[Federal Register Volume 77, Number 69 (Tuesday, April 10, 2012)]
[Notices]
[Page 21619]
[FR Doc No: 2012-8446]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Aviation Proceedings, Agreements Filed the Week Ending March 10,
2011

    The following Agreements were filed with the Department of
Transportation under the Sections 412 and 414 of the Federal Aviation
Act, as amended (49 U.S.C. 1382 and 1384) and procedures governing
proceedings to enforce these provisions. Answers may be filed within 21
days after the filing of the application.
    Docket Number: DOT-OST-2012-0035.
    Date Filed: March 7, 2012.
    Parties: Members of the International Air Transport Association.
    Subject: Mail Vote 702--Resolution 100 Standard Condition
Resolution for Special Fares (Memo 1665) Intended effective date: 1
April 2012.

Renee V. Wright,
Program Manager, Docket Operations, Federal Register Liaison.
[FR Doc. 2012-8446 Filed 4-9-12; 8:45 am]
BILLING CODE 4910-9X-P


[Federal Register Volume 85, Number 203 (Tuesday, October 20, 2020)]
[Notices]
[Pages 66607-66612]
[FR Doc No: 2020-23142]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90183; File No. SR-EMERALD-2020-09]

Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule To Adopt Application Programming Interface (``API'')
Testing and Certification Fees and Network Connectivity Testing and
Certification Fees

October 14, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 1, 2020, MIAX Emerald, LLC (``MIAX Emerald'' 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 amend the MIAX Emerald Fee
Schedule (the ``Fee Schedule'') to establish Application Programming
Interface (``API'') Testing and Certification fees and Network
Connectivity Testing and Certification fees.
    The text of the proposed rule change is available on the Exchange's
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX's
principal office, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule to establish API
Testing and Certification fees for Members \3\ and non-Members and
Network Connectivity Testing and Certification fees for Members and
non-Members. MIAX Emerald commenced operations as a national securities
exchange registered under Section 6 of the Act \4\ on March 1, 2019.\5\
The Exchange adopted its transaction fees and certain of its non-
transaction fees in its filing SR-EMERALD-2019-15.\6\ In that filing,
the Exchange expressly waived, among other fees, API Testing and
Certification fees and Network Connectivity Testing and Certification
fees, both for Members and non-Members, in order to provide an
incentive to prospective Members and non-Members to connect to MIAX
Emerald as soon as possible. At that time, the Exchange waived API
Testing and Certification fees and Network Connectivity Testing and
Certification fees for the Waiver Period \7\ and stated

that it would provide notice to market participants when the Exchange
intended to terminate the Waiver Period.
---------------------------------------------------------------------------

    \3\ ``Member'' means an individual or organization approved to
exercise the trading rights associated with a Trading Permit.
Members are deemed ``members'' under the Exchange Act. See Exchange
Rule 100 and the Definitions section of the Fee Schedule.
    \4\ 15 U.S.C. 78f.
    \5\ See Securities Exchange Act Release No. 84891 (December 20,
2018), 83 FR 67421 (December 28, 2018) (File No. 10-233) (order
approving application of MIAX Emerald, LLC for registration as a
national securities exchange).
    \6\ See Securities Exchange Act Release No. 85393 (March 21,
2019), 84 FR 11599 (March 27, 2019) (SR-EMERALD-2019-15) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Establish the MIAX Emerald Fee Schedule).
    \7\ ``Waiver Period'' means, for each applicable fee, the period
of time from the initial effective date of the MIAX Emerald Fee
Schedule until such time that the Exchange has an effective fee
filing establishing the applicable fee. The Exchange will issue a
Regulatory Circular announcing the establishment of an applicable
fee that was subject to a Waiver Period at least fifteen (15) days
prior to the termination of the Waiver Period and effective date of
any such applicable fee. See the Definitions Section of the Fee
Schedule.
---------------------------------------------------------------------------

    On September 15, 2020, the Exchange issued a Regulatory Circular
which announced that the Exchange would terminate the Waiver Period
for, among other fees, API Testing and Certification fees and Network
Connectivity Testing and Certification fees for Members and non-
Members, beginning October 1, 2020.\8\
---------------------------------------------------------------------------

