Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 519C, Mass Cancellation of Trading Interest, 14348-14351 [2021-05237]

Download as PDF 14348 Federal Register / Vol. 86, No. 48 / Monday, March 15, 2021 / Notices CALVERT CLIFFS NUCLEAR POWER PLANT, UNITS 1 AND 2 [Docket Nos. 50–317 and 50–318] ADAMS accession No. Document description Calvert Cliffs Nuclear Plant, Units 1 and 2—COVID-19 Related Request for Exemption from 10 CFR part 26 Work Hours Requirements, dated January 21, 2021. Calvert Cliffs Nuclear Power Plant, Units 1 and 2—Exemption from Select Requirements of 10 CFR part 26 (EPID L–2021– LLE–0005 [COVID–19]), dated February 18, 2021. ML21022A009 ML21029A336 COMANCHE PEAK NUCLEAR POWER PLANT, UNIT NOS. 1 AND 2 [Docket Nos. 50–445 and 50–446] ADAMS accession No. Document description Comanche Peak Nuclear Power Plant, Unit Nos. 1 and 2—Subsequent Request for Exemption from Specific Requirements of 10 CFR part 26, ‘‘Fitness for Duty Programs,’’ dated February 8, 2021. Comanche Peak Nuclear Power Plant, Unit Nos. 1 and 2—Supplement to Subsequent Request for Exemption from Specific Requirements of 10 CFR part 26, ‘‘Fitness for Duty Programs,’’ dated February 9, 2021. Comanche Peak Nuclear Power Plant, Unit Nos. 1 and 2—Second Supplement to Subsequent Request for Exemption from Specific Requirements of 10 CFR part 26, ‘‘Fitness for Duty Programs,’’ dated February 10, 2021. Comanche Peak Nuclear Power Plant, Unit Nos. 1 and 2—Exemption from Select requirements of 10 CFR part 26 (EPID L– 2021–LLE–0009 [COVID-19]), dated February 11, 2021. ML21039A688 ML21040A512 ML21041A541 ML21040A001 LASALLE COUNTY STATION, UNITS 1 AND 2 [Docket Nos. 50–373 and 50–374] Adams accession No. Document description LaSalle County Station, Units 1 and 2—Subsequent Request for Exemption from 10 CFR part 26 Work Hours Requirements, dated January 22, 2021. LaSalle County Station, Units 1 and 2—Exemption from Select Requirements of 10 CFR part 26 (EPID L–2021–LLE–0004 [COVID–19]), dated February 2, 2021. ML21022A372 ML21025A294 NINE MILE POINT NUCLEAR STATION, UNITS 1 AND 2 [Docket Nos. 50–220 and 50–410] Adams accession No. Document description Nine Mile Point Nuclear Station, Units 1 and 2—COVID–19 Related Request for Exemption from 10 CFR part 26 Work Hours Requirements, dated January 22, 2021. Nine Mile Point Nuclear Station, Units 1 and 2—Exemption from Select Requirements of 10 CFR part 26 (EPID L–2021–LLE– 0006 [COVID–19]), dated February 23, 2021. Dated: March 9, 2021. For the Nuclear Regulatory Commission. James G. Danna, Chief, Plant Licensing Branch I, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. [FR Doc. 2021–05268 Filed 3–12–21; 8:45 am] khammond on DSKJM1Z7X2PROD with NOTICES BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91282; File No. SR– PEARL–2021–05] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 519C, Mass Cancellation of Trading Interest March 9, 2021. 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 1 15 2 17 VerDate Sep<11>2014 16:36 Mar 12, 2021 Jkt 253001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00048 Fmt 4703 Sfmt 4703 ML21022A230 ML21029A309 on February 25, 2021, 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 proposed rule change to amend Exchange Rule 519C. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rule- E:\FR\FM\15MRN1.SGM 15MRN1 Federal Register / Vol. 86, No. 48 / Monday, March 15, 2021 / Notices filings/pearl at MIAX PEARL’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set 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 khammond on DSKJM1Z7X2PROD with NOTICES 1. Purpose The Exchange proposes to amend Rule 519C, Mass Cancellation of Trading Interest, to adopt new paragraph (d) titled, Detection of Unresponsive System Interface, which will state that a Member 3 may request that the Help Desk 4 enable the cancel on disconnect feature for a FIX session on their behalf. When the System 5 detects an unresponsive FIX Interface 6 due to a System issue, the System will cancel all open orders for that Interface session. MIAX PEARL Members may connect to the System using the MEO Interface 7 and/or the FIX Interface. These two connection protocols are not mutually exclusive and Members, specifically Market Makers (‘‘MMs’’) 8 on the 3 The term ‘‘Member’’ means an individual or organization that is registered with the Exchange pursuant to Chapter II of MIAX PEARL 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. 