Notice2024-24206
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 2618(a)(7)(A) To Allow Equity Members To Cancel a Subset of Orders Over an Order Entry Port
Primary source
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Published
October 21, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 203 (Monday, October 21, 2024)</title>
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[Federal Register Volume 89, Number 203 (Monday, October 21, 2024)]
[Notices]
[Pages 84216-84218]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-24206]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101341; File No. SR-PEARL-2024-48]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 2618(a)(7)(A) To Allow Equity Members To Cancel a Subset of Orders
Over an Order Entry Port
October 15, 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 October 8, 2024, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``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 proposes to amend Exchange Rule 2618(a)(7)(A) to allow
Equity Members \3\ to cancel a subset of orders over an order entry
port on the Exchange's equity trading platform (referred to herein as
``MIAX Pearl Equities'').
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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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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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange currently offers risk functionality that permits
Equity Members to cancel orders over their order entry port or over a
dedicated Purge Port. The Exchange offers risk functionality that
allows Equity Members to block new orders submitted, to cancel all open
orders, or both block new orders and cancel all open orders under
Exchange Rule 2618(a)(7)(A). The Exchange notes that order entry ports
may be used to enter orders, modify existing orders, and cancel
existing orders. The Exchange separately offers Purge Ports, which are
dedicated ports that permits an Equity Member to simultaneously cancel
all or a subset of its orders through a single cancel message.
Unlike Purge Ports, Exchange Rule 2618(a)(7)(A) does not provide
that Equity Members may cancel a subset of orders over an order entry
port. Due to Equity Member requests, the Exchange now proposes to amend
Exchange Rule 2618(a)(7)(A) to allow Equity Members to cancel a subset
of orders over an order entry port. An order cancelation request sent
over an order entry port, including the proposal to cancel a subset of
orders, is and would be handled along with other messages sent over
that same order entry port, such as new orders and order modification
requests. On a Purge Port, a request to cancel a subset of orders is
also handled only with other cancelation messages sent over that same
Purge Port. The Exchange notes that similar functionality is also
offered on at least on [sic] other national securities exchange.\4\
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\4\ See Interpretations and Policies .02(b) to MEMX LLC
(``MEMX'') Rule 11.10.
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* * * * *
The Exchange does not guarantee that the proposed cancelation
functionality is sufficiently comprehensive to meet all of an Equity
Member's risk management needs. Pursuant to Rule 15c3-5 under the
Act,\5\ a broker-dealer with market access must perform appropriate due
diligence to assure that controls are reasonably designed to be
effective, and otherwise consistent with the rule.\6\ Use of the
Exchange's risk controls included
[[Page 84217]]
in Exchange Rule 2618 does not automatically constitute compliance with
Exchange or federal rules and responsibility for compliance with all
Exchange and SEC rules remains with the Equity Member.
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\5\ 17 CFR 240.15c3-5.
\6\ See Division of Trading and Markets, Responses to Frequently
Asked Questions Concerning Risk Management Controls for Brokers or
Dealers with Market Access, available at <a href="https://www.sec.gov/divisions/marketreg/faq-15c-5-risk-management-">https://www.sec.gov/divisions/marketreg/faq-15c-5-risk-management-</a> controls-bd.htm.
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Implementation
Due to the technological changes associated with this proposed
change, the Exchange will issue a trading alert publicly announcing the
implementation date of the proposed enhancements to its risk controls
set forth herein. The Exchange anticipates that the implementation date
will be in the first or second quarter of 2025.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\7\ in general, and furthers the objectives of Section 6(b)(5),\8\
in particular, because it is designed to prevent fraudulent and
manipulative acts and practices, 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. Specifically, the Exchange
believes the proposed amendments will remove impediments to and perfect
the mechanism of a free and open market and a national market system
because the augmented functionality is being proposed in response to
Equity Member feedback as part of their efforts to appropriately manage
their risk. The proposed rule change is also similar to functionality
that is offered on at least on [sic] other national securities
exchange, which the Commission approved.\9\ Therefore, the Exchange
does not believe that the proposed rule change raises any new or novel
issues not already considered by the Commission.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ See Interpretations and Policies .02(b) to MEMX Rule 11.10.
See also Securities Exchange Act Release No. 88806 (May 4, 2020), 85
FR 27451 (May 8, 2020) (Order approving MEMX's exchange application,
which included Interpretations and Policies .02(b) to MEMX Rule
11.10).
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Specifically, the Exchange believes that the proposed rule change
is consistent with the protection of investors and the public interest
because allowing would allow [sic] Equity Members the ability to cancel
a subset of their orders via an order entry port. This additional
flexibility would provide Equity Members with additional cancelation
functionality and further align order entry port cancelation
functionality with what is currently provided via a Purge Port. Equity
Members that elect to utilize the proposed cancelation functionality
may do so over an order entry port rather than needing a separate Purge
Port. The Exchange believes the proposed amendments will remove
impediments to and perfect the mechanism of a free and open market and
a national market system because they provide additional functionality
for an Equity Member to manage its risk.
Finally, the Exchange believes that the proposed rule change does
not unfairly discriminate among Equity Members because use of the
proposed cancelation functionality is optional and is not a
prerequisite for participation on the Exchange. The proposed
cancelation functionality is completely voluntary and, as is relates
solely to optional risk management functionality, no equity Member is
required or under any regulatory obligation to utilize it.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
The Exchange believes its proposal will not impose any burden on
inter-market competition because it would provide Equity Members with
additional flexibility canceling orders in a manner that may better
suit their risk appetite when they seek to manage their order flow and
orders that may be resting on the Exchange. The proposal would also
promote inter-market competition because it would allow the Exchange to
better compete with at least one other national securities exchange
that offers similar functionality.\10\ The proposal would impose no
burden on intra-market competition because each risk setting would be
applied to all Equity Members' orders equally.
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\10\ See Interpretations and Policies .02(b) to MEMX Rule 11.10.
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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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\
thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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.
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#6c1e190009410f0301010902181f2c1f090f420b031a"><span class="__cf_email__" data-cfemail="d9abacb5bcf4bab6b4b4bcb7adaa99aabcbaf7beb6af">[email protected]</span></a>. Please include
file number SR-PEARL-2024-48 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-2024-48. 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
[[Page 84218]]
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-2024-48 and should be submitted on
or before November 12, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-24206 Filed 10-18-24; 8:45 am]
BILLING CODE 8011-01-P
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