Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 10145 

15 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (S7–10–04) 

(Final Rule) (‘‘Regulation NMS’’). 

5See Securities Exchange Act Release No. 51808, 

84 FR 5202, 5253 (February 20, 2019) (File No. S7– 

05–18) (Transaction Fee Pilot for NMS Stocks Final 

Rule) (‘‘Transaction Fee Pilot’’). 

6See Cboe Global Markets, U.S. Equities Market 

Volume Summary, available at http://

markets.cboe.com/us/equities/market_share/. See 

generally https://www.sec.gov/fast-answers/ 

divisionsmarketregmrexchangesshtml.html. 

7See FINRA ATS Transparency Data, available at 

https://otctransparency.finra.org/otctransparency/ 

AtsIssueData. Although 54 alternative trading 

systems were registered with the Commission as of 

July 29, 2019, only 31 are currently trading. A list 

of alternative trading systems registered with the 

Continued 

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

C2–2021–004 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–C2–2021–004. 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–C2–2021–004 and should 

be submitted on or before March 11, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–03213 Filed 2–17–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91110; File No. SR– 

NYSENAT–2021–02] 

Self-Regulatory Organizations; NYSE 

National, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Its Schedule of 

Fees and Rebates 

February 11, 2021. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on February 

1, 2021, NYSE National, Inc. (‘‘NYSE 

National’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Schedule of Fees and Rebates (‘‘Fee 

Schedule’’) to modify the requirements 

to qualify for the Adding Tier 1 and 2 

and Removing Tier 1. The Exchange 

proposes to implement the rule change 

on February 1, 2021. The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Schedule of Fees and Rebates (‘‘Fee 

Schedule’’) to modify the requirements 

to qualify for the Adding Tier 1 and 2 

and Removing Tier 1. 

The proposed changes respond to the 

current competitive environment where 

order flow providers have a choice of 

where to direct liquidity-providing and 

liquidity-removing orders by offering 

further incentives for ETP Holders to 

send additional displayed and nondisplayed liquidity to the Exchange. 

The Exchange proposes to implement 

the rule change on February 1, 2021. 

Current Market and Competitive 

Environment 

The Exchange operates in a highly 

competitive market. The Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 4

As the Commission itself recognized, 

the market for trading services in NMS 

stocks has become ‘‘more fragmented 

and competitive.’’ 5 Indeed, equity 

trading is currently dispersed across 16 

exchanges,6 31 alternative trading 

systems,7 and numerous broker-dealer 


jbell on DSKJLSW7X2PROD with NOTICES
10146 Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 

Commission is available at https://www.sec.gov/ 

foia/docs/atslist.htm. 

8See Cboe Global Markets U.S. Equities Market 

Volume Summary, available at http://

markets.cboe.com/us/equities/market_share/. 

9See id. 

internalizers and wholesalers. Based on 

publicly-available information, no 

single exchange has more than 16% of 

the market.8 Therefore, no exchange 

possesses significant pricing power in 

the execution of equity order flow. More 

specifically, the Exchange’s share of 

executed volume of equity trades in 

Tapes A, B and C securities is less than 

2%.9

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can move order flow, or discontinue or 

reduce use of certain products, in 

response to fee changes. While it is not 

possible to know a firm’s reason for 

moving order flow, the Exchange 

believes that one such reason is because 

of fee changes at any of the registered 

exchanges or non-exchange trading 

venues to which a firm routes order 

flow. These fees vary month to month, 

and not all are publicly available. With 

respect to non-marketable order flow 

that would provide liquidity on an 

exchange, ETP Holders can choose from 

any one of the 16 currently operating 

registered exchanges to route such order 

flow. Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees, and market participants can readily 

trade on competing venues if they deem 

pricing levels at those other venues to 

be more favorable. 

The Exchange utilizes a ‘‘takermaker’’ or inverted fee model to attract 

orders that provide liquidity at the most 

competitive prices. Under the takermaker model, offering rebates for taking 

(or removing) liquidity increases the 

likelihood that market participants will 

send orders to the Exchange to trade 

with liquidity providers’ orders. This 

increased taker order flow provides an 

incentive for market participants to send 

orders that provide liquidity. The 

Exchange generally charges fees for 

order flow that provides liquidity. These 

fees are reasonable due to the additional 

marketable interest (in part attracted by 

the Exchange’s rebate to remove 

liquidity) with which those order flow 

providers can trade. 

