Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Pearl Equities Fee Schedule, 56990-56994 [2022-20038]
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Federal Register / Vol. 87, No. 179 / Friday, September 16, 2022 / Notices
II. Docketed Proceeding(s)
section by
telephone for advice on filing
alternatives.
INFORMATION CONTACT
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
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I. Introduction
II. Docketed Proceeding(s)
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.
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).
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1. Docket No(s).: MC2022–104 and
CP2022–108; Filing Title: USPS Request
to Add Priority Mail Contract 760 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: September 12, 2022;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Jennaca Upperman; Comments Due:
September 20, 2022.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2022–20086 Filed 9–15–22; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95741; File No. SR–
PEARL–2022–36]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the MIAX Pearl
Equities Fee Schedule
September 12, 2022.
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 September 1, 2022, MIAX PEARL,
LLC (‘‘MIAX Pearl’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘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 fee schedule (the ‘‘Fee
Schedule’’) applicable to MIAX Pearl
Equities, an equities trading facility of
the Exchange.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal
office, and at the Commission’s Public
Reference Room.
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule applicable to MIAX Pearl
Equities to: (1) increase the rebate for
executions of all orders in securities
priced below $1.00 per share that add
displayed and non-displayed liquidity
to the Exchange; and (2) increase the fee
for executions of all orders in securities
priced below $1.00 per share that
remove liquidity from the Exchange.
Increase Standard Rebates for Added
Liquidity in Securities Priced Below
$1.00 per Share
The Exchange proposes to amend
Section (1)(a) of the Fee Schedule,
Standard Rates, to increase the standard
rebates for executions of all orders in
securities priced below $1.00 per share
that add displayed and non-displayed
liquidity to the Exchange. Currently, the
Exchange provides a standard rebate of
(0.05%) 3 of the total dollar value of any
transaction in securities priced below
$1.00 that add displayed or nondisplayed liquidity to MIAX Pearl
Equities. This rebate applies to all
Equity Members,4 including those that
qualify for any of the Exchange’s pricing
tiers. These rebates are described in
Section (1)(b) of the Fee Schedule,
Liquidity Indicator Codes and
Associated Fees. Liquidity Indicator
Codes ‘‘AA,’’ ‘‘AB,’’ ‘‘AC,’’ and ‘‘AR’’
apply to the standard rebate for
executions of all orders in securities
priced below $1.00 per share that add
displayed liquidity to the Exchange and
Liquidity Indicator Codes ‘‘Aa,’’ ‘‘Ab,’’
‘‘Ac,’’ ‘‘Ap,’’ and ‘‘Ar’’ apply to the
standard rebate for executions of all
3 Rebates are indicated by parentheses on the Fee
Schedule. See Fee Schedule, General Notes.
4 The term ‘‘Equity Member’’ means a Member
authorized by the Exchange to transact business on
MIAX Pearl Equities. See Exchange Rule 1901.
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orders in securities priced below $1.00
per share that add non-displayed
liquidity to the Exchange.
The Exchange now proposes to
increase the standard rebate from
(0.05%) to (0.10%) of the total dollar
value of any transaction for executions
of all orders in securities priced below
$1.00 per share that add displayed or
non-displayed liquidity to the Exchange
and make the corresponding changes to
the applicable Liquidity Indicator
Codes. The purpose of increasing the
rebate for executions of all orders in
securities priced below $1.00 per share
that add displayed or non-displayed
liquidity to the Exchange is to
incentivize Equity Members to submit
additional orders that add displayed
and non-displayed liquidity in subdollar volume to the Exchange. The
Exchange notes that overall volumes in
sub-dollar securities in the U.S. equities
markets have had significant increases
at certain times; however, the
Exchange’s volumes in these securities
have been disproportionately lower than
certain other venues, relative to the
overall market share of the Exchange
and such other venues, during these
times. Thus, the Exchange’s proposal to
increase the rebate for executions of all
orders in securities priced below $1.00
per share that add displayed and nondisplayed liquidity to the Exchange is
designed to encourage the submission of
additional orders in sub-dollar
securities in order to bring the
Exchange’s volumes in such securities
in line with its overall market share in
a manner that deepens liquidity and
promotes price discovery to the benefit
of all Equity Members. These proposed
changes will also align the Exchange’s
rebates for such securities with that of
at least one other competing exchange.5
Increase Standard Fee for Removing
Liquidity in Securities Priced Below
$1.00 per Share
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Next, the Exchange proposes to
increase the standard fee charged for
executions of all orders in securities
priced below $1.00 per share that
remove liquidity from the Exchange.
Currently, the Exchange charges a
standard fee of 0.05% of the total dollar
value of any transaction in securities
priced below $1.00 that removes
liquidity from MIAX Pearl Equities. The
5 See MEMX Fee Schedule, Fee/(Rebate)—
Securities below $1.00 (‘‘B’’), available at https://
info.memxtrading.com/fee-schedule/ (last visited
August 30, 2022); see also Securities Exchange Act
Release No. 95433 (August 5, 2022), 87 FR 49620
(August 11, 2022) (SR–MEMX–2022–22) (increasing
the rebate for all executions of Added Displayed
Sub-Dollar Volume to 0.10% of the total dollar
value of the transaction).
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Exchange now proposes to increase the
standard fee charged for executions of
all orders in securities priced below
$1.00 per share that remove liquidity
from the Exchange from 0.05% to 0.20%
of the total dollar value.6 Liquidity
Indicator Codes ‘‘RA,’’ ‘‘Ra,’’ ‘‘RB,’’
‘‘Rb,’’ ‘‘RC,’’ ‘‘Rc,’’ ‘‘RR,’’ and ‘‘Rr’’
apply to the standard fee for executions
of all orders in securities priced below
$1.00 per share that remove liquidity
from the Exchange. The Exchange
proposes to make the corresponding
changes to the applicable Liquidity
Indicator Codes.
