Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices 40605 

65Execution Access Letter at 2. 

66See supra notes 47–48 and accompanying text. 

67Notice, 83 FR at 27645. 

68FINRA stated that, based on a review of TRACE 

data over a sample period, only six ATSs that 

accounted for 99% of trade reports exceeded the 

proposed threshold. See Notice, 83 FR at 27645, at 

n. 13. 

69See FINRA Rule 6730, Supplementary Material 

.07(d). 70 15 U.S.C. 78s(b)(5) (providing that the 

Commission ‘‘shall consult with and consider the 

views of the Secretary of the Treasury prior to 

approving a proposed rule filed by a registered 

securities association that primarily concerns 

conduct related to transactions in government 

securities, except where the Commission 

determines that an emergency exists requiring 

expeditious or summary action and publishes its 

reasons therefor’’). 

71Telephone conversation with Treasury 

Department staff and Brett Redfearn, Director, 

Division of Trading and Markets, et al., on August 

3, 2018. 

72 15 U.S.C. 78s(b)(6). 

73 15 U.S.C. 78s(b)(2). 

74 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

might elect not to trade on covered 

ATSs ‘‘to maintain anonymity and avoid 

regulatory oversight.’’ 65 The 

Commission believes, nevertheless, that 

this comment does not preclude 

approval of the proposal at this time. 

Although some Treasury transactions 

will continue to be outside the scope of 

the new requirements, the new 

counterparty information reported by 

covered ATSs should greatly enhance 

surveillance capabilities and provide 

additional insights into the Treasury 

cash market. The Commission notes that 

other public sector authorities have 

expressed their intention to continue to 

assess effective means to ensure that 

reported data regarding the Treasury 

cash market is comprehensive and 

includes information from institutions 

that are not FINRA members.66

Furthermore, although theoretically 

possible, it might not be practical for 

non-FINRA members to shift their 

trading activity away from covered 

ATSs if covered ATSs continue to serve 

as significant pools of liquidity for U.S. 

Treasury Securities. The Commission 

notes that FINRA ‘‘intends to monitor 

. . . for any potential negative impacts 

or changes in ATS or non-member 

subscriber behavior.’’ 67

The Commission believes that the 

proposal is reasonably designed to 

minimize burdens on ATSs while still 

fulfilling the important policy objectives 

discussed above. The new non-FINRAmember identification requirements will 

apply only to ATSs that exceed the $10 

billion threshold. These ATS currently 

account for the vast majority of ATS 

transaction reports for transactions in 

U.S. Treasury Securities against nonFINRA members.68 Furthermore, the 

proposal does not appear likely to 

require covered ATSs to undertake 

significant programming work because 

new reporting fields will not be 

necessary. All ATSs that report to 

TRACE already utilize fields for 

counterparty identifiers and are familiar 

with the use of MPIDs for FINRA 

member counterparties. For Treasury 

transactions on covered ATSs, the 

proposal eliminates use of the generic 

‘‘C’’ and ‘‘A’’ identifiers and instead 

requires the ATS to populate the 

counterparty identifier field with an 

MPID in all cases, regardless of whether 

a particular counterparty is a FINRA 

member. Under the new rule, FINRA 

will assign MPIDs to all non-FINRAmember subscribers of covered ATSs 

who engage in Treasury transactions 

without employing a de minimis cut-off. 

The Commission believes that this is a 

reasonable means of simplifying 

compliance with the rule because 

covered ATSs will not have to analyze 

the transaction volume of non-FINRAmember subscribers to ascertain 

whether any of them become subject to 

or subsequently fall outside the scope of 

the rule. In addition, an ATS that 

reaches the $10 billion threshold will 

remain a covered ATS even if its 

volume of executed transactions in U.S. 

Treasury Securities subsequently falls 

below the $10 billion threshold.69 The 

Commission believes that this will 

simplify compliance with the new rule 

because an ATS will not be required to 

continue monitoring its volume of 

executions in U.S. Treasury Securities 

against non-FINRA-member subscribers 

once it has reached the $10 billion 

threshold. Finally, the Commission 

notes that the new rule will impose 

duties only on covered ATSs and not on 

any of their subscribers. 

