Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule, 14983-14988 [2019-07238]

Download as PDF Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices 19(b)(3)(A) of the Act 9 and Rule 19b– 4(f)(6) thereunder.10 A proposed rule change filed under Rule 19b–4(f)(6) 11 normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii),12 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA has asked the Commission to waive the 30-day operative delay so that the proposal may become operative upon filing. Extending the pilot for an additional six months will allow the uninterrupted operation of the existing pilot to halt trading across the U.S. markets while the Commission considers whether to approve the pilot on a permanent basis. The extension simply maintains the status quo. Therefore, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission hereby designates the proposed rule change to be operative upon filing.13 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: 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–FINRA–2019–010. 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 (http://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 FINRA. 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–FINRA– 2019–010, and should be submitted on or before May 3, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Electronic Comments • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– FINRA–2019–010 on the subject line. Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–07243 Filed 4–11–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85541; File No. SR– PEARL–2019–12] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule April 8, 2019. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 27, 2019, 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’’) to establish certain non-transaction fees applicable to participants and new members trading options on and/or using services provided by MIAX PEARL. MIAX PEARL commenced operations as a national securities exchange registered under Section 6 of the Act 3 on February 6, 2017.4 The Exchange adopted its transaction fees and certain of its non-transaction fees in its filing SR–PEARL–2017–10.5 While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on April 1, 2019. The text of the proposed rule change is available on the Exchange’s website at http://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal office, and at the Commission’s Public Reference Room. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78f. 4 See Securities Exchange Act Release No. 79543 (December 13, 2016), 81 FR 92901 (December 20, 2016) (File No. 10–227) (order approving application of MIAX PEARL, LLC for registration as a national securities exchange). 5 See Securities Exchange Act Release No. 80061 (February 17, 2017), 82 FR 11676 (February 24, 2017) (SR–PEARL–2017–10). 2 17 jbell on DSK30RV082PROD with NOTICES 9 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 11 Id. 12 17 CFR 240.19b–4(f)(6)(iii). 13 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 10 17 VerDate Sep<11>2014 18:18 Apr 11, 2019 Jkt 247001 14 17 PO 00000 CFR 200.30–3(a)(12). Frm 00073 Fmt 4703 Sfmt 4703 14983 E:\FR\FM\12APN1.SGM 12APN1 14984 Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices 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 jbell on DSK30RV082PROD with NOTICES 1. Purpose The purpose of the proposed rule change is to establish certain nontransaction fees applicable to certain market participants and new members trading options on and/or using certain services provided by the Exchange. The Exchange introduced the structure of certain non-transaction fees in its filing SR–PEARL–2017–10 (without proposing actual fee amounts), but also explicitly waived the assessment of any such fees for the period of time which the Exchange defined as the ‘‘Waiver Period.’’ 6 The Exchange now proposes to adopt certain non-transaction fees as described below, and thereby terminate the Waiver Period applicable to such non-transaction fees. In general, the Exchange proposes to amend the Fee Schedule to establish one-time application for membership fees for MIAX PEARL Members; 7 Application Programming Interface (‘‘API’’) Testing and Certification fees; and MIAX PEARL Member Participant Identifier (‘‘MPID’’) 8 fees. 6 ‘‘Waiver Period’’ means, for each applicable fee, the period of time from the initial effective date of the MIAX PEARL Fee Schedule until such time that the Exchange has an effective fee filing establishing the applicable fee. The Exchange will issue a Regulatory Circular announcing the establishment of an applicable fee that was subject to a Waiver Period at least fifteen (15) days prior to the termination of the Waiver Period and effective date of any such applicable fee. See the Definitions Section of the Fee Schedule. 7 ‘‘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 Exchange Rule 100. 8 An MPID is a code used in the MIAX PEARL system to identify the participant to MIAX PEARL and to the participant’s Clearing Member respecting trades executed on MIAX PEARL. Participants may use more than one MPID. VerDate Sep<11>2014 18:18 Apr 11, 2019 Jkt 247001 The Exchange also proposes to amend its Fee Schedule to remove the text and application of the New Member NonTransaction Fee Waiver.9 The Exchange adopted the three month New Member Non-Transaction Fee Waiver in its filing SR–PEARL–2018–07.10 The Exchange now proposes to remove the New Member NonTransaction Fee Waiver as described below, and thereby terminate the New Member Non-Transaction Fee Waiver as it applies to all relevant fees, including the Monthly Trading Permit fee; Port fees; and MIAX PEARL Top of Market (‘‘ToM’’) and MIAX PEARL Liquidity Feed (‘‘PLF’’) market data fees. The Exchange also proposes to amend the Definitions section of the Fee Schedule to delete the definitions of ‘‘New Member Non-Transaction Fee Waiver’’ and ‘‘Waiver Period’’ because those definitions are no longer applicable in accordance with this proposal to remove the Waiver Period for all remaining waived non-transaction fees, as described below, including the three month fee waiver applicable to certain non-transaction fees for new Members of the Exchange. A. Application for MIAX PEARL Membership A one-time application fee based upon the applicant’s status as either an Electronic Exchange Member 11 (‘‘EEM’’) or as a Market Maker 12 will be assessed by MIAX PEARL. Applicants for MIAX PEARL Membership as an EEM will be assessed a one-time application fee of $500. Applicants for MIAX PEARL 9 ‘‘New Member Non-Transaction Fee Waiver’’ means the waiver of certain non-transaction fees, as explicitly set forth in specific sections of the Fee Schedule, for a new Member of the Exchange, for the waiver period. For purposes of this definition, the waiver period consists of the calendar month the new Member is credentialed to use the System in the production environment following approval as a new Member of the Exchange and the two (2) subsequent calendar months thereafter. For purposes of this definition, a new Member shall mean any Member who has not previously been approved as a Member of the Exchange. See the Definitions Section of the Fee Schedule. 10 See Securities Exchange Act Release No. 82867 (March 13, 2018), 83 FR 12044 (March 19, 2018) (SR–PEARL–2018–07). 11 ‘‘Electronic Exchange Member’’ or ‘‘EEM’’ means the holder of a Trading Permit who is a Member representing as agent Public Customer Orders or Non-Customer Orders on the Exchange and those non-Market Maker Members conducting proprietary trading. Electronic Exchange Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. See the Definitions Section of the Fee Schedule. 12 ‘‘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 Exchange Rule 100. See the Definitions Section of the Fee Schedule. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 Membership as a Market Maker will be assessed a one-time application fee of $1,500. The difference in the fee charged to EEMs and Market Makers reflects the additional review and processing effort needed for Market Maker applications. MIAX PEARL’s one-time application fees are similar to and generally lower than one-time application fees in place at the Cboe Exchange, Inc. (‘‘Cboe’’) ($3,000 for an individual applicant and $5,000 for an applicant organization) 13 and at Nasdaq ISE, LLC (‘‘Nasdaq ISE’’) ($7,500 per firm for a primary market maker, $5,500 per firm for a competitive market maker, and $3,500 per firm for an electronic market maker).14 Below is the table for the proposed one-time fee for membership application for MIAX PEARL: Type of membership Electronic Exchange Member Market Maker ........................ Application fee $500.00 1,500.00 MIAX PEARL will assess a one-time Membership Application Fee on the earlier of (i) the date the applicant is certified in the membership system, or (ii) once an application for MIAX PEARL membership is finally denied. B. Member API Testing and Certification Fee MIAX PEARL will assess an API Testing and Certification fee on Members. An API makes it possible for Member software to communicate with MIAX PEARL software applications, and is subject to Member testing with, and certification by, MIAX PEARL. API testing and certification includes, for EEMs, testing all available order types, new order entry, order management, order throughput and mass order cancellation. For Market Makers, API testing and certification also includes testing of all available quote types, quote throughput, quote management and cancellation, Aggregate Risk Manager settings and triggers, and confirmation of quotes within the trading engines. The API Testing and Certification fees for Members are based upon the type of interface that the Member has been credentialed to use. MIAX PEARL will assess an API testing and certification fee for Members (i) initially per API for 13 See Cboe Fees Schedule, p. 12, Cboe Trading Permit Holder Application Fees. 14 See Nasdaq ISE Pricing Schedule, IX(A). E:\FR\FM\12APN1.SGM 12APN1 Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices higher fee charged to non-Members reflects the greater amount of time spent Type of interface by MIAX PEARL employees testing and certifying non-Members. It has been MEO ...................................... 1,500.00 MIAX PEARL’s experience that Member FXD ....................................... 500.00 testing takes less time than non-Member CTD ...................................... 500.00 testing because Members have more experience testing these systems with API Testing and Certification Fees exchanges; generally fewer questions will be assessed (i) initially per API for and issues arise during the testing and FIX, MEO, FXD and CTD in the month certification process. Also, because the Member has been credentialed to Third Party Vendors and Service use one or more ports in the production Bureaus are redistributing data and environment for the tested API, and (ii) reselling services to other Members and each time a Member initiates a change market participants, the number and to its system that requires testing and types of scenarios that need to be tested certification. API Testing and are more numerous and complex than Certification Fees will not be assessed in those tested and certified for a single situations where the Exchange initiates Member. a mandatory change to the Exchange’s Each non-Member who uses the FIX system that requires testing and Interface to connect to the System will certification. be assessed an API Testing and Certification fee of $1,200. Each nonC. Non-Member API Testing and Member who uses the MEO Interface to Certification Fee connect to the System will be assessed MIAX PEARL will assess an API an API Testing and Certification fee of Testing and Certification fee for Third $2,000. Each non-Member who uses the 20 21 Party Vendors , Service Bureaus and FXD Interface to connect to the system other non-Members (i) initially per API will be assessed an API Testing and for FIX, MEO, FXD, and CTD in the Certification fee of $600. Each nonmonth the non-Member has been Member who uses the CTD Port to credentialed to use one or more ports in connect to the system will be assessed the production environment for the an API Testing and Certification fee of tested API, and (ii) each time a Third $600. API testing Party Vendor, Service Bureau, or other Below is the proposed fee table for and non-Member initiates a change to its Type of interface API Testing and Certification fees for certification system that requires testing and non-Members: fee certification. API Testing and FIX ........................................ $1,000.00 Certification fees will not be assessed in API testing situations where the Exchange initiates and Type of interface certification 15 ‘‘FIX Interface’’ means the Financial a mandatory change to the Exchange’s fee Information Exchange interface for certain order system that requires testing and types as set forth in Exchange Rule 516. See certification. FIX ........................................ $1,200.00 Exchange Rule 100. See the Definitions Section of The MIAX PEARL API Testing and MEO ...................................... 2,000.00 the Fee Schedule. Certification fees for non-Members are 16 ‘‘MEO Interface’’ means a binary order interface FXD ....................................... 600.00 based upon the type of interface used by CTD ...................................... 600.00 for certain order types as set forth in Rule 516 into the MIAX PEARL System. See Exchange Rule 100. the non-Member to connect to the See the Definitions Section of the Fee Schedule. Exchange—the FIX Interface, the MEO API Testing and Certification Fees for 17 ‘‘FXD Interface’’ or ‘‘FIX Drop Copy Port’’ Interface, the FXD Interface, and/or the Third Party Vendors, Service Bureaus means a messaging interface that provides a copy CTD Port. Any non-Member can select and other non-Members will be assessed of real-time trade execution, trade correction and any type of interface (FIX Interface, (i) initially per API for FIX, MEO, FXD, trade cancellation information to FIX Drop Copy Port users who subscribe to the service. FXD Port MEO Interface, FXD Interface, and/or and CTD in the month the non-Member users are those users who are designated by an EEM the CTD Port) to test and certify. As has been credentialed to use one or to receive the information and the information is with Members, an API makes it possible more ports in the production restricted for use by the EEM only. See the for third party vendors’ and Service environment for the tested API, and (ii) Definitions Section of the Fee Schedule. 18 ‘‘CTD Port’’ or ‘‘Clearing Trade Drop Port’’ Bureaus’ software to communicate with each time a Third Party Vendor, Service provides an Exchange Member with a real-time MIAX PEARL software applications, Bureau, or other non-Member initiates a clearing trade updates. The updates include the and is subject to testing with, and change to its system that requires testing Member’s clearing trade messages on a low latency, certification by, MIAX PEARL. The and certification. API Testing and real-time basis. The trade messages are routed to a Member’s connection containing certain Certification Fees will not be assessed in 20 Third party vendors are subscribers of MIAX’s information. The information includes, among other situations where the Exchange initiates things, the following: (i) Trade date and time; (ii) market and other data feeds, which they in turn use a mandatory change to the Exchange’s symbol information; (iii) trade price/size for redistribution purposes. Third party vendors do system that requires testing and information; (iv) Member type (for example, and not provide connectivity and therefore are not without limitation, Market Maker, Electronic certification. subject to Network testing and certification. See the FIX,15 MEO,16 FXD 17 and CTD 18 in the month the Member has been credentialed to use one or more ports in the production environment for the tested API, and (ii) each time a Member initiates a change to its system that requires testing and certification. API Testing and Certification fees will not be assessed in situations where the Exchange initiates a mandatory change to the Exchange’s system that requires testing and certification. Any Member can select any type of interface (FIX Interface, MEO Interface, FXD Interface, and/or the CTD Port) to test and certify. Each Member who uses the FIX Interface to connect to the System 19 will be assessed an API Testing and Certification fee of $1,000. Each Member who uses the MEO Interface to connect to the System will be assessed an API Testing and Certification fee of $1,500. Each Member who uses the FXD Interface to connect to the system will be assessed an API Testing and Certification fee of $500. Each Member who uses the CTD Port to connect to the system will be assessed an API Testing and Certification fee of $500. Below is the proposed fee table for API Testing and Certification fees for Members: jbell on DSK30RV082PROD with NOTICES 14985 Exchange Member, Broker-Dealer); and (v) Exchange MPID for each side of the transaction, including Clearing Member MPID. 19 The term ‘‘System’’ means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. VerDate Sep<11>2014 18:18 Apr 11, 2019 Jkt 247001 API testing and certification fee Definitions Section of the Fee Schedule. 