4 The term ‘‘Help Desk’’ means the Exchange’s control room consisting of Exchange staff authorized to make certain trading determinations on behalf of the Exchange. The Help Desk shall report to and be supervised by a senior executive officer of the Exchange. See Exchange Rule 100. 5 The term ‘‘System’’ means the automated trading system used by the Exchange for the trading of securities. See Exchange Rule 100. 6 The term ‘‘FIX Interface’’ means the Financial Information Exchange interface used for submitting certain order types (as set forth in MIAX PEARL Rule 516) to the MIAX PEARL System. See Exchange Rule 100. 7 The term ‘‘MEO Interface’’ means a binary order interface used for submitting certain order types (as set forth in MIAX PEARL Rule 516) to the MIAX PEARL System. See Exchange Rule 100. 8 The term ‘‘Market Maker’’ or ‘‘MM’’ means a Member registered with the Exchange for the VerDate Sep<11>2014 16:36 Mar 12, 2021 Jkt 253001 Exchange, primarily use the MEO Interface for providing liquidity to the Exchange via their Market Making activities, while Electronic Exchange Members (‘‘EEMs’’) 9 primarily use the FIX Interface for submitting orders.10 These Interface ports provide the mechanism by which Members maintain a connection to the Exchange and through which a Member communicates its quotes and/or orders to the System. Market Makers may submit quotes 11 to the Exchange from one or more MEO ports. Similarly, Members may submit orders to the Exchange from one or more FIX ports. MEO Connections Members connect to their assigned MEO port using the MIAX Session Management Protocol (‘‘SesM’’). The SesM protocol uses Heartbeat 12 packets to detect link failures between the Member and the Exchange. The SesM protocol requires that the Exchange must send a Heartbeat packet anytime more than one (1) second has passed since the Exchange last sent any data. Further, the SesM protocol requires that the Member must send a Heartbeat packet anytime more than one (1) second has passed since the Member last sent any data. If a certain number of consecutive Heartbeats are missed,13 or if the Member fails to send data or Heartbeats within ‘‘xx’’ period of time (‘‘Heartbeat Interval’’), the System will automatically close the connection and listen for the Member to establish a new connection.14 The default Heartbeat 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 MIAX PEARL Rules. See Exchange Rule 100. 9 The term ‘‘Electronic Exchange Member’’ or ‘‘EEM’’ means the holder of a Trading Permit who is a Member representing as agent Public Customer Orders or Non-Customer Orders on the Exchange and those non-Market Maker Members conducting proprietary trading. Electronic Exchange Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. 10 The term ‘‘order’’ means a firm commitment to buy or sell option contracts. See Exchange Rule 100. 11 The term ‘‘quote’’ or ‘‘quotation’’ means a bid or offer entered by a Market Maker as a firm order that updates the Market Maker’s previous bid or offer, if any. When the term order is used in these Rules and a bid or offer is entered by the Market Maker in the option series to which such Market Maker is registered, such order shall, as applicable, constitute a quote or quotation for purposes of these Rules. See Exchange Rule 100. 12 A Heartbeat message is a communication which acts as a virtual pulse between the Exchange System and the Member’s system. The Heartbeat message sent by the Member and received by the Exchange allows the Exchange to continually monitor its connection with the Member. 13 The Exchange notes that the current setting is three (3) Heartbeats. 