Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Pearl Options Fee Schedule To Adopt Fees for a New Data Product Known as the Liquidity Taker Event Report, 33386-33389 [2021-13251]
Download as PDF
<![CDATA[
33386
Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
khammond on DSKJM1Z7X2PROD with NOTICES
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2021–101 and
CP2021–104; Filing Title: USPS Request
to Add Priority Mail & First-Class
Package Service Contract 195 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
VerDate Sep<11>2014
19:19 Jun 23, 2021
Jkt 253001
Acceptance Date: June 14, 2021; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
June 22, 2021.
2. Docket No(s).: MC2021–102 and
CP2021–105; Filing Title: USPS Request
to Add Priority Mail & First-Class
Package Service Contract 196 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: June 14, 2021; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
June 22, 2021.
This Notice will be published in the
Federal Register.
Mallory Smith,
Federal Register Liaison.
[FR Doc. 2021–13316 Filed 6–23–21; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92209; File No. SR–
PEARL–2021–27]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the MIAX Pearl
Options Fee Schedule To Adopt Fees
for a New Data Product Known as the
Liquidity Taker Event Report
June 17, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 7,
2021, MIAX PEARL, LLC (‘‘MIAX Pearl’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I, II, and III below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the MIAX Pearl Fee Schedule
(the ‘‘Fee Schedule’’) to adopt fees for a
new data product to be known as the
Liquidity Taker Event Report.3
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See, generally, Exchange Rule 531(a).
2 17
PO 00000
Frm 00181
Fmt 4703
Sfmt 4703
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
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 recently adopted a new
data product known as the Liquidity
Taker Event Report (the ‘‘Report’’),
which will be available for purchase to
Exchange Members 4 on a voluntary
basis. The Exchange now proposes to
adopt fees for the Report. The Report
was recently approved by the Securities
and Exchange Commission
(‘‘Commission’’) and is described under
Exchange Rule 531(a).5 The Report is an
optional product available to Members.
By way of background, the Report is
a daily report that provides a Member
(‘‘Recipient Member’’) with its liquidity
response time details for executions of
an order resting on the Book,6 where
that Recipient Member attempted to
execute against such resting order 7
within a certain timeframe. It is
important to note that the content of the
Report is specific to the Recipient
Member and the Report will not include
4 ‘‘Member’’ means an individual or organization
that is registered with the Exchange pursuant to
Chapter II of Exchange Rules for purposes of trading
on the Exchange as an ‘‘Electronic Exchange
Member’’ or ‘‘Market Maker.’’ Members are deemed
‘‘members’’ under the Exchange Act. See the
Definitions Section of the Fee Schedule and
Exchange Rule 100.
5 See Securities Exchange Act Release No. 92082
(June 1, 2021) (SR–PEARL–2021–25).
6 The term ‘‘Book’’ means the electronic book of
buy and sell orders and quotes maintained by the
System. See Exchange Rule 100. The term ‘‘System’’
means the automated trading system used by the
Exchange for the trading of securities. See id.
7 Only displayed orders will be included in the
Report. The Exchange notes that it does not
currently offer any non-displayed orders types on
its options trading platform.
E:\FR\FM\24JNN1.SGM
24JNN1
Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
any information related to any Member
other than the Recipient Member.
The following information is included
in the Report regarding the resting
order: (A) The time the resting order
was received by the Exchange; (B)
symbol; (C) order reference number,
which is a unique reference number
assigned to a new order at the time of
receipt; (D) whether the Recipient
Member is an Affiliate 8 of the Member
that entered the resting order;9 (E) origin
type (e.g., Priority Customer,10 Market
Maker) 11; (F) side (buy or sell); and (G)
displayed price and size of the resting
order.12
The following information is included
in the Report regarding the execution of
the resting order: (A) The PBBO 13 at the
time of execution; 14 (B) the ABBO 15 at
the time of execution; 16 (C) the time
first response that executes against the
resting order was received by the
Exchange and the size of the execution
8 The term ‘‘affiliate’’ of or person ‘‘affiliated
with’’ another person means a person who, directly,
or indirectly, controls, is controlled by, or is under
common control with, such other person. See
Exchange Rule 100.
9 The Report will simply indicate whether the
Recipient Member is Affiliate of the Member that
entered the resting order and not include any other
information that may indicate the identity of the
Member that entered the resting order.
10 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
The number of orders shall be counted in
accordance with Interpretation and Policy .01 to
Exchange Rule 100. See Exchange Rule 100.
