[Federal Register Volume 83, Number 158 (Wednesday, August 15, 2018)]
[Notices]
[Pages 40605-40610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17495]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83814; File No. SR-PEARL-2018-17]


Self-Regulatory Organizations: Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by MIAX PEARL, LLC To Amend the 
MIAX PEARL Fee Schedule

August 9, 2018.
    Pursuant to the provisions of 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 August 1, 2018, MIAX PEARL, LLC (``MIAX PEARL'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 MIAX PEARL Fee 
Schedule (the ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/pearl at MIAX 
PEARL's principal office, and at the Commission's Public Reference 
Room.

[[Page 40606]]

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 Add/Remove Tiered Rebates/Fees 
set forth in Section 1(a) of the Fee Schedule to (i) decrease Maker (as 
defined below) rebates in Tier 6 for options transactions in Penny 
classes (as defined below) and non-Penny classes (as defined below) for 
Priority Customers; \3\ (ii) increase Taker (as defined below) fees in 
certain Tiers for options transactions in Penny classes and in all 
Tiers for options transactions in non-Penny classes for MIAX PEARL 
Market Makers,\4\ and (iii) increase the Taker fees in all Tiers for 
options transactions in non-Penny classes for Non-Priority Customers, 
Firms, Broker-Dealers and Non-MIAX PEARL Market Makers (collectively 
herein ``Professional Members'').
---------------------------------------------------------------------------

    \3\ ``Priority Customer'' means a person or entity that (i) is 
not a broker or dealer in securities, and (ii) does not place more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). See Exchange Rule 
100, including Interpretations and Policies .01.
    \4\ ``Market Maker'' means a Member registered with the Exchange 
for the purpose of making markets in options contracts traded on the 
Exchange. See the Definitions Section of the Fee Schedule and 
Exchange Rule 100.
---------------------------------------------------------------------------

    The Exchange currently assesses transaction rebates and fees to all 
market participants which are based upon the total monthly volume 
executed by the Member \5\ on MIAX PEARL in the relevant, respective 
origin type (not including Excluded Contracts) \6\ expressed as a 
percentage of TCV.\7\ In addition, the per contract transaction rebates 
and fees are applied retroactively to all eligible volume for that 
origin type once the respective threshold tier (``Tier'') has been 
reached by the Member. The Exchange aggregates the volume of Members 
and their Affiliates.\8\ Members that place resting liquidity, i.e., 
orders resting on the book of the MIAX PEARL System,\9\ are paid the 
specified ``maker'' rebate (each a ``Maker''), and Members that execute 
against resting liquidity are assessed the specified ``taker'' fee 
(each a ``Taker''). For opening transactions and ABBO uncrossing 
transactions, per contract transaction rebates and fees are waived for 
all market participants. Finally, Members are assessed lower 
transaction fees and receive lower rebates for order executions in 
standard option classes in the Penny Pilot Program \10\ (``Penny 
classes'') than for order executions in standard option classes which 
are not in the Penny Pilot Program (``non-Penny classes''), where 
Members are assessed higher transaction fees and receive higher 
rebates. Transaction rebates and fees in Section 1(a) of the Fee 
Schedule are currently assessed according to the following tables:
---------------------------------------------------------------------------

