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, 91455-91460 [2024-26870]
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Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Notices
and the [Plan participants] have agreed
to the heightened requirements set forth
in the OPRA Plan (which have been
approved by the Commission).’’ 48
A group of affiliated OPRA Plan
participants similarly requested that the
Commission disapprove the Proposed
Amendment.49 Stating that ‘‘Rule 608(c)
under Regulation NMS provides that,
‘Each self-regulatory organization shall
comply with the terms of any effective
national market system plan of which it
is a sponsor or a participant,’ ’’ and that
‘‘the [Proposed] Amendment did not
receive the affirmative vote of all of the
members of the OPRA Plan pursuant to
Section 10.3 of the OPRA Plan,’’ the
commenter states that ‘‘Cboe’s
submission of the [Proposed]
Amendment violated Rule 608(c).’’ 50
The commenter further states that
Cboe’s reading of Rule 608(a)(1)—that it
alone can move to amend the OPRA Plan
without regard to the views of other OPRA
members—is nonsensical, contrary to Rule
608 as a whole, and, if accepted by the
Commission, would undermine the ability of
all national market system plans to govern
themselves. Cboe is contending, in effect,
that any two SROs disappointed in the
outcome in any NMS plan deliberations
should be able to file their proposal with the
Commission and rehash the same debate in
a different forum. This will inject uncertainty
in all NMS plan operations, and
unnecessarily complicate the plan
amendment process.51
Cboe cannot use Rule 608(a)(1) to
bypass the requirements of the OPRA
Plan. The Plan participants have
included a clear and specific
amendment clause in the OPRA Plan
(Article X, Section 10.3) to govern the
process of amending the Plan by the
Plan participants. This amendment
clause provides the specific
requirements for amendments of the
Plan and is more stringent than the
requirements of Rule 608(a)(1). That is,
the Plan requires unanimous participant
approval for plan amendments, and the
Commission approved the OPRA Plan
with that unanimous consent
amendment requirement.52 Such
provisions are not uncommon, as other
NMS Plans contain requirements to
amend that are more restrictive than
Rule 608 53 though some contain no
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48 Id.
49 See Letter from Greg Ferrari, Vice President,
U.S. Options, Nasdaq, dated Feb. 12, 2024 (‘‘Nasdaq
Letter’’), at 2.
50 Id. at 2.
51 Id.
52 See Securities Exchange Act Release No. 17638
(Mar. 18, 1981), 22 SEC. Docket 484 (Mar. 31, 1981).
See also OPRA Plan, Article X, Section 10.3
(Amendments).
53 See, e.g., Joint Self-Regulatory Organization
Plan Governing the Collection, Consolidation and
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general amendment provision.54 Rule
608(a)(1) provides the minimum for
plan amendments, but the Commission
has approved many NMS Plans that
include additional criteria that must be
met for plan amendments to be filed
with the Commission.55
Rule 608 permits the inclusion in
NMS Plans of more stringent
requirements for plan amendments that
go beyond the ‘‘any two or more SROs
acting jointly’’ minimum requirement in
Rule 608. Specifically, the Rule states
that any NMS Plan or amendment filed
with the Commission must be
accompanied by certain statements and
representations, including ‘‘[i]n the case
of a proposed amendment, a statement
that such amendment has been
approved by the sponsors in accordance
with the terms of the plan.’’ 56 In Cboe’s
Proposed Amendment, it stated ‘‘Not
Applicable’’ in response to that
requirement,57 though an applicable
provision does exist and was not
satisfied. As stated by OPRA, Cboe has
not complied with the terms of Section
10.3 of the OPRA Plan in that it failed
to obtain the affirmative vote of all Plan
participants to amend the OPRA Plan as
required by the OPRA Plan.58
When reviewing amendments to an
NMS Plan pursuant to Rule 608(b), the
Commission evaluates whether a
proposed amendment ‘‘is necessary or
appropriate in the public interest, for
the protection of investors and the
maintenance of fair and orderly markets,
to remove impediments to, and perfect
the mechanisms of, a national market
system, or otherwise in furtherance of
the purposes of the Act.’’ 59
The terms of the OPRA Plan are
applicable to Cboe as Plan participants,
and therefore unanimous agreement was
needed for the amendment.
Accordingly, the Commission cannot
make a finding that the Proposed
Amendment is necessary or appropriate
Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privilege Basis,
Article XVI (Modifications to the Plan), available at
https://www.utpplan.com/utp_plan.
54 See, e.g., Plan for the Purpose of Developing
and Implementing Procedures to Facilitate the
Listing and Trading of Standardized Options,
available at https://www.theocc.com/getmedia/
198bfc93-5d51-443c-9e5b-fd575a0a7d0f/options_
listing_procedures_plan.pdf.
55 Rule 608 would, however, apply where an
NMS Plan is silent on the topic and does not
provide a specific voting clause to govern
amendments.
56 See 17 CFR 242.608(a)(4)(ii)(E).
57 Notice, supra note 3, 89 FR 3967.
58 See 17 CFR 242.608(c) (‘‘Each [SRO] shall
comply with the terms of any effective national
market system plan of which it is a sponsor or a
participant.’’).
59 15 U.S.C. 78k–1(b)(2).
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91455
in the public interest, for the protection
of investors and the maintenance of fair
and orderly markets, to remove
impediments to, and perfect the
mechanisms of, a national market
system, or otherwise in furtherance of
the purposes of the Act.60
IV. Conclusion
For the reasons set forth above, the
Commission does not find, pursuant to
Section 11A of the Act, and Rule 608
thereunder, that the Proposed
Amendment is necessary or appropriate
in the public interest, for the protection
of investors and the maintenance of fair
and orderly markets, to remove
impediments to, and perfect the
mechanisms of, a national market
system, or otherwise in furtherance of
the purposes of the Act.
It is therefore ordered, pursuant to
Section 11A of the Act, and Rule
608(b)(2) thereunder, that the Proposed
Amendment (File No. 8–420) be, and
hereby is, disapproved.
By the Commission.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–26959 Filed 11–18–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101611; File No. SR–
PEARL–2024–50]
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
November 13, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
31, 2024, 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.
60 In light of Cboe’s failure to obtain the required
affirmative vote for the Proposed Amendment, the
Commission need not make a determination on the
merits of the proposal.
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Notices
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.miaxglobal.com/markets/
us-equities/pearl-equities/rule-filings, 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 to decrease the rebates for
executions of orders in securities priced
at or above $1.00 per share that add
displayed liquidity (‘‘Added Displayed
Volume’’) to the Exchange across all
Tapes.
Background
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Currently, the Exchange offers a
standard rebate of ($0.0022) 3 per share
for executions of orders in securities
priced at or above $1.00 per share for
Added Displayed Volume across all
Tapes.4 The Exchange also offers
enhanced rebates pursuant to the NBBO
Setter Plus Program (referred to in this
filing as the ‘‘NBBO Program’’) 5 for
Equity Members 6 that add displayed
liquidity in securities priced at or above
$1.00 per share in all Tapes based on
increasing volume thresholds and
3 Rebates are indicated by parentheses. See the
General Notes section of the Fee Schedule.
4 See Fee Schedule, Section 1)a); see also Fee
Schedule, Section 1)b), Liquidity Indicator Codes
‘‘AA’’, ‘‘AB’’, and ‘‘AC’’.
