Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing of a Proposed Rule Change To Amend the Exchange's By-Laws in Connection With an Equity Rights Program, 79252-79256 [2020-26995]

Download as PDF 79252 Federal Register / Vol. 85, No. 237 / Wednesday, December 9, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES solely because of a common investment adviser, director, or officer. Rule 17a–7 requires funds to keep various records in connection with purchase or sale transactions effected in reliance on the rule. The rule requires the fund’s board of directors to establish procedures reasonably designed to ensure that the rule’s conditions have been satisfied. The board is also required to determine, at least on a quarterly basis, that all affiliated transactions effected during the preceding quarter in reliance on the rule were made in compliance with these established procedures. If a fund enters into a purchase or sale transaction with an affiliated person, the rule requires the fund to compile and maintain written records of the transaction.1 The Commission’s examination staff uses these records to evaluate for compliance with the rule. While most funds do not commonly engage in transactions covered by rule 17a–7, the Commission staff estimates that nearly all funds have adopted procedures for complying with the rule.2 Of the approximately 2,915 currently active funds, the staff estimates that virtually all have already adopted procedures for compliance with rule 17a–7. This is a one-time burden, and the staff therefore does not estimate an ongoing burden related to the policies and procedures requirement of the rule for funds.3 The staff estimates that there are approximately 90 new funds that register each year, and that each of these funds adopts the relevant policies and procedures. The staff estimates that it takes approximately 4 hours to develop and adopt these policies and procedures. Therefore, the total annual burden related to developing and adopting these policies and procedures would be approximately 360 hours.4 Of the 2,915 existing funds, the staff assumes that approximately 25%, (or 729) enter into transactions affected by rule 17a–7 each year (either by the fund directly or through one of the fund’s 1 The written records are required to set forth a description of the security purchased or sold, the identity of the person on the other side of the transaction, and the information or materials upon which the board of directors’ determination that the transaction was in compliance with the procedures was made. 2 Unless stated otherwise, these estimates are based on conversations with the examination and inspections staff of the Commission and fund representatives. 3 Based on our reviews and conversations with fund representatives, we understand that funds rarely, if ever, need to make changes to these policies and procedures once adopted, and therefore we do not estimate a paperwork burden for such updates. 4 This estimate is based on the following calculations: (4 hours × 90 new funds = 360 hours). VerDate Sep<11>2014 16:16 Dec 08, 2020 Jkt 253001 series), and that the same percentage (25%, or 23 funds) of the estimated 90 funds that newly register each year will also enter into these transactions, for a total of 752 5 companies that are affected by the recordkeeping requirements of rule 17a–7. These funds must keep records of each of these transactions, and the board of directors must quarterly determine that all relevant transactions were made in compliance with the company’s policies and procedures. The rule generally imposes a minimal burden of collecting and storing records already generated for other purposes.6 The staff estimates that the burden related to making these records and for the board to review all transactions would be 3 hours annually for each respondent, (2 hours spent by compliance attorneys and 1 hour spent by the board of directors) 7 or 2,256 total hours each year.8 Based on these estimates, the staff estimates the combined total annual burden hours associated with rule 17a–7 is 2,616 hours.9 The staff also estimates that there are approximately 752 respondents and 6,016 total responses.10 The estimates of burden hours are made solely for the purposes of the Paperwork Reduction Act, and are not derived from a comprehensive or even a representative survey or study of the costs of Commission rules. The collection of information required by rule 17a–7 is necessary to obtain the benefits of the rule. Responses will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. 5 This estimate is based on the following calculation: (729 + 23 = 752). 6 Commission staff believes that rule 17a–7 does not impose any costs associated with record preservation in addition to the costs that funds already incur to comply with the record preservation requirements of rule 31a–2 under the Act. Rule 31a–2 requires companies to preserve certain records for specified periods of time. 7 The staff estimates that funds that rely on rule 17a–7 annually enter into an average of 8 rule 17a–7 transactions each year. The staff estimates that the compliance attorneys of the companies spend approximately 15 minutes per transaction on this recordkeeping, and the board of directors spends a total of 1 hour annually in determining that all transactions made that year were done in compliance with the company’s policies and procedures. 8 This estimate is based on the following calculation: (3 hours × 752 companies = 2,256 hours). 9 This estimate is based on the following calculation: (360 hours + 2,256 hours = 2,616 total hours). 10 This estimate is based on the following calculations: 752 funds that engage in rule 17a–7 transactions × 8 transactions per year = 6,016. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to (i) www.reginfo.gov/public/do/ PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o Cynthia Roscoe, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Dated: December 4, 2020. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–27027 Filed 12–8–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90563; File No. SR– PEARL–2020–30] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing of a Proposed Rule Change To Amend the Exchange’s By-Laws in Connection With an Equity Rights Program December 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 November 24, 2020, MIAX PEARL, LLC (‘‘MIAX PEARL’’ or the ‘‘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 Exchange’s By-Laws. 