    \5\ ``Member'' means an individual or organization that is 
registered with the Exchange pursuant to Chapter II of the Exchange 
Rules for purposes of trading on the Exchange as an ``Electronic 
Exchange Member'' or ``Market Maker.'' Members are deemed 
``members'' under the Exchange Act. See the Definitions Section of 
the Fee Schedule and Exchange Rule 100.
    \6\ ``Excluded Contracts'' means any contracts routed to an away 
market for execution. See the Definitions Section of the Fee 
Schedule.
    \7\ ``TCV'' means total consolidated volume calculated as the 
total national volume in those classes listed on MIAX PEARL for the 
month for which the fees apply, excluding consolidated volume 
executed during the period time in which the Exchange experiences an 
``Exchange System Disruption'' (solely in the option classes of the 
affected Matching Engine (as defined below)). The term Exchange 
System Disruption, which is defined in the Definitions section of 
the Fee Schedule, means an outage of a Matching Engine or collective 
Matching Engines for a period of two consecutive hours or more, 
during trading hours. The term Matching Engine, which is also 
defined in the Definitions section of the Fee Schedule, is a part of 
the MIAX PEARL electronic system that processes options orders and 
trades on a symbol-by-symbol basis. Some Matching Engines will 
process option classes with multiple root symbols, and other 
Matching Engines may be dedicated to one single option root symbol 
(for example, options on SPY may be processed by one single Matching 
Engine that is dedicated only to SPY). A particular root symbol may 
only be assigned to a single designated Matching Engine. A 
particular root symbol may not be assigned to multiple Matching 
Engines. The Exchange believes that it is reasonable and appropriate 
to select two consecutive hours as the amount of time necessary to 
constitute an Exchange System Disruption, as two hours equates to 
approximately 1.4% of available trading time per month. The Exchange 
notes that the term ``Exchange System Disruption'' and its meaning 
have no applicability outside of the Fee Schedule, as it is used 
solely for purposes of calculating volume for the threshold tiers in 
the Fee Schedule. See the Definitions Section of the Fee Schedule.
    \8\ ``Affiliate'' means (i) an affiliate of a Member of at least 
75% common ownership between the firms as reflected on each firm's 
Form BD, Schedule A, or (ii) the Appointed Market Maker of an 
Appointed EEM (or, conversely, the Appointed EEM of an Appointed 
Market Maker). An ``Appointed Market Maker'' is a MIAX PEARL Market 
Maker (who does not otherwise have a corporate affiliation based 
upon common ownership with an EEM) that has been appointed by an EEM 
and an ``Appointed EEM'' is an EEM (who does not otherwise have a 
corporate affiliation based upon common ownership with a MIAX PEARL 
Market Maker) that has been appointed by a MIAX PEARL Market Maker, 
pursuant to the process described in the Fee Schedule. See the 
Definitions Section of the Fee Schedule.
    \9\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \10\ See Securities Exchange Act Release No. 83517 (June 25, 
2018), 83 FR 30792 (June 29, 2018) (SR-PEARL-2018-14).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Per contract rebates/fees for penny classes       Per contract rebates/
                                                                           ----------------------------------------------------    fees for non-penny
               Origin                     Tier         Volume criteria                                                                   classes
                                                          (percent)            Maker       Taker *     SPY taker    QQQ, IWM,  -------------------------
                                                                                                                    VXX taker      Maker        Taker
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer...................            1  0.00-0.10..............      ($0.25)        $0.48        $0.44        $0.47      ($0.85)        $0.87
                                                2  Above 0.10-0.35........       (0.40)         0.46         0.43         0.46       (0.95)         0.86
                                                3  Above 0.35-0.50........       (0.45)         0.44         0.42         0.44       (1.00)         0.85
                                                4  Above 0.50-0.75........       (0.52)         0.44         0.41         0.43       (1.03)         0.84
                                                5  Above 0.75-1.25........       (0.53)         0.44         0.40         0.42       (1.04)         0.84
                                                6  Above 1.25.............       (0.54)         0.43         0.38         0.40       (1.05)         0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny Classes other than SPY, QQQ, IWM, and VXX.


[[Page 40607]]


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   penny classes                 non-penny classes
                  Origin                         Tier         Volume criteria (percent)  ---------------------------------------------------------------
                                                                                               Maker           Taker         Maker **        Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX PEARL Market Makers..............               1  0.00-0.15...................         ($0.25)           $0.50         ($0.30)           $1.05
                                                         2  Above 0.15-0.40.............          (0.40)            0.50          (0.30)            1.05
                                                         3  Above 0.40-0.65.............          (0.40)            0.48          (0.60)            1.03
                                                         4  Above 0.65-1.00 or Above              (0.47)            0.43          (0.65)            1.02
                                                             2.25 in SPY.
                                                         5  Above 1.00-1.40.............          (0.48)            0.43          (0.70)            1.02
                                                         6  Above 1.40..................          (0.48)            0.43          (0.85)            1.02
--------------------------------------------------------------------------------------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   penny classes                 non-penny classes
                  Origin                         Tier         Volume criteria (percent)  ---------------------------------------------------------------
                                                                                           Maker [caret]                       Maker
                                                                                                               Taker         **[caret]       Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Priority Customer, Firm, BD, and Non-                1  0.00-0.15...................         ($0.25)           $0.50         ($0.30)           $1.05
 MIAX PEARL Market Makers.                               2  Above 0.15-0.40.............          (0.40)            0.50          (0.30)            1.05
                                                         3  Above 0.40-0.65.............          (0.40)            0.48          (0.60)            1.04
                                                         4  Above 0.65-1.00.............          (0.47)            0.48          (0.65)            1.04
                                                         5  Above 1.00-1.40.............          (0.48)            0.48          (0.70)            1.04
                                                         6  Above 1.40..................          (0.48)            0.48          (0.85)            1.04
--------------------------------------------------------------------------------------------------------------------------------------------------------
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member
  executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option
  classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following
  Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
[caret] Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the
  amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 1.50% volume
  in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX
  PEARL listed option classes.