    \8\ See MIAX Emerald Regulatory Circular 2020-41 available at
https://www.miaxoptions.com/sites/default/files/circular-files/MIAX_Emerald_RC_2020_41.pdf.
---------------------------------------------------------------------------

API Testing and Certification Fees for Members
    The Exchange proposes to adopt an API Testing and Certification fee
for Members. An API makes it possible for Member software to
communicate with MIAX Emerald software applications, and is subject to
Member testing with, and certification by, MIAX Emerald. API testing
and certification includes, for Electronic Exchange Members \9\
(``EEMs''), testing all available order types, new order entry, order
management, order throughput and mass order cancellation. For Market
Makers,\10\ API testing and certification also includes testing of all
available quote types, quote throughput, quote management and
cancellation, Aggregate Risk Manager settings and triggers, and
confirmation of quotes within the trading engines.
---------------------------------------------------------------------------

    \9\ ``Electronic Exchange Member'' or ``EEM'' means the holder
of a Trading Permit who is not a Market Maker. Electronic Exchange
Members are deemed ``members'' under the Exchange Act. See the
Definitions section of the Fee Schedule.
    \10\ The term ``Market Maker'' refers to ``Lead Market Maker''
(``LMM''), ``Primary Lead Market Maker'' (``PLMM'') and ``Registered
Market Maker'' (``RMM''), collectively. See Exchange Rule 100. See
also the Definitions section of the Fee Schedule.
---------------------------------------------------------------------------

    The API Testing and Certification fees for Members are based upon
the type of interface that the Member has been credentialed to use. The
Exchange proposes to adopt an API testing and certification fee for
EEMs (other than Clearing Firms): (i) Initially per API for Financial
Information Exchange (``FIX'') \11\ ports, FIX Drop Copy (``FXD'') \12\
ports and Clearing Trade Drop (``CTD'') \13\ ports in the month the EEM
has been credentialed to use one or more ports in the production
environment for the tested API, and (ii) each time an EEM initiates a
change to its system that requires testing and certification. The
Exchange proposes to adopt an API testing and certification fee for EEM
Clearing Firms (i) initially per API in the month the EEM Clearing Firm
has been credentialed to use one or more CTD Ports in the production
environment, and (ii) each time an EEM Clearing Firm initiates a change
to its system that requires testing and certification.
---------------------------------------------------------------------------

    \11\ ``FIX Port'' means an interface with MIAX Emerald systems
that enables the Port user to submit simple and complex orders
electronically to MIAX Emerald. See the Definitions section of the
Fee Schedule.
    \12\ The FIX Drop Copy (``FXD'') Port is a messaging interface
that will provide a copy of real-time trade execution, trade
correction and trade cancellation information to FXD Port users who
subscribe to the service. FXD Port users are those users who are
designated by an EEM to receive the information and the information
is restricted for use by the EEM. FXD Port Fees will be assessed in
any month the Member is credentialed to use the FXD Port in the
production environment. See Fee Schedule, Section 4)d)iv).
    \13\ ``CTD Port'' or ``Clearing Trade Drop Port'' provides an
Exchange Member with a real-time clearing trade updates. The updates
include the Member's clearing trade messages on a low latency, real-
time basis. The trade messages are routed to a Member's connection
containing certain information. The information includes, among
other things, the following: (i) Trade date and time; (ii) symbol
information; (iii) trade price/size information; (iv) Member type
(for example, and without limitation, Market Maker, Electronic
Exchange Member, Broker-Dealer); and (v) Exchange MPID for each side
of the transaction, including Clearing Member MPID. See the
Definitions section of the Fee Schedule.
---------------------------------------------------------------------------

