Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule, 12836-12838 [2018-05901]
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12836
Federal Register / Vol. 83, No. 57 / Friday, March 23, 2018 / Notices
submission must file that rebuttal on or
before April 27, 2018. Comments may
be submitted by any of the following
methods:
Electronic Comments
[FR Doc. 2018–05902 Filed 3–22–18; 8:45 am]
• 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–
LCH SA–2017–012 and SR–LCH SA–
2017–013 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.63
Eduardo A. Aleman,
Assistant Secretary.
All submissions should refer to SR–LCH
SA–2017–012 and SR–LCH SA–2017–
013. These file numbers 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
(https://www.sec.gov/rules/sro.shtml).
Copies of the submissions, all
subsequent amendments, all written
statements with respect to the proposed
rule changes that are filed with the
Commission, and all written
communications relating to the
proposed rule changes 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
10:00 a.m. and 3:00 p.m. Copies of the
filings also will be available for
inspection and copying at the principal
office of LCH SA and on LCH SA’s
website at https://www.lch.com/assetclasses/cdsclear. All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly.
All submissions should refer to File
Number SR–LCH SA–2017–012 and SR–
LCH SA–2017–013 and should be
submitted on or before April 13, 2018.
If comments are received, any rebuttal
comments should be submitted on or
before April 27, 2018.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82900; File No. SR–
PEARL–2018–09]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fee
Schedule
March 19, 2018.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b–4
thereunder,2 notice is hereby given that
on March 8, 2018, 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.
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 Exchange
initially filed the proposal on February
28, 2018 (SR–PEARL–2018–06). That
filing was withdrawn and replaced with
the current filing (SR–PEARL–2018–09).
The text of the proposed rule change
is available on the Exchange’s website 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
1 15
63 17
CFR 200.30–3(a)(12).
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2 17
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CFR 240.19b–4.
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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 decrease the ‘‘Taker’’ fees in
Tiers 4, 5 and 6 assessable to all orders
submitted by a Market Maker 3 for
options in Penny classes (as defined
below).
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
3 ‘‘Market Maker’’ means a Member registered
with the Exchange for the purpose of making
markets in options contracts traded on the
Exchange and that is vested with the rights and
responsibilities specified in Chapter VI of Exchange
Rules. See the Definitions Section of the Fee
Schedule and Exchange Rule 100.
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 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 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.
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Federal Register / Vol. 83, No. 57 / Friday, March 23, 2018 / Notices
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
Origin
execute against resting liquidity are
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 generally 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
Tier
Per contract rebates/fees for
penny classes
Volume criteria
Maker
All MIAX PEARL Market
Makers.
1
2
3
4
5
6
0.00%–0.05% .....................
Above 0.05%–0.25% ..........
Above 0.25%–0.50% ..........
Above 0.50%–0.75% or
Above 2.0% in SPY.
Above 0.75%–1.00% ..........
Above 1.00% ......................
$1.05
1.05
1.03
1.02
(0.48)
(0.48)
0.47
0.47
(0.70)
(0.85)
1.02
1.02
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 No. 79778
(January 12, 2017), 82 FR 6662 (January 19, 2017)
(SR–PEARL–2016–01).
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Taker
($0.30)
(0.30)
(0.60)
(0.65)
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
VerDate Sep<11>2014
Maker
$0.50
0.50
0.48
0.47
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 10
in general, and furthers the objectives of
Section 6(b)(4) of the Act,11 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,12 in that it is designed
to prevent fraudulent and manipulative
2. Statutory Basis
Taker
Per contract rebates/fees
for non-penny classes
($0.25)
(0.40)
(0.40)
(0.47)
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 decreases in
Penny classes applicable to orders
submitted by a Market Maker are
reasonable, equitable and not unfairly
discriminatory because all Market
Maker 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 volume
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 believes
that lower Taker fees assessable to
Market Maker transactions in Penny
classes in Tiers 4, 5 and 6 will
encourage Market Makers to execute
more volume in Penny classes in order
to achieve the higher Tiers since they
will be assessed reduced fees in Tiers 4,
5 and 6 for orders in options in Penny
The Exchange proposes to decrease
the Taker fees for Market Maker orders
for options in Penny classes in Tiers 4,
5 and 6 from $0.47 to $0.43. The
purpose of decreasing the Taker fees for
Market Maker orders for options in
Penny classes to $0.43 in those Tiers is
for business and competitive reasons to
encourage Market Makers to execute
greater volume on the Exchange, by
offering lower rates in the higher Tiers.
The Exchange believes that reducing the
Taker fees for Market Maker orders for
options in Penny classes to $0.43 per
contract fee in those Tiers will
incentivize Market Makers to execute
more volume on the Exchange due to
favorable pricing for this liquidity type
in the higher Tiers. There are no other
changes proposed to the fee table.
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.
