Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule, 48140-48144 [2017-22264]
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48140
Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Notices
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). 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 Web site 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the MSRB. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–MSRB–
2017–07 and should be submitted on or
before November 6, 2017.
notice to solicit comments on the
proposed rule change from interested
persons.
For the Commission, pursuant to delegated
authority.34
Eduardo A. Aleman,
Assistant Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2017–22262 Filed 10–13–17; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81844; File No. SR–
PEARL–2017–34]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the MIAX
PEARL Fee Schedule
ethrower on DSK3G9T082PROD with NOTICES
October 10, 2017.
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 29, 2017, 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
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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The Exchange is filing a proposal to
amend the MIAX PEARL Fee Schedule
(the ‘‘Fee Schedule’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.miaxoptions.com/rulefilings/pearl 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.
1. Purpose
BILLING CODE 8011–01–P
34 17
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Add/Remove Tiered Rebates/Fees set
forth in Section 1(a) of the Fee Schedule
to increase the ‘‘Taker’’ fee in all Tiers
assessable to all orders submitted by a
Member for the account of a Priority
Customer.3 The Exchange also proposes
to make a number of non-substantive
changes to its routing fee table set forth
Section 1(b) of the Fee Schedule to
reflect recent corporate name changes to
some of the options exchanges listed in
the table.
Taker Fee Changes
The Exchange currently assesses
tiered transaction rebates and fees to all
market participants which are based
upon the total monthly volume
executed by the Member 4 on MIAX
3 ‘‘Priority Customer’’ means a person or entity
that (i) is not a broker or dealer in securities, and
(ii) does not place more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial accounts(s). See Exchange
Rule 100, including Interpretations and Policies .01.
4 ‘‘Member’’ means an individual or organization
that is registered with the Exchange pursuant to
Chapter II of the Exchange Rules for purposes of
trading on the Exchange as an ‘‘Electronic Exchange
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PEARL in the relevant, respective origin
type (not including Excluded
Contracts) 5 expressed as a percentage of
TCV.6 In addition, the per contract
transaction rebates and fees are applied
retroactively to all eligible volume for
that origin type once the respective
threshold tier (‘‘Tier’’) has been reached
by the Member. The Exchange
aggregates the volume of Members and
their Affiliates.7 Members that place
resting liquidity, i.e., orders resting on
the book of the MIAX PEARL System,8
are paid the specified ‘‘maker’’ rebate
(each a ‘‘Maker’’), and Members that
execute against resting liquidity are
Member’’ or ‘‘Market Maker.’’ Members are deemed
‘‘members’’ under the Exchange Act. See the
Definitions Section of the Fee Schedule and
Exchange Rule 100.
5 ‘‘Excluded Contracts’’ means any contracts
routed to an away market for execution. See the
Definitions Section of the Fee Schedule.
6 ‘‘TCV’’ means total consolidated volume
calculated as the total national volume in those
classes listed on MIAX PEARL for the month for
which the fees apply, excluding consolidated
volume executed during the period time [sic] in
which the Exchange experiences an ‘‘Exchange
System Disruption’’ (solely in the option classes of
the affected Matching Engine (as defined below)).
The term Exchange System Disruption, which is
defined in the Definitions section of the Fee
Schedule, means an outage of a Matching Engine or
collective Matching Engines for a period of two
consecutive hours or more, during trading hours.
The term Matching Engine, which is also defined
in the Definitions section of the Fee Schedule, is a
part of the MIAX PEARL electronic system that
processes options orders and trades on a symbolby-symbol basis. Some Matching Engines will
process option classes with multiple root symbols,
and other Matching Engines may be dedicated to
one single option root symbol (for example, options
on SPY may be processed by one single Matching
Engine that is dedicated only to SPY). A particular
root symbol may only be assigned to a single
designated Matching Engine. A particular root
symbol may not be assigned to multiple Matching
Engines. The Exchange believes that it is reasonable
and appropriate to select two consecutive hours as
the amount of time necessary to constitute an
Exchange System Disruption, as two hours equates
to approximately 1.4% of available trading time per
month. The Exchange notes that the term
‘‘Exchange System Disruption’’ and its meaning
have no applicability outside of the Fee Schedule,
as it is used solely for purposes of calculating
volume for the threshold tiers in the Fee Schedule.
See the Definitions Section of the Fee Schedule.
7 ‘‘Affiliate’’ means (i) an affiliate of a Member of
at least 75% common ownership between the firms
as reflected on each firm’s Form BD, Schedule A,
or (ii) the Appointed Market Maker of an Appointed
EEM (or, conversely, the Appointed EEM of an
Appointed Market Maker). An ‘‘Appointed Market
Maker’’ is a MIAX PEARL Market Maker (who does
not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has
been appointed by an EEM and an ‘‘Appointed
EEM’’ is an EEM (who does not otherwise have a
corporate affiliation based upon common
ownership with a MIAX PEARL Market Maker) that
has been appointed by a MIAX PEARL Market
Maker, pursuant to the process described in the Fee
Schedule. See the Definitions Section of the Fee
Schedule.
8 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
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assessed the specified ‘‘taker’’ fee (each
a ‘‘Taker’’). For opening transactions
and ABBO uncrossing transactions, per
contract transaction rebates and fees are
waived for all market participants.
Finally, Members are assessed lower
transaction fees and receive lower
Origin
rebates for order executions in standard
option classes in the Penny Pilot
Program 9 (‘‘Penny classes’’) than for
order executions in standard option
classes which are not in the Penny Pilot
Program (‘‘Non-Penny classes’’), where
Per contract rebates/fees for
penny classes
Volume criteria
(%)
Tier
Maker
Priority Customer ................
1
2
3
4
5
Members are assessed higher transaction
fees and receive higher rebates.
