Notice2022-08568
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 2600, Hours of Trading and Trading Days, and Exchange Rule 2615, Opening Process for Equity Securities
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 22, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 78 (Friday, April 22, 2022)</title>
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[Federal Register Volume 87, Number 78 (Friday, April 22, 2022)]
[Notices]
[Pages 24214-24218]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-08568]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94735; File No. SR-PEARL-2022-14]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 2600, Hours of Trading and Trading Days, and Exchange Rule 2615,
Opening Process for Equity Securities
April 18, 2022.
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 April 8, 2022, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
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 proposed rule change to amend Exchange
Rule 2600, Hours of Trading and Trading Days, and Exchange Rule 2615,
Opening Process for Equity Securities.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxoptions.com/rule-filings/pearl">https://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 allows for the trading of equity securities on its
equity trading platform (referred to herein as ``MIAX Pearl
Equities''). The purpose of the proposed rule change is to: (i) Accept
prior to 9:30 a.m. Eastern Time orders in equity securities that
include a Post Only \3\ instruction and a time-in-force of Regular
Hours Only (``RHO''),\4\ and orders that include a Minimum Execution
Quantity \5\ instruction and a time-in-force of RHO; and (ii) accept
and retain such orders when trading in a security is halted. This is
similar to functionality on other equity exchanges.\6\ Another purpose
of the proposed rule change is to amend Exchange Rule 2615(a)(1) to
provide additional specificity concerning the handling of Limit Orders
\7\ with a Reserve Quantity \8\ during the Exchange's opening process.
This change is based on the rules of other equity exchanges.\9\
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\3\ In sum, an order with a Post Only instruction is a non-
routable order that will be ranked and executed on the MIAX Pearl
Equities Book pursuant to Exchange Rules 2616 and 2617(a)(4). See
Exchange Rule 2614(c)(2) for a more detailed description of the Post
Only instruction. Exchange Rule 1901 defines the term ``MIAX Pearl
Equities Book'' as ``the electronic book of orders in equity
securities maintained by the System.''
\4\ In sum, an order with a time-in-force of RHO is designated
for execution only during Regular Trading Hours, which includes the
opening process for equity securities. See Exchange Rule 2614(b)(2)
for a more detailed description of the RHO instruction.
\5\ In sum, Minimum Execution Quantity is an instruction a User
may attach to a non-displayed order requiring the System to execute
the order only to the extent that a minimum quantity can be
satisfied. See Exchange Rule 2614(c)(7) for a more detailed
description of the Minimum Execution Quantity instruction.
\6\ See, e.g., Cboe BYX Exchange, Inc. (``BYX'') Rules 11.1(a)
and 11.23(a)(1), Cboe BZX Exchange, Inc. (``BZX'') Rules 11.1(a) and
11.24(a)(1), Cboe EDGA Exchange, Inc. (``EDGA'') and Cboe EDGX
Exchange, Inc. (``EDGX'', collectively with BYX, BZX, and EDGA, the
``Cboe Equity Exchanges'') Rules 11.1(a)(1) and 11.7(a)(1) (allowing
for the entry of Post Only and Minimum Execution Quantity order with
a time-in-force of Day to be entered prior to 9:30 a.m. Eastern Time
and not participate in their respective opening processes). See also
e.g., Investors Exchange LLC (``IEX'') Rules 11.190(b)(11)(B),
11.190(c)(3), and 11.190(b)(11)(F) (allowing for the entry of
Minimum Quantity Orders with a time-in-force of Day prior to 9:30
a.m. Eastern Time and allowing those orders to bypass their opening
process) and New York Stock Exchange LLC (``NYSE'') Rule 7.18(b)(1),
NYSE Arca LLC (``NYSE Arca'') Rule 7.18-E(b)(1), NYSE American LLC
(``NYSE American'') 7.18E(b)(1), NYSE National LLC (``NYSE
National'') Rule 7.18(b)(1), and NYSE Chicago LLC (``NYSE Chicago'',
collectively with NYSE, NYSE Arca, NYSE American, NYSE National, and
NYSE Chicago, the ``NYSE Equity Exchanges'') Rule 7.18(b)(1) (not
including ALO orders in the list of order types the exchanges would
cancel during a halt).
