[Federal Register Volume 85, Number 239 (Friday, December 11, 2020)]
[Notices]
[Pages 80200-80202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27201]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90579; File No. SR-PEARL-2020-28]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 2611, Odd and Mixed Lots

December 7, 2020.
    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 November 23, 2020, MIAX PEARL, LLC (``MIAX PEARL'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
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 Exchange Rule 2611 
regarding the handling of odd lot sized orders.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/pearl at MIAX 
PEARL's principal office, and at the Commission's Public Reference 
Room.

[[Page 80201]]

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 Exchange Rule 
2611 to provide that odd lot orders \3\ would no longer be processed 
differently than orders that are a round lot or greater in size.\4\ 
Exchange Rule 2611 sets forth the requirements relating to odd and 
mixed lot trading of equity securities on the Exchange's equity trading 
platform (referred to herein as ``MIAX PEARL Equities''). Exchange Rule 
2611(b) further provides that round lot, mixed lot, and odd lot orders 
are treated in the same manner on the Exchange, provided that, the 
working and display price of a displayable odd lot order will be 
adjusted both on arrival and when resting on the MIAX PEARL Equities 
Book.\5\
---------------------------------------------------------------------------

    \3\ Exchange Rule 2610 provides that the unit of trading in 
stocks is one (1) share. 100 shares constitutes a ``round lot,'' 
unless specified by the primary listing market to be fewer than 100 
shares. Any amount less than a round lot shall constitute an ``odd 
lot,'' and any amount greater than a round lot that is not a 
multiple of a round lot shall constitute a ``mixed lot.''
    \4\ The proposed rule change is substantially similar to a 
recent rule amendment by the New York Stock Exchange LLC (``NYSE''). 
See Securities Exchange Act Nos. 88362 (March 12, 2020), 85 FR 15538 
(March 18, 2020) (SR-NYSE-2020-13); and 88793 (May 1, 2020), 85 FR 
27259 (May 7, 2020) (SR-NYSE-2020-13) (``NYSE Approval Order''). See 
also NYSE Rule 7.38.
    \5\ See Exchange Rule 1901 defining the term ``MIAX PEARL 
Equities Book''.
---------------------------------------------------------------------------

    Currently, Exchange Rule 2611(b)(1) and subparagraphs (A)-(C) 
describe how the working and displayed price of odd lot orders are 
adjusted in relation to the contra-side Protected Best Bid (``PBB'') or 
Protected Best Offer (``PBO'', collectively with PBB, the ``PBBO''). In 
short, working and displayed prices of odd lot orders are bound by 
either the PBBO of an away trading center or of the Exchange, which 
means resting odd lot orders can be re-priced if the PBBO changes or 
becomes locked or crossed.
    Specifically, current Exchange Rule 2611(b)(1)(A) reflects standard 
behavior and provides that if the limit price of an odd lot order to 
buy (sell) is below (above) the PBO (PBB) of an away Trading Center, it 
will have a working and display price equal to the limit price. Current 
Exchange Rule 2611(b)(1)(B) provides that if the limit price of an odd 
lot order to buy (sell) is at or above (below) the PBO (PBB) of an away 
Trading Center, it will have a working price equal to the PBO (PBB). 
The display price will also be adjusted to one minimum price variation 
lower (higher) than the PBO (PBB). Current Exchange Rule 2611(b)(1)(C) 
provides that if the PBBO is locked or crossed and the limit price of 
an odd lot order to buy (sell) resting on the MIAX PEARL Equities Book 
is above (below) the PBO (PBB) of an away Trading Center, it will have 
a working and display price equal to the PBB (PBO) of the Exchange. 
Current Exchange Rule 2611(b)(1)(C) further provides that the working 
and display price of such odd lot order will be adjusted again pursuant 
to paragraphs (A) and (B) of Exchange Rule 2611(b)(1) should the PBBO 
unlock or uncross.
    As proposed, odd lot sized orders would be handled in the same 
manner as orders of a round lot size or higher, and if they are 
designated displayed, they would stand their ground if locked or 
crossed by the PBBO of an away trading center.\6\ The proposal would, 
therefore, result in fewer orders being re-priced, thereby allowing 
those orders to retain their priority on the MIAX PEARL Equites Book. 
To effect this change, the Exchange proposes to delete Exchange Rule 
2611(b)(1) and sub-paragraphs (A)-(C) in their entirety. As a result of 
these changes, Exchange Rule 2611(b) would provide, without any 
qualifiers, that ``[r]ound lot, mixed lot and odd lot orders are 
treated in the same manner on the Exchange.'' The Exchange proposes an 
additional non-substantive change to renumber current Exchange Rule 
2611(b)(2) as Exchange Rule 2611(c).
---------------------------------------------------------------------------

    \6\ Like round and mixed lot sized orders, odd lot sized orders 
would be subject to the Exchange price sliding processes under 
Exchange Rule 2614(g).
---------------------------------------------------------------------------

Implementation
    Due to the technological changes associated with this proposed 
change, the Exchange will issue a trading alert publicly announcing the 
implementation date of this proposed rule change. The Exchange 
anticipates that the implementation date will be in the first half of 
2021.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\7\ in general, and furthers the objectives of Section 6(b)(5),\8\ 
in particular, because it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The Exchange believes that 
processing odd lot sized orders in the same manner as round and mixed 
lot sized orders would remove impediments to and perfect the mechanism 
of a free and open market because the same principle applies: an order 
of any size that has been displayed has priority at that price if an 
away Trading Center subsequently locks or crosses that price. In 
addition, the Exchange believes that processing odd lot orders the same 
as round-lot sized orders is not novel as it is consistent with the 
rules of other exchanges.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See the NYSE Approval Order, supra note 5. See NYSE Rule 
7.38. See also Nasdaq Rules 4703(b)(3) (defining the term ``odd 
lot'' as an order attribute) and 4702 (describing which order 
attributes are available for orders on Nasdaq, without any 
discussion of odd lot sized orders being priced differently than 
round-lot sized orders). See also BZX Rules 11.10 (defining the term 
``odd lot'') and 11.9 (describing BZX Orders and Modifiers, without 
any discussion of odd lot sized orders being priced differently than 
round-lot sized orders).
---------------------------------------------------------------------------

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. In fact, the Exchange 
believes that the proposal may have a positive effect on competition 
because it is designed to conform how the Exchange processes odd lot 
orders to the functionality available on other exchanges. The Exchange 
believes that the proposed change would promote competition because 
fewer orders would need to be repriced on the Exchange and therefore 
liquidity providers seeking for their orders to retain priority may 
route additional orders to the Exchange. Likewise, liquidity takers may 
be more likely to route orders to the Exchange if

[[Page 80202]]

they have greater determinism regarding the price at which their orders 
would be executed.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ 
thereunder.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#3c4e495059115f5351515952484f7c4f595f125b534a"><span class="__cf_email__" data-cfemail="0775726b622a64686a6a626973744774626429606871">[email protected]</span></a>. Please include 
File Number SR-PEARL-2020-28 on the subject line.

Paper Comments

    <bullet> 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-2020-28. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-PEARL-2020-28, and should be submitted 
on or before January 4, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27201 Filed 12-10-20; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>