Notice2021-25757
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule
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Published
November 26, 2021
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 86 Issue 225 (Friday, November 26, 2021)</title>
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[Federal Register Volume 86, Number 225 (Friday, November 26, 2021)]
[Notices]
[Pages 67559-67562]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25757]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93631; File No. SR-PEARL-2021-56]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee
Schedule
November 19, 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 November 8, 2021, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II 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 Options
Fee Schedule (the ``Fee Schedule'').
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 amend the
exchange groupings of options exchanges within the routing fee table in
Section 1)b) of the Fee Schedule, Fees for Customer Orders Routed to
Another Options Exchange. The Exchange initially filed this proposal on
October 27, 2021 (SR-PEARL-2021-51) and withdrew such filing on
November 8, 2021. The Exchange proposes to implement the fee change
effective November 8, 2021.
Currently, the Exchange assesses routing fees based upon (i) the
origin type of the order, (ii) whether or not it is an order for
standard option classes in the Penny Interval Program \3\ (``Penny
classes'') or an order for standard option classes which are not in the
Penny Interval Program (``Non-Penny classes'')
[[Page 67560]]
(or other explicitly identified classes), and (iii) to which away
market it is being routed. This assessment practice is identical to the
routing fees assessment practice currently utilized by the Exchange's
affiliates, Miami International Securities Exchange, LLC (``MIAX'') and
MIAX Emerald, LLC (``MIAX Emerald''). This is also similar to the
methodology utilized by the Cboe BZX Exchange, Inc. (``Cboe BZX
Options''), a competing options exchange, in assessing routing fees.
Cboe BZX Options has exchange groupings in its fee schedule, similar to
those of the Exchange, whereby several exchanges are grouped into the
same category, dependent upon the order's origin type and whether it is
a Penny or Non-Penny class.\4\
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\3\ See Securities Exchange Act Release No. 88992 (June 2,
2020), 85 FR 35142 (June 8, 2020) (SR-PEARL-2020-06) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Exchange Rule 404, Series of Option Contracts Open for
Trading, and Rule 510, Minimum Price Variations and Minimum Trading
Increments, To Conform the Rules to Section 3.1 of the Plan for the
Purpose of Developing and Implementing Procedures Designed To
Facilitate the Listing and Trading of Standardized Options).
\4\ See Cboe U.S. Options Fee Schedules, BZX Options, effective
August 2, 2021, ``Fee Codes and Associated Fees,'' at <a href="https://www.cboe.com/us/options/membership/fee_schedule/bzx/">https://www.cboe.com/us/options/membership/fee_schedule/bzx/</a>.
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As a result of conducting a periodic review of the current
transaction fees and rebates charged by away markets, the Exchange has
determined to amend the exchange groupings of options exchanges within
the routing fee table to better reflect the associated costs of routing
customer orders to those options exchanges for execution.\5\ In
particular, the Exchange proposes to amend the exchange groupings in
the first row of the table identified as, ``Routed, Priority Customer,
Penny Program,'' to relocate Nasdaq BX Options from the first row of
the table to the second, also identified as ``Routed, Priority
Customer, Penny Program.'' The impact of this proposed change will be
that the routing fee for Priority Customer orders in the Penny Program
that are routed to Nasdaq BX Options will increase from $0.15 to $0.65.
The purpose of the proposed rule change is to adjust the routing fee
for certain orders routed to Nasdaq BX Options to reflect the
associated costs for that routed execution.
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\5\ Nasdaq BX established a Customer Taker fee of $0.46 in Penny
Classes and $0.65 in Non-Penny Classes. See Securities Exchange Act
Release No. 91473 (April 5, 2021), 86 FR 18562 (April 9, 2021) (SR-
BX-2021-009). Nasdaq BX recently increased the Customer Taker fee in
Non-Penny Classes from $0.65 to $0.79. See Securities Exchange Act
Release No. 93121 (September 24, 2021), 86 FR 54259 (September 30,
2021) (SR-BX-2021-040).
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Next, the Exchange proposes to amend the exchange groupings in the
third row of the table, identified as ``Routed, Priority Customer, Non-
Penny Program,'' to relocate Nasdaq BX Options from the third row of
the table to the fourth, also identified as ``Routed, Priority
Customer, Non-Penny Program.'' The impact of this proposed change will
be that the routing fee for Priority Customer orders in the Non-Penny
Program that are routed to Nasdaq BX Options will increase from $0.15
to $1.00. The purpose of the proposed rule change is to adjust the
routing fee for certain orders routed to Nasdaq BX Options to reflect
the associated costs for that routed execution.