\7\ In sum, a Limit Order is an order to buy or sell a stated
amount of a security at a specified price or better. See Exchange
Rule 2614(a) for a more detailed description of Limit Orders.
\8\ In sum, Reserve Quantity is an instruction a User may attach
to an order where a portion of the order is displayed (``Displayed
Quantity'') and with a portion of the order non-displayed (``Reserve
Quantity''). See Exchange Rule 2614(c)(8) for a more detailed
description of the Reserve Quantity instruction.
\9\ See BZX Rule 11.24(a)(2), BYX Rule 11.23(a)(2), and EDGA and
EDGX Rules 11.7(a)(2).
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Acceptance of Orders Before 9:30 a.m. Eastern Time
Exchange Rule 2600(a) provides for the entry of orders starting at
7:30 a.m. Eastern Time and that orders entered between 7:30 a.m. and
9:30 a.m. Eastern Time are not eligible for execution until the start
of Regular Trading Hours.\10\ Exchange Rule 2600(a) further provides
that the Exchange will not accept the following orders prior to 9:30
a.m. Eastern Time: Orders designated as Post Only with a time-in-force
of RHO, Intermarket Sweep Orders (``ISO''),\11\ all orders with a time-
in-force of
[[Page 24215]]
Immediate-or-Cancel (``IOC''),\12\ and orders that include a Minimum
Execution Quantity instruction.
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\10\ See Exchange Rule 1901 defines the term ``Regular Trading
Hours'' as ``the time between 9:30 a.m. and 4:00 p.m. Eastern
Time.''
\11\ ISOs are defined under Rule 600(b)(38) of Regulation NMS.
17 CFR 242.600(b)(38). See Exchange Rule 2614(d) for a more detailed
description of ISOs on MIAX Pearl Equities.
\12\ In sum, an order with a time-in-force of IOC is to be
executed in whole or in part as soon as such order is received. See
Exchange Rule 2614(b)(1) for a more detailed description of the
time-in-force instruction of IOC.
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The Exchange currently offers two time-in-force instructions, IOC
and RHO. The Exchange understands that some Members now wish to enter
orders with a time-in-force of RHO that include either a Post Only
instruction or Minimum Execution Quantity instruction prior to 9:30
a.m. Eastern Time. The Exchange, therefore, proposes to amend Exchange
Rule 2600(a) to accept prior to 9:30 a.m. Eastern Time orders that
include a time-in-force of RHO and either a Post Only instruction or
Minimum Execution Quantity instruction. The Exchange notes that this
proposal is limited to Limit Orders and Midpoint Peg Orders \13\ with a
time-in-force of RHO that include either a Post Only or Minimum
Execution Quantity instruction. Market Orders \14\ and orders that
include a time-in-force of IOC and Minimum Execution Quantity
instruction will continue to be rejected prior to 9:30 a.m. Eastern
Time.\15\
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\13\ In sum, a Midpoint Peg Order is a non-displayed Limit Order
that is assigned a working price pegged to the midpoint of the
Protected Best Bid and Offer (``PBBO''). See Exchange Rule
2614(a)(3) for a more detailed description of Midpoint Peg Orders.
Exchange Rule 1901 defines PBBO with respect to trading of equity
securities as the national best bid or offer that is a Protected
Quotation.
\14\ Market Orders may include a time-in-force of IOC. See
Exchange Rule 2614(a)(2)(B). Market Orders with a time-in-force of
IOC are rejected prior to the opening process and cancelled or
rejected during a halt. See Exchange Rules 2600(a) and
2615(e)(1)(A). A Market Order may include a time-in-force of RHO
when coupled with the Route to Primary Auction (``PAC'') routing
option and such orders are accepted prior to the opening process and
during a halt. In sum, PAC is a routing option for Market Orders and
displayed Limit Orders designated as RHO that the entering firm
wishes to designate for participation in the opening, re-opening
(following a regulatory halt, suspension, or pause), or closing
process of a primary listing market. See Exchange Rule 2617(b)(5)(B)
for a more detailed description of the PAC routing option.
