Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule, 16073-16077 [2019-07628]
Download as PDF
<![CDATA[
Federal Register / Vol. 84, No. 74 / Wednesday, April 17, 2019 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No comments were solicited or
received on the proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and
subparagraph (f)(6) of Rule 19b–4
thereunder.10
A proposed rule change filed under
Rule 19b–4(f)(6) 11 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 12 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become effective and
operative immediately upon filing. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest, as it will allow the
current the Options Pilot to continue
uninterrupted, without any changes,
while the Exchange and the other
national securities exchanges consider
and develop a permanent proposal for
the Options Pilot. For this reason, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change as operative upon
filing.13
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
9 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
11 17 CFR 240.19b–4(f)(6).
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).
amozie on DSK9F9SC42PROD with NOTICES
10 17
VerDate Sep<11>2014
18:23 Apr 16, 2019
Jkt 247001
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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–
CboeBZX–2019–026 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–CboeBZX–2019–026. 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
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
16073
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2019–026 and
should be submitted on or before May
8, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–07632 Filed 4–16–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85608; File No. SR–
PEARL–2019–13]
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 11, 2019.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on March 29, 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’’).
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\17APN1.SGM
17APN1
16074
Federal Register / Vol. 84, No. 74 / Wednesday, April 17, 2019 / Notices
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Add/Remove Tiered Rebates/Fees set
forth in Section (1)(a) of the Fee
Schedule to (i) establish that Members 3
may qualify for an alternative lower
Taker fee for Penny classes for their
Firm Origin orders when trading contra
to Origins other than Priority Customer 4
if certain thresholds are satisfied by the
Member; and (ii) change the volume
criteria for Members to qualify for
alternative Maker rebates for certain
options transactions in all classes for
Non-Priority Customers, Firms, BrokerDealers and Non-MIAX PEARL Market
Makers (collectively herein
‘‘Professional Members’’).
The Exchange currently assesses
transaction rebates and fees to all
market participants which are based
upon the total monthly volume
executed by the Member on MIAX
PEARL in the relevant, respective origin
type (not including Excluded
Contracts) 5 expressed as a percentage of
TCV.6 In addition, the per contract
transaction rebates and fees are applied
retroactively to all eligible volume for
that origin type once the respective
threshold tier (‘‘Tier’’) has been reached
by the Member. The Exchange
aggregates the volume of Members and
their Affiliates.7 Members that place
resting liquidity, i.e., orders resting on
the book of the MIAX PEARL System,8
are paid the specified ‘‘maker’’ rebate
(each a ‘‘Maker’’), and Members that
execute against resting liquidity are
assessed the specified ‘‘taker’’ fee (each
a ‘‘Taker’’). For opening transactions
and ABBO uncrossing transactions, per
contract transaction rebates and fees are
waived for all market participants.
Finally, Members are assessed lower
transaction fees and receive lower
rebates for order executions in standard
option classes in the Penny Pilot
Program 9 (‘‘Penny classes’’) than for
order executions in standard option
classes which are not in the Penny Pilot
Program (‘‘Non-Penny classes’’), where
Members are assessed higher transaction
fees and receive higher rebates.
Currently, transaction rebates and fees
in Section (1)(a) of the Fee Schedule for
Professional Members are assessed
according to the following table:
Per contract rebates/fees
for penny classes
Origin
Tier
Non-Priority Customer,
Firm, BD, and NonMIAX PEARL Market
Makers.
Maker ∧
(contra
origins ex
priority
customer)
Volume criteria
Maker ∧
(contra
priority
customer
origin)
Taker
(contra
origins ex
priority
customer)
Taker
(contra
priority
customer
origin)
Per contract
rebates/fees
for non-penny
classes
Maker **∧
Taker **
1
2
0.00%–0.15% ......................................
Above 0.15%–0.40% ...........................
($0.25)
($0.40)
($0.23)
($0.38)
$0.50
0.50
$0.50
0.50
($0.30)
($0.30)
$1.10
1.10
3
4
5
6
Above
Above
Above
Above
($0.40)
($0.47)
($0.48)
($0.48)
($0.38)
($0.45)
($0.46)
($0.46)
0.49
0.49
0.48
0.48
0.50
0.50
0.50
0.50
($0.60)
($0.65)
($0.70)
($0.85)
1.10
1.09
1.08
1.07
0.40%–0.65% ...........................
0.65%–1.00% ...........................
1.00%–1.40% ...........................
1.40% .......................................
amozie on DSK9F9SC42PROD with NOTICES
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member executes
more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option classes. For purposes of
qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following Origin types in Non-Penny classes: MIAX
PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
∧ Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the amount set forth in
the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 1.50% volume in the relevant month, in Priority
Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option classes.
3 ‘‘Member’’ means an individual or organization
that is registered with the Exchange pursuant to
Chapter II of the Exchange Rules for purposes of
trading on the Exchange as an ‘‘Electronic Exchange
Member’’ or ‘‘Market Maker.’’ Members are deemed
‘‘members’’ under the Exchange Act. See the
Definitions Section of the Fee Schedule and
Exchange Rule 100.
