[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Notices]
[Pages 3488-3493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00843]



[[Page 3488]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99318; File No. SR-PEARL-2023-73]


Self-Regulatory Organizations; MIAX Pearl, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX 
Pearl Equities Fee Schedule To Expand the NBBO Setter Plus Program and 
Remove the Step-Up Added Liquidity Rebate

January 11, 2024.
    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 29, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the fee schedule (the 
``Fee Schedule'') applicable to MIAX Pearl Equities, an equities 
trading facility of the Exchange.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings, at MIAX Pearl's principal office, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to: (i) adopt two 
new tiers and corresponding rebates for the NBBO Setter Plus Program 
(referred to in this filing as the ``NBBO Program''); (ii) remove the 
Step-Up Added Liquidity Rebate table and associated rebate; \3\ and 
(iii) make corresponding changes to the Definitions section and NBBO 
Setter Plus Table to account for the removal of the Step-Up Added 
Liquidity Rebate.
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    \3\ See Fee Schedule, Section 1(f).
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Background--NBBO Program and Step-Up Added Liquidity Rebate
    In general, the NBBO Program provides enhanced rebates for Equity 
Members \4\ that add displayed liquidity (``Added Displayed Volume'') 
in securities priced at or above $1.00 per share in all Tapes based on 
increasing volume thresholds and increasing market quality levels 
(described below), and provides an additive rebate \5\ applied to 
orders that set the NBB or NBO \6\ upon entry.\7\ The NBBO Program was 
implemented beginning September 1, 2023.\8\
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    \4\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
    \5\ The Exchange does not propose to amend the NBBO Setter 
Additive Rebate, which is an additive rebate of ($0.0003) per share 
for executions of orders in securities priced at or above $1.00 per 
share that set the NBB or NBO on MIAX Pearl Equities with a minimum 
size of a round lot. See Fee Schedule, Section 1(c).
    \6\ With respect to the trading of equity securities, the term 
``NBB'' shall mean the national best bid, the term ``NBO'' shall 
mean the national best offer, and the term ``NBBO'' shall mean the 
national best bid and offer. See Exchange Rule 1901.
    \7\ See Fee Schedule, Section 1(c).
    \8\ See Securities Exchange Act Release No. 98472 (September 21, 
2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-2023-45) (Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the MIAX Pearl Equities Fee Schedule To Adopt the NBBO Setter 
Plus Program and Eliminate Certain Other Rebates).
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    Pursuant to the NBBO Setter Plus Table in Section 1(c) of the Fee 
Schedule, the NBBO Program provides four volume tiers enhanced by three 
market quality levels to provide increasing rebates in this segment. 
The four volume tiers are achievable by greater volume from the best of 
three alternative methods. The three market quality levels are 
achievable by greater NBBO participation in a minimum number of 
specific securities.
    MIAX Pearl Equities first determines the applicable NBBO Program 
tier based on three different volume calculation methods. The three 
volume-based methods to determine the Equity Member's tier for purposes 
of the NBBO Program are calculated in parallel in each month, and each 
Equity Member receives the highest tier achieved from any of the three 
methods each month. All three volume calculation methods are based on 
an Equity Member's respective ADAV \9\ or NBBO Set Volume or ADV, each 
as a percent of industry TCV \10\ as the denominator.
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    \9\ ``ADAV'' means average daily added volume calculated as the 
number of shares added per day and ``ADV'' means average daily 
volume calculated as the number of shares added or removed, 
combined, per day. ADAV and ADV are calculated on a monthly basis. 
``NBBO Set Volume'' means the ADAV in all securities of an Equity 
Member that sets the NBB or NBO on MIAX Pearl Equities. The Exchange 
excludes from its calculation of ADAV, ADV, and NBBO Set Volume 
shares added or removed on any day that the Exchange's system 
experiences a disruption that lasts for more than 60 minutes during 
regular trading hours, on any day with a scheduled early market 
close, and on the ``Russell Reconstitution Day'' (typically the last 
Friday in June). Routed shares are not included in the ADAV or ADV 
calculation. See the Definitions section of the Fee Schedule.
    \10\ ``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.
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    Under volume calculation Method 1, the Exchange provides tiered 
rebates based on an Equity Member's ADAV as a percentage of TCV. An 
Equity Member qualifies for the base rebates in Tier 1 for executions 
of orders in securities priced at or above $1.00 per share for Added 
Displayed Volume across all Tapes by achieving an ADAV of at least 
0.00% and less than 0.08% of TCV. An Equity Member qualifies for the 
enhanced rebates in Tier 2 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an ADAV of at least 0.08% and less than 0.25% of 
TCV. An Equity Member qualifies for the enhanced rebates in Tier 3 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADAV of at 
least 0.25% and less than 0.40% of TCV. Finally, an Equity Member 
qualifies for the enhanced rebates in Tier 4 for executions of orders 
in securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an ADAV of at least 0.40% of TCV.
    Under volume calculation Method 2, the Exchange provides tiered 
rebates

