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Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices
lotter on DSK11XQN23PROD with NOTICES1

2, 2021, indicating the proposed rate change for August 1, 2021.8
The proposed decrease is based on recent options volumes, which included an increase in retail investors. With respect to options volume, the Exchange, and the options industry as a whole, experienced a significant increase between 2020 and 2021. For example, total options contract volumes in April, May and June 2021 were 29.7%, 32.7% and 25.6% higher than the total options contract volumes in April, May and June 2020, respectively.9
There can be no assurance that the Exchanges final costs for 2021 will not differ materially from these expectations, nor can the Exchange predict with certainty whether options volume will remain at the current level going forward. The Exchange notes however, that when combined with regulatory fees and fines, the revenue being generated utilizing the current ORF rate may result in revenue that will run in excess of the Exchanges estimated regulatory costs for the year.10
Particularly, as noted above, the options market has seen a substantial increase in volume throughout 2020 and 2021, due in large part to the extreme volatility in the marketplace as a result of the COVID19 pandemic. This unprecedented spike in volatility resulted in significantly higher volume than was originally projected by the Exchange thereby resulting in substantially higher ORF revenue than projected. The Exchange therefore proposes to decrease the ORF in order to ensure it does not exceed its regulatory costs for the year.
Particularly, the Exchange believes that decreasing the ORF when combined with all of the Exchanges other regulatory fees and fines, would allow the Exchange to continue covering a material portion of its regulatory costs, while lessening the potential for generating excess revenue that may otherwise occur using the current rate.11
8 See https www.miaxoptions.com/sites/default/
files/circular-files/MIAX_Pearl_Options_RC_2021_
29.pdf.
9 See data from OCC at: https
www.businesswire.com/news/home/
20210504005178/en/OCC-April-2021-TotalVolume-Up-29.7-Percent-from-a-Year-Ago, https
www.businesswire.com/news/home/
20210602005174/en/OCC-May-2021-Total-VolumeUp-32.7-Percent-from-a-Year-Ago, and https
apnews.com/press-release/business-wire/
778385e696f4407590cc6ff9cb64db03.
10 The Exchange notes that notwithstanding the potential excess ORF revenue the Exchange anticipates it would collect utilizing the current rate, it would not use such revenue for nonregulatory purposes.
11 The Exchange notes that its regulatory responsibilities with respect to Member compliance with options sales practice rules have been
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The Exchange will continue to monitor the amount of revenue collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed the Exchanges total regulatory costs. The Exchange will continue to monitor MIAX Pearl regulatory costs and revenues at a minimum on a semiannual basis. If the Exchange determines regulatory revenues exceed or are insufficient to cover a material portion of its regulatory costs, the Exchange will adjust the ORF by submitting a fee change filing to the Commission. The Exchange will notify Members of adjustments to the ORF via regulatory circular at least 30 days prior to the effective date of the change.
In connection with this filing, the Exchange notes that its affiliates, MIAX
and MIAX Emerald, will also be adjusting the ORF fees that each of those exchanges charge.
2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6b of the Act 12
in general, and furthers the objectives of Section 6b4 of the Act 13 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 6b5 of the Act 14 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 Exchange believes the proposed fee change is reasonable because customer transactions will be subject to a lower ORF fee than the current rate.
Moreover, the proposed reduction is necessary in order for the Exchange to not collect revenue in excess of its anticipated regulatory costs, in combination with other regulatory fees and fines, which is consistent with the Exchanges practices.
The ORF is designed to recover a material portion of the costs of supervising and regulating Members customer options business including allocated to the Financial Industry Regulatory Authority FINRA under a 17d2 Agreement.
The ORF is not designed to cover the cost of options sales practice regulation.
12 15 U.S.C. 78fb.
13 15 U.S.C. 78fb4.
14 15 U.S.C. 78fb5.

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performing routine surveillances and investigations, as well as policy, rulemaking, interpretive and enforcement activities. The Exchange will monitor the amount of revenue collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed the Exchanges total regulatory costs. The Exchange has designed the ORF to generate revenues that, when combined with all of the Exchanges other regulatory fees, will be less than or equal to the Exchanges regulatory costs, which is consistent with the Commissions view that regulatory fees be used for regulatory purposes and not to support the Exchanges business side.
In this regard, the Exchange believes that the proposed decrease to the fee is reasonable.
The Exchange believes that continuing to limit changes to the ORF
to twice a year on specific dates with advance notice is reasonable because it gives participants certainty on the timing of changes, if any, and better enables them to properly account for ORF charges among their customers.
The Exchange believes that continuing to limit changes to the ORF to twice a year on specific dates is equitable and not unfairly discriminatory because it will apply in the same manner to all Members that are subject to the ORF and provide them with additional advance notice of changes to that fee.
The Exchange believes that collecting the ORF from non-Members when such non-Members ultimately clear the transaction that is, when the nonMember is the ultimate clearing firm for a transaction in which a Member was assessed the ORF is an equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. The Exchange notes that there is a material distinction between assessing the ORF and collecting the ORF. The ORF is only assessed to a Member with respect to a particular transaction in which it is either the executing clearing firm or ultimate clearing firm. The Exchange does not assess the ORF to non-Members. Once, however, the ORF is assessed to a Member for a particular transaction, the ORF may be collected from the Member or a non-Member, depending on how the transaction is cleared at OCC. If there was no change to the clearing account of the original transaction, the ORF would be collected from the Member. If there was a change to the clearing account of the original transaction and a non-Member becomes the ultimate clearing firm for that transaction, then the ORF will be
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