Federal Register / Vol. 88, No. 186 / Wednesday, September 27, 2023 / Notices 66533 

31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Equity Member’’ is a Member 

authorized by the Exchange to transact business on 

MIAX Pearl Equities. See Exchange Rule 1901. 

4With 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. 

5See Fee Schedule, Section 1)b), Liquidity 

Indicator Codes AA, AB and AC. 

6See Fee Schedule, Section 1)c). 

7See Fee Schedule, Section 1)f). 

8The Exchange indicates rebates in parentheses 

in the Fee Schedule. See the General Notes Section 

of the Fee Schedule. 

9See Fee Schedule, Section 1)a). See also Fee 

Schedule, Section 1)b), Liquidity Indicator Codes 

AA, AB, and AC. 

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–CBOE–2023–048 and should be 

submitted on or before October 18, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20961 Filed 9–26–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98472; File No. SR– 

PEARL–2023–45] 

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 To Adopt the 

NBBO Setter Plus Program and 

Eliminate Certain Other Rebates 

September 21, 2023. 

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 

September 11, 2023, MIAX PEARL, LLC 

(‘‘MIAX Pearl’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the 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: (i) adopt a new 

incentive program called the ‘‘NBBO 

Setter Plus Program’’ (referred to in this 

filing as the ‘‘NBBO Program’’) that, in 

general, provides enhanced rebates for 

Equity Members’ 3 added displayed 

liquidity (‘‘Added Displayed Volume’’) 

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), 

as well as an additive rebate applied to 

orders that set the NBBO 4 upon entry; 

(ii) reduce the standard rebate for 

executions of orders in securities priced 

at or above $1.00 per share for Added 

Displayed Volume in all Tapes and 

make the corresponding changes to the 

Liquidity Indicator Codes and 

Associated Fees table 5; (iii) eliminate 

the Add Volume Tiers table 6 and 

associated rebates and make 

corresponding changes to rename 

Section 1)c) to now be titled ‘‘NBBO 

Setter Plus Program’’; (iv) eliminate the 

Market Quality Tiers table 7 and 

associated rebates; (v) renumber Section 

1)g), Step-Up Added Liquidity Rebate, 

to now be Section 1)f), Step-Up Added 

Liquidity Rebate; and (vi) amend the 

Definitions section to include a 

definition for the term ‘‘NBBO Set 

Volume’’ (described below). All of the 

proposed changes relate to the adoption 

of the proposed NBBO Program, which 

incorporates certain concepts from the 

current Add Volume Tiers and Market 

Quality Tiers programs. 

The Exchange originally filed this 

proposal on August 31, 2023 (SR– 

PEARL–2023–42). On September 11, 

2023, the Exchange withdrew SR– 

PEARL–2023–42 and refiled this 

proposal. 

Background of Current Rebate Programs 

Impacted by This Proposal 

Section 1)a) of the Fee Schedule sets 

forth the Exchange’s standard rebates 

and fees for adding, removing or routing 

orders (displayed and non-displayed) in 

all Tapes. The Exchange provides 

different rebates and fees depending on 

whether (i) the execution is for an order 

where the securities are priced at or 

above $1.00 per share, or (ii) the 

execution is for an order where the 

securities are priced below $1.00 per 

share. Relevant for the purposes of this 

proposal, the Exchange currently 

provides a standard rebate of ($0.0027) 8

per share for executions of orders in 

securities priced at or above $1.00 per 

share for Added Displayed Volume 

across all Tapes.9

Section 1)b) of the Fee Schedules 

provides a list of the liquidity indicator 

codes and associated rebates or fees that 

are applied to a transaction so that each 

Equity Member that enters an order is 

able to understand the fee or rebate that 

is applied to the execution. Each side of 

a trade is assigned a liquidity indicator 

code in order to identify the scenario 

under which the trade occurred. 

Section 1)c) of the Fee Schedule 

provides a volume-based tier structure, 

referred to as the Add Volume Tiers, in 


ddrumheller on DSK120RN23PROD with NOTICES1
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10The term ‘‘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. The Exchange 

excludes from its calculation of ADAV and ADV 

shares added or removed on any day that the 

Exchange’s system experiences a disruptions that 

lasts for more than 60 minutes during regular 

trading hours (‘‘Exchange System Disruption’’), on 

any day with a scheduled early market close, and 

on the ‘‘Russell Reconstitution Day’’ (typically the 

last Friday in June). Routed shares are not included 

in the ADAV or ADV calculation. See the 

Definitions Section of the Fee Schedule. 

11The term ‘‘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. The Exchange 

excludes from its calculation of TCV volume on any 

given day that the Exchange’s system experiences 

a disruption that lasts for more than 60 minutes 

during Regular Trading Hours. On any day with a 

scheduled early market close, and on the ‘‘Russell 

Reconstitution Day’’ (typically the last Friday in 

June). See the Definitions Section of the Fee 

Schedule. 

12The term ‘‘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 the national best offer (‘‘NBO’’). See 

the Definitions Section of the Fee Schedule. 

13Pursuant to this proposal, and as described 

further below, the Exchange proposes to slightly 

amend the term ‘‘Market Quality Securities’’ or 

‘‘MQ Securities’’ as currently defined in the Fee 

Schedule in order to account for the changes to the 

Market Quality Tiers program and newly proposed 

NBBO Setter Plus Program. Currently, the term 

‘‘Market Quality Securities’’ or ‘‘MQ Securities’’ 

means a list of securities designated as such, that 

are used for the purposes of qualifying for the 

Market Quality Tiers. The universe of these 

securities will be determined by the Exchange and 

published on the Exchange’s website. See the 

Definitions Section of the Fee Schedule. The 

proposed changes are described below. 

14See https://www.miaxglobal.com/markets/usequities/pearl-equities/fees (last visited August 21, 

2023). 

which the Exchange provides enhanced 

rebates for executions of orders in 

securities priced at or above $1.00 per 

share for Added Displayed Volume for 

Equity Members that meet specified 

volume thresholds on the Exchange. In 

particular, an Equity Member that 

qualifies for Add Volume Tier 1 will 

receive an enhanced rebate of ($0.0032) 

per share 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 10 of at least 0.07% of TCV.11 An 

Equity Member that qualifies for Add 

Volume Tier 2 will receive an enhanced 

rebate of ($0.0035) per share 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 0.10% of 

TCV. An Equity Member that qualifies 

for Add Volume Tier 3 will receive an 

enhanced rebate of ($0.0036) per share 

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 

0.30% of TCV. The enhanced rebates 

provided by the Add Volume Tiers are 

provided instead of the standard rebate 

of ($0.0027) per share applicable to 

executions of orders in securities priced 

at or above $1.00 per share for Added 

Displayed Volume across all Tapes. 

