Notice2023-10127
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 2622, Limit Up-Limit Down Plan and Trading Halts
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
May 12, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 92 (Friday, May 12, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 92 (Friday, May 12, 2023)]
[Notices]
[Pages 30815-30817]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-10127]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97454; File No. SR-PEARL-2023-21]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 2622, Limit Up-Limit Down Plan and Trading Halts
May 8, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 3, 2023, MIAX PEARL, LLC (``MIAX Pearl'' or the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to make a correction to a recently filed
proposal to amend Exchange Rule 2622, which sets forth common criteria
and procedures for halting and resuming trading in equity securities on
the Exchange's equity trading platform (referred to herein as ``MIAX
Pearl Equities'') in the event of regulatory or operational issues.
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
In conjunction with the adoption of an amended Nasdaq UTP Plan
proposed by its participants (``Amended Nasdaq UTP Plan''),\3\ the
Exchange recently amended Exchange Rule 2622 to integrate several
definitions and concepts from the Amended Nasdaq UTP Plan and to
reorganize the rule in light of the Exchange's experience with applying
the rule over the past few years as a national securities exchange.\4\
In sum, the proposal amended Exchange Rule 2622 to set forth common
criteria and procedures for halting and resuming trading in equity
securities on MIAX Pearl Equities in the event of regulatory or
operational issues. As part of that proposal, the Exchange adopted
paragraph (h)(3)(C)(ii) of Exchange Rule 2622, which provides that
``orders entered during the Operational Halt \5\ will not be accepted,
unless subject to instructions that the order will be directed to
another Trading Center.'' The text of paragraph (h)(3)(C)(ii) of
Exchange Rule 2622 was adopted in error since the Exchange does accept
orders during an Operational Halt, as set forth under Exchange Rule
2615(e),\6\ described below. Paragraph (h)(3)(C)(ii) of Exchange Rule
2622, therefore, conflicts with existing provisions in Exchange Rule
2615(e). The Exchange proposes to amend paragraph (h)(3)(C)(ii) of
Exchange Rule 2622 to clarify how the Exchange handles orders during an
operational halt and to be consistent with current Exchange Rule
2615(e).
---------------------------------------------------------------------------
\3\ On February 11, 2021, the Nasdaq UTP Plan participants filed
Amendment 50 to the Plan, to revise provisions governing regulatory
and operational halts. See Letter from Robert Brooks, Chairman, UTP
Operating Committee, Nasdaq UTP Plan, to Vanessa Countryman,
Secretary, Securities and Exchange Commission, dated February 11,
2021. The Nasdaq UTP Plan subsequently filed two partial amendments
to the 50th Amendment, on March 31, 2021 and on April 7, 2021. The
Commission approved the amendments on May 28, 2021. See Securities
Exchange Act Release No. 34-92071 (May 28, 2021), 86 FR 29846 (June
3, 2021) (S7-24-89). The Amended Nasdaq UTP Plan includes provisions
requiring participant self-regulatory organizations (``SROs'') to
honor a Regulatory Halt declared by the Primary Listing Market. The
provisions in the Nasdaq UTP Plan, and the plan for consolidation of
data for non-Nasdaq-listed securities, the Consolidated Tape System
and Consolidated Quotations System (collectively, the ``CTA/CQS
Plan''), include provisions similar to the changes proposed by the
Exchange in this filing.
\4\ See Securities Exchange Act Release No. 97093 (March 9,
2023), 88 FR 16045 (March 15, 2023) (SR-PEARL-2023-11).
\5\ Exchange Rule 2622(h)(1)(D) defines ``Operational Halt'' as
having the same meaning as in Section X.A.7 of the Amended Nasdaq
UTP Plan. Specifically, the Exchange defined Operational Halt to
mean a halt in trading in one or more securities only on the market
declaring the halt and is not a Regulatory Halt. An Operational Halt
is effective only on the Exchange; other markets are not required to
halt trading in the impacted securities. See also id.
\6\ See Securities Exchange Act Release No. 89563 (August 14,
2020), 85 FR 51510 (August 20, 2020) (SR-PEARL-2020-03) (adopting
Exchange Rule 2615(e)).
---------------------------------------------------------------------------
Exchange Rule 2615(e) describes the Exchange's Re-Opening Process
and provides, in sum, that while an equity security is subject to a
halt, other than a halt initiated pursuant to Exchange Rule 2622(b)(2)
following a Level 3 Market Decline, suspension, or pause in trading,
the Exchange will accept orders for queuing prior to the resumption of
trading in the security for participation in the Re-Opening Process.