21 ‘‘Service Bureau’’ means a technology provider that offers and supplies technology and technology services to a trading firm that does not have its own proprietary system. See the Definitions Section of the Fee Schedule. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 D. MPID Fees MIAX PEARL will assess monthly MPID fees on Members based upon type of MPID. MIAX PEARL assesses MPID E:\FR\FM\12APN1.SGM 12APN1 14986 Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices jbell on DSK30RV082PROD with NOTICES fees to cover the administrative costs it incurs in assigning and managing these identifiers for each Member. Members will be assessed a monthly MPID fee of $125 for each FIX MPID. Members will be assessed a monthly MPID fee of $125 for each MEO MPID. MPIDs allow the Exchange to provide additional services to its Members, including reporting, monitoring and risk protection services, down at the MPID level. MPIDs provide the Members the ability to segment their business operations in a manner that can be tailored to their business needs, as well as receive certain additional administrative and operational services provided by the Exchange. The Exchange also proposes to introduce a cap on the amount of MPID fees that are assessed by the Exchange to a Member of $500 per month, regardless of the actual number of EEM or MEO MPIDs assigned to such Member. The Exchange believes that establishing a monthly cap on MPID fees will give Members greater flexibility to accommodate their varying business models and customer configurations, as many Members often request multiple MPIDs from the Exchange, and the Exchange does not want MPID costs to serve as a barrier for requesting multiple MPIDs. The Exchange notes that this fee cap is similar to the MPID fee cap assessed by the Exchange’s affiliate, MIAX Options.22 Below is the proposed MPID fee table: The Exchange initially waived certain non-transaction fees for new Members in order to attract new business and encourage Members to use the Exchange. The Exchange now believes that the New Member Non-Transaction Fee Waiver is no longer necessary since the MIAX PEARL market is established and MIAX PEARL no longer needs to rely on such waivers to attract market participants. The Exchange notes that any Member who began receiving the New Member Non-Transaction Fee Waiver prior to the filing of this proposal, will continue to receive that benefit for the first calendar month during which they were approved as a Member and were credentialed to use the System in the production environment, and for the two (2) subsequent calendar months thereafter. The Exchange has issued a Regulatory Circular announcing the establishment of the aforementioned fees that were subject to the Waiver Period at least 15 days prior to the termination of the Waiver Period and effective date of the applicable fee. 2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act 24 in general, and furthers the objectives of Section 6(b)(4) of the Act 25 in particular, in that it is an equitable allocation of reasonable dues, fees and other charges among its members and issuers and other persons using its Monthly MPID Type of MPID facilities. The Exchange also believes fees the proposal furthers the objectives of FIX MPID .............................. $125.00 Section 6(b)(5) of the Act in that it is MEO MPID ........................... 125.00 designed to promote just and equitable principles of trade, to remove MPID fees are capped at $500.00 per impediments to and perfect the month per Member. mechanism of a free and open market and a national market system, and, in E. New Member Non-Transaction Fee general to protect investors and the Waiver public interest and is not designed to The Exchange proposes to remove the permit unfair discrimination between New Member Non-Transaction Fee customers, issuers, brokers and dealers. Waiver from the Fee Schedule. The New The Exchange believes that the Member Non-Transaction Fee Waiver proposed change to eliminate the waiver waived the assessment of a fee for a of the non-transaction fees described Trading Permit, Port, ToM or PLF above is reasonable because the market data feed for a new Member of Exchange no longer believes it is the Exchange for the first calendar necessary to waive these fees to attract month during which the new Member market participants to the MIAX PEARL was approved as a Member and was market since this market is now credentialed to use the System in the established and MIAX PEARL no longer production environment, and for the needs to rely on such waivers to attract two (2) subsequent calendar months market participants. The Exchange 23 thereafter. believes that the proposed changes are equitable and not unfairly 22 See Securities Exchange Act Release No. 82823 (March 7, 2018), 83 FR 10935 (March 13, 2018) (SR– discriminatory because the elimination MIAX–2018–09). 23 See the Definitions Section of the Fee Schedule. VerDate Sep<11>2014 18:18 Apr 11, 2019 Jkt 247001 24 15 25 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). Frm 00076 Fmt 4703 Sfmt 4703 of the non-transaction fees will uniformly apply to all Exchange participants based on market participant type. The Exchange believes its one-time membership application fees are reasonable, equitable and not unfairly discriminatory. As described above, the one-time application fees are similar and generally lower than application fees in place at other options exchanges,26 and are designed to recover costs associated with the processing of such applications. The Exchange believes that it is reasonable, equitable, and not unfairly discriminatory that Market Maker applicants are charged slightly more than EEM applicants because of the additional work involved in processing a Market Maker’s application. The Exchange believes it is reasonable, equitable, and not unfairly discriminatory to begin to assess API Testing and Certification fees for both Members and non-Members. The Exchange believes the proposed API Testing and Certification fees are a reasonable allocation of its costs and expenses among its Members and nonMembers using its facilities since it is recovering the costs associated with providing such infrastructure testing and certification services. MIAX PEARL believes it is reasonable, equitable and not unfairly discriminatory to assess different API Testing and Certification fees to Members and non-Members. The higher fee charged to non-Members reflects the greater amount of time spent by MIAX PEARL employees testing and certifying non-Members. It has been MIAX PEARL’s experience that Member testing takes less time than non-Member testing because Members have more experience testing these systems with exchanges; generally fewer questions and issues arise during the testing and certification process. Also, with respect to API testing and certification, because Third Party Vendors and Service Bureaus are redistributing data and reselling services to other Members and market participants the number and types of scenarios that need to be tested are more numerous and complex than those tested and certified for Members. The Exchange believes its fees for MPIDs are reasonable, equitable and not unfairly discriminatory in that they apply to all Members assigned MPIDs equally and allow the Exchange to recover administrative and operational costs in assigning and maintaining such services. In particular, MPIDs provide Members the ability to segment their 26 See E:\FR\FM\12APN1.SGM supra notes 13 and 14. 12APN1 jbell on DSK30RV082PROD with NOTICES Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices business operations in a manner that can be tailored to their business needs, as well as receive certain additional administrative and operational services provided by the Exchange. The Exchange also believes that the proposed amendment to establish a fee cap for Members on MPID fees is reasonable, equitable, and not unfairly discriminatory. The proposal to cap the total amount of MPID fees that can be assessed upon a Member to a maximum of $500 per month is designed to promote just and equitable principles of trade by encouraging Members to configure their MPID assignments with greater granularity and for MPID costs to not serve as a barrier for requesting multiple MPIDs. Because any Member is eligible to take advantage of the fee cap, the Exchange believes the fee cap is fair and equitable and not unreasonably discriminatory because it applies equally to all Members, and access to such fee cap is offered on terms that are not unfairly discriminatory. The Exchange believes that the proposed amendment to remove the New Member Non-Transaction Fee Waiver is reasonable, equitable, and not unfairly discriminatory because the removal of the New Member NonTransaction Fee Waiver applies equally to all new Members of the Exchange. The