4 ‘‘Priority Customer’’ means a person or entity
that (i) is not a broker or dealer in securities, and
(ii) does not place more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial account(s). See Exchange Rule
100, including Interpretations and Policies .01.
5 ‘‘Excluded Contracts’’ means any contracts
routed to an away market for execution. See the
Definitions Section of the Fee Schedule.
6 ‘‘TCV’’ means total consolidated volume
calculated as the total national volume in those
classes listed on MIAX PEARL for the month for
which the fees apply, excluding consolidated
volume executed during the period time in which
the Exchange experiences an ‘‘Exchange System
Disruption’’ (solely in the option classes of the
affected Matching Engine (as defined below)). The
term Exchange System Disruption, which is defined
VerDate Sep<11>2014
18:23 Apr 16, 2019
Jkt 247001
in the Definitions section of the Fee Schedule,
means an outage of a Matching Engine or collective
Matching Engines for a period of two consecutive
hours or more, during trading hours. The term
Matching Engine, which is also defined in the
Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes
options orders and trades on a symbol-by-symbol
basis. Some Matching Engines will process option
classes with multiple root symbols, and other
Matching Engines may be dedicated to one single
option root symbol (for example, options on SPY
may be processed by one single Matching Engine
that is dedicated only to SPY). A particular root
symbol may only be assigned to a single designated
Matching Engine. A particular root symbol may not
be assigned to multiple Matching Engines. The
Exchange believes that it is reasonable and
appropriate to select two consecutive hours as the
amount of time necessary to constitute an Exchange
System Disruption, as two hours equates to
approximately 1.4% of available trading time per
month. The Exchange notes that the term
‘‘Exchange System Disruption’’ and its meaning
have no applicability outside of the Fee Schedule,
as it is used solely for purposes of calculating
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
volume for the threshold tiers in the Fee Schedule.
See the Definitions Section of the Fee Schedule.
7 ‘‘Affiliate’’ means (i) an affiliate of a Member of
at least 75% common ownership between the firms
as reflected on each firm’s Form BD, Schedule A,
or (ii) the Appointed Market Maker of an Appointed
EEM (or, conversely, the Appointed EEM of an
Appointed Market Maker). An ‘‘Appointed Market
Maker’’ is a MIAX PEARL Market Maker (who does
not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has
been appointed by an EEM and an ‘‘Appointed
EEM’’ is an EEM (who does not otherwise have a
corporate affiliation based upon common
ownership with a MIAX PEARL Market Maker) that
has been appointed by a MIAX PEARL Market
Maker, pursuant to the process described in the Fee
Schedule. See the Definitions Section of the Fee
Schedule.
8 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
9 See Securities Exchange Act Release No. 79778
(January 12, 2017), 82 FR 6662 (January 19, 2017)
(SR–PEARL–2016–01).
E:\FR\FM\17APN1.SGM
17APN1
16075
Federal Register / Vol. 84, No. 74 / Wednesday, April 17, 2019 / Notices
The Exchange proposes to establish
an alternative lower Taker fee that
Members may qualify for in Penny
classes for their Firm Origin orders
when trading against Origins other than
Priority Customer if certain thresholds
are satisfied by the Member.
Specifically, Members may qualify for
Taker fees of $0.48 for Penny classes for
their Firm Origin when trading against
Origins other than Priority Customer if
the Member and their Affiliates: (1)
Execute at least 2.00% of TCV in the
relevant month in the Priority Customer
Origin type, in all options classes, not
including Excluded Contracts, as
compared to TCV in all MIAX PEARL
listed option classes; and (2) reach at
least Tier 3 in the relevant month in the
Professional Members Origin types. The
proposed alternative lower Taker fee is
specific to the Firm Origin and volume
aggregation would still be based on
Professional Members for tier purposes.
Other Origins within Professional
Members would still get the tier rate
assigned in the Professional Members
table as set forth in Section (1)(a) of the
Fee Schedule. The proposed change
would not apply to Taker fees for Firm
Origin orders in Penny classes that do
not reach at least Tier 3 (Tier 1 and Tier
2) in the relevant month in the
Professional Members Origin types. The
proposed change would apply to Taker
fees for Firm Origin orders in Penny
classes that reach Tier 3 or Tier 4 in the
relevant month in the Professional
Members Origin types, in which
Professional Members, including Firm,
in those tiers are currently assessed a
Taker fee of $0.49 when trading against
Origins other than Priority Customer.
The proposed change would have no
effect to Taker fees for Firm Origin
orders in Penny classes in Tiers 5 and
6 in the relevant month in the
Professional Members Origin types as
the Taker fee in those tiers is already set
at $0.48 when trading against Origins
other than Priority Customer.
The Exchange believes that by
encouraging Members to execute at least
2.00% of TCV in the relevant month in
the Priority Customer Origin type, in all
options classes, not including Excluded
Contracts, as compared to TCV in all
MIAX PEARL listed option classes, and
to reach at least Tier 3 in the relevant
month in the Professional Members
Origins types in order to qualify for a
lower Taker fee of $0.48 per contract for
Firm orders trading against Origins
other than Priority Customer, instead of
the fee otherwise applicable to such
orders in Tier 3 and Tier 4 for
Professional Members in Penny classes,
may increase volume of Firm and
Priority Customer order flow. The
Exchange believes that the increased
order flow will result in increased
liquidity, which benefits all Exchange
participants by providing more trading
opportunities and tighter spreads.
