Self-Regulatory Organizations: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by MIAX PEARL, LLC To Amend the MIAX PEARL Fee Schedule, 40605-40610 [2018-17495]
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Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices
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might elect not to trade on covered
ATSs ‘‘to maintain anonymity and avoid
regulatory oversight.’’ 65 The
Commission believes, nevertheless, that
this comment does not preclude
approval of the proposal at this time.
Although some Treasury transactions
will continue to be outside the scope of
the new requirements, the new
counterparty information reported by
covered ATSs should greatly enhance
surveillance capabilities and provide
additional insights into the Treasury
cash market. The Commission notes that
other public sector authorities have
expressed their intention to continue to
assess effective means to ensure that
reported data regarding the Treasury
cash market is comprehensive and
includes information from institutions
that are not FINRA members.66
Furthermore, although theoretically
possible, it might not be practical for
non-FINRA members to shift their
trading activity away from covered
ATSs if covered ATSs continue to serve
as significant pools of liquidity for U.S.
Treasury Securities. The Commission
notes that FINRA ‘‘intends to monitor
. . . for any potential negative impacts
or changes in ATS or non-member
subscriber behavior.’’ 67
The Commission believes that the
proposal is reasonably designed to
minimize burdens on ATSs while still
fulfilling the important policy objectives
discussed above. The new non-FINRAmember identification requirements will
apply only to ATSs that exceed the $10
billion threshold. These ATS currently
account for the vast majority of ATS
transaction reports for transactions in
U.S. Treasury Securities against nonFINRA members.68 Furthermore, the
proposal does not appear likely to
require covered ATSs to undertake
significant programming work because
new reporting fields will not be
necessary. All ATSs that report to
TRACE already utilize fields for
counterparty identifiers and are familiar
with the use of MPIDs for FINRA
member counterparties. For Treasury
transactions on covered ATSs, the
proposal eliminates use of the generic
‘‘C’’ and ‘‘A’’ identifiers and instead
requires the ATS to populate the
counterparty identifier field with an
MPID in all cases, regardless of whether
a particular counterparty is a FINRA
member. Under the new rule, FINRA
65 Execution
Access Letter at 2.
supra notes 47–48 and accompanying text.
67 Notice, 83 FR at 27645.
68 FINRA stated that, based on a review of TRACE
data over a sample period, only six ATSs that
accounted for 99% of trade reports exceeded the
proposed threshold. See Notice, 83 FR at 27645, at
n. 13.
66 See
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18:28 Aug 14, 2018
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will assign MPIDs to all non-FINRAmember subscribers of covered ATSs
who engage in Treasury transactions
without employing a de minimis cut-off.
The Commission believes that this is a
reasonable means of simplifying
compliance with the rule because
covered ATSs will not have to analyze
the transaction volume of non-FINRAmember subscribers to ascertain
whether any of them become subject to
or subsequently fall outside the scope of
the rule. In addition, an ATS that
reaches the $10 billion threshold will
remain a covered ATS even if its
volume of executed transactions in U.S.
Treasury Securities subsequently falls
below the $10 billion threshold.69 The
Commission believes that this will
simplify compliance with the new rule
because an ATS will not be required to
continue monitoring its volume of
executions in U.S. Treasury Securities
against non-FINRA-member subscribers
once it has reached the $10 billion
threshold. Finally, the Commission
notes that the new rule will impose
duties only on covered ATSs and not on
any of their subscribers.
Pursuant to Section 19(b)(5) of the
Act,70 the Commission consulted with
and considered the views of the
Treasury Department in determining to
approve the proposed rule change. The
Treasury Department supports FINRA’s
proposal to require covered ATSs to
identify non-FINRA-member
counterparties in their TRACE reports of
Treasury transactions.71 Pursuant to
Section 19(b)(6) of the Act,72 the
Commission has considered the
sufficiency and appropriateness of
existing laws and rules applicable to
government securities brokers,
government securities dealers, and their
associated persons in approving the
proposal. As discussed above, ATSs
currently report Treasury transactions
using generic identifiers that do not
specifically identify non-FINRAmember counterparties. By requiring
covered ATSs to identify non-FINRAmember counterparties in their TRACE
reports of Treasury transactions, the
69 See FINRA Rule 6730, Supplementary Material
.07(d).
70 15 U.S.C. 78s(b)(5) (providing that the
Commission ‘‘shall consult with and consider the
views of the Secretary of the Treasury prior to
approving a proposed rule filed by a registered
securities association that primarily concerns
conduct related to transactions in government
securities, except where the Commission
determines that an emergency exists requiring
expeditious or summary action and publishes its
reasons therefor’’).
71 Telephone conversation with Treasury
Department staff and Brett Redfearn, Director,
Division of Trading and Markets, et al., on August
3, 2018.
72 15 U.S.C. 78s(b)(6).
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40605
new rule will enhance FINRA’s
surveillance program for U.S. Treasury
Securities and provide the official sector
with important additional information
concerning activity in the U.S. Treasury
cash market.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,73 that the
proposed rule change (SR–FINRA–
2018–023) is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.74
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–17496 Filed 8–14–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83814; File No. SR–
PEARL–2018–17]
Self-Regulatory Organizations: Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change by MIAX
PEARL, LLC To Amend the MIAX
PEARL Fee Schedule
August 9, 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 August 1, 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 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.
