[Federal Register Volume 88, Number 200 (Wednesday, October 18, 2023)]
[Notices]
[Pages 71917-71920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22924]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98729; File No. SR-PEARL-2023-56]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee 
Schedule Related to the Options Regulatory Fee

October 12, 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 October 5, 2023, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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'') related to the Options Regulatory Fee.
    The text of the proposed rule change is available on the Exchange's 
website at

[[Page 71918]]

https://www.miaxglobal.com/markets/us-options/pearl-options/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 harmonize the 
language and processes relating to the Options Regulatory Fee (``ORF'') 
with the language and processes used by other options exchanges.\3\ By 
way of background, the ORF is designed to recover a material portion of 
the costs to the Exchange of the supervision and regulation of Member 
\4\ customer options business, including performing routine 
surveillances, investigations, examinations, financial monitoring, as 
well as policy, rulemaking, interpretive and enforcement activities. 
The revenue generated from the ORF covers a material portion and when 
combined with all of the Exchange's other regulatory fees and fines 
will cover a material portion of the Exchange's regulatory costs.
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    \3\ See Securities and Exchange Act Release Nos. 98108 (August 
10, 2023), 88 FR 55809 (August 16, 2023) (SR-CboeEDGX-2023-054) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change to Amend its Fee Schedule Related to the Options Regulatory 
Fee); 98109 (August 10, 2023), 88 FR 55801 (August 16, 2023) (SR-
CboeBZX-2023-061) (Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change to Amend its Fee Schedule Related to the 
Options Regulatory Fee); 98446 (September 20, 2023), 88 FR 66100 
(September 26, 2023) (SR-BOX-2023-24) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the Fee 
Schedule for Trading on the BOX Options Market LLC Facility To Amend 
the Language and Process Related to the Options Regulatory Fee).
    \4\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
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    The Exchange monitors the amount of revenue collected from the ORF 
to ensure that it, in combination with its other regulatory fees and 
fines, does not exceed the Exchange's total regulatory costs. The 
Exchange monitors its regulatory costs and revenues at a minimum on a 
semi-annual basis. If the Exchange determines regulatory revenues 
exceed or are insufficient to cover a material portion of its 
regulatory costs, the Exchange will adjust the ORF by submitting a fee 
change filing to the Securities and Exchange Commission (the 
``Commission''). The Exchange notifies Members of adjustments to the 
ORF via a Regulatory Circular. The Exchange provides Members with such 
notice at least 30 calendar days prior to the effective date of the 
change.
    The Regulatory Fee section of the Fee Schedule sets forth the 
details and description of how and when the ORF is assessed. For 
example, the Fee Schedule explicitly specifies that the Exchange may 
only increase or decrease the ORF semi-annually, and any such fee 
change will be effective on the first business day of February or 
August. The Fee Schedule further states that the Exchange will notify 
participants of any change in the amount of the fee at least 30 
calendar days prior to the effective date of the change.
    The Exchange proposes to update the Fee Schedule language relating 
to the timing of ORF changes. Particularly, the Exchange proposes to 
eliminate the strict requirement that the ORF may only be modified on 
the first business day of February or August, and also the explicit 
requirement that it must provide at least 30 calendar days prior notice 
to the effective date.
    The Exchange first proposes to eliminate the requirement that ORF 
may only be modified on the first business day of February or August to 
afford the Exchange increased flexibility in amending the ORF. As noted 
above, the ORF is based in part on options transactions volume, and as 
such the amount of ORF collected is variable. If options transactions 
reported to OCC in a given month increase, the ORF collected from 
Members may increase as well. Similarly, if options transactions 
reported to OCC in a given month decrease, the ORF collected from 
Members may decrease as well. Accordingly, the Exchange monitors the 
amount of ORF collected to ensure that it does not exceed a material 
portion of the Exchange's total regulatory costs. If the Exchange 
determines that the amount of ORF collected exceeds costs, the proposed 
rule change allows the Exchange to adjust the ORF by submitting a fee 
change filing to the Commission in a month other than just February or 
August. Although the Exchange proposes to eliminate the explicit 
language in the fee schedule that provides the Exchange will adjust the 
ORF only semi-annually, and only on the first business day of February 
or August, it would continue to monitor its regulatory costs and 
revenues at a minimum on a semi-annual basis and submit a proposed rule 
change for each modification of the ORF as needed.
    The Exchange also proposes to eliminate the explicit language in 
the Fee Schedule that it will notify participants of any change in the 
amount of the fee at least 30 calendar days prior to the effective date 
of the change. Although the Exchange proposes to eliminate this 
language from the Fee Schedule, it notes that it will endeavor to 
notify Members of any planned change to the ORF by Regulatory Circular 
at least 30 calendar days prior to the effective date of such change. 
The Exchange believes this proposed change also provides the Exchange 
additional flexibility. For example, the Exchange often provides fee 
change notices on the first business day of the month. It may be the 
case that such date is less than 30 days from the effective date of 
proposed change (e.g., if the Exchange wished to amend the ORF, 
effective, August 1, 2023, the Exchange would not have met the 30-day 
notice requirement if it had announced on the first business day of 
July, as it has been historic practice, since the first business day 
falls on July 3, 2023). As such, the proposed rule changes provide 
added flexibility while still committing to provide notice on the 
timing of any changes to the ORF and ensuring that Members are prepared 
to configure their systems to properly account for the ORF.
    The Exchange notes that the proposed changes will result in ORF 
processes and fee schedule language that will align with those of its 
affiliated exchanges, Miami International Securities Exchange, LLC 
(``MIAX Options'') and MIAX Emerald, LLC (``MIAX Emerald'').\5\ 
Moreover, other options exchanges recently amended their fees to allow 
for flexibility to adjust ORF during months other than February or 
August.\6\ The Exchange believes the proposed change provides 
uniformity across its affiliated options exchanges and reduces 
potential confusion. It also provides the Exchange added flexibility as 
to when modifications to the ORF may occur.
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    \5\ The Exchange intends to submit an identical proposal for its 
affiliates MIAX Options and MIAX Emerald.
    \6\ See supra note 3.