Transaction rebates and fees
applicable to orders submitted by a
Member for the account of a Priority
Customer 10 are currently assessed
according to the following table:
0.00–0.05 ...........................
Above 0.05–0.35 ................
Above 0.35–0.50 ................
Above 0.50–0.75 ................
Above 0.75 .........................
Taker *
($0.25)
(0.40)
(0.50)
(0.53)
(0.54)
$0.38
0.38
0.38
0.38
0.38
Per contract rebates/fees for
non-penny classes
Maker
($0.85)
(1.05)
(1.05)
(1.05)
(1.05)
Taker *
$0.87
0.86
0.85
0.84
0.84
* For all Penny classes other than SPY. For SPY, the Priority Customer Taker Fee shall be $0.35 per contract.
The Exchange now proposes, with
respect to orders submitted by a
Member for the account of a Priority
Customer, to: (i) Increase the Taker fee
for all Penny classes (other than SPY,
QQQ, IWM, and VXX) in all Tiers to
$0.42 per contract; (ii) increase the
Taker fee for SPY in all Tiers to $0.38
per contract; and (iii) increase the Taker
fee for QQQ, IWM, and VXX in all Tiers
to $0.40 per contract. The Exchange
notes that QQQ, IWM, and VXX are not
Origin
currently carved out from the Taker fee
that applies to all Penny classes (other
than SPY) in the Tiers. With this
proposed change, QQQ, IWM, and VXX
will become carved out alongside SPY
from the Taker fee that applies to all
Penny classes in the Tiers, and the
Taker fee for transactions in those
classes will be set forth in a sentence
beneath the Priority Customer table in
the Add/Remove Tiered Rebates/Fees
(by way of an asterisk to the Taker fee)
Per contract rebates/fees for
penny classes
Volume criteria
(%)
Tier
Maker
Priority Customer ................
1
2
3
4
5
to state that the Taker fee in the table
applies ‘‘For all Penny Classes other
than SPY, QQQ, IWM, and VXX. For
SPY, the Priority Customer Taker Fee
shall be $0.38 per contract. For QQQ,
IWM, and VXX, the Priority Customer
Taker Fee shall be $0.40 per contract.’’
Accordingly, as amended, transaction
rebates and fees applicable to orders
submitted by a Member for the account
of a Priority Customer will be assessed
according to the following table:
0.00–0.05 ...........................
Above 0.05–0.35 ................
Above 0.35–0.50 ................
Above 0.50–0.75 ................
Above 0.75 .........................
Taker *
($0.25)
(0.40)
(0.50)
(0.53)
(0.54)
$0.42
0.42
0.42
0.42
0.42
Per contract rebates/fees for
non-penny classes
Maker
($0.85)
(1.05)
(1.05)
(1.05)
(1.05)
Taker *
$0.87
0.86
0.85
0.84
0.84
* For all Penny Classes other than SPY, QQQ, IWM, and VXX. For SPY, the Priority Customer Taker Fee shall be $0.38 per contract. For
QQQ, IWM, and VXX, the Priority Customer Taker Fee shall be $0.40 per contract.
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The purpose of increasing the Taker
fees for Priority Customer orders is for
business and competitive reasons. As a
new exchange, in order to attract order
flow, the Exchange recently set its Taker
fees for Priority Customer orders so that
they were significantly lower than other
options exchanges that operate
comparable maker/taker pricing
models.11 The Exchange now believes
that it is appropriate to slightly increase
those Taker fees so that they are not as
steeply lower versus such other
exchanges, but will still remain highly
competitive such that they should
enable the Exchange to continue to
attract order flow and grow market
share. The Exchange notes that, even as
amended, its Taker fees for Priority
Customers are still lower than most
other options exchanges operating
competing models. For example, with
respect to taker fees for Priority
Customer orders in Penny classes, BATS
BZX Options 12 and Nasdaq Options
Market 13 each assess a fee of $0.50 per
contract; NYSE Arca Options 14 assesses
a fee of $0.49 per contract; and Nasdaq
ISE 15 assesses a fee of $0.44 per contract
(other than SPY, QQQ, IWM, and VXX
classes). With respect to taker fees for
Priority Customer orders in SPY,
NOM 16 assesses a fee of $0.48 per
contract.
The purpose of separately carving out
QQQ, IWM, and VXX from the Taker fee
that applies to all Penny classes in the
Tiers is to tailor transaction fees
specifically for these select products.
9 See Securities Exchange Act Release Nos. 79778
(January 12, 2017), 82 FR 6662 (January 19, 2017)
(SR–PEARL–2016–01); 80758 (May 24, 2017), 82 FR
25022 (May 31, 2017) (SR–PEARL–2017–24).
10 ‘‘Priority Customer’’ means a person or entity
that (i) is not a broker or dealer in securities, and
(ii) does not place more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial accounts(s). See Exchange
Rule 100, including Interpretations and Policies .01.
11 See Securities Exchange Act Release Nos.
80915 (June 13, 2017), 82 FR 27912 (June 19, 2017)
(SR–PEARL–2017–29); 80914 (June 13, 2017), 82 FR
27910 (June 19, 2017) (SR–PEARL–2017–30).
12 See BATS BZX Fee Schedule at: https://
www.bats.com/us/options/membership/fee_
schedule/bzx/.
13 See NOM Fee Schedule at: https://
www.nasdaqtrader.com/
Micro.aspx?id=OptionsPricing.
14 See NYSE Arca Options Fee Schedule at:
https://www.nyse.com/publicdocs/nyse/markets/
arca-options/NYSE_Arca_Options_Fee_
Schedule.pdf.
15 See Nasdaq ISE Fee Schedule at: https://
www.ise.com/fees.