73 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
74 17
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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 (i) decrease Maker (as defined below)
rebates in Tier 6 for options transactions
Origin
in Penny classes (as defined below) and
non-Penny classes (as defined below)
for Priority Customers; 3 (ii) increase
Taker (as defined below) fees in certain
Tiers for options transactions in Penny
classes and in all Tiers for options
transactions in non-Penny classes for
MIAX PEARL Market Makers,4 and (iii)
increase the Taker fees in all Tiers for
options transactions in non-Penny
classes for Non-Priority Customers,
Firms, Broker-Dealers and Non-MIAX
PEARL Market Makers (collectively
herein ‘‘Professional Members’’).
The Exchange currently assesses
transaction rebates and fees to all
market participants which are based
upon the total monthly volume
executed by the Member 5 on MIAX
PEARL in the relevant, respective origin
type (not including Excluded
Contracts) 6 expressed as a percentage of
TCV.7 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
Per contract
rebates/fees
for penny classes
Volume
criteria
(percent)
Tier
Maker
Priority Customer ..
1
2
3
4
5
6
by the Member. The Exchange
aggregates the volume of Members and
their Affiliates.8 Members that place
resting liquidity, i.e., orders resting on
the book of the MIAX PEARL System,9
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 assessed lower
transaction fees and receive lower
rebates for order executions in standard
option classes in the Penny Pilot
Program 10 (‘‘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.
Transaction rebates and fees in Section
1(a) of the Fee Schedule are currently
assessed according to the following
tables:
0.00–0.10 ..............
Above 0.10–0.35 ..
Above 0.35–0.50 ..
Above 0.50–0.75 ..
Above 0.75–1.25 ..
Above 1.25 ...........
($0.25)
(0.40)
(0.45)
(0.52)
(0.53)
(0.54)
Taker *
Per contract
rebates/fees
for non-penny classes
SPY taker
$0.48
0.46
0.44
0.44
0.44
0.43
QQQ, IWM,
VXX taker
$0.44
0.43
0.42
0.41
0.40
0.38
$0.47
0.46
0.44
0.43
0.42
0.40
Maker
($0.85)
(0.95)
(1.00)
(1.03)
(1.04)
(1.05)
Taker
$0.87
0.86
0.85
0.84
0.84
0.84
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* For all Penny Classes other than SPY, QQQ, IWM, and VXX.
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 account(s). See Exchange Rule
100, including Interpretations and Policies .01.
4 ‘‘Market Maker’’ means a Member registered
with the Exchange for the purpose of making
markets in options contracts traded on the
Exchange. See the Definitions Section of the Fee
Schedule and Exchange Rule 100.
5 ‘‘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.
6 ‘‘Excluded Contracts’’ means any contracts
routed to an away market for execution. See the
Definitions Section of the Fee Schedule.
7 ‘‘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
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18:28 Aug 14, 2018
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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
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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.
8 ‘‘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.
9 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
10 See Securities Exchange Act Release No. 83517
(June 25, 2018), 83 FR 30792 (June 29, 2018) (SR–
PEARL–2018–14).
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Origin
Per contract
rebates/fees
for penny classes
Volume
criteria
(percent)
Tier
Maker
All MIAX PEARL Market
Makers.
1
2
3
4
5
6
Origin
0.00–0.15 ...........................
Above 0.15–0.40 ................
Above 0.40–0.65 ................
Above 0.65–1.00 or Above
2.25 in SPY.
Above 1.00–1.40 ................
Above 1.40 .........................
Non-Priority Customer,
Firm, BD, and Non-MIAX
PEARL Market Makers.
1
2
3
4
5
6
Taker
Maker **
Taker **
($0.25)
(0.40)
(0.40)
(0.47)
$0.50
0.50
0.48
0.43
($0.30)
(0.30)
(0.60)
(0.65)
$1.05
1.05
1.03
1.02
(0.48)
(0.48)
0.43
0.43
(0.70)
(0.85)
1.02
1.02
Per contract
rebates/fees
for penny classes
Volume
criteria
(percent)
Tier
Per contract
rebates/fees
for non-penny classes
Maker ∧
0.00–0.15 ...........................
Above 0.15–0.40 ................
Above 0.40–0.65 ................
Above 0.65–1.00 ................
Above 1.00–1.40 ................
Above 1.40 .........................
Per contract
rebates/fees
for non-penny classes
Taker
($0.25)
(0.40)
(0.40)
(0.47)
(0.48)
(0.48)
Maker **∧
$0.50
0.50
0.48
0.48
0.48
0.48
($0.30)
(0.30)
(0.60)
(0.65)
(0.70)
(0.85)
Taker **
$1.05
1.05
1.04
1.04
1.04
1.04
daltland on DSKBBV9HB2PROD with NOTICES
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the
Member executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX
PEARL listed option classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their
Affiliates in the following Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX
PEARL Market Makers.
∧ Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B)
the amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least
1.50% volume in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to
the TCV in all MIAX PEARL listed option classes.
Except as otherwise set forth herein,
the Volume Criteria is calculated based
on the total monthly volume executed
by the Member in all options classes on
MIAX PEARL in the relevant Origin
type, not including Excluded Contracts,
(as the numerator) expressed as a
percentage of (divided by) TCV (as the
denominator). In Tier 4 for MIAX
PEARL Market Makers, the alternative
Volume Criteria (above 2.25% in SPY)
is calculated based on the total monthly
volume executed by the Market Maker
solely in SPY options on MIAX PEARL
in the relevant Origin type, not
including Excluded Contracts, (as the
numerator) expressed as a percentage of
(divided by) SPY TCV (as the
denominator). The per contract
transaction rebates and fees shall be
applied retroactively to all eligible
volume once the threshold has been
reached by Member. The Exchange
aggregates the volume of Members and
their Affiliates in the Add/Remove
Tiered Fees. The per contract
transaction rebates and fees shall be
waived for transactions executed during
the opening and for transactions that
uncross the ABBO.