\15\ The Exchange notes that orders that include a Post Only
instruction and time-in-force of IOC are always rejected regardless
of time of entry as these two order instructions are incompatible by
their terms. See preamble to Exchange Rule 2614 (providing that
``[o]rder, instruction, and parameter combinations which are
disallowed by the Exchange or incompatible by their terms, will be
rejected . . .'').
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Pursuant to its opening process described under Exchange Rule 2615,
the Exchange opens trading at the start of Regular Trading Hours by
matching buy and sell orders at the midpoint of the national best bid
and offer (``NBBO'').\16\ Only orders that include a time-in-force of
RHO may participate in the opening process. Exchange Rule 2615(a)(1)
provides that orders designated as Post Only, ISOs, orders with a
Minimum Execution Quantity instruction, and orders that include a time-
in-force other than RHO are not eligible to participate in the Opening
Process. As such, orders that include a time-in-force of RHO that
include either a Post Only instruction or Minimum Execution Quantity
instruction entered prior to 9:30 a.m. Eastern Time would continue to
not be eligible for execution until after the Exchange's opening
process is complete and continuous trading has begun. The operation of
the Post Only and Minimum Execution Quantity instructions are
incompatible with the operation of the opening process as each order
instruction places a contingency on the order that may prevent an
execution. This also reflects current functionality and the Exchange
understands this is consistent with how Equity Members \17\ who would
submit such orders prior to 9:30 a.m. Eastern Time would want their
orders to be handled and with their expectations of the types of orders
and order instructions that are eligible to participate in an opening
process. Exchange Rule 2615(a)(1) would be amended to specify that
while orders with a time-in-force of RHO that include a Post Only or
Minimum Execution Quantity instruction are accepted prior to the
opening process pursuant to Exchange Rule 2600(a) (as amended herein),
such orders would not be eligible to participate in the opening
process.\18\ As they are today, such orders, along with the unexecuted
portion of orders that were eligible to participate in the opening
process, will be placed on the MIAX Pearl Equities Book in time
sequence, beginning with the order with the oldest timestamp,
cancelled, executed, or routed to away Trading Centers in accordance
with the terms of the order at the conclusion of the opening
process.\19\
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\16\ See Exchange Rule 1901.
\17\ The term ``Equity Member'' means a Member authorized by the
Exchange to transact business on MIAX Pearl Equities. See Exchange
Rule 1901.
\18\ The Exchange proposes to make non-substantive conforming
changes to Exchange Rule 2615(a)(1) regarding what orders are not
eligible to participate in the opening process to account for the
proposed new text.
\19\ See Exchange Rule 2615(b).
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Acceptance and Retention of Orders During a Halt
Exchange Rule 2615(e)(1) provides that the re-opening process will
occur in the same manner as the opening process, with the following
differences: ISOs, orders that include a time-in-force of IOC, orders
that include a Minimum Execution Quantity instruction, and orders
designated as Post Only will be cancelled or rejected, as
applicable.\20\ As such, during a halt the Exchange cancels or rejects
orders that include a time-in-force of RHO and either a Post Only
instruction or Minimum Execution Quantity instruction. Equity Members
may then choose to resubmit such orders at the conclusion of the
Exchange's re-opening process when continuous trading resumes. The
Exchange understands that some Equity Members prefer the Exchange
accept or retain orders that include a time-in-force of RHO and either
a Post Only instruction or Minimum Execution Quantity instruction when
the security is halted so that such order would be placed on the MIAX
Pearl Equities Book when the re-opening process concludes and they
would not need to resubmit the order at that time. The Exchange,
therefore, proposes to amend Exchange Rule 2615(e)(1)(A) to no longer
cancel or reject orders that include a time-in-force of RHO and either
a Minimum Execution Quantity instruction or Post Only instruction when
trading in a security is halted. As is the case with the above proposal
regarding the opening process, this portion of the proposal is also
limited to Limit Orders and Midpoint Peg Orders with a time-in-force of
RHO that include either a Post Only or Minimum Execution Quantity
instruction.\21\
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\20\ An order that is cancelled is first accepted by the System
and then immediately cancelled back to the Member. An order that is
rejected is not accepted by the System and immediately returned to
the Member.