16 See supra footnote 13.
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The concept of carving out separate
pricing for select products is not novel,
and is currently employed by a number
of other options exchanges.17
Non-Substantive Changes
As a result of recent exchange
consolidation and corporate rebranding, some options exchanges have
changed their names. The names of all
options exchanges are set forth in the
Exchange’s routing fee table set forth
Section (1)(b) of the Fee Schedule,
which sets forth the fees for customer
orders that are routed to those options
exchanges for execution. Accordingly,
the Exchange proposes to update its
routing fee table set forth in Section
(1)(b) of the Fee Schedule to reflect
those recent exchange name changes.
No other changes are proposed to the
routing fee table. Accordingly, as
amended, the routing fee table shall be
as follows:
(b) Fees and Rebates for Customer
Orders Routed to Another Options
Exchange
MIAX PEARL will assess a Routing
Fee to market participants on all orders
routed to and executed on an away
market as set forth in the table below.
Description
Fees
Routed, Priority Customer, Penny Pilot, to: NYSE American, BOX, CBOE, Bats EDGX Options, Nasdaq MRX, MIAX OPTIONS,
Nasdaq PHLX (except SPY), Nasdaq BX Options ..................................................................................................................................
Routed, Priority Customer, Penny Pilot, to: NYSE Arca Options, Bats BZX Options, C2, Nasdaq GEMX, Nasdaq ISE, NOM, Nasdaq
PHLX (SPY only) .....................................................................................................................................................................................
Routed, Priority Customer, Non-Penny Pilot, to: NYSE American, BOX, CBOE, Bats EDGX Options, Nasdaq ISE, Nasdaq MRX,
MIAX OPTIONS, Nasdaq PHLX, Nasdaq BX Options ............................................................................................................................
Routed, Priority Customer, Non-Penny Pilot, to: NYSE Arca Options, Bats BZX Options, C2, Nasdaq GEMX, NOM ............................
Routed, Public Customer that is not a Priority Customer, Penny Pilot, to: NYSE American, NYSE Arca Options, BATS, BOX, CBOE,
C2, Bats EDGX Options, Nasdaq GEMX, Nasdaq ISE, Nasdaq MRX, MIAX OPTIONS, NOM, Nasdaq PHLX, Nasdaq BX Options
Routed, Public Customer that is not a Priority Customer, Non-Penny Pilot, to: NYSE American .............................................................
Routed, Public Customer that is not a Priority Customer, Non-Penny Pilot, to: NYSE Arca Options, Bats BZX Options, C2, Nasdaq
GEMX, Nasdaq MRX, Nasdaq BX Options .............................................................................................................................................
Routed (Public Customer that is not a Priority Customer), Non-Penny Pilot, to: BOX, CBOE, Bats EDGX Options, Nasdaq ISE, MIAX
OPTIONS, NOM, Nasdaq PHLX .............................................................................................................................................................
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The proposed rule changes are
scheduled to become operative October
1, 2017.
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 that it is
an equitable allocation of reasonable
dues, fees and other charges among
Exchange members and issuers and
other persons using its facilities, and
6(b)(5) of the Act,20 in that 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 facilitating
transactions in securities, to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The proposed Taker fee increases
applicable to orders submitted by a
Member for the account of a Priority
Customer are reasonable, equitable and
not unfairly discriminatory because all
Priority Customer option orders are
subject to the same Taker fees and
access to the Exchange is offered on
17 See, for example, Nasdaq ISE Fee Schedule,
which has separate pricing for SPY, as well as QQQ,
IWM, and VXX, at: https://www.ise.com/fees; see
also CBOE Fee Schedule at: https://www.cboe.com/
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CBOEFeeSchedule.pdf§ion=SEC_
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terms that are not unfairly
discriminatory. The Exchange initially
set its Taker fees at the various levels
based upon business determinations
and an analysis of current Taker fees
and volume levels at other exchanges.
For competitive and business reasons,
the Exchange recently set its Taker fees
for Priority Customer orders so that they
were significantly lower than other
options exchanges that operate
comparable maker/taker pricing
models.21 The Exchange now believes
that it is appropriate to slightly increase
those Taker fees so that they are not as
steeply lower versus such other
exchanges, but will still remain highly
competitive such that they should
enable the Exchange to continue to
attract order flow and grow market
share. The Exchange notes that, even as
amended, its Taker fees for Priority
Customers are still lower than most
other options exchanges operating
competing models.22 The Exchange
believes for these reasons that offering
slightly increased Taker fees for Priority
Customer transactions in all Tiers is
equitable, reasonable and not unfairly
discriminatory, and thus consistent with
the Act.
The Exchange believes that its
proposal to offer lower Taker fees
assessable to transactions solely in SPY,
RESOURCES&title=CBOE%20Fee%20Schedule; see
also NOM Fee Schedule at: https://
www.nasdaqtrader.com/
Micro.aspx?id=OptionsPricing.
18 15 U.S.C. 78f(b).
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$0.15
0.65
0.15
0.97
0.65
0.65
1.20
0.97
QQQ, IWM, and VXX options is
consistent with other options markets
that also assess different transaction fees
for select option classes (including SPY,
QQQ, IWM, and VXX) as compared to
other option classes. The Exchange
believes that establishing different
pricing for select products for Priority
Customers is reasonable, equitable, and
not unfairly discriminatory because
these select products are generally more
liquid than other option classes.
Additionally, other competing options
exchanges differentiate pricing in a
similar manner.23
Further, the Exchange believes that it
is equitable and not unfairly
discriminatory to assess lower fees to
Priority Customer orders than to nonPriority Customer orders. A Priority
Customer is by definition not a broker
or dealer in securities, and does not
place more than 390 orders in listed
options per day on average during a
calendar month for its own beneficial
account(s). This limitation does not
apply to participants on the Exchange
whose behavior is substantially similar
to that of market professionals,
including non-Priority Customers,
MIAX PEARL Market Makers, Firms,
and Broker-Dealers, who will generally
submit a higher number of orders (many
19 15
U.S.C. 78f(b)(4).