Maker Rebates
The Exchange proposes to decrease
the Maker rebate amounts in Tier 6 as
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19:35 Aug 14, 2018
Jkt 244001
described below for Penny and nonPenny classes for Priority Customers.
Specifically, for Priority Customer
options transactions in Penny classes,
the Exchange proposes to decrease the
Maker rebate in Tier 6 from ($0.54) to
($0.53). For Priority Customer options
transactions in non-Penny classes, the
Exchange proposes to decrease the
Maker rebate in Tier 6 from ($1.05) to
($1.04).
from $1.02 to $1.08, in Tier 5 from $1.02
to $1.07 and in Tier 6 from $1.02 to
$1.06. The Exchange proposes to
increase the Taker fees for Professional
Members for options transactions in
non-Penny classes in Tier 1 from $1.05
to $1.10, in Tier 2 from $1.05 to $1.10,
in Tier 3 from $1.04 to $1.10, in Tier 4
from $1.04 to $1.09, in Tier 5 from $1.04
to $1.08 and in Tier 6 from $1.04 to
$1.07.
Taker Fees
The purpose of increasing the
specified Taker fees and decreasing the
specified Maker rebates is for business
and competitive reasons. As a new
exchange, in order to attract order flow,
the Exchange initially set its Maker
rebates and Taker fees so that they were
meaningfully higher/lower than other
options exchanges that operate
comparable maker/taker pricing
models.11 The Exchange now believes
that it is appropriate to further adjust
these specified Maker rebates and Taker
fees so that they are more in line with
The Exchange proposes to: (i) Increase
the Taker fees assessable to MIAX
PEARL Market Makers in certain Tiers
for options transactions in Penny classes
and in all Tiers for options transactions
in non-Penny classes, and (ii) increase
the Taker fees assessable to Professional
Members in all tiers for options
transactions in non-Penny classes.
Specifically, the Exchange proposes to
increase the Taker fees for MIAX PEARL
Market Makers orders in options in
Penny classes in Tier 4 from $0.43 to
$0.47, in Tier 5 from $0.43 to $0.45 and
in Tier 6 from $0.43 to $0.44. The
Exchange also proposes to increase the
Taker fee for MIAX PEARL Market
Makers for options transactions in nonPenny classes in Tier 1 from $1.05 to
$1.10, in Tier 2 from $1.05 to $1.10, in
Tier 3 from $1.03 to $1.09, in Tier 4
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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).
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other exchanges, but will still remain
highly competitive such that they
should enable the Exchange to continue
to attract order flow and maintain
market share.12
Cboe BZX Exchange, Inc. (‘‘Cboe
BZX’’) generally provides for similar
fees and rebates. For example, under
threshold criteria similar to MIAX
PEARL’s proposed rebates in Priority
Customer Tier 6 for Penny Classes, Cboe
BZX’s Customer Penny Pilot Add Tiers
5, 6 and 7 provides for a rebate of
$0.53.13 Additionally, under threshold
Origin
criteria similar to MIAX PEARL’s
proposed rebates in Priority Customer
Tier 6 for non-Penny Classes, Cboe BZX
provides for a rebate of $1.02 in its
Customer Non-Penny Pilot Add Tier 3,
and a rebate of $1.05, in Tier 4.14
Further, under threshold criteria similar
to MIAX PEARL’s proposed Taker fees
for Market Makers in Tiers 4, 5 and 6,
in Penny Classes, Cboe BZX charges fees
of $0.44 and $0.47 in its non-Customer
Penny Pilot Take Volume Tiers for
Market Makers.15 Additionally, similar
to the Taker fees proposed by MIAX
Per contract
rebates/fees
for penny classes
Volume
criteria
(percent)
Tier
Maker
Priority Customer ..
1
2
3
4
5
6
PEARL for Market Makers in non-Penny
Classes, Cboe BZX charges Market
Makers a fee of $1.07 in its nonCustomer, Non-Penny Pilot Take
Volume Tiers.16 Furthermore, similar to
the Taker fees proposed by MIAX
PEARL for Professional Members in
Non-Penny Classes, Cboe BZX charges
Professionals a fee of $1.07 in its NonCustomer, Non-Penny Pilot Take
Volume Tiers.17
With all proposed changes, Section
1)a) of the Fee Schedule shall be the
following:
0.00–0.10 ..............
Above 0.10–0.35 ..
Above 0.35–0.50 ..
Above 0.50–0.75 ..
Above 0.75–1.25 ..
Above 1.25 ...........
SPY
taker
Taker *
($0.25)
(0.40)
(0.45)
(0.52)
(0.53)
(0.53)
Per contract
rebates/fees
for non-penny classes
$0.48
0.46
0.44
0.44
0.44
0.43
QQQ, IWM,
VXX taker
$0.44
0.43
0.42
0.41
0.40
0.38
$0.47
0.46
0.44
0.43
0.42
0.40
Maker
Taker
($0.85)
(0.95)
(1.00)
(1.03)
(1.04)
(1.04)
$0.87
0.86
0.85
0.84
0.84
0.84
* For all Penny Classes other than SPY, QQQ, IWM, and VXX.
