Self-Regulatory Organizations: Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by MIAX PEARL, LLC To Amend the MIAX Pearl Options Fee Schedule, 17882-17886 [2023-06056]
Download as PDF
<![CDATA[
17882
Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices
POSTAL SERVICE
International Product Change—Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service contract to the list
of Negotiated Service Agreements in the
Competitive Product List in the Mail
Classification Schedule.
DATES: Date of notice: March 24, 2023.
FOR FURTHER INFORMATION CONTACT:
Christopher C. Meyerson, (202) 268–
7820.
SUMMARY:
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on March 7, 2023,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express International,
Priority Mail International & First-Class
Package International Service Contract
15 to Competitive Product List.
Documents are available at
www.prc.gov, Docket Nos. MC2023–118
and CP2023–121.
SUPPLEMENTARY INFORMATION:
Sarah Sullivan,
Attorney, Ethics & Legal Compliance.
[FR Doc. 2023–06074 Filed 3–23–23; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34862; File No. 812–15332]
Ares Strategic Income Fund and Ares
Capital Management LLC
March 20, 2023.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
lotter on DSK11XQN23PROD with NOTICES1
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c), and 18(i), and
section 61(a) of the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
closed-end management investment
companies that have elected to be
regulated as business development
companies (‘‘BDCs’’) to issue multiple
classes of shares with varying sales
19:18 Mar 23, 2023
Jkt 259001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97168; File No. SR–
PEARL–2023–13]
Self-Regulatory Organizations: Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change by MIAX
PEARL, LLC To Amend the MIAX Pearl
Options Fee Schedule
March 20, 2023.
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 March 9, 2023, 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 Options Fee
Schedule (the ‘‘Fee Schedule’’).
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.
Jill
Ehrlich, Senior Counsel, or Lisa Reid
Ragen, Branch Chief, at (202) 551–6825
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ first amended and restated
application, dated September 20, 2022,
which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field, on the
SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at
https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090.
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.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
1. Purpose
The purpose of the proposed rule
change is to amend Section 1)a)
Exchange Rebates/Fees—Add/Remove
FOR FURTHER INFORMATION CONTACT:
BILLING CODE 7710–12–P
VerDate Sep<11>2014
loads and asset-based service and/or
distribution fees.
APPLICANTS: Ares Strategic Income Fund
and Ares Capital Management LLC.
FILING DATES: The application was filed
on April 29, 2022 and amended on
September 20, 2022.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the Commission’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 14, 2023, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Joshua M. Bloomstein, jbloomstein@
aresmgmt.com.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2023–06060 Filed 3–23–23; 8:45 am]
1 15
BILLING CODE 8011–01–P
2 17
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\24MRN1.SGM
24MRN1
Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices
Tiered Rebates/Fees of the Exchange’s
Fee Schedule to adopt an additional
alternative volume criteria for the Tier
2 rebates/fees for MIAX Pearl Market
Makers. The Exchange originally filed
this proposal on March 1, 2023 (SR–
PEARL–2023–12). On March 9, 2023,
the Exchange withdrew SR–PEARL–
2023–12 and resubmitted this proposal.
Background
lotter on DSK11XQN23PROD with NOTICES1
The Exchange currently assesses
transaction rebates and fees to all
market participants which are based
upon the total monthly volume
executed by the Member 3 on MIAX
Pearl in the relevant, respective origin
type (not including Excluded
Contracts) 4 (as the numerator)
expressed as a percentage of (divided
by) TCV 5 (as the denominator). In
addition, the per contract transaction
rebates and fees are applied
retroactively to all eligible volume for
that origin type once the respective
threshold tier (‘‘Tier’’) has been reached
by the Member. The Exchange
aggregates the volume of Members and
3 ‘‘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.
4 ‘‘Excluded Contracts’’ means any contracts
routed to an away market for execution. See the
Definitions Section of the Fee Schedule.
5 ‘‘TCV’’ means total consolidated volume
calculated as the total national volume in those
classes listed on MIAX PEARL for the month for
which the fees apply, excluding consolidated
volume executed during the period time in which
the Exchange experiences an ‘‘Exchange System
Disruption’’ (solely in the option classes of the
affected Matching Engine (as defined below)). The
term Exchange System Disruption, which is defined
in the Definitions section of the Fee Schedule,
means an outage of a Matching Engine or collective
Matching Engines for a period of two consecutive
hours or more, during trading hours. The term
Matching Engine, which is also defined in the
Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes
options orders and trades on a symbol-by-symbol
basis. Some Matching Engines will process option
classes with multiple root symbols, and other
Matching Engines may be dedicated to one single
option root symbol (for example, options on SPY
may be processed by one single Matching Engine
that is dedicated only to SPY). A particular root
symbol may only be assigned to a single designated
Matching Engine. A particular root symbol may not
be assigned to multiple Matching Engines. The
Exchange believes that it is reasonable and
appropriate to select two consecutive hours as the
amount of time necessary to constitute an Exchange
System Disruption, as two hours equates to
approximately 1.4% of available trading time per
month. The Exchange notes that the term
‘‘Exchange System Disruption’’ and its meaning
have no applicability outside of the Fee Schedule,
as it is used solely for purposes of calculating
volume for the threshold tiers in the Fee Schedule.
See the Definitions Section of the Fee Schedule.
VerDate Sep<11>2014
19:18 Mar 23, 2023
Jkt 259001
their Affiliates.6 Members that place
resting liquidity, i.e., orders resting on
the book of the MIAX Pearl System,7 are
paid the specified ‘‘maker’’ rebate (each
a ‘‘Maker’’), and Members that execute
against resting liquidity are assessed the
specified ‘‘taker’’ fee (each a ‘‘Taker’’).