    Except as otherwise set forth herein, the Volume Criteria is 
calculated based on the total monthly volume executed by the Member in 
all options classes on MIAX PEARL in the relevant Origin type, not 
including Excluded Contracts, (as the numerator) expressed as a 
percentage of (divided by) TCV (as the denominator). In Tier 4 for MIAX 
PEARL Market Makers, the alternative Volume Criteria (above 2.25% in 
SPY) is calculated based on the total monthly volume executed by the 
Market Maker solely in SPY options on MIAX PEARL in the relevant Origin 
type, not including Excluded Contracts, (as the numerator) expressed as 
a percentage of (divided by) SPY TCV (as the denominator). The per 
contract transaction rebates and fees shall be applied retroactively to 
all eligible volume once the threshold has been reached by Member. The 
Exchange aggregates the volume of Members and their Affiliates in the 
Add/Remove Tiered Fees. The per contract transaction rebates and fees 
shall be waived for transactions executed during the opening and for 
transactions that uncross the ABBO.

Maker Rebates

    The Exchange proposes to decrease the Maker rebate amounts in Tier 
6 as described below for Penny and non-Penny classes for Priority 
Customers. Specifically, for Priority Customer options transactions in 
Penny classes, the Exchange proposes to decrease the Maker rebate in 
Tier 6 from ($0.54) to ($0.53). For Priority Customer options 
transactions in non-Penny classes, the Exchange proposes to decrease 
the Maker rebate in Tier 6 from ($1.05) to ($1.04).

Taker Fees

    The Exchange proposes to: (i) Increase the Taker fees assessable to 
MIAX PEARL Market Makers in certain Tiers for options transactions in 
Penny classes and in all Tiers for options transactions in non-Penny 
classes, and (ii) increase the Taker fees assessable to Professional 
Members in all tiers for options transactions in non-Penny classes. 
Specifically, the Exchange proposes to increase the Taker fees for MIAX 
PEARL Market Makers orders in options in Penny classes in Tier 4 from 
$0.43 to $0.47, in Tier 5 from $0.43 to $0.45 and in Tier 6 from $0.43 
to $0.44. The Exchange also proposes to increase the Taker fee for MIAX 
PEARL Market Makers for options transactions in non-Penny classes in 
Tier 1 from $1.05 to $1.10, in Tier 2 from $1.05 to $1.10, in Tier 3 
from $1.03 to $1.09, in Tier 4 from $1.02 to $1.08, in Tier 5 from 
$1.02 to $1.07 and in Tier 6 from $1.02 to $1.06. The Exchange proposes 
to increase the Taker fees for Professional Members for options 
transactions in non-Penny classes in Tier 1 from $1.05 to $1.10, in 
Tier 2 from $1.05 to $1.10, in Tier 3 from $1.04 to $1.10, in Tier 4 
from $1.04 to $1.09, in Tier 5 from $1.04 to $1.08 and in Tier 6 from 
$1.04 to $1.07.
    The purpose of increasing the specified Taker fees and decreasing 
the specified Maker rebates is for business and competitive reasons. As 
a new exchange, in order to attract order flow, the Exchange initially 
set its Maker rebates and Taker fees so that they were meaningfully 
higher/lower than other options exchanges that operate comparable 
maker/taker pricing models.\11\ The Exchange now believes that it is 
appropriate to further adjust these specified Maker rebates and Taker 
fees so that they are more in line with

[[Page 40608]]

other exchanges, but will still remain highly competitive such that 
they should enable the Exchange to continue to attract order flow and 
maintain market share.\12\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release Nos. 80915 (June 13, 
2017), 82 FR 27912 (June 19, 2017) (SR-PEARL-2017-29); 80914 (June 
13, 2017), 82 FR 27910 (June 19, 2017) (SR-PEARL-2017-30).
    \12\ See Cboe BZX Options Exchange Fee Schedule, under 
``Transaction Fees.''
---------------------------------------------------------------------------