11 The term ‘‘Market Makers’’ refers to ‘‘Lead
Market Makers’’, ‘‘Primary Lead Market Makers’’
and ‘‘Registered Market Makers’’ collectively. See
Exchange Rule 100.
12 This information is also included in the Missed
Opportunity—Latency Report, which is a similar
report for equity securities that is offered by the
NASDAQ Stock Market, LLC (the ‘‘NASDAQ
Report’’). See NASDAQ Equity Section 7, Rule
146(a)(2). The Exchange notes that the displayed
price and size are also disseminated via the
Exchange’s proprietary data feeds and the Options
Price Reporting Authority (‘‘OPRA’’). The Exchange
also notes that the displayed price of the resting
order may be different than the ultimate execution
price. This may occur when a resting order is
displayed and ranked at different prices upon entry
to avoid a locked or crossed market.
13 The term ‘‘PBBO’’ means the best bid or offer
on the Pearl Exchange. See Exchange Rule 100.
14 Exchange Rule 531(a)(1)(ii)(B) provides that if
the resting order executes against multiple contraside responses, only the PBBO at the time of the
execution against the first response will be
included.
15 The term ‘‘ABBO’’ or ‘‘Away Best Bid or Offer’’
means the best bid(s) or offer(s) disseminated by
other Eligible Exchanges (defined in Exchange Rule
1400(g)) and calculated by the Exchange based on
market information received by the Exchange from
OPRA. See Exchange Rule 100.
16 Exchange Rule 531(a)(1)(ii)(A) further provides
that if the resting order executes against multiple
contra-side responses, only the ABBO at the time
of the execution against the first response will be
included.
VerDate Sep<11>2014
21:41 Jun 23, 2021
Jkt 253001
and type of the response; 17 (D) the time
difference between the time the resting
order was received by the Exchange and
the time the first response that executes
against the resting order was received by
the Exchange; 18 and (E) whether the
response was entered by the Recipient
Member. If the resting order executes
against multiple contra-side responses,
only the PBBO and ABBO at the time of
the execution against the first response
will be included.
The following information is included
in the Report regarding response(s) sent
by the Recipient Member: (A) Recipient
Member identifier; (B) the time
difference between the time the first
response that executes against the
resting order was received by the
Exchange and the time of each response
sent by the Recipient Member,
regardless of whether it executed or
not; 19 (C) size and type of each response
submitted by Recipient Member; and (D)
response reference number, which is a
unique reference number attached to the
response by the Recipient Member.
The Report includes the data set for
executions and contra-side responses
that occurred within 200 microseconds
of the time the resting order was
received by the Exchange. The Report
contains historical data from the prior
trading day and will be available after
the end of the trading day, generally on
a T+1 basis. The Report does not
include real-time data.
The Exchange believes the additional
data points from the matching engine
outlined above may help Members gain
a better understanding about their own
interactions with the Exchange. The
Exchange believes the Report will
provide Members with an opportunity
to learn more about better opportunities
to access liquidity and receive better
execution rates. The Report will
increase transparency and democratize
information so that all firms that
subscribe to the Report have access to
the same information on an equal basis,
even for firms that do not have the
appropriate resources to generate a
similar report regarding interactions
with the Exchange.
17 The time the Exchange received the response
order would be in nanoseconds and would be the
time the response was received by the Exchange’s
network, which is before the time the response
would be received by the System.
18 The time difference would be provided in
nanoseconds.
19 For purposes of calculating this duration of
time, the Exchange will use the time the resting
order and the Recipient Member’s response(s) is
received by the Exchange’s network, both of which
would be before the order and response(s) would
be received by the System. This time difference
would be provided in nanoseconds.
PO 00000
Frm 00182
Fmt 4703
Sfmt 4703
33387
Members generally would use a
liquidity accessing order if there is a
high probability that it will execute
against an order resting on the
Exchange’s Book. The Report identifies
by how much time an order that may
have been marketable missed an
execution. The Report will provide
greater visibility into the missed trading
execution, which will allow Members to
optimize their models and trading
patterns to yield better execution
results.
The Report will be a Member-specific
report and will help Members to better
understand by how much time a
particular order missed executing
against a specific resting order, thus
allowing that Member to determine
whether it wants to invest in the
necessary resources and technology to
mitigate missed executions against
certain resting orders on the Exchange’s
Book.
