Notice2023-27917
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Pearl Equities Fee Schedule
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
December 20, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 243 (Wednesday, December 20, 2023)</title>
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[Federal Register Volume 88, Number 243 (Wednesday, December 20, 2023)]
[Notices]
[Pages 88186-88191]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-27917]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99175; File No. SR-PEARL-2023-69]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
Pearl Equities Fee Schedule
December 14, 2023.
Pursuant to the provisions of 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 December 12, 2023, MIAX PEARL, LLC (``MIAX
Pearl'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the fee schedule (the
``Fee Schedule'') applicable to MIAX Pearl Equities, an equities
trading facility of the Exchange.
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
[[Page 88187]]
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: (1) amend
Section 1)d) to modify the volume requirement in Tier 1 of the Remove
Volume Tiers \3\ applicable to executions of orders in securities
priced at or above $1.00 per share that remove liquidity from the
Exchange (``Removed Volume'') and eliminate Remove Volume Tier 2 and
the corresponding fee; and (2) amend Section 1)f) to modify the
expiration month (referred to herein as the ``sunset period'') for the
Step-Up Added Liquidity Rebate. The Exchange originally filed this
proposal on November 30, 2023 (SR-PEARL-2023-67). On December 12, 2023,
the Exchange withdrew SR-PEARL-2023-67 and refiled this proposal with
minor changes.
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\3\ See Fee Schedule, Section 1)d).
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Remove Volume Tiers Table Changes
Currently the Exchange charges a fee of $0.00295 per share for
executions of Removed Volume on the Exchange in securities priced at or
above $1.00 per share, except for executions of Removed Volume that
execute at the midpoint for non-displayed Midpoint Peg Orders \4\ in
all Tapes.\5\ The Exchange also offers a tiered pricing structure in
Section 1)d) of the Fee Schedule, Remove Volume Tiers, which provides
reduced fees for executions of Removed Volume on the Exchange in
securities priced at or above $1.00 per share based on certain volume
thresholds achieved by Equity Members.\6\ To achieve the reduced fees
of the Remove Volume Tiers, Equity Members must, (i) for Tier 1,
achieve an average daily volume (``ADV'') \7\ that is equal to or
greater than 0.10% of the total consolidated volume (``TCV'') \8\ and
execute at least 1,000 shares of added liquidity during the month; and
(ii) for Tier 2, achieve an ADV that is equal to or greater than 0.15%
of TCV and execute at least 1,000 shares of added liquidity during the
month. Equity Members that qualify for the discounted rates of the
Remove Volume Tiers in a particular month will be charged the lower fee
according to the threshold tier achieved instead of the standard Remove
Volume fee of $0.00295 per share for executions of orders in securities
priced at or above $1.00 per share in that particular month.
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\4\ See 2614(a)(3)(i)(A) for the definition of Midpoint Peg
Order.
\5\ See Fee Schedule, Section 1)a) and Liquidity Indicator Codes
RA, Ra, RB, Rb, RC, Rc, Rp, RR, Rr, RT, and Rt.
\6\ The term ``Equity Member'' is a Member authorized by the
Exchange to transact business on MIAX Pearl Equities. See Exchange
Rule 1901.
\7\ ``ADV'' means average daily volume calculated as the number
of shares added or removed, combined, per day. ADV is calculated on
a monthly basis. See the Definitions Section of the Fee Schedule.
The Exchange excludes from its calculation of ADV shares added or
removed on any day that the Exchange's system experiences a
disruption that lasts for more than 60 minutes during regular
trading hours, on any day with a scheduled early market close, and
on the ``Russell Reconstitution Day'' (typically the last Friday in
June). Routed shares are also not included in the ADV calculation.
See id.