For opening transactions and ABBO 8
uncrossing transactions, per contract
transaction rebates and fees are waived
for all market participants. Finally,
Members are assessed lower transaction
fees and receive lower rebates for order
executions in standard option classes in
the Penny Interval Program 9 (‘‘Penny
Classes’’) than for order executions in
standard option classes which are not in
the Penny Interval Program (‘‘NonPenny Classes’’), where Members are
assessed higher transaction fees and
receive higher rebates.
6 ‘‘Affiliate’’ means (i) an affiliate of a Member of
at least 75% common ownership between the firms
as reflected on each firm’s Form BD, Schedule A,
or (ii) the Appointed Market Maker of an Appointed
EEM (or, conversely, the Appointed EEM of an
Appointed Market Maker). An ‘‘Appointed Market
Maker’’ is a MIAX PEARL Market Maker (who does
not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has
been appointed by an EEM and an ‘‘Appointed
EEM’’ is an EEM (who does not otherwise have a
corporate affiliation based upon common
ownership with a MIAX PEARL Market Maker) that
has been appointed by a MIAX PEARL Market
Maker, pursuant to the following process. A MIAX
PEARL Market Maker appoints an EEM and an EEM
appoints a MIAX PEARL Market Maker, for the
purposes of the Fee Schedule, by each completing
and sending an executed Volume Aggregation
Request Form by email to membership@
miaxoptions.com no later than 2 business days
prior to the first business day of the month in which
the designation is to become effective. Transmittal
of a validly completed and executed form to the
Exchange along with the Exchange’s
acknowledgement of the effective designation to
each of the Market Maker and EEM will be viewed
as acceptance of the appointment. The Exchange
will only recognize one designation per Member. A
Member may make a designation not more than
once every 12 months (from the date of its most
recent designation), which designation shall remain
in effect unless or until the Exchange receives
written notice submitted 2 business days prior to
the first business day of the month from either
Member indicating that the appointment has been
terminated. Designations will become operative on
the first business day of the effective month and
may not be terminated prior to the end of the
month. Execution data and reports will be provided
to both parties. See the Definitions Section of the
Fee Schedule.
7 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
8 ‘‘ABBO’’ 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 the Definitions
Section of the Fee Schedule and Exchange Rule
100.
9 See Securities Exchange Act Release No. 88992
(June 2, 2020), 85 FR 35142 (June 8, 2020) (SR–
PEARL–2020–06).
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
17883
Alternative Volume Criteria Threshold
Change in Tier 2
The Exchange proposes to amend the
Add/Remove Tiered Rebates/Fees table
set forth in Section 1)a) of the Fee
Schedule for MIAX Pearl Market Maker
origins, to adopt a new alternative
Volume Criteria in Tier 2. Currently, the
volume criteria for Pearl Market Makers
to qualify for Tier 2 fees/rebates is above
0.20% to 0.50%. The Exchange
currently provides an alternative
volume criteria in Tier 2 which is based
upon the total monthly volume
executed by a MIAX Pearl Market Maker
collectively in SPY/QQQ/IWM options
on the Exchange, expressed as a
percentage of total consolidated national
volume in SPY/QQQ/IWM options.10
Pursuant to this alternative volume
criteria, a Market Maker is able to reach
the Tier 2 threshold if the Market
Maker’s total executed monthly volume,
not including Excluded Contracts, in
SPY/QQQ/IWM options on MIAX Pearl
is above 0.55% of total consolidated
national monthly volume in SPY/QQQ/
IWM options. For this calculation,
volume that is from resting liquidity
(Maker) and taking liquidity (Taker) in
SPY/QQQ/IWM options is counted
towards the alternative volume criteria,
and the 0.55% threshold does not have
to be reached individually in each of the
three symbols. A Market Maker is able
to qualify for Tier 2 rebates and fees,
which will then be applicable to all
volume executed by the MIAX Pearl
Market Maker on MIAX Pearl.
Therefore, the two different volume
criteria available for Tier 2 are based
upon either: (a) the total monthly
volume executed by the Market Maker
in all options classes on MIAX Pearl,
not including Excluded Contracts, (as
the numerator), expressed as a
percentage of (divided by) TCV (as the
denominator); or (b) the total monthly
volume executed by the MIAX Pearl
Market Maker collectively in SPY/QQQ/
IWM options on MIAX Pearl, not
including Excluded Contracts, (as the
numerator), expressed as a percentage of
(divided by) SPY/QQQ/IWM TCV 11 (as
10 See Fee Schedule, Section 1)a), explanatory
paragraph below the tables and footnotes. See also
Securities Exchange Act Release Nos. 84592
(November 14, 2018), 83 FR 58646 (November 20,
2018) (SR–PEARL–2018–23); 90906 (January 21,
2021), 86 FR 5296 (January 19, 2021) (SR–PEARL–
2020–38).
11 ‘‘SPY/QQQ/IWM TCV’’ means total
consolidated volume in SPY, QQQ, and IWM
calculated as the total national volume in SPY,
QQQ, and IWM for the month for which the fees
apply, excluding consolidated volume executed
during the period of time in which the Exchange
experiences an Exchange System Disruption (solely
E:\FR\FM\24MRN1.SGM
Continued
24MRN1
17884
Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices
lotter on DSK11XQN23PROD with NOTICES1
the denominator). Once either volume
criteria threshold in Tier 2 is reached by
the Market Maker, the Tier 2 per
contract rebates and fees apply to all
volume in all options classes executed
by that MIAX Pearl Market Maker on
MIAX Pearl.
