Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule, 56281-56284 [2020-20022]

Download as PDF Federal Register / Vol. 85, No. 177 / Friday, September 11, 2020 / Notices For the Nuclear Regulatory Commission. David C. Cullison, NRC Clearance Officer, Office of the Chief Information Officer. BILLING CODE 7590–01–P NUCLEAR REGULATORY COMMISSION [NRC–2020–0196] Intent and Scope of the Physical Protection Upgrade Rule Requirements for Fixed Sites Nuclear Regulatory Commission. ACTION: Regulatory guide; withdrawal. AGENCY: The U.S. Nuclear Regulatory Commission (NRC) is withdrawing Regulatory Guide (RG) 5.61, ‘‘Intent and Scope of the Physical Protection Upgrade Rule Requirements for Fixed Sites.’’ This document is being withdrawn because the information in RG 5.61 is no longer needed. The reasons for the withdrawal are described in more detail under the ‘‘Background’’ Section of this document. DATES: The withdrawal of RG 5.61 takes effect on September 11, 2020. ADDRESSES: Please refer to Docket ID NRC–2020–0196 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods: • Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC–2020–0196. Address questions about NRC docket IDs in regulations.gov to Jennifer Borges; telephone: 301–287–9127; email: Jennifer.Borges@nrc.gov. For technical questions, contact the individuals listed in the FOR FURTHER INFORMATION CONTACT section of this document. • NRC’s Agencywide Documents Access and Management System (ADAMS): You may obtain publiclyavailable documents online in the ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/ adams.html. To begin the search, select ‘‘Begin Web-based ADAMS Search.’’ For problems with ADAMS, please contact the NRC’s Public Document Room reference staff at 1–800–397–4209, 301– 415–4737, or by email to pdr.resource@ nrc.gov. The ADAMS accession number for each document referenced (if it available in ADAMS) is provided the first time that a document is referenced. The basis for withdrawal of RG 5.61 is available in ADAMS under Accession No. ML20225A307. SUMMARY: VerDate Sep<11>2014 20:54 Sep 10, 2020 Jkt 250001 Tim Harris, Office of Nuclear Security Incident Response, telephone: 301–287– 3594, email: Tim.Harris@nrc.gov and Mekonen Bayssie, Office of Nuclear Regulatory Research, telephone: 301– 415–1669, email: Mekonen.Bayssie@ nrc.gov. Both are staff of the U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001. SUPPLEMENTARY INFORMATION: Dated: September 1, 2020. For the Nuclear Regulatory Commission. Meraj Rahimi, Chief, Regulatory Guidance and Generic Issues Branch, Division of Engineering, Office of Nuclear Regulatory Research. I. Background SECURITIES AND EXCHANGE COMMISSION FOR FURTHER INFORMATION CONTACT: [FR Doc. 2020–20043 Filed 9–10–20; 8:45 am] 56281 Regulatory Guide 5.61 was published in July 1980 to provide guidance to affected licensees in revising their physical protection plans in response to the requirements in part 73 of title 10 of the Code of Federal Regulations (10 CFR), ‘‘Physical Protection of Plants and Materials’’ (November 28, 1979; 44 FR 68184). The RG explains the link between the performance capabilities provided in 10 CFR 73.45 and the fixed site physical protection system requirements in 10 CFR 73.46. Future applicants and licensees may use other more relevant regulatory guidance documents to meet those regulatory requirements. The NRC is withdrawing RG 5.61, ‘‘Intent and Scope of the Physical Protection Upgrade Rule Requirements for Fixed Sites,’’ because the guide is no longer needed for several reasons. First, the regulatory requirements in 10 CFR 73.45 and 73.46 have not changed since 1979 and are well understood by existing licensees. Second, no new licensees that would possess and use formula quantities of strategic special nuclear material are expected in the foreseeable future. Third, the RG is predominately explanatory of the rulemaking rather than guidance on how to comply with the applicable requirements. Lastly, other guidance on developing security plans to meet the physical protection requirements in 10 CFR 73.46 are available. The basis for withdrawal of RG 5.61 is available in ADAMS under Accession No. ML20225A307. II. General Consideration The withdrawal of RG 5.61 does not alter any prior or existing NRC licensing approvals, or the acceptability of licensee commitments made regarding the withdrawn guidance. Although RG 5.61 is withdrawn, current licensees referencing this RG may continue to do so, and withdrawal does not affect any existing licenses or agreements. However, by withdrawing RG 5.61, the NRC no longer approves use of the guidance in future requests or applications for NRC licensing actions. PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 [FR Doc. 2020–19713 Filed 9–10–20; 8:45 am] BILLING CODE 7590–01–P [Release No. 34–89774; File No. SR– PEARL–2020–12] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule September 4, 2020. 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 August 25, 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’’) to increase the number of additional Limited Service MIAX Express Order Interface (‘‘MEO’’) Ports available to Market Makers.3 The Exchange does not propose to amend the fees for additional Limited Service MEO Ports. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal office, and at the Commission’s Public Reference Room. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The term ‘‘Market Maker’’ or ‘‘MM’’ means a Member registered with the Exchange for the purpose of making markets in options contracts traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of the Exchange’s Rules. See Exchange Rule 100. 2 17 E:\FR\FM\11SEN1.SGM 11SEN1 56282 Federal Register / Vol. 85, No. 177 / Friday, September 11, 2020 / Notices II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule to offer two (2) additional Limited Service MEO Ports to Market Makers. The Exchange does not propose to amend the fees charged for the additional Limited Service MEO Ports. The Exchange initially filed the proposal to increase the number of Limited Service MEO Ports available to Market Makers on June 30, 2020, with no change to the actual fee amounts being charged.4 The First Proposed Rule Change was published for comment in the Federal Register on July 20, 2020.5 On August 25, 2020, the Exchange withdrew the First Proposed Rule Change.6 The Exchange notes that the First Proposed Rule Change did not receive any comment letters; however, the Exchange has determined to refile its proposal to increase the number of Limited Service MEO Ports available to Market Makers (without increasing the actual fee amounts) to provide further clarification regarding the Exchange’s annual cost for providing additional Limited Service MEO Ports. The Exchange currently offers different options of MEO Ports depending on the services required by an Exchange Member,7 including a Full 4 See Securities Exchange Act Release No. 89316 (July 14, 2020), 85 FR 43898 (July 20, 2020) (SR– PEARL–2020–09) (the ‘‘First Proposed Rule Change’’). 5 Id. 6 See Comment Letter from Christopher Solgan, VP, Senior Counsel, the Exchange, dated August 24, 2020, notifying the Commission that the Exchange will withdraw the First Proposed Rule Change. 7 The term ‘‘Member’’ means an individual or organization that is registered with the Exchange pursuant to Chapter II of these Rules for purposes of trading on the Exchange as an ‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’ Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. VerDate Sep<11>2014 21:35 Sep 10, 2020 Jkt 250001 Service MEO Port-Bulk,8 a Full Service MEO Port-Single,9 and a Limited Service MEO Port.10 Currently, a Member may be allocated two (2) FullService MEO Ports of either type, Bulk and/or Single, per Matching Engine, and up to eight (8) Limited Service MEO Ports, per Matching Engine. The two (2) Full-Service MEO Ports that may be allocated per Matching Engine to a Member currently may consist of: (a) Two (2) Full Service MEO Ports—Bulk; or (b) two (2) Full Service MEO Ports— Single. The Exchange also has a third option, option (c), which permits a Member to have one (1) Full Service MEO Port—Bulk, and one (1) Full Service MEO Port—Single. The Exchange currently provides Market Makers the first two (2) requested Limited Service MEO Ports free of charge and charges $200 per month for Limited Service MEO Ports three (3) and four (4), $300 per month for Limited Service MEO Ports five (5) and six (6), and $400 per month for Limited Service MEO Ports seven (7) and eight (8). These fees have been unchanged since they were adopted in 2018.11 The Exchange originally added the Limited Service MEO Ports to enhance the MEO Port connectivity made available to Market Makers. Limited Service MEO Ports have been well received by Market Makers since their addition. The Exchange now proposes to offer to Market Makers the ability to purchase an additional two (2) Limited Service MEO Ports per matching engine over and above the current six (6) additional Limited Service MEO Ports per matching engine that are available for purchase by Market Makers. The Exchange proposes making a corresponding change to the text in the Port Fee table and to the text below the Port Fee table in Section 5(d) of the Fee Schedule to specify that Market Makers will now be limited to purchasing eight (8) additional Limited Service MEO Ports per matching engine, for a total of ten (10) per matching engine. All fees 8 ‘‘Full Service MEO Port—Bulk’’ means an MEO port that supports all MEO input message types and binary bulk order entry. See the Definitions Section of the Fee Schedule. 9 ‘‘Full Service MEO Port—Single’’ means an MEO port that supports all MEO input message types and binary order entry on a single order-byorder basis, but not bulk orders. See the Definitions Section of the Fee Schedule. 10 ‘‘Limited Service MEO Port’’ means an MEO port that supports all MEO input message types, but does not support bulk order entry and only supports limited order types, as specified by the Exchange via Regulatory Circular. See the Definitions Section of the Fee Schedule. 