The Exchange also proposes to amend
footnote ‘‘∧’’ below the tables in the
Add/Remove Tiered Rebates/Fees set
forth in Section (1)(a) of the Fee
Schedule to increase the Priority
Customer threshold in which Members
may qualify for alternative Maker
rebates for options transactions in all
classes for Professional Members,
provided that the Member meets certain
volume criteria. Currently, Members
may qualify for Maker rebates equal to
the greater of: (A) ($0.40) for Penny
Classes and ($0.65) for Non-Penny
Classes, or (B) the amount set forth in
the applicable Tier reached by the
Member in the relevant Origin, if the
Member and their Affiliates execute at
least 1.50% volume in the relevant
month, in Priority Customer Origin
type, in all options classes, not
including Excluded Contracts, as
compared to the TCV in all MIAX
PEARL listed option classes.
The Exchange proposes to increase
the Priority Customer threshold
percentage amount in footnote ‘‘∧’’ from
at least 1.50% to at least 2.00% of
volume in the relevant month, in
Priority Customer Origin type, in all
options classes, not including Excluded
Contracts, as compared to the TCV in all
MIAX PEARL listed option classes, in
order to qualify for the alternative
Maker rebates. For example, if a
Member met the monthly volume
criteria and reached Tier 1 for
Professional Members’ options
transactions but reached the proposed
increased Priority Customer monthly
threshold of over 2.00% of TCV, the
Member would receive a rebate of
($0.40) per contract trading against any
contra in Penny classes (instead of
($0.25) or ($0.23) per contract) and
($0.65) per contract in Non-Penny
classes (instead of ($0.30) per contract).
The member would receive the Taker
rates associated with the Tier, $0.50 for
Penny, trading against any contra, and
$1.10 for Non-Penny. For purposes of
qualifying for such rates, the Exchange
will continue to aggregate the Priority
Customer volume transacted by
Members and their Affiliates. As the
amount and type of volume that is
executed on the Exchange has shifted
since it first established the alternative
Maker rebates for options transactions
in all classes for Professional Members,
provided that the Member meets certain
volume criteria,10 the Exchange has
determined to level-set this threshold
amount so that it is more reflective of
the current operating conditions and the
current type and amount of volume
executed on the Exchange.
With all proposed changes, the
transaction rebates and fees in Section
(1)(a) of the Fee Schedule for
Professional Members shall be the
following:
Per contract rebates/fees
for penny classes
Origin
Tier
amozie on DSK9F9SC42PROD with NOTICES
Non-Priority Customer, Firm, BD, and
Non-MIAX PEARL Market Makers.
Maker ∧
(contra
origins ex
priority
customer)
Volume criteria
1
2
3
4
5
6
0.00%–0.15% .............
Above 0.15%–0.40% ..
Above 0.40%–0.65% ..
Above 0.65%–1.00% ..
Above 1.00%–1.40% ..
Above 1.40% ..............
($0.25)
($0.40)
($0.40)
($0.47)
($0.48)
($0.48)
Maker ∧
(contra
priority
customer
origin)
($0.23)
($0.38)
($0.38)
($0.45)
($0.46)
($0.46)
Taker ✧
(contra
origins ex
priority
customer)
Taker
(contra
priority
customer
origin)
$0.50
0.50
0.49
0.49
0.48
0.48
$0.50
0.50
0.50
0.50
0.50
0.50
Per contract
rebates/fees
for non-penny
classes
Maker **∧
($0.30)
($0.30)
($0.60)
($0.65)
($0.70)
($0.85)
Taker **
$1.10
1.10
1.10
1.09
1.08
1.07
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member executes
more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option classes. For purposes of
qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following Origin types in Non-Penny classes: MIAX
PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
10 See Securities Exchange Act Release No. 83419
(June 12, 2018), 83 FR 28285 (June 18, 2018) (SR–
PEARL–2018–13).
VerDate Sep<11>2014
18:23 Apr 16, 2019
Jkt 247001
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
E:\FR\FM\17APN1.SGM
17APN1
16076
Federal Register / Vol. 84, No. 74 / Wednesday, April 17, 2019 / Notices
∧ Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the amount set forth in
the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 2.00% volume in the relevant month, in Priority
Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option classes.
✧ Members may qualify for Taker Fees of $0.48 for Penny classes for their Firm Origin when trading against Origins not Priority Customer if the Member and their
Affiliates: (1) Execute at least 2.00% of TCV in the relevant month in the Priority Customer Origin type, in all options classes, not including Excluded Contracts, as
compared to TCV in all MIAX PEARL listed option classes, and (2) reach at least Tier 3 in the relevant month in the specified Origin types (Non-Priority Customer,
Firm, BD, and Non-MIAX PEARL Market Makers).
