[Federal Register Volume 89, Number 199 (Tuesday, October 15, 2024)]
[Notices]
[Pages 83061-83064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23659]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101282; File No. SR-PEARL-2024-46]


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

October 8, 2024.
    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 September 30, 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 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.

[[Page 83062]]

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 decrease the fee 
for executions of orders that remove liquidity from the Exchange in 
securities priced below $1.00 per share from 0.25% to 0.20% of the 
total dollar value of the transaction.\3\
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    \3\ The Exchange notes that it recently reduced the fee for 
removing liquidity in securities priced at or above $1.00. See 
Securities Exchange Act Release No. 101100 (September 19, 2024), 89 
FR 78359 (September 25, 2024) (SR-PEARL-2024-41).
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Proposal To Decrease the Fee for Removing Liquidity in Securities 
Priced Below $1.00 per Share
    Currently, the Exchange assesses a fee of 0.25% of the total dollar 
value of any transaction in securities priced below $1.00 per share 
that removes liquidity from the Exchange across all Tapes.\4\ The 
Exchange now proposes to decrease the fee from 0.25% to 0.20% of the 
total dollar value of any transaction in securities priced below $1.00 
per share that removes liquidity from the Exchange across all Tapes. 
The purpose of the proposed change is for business and competitive 
reasons.
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    \4\ See Fee Schedule, Section (1)(a). See also Fee Schedule, 
Section (1)(b), Liquidity Indicator Codes RA, RB, RC, RR, RT, Ra, 
Rb, Rc, Rp, Rr and Rt.
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    Specifically, the Exchange proposes to amend Section (1)(a) 
Standard Rates Table of the Fee Schedule to change the value in the 
table for Removing Liquidity in Securities below $1.00 from 0.25% to 
0.20%. Additionally, the Exchange proposes to amend the Section (1)(b) 
Liquidity Indicator Codes and Associated Fees, to reflect the proposed 
change to the Standard Rates Table.
    The Exchange provides a table in section (1)(b), Liquidity 
Indicator Codes and Associated Fees, that provides a list of fees and 
rebates so that Equity Members \5\ may better understand the fee or 
rebate that is applied to each execution. The liquidity indicator code 
for each execution is returned on the real-time trade report sent to 
the Equity Member that submitted the order.
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    \5\ 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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    The Exchange now proposes to amend the column titled ``Fee/(Rebate) 
Securities Priced Below $1.00'' in Section (1)(b) of the Fee Schedule 
to reflect the proposed decrease to the standard fee assessed for 
Removing Liquidity (Displayed Orders and Non-Displayed Orders) in 
securities priced below $1.00 per share from 0.25% to 0.20% for the 
following liquidity indicator codes: ``RA,'' ``RB,'' ``RC,'' ``RR,'' 
``RT,'' ``Ra,'' ``Rb,'' ``Rc,'' ``Rp,'' ``Rr,'' and ``Rt.''
    The Exchange believes it is appropriate to decrease the fee from 
0.25% to 0.20% of the total dollar value of any transaction in 
securities priced below $1.00 per share that removes liquidity from the 
Exchange across 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\
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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.
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Implementation
    The Exchange proposes to implement the changes to the Fee Schedule 
pursuant to this proposal on October 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 \7\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \8\ 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 proposed rule change is 
consistent with the objectives of Section 6(b)(5) \9\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 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 many venues, including 16 registered equities 
exchanges as well as 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 currently has more than approximately 15-
16% of the total market share of executed volume of equities 
trading.\10\ 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 currently represents 
less than 2% of the overall market share.\11\ 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.'' \12\
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    \10\ Market share percentage calculated as of August 25, 2024. 
The Exchange receives and processes data made available through 
consolidated data feeds.
    \11\ Id.
    \12\ 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 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 to the benefit of all Equity Members and market 
participants.
Proposal To Decrease the Fee for Removing Liquidity in Securities 
Priced Below $1.00 per Share
    The Exchange believes that the proposed change to decrease the 
standard fee for executions of all orders