The Exchange proposes to provide the
Report in response to Member demand
for data concerning the timeliness of
their incoming orders and executions
against resting orders. Members have
periodically requested from the
Exchange’s trading operations personnel
information concerning the timeliness
of their incoming orders and efficacy of
their attempts to execute against resting
liquidity on the Exchange’s Book. The
purpose of the Report is to provide
Members the necessary data in a
standardized format on a T+1 basis to
those that subscribe to the Report on an
equal basis.
The product is offered to Members on
a completely voluntary basis in that the
Exchange is not required by any rule or
regulation to make this data available
and potential subscribers may purchase
the Report only if they voluntarily
choose to do so. It is a business decision
of each Member whether to subscribe to
the Report or not.
The Exchange proposes to adopt new
Section 7), Reports, in its Fee Schedule,
which will provide that Members may
purchase the Report on a monthly or
annual (12-month) basis. The Exchange
proposes to assess a monthly fee of
$4,000 per month and a fee of $24,000
per year for a 12-month subscription for
the Report. Members may cancel their
subscription at any time. The Exchange
also proposes to specify that for midmonth subscriptions, new subscribers
will be charged for the full calendar
month for which they subscribe and
will be provided Report data for each
trading day of the calendar month prior
to the day on which they subscribed.
The Exchange intends to begin to offer
the Report and charge the proposed fees
on June 7, 2021.
E:\FR\FM\24JNN1.SGM
24JNN1
khammond on DSKJM1Z7X2PROD with NOTICES
33388
Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,20 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,21 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and to protect investors and the
public interest, and that it is not
designed to permit unfair
discrimination among customers,
brokers, or dealers. The Exchange also
believes that its proposal to adopt fees
for the Report is consistent with Section
6(b) of the Act 22 in general, and furthers
the objectives of Section 6(b)(4) of the
Act 23 in particular, in that it is an
equitable allocation of dues, fees and
other charges among its Members and
other recipients of Exchange data.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations (‘‘SROs’’) and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. It was
believed that this authority would
expand the amount of data available to
consumers, and also spur innovation
and competition for the provision of
market data. The Exchange believes that
the Report further broadens the
availability of U.S. option market data to
investors consistent with the principles
of Regulation NMS. The Report also
promotes increased transparency
through the dissemination of the Report.
Particularly, the Report will benefit
investors by facilitating their prompt
access to the value added information
that is included in the Report. The
Report will allow Members to access
information regarding their trading
activity that they may utilize to evaluate
their own trading behavior and order
interactions.
The Exchange operates in a highly
competitive environment. Indeed, there
are currently 16 registered options
exchanges that trade options. Based on
publicly available information, no single
options exchange has more than 15% of
the market share and currently the
Exchange represents only approximately
5.29% of the market share.24 The
20 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
22 15 U.S.C. 78f(b).
23 15 U.S.C. 78f(b)(4).
24 See Cboe Global Markets U.S. Options Market
Month-to-Date Volume Summary (June 1, 2021),
available at https://markets.cboe.com/us/options/
market_statistics/.
21 15
VerDate Sep<11>2014
19:19 Jun 23, 2021
Jkt 253001
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. Particularly, in
Regulation NMS, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 25
Making similar data products available
to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
charge supra-competitive fees. In the
event that a market participant views
one exchange’s data product as more
attractive than the competition, that
market participant can, and often does,
switch between similar products. The
proposed fees are a result of the
competitive environment of the U.S.
options industry as the Exchange seeks
to adopt fees to attract purchasers of the
recently introduced Report.
The Exchange believes the proposed
fees are reasonable as the proposed fees
are both modest and similar to fees
assessed by other exchanges that
provide similar data products.26 Indeed,
if the Exchange proposed fees that
market participants viewed as
excessively high, then the proposed fees
would simply serve to reduce demand
for the Exchange’s data product, which
as noted, is entirely optional. Other
options exchanges are also free to
introduce their own comparable data
products with lower prices to better
compete with the Exchange’s offering.
As such, the Exchange believes that the
proposed fees are reasonable and set at
a level to compete with other options
exchanges that may choose to offer
similar reports. Moreover, if a market
participant views another exchange’s
potential report as more attractive, then
such market participant can merely
25 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
26 The NASDAQ Stock Market LLC (‘‘NASDAQ’’)
charges fees ranging from $1,500 to $3,500 per
month for a similar report for equity securities
called the Missed Opportunity—Latency report as
part of its NASDAQ Trader Insights offering. See
NASDAQ Equity Section 7, Rule 146(a)(2). See also
the CME Group, Inc.’s Time and Sale report. https://
www.cmegroup.com/trading/about-timesales.html#:∼:text=CME%20Globex%20Options)-,
CME%20Group’s%20
Time%20%26%20Sales%20report
%20provides%20the%20price%20and%20
time,calendar%20date)%20of%20the%20
transaction.&text=A%20zero%20
volume%20represents%20an%20indicative
%20price.,-The%20Indicator%20column.