\21\ See supra notes 14 and 15 as [sic] accompanying text.
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Pursuant to its re-opening process described under Exchange Rule
2615(e), the Exchange re-opens trading following a halt by matching buy
and sell orders at the midpoint of the NBBO. Exchange Rule 2615(e)(1)
provides that the re-opening process will occur in the same manner as
the opening process, with certain differences described above. As such,
only orders that include a time-in-force of RHO may participate in the
re-opening process. As with the opening process, orders that include
either a Post Only instruction or Minimum Execution Quantity
instruction are not eligible to participate in the Exchange's re-
opening process because such orders are currently cancelled or rejected
during a halt. The Exchange proposes to amend Exchange Rule
2615(e)(1)(A) to specify that orders with a time-in-force of RHO that
include a Post Only instruction or a Minimum Execution Quantity
instruction would be accepted and
[[Page 24216]]
retained during a halt but will continue to not be eligible to
participate in the Exchange's re-opening process. The operation of the
Post Only and Minimum Execution Quantity instructions are incompatible
with the operation of the re-opening process as each order instruction
places a contingency on the order that may prevent an execution.
Further, such orders not being eligible to participate in the
Exchange's re-opening process reflects current functionality and the
Exchange understands this is consistent with how Equity Members would
want their orders to be handled and with their expectations of the
types of orders and order instructions that are eligible to participate
in a re-opening process. As they are today, such orders, along with the
unexecuted portion of orders that were eligible to participate in the
re-opening process, will be placed on the MIAX Pearl Equities Book in
time sequence, beginning with the order with the oldest timestamp,
cancelled, executed, or routed to away Trading Centers in accordance
with the terms of the order at the conclusion of the re-opening
process.
Reserve Quantity Clarification
The Exchange currently offers the Reserve Quantity instruction,
which enables a User \22\ to specify that a portion of their Limit
Order be displayed and another portion of their order be non-displayed.
The Reserve Quantity instruction may only be attached to a Limit
Order.\23\ Today, Limit Orders that include a time-in-force of RHO and
a Reserve Quantity are eligible to participate in the Exchange's
opening or re-opening process.\24\ The Exchange proposes to amend
Exchange Rule 2615(a)(1) to specify that Limit Orders with a Reserve
Quantity instruction may participate to the full extent of their
Displayed Quantity and Reserve Quantity. This added language would
allow the rule to reflect current functionality, provide market
participants with additional specificity regarding the handling of
Limit Orders with a Reserve Quantity during the opening and re-opening
processes, and is substantially similar to the rules of other
exchanges.\25\
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\22\ Exchange Rule 1901 defines the term ``User'' as ``any
Member or Sponsored Participant who is authorized to obtain access
to the System pursuant to Exchange Rule 2602.''
\23\ Exchange Rule 2614(a)(1)(A)(i).
\24\ See Exchange Rule 2615(a)(1) (providing that orders that
include a time-in-force of RHO may participate in the opening
process and not specifying that orders with a Reserve Quantity are
not eligible to participate in the opening process).
\25\ See supra note 9.
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Implementation
Due to the technological changes associated with this proposed
change, the Exchange will issue a trading alert publicly announcing the
implementation date of this proposed rule change to provide Equity
Members with adequate time to prepare for the associated technological
changes. The Exchange anticipates that the implementation date will be
in the second quarter of 2022.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\26\ in general, and furthers the objectives of Section
6(b)(5),\27\ in particular, because it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, facilitate transactions in securities,
remove impediments to and perfect the mechanism of a free and open
market and a national market system. The proposed rule change would
remove impediments to a free and open market and promote just and
equitable principles of trade because it would provide market
participants with another venue to which to send orders that include a
time-in-force of RHO and either a Post Only instruction or Minimum
Execution Quantity instruction prior to 9:30 a.m. Eastern Time. Because
the Exchange does not have this functionality, the Exchange believes
that market participants have refrained from sending orders that
include a time-in-force of RHO and either a Post Only instruction or
Minimum Execution Quantity instruction prior to 9:30 a.m. Eastern Time.