\8\ ``TCV'' means total consolidated volume calculated as the
volume in shares reported by all exchanges and reporting facilities
to a consolidated transaction reporting plan for the month for which
the fees apply. The Exchange excludes from its calculation of TCV
volume on any given day that the Exchange's system experiences a
disruption that lasts for more than 60 minutes during Regular
Trading Hours, on any day with a scheduled early market close, and
on the ``Russell Reconstitution Day'' (typically the last Friday in
June). See the Definitions Section of the Fee Schedule.
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The Exchange proposes to increase the ADV requirement in Remove
Volume Tier 1 from 0.10% to now be 0.20% of TCV. The Exchange also
proposes to eliminate Remove Volume Tier 2 from the Fee Schedule.
Accordingly, with the proposed changes, to achieve the reduced fee of
Remove Volume Tier 1, Equity Members must achieve an ADV that is equal
to or greater than 0.20% of TCV and execute at least 1,000 shares of
added liquidity during the month.
The purpose of this change is for business and competitive reasons.
The Exchange notes that despite the modest increase in volume ADV
requirement and elimination of Remove Volume Tier 2, the Exchange's
reduced fee and requirements to achieve Remove Volume Tier 1 remain
competitive with the fees to remove liquidity in securities priced at
or above $1.00 per share charged by other equity exchanges, including
other equity exchanges that also have reduced fees for meeting certain
criteria for removing liquidity.\9\
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\9\ See MEMX LLC (``MEMX'') Equities Fee Schedule, available at
<a href="https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/">https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/</a> (providing standard remove volume fee of $0.0030 per
share and reduced Liquidity Removal Tier fee of $0.00295 per share
so long as a member achieves an ADV greater than or equal to 0.60%
of TCV and a Removed Volume ADV greater than or equal to 0.30% of
TCV); see also Cboe EDGX Equities Fee Schedule, available at <a href="https://www.cboe.com/us/equities/membership/fee_schedule/edgx/">https://www.cboe.com/us/equities/membership/fee_schedule/edgx/</a> (providing a
standard fee of $0.0030 per share to remove liquidity in securities
priced at or above $1.00 per share, Remove Volume Tier 1 fee of
$0.0029 per share to remove liquidity in securities priced at or
above $1.00 per share so long as the member achieves an ADAV greater
than or equal to 0.25% of TCV).
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Step-Up Added Liquidity Rebate
The Exchange currently provides a standard rebate of ($0.0024) \10\
per share for executions of orders in securities priced at or above
$1.00 per share that add displayed liquidity to the Exchange. The
Exchange also currently offers various volume-based tiers and
incentives through which an Equity Member may receive an enhanced
rebate for executions of orders that add displayed liquidity to the
Exchange by achieving the specified criteria that corresponds to a
particular tier/incentive.
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\10\ Rebates are indicated by parentheses. See the General Notes
Section of the Fee Schedule.
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In particular, the Exchange adopted a volume based pricing
incentive, referred to as the ``Step-Up Added Liquidity Rebate,'' in
which qualifying Equity Members receive an enhanced rebate of ($0.0031)
per share for executions of orders in securities priced at or above
$1.00 per share that add displayed liquidity to the Exchange.\11\ The
enhanced rebate provided by the Step-Up Added Liquidity Rebate applies
to Liquidity Indicator Codes AA (adds liquidity, displayed order, Tape
A), AB (adds liquidity, displayed order, Tape B) and AC (adds
liquidity, displayed order, Tape C).\12\
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\11\ See Securities Exchange Act Release No. 95614 (August 26,
2022), 87 FR 53813 (September 1, 2022) (SR-PEARL-2022-33).
\12\ See Fee Schedule, Section 1)f), Step-Up Added Liquidity
Rebate, and Section 1)b), Liquidity Indicator Codes and Associated
Fees.
