Notice2021-20553
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Pearl Equities Fee Schedule Relating to Disaster Recovery Facility 1 Gigabit ULL per Connection Fee for Members
Primary source
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Published
September 23, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 182 (Thursday, September 23, 2021)</title>
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[Federal Register Volume 86, Number 182 (Thursday, September 23, 2021)]
[Notices]
[Pages 52940-52943]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-20553]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93047; File No. SR-PEARL-2021-42]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
Pearl Equities Fee Schedule Relating to Disaster Recovery Facility 1
Gigabit ULL per Connection Fee for Members
September 17, 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 September 10, 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 fee schedule
applicable for MIAX Pearl Equities, an equities trading facility of the
Exchange (the ``Fee Schedule'').\3\
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\3\ See Exchange Rule 1901.
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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
[[Page 52941]]
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 Section 2) of the Fee Schedule to:
(1) Waive certain monthly connectivity fees for Equity Members \4\ who
connect to the Exchange's disaster recovery facility; and (2) make a
minor, non-substantive correction to the headings for Sections 2)a) and
b). The Exchange originally filed this proposal on September 1, 2021
(SR-PEARL-2021-39). The Exchange has withdrawn SR-PEARL-2021-39 and
refiled this proposal.
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\4\ The term ``Equity Member'' is a Member authorized by the
Exchange to transact business on MIAX Pearl Equities. See Exchange
Rule 1901.
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Fee Waiver for Connection to the Disaster Recovery Facility
The Exchange proposes to amend Section 2)a) of the Fee Schedule to
waive certain monthly connectivity fees for Equity Members who connect
to the Exchange's disaster recovery facility for testing purposes only,
as described below. Currently, the Exchange assesses monthly fees of
$1,000 per connection and $3,000 per connection for Equity Members that
connect to the Exchange's disaster recovery facility via a 1 Gigabit
(``Gb'') ultra-low latency (``ULL'') connection or a 10Gb ULL
connection, respectively.
The Exchange now proposes to waive the disaster recovery facility
1Gb ULL monthly fee for a single 1Gb ULL connection for each Equity
Member that is designated by the Exchange to participate in required
testing in accordance with Regulation Systems Compliance and Integrity
(``Regulation SCI''),\5\ and pursuant to Chapter III of the Exchange's
Rules, so long as that same single connection is used for Regulation
SCI testing purposes only. The Exchange proposes that this waiver apply
to each month in which the designated Equity Member is required to
maintain that single 1Gb ULL connection to the disaster recovery
facility for Regulation SCI testing purposes, as described above.
Accordingly, each Equity Member that is required to connect to the
Exchange's disaster recovery facility in accordance with Regulation SCI
and Chapter III of the Exchange's Rules and who uses that connection
solely to fulfill those testing requirements, will receive the fee
waiver for a single 1Gb ULL connection. The proposed fee waiver will
not be available to an Equity Member that utilizes that same 1Gb ULL
connection to the disaster recovery facility for trading in addition to
Regulation SCI testing purposes.
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\5\ See Securities Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72252 (December 5, 2014) (``SCI Adopting Release'').
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The Exchange notes that the proposed waiver will apply uniformly to
Equity Members who currently maintain a 1Gb ULL connection to the
disaster recovery facility and those Equity Members that newly elect to
connect to the disaster recovery facility. Again, both current and
future 1Gb ULL connections must be used for Regulation SCI testing
purposes only. The proposed fee waiver will only apply to a single 1Gb
ULL connection to the disaster recovery facility and each additional
1Gb ULL connection to the disaster recovery facility will continue to
be charged the current monthly rate of $1,000 per connection. The
Exchange does not propose to waive the monthly network connectivity fee
for the 10Gb ULL connection to the disaster recovery facility or make
any other changes to network connectivity fees.
Technical Corrections to the Fee Schedule
Next, the Exchange proposes to amend the headings for Sections 2)a)
and b) of the Fee Schedule to make minor, non-substantive edits.