Next, the Exchange proposes to amend the exchange groupings in the
sixth row of the table, identified as ``Routed, Public Customer that is
not a Priority Customer, Non-Penny Program,'' to relocate Nasdaq ISE
from the exchange groupings in the sixth row of the table to the
exchange groupings in the seventh row of the table, also identified as
``Routed, Public Customer that is not a Priority Customer, Non-Penny
Program.'' The impact of this proposed change will be that the Exchange
routing fee for Public Customer orders that are not Priority Customer
orders in the Non-Penny Program that are routed to Nasdaq ISE will
increase from $1.00 to $1.15. The purpose of the proposed rule change
is to adjust the routing fee for certain orders routed to Nasdaq ISE to
reflect the associated costs for that routed execution.
Finally, the Exchange proposes to amend the exchange groupings in
the seventh row of the table, identified as ``Routed, Public Customer
that is not a Priority Customer, Non-Penny Program,'' to relocate
Nasdaq BX Options and MIAX Emerald, to the eighth row of the table,
also identified as, ``Routed, Public Customer that is not a Priority
Customer, Non-Penny Program.'' The impact of this proposed change will
be that the routing fee for Public Customer orders that are not
Priority Customer orders in the Non-Penny Program that are routed to
Nasdaq BX Options or MIAX Emerald will increase from $1.15 to $1.25.
The purpose of the proposed rule change is to adjust the routing fee
for certain orders routed to Nasdaq BX Options or MIAX Emerald to
reflect the associated costs for that routed execution. The Exchange
notes that no options exchanges were removed from the routing fee table
entirely, with the only change being the change in categorization.
Accordingly, with the proposed change, the routing fee table will
be as follows:
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Description Fees
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Routed, Priority Customer, Penny Program, to: NYSE $0.15
American, BOX, Cboe, Cboe EDGX Options, Nasdaq MRX,
MIAX, Nasdaq PHLX (except SPY).........................
Routed, Priority Customer, Penny Program, to: NYSE Arca 0.65
Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq
ISE, NOM, Nasdaq PHLX (SPY only), MIAX Emerald, Nasdaq
BX Options.............................................
Routed, Priority Customer, Non-Penny Program, to: NYSE 0.15
American, BOX, Cboe, Cboe EDGX Options, Nasdaq ISE,
Nasdaq MRX, MIAX, Nasdaq PHLX..........................
Routed, Priority Customer, Non-Penny Program, to: NYSE 1.00
Arca Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX,
NOM, MIAX Emerald, Nasdaq BX Options...................
Routed, Public Customer that is not a Priority Customer, 0.65
Penny Program, to: NYSE American, NYSE Arca Options,
Cboe BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX
Options, Nasdaq GEMX, Nasdaq ISE, Nasdaq MRX, MIAX
Emerald, MIAX, NOM, Nasdaq PHLX, Nasdaq BX Options.....
Routed, Public Customer that is not a Priority Customer, 1.00
Non-Penny Program, to: NYSE American, MIAX, Cboe,
Nasdaq PHLX, Cboe EDGX Options.........................
Routed, Public Customer that is not a Priority Customer, 1.15
Non-Penny Program, to: Cboe C2, NOM, BOX, Nasdaq ISE...
Routed, Public Customer that is not a Priority Customer, 1.25
Non-Penny Program, to: Cboe BZX Options, NYSE Arca
Options, Nasdaq GEMX, Nasdaq MRX, Nasdaq BX Options,
MIAX Emerald...........................................