Section 1)f) of the Fee Schedule sets 

forth a separate tiered pricing incentive 

structure, referred to as the Market 

Quality Tiers, which provides enhanced 

rebates for executions of orders in 

securities priced at or above $1.00 per 

share for Added Displayed Volume for 

Equity Members that meet certain 

minimum quoting requirements across a 

specified number of securities. In 

particular, the Exchange provides an 

enhanced rebate of ($0.0032) per share 

in Market Quality Tier 1 for executions 

of orders in securities priced at or above 

$1.00 per share for Added Displayed 

Volume if the Equity Member’s Percent 

Time at NBBO 12 is at least 25% in an 

average of at least 250 securities, at least 

50 of which must be Market Quality 

Securities,13 per trading day during the 

month. The Exchange also provides an 

enhanced rebate of ($0.0035) per share 

in Market Quality Tier 2 for executions 

of orders in securities priced at or above 

$1.00 per share for Added Displayed 

Volume if the Equity Member’s Percent 

Time at NBBO is at least 25% in an 

average of at least 1,000 securities, at 

least 100 of which must be MQ 

Securities, per trading day during the 

month. The list of MQ Securities is 

published on the Exchange’s website.14

Proposal To Adopt the NBBO Setter 

Plus Program 

The Exchange proposes to adopt a 

new incentive program called the 

‘‘NBBO Setter Plus Program’’ (referred 

to in this filing as the ‘‘NBBO 

Program’’), which is designed to 

incentivize market quality and quoting 

on the Exchange. Certain elements of 

the NBBO Program will be similar to the 

incentives and volume calculations for 

the current Add Volume Tiers and 

Market Quality Tiers programs. In 

connection with the establishment of 

the NBBO Program, the Exchange 

proposes to remove the Add Volume 

Tiers and Market Quality Tiers sections 

from the Fee Schedule (described 

further below), with Section 1)c) being 

re-titled ‘‘NBBO Setter Plus Program.’’ 

The Exchange proposes to add a new 

table in Section 1)c) of the Fee Schedule 

titled ‘‘NBBO Setter Plus Table.’’ The 

NBBO Setter Plus Table will provide 

enhanced rebates for executions of 

orders in securities priced at or above 

$1.00 per share for Added Displayed 

Volume across all Tapes (applicable to 

Liquidity Indicator Codes AA, AB and 

AC). Conceptually, the NBBO Program 

provides four volume tiers enhanced by 

three market quality levels to provide 

increasing rebates in this segment. The 

four volume tiers are achievable by 

greater volume from the best of three 

alternative methods. The three market 

quality levels are achievable by greater 

NBBO participation in a minimum 

number of specific securities. 

Additionally, there is an additive rebate 

for trades the set the NBBO, described 

further below. 

First, MIAX Pearl Equities will 

determine the applicable tier based on 

three different volume calculation 

methods. The three volume-based 

methods to determine the Equity 

Member’s tier for purposes of the NBBO 

Program will be calculated in parallel in 

each month, and each Equity Member 

will receive the highest tier achieved 

from any of the three methods each 

month. All three volume calculation 

methods will be based on an Equity 

Member’s respective ADAV or NBBO 

Set Volume or ADV as a percent of 

industry TCV as the denominator. 

Under volume calculation Method 1, 

the Exchange proposes to provide tiered 

rebates based on an Equity Member’s 

ADAV as a percentage of TCV. In 

particular, an Equity Member will 

qualify 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 0.08% of TCV. An Equity 

Member will qualify 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 0.08% and less than 0.25% of 

TCV. An Equity Member will qualify 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 0.25% 

and less than 0.40% of TCV. Finally, an 

Equity Member will qualify 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 0.40% of 

TCV. 

Under volume calculation Method 2, 

the Exchange proposes to provide tiered 

rebates based on an Equity Member’s 

NBBO Set Volume as a percentage of 

TCV. In connection with this proposed 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 186 / Wednesday, September 27, 2023 / Notices 66535 

15See Cboe BZX Equities Fee Schedule, NBBO 

Setter section and Add/Remove Volume Tiers 

section, available at https://www.cboe.com/us/ 

equities/membership/fee_schedule/bzx/ (providing 

an additional rebate of ($0.0007) per share to the 

top displayed liquidity tier rebate of ($0.0031) per 

share for executions of added displayed volume in 

securities priced at or above $1.00 per share that 

establish a new Setter NBBO in NBBO Setter 

Securities on Cboe BZX). For purposes of the Cboe 

BZX Fee Schedule, the term ‘‘Setter NBBO’’ means 

a quotation of at least 100 shares that is better than 

the NBBO or a quotation of a notional size of at 

least $10,000.00 that is better than the NBBO. 

Further, the term ‘‘NBBO Setter Securities’’ means 

a list of securities included in the Cboe BZX NBBO 

Setter Program, the universe of which will be 

determined by Cboe BZX and published in a notice 

distributed to Cboe BZX members and on the Cboe 

BZX website. See id. 

16See e.g., Cboe BZX Equities Fee Schedule, 

available at https://www.cboe.com/us/equities/ 

membership/fee_schedule/bzx/; Cboe EDGX 

Exchange, Inc. (‘‘Cboe EDGX’’) Equities Fee 

Schedule, available at https://www.cboe.com/us/ 

equities/membership/fee_schedule/edgx/; and 

MEMX, LLC (‘‘MEMX’’) Fee Schedule, available at 

https://info.memxtrading.com/fee-schedule/. 

17The Exchange notes that the proposed 

($0.00240) per share will be the base standard 

rebate for executions of orders in securities priced 

Continued 

volume calculation method, the 

Exchange proposes to adopt a definition 

for the term ‘‘NBBO Set Volume,’’ 

which will be included in the 

Definitions section of the Fee Schedule. 

