88186 Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 

7 15 U.S.C. 78s(b)(3)(A)(ii). 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which rebate 

and fee changes in this market may 

impose any burden on competition is 

extremely limited. 

In this instance, the Exchange is 

proposing to limit the category of DLPs 

that may qualify for the Additional Tape 

C ETP Incentives in the DLP Program to 

Primary DLPs in an effort to exclusively 

reward Primary DLPs with such 

incentives. The proposal is reflective of 

the greater responsibility borne by 

Primary DLPs. 

The Exchange uses incentives, such as 

the rebates of the DLP program, to 

incentivize market participants to 

improve the market. The Exchange 

must, from time to time, assess the 

effectiveness of incentives and adjust 

them when they are not as effective as 

the Exchange believes they could be. 

Moreover, the Exchange is ultimately 

limited in the amount of rebates it may 

offer. The proposal is reflective of such 

an analysis. 

The Exchange notes that participation 

in the DLP program is entirely voluntary 

and, to the extent that registered market 

makers determine that the rebates are 

not in line with the level of marketimproving behavior the Exchange 

requires, a DLP may elect to deregister 

as such with no penalty. The Exchange 

does not believe that the proposed 

change places an unnecessary burden 

on competition and, in sum, if the 

changes proposed herein are 

unattractive to market makers, it is 

likely that the Exchange will lose 

participation in the DLP program as a 

result. Thus, the Exchange does not 

believe that the proposal represents a 

burden on competition among Exchange 

members, or that the proposal will 

impair the ability of members or 

competing order execution venues to 

maintain their competitive standing in 

the financial markets. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or 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.7

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: (i) necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NASDAQ–2023–053 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–NASDAQ–2023–053. 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–NASDAQ–2023–053 and should be 

submitted on or before January 10, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27918 Filed 12–19–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99175; File No. SR– 

PEARL–2023–69] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX Pearl 

Equities Fee Schedule 

December 14, 2023. 

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 December 12, 2023, MIAX PEARL, 

LLC (‘‘MIAX Pearl’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the fee schedule (the ‘‘Fee 

Schedule’’) applicable to MIAX Pearl 

Equities, an equities trading facility of 

the Exchange. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-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 


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Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 88187 

3See Fee Schedule, Section 1)d). 

4See 2614(a)(3)(i)(A) for the definition of 

Midpoint Peg Order. 

5See Fee Schedule, Section 1)a) and Liquidity 

Indicator Codes RA, Ra, RB, Rb, RC, Rc, Rp, RR, Rr, 

RT, and Rt. 

6The term ‘‘Equity Member’’ is a Member 

authorized by the Exchange to transact business on 

MIAX Pearl Equities. See Exchange Rule 1901. 

7 ‘‘ADV’’ means average daily volume calculated 

as the number of shares added or removed, 

combined, per day. ADV is calculated on a monthly 

basis. See the Definitions Section of the Fee 

Schedule. The Exchange excludes from its 

calculation of ADV shares added or removed on any 

day that the Exchange’s system experiences a 

disruption that lasts for more than 60 minutes 

during regular trading hours, on any day with a 

scheduled early market close, and on the ‘‘Russell 

Reconstitution Day’’ (typically the last Friday in 

June). Routed shares are also not included in the 

ADV calculation. See id. 

8 ‘‘TCV’’ means total consolidated volume 

calculated as the volume in shares reported by all 

exchanges and reporting facilities to a consolidated 

transaction reporting plan for the month for which 

the fees apply. The Exchange excludes from its 

calculation of TCV volume on any given day that 

the Exchange’s system experiences a disruption that 

lasts for more than 60 minutes during Regular 

Trading Hours, on any day with a scheduled early 

market close, and on the ‘‘Russell Reconstitution 

Day’’ (typically the last Friday in June). See the 

Definitions Section of the Fee Schedule. 

