Notice2021-12478
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Pearl Options Fee Schedule To Adopt Fees for the Open-Close Report
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Published
June 15, 2021
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 86 Issue 113 (Tuesday, June 15, 2021)</title>
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[Federal Register Volume 86, Number 113 (Tuesday, June 15, 2021)]
[Notices]
[Pages 31748-31751]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-12478]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92137; File No. SR-PEARL-2021-26]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
Pearl Options Fee Schedule To Adopt Fees for the Open-Close Report
June 9, 2021.
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 May 28, 2021, MIAX PEARL, LLC (``MIAX Pearl'' 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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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 Pearl Fee
Schedule (the ``Fee Schedule'') to adopt fees for a new data product to
be known as the Open-Close Report.
The text of the proposed rule change is available on the Exchange's
website at <a href="http://www.miaxoptions.com/rule-filings/pearl">http://www.miaxoptions.com/rule-filings/pearl</a> at MIAX
Pearl'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 recently adopted a new data product for options known
as the Open-Close Report, which will be available for purchase to
Exchange Members \3\ and non-Members.\4\ The Exchange now proposes to
adopt fees for the Open-Close Report. The Open-Close Report is
described under Exchange Rule 531(b)(1).
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\3\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of these
Rules for purposes of trading on the Exchange as an ``Electronic
Exchange Member'' or ``Market Maker.'' Members are deemed
``members'' under the Exchange Act. See Exchange Rule 100.
\4\ See Securities Exchange Act Release No. 91965 (May 21,
2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Adopt a New Historical Market Data Product To Be Known as the Open-
Close Report).
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By way of background, the Exchange will offer two versions of the
Open-Close Report, an end of day summary and intra-day report. The end-
of-day version is a volume summary of trading activity on the Exchange
at the option level by origin (Priority Customer, Non-Priority
Customer, Firm, Broker-Dealer, and Market Maker \5\), side of the
market (buy or sell), contract volume, and transaction type (opening or
closing). The customer and professional customer volume is further
broken down into trade size buckets (less than 100 contracts, 100-199
contracts, greater than 199 contracts). The Open-Close Data is
proprietary Exchange trade data and does not include trade data from
any other exchange. It is also a historical data product and not a
real-time data feed.
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\5\ See Exchange Rule 100.
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The intraday Open-Close Report will provide similar information to
that of Open-Close Data but will be produced and updated every 10
minutes during the trading day. Data is captured in ``snapshots'' taken
every 10 minutes throughout the trading day and is available to
subscribers within five minutes of the conclusion of each 10-minute
period. For example, subscribers to the intraday product will receive
the first calculation of intraday data by no later than 9:45 a.m. ET,
which represents data captured from 9:30 a.m. to 9:40 a.m. Subscribers
will receive the next update by 9:55 a.m., representing the data
previously provided together with data captured from 9:40 a.m. through
9:50 a.m., and so forth. Each update will represent the aggregate data
captured from the current ``snapshot'' and all previous ``snapshots.''
The intraday Open-Close Data will provide a volume summary of trading
activity on the Exchange at the option level by origin (Priority
Customer, Non-Priority Customer, Firm, Broker-Dealer, and Market
Maker), side of the market (buy or sell), and transaction type (opening
or closing). All volume will be further broken down into trade size
buckets (less than 100 contracts, 100-199 contracts, greater than 199
contracts).