Proposed Rule Change 

To respond to this competitive 

environment, the Exchange proposes the 

following changes to its Fee Schedule 

designed to provide order flow 

providers with additional incentives to 

route liquidity-providing order flow to 

the Exchange. As described above, ETP 

Holders with liquidity-providing order 

flow have a choice of where to send that 

order flow. 

Proposed Changes to Adding Tier 1 and 

Adding Tier 2 

Under current Adding Tier 1, ETP 

Holders that add liquidity to the 

Exchange in securities with a per share 

price of $1.00 or more and that have at 

least 0.25% or more Adding ADV as a 

percentage of US CADV are charged a 

fee of $0.0020 per share for adding 

displayed orders in Tape A, B and C 

securities and $0.0024 per share for 

adding non-displayed orders in Tape A, 

B and C securities. 

The Exchange proposes to modify the 

requirements to qualify for Adding Tier 

1 by adopting an alternative 

qualification basis for the Adding Tier 1 

fee. As proposed, ETP Holders would 

qualify for the current fees by having at 

least 0.25% or more Adding ADV as a 

percentage of US CADV or at least 30 

million shares of Adding ADV. The 

Exchange does not propose any changes 

to the Adding Rate for Adding Tier 1, 

and the rate for orders that add liquidity 

under the Adding Tier 1 would remain 

unchanged. 

Similarly, under current Adding Tier 

2, ETP Holders that add liquidity to the 

Exchange in securities with a per share 

price of $1.00 or more and that have at 

least 0.13% or more Adding ADV as a 

percentage of US CADV are charged a 

fee of $0.0022 per share for adding 

displayed orders in Tape A, B and C 

securities. 

The Exchange proposes to revise 

Adding Tier 2 by adopting an 

alternative qualification basis for the 

tier. As proposed, ETP Holders would 

qualify for the current rebate by having 

at least 0.13% or more Adding ADV as 

a percentage of US CADV or at least 16 

million shares or more Adding ADV. 

The Exchange does not propose any 

changes to the Adding Rate for Adding 

Tier 2, and the rate for such orders that 

add liquidity under the Adding Tier 2 

would remain unchanged. 

The Exchange believes that 

introducing alternative criteria for ETP 

Holders to qualify for Adding Tier 1 and 

Adding Tier 2 will allow greater 

numbers of ETP Holders to potentially 

qualify for the tier, and will incentivize 

more ETP Holders to route their 

liquidity-providing order flow to the 

Exchange in order to qualify for the tier. 

This in turn would support the quality 

of price discovery on the Exchange and 

provide additional price improvement 

opportunities for incoming orders. The 

Exchange believes that by correlating 

the amount of the fee to the level of 

orders sent by an ETP Holder that add 

liquidity, the Exchange’s fee structure 

would incentivize ETP Holders to 

submit more orders that add liquidity to 

the Exchange, thereby increasing the 

potential for price improvement to 

incoming marketable orders submitted 

to the Exchange. 

As noted above, the Exchange 

operates in a competitive environment, 

particularly as relates to attracting nonmarketable orders, which add liquidity 

to the Exchange. The Exchange does not 

know how much order flow ETP 

Holders choose to route to other 

exchanges or to off-exchange venues. 

Based on the profile of liquidity-adding 

firms generally, the Exchange believes 

that additional ETP Holders could 

qualify for the tiered rate under the new 

qualification criteria if they choose to 

direct order flow to, and increase 

quoting on, the Exchange. However, 

without having a view of ETP Holders’ 

activity on other exchanges and offexchange venues, the Exchange has no 

way of knowing whether this proposed 

rule change would result in any 

additional ETP Holders directing orders 

to the Exchange in order to qualify for 

the Adding Tier 1 and Adding Tier 2 

rates. 

The Exchange proposes the nonsubstantive change of deleting ‘‘or 

more’’ following the amount of Adding 

ADV as a percentage of US CADV 

required to qualify for the Adding Tier 

1, Adding Tier 2, Adding Tier 4, Adding 

Tier 4 and Non-Displayed Adding Tier 

1. The designation ‘‘at least’’ before the 

relevant amount of Adding ADV in each 

tier renders the phrase ‘‘or more’’ after 

the amount redundant. 

Proposed Changes to Removing Tier 1 

Under current Removing Tier 1, the 

Exchange provides a rebate of $0.0030 

per share to ETP Holders that remove 

liquidity from the Exchange in 

securities with a per share price of $1.00 

or more and that have a combined 

Adding ADV and Removing ADV of at 

least 0.18% as a percentage of US CADV 

and at least 250,000 of Adding ADV. 