Pursuant to Section 19(b)(5) of the 

Act,70 the Commission consulted with 

and considered the views of the 

Treasury Department in determining to 

approve the proposed rule change. The 

Treasury Department supports FINRA’s 

proposal to require covered ATSs to 

identify non-FINRA-member 

counterparties in their TRACE reports of 

Treasury transactions.71 Pursuant to 

Section 19(b)(6) of the Act,72 the 

Commission has considered the 

sufficiency and appropriateness of 

existing laws and rules applicable to 

government securities brokers, 

government securities dealers, and their 

associated persons in approving the 

proposal. As discussed above, ATSs 

currently report Treasury transactions 

using generic identifiers that do not 

specifically identify non-FINRAmember counterparties. By requiring 

covered ATSs to identify non-FINRAmember counterparties in their TRACE 

reports of Treasury transactions, the 

new rule will enhance FINRA’s 

surveillance program for U.S. Treasury 

Securities and provide the official sector 

with important additional information 

concerning activity in the U.S. Treasury 

cash market. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,73 that the 

proposed rule change (SR–FINRA– 

2018–023) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.74

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–17496 Filed 8–14–18; 8:45 am] 

BILLING CODE 8011–01–P 

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. 

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/rulefilings/pearl at MIAX PEARL’s principal 

office, and at the Commission’s Public 

Reference Room. 


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40606 Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices 

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. 

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. 

9The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

10See Securities Exchange Act Release No. 83517 

(June 25, 2018), 83 FR 30792 (June 29, 2018) (SR– 

PEARL–2018–14). 

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’’). 

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: 

Origin Tier 

Volume 

criteria 

(percent) 

Per contract 

rebates/fees 

for penny classes 

Per contract 

rebates/fees 

for non-penny classes 

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. 


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11See 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). 

Origin Tier 

Volume 

criteria 

(percent) 

Per contract 

rebates/fees 

for penny classes 

Per contract 

rebates/fees 

for non-penny classes 

Maker Taker Maker ** Taker ** 

All MIAX PEARL Market 

Makers.

1 

2 

0.00–0.15 ...........................

Above 0.15–0.40 ................

($0.25) 

(0.40) 

$0.50 

0.50 

($0.30) 

(0.30) 

$1.05 

1.05 

3 Above 0.40–0.65 ................ (0.40) 0.48 (0.60) 1.03 

4 Above 0.65–1.00 or Above 

2.25 in SPY.

(0.47) 0.43 (0.65) 1.02 

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 

Origin Tier 

Volume 

criteria 

(percent) 

Per contract 

rebates/fees 

for penny classes 

Per contract 

rebates/fees 

for non-penny classes 

Maker ∧ Taker Maker **∧ Taker ** 

Non-Priority Customer, 

Firm, BD, and Non-MIAX 

PEARL Market Makers.

1 

2 

3 

0.00–0.15 ...........................

Above 0.15–0.40 ................

Above 0.40–0.65 ................

($0.25) 

(0.40) 

(0.40) 

$0.50 

0.50 

0.48 

($0.30) 

(0.30) 

(0.60) 

$1.05 

1.05 

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. 

∧ 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 nonPenny 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 nonPenny 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 


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12See Cboe BZX Options Exchange Fee Schedule, 

under ‘‘Transaction Fees.’’ 

13See Cboe BZX Options Exchange Fee Schedule, 

under ‘‘Transaction Fees,’’ ‘‘Customer Penny Pilot 

Add Tiers.’’ 

14See Cboe BZX Options Exchange Fee Schedule, 

under ‘‘Transaction Fees,’’ ‘‘Customer NonCustomer Penny Pilot Add Volume Tier.’’ 

15See Cboe BZX Options Exchange Fee Schedule, 

under ‘‘Transaction Fees,’’ ‘‘Non-Customer Penny 

Pilot Take Volume Tiers.’’ 

16See Cboe BZX Options Exchange Fee Schedule, 

under ‘‘Transaction Fees,’’ ‘‘Non-Customer NonPenny Pilot Take Volume Tiers.’’ 