The Exchange anticipates a wide variety of market participants to
purchase the Open-Close Report, including, but not limited to,
individual customers, buy-side investors, and investment banks. The
Exchange believes the Open-Close Report product may also provide
helpful trading information regarding investor sentiment that may allow
market participants to make better trading decisions throughout the day
and may be used to create and test trading models and analytical
strategies and provides comprehensive insight into trading on the
Exchange. For example, intraday open data may allow a market
participant to identify new interest or possible risks throughout the
trading day, while intraday closing data may allow a market participant
to identify fading interests in a security. The product is a completely
voluntary product, in that the Exchange is not required by any rule or
regulation to make this data available and that potential subscribers
may purchase it only if they voluntarily choose to do so. The Exchange
notes that other exchanges offer a similar data product.\6\
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\6\ See Securities Exchange Act Release Nos. 89497 (August 6,
2020), 85 FR 48747 (August 12, 2020) (SR-CboeBZX-2020-059); 89498
(August 6, 2020), 85 FR 48735 (August 12, 2020) (SR-Cboe-EDGX-2020-
36); 85817 (May 9, 2019), 84 FR 21863 (May 15, 2019) (SR-CBOE-2019-
026); 89496 (August 6, 2020), 85 FR 48743 (August 12, 2020) (SR-C2-
2020-010); 89596 [sic] (August 17, 2020), 85 FR 51833 (August 21,
2020) (SR-C2-2020-012); 62887 (September 10, 2010), 75 FR 57092
(September 17, 2010) (SR-Phlx-2010-121); 65587 (October 18, 2011),
76 FR 65765 (October 24, 2011) (SR-NASDAQ-2011-144); 61317 (January
8, 2010), 75 FR 2915 (January 19, 2010) (SR-ISE-2009-103); 62887
(September 10, 2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-
2010-121); 65587 (October 18, 2011), 76 FR 65765 (October 24, 2011)
(SR-NASDAQ-2011-144); and 81632 (September 15, 2017), 82 FR 44235
(September 21, 2017) (SR-GEMX-2017-42).
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The Exchange proposes to provide in its Fee Schedule that Members
and non-Members may purchase the Open-Close Report on a monthly basis.
The Exchange proposes to assess a monthly fee of $600 per month for
subscribing to the end-of-day summary Open-Close Report and $2,000 per
month for subscribing to the intra-day Open-Close
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Report. The Exchange also proposes to specify that for mid-month
subscriptions, new subscribers will be charged for the full calendar
month for which they subscribe and will be provided Open-Close Report
data for each trading day of the calendar month from the day on which
they subscribed. The proposed monthly fees will apply both to Members
or non-Members. The Exchange notes that other exchanges provide similar
data products that may be purchased on a monthly basis and are
similarly priced.\7\
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\7\ See Price List--U.S. Derivatives Data for Nasdaq PHLX, LLC
(``PHLX''), The Nasdaq Stock Market, LLC (``Nasdaq''), Nasdaq ISE,
LLC (``ISE''), and Nasdaq GEMX, LLC (``GEMX''), available at <a href="http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#web">http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#web</a>.
Particularly, PHLX offers ``Nasdaq PHLX Options Trade Outline
(PHOTO)'' and assesses $1,500 per month for an intra-day
subscription and $500 per month for end of day subscription; Nasdaq
offers the ``Nasdaq Options Trade Outline (NOTO)'' and assesses $750
per month for an intra-day subscription and $500 per month for end
of day subscription; ISE offers the ``Nasdaq ISE Open/Close Trade
Profile'' and assesses $2,000 per month for an intra-day
subscription and $750 per month for end of day subscription; and
GEMX offers the ``Nasdaq GEMX Open/Close Trade Profile'' and
assesses $1,000 per month for an intra-day subscription and $500 per
month for end of day subscription. Cboe EDGX Exchange, Inc.
(``EDGX'') assesses $1,000 per month for an intra-day subscription
and $500 per month for end of day subscription and Cboe BZX
Exchange, Inc. (``BZX'') assess $1,500 per month for an intra-day
subscription and $500 per month for end of day subscription. See the
EDGX fee schedule available at <a href="http://markets.cboe.com/us/options/membership/fee_schedule/edgx/">http://markets.cboe.com/us/options/membership/fee_schedule/edgx/</a> and the BZX fee schedule available at
<a href="http://markets.cboe.com/us/options/membership/fee_schedule/bzx/">http://markets.cboe.com/us/options/membership/fee_schedule/bzx/</a>. See
also Securities Exchange Act Release nos. 89879 [sic] (August 17,
2020), 85 FR 51796 (August 21, 2020) (SR-CboeEDGX-2020-040); and
89583 (August 17, 2020), 85 FR 51825 (August 21, 2020) (SR-CboeBZX-
2020-063).