5 See, generally, Fee Schedule, Section 1)c).
6 The term ‘‘Equity Member’’ is a Member
authorized by the Exchange to transact business on
MIAX Pearl Equities. See Exchange Rule 1901.
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increasing market quality levels
(described below). The NBBO Program
was implemented beginning September
1, 2023 and subsequently amended
several times.7
Pursuant to the NBBO Setter Plus
Table in Section 1)c) of the Fee
Schedule, the NBBO Program provides
six volume tiers enhanced by three
market quality levels to provide
increasing rebates in this segment. The
six volume tiers are achievable by
greater volume from the best of four
alternative methods. The three market
quality levels are achievable by greater
NBBO participation in a minimum
number of specific securities (described
below).
MIAX Pearl Equities first determines
the applicable NBBO Program tier based
on four different volume calculation
methods. The four volume-based
methods to determine the Equity
Member’s tier for purposes of the NBBO
Program are calculated in parallel in
each month, and each Equity Member
receives the highest tier achieved from
any of the four methods each month. All
four volume calculation methods are
based on an Equity Member’s respective
ADAV,8 NBBO Set Volume, or ADV,
each as a percent of industry TCV 9 as
the denominator.
Under volume calculation Method 1,
the Exchange provides tiered rebates
based on an Equity Member’s ADAV as
a percentage of TCV. An Equity Member
qualifies for the base rebates in Tier 1
for executions of orders in securities
7 See, e.g., Securities Exchange Act Release Nos.
98472 (September 21, 2023), 88 FR 66533
(September 27, 2023) (SR–PEARL–2023–45); 99318
(January 11, 2024), 89 FR 3488 (January 18, 2024)
(SR–PEARL–2023–73); 99695 (March 8, 2024), 89
FR 18694 (March, 14, 2024) (SR–PEARL–2024–11).
8 ‘‘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. ‘‘NBBO Set Volume’’ means the
ADAV in all securities of an Equity Member that
sets the NBB or NBO on MIAX Pearl Equities. See
the Definitions section of the Fee Schedule. The
Exchange excludes from its calculation of ADAV,
ADV, and TCV, and for the purpose of determining
qualification for the rebates described in all Levels
of the Market Quality Tier columns in the NBBO
Setter Plus Program: (1) any trading day that the
Exchange’s system experiences a disruption that
lasts for more than 60 minutes during regular
trading hours; (2) any day with a scheduled early
market close; (3) the ‘‘Russell Reconstitution Day’’
(typically the last Friday in June); (4) any day that
the MSCI Equities Indexes are rebalanced (i.e., on
a quarterly basis); and (5) any day that the S&P 400,
S&P 500, and S&P 600 Indexes are rebalanced (i.e.,
on a quarterly basis). See the General Notes section
of the Fee Schedule.
9 ‘‘TCV’’ means total consolidated volume
calculated as the volume in shares reported by all
exchanges and reporting facilities to a consolidated
transaction reporting plan for the month for which
the fees apply. See the Definitions section of the Fee
Schedule.
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priced at or above $1.00 per share for
Added Displayed Volume across all
Tapes by achieving an ADAV of at least
0.00% and less than 0.035% of TCV. An
Equity Member qualifies for the
enhanced rebates in Tier 2 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADAV of at least 0.035%
and less than 0.05% of TCV. An Equity
Member qualifies for the enhanced
rebates in Tier 3 for executions of orders
in securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an ADAV
of at least 0.05% and less than 0.08% of
TCV. An Equity Member qualifies for
the enhanced rebates in Tier 4 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADAV of at least 0.08%
and less than 0.20% of TCV. An Equity
Member qualifies for the enhanced
rebates in Tier 5 for executions of orders
in securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an ADAV
of at least 0.20% and less than 0.40% of
TCV. Finally, an Equity Member
qualifies for the enhanced rebates in
Tier 6 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an ADAV
of at least 0.40% of TCV.
Under volume calculation Method 2,
the Exchange provides tiered rebates
based on an Equity Member’s NBBO Set
Volume as a percentage of TCV. Under
volume calculation Method 2, an Equity
Member qualifies for the base rebates in
Tier 1 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an NBBO
Set Volume of at least 0.00% and less
than 0.01% of TCV. An Equity Member
qualifies for the enhanced rebates in
Tier 2 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an NBBO
Set Volume of at least 0.01% and less
than 0.015% of TCV. An Equity Member
qualifies for the enhanced rebates in
Tier 3 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an NBBO
Set Volume of at least 0.015% and less
than 0.02% of TCV. An Equity Member
qualifies for the enhanced rebates in
Tier 4 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an NBBO
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Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Notices
Set Volume of at least 0.02% and less
than 0.03% of TCV. An Equity Member
qualifies for the enhanced rebates in
Tier 5 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an NBBO
Set Volume of at least 0.03% and less
than 0.08% of TCV. Finally, an Equity
Member qualifies for the enhanced
rebates in Tier 6 for executions of orders
in securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an NBBO
Set Volume of at least 0.08% of TCV.
Under volume calculation Method 3,
the Exchange provides tiered rebates
based on an Equity Member’s ADV as a
percentage of TCV. An Equity Member
qualifies for the base rebates in Tier 1
for executions of orders in securities
priced at or above $1.00 per share for
Added Displayed Volume across all
Tapes by achieving an ADV of at least
0.00% and less than 0.15% of TCV. An
Equity Member qualifies for the
enhanced rebates in Tier 2 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADV of at least 0.15% and
less than 0.18% of TCV. An Equity
Member qualifies for the enhanced
rebates in Tier 3 for executions of orders
in securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an ADV of
at least 0.18% and less than 0.20% of
TCV. An Equity Member qualifies for
the enhanced rebates in Tier 4 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADV of at least 0.20% and
less than 0.60% of TCV. An Equity
Member qualifies for the enhanced
rebates in Tier 5 for executions of orders
in securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an ADV of
at least 0.60% and less than 1.00% of
TCV. Finally, an Equity Member
qualifies for the enhanced rebates in
Tier 6 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an ADV of
at least 1.00% of TCV.
Under volume calculation Method 4,
the Exchange provides tiered rebates
based on an Equity Member’s ADAV as
a percentage of TCV, excluding
executions of orders in securities priced
below $1.00 per share across all Tapes
from the calculation of both the
numerator (ADAV) and denominator
(TCV). An Equity Member qualifies for
the base rebates in Tier 1 for executions
of orders in securities priced at or above
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$1.00 per share for Added Displayed
Volume across all Tapes by achieving an
ADAV of at least 0.00% and less than
0.035% of TCV, exclusive of executions
of orders in securities priced below
$1.00 per share across all Tapes. An
Equity Member qualifies for the
enhanced rebates in Tier 2 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADAV of at least 0.035%
and less than 0.05% of TCV, exclusive
of executions of orders in securities
priced below $1.00 per share across all
Tapes. An Equity Member qualifies for
the enhanced rebates in Tier 3 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADAV of at least 0.05%
and less than 0.08% of TCV, exclusive
of executions of orders in securities
priced below $1.00 per share across all
Tapes. An Equity Member qualifies for
the enhanced rebates in Tier 4 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADAV of at least 0.08%
and less than 0.20% of TCV, exclusive
of executions of orders in securities
priced below $1.00 per share across all
Tapes. An Equity Member qualifies for
the enhanced rebates in Tier 5 for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume across all Tapes by
achieving an ADAV of at least 0.20%
and less than 0.40% of TCV, exclusive
of executions of orders in securities
priced below $1.00 per share across all
Tapes. Finally, an Equity Member
qualifies for the enhanced rebates in
Tier 6 for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes by achieving an ADAV
of at least 0.40% of TCV, exclusive of
executions of orders in securities priced
below $1.00 per share across all Tapes.
