Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Fee Schedule, 19996-20002 [2020-07439]
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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) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14
A proposed rule change filed under
Rule 19b–4(f)(6) 15 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b–4(f)(6)(iii),16 the Commission
may 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 proposal may become operative
immediately upon filing. The Exchange
states that waiver of the operative delay
would allow trading of Managed
Portfolio Shares on the Exchange during
all trading sessions as soon as possible,
making the treatment of Managed
Portfolio Shares consistent with all
other product types as well as the listing
market, and reducing confusion and
complexity associated with Managed
Portfolio Shares. In addition, the
Exchange states that the proposal raises
no novel or unique issues in that it
would allow Managed Portfolio Shares
to trade in a manner identical to all
other products traded on the Exchange
and consistent with the exemptive relief
granted by the Commission. For these
reasons, the Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Accordingly, the Commission waives
the 30-day operative delay and
designates the proposed rule change
operative upon filing.17
At any time within 60 days of the
filing of the proposed rule change, the
13 15
U.S.C. 78s(b)(3)(A).
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.
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 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).
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14 17
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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.
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–
CboeEDGX–2020–014 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–CboeEDGX–2020–014. 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
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Number SR–CboeEDGX–2020–014 and
should be submitted on or before April
30, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07434 Filed 4–8–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88554; File No. SR–
PEARL–2020–05]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Fee Schedule
April 3, 2020.
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 31, 2020, 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
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
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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) Increase Taker (as
defined below) fees in certain Tiers for
options transactions in Penny classes
(including SPY, QQQ, and IWM options
classes) and non-Penny classes (as
defined below) for Priority Customers; 3
(ii) increase Taker fees in certain Tiers
for options transactions in Penny and
non-Penny classes for MIAX PEARL
Market Makers; 4 and (iii) increase Taker
fees in certain Tiers for options
transactions in Penny and non-Penny
classes for Non-Priority Customers,
Firms, Broker-Dealers and Non-MIAX
PEARL Market Makers (collectively
herein ‘‘Professional Members’’).
Background
The Exchange currently assesses
transaction rebates and fees to all
market participants which are based
upon the total monthly volume
executed by the Member 5 on MIAX
PEARL in the relevant, respective origin
type (not including Excluded
Contracts) 6 expressed as a percentage of
TCV.7 In addition, the per contract
transaction rebates and fees are applied
retroactively to all eligible volume for
that origin type once the respective
threshold tier (‘‘Tier’’) has been reached
by the Member. The Exchange
aggregates the volume of Members and
their Affiliates.8 Members that place
resting liquidity, i.e., orders resting on
the book of the MIAX PEARL System,9
are paid the specified ‘‘maker’’ rebate
(each a ‘‘Maker’’), and Members that
execute against resting liquidity are
assessed the specified ‘‘taker’’ fee (each
a ‘‘Taker’’). For opening transactions
and ABBO uncrossing transactions, per
contract transaction rebates and fees are
waived for all market participants.
Finally, Members are assessed lower
transaction fees and receive lower
rebates for order executions in standard
option classes in the Penny Pilot
Program 10 (‘‘Penny classes’’) than for
order executions in standard option
classes which are not in the Penny Pilot
Program (‘‘non-Penny classes’’), where
Members are assessed higher transaction
fees and receive higher rebates.
Transaction rebates and fees in
Section (1)(a) of the Fee Schedule are
currently assessed according to the
following tables:
Per contract rebates/fees for penny classes
Origin
Tier
Volume criteria
Maker
Priority Customer ................
1
2
3
4
5
6
0.00%–0.10% .....................
Above 0.10%–0.35% ..........
Above 0.35%–0.50% ..........
Above 0.50%–0.75% ..........
Above 0.75%–1.25% ..........
Above 1.25% ......................
($0.25)
(0.40)
(0.45)
(0.51)
(0.52)
(0.52)
Taker *
$0.48
0.48
0.46
0.45
0.44
0.43
SPY
taker
$0.43
0.43
0.42
0.41
0.40
0.38
QQQ,
IWM
taker
$0.44
0.44
0.44
0.43
0.42
0.40
Per contract
rebates/fees for
non-penny classes
Maker
($0.85)
(0.95)
(1.00)
(1.03)
(1.04)
(1.04)
Taker
$0.84
0.84
0.84
0.84
0.84
0.84
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* For all Penny Classes other than SPY, QQQ, and IWM.
3 ‘‘Priority Customer’’ means a person or entity
that (i) is not a broker or dealer in securities, and
(ii) does not place more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial account(s). See Exchange Rule
100, including Interpretation and Policy .01.
4 ‘‘Market Maker’’ means a Member registered
with the Exchange for the purpose of making
markets in options contracts traded on the
Exchange. See the Definitions Section of the Fee
Schedule and Exchange Rule 100.
5 ‘‘Member’’ means an individual or organization
that is registered with the Exchange pursuant to
Chapter II of the Exchange Rules for purposes of
trading on the Exchange as an ‘‘Electronic Exchange
Member’’ or ‘‘Market Maker.’’ Members are deemed
‘‘members’’ under the Exchange Act. See the
Definitions Section of the Fee Schedule and
Exchange Rule 100.
6 ‘‘Excluded Contracts’’ means any contracts
routed to an away market for execution. See the
Definitions Section of the Fee Schedule.
7 ‘‘TCV’’ means total consolidated volume
calculated as the total national volume in those
classes listed on MIAX PEARL for the month for
which the fees apply, excluding consolidated
volume executed during the period time in which
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the Exchange experiences an ‘‘Exchange System
Disruption’’ (solely in the option classes of the
affected Matching Engine (as defined below)). The
term Exchange System Disruption, which is defined
in the Definitions section of the Fee Schedule,
means an outage of a Matching Engine or collective
Matching Engines for a period of two consecutive
hours or more, during trading hours. The term
Matching Engine, which is also defined in the
Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes
options orders and trades on a symbol-by-symbol
basis. Some Matching Engines will process option
classes with multiple root symbols, and other
Matching Engines may be dedicated to one single
option root symbol (for example, options on SPY
may be processed by one single Matching Engine
that is dedicated only to SPY). A particular root
symbol may only be assigned to a single designated
Matching Engine. A particular root symbol may not
be assigned to multiple Matching Engines. The
Exchange believes that it is reasonable and
appropriate to select two consecutive hours as the
amount of time necessary to constitute an Exchange
System Disruption, as two hours equates to
approximately 1.4% of available trading time per
month. The Exchange notes that the term
‘‘Exchange System Disruption’’ and its meaning
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have no applicability outside of the Fee Schedule,
as it is used solely for purposes of calculating
volume for the threshold tiers in the Fee Schedule.