9See MEMX LLC (‘‘MEMX’’) Equities Fee 

Schedule, available at https://info.

memxtrading.com/equities-trading-resources/usequities-fee-schedule/ (providing standard remove 

volume fee of $0.0030 per share and reduced 

Liquidity Removal Tier fee of $0.00295 per share so 

long as a member achieves an ADV greater than or 

equal to 0.60% of TCV and a Removed Volume 

ADV greater than or equal to 0.30% of TCV); see 

also Cboe EDGX Equities Fee Schedule, available at 

https://www.cboe.com/us/equities/membership/fee_

schedule/edgx/ (providing a standard fee of $0.0030 

per share to remove liquidity in securities priced at 

or above $1.00 per share, Remove Volume Tier 1 

fee of $0.0029 per share to remove liquidity in 

securities priced at or above $1.00 per share so long 

as the member achieves an ADAV greater than or 

equal to 0.25% of TCV). 

10Rebates are indicated by parentheses. See the 

General Notes Section of the Fee Schedule. 

11See Securities Exchange Act Release No. 95614 

(August 26, 2022), 87 FR 53813 (September 1, 2022) 

(SR–PEARL–2022–33). 

12See Fee Schedule, Section 1)f), Step-Up Added 

Liquidity Rebate, and Section 1)b), Liquidity 

Indicator Codes and Associated Fees. 

13The term ‘‘Step-Up ADAV as a % of TCV’’ 

means ADAV as a percent of TCV in the relevant 

baseline month subtracted from the current month’s 

ADAV as a percent of TCV. See the Definitions 

Section of the Fee Schedule. The Exchange notes 

that the Step-Up Added Liquidity Rebate does not 

apply to executions of orders in securities priced 

below $1.00 per share or executions of orders that 

constitute added non-displayed liquidity. 

14See the Definitions Section of the Fee 

Schedule. ADAV and ADV are calculated on a 

monthly basis. See id. 

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: (1) amend Section 1)d) 

to modify the volume requirement in 

Tier 1 of the Remove Volume Tiers 3

applicable to executions of orders in 

securities priced at or above $1.00 per 

share that remove liquidity from the 

Exchange (‘‘Removed Volume’’) and 

eliminate Remove Volume Tier 2 and 

the corresponding fee; and (2) amend 

Section 1)f) to modify the expiration 

month (referred to herein as the ‘‘sunset 

period’’) for the Step-Up Added 

Liquidity Rebate. The Exchange 

originally filed this proposal on 

November 30, 2023 (SR–PEARL–2023– 

67). On December 12, 2023, the 

Exchange withdrew SR–PEARL–2023– 

67 and refiled this proposal with minor 

changes. 

Remove Volume Tiers Table Changes 

Currently the Exchange charges a fee 

of $0.00295 per share for executions of 

Removed Volume on the Exchange in 

securities priced at or above $1.00 per 

share, except for executions of Removed 

Volume that execute at the midpoint for 

non-displayed Midpoint Peg Orders 4 in 

all Tapes.5 The Exchange also offers a 

tiered pricing structure in Section 1)d) 

of the Fee Schedule, Remove Volume 

Tiers, which provides reduced fees for 

executions of Removed Volume on the 

Exchange in securities priced at or 

above $1.00 per share based on certain 

volume thresholds achieved by Equity 

Members.6 To achieve the reduced fees 

of the Remove Volume Tiers, Equity 

Members must, (i) for Tier 1, achieve an 

average daily volume (‘‘ADV’’) 7 that is 

equal to or greater than 0.10% of the 

total consolidated volume (‘‘TCV’’) 8 and 

execute at least 1,000 shares of added 

liquidity during the month; and (ii) for 

Tier 2, achieve an ADV that is equal to 

or greater than 0.15% of TCV and 

execute at least 1,000 shares of added 

liquidity during the month. Equity 

Members that qualify for the discounted 

rates of the Remove Volume Tiers in a 

particular month will be charged the 

lower fee according to the threshold tier 

achieved instead of the standard 

Remove Volume fee of $0.00295 per 

share for executions of orders in 

securities priced at or above $1.00 per 

share in that particular month. 