[[Page 3489]]

based on an Equity Member's NBBO Set Volume as a percentage of TCV. 
Under volume calculation Method 2, an Equity Member qualifies for the 
base rebates in Tier 1 for executions of orders in securities priced at 
or above $1.00 per share for Added Displayed Volume across all Tapes by 
achieving an NBBO Set Volume of at least 0.00% and less than 0.02% of 
TCV. An Equity Member qualifies for the enhanced rebates in Tier 2 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an NBBO Set 
Volume of at least 0.02% and less than 0.03% of TCV. An Equity Member 
qualifies for the enhanced rebates in Tier 3 for executions of orders 
in securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an NBBO Set Volume of at least 
0.03% and less than 0.08% of TCV. An Equity Member qualifies for the 
enhanced rebates in Tier 4 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an NBBO Set Volume of at least 0.08% of TCV.
    Under volume calculation Method 3, the Exchange provides tiered 
rebates based on an Equity Member's ADV as a percentage of TCV. An 
Equity Member qualifies for the base rebates in Tier 1 for executions 
of orders in securities priced at or above $1.00 per share for Added 
Displayed Volume across all Tapes by achieving an ADV of at least 0.00% 
and less than 0.20% of TCV. An Equity Member qualifies for the enhanced 
rebates in Tier 2 for executions of orders in securities priced at or 
above $1.00 per share for Added Displayed Volume across all Tapes by 
achieving an ADV of at least 0.20% and less than 0.60% of TCV. An 
Equity Member qualifies for the enhanced rebates in Tier 3 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADV of at 
least 0.60% and less than 1.00% of TCV. An Equity Member qualifies for 
the enhanced rebates in Tier 4 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an ADV of at least 1.00% of TCV.
    After the volume calculation is performed to determine highest tier 
achieved by the Equity Member, the applicable rebate is calculated 
based on two different measurements based on the Equity Member's 
participation at the NBBO on the Exchange in certain securities 
(referenced below).
    The Exchange provides one column of base rebates (referred to in 
the NBBO Program table as ``Level A'') and two columns of enhanced 
rebates (referred to in the NBBO Program table as ``Level B'' and 
``Level C''),\11\ depending on the Equity Member's Percent Time at NBBO 
\12\ on MIAX Pearl Equities in a certain amount of specified securities 
(``Market Quality Securities'' or ``MQ Securities'').\13\ The NBBO 
Setter Plus Table specifies the percentage of time that the Equity 
Member must be at the NBBO on MIAX Pearl Equities in at least 200 
symbols out of the full list of 1,000 MQ Securities (which symbols may 
vary from time to time based on market conditions). The list of MQ 
Securities is generally based on the top multi-listed 1,000 symbols by 
ADV across all U.S. securities exchanges. The list of MQ Securities is 
updated monthly by the Exchange and published on the Exchange's 
website.\14\
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    \11\ For the purpose of determining qualification for the 
rebates described in Level B and Level C of the Market Quality Tier 
columns in the NBBO Setter Plus Program, the Exchange will exclude 
from its calculation: (1) any trading day that the Exchange's system 
experiences a disruption that lasts for more than 60 minutes during 
regular trading hours; (2) any day with a scheduled early market 
close; and (3) the ``Russell Reconstitution Day'' (typically the 
last Friday in June). See the Definitions section of the Fee 
Schedule.
    \12\ ``Percent Time at NBBO'' means the aggregate of the 
percentage of time during regular trading hours where a Member has a 