See the Definitions Section of the Fee Schedule.
8 ‘‘Affiliate’’ means (i) an affiliate of a Member of
at least 75% common ownership between the firms
as reflected on each firm’s Form BD, Schedule A,
or (ii) the Appointed Market Maker of an Appointed
EEM (or, conversely, the Appointed EEM of an
Appointed Market Maker). An ‘‘Appointed Market
Maker’’ is a MIAX PEARL Market Maker (who does
not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has
been appointed by an EEM and an ‘‘Appointed
EEM’’ is an EEM (who does not otherwise have a
corporate affiliation based upon common
ownership with a MIAX PEARL Market Maker) that
has been appointed by a MIAX PEARL Market
Maker, pursuant to the process described in the Fee
Schedule. See the Definitions Section of the Fee
Schedule.
9 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
10 See Securities Exchange Act Release No. 84865
(December 19, 2018), 83 FR 66813 (December 27,
2018) (SR–PEARL–2018–26).
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Per contract rebates/fees for penny classes
Origin
Tier
All MIAX 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)
Taker **
0.00%–0.15% .........
($0.25)
($0.23)
$0.50
$0.50
($0.30)
$1.10
2
Above 0.15%–
0.40% or Above
0.45% in SPY/
QQQ/IWM.
Above 0.40%–
0.65%.
Above 0.65%–
1.00% or Above
2.25% in SPY.
Above 1.00%–
1.40%.
Above 1.40% ..........
(0.40)
(0.38)
0.50
0.50
(0.30)
1.10
(0.40)
(0.38)
0.49
0.50
(0.60)
1.09
(0.47)
(0.45)
0.48
0.49
(0.65)
1.08
(0.48)
(0.46)
0.46
0.47
(0.70)
1.07
(0.48)
(0.47)
0.45
0.46
(0.85)
1.06
4
5
6
Per contract rebates/fees for penny classes
Tier
Non-Priority Customer, Firm, BD,
and Non-MIAX
PEARL Market
Makers.
Maker **
1
3
Origin
Per contract
rebates/fees for
non-penny classes
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% ..........
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 **
($0.25)
(0.40)
(0.40)
($0.23)
(0.38)
(0.38)
$0.50
0.50
0.49
$0.50
0.50
0.50
($0.30)
(0.30)
(0.60)
$1.10
1.10
1.10
(0.47)
(0.45)
0.49
0.50
(0.65)
1.09
(0.48)
(0.46)
0.48
0.50
(0.70)
1.08
(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.
∧ 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 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.
Except as otherwise set forth herein, the Volume Criteria is calculated based on the total monthly volume executed by the Member in all options classes on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of
(divided by) TCV (as the denominator).
In Tier 2 for MIAX PEARL Market Makers, the alternative Volume Criteria (above 0.45% in SPY/QQQ/IWM) is calculated based on the total
monthly volume executed by the Market Maker collectively in SPY, QQQ, and IWM options on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator). In Tier 4
for MIAX PEARL Market Makers, the alternative Volume Criteria (above 2.25% in SPY) is calculated based on the total monthly volume executed
by the Market Maker solely in SPY options on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) SPY TCV (as the denominator). The per contract transaction rebates and fees shall be applied retroactively to all eligible volume once the threshold has been reached by Member. The Exchange aggregates the volume of Members and their Affiliates in the Add/Remove Tiered Fees. The per contract transaction rebates and fees shall be waived for transactions executed during the opening and for transactions that uncross the ABBO.
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Priority Customer Taker Fees
The Exchange proposes to increase
Taker fees in certain Tiers for options
transactions in Penny classes (including
SPY, QQQ, and IWM options classes)
and non-Penny classes for Priority
Customers. Specifically, the Exchange
proposes to increase the Taker fees for
Priority Customer orders in options in
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certain Penny classes (excluding SPY,
QQQ, and IWM) in Tier 1 from $0.48 to
$0.50, in Tier 2 from $0.48 to $0.50, in
Tier 3 from $0.46 to $0.48, in Tier 4
from $0.45 to $0.47, in Tier 5 from $0.44
to $0.46, and in Tier 6 from $0.43 to
$0.45. The Exchange next proposes to
increase the Taker fees for Priority
Customer orders for SPY options in Tier
1 from $0.43 to $0.46, in Tier 2 from
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$0.43 to $0.46, in Tier 3 from $0.42 to
$0.45, in Tier 4 from $0.41 to $0.44, in
Tier 5 from $0.40 to $0.43, and in Tier
6 from $0.38 to $0.42. The Exchange
next proposes to increase the Taker fees
for Priority Customer orders for QQQ
and IWM options in Tier 1 from $0.44
to $0.50, in Tier 2 from $0.44 to $0.50,
in Tier 3 from $0.44 to $0.48, in Tier 4
from $0.43 to $0.47, in Tier 5 from $0.42
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to $0.46, and in Tier 6 from $0.40 to
$0.45. The Exchange next proposes to
increase the Taker fees for Priority
Customer orders in options in nonPenny classes in Tiers 1–6 from $0.84 to
$0.85.
Market Maker Taker Fees
Next, the Exchange proposes to
increase Taker fees in certain Tiers for
options transactions in Penny and nonPenny classes for Market Makers.
Specifically, the Exchange proposes to
increase the Taker fees for Market
Makers for orders contra Origins ex
Priority Customer in Penny classes in
Tier 3 from $0.49 to $0.50, in Tier 4
from $0.48 to $0.49, in Tier 5 from $0.46
to $0.47, and in Tier 6 from $0.45 to
$0.46. The Exchange next proposes to
increase the Taker fees for Market
Makers for orders contra Priority
Customer in Penny classes in Tier 4
from $0.49 to $0.50, in Tier 5 from $0.47
to $0.48, and in Tier 6 from $0.46 to
$0.47. The Exchange next proposes to
increase the Taker fees for Market Maker
orders in options in non-Penny classes
in Tier 3 from $1.09 to $1.10, in Tier 4
from $1.08 to $1.09, in Tier 5 from $1.07
to $1.08, and in Tier 6 from $1.06 to
$1.07.
Professional Customer Taker Fees
Next, the Exchange proposes to
increase Taker fees in certain Tiers for
options transactions in Penny and nonPenny classes for Professional Members.
Specifically, the Exchange proposes to
increase the Taker fees for Professional
Members for orders contra Origins ex
Priority Customer in Penny classes in
Tier 3 from $0.49 to $0.50, in Tier 4
from $0.49 to $0.50, in Tier 5 from $0.48
to $0.49, and in Tier 6 from $0.48 to
$0.49. The Exchange next proposes to
increase the Taker fees for Professional
Member orders in options in non-Penny
classes in Tier 4 from $1.09 to $1.10, in
Tier 5 from $1.08 to $1.09, and in Tier
6 from $1.07 to $1.09.