Transaction rebates and fees
applicable to orders submitted by a
Market Maker are currently assessed
according to the following table:
classes which remove liquidity. The
Exchange believes for these reasons that
offering the reduced Taker fees for
Market Maker transactions in Penny
classes in Tiers 4, 5 and 6 is equitable,
reasonable and not unfairly
discriminatory, and thus consistent with
the Act.
The Exchange believes that its
proposal to reduce Taker fees assessable
to transactions in options in Penny
classes and not to reduce Taker fees for
transactions in options in Non-Penny
classes is consistent with other options
markets that also assess different
transaction fees for options in NonPenny classes as compared to Penny
classes. The Exchange believes that
establishing different pricing for options
in Non-Penny classes and Penny classes
is reasonable, equitable, and not
unfairly discriminatory because options
in Penny classes are generally more
liquid as compared to Non-Penny
classes. Additionally, other competing
options exchanges differentiate pricing
in a similar manner today.13
Further, the Exchange believes that it
is equitable and not unfairly
discriminatory to assess lower fees to
Market Maker orders than to orders
submitted by all other market
participants who are not Priority
10 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
12 15 U.S.C. 78f(b)(1) and (b)(5).
13 See NASDAQ PHLX LLC Pricing Schedule,
Section II; NYSE American Options Fee Schedule,
p. 7; Cboe Exchange, Inc. Fee Schedule, p. 1. See
also Securities Exchange Act Release No. 68556
(January 2, 2013), 78 FR 1293 (January 8, 2013) (SR–
BX–2012–074).
11 15
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Federal Register / Vol. 83, No. 57 / Friday, March 23, 2018 / Notices
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Customers. Market Makers are assessed
lower transaction fees as compared to
Non-MIAX Market Makers, NonMember Broker-Dealers, and Firms
because they have market-making
obligations and regulatory requirements,
which normally do not apply to those
market participants that are not Market
Makers.14 Market Makers additionally
have obligations to make continuous
markets, engage in a course of dealings
reasonably calculated to contribute to
the maintenance of a fair and orderly
market, and not make bids or offers or
enter into transactions that are
inconsistent with a course of dealings.
Furthermore, the proposed decrease
to the Taker fees in Penny classes for
Market Makers in Tiers 4, 5 and 6
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 the proposed decrease
in the fees will encourage Market
Makers to send more orders to the
Exchange since they will be assessed a
reduced Taker fee in Tiers 4, 5 and 6.
To the extent that Market Maker order
flow in Penny classes 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. The
resulting increased volume and
liquidity will benefit all Exchange
participants by providing more trading
opportunities and tighter spreads.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
MIAX PEARL does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed Taker fee decreases are
intended to encourage executing more
volume on the Exchange. The decrease
in the Taker fee for Market Makers
should enable the Exchange to attract
and compete for order flow with other
exchanges which assess higher Taker
fees thereby adding liquidity. 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
encourages 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,15 and Rule
19b–4(f)(2) 16 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.
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–2018–09 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–2018–09. 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 (https://www.sec.gov/
15 15
14 See
Exchange Rules 603 and 604.
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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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 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
10:00 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–PEARL–2018–09 and
should be submitted on or before April
13, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–05901 Filed 3–22–18; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice: 10366]
E.O. 13224 Designation of Joe
Asperman, as a Specially Designated
Global Terrorist
Acting under the authority of and in
accordance with section 1(b) of
Executive Order 13224 of September 23,
2001, as amended by Executive Order
13268 of July 2, 2002, and Executive
Order 13284 of January 23, 2003, I
hereby determine that the person known
as Joe Asperman, committed, or poses a
significant risk of committing, acts of
terrorism that threaten the security of
U.S. nationals or the national security,
foreign policy, or economy of the United
States.
Consistent with the determination in
section 10 of Executive Order 13224 that
prior notice to persons determined to be
subject to the Order who might have a
constitutional presence in the United
17 17
E:\FR\FM\23MRN1.SGM
CFR 200.30–3(a)(12).
23MRN1
]]>Agencies
[Federal Register Volume 83, Number 57 (Friday, March 23, 2018)]
[Notices]
[Pages 12836-12838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05901]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82900; File No. SR-PEARL-2018-09]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule
March 19, 2018.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 8, 2018, 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 Exchange initially filed the
proposal on February 28, 2018 (SR-PEARL-2018-06). That filing was
withdrawn and replaced with the current filing (SR-PEARL-2018-09).
The text of the proposed rule change is available on the Exchange's
website 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 decrease the
``Taker'' fees in Tiers 4, 5 and 6 assessable to all orders submitted
by a Market Maker \3\ for options in Penny classes (as defined below).
---------------------------------------------------------------------------
\3\ ``Market Maker'' means a Member registered with the Exchange
for the purpose of making markets in options contracts traded on the
Exchange and that is vested with the rights and responsibilities
specified in Chapter VI of Exchange Rules. See the Definitions
Section of the Fee Schedule and Exchange Rule 100.
---------------------------------------------------------------------------
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
[[Page 12837]]
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 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
generally 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 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 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 No. 79778 (January 12,
2017), 82 FR 6662 (January 19, 2017) (SR-PEARL-2016-01).
