactions in SPY, QQQ, or IWM; a Maker
Fee of $0.50 and a Taker Fee of $0.50 for transactions in Penny Classes
(excluding SPY, QQQ, and IWM); and a Maker Fee of $0.95 and a Taker Fee
of $0.94 for transactions in Non-Penny Classes.
Additionally, the Exchange proposes to add a note to the table that
states, ``Priority Customer simple orders contra to Priority Customer
simple orders are neither charged nor rebated.''
Complex Market Fees and Rebates
For Priority Customer transactions that occur in the Strategy Book
the Exchange proposes to provide a Maker Rebate of ($0.36) and a Taker
Rebate of ($0.25) for transactions in SPY, QQQ, or IWM; a Maker Rebate
of ($0.34) and a Taker Rebate of ($0.54) for transactions in Penny
Classes (excluding SPY, QQQ, and IWM); and a Maker Rebate of ($0.71)
and a Taker Rebate of ($0.98) for transactions in Non-Penny Classes.
For Market Maker transactions in the Strategy Book the Exchange
proposes to assess a Maker Fee of $0.20 and a Taker Fee of $0.50 for
transactions in SPY, QQQ, or IWM; a Maker Fee of $0.50 and a Taker Fee
of $0.50 for transactions in Penny Classes (excluding SPY, QQQ, and
IWM); and a Maker Fee of $0.95 and a Taker Fee of $0.94 for
transactions in Non-Penny Classes.
For Non Priority Customer/Non Market Maker transactions in the
Strategy Book the Exchange proposes to assess a Maker Fee of $0.20 and
a Taker Fee of $0.50 for transactions in SPY, QQQ, or IWM; a Maker Fee
of $0.50 and a Taker Fee of $0.50 for transactions in Penny Classes
(excluding SPY, QQQ,
[[Page 68961]]
and IWM); and a Maker Fee of $0.95 and a Taker Fee of $0.94 for
transactions in Non-Penny Classes.
The Exchange proposes to adopt the following notes to the Complex
table. Note (1) to the Complex table that will provide, ``Priority
Customer complex orders contra to Priority Customer complex orders are
neither charged nor rebated.'' Note (2) to the Complex table will
provide that, ``Fees and Rebates are per contract leg.'' Finally, note
(3) to the Complex table will provide, ``a per contract surcharge of
$0.12 will be assessed for trading against a Priority Customer complex
order in all classes and will apply to all origins except Priority
Customer when trading against a Priority Customer on the Strategy
Book.''
Proposal To Adopt C2C and cC2C Order Fees and Rebates
The Exchange proposes to adopt Section 1) a) iv) to the Fee
Schedule as ``C2C and cC2C Fees'' to establish fees and rebates
applicable to C2C and cC2C Orders.
------------------------------------------------------------------------
C2C and cC2C order
Types of market participants per contract fee/
rebate
------------------------------------------------------------------------
Priority Customer................................... $0.00
------------------------------------------------------------------------
Customer to Customer Cross Orders are comprised entirely of
Priority Customer orders, therefore the Exchange assesses a $0.00 per
contract transaction fee and provides a $0.00 rebate to such orders,
pursuant to Section 1) a) i) of the Fee Schedule. However, the Exchange
desires to clarify and make explicit that C2C Orders are assessed a
$0.00 per contract transaction fee and are paid a $0.00 per contract
rebate. The Exchange is also proposing to assess cC2C Orders a $0.00
per contract transaction fee and to pay a $0.00 per contract rebate.
The Exchange also proposes to adopt certain explanatory text relating
to the C2C and cC2C Fees table. The text provides that all fees and
rebates are per contract per leg. Also, a C2C Order is comprised of a
Priority Customer Order to buy and a Priority Customer Order to sell at
the same price and for the same quantity. A cC2C Order is comprised of
one Priority Customer complex order to buy and one Priority Customer
complex order to sell at the same price and for the same quantity.
Proposal To Adopt Complex Stock-Option Order Fees
The Exchange proposes to adopt Section (1) (a) (v) of the Fee
Schedule as ``Complex Stock-Option Order Fees'' to adopt certain fees
for stock-option orders.