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 2 17 E:\FR\FM\09DEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 09DEN1 Federal Register / Vol. 85, No. 237 / Wednesday, December 9, 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 jbell on DSKJLSW7X2PROD with NOTICES 1. Purpose The Exchange proposes to amend certain sections of its By-Laws to: (i) Correspond with an Equity Rights Program (‘‘ERP’’) recently established by the Exchange; 3 and (ii) make nonsubstantive changes to the current ByLaws. On August 14, 2020, the Commission approved a proposed rule change to adopt rules governing the trading of equity securities on the Exchange (the platform for the trading of equity securities is referred to herein as ‘‘MIAX PEARL Equities’’).4 This filing corresponds with the recently implemented ERP pursuant to which units representing the right to acquire equity in the Exchange’s parent holding company, Miami International Holdings, Inc., were issued to participating Members 5 in exchange for 3 See Securities Exchange Act Release No. 89730 (September 1, 2020), 85 FR 55530 (September 8, 2020) (SR–PEARL–2020–10) (‘‘ERP Notice’’). This filing is also based on a past filing by the Exchange’s affiliate, Miami International Securities Exchange, LLC (‘‘MIAX’’). See Securities Exchange Act Release Nos. 71541 (February 12, 2014), 79 FR 9572 (February 19, 2014) (SR–MIAX–2013–58) (Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend the Exchange’s ByLaws); and 77876 (May 20, 2016), 81 FR 33283 (May 25, 2016) (SR– MIAX–2016–08) (collectively, the ‘‘MIAX Approval Orders’’). 4 See Securities Exchange Act Release Nos. 88132 (February 6, 2020), 85 FR 8053 (February 12, 2020) (SR–PEARL–2020–03) (Notice of Filing of a Proposed Rule Change to Adopt Rules Governing the Trading of Equity Securities); and 89563 (August 14, 2020), 85 FR 51510 (August 20, 2020) (Order Approving Proposed Rule Change to Adopt Rules Governing the Trading of Equity Securities). 5 The term ‘‘Member’’ means an individual or organization that is registered with the Exchange pursuant to Chapter II of the Exchange’s 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 16:16 Dec 08, 2020 Jkt 253001 the prepayment of certain ERP Exchange Fees 6 for trading equity securities on MIAX PEARL Equities and the achievement of certain liquidity volume thresholds on MIAX PEARL Equities over a 42-month period. This filing amends the By-Laws to the extent necessary to incorporate rights to participating Members in an ERP to appoint representation to the MIAX PEARL Board. Article I, Definitions The Exchange proposes to amend the By-Laws to provide definitions for key terms used to incorporate provisions related to the ERP. Specifically, the Exchange proposes the following definitions: • ‘‘ERP Agreement’’ means the agreement between the Exchange’s parent holding company, Miami International Holdings, Inc., and ERP Members dated September 11, 2020 pursuant to which Units were issued. • ‘‘ERP Director’’ means a MIAX PEARL Equities Industry Director who has been nominated by an ERP Member and appointed to the Board of Directors. • ‘‘ERP Member’’ means an Exchange Member who acquired Units pursuant to an ERP Agreement sufficient to acquire an ERP Director or an Observer position. • ‘‘Measurement Period’’ means the time period over which Units are vested. • ‘‘MIAX PEARL Equities’’ means the market of the Exchange on which equity securities are traded. • ‘‘Observer’’ has the meaning set forth in Article II, Section 2.2 of the ByLaws. • ‘‘Performance Criteria’’ means the trades on MIAX PEARL Equities in an amount equal to a percentage of the average daily volume for National Market System securities on MIAX PEARL Equities as reported by the Consolidated Tape Association (CTA) and Unlisted Traded Privileges (UTP) Plans, or any successor plans, for a specified Measurement Period in an 6 The ERP Exchange fees under the Program consist of: (a) Transaction fees as set forth in Section (1)a of the MIAX PEARL Options Fee Schedule; (b) membership fees as set forth in Section 3 of the MIAX PEARL Options Fee Schedule; (c) system connectivity fees as set forth in Section 5 of the MIAX PEARL Options Fee Schedule; (d) market data fees as set forth in Section 6 of the MIAX PEARL Options Fee Schedule; (a) transaction fees as set forth under Section (1)a of the MIAX PEARL Equities Fee Schedule; (b) system connectivity fees as set forth under Section (2) of the MIAX PEARL Equities Fee Schedule; and (c) market data fees as set forth under Section (3) of the MIAX PEARL Equities Fee Schedule (collectively, the ‘‘ERP Exchange Fees’’). The Exchange notes that proprietary real-time market data will be provided free of charge for a period of time. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 79253 amount such that the ERP Member earns Units during such specified Measurement Period and as more fully set forth in the ERP Agreement. • ‘‘Unit’’ means the securities issued pursuant to the ERP Agreement. The Exchange also proposes to delete the definition of the term ‘‘Exchange Contract’’ from the By-Laws because it is no longer used. The term ‘‘Exchange Contract’’ is currently defined as ‘‘a contract that is then listed for trading by the Exchange or that is contemplated by the then current business plan of the Company to be listed for trading by the Exchange within ninety (90) days following such date.’’ The Exchange proposes to renumber the existing definitions accordingly to accommodate the proposed additions and deletions. Article II, Section 2.2, Composition of the Board The Exchange proposed to amend the title of Article II, Section 2.2 to include reference to Observer Rights. The Exchange also proposes to amend Article II, Section 2.2(b)(i) to provide that ERP Directors will be included in the number of Industry Directors for purposes of calculating the composition of the Board. In addition, the Exchange proposes to amend Article II, Section 2.2 (b)(ii) to specify that Member Representative Directors will not include ERP Directors for purposes of calculating the Board composition. In addition, the Exchange proposes to amend Article II, Section 2.2(e) to replace the existing text with text that provides that an ERP Member has a right to nominate one (1) ERP Director or appoint an Observer to the Board of Directors. If at any time such ERP Member is otherwise able to nominate an ERP Director, but is unable to fill such position as a result of such ERP Member already having a representative on the Board, such ERP Member will have the right to nominate such Director in accordance with amended Article II, Section 2.2(e) upon