Notice2024-23659
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
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Published
October 15, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 199 (Tuesday, October 15, 2024)</title>
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[Federal Register Volume 89, Number 199 (Tuesday, October 15, 2024)]
[Notices]
[Pages 83061-83064]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-23659]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101282; File No. SR-PEARL-2024-46]
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
October 8, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 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 83062]]
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 decrease the fee
for executions of orders that remove liquidity from the Exchange in
securities priced below $1.00 per share from 0.25% to 0.20% of the
total dollar value of the transaction.\3\
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\3\ The Exchange notes that it recently reduced the fee for
removing liquidity in securities priced at or above $1.00. See
Securities Exchange Act Release No. 101100 (September 19, 2024), 89
FR 78359 (September 25, 2024) (SR-PEARL-2024-41).
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Proposal To Decrease the Fee for Removing Liquidity in Securities
Priced Below $1.00 per Share
Currently, the Exchange assesses a fee of 0.25% of the total dollar
value of any transaction in securities priced below $1.00 per share
that removes liquidity from the Exchange across all Tapes.\4\ The
Exchange now proposes to decrease the fee from 0.25% to 0.20% of the
total dollar value of any transaction in securities priced below $1.00
per share that removes liquidity from the Exchange across all Tapes.
The purpose of the proposed change is for business and competitive
reasons.
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\4\ See Fee Schedule, Section (1)(a). See also Fee Schedule,
Section (1)(b), Liquidity Indicator Codes RA, RB, RC, RR, RT, Ra,
Rb, Rc, Rp, Rr and Rt.
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Specifically, the Exchange proposes to amend Section (1)(a)
Standard Rates Table of the Fee Schedule to change the value in the
table for Removing Liquidity in Securities below $1.00 from 0.25% to
0.20%. Additionally, the Exchange proposes to amend the Section (1)(b)
Liquidity Indicator Codes and Associated Fees, to reflect the proposed
change to the Standard Rates Table.
The Exchange provides a table in section (1)(b), Liquidity
Indicator Codes and Associated Fees, that provides a list of fees and
rebates so that Equity Members \5\ may better understand the fee or
rebate that is applied to each execution. The liquidity indicator code
for each execution is returned on the real-time trade report sent to
the Equity Member that submitted the order.
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\5\ 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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The Exchange now proposes to amend the column titled ``Fee/(Rebate)
Securities Priced Below $1.00'' in Section (1)(b) of the Fee Schedule
to reflect the proposed decrease to the standard fee assessed for
Removing Liquidity (Displayed Orders and Non-Displayed Orders) in
securities priced below $1.00 per share from 0.25% to 0.20% for the
following liquidity indicator codes: ``RA,'' ``RB,'' ``RC,'' ``RR,''
``RT,'' ``Ra,'' ``Rb,'' ``Rc,'' ``Rp,'' ``Rr,'' and ``Rt.''
The Exchange believes it is appropriate to decrease the fee from
0.25% to 0.20% of the total dollar value of any transaction in
securities priced below $1.00 per share that removes liquidity from the
Exchange across 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\
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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.
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Implementation
The Exchange proposes to implement the changes to the Fee Schedule
pursuant to this proposal on October 1, 2024.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \7\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \8\ 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 proposed rule change is
consistent with the objectives of Section 6(b)(5) \9\ 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
\9\ 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 many venues, including 16 registered equities
exchanges as well as 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 currently has more than approximately 15-
16% of the total market share of executed volume of equities
trading.\10\ 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 currently represents
less than 2% of the overall market share.\11\ 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.'' \12\
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\10\ Market share percentage calculated as of August 25, 2024.
The Exchange receives and processes data made available through
consolidated data feeds.
\11\ Id.
\12\ 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 incentivize market participants to direct their order flow
to the Exchange, which the Exchange believes would enhance liquidity
and market quality to the benefit of all Equity Members and market
participants.