14 See TCP Session Management (SesM), Protocol Specification, (8/13/2015), Version 1.1e, available at https://www.miaxoptions.com/sites/default/files/ PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 14349 Interval setting is determined by the Exchange and configured directly into the System.15 Any change to these settings is communicated to Members accordingly. The Exchange offers Members three different types of MEO port connections. A Full Service Port Bulk (‘‘FSPB’’) which supports all message types and binary bulk order entry, a Full Service Port Single (‘‘FSPS’’) which supports all MEO input message types and binary order entry on a single order by order basis (no bulk orders), and a Limited Service Port (‘‘LSP’’), which supports all MEO input message types, but does not support bulk order entry and only supports IOC/ISO order types. All Ports can have ‘‘cancel on disconnect’’ enabled. By default, cancel on disconnect functionality will be triggered upon establishing a loss of communication to the Member’s last MEO Full Service Port connection to a matching engine. When cancel on disconnect is triggered, the System will close the session and remove the Member’s quotes and orders from the Exchange, for the impacted matching engine only.16 MEO cancel on disconnect functionality is not changing under this proposal. FIX Connections Members connect to their assigned FIX port using the MIAX PEARL FIX Orders Interface (‘‘FOI’’) which is a flexible interface that uses the FIX protocol for both application and session level messages. As per the FIX protocol, a connection is established by the Member submitting a logon message to the Exchange. This logon message establishes the Heartbeat interval that will be used by the session. This value must be greater than zero seconds and the same value must be used by both the Member and the Exchange. Within the logon message a Member can enable ‘‘Auto Cancel on Disconnect’’ for all orders sent through a session by setting a flag in the logon message. This would result in all eligible orders 17 submitted through the page-files/MIAX_PEARL_TcpSessionMgmt_SesM_ v1_1e_0.pdf. 15 The Exchange notes that the current setting is three (3) seconds. 16 See MIAX Express Orders Binary Orders for Trading Options, MEO Interface Specification, (8/ 12/2020), Version 2.0b, available at https:// www.miaxoptions.com/sites/default/files/pagefiles/MIAX_Express_Orders_MEO_v2.0b.pdf. See also Exchange Rule 519C(c)(1). 17 Good ’Til Cancelled (‘‘GTC’’) orders are not eligible for Auto Cancel on Disconnect. A GTC Order is an order to buy or sell which remains in effect until it is either executed, cancelled or the underlying option expires. See Exchange Rule 516(i). E:\FR\FM\15MRN1.SGM 15MRN1 14350 Federal Register / Vol. 86, No. 48 / Monday, March 15, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES FIX connection to be canceled upon a loss of communication. Alternatively, a Member can identify individual orders on a per order basis that are to be considered for Auto Cancel on Disconnect treatment. Upon missing a single Heartbeat, FOI will send a Test Request message 18 to the Member to check the status of the connection. Upon missing a certain number of Heartbeats,19 FOI will send a logout message and terminate the connection. When FOI detects a disconnection for any reason it will trigger the Auto Cancel on Disconnect process, whereby, if enabled, FOI will cancel all eligible orders. If Auto Cancel on Disconnect is not enabled for the session or for any orders, FOI will simply disconnect the FIX session and not cancel any orders. Once disconnected, a FIX user would have to commence a new session to add, modify, or cancel its orders. After a disconnect, FOI will not accept connections from the Member for a preconfigured period of time.20 This allows the Exchange to cancel orders without the Member being able to reconnect and attempt to interact with an order in the process of being canceled. Any change to this setting will be communicated to Members accordingly. The Auto Cancel on Disconnect functionality is designed to react to external connection loss scenarios only. Therefore, it does not cancel orders in the event of a FOI Interface becoming unresponsive as a result of a MIAX PEARL System issue. The execution reports resulting from cancels or trades during the period a Member is disconnected can be received upon a subsequent reconnection by the Member on the same trading day.21 The Exchange now proposes an additional risk protection feature designed to cancel orders in the event of a MIAX PEARL System issue that causes the FIX Order Interface to become unresponsive. The Exchange proposes to allow a Member to request that the Help Desk enable the cancel on 18 The test request message is a FIX Protocol message that forces a heartbeat from the opposing application. The test request message checks sequence numbers or verifies communication line status. The opposite application responds to the Test Request with a Heartbeat containing the Test Request ID. Financial Information Exchange Protocol (FIX), Version 4.2 with errata. May 1, 2001. 