[Federal Register Volume 89, Number 186 (Wednesday, September 25, 2024)]
[Notices]
[Pages 78359-78364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21872]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101100; File No. SR-PEARL-2024-41]


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

September 19, 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 September 9, 2024, 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

[[Page 78360]]

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: (1) amend Sections 1)a)-b) of the Fee 
Schedule to decrease the fee for executions of orders that remove 
liquidity from the Exchange in securities priced at or above $1.00 per 
share from $0.00295 to $0.00285 per share for all Tapes; and (2) amend 
Section 1)c) of the Fee Schedule to modify one aspect of the criteria 
that is required for Equity Members \3\ to receive the Step-Up Rebate 
(described below) and extend the sunset period (described below). The 
Exchange initially filed this proposal on August 30, 2024 (SR-PEARL-
2024-40). On September 9, 2024, the Exchange withdrew SR-PEARL-2024-40 
and refiled this proposal.
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    \3\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
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Proposal To Decrease the Fee To Remove Liquidity in Securities Priced 
at or Above $1.00 per Share
    The Exchange proposes to amend Sections 1)a)-b) of the Fee Schedule 
to decrease the fee for executions of orders that remove liquidity from 
the Exchange in securities priced at or above $1.00 per share from 
$0.00295 to $0.00285 per share for all Tapes.
    The Exchange currently charges a standard fee of $0.00295 per share 
for executions of orders in securities priced at or above $1.00 per 
share that remove liquidity from the Exchange for all Tapes.\4\
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    \4\ See Fee Schedule, Section 1)a).
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    The Exchange now proposes to amend the Standard Rates in Section 
1)a) of the Fee Schedule to decrease the fee to remove liquidity from 
the Exchange in securities priced at or above $1.00 per share from 
$0.00295 to $0.00285 per share for all Tapes.
    Further, the Exchange proposes to amend the Liquidity Indicator 
Codes and Associated Fees table in Section 1)b) of the Fee Schedule to 
reflect the aforementioned change. The Exchange proposes to amend the 
fee associated with Liquidity Indicator Codes ``RA,'' ``Ra,'' ``RB,'' 
``Rb,'' ``RC,'' ``Rc,'' ``RR,'' ``Rr,'' ``RT,'' ``Rt,'' and ``Rp'', 
from $0.00295 to now be $0.00285 per share, to reflect the proposed 
change to the fee for executions of orders in securities priced at or 
above $1.00 per share that remove liquidity from the Exchange in all 
Tapes. The Exchange does not propose to amend the fees for executions 
of orders in securities priced below $1.00 per share that remove 
liquidity from the Exchange in all Tapes, which is currently set at 
0.25% of the total dollar value of the transaction.\5\
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    \5\ See Fee Schedule, Sections 1)a)-b).
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    The purpose of these proposed changes is for business and 
competitive reasons. The Exchange believes it is appropriate to 
decrease the fee to remove liquidity from the Exchange in securities 
priced at or above $1.00 per share from $0.00295 to $0.00285 per share 
for all Tapes to further encourage market participants to enter 
liquidity removing orders on the Exchange, thereby increasing the 
execution opportunities for the liquidity adding orders resting on the 
MIAX Pearl Equities Book.\6\ The Exchange notes that the Exchange's 
proposed standard fee of $0.00285 per share for executions of all 
orders in securities priced at or above $1.00 per share that remove 
liquidity from the Exchange remains competitive with the standard fee 
to remove liquidity in securities priced at or above $1.00 per share 
charged by other equity exchanges.\7\
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    \6\ The term ``MIAX Pearl Equities Book'' shall mean the 
electronic book of orders in equity securities maintained by the 
System. See Exchange Rule 1901.
    \7\ See e.g., MEMX LLC (``MEMX'') Equities Fee Schedule, 
Transaction Fees, Fee Code ``R'' (providing standard remove volume 
fee of $0.0030 per share for executions of orders in securities 
priced at or above $1.00 per share); and Cboe EDGX Exchange, Inc. 
(``EDGX''), Equities Fee Schedule, Standard Rates (providing 
standard remove volume fee of $0.0030 per share for executions of 
orders in securities priced at or above $1.00 per share).
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Proposal To Amend the NBBO Setter Plus Table To Modify the Baseline 
Month and Sunset Period for the Step-Up Rebate
    The Exchange proposes to amend the Step-Up Rebate in footnote #4 of 
the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule to amend 
the baseline month and sunset period for Step-Up Rebate.\8\
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    \8\ See Fee Schedule, Section 1)c), note #4.
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    By way of background, the NBBO Setter Plus Program (referred to in 
this filing as the ``NBBO Program'') was implemented beginning 
September 1, 2023 and subsequently amended several times.\9\ In 
general, the NBBO Program provides enhanced rebates for Equity Members 
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. The NBBO 
Program provides the following additional incentives: (1) an NBBO 
Setter Additive Rebate \10\ applied to executions of orders in 
securities priced at or above $1.00 per share that set the NBB or NBO 
upon entry; (2) an NBBO First Joiner Additive Rebate \11\ applied to 
executions of orders in securities priced at or above $1.00 per share 
that bring MIAX Pearl Equities to the established NBB or NBO; and (3) a 
Step-Up Rebate for Equity Members that satisfy the following 
requirements: (i) minimum displayed ADAV \12\ as a percentage of TCV 
\13\ of 0.35% and (ii) an increase in the percentage of displayed ADAV 
as a percentage of TCV of at least 0.05% as compared to the Equity 
Member's February 2024 displayed ADAV percentage. Alternatively, an 
Equity Member may qualify for the Step-Up Rebate by satisfying the 
following requirements: (1) minimum displayed ADAV as a percentage of 
TCV of 0.35% (excluding sub-dollar volume); and (2) increase in the 
percentage of displayed ADAV as percentage of TCV of at least 0.05% as 
compared to the Equity Member's February 2024 displayed ADAV percentage 
(excluding sub-dollar volume). Currently, the Step-Up Rebate