U.S.C. 78f(b)(1) and (b)(5).
21 See supra note 11.
22 See supra footnotes 11–15.
23 See supra note 17.
20 15
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of which do not result in executions)
than Priority Customers.
Furthermore, the proposed slight
increases to the Taker fees for Priority
Customer transactions in all Tiers
promotes just and equitable principles
of trade, fosters cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and protects investors and the public
interest, because even with the such
slight increases, the Exchange’s
proposed Taker fees for Priority
Customer orders still remain highly
competitive with other options
exchanges offering comparable pricing
models, as they should enable the
Exchange to continue to attract order
flow and grow market share.24 The
Exchange believes that the amount of
such fees, as proposed to be increased,
will continue to encourage Members to
send more Priority Customer orders to
the Exchange even if it is an order
which takes liquidity since they will be
assessed a lower Taker fee in each Tier
than most competing exchanges. To the
extent that Priority Customer order flow
is increased by the proposal, market
participants will increasingly compete
for the opportunity to trade on the
Exchange, including sending more
orders which will have the potential to
be assessed lower fees and higher
rebates than most competing options
exchanges. The resulting increased
volume and liquidity will benefit all
Exchange participants by providing
more trading opportunities and tighter
spreads.
The Exchange believes the proposed
changes to update its routing fee table
set forth in Section 1(b) of the Fee
Schedule to reflect recent exchange
name changes promote just and
equitable principles of trade and remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because
the proposed rule change makes nonsubstantive technical corrections and
updates the Exchange’s Fee Schedule.
None of the name changes alter the
application of any fees or rebates on the
Fee Schedule. As such, the proposed
amendments would foster cooperation
and coordination with persons engaged
in facilitating transactions in securities
and would remove impediments to and
perfect the mechanism of a free and
open market and a national exchange
system. In particular, the Exchange
believes that the proposed changes will
provide greater clarity to Members and
the public regarding the Exchange’s
Rules. It is in the public interest for
rules to be accurate and concise so as to
eliminate the potential for confusion.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
MIAX PEARL does not believe that
the proposed rule changes will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed Taker fee increases are
intended to keep the Exchange’s fees
highly competitive with those of other
exchanges, and to encourage liquidity
and should enable the Exchange to
attract and compete for order flow with
other exchanges which assess higher
Priority Customer taker fees. The
proposed changes to update its routing
fee table set forth Section 1(b) of the Fee
Schedule to reflect recent exchange
name changes will have no impact on
competition as they are not designed to
address any competitive issues but
rather are designed to make nonsubstantive technical corrections and
update the Exchange’s Fee Schedule.
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive. In such an environment, the
Exchange must continually adjust its
rebates and fees to remain competitive
with other exchanges and to attract
order flow. The Exchange believes that
the proposed rule change reflects this
competitive environment because it
modifies the Exchange’s fees in a
manner that will continue to encourage
market participants to send order flow
to the Exchange.
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,25 and Rule
19b–4(f)(2) 26 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
25 15
24 See
supra note 22.
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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48143
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
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
PEARL–2017–34 on the subject line.
Paper Comments
• 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–2017–34. 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 Web site (https://www.sec.gov/
rules/sro.shtml). 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 Web site 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
PEARL–2017–34 and should be
submitted on or before November 6,
2017.
E:\FR\FM\16OCN1.SGM
16OCN1
48144
Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–22264 Filed 10–13–17; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Changes to SBA Secondary Market
Program
U.S. Small Business
Administration (‘‘SBA’’).
ACTION: Notice.
AGENCY:
The purpose of this Notice is
to provide the public with notification
of a procedural change in SBA’s
Secondary Market Pooling program.
This change involves the pass through
of principal payments to Registered
Holders of Pool Certificates resulting
from Pool loan prepayments.
DATES: The change referenced in this
Notice affects all outstanding Pools
issued between October 1, 2004, and on
or about September 1, 2017. The change
will be incorporated into payments
made to Registered Holders of Pool
Certificates before the end of the
calendar year.
FOR FURTHER INFORMATION CONTACT: John
M. Wade, Chief, Secondary Market
Division, U.S. Small Business
Administration, 409 3rd Street SW.,
Washington, DC 20416, or john.wade@
sba.gov.
SUMMARY:
The
Secondary Market Improvements Act of
1984 authorized SBA to guaranty the
timely payment of principal and interest
on Pool Certificates. A Pool Certificate
represents a fractional undivided
interest in a ‘‘Pool,’’ which is an
aggregation of SBA guaranteed portions
of loans made by SBA Lenders under
section 7(a) of the Small Business Act,
15 U.S.C. 636(a). In order to support the
timely payment guaranty requirement,
SBA established the Master Reserve
Fund (‘‘MRF’’), which serves as a
mechanism to cover the cost of SBA’s
timely payment guaranty on Pool
Certificates.
Pool payments to Registered Holders
of Pool Certificates are made monthly
and consist of scheduled payments of
pool principal and interest. The
payments may also include a return of
pool principal from full or partial
prepayments of pool loans prior to the
Pool maturity date. Principal from these
prepayments are passed through to
ethrower on DSK3G9T082PROD with NOTICES
SUPPLEMENTARY INFORMATION:
27 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
16:59 Oct 13, 2017
Jkt 244001
Registered Holders of Pool Certificates,
but the amounts may vary based on
amortization excess associated with the
prepaid loan.