the resignation or removal of such Director already serving on the Board.7 The nominee shall be appointed at the first annual meeting of the Company following the effective date of the By-Law amendment. The Exchange proposes to adopt paragraph (f) under Article II, Section 2.2. to provide that if an ERP Director position needs to be added pursuant to amended Article II, Section 2.2(e), such ERP Director shall be nominated by the 7 At this time, an ERP Member that is represented by a Member Representative Director may also have an Observer. But, an ERP Member that is represented by an ERP Director may not also have an Observer. E:\FR\FM\09DEN1.SGM 09DEN1 jbell on DSKJLSW7X2PROD with NOTICES 79254 Federal Register / Vol. 85, No. 237 / Wednesday, December 9, 2020 / Notices applicable ERP Member and elected by the LLC Member and additional Director positions shall be added and filled at the same time as the election of the new ERP Director, as required to comply with the requirements set forth in Article II, Section 2.2(a) and (b). The Exchange also proposes to adopt paragraph (g) under Article II, Section 2.2 to provide that, per amended Article II, Section 2.2(e), a person may be invited to attend meetings of the Board in a nonvoting Observer capacity as follows. Proposed Article II, Section 2.2(g)(i) would provide that any ERP Member that is not otherwise represented on the Board shall have the right to appoint one individual as an Observer. If the ERP Member is otherwise able to nominate an ERP Director, an Observer appointment would be in lieu of such ERP Director nomination. Proposed Article II, Section 2.2(g)(ii) would provide that the ERP Member’s right to appoint an Observer pursuant to proposed Section 2.2(g) shall be perpetual, subject to the provisions of Section 2.3 discussed below. An Observer may not be subject to a statutory disqualification. Lastly, proposed Article II, Section 2.2(g)(iii) would provide that Observers will have the right to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, the Company shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such Directors; provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest. The Exchange believes these changes are reasonably designed to ensure that the Board of Directors maintains the appropriate composition after the ERP and that Directors and Observers are qualified to represent ERP Members on the Board. The changes will also help to ensure that Directors, ERP Directors, and Observers, are qualified and held to the same restrictions against statutory disqualification. The Exchange notes that no substantive changes are being proposed to the Board’s composition; VerDate Sep<11>2014 16:16 Dec 08, 2020 Jkt 253001 the Board size will increase, but the current composition will remain. Lastly, the Exchange proposes to amend the title of Article II, Section 2.2 to refer to Observer Rights and reflect the above-proposed changes. Article II, Section 2.3, Terms of Office The Exchange proposes to amend Article II, Section 2.3(b) to specify that it does not apply to ERP Directors. The Exchange also proposes to adopt paragraph (c) under Article II, Section 2.3 to provide that in the event that an ERP Member (either by itself or its affiliates) who has the right to nominate an ERP Director and which fails to meet its Performance Criteria under the ERP Agreement for three consecutive Measurement Periods such that it only meets the required performance criteria of an ERP Member that may appoint an Observer, then the individual designated by the non-performing ERP Member shall immediately cease to be an ERP Director of the Company and such ERP Member shall cease to have the right to nominate an ERP Director. Such non-performing ERP Member shall continue to maintain Observer rights as set forth in the By-Laws. Notwithstanding the foregoing, in the event that the non-performing ERP Member satisfies the Performance Criteria for a subsequent Measurement Period, then such ERP Member may reappoint an ERP Director at the immediately following annual meeting of the Company. The Exchange believes that it is fair and reasonable to treat nonperforming ERP Member’s that can nominate an ERP Director differently than non-performing ERP Member’s that can only appoint Observers. ERP Members that can nominate ERP Directors have assumed greater performance obligations under the ERP Agreement, and thus even at the nonperforming level are entitled to more protections to their representation on the Board than non-performing ERP Members that can only appoint Observers. The Exchange also proposes to adopt paragraph (d) under Article II, Section 2.3 to provide that an individual ERP Director or Observer position shall be immediately terminated following the transfer of common stock or warrants of the LLC Member acquired pursuant to the ERP Agreement by an ERP Member which, after giving effect to such transfer, results in such ERP Member holding less than 25% of the aggregate number of shares of common stock of the LLC Member issued or issuable pursuant to the Units acquired pursuant to the ERP Agreement collectively. PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 The Exchange believes these changes regarding Terms of Office are reasonably designed to account for the removal of Directors or Observers of nonperforming ERP Members and Members that no longer have a controlling interest in the shares that provided them the right to such appointments. Article II, Section 2.4, Nomination and Election The Exchange proposes to amend Article II, Section 2.4(a) to provide that the Nominating Committee shall nominate to ERP Director positions only those persons whose names have been approved and submitted by the applicable ERP Members having the right to nominate such person. As mentioned above, the LLC Member is then obligated to vote for the nominated ERP Director. The nominee shall be appointed at the first annual meeting of the Company following September 11, 2020, which was the closing date of the ERP established by the Exchange.8 Article II, Section 2.8, Vacancies The Exchange proposes to adopt paragraph (c) under Article II, Section 2.8 to provide that if an ERP Director position becomes vacant that the applicable ERP Member will retain the ability to nominate a person to fill the vacant ERP Director position. To eliminate any potential confusion between the treatment of true vacancies and the non-performance provisions in proposed Article II, Section 2.3(c), the Exchange proposes to specify that proposed Article II, Section 2.8(c) will not apply for a vacancy resulting from an ERP Director position becoming vacant due to a non-performing ERP Member. In the situation of nonperformance of an ERP Member, the provisions of proposed Article II, Section 2.3(c) would apply. Article II, Section 2.9, Removal and Resignation The Exchange proposes to amend Article II, Section 2.9 to provide that ERP Directors may only be removed for cause, which shall include, without limitation, such Director being subject to a statutory disqualification. Article X, Sections 10.3 and 10.4 The Exchange proposes to amend Article X, Section 10.3 to provide that Observers will be subject to the same participation rights on the Board during meetings pertaining to the selfregulatory function of the Company as other members of the Board. In addition, Article X, Section 10.4 would be 8 See E:\FR\FM\09DEN1.SGM ERP Notice, supra note 3. 