The purpose of the proposed changes
to adjust the specified Taker fees is for
business and competitive reasons. In
order to attract order flow, the Exchange
initially set its Taker fees so that they
were meaningfully lower than other
options exchanges that operate
comparable maker/taker pricing
models.11 The Exchange now believes
that it is appropriate to further adjust
these specified Taker fees so that they
are more in line with other exchanges,
but will still remain highly competitive
such that they should enable the
Exchange to continue to attract order
flow and maintain market share.12
With all proposed changes, Section
(1)(a) of the Fee Schedule shall be the
following:
Per contract rebates/fees for penny classes
Origin
Tier
Volume criteria
Maker
Priority Customer ................
1
2
3
4
5
6
0.00%–0.10% .....................
Above 0.10%–0.35% ..........
Above 0.35%–0.50% ..........
Above 0.50%–0.75% ..........
Above 0.75%–1.25% ..........
Above 1.25% ......................
Taker *
($0.25)
(0.40)
(0.45)
(0.51)
(0.52)
(0.52)
QQQ,
IWM
taker
SPY
taker
$0.50
0.50
0.48
0.47
0.46
0.45
$0.46
0.46
0.45
0.44
0.43
0.42
$0.50
0.50
0.48
0.47
0.46
0.45
Per contract
rebates/fees for
non-penny classes
Maker
($0.85)
(0.95)
(1.00)
(1.03)
(1.04)
(1.04)
Taker
$0.85
0.85
0.85
0.85
0.85
0.85
* For all Penny Classes other than SPY, QQQ, and IWM.
Per contract rebates/fees for penny classes
Origin
Tier
All MIAX PEARL
Market Makers.
Taker
(contra
priority
customer
origin)
Maker **
Taker **
($0.25)
($0.23)
$0.50
$0.50
($0.30)
$1.10
2
Above 0.15%–
0.40% or Above
0.45% in SPY/
QQQ/IWM.
Above 0.40%–
0.65%.
Above 0.65%–
1.00% or Above
2.25% in SPY.
Above 1.00%–
1.40%.
Above 1.40% ..........
(0.40)
(0.38)
0.50
0.50
(0.30)
1.10
(0.40)
(0.38)
0.50
0.50
(0.60)
1.10
(0.47)
(0.45)
0.49
0.50
(0.65)
1.09
(0.48)
(0.46)
0.47
0.48
(0.70)
1.08
(0.48)
(0.47)
0.46
0.47
(0.85)
1.07
5
6
khammond on DSKJM1Z7X2PROD with NOTICES
Taker
(contra
origins
ex priority
customer)
0.00%–0.15% .........
4
11 See Securities Exchange Act Release Nos.
80915 (June 13, 2017), 82 FR 27912 (June 19, 2017)
16:28 Apr 08, 2020
Maker
(contra
priority
customer
origin)
1
3
VerDate Sep<11>2014
Maker
(contra
origins
ex priority
customer)
Volume criteria
Per contract
rebates/fees for
non-penny classes
Jkt 250001
(SR–PEARL–2017–29); 80914 (June 13, 2017), 82 FR
27910 (June 19, 2017) (SR–PEARL–2017–30).
PO 00000
Frm 00080
Fmt 4703
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12 See Cboe BZX Options Exchange Fee Schedule,
under ‘‘Transaction Fees.’’
E:\FR\FM\09APN1.SGM
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Federal Register / Vol. 85, No. 69 / Thursday, April 9, 2020 / Notices
Per contract rebates/fees for penny classes
Origin
Non-Priority Customer,
Firm, BD, and NonMIAX PEARL Market
Makers.
Tier
Volume criteria
1
2
3
4
5
6
Maker ∧
Maker ∧
(contra
origins
ex priority
customer)
(contra
priority
customer
origin)
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% ..
Taker ◊
(contra
origins
ex priority
customer)
Taker
(contra
priority
customer
origin)
Per contract
rebates/fees for
non-penny classes
Maker **∧
Taker **
($0.25)
(0.40)
(0.40)
($0.23)
(0.38)
(0.38)
$0.50
0.50
0.50
$0.50
0.50
0.50
($0.30)
(0.30)
(0.60)
$1.10
1.10
1.10
(0.47)
(0.45)
0.50
0.50
(0.65)
1.10
(0.48)
(0.46)
0.49
0.50
(0.70)
1.09
(0.48)
(0.46)
0.49
0.50
(0.85)
1.09
khammond on DSKJM1Z7X2PROD 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
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 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.
Except as otherwise set forth herein, the Volume Criteria is calculated based on the total monthly volume executed by the Member in all options classes on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of
(divided by) TCV (as the denominator).
In Tier 2 for MIAX PEARL Market Makers, the alternative Volume Criteria (above 0.45% in SPY/QQQ/IWM) is calculated based on the total
monthly volume executed by the Market Maker collectively in SPY, QQQ, and IWM options on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator). In Tier 4
for MIAX PEARL Market Makers, the alternative Volume Criteria (above 2.25% in SPY) is calculated based on the total monthly volume executed
by the Market Maker solely in SPY options on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) SPY TCV (as the denominator). The per contract transaction rebates and fees shall be applied retroactively to all eligible volume once the threshold has been reached by Member. The Exchange aggregates the volume of Members and their Affiliates in the Add/Remove Tiered Fees. The per contract transaction rebates and fees shall be waived for transactions executed during the opening and for transactions that uncross the ABBO.
The Commission has repeatedly
expressed its preference for competition
over regulatory intervention in
determining prices, products, and
services in the securities markets. In
Regulation NMS, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 13
There are currently 16 registered
options exchanges competing for order
flow. Based on publicly-available
information, and excluding index-based
options, no single exchange has more
than approximately 15% market
share.14 Therefore, no exchange
possesses significant pricing power.
More specifically, as of March 24, 2020,
the Exchange had an approximately
13 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
14 The Options Clearing Corporation (‘‘OCC’’)
publishes options and futures volume in a variety
of formats, including daily and monthly volume by
exchange, available here: https://www.theocc.com/
market-data/volume/default.jsp.
VerDate Sep<11>2014
16:28 Apr 08, 2020
Jkt 250001
4.03% market share of executed volume
of multiply-listed equity and exchange
traded fund (‘‘ETF’’) options for the
month of March 2020.15 The Exchange
believes that the ever-shifting market
share among the exchanges from month
to month demonstrates that market
participants can discontinue or reduce
use of certain categories of products and
services, terminate an existing
membership or determine to not become
a new member, and/or shift order flow,
in response to transaction fee changes.