Amortization excess represents that
portion of the outstanding principal
balance of a Pool allocated to a
particular pool loan compared to the
actual loan principal balance
outstanding at the time the loan is
prepaid. Amortization excess may
include differences attributed to
principal prepayments on a pool loan
that is less than or equal to 20% of the
outstanding principal balance. Borrower
payments of loan principal made up to
the date of prepayment are based on the
amortization schedule of the borrower’s
Note, but paid to Registered Holders of
Pool Certificates based on the
amortization schedule of the Pool. This
variance comes from differences in
interest rates and maturity dates of the
pool loan compared with the Pool
Certificate.
On September 21, 2004, SBA issued
Notice of a Change in the SBA
Secondary Market Program (and
referenced herein as the ‘‘2004 Notice’’).
69 FR 56472. This 2004 Notice
described program changes made to all
Pools formed on or after October 1, 2004
including the disposition of
amortization excess. Prior to October 1,
2004, SBA spread the amortization
excess from prepaid loans over the
remaining life of the Pool. In the 2004
Notice, SBA revised the program to pass
through amortization excess once a pool
loan is prepaid. In certain
circumstances, however, amortization
excess resulted in a reduction in the
amount of a principal passed through to
Registered Holders of Pool Certificates,
with the retained principal remaining in
the MRF to be paid out through
scheduled principal payments until the
Pool matures, or as all pool loans are
fully paid.
In order to improve the efficiency of
the program, SBA is implementing a
procedural change that will adjust the
timing of certain principal distributions
from the MRF. For Pools formed
between October 1, 2004 and on or
about September 1, 2017 with pool
loans remaining, SBA will reallocate the
outstanding Pool balances pro rata
across the remaining pool loan principal
within a Pool. When a pool loan
subsequently prepays in full, payments
to Registered Holders of Pool
Certificates may include retained
principal in addition to the scheduled
payments of pool principal, interest and
related prepayments. This change will
be incorporated, as needed, into the
SBA Secondary Market Program Guide,
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
and all other appropriate SBA
Secondary Market materials.
It is important to note that there is no
change to SBA’s obligation to honor its
guaranty of the amount owed to
Registered Holders of Pool Certificates
and that such guaranty continues to be
backed by the full faith and credit of the
United States.
Authority: 15 U.S.C. 634(g)(2).
William M. Manger,
Associate Administrator, Office of Capital
Access.
[FR Doc. 2017–22466 Filed 10–13–17; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #15342 and #15343;
US VIRGIN ISLANDS Disaster Number VI–
00012]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the U.S. Virgin Islands
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the US Virgin Islands (FEMA–4340–
DR), dated 10/05/2017.
Incident: Hurricane Maria.
Incident Period: 09/16/2017 and
continuing.
DATES: Issued on 10/05/2017.
Physical Loan Application Deadline
Date: 12/04/2017.
Economic Injury (EIDL) Loan
Application Deadline Date: 07/05/2018.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT:
A. Escobar, Office of Disaster
Assistance, U.S. Small Business
Administration, 409 3rd Street SW.,
Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
10/05/2017, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications at the
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Saint Croix, Saint
John, Saint Thomas.
SUMMARY:
E:\FR\FM\16OCN1.SGM
16OCN1
]]>Agencies
[Federal Register Volume 82, Number 198 (Monday, October 16, 2017)]
[Notices]
[Pages 48140-48144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22264]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81844; File No. SR-PEARL-2017-34]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
PEARL Fee Schedule
October 10, 2017.
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 29, 2017, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 MIAX PEARL Fee
Schedule (the ``Fee Schedule'').
The text of the proposed rule change is available on the Exchange's
Web site at https://www.miaxoptions.com/rule-filings/pearl 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 proposes to amend the Add/Remove Tiered Rebates/Fees
set forth in Section 1(a) of the Fee Schedule to increase the ``Taker''
fee in all Tiers assessable to all orders submitted by a Member for the
account of a Priority Customer.\3\ The Exchange also proposes to make a
number of non-substantive changes to its routing fee table set forth
Section 1(b) of the Fee Schedule to reflect recent corporate name
changes to some of the options exchanges listed in the table.
---------------------------------------------------------------------------
\3\ ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial accounts(s). See Exchange Rule
100, including Interpretations and Policies .01.
---------------------------------------------------------------------------
Taker Fee Changes
The Exchange currently assesses tiered transaction rebates and fees
to all market participants which are based upon the total monthly
volume executed by the Member \4\ on MIAX PEARL in the relevant,
respective origin type (not including Excluded Contracts) \5\ expressed
as a percentage of TCV.\6\ In addition, the per contract transaction
rebates and fees are applied retroactively to all eligible volume for
that origin type once the respective threshold tier (``Tier'') has been
reached by the Member. The Exchange aggregates the volume of Members
and their Affiliates.\7\ Members that place resting liquidity, i.e.,
orders resting on the book of the MIAX PEARL System,\8\ are paid the
specified ``maker'' rebate (each a ``Maker''), and Members that execute
against resting liquidity are
[[Page 48141]]
assessed the specified ``taker'' fee (each a ``Taker''). For opening
transactions and ABBO uncrossing transactions, per contract transaction
rebates and fees are waived for all market participants. Finally,
Members are assessed lower transaction fees and receive lower rebates
for order executions in standard option classes in the Penny Pilot
Program \9\ (``Penny classes'') than for order executions in standard
option classes which are not in the Penny Pilot Program (``Non-Penny
classes''), where Members are assessed higher transaction fees and
receive higher rebates.
---------------------------------------------------------------------------
\4\ ``Member'' means an individual or organization that is
registered with the Exchange pursuant to Chapter II of the Exchange
Rules for purposes of trading on the Exchange as an ``Electronic
Exchange Member'' or ``Market Maker.'' Members are deemed
``members'' under the Exchange Act. See the Definitions Section of
the Fee Schedule and Exchange Rule 100.