Origin
Per contract
rebates/fees
for penny classes
Volume
criteria
(percent)
Tier
Maker
All MIAX PEARL Market
Makers.
1
2
3
4
5
6
Origin
1
2
3
4
5
6
Taker
Maker **
Taker **
($0.25)
(0.40)
(0.40)
(0.47)
$0.50
0.50
0.48
0.47
($0.30)
(0.30)
(0.60)
(0.65)
$1.10
1.10
1.09
1.08
(0.48)
(0.48)
0.45
0.44
(0.70)
(0.85)
1.07
1.06
Per contract
rebates/fees
for penny classes
Volume
criteria
(percent)
Tier
Non-Priority Customer,
Firm, BD, and Non-MIAX
PEARL Market Makers.
daltland on DSKBBV9HB2PROD with NOTICES
0.00–0.15 ...........................
Above 0.15–0.40 ................
Above 0.40–0.65 ................
Above 0.65–1.00 ................
or Above 2.25 in SPY ........
Above 1.00–1.40 ................
Above 1.40 .........................
Per contract
rebates/fees
for non-penny classes
Maker ∧
0.00–0.15 ...........................
Above 0.15–0.40 ................
Above 0.40–0.65 ................
Above 0.65–1.00 ................
Above 1.00–1.40 ................
Above 1.40 .........................
Per contract
rebates/fees
for non-penny classes
Taker
($0.25)
(0.40)
(0.40)
(0.47)
(0.48)
(0.48)
Maker **∧
$0.50
0.50
0.48
0.48
0.48
0.48
($0.30)
(0.30)
(0.60)
(0.65)
(0.70)
(0.85)
Taker **
$1.10
1.10
1.10
1.09
1.08
1.07
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the
Member executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX
PEARL listed option classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their
Affiliates in the following Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX
PEARL Market Makers.
∧ Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B)
the amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least
1.50% volume in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to
the TCV in all MIAX PEARL listed option classes.
12 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees.’’
13 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees,’’ ‘‘Customer Penny Pilot
Add Tiers.’’
VerDate Sep<11>2014
19:35 Aug 14, 2018
Jkt 244001
14 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees,’’ ‘‘Customer NonCustomer Penny Pilot Add Volume Tier.’’
15 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees,’’ ‘‘Non-Customer Penny
Pilot Take Volume Tiers.’’
PO 00000
Frm 00110
Fmt 4703
Sfmt 4703
16 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees,’’ ‘‘Non-Customer NonPenny Pilot Take Volume Tiers.’’
17 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees,’’ ‘‘Non-Customer NonPenny Pilot Take Volume Tiers.’’
E:\FR\FM\15AUN1.SGM
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Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices
daltland on DSKBBV9HB2PROD with NOTICES
Except as otherwise set forth herein,
the Volume Criteria is calculated based
on the total monthly volume executed
by the Member in all options classes on
MIAX PEARL in the relevant Origin
type, not including Excluded Contracts,
(as the numerator) expressed as a
percentage of (divided by) TCV (as the
denominator). In Tier 4 for MIAX
PEARL Market Makers, the alternative
Volume Criteria (above 2.25% in SPY)
is calculated based on the total monthly
volume executed by the Market Maker
solely in SPY options on MIAX PEARL
in the relevant Origin type, not
including Excluded Contracts, (as the
numerator) expressed as a percentage of
(divided by) SPY TCV (as the
denominator). The per contract
transaction rebates and fees shall be
applied retroactively to all eligible
volume once the threshold has been
reached by Member. The Exchange
aggregates the volume of Members and
their Affiliates in the Add/Remove
Tiered Fees. The per contract
transaction rebates and fees shall be
waived for transactions executed during
the opening and for transactions that
uncross the ABBO.
The proposed changes are scheduled
to become operative August 1, 2018.
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 Maker rebate decrease
in Penny classes and non-Penny classes
applicable to Priority Customers in Tier
6 is reasonable, equitable and not
unfairly discriminatory because all
similarly situated market participants
are subject to the same tiered rebates
and fees and access to the Exchange is
offered on terms that are not unfairly
discriminatory. The Exchange believes
it is equitable and not unfairly
discriminatory to only offer this reduced
taker fee to Priority Customer orders
because 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, who will generally submit
a higher number of orders than Priority
Customers. For competitive and
business reasons, the Exchange initially
set its Maker rebates for Priority
Customer orders higher than certain
other options exchanges that operate
comparable maker/taker pricing
models.21 The Exchange now believes
that it is appropriate to further decrease
those specified Maker rebates so that
they are more in line with other
exchanges, and will still remain highly
competitive such that they should
enable the Exchange to continue to
attract order flow and maintain market
share.22
The proposed Taker fee increases in
certain specified Tiers applicable to
orders submitted by MIAX PEARL
Market Makers and Professional
Members are reasonable, equitable and
not unfairly discriminatory because all
option orders of the same origin type are
subject to the same tiered Taker fees and
access to the Exchange is offered on
terms that are not unfairly
discriminatory. For competitive and
business reasons, the Exchange initially
set its Taker fees for MIAX PEARL
Market Maker and Professional Member
orders lower than certain other options
exchanges that operate comparable
maker/taker pricing models.23 The
Exchange now believes that it is
appropriate to further increase those
specified Taker fees so that they are
more in line with other exchanges, and
will still remain highly competitive
such that they should enable the
Exchange to continue to attract order
flow and maintain market share. The
Exchange notes that, even as amended,
its Taker fees for MIAX PEARL Market
Makers and Professional Members are
generally lower than certain other
options exchanges operating competing
models.24 The Exchange believes for
these reasons that increasing certain
Taker fees for MIAX PEARL Market
Maker and Professional Member
transactions in the specified Tiers is
21 See
supra note 11.
supra note 12
23 See supra note 11.
24 See supra note 12
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).