In this regard, the Exchange notes that the proposed new functionality
may improve the Exchange's market by attracting more order flow. The
Exchange also believes that its proposal to accept new orders that
include a time-in-force of RHO and either a Post Only instruction or
Minimum Execution Quantity instruction and to retain such orders during
a halt would also improve the Exchange's market by attracting more
order flow. Such new order flow will further enhance the depth and
liquidity on the Exchange, which supports just and equitable principles
of trade and benefits all market participants.
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\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(5).
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Orders that include a time-in-force of RHO and either a Post Only
instruction or Minimum Execution Quantity instruction entered prior to
9:30 a.m. Eastern Time or during a halt would not receive any priority
advantage vis-[agrave]-vis the unexecuted portion of orders that are
eligible for execution in the Exchange's opening or re-opening process.
All orders, including orders that include a time-in-force of RHO and
either a Post Only instruction or Minimum Execution Quantity
instruction, and the unexecuted portion of orders that were eligible to
participate in the opening or re-opening process will be placed on the
MIAX Pearl Equities Book in time sequence based on their timestamp at
the conclusion of the opening or re-opening process.\28\ For example,
assume a Limit Order to sell 100 shares with a Post Only instruction
and time-in-force of RHO is entered at 8:45 a.m. Eastern Time (``Order
1''), then a Limit Order to sell 100 shares with a time-in-force of RHO
is entered at 9:00 a.m. Eastern Time (``Order 2''), and then a Limit
Order to sell 100 shares with a Minimum Execution Quantity instruction
and time-in-force of RHO is entered at 9:15 a.m. Eastern Time (``Order
3''). 50 shares of Order 2 are executed during the Exchange's opening
process. These orders would be fed onto the MIAX Pearl Equities Book in
the following order: Order 1 for 100 shares, Order 2 for 50 shares, and
Order 3 for 100 shares. Assume Order 1 increased its size to 200 shares
via a Cancel/Replace message at 9:20 a.m. causing its timestamp to be
updated to time of the modification. In this case, these orders would
be fed onto the MIAX Pearl Equities Book in the following order: Order
2 for 50 shares, Order 3 for 100 shares, then Order 1 for 200 shares.
Therefore, the proposal promotes just and equitable principles of trade
because orders that include a time-in-force of RHO and either a Post
Only instruction or Minimum Execution Quantity instruction entered
prior to 9:30 a.m. Eastern Time would not receive any priority
advantage vis-[agrave]-vis other orders when being fed onto the MIAX
Pearl Equities Book following the conclusion of the Exchange's opening
or re-opening process.
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\28\ The order's timestamp is the time of order entry unless the
order is canceled or replaced pursuant to Exchange Rule 2614(e) and
its timestamp is updated pursuant to Exchange Rule 2616(a)(5).
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The Exchange believes its proposal to allow for the entry of orders
that include a time-in-force of RHO and either a Post Only instruction
or Minimum Execution Quantity instruction prior to 9:30 a.m. Eastern
Time promotes just and equitable principles of trade because it is
similar to functionality at other exchanges that allow for orders to be
entered prior to 9:30 a.m. Eastern Time with a time-in-force
instruction that
[[Page 24217]]
allows the order to bypass that exchange's opening process. The Cboe
Equity Exchanges allow for the entry of Post Only and Minimum Execution
Quantity orders with a time-in-force of Day prior to 9:30 a.m. Eastern
Time and allow those orders to bypass their respective opening
processes.\29\ For example, on EDGX, orders that include a time-in-
force of Day that also include a Post Only instruction or a Minimum
Execution Quantity instruction are accepted prior to 9:30 a.m. Eastern
Time. EDGX Rule 11.7(a) further provides that only orders with a time-
in-force of RHO may participate in their opening. As a result, orders
that include a time-in-force of Day that also include a Post Only
instruction or a Minimum Execution Quantity instruction bypass EDGX's
opening processes. The Exchange notes that, unlike on the Exchange,
orders that include a time-in-force of Day that also include a Post
Only instruction or a Minimum Execution Quantity are eligible for
execution prior to 9:30 a.m. Eastern Time on EDGX because EDGX provides
pre-market trading and the Exchange does not. In addition, the Exchange
would process such orders in time priority following the opening
process, which is the same manner in which EDGX would process orders
that include a time-in-force of Day and a Post Only instruction or a
Minimum Execution Quantity that were not fully executed during EDGX's
pre-market trading session following their opening process.