The Exchange proposes to revise 

Removing Tier 1 by adopting an 

alternative qualification basis for the 

tier. As proposed, ETP Holders would 

qualify for the current rebate by having 

at least 250,000 Adding ADV and a 

combined Adding ADV and Removing 

ADV of at least (1) 0.18% as a 

percentage of US CADV, or (2) 21.5 

million shares ADV. The Exchange does 

not propose any changes to the 

Removing Rate for Orders that removed 

liquidity that qualify for Removing Tier 

1, and the rate for such orders under 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 10147 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(4) & (5). 

12See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) 

(S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 

13See Securities Exchange Act Release No. 61358, 

75 FR 3594, 3597 (January 21, 2010) (File No. S7– 

02–10) (Concept Release on Equity Market 

Structure). 

Removing Tier 1 would remain 

unchanged. 

The Exchange believes that providing 

an alternative way for ETP Holders to 

qualify for Removing Tier 1 of at least 

21.5 million shares ADV will allow 

greater numbers of ETP Holders to 

qualify for the tier, and will incentivize 

more ETP Holders to route liquidityremoving order flow to the Exchange in 

order to qualify for the tier. This is turn 

would support the quality of price 

discovery on the Exchange and provide 

additional price improvement 

opportunities for incoming orders. As 

described above, ETP Holders with 

liquidity-removing order flow have a 

choice of where to send that order flow. 

The Exchange believes that as a result 

of the proposed change to Removing 

Tier 1, more ETP Holders will choose to 

route their liquidity-removing order 

flow to the Exchange in order to qualify 

for the credit for removing liquidity 

associated with Removing Tier 1 given 

that the requirements to qualify have 

been reduced. 

As noted, the Exchange operates in a 

competitive environment. The Exchange 

does not know how much order flow 

ETP Holders choose to route to other 

exchanges or to off-exchange venues. 

Based on the profile of liquidity-adding 

firms generally, the Exchange believes 

that additional ETP Holders could 

qualify for the tiered rate under the new 

qualification criteria if they choose to 

direct order flow to, and increase 

quoting on, the Exchange. Without 

having a view of ETP Holders’ activity 

on other exchanges and off-exchange 

venues, the Exchange has no way of 

knowing whether this proposed rule 

change would result in any additional 

ETP Holders directing orders to the 

Exchange in order to qualify for the 

Removing Tier 1 rate. 

The proposed changes are not 

otherwise intended to address any other 

issues, and the Exchange is not aware of 

any problems that ETP Holders would 

have in complying with the proposed 

changes. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,10 in general, and 

furthers the objectives of Sections 

6(b)(4) and 6(b)(5) of the Act,11 in 

particular, because it provides for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members, issuers and other persons 

using its facilities and does not unfairly 

discriminate between customers, 

issuers, brokers or dealers. 

The Proposed Change Is Reasonable 

As discussed above, the Exchange 

operates in a highly competitive market. 

The Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. In 

Regulation NMS, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 12

While Regulation NMS has enhanced 

competition, it has also fostered a 

‘‘fragmented’’ market structure where 

trading in a single stock can occur 

across multiple trading centers. When 

multiple trading centers compete for 

order flow in the same stock, the 

Commission has recognized that ‘‘such 

competition can lead to the 

fragmentation of order flow in that 

stock.’’ 13

Given the current competitive 

environment, the Exchange believes that 

the proposal represents a reasonable 

attempt to attract additional order flow 

to the Exchange. Specifically, the 

Exchange believes that the proposed 

revisions to Adding Tiers 1 and 2 and 

Removing Tier 1 are reasonable because 

they would promote execution 

opportunities for ETP Holders routing 

order flow to the Exchange. 

The Exchange believes that the 

proposal as a whole represents a 

reasonable effort to promote price 

improvement and enhanced order 

execution opportunities for ETP 

Holders. All ETP Holders would benefit 

from the greater amounts of liquidity on 

the Exchange, which would represent a 

wider range of execution opportunities. 

The Exchange further believes that 

removing a redundant phrase from the 

Adding Tier 1, Adding Tier 2, Adding 

Tier 4, Adding Tier 4 and NonDisplayed Adding Tier 1 would also add 

clarity and transparency to the Schedule 

of Fees and Rebates. 

The Proposal Is an Equitable Allocation 

of Fees 

The Exchange believes the proposed 

rule change equitably allocates its fees 

among its market participants. The 

proposed change would continue to 

encourage ETP Holders to both submit 

additional liquidity to the Exchange and 

execute orders on the Exchange, thereby 

contributing to robust levels of liquidity, 

to the benefit of all market participants. 

