Notice2024-21872
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
September 25, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 186 (Wednesday, September 25, 2024)</title>
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[Federal Register Volume 89, Number 186 (Wednesday, September 25, 2024)]
[Notices]
[Pages 78359-78364]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-21872]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101100; File No. SR-PEARL-2024-41]
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
September 19, 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 September 9, 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
[[Page 78360]]
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: (1) amend Sections 1)a)-b) of the Fee
Schedule to decrease the fee for executions of orders that remove
liquidity from the Exchange in securities priced at or above $1.00 per
share from $0.00295 to $0.00285 per share for all Tapes; and (2) amend
Section 1)c) of the Fee Schedule to modify one aspect of the criteria
that is required for Equity Members \3\ to receive the Step-Up Rebate
(described below) and extend the sunset period (described below). The
Exchange initially filed this proposal on August 30, 2024 (SR-PEARL-
2024-40). On September 9, 2024, the Exchange withdrew SR-PEARL-2024-40
and refiled this proposal.
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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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Proposal To Decrease the Fee To Remove Liquidity in Securities Priced
at or Above $1.00 per Share
The Exchange proposes to amend Sections 1)a)-b) of the Fee Schedule
to decrease the fee for executions of orders that remove liquidity from
the Exchange in securities priced at or above $1.00 per share from
$0.00295 to $0.00285 per share for all Tapes.
The Exchange currently charges a standard fee of $0.00295 per share
for executions of orders in securities priced at or above $1.00 per
share that remove liquidity from the Exchange for all Tapes.\4\
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\4\ See Fee Schedule, Section 1)a).
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The Exchange now proposes to amend the Standard Rates in Section
1)a) of the Fee Schedule to decrease the fee to remove liquidity from
the Exchange in securities priced at or above $1.00 per share from
$0.00295 to $0.00285 per share for all Tapes.
Further, the Exchange proposes to amend the Liquidity Indicator
Codes and Associated Fees table in Section 1)b) of the Fee Schedule to
reflect the aforementioned change. The Exchange proposes to amend the
fee associated with Liquidity Indicator Codes ``RA,'' ``Ra,'' ``RB,''
``Rb,'' ``RC,'' ``Rc,'' ``RR,'' ``Rr,'' ``RT,'' ``Rt,'' and ``Rp'',
from $0.00295 to now be $0.00285 per share, to reflect the proposed
change to the fee for executions of orders in securities priced at or
above $1.00 per share that remove liquidity from the Exchange in all
Tapes. The Exchange does not propose to amend the fees for executions
of orders in securities priced below $1.00 per share that remove
liquidity from the Exchange in all Tapes, which is currently set at
0.25% of the total dollar value of the transaction.\5\
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\5\ See Fee Schedule, Sections 1)a)-b).
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The purpose of these proposed changes is for business and
competitive reasons. The Exchange believes it is appropriate to
decrease the fee to remove liquidity from the Exchange in securities
priced at or above $1.00 per share from $0.00295 to $0.00285 per share
for all Tapes to further encourage market participants to enter
liquidity removing orders on the Exchange, thereby increasing the
execution opportunities for the liquidity adding orders resting on the
MIAX Pearl Equities Book.\6\ The Exchange notes that the Exchange's
proposed standard fee of $0.00285 per share for executions of all
orders in securities priced at or above $1.00 per share that remove
liquidity from the Exchange remains competitive with the standard fee
to remove liquidity in securities priced at or above $1.00 per share
charged by other equity exchanges.\7\
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\6\ The term ``MIAX Pearl Equities Book'' shall mean the
electronic book of orders in equity securities maintained by the
System. See Exchange Rule 1901.
\7\ See e.g., MEMX LLC (``MEMX'') Equities Fee Schedule,
Transaction Fees, Fee Code ``R'' (providing standard remove volume
fee of $0.0030 per share for executions of orders in securities
priced at or above $1.00 per share); and Cboe EDGX Exchange, Inc.
(``EDGX''), Equities Fee Schedule, Standard Rates (providing
standard remove volume fee of $0.0030 per share for executions of
orders in securities priced at or above $1.00 per share).
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Proposal To Amend the NBBO Setter Plus Table To Modify the Baseline
Month and Sunset Period for the Step-Up Rebate
The Exchange proposes to amend the Step-Up Rebate in footnote #4 of
the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule to amend
the baseline month and sunset period for Step-Up Rebate.\8\
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\8\ See Fee Schedule, Section 1)c), note #4.