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In determining to amend its routing fees the Exchange took into
account transaction fees and rebates assessed by the away markets to
which the Exchange routes orders, as well as the Exchange's clearing
costs, administrative, regulatory, and technical costs associated with
routing orders to an away market. The Exchange uses unaffiliated
routing brokers to route orders to the away markets; the costs
associated with the use of these services
[[Page 67561]]
are included in the routing fees specified in the Fee Schedule. This
routing fees structure is not only similar to the Exchange's
affiliates, MIAX and MIAX Emerald, but is also comparable to the
structure in place on at least one other competing options exchange,
such as Cboe BZX Options.\6\ The Exchange's routing fee structure
approximates the Exchange's costs associated with routing orders to
away markets. The per-contract transaction fee amount associated with
each grouping closely approximates the Exchange's all-in cost (plus an
additional, non-material amount) \7\ to execute that corresponding
contract at that corresponding exchange. The Exchange notes that in
determining whether to adjust certain groupings of options exchanges in
the routing fee table, the Exchange considered the transaction fees and
rebates assessed by away markets, and determined to amend the grouping
of exchanges that assess transaction fees for routed orders within a
similar range. This same logic and structure applies to all of the
groupings in the routing fee table. By utilizing the same structure
that is utilized by the Exchange's affiliates, MIAX and MIAX Emerald,
the Exchange's Members \8\ will be assessed routing fees in a similar
manner. The Exchange believes that this structure will minimize any
confusion as to the method of assessing routing fees between the three
exchanges. The Exchange notes that its affiliates, MIAX and MIAX
Emerald, will file to make the same proposed routing fee changes
contained herein.
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\6\ See supra note 4. The Cboe BZX Options fee schedule has
exchange groupings, whereby several exchanges are grouped into the
same category, dependent on the order's Origin type and whether it
is a Penny or Non-Penny class. For example, Cboe BZX Options fee
code RR covers routed customer orders in Non-Penny classes to NYSE
Arca, Cboe C2, Nasdaq ISE, Nasdaq Gemini, MIAX Emerald, MIAX Pearl,
or NOM, with a single fee of $1.25 per contract.
\7\ This amount is to cover de minimis differences/changes to
away market fees (i.e., minor increases or decreases) that would not
necessitate a fee filing by the Exchange to re-categorize the away
exchange into a different grouping. Routing fees are not intended to
be a profit center for the Exchange and the Exchange's target
regarding routing fees and expenses is to be as close as possible to
net neutral.
\8\ The term ``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 the Definitions section of
the Fee Schedule and Exchange Rule 100.
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2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \9\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \10\ in particular, in
that it is an equitable allocation of reasonable dues, 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 \11\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed change to the exchange groupings
of options exchanges within the routing fee table furthers the
objectives of Section 6(b)(4) of the Act and is reasonable, equitable
and not unfairly discriminatory because the proposed change will
continue to apply in the same manner to all Members that are subject to
routing fees. The Exchange believes the proposed change to the routing
fee table exchange groupings furthers the objectives of Section 6(b)(5)
of the Act and is designed to promote just and equitable principles of
trade and is not unfairly discriminatory because the proposed change
seeks to recoup costs that are incurred by the Exchange when routing
customer orders to away markets on behalf of Members and does so in the
same manner to all Members that are subject to routing fees. The costs
to the Exchange to route orders to away markets for execution primarily
includes transaction fees and rebates assessed by the away markets to
which the Exchange routes orders, in addition to the Exchange's
clearing costs, administrative, regulatory and technical costs. The
Exchange believes that the proposed re-categorization of certain
exchange groupings would enable the Exchange to recover the costs it
incurs to route orders to Nasdaq BX Options, Nasdaq ISE, and MIAX
Emerald. 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 the corresponding contract at the
corresponding exchange.
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 Exchange believes its
proposed re-categorization of certain exchange groupings is intended to
enable the Exchange to recover the costs it incurs to route orders to
away markets, particularly Nasdaq BX Options and Nasdaq ISE. The
Exchange does not believe that this proposal imposes any unnecessary
burden on competition because it seeks to recoup costs incurred by the
Exchange when routing orders to away markets on behalf of Members and
at least one other options exchange has a similar routing fees
structure.\12\
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\12\ See supra note 6.
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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 is effective upon filing pursuant to
Section 19(b)(3)(A) \13\ of the Act and subparagraph (f)(2) of Rule
19b-4 \14\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 15 U.S.C. 78s(b)(2)(B).
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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#156760797038767a7878707b6166556670763b727a63"><span class="__cf_email__" data-cfemail="1c6e697079317f7371717972686f5c6f797f327b736a">[email protected]</span></a>. Please include
File Number SR-PEARL-2021-56 on the subject line.
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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-2021-56. 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-2021-56 and should be submitted on
or before December 17, 2021.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25757 Filed 11-24-21; 8:45 am]
BILLING CODE 8011-01-P
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