displayed order of at least one round lot at the national best bid 
(``NBB'') or national best offer (``NBO''). See the Definitions 
section of the Fee Schedule.
    \13\ ``Market Quality Securities'' or ``MQ Securities'' shall 
mean a list of securities designated as such, that are used for the 
purposes of qualifying for the rebates described in Level B and 
Level C of the Market Quality Tier columns in the NBBO Setter Plus 
Program. The universe of these securities will be determined by the 
Exchange and published on the Exchange's website. See the 
Definitions section of the Fee Schedule.
    \14\ See MIAX Pearl Equities Exchange--Market Quality Securities 
(MQ Securities) List, effective December 1 through December 29, 
2023, available at https://www.miaxglobal.com/markets/us-equities/pearl-equities/fees (last visited December 21, 2023).
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    The base rebates (``Level A'') are as follows: ($0.00240) per share 
in Tier 1; ($0.00310) per share in Tier 2; ($0.00345) per share in Tier 
3; and ($0.00350) per share in Tier 4. Under Level B, the Exchange 
provides enhanced rebates for executions of orders in securities priced 
at or above $1.00 per share for Added Displayed Volume across all Tapes 
if the Equity Member's Percent Time at NBBO is at least 25% and less 
than 50% in at least 200 MQ Securities per trading day during the 
month. The Level B rebates are as follows: ($0.00250) per share in Tier 
1; ($0.00315) per share in Tier 2; ($0.00350) per share in Tier 3; and 
($0.00355) per share in Tier 4. Under Level C, the Exchange provides 
enhanced rebates for executions of orders in securities priced at or 
above $1.00 per share for Added Displayed Volume across all Tapes if 
the Equity Member's Percent Time at NBBO is at least 50% in at least 
200 MQ Securities per trading day during the month. The Level C rebates 
are as follows: ($0.00260) per share in Tier 1; ($0.00320) per share in 
Tier 2; ($0.00355) per share in Tier 3; and ($0.00360) per share in 
Tier 4.
    The Exchange also provides a volume-based pricing incentive, 
referred to as the ``Step-Up Added Liquidity Rebate'' that is separate 
from the NBBO Program, 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.\15\ Equity Members qualify for the Step-Up 
Added Liquidity Rebate by achieving a ``Step-Up ADAV as a % of TCV'' 
\16\ of at least 0.03% over the baseline month of May 2023. The Step-Up 
Added Liquidity Rebate is currently set to expire on December 31, 
2023.\17\
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    \15\ See Securities Exchange Act Release No. 95614 (August 26, 
2022), 87 FR 53813 (September 1, 2022) (SR-PEARL-2022-33). The 
enhanced rebate provided by the Step-Up 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). See Fee Schedule, Section 
1(f), Step-Up Added Liquidity Rebate, and Section 1(b), Liquidity 
Indicator Codes and Associated Fees.
    \16\ The 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.
    \17\ See Fee Schedule, Section 1(f).
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Proposal To Adopt Two New Tiers and Corresponding Rebates for the NBBO 
Program
    The Exchange proposes to amend the NBBO Setter Plus Table in 
Section 1(c) of the Fee Schedule to adopt two new tiers and 
corresponding rebates for the NBBO Program. The two new tiers will 
result in the NBBO Program now offering six different tiers pursuant to 
which Equity Members are able to achieve higher rebates based on the 
three different volume calculation methods.
    The Exchange proposes that under volume calculation Method 1, an 
Equity Member will now qualify for the base rebates in Tier 1 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADAV of at 
least 0.00% and less than 0.035% of TCV. An Equity Member will qualify 
for the enhanced rebates in Tier 2 for