[[Page 78361]]

is set to expire no later than August 31, 2024 (referred to herein as 
the ``sunset period'').
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    \9\ See, e.g., Securities Exchange Act Release Nos. 98472 
(September 21, 2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-
2023-45); 99318 (January 11, 2024), 89 FR 3488 (January 18, 2024) 
(SR-PEARL-2023-73); and 99695 (March 8, 2024), 89 FR 18694 (March 
14, 2024) (SR-PEARL-2024-11).
    \10\ The Exchange does not propose to amend the NBBO Setter 
Additive Rebate, which is an additive rebate of ($0.0004) 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). The Exchange 
notes that rebates are indicated by parentheses in the Fee Schedule. 
See the General Notes section of the Fee Schedule.
    \11\ The Exchange does not propose to amend the NBBO First 
Joiner Additive Rebate, which is an additive rebate of ($0.0002) per 
share for executions of orders in securities priced at or above 
$1.00 per share that bring MIAX Pearl Equities to the established 
NBB or NBO with a minimum size of a round lot. See Fee Schedule, 
Section 1)c).
    \12\ ``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. See the 
Definitions section of the Fee Schedule.
    \13\ ``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. See id.
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    The Exchange now proposes to amend Section 1)c) of the Fee Schedule 
to modify one aspect of the criteria for Equity Members to receive the 
Step-Up Rebate and the sunset period. In particular, the Exchange 
proposes to amend the baseline month from February 2024 to now be July 
2024. With the proposed change, Equity Members will qualify for the 
Step-Up Rebate by satisfying the following requirements: (i) minimum 
displayed ADAV as a percentage of TCV of 0.35% and (ii) an increase in 
the percentage of displayed ADAV as a percentage of TCV of at least 
0.05% over the baseline month of July 2024.\14\ Alternatively, Equity 
Members will qualify for the Step-Up Rebate by satisfying the following 
requirements: (1) minimum displayed ADAV as a percentage of TCV of 
0.35% (excluding sub-dollar volume); and (2) increase in the percentage 
of displayed ADAV as percentage of TCV of at least 0.05% over the 
baseline month of July 2024 (excluding sub-dollar volume).
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    \14\ The Exchange will use a baseline ADAV of 0.00% of TCV for 
firms that become Equity Members of the Exchange after July 2024 for 
the purpose of the Step-Up Rebate calculation.
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    Additionally, the Exchange proposes to amend the sunset period by 
extending the Step-Up Rebate until January 31, 2025 (the last trading 
day for the month of January 2025).\15\ The Exchange will issue a 
proposed filing and alert to market participants should the Exchange 
determine that the Step-Up Rebate will expire earlier than January 31, 
2025 or if the Exchange determines to amend the criteria or rate 
applicable to the Step-Up Rebate prior to the end of the sunset period. 
The Exchange notes that at least one other competing equities exchange 
recently filed a proposal to use a more recent month (June 2024) as the 
baseline month comparison for one of its enhanced rebates and included 
a similar ``sunset period''.\16\ Accordingly, this proposal is not new 
or novel.
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    \15\ The Exchange notes that at the end of the sunset period, 
the Step-Up Rebate will no longer apply unless the Exchange files 
another 19b-4 Filing with the Commission to amend the criteria terms 
or update the baseline month to a more recent month.
    \16\ See Securities Exchange Act Release No. 100469 (July 9, 
2024), 89 FR 57463 (June 15, 2024) (SR-MEMX-2024-26); see also MEMX 
Equities Fee Schedule, Liquidity Provision Tiers, Tier 1, available 
at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/ (last visited August 25, 2024).
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    The Exchange does not propose any other changes to the qualifying 
criteria for Equity Members to receive the Step-Up Rebate. The Exchange 
also does not propose to amend the amount of the Step-Up rebate of 
($0.001) per share.\17\
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    \17\ See Fee Schedule, Section 1)c), note #4.
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    The purpose of this proposed change is to update the baseline month 
for the Step-Up Rebate calculation to a more recent month as volume on 
the Exchange has changed since the Exchange last amended the Step-Up 
Rebate. The Exchange believes that with the updated baseline month, the 
Step-Up Rebate will continue to provide an incentive for Equity Members 
to strive for higher ADAV on the Exchange 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 this will, in turn, promote price discovery and 
contribute 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 modifying the sunset period in the Fee Schedule is 
to extend the sunset period for the Step-Up Rebate until January 31, 
2025. This will allow Equity Members to take into account that the 
enhanced rebate provided by the Step-Up Rebate will be discontinued at 
the end of the new sunset period unless the Exchange announces 
otherwise and files a new proposal with the Commission.
Implementation
    The proposed fee 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 \18\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \19\ 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. The Exchange also believes that the 
proposal is consistent with the objectives of Section 6(b)(5) \20\ 
requirements that the rules of an exchange be designed to prevent 
fraudulent and manipulative acts and practices, and to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest, and, particularly, is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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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)(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. For the month of July 2024, 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.\21\ Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. For the month of July 
2024, the Exchange represented 1.61% of the total market share of 
executed volume of equities trading.\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\
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    \21\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/ (last visited August 26, 
2024).
    \22\ Id.
    \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 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