PO 00000
Frm 00183
Fmt 4703
Sfmt 4703
choose not to purchase the Exchange’s
Report and instead purchase another
exchange’s similar data product, which
may offer similar data points, albeit
based on that other market’s trading
activity.
The Exchange also believes providing
an annual subscription for an overall
lower fee than a monthly subscription is
equitable and reasonable because it
would enable the Exchange to gauge
long-term interest in the Report. A lower
annual subscription fee would also
incentivize Members to subscribe to the
Report on a long-term basis, thereby
improving the efficiency by which the
Exchange may deliver the Report by
doing so on a regular basis over a
prolonged and set period of time. The
Exchange notes that other exchanges
provide annual subscriptions for reports
concerning their data product
offerings.27
The Exchange also believes the
proposed fees are reasonable as they
would support the introduction of a
new market data product to Members
that are interested in gaining insight
into latency in connection with orders
that failed to execute against an order
resting on the Exchange’s Book. The
Report accomplishes this by providing
those Members data to analyze by how
much time their order may have missed
an execution against a contra-side order
resting on the Book. Members may use
this data to optimize their models and
trading patterns in an effort to yield
better execution results by calculating
by how much time their order may have
missed an execution.
Selling market data, such as the
Report, is also a means by which
exchanges compete to attract business.
To the extent that the Exchange is
successful in attracting subscribers for
the Report, it may earn trading revenues
and further enhance the value of its data
products. If the market deems the
proposed fees to be unfair or
inequitable, firms can diminish or
discontinue their use of the data and/or
avail themselves of similar products
offered by other exchanges.28 The
Exchange therefore believes that the
proposed fees for the Report reflect the
competitive environment and would be
properly assessed on Member users. The
Exchange also believes the proposed
fees are equitable and not unfairly
discriminatory as the fees would apply
equally to all users who choose to
purchase such data. It is a business
27 Cboe Exchange, Inc. (‘‘Cboe’’) assesses a
$24,000 annual fee for an intra-day subscription to
Open-Close Data. See https://datashop.cboe.com/
options-summary-subscription.
28 See supra note 26.
E:\FR\FM\24JNN1.SGM
24JNN1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices
decision of each Member that chooses to
purchase the Report. The Exchange’s
proposed fees would not differentiate
between subscribers that purchase the
Report and are set at a modest level that
would allow any interested Member to
purchase such data based on their
business needs.
The Exchange reiterates that the
decision as to whether or not to
purchase the Report is entirely optional
for all potential subscribers. Indeed, no
market participant is required to
purchase the Report, and the Exchange
is not required to make the Report
available to all investors. It is entirely a
business decision of each Member to
subscribe to the Report. The Exchange
offers the Report as a convenience to
Members to provide them with
additional information regarding trading
activity on the Exchange on a delayed
basis after the close of regular trading
hours. A Member that chooses to
subscribe to the Report may discontinue
receiving the Report at any time if that
Member determines that the information
contained in the Report is no longer
useful.
simply serve to reduce demand for the
Exchange’s data product, which as
discussed, market participants are under
no obligation to utilize. In this
competitive environment, potential
purchasers are free to choose which, if
any, similar product to purchase to
satisfy their need for market
information. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
The Exchange does not believe the
proposed rule change would cause any
unnecessary or inappropriate burden on
intramarket competition. Particularly,
the proposed product and fees apply
uniformly to any purchaser in that the
Exchange does not differentiate between
subscribers that purchase the Report.
The proposed fees are set at a modest
level that would allow any interested
Member to purchase such data based on
their business needs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Written comments were neither
solicited nor received.
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange made the Report available in
order to keep pace with changes in the
industry and evolving customer needs
and demands, and believes the data
product will contribute to robust
competition among national securities
exchanges. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
The Exchange also does not believe
the proposed fees would cause any
unnecessary or inappropriate burden on
intermarket competition as other
exchanges are free to introduce their
own comparable data product with
lower prices to better compete with the
Exchange’s offering. The Exchange
operates in a highly competitive
environment, and its ability to price the
Report is constrained by competition
among exchanges who choose to adopt
a similar product. The Exchange must
consider this in its pricing discipline in
order to compete for the market data.