Exchange initially waived certain non-transaction fees for new Members in order to attract new business and encourage Members to join the Exchange. The Exchange believes that the New Member Non-Transaction Fee Waiver is no longer necessary since the MIAX PEARL market is established and MIAX PEARL no longer relies on such waivers to attract market participants. Further, the proposed rule change will not apply to any new Member who began receiving the New Member NonTransaction Fee Waiver prior to the filing of this proposal and will continue to receive that benefit for the first calendar month during which they were approved as a Member and were credentialed to use the System in the production environment, and for the two (2) subsequent calendar months thereafter. Finally, 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 fees to remain competitive with other exchanges. The Exchange believes that the proposed changes reflect this competitive environment. VerDate Sep<11>2014 18:18 Apr 11, 2019 Jkt 247001 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. Unilateral action by MIAX PEARL in the assessment of certain non-transaction fees for services provided to its Members and others using its facilities will not have an impact on competition. As a more recent entrant in the already highly competitive environment for equity options trading, MIAX PEARL does not have the market power necessary to set prices for services that are unreasonable or unfairly discriminatory in violation of the Act. MIAX PEARL’s proposed nontransaction fee levels, as described herein, are comparable to fee levels charged by other options exchanges for the same or similar services, including those fees assessed by its affiliate, MIAX Options. Further, the Exchange believes that the proposed rule change will promote transparency by making it clear to Members and non-Members the applicable fees that MIAX PEARL will assess for application for membership to MIAX PEARL, API testing and certification, and MPID fees, as well as the cap on MPID fees for EEMs. This will permit Members and non-Members to more accurately anticipate and account for non-transactional costs, which promotes consistency. 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 fees and fee waivers to remain competitive with other exchanges and to attract 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,27 and Rule 19b–4(f)(2) 28 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission 27 15 28 17 PO 00000 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). Frm 00077 Fmt 4703 Sfmt 4703 14987 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– PEARL–2019–12 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–2019–12. 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 (http://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 E:\FR\FM\12APN1.SGM 12APN1 14988 Federal Register / Vol. 84, No. 71 / Friday, April 12, 2019 / Notices submit only information that you wish to make available publicly. All submissions should refer to File Number SR–PEARL–2019–12 and should be submitted on or before May 3, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–07238 Filed 4–11–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85551; File No. SR–MSRB– 2019–07] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change To Amend Rules G–11 and G–32 and Form G–32 Regarding a Collection of Data Elements Provided in Electronic Format to the EMMA Dataport System in Connection With Primary Offerings April 8, 2019. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on April 2, 2019 the Municipal Securities Rulemaking Board (the ‘‘MSRB’’ or ‘‘Board’’) filed with the Securities and Exchange Commission (the ‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the MSRB. 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 jbell on DSK30RV082PROD with NOTICES The MSRB filed with the Commission a proposed rule change to amend MSRB Rule G–11, on primary offering practices, MSRB Rule G–32, on disclosures in connection with primary offerings and Form G–32, regarding a collection of data elements provided in electronic format to the Electronic Municipal Market Access Dataport (the ‘‘EMMA Dataport’’) 3 system in connection with primary offerings (the 29 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 EMMA® is a registered trademark of the MSRB. The EMMA Dataport is the submission portal through which information is provided for display to the public on EMMA. 1 15 VerDate Sep<11>2014 18:18 Apr 11, 2019 Jkt 247001 ‘‘proposed rule change’’). The proposed rule change seeks to update and enhance the general practices undertaken by underwriters and others, as applicable, in a primary offering of municipal securities. Following the effectiveness of the proposed rule change, assuming all amendments are approved, the MSRB will publish one or more regulatory notices within 180 days of effectiveness, and such notices shall specify the compliance dates for the respective rule changes, which in any case shall be not less than 90 days nor more than one year following the date of the notice establishing each such compliance date. The MSRB will also make both amended Form G–32 as well as the updated EMMA Dataport Manual for Primary Market Submissions and the Specifications for Primary Market Submissions Service document 4 available to underwriters in advance of relevant compliance date(s) to aid them in completing the amended form. The MSRB will announce the availability of amended Form G–32 and the updated manual and specification document by publishing a regulatory notice at a later date. The text of the proposed rule change is available on the MSRB’s website at www.msrb.org/Rules-andInterpretations/SEC-Filings/2019Filings.aspx, at the MSRB’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 MSRB 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 MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 4 The EMMA Dataport Manual for Primary Market Submissions describes the requirements of MSRB Rule G–32 for underwriters to submit primary offering disclosure documents and information to EMMA and gives instructions for making such submissions. Rule G–32 requires that such submissions be made as set forth in the EMMA Dataport Manual. The Specifications for Primary Market Submissions Service document provides instructions for making continuous submissions of multiple offerings of securities to the EMMA Dataport and contains figures for making submissions to the EMMA Dataport through a computer-to-computer interface. PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Background Rule G–11—Primary Offering Practices Rule G–11 establishes terms and conditions for sales by brokers, dealers and municipal securities dealers (together, ‘‘dealers’’) of new issues of municipal securities in primary offerings, including provisions on communications relating to the syndicate and designations and allocations of securities. The rule was first adopted by the MSRB in 1978, and was designed to increase the scope of information available to syndicate managers and members, other municipal securities professionals and the investing public, in connection with the distribution of new issues of municipal securities without impinging upon the right of syndicates to establish their own procedures for the allocation of securities and other matters.5 The MSRB noted that, in adopting Rule G–11, the Board generally chose to require the disclosure of practices of syndicates rather than dictate what those practices must be.6 Because of the evolving nature of the municipal securities market, Rule G–11 has been amended several times over the years. More recently, as part of a retrospective rule review, the MSRB considered how Rule G–11 applies in the current market and whether amendments may be needed to address changing practices in primary offerings of municipal securities. In its review, the MSRB found there were opportunities to enhance regulatory transparency, equalize information dissemination in primary offerings, reinforce aspects of Rule G–11 to selling group members regarding their existing obligations under the rule and align the mandatory time frames for certain payments to syndicate members in order to reduce credit risk. More specifically, the proposed amendments to Rule G–11 would enhance the information dissemination requirements of Rule G–11 to require the senior syndicate manager to disseminate free-to-trade information to all syndicate and selling group members at the same time, thus eliminating any potential for unfair advantages in secondary market trading that could result from having advance notice that 5 MSRB 6 See, Reports, Vol. 5, No. 6 (Nov. 1985). e.g., MSRB Reports, Vol. 2, No. 5 (Jul. 1982). E:\FR\FM\12APN1.SGM 12APN1

