Notice2024-10593
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
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Published
May 15, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 95 (Wednesday, May 15, 2024)</title>
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[Federal Register Volume 89, Number 95 (Wednesday, May 15, 2024)]
[Notices]
[Pages 42558-42561]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-10593]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100092; File No. SR-PEARL-2024-23]
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
May 9, 2024.
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 April 30, 2024, 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-equities/pearl-equities/rule-filings">https://www.miaxglobal.com/markets/us-equities/pearl-equities/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.
[[Page 42559]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to: (1) amend the
Definitions and General Notes sections of the Fee Schedule to
consolidate and relocate text regarding certain days and circumstances
that the Exchange excludes from its calculation each month for purposes
of determining an Equity Member's \3\ qualification for the Exchange's
transaction pricing tiers and incentives; and (2) include additional
days that the Exchange will exclude from its calculation each month for
purposes of determining an Equity Member's qualification for the
Exchange's transaction pricing tiers and incentives.
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\3\ The term ``Equity Member'' is a Member authorized by the
Exchange to transact business on MIAX Pearl Equities. See Exchange
Rule 1901.
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Currently, the Definitions section of the Fee Schedule includes a
sentence that states that the Exchange excludes from its calculation of
ADAV,\4\ ADV,\5\ and NBBO Set Volume \6\ 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). The Definitions section of the Fee
Schedule also includes a sentence that states that the Exchange
excludes from its calculation of TCV \7\ volume on any given day that
the Exchange's system experiences a disruption that lasts for more than
60 minutes during Regular Trading Hours,\8\ on any day with a scheduled
early market close, and on the ``Russell Reconstitution Day''
(typically the last Friday in June). The General Notes section of the
Fee Schedule includes a sentence that states that for the purpose of
determining qualification for the rebates described in Level B and
Level C of the Market Quality Tier columns in the NBBO Setter Plus
Program (referred to herein as the ``NBBO Program''),\9\ the Exchange
will exclude from its calculation: (1) any trading day that the
Exchange's system experiences a disruption that lasts for more than 60
minutes during regular trading hours; (2) any day with a scheduled
early market close; and (3) the ``Russell Reconstitution Day''
(typically the last Friday in June).\10\
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\4\ The term ``ADAV'' means average daily added volume
calculated as the number of shares added per day and ``ADV'' means
average daily volume calculated as the number of shares added or
removed, combined, per day. ADAV and ADV are calculated on a monthly
basis. ``NBBO Set Volume'' means the ADAV in all securities of an
Equity Member that sets the NBB or NBO on MIAX Pearl Equities. See
the Definitions section of the Fee Schedule.
\5\ See id.
\6\ See id.
\7\ The term ``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. See the Definitions section of the
Fee Schedule.
\8\ The term ``Regular Trading Hours'' means the time between
9:30 a.m. and 4:00 p.m. Eastern Time. See Exchange Rule 1901.
\9\ See Fee Schedule, Section 1)c).
\10\ See the General Notes section of the Fee Schedule.
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The Exchange now proposes to reorganize the Definitions section and
the General Notes section of the Fee Schedule to consolidate the texts
of current days and circumstances that the Exchange excludes from its
calculation of ADAV, ADV, and TCV, and relocate the texts of those
exclusions from the Definitions section to the General Notes section of
the Fee Schedule. The Exchange also proposes to delete the reference to
``Level B and Level C'' of the Market Quality Tier columns of the NBBO
Program in the final sentence of the General Notes section as all
Levels of the Market Quality Tier columns of the NBBO Program are
subject to the same trading days and circumstances for volume
exclusions currently provided by the Exchange. The Exchange believes
that the proposed changes would provide greater clarity to market
participants regarding the days and circumstances that the Exchange
excludes volume from its calculation of ADAV, ADV, TCV, NBBO Set Volume
and Levels of the Market Quality Tier columns of the NBBO Program. The
Exchange notes that these proposed changes do not alter the current
days or circumstances pursuant to which the Exchange excludes volume
from its monthly calculation of an Equity Member's qualification for
the Exchange's transaction pricing tiers and incentives.