    The Exchange proposes to adopt an API testing and certification fee
for Market Makers: (i) Initially per API for CTD and MIAX Emerald
Express Interface (``MEI'') \14\ ports in the month the Market Maker
has been credentialed to use one or more ports in the production
environment for the tested API and the Market Maker has been assigned
to quote in one or more classes, and (ii) each time a Market Maker
initiates a change to its system that requires testing and
certification. The Exchange also proposes that API Testing and
Certification fees will not be assessed in situations where the
Exchange initiates a mandatory change to the Exchange's System \15\
that requires testing and certification. The Exchange proposes to
assess Member API Testing and Certification fees of $1,000 for EEMs and
$2,500 for Market Makers. Below is the proposed fee table for API
Testing and Certification fees for Members:
---------------------------------------------------------------------------

    \14\ The MEI is a connection to the MIAX Emerald System that
enables Market Makers to submit simple and complex electronic quotes
to MIAX Emerald. The Exchange offers Full Service MEI Ports, which
provide Market Makers with the ability to send Market Maker simple
and complex quotes, eQuotes, and quote purge messages to the MIAX
Emerald System. Full Service MEI Ports are also capable of receiving
administrative information. Market Makers are limited to two Full
Service MEI Ports per Matching Engine. The Exchange also offers
Limited Service MEI Ports, which provide Market Makers with the
ability to send simple and complex eQuotes and quote purge messages
only, but not Market Maker Quotes, to the MIAX Emerald System.
Limited Service MEI Ports are also capable of receiving
administrative information. Market Makers initially receive two
Limited Service MEI Ports per Matching Engine. See the Definitions
section of the Fee Schedule.
    \15\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.

------------------------------------------------------------------------
                                                        API testing and
                    Type of member                     certification fee
------------------------------------------------------------------------
Electronic Exchange Member...........................          $1,000.00
Market Maker.........................................           2,500.00
------------------------------------------------------------------------

API Testing and Certification Fee for Non-Members
    The Exchange proposes to adopt an API Testing and Certification fee
for Third Party Vendors,\16\ Service Bureaus \17\ and other non-Members
(such as clearing firms): (i) Initially per API for FIX, FXD, CTD and
MEI ports in the month the Third Party Vendor, Service Bureau or non-
Member has been credentialed to use one or more ports in the production
environment for the tested API, and (ii) each time a Third Party
Vendor, Service Bureau, or other non-Member initiates a change to its
system that requires testing and certification. The Exchange also
proposes that API Testing and Certification fees will not be assessed
to non-Members in situations where the Exchange initiates a mandatory
change to the Exchange's System that requires testing and
certification.
---------------------------------------------------------------------------

    \16\ Third Party Vendors are subscribers of MIAX Emerald's
market and other data feeds, which they in turn use for
redistribution purposes. Third Party Vendors do not provide
connectivity and therefore are not subject to Network testing and
certification. See the Definitions section of the Fee Schedule.
    \17\ ``Service Bureau'' means a technology provider that offers
and supplies technology and technology services to a trading firm
that does not have its own proprietary system. See the Definitions
section of the Fee Schedule.
---------------------------------------------------------------------------

    The Exchange proposes to assess non-Member API Testing and
Certification fees of $1,200 for Third Party Vendors, Service Bureaus
and other non-Members. Below is the proposed fee table for API Testing
and Certification fees for non-Members:

------------------------------------------------------------------------
                                                        API testing and
                      Non-member                       certification fee
------------------------------------------------------------------------
Third Party Vendors and Service Bureaus and other non-         $1,200.00
 Members.............................................
------------------------------------------------------------------------