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By way of background, the NBBO Setter Plus Program (referred to in
this filing as the ``NBBO Program'') was implemented beginning
September 1, 2023 and subsequently amended several times.\9\ In
general, the NBBO Program provides enhanced rebates for Equity Members
that add displayed liquidity (``Added Displayed Volume'') in securities
priced at or above $1.00 per share in all Tapes based on increasing
volume thresholds and increasing market quality levels. The NBBO
Program provides the following additional incentives: (1) an NBBO
Setter Additive Rebate \10\ applied to executions of orders in
securities priced at or above $1.00 per share that set the NBB or NBO
upon entry; (2) an NBBO First Joiner Additive Rebate \11\ applied to
executions of orders in securities priced at or above $1.00 per share
that bring MIAX Pearl Equities to the established NBB or NBO; and (3) a
Step-Up Rebate for Equity Members that satisfy the following
requirements: (i) minimum displayed ADAV \12\ as a percentage of TCV
\13\ of 0.35% and (ii) an increase in the percentage of displayed ADAV
as a percentage of TCV of at least 0.05% as compared to the Equity
Member's February 2024 displayed ADAV percentage. Alternatively, an
Equity Member may qualify for the Step-Up Rebate by satisfying the
following requirements: (1) minimum displayed ADAV as a percentage of
TCV of 0.35% (excluding sub-dollar volume); and (2) increase in the
percentage of displayed ADAV as percentage of TCV of at least 0.05% as
compared to the Equity Member's February 2024 displayed ADAV percentage
(excluding sub-dollar volume). Currently, the Step-Up Rebate
[[Page 78361]]
is set to expire no later than August 31, 2024 (referred to herein as
the ``sunset period'').
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\9\ See, e.g., Securities Exchange Act Release Nos. 98472
(September 21, 2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-
2023-45); 99318 (January 11, 2024), 89 FR 3488 (January 18, 2024)
(SR-PEARL-2023-73); and 99695 (March 8, 2024), 89 FR 18694 (March
14, 2024) (SR-PEARL-2024-11).
\10\ The Exchange does not propose to amend the NBBO Setter
Additive Rebate, which is an additive rebate of ($0.0004) per share
for executions of orders in securities priced at or above $1.00 per
share that set the NBB or NBO on MIAX Pearl Equities with a minimum
size of a round lot. See Fee Schedule, Section 1)c). The Exchange
notes that rebates are indicated by parentheses in the Fee Schedule.
See the General Notes section of the Fee Schedule.
\11\ The Exchange does not propose to amend the NBBO First
Joiner Additive Rebate, which is an additive rebate of ($0.0002) per
share for executions of orders in securities priced at or above
$1.00 per share that bring MIAX Pearl Equities to the established
NBB or NBO with a minimum size of a round lot. See Fee Schedule,
Section 1)c).
\12\ ``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.
\13\ ``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 id.
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The Exchange now proposes to amend Section 1)c) of the Fee Schedule
to modify one aspect of the criteria for Equity Members to receive the
Step-Up Rebate and the sunset period. In particular, the Exchange
proposes to amend the baseline month from February 2024 to now be July
2024. With the proposed change, Equity Members will qualify for the
Step-Up Rebate by satisfying the following requirements: (i) minimum
displayed ADAV as a percentage of TCV of 0.35% and (ii) an increase in
the percentage of displayed ADAV as a percentage of TCV of at least
0.05% over the baseline month of July 2024.\14\ Alternatively, Equity
Members will qualify for the Step-Up Rebate by satisfying the following
requirements: (1) minimum displayed ADAV as a percentage of TCV of
0.35% (excluding sub-dollar volume); and (2) increase in the percentage
of displayed ADAV as percentage of TCV of at least 0.05% over the
baseline month of July 2024 (excluding sub-dollar volume).
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\14\ The Exchange will use a baseline ADAV of 0.00% of TCV for
firms that become Equity Members of the Exchange after July 2024 for
the purpose of the Step-Up Rebate calculation.
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Additionally, the Exchange proposes to amend the sunset period by
extending the Step-Up Rebate until January 31, 2025 (the last trading
day for the month of January 2025).\15\ The Exchange will issue a
proposed filing and alert to market participants should the Exchange
determine that the Step-Up Rebate will expire earlier than January 31,
2025 or if the Exchange determines to amend the criteria or rate
applicable to the Step-Up Rebate prior to the end of the sunset period.
The Exchange notes that at least one other competing equities exchange
recently filed a proposal to use a more recent month (June 2024) as the
baseline month comparison for one of its enhanced rebates and included
a similar ``sunset period''.\16\ Accordingly, this proposal is not new
or novel.