17See Cboe BZX Options Exchange Fee Schedule, 

under ‘‘Transaction Fees,’’ ‘‘Non-Customer NonPenny Pilot Take Volume Tiers.’’ 

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

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 nonCustomer, 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 NonCustomer, Non-Penny Pilot Take 

Volume Tiers.17

With all proposed changes, Section 

1)a) of the Fee Schedule shall be the 

following: 

Origin Tier 

Volume 

criteria 

(percent) 

Per contract 

rebates/fees 

for penny classes 

Per contract 

rebates/fees 

for non-penny classes 

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. 

Origin Tier 

Volume 

criteria 

(percent) 

Per contract 

rebates/fees 

for penny classes 

Per contract 

rebates/fees 

for non-penny classes 

Maker Taker Maker ** Taker ** 

All MIAX PEARL Market 

Makers.

1 

2 

0.00–0.15 ...........................

Above 0.15–0.40 ................

($0.25) 

(0.40) 

$0.50 

0.50 

($0.30) 

(0.30) 

$1.10 

1.10 

3 Above 0.40–0.65 ................ (0.40) 0.48 (0.60) 1.09 

4 Above 0.65–1.00 ................

or Above 2.25 in SPY ........

(0.47) 0.47 (0.65) 1.08 

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 

Origin Tier 

Volume 

criteria 

(percent) 

Per contract 

rebates/fees 

for penny classes 

Per contract 

rebates/fees 

for non-penny classes 

Maker ∧ Taker Maker **∧ Taker ** 

Non-Priority Customer, 

Firm, BD, and Non-MIAX 

PEARL Market Makers.

1 

2 

3 

0.00–0.15 ...........................

Above 0.15–0.40 ................

Above 0.40–0.65 ................

($0.25) 

(0.40) 

(0.40) 

$0.50 

0.50 

0.48 

($0.30) 

(0.30) 

(0.60) 

$1.10 

1.10 

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. 

∧ 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. 


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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). 

21See supra note 11. 

22See supra note 12 

23See supra note 11. 

24See supra note 12 25See id. 

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. 

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

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. 

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. 

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 


daltland on DSKBBV9HB2PROD with NOTICES
40610 Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices 

26 15 U.S.C. 78s(b)(3)(A)(ii). 

27 17 CFR 240.19b–4(f)(2). 28 17 CFR 200.30–3(a)(12). 

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. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–2018–17 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–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

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–17495 Filed 8–14–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736. 

Extension: 

Rule 17f–1(c) and Form X–17F–1A. SEC 

File No. 270–29, OMB Control No. 3235– 

0037. 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the existing collection of information 

provided for in Rule 17f–1(c) and Form 

X–17F–1A (17 CFR 249.100) under the 

Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.). The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget (‘‘OMB’’) for 

extension and approval. 

Rule 17f–1(c) requires approximately 

10,100 entities in the securities industry 

to report lost, stolen, missing, or 

counterfeit securities certificates to the 

Commission or its designee, to a 

registered transfer agent for the issue, 

and, when criminal activity is 

suspected, to the Federal Bureau of 

Investigation. Such entities are required 

to use Form X–17F–1A to make such 

reports. Filing these reports fulfills a 

statutory requirement that reporting 

institutions report and inquire about 

missing, lost, counterfeit, or stolen 

securities. Since these reports are 

compiled in a central database, the rule 

facilitates reporting institutions to 

access the database that stores 

information for the Lost and Stolen 

Securities Program. 

We estimate that 10,100 reporting 

institutions will report that securities 

are either missing, lost, counterfeit, or 

stolen annually and that each reporting 

institution will submit this report 30 

times each year. The staff estimates that 

the average amount of time necessary to 

comply with Rule 17f–1(c) and Form X– 

17F–1A is five minutes. The total 

burden is approximately 25,250 hours 

annually for respondents (10,100 times 

30 times 5 divided by 60). 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information shall have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the proposed collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information on respondents; and (d) 

ways to minimize the burden of the 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 


daltland on DSKBBV9HB2PROD with NOTICES