For example, proposing fees that are
excessively higher than fees for
potentially similar data products would
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
VerDate Sep<11>2014
19:19 Jun 23, 2021
Jkt 253001
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,29 and Rule
19b–4(f)(2) 30 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
PEARL–2021–27 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–2021–27. 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–2021–27 and
should be submitted on or before July
15, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–13251 Filed 6–23–21; 8:45 am]
BILLING CODE 8011–01–P
U.S.C. 78s(b)(3)(A)(ii).
30 17 CFR 240.19b–4(f)(2).
29 15
PO 00000
Frm 00184
Fmt 4703
Sfmt 4703
33389
31 17
E:\FR\FM\24JNN1.SGM
CFR 200.30–3(a)(12).
24JNN1
]]>Agencies
[Federal Register Volume 86, Number 119 (Thursday, June 24, 2021)]
[Notices]
[Pages 33386-33389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13251]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92209; File No. SR-PEARL-2021-27]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
Pearl Options Fee Schedule To Adopt Fees for a New Data Product Known
as the Liquidity Taker Event Report
June 17, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 7, 2021, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') a proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the MIAX Pearl Fee
Schedule (the ``Fee Schedule'') to adopt fees for a new data product to
be known as the Liquidity Taker Event Report.\3\
---------------------------------------------------------------------------
\3\ See, generally, Exchange Rule 531(a).
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings/pearl at MIAX
Pearl's principal office, and at the Commission's Public Reference
Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set 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 recently adopted a new data product known as the
Liquidity Taker Event Report (the ``Report''), which will be available
for purchase to Exchange Members \4\ on a voluntary basis. The Exchange
now proposes to adopt fees for the Report. The Report was recently
approved by the Securities and Exchange Commission (``Commission'') and
is described under Exchange Rule 531(a).\5\ The Report is an optional
product available to Members.
---------------------------------------------------------------------------
\4\ ``Member'' means an individual or organization that is
registered with the Exchange pursuant to Chapter II of Exchange
Rules for purposes of trading on the Exchange as an ``Electronic
Exchange Member'' or ``Market Maker.'' Members are deemed
``members'' under the Exchange Act. See the Definitions Section of
the Fee Schedule and Exchange Rule 100.
\5\ See Securities Exchange Act Release No. 92082 (June 1, 2021)
(SR-PEARL-2021-25).
---------------------------------------------------------------------------
By way of background, the Report is a daily report that provides a
Member (``Recipient Member'') with its liquidity response time details
for executions of an order resting on the Book,\6\ where that Recipient
Member attempted to execute against such resting order \7\ within a
certain timeframe. It is important to note that the content of the
Report is specific to the Recipient Member and the Report will not
include
[[Page 33387]]
any information related to any Member other than the Recipient Member.
---------------------------------------------------------------------------
\6\ The term ``Book'' means the electronic book of buy and sell
orders and quotes maintained by the System. See Exchange Rule 100.
The term ``System'' means the automated trading system used by the
Exchange for the trading of securities. See id.
\7\ Only displayed orders will be included in the Report. The
Exchange notes that it does not currently offer any non-displayed
orders types on its options trading platform.
---------------------------------------------------------------------------
The following information is included in the Report regarding the
resting order: (A) The time the resting order was received by the
Exchange; (B) symbol; (C) order reference number, which is a unique
reference number assigned to a new order at the time of receipt; (D)
whether the Recipient Member is an Affiliate \8\ of the Member that
entered the resting order;\9\ (E) origin type (e.g., Priority
Customer,\10\ Market Maker) \11\; (F) side (buy or sell); and (G)
displayed price and size of the resting order.\12\
---------------------------------------------------------------------------
\8\ The term ``affiliate'' of or person ``affiliated with''
another person means a person who, directly, or indirectly,
controls, is controlled by, or is under common control with, such
other person. See Exchange Rule 100.
\9\ The Report will simply indicate whether the Recipient Member
is Affiliate of the Member that entered the resting order and not
include any other information that may indicate the identity of the
Member that entered the resting order.
\10\ The term ``Priority Customer'' means a person or entity
that (i) is not a broker or dealer in securities, and (ii) does not
place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s). The
number of orders shall be counted in accordance with Interpretation
and Policy .01 to Exchange Rule 100. See Exchange Rule 100.