VerDate Sep<11>2014
18:28 Aug 14, 2018
22 See
Jkt 244001
PO 00000
Frm 00111
Fmt 4703
equitable, reasonable and not unfairly
discriminatory, and thus consistent with
the Act.
Furthermore, the proposed increases
to the Taker fees for MIAX PEARL
Market Maker and Professional Member
transactions 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
increases, the Exchange’s proposed
Taker fees for MIAX PEARL Market
Maker and Professional Member orders
still remain highly competitive with
certain other options exchanges offering
comparable pricing models, and should
enable the Exchange to continue to
attract order flow and maintain market
share.25 The Exchange believes that the
amount of such fees, as proposed to be
increased, will continue to encourage
those market participants to send orders
to the Exchange. To the extent that 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 certain other competing
options exchanges. 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 changes will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
changes in the specified Maker rebates
and Taker fees for the applicable market
participants should continue to
encourage the provision of liquidity that
enhances the quality of the Exchange’s
market and increases the number of
trading opportunities on MIAX PEARL
for all participants who will be able to
compete for such opportunities. The
proposed rule change should enable the
Exchange to continue to attract and
compete for order flow with other
exchanges. However, this competition
does not create an undue burden on
competition but rather offers all market
participants the opportunity to receive
the benefit of competitive pricing.
The proposed Maker rebate decreases
and Taker fee increases are intended to
keep the Exchange’s fees highly
competitive with those of other
25 See
Sfmt 4703
40609
E:\FR\FM\15AUN1.SGM
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15AUN1
40610
Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices
exchanges, and to encourage liquidity
and should enable the Exchange to
continue to attract and compete for
order flow with other exchanges. 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 changes reflect this
competitive environment because they
modify the Exchange’s fees in a manner
that encourages market participants to
continue to provide liquidity and 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,26 and Rule
19b–4(f)(2) 27 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:
daltland on DSKBBV9HB2PROD with NOTICES
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–2018–17 on the subject line.
26 15
27 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
18:28 Aug 14, 2018
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–2018–17. 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–2018–17, and
should be submitted on or before
September 5, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–17495 Filed 8–14–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
28 17
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CFR 200.30–3(a)(12).
Frm 00112
Fmt 4703
Sfmt 4703
Extension:
Rule 17f–1(c) and Form X–17F–1A. SEC
File No. 270–29, OMB Control No. 3235–
0037.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17f–1(c) and Form
X–17F–1A (17 CFR 249.100) under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 17f–1(c) requires approximately
10,100 entities in the securities industry
to report lost, stolen, missing, or
counterfeit securities certificates to the
Commission or its designee, to a
registered transfer agent for the issue,
and, when criminal activity is
suspected, to the Federal Bureau of
Investigation. Such entities are required
to use Form X–17F–1A to make such
reports. Filing these reports fulfills a
statutory requirement that reporting
institutions report and inquire about
missing, lost, counterfeit, or stolen
securities. Since these reports are
compiled in a central database, the rule
facilitates reporting institutions to
access the database that stores
information for the Lost and Stolen
Securities Program.
We estimate that 10,100 reporting
institutions will report that securities
are either missing, lost, counterfeit, or
stolen annually and that each reporting
institution will submit this report 30
times each year. The staff estimates that
the average amount of time necessary to
comply with Rule 17f–1(c) and Form X–
17F–1A is five minutes. The total
burden is approximately 25,250 hours
annually for respondents (10,100 times
30 times 5 divided by 60).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the proposed collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information on respondents; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
E:\FR\FM\15AUN1.SGM
15AUN1
]]>Agencies
[Federal Register Volume 83, Number 158 (Wednesday, August 15, 2018)]
[Notices]
[Pages 40605-40610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17495]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83814; File No. SR-PEARL-2018-17]
Self-Regulatory Organizations: Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by MIAX PEARL, LLC To Amend the
MIAX PEARL Fee Schedule
August 9, 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 August 1, 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 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.
[[Page 40606]]
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 (i) decrease Maker (as
defined below) rebates in Tier 6 for options transactions in Penny
classes (as defined below) and non-Penny classes (as defined below) for
Priority Customers; \3\ (ii) increase Taker (as defined below) fees in
certain Tiers for options transactions in Penny classes and in all
Tiers for options transactions in non-Penny classes for MIAX PEARL
Market Makers,\4\ and (iii) increase the Taker fees in all Tiers for
options transactions in non-Penny classes for Non-Priority Customers,
Firms, Broker-Dealers and Non-MIAX PEARL Market Makers (collectively
herein ``Professional Members'').
---------------------------------------------------------------------------
\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 account(s). See Exchange Rule
100, including Interpretations and Policies .01.
\4\ ``Market Maker'' means a Member registered with the Exchange
for the purpose of making markets in options contracts traded on the
Exchange. See the Definitions Section of the Fee Schedule and
Exchange Rule 100.