For example, on February 28, 2019, the
Exchange filed with the Commission a
proposal to increase Taker fees in
certain Tiers for options transactions in
certain Penny classes for Priority
Customers and decrease Maker rebates
in certain Tiers for options transactions
in Penny classes for Priority Customers
(which fee was to be effective March 1,
2019).16 The Exchange experienced a
decrease in total market share for the
month of March 2019, after the proposal
went into effect. Accordingly, the
id.
Securities Exchange Act Release No. 85304
(March 13, 2019), 84 FR 10144 (March 19, 2019)
(SR–PEARL–2019–07).
Exchange believes that the March 1,
2019 fee change, to increase certain
transaction fees and decrease certain
transaction rebates, may have
contributed to the decrease in the
Exchange’s market share and, as such,
the Exchange believes competitive
forces constrain MIAX PEARL’s, and
other options exchanges, ability to set
transaction fees and market participants
can shift order flow based on fee
changes instituted by the exchanges.
The proposed changes are scheduled
to become operative April 1, 2020.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 17
in general, and furthers the objectives of
Section 6(b)(4) of the Act,18 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,19 in that it is designed
to prevent fraudulent and manipulative
15 See
16 See
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
17 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
19 15 U.S.C. 78f(b)(1) and (b)(5).
18 15
E:\FR\FM\09APN1.SGM
09APN1
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Federal Register / Vol. 85, No. 69 / Thursday, April 9, 2020 / Notices
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 believes its proposal to
increase Taker fees in certain Tiers for
options transactions in Penny classes
(including SPY, QQQ, and IWM options
classes) and non-Penny classes for
Priority Customers, increase Taker fees
in certain Tiers for options transactions
in Penny and non-Penny classes for
Market Makers, and increase Taker fees
in certain Tiers for options transactions
in Penny and non-Penny classes for
Professional Members provides for the
equitable allocation of reasonable dues
and fees and is not unfairly
discriminatory for the following
reasons. The Exchange operates in a
highly competitive market. The
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. In Regulation NMS,
the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 20
There are currently 16 registered
options exchanges competing for order
flow. Based on publicly-available
information, and excluding index-based
options, no single exchange has more
than approximately 15% of the market
share of executed volume of multiplylisted equity and ETF options trades as
of March 24, 2020, for the month of
March 2020.21 Therefore, no exchange
possesses significant pricing power in
the execution of multiply-listed equity
and ETF options order flow. More
specifically, as of March 24, 2020, the
Exchange had an approximately 4.03%
market share of executed volume of
multiply-listed equity and ETF options
for the month of March 2020.22
The Exchange believes that the evershifting market shares among the
exchanges from month to month
demonstrates that market participants
can shift order flow, or discontinue or
20 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
21 See supra note 15.
22 See id.
VerDate Sep<11>2014
16:28 Apr 08, 2020
Jkt 250001
reduce use of certain categories of
products, in response to transaction
and/or non-transaction fee changes. For
example, on February 28, 2019, the
Exchange filed with the Commission a
proposal to increase Taker fees in
certain Tiers for options transactions in
certain Penny classes for Priority
Customers and decrease Maker rebates
in certain Tiers for options transactions
in Penny classes for Priority Customers
(which fee was to be effective March 1,
2019).23 The Exchange experienced a
decrease in total market share between
the months of February and March of
2019, after the fees were in effect.
Accordingly, the Exchange believes that
the March 1, 2019 fee change may have
contributed to the decrease in the
Exchange’s market share and, as such,
the Exchange believes competitive
forces constrain options exchange
transaction fees and market participants
can shift order flow based on fee
changes instituted by the exchanges.
The Exchange believes that its
proposal to increase Taker fees in
certain Tiers for options transactions in
Penny classes (including SPY, QQQ,
and IWM options classes) and nonPenny classes for Priority Customers,
increase Taker fees in certain Tiers for
options transactions in Penny and nonPenny classes for Market Makers, and
increase Taker fees in certain Tiers for
options transactions in Penny and nonPenny classes for Professional Members
is reasonable, equitably allocated and
not unfairly discriminatory because
these changes are for business and
competitive reasons. The Exchange
cannot predict with certainty the
number of market participants that
would qualify for the higher Taker fees
for each of the proposed changes as
Members may continually shift among
the different Tiers from month to
month. The Exchange further believes
that it is appropriate to increase the
Taker fees for Priority Customers in
SPY, QQQ and IWM options classes
because these select products are
generally more liquid than other options
classes.
Further, the Exchange believes the
proposed Taker fee adjustments in
certain specified Tiers applicable to
certain orders submitted by Priority
Customers in Penny classes and nonPenny classes, Market Makers in Penny
classes and non-Penny classes, and
Professional Members in Penny classes
and non-Penny classes are reasonable,
equitable and not unfairly
discriminatory because all similarly
situated market participants in the same
Origin type are subject to the same
tiered Taker fees and access to the
Exchange is offered on terms that are
not unfairly discriminatory. For
competitive and business reasons, the
Exchange initially set its Taker fees for
such orders generally lower than certain
other options exchanges that operate
comparable maker/taker pricing
models.24 The Exchange now believes
that it is appropriate to further increase
those specified Taker fees so that they
are more in line with other exchanges,
and will still remain highly competitive
such that they should enable the
Exchange to continue to attract order
flow and maintain market share. The
Exchange believes for these reasons that
increasing certain Taker fees for
transactions in the specified Tiers is
equitable, reasonable and not unfairly
discriminatory, and thus consistent with
the Act.
Furthermore, the proposed
adjustments to the Taker fees promotes
just and equitable principles of trade,
fosters cooperation and coordination
with persons engaged in facilitating
transactions in securities, and protects
investors and the public interest,
because even with the increases to
Taker fees, the Exchange’s proposed
Taker fees for such orders still remain
highly competitive with certain other
options exchanges offering comparable
pricing models, and should enable the
Exchange to continue to attract order
flow and maintain market share.25 The
Exchange believes that the amount of
such fees, as proposed to be adjusted,
will continue to encourage those market
participants to send orders to the
Exchange.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
changes in the specified Taker fees for
the applicable market participants
should continue to encourage the
provision of liquidity that enhances the
quality of the Exchange’s market and
increases the number of trading
opportunities on the Exchange for all
participants who will be able to
compete for such opportunities. The
proposed rule changes 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
24 See
23 See
PO 00000
supra note 16.
Frm 00082
Fmt 4703
25 See
Sfmt 4703
20001
E:\FR\FM\09APN1.SGM
supra notes 11 and 12.
id.
09APN1
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Federal Register / Vol. 85, No. 69 / Thursday, April 9, 2020 / Notices
participants the opportunity to receive
the benefit of competitive pricing.