19 The Exchange notes that the current setting is two (2) Heartbeats. 20 The Exchange notes that the current setting is five (5) seconds. See also Exchange Rule 519C(c)(2). 21 See Options Order Management using FIX Protocol, FIX Interface Specification, (6/10/2018), Version 1.1, available at https:// www.miaxoptions.com/sites/default/files/pagefiles/MIAX_PEARL_FIX_Order_Interface_FOI_ v1.1a.pdf. VerDate Sep<11>2014 16:36 Mar 12, 2021 Jkt 253001 disconnect feature for FIX sessions on their behalf. When the System detects an unresponsive FIX Order Interface due to a MIAX PEARL System issue, the System will cancel all open orders, including GTC orders, for that specific session. After initially requesting that the Help Desk enable the cancel on disconnect feature on behalf of the Member, the setting will remain enabled until such time as the Member requests that it be disabled. While GTC orders by definition are designed to remain on the Exchange’s Book 22 until such time as they are executed or canceled, some Members have expressed a preference to have any order type, including Good ’til Cancelled, removed from the Exchange’s Book if the Member is unable to interact with their order due to a technical issue. Removing a Member’s order in the event of a technical issue reduces the chance of an undesirable execution occurring and gives the Member flexibility and control over their orders. Additionally, the Exchange proposes to make a minor non-substantive edit to subparagraph (c)(2) to replace the term ‘‘Session’’ (with an uppercase ‘‘S’’) with the term ‘‘session’’ (with a lowercase ‘‘s’’). The term ‘‘FIX Session’’ is not a defined term in the Exchange’s rulebook and is therefore currently erroneously identified as one. This proposed change improves the clarity and precision of the Exchange’s rulebook. 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act 23 in general, and furthers the objectives of Section 6(b)(5) of the Act 24 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. The proposed rule will remove impediments to and perfect the mechanism of a free and open market and a national market system and protect investors and the public interest by providing Members with a 22 The term ‘‘Book’’ means the electronic book of buy and sell orders and quotes maintained by the System. See Exchange Rule 100. 23 15 U.S.C. 78f(b). 24 15 U.S.C. 78f(b)(5). PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 mechanism by which to remove all open orders in the System in the event one of their FIX Order Interfaces becomes unresponsive due to a MIAX PEARL System issue. Offering this type of order cancellation functionality to Members is consistent with the Act because it enables Members to avoid risks associated with inadvertent executions in the event the Member is unable to interact with its orders on the Exchange. The proposed rule change is not unfairly discriminatory among Members, as it is available equally to all Members of the Exchange that use the FIX Protocol to submit orders to the Exchange. The Exchange’s proposal is consistent with the Act because it adds another risk protection tool for Members to employ that may mitigate the risk of potential erroneous or unintended executions associated with an unresponsive FIX Order Interface which protects investors and the public interest. The Exchange believes the proposed change to correct a typographical error, promotes just and equitable principles of trade, removes impediments to and perfects the mechanism of a free and open market and a national market system as it improves the accuracy and specificity of the Exchange’s Rules. The Exchange believes that the proposed change will provide greater clarity to Members and the public regarding the Exchange’s Rules, and it is in the public interest for rules to be accurate and concise so as to eliminate the potential for confusion. 