The Exchange proposes to increase 

the ADV requirement in Remove 

Volume Tier 1 from 0.10% to now be 

0.20% of TCV. The Exchange also 

proposes to eliminate Remove Volume 

Tier 2 from the Fee Schedule. 

Accordingly, with the proposed 

changes, to achieve the reduced fee of 

Remove Volume Tier 1, Equity Members 

must achieve an ADV that is equal to or 

greater than 0.20% of TCV and execute 

at least 1,000 shares of added liquidity 

during the month. 

The purpose of this change is for 

business and competitive reasons. The 

Exchange notes that despite the modest 

increase in volume ADV requirement 

and elimination of Remove Volume Tier 

2, the Exchange’s reduced fee and 

requirements to achieve Remove 

Volume Tier 1 remain competitive with 

the fees to remove liquidity in securities 

priced at or above $1.00 per share 

charged by other equity exchanges, 

including other equity exchanges that 

also have reduced fees for meeting 

certain criteria for removing liquidity.9

Step-Up Added Liquidity Rebate 

The Exchange currently provides a 

standard rebate of ($0.0024) 10 per share 

for executions of orders in securities 

priced at or above $1.00 per share that 

add displayed liquidity to the Exchange. 

The Exchange also currently offers 

various volume-based tiers and 

incentives through which an Equity 

Member may receive an enhanced 

rebate for executions of orders that add 

displayed liquidity to the Exchange by 

achieving the specified criteria that 

corresponds to a particular tier/ 

incentive. 

In particular, the Exchange adopted a 

volume based pricing incentive, referred 

to as the ‘‘Step-Up Added Liquidity 

Rebate,’’ in which qualifying Equity 

Members receive an enhanced rebate of 

($0.0031) per share for executions of 

orders in securities priced at or above 

$1.00 per share that add displayed 

liquidity to the Exchange.11 The 

enhanced rebate provided by the StepUp Added Liquidity Rebate applies to 

Liquidity Indicator Codes AA (adds 

liquidity, displayed order, Tape A), AB 

(adds liquidity, displayed order, Tape B) 

and AC (adds liquidity, displayed order, 

Tape C).12

Equity Members qualify for the StepUp Added Liquidity Rebate by 

achieving a ‘‘Step-Up ADAV as a % of 

TCV’’ 13 of at least 0.03% over the 

baseline month of May 2023. Average 

daily added volume (‘‘ADAV’’) means 

average daily added volume calculated 

as the number of shares added per 

day.14 For example, if an Equity 

Member had an ADAV as a percent of 

TCV of 0.01% in May 2023, then that 

Equity Member has to achieve an ADAV 

as a percent of TCV equal to or greater 


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88188 Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 

15See Fee Schedule, Section 1)f). 

16The Exchange notes that at the end of the 

sunset period, the Step-Up Added Liquidity Rebate 

will no longer apply unless the Exchange files 

another 19b–4 Filing with the Commission to 

amend the criteria terms. 

17See MEMX Equities Fee Schedule, Liquidity 

Provision Tiers table and corresponding footnotes 

‘‘*’’ through ‘‘***’’, supra note 9. 

18See NYSE Arca Equities Fee Schedule, Section 

VII, Step Up Tiers table, footnote ‘‘(b),’’ available at 

https://www.nyse.com/publicdocs/nyse/markets/ 

nyse-arca/NYSE_Arca_Marketplace_Fees.pdf 

(providing enhanced rebate of $0.0036 per share on 

all LMM add volume if the ETP Holder, together 

with its affiliates, executes Tape B adding ADV that 

is at least 40% over the ETP Holder’s adding ADV 

in Q3 2019, as a percentage of Tape B CADV with 

no sunset provision); Cboe BYX Equities Fee 

Schedule, Step-Up Tier table, available at https:// 

www.cboe.com/us/equities/membership/fee_

schedule/byx/ (providing reduced fee if the member 

has a combined Step-Up Auction ADV and Step-Up 

ADAV from April 2022 greater than or equal to 

3,000,000 and the member has a combined Auction 

ADV and ADAV greater than or equal to 0.25% of 

TCV with no sunset provision). 