[[Page 3490]]

executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADAV of at 
least 0.035% and less than 0.05% of TCV. An Equity Member will qualify 
for the enhanced rebates in Tier 3 for executions of orders in 
securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an ADAV of at least 0.05% and less 
than 0.08% of TCV. An Equity Member will qualify for the enhanced 
rebates in Tier 4 for executions of orders in securities priced at or 
above $1.00 per share for Added Displayed Volume across all Tapes by 
achieving an ADAV of at least 0.08% and less than 0.25% of TCV. An 
Equity Member will qualify for the enhanced rebates in Tier 5 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADAV of at 
least 0.25% and less than 0.40% of TCV. Finally, an Equity Member will 
qualify for the enhanced rebates in Tier 6 for executions of orders in 
securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an ADAV of at least 0.40% of TCV.
    The Exchange proposes that under volume calculation Method 2, an 
Equity Member will now qualify for the base rebates in Tier 1 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an NBBO Set 
Volume of at least 0.00% and less than 0.01% of TCV. An Equity Member 
will qualify for the enhanced rebates in Tier 2 for executions of 
orders in securities priced at or above $1.00 per share for Added 
Displayed Volume across all Tapes by achieving an NBBO Set Volume of at 
least 0.01% and less than 0.015% of TCV. An Equity Member will qualify 
for the enhanced rebates in Tier 3 for executions of orders in 
securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an NBBO Set Volume of at least 
0.015% and less than 0.02% of TCV. An Equity Member will qualify for 
the enhanced rebates in Tier 4 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an NBBO Set Volume of at least 0.02% and less 
than 0.03% of TCV. An Equity Member will qualify for the enhanced 
rebates in Tier 5 for executions of orders in securities priced at or 
above $1.00 per share for Added Displayed Volume across all Tapes by 
achieving an NBBO Set Volume of at least 0.03% and less than 0.08% of 
TCV. Finally, an Equity Member will qualify for the enhanced rebates in 
Tier 6 for executions of orders in securities priced at or above $1.00 
per share for Added Displayed Volume across all Tapes by achieving an 
NBBO Set Volume of at least 0.08% of TCV.
    The Exchange proposes that under volume calculation Method 3, an 
Equity Member will now qualify for the base rebates in Tier 1 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADV of at 
least 0.00% and less than 0.15% of TCV. An Equity Member will qualify 
for the enhanced rebates in Tier 2 for executions of orders in 
securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an ADV of at least 0.15% and less 
than 0.18% of TCV. An Equity Member will qualify for the enhanced 
rebates in Tier 3 for executions of orders in securities priced at or 
above $1.00 per share for Added Displayed Volume across all Tapes by 
achieving an ADV of at least 0.18% and less than 0.20% of TCV. An 
Equity Member will qualify for the enhanced rebates in Tier 4 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADV of at 
least 0.20% and less than 0.60% of TCV. An Equity Member will qualify 
for the enhanced rebates in Tier 5 for executions of orders in 
securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an ADV of at least 0.60% and less 
than 1.00% of TCV. Finally, an Equity Member will qualify for the 
enhanced rebates in Tier 6 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an ADV of at least 1.00% of TCV.