The Exchange now proposes to adopt
an additional alternative volume criteria
in Tier 2 to introduce cross-asset
volume based requirements that require
MIAX Pearl Market Makers to satisfy the
requirements of Tier 2 of the ‘‘Add
Volume Tiers’’ table in the MIAX Pearl
Equities fee schedule,12 and also the
requirements of Tier 2 of the ‘‘Midpoint
Peg Order Adding Liquidity at the
Midpoint Volume Tiers’’ table in the
MIAX Pearl Equities fee schedule.13 A
Midpoint Peg Order 14 on the MIAX
Pearl Equities Exchange is a nondisplayed limit order that is assigned a
working price pegged to the midpoint of
the PBBO.15
With the proposed change, the three
different volume criteria available for
Tier 2 are based upon either: (i) the total
monthly volume executed by the Market
Maker in all options classes on MIAX
Pearl, not including Excluded Contracts,
(as the numerator), expressed as a
percentage of (divided by) TCV (as the
denominator); or (ii) the total monthly
volume executed by the MIAX Pearl
Market Maker collectively in SPY/QQQ/
IWM options on MIAX Pearl, not
including Excluded Contracts, (as the
numerator), expressed as a percentage of
(divided by) SPY/QQQ/IWM TCV (as
the denominator); or (iii) if the Market
Maker is in Tier 2 of the Add Volume
Tiers table by having an ADAV 16 greater
than or equal to 0.10% of Total
Consolidated Volume on the MIAX
in SPY, QQQ, or IWM options). See the Definitions
Section of the Fee Schedule.
12 See MIAX Pearl Equities Fee Schedule, Section
1)c) Add Volume Tiers table, on its public website
(available online at https://www.miaxoptions.com/
fees/pearl-equities).
13 See MIAX Pearl Equities Fee Schedule, Section
1)e) Midpoint Peg Order Adding Liquidity at
Midpoint Volume Tiers table, on its public website
(available online at https://www.miaxoptions.com/
fees/pearl-equities).
14 See Exchange Rule 2614(a)(3).
15 With respect to the trading of equity securities,
the term ‘‘Protected NBB’’ or ‘‘PBB’’ shall mean the
national best bid that is a Protected Quotation, the
term ‘‘Protected NBO’’ or ‘‘PBO’’ shall mean the
national best offer that is a Protected Quotation, and
the term ‘‘Protected NBBO’’ or ‘‘PBBO’’ shall mean
the national best bid and offer that is a Protected
Quotation. See Exchange Rule 1901.
16 ‘‘ADAV’’ means average daily added volume
calculated as the number of shares added per day
and ‘‘ADV’’ means average daily volume calculated
as the number of shares added or removed,
combined, per day. ADAV and ADV are calculated
on a monthly basis. See Definitions, in the MIAX
Pearl Equities Fee Schedule, on its public website
(available online at https://www.miaxoptions.com/
fees/pearl-equities).
VerDate Sep<11>2014
19:18 Mar 23, 2023
Jkt 259001
Pearl Equities Exchange; and is also in
Tier 2 of the Midpoint Peg Order 17
Adding Liquidity at Midpoint Volume
Tier table by having a Midpoint ADAV
greater than or equal to 1,000,000 shares
on the MIAX Pearl Equities Exchange.
Once any one of the aforementioned
three volume criteria threshold in Tier
2 is reached by the Market Maker, the
Tier 2 per contract rebates and fees
apply to all volume in all options
classes executed by that MIAX Pearl
Market Maker.
The purpose of this proposed change
is for business and competitive reasons.
At least one other exchange with both
options and equities trading platforms
offers a similar cross-asset volume
criteria in a similar tier based
structure.18 The Exchange’s proposal
adds a third volume criteria that Market
Makers may satisfy in order to achieve
Tier 2 fees/rebates, i.e., satisfying each
of the cross-asset volume criteria
requirements for that month. The
Exchange believes that with the
proposed change, the Exchange will
attract additional equities order flow
from Market Makers, which should
benefit all Exchange participants by
providing more trading opportunities
and tighter spreads. The Exchange
cannot predict with certainty how many
Market Makers will satisfy the
alternative volume criteria in Tier 2.
Implementation
The proposed changes are
immediately effective.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 19
in general, and furthers the objectives of
Section 6(b)(4) of the Act,20 in that it is
an equitable allocation of reasonable
dues, fees and other charges among
Exchange members and issuers and
other persons using its facilities, and
17 A Midpoint Peg Order is a non-displayed Limit
Order that is assigned a working price pegged to the
midpoint of the PBBO. A Midpoint Peg Order
receives a new timestamp each time its working
price changes in response to changes in the
midpoint of the PBBO. See Exchange Rule
2614(a)(3).
18 See NYSE Arca Options Fee schedule, Market
Maker Penny and SPY Posting Credit Tiers, Super
Tier II, which provides a credit of $0.42 when a
Firm has at least 0.10% of TCADV from Market
Maker posted interest in all issues, plus ETP Holder
and Market Maker posted volume in Tape B
Securities (‘‘Tape B Adding ADV’’) that is equal to
at least 1.50% of US Tape B consolidated average
daily volume (‘‘CADV’’) for the billing month
executed on NYSE Arca Equity Market, available at
https://www.nyse.com/publicdocs/nyse/markets/
arca-options/NYSE_Arca_Options_Fee_
Schedule.pdf.
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(4).
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
6(b)(5) of the Act,21 in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, to remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Commission has repeatedly
expressed its 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.’’ 22
There are currently 16 registered
options exchanges competing for order
flow. Based on publicly-available
information, and excluding index-based
options, as of February 23, 2023, no
single exchange has more than
approximately 12–13% equity options
market share for the month of February
2023.23 Therefore, no exchange
possesses significant pricing power.