Next, the Exchange proposes to include in the list of days excluded
from such calculations any day that the MSCI Equities Indexes are
rebalanced (``MSCI Rebalance Day''), which occur on a quarterly basis
each year, and any day that the S&P 400, S&P 500, and S&P 600 Indexes
are rebalanced (``S&P Rebalance Day''), which also occur on a quarterly
basis each year.
For the same reasons that the Exchange currently excludes the day
that Russell Investments reconstitutes its family of indexes (``Russell
Reconstitution Day'') from these calculations,\11\ the Exchange
believes it is appropriate to exclude MSCI Rebalance Days and S&P
Rebalance Days from these calculations in the same manner, as such days
typically have extraordinarily high and/or abnormally distributed
trading volumes, which the Exchange believes is attributed to market
participants who are not generally as active entering the market to
rebalance their holdings in-line with these rebalances, and the
Exchange believes this change to normal activity may affect an Equity
Member's ability to meet the applicable volume thresholds under its
volume-based tiers and incentive programs, as well as the daily quoting
requirements under the NBBO Program. The Exchange notes that the
proposed exclusion of MSCI Rebalance Days and S&P Rebalance Days from
the relevant calculations would be applied in the same manner that the
Exchange currently excludes system disruption days, scheduled early
market close days, and the Russell Reconstitution Day from such
calculations. The proposed changes are based on substantively similar
exclusions provided by at least one other competing equities
exchange.\12\
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\11\ See Securities Exchange Act Release Nos. 93979 (January 14,
2022), 87 FR 3151 (January 20, 2022) (SR-PEARL-2022-01) (excluding
the Russell Reconstitution Day from the calculation ADAV, ADV and
TCV); 94926 [sic] (May 17, 2022), 87 FR 31269 (May 23, 2022) (SR-
PEARL-2022-21) (excluding the Russell Reconstitution Day from the
calculation of certain Market Quality Tiers of the NBBO Program).
\12\ See MEMX LLC (``MEMX'') Equities Fee Schedule, Notes
Section (``The Exchange excludes from its calculations of ADAV, ADV
and TCV, and for purposes of determining qualification for the
Displayed Liquidity Incentive: (1) any trading day that the
Exchange's system experiences a disruption that lasts for more than
60 minutes during regular trading hours; (2) the day that Russell
Investments reconstitutes its family of indexes (i.e., the last
Friday in June); (3) any day that the MSCI Equities Indexes are
rebalanced (i.e., on a quarterly basis); (4) any day that the S&P
400, S&P 500, and S&P 600 Indexes are rebalanced (i.e., on a
quarterly basis); and (5) any day with a scheduled early market
close.''). See Securities Exchange Act Release No. 94590 (April 4,
2022), 87 FR 20892 (April 8, 2022) (SR-MEMX-2022-05 [sic]).
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The Exchange also proposes to relocate the following two sentences
from the Definitions section to the General Notes section of the Fee
Schedule:
<bullet> Routed shares are not included in the ADAV or ADV
calculation.
<bullet> With prior notice to the Exchange, an Equity Member may
aggregate ADAV or ADV with other Equity Members that control, are
controlled by, or are under common control with such Equity Member (as
evidenced on such Equity Member's Form BD).
The Exchange does not propose to amend the text of either of the
above
[[Page 42560]]
sentences. The purpose of this change is to provide consistency and
clarity within the Fee Schedule so that all notes regarding exclusions
and volume aggregation are now included in the General Notes section of
the Fee Schedule, while keeping definitions for defined terms solely in
the Definitions section of the Fee Schedule.
Implementation
The proposed changes are effective beginning May 1, 2024.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
provisions of Section 6 of the Act,\13\ in general, and with Sections
6(b)(4) and 6(b)(5) of the Act,\14\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among its Equity Members and other persons using its facilities and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed rule changes to consolidate
and relocate text regarding certain excluded trading days is reasonable
and not designed to permit unfair discrimination between customers and
market participants because the changes will provide greater clarity
regarding the days that the Exchange excludes from its calculation of
ADAV, ADV, TCV, and NBBO Set Volume for purposes of determining an
Equity Member's qualification for the Exchange's transaction pricing
tiers and incentives. The Exchange believes it is reasonable and not
unfairly discriminatory to ensure that the Fee Schedule is clear and
concise to all market participants. The Exchange also notes that these
proposed changes do not alter the current method by which the Exchange
excludes certain days and circumstances.