\11\ The term ``Market Makers'' refers to ``Lead Market
Makers'', ``Primary Lead Market Makers'' and ``Registered Market
Makers'' collectively. See Exchange Rule 100.
\12\ This information is also included in the Missed
Opportunity--Latency Report, which is a similar report for equity
securities that is offered by the NASDAQ Stock Market, LLC (the
``NASDAQ Report''). See NASDAQ Equity Section 7, Rule 146(a)(2). The
Exchange notes that the displayed price and size are also
disseminated via the Exchange's proprietary data feeds and the
Options Price Reporting Authority (``OPRA''). The Exchange also
notes that the displayed price of the resting order may be different
than the ultimate execution price. This may occur when a resting
order is displayed and ranked at different prices upon entry to
avoid a locked or crossed market.
---------------------------------------------------------------------------
The following information is included in the Report regarding the
execution of the resting order: (A) The PBBO \13\ at the time of
execution; \14\ (B) the ABBO \15\ at the time of execution; \16\ (C)
the time first response that executes against the resting order was
received by the Exchange and the size of the execution and type of the
response; \17\ (D) the time difference between the time the resting
order was received by the Exchange and the time the first response that
executes against the resting order was received by the Exchange; \18\
and (E) whether the response was entered by the Recipient Member. If
the resting order executes against multiple contra-side responses, only
the PBBO and ABBO at the time of the execution against the first
response will be included.
---------------------------------------------------------------------------
\13\ The term ``PBBO'' means the best bid or offer on the Pearl
Exchange. See Exchange Rule 100.
\14\ Exchange Rule 531(a)(1)(ii)(B) provides that if the resting
order executes against multiple contra-side responses, only the PBBO
at the time of the execution against the first response will be
included.
\15\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the
best bid(s) or offer(s) disseminated by other Eligible Exchanges
(defined in Exchange Rule 1400(g)) and calculated by the Exchange
based on market information received by the Exchange from OPRA. See
Exchange Rule 100.
\16\ Exchange Rule 531(a)(1)(ii)(A) further provides that if the
resting order executes against multiple contra-side responses, only
the ABBO at the time of the execution against the first response
will be included.
\17\ The time the Exchange received the response order would be
in nanoseconds and would be the time the response was received by
the Exchange's network, which is before the time the response would
be received by the System.
\18\ The time difference would be provided in nanoseconds.
---------------------------------------------------------------------------
The following information is included in the Report regarding
response(s) sent by the Recipient Member: (A) Recipient Member
identifier; (B) the time difference between the time the first response
that executes against the resting order was received by the Exchange
and the time of each response sent by the Recipient Member, regardless
of whether it executed or not; \19\ (C) size and type of each response
submitted by Recipient Member; and (D) response reference number, which
is a unique reference number attached to the response by the Recipient
Member.
---------------------------------------------------------------------------
\19\ For purposes of calculating this duration of time, the
Exchange will use the time the resting order and the Recipient
Member's response(s) is received by the Exchange's network, both of
which would be before the order and response(s) would be received by
the System. This time difference would be provided in nanoseconds.
---------------------------------------------------------------------------
The Report includes the data set for executions and contra-side
responses that occurred within 200 microseconds of the time the resting
order was received by the Exchange. The Report contains historical data
from the prior trading day and will be available after the end of the
trading day, generally on a T+1 basis. The Report does not include
real-time data.
The Exchange believes the additional data points from the matching
engine outlined above may help Members gain a better understanding
about their own interactions with the Exchange. The Exchange believes
the Report will provide Members with an opportunity to learn more about
better opportunities to access liquidity and receive better execution
rates. The Report will increase transparency and democratize
information so that all firms that subscribe to the Report have access
to the same information on an equal basis, even for firms that do not
have the appropriate resources to generate a similar report regarding
interactions with the Exchange.
Members generally would use a liquidity accessing order if there is
a high probability that it will execute against an order resting on the
Exchange's Book. The Report identifies by how much time an order that
may have been marketable missed an execution. The Report will provide
greater visibility into the missed trading execution, which will allow
Members to optimize their models and trading patterns to yield better
execution results.
The Report will be a Member-specific report and will help Members
to better understand by how much time a particular order missed
executing against a specific resting order, thus allowing that Member
to determine whether it wants to invest in the necessary resources and
technology to mitigate missed executions against certain resting orders
on the Exchange's Book.