    With the addition of two tiers to the NBBO Program, the Exchange 
proposes to amend the corresponding rebates for each tier, described 
below. The Exchange proposes that the base rebates (``Level A'') will 
now be as follows: ($0.00240) per share in Tier 1; ($0.00290) per share 
in Tier 2; ($0.00300) per share in Tier 3; ($0.00310) per share in Tier 
4; ($0.00345) per share in Tier 5; and ($0.00350) per share in Tier 6.
    Under Level B, the Exchange will continue to provide enhanced 
rebates for executions of orders in securities priced at or above $1.00 
per share for Added Displayed Volume across all Tapes if the Equity 
Member's Percent Time at NBBO is at least 25% and less than 50% in at 
least 200 MQ Securities per trading day during the month. The Exchange 
proposes that the Level B rebates will be as follows: ($0.00250) per 
share in Tier 1; ($0.00295) per share in Tier 2; ($0.00305) per share 
in Tier 3; ($0.00315) per share in Tier 4; ($0.00350) per share in Tier 
5; and ($0.00355) per share in Tier 6.
    Under Level C, the Exchange will continue to provide enhanced 
rebates for executions of orders in securities priced at or above $1.00 
per share for Added Displayed Volume across all Tapes if the Equity 
Member's Percent Time at NBBO is at least 50% in at least 200 MQ 
Securities per trading day during the month. The Exchange proposes that 
the Level C rebates will be as follows: ($0.00260) per share in Tier 1; 
($0.00300) per share in Tier 2; ($0.00310) per share in Tier 3; 
($0.00320) per share in Tier 4; ($0.00355) per share in Tier 5; and 
($0.00360) per share in Tier 6.
    The purpose of adding two new tiers and corresponding rebates to 
the NBBO Program is for business and competitive reasons in light of 
recent volume growth on the Exchange. The Exchange notes that with the 
addition of two interim tiers to the NBBO Program, the base rebates, 
enhanced rebates and volume requirements of the NBBO Program remain 
competitive with, or better than, the rebates and volume requirements 
provided by other exchanges for executions of orders in securities 
priced at or above $1.00 per share that add displayed liquidity to 
those exchanges.\18\
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    \18\ See Cboe BZX Equities Fee Schedule, NBBO Setter section and 
Add/Remove Volume Tiers section, available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ (providing a base rebate of 
($0.0016) per share and a top displayed liquidity tier rebate of 
($0.0031) per share for executions of added displayed volume in 
securities priced at or above $1.00 per share, so long as the member 
meets all three volume requirements for the enhanced rebate); see 
also NYSE Arca Equities Fee Schedule, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (providing standard rebates of 
$0.0020 per share (Tapes A and C) and $0.0016 per share (Tape B) for 
adding displayed liquidity in securities priced at or above $1.00 
per share).
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Proposal To Remove the Step-Up Added Liquidity Rebate
    The Exchange proposes to remove the Step-Up Added Liquidity Rebate 
table and associated rebate in Section 1(f) of the Fee Schedule. The 
Step-Up Added Liquidity Rebate is currently set to expire on December 
31, 2023, as set forth in the Fee Schedule. The Exchange has determined 
to not extend or modify the Step-Up Added Liquidity Rebate. 
Accordingly, the Exchange proposes to remove the Step-Up Added 
Liquidity Rebate table and associated rebate from the Fee Schedule. The 
purpose of this