    Cboe BZX Exchange, Inc. (``Cboe BZX'') generally provides for 
similar fees and rebates. For example, under threshold criteria similar 
to MIAX PEARL's proposed rebates in Priority Customer Tier 6 for Penny 
Classes, Cboe BZX's Customer Penny Pilot Add Tiers 5, 6 and 7 provides 
for a rebate of $0.53.\13\ Additionally, under threshold criteria 
similar to MIAX PEARL's proposed rebates in Priority Customer Tier 6 
for non-Penny Classes, Cboe BZX provides for a rebate of $1.02 in its 
Customer Non-Penny Pilot Add Tier 3, and a rebate of $1.05, in Tier 
4.\14\ Further, under threshold criteria similar to MIAX PEARL's 
proposed Taker fees for Market Makers in Tiers 4, 5 and 6, in Penny 
Classes, Cboe BZX charges fees of $0.44 and $0.47 in its non-Customer 
Penny Pilot Take Volume Tiers for Market Makers.\15\ Additionally, 
similar to the Taker fees proposed by MIAX PEARL for Market Makers in 
non-Penny Classes, Cboe BZX charges Market Makers a fee of $1.07 in its 
non-Customer, Non-Penny Pilot Take Volume Tiers.\16\ Furthermore, 
similar to the Taker fees proposed by MIAX PEARL for Professional 
Members in Non-Penny Classes, Cboe BZX charges Professionals a fee of 
$1.07 in its Non-Customer, Non-Penny Pilot Take Volume Tiers.\17\
---------------------------------------------------------------------------

    \13\ See Cboe BZX Options Exchange Fee Schedule, under 
``Transaction Fees,'' ``Customer Penny Pilot Add Tiers.''
    \14\ See Cboe BZX Options Exchange Fee Schedule, under 
``Transaction Fees,'' ``Customer Non-Customer Penny Pilot Add Volume 
Tier.''
    \15\ See Cboe BZX Options Exchange Fee Schedule, under 
``Transaction Fees,'' ``Non-Customer Penny Pilot Take Volume 
Tiers.''
    \16\ See Cboe BZX Options Exchange Fee Schedule, under 
``Transaction Fees,'' ``Non-Customer Non-Penny Pilot Take Volume 
Tiers.''
    \17\ See Cboe BZX Options Exchange Fee Schedule, under 
``Transaction Fees,'' ``Non-Customer Non-Penny Pilot Take Volume 
Tiers.''
---------------------------------------------------------------------------

    With all proposed changes, Section 1)a) of the Fee Schedule shall 
be the following:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Per contract rebates/fees for penny classes       Per contract rebates/
                                                                           ----------------------------------------------------    fees for non-penny
               Origin                     Tier         Volume criteria                                                                   classes
                                                          (percent)            Maker       Taker *     SPY taker    QQQ, IWM,  -------------------------
                                                                                                                    VXX taker      Maker        Taker
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer...................            1  0.00-0.10..............      ($0.25)        $0.48        $0.44        $0.47      ($0.85)        $0.87
                                                2  Above 0.10-0.35........       (0.40)         0.46         0.43         0.46       (0.95)         0.86
                                                3  Above 0.35-0.50........       (0.45)         0.44         0.42         0.44       (1.00)         0.85
                                                4  Above 0.50-0.75........       (0.52)         0.44         0.41         0.43       (1.03)         0.84
                                                5  Above 0.75-1.25........       (0.53)         0.44         0.40         0.42       (1.04)         0.84
                                                6  Above 1.25.............       (0.53)         0.43         0.38         0.40       (1.04)         0.84
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For all Penny Classes other than SPY, QQQ, IWM, and VXX.


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   penny classes                 non-penny classes
                  Origin                         Tier         Volume criteria (percent)  ---------------------------------------------------------------
                                                                                               Maker           Taker         Maker **        Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX PEARL Market Makers..............               1  0.00-0.15...................         ($0.25)           $0.50         ($0.30)           $1.10
                                                         2  Above 0.15-0.40.............          (0.40)            0.50          (0.30)            1.10
                                                         3  Above 0.40-0.65.............          (0.40)            0.48          (0.60)            1.09
                                                         4  Above 0.65-1.00.............          (0.47)            0.47          (0.65)            1.08
                                                            or Above 2.25 in SPY........
                                                         5  Above 1.00-1.40.............          (0.48)            0.45          (0.70)            1.07
                                                         6  Above 1.40..................          (0.48)            0.44          (0.85)            1.06
--------------------------------------------------------------------------------------------------------------------------------------------------------