    The higher proposed fee charged to Third Party Vendors, Service
Bureaus and non-Members reflects the greater amount of time spent by
MIAX Emerald employees testing and certifying non-Members. It has been
MIAX Emerald's experience that Member testing takes less time than non-
Member testing because Members have more experience testing these
systems with exchanges, resulting in generally fewer questions and
issues arising during the testing and certification process. Also,
because Third Party Vendors and Service Bureaus are redistributing data
and reselling services to other Members and market participants, the
number and types of scenarios that need to be tested are more numerous
and complex than those tested and certified for a single Member.
    The Exchange believes it is necessary to charge an API Testing and
Certification fee to Members and non-Members because of the time and
resources spent to ensure that Member and non-Member APIs function
correctly to prevent any System malfunction. Further, the Exchange
believes the price differential in API Testing and Certification fees
for Members and non-Members is not unfairly discriminatory because, in
the Exchange's experience, Member testing takes less time than non-
Member testing as Members have more experience testing these systems
with exchanges, resulting generally in fewer questions and issues
arising during the testing and certification process.
Network Connectivity Testing and Certification Fee for Members
    The Exchange established electronic communication connections with
Members and now proposes to assess Members a Network Connectivity
Testing and Certification fee for each 1 Gigabit (``Gb'') connection
and 10 Gb ultra-low-latency (``ULL'') connection. The Exchange proposes
to assess a Member Network Connectivity Testing and Certification fee:
(i) Initially per connection in the month the Individual Firm has been
credentialed to use any API or Market Data feeds in the production
environment utilizing the tested network connection, and (ii) each time
an Individual Firm initiates a change to its system that requires
network connectivity testing and certification. Network Connectivity
Testing and Certification fees will not be assessed in situations where
the Exchange initiates a mandatory change to the Exchange's system that
requires testing and certification. Member Network Connectivity Testing
and Certification fees will not be assessed for testing and
certification of connectivity to the Exchange's Disaster Recovery
Facility.
    The Exchange proposes to assess Members a Network Connectivity
Testing and Certification Fee of $1,000 per 1Gb connection and $4,000
per 10Gb ULL connection. Below is the proposed fee table for Member
Network Connectivity Testing and Certification fees:

------------------------------------------------------------------------
                                                          10 Gigabit ULL
             Type of member                1 Gigabit fee      fee per
                                          per connection    connection
------------------------------------------------------------------------
Individual Firm.........................       $1,000.00       $4,000.00
------------------------------------------------------------------------

    The proposed fee amounts are identical to the fees currently
assessed for the same services at the Exchange's affiliates, Miami
International Securities Exchange, LLC (``MIAX'') and MIAX PEARL, LLC
(``MIAX PEARL''). The Exchange notes that the Emerald Express Network
Interconnect (``EENI'') \18\ is a network infrastructure which provides
Members and non-Members network connectivity to the trading platforms,
market data systems, test systems, and disaster recovery facility of
the Exchange. When utilizing a Shared \19\ cross-connect, the EENI can
also be configured to offer network connectivity to the trading
platforms, market data systems, test systems, and disaster recovery
facilities of the Exchange's affiliates, MIAX and MIAX PEARL.
---------------------------------------------------------------------------

    \18\ ``EENI'' means the Emerald Express Network Interconnect,
which is a network infrastructure which provides Members and non-
Members network connectivity to the trading platforms, market data
systems, test systems, and disaster recovery facilities of MIAX
Emerald. When utilizing a Shared cross-connect, the EENI can also be
configured to offer network connectivity to the trading platforms,
market data systems, test systems, and disaster recovery facilities
of MIAX and MIAX PEARL. When utilizing a Dedicated cross-connect,
the EENI can only be configured to offer network connectivity to the
trading platforms, market data systems, and test systems of MIAX
Emerald. The EENI consists of the low latency and ultra-low latency
connectivity options set forth in the Exchange's Fee Schedule. See
the Definitions section of the Fee Schedule.
    \19\ ``Shared'' (cross-connect) means cross-connect that
provides network connectivity to the trading platforms, market data
systems, test systems, and/or disaster recovery facilities of MIAX
Emerald, MIAX and MIAX PEARL via a single, shared connection. The
following connections can be Shared across MIAX Emerald, MIAX and
MIAX PEARL: 1 Gigabit, 1 Gigabit Disaster Recovery, and 10 Gigabit
Disaster Recovery. See the Definitions section of the Fee Schedule.
---------------------------------------------------------------------------