19 15 U.S.C. 78f(b). 

20 15 U.S.C. 78f(b)(4). 

21See the ‘‘Market Share’’ section of the 

Exchange’s website, available at https://

www.miaxglobal.com/ (last visited December 12, 

2023). 

22See id. 

23See Securities Exchange Act Release No. 51808 

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

than 0.04% in any subsequent month in 

order to qualify for the Step-Up Added 

Liquidity Rebate. Currently, the Step-Up 

Added Liquidity Rebate will expire no 

later than November 30, 2023.15

The Exchange now proposes to amend 

Section 1)f) of the Fee Schedule so that 

the criteria to qualify for the Step-Up 

Added Liquidity Rebate will expire no 

later than December 31, 2023.16 The 

Exchange will issue an alert to market 

participants should the Exchange 

determine that the Step-Up Added 

Liquidity Rebate will expire earlier than 

December 31, 2023, or if the Exchange 

determines to amend the criteria or rate 

applicable to the Step-Up Added 

Liquidity Rebate prior to the end of the 

sunset period. The Exchange notes that 

at least one other competing equities 

exchange provides a similar ‘‘sunset 

period’’ for one of its enhanced rebates 

subject to the same baseline month as 

the Exchange proposes.17

The Exchange does not propose any 

other changes to the qualifying criteria 

for Equity Members to receive the StepUp Added Liquidity Rebate. The 

Exchange also does not propose to 

amend the amount of the enhanced 

rebate of ($0.0031) per share for Equity 

Members that qualify for the Step-Up 

Added Liquidity Rebate. Finally, the 

Exchange does not propose to change 

the baseline ADAV of 0.00% of TCV 

used for firms that become Equity 

Members of the Exchange after May 

2023 for the purpose of the Step-Up 

Added Liquidity Rebate calculation. 

This change simply extends the 

sunset period from November 30, 2023 

until December 31, 2023. The Exchange 

believes that the Step-Up Added 

Liquidity Rebate will continue to 

provide an incentive for Equity 

Members to strive for higher ADAV on 

the Exchange (above their ADAV in the 

baseline month of May 2023) to receive 

the enhanced rebate for qualifying 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity to the Exchange. The 

Exchange believes that with the 

extension of the sunset period the StepUp Added Liquidity Rebate will 

continue to encourage the submission of 

additional displayed added liquidity to 

the Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market, which benefits 

all market participants and enhances the 

attractiveness of the Exchange as a 

trading venue. 

The purpose of this change is for 

business and competitive reasons. 

Several competing equities exchanges 

continue to use a baseline month’s 

volume for their members as the 

requirements for higher rebates/lower 

fees that is an older month than the 

Exchange’s baseline month of May 2023 

and many of those exchanges do not 

have a sunset provision.18 By extending 

the sunset period, the Exchange will be 

able to continue to compete with the 

enhanced rebates offered by competing 

exchanges that use older baseline 

months’ volume in their requirements 

for the higher rebates/lower fees. 

Implementation 

The proposed changes are 

immediately effective. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 19

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 20 in 

particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among its Equity Members and 

issuers and other persons using its 

facilities and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange operates in a highly 

fragmented and competitive market in 

which market participants can readily 

direct their order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

sixteen registered equities exchanges, 

and there are a number of alternative 

trading systems and other off-exchange 

venues, to which market participants 

may direct their order flow. Based on 

publicly available information, no single 

registered equities exchange had more 

than approximately 15.58% of the total 

market share of executed volume of 

equities trading for the month of 

November 2023.21 Thus, in such a lowconcentrated and highly competitive 

market, no single equities exchange 

possesses significant pricing power in 

the execution of order flow, and the 

Exchange represented approximately 

2.08% of the overall equities market 

share for the month of November 

2023.22 The Commission and the courts 

have repeatedly expressed their 

preference for competition over 

regulatory intervention in determining 

prices, products, and services in the 

securities markets. In Regulation NMS, 

the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and also recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 23