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 that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed rule change will not impose any burden on intra-market competition because every Member of the Exchange has the opportunity to benefit from the optional functionality described in the proposed rule. Offering optional functionality to cancel all open orders, including GTC orders, in the System upon detection of an unresponsive FOI connection due to a MIAX PEARL System issue, does not create an undue burden on intra-market competition as Members may wish to have all open orders canceled to reduce the possibility of an undesired execution occurring. The Exchange does not believe the proposed rule change will impose any E:\FR\FM\15MRN1.SGM 15MRN1 Federal Register / Vol. 86, No. 48 / Monday, March 15, 2021 / Notices burden on inter-market competition that is not necessary or appropriate in furtherance of the purposes of the Act. At least one other option exchange similarly offers a variation of cancel functionality to their users to protect against unintended or unwanted executions.25 For the reasons stated, 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. 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 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 26 and Rule 19b– 4(f)(6) 27 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 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. khammond on DSKJM1Z7X2PROD with NOTICES 7 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Today, all non-Customers pay a $0.48 per contract Fee for Removing Liquidity in SPY. 4 This would include Lead Market Maker or Market Maker quotes or orders that were executed. Comments may be submitted by any of the following methods: 16:36 Mar 12, 2021 Jkt 253001 SECURITIES AND EXCHANGE COMMISSION 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–2021–05 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–PEARL–2021–05. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–PEARL–2021–05 and should be submitted on or before April 5, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–05237 Filed 3–12–21; 8:45 am] BILLING CODE 8011–01–P 28 17 VerDate Sep<11>2014 14351 PO 00000 CFR 200.30–3(a)(12). Frm 00051 Fmt 4703 Sfmt 4703 [Release No. 34–91284; File No. SR– NYSEArca–2020–77] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Withdrawal of a Proposed Rule Change To Amend NYSE Arca Rule 8.601–E To Adopt Generic Listing Standards for Active Proxy Portfolio Shares March 9, 2021. On August 31, 2020, NYSE Arca, Inc. (‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend NYSE Arca Rule 8.601–E to adopt generic listing standards for Active Proxy Portfolio Shares. The proposed rule change was published for comment in the Federal Register on September 21, 2020.3 On October 30, 2020, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On December 11, 2020, the Commission instituted proceedings to determine whether to approve or disapprove the proposed rule change.6 The Commission received no comments on the proposed rule change. On March 5, 2021, the Exchange withdrew the proposed rule change (SR–NYSEArca–2020–77). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–05239 Filed 3–12–21; 8:45 am] BILLING CODE 8011–01–P 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 89874 (September 15, 2020), 85 FR 59338. 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 90296, 85 FR 70696 (November 5, 2020). 6 See Securities Exchange Act Release No. 90652, 85 FR 82011 (December 17, 2020). 7 17 CFR 200.30–3(a)(12). 2 17 E:\FR\FM\15MRN1.SGM 15MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 48 (Monday, March 15, 2021)]
[Notices]
[Pages 14348-14351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05237]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91282; File No. SR-PEARL-2021-05]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 519C, Mass Cancellation of Trading Interest