11 See Securities Exchange Act Release No. 83867 (March 13, 2018), 83 FR 12044 (March 19, 2018) (SR–PEARL–2018–07). PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 related to MEO Ports shall remain unchanged and Market Makers that voluntarily purchase the additional ninth or tenth Limited Service MEO Ports will be subject to the existing $400 monthly fee per port that is charged to Market Makers that request a seventh or eighth Limited Service MEO Port. The Exchange is increasing the number of additional Limited Service MEO Ports because the Exchange is expanding its network. This network expansion is necessary due to increased customer demand and increased volatility in the marketplace, both of which have translated into increased message traffic rates across the network. Consequently, this network expansion, which increases the number of switches supporting customer facing systems, is necessary in order to provide sufficient access to new and existing Members, to maintain a sufficient amount of network capacity head-room, and to continue to provide the same level of service across the Exchange’s low-latency, highthroughput technology environment. Currently, the Exchange has 8 network switches that support the entire customer base of MIAX PEARL. The Exchange plans to increase this to 10 switches, which will increase the number of available customer ports by 25%. This increase in the number of available customer ports will enable the Exchange to continue to provide sufficient and equal access to the MIAX PEARL System to all Members. Absent the proposed increase in available MEO Ports, the Exchange projects that its current inventory will be depleted and it will lack sufficient capacity to continue to meet Members’ access needs. 2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act 12 in general, and furthers the objectives of Section 6(b)(5) of the Act 13 in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest and is not designed to permit unfair discrimination between customers, issuers, brokers and dealers. The Exchange believes that its proposal is consistent with the objectives of Section 6(b)(5) of the Act 14 because the proposed additional Limited Service MEO Ports will be 12 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(5). 13 15 E:\FR\FM\11SEN1.SGM 11SEN1 Federal Register / Vol. 85, No. 177 / Friday, September 11, 2020 / Notices available to all Market Makers and the current fees for the additional Limited Service MEO Ports apply equally to all Market Makers regardless of type, and access to the Exchange is offered on terms that are not unfairly discriminatory. The Exchange is proposing to increase the number of available Limited Service MEO Ports because the Exchange is expanding its network. This network expansion is necessary due to increased customer demand and increased volatility in the marketplace, both of which have translated into increased message traffic rates across the network. Consequently, this network expansion, which increases the number of switches supporting customer facing systems, is necessary in order to provide sufficient and equal access to new and existing Members, to maintain a sufficient amount of network capacity head-room, and to continue to provide the same level of service across the Exchange’s low-latency, high-throughput technology environment. Currently, the Exchange has 8 network switches that support the entire customer base of MIAX PEARL. The Exchange plans to increase this to 10 switches, which will increase the number of available customer ports by 25%. This increase in the number of available customer ports will enable the Exchange to continue to provide sufficient and equal access to MIAX PEARL Systems for all Members. Absent the proposed increase in available MEO Ports, the Exchange projects that its current inventory will be depleted and it will lack sufficient capacity to continue to meet Members’ access needs. Further, the Exchange notes that decision of whether to purchase two additional Limited Service MEO Ports is completely optional and it is a business decision for each Market Maker to determine whether the additional Limited Service MEO Ports are necessary to meet their business requirements. The Exchange further believes that the availability of the additional Limited Service MEO Ports is equitable and not unfairly discriminatory because it will enable Market Makers to maintain uninterrupted access to the MIAX PEARL System and consequently enhance the marketplace by helping Market Makers to better manage risk, thus preserving the integrity of the MIAX markets, all to the benefit of and protection of investors and the public as a whole. The Exchange also believes that its proposal is consistent with Section 6(b)(4) of the Act because only Market Makers that voluntarily purchase the VerDate Sep<11>2014 20:54 Sep 10, 2020 Jkt 250001 two additional Limited Service MEO Ports will be charged the existing $400 monthly fee per port applicable to ports seven (7) and eight (8), which has been unchanged since adopted 2018.15 The Exchange does not propose to amend the fees applicable to additional Limited Service MEO Ports which have been previously filed with the