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\15\ The Exchange notes that at the end of the sunset period,
the Step-Up Rebate will no longer apply unless the Exchange files
another 19b-4 Filing with the Commission to amend the criteria terms
or update the baseline month to a more recent month.
\16\ See Securities Exchange Act Release No. 100469 (July 9,
2024), 89 FR 57463 (June 15, 2024) (SR-MEMX-2024-26); see also MEMX
Equities Fee Schedule, Liquidity Provision Tiers, Tier 1, 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> (last visited August 25, 2024).
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The Exchange does not propose any other changes to the qualifying
criteria for Equity Members to receive the Step-Up Rebate. The Exchange
also does not propose to amend the amount of the Step-Up rebate of
($0.001) per share.\17\
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\17\ See Fee Schedule, Section 1)c), note #4.
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The purpose of this proposed change is to update the baseline month
for the Step-Up Rebate calculation to a more recent month as volume on
the Exchange has changed since the Exchange last amended the Step-Up
Rebate. The Exchange believes that with the updated baseline month, the
Step-Up Rebate will continue to provide an incentive for Equity Members
to strive for higher ADAV on the Exchange 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 this will, in turn, promote price discovery and
contribute 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 modifying the sunset period in the Fee Schedule is
to extend the sunset period for the Step-Up Rebate until January 31,
2025. This will allow Equity Members to take into account that the
enhanced rebate provided by the Step-Up Rebate will be discontinued at
the end of the new sunset period unless the Exchange announces
otherwise and files a new proposal with the Commission.
Implementation
The proposed fee 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 \18\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \19\ 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. The Exchange also believes that the
proposal is consistent with the objectives of Section 6(b)(5) \20\
requirements that the rules of an exchange be designed to prevent
fraudulent and manipulative acts and practices, and to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, 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, particularly, is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(4).
\20\ 15 U.S.C 78f(b)(5).
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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. For the month of July 2024, based on publicly available
information, no single registered equities exchange had more than
approximately 15-16% of the total market share of executed volume of
equities trading.\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. For the month of July
2024, the Exchange represented 1.61% of the total market share of
executed volume of equities trading.\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 August 26,
2024).
\22\ 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
[[Page 78362]]
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 their order flow to the Exchange, which the Exchange believes
would continue to enhance liquidity and market quality to the benefit
of all Equity Members and market participants.
Proposal To Decrease the Fee To Remove Liquidity in Securities Priced
at or Above $1.00 per Share
The Exchange believes the proposed change to decrease the fee to
remove liquidity in securities priced at or above $1.00 per share from
$0.00295 to $0.00285 per share for all tapes is reasonable because the
proposed fee remains lower than, and competitive with, the standard fee
charged by competing exchanges to remove liquidity in securities priced
at or above $1.00 per share.\24\ The Exchange further believes that the
proposed change is equitably allocated and not unfairly discriminatory
because the proposed fee of $0.00285 per share for executions of all
orders in securities priced at or above $1.00 per share that remove
liquidity from the Exchange will apply equally to all Equity Members
that remove liquidity.
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\24\ See supra note 7.
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Proposal To Amend the NBBO Setter Plus Table To Amend the Baseline
Month and Sunset Period for the Step-Up Rebate
The Exchange believes its proposal to update the baseline month for
the Step-Up Rebate is reasonable, equitably allocated and not unfairly
discriminatory because volume on the Exchange has changed since the
Exchange last amended the Step-Up Rebate and the Exchange now proposes
to update the baseline month to a more recent month. The Exchange
believes that with the updated baseline month, the Step-Up Rebate will
continue to provide an incentive for Equity Members to strive for
higher ADAV on the Exchange 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 the proposal is reasonable because even with the updated
baseline month, the Step-Up Rebate will continue to encourage the
submission of added displayed 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 Exchange believes that the Step-Up Rebate, as modified by the
proposed change to the baseline month, is reasonable, equitable and not
unfairly discriminatory as the Step-Up 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. The Exchange also notes that MEMX recently filed a
proposal to use a more recent month (June 2024) as the baseline month
for MEMX's members to receive one of its enhanced rebates.\25\
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\25\ See supra note 16.
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The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to extend the sunset period for the Step-Up Rebate until
January 31, 2025. Unless the Exchange determines to amend or otherwise
modify the Step-Up Rebate, the Step-Up 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 Rebate will be
discontinued at the end of sunset period unless the Exchange announces
otherwise and files a new proposal with the Commission. The Exchange
further notes that it will issue a proposed filing and alert to market
participants should the Exchange determine that the Step-Up Rebate will
expire earlier than January 31, 2025 or if the Exchange determines to
amend the criteria or rate applicable to the Step-Up Rebate prior to
the end of the sunset period. At least one other competing equities
exchange provided a similar sunset period in its fee schedule for one
of its enhanced rebates subject to a baseline month comparison with a
more recent month.\26\
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\26\ See id.