The Exchange proposes to provide the Report in response to Member
demand for data concerning the timeliness of their incoming orders and
executions against resting orders. Members have periodically requested
from the Exchange's trading operations personnel information concerning
the timeliness of their incoming orders and efficacy of their attempts
to execute against resting liquidity on the Exchange's Book. The
purpose of the Report is to provide Members the necessary data in a
standardized format on a T+1 basis to those that subscribe to the
Report on an equal basis.
The product is offered to Members on a completely voluntary basis
in that the Exchange is not required by any rule or regulation to make
this data available and potential subscribers may purchase the Report
only if they voluntarily choose to do so. It is a business decision of
each Member whether to subscribe to the Report or not.
The Exchange proposes to adopt new Section 7), Reports, in its Fee
Schedule, which will provide that Members may purchase the Report on a
monthly or annual (12-month) basis. The Exchange proposes to assess a
monthly fee of $4,000 per month and a fee of $24,000 per year for a 12-
month subscription for the Report. Members may cancel their
subscription at any time. The Exchange also proposes to specify that
for mid-month subscriptions, new subscribers will be charged for the
full calendar month for which they subscribe and will be provided
Report data for each trading day of the calendar month prior to the day
on which they subscribed.
The Exchange intends to begin to offer the Report and charge the
proposed fees on June 7, 2021.
[[Page 33388]]
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\20\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\21\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes that
its proposal to adopt fees for the Report is consistent with Section
6(b) of the Act \22\ in general, and furthers the objectives of Section
6(b)(4) of the Act \23\ in particular, in that it is an equitable
allocation of dues, fees and other charges among its Members and other
recipients of Exchange data.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78f(b).
\21\ 15 U.S.C. 78f(b)(5).
\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Exchange believes that the Report further
broadens the availability of U.S. option market data to investors
consistent with the principles of Regulation NMS. The Report also
promotes increased transparency through the dissemination of the
Report. Particularly, the Report will benefit investors by facilitating
their prompt access to the value added information that is included in
the Report. The Report will allow Members to access information
regarding their trading activity that they may utilize to evaluate
their own trading behavior and order interactions.
The Exchange operates in a highly competitive environment. Indeed,
there are currently 16 registered options exchanges that trade options.
Based on publicly available information, no single options exchange has
more than 15% of the market share and currently the Exchange represents
only approximately 5.29% of the market share.\24\ The Commission has
repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. Particularly, in Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \25\ Making similar data products available to
market participants fosters competition in the marketplace, and
constrains the ability of exchanges to charge supra-competitive fees.
In the event that a market participant views one exchange's data
product as more attractive than the competition, that market
participant can, and often does, switch between similar products. The
proposed fees are a result of the competitive environment of the U.S.
options industry as the Exchange seeks to adopt fees to attract
purchasers of the recently introduced Report.
---------------------------------------------------------------------------
\24\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (June 1, 2021), available at https://markets.cboe.com/us/options/market_statistics/.
\25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
The Exchange believes the proposed fees are reasonable as the
proposed fees are both modest and similar to fees assessed by other
exchanges that provide similar data products.\26\ Indeed, if the
Exchange proposed fees that market participants viewed as excessively
high, then the proposed fees would simply serve to reduce demand for
the Exchange's data product, which as noted, is entirely optional.
Other options exchanges are also free to introduce their own comparable
data products with lower prices to better compete with the Exchange's
offering. As such, the Exchange believes that the proposed fees are
reasonable and set at a level to compete with other options exchanges
that may choose to offer similar reports. Moreover, if a market
participant views another exchange's potential report as more
attractive, then such market participant can merely choose not to
purchase the Exchange's Report and instead purchase another exchange's
similar data product, which may offer similar data points, albeit based
on that other market's trading activity.
---------------------------------------------------------------------------
\26\ The NASDAQ Stock Market LLC (``NASDAQ'') charges fees
ranging from $1,500 to $3,500 per month for a similar report for
equity securities called the Missed Opportunity--Latency report as
part of its NASDAQ Trader Insights offering. See NASDAQ Equity
Section 7, Rule 146(a)(2). See also the CME Group, Inc.'s Time and
Sale report. https://www.cmegroup.com/trading/about-time-
sales.html#:~:text=CME%20Globex%20Options)-
,CME%20Group's%20Time%20%26%20Sales%20report%20provides%20the%20price
%20and%20time,calendar%20date)%20of%20the%20transaction.&text=A%20zer
o%20volume%20represents%20an%20indicative%20price.,-
The%20Indicator%20column.