The Exchange believes that the proposed exclusion of MSCI Rebalance
Days and S&P Rebalance Days from the relevant calculations is
reasonable and appropriate because, as described above, MSCI Rebalance
Days and S&P Rebalance Days typically have extraordinarily high and/or
abnormally distributed trading volumes which, in turn, may affect an
Equity Member's ability to meet the applicable volume thresholds and/or
daily quoting requirements under its transaction pricing tiers/
incentives, and the Exchange believes that excluding such days from the
relevant calculations for purposes of determining an Equity Member's
qualification for such tiers/incentives. Additionally, the Exchange
believes that the proposed rule change is equitable and not unfairly
discriminatory because it will apply to all Equity Members uniformly,
in that each Equity Member's volume and quoting activities for purposes
of pricing tiers/incentives would continue to be calculated in a
uniform manner and would now exclude MSCI Rebalance Days and S&P
Rebalance Days, in addition to the exclusions the Exchange currently
provides.
The Exchange believes its proposal to relocate certain text from
the Definitions section to the General Notes section of the Fee
Schedule regarding the exclusion for routed shares from ADAV and ADV
calculations and the ability of an Equity Member to aggregate certain
volume is reasonable because it will provide consistency and clarity
within the Fee Schedule such that all exclusions and volume aggregation
notes will now be located in the General Notes section of the Fee
Schedule.
For the reasons discussed above, the Exchange submits that the
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of
the Act \15\ in that it provides for the equitable allocation of
reasonable dues, fees and other charges among its Equity Members and
other persons using its facilities and is not designed to unfairly
discriminate between customers, issuers, brokers, or dealers.
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\15\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will result in any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Rather, as described above, the
proposed rule changes are designed to provide greater clarity regarding
the days that the Exchange excludes from its calculation of ADAV, ADV,
TCV, and NBBO Set Volume for the purpose of determining and Equity
Member's qualification for the Exchange's transaction pricing tiers and
incentives. In addition, the proposed exclusion of MSCI Rebalance Days
and S&P Rebalance Days from the relevant calculations is intended to
avoid affecting Equity Members' ability to meet the applicable volume
thresholds and/or quoting requirements to qualify for the Exchange's
transaction pricing tiers/incentives due to the abnormal trading
volumes and market conditions typically experienced in the equities
markets on MSCI Rebalance Days and S&P Rebalance Days.
Inter-Market Competition
The Exchange does not believe the proposal would impose any burden
on inter-market competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as the Exchange believes the
proposal is not concerned with competitive issues, but rather relates
to calculation methodologies applicable to its pricing tiers/
incentives.
Intra-Market Competition
Additionally, the Exchange believes the proposal would not impose
any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act because, as
described above, the proposal will apply to all Equity Members
uniformly and in the same manner that the Exchange currently excludes
system disruption days and the Russell Reconstitution Day from such
calculations.
The Exchange believes its proposal to relocate certain text from
the Definitions section to the General Notes section of the Fee
Schedule regarding the exclusion for routed shares from ADAV and ADV
calculations and the ability of an Equity Member to aggregate certain
volume will result in any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act because it
will provide consistency and clarity within the Fee Schedule such that
all exclusions and volume aggregation notes will now be located in the
General Notes section of the Fee Schedule.
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,\16\ and Rule 19b-4(f)(2) \17\ 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,
[[Page 42561]]
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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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
\17\ 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#5123243d347c323e3c3c343f2522112234327f363e27"><span class="__cf_email__" data-cfemail="6a181f060f47090507070f041e192a190f09440d051c">[email protected]</span></a>. Please include
file number SR-PEARL-2024-23 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-2024-23. 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-2024-23 and should be
submitted on or before June 5, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-10593 Filed 5-14-24; 8:45 am]
BILLING CODE 8011-01-P
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