    Members utilizing a single, Shared cross-connect to connect to the
trading platforms, market data systems, test systems, and disaster
recovery facilities of the Exchange, MIAX and MIAX PEARL will only be
assessed one Network Connectivity Testing and Certification fee per
connection tested, regardless of the trading platforms, market data
systems, test systems, and disaster recovery facilities accessed via
such connection.
Network Connectivity Testing and Certification Fee for Non-Members
    MIAX Emerald established electronic connections with Service
Bureaus, Extranet Providers and other non-Members, and now proposes to
assess a Network Connectivity Testing and Certification fee for each
1Gb connection and 10Gb ULL connection. The Exchange proposes to assess
a non-Member Network Connectivity Testing and Certification fee: (i)
Initially per connection in the month the Service Bureau, Extranet
Provider or other non-Member has been credentialed to use any API or
Market Data feeds in the production environment using the tested
network connection, and (ii) each time Service Bureau, Extranet
Provider or other non-Member initiates a change to its system that
requires network connectivity testing and certification. Network
Connectivity Testing and Certification fees will not be assessed in
situations where the Exchange initiates a mandatory change to the
Exchange's system that requires testing and certification. Non-Member
Network Connectivity Testing and Certification fees will not be
assessed for testing and certification of connectivity to the
Exchange's Disaster Recovery Facility.
    The Exchange proposes to assess non-Members a Network Connectivity
Testing and Certification Fee of $1,200 per 1Gb connection and $4,200
per 10Gb ULL connection. Below is the proposed fee table for non-Member
Network Connectivity Testing and Certification fees:

------------------------------------------------------------------------
                                                          10 Gigabit ULL
               Non-member                  1 Gigabit fee      fee per
                                          per connection    connection
------------------------------------------------------------------------
Service Bureau/Extranet Provider and           $1,200.00       $4,200.00
 other non-Members......................
------------------------------------------------------------------------

    The EENI is also available to non-Member subscribers. For non-
Member subscribers, when utilizing a Shared cross-connect, the EENI can
also be configured to offer network connectivity to the trading
platforms, market data systems, test systems, and disaster recovery
facilities of the Exchange's affiliates, MIAX and MIAX PEARL.
Accordingly, non-Members utilizing Shared cross-connects to connect to
the trading platforms, market data systems, test systems, and disaster
recovery facilities of the Exchange and its affiliates, MIAX and MIAX
PEARL, will only be assessed one Network Connectivity Testing and
Certification fee per connection tested, regardless of the trading
platforms, market data systems, test systems, and disaster recovery
facilities accessed via such connection. The Member and non-Member
Network Testing and Certification fees represent installation and
support costs incurred by the Exchange as it works with each Member and
non-Member to make sure there are appropriate electronic connections
with MIAX Emerald. The Exchange's affiliates, MIAX and MIAX PEARL,
charge the same fees for the same services for their Members and non-
Members.\20\ The Exchange proposes to assess a higher Network
Connectivity Testing and Certification fee to non-Members than to
Members, similar to how MIAX and MIAX PEARL assesses such fees to their
Members and non-Members. The higher fee charged to non-Members reflects
the greater amount of time spent by MIAX Emerald employees testing and
certifying non-Members. It has been MIAX Emerald's experience that
Member network connectivity testing takes less time than non-Member
network connectivity testing because Members have more experience
testing these systems with exchanges as generally fewer questions and
issues arise during the testing and certification process.
---------------------------------------------------------------------------

    \20\ See MIAX Fee Schedule, Sections 4)c) and 4)d); see also
MIAX PEARL Fee Schedule, Sections 4)c) and 4)d.
---------------------------------------------------------------------------

    The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. 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.'' \21\
---------------------------------------------------------------------------

    \21\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------

    There are currently 16 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based options, no single exchange has more than approximately 16%
market share.\22\ Therefore, no exchange possesses significant pricing
power. More specifically, for the month of August 2020, the Exchange
had an approximately 3.24% market share of executed volume of multiply-
listed equity options.\23\ The Exchange believes that the ever-shifting
market share among the exchanges from month to month demonstrates that
market participants can discontinue or reduce use of certain categories
of products, or shift order flow, in response to non-transaction and
transaction fee changes. For example, on February 28, 2019, the
Exchange's affiliate, MIAX PEARL, LLC (``MIAX PEARL'') filed with the
Commission a proposal to increase Taker fees in certain Tiers for
options transactions in certain Penny classes for Priority Customers
and decrease Maker rebates in certain Tiers for options transactions in
Penny classes for Priority Customers (which fee was to be effective
March 1, 2019).\24\ MIAX PEARL experienced a decrease in total market
share for the month of March 2019, after the proposal went into effect.
Accordingly, the Exchange believes that the MIAX PEARL March 1, 2019
fee change, to increase certain transaction fees and decrease certain
transaction rebates, may have contributed to the decrease in MIAX
PEARL's market share and, as such, the Exchange believes competitive
forces constrain the Exchange's, and other options exchanges, ability
to set transaction fees and market participants can shift order flow
based on fee changes instituted by the exchanges.
---------------------------------------------------------------------------

