Notice2021-14904
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 Remove References and Fees Associated With the 10Gb Fiber Connection
Primary source
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Published
July 14, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 132 (Wednesday, July 14, 2021)</title>
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[Federal Register Volume 86, Number 132 (Wednesday, July 14, 2021)]
[Notices]
[Pages 37200-37202]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-14904]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92348; File No. SR-PEARL-2021-28]
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 Remove References and Fees Associated
With the 10Gb Fiber Connection
July 8, 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 June 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 proposes to amend the MIAX Pearl Options Fee Schedule
(the ``Fee Schedule'') to remove text pertaining to 10 gigabit (``Gb'')
connectivity that will no longer be offered by the Exchange and the
corresponding fees for those services.
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 proposes to amend the Fee Schedule to remove
references and fees for the 10Gb fiber connection for Members \3\ and
non-Members. The Exchange will cease offering 10Gb connectivity as of
July 1, 2021. The Exchange will continue to offer 10Gb ultra-low
latency (``ULL'') connectivity.
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\3\ ``Member'' means an individual or organization that is
registered with the Exchange pursuant to Chapter II of Exchange
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.
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The Exchange currently offers various bandwidth alternatives for
connectivity to the Exchange, including its primary and secondary
facilities. These connectivity offerings consist of a 1Gb fiber
connection, a 10Gb fiber connection, and a 10Gb ULL fiber connection.
The Exchange's MIAX Express Network Interconnect (``MENI'') can be
configured to provide Members and non-Members of the Exchange network
connectivity to the trading platforms, market data systems, test
systems, and disaster recovery facilities of both the Exchange and its
affiliate, Miami International Securities Exchange, LLC (``MIAX''), via
a single, shared connection.
On February 4, 2021, the Exchange issued a notice that MIAX Pearl
and MIAX would decommission the 10Gb fiber connection in June 2021.\4\
This
[[Page 37201]]
means that all Members and non-Members utilizing the 10Gb fiber
connection would have to migrate their connections to either the 1Gb
fiber connection or the 10Gb ULL fiber connection. Members and non-
Members utilizing the 10Gb fiber connection could perform the migration
from April 12, 2021 until June 30, 2021.
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\4\ See <a href="https://www.miaxoptions.com/alerts/2021/02/04/miax-options-and-miax-pearl-options-deprecation-10g-ll-infrastructure-and">https://www.miaxoptions.com/alerts/2021/02/04/miax-options-and-miax-pearl-options-deprecation-10g-ll-infrastructure-and</a>. The Exchanged issued two subsequent alerts on March 4, 2021 and
March 29, 2021 reminding market participants of its intent to
decommission 10 Gb connectivity in June 2021. See <a href="https://www.miaxoptions.com/alerts/2021/03/04/miax-options-and-miax-pearl-options-reminder-and-updates-deprecation-10g-ll">https://www.miaxoptions.com/alerts/2021/03/04/miax-options-and-miax-pearl-options-reminder-and-updates-deprecation-10g-ll</a> and <a href="https://www.miaxoptions.com/alerts/2021/03/29/miax-options-and-miax-pearl-options-3rd-reminder-deprecation-10g-ll">https://www.miaxoptions.com/alerts/2021/03/29/miax-options-and-miax-pearl-options-3rd-reminder-deprecation-10g-ll</a>.
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The Exchange now proposes to amend the Fee Schedule to remove
references and fees associated with the 10Gb fiber connection. The
Exchange proposes to remove the references to the 10Gb fiber connection
from the tables in Sections 4)c)-d) of the Fee Schedule, which are
related to Member and non-Member network connectivity testing and
certification fees. The Exchange will continue to offer the 10 Gb ULL
connection and does not propose to amend the fees for Member and non-
Member network connectivity testing and certification. The Exchange
also proposes to amend the tables in Sections 5)a)-b) of the Fee
Schedule, related to Member and non-Member monthly network connectivity
fees, to remove the fee columns for the 10Gb fiber connection.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \5\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that
it is an equitable allocation of reasonable 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.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes the elimination of the 10Gb fiber connection
fee and related rule text is reasonable because the Exchange will no
longer offer this functionality as of July 1, 2021, thus making the
fees irrelevant going forward. The Exchange notes that, because the
10Gb fiber connection is outdated technology and that Members and non-
Members have other connectivity options, the Exchange planned to phase
out this connectivity service in its entirety on or before July 1,
2021.\7\
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\7\ See supra note 4.