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue to 

reduce use of certain categories of 

products, in response to new or 

different pricing structures being 

introduced into the market. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees and rebates, and market 

participants can readily trade on 

competing venues if they deem pricing 

levels at those other venues to be more 

favorable. The Exchange believes the 

proposal reflects a reasonable and 

competitive pricing structure designed 

to continue to incentivize market 

participants to direct additional orders 

that add liquidity to the Exchange in 

securities priced at or above $1.00 per 

share, which the Exchange believes 

would deepen liquidity and promote 

market quality on the Exchange to the 

benefit of all market participants. 

The Exchange notes that volumebased incentives and discounts (such as 

tiers) have been widely adopted by 

exchanges (including the Exchange), 

and believes they are reasonable, 

equitable and not unfairly 

discriminatory because they are 

available to all Equity Members on an 

equal basis, provide additional benefits 

or discounts that are reasonably related 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 88189 

24See supra note 9. 25See supra note 18. 26See supra note 9. 

to the value of an exchange’s market 

quality associated with higher levels of 

market activity (such as higher levels of 

liquidity provision and/or growth 

patterns), and the introduction of higher 

volumes of orders into the price and 

volume discovery process. 

The Exchange believes its proposal to 

increase the ADV requirement in 

Remove Volume Tier 1 and eliminate 

Remove Volume Tier 2 from the Fee 

Schedule is reasonable, equitably 

allocated and not unfairly 

discriminatory because the reduced fee 

for Remove Volume Tier 1 will continue 

to be available to all Equity Members on 

an equal basis, and is reasonably 

designed to encourage Equity Members 

to maintain or increase their order flow. 

The Exchange believes that even with 

this proposal, the reduced fee of 

Remove Volume Tier 1 will continue to 

promote price discovery, enhance 

liquidity and market quality, and 

contribute to a more robust and wellbalanced market ecosystem on the 

Exchange to the benefit of all Equity 

Members and market participants. 

Further, the Exchange believes its 

proposal to increase the ADV 

requirement in Remove Volume Tier 1 

from 0.10% to now be 0.20% of TCV 

and eliminate Remove Volume Tier 2 is 

reasonable, equitably allocated and not 

unfairly discriminatory because, despite 

the modest increase in ADV 

requirement and elimination of Remove 

Volume Tier 2, the Exchange’s reduced 

fee and requirements to achieve Remove 

Volume Tier 1 remain competitive with 

the fees to remove liquidity in securities 

priced at or above $1.00 per share 

charged by other equity exchanges, 

including other equity exchanges that 

also have reduced fees for meeting 

certain criteria for removing liquidity.24

The Exchange believes that the StepUp Added Liquidity Rebate, as modified 

by the proposed change to the sunset 

period, is reasonable, equitable and not 

unfairly discriminatory as the Step-Up 

Added Liquidity Rebate will continue to 

be available to all Equity Members on an 

equal basis, and is reasonably designed 

to encourage Equity Members to 

maintain or increase their order flow in 

liquidity-adding volume. The Exchange 

believes this will continue to promote 

price discovery, enhance liquidity and 

market quality, and contribute to a more 

robust and well-balanced market 

ecosystem on the Exchange to the 

benefit of all Equity Members and 

market participants. 