The Exchange proposes that the term 

NBBO Set Volume means the ADAV in 

all securities of an Equity Member that 

sets the NBB or NBO on MIAX Pearl 

Equities. Pursuant to proposed Method 

2, an Equity Member will qualify 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 0.02% of TCV. An Equity 

Member will qualify 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 0.02% and less 

than 0.03% of TCV. An Equity Member 

will qualify 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 0.03% and less 

than 0.08% of TCV. An Equity Member 

will qualify 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 

Set Volume of at least 0.08% of TCV. 

Under volume calculation Method 3, 

the Exchange proposes to provide tiered 

rebates based on an Equity Member’s 

ADV as a percentage of TCV. In 

particular, an Equity Member will 

qualify 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 0.20% of TCV. An Equity 

Member will qualify 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 0.20% and less than 0.60% of 

TCV. An Equity Member will qualify 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 0.60% and 

less than 1.00% of TCV. An Equity 

Member will qualify 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 1.00% of TCV. 

After the volume calculation is 

performed to determine highest tier 

achieved by the Equity Member, the 

applicable rebate will be 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 proposes to provide 

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’’), depending on the Equity Member’s 

Percent Time at NBBO on MIAX Pearl 

Equities in a certain amount of specified 

securities (‘‘Market Quality Securities’’ 

or ‘‘MQ Securities,’’ defined below). The 

Fee Schedule will specify the 

percentage of time that the Equity 

Member must be at the NBBO on MIAX 

Pearl Equities in at least 200 symbols 

out of the full list of 1,000 MQ 

Securities (which may vary from time to 

time based on market conditions). The 

list of MQ Securities will be generally 

based on the top multi-listed 1,000 

symbols by ADV across all U.S. 

securities exchanges. The list of MQ 

Securities will be updated monthly by 

the Exchange and published on the 

Exchange’s website. The Exchange notes 

that at least one other competing 

exchange provides enhanced rebates for 

executions of orders in certain securities 

priced at or above $1.00 per share 

submitted by members that set or join 

the NBBO on that exchange.15

The Exchange proposes that, for the 

purpose of determining qualification for 

the rebates described in Level B and 

Level C of Market Quality Tier columns 

in the NBBO Setter Plus Program, the 

Exchange will exclude from its 

calculation: (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; and (3) the ‘‘Russell 

Reconstitution Day’’ (typically the last 

Friday in June). The Exchange proposes 

to describe this exclusion in the General 

Notes section of the Fee Schedule. The 

Exchange believes that these types of 

Exchange system disruptions could 

preclude Equity Members from 

participating on the Exchange to the 

extent that they might have otherwise 

participated on such days, and thus, the 

Exchange believes it is appropriate to 

exclude such days when determining 

whether an Equity Member meets the 

applicable Percent Time at NBBO 

during a month to avoid penalizing 

Equity Members that might otherwise 

have met such requirements. 

Additionally, the Exchange believes 

that scheduled early market closures, 

which typically are the day before, or 

the day after, a holiday, may preclude 

some Equity Members from 

participating on the Exchange at the 

same level that they might otherwise. 

For similar reasons, the Exchange 

believes it is appropriate to exclude the 

Russell Reconstitution Day in the same 

manner, as the Exchange believes that 

the Russell Reconstitution Day typically 

has extraordinarily high, and 

abnormally distributed, trading volumes 

and the Exchange believes this change 

to normal activity may affect an Equity 

Member’s ability to meet the quoting 

requirement across various MQ 

Securities on that day. The Exchange 

notes that the exclusion of any day 

during which the Exchange’s system 

experiences a disruption that lasts for 

more than 60 minutes during Regular 

Trading Hours, any day with a 

scheduled early market close, and the 

Russell Reconstitution Day is consistent 

with the methodologies used by other 

exchanges when calculating certain 

member trading and other volume 

metrics for purposes of determining 

whether those members qualify for 

certain pricing incentives, and the 

Exchange believes application of this 

methodology is similarly appropriate for 

the proposed Percent Time at NBBO 

requirements under the proposed NBBO 

Program.16

The Exchange proposes that the base 

rebates (‘‘Level A’’) will be as follows: 

($0.00240) per share in Tier 1; 

($0.00310) per share in Tier 2; 

($0.00345) per share in Tier 3; and 

($0.00350) per share in Tier 4.17


ddrumheller on DSK120RN23PROD with NOTICES1
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at or above $1.00 per share for Added Displayed 

Volume across all Tapes, which is a decrease from 

the current standard rebate of ($0.0027) per share, 

listed in Section 1)a) of the Fee Schedule and 

attributable to Liquidity Indicator Codes AA, AB 

and AC. The purpose and rationale for the proposed 

decrease in the standard rebate for executions of 

orders in securities priced at or above $1.00 per 

share for Added Displayed Volume across all Tapes 

is discussed below. 

18A ‘‘Retail Order’’ is an agency or riskless 

principal order that meets the criteria of FINRA 

Rule 5320.03 that originates from a natural person 

and is submitted to the Exchange by a Retail 

Member Organization, provided that no change is 

made to the terms of the order with respect to price 

or side of market and the order does not originate 

from a trading algorithm or any other computerized 

methodology. See Exchange Rule 2626(a)(2). 

19See MEMX Fee Schedule, NBBO Setter/Joiner 

Tiers Section (providing additional rebate of 

($0.0004) per share to the top displayed liquidity 

tier rebate of ($0.0033) per share for executions of 

added displayed volume (other than retail orders) 

in securities priced at or above $1.00 per share that 

establish the NBBO or establish a new BBO on 

MEMX that matches the NBBO first established on 

an away market, for a total ‘‘enhanced’’ rebate of 

($0.0037) per share); and Cboe BZX Fee Schedule, 

NBBO Setter section and Add/Remove Volume 

Tiers section (providing additional rebate of 

($0.0007) per share to the top displayed liquidity 

tier rebate of ($0.0031) per share for executions of 

added displayed volume in securities priced at or 

above $1.00 per share that establish a new Setter 

NBBO in NBBO Setter Securities on Cboe BZX, for 

a total ‘‘enhanced’’ rebate of ($0.0038) per share). 