More specifically, as of February 23,
2023, the Exchange had a market share
of approximately 6.83% of executed
volume of multiply-listed equity options
for the month of February 2023.24
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can discontinue or reduce use of certain
categories of products and services,
terminate an existing membership or
determine to not become a new member,
and/or shift order flow, in response to
transaction fee changes. For example, on
February 28, 2019, the Exchange filed
with the Commission a proposal to
increase Taker fees in certain Tiers for
options transactions in certain Penny
classes for Priority Customers and
decrease Maker rebates in certain Tiers
for options transactions in Penny classes
for Priority Customers (which fee was to
21 15
U.S.C. 78f(b)(1) and (b)(5).
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
23 See MIAX’s ‘‘The market at a glance/MTD
AVERAGE,’’ available at https://
www.miaxoptions.com/ (Data as of 2/1/2023–2/23/
2023).
24 See id.
22 See
E:\FR\FM\24MRN1.SGM
24MRN1
lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices
be effective March 1, 2019).25 The
Exchange experienced a decrease in
total market share for the month of
March 2019, after the proposal went
into effect. Accordingly, the Exchange
believes that its March 1, 2019, fee
change, to increase certain transaction
fees and decrease certain transaction
rebates, may have contributed to the
decrease in MIAX Pearl’s market share
and, as such, the Exchange believes
competitive forces constrain the
Exchange’s, and other options
exchanges, ability to set transaction fees
and market participants can shift order
flow based on fee changes instituted by
the exchanges.
The Exchange believes that its
proposal represents an equitable
allocation of fees and is not unfairly
discriminatory because it applies
uniformly to all Market Makers, in that
all Market Makers have the opportunity
to compete for and achieve the proposed
alternative volume criteria of Tier 2, and
the Tier 2 fees/rebates will apply
uniformly to all Market Makers that
achieve Tier 2. While the Exchange has
no way of knowing whether this
proposed rule change would
definitively result in any particular
Market Maker achieving the alternative
volume criteria, the proposed
alternative volume criteria is available
for any Market Maker. To the extent a
Member participates on the Exchange
but not on MIAX Pearl Equities, the
Exchange believes that the proposal is
still reasonable, equitably allocated and
non-discriminatory with respect to such
Member based on the overall benefit to
the Exchange resulting from the success
of its equities platform. Particularly, the
Exchange believes that additional such
success allows the Exchange to continue
to provide and potentially expand its
existing incentive programs to the
benefit of all participants on the
Exchange, whether they participate on
MIAX Pearl Equities or not.
Additionally, a Market Maker that is not
a Member of MIAX Pearl Equities may
still satisfy the current primary volume
criteria or the current alternative
volume criteria, which aren’t changing
under this proposal, to be eligible for
Tier 2 fees/rebates.
Additionally, the Exchange believes
its proposal represents a reasonable
attempt to incentivize market
participants to increase the number and
variety of orders sent to the Exchange
for execution. Specifically, the
Exchange proposes to introduce two
new volume-based requirements that
25 See
Securities Exchange Act Release No. 85304
(March 13, 2019), 84 FR 10144 (March 19, 2019)
(SR–PEARL–2019–07).
VerDate Sep<11>2014
19:18 Mar 23, 2023
Jkt 259001
require MIAX Pearl Market Makers to
satisfy Tier 2 criteria on the MIAX Pearl
Equities Exchange for Add Volume and
Midpoint Peg Order Adding Liquidity at
Midpoint Volume. The Exchange
believes that the new alternative volume
criteria will continue to incentivize
participation in greater volume from
cross-asset activity, which would
improve the overall quality of the
Exchange’s marketplace to the benefit of
all market participants, both on the
MIAX Pearl Options Exchange and the
MIAX Pearl Equities Exchange.
The Exchange also believes that its
new proposed qualifications for the Tier
2 alternative volume criteria for MIAX
Pearl Market Makers is equitable and
not unfairly discriminatory because the
Exchange will uniformly assess the
rebates and fees for any Market Makers
qualifying for Tier 2. Finally,
encouraging Market Makers to add
greater liquidity benefits all market
participants, both on the MIAX Pearl
Options Exchange, and the MIAX Pearl
Equities Exchange, in the quality of
order interaction.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
The Exchange does not believe that its
proposal will impose any burden on
intra-market competition as the
Exchange believes that its proposal will
not place any market participant at a
competitive disadvantage as Market
Makers may satisfy any of the volume
criteria requirements to be eligible for
the Tier 2 fees/rebates. The Exchange
believes that the proposed change
should continue to encourage the
provision of liquidity in options that
enhances the quality of the Exchange’s
market and increases the number of
trading opportunities on the Exchange
for all participants who will be able to
compete for such opportunities.
Additionally, as discussed, the
proposed changes are ultimately aimed
at attracting greater order flow to the
Exchange, which benefits all market
participants by providing more trading
opportunities.
The Exchange does not believe that its
proposal will impose any burden on
inter-market competition and the
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
17885
available at other venues to be more
favorable.
There are currently 16 registered
options exchanges competing for order
flow. Based on publicly-available
information, and excluding index-based
options, no single exchange has more
than approximately 12–13% of the
market share of executed volume of
multiply-listed equity and ETF options
trades as of February 23, 2023, for the
month of February 2023.26 Therefore, no
exchange possesses significant pricing
power in the execution of multiplylisted equity and ETF options order
flow. More specifically, as of February
23, 2023, the Exchange had a market
share of approximately 6.83% of
executed volume of multiply-listed
equity and ETF options for the month of
February 2023.27 In such an
environment, the Exchange must
continually adjust its fees and tiers to
remain competitive with other options
exchanges. Because competitors are free
to modify their own fees and Tiers in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited. The Exchange believes that the
proposed rule changes reflect this
competitive environment because they
modify the Exchange’s fees and Tiers in
a manner that encourages market
participants to continue to provide
liquidity and to send order flow to the
Exchange.