The proposed rule change is to
become operative April 1, 2019.
amozie on DSK9F9SC42PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 11
in general, and furthers the objectives of
Section 6(b)(4) of the Act,12 in that it is
an equitable allocation of reasonable
dues, fees and other charges among
Exchange members and issuers and
other persons using its facilities, and
6(b)(5) of the Act,13 in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Exchange’s proposal to establish
an alternative Taker fee for Firm Origin
when trading against Origins other than
Priority Customer that will apply
instead of the Taker fee otherwise
applicable to such orders, if a certain
threshold in the Priority Customer
Origin and a certain tier level by
Professional Members are satisfied by
the member, is consistent with Section
6(b)(4) of the Act 14 because it applies
equally to all Members for their Firm
Origin with similar order flow. The
Exchange believes that the proposed
alternative threshold by which any
Member may qualify for the lower Taker
fee of $0.48 for Penny classes for their
Firm Origin when trading against
Origins other than Priority Customer
instead of the Taker fee otherwise
applicable to such orders is fair,
equitable, and not unreasonably
discriminatory because it will encourage
Members to submit both Firm and
Priority Customer orders, which will
increase liquidity, which benefit all
market participants by providing more
trading opportunities and tighter
spreads. The alternative Taker fee is
reasonable because it will incentivize
providers of Priority Customer order
flow to send that Priority Customer
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
13 15 U.S.C. 78f(b)(1) and (b)(5).
14 15 U.S.C. 78f(b)(4).
12 15
VerDate Sep<11>2014
18:23 Apr 16, 2019
Jkt 247001
order flow to the Exchange in order to
obtain the highest volume threshold and
receive a Taker fee in a manner that
enables the Exchange to improve its
overall competitiveness and strengthen
its market quality for all market
participants.
The proposal to increase the Priority
Customer threshold for alternative
Maker rebates for options transactions
in all classes for Professional Members,
provided that the Member meets certain
volume criteria (the Member and their
Affiliates execute at least 2.00% (instead
of 1.50%) of volume in the relevant
month, in Priority Customer Origin
type, in all options classes, not
including Excluded Contracts, as
compared to the TCV in all MIAX
PEARL listed option classes), is
reasonable, equitable and not unfairly
discriminatory because all similarly
situated market participants are subject
to the same tiered rebates and fees and
access to the Exchange is offered on
terms that are not unfairly
discriminatory. The Exchange believes
that providing alternative Maker rebates
for options transactions in all classes for
Professional Members (if the Member
meets certain volume criteria relating to
Priority Customer volume), and
adjusting the threshold requirements so
that they are reflective of current
operating conditions and the current
type and amount of volume executed on
the Exchange, will encourage Members
to execute additional Priority Customer
and Professional Member volume on the
Exchange. The Exchange believes that
additional Priority Customer and
Professional Member volume executed
on the Exchange will attract further
liquidity to the Exchange, which in turn
will benefit all market participants.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
MIAX PEARL does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
changes to establish a lower Taker fee
assessed to Firm Origin when trading
contra to Origins other than Priority
Customer and the change to the volume
criteria for Members to qualify for
alternative Maker rebates should
continue to encourage the provision of
liquidity that enhances the quality of
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
the Exchange’s markets and increases
the number of trading opportunities on
MIAX PEARL for all participants who
will be able to compete for such
opportunities. The proposed rule
change should enable the Exchange to
continue to attract and compete for
order flow with other exchanges.
However, this competition does not
create an undue burden on competition
but rather offers all market participants
the opportunity to receive the benefit of
competitive pricing.
The Exchange further believes that its
proposal to establish a lower Taker fee
that Members may qualify for in Penny
classes for their Firm Origin when
trading against Origins other than
Priority Customer, provided that the
Member meets certain volume criteria,
that will apply instead of the Taker fee
otherwise applicable to such orders,
will not have an impact on intra-market
competition. Specifically, the Exchange
believes that the proposal to establish
additional thresholds by which any
Member may qualify for a Taker fee of
$0.48 per contract for their Firm Orders
when trading against Origins other than
Priority Customer, when Members and
their Affiliates execute at least 2.00% of
TCV in the relevant month in the
Priority Customer Origin type, in all
options classes, not including Excluded
Contracts, as compared to TCV in all
MIAX PEARL listed option classes, and
to reach at least Tier 3 in the relevant
month in the specified Origin types,
instead of the fee otherwise applicable
to such orders in Tier 3 or Tier 4, will
increase volume of Firm and Priority
Customer order flow. The Exchange
believes that the increased order flow
will result in increased liquidity which
benefits all Exchange participants by
providing more trading opportunities
and tighter spreads. Because the
proposal offers additional thresholds by
which a Member can receive a lower
Taker fee for their Firm Origin instead
of the Taker fee otherwise applicable to
such orders in Tier 3 or Tier 4, the
Exchange believes that the proposed
rule change will not impose any burden
on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
The Exchange further believes that its
proposal to increase the Priority
Customer Threshold in which Members
may qualify for alternative Maker
rebates for options transactions in all
E:\FR\FM\17APN1.SGM
17APN1
Federal Register / Vol. 84, No. 74 / Wednesday, April 17, 2019 / Notices
classes for Professional Members,
provided that the Member meets certain
volume criteria, will not have an impact
on intra-market competition.