---------------------------------------------------------------------------
The Exchange also believes providing an annual subscription for an
overall lower fee than a monthly subscription is equitable and
reasonable because it would enable the Exchange to gauge long-term
interest in the Report. A lower annual subscription fee would also
incentivize Members to subscribe to the Report on a long-term basis,
thereby improving the efficiency by which the Exchange may deliver the
Report by doing so on a regular basis over a prolonged and set period
of time. The Exchange notes that other exchanges provide annual
subscriptions for reports concerning their data product offerings.\27\
---------------------------------------------------------------------------
\27\ Cboe Exchange, Inc. (``Cboe'') assesses a $24,000 annual
fee for an intra-day subscription to Open-Close Data. See https://datashop.cboe.com/options-summary-subscription.
---------------------------------------------------------------------------
The Exchange also believes the proposed fees are reasonable as they
would support the introduction of a new market data product to Members
that are interested in gaining insight into latency in connection with
orders that failed to execute against an order resting on the
Exchange's Book. The Report accomplishes this by providing those
Members data to analyze by how much time their order may have missed an
execution against a contra-side order resting on the Book. Members may
use this data to optimize their models and trading patterns in an
effort to yield better execution results by calculating by how much
time their order may have missed an execution.
Selling market data, such as the Report, is also a means by which
exchanges compete to attract business. To the extent that the Exchange
is successful in attracting subscribers for the Report, it may earn
trading revenues and further enhance the value of its data products. If
the market deems the proposed fees to be unfair or inequitable, firms
can diminish or discontinue their use of the data and/or avail
themselves of similar products offered by other exchanges.\28\ The
Exchange therefore believes that the proposed fees for the Report
reflect the competitive environment and would be properly assessed on
Member users. The Exchange also believes the proposed fees are
equitable and not unfairly discriminatory as the fees would apply
equally to all users who choose to purchase such data. It is a business
[[Page 33389]]
decision of each Member that chooses to purchase the Report. The
Exchange's proposed fees would not differentiate between subscribers
that purchase the Report and are set at a modest level that would allow
any interested Member to purchase such data based on their business
needs.
---------------------------------------------------------------------------
\28\ See supra note 26.
---------------------------------------------------------------------------
The Exchange reiterates that the decision as to whether or not to
purchase the Report is entirely optional for all potential subscribers.
Indeed, no market participant is required to purchase the Report, and
the Exchange is not required to make the Report available to all
investors. It is entirely a business decision of each Member to
subscribe to the Report. The Exchange offers the Report as a
convenience to Members to provide them with additional information
regarding trading activity on the Exchange on a delayed basis after the
close of regular trading hours. A Member that chooses to subscribe to
the Report may discontinue receiving the Report at any time if that
Member determines that the information contained in the Report is no
longer useful.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
made the Report available in order to keep pace with changes in the
industry and evolving customer needs and demands, and believes the data
product will contribute to robust competition among national securities
exchanges. As a result, the Exchange believes this proposed rule change
permits fair competition among national securities exchanges.
The Exchange also does not believe the proposed fees would cause
any unnecessary or inappropriate burden on intermarket competition as
other exchanges are free to introduce their own comparable data product
with lower prices to better compete with the Exchange's offering. The
Exchange operates in a highly competitive environment, and its ability
to price the Report is constrained by competition among exchanges who
choose to adopt a similar product. The Exchange must consider this in
its pricing discipline in order to compete for the market data. For
example, proposing fees that are excessively higher than fees for
potentially similar data products would simply serve to reduce demand
for the Exchange's data product, which as discussed, market
participants are under no obligation to utilize. In this competitive
environment, potential purchasers are free to choose which, if any,
similar product to purchase to satisfy their need for market
information. As a result, the Exchange believes this proposed rule
change permits fair competition among national securities exchanges.
The Exchange does not believe the proposed rule change would cause
any unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed product and fees apply uniformly to any
purchaser in that the Exchange does not differentiate between
subscribers that purchase the Report. The proposed fees are set at a
modest level that would allow any interested Member to purchase such
data based on their business needs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\29\ and Rule 19b-4(f)(2) \30\ 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.
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78s(b)(3)(A)(ii).
\30\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-PEARL-2021-27 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-2021-27. 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-2021-27 and should be submitted on
or before July 15, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
---------------------------------------------------------------------------
\31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13251 Filed 6-23-21; 8:45 am]
BILLING CODE 8011-01-P