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\29\ See supra note 6. EDGX Rule 11.6(q)(2) provide that the Day
time-in-force is an ``instruction the User may attach to an order
stating that an order to buy or sell which, if not executed, expires
at the end of Regular Trading Hours.'' Orders with a time-in-force
of Day on EDGX or RHO on the Exchange both expire at the end of
Regular Trading Hours and are not meaningfully different other than
the fact that on EDGX, orders with a time-in-force of Day are
eligible for execution during EDGX's pre-market trading sessions.
The Exchange does not currently offer pre-market trading. EDGX Rule
11.1(a)(1) provides that EDGX will not accept orders with a Post
Only instruction, orders with a Minimum Execution Quantity
instruction that also include a time-in-force of Regular Hours Only,
and all orders with a TIF instruction of IOC or FOK prior to either
4:00 a.m. Eastern Time or 7:00 a.m. Eastern Time, as applicable. The
Exchange understands that orders with a Post Only instruction and
orders with a Minimum Execution Quantity instruction that also
include a time-in-force of Regular Hours Only are accepted after
either 4:00 a.m. Eastern Time or 7:00 a.m. Eastern Time, as
applicable, and bypass EDGX's opening process. See EDGX Rule
11.7(a). The Exchange notes that its Post Only instruction and
Minimum Execution Quantity instruction are substantially similar to
EDGX's Post Only instruction and Minimum Execution Quantity
instruction.
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IEX similarly allows for the entry of Minimum Quantity Orders with
a time-in-force of Day \30\ prior to 9:30 a.m. Eastern Time and allows
those orders to bypass their opening process. IEX's Minimum Quantity
Order, which is substantially similar to the Exchange's Minimum
Execution Quantity instruction, may be entered but not eligible for
execution prior to 9:30 a.m. Eastern Time and bypass IEX's opening
process.\31\ This is similar to the Exchange's proposal to accept
orders that include a time-in-force of RHO and a Minimum Execution
Quantity instruction prior to 9:30 a.m. Eastern Time and for those
orders to not be eligible for execution prior to 9:30 a.m. Eastern Time
and bypass the opening process.
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\30\ See IEX Rule 11.190(b)(11)(B).
\31\ See IEX Rules 11.190(c)(3) and 11.190(b)(11)(F).
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The Exchange also believes its proposal to allow for the retention
of orders that include a time-in-force of RHO and a Post Only
instruction during a halt promotes just and equitable principles of
trade because it is similar to functionality at other exchanges. The
NYSE Equity Exchanges do not cancel ALO Orders,\32\ which are similar
to the Exchange's Post Only instruction, during a halt.\33\ For
example, NYSE Rule 7.18(b) lists the order types that NYSE cancels or
rejects when trading in a non-NYSE listed security is halted. NYSE Rule
7.18(b) does not include ALO orders in the list of order types that
NYSE will cancel during a halt. Therefore, the Exchange believes NYSE
retains ALO orders when trading in a non-NYSE listed security is
halted.
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\32\ See e.g., NYSE Rule 7.31(e)(2) for a description of the
NYSE Equity Exchange's ALO Order.
\33\ See supra note 6.
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The Exchange believes that, unlike as proposed by the Exchange, the
NYSE Equity Exchanges do not accept ALO orders when trading in a non-
NYSE listed security is halted. The Exchange also believes that the
NYSE Equity Exchanges do not accept new orders with a Minimum Trade
Size (``MTS'') modifier \34\ and cancel existing ones during a halt.