The proposed Taker fee adjustments
are intended to keep the Exchange’s fees
highly competitive with those of other
exchanges, and to encourage liquidity
and should enable the Exchange to
continue to attract and compete for
order flow with other exchanges. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive. In such an environment, the
Exchange must continually adjust its
rebates and fees to remain competitive
with other exchanges and to attract
order flow. The Exchange believes that
the proposed rule changes reflect this
competitive environment because they
modify the Exchange’s fees in a manner
that encourages market participants to
continue to provide liquidity and to
send order flow to the Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,26 and Rule
19b–4(f)(2) 27 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
khammond on DSKJM1Z7X2PROD with NOTICES
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–2020–05 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–2020–05. 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–2020–05, and
should be submitted on or before April
30, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07439 Filed 4–8–20; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88562; File No. SR–NYSE–
2020–29]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Add
Commentary .03 to Rule 7.35C
April 3, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on April 3,
2020, New York Stock Exchange LLC
(‘‘NYSE’’ 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 add
Commentary .03 to Rule 7.35C to
provide that, for a temporary period that
begins April 6, 2020, and ends on the
earlier of the reopening of the Trading
Floor facilities or after the Exchange
closes on May 15, 2020, certain DMM
Interest would not be cancelled
following an Exchange-facilitated
Auction. The proposed rule change is
available on the Exchange’s website at
www.nyse.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
In its filing with the Commission, the
self-regulatory organization 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 those 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 parts of such
statements.
BILLING CODE 8011–01–P
1 15
26 15
U.S.C. 78s(b)(3)(A)(ii).
27 17 CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
16:28 Apr 08, 2020
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
28 17
Jkt 250001
PO 00000
CFR 200.30–3(a)(12).
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09APN1
]]>Agencies
[Federal Register Volume 85, Number 69 (Thursday, April 9, 2020)]
[Notices]
[Pages 19996-20002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07439]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88554; File No. SR-PEARL-2020-05]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Fee
Schedule
April 3, 2020.
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 31, 2020, 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
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
[[Page 19997]]
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) Increase Taker
(as defined below) fees in certain Tiers for options transactions in
Penny classes (including SPY, QQQ, and IWM options classes) and non-
Penny classes (as defined below) for Priority Customers; \3\ (ii)
increase Taker fees in certain Tiers for options transactions in Penny
and non-Penny classes for MIAX PEARL Market Makers; \4\ and (iii)
increase Taker fees in certain Tiers for options transactions in Penny
and non-Penny classes for Non-Priority Customers, Firms, Broker-Dealers
and Non-MIAX PEARL Market Makers (collectively herein ``Professional
Members'').
---------------------------------------------------------------------------
\3\ ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100, including Interpretation and Policy .01.
\4\ ``Market Maker'' means a Member registered with the Exchange
for the purpose of making markets in options contracts traded on the
Exchange. See the Definitions Section of the Fee Schedule and
Exchange Rule 100.
---------------------------------------------------------------------------
Background
The Exchange currently assesses transaction rebates and fees to all
market participants which are based upon the total monthly volume
executed by the Member \5\ on MIAX PEARL in the relevant, respective
origin type (not including Excluded Contracts) \6\ expressed as a
percentage of TCV.\7\ In addition, the per contract transaction rebates
and fees are applied retroactively to all eligible volume for that
origin type once the respective threshold tier (``Tier'') has been
reached by the Member. The Exchange aggregates the volume of Members
and their Affiliates.\8\ Members that place resting liquidity, i.e.,
orders resting on the book of the MIAX PEARL System,\9\ are paid the
specified ``maker'' rebate (each a ``Maker''), and Members that execute
against resting liquidity are assessed the specified ``taker'' fee
(each a ``Taker''). For opening transactions and ABBO uncrossing
transactions, per contract transaction rebates and fees are waived for
all market participants. Finally, Members are assessed lower
transaction fees and receive lower rebates for order executions in
standard option classes in the Penny Pilot Program \10\ (``Penny
classes'') than for order executions in standard option classes which
are not in the Penny Pilot Program (``non-Penny classes''), where
Members are assessed higher transaction fees and receive higher
rebates.
---------------------------------------------------------------------------
\5\ ``Member'' means an individual or organization that is
registered with the Exchange pursuant to Chapter II of the Exchange
Rules for purposes of trading on the Exchange as an ``Electronic
Exchange Member'' or ``Market Maker.'' Members are deemed
``members'' under the Exchange Act. See the Definitions Section of
the Fee Schedule and Exchange Rule 100.
\6\ ``Excluded Contracts'' means any contracts routed to an away
market for execution. See the Definitions Section of the Fee
Schedule.
\7\ ``TCV'' means total consolidated volume calculated as the
total national volume in those classes listed on MIAX PEARL for the
month for which the fees apply, excluding consolidated volume
executed during the period time in which the Exchange experiences an
``Exchange System Disruption'' (solely in the option classes of the
affected Matching Engine (as defined below)). The term Exchange
System Disruption, which is defined in the Definitions section of
the Fee Schedule, means an outage of a Matching Engine or collective
Matching Engines for a period of two consecutive hours or more,
during trading hours. The term Matching Engine, which is also
defined in the Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes options orders and
trades on a symbol-by-symbol basis. Some Matching Engines will
process option classes with multiple root symbols, and other
Matching Engines may be dedicated to one single option root symbol
(for example, options on SPY may be processed by one single Matching
Engine that is dedicated only to SPY). A particular root symbol may
only be assigned to a single designated Matching Engine. A
particular root symbol may not be assigned to multiple Matching
Engines. The Exchange believes that it is reasonable and appropriate
to select two consecutive hours as the amount of time necessary to
constitute an Exchange System Disruption, as two hours equates to
approximately 1.4% of available trading time per month. The Exchange
notes that the term ``Exchange System Disruption'' and its meaning
have no applicability outside of the Fee Schedule, as it is used
solely for purposes of calculating volume for the threshold tiers in
the Fee Schedule. See the Definitions Section of the Fee Schedule.
\8\ ``Affiliate'' means (i) an affiliate of a Member of at least
75% common ownership between the firms as reflected on each firm's
Form BD, Schedule A, or (ii) the Appointed Market Maker of an
Appointed EEM (or, conversely, the Appointed EEM of an Appointed
Market Maker). An ``Appointed Market Maker'' is a MIAX PEARL Market
Maker (who does not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has been appointed by an EEM
and an ``Appointed EEM'' is an EEM (who does not otherwise have a
corporate affiliation based upon common ownership with a MIAX PEARL
Market Maker) that has been appointed by a MIAX PEARL Market Maker,
pursuant to the process described in the Fee Schedule. See the
Definitions Section of the Fee Schedule.