The purpose of increasing the
standard fee charged for executions of
all orders in securities priced below
$1.00 per share that remove liquidity
from the Exchange is for business and
competitive reasons. The Exchange
believes that increasing such fee as
proposed would generate additional
revenue to offset some of the costs
associated with the Exchange’s
proposed pricing structure, which
provides various rebates for liquidityadding orders and discounted fees for
liquidity-removing orders, and the
Exchange’s operations generally, in a
manner that is consistent with the
Exchange’s overall pricing philosophy
of encouraging added liquidity. The
Exchange notes that despite the modest
increase proposed herein, the
Exchange’s proposed standard fee for
executions of all orders in securities
priced below $1.00 per share that
remove liquidity from the Exchange
(0.20% of the total dollar value) remains
competitive with the standard fee to
remove liquidity in securities priced
below $1.00 per share charged by other
equity exchanges.7
Conforming Changes to Liquidity
Indicator Codes and Associated Fees
Table
In conjunction with the Exchange’s
proposal to (1) increase the rebate for
executions of all orders in securities
priced below $1.00 per share that add
displayed and non-displayed liquidity
to the Exchange and (2) increase the fee
for executions of all orders in securities
priced below $1.00 per share that
6 The proposed pricing is referred to by the
Exchange on the Fee Schedule under the existing
description ‘‘Removing Liquidity’’ in Section (1)(a),
Standard Rates.
7 See MEMX Fee Schedule, Fee Code ‘‘R,’’ supra
note 4 (charging a standard fee of 0.25% of the total
dollar value to remove liquidity in securities priced
below $1.00 per share); see also Cboe BZX Equities
Fee Schedule, Standard Rates, available at https://
www.cboe.com/us/equities/membership/fee_
schedule/bzx/) (last visited August 30, 2022)
(charging a standard fee of 0.30% of total dollar
value to remove liquidity in securities priced below
$1.00 per share).
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56991
remove liquidity from the Exchange, the
Exchange proposes to update the
Liquidity Indicator Codes and
Associated Fees table to reflect the
aforementioned changes. The Exchange
proposes to update the liquidity
indicator codes as follows:
• Liquidity indicator code AA, Adds
Liquidity, Displayed Order (Tape A).
The Liquidity Indicator Code and
Associated Fees table would specify that
orders that yield liquidity indicator
code AA would receive a rebate of
$0.0029 per share in securities priced at
or above $1.00 and 0.10% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code AB, Adds
Liquidity, Displayed Order (Tape B).
The Liquidity Indicator Code and
Associated Fees table would specify that
orders that yield liquidity indicator
code AB would receive a rebate of
$0.0029 per share in securities priced at
or above $1.00 and 0.10% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code AC, Adds
Liquidity, Displayed Order (Tape C).
The Liquidity Indicator Code and
Associated Fees table would specify that
orders that yield liquidity indicator
code AC would receive a rebate of
$0.0029 per share in securities priced at
or above $1.00 and 0.10% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code AR, Retail
Order, Adds Liquidity, Displayed Order
(All Tapes). The Liquidity Indicator
Code and Associated Fees table would
specify that orders that yield liquidity
indicator code AR would receive a
rebate of $0.0037 per share in securities
priced at or above $1.00 and 0.10% of
the transaction’s dollar value in
securities priced below $1.00.
• Liquidity indicator code Aa, Adds
Liquidity, Non-Displayed Order (Tape
A). The Liquidity Indicator Code and
Associated Fees table would specify that
orders that yield liquidity indicator
code Aa would receive a rebate of
$0.0021 per share in securities priced at
or above $1.00 and 0.10% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code Ab, Adds
Liquidity, Non-Displayed Order (Tape
B). The Liquidity Indicator Code and
Associated Fees table would specify that
orders that yield liquidity indicator
code Ab would receive a rebate of
$0.0021 per share in securities priced at
or above $1.00 and 0.10% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code Ac, Adds
Liquidity, Non-Displayed Order (Tape
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C). The Liquidity Indicator Code and
Associated Fees table would specify that
orders that yield liquidity indicator
code Ac would receive a rebate of
$0.0021 per share in securities priced at
or above $1.00 and 0.10% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code Ap, Adds
Liquidity and Executes at the Midpoint,
Non-Displayed Midpoint Peg Order (All
Tapes). The Liquidity Indicator Code
and Associated Fees table would specify
that orders that yield liquidity indicator
code Ap would receive a rebate of
$0.0021 per share in securities priced at
or above $1.00 and 0.10% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code Ar, Retail
Order, Adds Liquidity, Non-Displayed
Order (All Tapes). The Liquidity
Indicator Code and Associated Fees
table would specify that orders that
yield liquidity indicator code Ar would
receive a rebate of $0.0021 per share in
securities priced at or above $1.00 and
0.10% of the transaction’s dollar value
in securities priced below $1.00.
• Liquidity indicator code RA,
Removes Liquidity, Displayed Order
(Tape A). The Liquidity Indicator Code
and Associated Fees table would specify
that orders that yield liquidity indicator
code RA would be subject to a fee of
$0.0029 per share in securities priced at
or above $1.00 and 0.20% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code RB,
Removes Liquidity, Displayed Order
(Tape B). The Liquidity Indicator Code
and Associated Fees table would specify
that orders that yield liquidity indicator
code RB would be subject to a fee of
$0.0029 per share in securities priced at
or above $1.00 and 0.20% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code RC,
Removes Liquidity, Displayed Order
(Tape C). The Liquidity Indicator Code
and Associated Fees table would specify
that orders that yield liquidity indicator
code RC would be subject to a fee of
$0.0029 per share in securities priced at
or above $1.00 and 0.20% of the
transaction’s dollar value in securities
priced below $1.00.