---------------------------------------------------------------------------
The Exchange currently assesses transaction rebates and fees to all
market participants which are based upon the total monthly volume
executed by the Member \5\ on MIAX PEARL in the relevant, respective
origin type (not including Excluded Contracts) \6\ expressed as a
percentage of TCV.\7\ 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.\8\ Members that place resting liquidity, i.e.,
orders resting on the book of the MIAX PEARL System,\9\ 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 assessed lower
transaction fees and receive lower rebates for order executions in
standard option classes in the Penny Pilot Program \10\ (``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. Transaction rebates and fees in Section 1(a) of the Fee
Schedule are currently assessed according to the following tables:
---------------------------------------------------------------------------
\5\ ``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.
\6\ ``Excluded Contracts'' means any contracts routed to an away
market for execution. See the Definitions Section of the Fee
Schedule.
\7\ ``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 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.
\8\ ``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.
\9\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\10\ See Securities Exchange Act Release No. 83517 (June 25,
2018), 83 FR 30792 (June 29, 2018) (SR-PEARL-2018-14).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
---------------------------------------------------- fees for non-penny
Origin Tier Volume criteria classes
(percent) Maker Taker * SPY taker QQQ, IWM, -------------------------
VXX taker Maker Taker
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer................... 1 0.00-0.10.............. ($0.25) $0.48 $0.44 $0.47 ($0.85) $0.87
2 Above 0.10-0.35........ (0.40) 0.46 0.43 0.46 (0.95) 0.86
3 Above 0.35-0.50........ (0.45) 0.44 0.42 0.44 (1.00) 0.85
4 Above 0.50-0.75........ (0.52) 0.44 0.41 0.43 (1.03) 0.84
5 Above 0.75-1.25........ (0.53) 0.44 0.40 0.42 (1.04) 0.84
6 Above 1.25............. (0.54) 0.43 0.38 0.40 (1.05) 0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny Classes other than SPY, QQQ, IWM, and VXX.
[[Page 40607]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for Per contract rebates/fees for
penny classes non-penny classes
Origin Tier Volume criteria (percent) ---------------------------------------------------------------
Maker Taker Maker ** Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX PEARL Market Makers.............. 1 0.00-0.15................... ($0.25) $0.50 ($0.30) $1.05
2 Above 0.15-0.40............. (0.40) 0.50 (0.30) 1.05
3 Above 0.40-0.65............. (0.40) 0.48 (0.60) 1.03
4 Above 0.65-1.00 or Above (0.47) 0.43 (0.65) 1.02
2.25 in SPY.
5 Above 1.00-1.40............. (0.48) 0.43 (0.70) 1.02
6 Above 1.40.................. (0.48) 0.43 (0.85) 1.02
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for Per contract rebates/fees for
penny classes non-penny classes
Origin Tier Volume criteria (percent) ---------------------------------------------------------------
Maker [caret] Maker
Taker **[caret] Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Priority Customer, Firm, BD, and Non- 1 0.00-0.15................... ($0.25) $0.50 ($0.30) $1.05
MIAX PEARL Market Makers. 2 Above 0.15-0.40............. (0.40) 0.50 (0.30) 1.05
3 Above 0.40-0.65............. (0.40) 0.48 (0.60) 1.04
4 Above 0.65-1.00............. (0.47) 0.48 (0.65) 1.04
5 Above 1.00-1.40............. (0.48) 0.48 (0.70) 1.04
6 Above 1.40.................. (0.48) 0.48 (0.85) 1.04
--------------------------------------------------------------------------------------------------------------------------------------------------------
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member
executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option
classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following
Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
[caret] Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the
amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 1.50% volume
in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX
PEARL listed option classes.
Except as otherwise set forth herein, the Volume Criteria is
calculated based on the total monthly volume executed by the Member in
all options classes on MIAX PEARL in the relevant Origin type, not
including Excluded Contracts, (as the numerator) expressed as a
percentage of (divided by) TCV (as the denominator). In Tier 4 for MIAX
PEARL Market Makers, the alternative Volume Criteria (above 2.25% in
SPY) is calculated based on the total monthly volume executed by the
Market Maker solely in SPY options on MIAX PEARL in the relevant Origin
type, not including Excluded Contracts, (as the numerator) expressed as
a percentage of (divided by) SPY TCV (as the denominator). The per
contract transaction rebates and fees shall be applied retroactively to
all eligible volume once the threshold has been reached by Member. The
Exchange aggregates the volume of Members and their Affiliates in the
Add/Remove Tiered Fees. The per contract transaction rebates and fees
shall be waived for transactions executed during the opening and for
transactions that uncross the ABBO.
Maker Rebates
The Exchange proposes to decrease the Maker rebate amounts in Tier
6 as described below for Penny and non-Penny classes for Priority
Customers. Specifically, for Priority Customer options transactions in
Penny classes, the Exchange proposes to decrease the Maker rebate in
Tier 6 from ($0.54) to ($0.53). For Priority Customer options
transactions in non-Penny classes, the Exchange proposes to decrease
the Maker rebate in Tier 6 from ($1.05) to ($1.04).
Taker Fees
The Exchange proposes to: (i) Increase the Taker fees assessable to
MIAX PEARL Market Makers in certain Tiers for options transactions in
Penny classes and in all Tiers for options transactions in non-Penny
classes, and (ii) increase the Taker fees assessable to Professional
Members in all tiers for options transactions in non-Penny classes.