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The Exchange intends to begin to offer the Open-Close Report and
charge the proposed fees on June 1, 2021.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\9\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
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 to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes that
its proposal to adopt fees for the Open-Close Report is consistent with
Section 6(b) of the Act \10\ in general, and furthers the objectives of
Section 6(b)(4) of the Act \11\ in particular, in that it is an
equitable allocation of dues, fees and other charges among its members
and other recipients of Exchange data.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. Particularly, the Open-Close Report further
broadens the availability of U.S. option market data to investors
consistent with the principles of Regulation NMS. The data product also
promotes increased transparency through the dissemination of the Open-
Close Report. Particularly, information regarding opening and closing
activity across different option series during the trading day may
indicate investor sentiment, which may allow market participants to
make better informed trading decisions throughout the day. Subscribers
to the data may also be able to enhance their ability to analyze option
trade and volume data and create and test trading models and analytical
strategies. The Exchange believes the Open-Close Report provides a
valuable tool that subscribers can use to gain comprehensive insight
into the trading activity in a particular series, but also emphasizes
such data is not necessary for trading. Moreover, other exchanges offer
a similar data product.\12\
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\12\ See supra note 6.
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The Exchange operates in a highly competitive environment. Indeed,
there are currently 16 registered options exchanges that trade options.
Based on publicly available information, no single options exchange has
more than 15% of the market share and currently the Exchange represents
only approximately 6.73% of the market share.\13\ The Commission has
repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. Particularly, 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.'' \14\ Making similar data products available to
market participants fosters competition in the marketplace, and
constrains the ability of exchanges to charge supra-competitive fees.
In the event that a market participant views one exchange's data
product as more or less attractive than the competition they can and do
switch between similar products. The proposed fees are a result of the
competitive environment, as the Exchange seeks to adopt fees to attract
purchasers of the recently introduced Open-Close Data product.
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\13\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (May 26, 2021), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\14\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes the proposed fees are reasonable as the
proposed fees are both modest and similar to, or even lower than, the
fees assessed by other exchanges that provide similar data
products.\15\ Indeed, proposing fees that are excessively higher than
established fees for similar data products would simply serve to reduce
demand for the Exchange's data product, which as noted, is entirely
optional. Like the Exchange's Open-Close Report, other exchanges offer
similar data products that each provide insight into trading on those
markets and may likewise aid in assessing investor sentiment. Although
each of these similar Open-Close data products provide only proprietary
trade data and not trade data from other exchanges, it is possible
investors are still able to gauge overall investor sentiment across
different option series based on open and closing interest on any one
exchange.\16\ Similarly, market participants may be able to analyze
option trade and volume data, and create and test trading models and
analytical strategies using only Open-Close data relating to trading
activity on one or more of the other markets that provide similar data
products. As such, if a market participant views another exchange's
Open-Close data as more attractive than its proposed Open-Close Report,
then such market participant can merely choose not to purchase the
Exchange's Open-Close Report and instead purchase another exchange's
Open-Close data product, which offer similar data points, albeit based
on that other market's trading activity.
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\15\ See supra note 7.
\16\ The exchange notes that its Open-Close Report data product
does not include data on any exclusive, singly-listed option series.
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The Exchange also believes the proposed fees are reasonable as they
would support the introduction of a
[[Page 31750]]
new market data product that is designed to aid investors by providing
insight into trading on the Exchange. The recently adopted Open-Close
Report would provide options market participants with valuable
information about opening and closing transactions executed on the
Exchange throughout the trading day, similar to other trade data
products offered by competing options exchanges. In turn, this data
would assist market participants in gauging investor sentiment and
trading activity, resulting in potentially better informed trading
decisions. As noted above, users may also use such data to create and
test trading models and analytical strategies.