Agencies

[Federal Register Volume 84, Number 71 (Friday, April 12, 2019)]
[Notices]
[Pages 14983-14988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07238]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85541; File No. SR-PEARL-2019-12]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX 
PEARL Fee Schedule

April 8, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 27, 2019, 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'') to establish certain non-transaction 
fees applicable to participants and new members trading options on and/
or using services provided by MIAX PEARL.
    MIAX PEARL commenced operations as a national securities exchange 
registered under Section 6 of the Act \3\ on February 6, 2017.\4\ The 
Exchange adopted its transaction fees and certain of its non-
transaction fees in its filing SR-PEARL-2017-10.\5\
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f.
    \4\ See Securities Exchange Act Release No. 79543 (December 13, 
2016), 81 FR 92901 (December 20, 2016) (File No. 10-227) (order 
approving application of MIAX PEARL, LLC for registration as a 
national securities exchange).
    \5\ See Securities Exchange Act Release No. 80061 (February 17, 
2017), 82 FR 11676 (February 24, 2017) (SR-PEARL-2017-10).
---------------------------------------------------------------------------

    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on April 1, 2019.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/pearl at MIAX 
PEARL's principal office, and at the Commission's Public Reference 
Room.

[[Page 14984]]

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 purpose of the proposed rule change is to establish certain 
non-transaction fees applicable to certain market participants and new 
members trading options on and/or using certain services provided by 
the Exchange. The Exchange introduced the structure of certain non-
transaction fees in its filing SR-PEARL-2017-10 (without proposing 
actual fee amounts), but also explicitly waived the assessment of any 
such fees for the period of time which the Exchange defined as the 
``Waiver Period.'' \6\ The Exchange now proposes to adopt certain non-
transaction fees as described below, and thereby terminate the Waiver 
Period applicable to such non-transaction fees. In general, the 
Exchange proposes to amend the Fee Schedule to establish one-time 
application for membership fees for MIAX PEARL Members; \7\ Application 
Programming Interface (``API'') Testing and Certification fees; and 
MIAX PEARL Member Participant Identifier (``MPID'') \8\ fees.
---------------------------------------------------------------------------

    \6\ ``Waiver Period'' means, for each applicable fee, the period 
of time from the initial effective date of the MIAX PEARL Fee 
Schedule until such time that the Exchange has an effective fee 
filing establishing the applicable fee. The Exchange will issue a 
Regulatory Circular announcing the establishment of an applicable 
fee that was subject to a Waiver Period at least fifteen (15) days 
prior to the termination of the Waiver Period and effective date of 
any such applicable fee. See the Definitions Section of the Fee 
Schedule.
    \7\ ``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 Exchange Rule 100.
    \8\ An MPID is a code used in the MIAX PEARL system to identify 
the participant to MIAX PEARL and to the participant's Clearing 
Member respecting trades executed on MIAX PEARL. Participants may 
use more than one MPID.
---------------------------------------------------------------------------

    The Exchange also proposes to amend its Fee Schedule to remove the 
text and application of the New Member Non-Transaction Fee Waiver.\9\ 
The Exchange adopted the three month New Member Non-Transaction Fee 
Waiver in its filing SR-PEARL-2018-07.\10\
---------------------------------------------------------------------------

    \9\ ``New Member Non-Transaction Fee Waiver'' means the waiver 
of certain non-transaction fees, as explicitly set forth in specific 
sections of the Fee Schedule, for a new Member of the Exchange, for 
the waiver period. For purposes of this definition, the waiver 
period consists of the calendar month the new Member is credentialed 
to use the System in the production environment following approval 
as a new Member of the Exchange and the two (2) subsequent calendar 
months thereafter. For purposes of this definition, a new Member 
shall mean any Member who has not previously been approved as a 
Member of the Exchange. See the Definitions Section of the Fee 
Schedule.
    \10\ See Securities Exchange Act Release No. 82867 (March 13, 
2018), 83 FR 12044 (March 19, 2018) (SR-PEARL-2018-07).
---------------------------------------------------------------------------