09DEN1 Federal Register / Vol. 85, No. 237 / Wednesday, December 9, 2020 / Notices amended to provide that Observers will be subject to the same requirements to maintain the confidentiality of all books and records of the Company reflecting confidential information pertaining to the self-regulatory function of the Company. jbell on DSKJLSW7X2PROD with NOTICES Miscellaneous Non-Substantive Changes In addition to the changes set forth above, the Exchange proposes to make the following non-substantive changes to the current By-Laws. The Exchange proposes to delete dated references to time periods and events that have expired since the proposal of the new By-Laws. Specifically, the Exchange proposes to delete provisions in Article II, Section 2.5, and Article III, Section 3.1(b), regarding Interim Directors and Interim Member Representative Directors since these appointments have already occurred. Consistent with this change, the Exchange proposes to remove references to Article II, Section 2.5 and Interim Directors and Interim Member Representative Directors from current Article I(x) (proposed to be renumbered as Article I(aa)) and Article II, Section 2.2(b)(i). 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act 9 in general, and furthers the objectives of Sections 6(b)(1) and 6(b)(5) of the Act 10 in particular, in that it enables the Exchange to be so organized as to have the capacity to carry out the purposes of the Act and to comply, and to enforce compliance by its Members and persons associated with its Members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange; and that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. In addition, the proposed change is consistent with Section 6(b)(3) of the Act,11 in that it enables the Exchange to assure a fair representation of its members in the selection of its directors and administration of its affairs and provide that one or more directors shall be representative of issuers and investors 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 11 15 U.S.C. 78f(b)(3). 10 15 VerDate Sep<11>2014 16:16 Dec 08, 2020 Jkt 253001 and not be associated with a member of the exchange, broker, or dealer. Specifically, the proposed amendments to the By-Laws are reasonably designed to incorporate provisions related to the ERP in a manner that ensures that the Exchange will remain so organized as to have the capacity to carry out the purposes of the Act and to comply, and to enforce compliance by its Members and persons associated with its Members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange. The changes will also help to ensure that Directors, ERP Directors, Observers, and committee members are qualified and held to the same restrictions against statutory disqualification. The proposed ERP Directors will be subject to the same restrictions as current Directors including evaluating proposals with the Company’s self-regulatory status in mind, restricting participation in activities where there is a conflict of interest, and requirement to maintain the confidentiality of information related to the Company’s self-regulatory function. The proposed Observers will be subject to the same restrictions as current Directors regarding maintaining the confidentiality of information related to the Company’s self-regulatory function. However, Observers will not be subject to the same restrictions as current Directors regarding evaluating proposals with the Company’s selfregulatory status in mind and restricting participation in activities where there is a conflict of interest. The Exchange believes that treating Observers differently than Directors in these circumstances is reasonable because Observers will not be affirmatively voting on any such proposals in their non-voting observer capacity. In addition, the Exchange’s proposed amendments address other nonsubstantive revisions to reflect changes since the Commission granted the Exchange’s registration as a national securities exchange. The proposal will continue to assure a fair representation of its Members in that ERP Directors will not affect the current Member Representation Director calculation or process in any way. The Exchange notes that no substantive changes are being proposed to the Board’s composition; the Board size will increase, but the current composition will remain. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 79255 necessary or appropriate in furtherance of the purposes of the Act. The proposed changes to the Exchange ByLaws are designed to enable the Exchange to be so organized as to have the capacity to carry out the purposes of the Act and to comply, and to enforce compliance by its Members and persons associated with its Members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange. As such, this is not a competitive filing and thus should not impose any burden on competition. 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission shall: (a) By order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be 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–2020–30 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–2020–30. 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 E:\FR\FM\09DEN1.SGM 09DEN1 79256 Federal Register / Vol. 85, No. 237 / Wednesday, December 9, 2020 / Notices 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–2020–30, and should be submitted on or before December 30, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–26995 Filed 12–8–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–173, OMB Control No. 3235–0178] Submission for OMB Review; Comment Request Upon Written Request Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–02736 jbell on DSKJLSW7X2PROD with NOTICES Extension: Rule 31a–1 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below. 