Selling market data, such as the Open-Close Report, is also a means
by which exchanges compete to attract business. To the extent that the
Exchange is successful in attracting subscribers for the Open-Close
Report, it may earn trading revenues and further enhance the value of
its data products. If the market deems the proposed fees to be unfair
or inequitable, firms can diminish or discontinue their use of the data
and/or avail themselves of similar products offered by other
exchanges.\17\ The Exchange therefore believes that the proposed fees
for the Open-Close Report reflect the competitive environment and would
be properly assessed on Member or non-Member users. The Exchange also
believes the proposed fees are equitable and not unfairly
discriminatory as the fees would apply equally to all users who choose
to purchase such data. The Exchange's proposed fees would not
differentiate between subscribers that purchase the Open-Close Report
and are set at a modest level that would allow any interested Member or
non-Member to purchase such data based on their business needs.
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\17\ See supra note 6.
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As noted above, the Exchange anticipates a wide variety of market
participants to purchase the Open-Close Report, including but not
limited to individual customers, buy-side investors and investment
banks. The Exchange reiterates that the decision as to whether or not
to purchase the Open-Close Report is entirely optional for all
potential subscribers. Indeed, no market participant is required to
purchase the Open-Close Report, and the Exchange is not required to
make the Open-Close Report available to all investors. Rather, the
Exchange is voluntarily making the Open-Close Report available, as
requested by customers, and market participants may choose to receive
(and pay for) this data based on their own business needs. Potential
purchasers may request the data at any time if they believe it to be
valuable or may decline to purchase such data.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Rather, the
Exchange believes that the proposal will promote competition by
permitting the Exchange to sell a data product similar to those offered
by other competitor options exchanges.\18\ The Exchange made Open-Close
Data available in order to keep pace with changes in the industry and
evolving customer needs, and believes the data product will contribute
to robust competition among national securities exchanges. At least
eight other U.S. options exchanges offer a market data product that is
substantially similar to the Open-Close Report. As a result, the
Exchange believes this proposed rule change permits fair competition
among national securities exchanges.
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\18\ Id.
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Furthermore, the Exchange operates in a highly competitive
environment, and its ability to price the Open-Close Report is
constrained by competition among exchanges that offer similar data
products to their customers. As discussed, there are currently a number
of similar products available to market participants and investors. At
least eight other U.S. options exchanges offer a market data product
that is substantially similar to the Open-Close Report, which the
Exchange must consider in its pricing discipline in order to compete
for the market data.\19\ For example, proposing fees that are
excessively higher than established fees for similar data products
would simply serve to reduce demand for the Exchange's data product,
which as discussed, market participants are under no obligation to
utilize. In this competitive environment, potential purchasers are free
to choose which, if any, similar product to purchase to satisfy their
need for market information. As a result, the Exchange believes this
proposed rule change permits fair competition among national securities
exchanges.
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\19\ See, e.g., Cboe Options Fees Schedule, Livevol Fees, Open-
Close Data. See also Nasdaq ISE Options 7 Pricing Schedule, Section
10.A and Nasdaq PHLX Options 7 Pricing Schedule, Section 10, PHLX
Options Trade Outline (``PHOTO'').
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The Exchange also does not believe the proposed fees would cause
any unnecessary or in appropriate burden on intermarket competition as
other exchanges are free to introduce their own comparable data product
and lower their prices to better compete with the Exchange's offering.
The Exchange does not believe the proposed rule change would cause any
unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed product and fees apply uniformly to any
purchaser, in that it does not differentiate between subscribers that
purchase the Open-Close Report. The proposed fees are set at a modest
level that would allow any interested Member or non-Member to purchase
such data based on their business needs.
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,\20\ and Rule 19 b-4(f)(2) \21\ 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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\20\ 15 U.S.C. 78s(b)(3)(A)(ii).
\21\ 17 CFR 240.19 b-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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#4a383f262f67292527272f243e390a392f29642d253c"><span class="__cf_email__" data-cfemail="0f7d7a636a226c6062626a617b7c4f7c6a6c21686079">[email protected]</span></a>. Please include
File Number SR-PEARL-2021-26 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
[[Page 31751]]
All submissions should refer to File Number SR-PEARL-2021-26. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-PEARL-2021-26 and should be submitted on
or before July 6, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12478 Filed 6-14-21; 8:45 am]
BILLING CODE 8011-01-P
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