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Equity Members qualify for the Step-Up Added Liquidity Rebate by
achieving a ``Step-Up ADAV as a % of TCV'' \13\ of at least 0.03% over
the baseline month of May 2023. Average daily added volume (``ADAV'')
means average daily added volume calculated as the number of shares
added per day.\14\ For example, if an Equity Member had an ADAV as a
percent of TCV of 0.01% in May 2023, then that Equity Member has to
achieve an ADAV as a percent of TCV equal to or greater
[[Page 88188]]
than 0.04% in any subsequent month in order to qualify for the Step-Up
Added Liquidity Rebate. Currently, the Step-Up Added Liquidity Rebate
will expire no later than November 30, 2023.\15\
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\13\ The term ``Step-Up ADAV as a % of TCV'' means ADAV as a
percent of TCV in the relevant baseline month subtracted from the
current month's ADAV as a percent of TCV. See the Definitions
Section of the Fee Schedule. The Exchange notes that the Step-Up
Added Liquidity Rebate does not apply to executions of orders in
securities priced below $1.00 per share or executions of orders that
constitute added non-displayed liquidity.
\14\ See the Definitions Section of the Fee Schedule. ADAV and
ADV are calculated on a monthly basis. See id.
\15\ See Fee Schedule, Section 1)f).
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The Exchange now proposes to amend Section 1)f) of the Fee Schedule
so that the criteria to qualify for the Step-Up Added Liquidity Rebate
will expire no later than December 31, 2023.\16\ The Exchange will
issue an alert to market participants should the Exchange determine
that the Step-Up Added Liquidity Rebate will expire earlier than
December 31, 2023, or if the Exchange determines to amend the criteria
or rate applicable to the Step-Up Added Liquidity Rebate prior to the
end of the sunset period. The Exchange notes that at least one other
competing equities exchange provides a similar ``sunset period'' for
one of its enhanced rebates subject to the same baseline month as the
Exchange proposes.\17\
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\16\ The Exchange notes that at the end of the sunset period,
the Step-Up Added Liquidity Rebate will no longer apply unless the
Exchange files another 19b-4 Filing with the Commission to amend the
criteria terms.
\17\ See MEMX Equities Fee Schedule, Liquidity Provision Tiers
table and corresponding footnotes ``*'' through ``***'', supra note
9.
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The Exchange does not propose any other changes to the qualifying
criteria for Equity Members to receive the Step-Up Added Liquidity
Rebate. The Exchange also does not propose to amend the amount of the
enhanced rebate of ($0.0031) per share for Equity Members that qualify
for the Step-Up Added Liquidity Rebate. Finally, the Exchange does not
propose to change the baseline ADAV of 0.00% of TCV used for firms that
become Equity Members of the Exchange after May 2023 for the purpose of
the Step-Up Added Liquidity Rebate calculation.
This change simply extends the sunset period from November 30, 2023
until December 31, 2023. The Exchange believes that the Step-Up Added
Liquidity Rebate will continue to provide an incentive for Equity
Members to strive for higher ADAV on the Exchange (above their ADAV in
the baseline month of May 2023) to receive the enhanced rebate for
qualifying executions of orders in securities priced at or above $1.00
per share that add displayed liquidity to the Exchange. The Exchange
believes that with the extension of the sunset period the Step-Up Added
Liquidity Rebate will continue to encourage the submission of
additional displayed added liquidity to the Exchange, thereby promoting
price discovery and contributing to a deeper and more liquid market,
which benefits all market participants and enhances the attractiveness
of the Exchange as a trading venue.
The purpose of this change is for business and competitive reasons.
Several competing equities exchanges continue to use a baseline month's
volume for their members as the requirements for higher rebates/lower
fees that is an older month than the Exchange's baseline month of May
2023 and many of those exchanges do not have a sunset provision.\18\ By
extending the sunset period, the Exchange will be able to continue to
compete with the enhanced rebates offered by competing exchanges that
use older baseline months' volume in their requirements for the higher
rebates/lower fees.