March 9, 2021.
    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 February 25, 2021, 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.
---------------------------------------------------------------------------

    \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 proposed rule change to amend Exchange 
Rule 519C.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxoptions.com/rule-

[[Page 14349]]

filings/pearl at MIAX PEARL's principal office, and at the Commission's 
Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set 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 Rule 519C, Mass Cancellation of 
Trading Interest, to adopt new paragraph (d) titled, Detection of 
Unresponsive System Interface, which will state that a Member \3\ may 
request that the Help Desk \4\ enable the cancel on disconnect feature 
for a FIX session on their behalf. When the System \5\ detects an 
unresponsive FIX Interface \6\ due to a System issue, the System will 
cancel all open orders for that Interface session.
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    \3\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of MIAX PEARL 
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.
    \4\ The term ``Help Desk'' means the Exchange's control room 
consisting of Exchange staff authorized to make certain trading 
determinations on behalf of the Exchange. The Help Desk shall report 
to and be supervised by a senior executive officer of the Exchange. 
See Exchange Rule 100.
    \5\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \6\ The term ``FIX Interface'' means the Financial Information 
Exchange interface used for submitting certain order types (as set 
forth in MIAX PEARL Rule 516) to the MIAX PEARL System. See Exchange 
Rule 100.
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    MIAX PEARL Members may connect to the System using the MEO 
Interface \7\ and/or the FIX Interface. These two connection protocols 
are not mutually exclusive and Members, specifically Market Makers 
(``MMs'') \8\ on the Exchange, primarily use the MEO Interface for 
providing liquidity to the Exchange via their Market Making activities, 
while Electronic Exchange Members (``EEMs'') \9\ primarily use the FIX 
Interface for submitting orders.\10\
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    \7\ The term ``MEO Interface'' means a binary order interface 
used for submitting certain order types (as set forth in MIAX PEARL 
Rule 516) to the MIAX PEARL System. See Exchange Rule 100.
    \8\ 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 MIAX PEARL 
Rules. See Exchange Rule 100.
    \9\ The term ``Electronic Exchange Member'' or ``EEM'' means the 
holder of a Trading Permit who is a Member representing as agent 
Public Customer Orders or Non-Customer Orders on the Exchange and 
those non-Market Maker Members conducting proprietary trading. 
Electronic Exchange Members are deemed ``members'' under the 
Exchange Act. See Exchange Rule 100.
    \10\ The term ``order'' means a firm commitment to buy or sell 
option contracts. See Exchange Rule 100.
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    These Interface ports provide the mechanism by which Members 
maintain a connection to the Exchange and through which a Member 
communicates its quotes and/or orders to the System. Market Makers may 
submit quotes \11\ to the Exchange from one or more MEO ports. 
Similarly, Members may submit orders to the Exchange from one or more 
FIX ports.
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    \11\ The term ``quote'' or ``quotation'' means a bid or offer 
entered by a Market Maker as a firm order that updates the Market 
Maker's previous bid or offer, if any. When the term order is used 
in these Rules and a bid or offer is entered by the Market Maker in 
the option series to which such Market Maker is registered, such 
order shall, as applicable, constitute a quote or quotation for 
purposes of these Rules. See Exchange Rule 100.
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MEO Connections
    Members connect to their assigned MEO port using the MIAX Session 
Management Protocol (``SesM''). The SesM protocol uses Heartbeat \12\ 
packets to detect link failures between the Member and the Exchange. 
The SesM protocol requires that the Exchange must send a Heartbeat 
packet anytime more than one (1) second has passed since the Exchange 
last sent any data. Further, the SesM protocol requires that the Member 
must send a Heartbeat packet anytime more than one (1) second has 
passed since the Member last sent any data. If a certain number of 
consecutive Heartbeats are missed,\13\ or if the Member fails to send 
data or Heartbeats within ``xx'' period of time (``Heartbeat 
Interval''), the System will automatically close the connection and 
listen for the Member to establish a new connection.\14\ The default 
Heartbeat Interval setting is determined by the Exchange and configured 
directly into the System.\15\ Any change to these settings is 
communicated to Members accordingly.
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    \12\ A Heartbeat message is a communication which acts as a 
virtual pulse between the Exchange System and the Member's system. 
The Heartbeat message sent by the Member and received by the 
Exchange allows the Exchange to continually monitor its connection 
with the Member.
    \13\ The Exchange notes that the current setting is three (3) 
Heartbeats.
    \14\ See TCP Session Management (SesM), Protocol Specification, 
(8/13/2015), Version 1.1e, available at https://www.miaxoptions.com/sites/default/files/page-files/MIAX_PEARL_TcpSessionMgmt_SesM_v1_1e_0.pdf.
    \15\ The Exchange notes that the current setting is three (3) 
seconds.
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    The Exchange offers Members three different types of MEO port 
connections. A Full Service Port Bulk (``FSPB'') which 
supports all message types and binary bulk order entry, a Full Service 
Port Single (``FSPS'') which supports all MEO input message 
types and binary order entry on a single order by order basis (no bulk 
orders), and a Limited Service Port (``LSP''), which supports all MEO 
input message types, but does not support bulk order entry and only 
supports IOC/ISO order types. All Ports can have ``cancel on 
disconnect'' enabled.
    By default, cancel on disconnect functionality will be triggered 
upon establishing a loss of communication to the Member's last MEO Full 
Service Port connection to a matching engine. When cancel on disconnect 
is triggered, the System will close the session and remove the Member's 
quotes and orders from the Exchange, for the impacted matching engine 
only.\16\ MEO cancel on disconnect functionality is not changing under 
this proposal.
---------------------------------------------------------------------------