[[Page 78362]]

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 their order flow to the Exchange, which the Exchange believes 
would continue to enhance liquidity and market quality to the benefit 
of all Equity Members and market participants.
Proposal To Decrease the Fee To Remove Liquidity in Securities Priced 
at or Above $1.00 per Share
    The Exchange believes the proposed change to decrease the fee to 
remove liquidity in securities priced at or above $1.00 per share from 
$0.00295 to $0.00285 per share for all tapes is reasonable because the 
proposed fee remains lower than, and competitive with, the standard fee 
charged by competing exchanges to remove liquidity in securities priced 
at or above $1.00 per share.\24\ The Exchange further believes that the 
proposed change is equitably allocated and not unfairly discriminatory 
because the proposed fee of $0.00285 per share for executions of all 
orders in securities priced at or above $1.00 per share that remove 
liquidity from the Exchange will apply equally to all Equity Members 
that remove liquidity.
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    \24\ See supra note 7.
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Proposal To Amend the NBBO Setter Plus Table To Amend the Baseline 
Month and Sunset Period for the Step-Up Rebate
    The Exchange believes its proposal to update the baseline month for 
the Step-Up Rebate is reasonable, equitably allocated and not unfairly 
discriminatory because volume on the Exchange has changed since the 
Exchange last amended the Step-Up Rebate and the Exchange now proposes 
to update the baseline month to a more recent month. The Exchange 
believes that with the updated baseline month, the Step-Up Rebate will 
continue to provide an incentive for Equity Members to strive for 
higher ADAV on the Exchange 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 the proposal is reasonable because even with the updated 
baseline month, the Step-Up Rebate will continue to encourage the 
submission of added displayed 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 Exchange believes that the Step-Up Rebate, as modified by the 
proposed change to the baseline month, is reasonable, equitable and not 
unfairly discriminatory as the Step-Up 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. The Exchange also notes that MEMX recently filed a 
proposal to use a more recent month (June 2024) as the baseline month 
for MEMX's members to receive one of its enhanced rebates.\25\
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    \25\ See supra note 16.
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    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to extend the sunset period for the Step-Up Rebate until 
January 31, 2025. Unless the Exchange determines to amend or otherwise 
modify the Step-Up Rebate, the Step-Up 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 Rebate will be 
discontinued at the end of sunset period unless the Exchange announces 
otherwise and files a new proposal with the Commission. The Exchange 
further notes that it will issue a proposed filing and alert to market 
participants should the Exchange determine that the Step-Up Rebate will 
expire earlier than January 31, 2025 or if the Exchange determines to 
amend the criteria or rate applicable to the Step-Up Rebate prior to 
the end of the sunset period. At least one other competing equities 
exchange provided a similar sunset period in its fee schedule for one 
of its enhanced rebates subject to a baseline month comparison with a 
more recent month.\26\
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    \26\ See id.
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    For the reasons discussed above, the Exchange submits that the 
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act in that it provides for the equitable allocation of reasonable 
dues, fees and other charges among its Equity Members and other persons 
using its facilities and is not designed to unfairly discriminate 
between customers, issuers, brokers, or dealers.