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\18\ See NYSE Arca Equities Fee Schedule, Section VII, Step Up
Tiers table, footnote ``(b),'' available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>
(providing enhanced rebate of $0.0036 per share on all LMM add
volume if the ETP Holder, together with its affiliates, executes
Tape B adding ADV that is at least 40% over the ETP Holder's adding
ADV in Q3 2019, as a percentage of Tape B CADV with no sunset
provision); Cboe BYX Equities Fee Schedule, Step-Up Tier table,
available at <a href="https://www.cboe.com/us/equities/membership/fee_schedule/byx/">https://www.cboe.com/us/equities/membership/fee_schedule/byx/</a> (providing reduced fee if the member has a
combined Step-Up Auction ADV and Step-Up ADAV from April 2022
greater than or equal to 3,000,000 and the member has a combined
Auction ADV and ADAV greater than or equal to 0.25% of TCV with no
sunset provision).
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Implementation
The proposed changes are immediately effective.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \19\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \20\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among its Equity Members and issuers and other
persons using its facilities and is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
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\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4).
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The Exchange operates in a highly fragmented and competitive market
in which market participants can readily direct their order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of sixteen registered equities exchanges, and
there are a number of alternative trading systems and other off-
exchange venues, to which market participants may direct their order
flow. Based on publicly available information, no single registered
equities exchange had more than approximately 15.58% of the total
market share of executed volume of equities trading for the month of
November 2023.\21\ Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow, and the Exchange
represented approximately 2.08% of the overall equities market share
for the month of November 2023.\22\ The Commission and the courts have
repeatedly expressed their preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. In Regulation NMS, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and
also recognized that current regulation of the market system ``has been
remarkably successful in promoting market competition in its broader
forms that are most important to investors and listed companies.'' \23\
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\21\ See the ``Market Share'' section of the Exchange's website,
available at <a href="https://www.miaxglobal.com/">https://www.miaxglobal.com/</a> (last visited December 12,
2023).
\22\ See id.
\23\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37499 (June 29, 2005).
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue to reduce use of certain categories of
products, in response to new or different pricing structures being
introduced into the market. Accordingly, competitive forces constrain
the Exchange's transaction fees and rebates, and market participants
can readily trade on competing venues if they deem pricing levels at
those other venues to be more favorable. The Exchange believes the
proposal reflects a reasonable and competitive pricing structure
designed to continue to incentivize market participants to direct
additional orders that add liquidity to the Exchange in securities
priced at or above $1.00 per share, which the Exchange believes would
deepen liquidity and promote market quality on the Exchange to the
benefit of all market participants.
The Exchange notes that volume-based incentives and discounts (such
as tiers) have been widely adopted by exchanges (including the
Exchange), and believes they are reasonable, equitable and not unfairly
discriminatory because they are available to all Equity Members on an
equal basis, provide additional benefits or discounts that are
reasonably related
[[Page 88189]]
to the value of an exchange's market quality associated with higher
levels of market activity (such as higher levels of liquidity provision
and/or growth patterns), and the introduction of higher volumes of
orders into the price and volume discovery process.
The Exchange believes its proposal to increase the ADV requirement
in Remove Volume Tier 1 and eliminate Remove Volume Tier 2 from the Fee
Schedule is reasonable, equitably allocated and not unfairly
discriminatory because the reduced fee for Remove Volume Tier 1 will
continue to be available to all Equity Members on an equal basis, and
is reasonably designed to encourage Equity Members to maintain or
increase their order flow. The Exchange believes that even with this
proposal, the reduced fee of Remove Volume Tier 1 will continue to
promote price discovery, enhance liquidity and market quality, and
contribute to a more robust and well-balanced market ecosystem on the
Exchange to the benefit of all Equity Members and market participants.