The Exchange proposes to adopt a stock handling fee applicable to
stock-option orders executed against other stock-option orders in the
complex order book, which the Exchange must route to an outside venue.
Specifically, the Exchange proposes to adopt a stock handling fee of
$0.0010 per share for the stock leg of stock-option orders executed
against other stock-option orders in the complex order book, which are
routed to an outside venue. This stock handling fee to be assessed by
the Exchange will cover all fees charged by the outside venue that
prints the trade, and it is also intended to compensate the Exchange
for matching these stock-option orders against other stock-option
orders on the complex order book. A maximum of $50 per order, per day,
will be assessed under this fee. The cap is intended to give market
participants assurance that they will not pay more than the capped
amount for the execution of the stock leg of their stock-option orders.
The Exchange believes that by limiting this fee to a maximum of $50 per
order, per day, the Exchange addresses the possibility that a GTC order
could be executed over multiple days. For example, if such an order was
partially-executed on a Monday, and then the remainder was fully-
executed on a Tuesday, the total maximum fee charged to the market
participant would be $100 ($50 per day). In addition to the Exchange's
fee, the Exchange will also pass through to the Member any fees
assessed by the routing broker-dealer utilized by the Exchange with
respect to the execution of the stock leg of any such order (with such
fees to be passed through at cost). For example, the Exchange
anticipates that the routing broker-dealer will bill the Exchange for
Section 31 fees and FINRA Trading Activity Fees with respect to the
execution of the stock leg of any such order. The Exchange will pass
such fees through to the Member, at cost (that is, without any
additional mark-up).
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \11\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \12\ in
particular, in that it is an equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other persons
using its facilities. The Exchange also believes the proposal furthers
the objectives of Section 6(b)(5) of the Act \13\ in that it is
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest and is not designed to permit unfair discrimination
between customers, issuers, brokers and dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
\13\ 15 U.S.C. 78f(b)(5).
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The proposed changes are reasonable in several respects. As a
threshold matter, the Exchange is subject to significant competitive
forces in the market for options securities transaction services that
constrain its pricing determinations in that market. The fact that this
market is competitive has long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows'' ``[n]o one disputes that competition for order flow
is `fierce.' . . . As the SEC explained, [i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers' . . .'' \14\
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\14\ NetCoalition v. SEC, 615F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, 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.'' \15\
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\15\ See Securities Exchange Act Release No. 51808 (June 9,
2005, 70 FR 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange is a new entrant to the market and will be one of
eighteen options exchanges to which market participants may direct
their order flow. Within this environment, market participants can
freely shift their order flow among exchanges in response to changes in
their respective pricing schedules. As such, this proposal
[[Page 68962]]
represents a reasonable attempt by the Exchange to attract liquidity.
Transaction Fees and Rebates (Simple Market)
The Exchange believes the proposed fee structure is equitable and
not unfairly discriminatory because all similarly situated market
participants are subject to the same fee and rebate structure for order
transactions in the Simple Market. The Exchange's proposal to offer
Maker and Taker Rebates to Priority Customers is reasonable because the
Exchange desires to attract Priority Customers to the Exchange.
Priority Customers are being paid Maker Rebates and Taker Rebates in
all classes, as compared to other origins which are not rebated at all,
as Priority Customer activity enhances liquidity on the Exchange for
the benefit of all market participants by providing more trading
opportunities, which attracts market makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants.
The Exchange believes its Maker Rebate of ($0.30) in SPY, QQQ, and
IWM; its Maker Rebate of ($0.28) in Penny Classes (excluding SPY, QQQ,
and IWM); and its Maker Rebate of ($0.65) in Non-Penny classes is
reasonable as it is in line with current rebates provided by at least
one other competing options exchange.\16\ Further, the Exchange
believes its Taker Rebate of ($0.19) in SPY, QQQ, and IWM; its Taker
Rebate of ($0.48) in Penny Classes (excluding SPY, QQQ, and IWM); and
its Taker Rebate of ($0.92) in Non-Penny classes is reasonable as it is
designed to attract Priority Customer order flow to the Exchange for
the aforementioned mentioned reasons. Additionally, other competing
exchanges similarly provide Taker Rebates to Priority Customer Orders
in Penny and Non-Penny Classes that exceed the Maker Rebate.\17\
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\16\ See Nasdaq BX Options 7, Section 2, BX Options Market-Fees
and Rebates, which provides a ($0.30) rebate to Customer orders in
Penny Symbols and a ($1.10) rebate to Customer orders in Non-Penny
Symbols.