The Exchange believes that modifying 

Adding Tiers 1 and 2 and Removing 

Tier 1 would encourage the submission 

and removal of additional liquidity from 

the Exchange, thus enhancing order 

execution opportunities for ETP Holders 

from the substantial amounts of 

liquidity present on the Exchange. All 

ETP Holders would benefit from the 

greater amounts of liquidity that would 

be present on the Exchange, which 

would provide greater execution 

opportunities. 

The Exchange believes the proposed 

rule change would also improve market 

quality for all market participants 

seeking to remove liquidity on the 

Exchange and, as a consequence, attract 

more liquidity to the Exchange, thereby 

improving market-wide quality. The 

proposal neither targets nor will it have 

a disparate impact on any particular 

category of market participant. 

Specifically, the Exchange believes 

that the proposal constitutes an 

equitable allocation of fees because all 

similarly situated ETP Holders and 

other market participants would be 

eligible for the same general and tiered 

rates and would be eligible for the same 

fees and credits. Moreover, the proposed 

change is equitable because the revised 

fees would apply equally to all similarly 

situated ETP Holders. 

The Proposal Is Not Unfairly 

Discriminatory 

The Exchange believes that the 

proposal is not unfairly discriminatory. 

In the prevailing competitive 

environment, ETP Holders are free to 

disfavor the Exchange’s pricing if they 

believe that alternatives offer them 

better value. 

Moreover, the proposal neither targets 

nor will it have a disparate impact on 

any particular category of market 

participant. The Exchange believes that 

the proposal does not permit unfair 

discrimination because the proposal 

would be applied to all similarly 

situated ETP Holders and all ETP 

Holders would be subject to the same 

modified Adding Tiers 1 and 2 and 

Removing Tier 1. Accordingly, no ETP 

Holder already operating on the 

Exchange would be disadvantaged by 


jbell on DSKJLSW7X2PROD with NOTICES
10148 Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 

14 15 U.S.C. 78f(b)(8). 

15Regulation NMS, 70 FR at 37498–99. 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(2). 

18 15 U.S.C. 78s(b)(2)(B). 

the proposed allocation of fees and 

credits. 

The Exchange further believes that the 

proposed changes would not permit 

unfair discrimination among ETP 

Holders because the tiered rates are 

available equally to all ETP Holders. As 

described above, in today’s competitive 

marketplace, order flow providers have 

a choice of where to direct liquidityproviding order flow, and the Exchange 

believes there are additional ETP 

Holders that could qualify if they chose 

to direct their order flow to the 

Exchange. 

Finally, the Exchange believes that it 

is subject to significant competitive 

forces, as described below in the 

Exchange’s statement regarding the 

burden on competition. 

For the foregoing reasons, the 

Exchange believes that the proposal is 

consistent with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,14 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Instead, as 

discussed above, the Exchange believes 

that the proposed change would 

encourage the submission of additional 

liquidity and order flow to a public 

exchange, thereby enhancing order 

execution opportunities for ETP 

Holders. As a result, the Exchange 

believes that the proposed change 

furthers the Commission’s goal in 

adopting Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 15

Intramarket Competition. The 

proposed change is designed to attract 

additional order flow to the Exchange. 

As described above, the Exchange 

believes that the proposed change 

would provide additional incentives for 

market participants to route liquidityproviding and liquidity-removing orders 

to the Exchange. Greater liquidity 

benefits all market participants on the 

Exchange by providing more trading 

opportunities and encourages ETP 

Holders to send orders, thereby 

contributing to robust levels of liquidity. 

The proposed revised fees would be 

available to all similarly-situated market 

participants, and thus, the proposed 

change would not impose a disparate 

burden on competition among market 

participants on the Exchange. 

Intermarket Competition. The 

Exchange operates in a highly 

competitive market in which 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. In such an environment, the 

Exchange must continually adjust its 

fees and rebates to remain competitive 

with other exchanges and off-exchange 

venues. Because competitors are free to 

modify their own fees and credits in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

does not believe its proposed fee change 

can impose any burden on intermarket 

competition. 