Specifically, the Exchange believes the
proposal to increase the Priority
Customer threshold that Members may
qualify for Maker rebates equal to the
greater of: (A) ($0.40) for Penny Classes
and ($0.65) for Non-Penny Classes, or
(B) the amount set forth in the
applicable Tier reached by the Member
in the relevant Origin, if the Member
and their Affiliates execute at least
2.00% volume in the relevant month, in
Priority Customer Origin type, in all
options classes, not including Excluded
Contracts, as compared to the TCV in all
MIAX PEARL listed option classes, will
not impose any burden on competition
because the proposed increase is a levelsetting change to keep up with the
changes in the Exchange’s market share
and Members volume on the Exchange.
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive. In such an environment, the
Exchange must continually adjust its
rebates and fees to remain competitive
with other exchanges and to attract
order flow. The Exchange believes that
the proposed rule changes reflect this
competitive environment because they
modify the Exchange’s fees and rebates
in a manner that encourages market
participants to continue to provide
liquidity and to send order flow to the
Exchange.
amozie on DSK9F9SC42PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,15 and Rule
19b–4(f)(2) 16 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
15 15
U.S.C. 78s(b)(3)(A)(ii).
16 17 CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
18:23 Apr 16, 2019
Jkt 247001
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–2019–13 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–2019–13. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
16077
to make available publicly. All
submissions should refer to File
Number SR–PEARL–2019–13, and
should be submitted on or before May
8, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–07628 Filed 4–16–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85613; File No. SR–BX–
2019–009]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Current
Pilot Program Related to Clearly
Erroneous Transactions
April 11, 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 April 9,
2019, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
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 proposes to extend the
current pilot program related to BX Rule
11890, Clearly Erroneous Transactions,
to the close of business on October 18,
2019.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqbx.cchwallstreet.com/, at
the principal office of the Exchange, 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
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\17APN1.SGM
17APN1
]]>Agencies
[Federal Register Volume 84, Number 74 (Wednesday, April 17, 2019)]
[Notices]
[Pages 16073-16077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07628]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85608; File No. SR-PEARL-2019-13]
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 11, 2019.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 29, 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'').
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/pearl at MIAX
PEARL's principal office, and at the Commission's Public Reference
Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
[[Page 16074]]
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Add/Remove Tiered Rebates/Fees
set forth in Section (1)(a) of the Fee Schedule to (i) establish that
Members \3\ may qualify for an alternative lower Taker fee for Penny
classes for their Firm Origin orders when trading contra to Origins
other than Priority Customer \4\ if certain thresholds are satisfied by
the Member; and (ii) change the volume criteria for Members to qualify
for alternative Maker rebates for certain options transactions in all
classes for Non-Priority Customers, Firms, Broker-Dealers and Non-MIAX
PEARL Market Makers (collectively herein ``Professional Members'').
---------------------------------------------------------------------------
\3\ ``Member'' means an individual or organization that is
registered with the Exchange pursuant to Chapter II of the Exchange
Rules for purposes of trading on the Exchange as an ``Electronic
Exchange Member'' or ``Market Maker.'' Members are deemed
``members'' under the Exchange Act. See the Definitions Section of
the Fee Schedule and Exchange Rule 100.
\4\ ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100, including Interpretations and Policies .01.
---------------------------------------------------------------------------
The Exchange currently assesses transaction rebates and fees to all
market participants which are based upon the total monthly volume
executed by the Member on MIAX PEARL in the relevant, respective origin
type (not including Excluded Contracts) \5\ expressed as a percentage
of TCV.\6\ In addition, the per contract transaction rebates and fees
are applied retroactively to all eligible volume for that origin type
once the respective threshold tier (``Tier'') has been reached by the
Member. The Exchange aggregates the volume of Members and their
Affiliates.\7\ Members that place resting liquidity, i.e., orders
resting on the book of the MIAX PEARL System,\8\ are paid the specified
``maker'' rebate (each a ``Maker''), and Members that execute against
resting liquidity are assessed the specified ``taker'' fee (each a
``Taker''). For opening transactions and ABBO uncrossing transactions,
per contract transaction rebates and fees are waived for all market
participants. Finally, Members are assessed lower transaction fees and
receive lower rebates for order executions in standard option classes
in the Penny Pilot Program \9\ (``Penny classes'') than for order
executions in standard option classes which are not in the Penny Pilot
Program (``Non-Penny classes''), where Members are assessed higher
transaction fees and receive higher rebates. Currently, transaction
rebates and fees in Section (1)(a) of the Fee Schedule for Professional
Members are assessed according to the following table:
---------------------------------------------------------------------------
\5\ ``Excluded Contracts'' means any contracts routed to an away
market for execution. See the Definitions Section of the Fee
Schedule.