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[[Page 71919]]

Implementation Date
    The Exchange will announce the effective date of the proposed 
changes by Regulatory Circular distributed to all Members.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the Act 
and the rules and regulations thereunder applicable to the Exchange 
and, in particular, the requirements of section 6(b) of the Act.\7\ 
Specifically, the Exchange believes that the proposal is consistent 
with the section 6(b)(5) \8\ requirements that the rules of an exchange 
be designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes that the proposal is consistent 
with the section 6(b)(5) \9\ requirement that the rules of an exchange 
not be designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. The Exchange also believes that the 
proposal is consistent with section 6(b)(4) of the Act,\10\ which 
requires that Exchange rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among its Members and other 
persons using its facilities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed changes to the Fees Schedule are 
appropriate as it provides the Exchange with more flexibility in its 
assessment of ORF based on its periodic monitoring of ORF rates. The 
Exchange also represents that it will continue to monitor its 
regulatory costs and revenues at a minimum on a semi-annual basis, just 
as it, and its affiliated options exchanges (including MIAX Options and 
MIAX Emerald) do today. The Exchange believes that the proposed 
elimination of language specifying that the Exchange may only increase 
or decrease the ORF on the first business day February or August is 
reasonable because it is designed to afford the Exchange increased 
flexibility in making necessary adjustments to the ORF, as the Exchange 
is required to monitor the amount collected from the ORF to ensure that 
it, in combination with its other regulatory fees and fines, does not 
exceed total regulatory costs.
    The Exchange also represents that it will endeavor to provide 
notice of any changes at least 30 days in advance of the effective date 
of such change, thereby providing Members with adequate time to make 
any necessary adjustments to accommodate any proposed changes. Taking 
out the strict requirements from the Fee Schedule, however, will 
provide the Exchange flexibility in modifying ORF and being able to 
adjust ORF even if it doesn't meet the strict 30-day deadline in the 
event extenuating circumstances prevent the Exchange from meeting this 
deadline or in the event such notice is a day or two less than 30 days 
due to when the first business days of the month fall. For example, as 
noted above, the Exchange often provides fee change notices on the 
first business day of the month. It may be the case that such date is 
less than 30 days from the effective date of proposed change (e.g., if 
the Exchange wished to amend the ORF, effective August 1, 2023, the 
Exchange would not have met the 30-day notice requirement if it had 
announced on the first business day of July, as it has been historic 
practice, since the first business day falls on July 3, 2023).
    The Exchange believes that the proposal is reasonable, equitable 
and not unfairly discriminatory because it conforms to the process and 
fee schedule language used by two of its affiliated options exchanges, 
thereby providing consistency across the MIAX family options exchanges 
and reducing potential confusion. The proposed changes also apply 
uniformly to all Members subject to ORF. As noted above, other options 
exchanges are also not confined to making ORF changes on the first 
business day of February or August or required to provide 30 day 
notice.\11\
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    \11\ See supra note 3.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act. In this regard and as indicated above, the 
Exchange notes that the proposal is substantially similar in all 
material respects to filings submitted by Cboe EDGX Exchange, Inc. 
(``EDGX''), Cboe BZX Exchange, Inc. (``BZX''), and BOX Options Market 
LLC (``BOX'').\12\ This proposal does not create an unnecessary or 
inappropriate inter-market burden on competition because it merely 
amends the Fee Schedule to modify the timing and notice requirements 
relating to the modification of the ORF and conforms to the timing and 
notice requirements used by other options exchanges within their fee 
schedules.\13\ Further, ORF is a regulatory fee that supports 
regulation in furtherance of the purposes of the Act. The Exchange is 
obligated to ensure that the amount of regulatory revenue collected 
from the ORF, in combination with its other regulatory fees and fines, 
does not exceed regulatory costs and the proposed rule change does not 
seek to change that.
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    \12\ Id.
    \13\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) \15\ thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative upon filing. The Exchange is 
requesting the waiver because it will allow the Exchange to exercise 
more flexibility with respect to timing of changes to its

[[Page 71920]]

assessment of ORF based on its periodic monitoring of ORF rates and 
allow the Exchange to mirror similar provisions already in place on 
other exchanges. Finally, the Exchange states that the proposed change 
would not introduce any novel regulatory issues. For these reasons, and 
because the proposed rule change does not raise any novel legal or 
regulatory issues, the Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#92e0e7fef7bff1fdfffff7fce6e1d2e1f7f1bcf5fde4"><span class="__cf_email__" data-cfemail="552720393078363a3838303b2126152630367b323a23">[email protected]</span></a>. Please include 
file number SR-PEARL-2023-56 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-PEARL-2023-56. 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-2023-56 and should be 
submitted on or before November 8, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12) and (a)(59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22924 Filed 10-17-23; 8:45 am]
BILLING CODE 8011-01-P


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