20See e.g., NYSE Arca Equities Fee Schedule, 

available at https://www.nyse.com/publicdocs/ 

nyse/markets/nyse-arca/NYSE_Arca_Marketplace_

Fees.pdf (providing standard rebates of $0.0020 per 

share (Tapes A and C) and $0.0016 per share (Tape 

B) for adding displayed liquidity in securities 

priced at or above $1.00 per share); 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). 

Under Level B, the Exchange proposes 

to provide 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 Exchange 

proposes that the Level B rebates will be 

as follows: ($0.00250) per share in Tier 

1; ($0.00315) per share in Tier 2; 

($0.00350) per share in Tier 3; and 

($0.00355) per share in Tier 4. 

Under Level C, the Exchange proposes 

to provide 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 50% in at least 200 MQ 

Securities per trading day during the 

month. The Exchange proposes that the 

Level C rebates will be as follows: 

($0.00260) per share in Tier 1; 

($0.00320) per share in Tier 2; 

($0.00355) per share in Tier 3; and 

($0.00360) per share in Tier 4. 

The Exchange notes that the 

introduction of the NBBO Setter Plus 

Program will be available to all Equity 

Members and will provide Equity 

Members several different opportunities 

to receive enhanced rebates utilizing 

three different volume calculation 

methodologies and different 

participation levels at the NBBO. The 

proposed changes are designed to 

encourage Equity Members that provide 

Added Displayed Volume in securities 

priced at or above $1.00 per share across 

all Tapes to the Exchange to increase 

such order flow, which would benefit 

all Equity Members by providing greater 

execution opportunities on the 

Exchange and contribute to a deeper, 

more liquid market, to the benefit of all 

investors and market participants. 

NBBO Setter Additive Rebate 

The Exchange proposes to provide an 

additional rebate as part of the NBBO 

Program, which will be included as a 

line item at the bottom of the NBBO 

Setter Plus table. In particular, the 

Exchange proposes to provide an 

‘‘NBBO Setter Additive Rebate’’ of 

($0.0003) per share, which will be 

applicable only to executions of orders 

in securities priced at or above $1.00 per 

share for Added Displayed Volume 

(other than Retail Orders 18) that set the 

NBB or NBO on MIAX Pearl Equities 

with a minimum size of a round lot. The 

purpose of the proposed NBBO Setter 

Additive Rebate is to provide an 

additional incentive for Equity Members 

to contribute Added Displayed Volume 

in securities priced at or above $1.00 per 

share that sets the NBBO on MIAX Pearl 

Equities, which should benefit all 

Equity Members by providing greater 

execution opportunities on the 

Exchange and contribute to a deeper, 

more liquid market, to the benefit of all 

investors and market participants. 

Additionally, other U.S. equity 

exchanges have adopted similar pricing 

incentives applicable to executions of 

orders that establish the NBBO, with the 

Exchange’s proposed top tier rebate, 

coupled with the NBBO Setter Additive 

Rebate, being higher than competing 

exchanges’ top rebates for similar 

executions (providing additive rebate of 

($0.0003) per share to the top displayed 

liquidity tier rebate of ($0.0036) per 

share for executions of added displayed 

volume (other than retail orders) in 

securities priced at or above $1.00 per 

share that establish the NBBO on the 

Exchange, for a total ‘‘enhanced’’ rebate 

of ($0.0039) per share).19

Corresponding Changes to the Fee 

Schedule 

Proposal To Reduce the Standard Rebate 

for Executions of Orders in Securities 

Priced at or Above $1.00 per Share for 

Added Displayed Volume (All Tapes) 

and Corresponding Changes to Liquidity 

Indicator Codes 

In connection with the proposed 

NBBO Setter Plus Program, the 

Exchange proposes to reduce the 

standard rebate for executions of orders 

in securities priced at or above $1.00 per 

share that add displayed liquidity to the 

Exchange across all Tapes (as 

mentioned above). Currently, the 

Exchange provides a standard rebate of 

($0.0027) per share for executions of 

orders in securities priced at or above 

$1.00 per share for Added Displayed 

Volume in all Tapes. The Exchange now 

proposes to reduce the standard rebate 

from ($0.0027) to ($0.0024) per share for 

executions of orders in securities priced 

at or above $1.00 per share for Added 

Displayed Volume across all Tapes. 

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. 

The purpose of reducing the standard 

rebate for executions of orders in 

securities priced at or above $1.00 per 

share for Added Displayed Volume 

across all Tapes is due to the Exchange’s 

proposal to adopt the NBBO Program, 

which provides multiple volume 

calculation methods for Equity Members 

to receive enhanced rebates compared to 

the standard rate. The Exchange notes 

that despite the modest reduction 

proposed herein, the proposed standard 

rebate of ($0.0024) per share for 

executions of orders in securities priced 

at or above $1.00 per share for Added 

Displayed Volume across all Tapes 

remains competitive with, and higher 

than, the standard rebates provided by 

other exchanges for similar 

executions.20

Proposal To Eliminate the Add Volume 

Tiers Table and Associated Rebates 

In connection with the NBBO Setter 

Plus Program, the Exchange proposes to 

eliminate the Add Volume Tiers table 

and associated rebates in Section 1)c) of 

the Fee Schedule and rename Section 

1)c) as the NBBO Setter Plus Program. 

As mentioned above, the Add Volume 

Tiers provided enhanced rebates for 

executions of orders in securities priced 

at or above $1.00 per share for Added 

Displayed Volume so long as the Equity 

Member met specified ADAV thresholds 

on the Exchange. The Exchange adopted 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 186 / Wednesday, September 27, 2023 / Notices 66537 

21See Securities Exchange Act Release No. 93979 

(January 14, 2022), 87 FR 3151 (January 20, 2022) 

(SR–PEARL–2022–01). 

22See Securities Exchange Act Release No. 94929 

(May 17, 2022), 87 FR 31269 (May 23, 2022) (SR– 

PEARL–2022–21). 

23 15 U.S.C. 78f(b). 