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   penny classes                 non-penny classes
                  Origin                         Tier         Volume criteria (percent)  ---------------------------------------------------------------
                                                                                           Maker [caret]                       Maker
                                                                                                               Taker         **[caret]       Taker **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Priority Customer, Firm, BD, and Non-                1  0.00-0.15...................         ($0.25)           $0.50         ($0.30)           $1.10
 MIAX PEARL Market Makers.                               2  Above 0.15-0.40.............          (0.40)            0.50          (0.30)            1.10
                                                         3  Above 0.40-0.65.............          (0.40)            0.48          (0.60)            1.10
                                                         4  Above 0.65-1.00.............          (0.47)            0.48          (0.65)            1.09
                                                         5  Above 1.00-1.40.............          (0.48)            0.48          (0.70)            1.08
                                                         6  Above 1.40..................          (0.48)            0.48          (0.85)            1.07
--------------------------------------------------------------------------------------------------------------------------------------------------------
** Members may qualify for the Maker Rebate and the Taker Fee associated with the highest Tier for transactions in Non-Penny classes if the Member
  executes more than 0.30% volume in Non-Penny classes, not including Excluded Contracts, as compared to the TCV in all MIAX PEARL listed option
  classes. For purposes of qualifying for such rates, the Exchange will aggregate the volume transacted by Members and their Affiliates in the following
  Origin types in Non-Penny classes: MIAX PEARL Market Makers, and Non-Priority Customer, Firm, BD, and Non-MIAX PEARL Market Makers.
[caret] Members may qualify for Maker Rebates equal to the greater of: (A) ($0.40) for Penny Classes and ($0.65) for Non-Penny Classes, or (B) the
  amount set forth in the applicable Tier reached by the Member in the relevant Origin, if the Member and their Affiliates execute at least 1.50% volume
  in the relevant month, in Priority Customer Origin type, in all options classes, not including Excluded Contracts, as compared to the TCV in all MIAX
  PEARL listed option classes.


[[Page 40609]]

    Except as otherwise set forth herein, the Volume Criteria is 
calculated based on the total monthly volume executed by the Member in 
all options classes on MIAX PEARL in the relevant Origin type, not 
including Excluded Contracts, (as the numerator) expressed as a 
percentage of (divided by) TCV (as the denominator). In Tier 4 for MIAX 
PEARL Market Makers, the alternative Volume Criteria (above 2.25% in 
SPY) is calculated based on the total monthly volume executed by the 
Market Maker solely in SPY options on MIAX PEARL in the relevant Origin 
type, not including Excluded Contracts, (as the numerator) expressed as 
a percentage of (divided by) SPY TCV (as the denominator). The per 
contract transaction rebates and fees shall be applied retroactively to 
all eligible volume once the threshold has been reached by Member. The 
Exchange aggregates the volume of Members and their Affiliates in the 
Add/Remove Tiered Fees. The per contract transaction rebates and fees 
shall be waived for transactions executed during the opening and for 
transactions that uncross the ABBO.
    The proposed changes are scheduled to become operative August 1, 
2018.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \18\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\19\ in that it 
is an equitable allocation of reasonable dues, fees and other charges 
among Exchange members and issuers and other persons using its 
facilities, and 6(b)(5) of the Act,\20\ in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4).
    \20\ 15 U.S.C. 78f(b)(1) and (b)(5).
---------------------------------------------------------------------------

    The proposed Maker rebate decrease in Penny classes and non-Penny 
classes applicable to Priority Customers in Tier 6 is reasonable, 
equitable and not unfairly discriminatory because all similarly 
situated market participants are subject to the same tiered rebates and 
fees and access to the Exchange is offered on terms that are not 
unfairly discriminatory. The Exchange believes it is equitable and not 
unfairly discriminatory to only offer this reduced taker fee to 
Priority Customer orders because a Priority Customer is, by definition, 
not a broker or dealer in securities, and does not place more than 390 
orders in listed options per day on average during a calendar month for 
its own beneficial account(s). This limitation does not apply to 
participants on the Exchange whose behavior is substantially similar to 
that of market professionals, who will generally submit a higher number 
of orders than Priority Customers. For competitive and business 
reasons, the Exchange initially set its Maker rebates for Priority 
Customer orders higher than certain other options exchanges that 
operate comparable maker/taker pricing models.\21\ The Exchange now 
believes that it is appropriate to further decrease those specified 
Maker rebates so that they are more in line with other exchanges, and 
will still remain highly competitive such that they should enable the 
Exchange to continue to attract order flow and maintain market 
share.\22\
---------------------------------------------------------------------------