• Liquidity indicator code RR, Retail
Order, Removes Liquidity, Displayed
Order (All Tapes). The Liquidity
Indicator Code and Associated Fees
table would specify that orders that
yield liquidity indicator code RR would
be subject to a fee of $0.0029 per share
in securities priced at or above $1.00
and 0.20% of the transaction’s dollar
value in securities priced below $1.00.
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• Liquidity indicator code Ra,
Removes Liquidity, Non-Displayed
Order (Tape A). The Liquidity Indicator
Code and Associated Fees table would
specify that orders that yield liquidity
indicator code Ra would be subject to a
fee of $0.0029 per share in securities
priced at or above $1.00 and 0.20% of
the transaction’s dollar value in
securities priced below $1.00.
• Liquidity indicator code Rb,
Removes Liquidity, Non-Displayed
Order (Tape B). The Liquidity Indicator
Code and Associated Fees table would
specify that orders that yield liquidity
indicator code Rb would be subject to a
fee of $0.0029 per share in securities
priced at or above $1.00 and 0.20% of
the transaction’s dollar value in
securities priced below $1.00.
• Liquidity indicator code Rc,
Removes Liquidity, Non-Displayed
Order (Tape C). The Liquidity Indicator
Code and Associated Fees table would
specify that orders that yield liquidity
indicator code Rc would be subject to a
fee of $0.0029 per share in securities
priced at or above $1.00 and 0.20% of
the transaction’s dollar value in
securities priced below $1.00.
• Liquidity indicator code Rr, Retail
Order, Removes Liquidity, NonDisplayed Order (All Tapes). The
Liquidity Indicator Code and Associated
Fees table would specify that orders that
yield liquidity indicator code Rr would
be subject to a fee of $0.0029 per share
in securities priced at or above $1.00
and 0.20% of the transaction’s dollar
value in securities priced below $1.00.
Implementation
The Exchange proposes to implement
the changes to the Fee Schedule
pursuant to this proposal on September
1, 2022.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 8
in general, and furthers the objectives of
Section 6(b)(4) of the Act 9 in particular,
in that it is an equitable allocation of
reasonable fees and other charges among
its Equity Members and issuers and
other persons using its facilities. The
Exchange also believes that the
proposed rule change is consistent with
the objectives of Section 6(b)(5) 10
requirements that the rules of an
exchange be designed to prevent
fraudulent and manipulative acts and
practices, and to promote just and
equitable principles of trade, to foster
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
10 15 U.S.C 78f(b)(5).
9 15
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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 mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest, and,
particularly, is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange operates in a highly
fragmented and competitive market in
which market participants can readily
direct their order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. More
specifically, the Exchange is only one of
sixteen registered equities exchanges,
and there are a number of alternative
trading systems and other off-exchange
venues, to which market participants
may direct their order flow. Based on
publicly available information, no single
registered equities exchange currently
has more than approximately 15–16% of
the total market share of executed
volume of equities trading.11 Thus, in
such a low-concentrated and highly
competitive market, no single equities
exchange possesses significant pricing
power in the execution of order flow,
and the Exchange currently represents
approximately 1% of the overall market
share.12 The Commission and the courts
have repeatedly expressed their
preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. In Regulation NMS,
the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and also recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 13
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow or reduce use of
certain categories of products, in
response to new or different pricing
structures being introduced into the
market. Accordingly, competitive forces
constrain the Exchange’s transaction
fees and rebates, and market
participants can readily trade on
11 See ‘‘The Market at a Glance,’’ available at
https://www.miaxoptions.com/ (last visited August
30, 2022).
12 See id.
13 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37499 (June 29, 2005).
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competing venues if they deem pricing
levels at those other venues to be more
favorable. The Exchange believes the
proposal reflects a reasonable and
competitive pricing structure designed
to incentivize market participants to
direct their order flow to the Exchange,
which the Exchange believes would
enhance liquidity and market quality to
the benefit of all Members and market
participants.
The Exchange believes that the
proposed increased rebate for
executions of all orders in securities
priced below $1.00 per share that add
displayed and non-displayed liquidity
to the Exchange is reasonable, equitable,
and non-discriminatory because it
would further incentivize Equity
Members to submit displayed and nondisplayed liquidity-adding orders in
sub-dollar securities to the Exchange.
The Exchange believes that this would
deepen liquidity and promote price
discovery in such securities to the
benefit of all Equity Members, and such
rebates would continue to apply equally
to all Equity Members. The Exchange
further believes that the proposed
increased rebate is reasonable because at
least one other exchange provides
rebates for executions of liquidityadding orders in sub-dollar securities
that are lower than, equal to, and higher
than the proposed rebate.14
The Exchange believes that the
proposed change to increase the
standard fee for executions of all orders
in securities priced below $1.00 per
share that remove liquidity from the
Exchange is reasonable, equitable, and
consistent with the Act because such a
change is designed to generate
additional revenue and decrease the
Exchange’s expenditures with respect to
transaction pricing in order to offset
some of the costs associated with the
various rebates provided by the
Exchange for liquidity-adding orders
and the Exchange’s operations
generally, in a manner that is consistent
with the Exchange’s overall pricing
philosophy of encouraging added
liquidity, as described above. The
Exchange also believes the proposed
increased standard fee for executions of
all orders in securities priced below
$1.00 per share that remove liquidity is
reasonable and not unfairly
14 See supra note 5; see also NYSE Arca Equities
Fee Schedule, III. Standard Rates—Transactions,
available at https://www.nyse.com/markets/nysearca/trading-info#trading-fees (last visited August
30, 2022) (providing a standard rebate of 0.0% of
the total dollar value of the transaction for liquidityadding transactions in securities priced below $1.00
per share, and tiered rebates for such transactions
ranging from 0.05% to 0.15% of the total dollar
value of the transaction based on a participant
achieving certain volume thresholds).