    The Exchange now proposes to remove the New Member Non-Transaction 
Fee Waiver as described below, and thereby terminate the New Member 
Non-Transaction Fee Waiver as it applies to all relevant fees, 
including the Monthly Trading Permit fee; Port fees; and MIAX PEARL Top 
of Market (``ToM'') and MIAX PEARL Liquidity Feed (``PLF'') market data 
fees. The Exchange also proposes to amend the Definitions section of 
the Fee Schedule to delete the definitions of ``New Member Non-
Transaction Fee Waiver'' and ``Waiver Period'' because those 
definitions are no longer applicable in accordance with this proposal 
to remove the Waiver Period for all remaining waived non-transaction 
fees, as described below, including the three month fee waiver 
applicable to certain non-transaction fees for new Members of the 
Exchange.
A. Application for MIAX PEARL Membership
    A one-time application fee based upon the applicant's status as 
either an Electronic Exchange Member \11\ (``EEM'') or as a Market 
Maker \12\ will be assessed by MIAX PEARL. Applicants for MIAX PEARL 
Membership as an EEM will be assessed a one-time application fee of 
$500. Applicants for MIAX PEARL Membership as a Market Maker will be 
assessed a one-time application fee of $1,500. The difference in the 
fee charged to EEMs and Market Makers reflects the additional review 
and processing effort needed for Market Maker applications. MIAX 
PEARL's one-time application fees are similar to and generally lower 
than one-time application fees in place at the Cboe Exchange, Inc. 
(``Cboe'') ($3,000 for an individual applicant and $5,000 for an 
applicant organization) \13\ and at Nasdaq ISE, LLC (``Nasdaq ISE'') 
($7,500 per firm for a primary market maker, $5,500 per firm for a 
competitive market maker, and $3,500 per firm for an electronic market 
maker).\14\ Below is the table for the proposed one-time fee for 
membership application for MIAX PEARL:
---------------------------------------------------------------------------

    \11\ ``Electronic Exchange Member'' or ``EEM'' means the holder 
of a Trading Permit who is a Member representing as agent Public 
Customer Orders or Non-Customer Orders on the Exchange and those 
non-Market Maker Members conducting proprietary trading. Electronic 
Exchange Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100. See the Definitions Section of the Fee Schedule.
    \12\ ``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 
Exchange Rule 100. See the Definitions Section of the Fee Schedule.
    \13\ See Cboe Fees Schedule, p. 12, Cboe Trading Permit Holder 
Application Fees.
    \14\ See Nasdaq ISE Pricing Schedule, IX(A).

------------------------------------------------------------------------
                                                            Application
                   Type of membership                           fee
------------------------------------------------------------------------
Electronic Exchange Member..............................         $500.00
Market Maker............................................        1,500.00
------------------------------------------------------------------------

    MIAX PEARL will assess a one-time Membership Application Fee on the 
earlier of (i) the date the applicant is certified in the membership 
system, or (ii) once an application for MIAX PEARL membership is 
finally denied.
B. Member API Testing and Certification Fee
    MIAX PEARL will assess an API Testing and Certification fee on 
Members. An API makes it possible for Member software to communicate 
with MIAX PEARL software applications, and is subject to Member testing 
with, and certification by, MIAX PEARL. API testing and certification 
includes, for EEMs, testing all available order types, new order entry, 
order management, order throughput and mass order cancellation. For 
Market Makers, API testing and certification also includes testing of 
all available quote types, quote throughput, quote management and 
cancellation, Aggregate Risk Manager settings and triggers, and 
confirmation of quotes within the trading engines.
    The API Testing and Certification fees for Members are based upon 
the type of interface that the Member has been credentialed to use. 
MIAX PEARL will assess an API testing and certification fee for Members 
(i) initially per API for

[[Page 14985]]

FIX,\15\ MEO,\16\ FXD \17\ and CTD \18\ in the month the Member has 
been credentialed to use one or more ports in the production 
environment for the tested API, and (ii) each time a Member initiates a 
change to its system that requires testing and certification. API 
Testing and Certification fees will not be assessed in situations where 
the Exchange initiates a mandatory change to the Exchange's system that 
requires testing and certification.
---------------------------------------------------------------------------

    \15\ ``FIX Interface'' means the Financial Information Exchange 
interface for certain order types as set forth in Exchange Rule 516. 
See Exchange Rule 100. See the Definitions Section of the Fee 
Schedule.
    \16\ ``MEO Interface'' means a binary order interface for 
certain order types as set forth in Rule 516 into the MIAX PEARL 
System. See Exchange Rule 100. See the Definitions Section of the 
Fee Schedule.
    \17\ ``FXD Interface'' or ``FIX Drop Copy Port'' means a 
messaging interface that provides a copy of real-time trade 
execution, trade correction and trade cancellation information to 
FIX Drop Copy Port users who subscribe to the service. FXD Port 
users are those users who are designated by an EEM to receive the 
information and the information is restricted for use by the EEM 
only. See the Definitions Section of the Fee Schedule.
    \18\ ``CTD Port'' or ``Clearing Trade Drop Port'' provides an 
Exchange Member with a real-time clearing trade updates. The updates 
include the Member's clearing trade messages on a low latency, real-
time basis. The trade messages are routed to a Member's connection 
containing certain information. The information includes, among 
other things, the following: (i) Trade date and time; (ii) symbol 
information; (iii) trade price/size information; (iv) Member type 
(for example, and without limitation, Market Maker, Electronic 
Exchange Member, Broker-Dealer); and (v) Exchange MPID for each side 
of the transaction, including Clearing Member MPID.
---------------------------------------------------------------------------

    Any Member can select any type of interface (FIX Interface, MEO 
Interface, FXD Interface, and/or the CTD Port) to test and certify. 
Each Member who uses the FIX Interface to connect to the System \19\ 
will be assessed an API Testing and Certification fee of $1,000. Each 
Member who uses the MEO Interface to connect to the System will be 
assessed an API Testing and Certification fee of $1,500. Each Member 
who uses the FXD Interface to connect to the system will be assessed an 
API Testing and Certification fee of $500. Each Member who uses the CTD 
Port to connect to the system will be assessed an API Testing and 
Certification fee of $500.
---------------------------------------------------------------------------

    \19\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
---------------------------------------------------------------------------

    Below is the proposed fee table for API Testing and Certification 
fees for Members:

------------------------------------------------------------------------
                                                            API testing
                                                                and
                    Type of interface                      certification
                                                                fee
------------------------------------------------------------------------
FIX.....................................................       $1,000.00
MEO.....................................................        1,500.00
FXD.....................................................          500.00
CTD.....................................................          500.00
------------------------------------------------------------------------