Notwithstanding these differences, the Exchange believes the Exchange's
proposal to accept and retain orders with a Post Only instruction or
Minimum Execution Quantity instruction during a halt would promote just
and equitable principles of trade by providing such orders with
increased execution opportunities once the re-opening process
concludes. The Exchange also believes that its proposal promotes
efficiency because the Exchange would accept or retain orders that
include a time-in-force of RHO and either a Post Only instruction or
Minimum Execution Quantity instruction when not engaged in continuous
trading and an Equity Member would not need to resubmit such orders
when continuous trading commences following a halt. The Exchange also
believes that its proposal to accept new orders that include a time-in-
force of RHO and either a Post Only instruction or Minimum Execution
Quantity instruction and to retain such orders during a halt would also
improve the Exchange's market by attracting more order flow. Such new
order flow will further enhance the depth and liquidity on the
Exchange, which supports just and equitable principles of trade and
benefits all market participants.
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\34\ See e.g., NYSE Rule 7.31(i)(3) for a description of the
NYSE Equity Exchange's MTS modifier including that an MTS modifier
may be included on a Non-Displayed Limit Order. NYSE Rule 7.18(b)(1)
states that NYSE will cancel any unexecuted portion of a Non-
Displayed Limit Order in a UTP security during a halt.
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The Exchange believes its proposal to amend Exchange Rule
2615(a)(1) to specify that Limit Orders with a Reserve Quantity may
participate in the opening and re-opening processes to the full extent
of their Displayed Quantity and Reserve Quantity promotes just and
equitable principles of trade and removes impediments to and perfects
the mechanism of a free and open market and a national market system
because this added language provides market participants with
additional specificity within the rule regarding the handling of Limit
Orders with a Reserve Quantity during the opening and re-opening
processes, thereby avoiding any potential investor confusion. Further,
this proposed change does not raise any new or novel issues because it
is based on the rules of other exchanges.\35\
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\35\ See supra note 9.
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
The Exchange believes that the proposal will not impose any burden
on inter-market competition, but rather promote competition by
enhancing the Exchange's functionality and expanding the times when
certain orders may be submitted. The proposed rule change would improve
inter-market competition because it will enable the Exchange to offer
functionality substantially similar to that offered by the Cboe Equity
Exchanges, NYSE Equity Exchanges, and IEX.\36\ The Exchange believes
its lack of this functionality has put it at a competitive
[[Page 24218]]
disadvantage as market participants that seek to enter orders with a
Post Only or Minimum Execution Quantity instruction prior to 9:30 a.m.
Eastern Time or during a halt have avoided sending orders to the
Exchange. The Exchange believes that its proposal promotes competition
because it is designed to attract liquidity to the Exchange and improve
the overall quality of the MIAX Pearl Equities Book.
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\36\ See supra note 6.
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The Exchange believes that the proposal will not impose any burden
on intra-market competition because it would be available to all Equity
Members. Any Equity Member that seeks to enter orders that include a
time-in-force of RHO and either a Post Only instruction or Minimum
Execution Quantity instruction prior to 9:30 a.m. Eastern Time or
during a halt would be free to do so on the Exchange. All orders that
include a time-in-force of RHO and either a Post Only instruction or
Minimum Execution Quantity instruction entered prior to 9:30 a.m.
Eastern Time or during a halt would be treated equally and no order
would receive any priority advantage vis-[agrave]-vis other orders when
being fed onto the MIAX Pearl Equities Book following the conclusion of
the Exchange's opening or re-opening process.
Finally, the proposed clarification to Exchange Rule 2615(a)(1)
would not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act because it better
aligns the rule with System functionality by providing additional
specificity and avoiding potential investor confusion.
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 \37\ and Rule 19b-4(f)(6) \38\
thereunder.
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\37\ 15 U.S.C. 78s(b)(3)(A).
\38\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#fe8c8b929bd39d9193939b908a8dbe8d9b9dd0999188"><span class="__cf_email__" data-cfemail="81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7">[email protected]</span></a>. Please include
File Number SR-PEARL-2022-14 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-2022-14. 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="https://www.sec.gov/rules/sro.shtml">https://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-2022-14, and should be
submitted on or before May 13, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
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\39\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-08568 Filed 4-21-22; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on April 22, 2022.
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