After the volume calculation is
performed to determine highest tier
achieved by the Equity Member, the
applicable rebate is calculated based on
two different measurements based on
the Equity Member’s participation at the
NBBO on the Exchange in certain
securities (referenced below).
The Exchange provides one column of
base rebates (referred to in the NBBO
Program table as ‘‘Level A’’) and two
columns of enhanced rebates (referred
to in the NBBO Program table as ‘‘Level
B’’ and ‘‘Level C’’),10 depending on the
10 The Exchange excludes from its calculation of
ADAV, ADV, and TCV, and for the purpose of
determining qualification for the rebates described
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91457
Equity Member’s Percent Time at
NBBO 11 on MIAX Pearl Equities in a
certain amount of specified securities
(‘‘Market Quality Securities’’ or ‘‘MQ
Securities’’).12 The NBBO Setter Plus
Table specifies the percentage of time
that the Equity Member must be at the
NBB or NBO on MIAX Pearl Equities in
at least 200 symbols out of the full list
of 1,000 MQ Securities (which symbols
may vary from time to time based on
market conditions). The list of MQ
Securities is generally based on the top
multi-listed 1,000 symbols by ADV
across all U.S. securities exchanges. The
list of MQ Securities is updated
monthly by the Exchange and published
on the Exchange’s website.13
The base rebates (‘‘Level A’’) are as
follows: ($0.00220) per share in Tier 1;
($0.00290) per share in Tier 2;
($0.00300) per share in Tier 3;
($0.00310) per share in Tier 4;
($0.00335) per share in Tier 5; and
($0.00340) per share in Tier 6. Under
Level B, the Exchange provides
enhanced rebates for executions of
orders in securities priced at or above
$1.00 per share for Added Displayed
Volume across all Tapes if the Equity
Member’s Percent Time at NBBO is at
least 25% and less than 50% in at least
200 MQ Securities per trading day
during the month. The Level B rebates
are as follows: ($0.00225) per share in
Tier 1; ($0.00295) per share in Tier 2;
($0.00305) per share in Tier 3;
($0.00315) per share in Tier 4;
($0.00340) per share in Tier 5; and
($0.00345) per share in Tier 6. Under
Level C, the Exchange provides
enhanced rebates for executions of
in all Levels of the Market Quality Tier columns in
the NBBO Setter Plus Program: (1) any trading day
that the Exchange’s system experiences a disruption
that lasts for more than 60 minutes during regular
trading hours; (2) any day with a scheduled early
market close; (3) the ‘‘Russell Reconstitution Day’’
(typically the last Friday in June); (4) any day that
the MSCI Equities Indexes are rebalanced (i.e., on
a quarterly basis); and (5) any day that the S&P 400,
S&P 500, and S&P 600 Indexes are rebalanced (i.e.,
on a quarterly basis). See the General Notes section
of the Fee Schedule.
11 ‘‘Percent Time at NBBO’’ means the aggregate
of the percentage of time during regular trading
hours where a Member has a displayed order of at
least one round lot at the national best bid (‘‘NBB’’)
or national best offer (‘‘NBO’’). See the Definitions
section of the Fee Schedule.
12 ‘‘Market Quality Securities’’ or ‘‘MQ
Securities’’ shall mean a list of securities designated
as such, that are used for the purposes of qualifying
for the rebates described in Level B and Level C of
the Market Quality Tier columns in the NBBO
Setter Plus Program. The universe of these
securities will be determined by the Exchange and
published on the Exchange’s website. See id.
13 See e.g., MIAX Pearl Equities Exchange—
Market Quality Securities (MQ Securities) List,
effective October 1 through October 31, 2024,
available at https://www.miaxglobal.com/markets/
us-equities/pearl-equities/fees (last visited October
30, 2024).
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Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Notices
orders in securities priced at or above
$1.00 per share for Added Displayed
Volume across all Tapes if the Equity
Member’s Percent Time at NBBO is at
least 50% in at least 200 MQ Securities
per trading day during the month. The
Level C rebates are as follows:
($0.00230) per share in Tier 1;
($0.00300) per share in Tier 2;
($0.00310) per share in Tier 3;
($0.00320) per share in Tier 4;
($0.00345) per share in Tier 5; 14 and
($0.00350) per share in Tier 6.
The Exchange offers an NBBO Setter
Additive Rebate,15 which is an additive
rebate of ($0.0004) per share for
executions of orders in securities priced
at or above $1.00 per share that set the
NBB or NBO 16 upon entry on MIAX
Pearl Equities with a minimum size of
a round lot.17 The Exchange also offers
an NBBO First Joiner Rebate, which is
an additive rebate of ($0.0002) per share
for executions of orders in securities
priced at or above $1.00 per share that
bring MIAX Pearl Equities to the
established NBB or NBO with a
minimum size of a round lot.18
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Proposal
The Exchange proposes to reduce the
standard rebate for executions of orders
in securities priced at or above $1.00 per
share for Added Displayed Volume
across all Tapes. Currently, the
Exchange provides a standard rebate of
14 Equity Members may also qualify for the Tier
5, Level C enhanced rebate via an alternative
method by satisfying the following three
requirements in the relevant month: (1) Midpoint
ADAV of at least 2,500,000 shares; (2) Displayed
ADAV of at least 10,000,000 shares; and (3) Percent
Time at the NBB or NBO of at least 50% in 200 or
more symbols from the list of MQ Securities. See
Fee Schedule, Section 1)c), Notes to NBBO Setter
Plus Table, note 3. Midpoint ADAV means the
ADAV for the current month consisting of Midpoint
Peg Orders in securities priced at or above $1.00 per
share that execute at the midpoint of the Protected
NBBO and add liquidity to the Exchange. 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). With respect to the trading of equity
securities, the term ‘‘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.
15 See Fee Schedule, Section 1)c), NBBO Setter
Additive Rebate.
16 With respect to the trading of equity securities,
the term ‘‘NBB’’ shall mean the national best bid,
the term ‘‘NBO’’ shall mean the national best offer,
and the term ‘‘NBBO’’ shall mean the national best
bid and offer. See Exchange Rule 1901.
17 See Fee Schedule, Section 1)c).
18 See Fee Schedule, Section 1)c), NBBO First
Joiner Additive Rebate.
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17:42 Nov 18, 2024
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($0.0022) per share for executions of
orders in securities priced at or above
$1.00 per share for Added Displayed
Volume across all Tapes. The Exchange
now proposes to reduce the standard
rebate for executions of Added
Displayed Volume in securities priced
at or above $1.00 per share from
($0.0022) to ($0.0021) per share for all
Tapes.19 Accordingly, the Exchange
proposes to amend Section 1)a),
Standard Rates, to reflect this proposed
change and amend Section 1)b),
Liquidity Indicator Codes and
Associated Fees, to reflect the
corresponding changes to the applicable
Liquidity Indicator Codes, AA, AB and
AC.