Commission and become effective after notice and public comment.16 As stated above, the Exchange proposes to expand its network by making available two additional Limit Service MEO Ports due to increased customer demand and increased volatility in the marketplace, both of which have translated into increased message traffic rates across the network. The cost to expand the network in this manner is greater than the revenue the Exchange anticipates the additional Limited Service MEO Ports will generate. Specifically, the Exchange estimates it will incur a onetime cost of approximately $175,000 in capital expenditures on hardware, software, and other items to expand the network to make available the two additional Limited Service MEO Ports. This estimated cost also includes expense associated with providing the necessary engineering and support personnel to transition those Market Makers who wish to acquire the two additional Limited Service MEO Ports. The Exchange projects that approximately six or seven Market Makers will elect to purchase the additional Limited Service MEO Ports, which will be subject to the existing monthly fee of $400 per port applicable to ports seven (7) and eight (8). Accordingly, the Exchange projects that the annualized revenue from the two additional Limited Service MEO Ports will be approximately $67,200 (assuming that seven Market Makers purchase the two additional Limited Service MEO Ports). Therefore, the Exchange’s cost in expanding its network to provide its Members with the two additional Limited Service MEO Ports—approximately $175,000—is clearly greater than the anticipated annualized revenue the Exchange expects to bring in from the two additional Limited Service MEO Ports— approximately $67,200. Further, the Exchange anticipates it will incur approximately $88,636 in annual ongoing operating expense in order to support the expanded network and the two additional Limited Service MEO Ports. Thus, the Exchange is not generating a supra-competitive profit from the provision of these two 15 See supra note 11. PO 00000 Frm 00072 additional Limited Service MEO Ports. In fact, even excluding the one-time capital expenditure cost of $175,000, the Exchange anticipates generating an annual loss from the provision of these two additional Limited Service MEO Ports of ($26,136)—that is, $67,200 in revenue minus $88,636 in expense equates to a loss of ($26,136) to support the additional ports annually. Subjecting the two additional Limited Service MEO Ports to the existing $400 monthly fee per port applicable to ports seven (7) and eight (8) is also designed to encourage Market Makers to be efficient with their port usage, thereby resulting in a corresponding increase in the efficiency that the Exchange would be able to realize in managing its aggregate costs for providing the two additional ports. There is no requirement that any Market Maker maintain a specific number of Limited Service MEO Ports and a Market Maker may choose to maintain as many or as few of such ports as each Market Maker deems appropriate. Finally, subjecting the two additional Limited Service MEO Ports to the existing $400 monthly fee applicable to ports seven (7) and eight (8) will help to encourage Limited Service MEO Port usage in a way that aligns with the Exchange’s regulatory obligations. As a national securities exchange, the Exchange is subject to Regulation Systems Compliance and Integrity (‘‘Reg. SCI’’).17 Reg. SCI Rule 1001(a) requires that the Exchange establish, maintain, and enforce written policies and procedures reasonably designed to ensure (among other things) that its Reg. SCI systems have levels of capacity adequate to maintain the Exchange’s operational capability and promote the maintenance of fair and orderly markets.18 By encouraging Members to be efficient with their usage of Limited MEO Ports, the current fee that will continue to apply to the proposed two (2) additional Limited Service MEO Ports will support the Exchange’s Reg. SCI obligations in this regard by ensuring that unused ports are available to be allocated based on individual Members needs and as the Exchange’s overall order and trade volumes increase. B. Self-Regulatory Organization’s Statement on Burden on Competition MIAX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. 17 17 16 Id. 18 17 Fmt 4703 Sfmt 4703 56283 E:\FR\FM\11SEN1.SGM CFR 242.1000–1007. CFR 242.1001(a). 11SEN1 56284 Federal Register / Vol. 85, No. 177 / Friday, September 11, 2020 / Notices The proposed rule change will not impose a burden on competition but will benefit competition by enhancing the Exchange’s ability to compete by providing additional services to market participants. It is not intended to address a competitive issue. Rather, the proposed increase in the number of additional Limited Service MEO Ports available per Market Maker is intended to allow the Exchange to increase its inventory of MEO Ports to meet increased Member demand. The Exchange is increasing the number of available additional Limited Service MEO Ports in response to Market Maker demand for increased connectivity to the MIAX PEARL System. The Exchange’s current inventory may soon be insufficient to meet those needs. Again, the Exchange is not proposing to amend the fees for MEO Ports, just to increase the number of MEO Ports available per Market Maker. The Exchange also does not believe that the proposed rule change will impose a burden on intramarket competition because the two additional Limited Service MEO Ports will be available to all Market Makers on an equal basis. It is a business decision of each Market Maker whether to pay for the additional Limited Service MEO Ports. 