Self-Regulatory Organizations; MIAX Emerald, LLC; Order Declaring Effective a Minor Rule Violation Plan, 8956 [2025-02149]

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• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 90, Number 22 (Tuesday, February 4, 2025)]
[Notices]
[Page 8956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-02149]



[[Page 8956]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102302; File No. 4-845]


Self-Regulatory Organizations; MIAX Emerald, LLC; Order Declaring 
Effective a Minor Rule Violation Plan

January 29, 2025.
    On November 19, 2024, MIAX Emerald, LLC (``Emerald'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed minor rule violation plan (``MRVP'' or 
``Plan'') pursuant to Section 19(d)(1) of the Securities Exchange Act 
of 1934 (the ``Act''),\1\ and Rule 19d-1(c)(2) thereunder.\2\ The 
proposed MRVP was published for comment on December 3, 2024.\3\ The 
Commission received no comments on the proposal. This order declares 
the Exchange's proposed MRVP effective.
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    \1\ 15 U.S.C. 78s(d)(1).
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ See Securities Exchange Act Release No. 101759 (November 26, 
2024), 89 FR 95833 (``Notice'').
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    The Exchange's MRVP specifies the rule violations that will be 
included in the Plan and will have sanctions not exceeding $2,500. Any 
violations resolved under the MRVP would not be subject to the 
provisions of Rule 19d-1(c)(1) of the Act,\4\ which requires that a 
self-regulatory organization (``SRO'') promptly file notice with the 
Commission of any final disciplinary action taken with respect to any 
person or organization.\5\ In accordance with Rule 19d-1(c)(2) under 
the Act,\6\ the Exchange proposed to designate certain specified rule 
violations as minor rule violations and requested that it be relieved 
of the prompt reporting requirements regarding such violations, 
provided it gives notice of such violations to the Commission on a 
quarterly basis.
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    \4\ 17 CFR 240.19d-1(c)(1).
    \5\ The Commission adopted amendments to paragraph (c) of Rule 
19d-1 to allow SROs to submit for Commission approval plans for the 
abbreviated reporting of minor disciplinary infractions. See 
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 
23828 (June 8, 1984). Any disciplinary action taken by an SRO 
against any person for violation of a rule of the SRO which has been 
designated as a minor rule violation pursuant to a plan filed with 
and declared effective by the Commission is not considered ``final'' 
for purposes of Section 19(d)(1) of the Act if the sanction imposed 
consists of a fine not exceeding $2,500 and the sanctioned person 
has not sought an adjudication, including a hearing, or otherwise 
exhausted his administrative remedies.
    \6\ 17 CFR 240.19d-1(c)(2).
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    The Exchange proposed to include in its MRVP the procedures and 
violations currently included in Exchange Rule 1014 (``Imposition of 
Fines for Minor Rule Violations'').\7\ According to the Exchange's 
proposed MRVP, the Exchange may impose a fine (not to exceed $2,500) on 
any Member, or person associated with or employed by a Member, for any 
rule violation listed in Rule 1014(d).\8\ The Exchange shall serve the 
person against whom a fine is imposed with a written statement setting 
forth the rule or rules allegedly violated, the act or omission 
constituting each such violation, the fine imposed for each violation, 
and the date by which such determination becomes final or by which such 
fine must be paid or contested. If the person against whom the fine is 
imposed pays the fine, such payment shall be deemed to be a waiver of 
such person's right to a disciplinary proceeding and any review of the 
matter under the Exchange rules. Any person against whom a fine is 
imposed may contest the Exchange's determination by filing with the 
Exchange a written answer, at which point the matter shall become a 
disciplinary proceeding.\9\
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    \7\ The Exchange received its grant of registration on December 
20, 2018, which included approving the rules that govern the 
Exchange. See Securities Exchange Act Release No. 84891 (December 
20, 2018), 83 FR 67421 (December 28, 2018) (File No. 10-233). Under 
the proposed MRVP, violations of the following rules would be 
appropriate for disposition under the MRVP: Rule 307 (Position 
Limits); Rule 803 (Focus Reports); Rule 804 (Requests for Trade 
Data); Rule 520 (Order Entry); Rule 603 (Quotation Parameters); Rule 
605 (Execution of Orders in Appointed Options); Rule 314 (Mandatory 
Systems Testing); Rule 700 (Exercise of Option Contracts); Rule 309 
(Exercise Limits); Rule 310 (Reports Related to Position Limits); 
Rule 403 (Trading in Restricted Classes); Rule 604 (Market Maker 
Quotations); Rule 1904 (Failure to Timely File Amendments to Form 
U4, Form U5, and Form BD); and Rules 1701-1713 (Failure to Comply 
with the Consolidated Audit Trail Compliance Rule Under Chapter 
XVII). According to the Exchange, the Conduct and Decorum Policies 
under Rule 1014(d)(4) are excluded from the proposed MRVP. See 
Notice, supra note 3, at 95833.
    \8\ While Rule 1014 allows the Exchange to administer fines up 
to $5,000, the Exchange is only seeking relief from the reporting 
requirements of paragraph (c)(1) of Rule 19d-1 for fines 
administered under Rule 1014(d) that do not exceed $2,500.
    \9\ See Notice, supra note 3, at 95833.
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    According to the Exchange, upon the Commission's declaration of 
effectiveness of the MRVP, the Exchange will provide to the Commission 
a quarterly report for any actions taken on minor rule violations under 
the MRVP.\10\ The quarterly report will include: the disposition date, 
the name of the firm/individual, the Exchange's internal enforcement 
number, the review period, the nature of the violation type, the number 
of the rule that was violated, the number of instances the violation 
occurred, and the sanction imposed.\11\
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    \10\ See id.
    \11\ See id.
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    The Exchange requested that the Commission deem any changes to the 
rules applicable to the Exchange's MRVP to be deemed modifications to 
the Exchange's MRVP.
    The Commission finds that the proposal is consistent with the 
public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act,\12\ because the MRVP will permit the Exchange to carry 
out its oversight and enforcement responsibilities as an SRO more 
efficiently in cases where formal disciplinary proceedings are not 
necessary due to the minor nature of the particular violation.
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    \12\ 17 CFR 240.19d-1(c)(2).
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    In declaring the Exchange's MRVP effective, the Commission does not 
minimize the importance of compliance with Exchange rules and all other 
rules subject to the imposition of sanctions under Exchange Rule 
1014(d). Violation of an SRO's rules, as well as Commission rules, is a 
serious matter. However, Exchange Rule 1014(d) provides a reasonable 
means of addressing violations that do not rise to the level of 
requiring formal disciplinary proceedings, while providing greater 
flexibility in handling certain violations. The Commission expects the 
Exchange to continue to conduct surveillance and make determinations 
based on its findings, on a case-by-case basis, regarding whether a 
violation requires formal disciplinary action or whether a sanction 
under the MRVP is appropriate.
    It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the 
Act,\13\ that the proposed MRVP for MIAX Emerald, LLC, File No. 4-845 
be, and hereby is, declared effective.
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    \13\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(44).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-02149 Filed 2-3-25; 8:45 am]
BILLING CODE 8011-01-P