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discriminatory because it represents a
modest increase from the current
standard fee. Further, even with the
proposed increase, the Exchange’s
standard fee for executions of all orders
in securities priced below $1.00 per
share that remove liquidity remains
lower than, or similar to, the standard
fee to remove liquidity in securities
priced below $1.00 per share charged by
competing equities exchanges.15 The
Exchange further believes that the
proposal to increase the standard fee for
executions of all orders in securities
priced below $1.00 per share that
remove liquidity from the Exchange is
equitably allocated and not unfairly
discriminatory because it will apply to
all Equity Members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed changes will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act. The Exchange
believes the proposed changes would
encourage Equity Members to maintain
or increase their order flow to the
Exchange, thereby contributing to a
deeper and more liquid market to the
benefit of all market participants and
enhancing the attractiveness of the
Exchange as a trading venue. As a
result, the Exchange believes the
proposal would enhance its
competitiveness as a market that attracts
actionable orders, thereby making it a
more desirable destination venue for its
customers. For these reasons, the
Exchange believes that the proposal
furthers the Commission’s goal in
adopting Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 16
Intramarket Competition
As discussed above, the Exchange
believes that the proposal would
incentivize Equity Members to submit
additional order flow, including
displayed and non-displayed added
liquidity in sub-dollar securities to the
Exchange, thereby promoting price
discovery and enhancing liquidity and
market quality on the Exchange to the
benefit of all Equity Members.
15 See supra note 7; see also Cboe EDGX Equities
Fee Schedule, Standard Rates, available at https://
www.cboe.com/us/equities/membership/fee_
schedule/edgx/ (last visited August 30, 2022)
(charging a standard fee of 0.30% of the dollar value
to remove liquidity in securities priced below $1.00
per share).
16 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 47396 (June 29, 2005).
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56993
Additionally, the Exchange believes this
will enhance the attractiveness of the
Exchange as a trading venue, which the
Exchange believes, in turn, would
continue to encourage market
participants to direct additional order
flow to the Exchange. Greater liquidity
benefits all Equity Members by
providing more trading opportunities
and encourages Equity Members to send
additional orders to the Exchange,
thereby contributing to robust levels of
liquidity, which benefits all market
participants.
The Exchange believes that the
proposed change to increase the
standard fee for executions of all orders
in securities priced below $1.00 per
share that remove liquidity from the
Exchange will not impose any burden
on intramarket competition because it
represents a modest increase from the
current standard fee and remains lower
than, or similar to, the standard fee to
remove liquidity in securities priced
below $1.00 per share charged by
competing equities exchanges.17
Further, the proposed increased
standard removal fee will apply to all
Equity Members. For the foregoing
reasons, the Exchange believes the
proposed changes would not impose
any burden on intramarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
Intermarket Competition
The Exchange believes its proposal
will benefit competition as the
Exchange operates in a highly
competitive market. Equity Members
have numerous alternative venues they
may participate on and direct their
order flow to, including fifteen other
equities exchanges and numerous
alternative trading systems and other
off-exchange venues. As noted above, no
single registered equities exchange
currently has more than 15–16% of the
total market share of executed volume of
equities trading. Thus, in such a lowconcentrated and highly competitive
market, no single equities exchange
possesses significant pricing power in
the execution of order flow. Moreover,
the Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow in response to new
or different pricing structures being
introduced to the market. Accordingly,
competitive forces constrain the
Exchange’s transaction fees and rebates
generally, including with respect to
executions of all orders in securities
priced below $1.00 per share that
17 See
E:\FR\FM\16SEN1.SGM
supra notes 7 and 15.
16SEN1
56994
Federal Register / Vol. 87, No. 179 / Friday, September 16, 2022 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
remove liquidity from the Exchange,
and market participants can readily
choose to send their orders to other
exchanges and off-exchange venues if
they deem fee levels at those other
venues to be more favorable.
As described above, the proposed
changes are competitive proposals
through which the Exchange is seeking
to encourage additional order flow to
the Exchange and to generate additional
revenue to offset some of the costs
associated with the Exchange’s current
pricing structure and its operations
generally, and such proposed rates are
comparable to, and competitive with,
rates charged by other exchanges.18
Additionally, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, 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.’’ 19 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. circuit
stated: ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, ‘[i]n the U.S.
national market system, buyers and
sellers of securities, and the brokerdealers that act as their routing agents,
have a wide range of choices of where
to route orders for execution’; [and] ‘no
exchange can afford to take its market
share percentages for granted’ because
‘no exchange possess a monopoly,
regulatory or otherwise, in the execution
of order flow from broker dealers’
. . .’’.20 Accordingly, the Exchange does
not believe its proposed pricing changes
impose any burden on competition that
is 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.
18 See
supra notes 5, 7, 14 and 15.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
20 See NetCoalition v. SEC, 615 F.3d 525, 539
(D.C. Cir. 2010) (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–NYSE–
2006–21)).