24 15 U.S.C. 78f(b)(4). 

the Add Volume Tiers rebates for the 

purpose of encouraging Equity Members 

to increase their orders that add 

liquidity on the Exchange, thereby 

improving its market quality with 

respect to such securities and 

contributing to a more robust and wellbalanced market ecosystem on the 

Exchange to the benefit of all Equity 

Members.21 The Exchange now 

proposes to eliminate the Add Volume 

Tiers table and associated rebates as the 

NBBO Program incorporates similar 

aspects and rebate amounts, including, 

under volume calculation Method 1, 

tiered rebates based on an Equity 

Member’s ADAV as a percentage of 

TCV. The Exchange notes that the 

NBBO Program does have slightly lower 

rebates for the corresponding Add 

Volume Tier thresholds; however, the 

Exchange believes that the benefits of 

the NBBO Program—three volume 

calculation methods and two market 

quality levels based on participation at 

the NBBO in order to obtain enhanced 

rebates—provides more opportunities 

for Equity Members to achieve higher 

rebates and will encourage the 

submission of increased order flow. The 

Exchange believes this will, in turn 

benefit all Equity Members by providing 

greater execution opportunities on the 

Exchange and contribute to a deeper, 

more liquid market, to the benefit of all 

investors and market participants. 

Proposal To Eliminate the Market 

Quality Tiers Table and Associated 

Rebates 

In connection with the NBBO Setter 

Plus Program, the Exchange proposes to 

eliminate the Market Quality Tiers table 

and associated rebate in Section 1)f) of 

the Fee Schedule. As mentioned above, 

the Market Quality Tiers provided 

enhanced rebates for Equity Members 

that met certain minimum quoting 

requirements across a specified number 

of securities. The Exchange adopted the 

Market Quality Tiers for the purpose of 

encouraging executions of Added 

Displayed Volume for qualifying Equity 

Members as a means of recognizing the 

value of market participants that 

consistently quote at the NBBO in a 

large number of securities generally, and 

in the specified MQ Securities, in 

particular.22 The Exchange now 

proposes to eliminate the Market 

Quality Tiers table and associated 

rebates as the NBBO Program 

incorporates similar aspects, rebate 

amounts, and calculation methodologies 

based on an Equity Member’s Percent 

Time at NBBO in certain MQ Securities 

under Level B and Level C. 

Proposal To Renumber Fee Schedule 

Section 1)g), Step-Up Added Liquidity 

Rebate, as Section 1)f) 

As described above, the Exchange 

proposes to eliminate the Market 

Quality Tiers table and associated 

rebates currently described in Section 

1)f) of the Fee Schedule. Accordingly, 

the Exchange proposes to renumber 

Section 1)g), Step-Up Added Liquidity 

Rebate, as Section 1)f). The purpose of 

this change is to provide consistency 

and clarity in the Fee Schedule. 

Proposed Changes to the Definitions and 

General Notes Sections of the Fee 

Schedule 

As mentioned above, with the 

adoption of the NBBO Program, the 

Exchange proposes to make several 

corresponding changes to the 

Definitions and General Notes sections 

of the Fee Schedule. First, the Exchange 

proposes to amend the paragraphs 

describing ‘‘ADAV’’ in the Definition 

section to include the definition of 

‘‘NBBO Set Volume.’’ In particular, the 

term ‘‘NBBO Set Volume’’ will mean the 

ADAV in all securities of an Equity 

Member that sets the NBB or NBO on 

MIAX Pearl Equities. Further, the 

Exchange proposes that an Equity 

Member’s NBBO Set Volume will be 

excluded from the calculation of the 

NBBO Program in certain instances. The 

Exchange proposes to amend the second 

paragraph related to ADAV in the 

Definitions section to include NBBO Set 

Volume as excluded volume. With the 

proposed changes, the paragraphs 

describing ADAV in the Definitions 

section will read as follows: 

‘‘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. 

The Exchange excludes from its calculation 

of ADAV, ADV, and NBBO Set Volume 

shares added or removed on any day that the 

Exchange’s system experiences a disruption 

that lasts for more than 60 minutes during 

regular trading hours, on any day with a 

scheduled early market close, and on the 

‘‘Russell Reconstitution Day’’ (typically the 

last Friday in June). 

Next, the Exchange proposes to 

amend the definition for ‘‘Market 

Quality Securities’’ or ‘‘MQ Securities.’’ 

Since the Exchange proposes to 

eliminate the Market Quality Tiers and 

associated rebates, which are based on 

an Equity Member’s participation at the 

NBBO in the currently-defined MQ 

Securities, the Exchange will amend 

this definition to fit within the NBBO 

Program. As described above, Level B 

and Level C enhanced rebates in the 

NBBO Program will be partly based on 

an Equity Member’s Percent Time at 

NBBO on MIAX Pearl Equities in a 

certain amount of MQ Securities. The 

Exchange proposes to amend the 

definition of MQ Securities to reflect the 

elimination of the Market Quality Tiers 

and adoption of the NBBO Program. 

Accordingly, with the proposed 

changes, the definition for Market 

Quality Securities will be as follows: 

‘‘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. 

In connection with the proposed 

revised definition for MQ Securities, the 

Exchange also proposes to amend the 

corresponding paragraph in the General 

Notes section regarding when the 

Exchange excludes certain Market 

Quality security volume. With the 

proposed changes, the exclusion 

paragraph will read as follows: 

For the purpose of determining 

qualification for the rebates described in 

Level B and Level C of Market Quality Tier 

columns in the NBBO Setter Plus Program, 

the Exchange will exclude from its 

calculation: (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; and (3) the 

‘‘Russell Reconstitution Day’’ (typically the 

last Friday in June). 

The purpose of all these changes is to 

provide consistency and clarity in the 

Fee Schedule in light of the proposed 

adoption of the NBBO Program and 

corresponding elimination of other 

rebate programs. 

Implementation 

The proposed changes are 

immediately effective. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 23

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 24 in 


ddrumheller on DSK120RN23PROD with NOTICES1
66538 Federal Register / Vol. 88, No. 186 / Wednesday, September 27, 2023 / Notices 

25 15 U.S.C. 78f(b)(5). 

26See the ‘‘Market Share’’ section of the 

Exchange’s website, available at https://

www.miaxglobal.com/ (last visited August 23, 

2023). 

27See Securities Exchange Act Release No. 51808 

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

28See, generally, Fee Schedule, Section 1)c) and 

Section 1)f); see also Cboe BZX Equities Fee 

Schedule, NBBO Setter Section and Add/Remove 

Volume Tiers Section and MEMX Fee Schedule, 

NBBO Setter/Joiner Tiers Section. 

29See supra note 15. 