\6\ ``TCV'' means total consolidated volume calculated as the
total national volume in those classes listed on MIAX PEARL for the
month for which the fees apply, excluding consolidated volume
executed during the period time in which the Exchange experiences an
``Exchange System Disruption'' (solely in the option classes of the
affected Matching Engine (as defined below)). The term Exchange
System Disruption, which is defined in the Definitions section of
the Fee Schedule, means an outage of a Matching Engine or collective
Matching Engines for a period of two consecutive hours or more,
during trading hours. The term Matching Engine, which is also
defined in the Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes options orders and
trades on a symbol-by-symbol basis. Some Matching Engines will
process option classes with multiple root symbols, and other
Matching Engines may be dedicated to one single option root symbol
(for example, options on SPY may be processed by one single Matching
Engine that is dedicated only to SPY). A particular root symbol may
only be assigned to a single designated Matching Engine. A
particular root symbol may not be assigned to multiple Matching
Engines. The Exchange believes that it is reasonable and appropriate
to select two consecutive hours as the amount of time necessary to
constitute an Exchange System Disruption, as two hours equates to
approximately 1.4% of available trading time per month. The Exchange
notes that the term ``Exchange System Disruption'' and its meaning
have no applicability outside of the Fee Schedule, as it is used
solely for purposes of calculating volume for the threshold tiers in
the Fee Schedule. See the Definitions Section of the Fee Schedule.
\7\ ``Affiliate'' means (i) an affiliate of a Member of at least
75% common ownership between the firms as reflected on each firm's
Form BD, Schedule A, or (ii) the Appointed Market Maker of an
Appointed EEM (or, conversely, the Appointed EEM of an Appointed
Market Maker). An ``Appointed Market Maker'' is a MIAX PEARL Market
Maker (who does not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has been appointed by an EEM
and an ``Appointed EEM'' is an EEM (who does not otherwise have a
corporate affiliation based upon common ownership with a MIAX PEARL
Market Maker) that has been appointed by a MIAX PEARL Market Maker,
pursuant to the process described in the Fee Schedule. See the
Definitions Section of the Fee Schedule.
\8\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\9\ See Securities Exchange Act Release No. 79778 (January 12,
2017), 82 FR 6662 (January 19, 2017) (SR-PEARL-2016-01).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
---------------------------------------------------- fees for non-penny
Maker Maker classes
[caret] [caret] Taker Taker -------------------------
Origin Tier Volume criteria (contra (contra (contra (contra
origins ex priority origins ex priority Maker
priority customer priority customer **[caret] Taker **
customer) origin) customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Priority Customer, Firm, BD, and 1 0.00%-0.15%............. ($0.25) ($0.23) $0.50 $0.50 ($0.30) $1.10
Non-MIAX PEARL Market Makers. 2 Above 0.15%-0.40%....... ($0.40) ($0.38) 0.50 0.50 ($0.30) 1.10
3 Above 0.40%-0.65%....... ($0.40) ($0.38) 0.49 0.50 ($0.60) 1.10
4 Above 0.65%-1.00%....... ($0.47) ($0.45) 0.49 0.50 ($0.65) 1.09
5 Above 1.00%-1.40%....... ($0.48) ($0.46) 0.48 0.50 ($0.70) 1.08
6 Above 1.40%............. ($0.48) ($0.46) 0.48 0.50 ($0.85) 1.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member
executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option
classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following
Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
[caret] Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the
amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 1.50% volume
in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX
PEARL listed option classes.
[[Page 16075]]
The Exchange proposes to establish an alternative lower Taker fee
that Members may qualify for in Penny classes for their Firm Origin
orders when trading against Origins other than Priority Customer if
certain thresholds are satisfied by the Member. Specifically, Members
may qualify for Taker fees of $0.48 for Penny classes for their Firm
Origin when trading against Origins other than Priority Customer if the
Member and their Affiliates: (1) Execute at least 2.00% of TCV in the
relevant month in the Priority Customer Origin type, in all options
classes, not including Excluded Contracts, as compared to TCV in all
MIAX PEARL listed option classes; and (2) reach at least Tier 3 in the
relevant month in the Professional Members Origin types. The proposed
alternative lower Taker fee is specific to the Firm Origin and volume
aggregation would still be based on Professional Members for tier
purposes. Other Origins within Professional Members would still get the
tier rate assigned in the Professional Members table as set forth in
Section (1)(a) of the Fee Schedule. The proposed change would not apply
to Taker fees for Firm Origin orders in Penny classes that do not reach
at least Tier 3 (Tier 1 and Tier 2) in the relevant month in the
Professional Members Origin types. The proposed change would apply to
Taker fees for Firm Origin orders in Penny classes that reach Tier 3 or
Tier 4 in the relevant month in the Professional Members Origin types,
in which Professional Members, including Firm, in those tiers are
currently assessed a Taker fee of $0.49 when trading against Origins
other than Priority Customer. The proposed change would have no effect
to Taker fees for Firm Origin orders in Penny classes in Tiers 5 and 6
in the relevant month in the Professional Members Origin types as the
Taker fee in those tiers is already set at $0.48 when trading against
Origins other than Priority Customer.
The Exchange believes that by encouraging Members to execute at
least 2.00% of TCV in the relevant month in the Priority Customer
Origin type, in all options classes, not including Excluded Contracts,
as compared to TCV in all MIAX PEARL listed option classes, and to
reach at least Tier 3 in the relevant month in the Professional Members
Origins types in order to qualify for a lower Taker fee of $0.48 per
contract for Firm orders trading against Origins other than Priority
Customer, instead of the fee otherwise applicable to such orders in
Tier 3 and Tier 4 for Professional Members in Penny classes, may
increase volume of Firm and Priority Customer order flow. The Exchange
believes that the increased order flow will result in increased
liquidity, which benefits all Exchange participants by providing more
trading opportunities and tighter spreads.