Next, the Exchange proposes to
amend the NBBO Setter Plus Table in
Section 1)c) of the Fee Schedule to
decrease the rebates for all tiers by
($0.0001) per share for all rebate levels
of the NBBO Program. With the
proposed changes, the Level A rebates
will be as follows: ($0.00210) per share
in Tier 1; ($0.00280) per share in Tier
2; ($0.00290) per share in Tier 3;
($0.00300) per share in Tier 4;
($0.00325) per share in Tier 5; and
($0.00330) per share in Tier 6. The Level
B rebates will be as follows: ($0.00215)
per share in Tier 1; ($0.00285) per share
in Tier 2; ($0.00295) per share in Tier
3; ($0.00305) per share in Tier 4;
($0.00330) per share in Tier 5; and
($0.00335) per share in Tier 6. The Level
C rebates will be as follows: ($0.00220)
per share in Tier 1; ($0.00290) per share
in Tier 2; ($0.00300) per share in Tier
3; ($0.00310) per share in Tier 4;
($0.00335) per share in Tier 5; and
($0.00340) per share in Tier 6.
The Exchange does not propose to
amend any of volume calculation
methods used to determine the Equity
Member’s tier for purposes of the NBBO
Program, which will continue to be
calculated in parallel in each month,
and each Equity Member will continue
to receive the highest tier achieved from
any of the four methods each month.20
The Exchange also does not propose to
amend the different measurements to
calculate an Equity Member’s
participation at the NBBO on the
Exchange in Market Quality Securities
under the NBBO Program.
The purpose of reducing the standard
rebate for executions of Added
Displayed Volume is for business and
competitive reasons in light of recent
19 See Fee Schedule, Section 1)a), Standard Rates,
for the standard pricing for executions of Added
Displayed Volume, among other rates.
20 The Exchange does not propose to amend the
alternative volume calculation method for Equity
Members to quality for the Tier 5, Level C enhanced
rebate, as proposed to be reduced.
PO 00000
Frm 00146
Fmt 4703
Sfmt 4703
volume growth on the Exchange. The
Exchange notes that despite the modest
reduction proposed herein, the
proposed standard rebate for executions
of Added Displayed Volume (i.e.,
($0.0021) per share) remains higher
than, and competitive with, the
standard rebates provided by other
exchanges for executions of orders in
securities priced at or above $1.00 per
share that add displayed liquidity to
those exchanges.21
The purpose of reducing the
enhanced rebates for executions of
Added Displayed Volume for all tiers
and market quality levels of the NBBO
Program is for business and competitive
reasons in light of recent volume growth
on the Exchange. The Exchange notes
that, even with the proposed decrease in
the NBBO Program rebates, the base
rebates and enhanced rebates of the
NBBO Program remain competitive
with, or higher than, the rebates
provided by other exchanges for
executions of orders in securities priced
at or above $1.00 per share that add
displayed liquidity to those
exchanges.22
Implementation
The proposed changes are effective
beginning November 1, 2024.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 23
in general, and furthers the objectives of
Section 6(b)(4) of the Act 24 in
21 See e.g., MEMX LLC Equities Fee Schedule,
Transaction fees (last visited October 22, 2024),
available at https://info.memxtrading.com/equitiestrading-resources/us-equities-fee-schedule/
(providing standard rebate of ($0.0015) per share for
executions of orders in securities priced at or above
$1.00 per share across all tapes); see also Cboe BZX
Equities Fee Schedule, available at https://
www.cboe.com/us/equities/membership/fee_
schedule/bzx/ (providing a standard rebate of
($0.0016) per share for adding displayed liquidity
in securities priced at or above $1.00 per share).
22 See Cboe BZX Equities Fee Schedule, Add/
Remove Volume Tiers section, available at https://
www.cboe.com/us/equities/membership/fee_
schedule/bzx/ (providing an enhanced rebates
ranging from ($0.0020) to ($0.0032) per share for
executions of added displayed volume in securities
priced at or above $1.00 per share, so long as the
member meets certain volume requirements,
including, for tier 4, minimum NBBO Time and
NBBO Size requirements from a list of specified
securities and minimum requirement of ADAV as
a percentage of TCV); see also Cboe EDGX Equities
Fee Schedule, Add/Remove Volume Tiers section,
available at https://www.cboe.com/us/equities/
membership/fee_schedule/edgx/ (providing an
enhanced rebates ranging from ($0.0020) to
($0.0034) per share for executions of added
displayed volume in securities priced at or above
$1.00 per share, so long as the member meets
certain volume requirements).
23 15 U.S.C. 78f(b).
24 15 U.S.C. 78f(b)(4).
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particular, in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among its Equity
Members and issuers and other persons
using its facilities. Additionally, the
Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 25 requirement that the rules of
an exchange not be 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 had more
than approximately 15–16% of the total
market share of executed volume of
equities trading for the month of
September 2024.26 Thus, in such a lowconcentrated and highly competitive
market, no single equities exchange
possesses significant pricing power in
the execution of order flow, and the
Exchange represented approximately
1.71% of the overall market share for
the month of September 2024. 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.’’ 27
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow or discontinue 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
25 15
U.S.C. 78f(b)(5).
the ‘‘Market Share’’ section of the
Exchange’s website, available at https://
www.miaxglobal.com/ (last visited October 25,
2024).
27 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37499 (June 29, 2005).
26 See
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17:42 Nov 18, 2024
Jkt 265001
fees and rebates, and market
participants can readily trade on
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 in
both a broad manner and in a targeted
manner with respect to the NBBO
Program, in particular, and Added
Displayed Volume in securities priced
at or above $1.00 per share, in general.
The Exchange believes its proposal to
reduce the rebates for executions of
orders in securities priced at or above
$1.00 per share for Added Displayed
Volume across all Tapes is reasonable
because the Exchange’s standard rebate
and enhanced rebates will remain
competitive with, or higher than, the
rebates provided by other exchanges for
executions of orders in securities priced
at or above $1.00 per share that add
displayed liquidity to those
exchanges.28 The Exchange believes that
the enhanced rebates under the NBBO
Program, as modified by this proposal,
continue to be equitable and not
unfairly discriminatory because the
NBBO Program is open to all Equity
Members on an equal basis and provides
enhanced rebates that are reasonably
related to the value of the Exchange’s
market quality associated with greater
order flow by Equity Members that set
the NBB or NBO, and the introduction
of higher volumes of orders into the
price and volume discovery process.
The Exchange believes the proposal is
equitable and not unfairly
discriminatory because the Exchange’s
pricing structure, as modified by this
proposal, continues to be designed to
incentivize the entry of aggressively
priced displayed liquidity that may
create tighter spreads, thereby
promoting price discovery and market
quality on the Exchange to the benefit
of all Equity Members and public
investors.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
Intra-Market Competition
The Exchange does not believe that
the proposal will impose any burden on
intra-market competition not necessary
28 See
PO 00000
supra notes 21 and 22.
Frm 00147
Fmt 4703
Sfmt 4703
91459
or appropriate in furtherance of the
purposes of the Act.
