On December 15, 2025, MIAX Sapphire, LLC submitted a proposed rule change to the Securities and Exchange Commission, seeking to amend its options exchange fee schedule. The filing, published in the Federal Register on December 18, 2025, focuses on regrouping options exchanges within the routing fee table for customer orders routed to away markets. This adjustment responds to recent fee changes at MEMX LLC, aiming to better reflect the costs of routing orders. Effective immediately upon filing, the change underscores ongoing efforts by options exchanges to manage routing expenses amid evolving market dynamics. Its significance lies in maintaining competitive equity for market participants while ensuring fee structures approximate actual execution costs at away venues.
Background and Purpose of the Proposal
MIAX Sapphire operates as a self-regulatory organization under the Securities Exchange Act of 1934, overseeing trading in options contracts. The exchange assesses routing fees for customer orders executed at other options markets, categorizing these fees based on order origin type, whether the options are in penny or non-penny classes, and the destination exchange. This structure mirrors practices at affiliated exchanges like MIAX, MIAX Pearl, and MIAX Emerald, as well as competitors such as Cboe BZX Options.
The proposal stems from a periodic review of transaction fees at away markets. Specifically, it addresses MEMX's August 2024 fee increase, which raised charges for professional capacity orders removing liquidity in non-penny classes to $1.21 per contract. MIAX Sapphire seeks to regroup exchanges to align its routing fees more closely with these costs, including clearing, administrative, regulatory, and technical expenses. The exchange emphasizes that routing fees are designed to be near net neutral, covering costs plus a minimal buffer for minor fee fluctuations at away markets.
Key players include MIAX Sapphire as the filer, the SEC as the regulatory overseer, and referenced exchanges like MEMX, NYSE Arca Options, and Cboe BZX Options. The filing invokes Section 19(b)(1) of the Exchange Act and Rule 19b-4, allowing immediate effectiveness for fee-related changes that do not significantly affect competition or investor protection.
Key Changes to the Routing Fee Table
The core amendment involves shifting MEMX from the $1.25 fee tier to the $1.40 tier for public customer orders that are not priority customers in non-penny programs. This tier already includes Cboe BZX Options, Nasdaq ISE, Nasdaq BX Options, and MEMX after the change. No alterations are made to the fee amounts themselves, only to the groupings.
For context, priority customers in penny programs routed to certain exchanges face fees ranging from $0.15 to $0.65, while non-penny programs range from $0.15 to $1.00. Non-priority public customers in non-penny programs see fees from $1.00 to $1.40, with the highest tier now encompassing MEMX due to its elevated charges. The filing details the updated table, showing MEMX's removal from the $1.25 group (which includes Cboe C2 and BOX) and addition to the $1.40 group.
Additionally, a minor non-substantive edit changes the heading of Fee Schedule Section 1)b) from 'Fees and Rebates for Customer Orders Routed to Another Options Exchange' to 'Fees for Customer Orders Routed to Another Options Exchange.' This aligns terminology with MIAX Sapphire's affiliates, promoting consistency without impacting fee calculations.
Legal and Regulatory Framework
The proposal aligns with Section 6(b) of the Exchange Act, which requires equitable allocation of fees and promotion of just and equitable principles of trade. MIAX Sapphire argues the regrouping is reasonable and non-discriminatory, applying uniformly to all members subject to routing fees. It approximates costs without creating undue burdens, similar to structures at Cboe BZX Options.
Precedents include prior SEC approvals of routing fee adjustments, such as those in Securities Exchange Act Release No. 100804 for MEMX's fee changes. The filing notes that affiliates MIAX, MIAX Pearl, and MIAX Emerald plan identical updates, ensuring harmonized practices across the MIAX family. Perspectives vary: proponents view it as essential for cost recovery, while critics might argue it could indirectly raise barriers for smaller market participants, though the filing asserts no unfair discrimination.
Implications for Market Participants
Short-term effects include updated routing costs for members sending non-priority customer orders in non-penny classes to MEMX, potentially influencing order flow decisions. For instance, brokers might reroute to lower-cost venues, affecting liquidity distribution across exchanges.
Long-term, the change highlights the interconnected nature of options markets, where fee adjustments at one venue ripple through routing structures elsewhere. It could encourage more frequent reviews and filings, fostering transparency but adding regulatory overhead. Different stakeholders offer contrasting views: exchanges like MIAX Sapphire emphasize cost alignment for sustainability, while traders may see it as increasing complexity in fee navigation. Regulators, via the SEC, prioritize investor protection, ensuring changes do not impede fair access.
The proposal does not alter rebates, focusing solely on fees, which supports the exchange's claim of neutrality. Evidence from the filing includes references to MEMX's fee schedule and comparisons to affiliates, underscoring a data-driven approach.
In summary, this filing by MIAX Sapphire adjusts exchange groupings in its routing fee table to reflect updated costs at MEMX, while making a minor heading change for consistency. Potential next steps include SEC review of any public comments, though immediate effectiveness minimizes delays. Ongoing debates may center on the balance between cost recovery and market competition, with challenges arising if away-market fees continue to fluctuate. Future trajectories could involve broader industry standardization of routing fee methodologies or increased scrutiny from regulators on fee transparency.