\9\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\10\ See Securities Exchange Act Release No. 84865 (December 19,
2018), 83 FR 66813 (December 27, 2018) (SR-PEARL-2018-26).
---------------------------------------------------------------------------
Transaction rebates and fees in Section (1)(a) of the Fee Schedule
are currently assessed according to the following tables:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny Per contract rebates/
classes fees for non-penny
Origin Tier Volume criteria -------------------------------------------- classes
QQQ, IWM ---------------------
Maker Taker * SPY taker taker Maker Taker
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer.......................... 1 0.00%-0.10%................... ($0.25) $0.48 $0.43 $0.44 ($0.85) $0.84
2 Above 0.10%-0.35%............. (0.40) 0.48 0.43 0.44 (0.95) 0.84
3 Above 0.35%-0.50%............. (0.45) 0.46 0.42 0.44 (1.00) 0.84
4 Above 0.50%-0.75%............. (0.51) 0.45 0.41 0.43 (1.03) 0.84
5 Above 0.75%-1.25%............. (0.52) 0.44 0.40 0.42 (1.04) 0.84
6 Above 1.25%................... (0.52) 0.43 0.38 0.40 (1.04) 0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny Classes other than SPY, QQQ, and IWM.
[[Page 19998]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
-------------------------------------------------------- fees for non-penny
Maker Maker Taker Taker classes
Origin Tier Volume criteria (contra (contra (contra (contra ---------------------
origins ex priority origins ex priority
priority customer priority customer Maker ** Taker **
customer) origin) customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX PEARL Market Makers......... 1 0.00%-0.15%............. ($0.25) ($0.23) $0.50 $0.50 ($0.30) $1.10
2 Above 0.15%-0.40% or (0.40) (0.38) 0.50 0.50 (0.30) 1.10
Above 0.45% in SPY/QQQ/
IWM.
3 Above 0.40%-0.65%....... (0.40) (0.38) 0.49 0.50 (0.60) 1.09
4 Above 0.65%-1.00% or (0.47) (0.45) 0.48 0.49 (0.65) 1.08
Above 2.25% in SPY.
5 Above 1.00%-1.40%....... (0.48) (0.46) 0.46 0.47 (0.70) 1.07
6 Above 1.40%............. (0.48) (0.47) 0.45 0.46 (0.85) 1.06
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
-------------------------------------------------------- fees for non-penny
Maker Maker Taker [diam] classes
[supcaret] [supcaret] (contra Taker ------------------------
Origin Tier Volume criteria (contra (contra origins ex (contra
origins ex priority priority priority Maker
priority customer customer) customer **[supcaret] Taker **
customer) origin) 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.
[supcaret] 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.
[diam] 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 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.
Except as otherwise set forth herein, the Volume Criteria is calculated based on the total monthly volume executed by the Member in all options classes
on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) TCV (as the
denominator).
In Tier 2 for MIAX PEARL Market Makers, the alternative Volume Criteria (above 0.45% in SPY/QQQ/IWM) is calculated based on the total monthly volume
executed by the Market Maker collectively in SPY, QQQ, and IWM options on MIAX PEARL in the relevant Origin type, not including Excluded Contracts,
(as the numerator) expressed as a percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator). In Tier 4 for MIAX PEARL Market Makers, the
alternative Volume Criteria (above 2.25% in SPY) is calculated based on the total monthly volume executed by the Market Maker solely in SPY options on
MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) SPY TCV (as the
denominator). The per contract transaction rebates and fees shall be applied retroactively to all eligible volume once the threshold has been reached
by Member. The Exchange aggregates the volume of Members and their Affiliates in the Add/Remove Tiered Fees. The per contract transaction rebates and
fees shall be waived for transactions executed during the opening and for transactions that uncross the ABBO.
Priority Customer Taker Fees
The Exchange proposes to increase Taker fees in certain Tiers for
options transactions in Penny classes (including SPY, QQQ, and IWM
options classes) and non-Penny classes for Priority Customers.
Specifically, the Exchange proposes to increase the Taker fees for
Priority Customer orders in options in certain Penny classes (excluding
SPY, QQQ, and IWM) in Tier 1 from $0.48 to $0.50, in Tier 2 from $0.48
to $0.50, in Tier 3 from $0.46 to $0.48, in Tier 4 from $0.45 to $0.47,
in Tier 5 from $0.44 to $0.46, and in Tier 6 from $0.43 to $0.45. The
Exchange next proposes to increase the Taker fees for Priority Customer
orders for SPY options in Tier 1 from $0.43 to $0.46, in Tier 2 from
$0.43 to $0.46, in Tier 3 from $0.42 to $0.45, in Tier 4 from $0.41 to
$0.44, in Tier 5 from $0.40 to $0.43, and in Tier 6 from $0.38 to
$0.42. The Exchange next proposes to increase the Taker fees for
Priority Customer orders for QQQ and IWM options in Tier 1 from $0.44
to $0.50, in Tier 2 from $0.44 to $0.50, in Tier 3 from $0.44 to $0.48,
in Tier 4 from $0.43 to $0.47, in Tier 5 from $0.42
[[Page 19999]]
to $0.46, and in Tier 6 from $0.40 to $0.45. The Exchange next proposes
to increase the Taker fees for Priority Customer orders in options in
non-Penny classes in Tiers 1-6 from $0.84 to $0.85.
Market Maker Taker Fees
Next, the Exchange proposes to increase Taker fees in certain Tiers
for options transactions in Penny and non-Penny classes for Market
Makers. Specifically, the Exchange proposes to increase the Taker fees
for Market Makers for orders contra Origins ex Priority Customer in
Penny classes in Tier 3 from $0.49 to $0.50, in Tier 4 from $0.48 to
$0.49, in Tier 5 from $0.46 to $0.47, and in Tier 6 from $0.45 to
$0.46. The Exchange next proposes to increase the Taker fees for Market
Makers for orders contra Priority Customer in Penny classes in Tier 4
from $0.49 to $0.50, in Tier 5 from $0.47 to $0.48, and in Tier 6 from
$0.46 to $0.47. The Exchange next proposes to increase the Taker fees
for Market Maker orders in options in non-Penny classes in Tier 3 from
$1.09 to $1.10, in Tier 4 from $1.08 to $1.09, in Tier 5 from $1.07 to
$1.08, and in Tier 6 from $1.06 to $1.07.