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,19 and Rule 19b–4(f)(2) 20 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 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–2020–12 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–PEARL–2020–12. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–PEARL–2020–12 and should be submitted on or before October 2, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–20022 Filed 9–10–20; 8:45 am] BILLING CODE 8011–01–P 19 15 U.S.C. 78s(b)(3)(A)(ii). 20 17 CFR 240.19b–4(f)(2). VerDate Sep<11>2014 20:54 Sep 10, 2020 21 17 Jkt 250001 PO 00000 CFR 200.30–3(a)(12). Frm 00073 Fmt 4703 Sfmt 4703 SOCIAL SECURITY ADMINISTRATION [Docket No: SSA–2020–0052] Agency Information Collection Activities: Comment Request The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104–13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes an extension of an OMB-approved information collection. SSA is soliciting comments on the accuracy of the agency’s burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information collection(s) to the OMB Desk Officer and SSA Reports Clearance Officer at the following addresses or fax numbers. (OMB), Office of Management and Budget, Attn: Desk Officer for SSA, Fax: 202–395–6974, Email address: OIRA_Submission@omb.eop.gov (SSA), Social Security Administration, OLCA, Attn: Reports Clearance Director, 3100 West High Rise, 6401 Security Blvd., Baltimore, MD 21235, Fax: 410–966–2830, Email address: OR.Reports.Clearance@ssa.gov Or you may submit your comments online through www.regulations.gov, referencing Docket ID Number [SSA– 2020–0052]. SSA submitted the information collection below to OMB for clearance. Your comments regarding this information collection would be most useful if OMB and SSA receive them 30 days from the date of this publication. To be sure we consider your comments, we must receive them no later than October 13, 2020. Individuals can obtain copies of this OMB clearance package by writing to OR.Reports.Clearance@ ssa.gov. Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery—0960–0788. SSA, as part of our continuing effort to reduce paperwork and respondent burden, invites the general public to take this opportunity to comment on the ‘‘Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery’’ for approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.). We developed this E:\FR\FM\11SEN1.SGM 11SEN1

Agencies

[Federal Register Volume 85, Number 177 (Friday, September 11, 2020)]
[Notices]
[Pages 56281-56284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20022]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89774; File No. SR-PEARL-2020-12]


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

September 4, 2020.
    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 August 25, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX PEARL Fee 
Schedule (the ``Fee Schedule'') to increase the number of additional 
Limited Service MIAX Express Order Interface (``MEO'') Ports available 
to Market Makers.\3\ The Exchange does not propose to amend the fees 
for additional Limited Service MEO Ports.
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    \3\ The term ``Market Maker'' or ``MM'' means a Member 
registered with the Exchange for the purpose of making markets in 
options contracts traded on the Exchange and that is vested with the 
rights and responsibilities specified in Chapter VI of the 
Exchange's Rules. See Exchange Rule 100.
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    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxoptions.com/rule-filings/pearl at MIAX 
PEARL's principal office, and at the Commission's Public Reference 
Room.

[[Page 56282]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to offer two (2) 
additional Limited Service MEO Ports to Market Makers. The Exchange 
does not propose to amend the fees charged for the additional Limited 
Service MEO Ports.
    The Exchange initially filed the proposal to increase the number of 
Limited Service MEO Ports available to Market Makers on June 30, 2020, 
with no change to the actual fee amounts being charged.\4\ The First 
Proposed Rule Change was published for comment in the Federal Register 
on July 20, 2020.\5\ On August 25, 2020, the Exchange withdrew the 
First Proposed Rule Change.\6\
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    \4\ See Securities Exchange Act Release No. 89316 (July 14, 
2020), 85 FR 43898 (July 20, 2020) (SR-PEARL-2020-09) (the ``First 
Proposed Rule Change'').