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,28 and Rule
19b–4(f)(2) 29 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
26 See
supra note 23.
id.
28 15 U.S.C. 78s(b)(3)(A)(ii).
29 17 CFR 240.19b–4(f)(2).
27 See
E:\FR\FM\24MRN1.SGM
24MRN1
17886
Federal Register / Vol. 88, No. 57 / Friday, March 24, 2023 / Notices
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
[FR Doc. 2023–06056 Filed 3–23–23; 8:45 am]
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–2023–13 on the subject line.
lotter on DSK11XQN23PROD with NOTICES1
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–2023–13. 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 such
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–2023–13 and
should be submitted on or before April
14, 2023.
VerDate Sep<11>2014
19:18 Mar 23, 2023
Jkt 259001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Sherry R. Haywood,
Assistant Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34861; File No. 812–15329]
AGTB Fund Manager, LLC and AG
Twin Brook Capital Income Fund
March 20, 2023.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c) and 18(i) and
section 61(a) of the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
closed-end management investment
companies that have elected to be
regulated as business development
companies (‘‘BDCs’’) to issue multiple
classes of shares with varying sales
loads and asset-based service and/or
distribution fees.
APPLICANTS: AGTB Fund Manager, LLC
and AG Twin Brook Capital Income
Fund.
FILING DATES: The application was filed
on April 29, 2022 and amended on June
2, 2022, June 22, 2022, September 29,
2022, and March 14, 2023.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the Commission’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 14, 2023, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Jenny B. Neslin, jneslin@
angelogordon.com.
FOR FURTHER INFORMATION CONTACT: Lisa
Reid Ragen, Branch Chief, at (202) 551–
6825 (Division of Investment
Management, Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ fourth amended and
restated application, dated March 14,
2023, which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field, on the
SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at
https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–06062 Filed 3–23–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97169; File No. SR–ICEEU–
2023–004]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Order Approving
Proposed Rule Change Relating to
Amendments to the ICE Clear Europe
Counterparty Credit Risk Policy and
Counterparty Credit Risk Procedures
March 20, 2023.
I. Introduction
On January 20, 2023, ICE Clear
Europe Limited (‘‘ICE Clear Europe’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (the ‘‘Act’’),1 and
Rule 19b–4,2 a proposed rule change to
amend its Counterparty Credit Risk
Policy (the ‘‘CC Risk Policy’’) and
Counterparty Credit Risk Procedures
(the ‘‘CC Risk Procedures’’). The
proposed rule change was published for
comment in the Federal Register on
1 15
30 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00105
Fmt 4703
Sfmt 4703
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\24MRN1.SGM
24MRN1
]]>Agencies
[Federal Register Volume 88, Number 57 (Friday, March 24, 2023)]
[Notices]
[Pages 17882-17886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06056]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97168; File No. SR-PEARL-2023-13]
Self-Regulatory Organizations: Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by MIAX PEARL, LLC To Amend the
MIAX Pearl Options Fee Schedule
March 20, 2023.
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 March 9, 2023, 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 Options
Fee Schedule (the ``Fee Schedule'').
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 purpose of the proposed rule change is to amend Section 1)a)
Exchange Rebates/Fees--Add/Remove
[[Page 17883]]
Tiered Rebates/Fees of the Exchange's Fee Schedule to adopt an
additional alternative volume criteria for the Tier 2 rebates/fees for
MIAX Pearl Market Makers. The Exchange originally filed this proposal
on March 1, 2023 (SR-PEARL-2023-12). On March 9, 2023, the Exchange
withdrew SR-PEARL-2023-12 and resubmitted this proposal.
Background
The Exchange currently assesses transaction rebates and fees to all
market participants which are based upon the total monthly volume
executed by the Member \3\ on MIAX Pearl in the relevant, respective
origin type (not including Excluded Contracts) \4\ (as the numerator)
expressed as a percentage of (divided by) TCV \5\ (as the denominator).
In addition, the per contract transaction rebates and fees are applied
retroactively to all eligible volume for that origin type once the
respective threshold tier (``Tier'') has been reached by the Member.
The Exchange aggregates the volume of Members and their Affiliates.\6\
Members that place resting liquidity, i.e., orders resting on the book
of the MIAX Pearl System,\7\ are paid the specified ``maker'' rebate
(each a ``Maker''), and Members that execute against resting liquidity
are assessed the specified ``taker'' fee (each a ``Taker''). For
opening transactions and ABBO \8\ uncrossing transactions, per contract
transaction rebates and fees are waived for all market participants.
Finally, Members are assessed lower transaction fees and receive lower
rebates for order executions in standard option classes in the Penny
Interval Program \9\ (``Penny Classes'') than for order executions in
standard option classes which are not in the Penny Interval Program
(``Non-Penny Classes''), where Members are assessed higher transaction
fees and receive higher rebates.
---------------------------------------------------------------------------
\3\ ``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.
\4\ ``Excluded Contracts'' means any contracts routed to an away
market for execution. See the Definitions Section of the Fee
Schedule.
\5\ ``TCV'' means total consolidated volume calculated as the
total national volume in those classes listed on MIAX PEARL for the
month for which the fees apply, excluding consolidated volume
executed during the period time in which the Exchange experiences an
``Exchange System Disruption'' (solely in the option classes of the
affected Matching Engine (as defined below)). The term Exchange
System Disruption, which is defined in the Definitions section of
the Fee Schedule, means an outage of a Matching Engine or collective
Matching Engines for a period of two consecutive hours or more,
during trading hours. The term Matching Engine, which is also
defined in the Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes options orders and
trades on a symbol-by-symbol basis. Some Matching Engines will
process option classes with multiple root symbols, and other
Matching Engines may be dedicated to one single option root symbol
(for example, options on SPY may be processed by one single Matching
Engine that is dedicated only to SPY). A particular root symbol may
only be assigned to a single designated Matching Engine. A
particular root symbol may not be assigned to multiple Matching
Engines. The Exchange believes that it is reasonable and appropriate
to select two consecutive hours as the amount of time necessary to
constitute an Exchange System Disruption, as two hours equates to
approximately 1.4% of available trading time per month. The Exchange
notes that the term ``Exchange System Disruption'' and its meaning
have no applicability outside of the Fee Schedule, as it is used
solely for purposes of calculating volume for the threshold tiers in
the Fee Schedule. See the Definitions Section of the Fee Schedule.