    \16\ See MIAX Express Orders Binary Orders for Trading Options, 
MEO Interface Specification, (8/12/2020), Version 2.0b, available at 
https://www.miaxoptions.com/sites/default/files/page-files/MIAX_Express_Orders_MEO_v2.0b.pdf. See also Exchange Rule 
519C(c)(1).
---------------------------------------------------------------------------

FIX Connections
    Members connect to their assigned FIX port using the MIAX PEARL FIX 
Orders Interface (``FOI'') which is a flexible interface that uses the 
FIX protocol for both application and session level messages. As per 
the FIX protocol, a connection is established by the Member submitting 
a logon message to the Exchange. This logon message establishes the 
Heartbeat interval that will be used by the session. This value must be 
greater than zero seconds and the same value must be used by both the 
Member and the Exchange.
    Within the logon message a Member can enable ``Auto Cancel on 
Disconnect'' for all orders sent through a session by setting a flag in 
the logon message. This would result in all eligible orders \17\ 
submitted through the

[[Page 14350]]

FIX connection to be canceled upon a loss of communication. 
Alternatively, a Member can identify individual orders on a per order 
basis that are to be considered for Auto Cancel on Disconnect 
treatment.
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    \17\ Good 'Til Cancelled (``GTC'') orders are not eligible for 
Auto Cancel on Disconnect. A GTC Order is an order to buy or sell 
which remains in effect until it is either executed, cancelled or 
the underlying option expires. See Exchange Rule 516(i).
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    Upon missing a single Heartbeat, FOI will send a Test Request 
message \18\ to the Member to check the status of the connection. Upon 
missing a certain number of Heartbeats,\19\ FOI will send a logout 
message and terminate the connection. When FOI detects a disconnection 
for any reason it will trigger the Auto Cancel on Disconnect process, 
whereby, if enabled, FOI will cancel all eligible orders. If Auto 
Cancel on Disconnect is not enabled for the session or for any orders, 
FOI will simply disconnect the FIX session and not cancel any orders. 
Once disconnected, a FIX user would have to commence a new session to 
add, modify, or cancel its orders. After a disconnect, FOI will not 
accept connections from the Member for a pre-configured period of 
time.\20\ This allows the Exchange to cancel orders without the Member 
being able to reconnect and attempt to interact with an order in the 
process of being canceled. Any change to this setting will be 
communicated to Members accordingly.
---------------------------------------------------------------------------

    \18\ The test request message is a FIX Protocol message that 
forces a heartbeat from the opposing application. The test request 
message checks sequence numbers or verifies communication line 
status. The opposite application responds to the Test Request with a 
Heartbeat containing the Test Request ID. Financial Information 
Exchange Protocol (FIX), Version 4.2 with errata. May 1, 2001.
    \19\ The Exchange notes that the current setting is two (2) 
Heartbeats.
    \20\ The Exchange notes that the current setting is five (5) 
seconds. See also Exchange Rule 519C(c)(2).
---------------------------------------------------------------------------

    The Auto Cancel on Disconnect functionality is designed to react to 
external connection loss scenarios only. Therefore, it does not cancel 
orders in the event of a FOI Interface becoming unresponsive as a 
result of a MIAX PEARL System issue. The execution reports resulting 
from cancels or trades during the period a Member is disconnected can 
be received upon a subsequent reconnection by the Member on the same 
trading day.\21\
---------------------------------------------------------------------------

    \21\ See Options Order Management using FIX Protocol, FIX 
Interface Specification, (6/10/2018), Version 1.1, available at 
https://www.miaxoptions.com/sites/default/files/page-files/MIAX_PEARL_FIX_Order_Interface_FOI_v1.1a.pdf.
---------------------------------------------------------------------------