    API Testing and Certification Fees will be assessed (i) initially 
per API for FIX, MEO, FXD and CTD in the month the Member has been 
credentialed to use one or more ports in the production environment for 
the tested API, and (ii) each time a Member initiates a change to its 
system that requires testing and certification. API Testing and 
Certification Fees will not be assessed in situations where the 
Exchange initiates a mandatory change to the Exchange's system that 
requires testing and certification.
C. Non-Member API Testing and Certification Fee
    MIAX PEARL will assess an API Testing and Certification fee for 
Third Party Vendors \20\, Service Bureaus \21\ and other non-Members 
(i) initially per API for FIX, MEO, FXD, and CTD in the month the non-
Member has been credentialed to use one or more ports in the production 
environment for the tested API, and (ii) each time a Third Party 
Vendor, Service Bureau, or other non-Member initiates a change to its 
system that requires testing and certification. API Testing and 
Certification fees will not be assessed in situations where the 
Exchange initiates a mandatory change to the Exchange's system that 
requires testing and certification.
---------------------------------------------------------------------------

    \20\ Third party vendors are subscribers of MIAX's market and 
other data feeds, which they in turn use for redistribution 
purposes. Third party vendors do not provide connectivity and 
therefore are not subject to Network testing and certification. See 
the Definitions Section of the Fee Schedule.
    \21\ ``Service Bureau'' means a technology provider that offers 
and supplies technology and technology services to a trading firm 
that does not have its own proprietary system. See the Definitions 
Section of the Fee Schedule.
---------------------------------------------------------------------------

    The MIAX PEARL API Testing and Certification fees for non-Members 
are based upon the type of interface used by the non-Member to connect 
to the Exchange--the FIX Interface, the MEO Interface, the FXD 
Interface, and/or the CTD Port. Any non-Member can select any type of 
interface (FIX Interface, MEO Interface, FXD Interface, and/or the CTD 
Port) to test and certify. As with Members, an API makes it possible 
for third party vendors' and Service Bureaus' software to communicate 
with MIAX PEARL software applications, and is subject to testing with, 
and certification by, MIAX PEARL. The higher fee charged to non-Members 
reflects the greater amount of time spent by MIAX PEARL employees 
testing and certifying non-Members. It has been MIAX PEARL's experience 
that Member testing takes less time than non-Member testing because 
Members have more experience testing these systems with exchanges; 
generally fewer questions and issues arise during the testing and 
certification process. Also, because Third Party Vendors and Service 
Bureaus are redistributing data and reselling services to other Members 
and market participants, the number and types of scenarios that need to 
be tested are more numerous and complex than those tested and certified 
for a single Member.
    Each non-Member who uses the FIX Interface to connect to the System 
will be assessed an API Testing and Certification fee of $1,200. Each 
non-Member who uses the MEO Interface to connect to the System will be 
assessed an API Testing and Certification fee of $2,000. Each non-
Member who uses the FXD Interface to connect to the system will be 
assessed an API Testing and Certification fee of $600. Each non-Member 
who uses the CTD Port to connect to the system will be assessed an API 
Testing and Certification fee of $600.
    Below is the proposed fee table for API Testing and Certification 
fees for non-Members:

------------------------------------------------------------------------
                                                            API testing
                                                                and
                    Type of interface                      certification
                                                                fee
------------------------------------------------------------------------
FIX.....................................................       $1,200.00
MEO.....................................................        2,000.00
FXD.....................................................          600.00
CTD.....................................................          600.00
------------------------------------------------------------------------

    API Testing and Certification Fees for Third Party Vendors, Service 
Bureaus and other non-Members will be assessed (i) initially per API 
for FIX, MEO, FXD, and CTD in the month the non-Member has been 
credentialed to use one or more ports in the production environment for 
the tested API, and (ii) each time a Third Party Vendor, Service 
Bureau, or other non-Member initiates a change to its system that 
requires testing and certification. API Testing and Certification Fees 
will not be assessed in situations where the Exchange initiates a 
mandatory change to the Exchange's system that requires testing and 
certification.
D. MPID Fees
    MIAX PEARL will assess monthly MPID fees on Members based upon type 
of MPID. MIAX PEARL assesses MPID

[[Page 14986]]

fees to cover the administrative costs it incurs in assigning and 
managing these identifiers for each Member. Members will be assessed a 
monthly MPID fee of $125 for each FIX MPID. Members will be assessed a 
monthly MPID fee of $125 for each MEO MPID. MPIDs allow the Exchange to 
provide additional services to its Members, including reporting, 
monitoring and risk protection services, down at the MPID level. MPIDs 
provide the Members the ability to segment their business operations in 
a manner that can be tailored to their business needs, as well as 
receive certain additional administrative and operational services 
provided by the Exchange.
    The Exchange also proposes to introduce a cap on the amount of MPID 
fees that are assessed by the Exchange to a Member of $500 per month, 
regardless of the actual number of EEM or MEO MPIDs assigned to such 
Member. The Exchange believes that establishing a monthly cap on MPID 
fees will give Members greater flexibility to accommodate their varying 
business models and customer configurations, as many Members often 
request multiple MPIDs from the Exchange, and the Exchange does not 
want MPID costs to serve as a barrier for requesting multiple MPIDs. 
The Exchange notes that this fee cap is similar to the MPID fee cap 
assessed by the Exchange's affiliate, MIAX Options.\22\
---------------------------------------------------------------------------

    \22\ See Securities Exchange Act Release No. 82823 (March 7, 
2018), 83 FR 10935 (March 13, 2018) (SR-MIAX-2018-09).
---------------------------------------------------------------------------

    Below is the proposed MPID fee table:

------------------------------------------------------------------------
                                                           Monthly MPID
                      Type of MPID                             fees
------------------------------------------------------------------------
FIX MPID................................................         $125.00
MEO MPID................................................          125.00
------------------------------------------------------------------------

    MPID fees are capped at $500.00 per month per Member.
E. New Member Non-Transaction Fee Waiver
    The Exchange proposes to remove the New Member Non-Transaction Fee 
Waiver from the Fee Schedule. The New Member Non-Transaction Fee Waiver 
waived the assessment of a fee for a Trading Permit, Port, ToM or PLF 
market data feed for a new Member of the Exchange for the first 
calendar month during which the new Member was approved as a Member and 
was credentialed to use the System in the production environment, and 
for the two (2) subsequent calendar months thereafter.\23\
---------------------------------------------------------------------------

    \23\ See the Definitions Section of the Fee Schedule.
---------------------------------------------------------------------------