[[Page 83063]]

in securities priced below $1.00 per share that remove liquidity from 
the Exchange is reasonable, equitable, and consistent with the Act as 
the proposed fee remains lower than, or similar to, the standard fee to 
remove liquidity in securities priced below $1.00 per share charged by 
competing equities exchanges.\13\ The Exchange further believes that 
the proposal to decrease the standard fee for executions of all orders 
in securities priced below $1.00 per share that remove liquidity from 
the Exchange is equitably allocated and not unfairly discriminatory 
because it will apply equally to all Equity Members that remove 
liquidity from the Exchange.
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    \13\ See Cboe EDGX Equities Fee Schedule, Standard Rates, 
available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/ (charging a standard fee of 0.30% of the dollar 
value to remove liquidity in securities priced below $1.00 per 
share); see also MEMX Fee Schedule, Transaction Fees (charging a 
standard fee of 0.28% of the total dollar value to remove liquidity 
in securities priced below $1.00 per share); and NYSE American 
Equities Price List, Section I.A.2., available at https://www.nyse.com/publicdocs/nyse/markets/nyse-american/NYSE_America_Equities_Price_List.pdf (charging a standard fee of 
0.25% of the total dollar value of the transaction to remove 
liquidity in securities priced below $1.00 per share).
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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. As described more 
fully below in the Exchange's statement regarding the burden on 
competition, the Exchange believes that its transaction pricing is 
subject to significant competitive forces, and that the proposed fees 
and rebates described herein are appropriate to address such forces.

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. The Exchange believes the proposed changes 
will continue to encourage Equity Members to maintain or increase their 
order flow to the Exchange, thereby contributing to a deeper and more 
liquid market to the benefit of all market participants and enhancing 
the attractiveness of the Exchange as a trading venue. As a result, the 
Exchange believes the proposal will enhance its competitiveness as a 
market that attracts actionable orders, thereby making it a more 
desirable destination venue for its customers. For these reasons, the 
Exchange believes that the proposal furthers the Commission's goal in 
adopting Regulation NMS of fostering competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \14\
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    \14\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 47396 (June 29, 2005).
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Intra-Market Competition
    The Exchange believes that the proposed changes will continue to 
incentivize market participants to direct order flow to the Exchange, 
thereby contributing to a deeper and more liquid market to the benefit 
of all market participants and enhancing the attractiveness of the 
Exchange as a trading venue, which the Exchange believes, in turn, will 
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 orders to the Exchange, thereby contributing to robust levels of 
liquidity, which benefits all Equity Members.
    Similarly, the proposed decrease to the standard fee for executions 
of orders that remove volume from the Exchange will continue to apply 
equally to all Equity Members. As such, the Exchange believes the 
proposed changes would not impose any burden on intra-market 
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 
15-16% of the total market share of executed volume of equities 
trading.\15\ 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 
orders that remove volume 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.
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    \15\ See supra note 10.
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    As described above, the proposed changes are competitive proposals 
through which the Exchange is seeking to encourage additional order 
flow to the Exchange. Such proposed changes to (i) [sic] decrease the 
Removing Liquidity fee is comparable to, and competitive with, rates 
charged by other exchanges.\16\ The proposed change to update the 
Liquidity Indicator Codes and Associated Fees table is in conjunction 
with the Exchange's above mentioned proposed change to the standard fee 
for Removing Liquidity from the Exchange.
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    \16\ See supra note 13.
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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.'' \17\ 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 possesses a 
monopoly, regulatory or otherwise, in the execution of order flow from 
broker dealers' . . . .'' \18\ Accordingly, the Exchange

[[Page 83064]]

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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    \17\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \18\ 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,\19\ and Rule 19b-
4(f)(2) thereunder \20\ 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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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 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#a9dbdcc5cc84cac6c4c4ccc7dddae9daccca87cec6df"><span class="__cf_email__" data-cfemail="fe8c8b929bd39d9193939b908a8dbe8d9b9dd0999188">[email protected]</span></a>. Please include 
file number SR-PEARL-2024-46 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-2024-46. 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-2024-46 and should be 
submitted on or before November 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-23659 Filed 10-11-24; 8:45 am]
BILLING CODE 8011-01-P


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