\6\ ``Affiliate'' means (i) an affiliate of a Member of at least
75% common ownership between the firms as reflected on each firm's
Form BD, Schedule A, or (ii) the Appointed Market Maker of an
Appointed EEM (or, conversely, the Appointed EEM of an Appointed
Market Maker). An ``Appointed Market Maker'' is a MIAX PEARL Market
Maker (who does not otherwise have a corporate affiliation based
upon common ownership with an EEM) that has been appointed by an EEM
and an ``Appointed EEM'' is an EEM (who does not otherwise have a
corporate affiliation based upon common ownership with a MIAX PEARL
Market Maker) that has been appointed by a MIAX PEARL Market Maker,
pursuant to the following process. A MIAX PEARL Market Maker
appoints an EEM and an EEM appoints a MIAX PEARL Market Maker, for
the purposes of the Fee Schedule, by each completing and sending an
executed Volume Aggregation Request Form by email to
[email protected] no later than 2 business days prior to
the first business day of the month in which the designation is to
become effective. Transmittal of a validly completed and executed
form to the Exchange along with the Exchange's acknowledgement of
the effective designation to each of the Market Maker and EEM will
be viewed as acceptance of the appointment. The Exchange will only
recognize one designation per Member. A Member may make a
designation not more than once every 12 months (from the date of its
most recent designation), which designation shall remain in effect
unless or until the Exchange receives written notice submitted 2
business days prior to the first business day of the month from
either Member indicating that the appointment has been terminated.
Designations will become operative on the first business day of the
effective month and may not be terminated prior to the end of the
month. Execution data and reports will be provided to both parties.
See the Definitions Section of the Fee Schedule.
\7\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\8\ ``ABBO'' 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 the Definitions Section of the Fee
Schedule and Exchange Rule 100.
\9\ See Securities Exchange Act Release No. 88992 (June 2,
2020), 85 FR 35142 (June 8, 2020) (SR-PEARL-2020-06).
---------------------------------------------------------------------------
Alternative Volume Criteria Threshold Change in Tier 2
The Exchange proposes to amend the Add/Remove Tiered Rebates/Fees
table set forth in Section 1)a) of the Fee Schedule for MIAX Pearl
Market Maker origins, to adopt a new alternative Volume Criteria in
Tier 2. Currently, the volume criteria for Pearl Market Makers to
qualify for Tier 2 fees/rebates is above 0.20% to 0.50%. The Exchange
currently provides an alternative volume criteria in Tier 2 which is
based upon the total monthly volume executed by a MIAX Pearl Market
Maker collectively in SPY/QQQ/IWM options on the Exchange, expressed as
a percentage of total consolidated national volume in SPY/QQQ/IWM
options.\10\ Pursuant to this alternative volume criteria, a Market
Maker is able to reach the Tier 2 threshold if the Market Maker's total
executed monthly volume, not including Excluded Contracts, in SPY/QQQ/
IWM options on MIAX Pearl is above 0.55% of total consolidated national
monthly volume in SPY/QQQ/IWM options. For this calculation, volume
that is from resting liquidity (Maker) and taking liquidity (Taker) in
SPY/QQQ/IWM options is counted towards the alternative volume criteria,
and the 0.55% threshold does not have to be reached individually in
each of the three symbols. A Market Maker is able to qualify for Tier 2
rebates and fees, which will then be applicable to all volume executed
by the MIAX Pearl Market Maker on MIAX Pearl. Therefore, the two
different volume criteria available for Tier 2 are based upon either:
(a) the total monthly volume executed by the Market Maker in all
options classes on MIAX Pearl, not including Excluded Contracts, (as
the numerator), expressed as a percentage of (divided by) TCV (as the
denominator); or (b) the total monthly volume executed by the MIAX
Pearl Market Maker collectively in SPY/QQQ/IWM options on MIAX Pearl,
not including Excluded Contracts, (as the numerator), expressed as a
percentage of (divided by) SPY/QQQ/IWM TCV \11\ (as
[[Page 17884]]
the denominator). Once either volume criteria threshold in Tier 2 is
reached by the Market Maker, the Tier 2 per contract rebates and fees
apply to all volume in all options classes executed by that MIAX Pearl
Market Maker on MIAX Pearl.
---------------------------------------------------------------------------
\10\ See Fee Schedule, Section 1)a), explanatory paragraph below
the tables and footnotes. See also Securities Exchange Act Release
Nos. 84592 (November 14, 2018), 83 FR 58646 (November 20, 2018) (SR-
PEARL-2018-23); 90906 (January 21, 2021), 86 FR 5296 (January 19,
2021) (SR-PEARL-2020-38).
\11\ ``SPY/QQQ/IWM TCV'' means total consolidated volume in SPY,
QQQ, and IWM calculated as the total national volume in SPY, QQQ,
and IWM for the month for which the fees apply, excluding
consolidated volume executed during the period of time in which the
Exchange experiences an Exchange System Disruption (solely in SPY,
QQQ, or IWM options). See the Definitions Section of the Fee
Schedule.