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The Exchange believes the proposed change is reasonable, equitably
allocated and not unfairly discriminatory because the Exchange has
experienced a steady decrease in the number of Members and non-Members
that purchase the 10Gb connection over the past few years. Further, as
a consequence of more firms choosing to purchase the 10Gb ULL
connection over the 10Gb connection, the Exchange believes that, if it
did not decommission the 10Gb connections, it would be unable to
provide the current level of support to those firms that have such
connections. The Exchange notes that from the time the Exchange
initially issued its notice that it would decommission the 10Gb
connection to now, 11 Members and 2 non-Members migrated their 10Gb
connections to 10Gb ULL connections.\8\ The Exchange also believes the
proposed changes are reasonable as the Exchange provided Members and
non-Members six months' notice that the Exchange planned to make these
changes. During that time, Members and non-Members had the ability to
make the business decision to: (1) Switch to the Exchange's 1Gb or 10Gb
ULL connections; (2) access the Exchange through another Exchange
Member as a Sponsored User; \9\ or (3) no longer access the Exchange.
Market participants can also choose from 15 competing options markets.
In the event that a market participant views the Exchange's
connectivity and access fees as more or less attractive than competing
markets, that market participant can choose to connect to the Exchange
indirectly or may choose not to connect to the Exchange and connect
instead to one or more of the other 15 options markets.
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\8\ The Exchange notes that no Member or non-Member transferred
from the 10Gb connection to a 1Gb connection and no Member or non-
Member disconnected from the Exchange.
\9\ See Exchange Rule 210.
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Further, the Exchange notes that there is no regulatory or legal
requirement for any Member or non-Member to connect to the Exchange. It
is a business decision of each Member and non-Member whether to connect
to the Exchange and, if so, whether to connect via 1Gb, 10Gb, or 10Gb
ULL connection. The Exchange believes the proposed rule change to
remove the fees and rule text related to the 10Gb fiber connection is
reasonable as the Exchange has observed a minimal amount of Members and
non-Members utilize the 10Gb fiber connection and, therefore, the
continuation of this connectivity alternative does not warrant the
infrastructure and ongoing Systems maintenance required to support this
connectivity alternative. The Exchange notes that its affiliate, MIAX
Emerald, LLC (``MIAX Emerald''), never offered the 10Gb fiber
connection as a connectivity alternative. The Exchange believes that
the proposed rule change is equitable and not unfairly discriminatory
because the Exchange will no longer offer the 10Gb connection to all
Members and non-Members while continuing to offer both 1Gb and 10Gb ULL
connectivity to all.
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. The proposed changes eliminate
the fees and related rule text that apply to the 10Gb fiber connection,
which the Exchange will no longer offer as of July 1, 2021. As noted
above, while there are a very small number of Members and non-Members
that utilized the 10Gb fiber connection, Members and non-Members are
not required to utilize this connectivity alternative. As discussed
above, decommissioning of the 10Gb connection should have minimal to no
impact on Members and non-Members as those Members that utilize a 10Gb
connection have other means to access the Exchange, either by to
transitioning to the 1Gb or 10Gb ULL connection, or access the Exchange
through a Sponsored User. Accordingly, the Exchange does not believe
that its proposal imposes any burden on intra-market competition, or
places certain market participants at a relative disadvantage compared
to other market participants.
In terms of inter-market competition, 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, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges. Because competitors are free to modify their own fees in
response, the Exchange believes that the degree to which fee changes in
this market may impose any burden on competition is extremely limited.
[[Page 37202]]
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\
thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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.
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#82f0f7eee7afe1edefefe7ecf6f1c2f1e7e1ace5edf4"><span class="__cf_email__" data-cfemail="b0c2c5dcd59dd3dfddddd5dec4c3f0c3d5d39ed7dfc6">[email protected]</span></a>. Please include
File Number SR-PEARL-2021-28 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.
All submissions should refer to File Number SR-PEARL-2021-28. 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-2021-28 and should be submitted on
or before August 4, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-14904 Filed 7-13-21; 8:45 am]
BILLING CODE 8011-01-P
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