30Proposed tiered rebates ranging from 

($0.00250) in Tier 1 to ($0.00355) in Tier 4. 

31Proposed tiered rebates ranging from 

($0.00260) in Tier 1 to ($0.00360) in Tier 4. 

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. As of 

August 23, 2023, based on publicly 

available information, no single 

registered equities exchange currently 

has more than approximately 13–14% of 

the total market share of executed 

volume of equities trading for the month 

of August 2023.26 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 currently represents 

approximately 1.86% of the overall 

market share. 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 to 

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 MQ 

Securities and the NBBO Program. 

NBBO Setter Plus Program 

The Exchange believes that the 

proposed NBBO Setter Plus Program, in 

general, is a reasonable means to 

encourage Equity Members to not only 

increase their order flow to the 

Exchange but also to contribute to price 

discovery and market quality on the 

Exchange by submitting aggressively 

priced displayed liquidity in securities 

priced at or above $1.00 per share. As 

noted above, aspects of the proposed 

NBBO Program are comparable to other 

volume-based incentives currently in 

place at the Exchange and competing 

exchanges, which have been widely 

adopted.28 The Exchange believes the 

proposed NBBO Program is equitable 

and not unfairly discriminatory because 

it is open to all Equity Members on an 

equal basis and provides enhanced 

rebates that are reasonably related to the 

value to the Exchange’s market quality 

associated with greater order flow by 

Equity Members that set the NBBO, and 

the introduction of higher volumes of 

orders into the price and volume 

discovery process. The Exchange 

believes the proposed NBBO Program is 

equitable and not unfairly 

discriminatory because it is designed to 

incentivize the entry of aggressively 

priced displayed liquidity that will 

create tighter spreads, thereby 

promoting price discovery and market 

quality on the Exchange to the benefit 

of all Equity Members and public 

investors. 

The Exchange believes the proposal to 

have three different volume calculation 

methods to determine the Equity 

Member’s tier for purposes of the NBBO 

Program is reasonable, equitably 

allocated, and not unfairly 

discriminatory because the three 

methods will be calculated in parallel in 

each month, and each Equity Member 

will receive the tier associated with the 

highest tier achieved each month. This 

allows market participants with various 

trading strategies to participate in the 

NBBO Program, including, among 

others, Equity Members with liquidity 

providing strategies, aggressive order 

adding strategies that attempt to set the 

NBBO, as well as Equity Members 

acting as an agency for customers. 

The Exchange believes the proposed 

Market Quality Tiers applicable to the 

enhanced rebates in the NBBO Program, 

which are dependent upon the Equity 

Member’s Percent Time at NBBO in MQ 

Securities, are reasonable, equitably 

allocated and not unfairly 

discriminatory. This is because the 

Market Quality Tiers of the NBBO 

Program are intended to encourage 

Equity Members to promote price 

discovery and market quality by quoting 

at the NBBO for a significant portion of 

each day in a large number of securities 

generally, and in MQ Securities in 

particular, thereby benefiting the 

Exchange and other investors by 

providing improved trading conditions 

for all market participants through 

narrower bid-ask spreads and increasing 

the depth of liquidity available at the 

NBBO in a broad base of highly liquid 

securities. As noted above, Cboe BZX 

provides an enhanced rebate based on 

increased member participation in a 

defined list of securities (called the 

NBBO Setter Securities on Cboe BZX) 

that set the NBBO on that exchange.29

The Exchange believes the proposed 

enhanced rebates in Level B 30 and Level 

C 31 of the Market Quality Tiers of the 

NBBO Program are reasonable in that 

they do not reflect disproportionate 

increases above the standard rebates of 

($0.00250) per share for Level B and 

($0.00260) per share for Level C, but 

reflect the value added value to the 

Exchange’s market quality from Equity 

Members that meet the required Percent 

Time at NBBO in the minimum number 

of MQ Securities, which should 

incentivize the entry of aggressively 

priced displayed liquidity that will 

create tighter spreads, promote price 

discovery and market quality on the 

Exchange to the benefit of all Equity 

Members and public investors. 

The Exchange further believes that the 

proposed criteria to achieve the 

enhanced rebates provided in Level B 

and Level C of the Market Quality Tiers 

of the NBBO Program is reasonable and 

not unfairly discriminatory because the 

proposed criteria for Level C rebates is 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 186 / Wednesday, September 27, 2023 / Notices 66539 

32See supra note 15. 

33 Id. 

34 Id. 

35 15 U.S.C. 78f(b)(4) and (5). 

36See MEMX Fee Schedule, NBBO Setter/Joiner 

Tiers Section (providing additional rebate of 

($0.0004) per share to the top displayed liquidity 

tier rebate of ($0.0033) per share for executions of 

added displayed volume (other than retail orders) 

in securities priced at or above $1.00 per share that 

establish the NBBO or establish a new BBO on 

MEMX that matches the NBBO first established on 

an away market, for a total ‘‘enhanced’’ rebate of 

($0.0037) per share); and Cboe BZX Equities Fee 

Schedule, NBBO Setter section and Add/Remove 

Volume Tiers section (providing additional rebate 

of ($0.0007) per share to the top displayed liquidity 

tier rebate of ($0.0031) per share for executions of 

added displayed volume in securities priced at or 

above $1.00 per share that establish a new Setter 

NBBO in NBBO Setter Securities on Cboe BZX, for 

a total ‘‘enhanced’’ rebate of ($0.0038) per share). 

37See supra note 20. 

incrementally more difficult to achieve 

than that of Level B, and thus Level C 

appropriately offers higher rebates 

commensurate with the corresponding 

higher Percent Time at NBBO by Equity 

Members in the minimum number of 

MQ Securities. Therefore, the Exchange 

believes that the Market Quality Tiers of 

the NBBO Program, as proposed, are 

consistent with an equitable allocation 

of fees and rebates, as the more stringent 

criteria correlates with the 

corresponding higher tiers’ enhanced 

rebates. 