Professional Customer Taker Fees
Next, the Exchange proposes to increase Taker fees in certain Tiers
for options transactions in Penny and non-Penny classes for
Professional Members. Specifically, the Exchange proposes to increase
the Taker fees for Professional Members for orders contra Origins ex
Priority Customer in Penny classes in Tier 3 from $0.49 to $0.50, in
Tier 4 from $0.49 to $0.50, in Tier 5 from $0.48 to $0.49, and in Tier
6 from $0.48 to $0.49. The Exchange next proposes to increase the Taker
fees for Professional Member orders in options in non-Penny classes in
Tier 4 from $1.09 to $1.10, in Tier 5 from $1.08 to $1.09, and in Tier
6 from $1.07 to $1.09.
The purpose of the proposed changes to adjust the specified Taker
fees is for business and competitive reasons. In order to attract order
flow, the Exchange initially set its Taker fees so that they were
meaningfully lower than other options exchanges that operate comparable
maker/taker pricing models.\11\ The Exchange now believes that it is
appropriate to further adjust these specified Taker fees so that they
are more in line with other exchanges, but will still remain highly
competitive such that they should enable the Exchange to continue to
attract order flow and maintain market share.\12\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release Nos. 80915 (June 13,
2017), 82 FR 27912 (June 19, 2017) (SR-PEARL-2017-29); 80914 (June
13, 2017), 82 FR 27910 (June 19, 2017) (SR-PEARL-2017-30).
\12\ See Cboe BZX Options Exchange Fee Schedule, under
``Transaction Fees.''
---------------------------------------------------------------------------
With all proposed changes, Section (1)(a) of the Fee Schedule shall
be the following:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny Per contract rebates/
classes fees for non-penny
Origin Tier Volume criteria -------------------------------------------- classes
QQQ, IWM ---------------------
Maker Taker * SPY taker taker Maker Taker
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer.......................... 1 0.00%-0.10%................... ($0.25) $0.50 $0.46 $0.50 ($0.85) $0.85
2 Above 0.10%-0.35%............. (0.40) 0.50 0.46 0.50 (0.95) 0.85
3 Above 0.35%-0.50%............. (0.45) 0.48 0.45 0.48 (1.00) 0.85
4 Above 0.50%-0.75%............. (0.51) 0.47 0.44 0.47 (1.03) 0.85
5 Above 0.75%-1.25%............. (0.52) 0.46 0.43 0.46 (1.04) 0.85
6 Above 1.25%................... (0.52) 0.45 0.42 0.45 (1.04) 0.85
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny Classes other than SPY, QQQ, and IWM.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
-------------------------------------------------------- fees for non-penny
Maker Maker Taker Taker classes
Origin Tier Volume criteria (contra (contra (contra (contra ---------------------
origins ex priority origins ex priority
priority customer priority customer Maker ** Taker **
customer) origin) customer) origin)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX PEARL Market Makers......... 1 0.00%-0.15%............. ($0.25) ($0.23) $0.50 $0.50 ($0.30) $1.10
2 Above 0.15%-0.40% or (0.40) (0.38) 0.50 0.50 (0.30) 1.10
Above 0.45% in SPY/QQQ/
IWM.
3 Above 0.40%-0.65%....... (0.40) (0.38) 0.50 0.50 (0.60) 1.10
4 Above 0.65%-1.00% or (0.47) (0.45) 0.49 0.50 (0.65) 1.09
Above 2.25% in SPY.
5 Above 1.00%-1.40%....... (0.48) (0.46) 0.47 0.48 (0.70) 1.08
6 Above 1.40%............. (0.48) (0.47) 0.46 0.47 (0.85) 1.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 20000]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per contract rebates/fees for penny classes Per contract rebates/
-------------------------------------------------------- fees for non-penny
Maker Maker Taker [diam] classes
[supcaret] [supcaret] (contra Taker ------------------------
Origin Tier Volume criteria (contra (contra origins ex (contra
origins ex priority priority priority Maker
priority customer customer) customer **[supcaret] Taker **
customer) origin) 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) 0.50 0.50 (0.60) 1.10
4 Above 0.65%-1.00%..... (0.47) (0.45) 0.50 0.50 (0.65) 1.10
5 Above 1.00%-1.40%..... (0.48) (0.46) 0.49 0.50 (0.70) 1.09
6 Above 1.40%........... (0.48) (0.46) 0.49 0.50 (0.85) 1.09
--------------------------------------------------------------------------------------------------------------------------------------------------------
** 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.
[supcaret] 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.
[diam] 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 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.
Except as otherwise set forth herein, the Volume Criteria is calculated based on the total monthly volume executed by the Member in all options classes
on MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) TCV (as the
denominator).
In Tier 2 for MIAX PEARL Market Makers, the alternative Volume Criteria (above 0.45% in SPY/QQQ/IWM) is calculated based on the total monthly volume
executed by the Market Maker collectively in SPY, QQQ, and IWM options on MIAX PEARL in the relevant Origin type, not including Excluded Contracts,
(as the numerator) expressed as a percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator). In Tier 4 for MIAX PEARL Market Makers, the
alternative Volume Criteria (above 2.25% in SPY) is calculated based on the total monthly volume executed by the Market Maker solely in SPY options on
MIAX PEARL in the relevant Origin type, not including Excluded Contracts, (as the numerator) expressed as a percentage of (divided by) SPY TCV (as the
denominator). The per contract transaction rebates and fees shall be applied retroactively to all eligible volume once the threshold has been reached
by Member. The Exchange aggregates the volume of Members and their Affiliates in the Add/Remove Tiered Fees. The per contract transaction rebates and
fees shall be waived for transactions executed during the opening and for transactions that uncross the ABBO.
The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \13\
---------------------------------------------------------------------------
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------
There are currently 16 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based options, no single exchange has more than approximately 15%
market share.\14\ Therefore, no exchange possesses significant pricing
power. More specifically, as of March 24, 2020, the Exchange had an
approximately 4.03% market share of executed volume of multiply-listed
equity and exchange traded fund (``ETF'') options for the month of
March 2020.\15\ The Exchange believes that the ever-shifting market
share among the exchanges from month to month demonstrates that market
participants can discontinue or reduce use of certain categories of
products and services, terminate an existing membership or determine to
not become a new member, and/or shift order flow, in response to
transaction fee changes. For example, on February 28, 2019, the
Exchange filed with the Commission a proposal to increase Taker fees in
certain Tiers for options transactions in certain Penny classes for
Priority Customers and decrease Maker rebates in certain Tiers for
options transactions in Penny classes for Priority Customers (which fee
was to be effective March 1, 2019).\16\ The Exchange experienced a
decrease in total market share for the month of March 2019, after the
proposal went into effect. Accordingly, the Exchange believes that the
March 1, 2019 fee change, to increase certain transaction fees and
decrease certain transaction rebates, may have contributed to the
decrease in the Exchange's market share and, as such, the Exchange
believes competitive forces constrain MIAX PEARL's, and other options
exchanges, ability to set transaction fees and market participants can
shift order flow based on fee changes instituted by the exchanges.