[[Page 3491]]

change is to provide clarity within the Fee Schedule that the expiring 
Step-Up Added Liquidity Rebate will no longer be available after 
December 31, 2023. The Exchange believes that the benefits of the NBBO 
Program--three volume calculation methods, higher base (Level A) 
rebates, and two market quality levels based on participation at the 
NBBO in order to obtain enhanced rebates--provide more opportunities 
for Equity Members to achieve higher rebates and will encourage the 
submission of increased order flow. The Exchange believes this will, in 
turn, benefit all Equity Members by providing greater execution 
opportunities on the Exchange and contribute to a deeper, more liquid 
market, to the benefit of all investors and market participants.
Corresponding Changes to the Fee Schedule
    As mentioned above, with the removal of Step-Up Added Liquidity 
Rebate table and associated rebate, the Exchange proposes to amend the 
Definitions section of the Fee Schedule to delete the defined term 
``Step-Up ADAV as a % of TCV.'' The Exchange also proposes to amend the 
NBBO Setter Plus Table in Section 1(c) of the Fee Schedule to delete 
footnote #4, which refers to the Step-Up Added Liquidity Rebate. The 
purpose of these changes is to provide consistency and clarity in the 
Fee Schedule in light of the proposed removal of the Step-Up Added 
Liquidity Rebate table and associated rebate.
Implementation
    The proposed changes are effective beginning January 1, 2024.
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 provides for the equitable allocation of 
reasonable dues, fees and other charges among its Equity Members and 
issuers and other persons using its facilities. Additionally, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \21\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers or dealers.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4).
    \21\ 15 U.S.C. 78f(b)(5).
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    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 15-16% of the total 
market share of executed volume of equities trading for the month of 
November 2023.\22\ Thus, in such a low-concentrated 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 share for the 
month of November 2023. 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\
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    \22\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/ (last visited December 21, 
2023).
    \23\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37499 (June 29, 2005).
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue or reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, and market participants 
can readily trade on competing venues if they deem pricing levels at 
those other venues to be more favorable. The Exchange believes the 
proposal reflects a reasonable and competitive pricing structure 
designed to incentivize market participants to direct their order flow 
to the Exchange, which the Exchange believes would enhance liquidity 
and market quality in both a broad manner and in a targeted manner with 
respect to the MQ Securities and the modified NBBO Program.
Proposal To Adopt Two New Tiers and Corresponding Rebates for the NBBO 
Program
    The Exchange believes that the proposal to add two new tiers to the 
NBBO Program, in general, provides a reasonable means to continue to 
encourage Equity Members to not only increase their order flow to the 
Exchange but also to contribute to price discovery and market quality 
on the Exchange by submitting aggressively priced displayed liquidity 
in securities priced at or above $1.00 per share. The Exchange believes 
that the NBBO Program, as modified with this proposal, continues to be 
equitable and not unfairly discriminatory because it is open to all 
Equity Members on an equal basis and provides enhanced rebates that are 
reasonably related to the value of the Exchange's market quality 
associated with greater order flow by Equity Members that set the NBBO, 
and the introduction of higher volumes of orders into the price and 
volume discovery process. The Exchange believes the proposal to add two 
new tiers to the NBBO Program is equitable and not unfairly 
discriminatory because it is designed to incentivize the entry of 
aggressively priced displayed liquidity that will create tighter 
spreads, thereby promoting price discovery and market quality on the 
Exchange to the benefit of all Equity Members and public investors.
    The Exchange believes that its proposal to add two new tiers and 
corresponding rebates to the NBBO Program is reasonable and not 
unfairly discriminatory in light of recent volume growth on the 
Exchange. The Exchange notes that with the addition of two interim 
tiers to the NBBO Program, the base rebates, enhanced rebates and 
volume requirements of the NBBO Program remain competitive with, or 
better than, the rebates and volume requirements provided by other 
exchanges for executions of orders in securities priced at or above 
$1.00 per share that add displayed liquidity to those exchanges.\24\
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    \24\ See supra note 18.
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Proposal To Remove the Step-Up Added Liquidity Rebate Table and 
Associated Rebate
    The Exchange believes its proposal to remove the Step-Up Added 
Liquidity Rebate table and associated rebate in Section 1(f) of the Fee 
Schedule is reasonable, equitably allocated and not unfairly 
discriminatory. The Exchange adopted the Step-Up Added Liquidity Rebate 
for the purpose of encouraging

[[Page 3492]]