The Exchange believes that its
proposal to reduce the standard and
enhanced rebates provided for in the
NBBO Program, for executions of orders
in securities priced at or above $1.00 per
share for Added Displayed Volume will
not impose any burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because these
changes are for business and
competitive reasons in light of recent
volume growth on the Exchange. The
Exchange notes that despite the modest
reduction proposed herein of ($0.0001)
per share for executions of orders in
securities priced at or above $1.00 per
share for Added Displayed Volume, the
Exchange’s standard and enhanced
rebates remain competitive with, or
higher than, the standard and enhanced
rebates provided by other exchanges for
executions of orders in securities priced
at or above $1.00 per share for Added
Displayed Volume on those
exchanges.29
The Exchange believes that, even with
the proposed decrease to the standard
and enhanced Added Displayed Volume
rebates, the Exchange’s rebate structure
for such orders will continue to
incentivize market participants to direct
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. The Exchange believes
that this, in turn, will continue to
encourage market participants to direct
additional orders in securities priced at
or above $1.00 per share to the
Exchange. Greater liquidity benefits all
Equity Members by providing more
trading opportunities and encourages
Equity Members to send orders to the
Exchange, thereby contributing to robust
levels of liquidity, which benefits all
market participants.
Intermarket Competition
The Exchange believes the proposed
changes will benefit competition, and
the Exchange notes that it operates in a
highly competitive market. Equity
Members have numerous alternative
venues they may participate on and
direct their order flow to, including
sixteen equities exchanges and
numerous alternative trading systems
and other off-exchange venues. As noted
above, no single registered equities
exchange currently had more than 15–
16% of the total market share of
executed volume of equities trading for
29 See
E:\FR\FM\19NON1.SGM
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19NON1
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91460
Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Notices
the month of September 2024.30 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 orders in securities priced
at or above $1.00 per share for Added
Displayed Volume, and market
participants can readily choose to send
their orders to other exchanges and offexchange venues if they deem fee levels
at those other venues to be more
favorable.
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 self-regulatory
organization (‘‘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.’’ 31 The fact that this
market is competitive has also long been
recognized by the courts. In
NetCoalition v. Securities and Exchange
Commission, the DC 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’
. . .’’.32 Accordingly, the Exchange does
not believe its proposed pricing changes
impose any burden on competition that
30 See
supra note 26.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
32 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)).
31 See
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17:42 Nov 18, 2024
Jkt 265001
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.
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,33 and Rule
19b–4(f)(2) 34 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–2024–50 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–2024–50. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–PEARL–2024–50 and should be
submitted on or before December 10,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.35
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–26870 Filed 11–18–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101605; File No. SR–
PEARL–2024–49]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the MIAX Pearl
Options Fee Schedule
November 13, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
31, 2024, 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.
35 17
33 15
U.S.C. 78s(b)(3)(A)(ii).
34 17 CFR 240.19b–4(f)(2).
PO 00000
Frm 00148
Fmt 4703
Sfmt 4703
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\19NON1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 223 (Tuesday, November 19, 2024)]
[Notices]
[Pages 91455-91460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26870]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101611; File No. SR-PEARL-2024-50]
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
November 13, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 31, 2024, 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.
---------------------------------------------------------------------------
[[Page 91456]]
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.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings, 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 to decrease the
rebates for executions of orders in securities priced at or above $1.00
per share that add displayed liquidity (``Added Displayed Volume'') to
the Exchange across all Tapes.
Background
Currently, the Exchange offers a standard rebate of ($0.0022) \3\
per share for executions of orders in securities priced at or above
$1.00 per share for Added Displayed Volume across all Tapes.\4\ The
Exchange also offers enhanced rebates pursuant to the NBBO Setter Plus
Program (referred to in this filing as the ``NBBO Program'') \5\ for
Equity Members \6\ that add displayed liquidity in securities priced at
or above $1.00 per share in all Tapes based on increasing volume
thresholds and increasing market quality levels (described below). The
NBBO Program was implemented beginning September 1, 2023 and
subsequently amended several times.\7\
---------------------------------------------------------------------------
\3\ Rebates are indicated by parentheses. See the General Notes
section of the Fee Schedule.
\4\ See Fee Schedule, Section 1)a); see also Fee Schedule,
Section 1)b), Liquidity Indicator Codes ``AA'', ``AB'', and ``AC''.
\5\ See, generally, Fee Schedule, Section 1)c).
\6\ The term ``Equity Member'' is a Member authorized by the
Exchange to transact business on MIAX Pearl Equities. See Exchange
Rule 1901.
\7\ See, e.g., Securities Exchange Act Release Nos. 98472
(September 21, 2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-
2023-45); 99318 (January 11, 2024), 89 FR 3488 (January 18, 2024)
(SR-PEARL-2023-73); 99695 (March 8, 2024), 89 FR 18694 (March, 14,
2024) (SR-PEARL-2024-11).
---------------------------------------------------------------------------
Pursuant to the NBBO Setter Plus Table in Section 1)c) of the Fee
Schedule, the NBBO Program provides six volume tiers enhanced by three
market quality levels to provide increasing rebates in this segment.
The six volume tiers are achievable by greater volume from the best of
four alternative methods. The three market quality levels are
achievable by greater NBBO participation in a minimum number of
specific securities (described below).
MIAX Pearl Equities first determines the applicable NBBO Program
tier based on four different volume calculation methods. The four
volume-based methods to determine the Equity Member's tier for purposes
of the NBBO Program are calculated in parallel in each month, and each
Equity Member receives the highest tier achieved from any of the four
methods each month. All four volume calculation methods are based on an
Equity Member's respective ADAV,\8\ NBBO Set Volume, or ADV, each as a
percent of industry TCV \9\ as the denominator.
---------------------------------------------------------------------------
\8\ ``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.
``NBBO Set Volume'' means the ADAV in all securities of an Equity
Member that sets the NBB or NBO on MIAX Pearl Equities. See the
Definitions section of the Fee Schedule. The Exchange excludes from
its calculation of ADAV, ADV, and TCV, and for the purpose of
determining qualification for the rebates described in all Levels of
the Market Quality Tier columns in the NBBO Setter Plus Program: (1)
any trading day that the Exchange's system experiences a disruption
that lasts for more than 60 minutes during regular trading hours;
(2) any day with a scheduled early market close; (3) the ``Russell
Reconstitution Day'' (typically the last Friday in June); (4) any
day that the MSCI Equities Indexes are rebalanced (i.e., on a
quarterly basis); and (5) any day that the S&P 400, S&P 500, and S&P
600 Indexes are rebalanced (i.e., on a quarterly basis). See the
General Notes section of the Fee Schedule.
\9\ ``TCV'' means total consolidated volume calculated as the
volume in shares reported by all exchanges and reporting facilities
to a consolidated transaction reporting plan for the month for which
the fees apply. See the Definitions section of the Fee Schedule.