\17\ See Nasdaq MRX Options 7, Section 3, Fees and Rebates for
Regular Orders and all Crossing Orders, which provides for a $0.00
Maker Fee/Rebate and a ($0.44) Taker Rebate to Priority Customer
orders in Penny Symbols; and provides for a $0.00 Maker Fee/Rebate
and a ($1.10) Taker rebate for Priority Customer orders in Non-Penny
Symbols.
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The Exchange believes its Market Maker and Non Priority Customer/
Non Market Maker Maker/Taker Fees to be reasonable as the Exchange
proposes to assess a $0.20 Maker Fee and a $0.50 Taker Fee for orders
in SPY, QQQ, and IWM. The Exchange believes this fee structure will
encourage Market Makers, Non Priority Customers, and Non Market Makers
to submit orders in SPY, QQQ, and IWM. Additionally, the Exchange
believes its Market Maker and Non Priority Customer/Non Market Maker
Maker Fee of $0.50 and its Taker Fee of $0.50 in Penny Classes
(excluding SPY, QQQ, and IWM) is reasonable as at least one other
competing options exchange assesses a similar fee for Market Maker and
Non Priority Customer/Non Market Maker orders in Penny Symbols.\18\ The
Exchange believes that its Market Maker and Non Priority Customer/Non
Market Maker Taker Fee of $0.50 is reasonable as it is equal to its
Maker Fee, which is a common pricing strategy used by at least one
other options exchange.\19\ Finally, the Exchange believes that its
Market Maker and Non Priority Customer/Non Market Maker Maker Fee of
$0.95 and its Taker Fee of $0.94 is reasonable as it is competitively
priced in regard to the Maker and Taker Fees of other options exchanges
for transactions in Non-Penny Classes.\20\
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\18\ See Nasdaq MRX Options 7, Section 3, Fees and Rebates for
Regular Orders and all Crossing Orders, Table 1, Penny Symbols,
which provides for a $0.50 Maker Fee for Market Maker and
Professional orders.
\19\ See BOX Options Fee Schedule, Section A, which assesses a
$0.50 Maker Fee and a $0.50 Taker Fee for Market Maker and
Professional Customer or Broker Dealer orders that trade contra to a
Public Customer.
\20\ See Nasdaq MRX Options 7, Section 3, Fees and Rebates for
Regular Orders and all Crossing Orders, Table 1, Non-Penny Symbols,
which provides for a $1.25 Maker Fee and a $1.10 Taker Fee for
Market Maker, Firm Proprietary/Broker Dealer, and Professional
Customer orders.
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Additionally, the Exchange believes its proposal regarding Maker/
Taker Fees for the Simple Market is equitable and not unfairly
discriminatory. The Exchange will uniformly apply the proposed fees and
rebates to each origin in accordance to the Simple table.
Transaction Fees and Rebates (Complex Market)
The Exchange believes the proposed fee structure is equitable and
not unfairly discriminatory because all similarly situated market
participants are subject to the same fee and rebate structure for
complex order transactions in the Complex Market. The Exchange's
proposal to offer Maker and Taker Rebates to Priority Customers is
reasonable because the Exchange desires to attract Priority Customers
to the Exchange. Priority Customers are being paid Maker Rebates and
Taker Rebates in all classes, as compared to other origins which are
not rebated at all, as Priority Customer activity enhances liquidity on
the Exchange for the benefit of all market participants by providing
more trading opportunities, which attracts market makers. Additionally,
the Exchange believes that its Priority Customer Maker Rebate of
($0.36) and Taker Rebate of ($0.25) in SPY, QQQ, and IWM; its ($0.34)
Maker Rebate and ($0.54) Taker Rebate in Penny Classes (excluding SPY,
QQQ, and IWM); and its ($0.71) Maker Rebate and ($0.98) Taker Rebate in
Non-Penny Classes is reasonable as it is designed to attract Priority
Customer complex order flow to the Exchange.