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

    The Exchange does not believe that the proposed changes will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act.
Intramarket Competition
    The Exchange believes that the proposed change to decrease the fee 
from $0.00295 to $0.00285 per share for executions of orders in 
securities priced at or above $1.00 per share for all Tapes will not 
impose any burden on intramarket competition because it represents a 
decrease from the current fee for such executions. The Exchange 
believes the proposed reduced fee will further encourage market 
participants to enter liquidity removing orders on the Exchange, 
thereby increasing the execution opportunities for the liquidity adding 
orders resting on the MIAX Pearl Equities Book, thereby promoting 
competition on the Exchange. The proposed reduced fee for executions of 
orders in securities priced at or above $1.00 per share that remove 
liquidity from the Exchange will apply equally to all Equity Members. 
Further, the Exchange notes that the Exchange's proposed reduced fee of 
$0.00285 per share for executions of all orders in securities priced at 
or above $1.00 per share that remove liquidity from the Exchange 
remains lower than, and competitive with, the standard fee to remove 
liquidity in securities priced at or above $1.00 per share charged by 
competing equity exchanges.\27\
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    \27\ See supra note 7.
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    The Exchange does not believe that the proposal to update the 
baseline month for Step-Up Rebate will impose any burden on intramarket 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. The Exchange believes the Step-Up 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.
    The Exchange believes its proposal to modify the sunset period in 
the Fee Schedule for the Step-Up Rebate will not impose any burden on 
intramarket

[[Page 78363]]

competition not necessary or appropriate in furtherance of the purposes 
of the Act. With the proposed extension of the sunset period, all 
Equity Members may continue to qualify for the enhanced rebate provided 
by the Step-Up Rebate until January 31, 2025. Unless the Exchange 
determines to amend or otherwise modify the Step-Up Rebate, the Step-Up 
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 Rebate will be discontinued at the end of 
sunset period unless the Exchange announces otherwise. The Exchange 
further notes that it will issue a proposed filing and alert to market 
participants should the Exchange determine that the Step-Up Rebate will 
expire earlier than January 31, 2025 or if the Exchange determines to 
amend the criteria or rate applicable to the Step-Up Rebate prior to 
the end of the sunset period. At least one other competing equities 
exchange provided a similar sunset period in its fee schedule for one 
of its enhanced rebates subject to a baseline month comparison with a 
more recent month.\28\
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    \28\ See supra note 16.
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    For the foregoing reasons, the Exchange believes the proposed 
changes would not impose any burden on intramarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act.
Intermarket Competition
    The Exchange believes its proposal will benefit competition as the 
Exchange 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 has more than 
approximately 15-16% of the total market share of executed volume of 
equities trading. 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 all orders in securities priced at or above 
$1.00 per share that remove liquidity from the Exchange, 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. As described above, the proposed changes are 
competitive proposals and the proposed reduce fee of $0.00285 per share 
for removing liquidity in securities priced at or above $1.00 per share 
remains lower than, or similar to, the standard fee to remove liquidity 
in securities priced at or above $1.00 per share charged by competing 
equities exchanges.\29\ Further, the proposed reduce fee to remove 
liquidity from securities priced at or above $1.00 per share will apply 
to all Equity Members equally.
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    \29\ See supra note 7.
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    As described above, the proposed changes to modify the baseline 
month and extend the sunset period for the Step-Up Rebate 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 volume-based 
incentives adopted by at least one other competing exchange which also 
updated its baseline month to a more recent month for a specific 
enhanced rebate that adds liquidity to that market.\30\ 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.
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    \30\ See supra note 16.
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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.'' \31\ 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 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' . . . .'' \32\ 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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    \31\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \32\ See 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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\33\ and Rule 19b-
4(f)(2) thereunder \34\ the Exchange has designated this proposal as 
establishing or changing a due, fee, or other charge imposed on any 
person, whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
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    \33\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \34\ 17 CFR 240.19b-4.
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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#fe8c8b929bd39d9193939b908a8dbe8d9b9dd0999188"><span class="__cf_email__" data-cfemail="156760797038767a7878707b6166556670763b727a63">[email protected]</span></a>. Please include 
File Number SR-PEARL-2024-41 on the subject line.

Paper Comments

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


[[Page 78364]]


All submissions should refer to file number SR-PEARL-2024-41. 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-2024-41 and should be 
submitted on or before October 16, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21872 Filed 9-24-24; 8:45 am]
BILLING CODE 8011-01-P


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