---------------------------------------------------------------------------
Under volume calculation Method 1, the Exchange provides tiered
rebates based on an Equity Member's ADAV as a percentage of TCV. An
Equity Member qualifies for the base rebates in Tier 1 for executions
of orders in securities priced at or above $1.00 per share for Added
Displayed Volume across all Tapes by achieving an ADAV of at least
0.00% and less than 0.035% of TCV. An Equity Member qualifies for the
enhanced rebates in Tier 2 for executions of orders in securities
priced at or above $1.00 per share for Added Displayed Volume across
all Tapes by achieving an ADAV of at least 0.035% and less than 0.05%
of TCV. An Equity Member qualifies for the enhanced rebates in Tier 3
for executions of orders in securities priced at or above $1.00 per
share for Added Displayed Volume across all Tapes by achieving an ADAV
of at least 0.05% and less than 0.08% of TCV. An Equity Member
qualifies for the enhanced rebates in Tier 4 for executions of orders
in securities priced at or above $1.00 per share for Added Displayed
Volume across all Tapes by achieving an ADAV of at least 0.08% and less
than 0.20% of TCV. An Equity Member qualifies for the enhanced rebates
in Tier 5 for executions of orders in securities priced at or above
$1.00 per share for Added Displayed Volume across all Tapes by
achieving an ADAV of at least 0.20% and less than 0.40% of TCV.
Finally, an Equity Member qualifies for the enhanced rebates in Tier 6
for executions of orders in securities priced at or above $1.00 per
share for Added Displayed Volume across all Tapes by achieving an ADAV
of at least 0.40% of TCV.
Under volume calculation Method 2, the Exchange provides tiered
rebates based on an Equity Member's NBBO Set Volume as a percentage of
TCV. Under volume calculation Method 2, an Equity Member qualifies for
the base rebates in Tier 1 for executions of orders in securities
priced at or above $1.00 per share for Added Displayed Volume across
all Tapes by achieving an NBBO Set Volume of at least 0.00% and less
than 0.01% of TCV. An Equity Member qualifies for the enhanced rebates
in Tier 2 for executions of orders in securities priced at or above
$1.00 per share for Added Displayed Volume across all Tapes by
achieving an NBBO Set Volume of at least 0.01% and less than 0.015% of
TCV. An Equity Member qualifies for the enhanced rebates in Tier 3 for
executions of orders in securities priced at or above $1.00 per share
for Added Displayed Volume across all Tapes by achieving an NBBO Set
Volume of at least 0.015% and less than 0.02% of TCV. An Equity Member
qualifies for the enhanced rebates in Tier 4 for executions of orders
in securities priced at or above $1.00 per share for Added Displayed
Volume across all Tapes by achieving an NBBO
[[Page 91457]]
Set Volume of at least 0.02% and less than 0.03% of TCV. An Equity
Member qualifies for the enhanced rebates in Tier 5 for executions of
orders in securities priced at or above $1.00 per share for Added
Displayed Volume across all Tapes by achieving an NBBO Set Volume of at
least 0.03% and less than 0.08% of TCV. Finally, an Equity Member
qualifies for the enhanced rebates in Tier 6 for executions of orders
in securities priced at or above $1.00 per share for Added Displayed
Volume across all Tapes by achieving an NBBO Set Volume of at least
0.08% of TCV.
Under volume calculation Method 3, the Exchange provides tiered
rebates based on an Equity Member's ADV as a percentage of TCV. An
Equity Member qualifies for the base rebates in Tier 1 for executions
of orders in securities priced at or above $1.00 per share for Added
Displayed Volume across all Tapes by achieving an ADV of at least 0.00%
and less than 0.15% of TCV. An Equity Member qualifies for the enhanced
rebates in Tier 2 for executions of orders in securities priced at or
above $1.00 per share for Added Displayed Volume across all Tapes by
achieving an ADV of at least 0.15% and less than 0.18% of TCV. An
Equity Member qualifies for the enhanced rebates in Tier 3 for
executions of orders in securities priced at or above $1.00 per share
for Added Displayed Volume across all Tapes by achieving an ADV of at
least 0.18% and less than 0.20% of TCV. An Equity Member qualifies for
the enhanced rebates in Tier 4 for executions of orders in securities
priced at or above $1.00 per share for Added Displayed Volume across
all Tapes by achieving an ADV of at least 0.20% and less than 0.60% of
TCV. An Equity Member qualifies for the enhanced rebates in Tier 5 for
executions of orders in securities priced at or above $1.00 per share
for Added Displayed Volume across all Tapes by achieving an ADV of at
least 0.60% and less than 1.00% of TCV. Finally, an Equity Member
qualifies for the enhanced rebates in Tier 6 for executions of orders
in securities priced at or above $1.00 per share for Added Displayed
Volume across all Tapes by achieving an ADV of at least 1.00% of TCV.
Under volume calculation Method 4, the Exchange provides tiered
rebates based on an Equity Member's ADAV as a percentage of TCV,
excluding executions of orders in securities priced below $1.00 per
share across all Tapes from the calculation of both the numerator
(ADAV) and denominator (TCV). An Equity Member qualifies for the base
rebates in Tier 1 for executions of orders in securities priced at or
above $1.00 per share for Added Displayed Volume across all Tapes by
achieving an ADAV of at least 0.00% and less than 0.035% of TCV,
exclusive of executions of orders in securities priced below $1.00 per
share across all Tapes. An Equity Member qualifies for the enhanced
rebates in Tier 2 for executions of orders in securities priced at or
above $1.00 per share for Added Displayed Volume across all Tapes by
achieving an ADAV of at least 0.035% and less than 0.05% of TCV,
exclusive of executions of orders in securities priced below $1.00 per
share across all Tapes. An Equity Member qualifies for the enhanced
rebates in Tier 3 for executions of orders in securities priced at or
above $1.00 per share for Added Displayed Volume across all Tapes by
achieving an ADAV of at least 0.05% and less than 0.08% of TCV,
exclusive of executions of orders in securities priced below $1.00 per
share across all Tapes. An Equity Member qualifies for the enhanced
rebates in Tier 4 for executions of orders in securities priced at or
above $1.00 per share for Added Displayed Volume across all Tapes by
achieving an ADAV of at least 0.08% and less than 0.20% of TCV,
exclusive of executions of orders in securities priced below $1.00 per
share across all Tapes. An Equity Member qualifies for the enhanced
rebates in Tier 5 for executions of orders in securities priced at or
above $1.00 per share for Added Displayed Volume across all Tapes by
achieving an ADAV of at least 0.20% and less than 0.40% of TCV,
exclusive of executions of orders in securities priced below $1.00 per
share across all Tapes. Finally, an Equity Member qualifies for the
enhanced rebates in Tier 6 for executions of orders in securities
priced at or above $1.00 per share for Added Displayed Volume across
all Tapes by achieving an ADAV of at least 0.40% of TCV, exclusive of
executions of orders in securities priced below $1.00 per share across
all Tapes.
After the volume calculation is performed to determine highest tier
achieved by the Equity Member, the applicable rebate is calculated
based on two different measurements based on the Equity Member's
participation at the NBBO on the Exchange in certain securities
(referenced below).
The Exchange provides one column of base rebates (referred to in
the NBBO Program table as ``Level A'') and two columns of enhanced
rebates (referred to in the NBBO Program table as ``Level B'' and
``Level C''),\10\ depending on the Equity Member's Percent Time at NBBO
\11\ on MIAX Pearl Equities in a certain amount of specified securities
(``Market Quality Securities'' or ``MQ Securities'').\12\ The NBBO
Setter Plus Table specifies the percentage of time that the Equity
Member must be at the NBB or NBO on MIAX Pearl Equities in at least 200
symbols out of the full list of 1,000 MQ Securities (which symbols may
vary from time to time based on market conditions). The list of MQ
Securities is generally based on the top multi-listed 1,000 symbols by
ADV across all U.S. securities exchanges. The list of MQ Securities is
updated monthly by the Exchange and published on the Exchange's
website.\13\
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\10\ The Exchange excludes from its calculation of ADAV, ADV,
and TCV, and for the purpose of determining qualification for the
rebates described in all Levels of the Market Quality Tier columns
in the NBBO Setter Plus Program: (1) any trading day that the
Exchange's system experiences a disruption that lasts for more than
60 minutes during regular trading hours; (2) any day with a
scheduled early market close; (3) the ``Russell Reconstitution Day''
(typically the last Friday in June); (4) any day that the MSCI
Equities Indexes are rebalanced (i.e., on a quarterly basis); and
(5) any day that the S&P 400, S&P 500, and S&P 600 Indexes are
rebalanced (i.e., on a quarterly basis). See the General Notes
section of the Fee Schedule.