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Transaction rebates and fees applicable to orders submitted by a
Market Maker are currently 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX PEARL Market Makers.............. 1 0.00%-0.05%................. ($0.25) $0.50 ($0.30) $1.05
2 Above 0.05%-0.25%........... (0.40) 0.50 (0.30) 1.05
3 Above 0.25%-0.50%........... (0.40) 0.48 (0.60) 1.03
4 Above 0.50%-0.75% or Above (0.47) 0.47 (0.65) 1.02
2.0% in SPY.
5 Above 0.75%-1.00%........... (0.48) 0.47 (0.70) 1.02
6 Above 1.00%................. (0.48) 0.47 (0.85) 1.02
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Exchange proposes to decrease the Taker fees for Market Maker
orders for options in Penny classes in Tiers 4, 5 and 6 from $0.47 to
$0.43. The purpose of decreasing the Taker fees for Market Maker orders
for options in Penny classes to $0.43 in those Tiers is for business
and competitive reasons to encourage Market Makers to execute greater
volume on the Exchange, by offering lower rates in the higher Tiers.
The Exchange believes that reducing the Taker fees for Market Maker
orders for options in Penny classes to $0.43 per contract fee in those
Tiers will incentivize Market Makers to execute more volume on the
Exchange due to favorable pricing for this liquidity type in the higher
Tiers. There are no other changes proposed to the fee table.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \10\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\11\ 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,\12\ 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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
\12\ 15 U.S.C. 78f(b)(1) and (b)(5).
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The proposed Taker fee decreases in Penny classes applicable to
orders submitted by a Market Maker are reasonable, equitable and not
unfairly discriminatory because all Market Maker 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 volume 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 believes
that lower Taker fees assessable to Market Maker transactions in Penny
classes in Tiers 4, 5 and 6 will encourage Market Makers to execute
more volume in Penny classes in order to achieve the higher Tiers since
they will be assessed reduced fees in Tiers 4, 5 and 6 for orders in
options in Penny classes which remove liquidity. The Exchange believes
for these reasons that offering the reduced Taker fees for Market Maker
transactions in Penny classes in Tiers 4, 5 and 6 is equitable,
reasonable and not unfairly discriminatory, and thus consistent with
the Act.
The Exchange believes that its proposal to reduce Taker fees
assessable to transactions in options in Penny classes and not to
reduce Taker fees for transactions in options in Non-Penny classes is
consistent with other options markets that also assess different
transaction fees for options in Non-Penny classes as compared to Penny
classes. The Exchange believes that establishing different pricing for
options in Non-Penny classes and Penny classes is reasonable,
equitable, and not unfairly discriminatory because options in Penny
classes are generally more liquid as compared to Non-Penny classes.
Additionally, other competing options exchanges differentiate pricing
in a similar manner today.\13\
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\13\ See NASDAQ PHLX LLC Pricing Schedule, Section II; NYSE
American Options Fee Schedule, p. 7; Cboe Exchange, Inc. Fee
Schedule, p. 1. See also Securities Exchange Act Release No. 68556
(January 2, 2013), 78 FR 1293 (January 8, 2013) (SR-BX-2012-074).
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Further, the Exchange believes that it is equitable and not
unfairly discriminatory to assess lower fees to Market Maker orders
than to orders submitted by all other market participants who are not
Priority
[[Page 12838]]
Customers. Market Makers are assessed lower transaction fees as
compared to Non-MIAX Market Makers, Non-Member Broker-Dealers, and
Firms because they have market-making obligations and regulatory
requirements, which normally do not apply to those market participants
that are not Market Makers.\14\ Market Makers additionally have
obligations to make continuous markets, engage in a course of dealings
reasonably calculated to contribute to the maintenance of a fair and
orderly market, and not make bids or offers or enter into transactions
that are inconsistent with a course of dealings.
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\14\ See Exchange Rules 603 and 604.
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Furthermore, the proposed decrease to the Taker fees in Penny
classes for Market Makers in Tiers 4, 5 and 6 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 the proposed
decrease in the fees will encourage Market Makers to send more orders
to the Exchange since they will be assessed a reduced Taker fee in
Tiers 4, 5 and 6. To the extent that Market Maker order flow in Penny
classes 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. The resulting increased volume
and liquidity will benefit all Exchange participants by providing more
trading opportunities and tighter spreads.
B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX PEARL does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed Taker fee
decreases are intended to encourage executing more volume on the
Exchange. The decrease in the Taker fee for Market Makers should enable
the Exchange to attract and compete for order flow with other exchanges
which assess higher Taker fees thereby adding liquidity. 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 encourages 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,\15\ and Rule 19b-4(f)(2) \16\ 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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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 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 [email protected]. Please include
File Number SR-PEARL-2018-09 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-2018-09. 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 (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 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 10:00 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-PEARL-2018-09 and should be submitted on
or before April 13, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05901 Filed 3-22-18; 8:45 am]
BILLING CODE 8011-01-P