Equity Members to increase their orders that add liquidity on the 
Exchange, thereby improving its market quality with respect to such 
securities and contributing to a more robust and well-balanced market 
ecosystem on the Exchange to the benefit of all Equity Members.
    Further, the Step-Up Added Liquidity Rebate is currently set to 
expire on December 31, 2023, as set forth in the Fee Schedule. The 
Exchange has determined to not extend or modify the Step-Up Added 
Liquidity Rebate. Accordingly, the Exchange believes it is reasonable 
and not unfairly discriminatory to remove the expiring rebate from the 
Fee Schedule in order to provide clarity to Equity Members that this 
rebate is no longer available.
Proposal To Make Corresponding Changes to the Fee Schedule
    The Exchange believes its proposal to amend the Definitions section 
of the Fee Schedule to delete the defined term ``Step-Up ADAV as a % of 
TCV'' and footnote #4 from the NBBO Setter Plus Table is reasonable 
because the Exchange will no longer offer the Step-Up Added Liquidity 
Rebate after December 31, 2023. The Exchange believes it is reasonable 
to provide clarity and consistency within the Fee Schedule by removing 
references to the Step-Up Added Liquidity Rebate, which will no longer 
be available.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
Intra-Market Competition
    The Exchange believes the proposed rule change does not impose any 
burden on intra-market competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the proposed 
new tiers to the NBBO Program will be eligible to all Equity Members 
equally in that all Equity Members have the opportunity to participate 
and therefore qualify for the proposed enhanced rebates. Furthermore, 
the Exchange believes that the NBBO Program, as modified by this 
proposal, will continue to incentivize Equity Members to submit 
additional aggressively priced displayed liquidity to the Exchange, and 
to increase their order flow on the Exchange generally, thereby 
contributing to a deeper and more liquid market and promoting price 
discovery and market quality on the Exchange to the benefit of all 
market participants and enhancing the attractiveness of the Exchange as 
a trading venue. The Exchange believes that this, in turn, would 
continue to encourage market participants to direct additional order 
flow to the Exchange. Greater liquidity benefits all Equity Members by 
providing more trading opportunities and encourages Equity Members to 
send additional orders to the Exchange, thereby contributing to robust 
levels of liquidity, which benefits all market participants.
    The proposal to remove the Step-Up Added Liquidity Rebate table and 
associated rebate from the Fee Schedule does not impose a burden on 
intra-market competition that is not in furtherance of the Act in that 
the proposed change applies to all Equity Members equally and Equity 
Members may still compete for the enhanced rebates provided in the NBBO 
Program under volume calculation Method 1, which is similar to the 
expiring volume calculation provided for in the Step-Up Added Liquidity 
Rebate table.
    The proposed changes to the Definitions section and NBBO Setter 
Plus table to remove references to the Step-Up Added Liquidity Rebate 
are similarly non-burdensome as they are intended to provide 
consistency and clarity within the Fee Schedule.
Intermarket Competition
    The Exchange believes its proposal will benefit competition, and 
the Exchange notes that it operates in a highly competitive market. 
Equity Members have numerous alternative venues they may participate on 
and direct their order flow to, including fifteen other equities 
exchanges and numerous alternative trading systems and other off-
exchange venues. As noted above, no single registered equities exchange 
currently had more than 15-16% of the total market share of executed 
volume of equities trading for the month of November 2023.\25\ Thus, in 
such a low-concentrated and highly competitive market, no single 
equities exchange possesses significant pricing power in the execution 
of order flow. Moreover, the Exchange believes that the ever-shifting 
market share among the exchanges from month to month demonstrates that 
market participants can shift order flow in response to new or 
different pricing structures being introduced to the market. 
Accordingly, competitive forces constrain the Exchange's transaction 
fees and rebates generally, including with respect to executions of 
Added Displayed Volume, and market participants can readily choose to 
send their orders to other exchanges and off-exchange venues if they 
deem fee levels at those other venues to be more favorable.
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    \25\ See supra note 22.
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    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.'' \26\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. Securities and Exchange Commission, the DC 
circuit stated: ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their routing agents, have a wide range of choices of where to 
route orders for execution'; [and] `no exchange can afford to take its 
market share percentages for granted' because `no exchange possess a 
monopoly, regulatory or otherwise, in the execution of order flow from 
broker dealers' . . .''.\27\ 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.
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    \26\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \27\ 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)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\28\ and Rule 19b-4(f)(2) \29\ 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

[[Page 3493]]

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.
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    \28\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \29\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#255750494008464a4848404b5156655640460b424a53"><span class="__cf_email__" data-cfemail="7103041d145c121e1c1c141f0502310214125f161e07">[email protected]</span></a>. Please include 
file number SR-PEARL-2023-73 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-PEARL-2023-73. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-PEARL-2023-73 and should be 
submitted on or before February 8, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00843 Filed 1-17-24; 8:45 am]
BILLING CODE 8011-01-P


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