The Exchange believes its Market Maker and Non Priority Customer/
Non Market Maker Maker/Taker Fees to be reasonable as the Exchange
proposes to assess a $0.20 Maker Fee and a $0.50 Taker Fee for orders
in SPY, QQQ, and IWM. The Exchange believes this fee structure will
encourage Market Makers, Non Priority Customers, and Non Market Makers
to submit orders in SPY, QQQ, and IWM. Additionally, the Exchange
believes its Market Maker and Non Priority Customer/Non Market Maker
Maker Fee of $0.50 and its Taker Fee of $0.50 in Penny Classes
(excluding SPY, QQQ, and IWM) is reasonable as it provides a standard
fee for both Maker and Taker activity. Finally, the Exchange believes
its Market Maker and Non Priority Customer/Non Market Maker Maker Fee
of $0.95 and its Taker Fee of $0.94 in Non-Penny Classes is reasonable
as at least one other exchange charges a similar Maker Fee \21\ and
Taker Fee.\22\
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\21\ See Nasdaq MRX, Options 7, Section 4, Complex Order Fees,
which assesses an $0.85 fee per contract in Non-Penny Symbols.
\22\ See Nasdaq ISE, Options 7, Section 4, Complex Order Fees
and Rebates, which assesses a $1.15 Taker Fee for Market Makers and
Firm Proprietary/Broker Dealer orders in Non-Penny Symbols.
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Complex Market per Contract Surcharge
The Exchange's proposal to establish and assess a surcharge of
$0.12 per contract for all origins (excluding Priority Customer) that
add or remove liquidity in Penny Classes (including SPY, QQQ, and IWM)
and non-Penny Classes when trading against a Priority Customer on the
Strategy Book. The Exchange believes this surcharge is consistent with
Section 6(b)(4) of the Act \23\ because it applies equally to all
participants (with the exception of Priority Customers). This surcharge
is similar in structure and amount to one applied on the NYSE American
Options Exchange (``NYSE American''),\24\ and
[[Page 68963]]
identical to the surcharge assessed and applied on the Exchange's
affiliate exchanges, Miami International Securities, LLC (``MIAX
Options''),\25\ and MIAX Emerald, LLC (``MIAX Emerald'').\26\ The
Exchange believes that this surcharge is fair and equitable because it
is in line with the amount of surcharges assessed on other options
exchanges when trading against Priority Customer complex orders.\27\
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\23\ 15 U.S.C. 78f(b)(4).
\24\ See NYSE American Options Exchange Fee Schedule, Section I.
Options Transaction Fees and Credits, footnote 5, which similarly
assesses a complex surcharge of $0.12 for any Non-Customer Complex
Order that executes against a Customer Complex Order.
\25\ See MIAX Options Fee Schedule, Section 1)a)i), available
online at https://www.miaxglobal.com/markets/us-options/miax-options/fees.
\26\ See MIAX Emerald Options Fee Schedule, Section 1)a)i)
available online at https://www.miaxglobal.com/markets/us-options/emerald-options/fees.
\27\ See supra note 24, 25, and 26.
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C2C and cC2C Order Fees and Rebates
The Exchange believes that adding the C2C fee to the Fee Schedule
is reasonable since it is clarifying the Exchange's existing practice
and by adding such C2C Order fee to the Fee Schedule the Exchange
believes that it will make it more transparent as to how the Exchange
assesses such fee and avoid any confusion as to how such fee is
assessed for simple (C2C) and complex (cC2C) orders. The Exchange
believes that the proposed transaction fee for cC2C Orders is
reasonable because the proposed amount is identical to the fee assessed
for C2C transactions, which is currently $0.00. The proposed fees would
be charged to all Priority Customers alike and the Exchange believes
that assessing a $0.00 fee to Priority Customers is equitable and not
unfairly discriminatory. By assessing a $0.00 fee to Priority Customer
orders, the C2C and cC2C transaction fees will not discourage the
sending of Priority Customer orders.