    \5\ Id.
    \6\ See Comment Letter from Christopher Solgan, VP, Senior 
Counsel, the Exchange, dated August 24, 2020, notifying the 
Commission that the Exchange will withdraw the First Proposed Rule 
Change.
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    The Exchange notes that the First Proposed Rule Change did not 
receive any comment letters; however, the Exchange has determined to 
refile its proposal to increase the number of Limited Service MEO Ports 
available to Market Makers (without increasing the actual fee amounts) 
to provide further clarification regarding the Exchange's annual cost 
for providing additional Limited Service MEO Ports.
    The Exchange currently offers different options of MEO Ports 
depending on the services required by an Exchange Member,\7\ including 
a Full Service MEO Port-Bulk,\8\ a Full Service MEO Port-Single,\9\ and 
a Limited Service MEO Port.\10\ Currently, a Member may be allocated 
two (2) Full-Service MEO Ports of either type, Bulk and/or Single, per 
Matching Engine, and up to eight (8) Limited Service MEO Ports, per 
Matching Engine. The two (2) Full-Service MEO Ports that may be 
allocated per Matching Engine to a Member currently may consist of: (a) 
Two (2) Full Service MEO Ports--Bulk; or (b) two (2) Full Service MEO 
Ports--Single. The Exchange also has a third option, option (c), which 
permits a Member to have one (1) Full Service MEO Port--Bulk, and one 
(1) Full Service MEO Port--Single.
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    \7\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of these 
Rules for purposes of trading on the Exchange as an ``Electronic 
Exchange Member'' or ``Market Maker.'' Members are deemed 
``members'' under the Exchange Act. See Exchange Rule 100.
    \8\ ``Full Service MEO Port--Bulk'' means an MEO port that 
supports all MEO input message types and binary bulk order entry. 
See the Definitions Section of the Fee Schedule.
    \9\ ``Full Service MEO Port--Single'' means an MEO port that 
supports all MEO input message types and binary order entry on a 
single order-by-order basis, but not bulk orders. See the 
Definitions Section of the Fee Schedule.
    \10\ ``Limited Service MEO Port'' means an MEO port that 
supports all MEO input message types, but does not support bulk 
order entry and only supports limited order types, as specified by 
the Exchange via Regulatory Circular. See the Definitions Section of 
the Fee Schedule.
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    The Exchange currently provides Market Makers the first two (2) 
requested Limited Service MEO Ports free of charge and charges $200 per 
month for Limited Service MEO Ports three (3) and four (4), $300 per 
month for Limited Service MEO Ports five (5) and six (6), and $400 per 
month for Limited Service MEO Ports seven (7) and eight (8). These fees 
have been unchanged since they were adopted in 2018.\11\
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    \11\ See Securities Exchange Act Release No. 83867 (March 13, 
2018), 83 FR 12044 (March 19, 2018) (SR-PEARL-2018-07).
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    The Exchange originally added the Limited Service MEO Ports to 
enhance the MEO Port connectivity made available to Market Makers. 
Limited Service MEO Ports have been well received by Market Makers 
since their addition. The Exchange now proposes to offer to Market 
Makers the ability to purchase an additional two (2) Limited Service 
MEO Ports per matching engine over and above the current six (6) 
additional Limited Service MEO Ports per matching engine that are 
available for purchase by Market Makers. The Exchange proposes making a 
corresponding change to the text in the Port Fee table and to the text 
below the Port Fee table in Section 5(d) of the Fee Schedule to specify 
that Market Makers will now be limited to purchasing eight (8) 
additional Limited Service MEO Ports per matching engine, for a total 
of ten (10) per matching engine. All fees related to MEO Ports shall 
remain unchanged and Market Makers that voluntarily purchase the 
additional ninth or tenth Limited Service MEO Ports will be subject to 
the existing $400 monthly fee per port that is charged to Market Makers 
that request a seventh or eighth Limited Service MEO Port.