Specifically, the Exchange proposes to increase the Taker fees for MIAX
PEARL Market Makers orders in options in Penny classes in Tier 4 from
$0.43 to $0.47, in Tier 5 from $0.43 to $0.45 and in Tier 6 from $0.43
to $0.44. The Exchange also proposes to increase the Taker fee for MIAX
PEARL Market Makers for options transactions in non-Penny classes in
Tier 1 from $1.05 to $1.10, in Tier 2 from $1.05 to $1.10, in Tier 3
from $1.03 to $1.09, in Tier 4 from $1.02 to $1.08, in Tier 5 from
$1.02 to $1.07 and in Tier 6 from $1.02 to $1.06. The Exchange proposes
to increase the Taker fees for Professional Members for options
transactions in non-Penny classes in Tier 1 from $1.05 to $1.10, in
Tier 2 from $1.05 to $1.10, in Tier 3 from $1.04 to $1.10, in Tier 4
from $1.04 to $1.09, in Tier 5 from $1.04 to $1.08 and in Tier 6 from
$1.04 to $1.07.
The purpose of increasing the specified Taker fees and decreasing
the specified Maker rebates is for business and competitive reasons. As
a new exchange, in order to attract order flow, the Exchange initially
set its Maker rebates and Taker fees so that they were meaningfully
higher/lower than other options exchanges that operate comparable
maker/taker pricing models.\11\ The Exchange now believes that it is
appropriate to further adjust these specified Maker rebates and Taker
fees so that they are more in line with
[[Page 40608]]
other exchanges, but will still remain highly competitive such that
they should enable the Exchange to continue to attract order flow and
maintain market share.\12\
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\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 Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees.''
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Cboe BZX Exchange, Inc. (``Cboe BZX'') generally provides for
similar fees and rebates. For example, under threshold criteria similar
to MIAX PEARL's proposed rebates in Priority Customer Tier 6 for Penny
Classes, Cboe BZX's Customer Penny Pilot Add Tiers 5, 6 and 7 provides
for a rebate of $0.53.\13\ Additionally, under threshold criteria
similar to MIAX PEARL's proposed rebates in Priority Customer Tier 6
for non-Penny Classes, Cboe BZX provides for a rebate of $1.02 in its
Customer Non-Penny Pilot Add Tier 3, and a rebate of $1.05, in Tier
4.\14\ Further, under threshold criteria similar to MIAX PEARL's
proposed Taker fees for Market Makers in Tiers 4, 5 and 6, in Penny
Classes, Cboe BZX charges fees of $0.44 and $0.47 in its non-Customer
Penny Pilot Take Volume Tiers for Market Makers.\15\ Additionally,
similar to the Taker fees proposed by MIAX PEARL for Market Makers in
non-Penny Classes, Cboe BZX charges Market Makers a fee of $1.07 in its
non-Customer, Non-Penny Pilot Take Volume Tiers.\16\ Furthermore,
similar to the Taker fees proposed by MIAX PEARL for Professional
Members in Non-Penny Classes, Cboe BZX charges Professionals a fee of
$1.07 in its Non-Customer, Non-Penny Pilot Take Volume Tiers.\17\
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\13\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees,'' ``Customer Penny Pilot Add Tiers.''
\14\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees,'' ``Customer Non-Customer Penny Pilot Add Volume
Tier.''
\15\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees,'' ``Non-Customer Penny Pilot Take Volume
Tiers.''
\16\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees,'' ``Non-Customer Non-Penny Pilot Take Volume
Tiers.''
\17\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees,'' ``Non-Customer Non-Penny Pilot Take Volume
Tiers.''
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With all proposed changes, Section 1)a) of the Fee Schedule shall
be the following:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
---------------------------------------------------- fees for non-penny
Origin Tier Volume criteria classes
(percent) Maker Taker * SPY taker QQQ, IWM, -------------------------
VXX taker Maker Taker
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer................... 1 0.00-0.10.............. ($0.25) $0.48 $0.44 $0.47 ($0.85) $0.87
2 Above 0.10-0.35........ (0.40) 0.46 0.43 0.46 (0.95) 0.86
3 Above 0.35-0.50........ (0.45) 0.44 0.42 0.44 (1.00) 0.85
4 Above 0.50-0.75........ (0.52) 0.44 0.41 0.43 (1.03) 0.84
5 Above 0.75-1.25........ (0.53) 0.44 0.40 0.42 (1.04) 0.84
6 Above 1.25............. (0.53) 0.43 0.38 0.40 (1.04) 0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny Classes other than SPY, QQQ, IWM, and VXX.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for Per contract rebates/fees for
penny classes non-penny classes
Origin Tier Volume criteria (percent) ---------------------------------------------------------------
Maker Taker Maker ** Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX PEARL Market Makers.............. 1 0.00-0.15................... ($0.25) $0.50 ($0.30) $1.10
2 Above 0.15-0.40............. (0.40) 0.50 (0.30) 1.10
3 Above 0.40-0.65............. (0.40) 0.48 (0.60) 1.09
4 Above 0.65-1.00............. (0.47) 0.47 (0.65) 1.08
or Above 2.25 in SPY........
5 Above 1.00-1.40............. (0.48) 0.45 (0.70) 1.07
6 Above 1.40.................. (0.48) 0.44 (0.85) 1.06
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for Per contract rebates/fees for
penny classes non-penny classes
Origin Tier Volume criteria (percent) ---------------------------------------------------------------
Maker [caret] Maker
Taker **[caret] Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Priority Customer, Firm, BD, and Non- 1 0.00-0.15................... ($0.25) $0.50 ($0.30) $1.10
MIAX PEARL Market Makers. 2 Above 0.15-0.40............. (0.40) 0.50 (0.30) 1.10
3 Above 0.40-0.65............. (0.40) 0.48 (0.60) 1.10
4 Above 0.65-1.00............. (0.47) 0.48 (0.65) 1.09
5 Above 1.00-1.40............. (0.48) 0.48 (0.70) 1.08
6 Above 1.40.................. (0.48) 0.48 (0.85) 1.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member
executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option
classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following
Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
[caret] Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the
amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 1.50% volume
in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX
PEARL listed option classes.