The Exchange also proposes to amend footnote ``[caret]'' below the
tables in the Add/Remove Tiered Rebates/Fees set forth in Section
(1)(a) of the Fee Schedule to increase the Priority Customer threshold
in which Members may qualify for alternative Maker rebates for options
transactions in all classes for Professional Members, provided that the
Member meets certain volume criteria. Currently, Members may qualify
for Maker rebates equal to the greater of: (A) ($0.40) for Penny
Classes and ($0.65) for Non-Penny Classes, or (B) the amount set forth
in the applicable Tier reached by the Member in the relevant Origin, if
the Member and their Affiliates execute at least 1.50% volume in the
relevant month, in Priority Customer Origin type, in all options
classes, not including Excluded Contracts, as compared to the TCV in
all MIAX PEARL listed option classes.
The Exchange proposes to increase the Priority Customer threshold
percentage amount in footnote ``[caret]'' from at least 1.50% to at
least 2.00% of volume in the relevant month, in Priority Customer
Origin type, in all options classes, not including Excluded Contracts,
as compared to the TCV in all MIAX PEARL listed option classes, in
order to qualify for the alternative Maker rebates. For example, if a
Member met the monthly volume criteria and reached Tier 1 for
Professional Members' options transactions but reached the proposed
increased Priority Customer monthly threshold of over 2.00% of TCV, the
Member would receive a rebate of ($0.40) per contract trading against
any contra in Penny classes (instead of ($0.25) or ($0.23) per
contract) and ($0.65) per contract in Non-Penny classes (instead of
($0.30) per contract). The member would receive the Taker rates
associated with the Tier, $0.50 for Penny, trading against any contra,
and $1.10 for Non-Penny. For purposes of qualifying for such rates, the
Exchange will continue to aggregate the Priority Customer volume
transacted by Members and their Affiliates. As the amount and type of
volume that is executed on the Exchange has shifted since it first
established the alternative Maker rebates for options transactions in
all classes for Professional Members, provided that the Member meets
certain volume criteria,\10\ the Exchange has determined to level-set
this threshold amount so that it is more reflective of the current
operating conditions and the current type and amount of volume executed
on the Exchange.
With all proposed changes, the transaction rebates and fees in
Section (1)(a) of the Fee Schedule for Professional Members shall be
the following:
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 83419 (June 12,
2018), 83 FR 28285 (June 18, 2018) (SR-PEARL-2018-13).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
---------------------------------------------------- fees for non-penny
Maker Maker classes
[caret] [caret] Taker [loz] Taker -------------------------
Origin Tier Volume criteria (contra (contra (contra (contra
origins ex priority origins ex priority Maker
priority customer priority customer **[caret] Taker **
customer) origin) customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Priority Customer, Firm, BD, and 1 0.00%-0.15%............. ($0.25) ($0.23) $0.50 $0.50 ($0.30) $1.10
Non-MIAX PEARL Market Makers. 2 Above 0.15%-0.40%....... ($0.40) ($0.38) 0.50 0.50 ($0.30) 1.10
3 Above 0.40%-0.65%....... ($0.40) ($0.38) 0.49 0.50 ($0.60) 1.10
4 Above 0.65%-1.00%....... ($0.47) ($0.45) 0.49 0.50 ($0.65) 1.09
5 Above 1.00%-1.40%....... ($0.48) ($0.46) 0.48 0.50 ($0.70) 1.08
6 Above 1.40%............. ($0.48) ($0.46) 0.48 0.50 ($0.85) 1.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member
executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option
classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following
Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
[[Page 16076]]
[caret] Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the
amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 2.00% volume
in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX
PEARL listed option classes.
[loz] Members may qualify for Taker Fees of $0.48 for Penny classes for their Firm Origin when trading against Origins not Priority Customer if the
Member and their Affiliates: (1) Execute at least 2.00% of TCV in the relevant month in the Priority Customer Origin type, in all options classes, not
including Excluded Contracts, as compared to TCV in all MIAX PEARL listed option classes, and (2) reach at least Tier 3 in the relevant month in the
specified Origin types (Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers).
The proposed rule change is to become operative April 1, 2019.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \11\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\12\ in that it
is an equitable allocation of reasonable dues, fees and other charges
among Exchange members and issuers and other persons using its
facilities, and 6(b)(5) of the Act,\13\ in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanisms of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
\13\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------
The Exchange's proposal to establish an alternative Taker fee for
Firm Origin when trading against Origins other than Priority Customer
that will apply instead of the Taker fee otherwise applicable to such
orders, if a certain threshold in the Priority Customer Origin and a
certain tier level by Professional Members are satisfied by the member,
is consistent with Section 6(b)(4) of the Act \14\ because it applies
equally to all Members for their Firm Origin with similar order flow.