In addition, the Exchange believes its 

proposal is reasonable because several 

competing equities exchanges continue 

to use a baseline month’s volume for 

their members as the requirement for 

higher rebates/lower fees that is an older 

month than the Exchange’s baseline 

month of May 2023 and many of those 

exchanges do not have a sunset 

provision.25 By extending the sunset 

period, the Exchange will be able to 

continue to compete with the enhanced 

rebates offered by competing exchanges 

that use older baseline months’ volume 

in their requirements for the higher 

rebates/lower fees. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to amend the sunset 

period in the Fee Schedule for the StepUp Added Liquidity Rebate because it 

will provide clarity to Equity Members 

that, unless the Exchange determines to 

amend or otherwise modify the Step-Up 

Added Liquidity Rebate, the Step-Up 

Added Liquidity Rebate will expire at 

the end of the sunset period. This will 

allow Equity Members to take into 

account that the enhanced rebate 

provided for by the Step-Up Added 

Liquidity Rebate may be discontinued at 

the end of sunset period unless the 

Exchange announces otherwise and files 

a revised proposal with the 

Commission. The Exchange further 

notes that it will issue an alert to market 

participants should the Exchange 

determine that the Step-Up Added 

Liquidity Rebate will expire earlier than 

December 31, 2023, or if the Exchange 

determines to amend the criteria or rate 

applicable to the Step-Up Added 

Liquidity Rebate prior to the end of the 

sunset period. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes that the 

proposed change will not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intramarket Competition 

The Exchange believes that its 

proposal will not impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes the Step-Up Added 

Liquidity Rebate, as modified by this 

proposal, will continue to incentivize 

Equity Members to submit additional 

orders that add liquidity to the 

Exchange, thereby contributing to a 

deeper and more liquid market and 

promoting price discovery and market 

quality on the Exchange to the benefit 

of all market participants and enhancing 

the attractiveness of the Exchange as a 

trading venue, which the Exchange 

believes, in turn, would continue to 

encourage market participants to direct 

additional order flow to the Exchange. 

Greater liquidity benefits all Equity 

Members by providing more trading 

opportunities and encourages Equity 

Members to send additional orders to 

the Exchange, thereby contributing to 

robust levels of liquidity, which benefits 

all market participants. As described 

above, the Exchange believes its 

proposal to increase the ADV 

requirement in Remove Volume Tier 1 

from 0.10% to now be 0.20% of TCV 

and eliminate Remove Volume Tier 2 

allows the Exchange’s reduced Removed 

Volume fee to remain competitive with 

the fees to remove liquidity in securities 

priced at or above $1.00 per share 

charged by other equity exchanges, 

including other equity exchanges that 

also have reduced fees for meeting 

certain criteria for removing liquidity.26

Similarly, the opportunity to qualify for 

the proposed new Step-Up Added 

Liquidity Rebate, and thus receive the 

proposed rebate for qualifying 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed volume will continue to be 

available to all Equity Members that 

meet the associated volume 

requirement, and the Exchange believes 

the proposed extension of the sunset 

period is reasonably related to the 

enhanced market quality that the StepUp Added Liquidity Rebate is designed 

to promote. Accordingly, the Exchange 

does not believe the proposed changes 

would impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. 

The Exchange believes its proposal to 

extend the sunset period in the Fee 

Schedule for the Step-Up Added 

Liquidity Rebate will not impose any 

burden on intramarket competition not 

necessary or appropriate in furtherance 

of the purposes of the Act because it 

will provide clarity to Equity Members 

that, unless the Exchange determines to 

amend or otherwise modify the Step-Up 

Added Liquidity Rebate, the Step-Up 

Added Liquidity Rebate will be 

discontinued at the end of the sunset 

period. This will allow Equity Members 

to take into account that the enhanced 

rebate provided for by the Step-Up 

Added Liquidity Rebate may be 

discontinued at the end of the sunset 

period unless the Exchange announces 

otherwise. The Exchange further notes 

that it will issue an alert to market 

participants should the Exchange 

determine that the Step-Up Added 


ddrumheller on DSK120RN23PROD with NOTICES1
88190 Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 

27See supra note 21. 

28See id. 

29See supra note 17. 

30See Securities Exchange Act Release No. 51808 

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

31See NetCoalition v. SEC, 615 F.3d 525, 539 

(D.C. Cir. 2010) (quoting Securities Exchange Act 

Release No. 59039 (December 2, 2008), 73 FR 

74770, 74782–83 (December 9, 2008) (SR–NYSE– 

2006–21)). 