19 See
VerDate Sep<11>2014
16:43 Sep 15, 2022
Jkt 256001
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,21 and Rule
19b–4(f)(2) 22 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–2022–36 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–2022–36. 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
21 15
22 17
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
Frm 00069
Fmt 4703
Sfmt 4703
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–2022–36 and
should be submitted on or before
October 7, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–20038 Filed 9–15–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–265, OMB Control No.
3235–0273]
Proposed Collection; Comment
Request; Extension: Rule 17Ad–10
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17Ad–10, (17 CFR
240.17Ad–10), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17Ad–10 generally requires
registered transfer agents to: (1) create
and maintain current and accurate
securityholder records; (2) promptly and
accurately record all transfers,
purchases, redemptions, and issuances,
and notify their appropriate regulatory
agency if they are unable to do so; (3)
exercise diligent and continuous
attention in resolving record
inaccuracies; (4) disclose to the issuers
for whom they perform transfer agent
functions and to their appropriate
23 17
E:\FR\FM\16SEN1.SGM
CFR 200.30–3(a)(12).
16SEN1
]]>Agencies
[Federal Register Volume 87, Number 179 (Friday, September 16, 2022)]
[Notices]
[Pages 56990-56994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20038]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95741; File No. SR-PEARL-2022-36]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
Pearl Equities Fee Schedule
September 12, 2022.
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 September 1, 2022, MIAX PEARL, LLC (``MIAX
Pearl'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``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 fee schedule (the
``Fee Schedule'') applicable to MIAX Pearl Equities, an equities
trading facility of the Exchange.
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 proposes to amend the Fee Schedule applicable to MIAX
Pearl Equities to: (1) increase the rebate for executions of all orders
in securities priced below $1.00 per share that add displayed and non-
displayed liquidity to the Exchange; and (2) increase the fee for
executions of all orders in securities priced below $1.00 per share
that remove liquidity from the Exchange.
Increase Standard Rebates for Added Liquidity in Securities Priced
Below $1.00 per Share
The Exchange proposes to amend Section (1)(a) of the Fee Schedule,
Standard Rates, to increase the standard rebates for executions of all
orders in securities priced below $1.00 per share that add displayed
and non-displayed liquidity to the Exchange. Currently, the Exchange
provides a standard rebate of (0.05%) \3\ of the total dollar value of
any transaction in securities priced below $1.00 that add displayed or
non-displayed liquidity to MIAX Pearl Equities. This rebate applies to
all Equity Members,\4\ including those that qualify for any of the
Exchange's pricing tiers. These rebates are described in Section (1)(b)
of the Fee Schedule, Liquidity Indicator Codes and Associated Fees.
Liquidity Indicator Codes ``AA,'' ``AB,'' ``AC,'' and ``AR'' apply to
the standard rebate for executions of all orders in securities priced
below $1.00 per share that add displayed liquidity to the Exchange and
Liquidity Indicator Codes ``Aa,'' ``Ab,'' ``Ac,'' ``Ap,'' and ``Ar''
apply to the standard rebate for executions of all
[[Page 56991]]
orders in securities priced below $1.00 per share that add non-
displayed liquidity to the Exchange.
---------------------------------------------------------------------------
\3\ Rebates are indicated by parentheses on the Fee Schedule.
See Fee Schedule, General Notes.
\4\ The term ``Equity Member'' means a Member authorized by the
Exchange to transact business on MIAX Pearl Equities. See Exchange
Rule 1901.
---------------------------------------------------------------------------
The Exchange now proposes to increase the standard rebate from
(0.05%) to (0.10%) of the total dollar value of any transaction for
executions of all orders in securities priced below $1.00 per share
that add displayed or non-displayed liquidity to the Exchange and make
the corresponding changes to the applicable Liquidity Indicator Codes.
The purpose of increasing the rebate for executions of all orders in
securities priced below $1.00 per share that add displayed or non-
displayed liquidity to the Exchange is to incentivize Equity Members to
submit additional orders that add displayed and non-displayed liquidity
in sub-dollar volume to the Exchange. The Exchange notes that overall
volumes in sub-dollar securities in the U.S. equities markets have had
significant increases at certain times; however, the Exchange's volumes
in these securities have been disproportionately lower than certain
other venues, relative to the overall market share of the Exchange and
such other venues, during these times. Thus, the Exchange's proposal to
increase the rebate for executions of all orders in securities priced
below $1.00 per share that add displayed and non-displayed liquidity to
the Exchange is designed to encourage the submission of additional
orders in sub-dollar securities in order to bring the Exchange's
volumes in such securities in line with its overall market share in a
manner that deepens liquidity and promotes price discovery to the
benefit of all Equity Members. These proposed changes will also align
the Exchange's rebates for such securities with that of at least one
other competing exchange.\5\
---------------------------------------------------------------------------
\5\ See MEMX Fee Schedule, Fee/(Rebate)--Securities below $1.00
(``B''), available at https://info.memxtrading.com/fee-schedule/
(last visited August 30, 2022); see also Securities Exchange Act
Release No. 95433 (August 5, 2022), 87 FR 49620 (August 11, 2022)
(SR-MEMX-2022-22) (increasing the rebate for all executions of Added
Displayed Sub-Dollar Volume to 0.10% of the total dollar value of
the transaction).