---------------------------------------------------------------------------
The Exchange now proposes to adopt an additional alternative volume
criteria in Tier 2 to introduce cross-asset volume based requirements
that require MIAX Pearl Market Makers to satisfy the requirements of
Tier 2 of the ``Add Volume Tiers'' table in the MIAX Pearl Equities fee
schedule,\12\ and also the requirements of Tier 2 of the ``Midpoint Peg
Order Adding Liquidity at the Midpoint Volume Tiers'' table in the MIAX
Pearl Equities fee schedule.\13\ A Midpoint Peg Order \14\ on the MIAX
Pearl Equities Exchange is a non-displayed limit order that is assigned
a working price pegged to the midpoint of the PBBO.\15\
---------------------------------------------------------------------------
\12\ See MIAX Pearl Equities Fee Schedule, Section 1)c) Add
Volume Tiers table, on its public website (available online at
https://www.miaxoptions.com/fees/pearl-equities).
\13\ See MIAX Pearl Equities Fee Schedule, Section 1)e) Midpoint
Peg Order Adding Liquidity at Midpoint Volume Tiers table, on its
public website (available online at https://www.miaxoptions.com/fees/pearl-equities).
\14\ See Exchange Rule 2614(a)(3).
\15\ With respect to the trading of equity securities, the term
``Protected NBB'' or ``PBB'' shall mean the national best bid that
is a Protected Quotation, the term ``Protected NBO'' or ``PBO''
shall mean the national best offer that is a Protected Quotation,
and the term ``Protected NBBO'' or ``PBBO'' shall mean the national
best bid and offer that is a Protected Quotation. See Exchange Rule
1901.
---------------------------------------------------------------------------
With the proposed change, the three different volume criteria
available for Tier 2 are based upon either: (i) the total monthly
volume executed by the Market Maker in all options classes on MIAX
Pearl, not including Excluded Contracts, (as the numerator), expressed
as a percentage of (divided by) TCV (as the denominator); or (ii) the
total monthly volume executed by the MIAX Pearl Market Maker
collectively in SPY/QQQ/IWM options on MIAX Pearl, not including
Excluded Contracts, (as the numerator), expressed as a percentage of
(divided by) SPY/QQQ/IWM TCV (as the denominator); or (iii) if the
Market Maker is in Tier 2 of the Add Volume Tiers table by having an
ADAV \16\ greater than or equal to 0.10% of Total Consolidated Volume
on the MIAX Pearl Equities Exchange; and is also in Tier 2 of the
Midpoint Peg Order \17\ Adding Liquidity at Midpoint Volume Tier table
by having a Midpoint ADAV greater than or equal to 1,000,000 shares on
the MIAX Pearl Equities Exchange. Once any one of the aforementioned
three volume criteria threshold in Tier 2 is reached by the Market
Maker, the Tier 2 per contract rebates and fees apply to all volume in
all options classes executed by that MIAX Pearl Market Maker.
---------------------------------------------------------------------------
\16\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day and ``ADV'' means average daily
volume calculated as the number of shares added or removed,
combined, per day. ADAV and ADV are calculated on a monthly basis.
See Definitions, in the MIAX Pearl Equities Fee Schedule, on its
public website (available online at https://www.miaxoptions.com/fees/pearl-equities).
\17\ A Midpoint Peg Order is a non-displayed Limit Order that is
assigned a working price pegged to the midpoint of the PBBO. A
Midpoint Peg Order receives a new timestamp each time its working
price changes in response to changes in the midpoint of the PBBO.
See Exchange Rule 2614(a)(3).
---------------------------------------------------------------------------
The purpose of this proposed change is for business and competitive
reasons. At least one other exchange with both options and equities
trading platforms offers a similar cross-asset volume criteria in a
similar tier based structure.\18\ The Exchange's proposal adds a third
volume criteria that Market Makers may satisfy in order to achieve Tier
2 fees/rebates, i.e., satisfying each of the cross-asset volume
criteria requirements for that month. The Exchange believes that with
the proposed change, the Exchange will attract additional equities
order flow from Market Makers, which should benefit all Exchange
participants by providing more trading opportunities and tighter
spreads. The Exchange cannot predict with certainty how many Market
Makers will satisfy the alternative volume criteria in Tier 2.
---------------------------------------------------------------------------
\18\ See NYSE Arca Options Fee schedule, Market Maker Penny and
SPY Posting Credit Tiers, Super Tier II, which provides a credit of
$0.42 when a Firm has at least 0.10% of TCADV from Market Maker
posted interest in all issues, plus ETP Holder and Market Maker
posted volume in Tape B Securities (``Tape B Adding ADV'') that is
equal to at least 1.50% of US Tape B consolidated average daily
volume (``CADV'') for the billing month executed on NYSE Arca Equity
Market, available at https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf.
---------------------------------------------------------------------------
Implementation
The proposed changes are immediately effective.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \19\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\20\ in that it
is an equitable allocation of reasonable dues, fees and other charges
among Exchange members and issuers and other persons using its
facilities, and 6(b)(5) of the Act,\21\ in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanisms of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4).
\21\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------
The Commission has repeatedly expressed its 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.'' \22\
---------------------------------------------------------------------------
\22\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------
There are currently 16 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based options, as of February 23, 2023, no single exchange has
more than approximately 12-13% equity options market share for the
month of February 2023.\23\ Therefore, no exchange possesses
significant pricing power. More specifically, as of February 23, 2023,
the Exchange had a market share of approximately 6.83% of executed
volume of multiply-listed equity options for the month of February
2023.\24\
---------------------------------------------------------------------------
\23\ See MIAX's ``The market at a glance/MTD AVERAGE,''
available at https://www.miaxoptions.com/ (Data as of 2/1/2023-2/23/
2023).