    The Exchange is increasing the number of additional Limited Service 
MEO Ports because the Exchange is expanding its network. This network 
expansion is necessary due to increased customer demand and increased 
volatility in the marketplace, both of which have translated into 
increased message traffic rates across the network. Consequently, this 
network expansion, which increases the number of switches supporting 
customer facing systems, is necessary in order to provide sufficient 
access to new and existing Members, to maintain a sufficient amount of 
network capacity head-room, and to continue to provide the same level 
of service across the Exchange's low-latency, high-throughput 
technology environment.
    Currently, the Exchange has 8 network switches that support the 
entire customer base of MIAX PEARL. The Exchange plans to increase this 
to 10 switches, which will increase the number of available customer 
ports by 25%. This increase in the number of available customer ports 
will enable the Exchange to continue to provide sufficient and equal 
access to the MIAX PEARL System to all Members. Absent the proposed 
increase in available MEO Ports, the Exchange projects that its current 
inventory will be depleted and it will lack sufficient capacity to 
continue to meet Members' access needs.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \12\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act \13\ in that it 
is designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general to protect 
investors and the public interest and is not designed to permit unfair 
discrimination between customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal is consistent with the 
objectives of Section 6(b)(5) of the Act \14\ because the proposed 
additional Limited Service MEO Ports will be

[[Page 56283]]

available to all Market Makers and the current fees for the additional 
Limited Service MEO Ports apply equally to all Market Makers regardless 
of type, and access to the Exchange is offered on terms that are not 
unfairly discriminatory. The Exchange is proposing to increase the 
number of available Limited Service MEO Ports because the Exchange is 
expanding its network. This network expansion is necessary due to 
increased customer demand and increased volatility in the marketplace, 
both of which have translated into increased message traffic rates 
across the network. Consequently, this network expansion, which 
increases the number of switches supporting customer facing systems, is 
necessary in order to provide sufficient and equal access to new and 
existing Members, to maintain a sufficient amount of network capacity 
head-room, and to continue to provide the same level of service across 
the Exchange's low-latency, high-throughput technology environment.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Currently, the Exchange has 8 network switches that support the 
entire customer base of MIAX PEARL. The Exchange plans to increase this 
to 10 switches, which will increase the number of available customer 
ports by 25%. This increase in the number of available customer ports 
will enable the Exchange to continue to provide sufficient and equal 
access to MIAX PEARL Systems for all Members. Absent the proposed 
increase in available MEO Ports, the Exchange projects that its current 
inventory will be depleted and it will lack sufficient capacity to 
continue to meet Members' access needs. Further, the Exchange notes 
that decision of whether to purchase two additional Limited Service MEO 
Ports is completely optional and it is a business decision for each 
Market Maker to determine whether the additional Limited Service MEO 
Ports are necessary to meet their business requirements.
    The Exchange further believes that the availability of the 
additional Limited Service MEO Ports is equitable and not unfairly 
discriminatory because it will enable Market Makers to maintain 
uninterrupted access to the MIAX PEARL System and consequently enhance 
the marketplace by helping Market Makers to better manage risk, thus 
preserving the integrity of the MIAX markets, all to the benefit of and 
protection of investors and the public as a whole.
    The Exchange also believes that its proposal is consistent with 
Section 6(b)(4) of the Act because only Market Makers that voluntarily 
purchase the two additional Limited Service MEO Ports will be charged 
the existing $400 monthly fee per port applicable to ports seven (7) 
and eight (8), which has been unchanged since adopted 2018.\15\ The 
Exchange does not propose to amend the fees applicable to additional 
Limited Service MEO Ports which have been previously filed with the 
Commission and become effective after notice and public comment.\16\ As 
stated above, the Exchange proposes to expand its network by making 
available two additional Limit Service MEO Ports due to increased 
customer demand and increased volatility in the marketplace, both of 
which have translated into increased message traffic rates across the 
network. The cost to expand the network in this manner is greater than 
the revenue the Exchange anticipates the additional Limited Service MEO 
Ports will generate. Specifically, the Exchange estimates it will incur 
a one-time cost of approximately $175,000 in capital expenditures on 
hardware, software, and other items to expand the network to make 
available the two additional Limited Service MEO Ports. This estimated 
cost also includes expense associated with providing the necessary 
engineering and support personnel to transition those Market Makers who 
wish to acquire the two additional Limited Service MEO Ports.
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    \15\ See supra note 11.
    \16\ Id.