Further, the Exchange believes its proposal to increase the ADV
requirement in Remove Volume Tier 1 from 0.10% to now be 0.20% of TCV
and eliminate Remove Volume Tier 2 is reasonable, equitably allocated
and not unfairly discriminatory because, despite the modest increase in
ADV requirement and elimination of Remove Volume Tier 2, the Exchange's
reduced fee and requirements to achieve Remove Volume Tier 1 remain
competitive with the fees to remove liquidity in securities priced at
or above $1.00 per share charged by other equity exchanges, including
other equity exchanges that also have reduced fees for meeting certain
criteria for removing liquidity.\24\
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\24\ See supra note 9.
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The Exchange believes that the Step-Up Added Liquidity Rebate, as
modified by the proposed change to the sunset period, is reasonable,
equitable and not unfairly discriminatory as the Step-Up Added
Liquidity Rebate will continue to be available to all Equity Members on
an equal basis, and is reasonably designed to encourage Equity Members
to maintain or increase their order flow in liquidity-adding volume.
The Exchange believes this will continue to promote price discovery,
enhance liquidity and market quality, and contribute to a more robust
and well-balanced market ecosystem on the Exchange to the benefit of
all Equity Members and market participants.
In addition, the Exchange believes its proposal is reasonable
because several competing equities exchanges continue to use a baseline
month's volume for their members as the requirement for higher rebates/
lower fees that is an older month than the Exchange's baseline month of
May 2023 and many of those exchanges do not have a sunset
provision.\25\ By extending the sunset period, the Exchange will be
able to continue to compete with the enhanced rebates offered by
competing exchanges that use older baseline months' volume in their
requirements for the higher rebates/lower fees.
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\25\ See supra note 18.
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The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to amend the sunset period in the Fee Schedule for the
Step-Up Added Liquidity Rebate because it will provide clarity to
Equity Members that, unless the Exchange determines to amend or
otherwise modify the Step-Up Added Liquidity Rebate, the Step-Up Added
Liquidity Rebate will expire at the end of the sunset period. This will
allow Equity Members to take into account that the enhanced rebate
provided for by the Step-Up Added Liquidity Rebate may be discontinued
at the end of sunset period unless the Exchange announces otherwise and
files a revised proposal with the Commission. The Exchange further
notes that it will issue an alert to market participants should the
Exchange determine that the Step-Up Added Liquidity Rebate will expire
earlier than December 31, 2023, or if the Exchange determines to amend
the criteria or rate applicable to the Step-Up Added Liquidity Rebate
prior to the end of the sunset period.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed change will not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition
The Exchange believes that its proposal will not impose any burden
on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes the Step-
Up Added Liquidity Rebate, as modified by this proposal, will continue
to incentivize Equity Members to submit additional orders that add
liquidity to the Exchange, thereby contributing to a deeper and more
liquid market and promoting price discovery and market quality on the
Exchange to the benefit of all market participants and enhancing the
attractiveness of the Exchange as a trading venue, which the Exchange
believes, in turn, would continue to encourage market participants to
direct additional order flow to the Exchange. Greater liquidity
benefits all Equity Members by providing more trading opportunities and
encourages Equity Members to send additional orders to the Exchange,
thereby contributing to robust levels of liquidity, which benefits all
market participants. As described above, the Exchange believes its
proposal to increase the ADV requirement in Remove Volume Tier 1 from
0.10% to now be 0.20% of TCV and eliminate Remove Volume Tier 2 allows
the Exchange's reduced Removed Volume fee to remain competitive with
the fees to remove liquidity in securities priced at or above $1.00 per
share charged by other equity exchanges, including other equity
exchanges that also have reduced fees for meeting certain criteria for
removing liquidity.\26\ Similarly, the opportunity to qualify for the
proposed new Step-Up Added Liquidity Rebate, and thus receive the
proposed rebate for qualifying executions of orders in securities
priced at or above $1.00 per share that add displayed volume will
continue to be available to all Equity Members that meet the associated
volume requirement, and the Exchange believes the proposed extension of
the sunset period is reasonably related to the enhanced market quality
that the Step-Up Added Liquidity Rebate is designed to promote.