12 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:16 Dec 08, 2020 Jkt 253001 Rule 31a–1 (17 CFR 270.31a–1) under the Investment Company Act of 1940 (the ‘‘Act’’) (15 U.S.C. 80a) is entitled ‘‘Records to be maintained by registered investment companies, certain majorityowned subsidiaries thereof, and other persons having transactions with registered investment companies.’’ Rule 31a–1 requires registered investment companies (‘‘funds’’), and every underwriter, broker, dealer, or investment adviser that is a majorityowned subsidiary of a fund, to maintain and keep current accounts, books, and other documents which constitute the record forming the basis for financial statements required to be filed pursuant to section 31 of the Act (15 U.S.C. 80a– 30) and of the auditor’s certificates relating thereto. The rule lists specific records to be maintained by funds. The rule also requires certain underwriters, brokers, dealers, depositors, and investment advisers to maintain the records that they are required to maintain under federal securities laws. The Commission periodically inspects the operations of funds to insure their compliance with the provisions of the Act and the rules thereunder. The books and records required to be maintained by rule 31a–1 constitute a major focus of the Commission’s inspection program. There are approximately 3,964 investment companies registered with the Commission, all of which are required to comply with rule 31a–1. For purposes of determining the burden imposed by rule 31a–1, the Commission staff estimates that each fund is divided into approximately four series, on average, and that each series is required to comply with the recordkeeping requirements of rule 31a–1. Based on conversations with fund representatives, it is estimated that rule 31a–1 imposes an average burden of approximately 1,750 hours annually per series for a total of 7,000 annual hours per fund. The estimated total annual burden for all 3,964 funds subject to the rule therefore is approximately 27,748,000 hours. Based on conversations with fund representatives, however, the Commission staff estimates that even absent the requirements of rule 31a–1, 90 percent of the records created pursuant to the rule are the type that generally would be created as a matter of normal business practice and to prepare financial statements. Thus, the Commission staff estimates that the total annual burden associated with rule 31a– 1 is 2,774,800 hours. The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act, and is not derived from a comprehensive or even PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 a representative survey or study. The collection of information required by rule 31a–1 is mandatory. Responses will not be kept confidential. The records required by rule 31a–1 are required to be preserved pursuant to rule 31a–2 under the Investment Company Act (17 CFR 270.31a–2). Rule 31a–2 requires that certain of these records be preserved permanently, and that others be preserved six years from the end of the fiscal year in which any transaction occurred. In both cases, the records should be kept in an easily accessible place for the first two years. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to (i) www.reginfo.gov/public/do/ PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o Cynthia Roscoe, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Dated: December 4, 2020. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–27029 Filed 12–8–20; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration [Docket No. 2120–0671] Agency Information Collection Activities: Request for Renewal of a Previously Approved Information Collection(s): Safety Management Systems for Part 121 Certificate Holders Federal Aviation Administration (FAA), DOT. ACTION: Notice and request for comments. AGENCY: E:\FR\FM\09DEN1.SGM 09DEN1

Agencies

[Federal Register Volume 85, Number 237 (Wednesday, December 9, 2020)]
[Notices]
[Pages 79252-79256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26995]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90563; File No. SR-PEARL-2020-30]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
of a Proposed Rule Change To Amend the Exchange's By-Laws in Connection 
With an Equity Rights Program

December 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 November 24, 2020, MIAX PEARL, LLC (``MIAX 
PEARL'' or the ``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 Exchange's By-Laws.
    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 79253]]

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 certain sections of its By-Laws to: 
(i) Correspond with an Equity Rights Program (``ERP'') recently 
established by the Exchange; \3\ and (ii) make non-substantive changes 
to the current By-Laws.
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    \3\ See Securities Exchange Act Release No. 89730 (September 1, 
2020), 85 FR 55530 (September 8, 2020) (SR-PEARL-2020-10) (``ERP 
Notice''). This filing is also based on a past filing by the 
Exchange's affiliate, Miami International Securities Exchange, LLC 
(``MIAX''). See Securities Exchange Act Release Nos. 71541 (February 
12, 2014), 79 FR 9572 (February 19, 2014) (SR-MIAX-2013-58) (Notice 
of Filing of Amendment No. 1 and Order Granting Accelerated Approval 
of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, 
To Amend the Exchange's ByLaws); and 77876 (May 20, 2016), 81 FR 
33283 (May 25, 2016) (SR-MIAX-2016-08) (collectively, the ``MIAX 
Approval Orders'').
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    On August 14, 2020, the Commission approved a proposed rule change 
to adopt rules governing the trading of equity securities on the 
Exchange (the platform for the trading of equity securities is referred 
to herein as ``MIAX PEARL Equities'').\4\ This filing corresponds with 
the recently implemented ERP pursuant to which units representing the 
right to acquire equity in the Exchange's parent holding company, Miami 
International Holdings, Inc., were issued to participating Members \5\ 
in exchange for the prepayment of certain ERP Exchange Fees \6\ for 
trading equity securities on MIAX PEARL Equities and the achievement of 
certain liquidity volume thresholds on MIAX PEARL Equities over a 42-
month period. This filing amends the By-Laws to the extent necessary to 
incorporate rights to participating Members in an ERP to appoint 
representation to the MIAX PEARL Board.