---------------------------------------------------------------------------

    The Exchange projects that approximately six or seven Market Makers 
will elect to purchase the additional Limited Service MEO Ports, which 
will be subject to the existing monthly fee of $400 per port applicable 
to ports seven (7) and eight (8). Accordingly, the Exchange projects 
that the annualized revenue from the two additional Limited Service MEO 
Ports will be approximately $67,200 (assuming that seven Market Makers 
purchase the two additional Limited Service MEO Ports). Therefore, the 
Exchange's cost in expanding its network to provide its Members with 
the two additional Limited Service MEO Ports--approximately $175,000--
is clearly greater than the anticipated annualized revenue the Exchange 
expects to bring in from the two additional Limited Service MEO Ports--
approximately $67,200. Further, the Exchange anticipates it will incur 
approximately $88,636 in annual ongoing operating expense in order to 
support the expanded network and the two additional Limited Service MEO 
Ports. Thus, the Exchange is not generating a supra-competitive profit 
from the provision of these two additional Limited Service MEO Ports. 
In fact, even excluding the one-time capital expenditure cost of 
$175,000, the Exchange anticipates generating an annual loss from the 
provision of these two additional Limited Service MEO Ports of 
($26,136)--that is, $67,200 in revenue minus $88,636 in expense equates 
to a loss of ($26,136) to support the additional ports annually.
    Subjecting the two additional Limited Service MEO Ports to the 
existing $400 monthly fee per port applicable to ports seven (7) and 
eight (8) is also designed to encourage Market Makers to be efficient 
with their port usage, thereby resulting in a corresponding increase in 
the efficiency that the Exchange would be able to realize in managing 
its aggregate costs for providing the two additional ports. There is no 
requirement that any Market Maker maintain a specific number of Limited 
Service MEO Ports and a Market Maker may choose to maintain as many or 
as few of such ports as each Market Maker deems appropriate.
    Finally, subjecting the two additional Limited Service MEO Ports to 
the existing $400 monthly fee applicable to ports seven (7) and eight 
(8) will help to encourage Limited Service MEO Port usage in a way that 
aligns with the Exchange's regulatory obligations. As a national 
securities exchange, the Exchange is subject to Regulation Systems 
Compliance and Integrity (``Reg. SCI'').\17\ Reg. SCI Rule 1001(a) 
requires that the Exchange establish, maintain, and enforce written 
policies and procedures reasonably designed to ensure (among other 
things) that its Reg. SCI systems have levels of capacity adequate to 
maintain the Exchange's operational capability and promote the 
maintenance of fair and orderly markets.\18\ By encouraging Members to 
be efficient with their usage of Limited MEO Ports, the current fee 
that will continue to apply to the proposed two (2) additional Limited 
Service MEO Ports will support the Exchange's Reg. SCI obligations in 
this regard by ensuring that unused ports are available to be allocated 
based on individual Members needs and as the Exchange's overall order 
and trade volumes increase.
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    \17\ 17 CFR 242.1000-1007.
    \18\ 17 CFR 242.1001(a).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    MIAX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

[[Page 56284]]

The proposed rule change will not impose a burden on competition but 
will benefit competition by enhancing the Exchange's ability to compete 
by providing additional services to market participants. It is not 
intended to address a competitive issue. Rather, the proposed increase 
in the number of additional Limited Service MEO Ports available per 
Market Maker is intended to allow the Exchange to increase its 
inventory of MEO Ports to meet increased Member demand. The Exchange is 
increasing the number of available additional Limited Service MEO Ports 
in response to Market Maker demand for increased connectivity to the 
MIAX PEARL System. The Exchange's current inventory may soon be 
insufficient to meet those needs. Again, the Exchange is not proposing 
to amend the fees for MEO Ports, just to increase the number of MEO 
Ports available per Market Maker. The Exchange also does not believe 
that the proposed rule change will impose a burden on intramarket 
competition because the two additional Limited Service MEO Ports will 
be available to all Market Makers on an equal basis. It is a business 
decision of each Market Maker whether to pay for the additional Limited 
Service MEO Ports.

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,\19\ and Rule 19b-4(f)(2) \20\ 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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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 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-2020-12 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-PEARL-2020-12. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-PEARL-2020-12 and should be submitted on 
or before October 2, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20022 Filed 9-10-20; 8:45 am]
BILLING CODE 8011-01-P
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