Exchange Rule 2615(e)(1) further provides, in sum, that the Re-Opening
Process will occur in the same manner as the Exchange's Opening
Process,\7\ and enumerates certain exceptions. One exception is set
forth under Exchange Rule 2615(e)(1)(A), which provides that
[[Page 30816]]
Intermarket Sweep Orders (``ISOs'') \8\ and orders that include a time-
in-force of Immediate-or-Cancel (``IOC'') \9\ will be cancelled or
rejected, as applicable.\10\ These provisions conflict with recently
adopted paragraph (h)(3)(C)(ii) of Exchange Rule 2622. The Exchange,
therefore, proposes to amend paragraph (h)(3)(C)(ii) of Exchange Rule
2622 to be consistent with Exchange Rule 2615(e)(1).\11\
---------------------------------------------------------------------------
\7\ See Exchange Rule 2615(a)-(c) for a description of the
Exchange's Opening Process.
\8\ See Exchange Rule 2614(d) for a description of ISOs.
\9\ See Exchange Rule 2614(b)(1) for a description of the IOC
time-in-force.
\10\ Exchange Rule 2615(e)(1)(A) also provides that Orders with
a time-in-force of Regular Hours Only (``RHO'') that include a Post
Only instruction or a Minimum Execution Quantity instruction will be
accepted and retained during a halt but are not eligible to
participate in the Re-Opening Process. See Exchange Rule 2614(b)(2)
for a description of the RHO time-in-force. See Exchange Rule
2614(c)(2) for a description of the Post Only instruction. See
Exchange Rule 2614(c)(7) for a description of the Minimum Execution
Quantity instruction.
\11\ MIAX Pearl Equities has not experienced an Operational Halt
since the proposed amendments to Exchange Rule 2622 were filed on
February 28, 2023.
---------------------------------------------------------------------------
As amended, paragraph (h)(3)(C)(ii) of Exchange Rule 2622 would
provide that, ``[d]uring any Operational Halt, the System will accept
all orders, except orders designated as ISO and orders that include a
time-in-force of IOC, for queuing and participation in the Re-Opening
Process pursuant to Rule 2615(e).'' As amended, paragraph (h)(3)(C)(ii)
of Exchange Rule 2622 would reflect current functionality that is
currently set forth under Exchange Rule 2615(e) and the proposed
amendments would remove any chance for potential investor confusion
regarding how the Exchange handles orders in equity securities during
an Operational Halt. The Exchange does not propose any other changes to
Exchange Rule 2622.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of section 6(b) of the Act.\12\ Specifically, the
proposal is consistent with section 6(b)(5) of the Act \13\ because it
would promote just and equitable principles of trade, remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system, and, in general, protect investors and
the public interest because it proposes to correct paragraph
(h)(3)(C)(ii) of Exchange Rule 2622 to reflect current functionality
that is set for under Exchange Rule 2615(e) and remove any conflict
between the two rules. The Exchange does not propose any other changes
to Exchange Rule 2622. The proposed rule change would prevent any
potential investor confusion by providing clarity within the rule text
and make the Exchange's rules easier to understand, thereby removing
impediments to and perfecting the mechanism of a free and open market
and a national market system.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
proposed rule change would not have any impact on inter-market
competition or intra-market competition because it simply updates
paragraph (h)(3)(C)(ii) of Exchange Rule 2622 to reflect current
functionality that is set forth under Exchange Rule 2615(e) and removes
any conflict between the two rules. The proposed rule change does not
propose any new functionality, products, or services, and thus, would
not have any impact on competition.
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 \14\ and Rule 19b-4(f)(6) \15\
thereunder.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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, along
with a brief description and text of 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission
may designate a shorter time if such action is consistent with the
protection of investor and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative upon filing. The Exchange states that
the proposed rule change would remove potential investor confusion
regarding how the Exchange handles orders in equity securities during
an Operational Halt. For this reason, and because the proposed rule
change does not raise any novel regulatory issues, the Commission
believes waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. Therefore, the
Commission hereby waives the operative delay and designates the
proposal operative upon filing.\18\
---------------------------------------------------------------------------
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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#5f2d2a333a723c3032323a312b2c1f2c3a3c71383029"><span class="__cf_email__" data-cfemail="b5c7c0d9d098d6dad8d8d0dbc1c6f5c6d0d69bd2dac3">[email protected]</span></a>. Please include
File Number SR-PEARL-2023-21 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-2023-21. This file
number should be included on the subject line if email is used. To help
the
[[Page 30817]]
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. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-PEARL-2023-21 and should be submitted on
or before June 2, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10127 Filed 5-11-23; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on May 12, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.