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    \4\ See Securities Exchange Act Release Nos. 88132 (February 6, 
2020), 85 FR 8053 (February 12, 2020) (SR-PEARL-2020-03) (Notice of 
Filing of a Proposed Rule Change to Adopt Rules Governing the 
Trading of Equity Securities); and 89563 (August 14, 2020), 85 FR 
51510 (August 20, 2020) (Order Approving Proposed Rule Change to 
Adopt Rules Governing the Trading of Equity Securities).
    \5\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of the 
Exchange's 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.
    \6\ The ERP Exchange fees under the Program consist of: (a) 
Transaction fees as set forth in Section (1)a of the MIAX PEARL 
Options Fee Schedule; (b) membership fees as set forth in Section 3 
of the MIAX PEARL Options Fee Schedule; (c) system connectivity fees 
as set forth in Section 5 of the MIAX PEARL Options Fee Schedule; 
(d) market data fees as set forth in Section 6 of the MIAX PEARL 
Options Fee Schedule; (a) transaction fees as set forth under 
Section (1)a of the MIAX PEARL Equities Fee Schedule; (b) system 
connectivity fees as set forth under Section (2) of the MIAX PEARL 
Equities Fee Schedule; and (c) market data fees as set forth under 
Section (3) of the MIAX PEARL Equities Fee Schedule (collectively, 
the ``ERP Exchange Fees''). The Exchange notes that proprietary 
real-time market data will be provided free of charge for a period 
of time.
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Article I, Definitions
    The Exchange proposes to amend the By-Laws to provide definitions 
for key terms used to incorporate provisions related to the ERP. 
Specifically, the Exchange proposes the following definitions:
     ``ERP Agreement'' means the agreement between the 
Exchange's parent holding company, Miami International Holdings, Inc., 
and ERP Members dated September 11, 2020 pursuant to which Units were 
issued.
     ``ERP Director'' means a MIAX PEARL Equities Industry 
Director who has been nominated by an ERP Member and appointed to the 
Board of Directors.
     ``ERP Member'' means an Exchange Member who acquired Units 
pursuant to an ERP Agreement sufficient to acquire an ERP Director or 
an Observer position.
     ``Measurement Period'' means the time period over which 
Units are vested.
     ``MIAX PEARL Equities'' means the market of the Exchange 
on which equity securities are traded.
     ``Observer'' has the meaning set forth in Article II, 
Section 2.2 of the By-Laws.
     ``Performance Criteria'' means the trades on MIAX PEARL 
Equities in an amount equal to a percentage of the average daily volume 
for National Market System securities on MIAX PEARL Equities as 
reported by the Consolidated Tape Association (CTA) and Unlisted Traded 
Privileges (UTP) Plans, or any successor plans, for a specified 
Measurement Period in an amount such that the ERP Member earns Units 
during such specified Measurement Period and as more fully set forth in 
the ERP Agreement.
     ``Unit'' means the securities issued pursuant to the ERP 
Agreement.
    The Exchange also proposes to delete the definition of the term 
``Exchange Contract'' from the By-Laws because it is no longer used. 
The term ``Exchange Contract'' is currently defined as ``a contract 
that is then listed for trading by the Exchange or that is contemplated 
by the then current business plan of the Company to be listed for 
trading by the Exchange within ninety (90) days following such date.''
    The Exchange proposes to renumber the existing definitions 
accordingly to accommodate the proposed additions and deletions.
Article II, Section 2.2, Composition of the Board
    The Exchange proposed to amend the title of Article II, Section 2.2 
to include reference to Observer Rights. The Exchange also proposes to 
amend Article II, Section 2.2(b)(i) to provide that ERP Directors will 
be included in the number of Industry Directors for purposes of 
calculating the composition of the Board. In addition, the Exchange 
proposes to amend Article II, Section 2.2 (b)(ii) to specify that 
Member Representative Directors will not include ERP Directors for 
purposes of calculating the Board composition.
    In addition, the Exchange proposes to amend Article II, Section 
2.2(e) to replace the existing text with text that provides that an ERP 
Member has a right to nominate one (1) ERP Director or appoint an 
Observer to the Board of Directors. If at any time such ERP Member is 
otherwise able to nominate an ERP Director, but is unable to fill such 
position as a result of such ERP Member already having a representative 
on the Board, such ERP Member will have the right to nominate such 
Director in accordance with amended Article II, Section 2.2(e) upon the 
resignation or removal of such Director already serving on the 
Board.\7\ The nominee shall be appointed at the first annual meeting of 
the Company following the effective date of the By-Law amendment.
---------------------------------------------------------------------------

    \7\ At this time, an ERP Member that is represented by a Member 
Representative Director may also have an Observer. But, an ERP 
Member that is represented by an ERP Director may not also have an 
Observer.