32 15 U.S.C. 78s(b)(3)(A)(ii). 

33 17 CFR 240.19b–4(f)(2). 

Liquidity Rebate will expire earlier than 

December 31, 2023, or if the Exchange 

determines to amend the criteria or rate 

applicable to the Step-Up Added 

Liquidity Rebate prior to the end of the 

sunset period. 

Intermarket Competition 

The Exchange believes its proposal 

will benefit competition, and the 

Exchange notes that it operates in a 

highly competitive market. Equity 

Members have numerous alternative 

venues they may participate on and 

direct their order flow to, including 

fifteen other equities exchanges and 

numerous alternative trading systems 

and other off-exchange venues. As noted 

above, based on publicly available 

information, no single registered 

equities exchange had more than 

approximately 15.58% of the total 

market share of executed volume of 

equities trading for the month of 

November 2023.27 Thus, in such a lowconcentrated and highly competitive 

market, no single equities exchange 

possesses significant pricing power in 

the execution of order flow, and the 

Exchange represented approximately 

2.08% of the overall market for the 

month of November 2023.28 Moreover, 

the Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow in response to new 

or different pricing structures being 

introduced to the market. Accordingly, 

competitive forces constrain the 

Exchange’s transaction fees and rebates 

generally, including with respect to the 

criteria for Equity Members to achieve 

Remove Volume Tier 1 and the Step-Up 

Added Liquidity Rebate, and market 

participants can readily choose to send 

their orders to other exchanges and offexchange venues if they deem rebate 

criteria at those other venues to be more 

favorable. 

As described above, the proposed 

changes represent a competitive 

proposal through which the Exchange is 

seeking to continue to encourage 

additional order flow to the Exchange 

through a volume-based incentive that 

is comparable to the criteria for volumebased incentives adopted by at least one 

other competing exchange that has a 

similar sunset period for a specific 

enhanced rebate that adds liquidity to 

that market.29 Accordingly, the 

Exchange believes that its proposal 

would not burden, but rather promote, 

intermarket competition by enabling it 

to better compete with other exchanges 

that offer similar pricing incentives to 

market participants that achieve certain 

volume criteria and thresholds. 

Additionally, the Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 30 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. circuit 

stated: ‘‘[n]o one disputes that 

competition for order flow is ‘fierce.’ 

. . . As the SEC explained, ‘[i]n the U.S. 

national market system, buyers and 

sellers of securities, and the brokerdealers that act as their routing agents, 

have a wide range of choices of where 

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

exchange can afford to take its market 

share percentages for granted’ because 

‘no exchange possesses a monopoly, 

regulatory or otherwise, in the execution 

of order flow from broker dealers’ 

. . .’’.31 Accordingly, the Exchange does 

not believe its proposed pricing changes 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act,32 and Rule 

19b–4(f)(2) 33 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

PEARL–2023–69 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–PEARL–2023–69. 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 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 88191 

34 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed 

pricing changes on November 28, 2023 (SR–Phlx– 

2023–52). On December 5, 2023, the Exchange 

withdrew that filing and submitted this filing. 

4 ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an 

interface that allows Lead Market Makers, 

Streaming Quote Traders (‘‘SQTs’’) and Remote 

Streaming Quote Traders (‘‘RSQTs’’) to connect, 

send, and receive messages related to quotes, 

Immediate-or-Cancel Orders, and auction responses 

into and from the Exchange. Features include the 

following: (1) options symbol directory messages 

(e.g., underlying and complex instruments); (2) 

system event messages (e.g., start of trading hours 

messages and start of opening); (3) trading action 

messages (e.g., halts and resumes); (4) execution 

messages; (5) quote messages; (6) Immediate-orCancel Order messages; (7) risk protection triggers 

and purge notifications; (8) opening imbalance 

messages; (9) auction notifications; and (10) auction 

responses. The SQF Purge Interface only receives 

and notifies of purge requests from the Lead Market 

Maker, SQT or RSQT. Lead Market Makers, SQTs 

and RSQTs may only enter interest into SQF in 

their assigned options series. Immediate-or-Cancel 

Orders entered into SQF are not subject to the Order 

Price Protection, the Market Order Spread 

Protection, or Size Limitation in Options 3, Section 

15(a)(1), (a)(2) and (b)(2), respectively. See Options 

3, Section 7(a)(i)(B). 