Complex Stock-Option Order Fees
The Exchange believes that the proposed stock handling fee for
stock-option orders is consistent with Section 6(b)(4) of the Act in
that it is reasonable, equitable and not unfairly discriminatory. The
Exchange believes the proposed stock handling fee for stock-option
orders is reasonable and equitable as the proposed fee will cover the
costs of developing and maintaining the systems that allow for the
matching and processing of the stock legs of stock-option orders
executed in the complex order book, as well as all fees charged by the
outside venue that prints the trade. The Exchange also believes it is
reasonable and equitable to pass through to the Member any fees
assessed by the routing broker-dealer utilized by the Exchange with
respect to the execution of the stock leg of any such order (with such
fees to be passed through at cost). The Exchange notes that another
exchange has a comparable fee for the handling of the stock leg of
stock-option orders. Specifically, Nasdaq ISE (``ISE'') charges a stock
handling fee of $0.0010 per share which is capped at $50 per order.\28\
The Exchange also believes that its proposal is consistent with Section
6(b)(5) of the Act \29\ because it will be uniformly applied to all
Members that execute stock-option orders in the Strategy Book on the
Exchange.
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\28\ See Nasdaq ISE, Options 7, Pricing Schedule, Section 4,
Complex Order Fees and Rebates, Note 12; see also Securities
Exchange Act Release No. 74117 (January 22, 2015), 80 FR 4600
(January 28, 2015) (SR-ISE-2015-03).
\29\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Intra-Market Competition
The proposal does not impose an undue burden on intra-market
competition as its fees will be applied uniformly to each respective
origin in accordance to either the Simple Market or Complex Market
table. The Exchange believes its proposal will encourage Members \30\
to submit Priority Customer Orders \31\ to the Exchange which will
increase liquidity and benefit all market participants by providing
more trading opportunities and tighter spreads. Accordingly, the
Exchange believes that the proposed changes will not impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act because it will continue to encourage order
flow, which provides greater volume and liquidity, benefiting all
market participants by providing more trading opportunities and tighter
spreads.
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\30\ The term ``Member'' means an individual or organization
that is registered with the Exchange pursuant to Chapter II of MIAX
Sapphire 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.
\31\ The term ``Priority Customer Order'' means an order for the
account of a Priority Customer. See Exchange Rule 100.
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Additionally, the Exchange does not believe its Maker/Taker Fees
for Market Makers and Non Priority Customers/Non Market Makers will
impose a burden on competition as the fees will be applied in a uniform
manner to similarly situated participants in accordance to either the
Simple or Complex table.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice on where to route their orders for execution. The
Exchange notes that it operates in a highly competitive market in which
market participants can readily favor competing venues if they deem fee
levels at a particular venue to be excessive. With the addition of MIAX
Sapphire, there are currently 18 registered options exchanges competing
for order flow. For the month of July 2024, based on publicly-available
information, and excluding index-based options, no single exchange
(MIAX Sapphire excluded) exceeded approximately 13-14% of the market
share of executed volume of multiply-listed equity and exchange-traded
fund (``ETF'') options.\32\ Therefore, no exchange possesses
significant pricing power in the execution of multiply-listed equity
and ETF options order flow. In such an environment, the Exchange must
propose transaction fees and rebates to be competitive with other
exchanges and to attract order flow. The Exchange believes that the
Exchange's proposal reflects this competitive environment, to the
extent this is achieved, all of the Exchange's market participants
should benefit from the quality of the Exchange's market.
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\32\ See the ``Market Share'' section of the Exchange's website,
available at https://www.miaxglobal.com/.
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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,\33\ and Rule 19b-4(f)(2) \34\ 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,
[[Page 68964]]
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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\33\ 15 U.S.C. 78s(b)(3)(A)(ii).
\34\ 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-2024-19 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-2024-19. 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-2024-19 and should
be submitted on or before September 18, 2024.
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\35\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-19264 Filed 8-27-24; 8:45 am]
BILLING CODE 8011-01-P