The Exchange believes that the 

proposed change could promote 

competition between the Exchange and 

other execution venues, including those 

that currently offer similar order types 

and comparable transaction pricing, by 

encouraging additional orders to be sent 

to the Exchange for execution. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 16 of the Act and 

subparagraph (f)(2) of Rule 19b–4 17

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 18 of the Act to 

determine whether the proposed rule 

change 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSENAT–2021–02 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–NYSENAT–2021–02. 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; 

the Commission does not edit personal 

identifying information from 

submissions. 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–NYSENAT–2021–02 

and should be submitted on or before 

March 11, 2021. 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices 10149 

19 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90563 

(December 3, 2020), 85 FR 79252 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 90962, 

86 FR 7317 (January 27, 2021). The Commission 

designated March 9, 2021, as the date by which it 

should approve, disapprove, or institute 

proceedings to determine whether to disapprove the 

proposed rule changes. 

6See Securities Exchange Act Release Nos. 88132 

(February 6, 2020), 85 FR 8053 (February 12, 2020) 

(SR–PEARL–2020–03) (Notice of Filing of a 

Proposed Rule Change to Adopt Rules Governing 

the Trading of Equity Securities); and 89563 

(August 14, 2020), 85 FR 51510 (August 20, 2020) 

(Order Approving Proposed Rule Change to 

Establish Rules Governing the Trading of Equity 

Securities). 

7See Securities Exchange Act Release No. 89730 

(September 1, 2020), 85 FR 55530 (September 8, 

2020) (SR–PEARL–2020–10) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Implement a Second Equity Rights Program) 

(‘‘ERP Notice’’). 

8See ERP Notice, supra note 7, 85 FR at 55530– 

31. In the ERP Notice, the Commission noted that 

MIAX PEARL would need to submit a separate 

proposed rule change to make changes to its 

corporate governance documents to accommodate 

aspects of the proposal that involve or affect the 

MIAX PEARL Board of Directors. See ERP Notice, 

supra note 7, 85 FR at 55532, n.16. 

9See ERP Notice, supra note 7, 85 FR at 55532. 

10See Article I(p) of the MIAX PEARL Amended 

and Restated By-Laws, defining ‘‘Exchange 

Member’’ as ‘‘any registered broker or dealer that 

has been admitted to membership in the national 

securities exchange operated by [MIAX PEARL].’’ 

11See Notice, supra note 3, 85 FR at 79255. The 

non-substantive changes include deletion from the 

current by-laws of provisions that specifically 

referenced past deadlines and events that have 

since occurred and deletion of the definition of the 

term ‘‘Exchange Contract’’ in Article I(m) of the 

current By-Laws because the term is not used 

therein or in the MIAX PEARL Amended and 

Restated By-Laws. 

12See Article I(n) of the MIAX PEARL Amended 

and Restated By-Laws, defining ‘‘ERP Member’’ as 

‘‘an Exchange Member who acquired Units 

pursuant to an ERP Agreement sufficient to acquire 

an ERP Director or an Observer position.’’ See also 

Article I(l) of the MIAX PEARL Amended and 

Restated By-Laws, defining ‘‘ERP Agreement’’ as 

‘‘the agreement between the Exchange’s parent 

holding company, MIH, and ERP Members dated 

September 11, 2020 pursuant to which Units were 

issued;’’ and Article I(pp) of the MIAX PEARL 

Amended and Restated By-Laws, defining ‘‘Unit’’ as 

‘‘the securities issued pursuant to the ERP 

Agreement.’’ 

13See Article I(m) of the MIAX PEARL Amended 

and Restated By-Laws, defining ‘‘ERP Director’’ as 

‘‘a MIAX PEARL Equities Industry Director who has 

been nominated by an ERP Member and appointed 

to the Board of Directors.’’ 

14See Article I(gg) of the MIAX PEARL Amended 

and Restated By-Laws, providing that ‘‘Observer’’ 

has the meaning set forth in Article II, Section 2.2 

of the [MIAX PEARL Amended and Restated] ByLaws. As described further below, an ‘‘Observer’’ is 

a person, appointed pursuant to Section 2.2 of the 

MIAX PEARL Amended and Restated By-Laws that 

‘‘may be invited to attend meetings of the Board in 

a non-voting observer capacity.’’ 

15See Article II, Section 2.2(e) of the MIAX 

PEARL Amended and Restated By-Laws. The ERP 

Member’s right to nominate a Director or appoint 

an Observer pursuant to amended Section 2.2(e) 

will be perpetual, subject to the certain conditions 

discussed below. See Notice, supra note 3, 85 FR 

at 79254. 