---------------------------------------------------------------------------

    The Exchange proposes to adopt paragraph (f) under Article II, 
Section 2.2. to provide that if an ERP Director position needs to be 
added pursuant to amended Article II, Section 2.2(e), such ERP Director 
shall be nominated by the

[[Page 79254]]

applicable ERP Member and elected by the LLC Member and additional 
Director positions shall be added and filled at the same time as the 
election of the new ERP Director, as required to comply with the 
requirements set forth in Article II, Section 2.2(a) and (b).
    The Exchange also proposes to adopt paragraph (g) under Article II, 
Section 2.2 to provide that, per amended Article II, Section 2.2(e), a 
person may be invited to attend meetings of the Board in a nonvoting 
Observer capacity as follows. Proposed Article II, Section 2.2(g)(i) 
would provide that any ERP Member that is not otherwise represented on 
the Board shall have the right to appoint one individual as an 
Observer. If the ERP Member is otherwise able to nominate an ERP 
Director, an Observer appointment would be in lieu of such ERP Director 
nomination. Proposed Article II, Section 2.2(g)(ii) would provide that 
the ERP Member's right to appoint an Observer pursuant to proposed 
Section 2.2(g) shall be perpetual, subject to the provisions of Section 
2.3 discussed below. An Observer may not be subject to a statutory 
disqualification.
    Lastly, proposed Article II, Section 2.2(g)(iii) would provide that 
Observers will have the right to attend all meetings of the Board of 
Directors in a nonvoting observer capacity and, in this respect, the 
Company shall give such representative copies of all notices, minutes, 
consents, and other materials that it provides to its directors at the 
same time and in the same manner as provided to such Directors; 
provided, however, that such representative shall agree to hold in 
confidence and trust and to act in a fiduciary manner with respect to 
all information so provided; and provided further, that the Company 
reserves the right to withhold any information and to exclude such 
representative from any meeting or portion thereof if access to such 
information or attendance at such meeting could adversely affect the 
attorney-client privilege between the Company and its counsel or result 
in disclosure of trade secrets or a conflict of interest.
    The Exchange believes these changes are reasonably designed to 
ensure that the Board of Directors maintains the appropriate 
composition after the ERP and that Directors and Observers are 
qualified to represent ERP Members on the Board. The changes will also 
help to ensure that Directors, ERP Directors, and Observers, are 
qualified and held to the same restrictions against statutory 
disqualification. The Exchange notes that no substantive changes are 
being proposed to the Board's composition; the Board size will 
increase, but the current composition will remain.
    Lastly, the Exchange proposes to amend the title of Article II, 
Section 2.2 to refer to Observer Rights and reflect the above-proposed 
changes.
Article II, Section 2.3, Terms of Office
    The Exchange proposes to amend Article II, Section 2.3(b) to 
specify that it does not apply to ERP Directors. The Exchange also 
proposes to adopt paragraph (c) under Article II, Section 2.3 to 
provide that in the event that an ERP Member (either by itself or its 
affiliates) who has the right to nominate an ERP Director and which 
fails to meet its Performance Criteria under the ERP Agreement for 
three consecutive Measurement Periods such that it only meets the 
required performance criteria of an ERP Member that may appoint an 
Observer, then the individual designated by the non-performing ERP 
Member shall immediately cease to be an ERP Director of the Company and 
such ERP Member shall cease to have the right to nominate an ERP 
Director. Such non-performing ERP Member shall continue to maintain 
Observer rights as set forth in the By-Laws. Notwithstanding the 
foregoing, in the event that the non-performing ERP Member satisfies 
the Performance Criteria for a subsequent Measurement Period, then such 
ERP Member may reappoint an ERP Director at the immediately following 
annual meeting of the Company. The Exchange believes that it is fair 
and reasonable to treat non-performing ERP Member's that can nominate 
an ERP Director differently than non-performing ERP Member's that can 
only appoint Observers. ERP Members that can nominate ERP Directors 
have assumed greater performance obligations under the ERP Agreement, 
and thus even at the non-performing level are entitled to more 
protections to their representation on the Board than non-performing 
ERP Members that can only appoint Observers.
    The Exchange also proposes to adopt paragraph (d) under Article II, 
Section 2.3 to provide that an individual ERP Director or Observer 
position shall be immediately terminated following the transfer of 
common stock or warrants of the LLC Member acquired pursuant to the ERP 
Agreement by an ERP Member which, after giving effect to such transfer, 
results in such ERP Member holding less than 25% of the aggregate 
number of shares of common stock of the LLC Member issued or issuable 
pursuant to the Units acquired pursuant to the ERP Agreement 
collectively.
    The Exchange believes these changes regarding Terms of Office are 
reasonably designed to account for the removal of Directors or 
Observers of non-performing ERP Members and Members that no longer have 
a controlling interest in the shares that provided them the right to 
such appointments.
Article II, Section 2.4, Nomination and Election
    The Exchange proposes to amend Article II, Section 2.4(a) to 
provide that the Nominating Committee shall nominate to ERP Director 
positions only those persons whose names have been approved and 
submitted by the applicable ERP Members having the right to nominate 
such person. As mentioned above, the LLC Member is then obligated to 
vote for the nominated ERP Director. The nominee shall be appointed at 
the first annual meeting of the Company following September 11, 2020, 
which was the closing date of the ERP established by the Exchange.\8\
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    \8\ See ERP Notice, supra note 3.