---------------------------------------------------------------------------
\14\ The Options Clearing Corporation (``OCC'') publishes
options and futures volume in a variety of formats, including daily
and monthly volume by exchange, available here: https://www.theocc.com/market-data/volume/default.jsp.
\15\ See id.
\16\ See Securities Exchange Act Release No. 85304 (March 13,
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
---------------------------------------------------------------------------
The proposed changes are scheduled to become operative April 1,
2020.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \17\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\18\ 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,\19\ in that it is designed to
prevent fraudulent and manipulative
[[Page 20001]]
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.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(4).
\19\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------
The Exchange believes its proposal to increase Taker fees in
certain Tiers for options transactions in Penny classes (including SPY,
QQQ, and IWM options classes) and non-Penny classes for Priority
Customers, increase Taker fees in certain Tiers for options
transactions in Penny and non-Penny classes for Market Makers, and
increase Taker fees in certain Tiers for options transactions in Penny
and non-Penny classes for Professional Members provides for the
equitable allocation of reasonable dues and fees and is not unfairly
discriminatory for the following reasons. The Exchange operates in a
highly competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \20\ There are currently
16 registered options exchanges competing for order flow. Based on
publicly-available information, and excluding index-based options, no
single exchange has more than approximately 15% of the market share of
executed volume of multiply-listed equity and ETF options trades as of
March 24, 2020, for the month of March 2020.\21\ Therefore, no exchange
possesses significant pricing power in the execution of multiply-listed
equity and ETF options order flow. More specifically, as of March 24,
2020, the Exchange had an approximately 4.03% market share of executed
volume of multiply-listed equity and ETF options for the month of March
2020.\22\
---------------------------------------------------------------------------
\20\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
\21\ See supra note 15.
\22\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market shares among
the exchanges from month to month demonstrates that market participants
can shift order flow, or discontinue or reduce use of certain
categories of products, in response to transaction and/or non-
transaction fee changes. For example, on February 28, 2019, the
Exchange filed with the Commission a proposal to increase Taker fees in
certain Tiers for options transactions in certain Penny classes for
Priority Customers and decrease Maker rebates in certain Tiers for
options transactions in Penny classes for Priority Customers (which fee
was to be effective March 1, 2019).\23\ The Exchange experienced a
decrease in total market share between the months of February and March
of 2019, after the fees were in effect. Accordingly, the Exchange
believes that the March 1, 2019 fee change may have contributed to the
decrease in the Exchange's market share and, as such, the Exchange
believes competitive forces constrain options exchange transaction fees
and market participants can shift order flow based on fee changes
instituted by the exchanges.
---------------------------------------------------------------------------
\23\ See supra note 16.
---------------------------------------------------------------------------
The Exchange believes that its proposal to increase Taker fees in
certain Tiers for options transactions in Penny classes (including SPY,
QQQ, and IWM options classes) and non-Penny classes for Priority
Customers, increase Taker fees in certain Tiers for options
transactions in Penny and non-Penny classes for Market Makers, and
increase Taker fees in certain Tiers for options transactions in Penny
and non-Penny classes for Professional Members is reasonable, equitably
allocated and not unfairly discriminatory because these changes are for
business and competitive reasons. The Exchange cannot predict with
certainty the number of market participants that would qualify for the
higher Taker fees for each of the proposed changes as Members may
continually shift among the different Tiers from month to month. The
Exchange further believes that it is appropriate to increase the Taker
fees for Priority Customers in SPY, QQQ and IWM options classes because
these select products are generally more liquid than other options
classes.
Further, the Exchange believes the proposed Taker fee adjustments
in certain specified Tiers applicable to certain orders submitted by
Priority Customers in Penny classes and non-Penny classes, Market
Makers in Penny classes and non-Penny classes, and Professional Members
in Penny classes and non-Penny classes are reasonable, equitable and
not unfairly discriminatory because all similarly situated market
participants in the same Origin type are subject to the same tiered
Taker fees and access to the Exchange is offered on terms that are not
unfairly discriminatory. For competitive and business reasons, the
Exchange initially set its Taker fees for such orders generally lower
than certain other options exchanges that operate comparable maker/
taker pricing models.\24\ The Exchange now believes that it is
appropriate to further increase those specified Taker fees so that they
are more in line with other exchanges, and will still remain highly
competitive such that they should enable the Exchange to continue to
attract order flow and maintain market share. The Exchange believes for
these reasons that increasing certain Taker fees for transactions in
the specified Tiers is equitable, reasonable and not unfairly
discriminatory, and thus consistent with the Act.
---------------------------------------------------------------------------
\24\ See supra notes 11 and 12.
---------------------------------------------------------------------------
Furthermore, the proposed adjustments to the Taker fees promotes
just and equitable principles of trade, fosters cooperation and
coordination with persons engaged in facilitating transactions in
securities, and protects investors and the public interest, because
even with the increases to Taker fees, the Exchange's proposed Taker
fees for such orders still remain highly competitive with certain other
options exchanges offering comparable pricing models, and should enable
the Exchange to continue to attract order flow and maintain market
share.\25\ The Exchange believes that the amount of such fees, as
proposed to be adjusted, will continue to encourage those market
participants to send orders to the Exchange.
---------------------------------------------------------------------------
\25\ See id.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
proposed changes in the specified Taker fees for the applicable market
participants should continue to encourage the provision of liquidity
that enhances the quality of the Exchange's market and increases the
number of trading opportunities on the Exchange for all participants
who will be able to compete for such opportunities. The proposed rule
changes 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
[[Page 20002]]
participants the opportunity to receive the benefit of competitive
pricing.
The proposed Taker fee adjustments are intended to keep the
Exchange's fees highly competitive with those of other exchanges, and
to encourage liquidity and should enable the Exchange to continue to
attract and compete for order flow with other exchanges. The Exchange
notes that it operates in a highly competitive market in which market
participants can readily favor competing venues if they deem fee levels
at a particular venue to be excessive. In such an environment, the
Exchange must continually adjust its rebates and fees to remain
competitive with other exchanges and to attract order flow. The
Exchange believes that the proposed rule changes reflect this
competitive environment because they modify the Exchange's fees in a
manner that encourages market participants to continue to provide
liquidity and to send order flow to the Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\26\ and Rule 19b-4(f)(2) \27\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
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\26\ 15 U.S.C. 78s(b)(3)(A)(ii).
\27\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-PEARL-2020-05 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-2020-05. 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-2020-05, and should be submitted
on or before April 30, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07439 Filed 4-8-20; 8:45 am]
BILLING CODE 8011-01-P