    \21\ See supra note 11.
    \22\ See supra note 12
---------------------------------------------------------------------------

    The proposed Taker fee increases in certain specified Tiers 
applicable to orders submitted by MIAX PEARL Market Makers and 
Professional Members are reasonable, equitable and not unfairly 
discriminatory because all option orders of the same origin type are 
subject to the same tiered Taker fees and access to the Exchange is 
offered on terms that are not unfairly discriminatory. For competitive 
and business reasons, the Exchange initially set its Taker fees for 
MIAX PEARL Market Maker and Professional Member orders lower than 
certain other options exchanges that operate comparable maker/taker 
pricing models.\23\ The Exchange now believes that it is appropriate to 
further increase those specified Taker fees so that they are more in 
line with other exchanges, and will still remain highly competitive 
such that they should enable the Exchange to continue to attract order 
flow and maintain market share. The Exchange notes that, even as 
amended, its Taker fees for MIAX PEARL Market Makers and Professional 
Members are generally lower than certain other options exchanges 
operating competing models.\24\ The Exchange believes for these reasons 
that increasing certain Taker fees for MIAX PEARL Market Maker and 
Professional Member transactions in the specified Tiers is equitable, 
reasonable and not unfairly discriminatory, and thus consistent with 
the Act.
---------------------------------------------------------------------------

    \23\ See supra note 11.
    \24\ See supra note 12
---------------------------------------------------------------------------

    Furthermore, the proposed increases to the Taker fees for MIAX 
PEARL Market Maker and Professional Member transactions promotes just 
and equitable principles of trade, fosters cooperation and coordination 
with persons engaged in facilitating transactions in securities, and 
protects investors and the public interest, because even with the 
increases, the Exchange's proposed Taker fees for MIAX PEARL Market 
Maker and Professional Member orders still remain highly competitive 
with certain other options exchanges offering comparable pricing 
models, and should enable the Exchange to continue to attract order 
flow and maintain market share.\25\ The Exchange believes that the 
amount of such fees, as proposed to be increased, will continue to 
encourage those market participants to send orders to the Exchange. To 
the extent that order flow is increased by the proposal, market 
participants will increasingly compete for the opportunity to trade on 
the Exchange, including sending more orders which will have the 
potential to be assessed lower fees and higher rebates than certain 
other competing options exchanges. The resulting increased volume and 
liquidity will benefit all Exchange participants by providing more 
trading opportunities and tighter spreads.
---------------------------------------------------------------------------

    \25\ See id.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    MIAX PEARL does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
proposed changes in the specified Maker rebates and Taker fees for the 
applicable market participants should continue to encourage the 
provision of liquidity that enhances the quality of the Exchange's 
market and increases the number of trading opportunities on MIAX PEARL 
for all participants who will be able to compete for such 
opportunities. The proposed rule change should enable the Exchange to 
continue to attract and compete for order flow with other exchanges. 
However, this competition does not create an undue burden on 
competition but rather offers all market participants the opportunity 
to receive the benefit of competitive pricing.
    The proposed Maker rebate decreases and Taker fee increases are 
intended to keep the Exchange's fees highly competitive with those of 
other

[[Page 40610]]

exchanges, and to encourage liquidity and should enable the Exchange to 
continue to attract and compete for order flow with other exchanges. 
The Exchange notes that it operates in a highly competitive market in 
which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive. In such an 
environment, the Exchange must continually adjust its rebates and fees 
to remain competitive with other exchanges and to attract order flow. 
The Exchange believes that the proposed rule changes reflect this 
competitive environment because they modify the Exchange's fees in a 
manner that encourages market participants to continue to provide 
liquidity and to send order flow to the Exchange.

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,\26\ and Rule 19b-4(f)(2) \27\ 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \27\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#fb898e979ed6989496969e958f88bb889e98d59c948d"><span class="__cf_email__" data-cfemail="fb898e979ed6989496969e958f88bb889e98d59c948d">[email protected]</span></a>. Please include 
File Number SR-PEARL-2018-17 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-2018-17. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-PEARL-2018-17, and should be submitted 
on or before September 5, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17495 Filed 8-14-18; 8:45 am]
 BILLING CODE 8011-01-P


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