The Exchange believes that the proposed alternative threshold by which
any Member may qualify for the lower Taker fee of $0.48 for Penny
classes for their Firm Origin when trading against Origins other than
Priority Customer instead of the Taker fee otherwise applicable to such
orders is fair, equitable, and not unreasonably discriminatory because
it will encourage Members to submit both Firm and Priority Customer
orders, which will increase liquidity, which benefit all market
participants by providing more trading opportunities and tighter
spreads. The alternative Taker fee is reasonable because it will
incentivize providers of Priority Customer order flow to send that
Priority Customer order flow to the Exchange in order to obtain the
highest volume threshold and receive a Taker fee in a manner that
enables the Exchange to improve its overall competitiveness and
strengthen its market quality for all market participants.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The proposal to increase the Priority Customer threshold for
alternative Maker rebates for options transactions in all classes for
Professional Members, provided that the Member meets certain volume
criteria (the Member and their Affiliates execute at least 2.00%
(instead of 1.50%) of volume in the relevant month, in Priority
Customer Origin type, in all options classes, not including Excluded
Contracts, as compared to the TCV in all MIAX PEARL listed option
classes), is reasonable, equitable and not unfairly discriminatory
because all similarly situated market participants are subject to the
same tiered rebates and fees and access to the Exchange is offered on
terms that are not unfairly discriminatory. The Exchange believes that
providing alternative Maker rebates for options transactions in all
classes for Professional Members (if the Member meets certain volume
criteria relating to Priority Customer volume), and adjusting the
threshold requirements so that they are reflective of current operating
conditions and the current type and amount of volume executed on the
Exchange, will encourage Members to execute additional Priority
Customer and Professional Member volume on the Exchange. The Exchange
believes that additional Priority Customer and Professional Member
volume executed on the Exchange will attract further liquidity to the
Exchange, which in turn will benefit all market participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX PEARL does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
proposed changes to establish a lower Taker fee assessed to Firm Origin
when trading contra to Origins other than Priority Customer and the
change to the volume criteria for Members to qualify for alternative
Maker rebates should continue to encourage the provision of liquidity
that enhances the quality of the Exchange's markets and increases the
number of trading opportunities on MIAX PEARL for all participants who
will be able to compete for such opportunities. The proposed rule
change should enable the Exchange to continue to attract and compete
for order flow with other exchanges. However, this competition does not
create an undue burden on competition but rather offers all market
participants the opportunity to receive the benefit of competitive
pricing.
The Exchange further believes that its proposal to establish a
lower Taker fee that Members may qualify for in Penny classes for their
Firm Origin when trading against Origins other than Priority Customer,
provided that the Member meets certain volume criteria, that will apply
instead of the Taker fee otherwise applicable to such orders, will not
have an impact on intra-market competition. Specifically, the Exchange
believes that the proposal to establish additional thresholds by which
any Member may qualify for a Taker fee of $0.48 per contract for their
Firm Orders when trading against Origins other than Priority Customer,
when Members and their Affiliates execute at least 2.00% of TCV in the
relevant month in the Priority Customer Origin type, in all options
classes, not including Excluded Contracts, as compared to TCV in all
MIAX PEARL listed option classes, and to reach at least Tier 3 in the
relevant month in the specified Origin types, instead of the fee
otherwise applicable to such orders in Tier 3 or Tier 4, will increase
volume of Firm and Priority Customer order flow. The Exchange believes
that the increased order flow will result in increased liquidity which
benefits all Exchange participants by providing more trading
opportunities and tighter spreads. Because the proposal offers
additional thresholds by which a Member can receive a lower Taker fee
for their Firm Origin instead of the Taker fee otherwise applicable to
such orders in Tier 3 or Tier 4, the Exchange believes that the
proposed rule change will not impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act.
The Exchange further believes that its proposal to increase the
Priority Customer Threshold in which Members may qualify for
alternative Maker rebates for options transactions in all
[[Page 16077]]
classes for Professional Members, provided that the Member meets
certain volume criteria, will not have an impact on intra-market
competition. Specifically, the Exchange believes the proposal to
increase the Priority Customer threshold that Members may qualify for
Maker rebates equal to the greater of: (A) ($0.40) for Penny Classes
and ($0.65) for Non-Penny Classes, or (B) the amount set forth in the
applicable Tier reached by the Member in the relevant Origin, if the
Member and their Affiliates execute at least 2.00% volume in the
relevant month, in Priority Customer Origin type, in all options
classes, not including Excluded Contracts, as compared to the TCV in
all MIAX PEARL listed option classes, will not impose any burden on
competition because the proposed increase is a level-setting change to
keep up with the changes in the Exchange's market share and Members
volume on the Exchange.
The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its rebates and fees
to remain competitive with other exchanges and to attract order flow.
The Exchange believes that the proposed rule changes reflect this
competitive environment because they modify the Exchange's fees and
rebates in a manner that encourages market participants to continue to
provide liquidity and to send order flow to the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\15\ and Rule 19b-4(f)(2) \16\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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-2019-13 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-2019-13. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-PEARL-2019-13, and should be submitted
on or before May 8, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07628 Filed 4-16-19; 8:45 am]
BILLING CODE 8011-01-P