Proposal To Decrease the Fee for Removing Liquidity in Securities
Priced Below $1.00 per Share
The Exchange believes that the proposed change to decrease the
standard fee for executions of all orders
[[Page 83063]]
in securities priced below $1.00 per share that remove liquidity from
the Exchange is reasonable, equitable, and consistent with the Act as
the proposed fee remains lower than, or similar to, the standard fee to
remove liquidity in securities priced below $1.00 per share charged by
competing equities exchanges.\13\ The Exchange further believes that
the proposal to decrease the standard fee for executions of all orders
in securities priced below $1.00 per share that remove liquidity from
the Exchange is equitably allocated and not unfairly discriminatory
because it will apply equally to all Equity Members that remove
liquidity from the Exchange.
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\13\ See Cboe EDGX Equities Fee Schedule, Standard Rates,
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> (charging a standard fee of 0.30% of the dollar
value to remove liquidity in securities priced below $1.00 per
share); see also MEMX Fee Schedule, Transaction Fees (charging a
standard fee of 0.28% of the total dollar value to remove liquidity
in securities priced below $1.00 per share); and NYSE American
Equities Price List, Section I.A.2., available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf</a> (charging a standard fee of
0.25% of the total dollar value of the transaction to remove
liquidity in securities priced below $1.00 per share).
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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. As described more
fully below in the Exchange's statement regarding the burden on
competition, the Exchange believes that its transaction pricing is
subject to significant competitive forces, and that the proposed fees
and rebates described herein are appropriate to address such forces.
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. The Exchange believes the proposed changes
will continue to encourage Equity Members to maintain or increase their
order flow to the Exchange, thereby contributing to a deeper and more
liquid market to the benefit of all market participants and enhancing
the attractiveness of the Exchange as a trading venue. As a result, the
Exchange believes the proposal will enhance its competitiveness as a
market that attracts actionable orders, thereby making it a more
desirable destination venue for its customers. For these reasons, the
Exchange believes that the proposal furthers the Commission's goal in
adopting Regulation NMS of fostering competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \14\
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\14\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 47396 (June 29, 2005).
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Intra-Market Competition
The Exchange believes that the proposed changes will continue to
incentivize market participants to direct order flow to the Exchange,
thereby contributing to a deeper and more liquid market to the benefit
of all market participants and enhancing the attractiveness of the
Exchange as a trading venue, which the Exchange believes, in turn, will
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 orders to the Exchange, thereby contributing to robust levels of
liquidity, which benefits all Equity Members.
Similarly, the proposed decrease to the standard fee for executions
of orders that remove volume from the Exchange will continue to apply
equally to all Equity Members. As such, the Exchange believes the
proposed changes would not impose any burden on intra-market
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
15-16% of the total market share of executed volume of equities
trading.\15\ 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
orders that remove volume 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.
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\15\ See supra note 10.
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As described above, the proposed changes are competitive proposals
through which the Exchange is seeking to encourage additional order
flow to the Exchange. Such proposed changes to (i) [sic] decrease the
Removing Liquidity fee is comparable to, and competitive with, rates
charged by other exchanges.\16\ The proposed change to update the
Liquidity Indicator Codes and Associated Fees table is in conjunction
with the Exchange's above mentioned proposed change to the standard fee
for Removing Liquidity from the Exchange.
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\16\ See supra note 13.
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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.'' \17\ 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' . . . .'' \18\ Accordingly, the Exchange
[[Page 83064]]
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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\17\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\18\ 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,\19\ and Rule 19b-
4(f)(2) thereunder \20\ 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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\19\ 15 U.S.C. 78s(b)(3)(A)(ii).
\20\ 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#a9dbdcc5cc84cac6c4c4ccc7dddae9daccca87cec6df"><span class="__cf_email__" data-cfemail="fe8c8b929bd39d9193939b908a8dbe8d9b9dd0999188">[email protected]</span></a>. Please include
file number SR-PEARL-2024-46 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-2024-46. 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-2024-46 and should be
submitted on or before November 5, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-23659 Filed 10-11-24; 8:45 am]
BILLING CODE 8011-01-P
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