The Securities and Exchange Commission published a notice on December 18, 2025, detailing a proposed rule change by MIAX Emerald, LLC. Filed on December 1, 2025, under Section 19(b)(3)(A) of the Securities Exchange Act of 1934, the amendment to the exchange's fee schedule regrouped options exchanges within its routing fee table. This immediately effective filing adjusts how MIAX Emerald categorizes away markets for routing customer orders, based on transaction costs, without changing the fee rates. The move reflects ongoing reviews of away market fees and aims to ensure routing charges approximate the exchange's execution costs. It highlights the dynamic nature of options market pricing and could influence how market participants route orders across venues.
Background on Routing Fees
Routing fees are charges that options exchanges like MIAX Emerald impose when directing customer orders to other exchanges for execution. These fees typically depend on the order's origin type, such as Priority Customer or Public Customer that is not a Priority Customer, and whether the options are in Penny classes—those trading in one-cent increments—or Non-Penny classes. MIAX Emerald's current structure groups away markets into tiers, with fees ranging from $0.15 to $1.40 per contract, based on these factors. This approach mirrors practices at affiliated exchanges like MIAX, MIAX Pearl, and MIAX Sapphire, as well as competitors such as Cboe BZX Options. The grouping system helps exchanges recover costs including away market transaction fees, clearing expenses, and administrative overhead. Periodic reviews ensure these groupings remain aligned with evolving market conditions.
Details of the Proposed Change
The core of the proposal involves shifting MEMX from one fee tier to another in the Non-Penny Program category for Public Customers that are not Priority Customers. Specifically, MEMX is removed from the $1.25 tier and added to the $1.40 tier. This adjustment stems from MEMX's recent fee increase to $1.21 per contract for removing liquidity in Non-Penny classes for professional orders, as outlined in MEMX's August 1, 2025, fee schedule update. No other exchanges are regrouped, and fee amounts remain unchanged. The updated table lists tiers such as $0.15 for routing Priority Customer Penny Program orders to markets like NYSE American and Cboe, up to $1.40 for certain Non-Penny routings to Cboe BZX Options and now MEMX. The filing emphasizes that this recategorization better reflects the 'all-in' costs of routing, including a small buffer for minor fee fluctuations at away markets.
Purpose and Statutory Basis
MIAX Emerald states that the change promotes an equitable allocation of fees under Section 6(b)(4) of the Exchange Act by ensuring routing charges apply uniformly to all members. It also aligns with Section 6(b)(5) by fostering just and equitable trade principles without unfair discrimination. The exchange argues that the regrouping recoups costs associated with routing, such as transaction fees at away markets and operational expenses, while approximating net neutrality on routing. As noted in the filing, 'The per-contract transaction fee amount associated with each grouping approximates the Exchange's all-in cost (plus an additional, non-material amount) to execute that corresponding contract at that corresponding exchange.' This rationale draws from similar structures at affiliates and Cboe BZX Options, where exchange groupings are adjusted based on cost reviews.
Relevant Legal Precedents and Market Forces
Options exchange fee structures are governed by the Exchange Act, with the SEC overseeing filings to ensure they meet standards of fairness and competition. Precedents like the SEC's approval of similar routing fee adjustments at other exchanges, such as Cboe BZX Options' periodic regroupings, underscore the acceptability of cost-based modifications. Political and regulatory forces include ongoing SEC scrutiny of market data and access fees, as seen in recent debates over exchange pricing transparency. Market participants, including broker-dealers and institutional traders, often advocate for lower routing costs to enhance liquidity, while exchanges balance revenue needs. Perspectives vary: proponents view such changes as necessary for efficiency, while critics might argue they could indirectly raise costs for end-users if not transparently justified.
Potential Implications
In the short term, the regrouping may lead to slightly higher routing fees for orders directed to MEMX in the affected category, potentially influencing order flow decisions by members. For instance, a broker routing Non-Penny orders might opt for lower-tier venues to minimize costs. Long-term, this could encourage more frequent fee reviews across the industry, promoting alignment between routing charges and actual execution expenses. It may also affect competition among the 17 U.S. options exchanges, as groupings influence perceived cost-effectiveness. Different stakeholders offer varied views—retail investors might see minimal direct impact, while high-volume traders could adjust strategies. The filing's immediate effectiveness allows quick adaptation but invites public comments, which could shape future amendments.
The proposed rule change by MIAX Emerald underscores the importance of adaptive fee structures in a competitive options market. Key takeaways include the focus on cost recovery without altering fee levels and the emphasis on uniformity across affiliates. Potential next steps involve the SEC's 60-day review period, during which interested parties can submit comments that might lead to suspension or further proceedings. Ongoing debates may center on broader fee transparency and the balance between exchange revenues and market accessibility, with challenges arising from fluctuating away market fees or regulatory shifts.