\5\ ``Excluded Contracts'' means any contracts routed to an away
market for execution. See the Definitions Section of the Fee
Schedule.
\6\ ``TCV'' means total consolidated volume calculated as the
total national volume in those classes listed on MIAX PEARL for the
month for which the fees apply, excluding consolidated volume
executed during the period time [sic] in which the Exchange
experiences an ``Exchange System Disruption'' (solely in the option
classes of the affected Matching Engine (as defined below)). The
term Exchange System Disruption, which is defined in the Definitions
section of the Fee Schedule, means an outage of a Matching Engine or
collective Matching Engines for a period of two consecutive hours or
more, during trading hours. The term Matching Engine, which is also
defined in the Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes options orders and
trades on a symbol-by-symbol basis. Some Matching Engines will
process option classes with multiple root symbols, and other
Matching Engines may be dedicated to one single option root symbol
(for example, options on SPY may be processed by one single Matching
Engine that is dedicated only to SPY). A particular root symbol may
only be assigned to a single designated Matching Engine. A
particular root symbol may not be assigned to multiple Matching
Engines. The Exchange believes that it is reasonable and appropriate
to select two consecutive hours as the amount of time necessary to
constitute an Exchange System Disruption, as two hours equates to
approximately 1.4% of available trading time per month. The Exchange
notes that the term ``Exchange System Disruption'' and its meaning
have no applicability outside of the Fee Schedule, as it is used
solely for purposes of calculating volume for the threshold tiers in
the Fee Schedule. See the Definitions Section of the Fee Schedule.
\7\ ``Affiliate'' means (i) an affiliate of a Member of at least
75% common ownership between the firms as reflected on each firm's
Form BD, Schedule A, or (ii) the Appointed Market Maker of an
Appointed EEM (or, conversely, the Appointed EEM of an Appointed
Market Maker). An ``Appointed Market Maker'' is a MIAX PEARL Market
Maker (who does not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has been appointed by an EEM
and an ``Appointed EEM'' is an EEM (who does not otherwise have a
corporate affiliation based upon common ownership with a MIAX PEARL
Market Maker) that has been appointed by a MIAX PEARL Market Maker,
pursuant to the process described in the Fee Schedule. See the
Definitions Section of the Fee Schedule.
\8\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\9\ See Securities Exchange Act Release Nos. 79778 (January 12,
2017), 82 FR 6662 (January 19, 2017) (SR-PEARL-2016-01); 80758 (May
24, 2017), 82 FR 25022 (May 31, 2017) (SR-PEARL-2017-24).
---------------------------------------------------------------------------
Transaction rebates and fees applicable to orders submitted by a
Member for the account of a Priority Customer \10\ are currently
assessed according to the following table:
---------------------------------------------------------------------------
\10\ ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial accounts(s). See Exchange Rule
100, including Interpretations and Policies .01.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for Per contract rebates/fees for
penny classes non-penny classes
Origin Tier Volume criteria (%) ---------------------------------------------------------------
Maker Taker * Maker Taker *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer......................... 1 0.00-0.05................... ($0.25) $0.38 ($0.85) $0.87
2 Above 0.05-0.35............. (0.40) 0.38 (1.05) 0.86
3 Above 0.35-0.50............. (0.50) 0.38 (1.05) 0.85
4 Above 0.50-0.75............. (0.53) 0.38 (1.05) 0.84
5 Above 0.75.................. (0.54) 0.38 (1.05) 0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny classes other than SPY. For SPY, the Priority Customer Taker Fee shall be $0.35 per contract.
The Exchange now proposes, with respect to orders submitted by a
Member for the account of a Priority Customer, to: (i) Increase the
Taker fee for all Penny classes (other than SPY, QQQ, IWM, and VXX) in
all Tiers to $0.42 per contract; (ii) increase the Taker fee for SPY in
all Tiers to $0.38 per contract; and (iii) increase the Taker fee for
QQQ, IWM, and VXX in all Tiers to $0.40 per contract. The Exchange
notes that QQQ, IWM, and VXX are not currently carved out from the
Taker fee that applies to all Penny classes (other than SPY) in the
Tiers. With this proposed change, QQQ, IWM, and VXX will become carved
out alongside SPY from the Taker fee that applies to all Penny classes
in the Tiers, and the Taker fee for transactions in those classes will
be set forth in a sentence beneath the Priority Customer table in the
Add/Remove Tiered Rebates/Fees (by way of an asterisk to the Taker fee)
to state that the Taker fee in the table applies ``For all Penny
Classes other than SPY, QQQ, IWM, and VXX. For SPY, the Priority
Customer Taker Fee shall be $0.38 per contract. For QQQ, IWM, and VXX,
the Priority Customer Taker Fee shall be $0.40 per contract.''
Accordingly, as amended, transaction rebates and fees applicable to
orders submitted by a Member for the account of a Priority Customer
will be assessed according to the following table:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for Per contract rebates/fees for
penny classes non-penny classes
Origin Tier Volume criteria (%) ---------------------------------------------------------------
Maker Taker * Maker Taker *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer......................... 1 0.00-0.05................... ($0.25) $0.42 ($0.85) $0.87
2 Above 0.05-0.35............. (0.40) 0.42 (1.05) 0.86
3 Above 0.35-0.50............. (0.50) 0.42 (1.05) 0.85
4 Above 0.50-0.75............. (0.53) 0.42 (1.05) 0.84
5 Above 0.75.................. (0.54) 0.42 (1.05) 0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny Classes other than SPY, QQQ, IWM, and VXX. For SPY, the Priority Customer Taker Fee shall be $0.38 per contract. For QQQ, IWM, and VXX,
the Priority Customer Taker Fee shall be $0.40 per contract.