---------------------------------------------------------------------------
Increase Standard Fee for Removing Liquidity in Securities Priced Below
$1.00 per Share
Next, the Exchange proposes to increase the standard fee charged
for executions of all orders in securities priced below $1.00 per share
that remove liquidity from the Exchange. Currently, the Exchange
charges a standard fee of 0.05% of the total dollar value of any
transaction in securities priced below $1.00 that removes liquidity
from MIAX Pearl Equities. The Exchange now proposes to increase the
standard fee charged for executions of all orders in securities priced
below $1.00 per share that remove liquidity from the Exchange from
0.05% to 0.20% of the total dollar value.\6\ Liquidity Indicator Codes
``RA,'' ``Ra,'' ``RB,'' ``Rb,'' ``RC,'' ``Rc,'' ``RR,'' and ``Rr''
apply to the standard fee for executions of all orders in securities
priced below $1.00 per share that remove liquidity from the Exchange.
The Exchange proposes to make the corresponding changes to the
applicable Liquidity Indicator Codes.
---------------------------------------------------------------------------
\6\ The proposed pricing is referred to by the Exchange on the
Fee Schedule under the existing description ``Removing Liquidity''
in Section (1)(a), Standard Rates.
---------------------------------------------------------------------------
The purpose of increasing the standard fee charged for executions
of all orders in securities priced below $1.00 per share that remove
liquidity from the Exchange is for business and competitive reasons.
The Exchange believes that increasing such fee as proposed would
generate additional revenue to offset some of the costs associated with
the Exchange's proposed pricing structure, which provides various
rebates for liquidity-adding orders and discounted fees for liquidity-
removing orders, and the Exchange's operations generally, in a manner
that is consistent with the Exchange's overall pricing philosophy of
encouraging added liquidity. The Exchange notes that despite the modest
increase proposed herein, the Exchange's proposed standard fee for
executions of all orders in securities priced below $1.00 per share
that remove liquidity from the Exchange (0.20% of the total dollar
value) remains competitive with the standard fee to remove liquidity in
securities priced below $1.00 per share charged by other equity
exchanges.\7\
---------------------------------------------------------------------------
\7\ See MEMX Fee Schedule, Fee Code ``R,'' supra note 4
(charging a standard fee of 0.25% of the total dollar value to
remove liquidity in securities priced below $1.00 per share); see
also Cboe BZX Equities Fee Schedule, Standard Rates, available at
https://www.cboe.com/us/equities/membership/fee_schedule/bzx/) (last
visited August 30, 2022) (charging a standard fee of 0.30% of total
dollar value to remove liquidity in securities priced below $1.00
per share).
---------------------------------------------------------------------------
Conforming Changes to Liquidity Indicator Codes and Associated Fees
Table
In conjunction with the Exchange's proposal to (1) increase the
rebate for executions of all orders in securities priced below $1.00
per share that add displayed and non-displayed liquidity to the
Exchange and (2) increase the fee for executions of all orders in
securities priced below $1.00 per share that remove liquidity from the
Exchange, the Exchange proposes to update the Liquidity Indicator Codes
and Associated Fees table to reflect the aforementioned changes. The
Exchange proposes to update the liquidity indicator codes as follows:
Liquidity indicator code AA, Adds Liquidity, Displayed
Order (Tape A). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code AA would
receive a rebate of $0.0029 per share in securities priced at or above
$1.00 and 0.10% of the transaction's dollar value in securities priced
below $1.00.
Liquidity indicator code AB, Adds Liquidity, Displayed
Order (Tape B). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code AB would
receive a rebate of $0.0029 per share in securities priced at or above
$1.00 and 0.10% of the transaction's dollar value in securities priced
below $1.00.
Liquidity indicator code AC, Adds Liquidity, Displayed
Order (Tape C). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code AC would
receive a rebate of $0.0029 per share in securities priced at or above
$1.00 and 0.10% of the transaction's dollar value in securities priced
below $1.00.
Liquidity indicator code AR, Retail Order, Adds Liquidity,
Displayed Order (All Tapes). The Liquidity Indicator Code and
Associated Fees table would specify that orders that yield liquidity
indicator code AR would receive a rebate of $0.0037 per share in
securities priced at or above $1.00 and 0.10% of the transaction's
dollar value in securities priced below $1.00.
Liquidity indicator code Aa, Adds Liquidity, Non-Displayed
Order (Tape A). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code Aa would
receive a rebate of $0.0021 per share in securities priced at or above
$1.00 and 0.10% of the transaction's dollar value in securities priced
below $1.00.
Liquidity indicator code Ab, Adds Liquidity, Non-Displayed
Order (Tape B). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code Ab would
receive a rebate of $0.0021 per share in securities priced at or above
$1.00 and 0.10% of the transaction's dollar value in securities priced
below $1.00.
Liquidity indicator code Ac, Adds Liquidity, Non-Displayed
Order (Tape
[[Page 56992]]
C). The Liquidity Indicator Code and Associated Fees table would
specify that orders that yield liquidity indicator code Ac would
receive a rebate of $0.0021 per share in securities priced at or above
$1.00 and 0.10% of the transaction's dollar value in securities priced
below $1.00.
Liquidity indicator code Ap, Adds Liquidity and Executes
at the Midpoint, Non-Displayed Midpoint Peg Order (All Tapes). The
Liquidity Indicator Code and Associated Fees table would specify that
orders that yield liquidity indicator code Ap would receive a rebate of
$0.0021 per share in securities priced at or above $1.00 and 0.10% of
the transaction's dollar value in securities priced below $1.00.
Liquidity indicator code Ar, Retail Order, Adds Liquidity,
Non-Displayed Order (All Tapes). The Liquidity Indicator Code and
Associated Fees table would specify that orders that yield liquidity
indicator code Ar would receive a rebate of $0.0021 per share in
securities priced at or above $1.00 and 0.10% of the transaction's
dollar value in securities priced below $1.00.