\11\ ``Percent Time at NBBO'' means the aggregate of the
percentage of time during regular trading hours where a Member has a
displayed order of at least one round lot at the national best bid
(``NBB'') or national best offer (``NBO''). See the Definitions
section of the Fee Schedule.
\12\ ``Market Quality Securities'' or ``MQ Securities'' shall
mean a list of securities designated as such, that are used for the
purposes of qualifying for the rebates described in Level B and
Level C of the Market Quality Tier columns in the NBBO Setter Plus
Program. The universe of these securities will be determined by the
Exchange and published on the Exchange's website. See id.
\13\ See e.g., MIAX Pearl Equities Exchange--Market Quality
Securities (MQ Securities) List, effective October 1 through October
31, 2024, available at https://www.miaxglobal.com/markets/us-equities/pearl-equities/fees (last visited October 30, 2024).
---------------------------------------------------------------------------
The base rebates (``Level A'') are as follows: ($0.00220) per share
in Tier 1; ($0.00290) per share in Tier 2; ($0.00300) per share in Tier
3; ($0.00310) per share in Tier 4; ($0.00335) per share in Tier 5; and
($0.00340) per share in Tier 6. Under Level B, the Exchange provides
enhanced rebates for executions of orders in securities priced at or
above $1.00 per share for Added Displayed Volume across all Tapes if
the Equity Member's Percent Time at NBBO is at least 25% and less than
50% in at least 200 MQ Securities per trading day during the month. The
Level B rebates are as follows: ($0.00225) per share in Tier 1;
($0.00295) per share in Tier 2; ($0.00305) per share in Tier 3;
($0.00315) per share in Tier 4; ($0.00340) per share in Tier 5; and
($0.00345) per share in Tier 6. Under Level C, the Exchange provides
enhanced rebates for executions of
[[Page 91458]]
orders in securities priced at or above $1.00 per share for Added
Displayed Volume across all Tapes if the Equity Member's Percent Time
at NBBO is at least 50% in at least 200 MQ Securities per trading day
during the month. The Level C rebates are as follows: ($0.00230) per
share in Tier 1; ($0.00300) per share in Tier 2; ($0.00310) per share
in Tier 3; ($0.00320) per share in Tier 4; ($0.00345) per share in Tier
5; \14\ and ($0.00350) per share in Tier 6.
---------------------------------------------------------------------------
\14\ Equity Members may also qualify for the Tier 5, Level C
enhanced rebate via an alternative method by satisfying the
following three requirements in the relevant month: (1) Midpoint
ADAV of at least 2,500,000 shares; (2) Displayed ADAV of at least
10,000,000 shares; and (3) Percent Time at the NBB or NBO of at
least 50% in 200 or more symbols from the list of MQ Securities. See
Fee Schedule, Section 1)c), Notes to NBBO Setter Plus Table, note 3.
Midpoint ADAV means the ADAV for the current month consisting of
Midpoint Peg Orders in securities priced at or above $1.00 per share
that execute at the midpoint of the Protected NBBO and add liquidity
to the Exchange. 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). With respect to the trading of equity
securities, the term ``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.
---------------------------------------------------------------------------
The Exchange offers an NBBO Setter Additive Rebate,\15\ which is an
additive rebate of ($0.0004) per share for executions of orders in
securities priced at or above $1.00 per share that set the NBB or NBO
\16\ upon entry on MIAX Pearl Equities with a minimum size of a round
lot.\17\ The Exchange also offers an NBBO First Joiner Rebate, which is
an additive rebate of ($0.0002) per share for executions of orders in
securities priced at or above $1.00 per share that bring MIAX Pearl
Equities to the established NBB or NBO with a minimum size of a round
lot.\18\
---------------------------------------------------------------------------
\15\ See Fee Schedule, Section 1)c), NBBO Setter Additive
Rebate.
\16\ With respect to the trading of equity securities, the term
``NBB'' shall mean the national best bid, the term ``NBO'' shall
mean the national best offer, and the term ``NBBO'' shall mean the
national best bid and offer. See Exchange Rule 1901.
\17\ See Fee Schedule, Section 1)c).
\18\ See Fee Schedule, Section 1)c), NBBO First Joiner Additive
Rebate.
---------------------------------------------------------------------------
Proposal
The Exchange proposes to reduce the standard rebate for executions
of orders in securities priced at or above $1.00 per share for Added
Displayed Volume across all Tapes. Currently, the Exchange provides a
standard rebate of ($0.0022) per share for executions of orders in
securities priced at or above $1.00 per share for Added Displayed
Volume across all Tapes. The Exchange now proposes to reduce the
standard rebate for executions of Added Displayed Volume in securities
priced at or above $1.00 per share from ($0.0022) to ($0.0021) per
share for all Tapes.\19\ Accordingly, the Exchange proposes to amend
Section 1)a), Standard Rates, to reflect this proposed change and amend
Section 1)b), Liquidity Indicator Codes and Associated Fees, to reflect
the corresponding changes to the applicable Liquidity Indicator Codes,
AA, AB and AC.
---------------------------------------------------------------------------
\19\ See Fee Schedule, Section 1)a), Standard Rates, for the
standard pricing for executions of Added Displayed Volume, among
other rates.
---------------------------------------------------------------------------
Next, the Exchange proposes to amend the NBBO Setter Plus Table in
Section 1)c) of the Fee Schedule to decrease the rebates for all tiers
by ($0.0001) per share for all rebate levels of the NBBO Program. With
the proposed changes, the Level A rebates will be as follows:
($0.00210) per share in Tier 1; ($0.00280) per share in Tier 2;
($0.00290) per share in Tier 3; ($0.00300) per share in Tier 4;
($0.00325) per share in Tier 5; and ($0.00330) per share in Tier 6. The
Level B rebates will be as follows: ($0.00215) per share in Tier 1;
($0.00285) per share in Tier 2; ($0.00295) per share in Tier 3;
($0.00305) per share in Tier 4; ($0.00330) per share in Tier 5; and
($0.00335) per share in Tier 6. The Level C rebates will be as follows:
($0.00220) per share in Tier 1; ($0.00290) per share in Tier 2;
($0.00300) per share in Tier 3; ($0.00310) per share in Tier 4;
($0.00335) per share in Tier 5; and ($0.00340) per share in Tier 6.
The Exchange does not propose to amend any of volume calculation
methods used to determine the Equity Member's tier for purposes of the
NBBO Program, which will continue to be calculated in parallel in each
month, and each Equity Member will continue to receive the highest tier
achieved from any of the four methods each month.\20\ The Exchange also
does not propose to amend the different measurements to calculate an
Equity Member's participation at the NBBO on the Exchange in Market
Quality Securities under the NBBO Program.