In addition, the Exchange believes 

that it is reasonable and consistent with 

an equitable allocation of fees to pay 

higher rebates for executions of orders 

in securities priced at or above $1.00 per 

share for Added Displayed Volume to 

Equity Members that qualify for one of 

the Market Quality Tiers of the NBBO 

Program because of the additional 

commitment to market quality reflected 

in the associated Percent Time at NBBO 

requirements. Such Equity Members 

benefit all investors by promoting price 

discovery and increasing the depth of 

liquidity available at the NBBO and 

benefit the Exchange itself by enhancing 

its competitiveness as a market center 

that attracts actionable orders. Further, 

the Exchange notes that the proposed 

Market Quality Tiers of the NBBO 

Program offer incentives on the 

Exchange that would apply uniformly to 

all Equity Members, and any Equity 

Member may choose to qualify for one 

of those tiers by meeting the associated 

requirements in any month. The 

Exchange believes that the requirements 

are attainable for many market 

participants who do actively quote on 

the Exchange and are reasonably related 

to the enhanced market quality that the 

NBBO Program is designed to promote. 

The Exchange also believes that 

including in the proposed Market 

Quality Tiers of the NBBO Program a 

quoting requirement for certain 

specified securities (i.e., the MQ 

Securities), is equitable and not unfairly 

discriminatory because the Exchange 

has identified the MQ Securities as 

securities in which it would like to 

inject additional quoting competition, 

which the Exchange believes will 

generally act to narrow spreads, increase 

size at the NBBO, and increase liquidity 

depth in such securities, thereby 

increasing the attractiveness of the 

Exchange as a destination venue with 

respect to such securities. Accordingly, 

the Exchange believes that this aspect of 

the proposal is reasonable, equitably 

allocated, and not unfairly 

discriminatory because it is consistent 

with the overall goals of enhancing 

market quality. 

As noted above, the proposed Market 

Quality Tiers of the NBBO Program are 

similar in structure and purpose to 

pricing programs in place on at least one 

other exchange that is designed to 

enhance market quality.32 Specifically, 

this program provides a higher rebate 

for executions of liquidity-adding 

displayed orders for members that 

achieve minimum quoting standards, 

including minimum quoting at the 

NBBO in a large number of securities 

generally, or certain designated 

securities in particular.33 The Exchange 

also notes that the proposed Market 

Quality Tiers of the NBBO Program are 

not dissimilar from volume-based 

rebates and fees which have been 

widely adopted by exchanges 34 and are 

equitable and not unfairly 

discriminatory because they are 

generally open to all Equity Members on 

an equal basis and provide higher 

rebates that are reasonably related to the 

value of an exchange’s market quality. 

Much like volume-based tiers are 

designed to incentivize higher levels of 

liquidity provision, the proposed 

Market Quality Tiers portion of the 

NBBO Program is designed to 

incentivize enhanced market quality on 

the Exchange through tighter spreads, 

greater size at the NBBO, and greater 

quoting depth in a large number of 

securities generally, and in MQ 

Securities specifically, through the 

provision of an enhanced rebate, where 

such rebate will in turn incentivize 

higher levels of displayed liquidity 

provision in a general manner. 

Accordingly, the Exchange believes that 

the proposed NBBO Program, in general, 

promotes the principles discussed in 

Sections 6(b)(4) and 6(b)(5) of the Act.35

NBBO Setter Additive Rebate 

The Exchange believes the proposed 

NBBO Setter Additive Rebate is 

reasonable, equitably allocated and not 

unfairly discriminatory because is 

available to all Equity Members and is 

designed to incentivize the entry of 

aggressively priced displayed liquidity 

that will create tighter spreads, thereby 

promoting price discovery and market 

quality on the Exchange to the benefit 

of all Equity Members and public 

investors. As such, the Exchange 

believes the NBBO Setter Additive 

Rebate for executions of orders in 

securities priced at or above $1.00 per 

share for Added Displayed Volume 

(other than Retail Orders) that sets the 

NBB or NBO on the Exchange is 

reasonably related to the market quality 

benefits that such additional enhanced 

rebate is designed to promote. 

Additionally, other U.S. equity 

exchanges have adopted similar pricing 

incentives applicable to executions of 

orders that establish the NBBO, with the 

Exchange’s proposed top tier rebate, 

coupled with the NBBO Setter Additive 

Rebate, being higher than competing 

exchanges’ top rebates for similar 

executions.36

Reduce Standard Rebate for Executions 

of Orders in Securities Priced at or 

Above $1.00 per Share for Added 

Displayed Volume (All Tapes) and 

Corresponding Changes to Liquidity 

Indicator Codes 

The Exchange believes that the 

proposal to reduce the standard rebate 

from ($0.0027) to ($0.0024) per share for 

executions of orders in securities priced 

at or above $1.00 per share for Added 

Displayed Volume is reasonable, 

equitably allocated and not unfairly 

discriminatory because it represents a 

modest decrease from the current 

standard rebate and competitive with, 

and higher than, the standard rebates 

provided by other exchanges for similar 

executions.37 The Exchange further 

believes that the proposed reduced 

standard rebate for executions of orders 

in securities priced at or above $1.00 per 

share for Added Displayed Volume is 

equitably allocated and not unfairly 

discriminatory because the standard 

rebate will apply equally to all Equity 

Members. The Exchange also believes 

its proposal to amend Section 1)b), 

Liquidity Indicator Codes and 

Associated Fees, to reflect the proposed 

decreased rebate for Added Displayed 

Volume in the corresponding Liquidity 

Indicator Codes AA, AB and AC is 

reasonable because it provides 

uniformity and clarity in the Fee 

Schedule. 


ddrumheller on DSK120RN23PROD with NOTICES1
66540 Federal Register / Vol. 88, No. 186 / Wednesday, September 27, 2023 / Notices 

38See supra note 20. 

39See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 47396 (June 29, 2005). 

40See supra note 26. 