Currently, the headings for Sections 2)a) and b) of the Fee Schedule
read as follows, ``Monthly Member Network Connectivity Fee,'' and
``Monthly Non-Member Network Connectivity Fee,'' respectively. The
Exchange now proposes to make a minor, non-substantive correction to
amend each heading to make the word ``Fee'' plural to reflect that more
than one fee is provided for in each section. With the proposed
changes, the headings for Sections 2)a) and b) of the Fee Schedule will
read as follows, ``Monthly Member Network Connectivity Fees,'' and
``Monthly Non-Member Network Connectivity Fees,'' respectively.
Implementation
The proposed changes are immediately effective. The Exchange does
not propose any other changes to the MIAX Pearl Equities Fee Schedule.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \6\ in general, and furthers
the objectives of Section 6(b)(4) of the Act,\7\ in that it is an
equitable allocation of reasonable dues, fees and other charges among
Exchange members and issuers and other persons using its facilities,
and 6(b)(5) of the Act,\8\ in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanisms of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(1) and (b)(5).
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Equity Members connect to the disaster recovery facility for
several reasons, including: (1) To fulfill the requirement to
participate in the Exchange's annual business continuity and disaster
recovery (``BC/DR'') testing in connection with the requirements of
Regulation SCI; \9\ and (2) for redundancy and trading purposes in a
fail over situation. With respect to the BC/DR plans of the Exchange
(defined as an ``SCI entity'' under Regulation SCI), including the
Exchange's backup systems, paragraph (a) of Rule 1004 of Regulation SCI
requires each SCI entity to, ``[e]stablish standards for the
designation of those members or participants that the SCI entity
reasonably determines are, taken as a whole, the minimum necessary for
the maintenance of fair and orderly markets in the event of the
activation of such plans.'' \10\ Paragraph (b) of Rule 1004 further
requires each SCI entity to ``[d]esignate members or participants
pursuant to the standards established in paragraph (a) of [Rule 1004]
and require participation by such designated members or participants in
scheduled functional and performance testing of the operation of such
plans, in the manner and frequency specified by the SCI entity,
provided that such frequency shall not be less than once every 12
months.'' \11\ Pursuant to Rule 1004 of Regulation SCI, each Equity
Member of the Exchange is required to connect to the disaster recovery
facility and take part in the annual testing. This means that, as
currently contemplated in the Fee Schedule, each Equity Member must
utilize and purchase at least one 1Gb ULL connection to the disaster
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recovery facility to fulfill this testing requirement. Accordingly, the
Exchange believes it is reasonable to waive the monthly fee for Equity
Members that are designated by the Exchange for required testing in
accordance with Regulation SCI, and pursuant to Chapter III of the
Exchange's Rules, where that same single connection is used for
Regulation SCI testing purposes only.
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\9\ See supra note 5.
\10\ 17 CFR 242.1004(a).
\11\ 17 CFR 242.1004(b).
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The Exchange believes that its proposal is reasonable because it
waives the monthly fee for Equity Members that are required to connect
to the disaster recovery facility and only utilize one 1Gb ULL
connection solely to fulfill the annual BC/DR testing requirements
under Rule 1004 of Regulation SCI and do not use that same connection
for trading purposes. The Exchange believes that the proposed waiver is
reasonable to further ensure Equity Members that need to participate in
Exchange testing are able to do so without also incurring a charge for
the required connection. As set forth in the SCI Adopting Release,
``SROs have the authority, and legal responsibility, under Section 6 of
the Exchange Act, to adopt and enforce rules (including rules to comply
with Regulation SCI's requirements relating to BC/DR testing)
applicable to their members or participants that are designed to, among
other things, foster cooperation and coordination with persons engaged
in regulating, clearing, settling, processing information with respect
to, and facilitating transactions in securities, 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.'' \12\ The Exchange believes that this proposal is consistent
with such authority and legal responsibility.
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\12\ See SCI Adopting Release, supra note 5, at 72350.
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The Exchange believes that the proposal represents an equitable
allocation of reasonable dues, fees, and other charges and is not
unreasonably discriminatory in that it applies uniformly to all
similarly situated Equity Members. The proposed waiver for a single 1Gb
ULL connection to the disaster recovery facility will apply uniformly
to Equity Members designated by the Exchange to fulfill their
Regulation SCI testing requirements. Specifically, an Equity Member who
currently has a 1Gb ULL connection to the disaster recovery facility
and only utilizes such connection for Regulation SCI testing purposes
will receive the fee waiver for that single connection going forward.
