Notice2023-15264
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule
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Published
July 19, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 137 (Wednesday, July 19, 2023)</title>
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[Federal Register Volume 88, Number 137 (Wednesday, July 19, 2023)]
[Notices]
[Pages 46313-46315]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-15264]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97896; File No. SR-PEARL-2023-30]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule
July 13, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on June 29, 2023, MIAX PEARL, LLC (``MIAX Pearl'' or
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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 (``Fee Schedule'').
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings">https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings</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 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,
to adjust the groupings of options exchanges and to adopt new routing
fees.
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 \4\ (``Penny
classes'') or an order for standard option classes which are not in the
Penny Interval Program (``Non-Penny classes'') (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 Options'') 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.\5\
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\4\ See Exchange Rule 510(c).
\5\ See Cboe U.S. Options Fee Schedules, BZX Options, effective
May 15, 2023, ``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. Specifically,
the Exchange is proposing to create a separate group for Nasdaq MRX as
a result of a recent proposal by that exchange to amend its fee
schedule.\6\
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\6\ The Nasdaq MRX proposal (SR-MRX-2023-11) amends their fee
schedule to change the Taker Fee in Penny symbols in Tier 1 from
$0.00 to $0.15 for Priority Customer Orders and from $0.00 in Tier 1
for Priority Customer Orders in Non-Penny symbols to $0.35.
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[[Page 46314]]
The Exchange now proposes to adopt a new row for ``Routed, Priority
Customer, Penny Program,'' and to adopt a new associated fee of $0.30.
Additionally, the Exchange proposes to adopt new row for, ``Routed,
Priority Customer, Non-Penny Program,'' and to adopt a new associated
fee of $0.50.
The Exchange also proposes to amend the first row in the first
column of the table identified as, ``Routed, Priority Customer, Penny
Program,'' to relocate Nasdaq MRX from the first row of the table to
the new proposed row also identified as ``Routed, Priority Customer,
Penny Program.'' The impact of this proposed change will be that the
routing fee for Priority Customer Orders \7\ in the Penny Program that
are routed to Nasdaq MRX, will increase from $0.15 to $0.30.
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\7\ The term ``Priority Customer Order'' means an order for the
account of a Priority Customer. See Exchange Rule 100. The term
``Priority Customer'' means a person or entity that (i) is not a
broker or dealer in securities, and (ii) does not place more than
390 orders in listed options per day on average during a calendar
month for its own beneficial account(s). See Exchange Rule 100.
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The Exchange also proposes to amend the exchange groupings in the
third row of the table, identified as ``Routed, Priority Customer, Non-
Penny Program,'' to relocate Nasdaq MRX Options from the third row of
the table to the new proposed row, 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 MRX Options will increase
from $0.15 to $0.50. The purpose of the proposed rule change is to
adjust the routing fee for Priority Customer Orders routed to the
Nasdaq MRX options exchange to reflect the associated costs for that
routed execution in Penny and Non-Penny Classes as a result of the
recent fee schedule change made by Nasdaq MRX.
Accordingly, with the proposed changes, the routing fee table will
be:
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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, MIAX, Nasdaq PHLX
(except SPY)..............................................
Routed, Priority Customer, Penny Program, to: Nasdaq MRX... 0.30
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, MIAX,
Nasdaq PHLX...............................................
Routed, Priority Customer, Non-Penny Program, to: Nasdaq 0.50
MRX.......................................................
Routed, Priority Customer, Non-Penny Program, to: NYSE Arca 1.00
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 market 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 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 Options 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.\8\ 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) \9\ 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 Options and MIAX
Emerald, the Exchange's Members \10\ 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 Options
and MIAX Emerald, will file to make the same proposed routing fee
changes contained herein.
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\8\ 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.
\9\ 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.
\10\ 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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Implementation
The proposed rule change will become operative on July 1, 2023.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \11\
[[Page 46315]]
in general, and furthers the objectives of Section 6(b)(4) of the Act
\12\ 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 \13\ 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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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
\13\ 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
Priority Customer Orders to away markets on behalf of Members and does
so in the same manner for 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 the Nasdaq MRX options exchange. 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's 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 MRX. 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 notes that at least one other
options exchange has a similar routing fee structure.\14\
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\14\ See supra note 4.
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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 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="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#6113140d044c020e0c0c040f1512211204024f060e17"><span class="__cf_email__" data-cfemail="b5c7c0d9d098d6dad8d8d0dbc1c6f5c6d0d69bd2dac3">[email protected]</span></a>. Please include
file number SR-PEARL-2023-30 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-2023-30. 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
a.m. and 3 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-2023-30 and should be
submitted on or before August 9, 2023.
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,
Deputy Secretary.
[FR Doc. 2023-15264 Filed 7-18-23; 8:45 am]
BILLING CODE 8011-01-P
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