Liquidity indicator code RA, Removes Liquidity, Displayed
Order (Tape A). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code RA would
be subject to a fee of $0.0029 per share in securities priced at or
above $1.00 and 0.20% of the transaction's dollar value in securities
priced below $1.00.
Liquidity indicator code RB, Removes Liquidity, Displayed
Order (Tape B). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code RB would
be subject to a fee of $0.0029 per share in securities priced at or
above $1.00 and 0.20% of the transaction's dollar value in securities
priced below $1.00.
Liquidity indicator code RC, Removes Liquidity, Displayed
Order (Tape C). The Liquidity Indicator Code and Associated Fees table
would specify that orders that yield liquidity indicator code RC would
be subject to a fee of $0.0029 per share in securities priced at or
above $1.00 and 0.20% of the transaction's dollar value in securities
priced below $1.00.
Liquidity indicator code RR, Retail Order, Removes
Liquidity, Displayed Order (All Tapes). The Liquidity Indicator Code
and Associated Fees table would specify that orders that yield
liquidity indicator code RR would be subject to a fee of $0.0029 per
share in securities priced at or above $1.00 and 0.20% of the
transaction's dollar value in securities priced below $1.00.
Liquidity indicator code Ra, Removes Liquidity, Non-
Displayed Order (Tape A). The Liquidity Indicator Code and Associated
Fees table would specify that orders that yield liquidity indicator
code Ra would be subject to a fee of $0.0029 per share in securities
priced at or above $1.00 and 0.20% of the transaction's dollar value in
securities priced below $1.00.
Liquidity indicator code Rb, Removes Liquidity, Non-
Displayed Order (Tape B). The Liquidity Indicator Code and Associated
Fees table would specify that orders that yield liquidity indicator
code Rb would be subject to a fee of $0.0029 per share in securities
priced at or above $1.00 and 0.20% of the transaction's dollar value in
securities priced below $1.00.
Liquidity indicator code Rc, Removes Liquidity, Non-
Displayed Order (Tape C). The Liquidity Indicator Code and Associated
Fees table would specify that orders that yield liquidity indicator
code Rc would be subject to a fee of $0.0029 per share in securities
priced at or above $1.00 and 0.20% of the transaction's dollar value in
securities priced below $1.00.
Liquidity indicator code Rr, Retail Order, Removes
Liquidity, Non-Displayed Order (All Tapes). The Liquidity Indicator
Code and Associated Fees table would specify that orders that yield
liquidity indicator code Rr would be subject to a fee of $0.0029 per
share in securities priced at or above $1.00 and 0.20% of the
transaction's dollar value in securities priced below $1.00.
Implementation
The Exchange proposes to implement the changes to the Fee Schedule
pursuant to this proposal on September 1, 2022.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among its Equity Members and issuers and other persons using its
facilities. The Exchange also believes that the proposed rule change is
consistent with the objectives of Section 6(b)(5) \10\ requirements
that the rules of an exchange be designed to prevent fraudulent and
manipulative acts and practices, and 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 mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest, and, particularly, is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
\10\ 15 U.S.C 78f(b)(5).
---------------------------------------------------------------------------
The Exchange operates in a highly fragmented and competitive market
in which market participants can readily direct their order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of sixteen registered equities exchanges, and
there are a number of alternative trading systems and other off-
exchange venues, to which market participants may direct their order
flow. Based on publicly available information, no single registered
equities exchange currently has more than approximately 15-16% of the
total market share of executed volume of equities trading.\11\ Thus, in
such a low-concentrated and highly competitive market, no single
equities exchange possesses significant pricing power in the execution
of order flow, and the Exchange currently represents approximately 1%
of the overall market share.\12\ The Commission and the courts have
repeatedly expressed their preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. In Regulation NMS, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and
also recognized that current regulation of the market system ``has been
remarkably successful in promoting market competition in its broader
forms that are most important to investors and listed companies.'' \13\
---------------------------------------------------------------------------
\11\ See ``The Market at a Glance,'' available at https://www.miaxoptions.com/ (last visited August 30, 2022).
\12\ See id.
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37499 (June 29, 2005).
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or reduce use of certain categories of products, in
response to new or different pricing structures being introduced into
the market. Accordingly, competitive forces constrain the Exchange's
transaction fees and rebates, and market participants can readily trade
on
[[Page 56993]]
competing venues if they deem pricing levels at those other venues to
be more favorable. The Exchange believes the proposal reflects a
reasonable and competitive pricing structure designed to incentivize
market participants to direct their order flow to the Exchange, which
the Exchange believes would enhance liquidity and market quality to the
benefit of all Members and market participants.
The Exchange believes that the proposed increased rebate for
executions of all orders in securities priced below $1.00 per share
that add displayed and non-displayed liquidity to the Exchange is
reasonable, equitable, and non-discriminatory because it would further
incentivize Equity Members to submit displayed and non-displayed
liquidity-adding orders in sub-dollar securities to the Exchange. The
Exchange believes that this would deepen liquidity and promote price
discovery in such securities to the benefit of all Equity Members, and
such rebates would continue to apply equally to all Equity Members. The
Exchange further believes that the proposed increased rebate is
reasonable because at least one other exchange provides rebates for
executions of liquidity-adding orders in sub-dollar securities that are
lower than, equal to, and higher than the proposed rebate.\14\
---------------------------------------------------------------------------
\14\ See supra note 5; see also NYSE Arca Equities Fee Schedule,
III. Standard Rates--Transactions, available at https://www.nyse.com/markets/nyse-arca/trading-info#trading-fees (last
visited August 30, 2022) (providing a standard rebate of 0.0% of the
total dollar value of the transaction for liquidity-adding
transactions in securities priced below $1.00 per share, and tiered
rebates for such transactions ranging from 0.05% to 0.15% of the
total dollar value of the transaction based on a participant
achieving certain volume thresholds).