5An active port shall mean that the port was 

utilized to submit a quote to the System during a 

given month. See Options 7, Section 9, B. 

6The member organization is required to provide 

the Exchange with written notification of the 

transition and all additional ports, provided at no 

cost, will be removed at the end of the ten business 

days. See Options 7, Section 9, B. 

7The Exchange also proposes a technical 

amendment to add a comma between ‘‘per port’’ 

and ‘‘per month’’ for the SQF Port Fee in Options 

7, Section 9, B. 

8For example, a Phlx Market Maker may desire 

to utilize multiple SQF Ports for accounting 

purposes, to measure performance, for regulatory 

reasons or other determinations that are specific to 

that member organization. 

9Phlx Market Makers have various regulatory 

requirements as provided for in Options 2, Section 

4. Additionally, Phlx Market Makers have certain 

quoting requirements with respect to their assigned 

options series as provided in Options 2, Section 5. 

SQF Ports are the only quoting protocol available 

on Phlx and only Market Makers may utilize SQF 

Ports. 

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

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

submissions should refer to file number 

SR–PEARL–2023–69 and should be 

submitted on or before January 10, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27917 Filed 12–19–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99186; File No. SR–Phlx– 

2023–56] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Options 7, 

Section 9 

December 14, 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 December 

5, 2023, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Rules at Options 7, Section 9, Other 

Member Fees.3

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

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 

Options 7, Section 9, B, Port Fees, to 

increase the SQF Port 4 Fee cap. 

Today, Phlx assesses $1,250 per port, 

per month up to a maximum of $42,000 

per month for an SQF Port that receives 

inbound quotes at any time within that 

month.5 Today, member organizations 

are not assessed an active SQF Port Fee 

for additional ports acquired for ten 

business days for the purpose of 

transitioning technology.6 The Exchange 

proposes to add the words ‘‘active port’’ 

in parenthesis at the end of the 

description of SQF Port Fee to tie the 

definition of an active port to the 

description for the port.7

At this time, the Exchange proposes to 

increase the maximum SQF Port Fee of 

$42,000 per month to $50,000 per 

month. The Exchange is not amending 

the $1,250 per port, per month fee. As 

is the case today, the Exchange would 

not assess a member organization an 

SQF Port Fee beyond the monthly cap 

once the member organization has 

exceeded the monthly cap for the 

respective month. Despite increasing the 

maximum SQF Port Fee from $42,000 

per month to $50,000 per month, the 

Exchange will continue to offer member 

organizations the opportunity to cap 

their SQF Port Fees so that they would 

not be assessed these fees beyond the 

cap. A Phlx Market Maker requires only 

one SQF Port to submit quotes in its 

assigned options series into Phlx. A 

Phlx Market Maker may submit all 

quotes through one SQF Port. While a 

Phlx Market Maker may elect to obtain 

multiple SQF Ports to organize its 

business,8 only one SQF Port is 

necessary for a Phlx Market Maker to 

fulfill its regulatory quoting 

obligations.9

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,10 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,11 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees, and other charges 

among members and issuers and other 

persons using any facility, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The proposed pricing change to 

increase the maximum SQF Port Fee is 

reasonable in several respects. As a 

threshold matter, the Exchange is 

subject to significant competitive forces 

in the market for options securities 

transaction services that constrain its 

pricing determinations in that market. 

The fact that this market is competitive 

has long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 


ddrumheller on DSK120RN23PROD with NOTICES1