The purpose of increasing the Taker fees for Priority Customer
orders is for business and competitive reasons. As a new exchange, in
order to attract order flow, the Exchange recently set its Taker fees
for Priority Customer orders so that they were significantly lower than
other options exchanges that operate comparable maker/taker pricing
models.\11\ The Exchange now believes that it is appropriate to
slightly increase those Taker fees so that they are not as steeply
lower versus such other exchanges, but will still remain highly
competitive such that they should enable the Exchange to continue to
attract order flow and grow market share. The Exchange notes that, even
as amended, its Taker fees for Priority Customers are still lower than
most other options exchanges operating competing models. For example,
with respect to taker fees for Priority Customer orders in Penny
classes, BATS BZX Options \12\ and Nasdaq Options Market \13\ each
assess a fee of $0.50 per contract; NYSE Arca Options \14\ assesses a
fee of $0.49 per contract; and Nasdaq ISE \15\ assesses a fee of $0.44
per contract (other than SPY, QQQ, IWM, and VXX classes). With respect
to taker fees for Priority Customer orders in SPY, NOM \16\ assesses a
fee of $0.48 per contract.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release Nos. 80915 (June 13,
2017), 82 FR 27912 (June 19, 2017) (SR-PEARL-2017-29); 80914 (June
13, 2017), 82 FR 27910 (June 19, 2017) (SR-PEARL-2017-30).
\12\ See BATS BZX Fee Schedule at: https://www.bats.com/us/options/membership/fee_schedule/bzx/.
\13\ See NOM Fee Schedule at: https://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing.
\14\ See NYSE Arca Options Fee Schedule at: https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf.
\15\ See Nasdaq ISE Fee Schedule at: https://www.ise.com/fees.
\16\ See supra footnote 13.
---------------------------------------------------------------------------
The purpose of separately carving out QQQ, IWM, and VXX from the
Taker fee that applies to all Penny classes in the Tiers is to tailor
transaction fees specifically for these select products.
[[Page 48142]]
The concept of carving out separate pricing for select products is not
novel, and is currently employed by a number of other options
exchanges.\17\
---------------------------------------------------------------------------
\17\ See, for example, Nasdaq ISE Fee Schedule, which has
separate pricing for SPY, as well as QQQ, IWM, and VXX, at: https://www.ise.com/fees; see also CBOE Fee Schedule at: https://www.cboe.com/framed/pdfframed?content=/publish/feeschedule/CBOEFeeSchedule.pdf§ion=SEC_RESOURCES&title=CBOE%20Fee%20Schedule
; see also NOM Fee Schedule at: https://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing.
---------------------------------------------------------------------------
Non-Substantive Changes
As a result of recent exchange consolidation and corporate re-
branding, some options exchanges have changed their names. The names of
all options exchanges are set forth in the Exchange's routing fee table
set forth Section (1)(b) of the Fee Schedule, which sets forth the fees
for customer orders that are routed to those options exchanges for
execution. Accordingly, the Exchange proposes to update its routing fee
table set forth in Section (1)(b) of the Fee Schedule to reflect those
recent exchange name changes. No other changes are proposed to the
routing fee table. Accordingly, as amended, the routing fee table shall
be as follows:
(b) Fees and Rebates for Customer Orders Routed to Another Options
Exchange
MIAX PEARL will assess a Routing Fee to market participants on all
orders routed to and executed on an away market as set forth in the
table below.
------------------------------------------------------------------------
Description Fees
------------------------------------------------------------------------
Routed, Priority Customer, Penny Pilot, to: NYSE American, $0.15
BOX, CBOE, Bats EDGX Options, Nasdaq MRX, MIAX OPTIONS,
Nasdaq PHLX (except SPY), Nasdaq BX Options.................
Routed, Priority Customer, Penny Pilot, to: NYSE Arca 0.65
Options, Bats BZX Options, C2, Nasdaq GEMX, Nasdaq ISE, NOM,
Nasdaq PHLX (SPY only)......................................
Routed, Priority Customer, Non-Penny Pilot, to: NYSE 0.15
American, BOX, CBOE, Bats EDGX Options, Nasdaq ISE, Nasdaq
MRX, MIAX OPTIONS, Nasdaq PHLX, Nasdaq BX Options...........
Routed, Priority Customer, Non-Penny Pilot, to: NYSE Arca 0.97
Options, Bats BZX Options, C2, Nasdaq GEMX, NOM.............
Routed, Public Customer that is not a Priority Customer, 0.65
Penny Pilot, to: NYSE American, NYSE Arca Options, BATS,
BOX, CBOE, C2, Bats EDGX Options, Nasdaq GEMX, Nasdaq ISE,
Nasdaq MRX, MIAX OPTIONS, NOM, Nasdaq PHLX, Nasdaq BX
Options.....................................................
Routed, Public Customer that is not a Priority Customer, Non- 0.65
Penny Pilot, to: NYSE American..............................
Routed, Public Customer that is not a Priority Customer, Non- 1.20
Penny Pilot, to: NYSE Arca Options, Bats BZX Options, C2,
Nasdaq GEMX, Nasdaq MRX, Nasdaq BX Options..................
Routed (Public Customer that is not a Priority Customer), Non- 0.97
Penny Pilot, to: BOX, CBOE, Bats EDGX Options, Nasdaq ISE,
MIAX OPTIONS, NOM, Nasdaq PHLX..............................
------------------------------------------------------------------------
The proposed rule changes are scheduled to become operative October
1, 2017.