    \22\ The Options Clearing Corporation (``OCC'') publishes
options and futures volume in a variety of formats, including daily
and monthly volume by exchange, available here: https://www.theocc.com/market-data/volume/default.jsp.
    \23\ See id.
    \24\ See Securities Exchange Act Release No. 85304 (March 13,
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
---------------------------------------------------------------------------

    Further, as there are currently 16 registered options exchanges
competing for order flow with no single exchange accounting for more
than approximately 16% of market share,\25\ the Exchange cannot predict
with certainty whether any market participant is planning to utilize
any of the services of the Exchange such that API testing and
certification or network connectivity testing and certification would
be required, in which the Member or non-Member would be subject to the
proposed API Testing and Certification fees and/or the Network
Connectivity Testing and Certification fees that the Exchange proposes
to establish herein.
---------------------------------------------------------------------------

    \25\ See supra note 22.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \26\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \27\ 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 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes its proposal to adopt API Testing and
Certification fees and Network Connectivity Testing and Certification
fees provides for the equitable allocation of reasonable dues and fees
and is not unfairly discriminatory for the following reasons. First,
the Exchange operates in a highly competitive market. The Commission
has repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. 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.'' \28\ There are currently
16 registered options exchanges competing for order flow. Based on
publicly-available information, and excluding index-based options, no
single exchange has more than approximately 16% of the market share of
executed volume of multiply-listed equity and ETF options.\29\
Therefore, no exchange possesses significant pricing power. More
specifically, for the month of August 2020, the Exchange had
approximately 3.24% market share of executed volume of multiply-listed
equity options.\30\
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
    \29\ The Options Clearing Corporation (``OCC'') publishes
options and futures volume in a variety of formats, including daily
and monthly volume by exchange, available here: https://www.theocc.com/market-data/volume/default.jsp.
    \30\ See id.
---------------------------------------------------------------------------

    The Exchange also believes that the ever-shifting market share
among the exchanges from month to month demonstrates that market
participants can discontinue or reduce use of certain categories of
products, or shift order flow, in response to non-transaction and
transaction fee changes. For example, on February 28, 2019, the
Exchange's affiliate, MIAX PEARL, filed with the Commission a proposal
to increase Taker fees in certain Tiers for options transactions in
certain Penny classes for Priority Customers and decrease Maker rebates
in certain Tiers for options transactions in Penny classes for Priority
Customers (which fee was to be effective March 1, 2019).\31\ MIAX PEARL
experienced a decrease in total market share for the month of March
2019, after the proposal went into effect. Accordingly, the Exchange
believes that the MIAX PEARL March 1, 2019 fee change, to increase
certain transaction fees and decrease certain transaction rebates, may
have contributed to the decrease in MIAX PEARL's market share and, as
such, the Exchange believes competitive forces constrain the
Exchange's, and other options exchanges, ability to set transaction
fees and market participants can shift order flow based on fee changes
instituted by the exchanges.
---------------------------------------------------------------------------

    \31\ See supra note 24.
---------------------------------------------------------------------------