---------------------------------------------------------------------------
\20\ The Exchange does not propose to amend the alternative
volume calculation method for Equity Members to quality for the Tier
5, Level C enhanced rebate, as proposed to be reduced.
---------------------------------------------------------------------------
The purpose of reducing the standard rebate for executions of Added
Displayed Volume is for business and competitive reasons in light of
recent volume growth on the Exchange. The Exchange notes that despite
the modest reduction proposed herein, the proposed standard rebate for
executions of Added Displayed Volume (i.e., ($0.0021) per share)
remains higher than, and competitive with, the standard rebates
provided by other exchanges for executions of orders in securities
priced at or above $1.00 per share that add displayed liquidity to
those exchanges.\21\
---------------------------------------------------------------------------
\21\ See e.g., MEMX LLC Equities Fee Schedule, Transaction fees
(last visited October 22, 2024), available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/ (providing standard rebate of ($0.0015) per share for
executions of orders in securities priced at or above $1.00 per
share across all tapes); see also Cboe BZX Equities Fee Schedule,
available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ (providing a standard rebate of ($0.0016) per
share for adding displayed liquidity in securities priced at or
above $1.00 per share).
---------------------------------------------------------------------------
The purpose of reducing the enhanced rebates for executions of
Added Displayed Volume for all tiers and market quality levels of the
NBBO Program is for business and competitive reasons in light of recent
volume growth on the Exchange. The Exchange notes that, even with the
proposed decrease in the NBBO Program rebates, the base rebates and
enhanced rebates of the NBBO Program remain competitive with, or higher
than, the rebates provided by other exchanges for executions of orders
in securities priced at or above $1.00 per share that add displayed
liquidity to those exchanges.\22\
---------------------------------------------------------------------------
\22\ See Cboe BZX Equities Fee Schedule, Add/Remove Volume Tiers
section, available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ (providing an enhanced rebates ranging from
($0.0020) to ($0.0032) per share for executions of added displayed
volume in securities priced at or above $1.00 per share, so long as
the member meets certain volume requirements, including, for tier 4,
minimum NBBO Time and NBBO Size requirements from a list of
specified securities and minimum requirement of ADAV as a percentage
of TCV); see also Cboe EDGX Equities Fee Schedule, Add/Remove Volume
Tiers section, available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/ (providing an enhanced rebates ranging
from ($0.0020) to ($0.0034) per share for executions of added
displayed volume in securities priced at or above $1.00 per share,
so long as the member meets certain volume requirements).
---------------------------------------------------------------------------
Implementation
The proposed changes are effective beginning November 1, 2024.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \23\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \24\ in
[[Page 91459]]
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among its Equity Members and
issuers and other persons using its facilities. Additionally, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \25\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers or dealers.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(4).
\25\ 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 had more than approximately 15-16% of the total
market share of executed volume of equities trading for the month of
September 2024.\26\ 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
represented approximately 1.71% of the overall market share for the
month of September 2024. 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.'' \27\
---------------------------------------------------------------------------
\26\ See the ``Market Share'' section of the Exchange's website,
available at https://www.miaxglobal.com/ (last visited October 25,
2024).
\27\ 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 discontinue 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 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 in both a broad manner and in a targeted manner with
respect to the NBBO Program, in particular, and Added Displayed Volume
in securities priced at or above $1.00 per share, in general.
The Exchange believes its proposal to reduce the rebates for
executions of orders in securities priced at or above $1.00 per share
for Added Displayed Volume across all Tapes is reasonable because the
Exchange's standard rebate and enhanced rebates will remain competitive
with, or higher than, the rebates provided by other exchanges for
executions of orders in securities priced at or above $1.00 per share
that add displayed liquidity to those exchanges.\28\ The Exchange
believes that the enhanced rebates under the NBBO Program, as modified
by this proposal, continue to be equitable and not unfairly
discriminatory because the NBBO Program is open to all Equity Members
on an equal basis and provides enhanced rebates that are reasonably
related to the value of the Exchange's market quality associated with
greater order flow by Equity Members that set the NBB or NBO, and the
introduction of higher volumes of orders into the price and volume
discovery process. The Exchange believes the proposal is equitable and
not unfairly discriminatory because the Exchange's pricing structure,
as modified by this proposal, continues to be designed to incentivize
the entry of aggressively priced displayed liquidity that may create
tighter spreads, thereby promoting price discovery and market quality
on the Exchange to the benefit of all Equity Members and public
investors.
---------------------------------------------------------------------------
\28\ See supra notes 21 and 22.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Intra-Market Competition
The Exchange does not believe that the proposal will impose any
burden on intra-market competition not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange believes that its proposal to reduce the standard and
enhanced rebates provided for in the NBBO Program, for executions of
orders in securities priced at or above $1.00 per share for Added
Displayed Volume will not impose any burden on intramarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act because these changes are for business and competitive reasons
in light of recent volume growth on the Exchange. The Exchange notes
that despite the modest reduction proposed herein of ($0.0001) per
share for executions of orders in securities priced at or above $1.00
per share for Added Displayed Volume, the Exchange's standard and
enhanced rebates remain competitive with, or higher than, the standard
and enhanced rebates provided by other exchanges for executions of
orders in securities priced at or above $1.00 per share for Added
Displayed Volume on those exchanges.\29\
---------------------------------------------------------------------------
\29\ See supra notes 21 and 22.
---------------------------------------------------------------------------
The Exchange believes that, even with the proposed decrease to the
standard and enhanced Added Displayed Volume rebates, the Exchange's
rebate structure for such orders will continue to incentivize market
participants to direct 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. The Exchange believes that this, in turn, will continue
to encourage market participants to direct additional orders in
securities priced at or above $1.00 per share to the Exchange. Greater
liquidity benefits all Equity Members by providing more trading
opportunities and encourages Equity Members to send orders to the
Exchange, thereby contributing to robust levels of liquidity, which
benefits all market participants.
Intermarket Competition
The Exchange believes the proposed changes will benefit
competition, and the Exchange notes that it operates in a highly
competitive market. Equity Members have numerous alternative venues
they may participate on and direct their order flow to, including
sixteen equities exchanges and numerous alternative trading systems and
other off-exchange venues. As noted above, no single registered
equities exchange currently had more than 15-16% of the total market
share of executed volume of equities trading for
[[Page 91460]]
the month of September 2024.\30\ Thus, in such a low-concentrated and
highly competitive market, no single equities exchange possesses
significant pricing power in the execution of order flow.
---------------------------------------------------------------------------
\30\ See supra note 26.
---------------------------------------------------------------------------
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 orders in
securities priced at or above $1.00 per share for Added Displayed
Volume, 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.
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 self-regulatory organization (``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.'' \31\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the DC 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' . .
.''.\32\ 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.
---------------------------------------------------------------------------
\31\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\32\ 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)).
---------------------------------------------------------------------------
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,\33\ and Rule 19b-4(f)(2) \34\ 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.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78s(b)(3)(A)(ii).
\34\ 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-2024-50 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-2024-50. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-PEARL-2024-50 and should be
submitted on or before December 10, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-26870 Filed 11-18-24; 8:45 am]
BILLING CODE 8011-01-P
