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]
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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 (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 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 (https://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
https://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
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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
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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
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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.
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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.
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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).
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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:
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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.
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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.
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D. MPID Fees
MIAX PEARL will assess monthly
MPID fees on Members based upon type
of MPID. MIAX PEARL assesses MPID
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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.
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25 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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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
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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 (https://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 (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
E:\FR\FM\12APN1.SGM
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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]
-----------------------------------------------------------------------
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 https://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.
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\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.
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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\
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\22\ See Securities Exchange Act Release No. 82823 (March 7,
2018), 83 FR 10935 (March 13, 2018) (SR-MIAX-2018-09).
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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\
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\23\ See the Definitions Section of the Fee Schedule.
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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.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(4) and (5).
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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 (https://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 (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
[[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