16See Article I(t) of the MIAX PEARL Amended 

and Restated By-Laws, defining ‘‘Industry Director’’ 

to mean ‘‘a Director who (i) is or has served in the 

prior three years as an officer, director, or employee 

of a broker or dealer, excluding an outside director 

or a director not engaged in the day-to-day 

management of a broker or dealer; (ii) is an officer, 

director (excluding an outside director), or 

employee of an entity that owns more than 10% of 

the equity of a broker or dealer, and the broker or 

dealer accounts for more than 5% of the gross 

revenues received by the consolidated entity; (iii) 

owns more than 5% of the equity securities of any 

broker or dealer, whose investments in brokers or 

dealers exceed 10% of his or her net worth, or 

whose ownership interest otherwise permits him or 

her to be engaged in the day-to-day management of 

a broker or dealer; (iv) provides professional 

services to brokers or dealers, and such services 

constitute 20% or more of the professional revenues 

received by the Director or 20% or more of the gross 

revenues received by the Director’s firm or 

partnership; (v) provides professional services to a 

director, officer, or employee of a broker, dealer, or 

corporation that owns 50% or more of the voting 

stock of a broker or dealer, and such services relate 

to the director’s, officer’s, or employee’s 

professional capacity and constitute 20% or more 

of the professional revenues received by the 

Director or member or 20% or more of the gross 

revenues received by the Director’s or member’s 

firm or partnership; or (vi) has a consulting or 

employment relationship with or provides 

professional services to the Company or any 

affiliate thereof or has had any such relationship or 

provided any such services at any time within the 

prior three years.’’ 

17See Article II, Section 2.2(g)(iii) of the MIAX 

PEARL Amended and Restated By-Laws, providing 

Continued 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–03215 Filed 2–17–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91112; File No. SR– 

PEARL–2020–30] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Order Granting Approval 

of a Proposed Rule Change To Amend 

the Exchange’s By-Laws in Connection 

With an Equity Rights Program 

February 11, 2021. 

I. Introduction 

On November 24, 2020, MIAX 

PEARL, LLC (the ‘‘Exchange’’ or ‘‘MIAX 

PEARL’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a 

proposed rule change to amend the 

Amended and Restated By-Laws of 

MIAX PEARL (as amended, the ‘‘MIAX 

PEARL Amended and Restated ByLaws’’) to correspond with an Equity 

Rights Program recently established by 

the Exchange. The proposed rule change 

was published for comment in the 

Federal Register on December 9, 2020.3

On January 21, 2021, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to either approve the 

proposed rule change, disapprove the 

proposed rule changes, or institute 

proceedings to determine whether to 

disapprove the proposed rule changes.5

The Commission received no comments 

on the proposal. This order approves the 

proposed rule change. 

II. Background and Description of the 

Proposed Rule Change 

On August 14, 2020, the Commission 

approved a proposed rule change to 

adopt rules governing the trading of 

equity securities on the Exchange and 

establish a platform for the trading of 

equity securities referred to as MIAX 

PEARL Equities.6 On August 20, 2020, 

the Exchange filed an immediately 

effective proposed rule change to 

establish an Equity Rights Program 

(‘‘ERP’’),7 pursuant to which Units 

representing the right to acquire equity 

in the Exchange’s parent holding 

company, Miami International 

Holdings, Inc. (‘‘MIH’’), were issued to 

participating Exchange Members in 

exchange for the prepayment of certain 

Exchange fees and the achievement of 

certain liquidity volume thresholds on 

MIAX PEARL Equities over a 42-month 

period.8 In that August 2020 filing to 

implement the ERP, the Exchange stated 

that ‘‘[w]hen a participating Member 

acquires a certain number of [U]nits, the 

Member can appoint one director to the 

MIAX PEARL Board [of Directors].’’ 9 In 

this filing, the Exchange proposes to 

amend its By-Laws to provide for the 

right of such Exchange Members 10

participating in the ERP to nominate or 

appoint a representative to the MIAX 

PEARL Board of Directors (‘‘PEARL 

Board’’ or ‘‘Board’’), as well as to make 

other changes, including certain nonsubstantive changes.11

Specifically, the Exchange proposes to 

amend its By-Laws to provide that an 

ERP Member 12 (either by itself or with 

its affiliates) that is not otherwise 

represented on the PEARL Board may 

have the right to nominate one ERP 

Director 13 or appoint an Observer 14 to 

the Board, as applicable.15 As proposed, 

ERP Directors will be classified as 

‘‘Industry Directors’’ 16 with attendant 

voting rights, while Observers will be 

invited to attend meetings of the Board 

in a non-voting Observer capacity.17


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