    Second, the Exchange believes its proposal to adopt API Testing and
Certification fees and Network Connectivity Testing and Certification
fees for Members and non-Members is an equitable allocation of
reasonable dues and fees pursuant to Section 6(b)(4) of the Act \32\
because of the time and resources spent to ensure that Member and non-
Member APIs and connectivity function correctly to prevent any System
malfunction. Further, the Exchange believes the price differential in
API Testing and Certification fees and Network Connectivity Testing and
Certification fees for Members and non-Members is not unfairly
discriminatory because, in the Exchange's experience, Member testing
utilizes less Exchange resources and employee time than non-Member
testing as Members have more experience testing these systems with
exchanges, resulting generally in fewer questions and issues arising
during the testing and certification process. Also, with respect to API
testing and certification, because Third Party Vendors and Service
Bureaus are redistributing data and reselling services to other Members
and market participants the number and types of scenarios that need to
be tested are more numerous and complex than those tested and certified
for Members.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    Accordingly, the Exchange no longer believes it is necessary to
waive API Testing and Certification fees and Network Connectivity
Testing and Certification fees to attract market participants to the
MIAX Emerald market since this market is now established and MIAX
Emerald no longer needs to rely on such waivers to attract market
participants. The Exchange believes its proposed API Testing and
Certification fees and Network Connectivity Testing and Certification
fees are reasonable and well within the range of non-transaction fees
assessed among other exchanges, including the Exchange's affiliates,
MIAX and MIAX PEARL.\33\
---------------------------------------------------------------------------

    \33\ See supra note 20.
---------------------------------------------------------------------------

    Finally, 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. In such an environment, the Exchange must continually adjust
its fees for services and products, in addition to order flow, to
remain competitive with other exchanges. The Exchange believes that the
proposed changes reflect this competitive environment.

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 Exchange does not believe that the proposed rule change would
place certain market participants at the Exchange at a relative
disadvantage compared to other market participants or affect the
ability of such market participants to compete. Unilateral action by
MIAX Emerald in the assessment of certain non-transaction fees for
services provided to its Members and others using its facilities will
not have an impact on competition. As a more recent entrant in the
already highly competitive environment for equity options trading, MIAX
Emerald does not have the market power necessary to set prices for
services that are unreasonable or unfairly discriminatory in violation
of the Act. MIAX Emerald's proposed API Testing and Certification fee
levels and Network Connectivity Testing and Certification fee levels,
as described herein, are comparable to fee levels charged by other
options exchanges for the same or similar services, including those
fees assessed by the Exchange's affiliates, MIAX and MIAX PEARL.\34\
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    \34\ See supra note 20.
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    The Exchange believes that the proposed API Testing and
Certification fees and Network Connectivity Testing and Certification
fees do not place certain market participants at a relative
disadvantage to other market participants because the fees do not apply
unequally to different size market participants, but instead would
allow the Exchange charge for the time and resource necessary for API
testing and certification and network connectivity testing and
certification for Members and non-Members to ensure proper functioning
of all available order types, new order entry, order management, order
throughput and mass order cancellation (as well as, for Market Makers,
all available quote types, quote throughput, quote management and
cancellation, Aggregate Risk Manager settings and triggers, and
confirmation of quotes within the trading engines). Accordingly, the
proposed API Testing and Certification fees and network connectivity
testing and certification fees do not favor certain categories of
market participants in a manner that would impose a burden on
competition.
Inter-Market Competition
    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 operates in a
highly competitive market in which market participants can readily
favor one of the 16 competing options venues if they deem fee levels at
a particular venue to be excessive.\35\ Based on publicly-available
information, and excluding index-based options, no single exchange has
more than 16% market share. Therefore, no exchange possesses
significant pricing power in the execution of multiply-listed equity
and ETF options order flow. For the month of August 2020, the Exchange
had a market share of approximately 3.24% of executed multiply-listed
equity options \36\ and the Exchange believes that the ever-shifting
market share among exchanges from month to month demonstrates that
market participants can discontinue or reduce use of certain categories
of products, or shift order flow, in response to fee changes. In such
an environment, the Exchange must continually adjust its fees and fee
waivers to remain competitive with other exchanges and to attract order
flow to the Exchange.
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    \35\ See supra note 22.
    \36\ Id.
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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,\37\ and Rule 19b-4(f)(2) \38\ 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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    \37\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \38\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-EMERALD-2020-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-EMERALD-2020-09. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-EMERALD-2020-09 and should be submitted
on or before November 10, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-23142 Filed 10-19-20; 8:45 am]
BILLING CODE 8011-01-P