    The Exchange initially waived certain non-transaction fees for new 
Members in order to attract new business and encourage Members to use 
the Exchange. The Exchange now believes that the New Member Non-
Transaction Fee Waiver is no longer necessary since the MIAX PEARL 
market is established and MIAX PEARL no longer needs to rely on such 
waivers to attract market participants.
    The Exchange notes that any Member who began receiving the New 
Member Non-Transaction Fee Waiver prior to the filing of this proposal, 
will continue to receive that benefit for the first calendar month 
during which they were approved as a Member and were credentialed to 
use the System in the production environment, and for the two (2) 
subsequent calendar months thereafter.
    The Exchange has issued a Regulatory Circular announcing the 
establishment of the aforementioned fees that were subject to the 
Waiver Period at least 15 days prior to the termination of the Waiver 
Period and effective date of the applicable fee.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \24\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \25\ in 
particular, in that it is an equitable allocation of reasonable dues, 
fees and other charges among its members and issuers and other persons 
using its facilities. The Exchange also believes the proposal furthers 
the objectives of Section 6(b)(5) of the Act in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest and is not designed to permit unfair discrimination between 
customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed change to eliminate the 
waiver of the non-transaction fees described above is reasonable 
because the Exchange no longer believes it is necessary to waive these 
fees to attract market participants to the MIAX PEARL market since this 
market is now established and MIAX PEARL no longer needs to rely on 
such waivers to attract market participants. The Exchange believes that 
the proposed changes are equitable and not unfairly discriminatory 
because the elimination of the non-transaction fees will uniformly 
apply to all Exchange participants based on market participant type.
    The Exchange believes its one-time membership application fees are 
reasonable, equitable and not unfairly discriminatory. As described 
above, the one-time application fees are similar and generally lower 
than application fees in place at other options exchanges,\26\ and are 
designed to recover costs associated with the processing of such 
applications. The Exchange believes that it is reasonable, equitable, 
and not unfairly discriminatory that Market Maker applicants are 
charged slightly more than EEM applicants because of the additional 
work involved in processing a Market Maker's application.
---------------------------------------------------------------------------

    \26\ See supra notes 13 and 14.
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    The Exchange believes it is reasonable, equitable, and not unfairly 
discriminatory to begin to assess API Testing and Certification fees 
for both Members and non-Members. The Exchange believes the proposed 
API Testing and Certification fees are a reasonable allocation of its 
costs and expenses among its Members and non-Members using its 
facilities since it is recovering the costs associated with providing 
such infrastructure testing and certification services.
    MIAX PEARL believes it is reasonable, equitable and not unfairly 
discriminatory to assess different API Testing and Certification fees 
to Members and non-Members. The higher fee charged to non-Members 
reflects the greater amount of time spent by MIAX PEARL employees 
testing and certifying non-Members. It has been MIAX PEARL's experience 
that Member testing takes less time than non-Member testing because 
Members have more experience testing these systems with exchanges; 
generally fewer questions and issues arise during the testing and 
certification process. Also, with respect to API testing and 
certification, because Third Party Vendors and Service Bureaus are 
redistributing data and reselling services to other Members and market 
participants the number and types of scenarios that need to be tested 
are more numerous and complex than those tested and certified for 
Members.
    The Exchange believes its fees for MPIDs are reasonable, equitable 
and not unfairly discriminatory in that they apply to all Members 
assigned MPIDs equally and allow the Exchange to recover administrative 
and operational costs in assigning and maintaining such services. In 
particular, MPIDs provide Members the ability to segment their

[[Page 14987]]

business operations in a manner that can be tailored to their business 
needs, as well as receive certain additional administrative and 
operational services provided by the Exchange. The Exchange also 
believes that the proposed amendment to establish a fee cap for Members 
on MPID fees is reasonable, equitable, and not unfairly discriminatory. 
The proposal to cap the total amount of MPID fees that can be assessed 
upon a Member to a maximum of $500 per month is designed to promote 
just and equitable principles of trade by encouraging Members to 
configure their MPID assignments with greater granularity and for MPID 
costs to not serve as a barrier for requesting multiple MPIDs. Because 
any Member is eligible to take advantage of the fee cap, the Exchange 
believes the fee cap is fair and equitable and not unreasonably 
discriminatory because it applies equally to all Members, and access to 
such fee cap is offered on terms that are not unfairly discriminatory.
    The Exchange believes that the proposed amendment to remove the New 
Member Non-Transaction Fee Waiver is reasonable, equitable, and not 
unfairly discriminatory because the removal of the New Member Non-
Transaction Fee Waiver applies equally to all new Members of the 
Exchange. The Exchange initially waived certain non-transaction fees 
for new Members in order to attract new business and encourage Members 
to join the Exchange. The Exchange believes that the New Member Non-
Transaction Fee Waiver is no longer necessary since the MIAX PEARL 
market is established and MIAX PEARL no longer relies on such waivers 
to attract market participants. Further, the proposed rule change will 
not apply to any new Member who began receiving the New Member Non-
Transaction Fee Waiver prior to the filing of this proposal and will 
continue to receive that benefit for the first calendar month during 
which they were approved as a Member and were credentialed to use the 
System in the production environment, and for the two (2) subsequent 
calendar months thereafter.
    Finally, 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 fees to remain competitive with other exchanges. The Exchange 
believes that the proposed changes reflect this competitive 
environment.

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. Unilateral action by MIAX PEARL 
in the assessment of certain non-transaction fees for services provided 
to its Members and others using its facilities will not have an impact 
on competition. As a more recent entrant in the already highly 
competitive environment for equity options trading, MIAX PEARL does not 
have the market power necessary to set prices for services that are 
unreasonable or unfairly discriminatory in violation of the Act. MIAX 
PEARL's proposed non-transaction fee levels, as described herein, are 
comparable to fee levels charged by other options exchanges for the 
same or similar services, including those fees assessed by its 
affiliate, MIAX Options.
    Further, the Exchange believes that the proposed rule change will 
promote transparency by making it clear to Members and non-Members the 
applicable fees that MIAX PEARL will assess for application for 
membership to MIAX PEARL, API testing and certification, and MPID fees, 
as well as the cap on MPID fees for EEMs. This will permit Members and 
non-Members to more accurately anticipate and account for non-
transactional costs, which promotes consistency.
    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 fees and fee 
waivers to remain competitive with other exchanges and to attract 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,\27\ and Rule 19b-4(f)(2) \28\ 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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    \27\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \28\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-PEARL-2019-12 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-2019-12. 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 (http://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

[[Page 14988]]

submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-PEARL-2019-12 and should be 
submitted on or before May 3, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07238 Filed 4-11-19; 8:45 am]
 BILLING CODE 8011-01-P