Proposal To Eliminate the Add Volume 

Tiers Table and Associated Rebates and 

the Market Quality Tiers Table and 

Associated Rebates 

The Exchange believes its proposal to 

eliminate the Add Volume Tiers table 

and associated rebates in Section 1)c) of 

the Fee Schedule and rename Section 

1)c) as the NBBO Setter Plus Program in 

connection with the NBBO Program, is 

reasonable, equitably allocated and not 

unfairly discriminatory. The Exchange 

adopted the Add Volume Tiers rebates 

for the purpose of encouraging Equity 

Members to increase their orders that 

add liquidity on the Exchange, thereby 

improving its market quality with 

respect to such securities and 

contributing to a more robust and wellbalanced market ecosystem on the 

Exchange to the benefit of all Equity 

Members. The Exchange’s proposal to 

eliminate the Add Volume Tiers table 

and associated rebates is reasonable 

because the NBBO Program incorporates 

similar aspects and rebate amounts, 

including, under volume calculation 

Method 1, tiered rebates based on an 

Equity Member’s ADAV as a percentage 

of TCV. The Exchange notes that the 

NBBO Program does have slightly lower 

rebates for the corresponding Add 

Volume Tier thresholds; however, the 

Exchange believes that the benefits of 

the NBBO Program, i.e., several volume 

calculation methods to obtain enhanced 

rebates, provides more opportunities for 

Equity Members to achieve higher 

rebates and will encourage the 

submission of increased order flow, 

which would benefit all Equity 

Members by providing greater execution 

opportunities on the Exchange and 

contribute to a deeper, more liquid 

market, to the benefit of all investors 

and market participants. 

Similarly, the Exchange believes its 

proposal to eliminate the Market 

Quality Tiers table and associated rebate 

in Section 1)f) of the Fee Schedule is 

reasonable, equitably allocated and not 

unfairly discriminatory. The Exchange 

adopted the Market Quality Tiers for the 

purpose of encouraging executions of 

Added Displayed Volume for qualifying 

Equity Members as a means of 

recognizing the value of market 

participants that consistently quote at 

the NBBO in a large number of 

securities generally, and in the specified 

MQ Securities, in particular. The 

Exchange’s proposal to eliminate the 

Market Quality Tiers table and 

associated rebates is reasonable as the 

NBBO Program incorporates similar 

aspects, rebate amounts calculation 

methodologies based on an Equity 

Member’s Percent Time at NBBO in 

certain MQ Securities under Level B 

and Level C, which should provide 

more opportunities for Equity Members 

to achieve higher rebates and will 

encourage the submission of increased 

order flow to the benefit of all Equity 

Members. This should provide greater 

execution opportunities on the 

Exchange and contribute to a more 

liquid market, to the benefit of all 

investors and market participants. 

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 believes the proposed 

rule change does not impose any burden 

on intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Particularly, 

the proposed NBBO Program will be 

eligible to all Equity Members equally in 

that all Equity Members have the 

opportunity to participate and therefore 

qualify for the proposed enhanced 

rebates. Furthermore, the Exchange 

believes that the proposed NBBO 

Program will incentivize Equity 

Members to submit additional 

aggressively priced displayed liquidity 

to the Exchange, and to increase their 

order flow on the Exchange generally, 

thereby contributing to a deeper and 

more liquid market and promoting price 

discovery and market quality on the 

Exchange 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, would continue to 

encourage market participants to direct 

additional order flow to the Exchange. 

Greater liquidity benefits all Equity 

Members by providing more trading 

opportunities and encourages Equity 

Members to send additional orders to 

the Exchange, thereby contributing to 

robust levels of liquidity, which benefits 

all market participants. 

The proposed decrease to the 

standard rebate for executions of orders 

in securities priced at or above $1.00 per 

share for Added Displayed Volume does 

not impose a burden on intramarket 

competition that is not in furtherance of 

the Act in that the proposed change 

applies to all Equity Members equally 

and the proposed reduced rate is still 

competitive with, or higher than, rebates 

offered by competing exchanges for 

similar executions.38

The proposed non-substantive 

changes to the Definitions section of the 

Fee Schedule are similarly nonburdensome as they are intended to 

provide clear descriptions of the terms 

applicable to the proposed NBBO 

Program. 

In general, the Exchange believes all 

of the proposed changes are intended to 

enhance market quality on the Exchange 

in a large number of securities generally, 

and in the MQ Securities specifically, 

and to encourage Equity Members to 

maintain or increase their order flow on 

the Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market to the benefit of 

all market participants. As a result, the 

Exchange believes the proposal would 

enhance its competitiveness as a market 

that attracts actionable orders, thereby 

making it a more desirable destination 

venue for its customers. For these 

reasons, the Exchange believes that the 

proposal furthers the Commission’s goal 

in adopting Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 39

Intermarket Competition 

The Exchange believes its proposal 

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 

fifteen other equities exchanges and 

numerous alternative trading systems 

and other off-exchange venues. As noted 

above, no single registered equities 

exchange currently has more than 13– 

14% of the total market share of 

executed volume of equities trading.40

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 Added 

Displayed Volume, and market 

participants can readily choose to send 

their orders to other exchanges and offexchange venues if they deem fee levels 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 186 / Wednesday, September 27, 2023 / Notices 66541 

41See supra note 19. 

42See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

43NetCoalition 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)). 

44 15 U.S.C. 78s(b)(3)(A)(ii). 

45 17 CFR 240.19b–4(f)(2). 

46 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

at those other venues to be more 

favorable. 

As described above, the proposal is 

designed to enhance market quality on 

the Exchange and to encourage 

additional order flow and quoting 

activity on the Exchange and to promote 

market quality through pricing 

incentives that are comparable to, and 

competitive with, pricing programs in 

place at other exchanges with respect to 

executions of Added Displayed 

Volume.41 Accordingly, the Exchange 

believes the proposal would not be a 

burden on, but rather promote, 

intermarket competition by enabling the 

Exchange to better compete with other 

exchanges that offer similar incentives 

to market participants that enhance 

market quality and/or achieve certain 

volume criteria and thresholds. 

Additionally, the Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 42 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 brokerdealers that act as their routing agents, 

have a wide range of choices of where 

to route orders for execution’; [and] ‘no 

exchange can afford to take its market 

share percentages for granted’ because 

‘no exchange possess a monopoly, 

regulatory or otherwise, in the execution 

of order flow from broker dealers’ 

. . .’’.43 Accordingly, the Exchange does 

not believe its proposed pricing changes 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

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,44 and Rule 

19b-4(f)(2) 45 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–2023–45 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–PEARL–2023–45. 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–2023–45 and should be 

submitted on or before October 18, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20960 Filed 9–26–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98475; File No. SR– 

NASDAQ–2023–037] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

NOM Options 7, Section 2 

September 21, 2023. 

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 

September 13, 2023, The Nasdaq Stock 

Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘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. 


ddrumheller on DSK120RN23PROD with NOTICES1