\24\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
discontinue or reduce use of certain categories of products and
services, terminate an existing membership or determine to not become a
new member, and/or shift order flow, in response to transaction fee
changes. For example, on February 28, 2019, the Exchange filed with the
Commission a proposal to increase Taker fees in certain Tiers for
options transactions in certain Penny classes for Priority Customers
and decrease Maker rebates in certain Tiers for options transactions in
Penny classes for Priority Customers (which fee was to
[[Page 17885]]
be effective March 1, 2019).\25\ The Exchange experienced a decrease in
total market share for the month of March 2019, after the proposal went
into effect. Accordingly, the Exchange believes that its March 1, 2019,
fee change, to increase certain transaction fees and decrease certain
transaction rebates, may have contributed to the decrease in MIAX
Pearl's market share and, as such, the Exchange believes competitive
forces constrain the Exchange's, and other options exchanges, ability
to set transaction fees and market participants can shift order flow
based on fee changes instituted by the exchanges.
---------------------------------------------------------------------------
\25\ See Securities Exchange Act Release No. 85304 (March 13,
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
---------------------------------------------------------------------------
The Exchange believes that its proposal represents an equitable
allocation of fees and is not unfairly discriminatory because it
applies uniformly to all Market Makers, in that all Market Makers have
the opportunity to compete for and achieve the proposed alternative
volume criteria of Tier 2, and the Tier 2 fees/rebates will apply
uniformly to all Market Makers that achieve Tier 2. While the Exchange
has no way of knowing whether this proposed rule change would
definitively result in any particular Market Maker achieving the
alternative volume criteria, the proposed alternative volume criteria
is available for any Market Maker. To the extent a Member participates
on the Exchange but not on MIAX Pearl Equities, the Exchange believes
that the proposal is still reasonable, equitably allocated and non-
discriminatory with respect to such Member based on the overall benefit
to the Exchange resulting from the success of its equities platform.
Particularly, the Exchange believes that additional such success allows
the Exchange to continue to provide and potentially expand its existing
incentive programs to the benefit of all participants on the Exchange,
whether they participate on MIAX Pearl Equities or not. Additionally, a
Market Maker that is not a Member of MIAX Pearl Equities may still
satisfy the current primary volume criteria or the current alternative
volume criteria, which aren't changing under this proposal, to be
eligible for Tier 2 fees/rebates.
Additionally, the Exchange believes its proposal represents a
reasonable attempt to incentivize market participants to increase the
number and variety of orders sent to the Exchange for execution.
Specifically, the Exchange proposes to introduce two new volume-based
requirements that require MIAX Pearl Market Makers to satisfy Tier 2
criteria on the MIAX Pearl Equities Exchange for Add Volume and
Midpoint Peg Order Adding Liquidity at Midpoint Volume. The Exchange
believes that the new alternative volume criteria will continue to
incentivize participation in greater volume from cross-asset activity,
which would improve the overall quality of the Exchange's marketplace
to the benefit of all market participants, both on the MIAX Pearl
Options Exchange and the MIAX Pearl Equities Exchange.
The Exchange also believes that its new proposed qualifications for
the Tier 2 alternative volume criteria for MIAX Pearl Market Makers is
equitable and not unfairly discriminatory because the Exchange will
uniformly assess the rebates and fees for any Market Makers qualifying
for Tier 2. Finally, encouraging Market Makers to add greater liquidity
benefits all market participants, both on the MIAX Pearl Options
Exchange, and the MIAX Pearl Equities Exchange, in the quality of order
interaction.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange does not believe that its proposal will impose any
burden on intra-market competition as the Exchange believes that its
proposal will not place any market participant at a competitive
disadvantage as Market Makers may satisfy any of the volume criteria
requirements to be eligible for the Tier 2 fees/rebates. The Exchange
believes that the proposed change should continue to encourage the
provision of liquidity in options that enhances the quality of the
Exchange's market and increases the number of trading opportunities on
the Exchange for all participants who will be able to compete for such
opportunities. Additionally, as discussed, the proposed changes are
ultimately aimed at attracting greater order flow to the Exchange,
which benefits all market participants by providing more trading
opportunities.
The Exchange does not believe that its proposal will impose any
burden on inter-market competition and the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable.
There are currently 16 registered options exchanges competing for
order flow. Based on publicly-available information, and excluding
index-based options, no single exchange has more than approximately 12-
13% of the market share of executed volume of multiply-listed equity
and ETF options trades as of February 23, 2023, for the month of
February 2023.\26\ Therefore, no exchange possesses significant pricing
power in the execution of multiply-listed equity and ETF options order
flow. More specifically, as of February 23, 2023, the Exchange had a
market share of approximately 6.83% of executed volume of multiply-
listed equity and ETF options for the month of February 2023.\27\ In
such an environment, the Exchange must continually adjust its fees and
tiers to remain competitive with other options exchanges. Because
competitors are free to modify their own fees and Tiers in response,
and because market participants may readily adjust their order routing
practices, the Exchange believes that the degree to which fee changes
in this market may impose any burden on competition is extremely
limited. The Exchange believes that the proposed rule changes reflect
this competitive environment because they modify the Exchange's fees
and Tiers in a manner that encourages market participants to continue
to provide liquidity and to send order flow to the Exchange.
---------------------------------------------------------------------------
\26\ See supra note 23.
\27\ See id.
---------------------------------------------------------------------------
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,\28\ and Rule 19b-4(f)(2) \29\ 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
[[Page 17886]]
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78s(b)(3)(A)(ii).
\29\ 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-2023-13 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-2023-13. 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 such 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-2023-13 and should be submitted on
or before April 14, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
---------------------------------------------------------------------------
\30\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06056 Filed 3-23-23; 8:45 am]
BILLING CODE 8011-01-P