    The Exchange now proposes an additional risk protection feature 
designed to cancel orders in the event of a MIAX PEARL System issue 
that causes the FIX Order Interface to become unresponsive. The 
Exchange proposes to allow a Member to request that the Help Desk 
enable the cancel on disconnect feature for FIX sessions on their 
behalf. When the System detects an unresponsive FIX Order Interface due 
to a MIAX PEARL System issue, the System will cancel all open orders, 
including GTC orders, for that specific session. After initially 
requesting that the Help Desk enable the cancel on disconnect feature 
on behalf of the Member, the setting will remain enabled until such 
time as the Member requests that it be disabled.
    While GTC orders by definition are designed to remain on the 
Exchange's Book \22\ until such time as they are executed or canceled, 
some Members have expressed a preference to have any order type, 
including Good 'til Cancelled, removed from the Exchange's Book if the 
Member is unable to interact with their order due to a technical issue. 
Removing a Member's order in the event of a technical issue reduces the 
chance of an undesirable execution occurring and gives the Member 
flexibility and control over their orders.
---------------------------------------------------------------------------

    \22\ The term ``Book'' means the electronic book of buy and sell 
orders and quotes maintained by the System. See Exchange Rule 100.
---------------------------------------------------------------------------

    Additionally, the Exchange proposes to make a minor non-substantive 
edit to subparagraph (c)(2) to replace the term ``Session'' (with an 
uppercase ``S'') with the term ``session'' (with a lowercase ``s''). 
The term ``FIX Session'' is not a defined term in the Exchange's 
rulebook and is therefore currently erroneously identified as one. This 
proposed change improves the clarity and precision of the Exchange's 
rulebook.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \23\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \24\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
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.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule will remove impediments to and perfect the 
mechanism of a free and open market and a national market system and 
protect investors and the public interest by providing Members with a 
mechanism by which to remove all open orders in the System in the event 
one of their FIX Order Interfaces becomes unresponsive due to a MIAX 
PEARL System issue.
    Offering this type of order cancellation functionality to Members 
is consistent with the Act because it enables Members to avoid risks 
associated with inadvertent executions in the event the Member is 
unable to interact with its orders on the Exchange. The proposed rule 
change is not unfairly discriminatory among Members, as it is available 
equally to all Members of the Exchange that use the FIX Protocol to 
submit orders to the Exchange.
    The Exchange's proposal is consistent with the Act because it adds 
another risk protection tool for Members to employ that may mitigate 
the risk of potential erroneous or unintended executions associated 
with an unresponsive FIX Order Interface which protects investors and 
the public interest.
    The Exchange believes the proposed change to correct a 
typographical error, promotes just and equitable principles of trade, 
removes impediments to and perfects the mechanism of a free and open 
market and a national market system as it improves the accuracy and 
specificity of the Exchange's Rules. The Exchange believes that the 
proposed change will provide greater clarity to Members and the public 
regarding the Exchange's Rules, and it is in the public interest for 
rules to be accurate and concise so as to eliminate the potential for 
confusion.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes the 
proposed rule change will not impose any burden on intra-market 
competition because every Member of the Exchange has the opportunity to 
benefit from the optional functionality described in the proposed rule.
    Offering optional functionality to cancel all open orders, 
including GTC orders, in the System upon detection of an unresponsive 
FOI connection due to a MIAX PEARL System issue, does not create an 
undue burden on intra-market competition as Members may wish to have 
all open orders canceled to reduce the possibility of an undesired 
execution occurring.
    The Exchange does not believe the proposed rule change will impose 
any

[[Page 14351]]

burden on inter-market competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. At least one other option 
exchange similarly offers a variation of cancel functionality to their 
users to protect against unintended or unwanted executions.\25\
---------------------------------------------------------------------------

    \25\ See Cboe Exchange Rule 5.34(c)(6) and (7).
---------------------------------------------------------------------------

    For the reasons stated, 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.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \26\ and Rule 19b-4(f)(6) 
\27\ thereunder.
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    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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 [email protected]. Please include 
File Number SR-PEARL-2021-05 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-PEARL-2021-05. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-PEARL-2021-05 and should be submitted on 
or before April 5, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05237 Filed 3-12-21; 8:45 am]
BILLING CODE 8011-01-P

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