[[Page 40609]]
Except as otherwise set forth herein, the Volume Criteria is
calculated based on the total monthly volume executed by the Member in
all options classes on MIAX PEARL in the relevant Origin type, not
including Excluded Contracts, (as the numerator) expressed as a
percentage of (divided by) TCV (as the denominator). In Tier 4 for MIAX
PEARL Market Makers, the alternative Volume Criteria (above 2.25% in
SPY) is calculated based on the total monthly volume executed by the
Market Maker solely in SPY options on MIAX PEARL in the relevant Origin
type, not including Excluded Contracts, (as the numerator) expressed as
a percentage of (divided by) SPY TCV (as the denominator). The per
contract transaction rebates and fees shall be applied retroactively to
all eligible volume once the threshold has been reached by Member. The
Exchange aggregates the volume of Members and their Affiliates in the
Add/Remove Tiered Fees. The per contract transaction rebates and fees
shall be waived for transactions executed during the opening and for
transactions that uncross the ABBO.
The proposed changes are scheduled to become operative August 1,
2018.
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.
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(4).
\20\ 15 U.S.C. 78f(b)(1) and (b)(5).
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The proposed Maker rebate decrease in Penny classes and non-Penny
classes applicable to Priority Customers in Tier 6 is reasonable,
equitable and not unfairly discriminatory because all similarly
situated market participants are subject to the same tiered rebates and
fees and access to the Exchange is offered on terms that are not
unfairly discriminatory. The Exchange believes it is equitable and not
unfairly discriminatory to only offer this reduced taker fee to
Priority Customer orders because 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, who will generally submit a higher number
of orders than Priority Customers. For competitive and business
reasons, the Exchange initially set its Maker rebates for Priority
Customer orders higher than certain other options exchanges that
operate comparable maker/taker pricing models.\21\ The Exchange now
believes that it is appropriate to further decrease those specified
Maker rebates so that they are more in line with other exchanges, and
will still remain highly competitive such that they should enable the
Exchange to continue to attract order flow and maintain market
share.\22\
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\21\ See supra note 11.
\22\ See supra note 12
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The proposed Taker fee increases in certain specified Tiers
applicable to orders submitted by MIAX PEARL Market Makers and
Professional Members are reasonable, equitable and not unfairly
discriminatory because all option orders of the same origin type are
subject to the same tiered Taker fees and access to the Exchange is
offered on terms that are not unfairly discriminatory. For competitive
and business reasons, the Exchange initially set its Taker fees for
MIAX PEARL Market Maker and Professional Member orders lower than
certain other options exchanges that operate comparable maker/taker
pricing models.\23\ The Exchange now believes that it is appropriate to
further increase those specified Taker fees so that they are more in
line with other exchanges, and will still remain highly competitive
such that they should enable the Exchange to continue to attract order
flow and maintain market share. The Exchange notes that, even as
amended, its Taker fees for MIAX PEARL Market Makers and Professional
Members are generally lower than certain other options exchanges
operating competing models.\24\ The Exchange believes for these reasons
that increasing certain Taker fees for MIAX PEARL Market Maker and
Professional Member transactions in the specified Tiers is equitable,
reasonable and not unfairly discriminatory, and thus consistent with
the Act.
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\23\ See supra note 11.
\24\ See supra note 12
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Furthermore, the proposed increases to the Taker fees for MIAX
PEARL Market Maker and Professional Member transactions 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
increases, the Exchange's proposed Taker fees for MIAX PEARL Market
Maker and Professional Member orders still remain highly competitive
with certain other options exchanges offering comparable pricing
models, and should enable the Exchange to continue to attract order
flow and maintain market share.\25\ The Exchange believes that the
amount of such fees, as proposed to be increased, will continue to
encourage those market participants to send orders to the Exchange. To
the extent that 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 certain
other 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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\25\ See id.
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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 Exchange believes that the
proposed changes in the specified Maker rebates and Taker fees for the
applicable market participants should continue to encourage the
provision of liquidity that enhances the quality of the Exchange's
market and increases the number of trading opportunities on MIAX PEARL
for all participants who will be able to compete for such
opportunities. The proposed rule change should enable the Exchange to
continue to attract and compete for order flow with other exchanges.
However, this competition does not create an undue burden on
competition but rather offers all market participants the opportunity
to receive the benefit of competitive pricing.
The proposed Maker rebate decreases and Taker fee increases are
intended to keep the Exchange's fees highly competitive with those of
other
[[Page 40610]]
exchanges, and to encourage liquidity and should enable the Exchange to
continue to attract and compete for order flow with other exchanges.
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 changes reflect this
competitive environment because they modify the Exchange's fees in a
manner that encourages market participants to continue to provide
liquidity and 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,\26\ and Rule 19b-4(f)(2) \27\ 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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\26\ 15 U.S.C. 78s(b)(3)(A)(ii).
\27\ 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-2018-17 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-2018-17. 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-2018-17, and should be submitted
on or before September 5, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17495 Filed 8-14-18; 8:45 am]
BILLING CODE 8011-01-P