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 that it
is an equitable allocation of reasonable dues, fees and other charges
among Exchange members and issuers and other persons using its
facilities, and 6(b)(5) of the Act,\20\ in that 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 facilitating transactions in
securities, to remove impediments to and perfect the mechanisms of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(4).
\20\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------
The proposed Taker fee increases applicable to orders submitted by
a Member for the account of a Priority Customer are reasonable,
equitable and not unfairly discriminatory because all Priority Customer
option orders are subject to the same Taker fees and access to the
Exchange is offered on terms that are not unfairly discriminatory. The
Exchange initially set its Taker fees at the various levels based upon
business determinations and an analysis of current Taker fees and
volume levels at other exchanges. For competitive and business reasons,
the Exchange recently set its Taker fees for Priority Customer orders
so that they were significantly lower than other options exchanges that
operate comparable maker/taker pricing models.\21\ The Exchange now
believes that it is appropriate to slightly increase those Taker fees
so that they are not as steeply lower versus such other exchanges, but
will still remain highly competitive such that they should enable the
Exchange to continue to attract order flow and grow market share. The
Exchange notes that, even as amended, its Taker fees for Priority
Customers are still lower than most other options exchanges operating
competing models.\22\ The Exchange believes for these reasons that
offering slightly increased Taker fees for Priority Customer
transactions in all Tiers is equitable, reasonable and not unfairly
discriminatory, and thus consistent with the Act.
---------------------------------------------------------------------------
\21\ See supra note 11.
\22\ See supra footnotes 11-15.
---------------------------------------------------------------------------
The Exchange believes that its proposal to offer lower Taker fees
assessable to transactions solely in SPY, QQQ, IWM, and VXX options is
consistent with other options markets that also assess different
transaction fees for select option classes (including SPY, QQQ, IWM,
and VXX) as compared to other option classes. The Exchange believes
that establishing different pricing for select products for Priority
Customers is reasonable, equitable, and not unfairly discriminatory
because these select products are generally more liquid than other
option classes. Additionally, other competing options exchanges
differentiate pricing in a similar manner.\23\
---------------------------------------------------------------------------
\23\ See supra note 17.
---------------------------------------------------------------------------
Further, the Exchange believes that it is equitable and not
unfairly discriminatory to assess lower fees to Priority Customer
orders than to non-Priority Customer orders. A Priority Customer is by
definition not a broker or dealer in securities, and does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). This limitation does
not apply to participants on the Exchange whose behavior is
substantially similar to that of market professionals, including non-
Priority Customers, MIAX PEARL Market Makers, Firms, and Broker-
Dealers, who will generally submit a higher number of orders (many
[[Page 48143]]
of which do not result in executions) than Priority Customers.
Furthermore, the proposed slight increases to the Taker fees for
Priority Customer transactions in all Tiers promotes just and equitable
principles of trade, fosters cooperation and coordination with persons
engaged in facilitating transactions in securities, and protects
investors and the public interest, because even with the such slight
increases, the Exchange's proposed Taker fees for Priority Customer
orders still remain highly competitive with other options exchanges
offering comparable pricing models, as they should enable the Exchange
to continue to attract order flow and grow market share.\24\ The
Exchange believes that the amount of such fees, as proposed to be
increased, will continue to encourage Members to send more Priority
Customer orders to the Exchange even if it is an order which takes
liquidity since they will be assessed a lower Taker fee in each Tier
than most competing exchanges. To the extent that Priority Customer
order flow is increased by the proposal, market participants will
increasingly compete for the opportunity to trade on the Exchange,
including sending more orders which will have the potential to be
assessed lower fees and higher rebates than most competing options
exchanges. The resulting increased volume and liquidity will benefit
all Exchange participants by providing more trading opportunities and
tighter spreads.
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\24\ See supra note 22.
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The Exchange believes the proposed changes to update its routing
fee table set forth in Section 1(b) of the Fee Schedule to reflect
recent exchange name changes promote just and equitable principles of
trade and remove impediments to and perfect the mechanism of a free and
open market and a national market system because the proposed rule
change makes non-substantive technical corrections and updates the
Exchange's Fee Schedule. None of the name changes alter the application
of any fees or rebates on the Fee Schedule. As such, the proposed
amendments would foster cooperation and coordination with persons
engaged in facilitating transactions in securities and would remove
impediments to and perfect the mechanism of a free and open market and
a national exchange system. In particular, the Exchange believes that
the proposed changes will provide greater clarity to Members and the
public regarding the Exchange's Rules. It is in the public interest for
rules to be accurate and concise so as to eliminate the potential for
confusion.
B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX PEARL does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed Taker fee
increases are intended to keep the Exchange's fees highly competitive
with those of other exchanges, and to encourage liquidity and should
enable the Exchange to attract and compete for order flow with other
exchanges which assess higher Priority Customer taker fees. The
proposed changes to update its routing fee table set forth Section 1(b)
of the Fee Schedule to reflect recent exchange name changes will have
no impact on competition as they are not designed to address any
competitive issues but rather are designed to make non-substantive
technical corrections and update the Exchange's Fee Schedule.
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its rebates and fees
to remain competitive with other exchanges and to attract order flow.
The Exchange believes that the proposed rule change reflects this
competitive environment because it modifies the Exchange's fees in a
manner that will continue to encourage market participants to send
order flow to the Exchange.
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,\25\ and Rule 19b-4(f)(2) \26\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
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\25\ 15 U.S.C. 78s(b)(3)(A)(ii).
\26\ 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
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-PEARL-2017-34 on the subject line.
Paper Comments
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-2017-34. 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 Web site (https://www.sec.gov/rules/sro.shtml). 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 Web site 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-PEARL-2017-34 and should be
submitted on or before November 6, 2017.
[[Page 48144]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22264 Filed 10-13-17; 8:45 am]
BILLING CODE 8011-01-P