---------------------------------------------------------------------------
The Exchange believes that the proposed change to increase the
standard fee for executions of all orders in securities priced below
$1.00 per share that remove liquidity from the Exchange is reasonable,
equitable, and consistent with the Act because such a change is
designed to generate additional revenue and decrease the Exchange's
expenditures with respect to transaction pricing in order to offset
some of the costs associated with the various rebates provided by the
Exchange for liquidity-adding orders and the Exchange's operations
generally, in a manner that is consistent with the Exchange's overall
pricing philosophy of encouraging added liquidity, as described above.
The Exchange also believes the proposed increased standard fee for
executions of all orders in securities priced below $1.00 per share
that remove liquidity is reasonable and not unfairly discriminatory
because it represents a modest increase from the current standard fee.
Further, even with the proposed increase, the Exchange's standard fee
for executions of all orders in securities priced below $1.00 per share
that remove liquidity remains lower than, or similar to, the standard
fee to remove liquidity in securities priced below $1.00 per share
charged by competing equities exchanges.\15\ The Exchange further
believes that the proposal to increase the standard fee for executions
of all orders in securities priced below $1.00 per share that remove
liquidity from the Exchange is equitably allocated and not unfairly
discriminatory because it will apply to all Equity Members.
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\15\ See supra note 7; see also Cboe EDGX Equities Fee Schedule,
Standard Rates, available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/ (last visited August 30, 2022)
(charging a standard fee of 0.30% of the dollar value to remove
liquidity in securities priced below $1.00 per share).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed changes will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. The Exchange believes the proposed changes
would encourage Equity Members to maintain or increase their order flow
to the Exchange, thereby contributing to a deeper and more liquid
market to the benefit of all market participants and enhancing the
attractiveness of the Exchange as a trading venue. As a result, the
Exchange believes the proposal would enhance its competitiveness as a
market that attracts actionable orders, thereby making it a more
desirable destination venue for its customers. For these reasons, the
Exchange believes that the proposal furthers the Commission's goal in
adopting Regulation NMS of fostering competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \16\
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\16\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 47396 (June 29, 2005).
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Intramarket Competition
As discussed above, the Exchange believes that the proposal would
incentivize Equity Members to submit additional order flow, including
displayed and non-displayed added liquidity in sub-dollar securities to
the Exchange, thereby promoting price discovery and enhancing liquidity
and market quality on the Exchange to the benefit of all Equity
Members. Additionally, the Exchange believes this will enhance the
attractiveness of the Exchange as a trading venue, which the Exchange
believes, in turn, would continue to encourage market participants to
direct additional order flow to the Exchange. Greater liquidity
benefits all Equity Members by providing more trading opportunities and
encourages Equity Members to send additional orders to the Exchange,
thereby contributing to robust levels of liquidity, which benefits all
market participants.
The Exchange believes that the proposed change to increase the
standard fee for executions of all orders in securities priced below
$1.00 per share that remove liquidity from the Exchange will not impose
any burden on intramarket competition because it represents a modest
increase from the current standard fee and remains lower than, or
similar to, the standard fee to remove liquidity in securities priced
below $1.00 per share charged by competing equities exchanges.\17\
Further, the proposed increased standard removal fee will apply to all
Equity Members. For the foregoing reasons, the Exchange believes the
proposed changes would not impose any burden on intramarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
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\17\ See supra notes 7 and 15.
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Intermarket Competition
The Exchange believes its proposal will benefit competition as the
Exchange operates in a highly competitive market. Equity Members have
numerous alternative venues they may participate on and direct their
order flow to, including fifteen other equities exchanges and numerous
alternative trading systems and other off-exchange venues. As noted
above, no single registered equities exchange currently has more than
15-16% of the total market share of executed volume of equities
trading. Thus, in such a low-concentrated and highly competitive
market, no single equities exchange possesses significant pricing power
in the execution of order flow. Moreover, the Exchange believes that
the ever-shifting market share among the exchanges from month to month
demonstrates that market participants can shift order flow in response
to new or different pricing structures being introduced to the market.
Accordingly, competitive forces constrain the Exchange's transaction
fees and rebates generally, including with respect to executions of all
orders in securities priced below $1.00 per share that
[[Page 56994]]
remove liquidity from the Exchange, and market participants can readily
choose to send their orders to other exchanges and off-exchange venues
if they deem fee levels at those other venues to be more favorable.
As described above, the proposed changes are competitive proposals
through which the Exchange is seeking to encourage additional order
flow to the Exchange and to generate additional revenue to offset some
of the costs associated with the Exchange's current pricing structure
and its operations generally, and such proposed rates are comparable
to, and competitive with, rates charged by other exchanges.\18\
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\18\ See supra notes 5, 7, 14 and 15.
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Additionally, the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
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.'' \19\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission, the D.C.
circuit stated: ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their routing agents, have a wide range of choices of where to
route orders for execution'; [and] `no exchange can afford to take its
market share percentages for granted' because `no exchange possess a
monopoly, regulatory or otherwise, in the execution of order flow from
broker dealers' . . .''.\20\ Accordingly, the Exchange does not believe
its proposed pricing changes impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
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\19\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\20\ See NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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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,\21\ and Rule 19b-4(f)(2) \22\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(3)(A)(ii).
\22\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-PEARL-2022-36 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-2022-36. 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-2022-36 and should be submitted on
or before October 7, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20038 Filed 9-15-22; 8:45 am]
BILLING CODE 8011-01-P