Accordingly, the Exchange does not believe the proposed changes would
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purpose of the Act.
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\26\ See supra note 9.
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The Exchange believes its proposal to extend the sunset period in
the Fee Schedule for the Step-Up Added Liquidity Rebate will not impose
any burden on intramarket competition not necessary or appropriate in
furtherance of the purposes of the Act because it will provide clarity
to Equity Members that, unless the Exchange determines to amend or
otherwise modify the Step-Up Added Liquidity Rebate, the Step-Up Added
Liquidity Rebate will be discontinued at the end of the sunset period.
This will allow Equity Members to take into account that the enhanced
rebate provided for by the Step-Up Added Liquidity Rebate may be
discontinued at the end of the sunset period unless the Exchange
announces otherwise. The Exchange further notes that it will issue an
alert to market participants should the Exchange determine that the
Step-Up Added
[[Page 88190]]
Liquidity Rebate will expire earlier than December 31, 2023, or if the
Exchange determines to amend the criteria or rate applicable to the
Step-Up Added Liquidity Rebate prior to the end of the sunset period.
Intermarket Competition
The Exchange believes its proposal will benefit competition, and
the Exchange notes that it operates in a highly competitive market.
Equity Members have numerous alternative venues they may participate on
and direct their order flow to, including fifteen other equities
exchanges and numerous alternative trading systems and other off-
exchange venues. As noted above, based on publicly available
information, no single registered equities exchange had more than
approximately 15.58% of the total market share of executed volume of
equities trading for the month of November 2023.\27\ Thus, in such a
low-concentrated and highly competitive market, no single equities
exchange possesses significant pricing power in the execution of order
flow, and the Exchange represented approximately 2.08% of the overall
market for the month of November 2023.\28\ Moreover, the Exchange
believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order
flow in response to new or different pricing structures being
introduced to the market. Accordingly, competitive forces constrain the
Exchange's transaction fees and rebates generally, including with
respect to the criteria for Equity Members to achieve Remove Volume
Tier 1 and the Step-Up Added Liquidity Rebate, and market participants
can readily choose to send their orders to other exchanges and off-
exchange venues if they deem rebate criteria at those other venues to
be more favorable.
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\27\ See supra note 21.
\28\ See id.
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As described above, the proposed changes represent a competitive
proposal through which the Exchange is seeking to continue to encourage
additional order flow to the Exchange through a volume-based incentive
that is comparable to the criteria for volume-based incentives adopted
by at least one other competing exchange that has a similar sunset
period for a specific enhanced rebate that adds liquidity to that
market.\29\ Accordingly, the Exchange believes that its proposal would
not burden, but rather promote, intermarket competition by enabling it
to better compete with other exchanges that offer similar pricing
incentives to market participants that achieve certain volume criteria
and thresholds.
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\29\ See supra note 17.
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Additionally, the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \30\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission, the D.C.
circuit stated: ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their routing agents, have a wide range of choices of where to
route orders for execution'; [and] `no exchange can afford to take its
market share percentages for granted' because `no exchange possesses a
monopoly, regulatory or otherwise, in the execution of order flow from
broker dealers' . . .''.\31\ Accordingly, the Exchange does not believe
its proposed pricing changes impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
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\30\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\31\ See NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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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,\32\ and Rule 19b-4(f)(2) \33\ 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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\32\ 15 U.S.C. 78s(b)(3)(A)(ii).
\33\ 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#ef9d9a838ac28c8082828a819b9caf9c8a8cc1888099"><span class="__cf_email__" data-cfemail="3d4f485158105e5250505853494e7d4e585e135a524b">[email protected]</span></a>. Please include
file number SR-PEARL-2023-69 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-2023-69. 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
[[Page 88191]]
submissions should refer to file number SR-PEARL-2023-69 and should be
submitted on or before January 10, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27917 Filed 12-19-23; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 20, 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.