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Article II, Section 2.8, Vacancies
    The Exchange proposes to adopt paragraph (c) under Article II, 
Section 2.8 to provide that if an ERP Director position becomes vacant 
that the applicable ERP Member will retain the ability to nominate a 
person to fill the vacant ERP Director position. To eliminate any 
potential confusion between the treatment of true vacancies and the 
non-performance provisions in proposed Article II, Section 2.3(c), the 
Exchange proposes to specify that proposed Article II, Section 2.8(c) 
will not apply for a vacancy resulting from an ERP Director position 
becoming vacant due to a non-performing ERP Member. In the situation of 
non-performance of an ERP Member, the provisions of proposed Article 
II, Section 2.3(c) would apply.
Article II, Section 2.9, Removal and Resignation
    The Exchange proposes to amend Article II, Section 2.9 to provide 
that ERP Directors may only be removed for cause, which shall include, 
without limitation, such Director being subject to a statutory 
disqualification.
Article X, Sections 10.3 and 10.4
    The Exchange proposes to amend Article X, Section 10.3 to provide 
that Observers will be subject to the same participation rights on the 
Board during meetings pertaining to the self-regulatory function of the 
Company as other members of the Board. In addition, Article X, Section 
10.4 would be

[[Page 79255]]

amended to provide that Observers will be subject to the same 
requirements to maintain the confidentiality of all books and records 
of the Company reflecting confidential information pertaining to the 
self-regulatory function of the Company.
Miscellaneous Non-Substantive Changes
    In addition to the changes set forth above, the Exchange proposes 
to make the following non-substantive changes to the current By-Laws. 
The Exchange proposes to delete dated references to time periods and 
events that have expired since the proposal of the new By-Laws. 
Specifically, the Exchange proposes to delete provisions in Article II, 
Section 2.5, and Article III, Section 3.1(b), regarding Interim 
Directors and Interim Member Representative Directors since these 
appointments have already occurred. Consistent with this change, the 
Exchange proposes to remove references to Article II, Section 2.5 and 
Interim Directors and Interim Member Representative Directors from 
current Article I(x) (proposed to be renumbered as Article I(aa)) and 
Article II, Section 2.2(b)(i).
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and furthers the 
objectives of Sections 6(b)(1) and 6(b)(5) of the Act \10\ in 
particular, in that it enables the Exchange to be so organized as to 
have the capacity to carry out the purposes of the Act and to comply, 
and to enforce compliance by its Members and persons associated with 
its Members, with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the Exchange; and that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. In addition, the proposed 
change is consistent with Section 6(b)(3) of the Act,\11\ in that it 
enables the Exchange to assure a fair representation of its members in 
the selection of its directors and administration of its affairs and 
provide that one or more directors shall be representative of issuers 
and investors and not be associated with a member of the exchange, 
broker, or dealer.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78f(b)(3).
---------------------------------------------------------------------------

    Specifically, the proposed amendments to the By-Laws are reasonably 
designed to incorporate provisions related to the ERP in a manner that 
ensures that the Exchange will remain so organized as to have the 
capacity to carry out the purposes of the Act and to comply, and to 
enforce compliance by its Members and persons associated with its 
Members, with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the Exchange. The changes will also help 
to ensure that Directors, ERP Directors, Observers, and committee 
members are qualified and held to the same restrictions against 
statutory disqualification. The proposed ERP Directors will be subject 
to the same restrictions as current Directors including evaluating 
proposals with the Company's self-regulatory status in mind, 
restricting participation in activities where there is a conflict of 
interest, and requirement to maintain the confidentiality of 
information related to the Company's self-regulatory function. The 
proposed Observers will be subject to the same restrictions as current 
Directors regarding maintaining the confidentiality of information 
related to the Company's self-regulatory function. However, Observers 
will not be subject to the same restrictions as current Directors 
regarding evaluating proposals with the Company's self-regulatory 
status in mind and restricting participation in activities where there 
is a conflict of interest. The Exchange believes that treating 
Observers differently than Directors in these circumstances is 
reasonable because Observers will not be affirmatively voting on any 
such proposals in their non-voting observer capacity.
    In addition, the Exchange's proposed amendments address other non-
substantive revisions to reflect changes since the Commission granted 
the Exchange's registration as a national securities exchange.
    The proposal will continue to assure a fair representation of its 
Members in that ERP Directors will not affect the current Member 
Representation Director calculation or process in any way. The Exchange 
notes that no substantive changes are being proposed to the Board's 
composition; the Board size will increase, but the current composition 
will remain.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed changes to the 
Exchange By-Laws are designed to enable the Exchange to be so organized 
as to have the capacity to carry out the purposes of the Act and to 
comply, and to enforce compliance by its Members and persons associated 
with its Members, with the provisions of the Act, the rules and 
regulations thereunder, and the rules of the Exchange. As such, this is 
not a competitive filing and thus should not impose any burden on 
competition.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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 [email protected]. Please include 
File Number SR-PEARL-2020-30 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-2020-30. 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

[[Page 79256]]

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-2020-30, and should be submitted 
on or before December 30, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-26995 Filed 12-8-20; 8:45 am]
BILLING CODE 8011-01-P
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