Likewise, any Equity Member newly designated by the Exchange for
Regulation SCI testing who does not currently have a 1Gb ULL connection
will now be able to utilize a single 1Gb ULL connection to the disaster
recovery facility for free, so long as that Equity Member only utilizes
the new connection for Regulation SCI testing purposes only, as
described herein. The Exchange does not propose to amend any of the
rates for its connectivity fees.
Further, the Exchange believes that the proposal represents an
equitable allocation of reasonable dues, fees, and other charges and is
not unreasonably discriminatory to firms that utilize the 10Gb ULL
connection to the disaster recovery facility because those firms likely
not only utilize those connections for testing, but also trading and
redundancy purposes due to the increased size of the connection. Each
Equity Member that has a 10Gb ULL connection to the disaster recovery
facility is able to utilize a single 1Gb ULL connection solely for
Regulation SCI testing purposes if that firm so desired.
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \13\ in general, and furthers the objectives of Section
6(b)(4) of the Act \14\ in particular, in that it is an equitable
allocation of reasonable fees and not unfairly discriminatory because
non-Members do not have the same requirements as Equity Members
relating to Regulation SCI's requirements for BC/DR testing. As such,
non-Members are not required to connect to the disaster recovery
facility at all. It is a business decision of each non-Member whether
to connect to the disaster recovery facility and, if so, whether to
utilize a 1Gb ULL connection and/or a 10Gb ULL connection. Further,
non-Members themselves can and often do have their own customer base
that utilizes the non-Member's connection to the Exchange. However,
that non-Member can charge its customers any amount it wants and recoup
its costs to connect to the Exchange.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed fee change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Inter-Market Competition
The Exchange believes that the proposed rule change will not impose
any burden on inter-market competition. The proposed rule change is not
a competitive filing but rather is designed to ensure that Equity
Members that are designated by the Exchange and required to connect to
the disaster recovery facility solely to fulfill their annual BC/DR
testing requirements under Rule 1004 of Regulation SCI are able to do
so. Accordingly, the Exchange believes that the proposed change will
not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposal is not a competitive proposal but rather is necessary for the
Exchange and designated Equity Members to comply with annual testing
requirements of Regulation SCI.
Intra-Market Competition
The Exchange believes that its proposal will not impose any undue
burden on intra-market competition because the fee waiver applies
equally to all Equity Members that only utilize a single 1Gb ULL
connection to the disaster recovery facility to participate in
Regulation SCI testing. The fee waiver will apply to designated Equity
Members who currently have at least one 1Gb ULL connection to the
disaster recovery facility and to newly designated Equity Members who
all have to participate in Regulation SCI testing. The Exchange
believes the proposal does not impose any undue burden on intra-market
competition between Equity Members who utilize 10Gb ULL connections to
the disaster recovery facility because those firms utilize the 10Gb ULL
connections for redundancy and trading purposes throughout the course
of the year. Each Equity Member with a 10Gb ULL connection that is
designated by the Exchange to participate in the annual BC/DR testing
already uses that connection for the Regulation SCI testing.
Additionally, the Exchange believes that its proposal will not impose
any undue burden on intra-market competition on non-Members because
non-Members do not have the same requirements as Equity Members
relating to Regulation SCI's requirements for BC/DR testing. Non-
Members are not required to connect to the disaster recovery facility
at all and it is a business decision of each non-Member whether to
connect to the disaster recovery facility and, if so, whether to
utilize a 1Gb ULL
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connection and/or a 10Gb ULL connection.
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,\15\ and Rule 19b-4(f)(2) \16\ 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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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-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#4b393e272e66282426262e253f380b382e28652c243d"><span class="__cf_email__" data-cfemail="5725223b327a34383a3a323923241724323479303821">[email protected]</span></a>. Please include
File Number SR-PEARL-2021-42 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-2021-42. 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-2021-42 and should be submitted on
or before October 14, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-20553 Filed 9-22-21; 8:45 am]
BILLING CODE 8011-01-P
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