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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 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.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed changes will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.
Intramarket Competition
The Exchange believes that the proposed change to decrease the fee
from $0.00295 to $0.00285 per share for executions of orders in
securities priced at or above $1.00 per share for all Tapes will not
impose any burden on intramarket competition because it represents a
decrease from the current fee for such executions. The Exchange
believes the proposed reduced fee will further encourage market
participants to enter liquidity removing orders on the Exchange,
thereby increasing the execution opportunities for the liquidity adding
orders resting on the MIAX Pearl Equities Book, thereby promoting
competition on the Exchange. The proposed reduced fee for executions of
orders in securities priced at or above $1.00 per share that remove
liquidity from the Exchange will apply equally to all Equity Members.
Further, the Exchange notes that the Exchange's proposed reduced fee of
$0.00285 per share for executions of all orders in securities priced at
or above $1.00 per share that remove liquidity from the Exchange
remains lower than, and competitive with, the standard fee to remove
liquidity in securities priced at or above $1.00 per share charged by
competing equity exchanges.\27\
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\27\ See supra note 7.
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The Exchange does not believe that the proposal to update the
baseline month for Step-Up Rebate will impose any burden on intramarket
competition not necessary or appropriate in furtherance of the purposes
of the Act. The Exchange believes the Step-Up 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.
The Exchange believes its proposal to modify the sunset period in
the Fee Schedule for the Step-Up Rebate will not impose any burden on
intramarket
[[Page 78363]]
competition not necessary or appropriate in furtherance of the purposes
of the Act. With the proposed extension of the sunset period, all
Equity Members may continue to qualify for the enhanced rebate provided
by the Step-Up Rebate until January 31, 2025. Unless the Exchange
determines to amend or otherwise modify the Step-Up Rebate, the Step-Up
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 Rebate will be discontinued at the end of
sunset period unless the Exchange announces otherwise. The Exchange
further notes that it will issue a proposed filing and alert to market
participants should the Exchange determine that the Step-Up Rebate will
expire earlier than January 31, 2025 or if the Exchange determines to
amend the criteria or rate applicable to the Step-Up Rebate prior to
the end of the sunset period. At least one other competing equities
exchange provided a similar sunset period in its fee schedule for one
of its enhanced rebates subject to a baseline month comparison with a
more recent month.\28\
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\28\ See supra note 16.
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For the foregoing reasons, the Exchange believes the proposed
changes would not impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
Intermarket Competition
The Exchange believes its proposal will benefit competition as the
Exchange 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, no single registered equities exchange currently has more than
approximately 15-16% of the total market share of executed volume of
equities trading. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. 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 executions of all orders in securities priced at or above
$1.00 per share that remove liquidity from the Exchange, and market
participants can readily choose to send their orders to other exchanges
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. As described above, the proposed changes are
competitive proposals and the proposed reduce fee of $0.00285 per share
for removing liquidity in securities priced at or above $1.00 per share
remains lower than, or similar to, the standard fee to remove liquidity
in securities priced at or above $1.00 per share charged by competing
equities exchanges.\29\ Further, the proposed reduce fee to remove
liquidity from securities priced at or above $1.00 per share will apply
to all Equity Members equally.
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\29\ See supra note 7.
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As described above, the proposed changes to modify the baseline
month and extend the sunset period for the Step-Up Rebate 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 which also
updated its baseline month to a more recent month for a specific
enhanced rebate that adds liquidity to that market.\30\ 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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\30\ See supra note 16.
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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.'' \31\ 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 possess a
monopoly, regulatory or otherwise, in the execution of order flow from
broker dealers' . . . .'' \32\ 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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\31\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\32\ 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
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\33\ and Rule 19b-
4(f)(2) thereunder \34\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge imposed on any
person, whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing.
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\33\ 15 U.S.C. 78s(b)(3)(A)(ii).
\34\ 17 CFR 240.19b-4.
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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#fe8c8b929bd39d9193939b908a8dbe8d9b9dd0999188"><span class="__cf_email__" data-cfemail="156760797038767a7878707b6166556670763b727a63">[email protected]</span></a>. Please include
File Number SR-PEARL-2024-41 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Vanessa Countryman,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
[[Page 78364]]
All submissions should refer to file number SR-PEARL-2024-41. 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-2024-41 and should be
submitted on or before October 16, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21872 Filed 9-24-24; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on September 25, 2024.
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