[Federal Register Volume 89, Number 203 (Monday, October 21, 2024)]
[Notices]
[Pages 84216-84218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-24206]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101341; File No. SR-PEARL-2024-48]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 2618(a)(7)(A) To Allow Equity Members To Cancel a Subset of Orders 
Over an Order Entry Port

October 15, 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 October 8, 2024, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``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 proposes to amend Exchange Rule 2618(a)(7)(A) to allow 
Equity Members \3\ to cancel a subset of orders over an order entry 
port on the Exchange's equity trading platform (referred to herein as 
``MIAX Pearl Equities'').
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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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    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 currently offers risk functionality that permits 
Equity Members to cancel orders over their order entry port or over a 
dedicated Purge Port. The Exchange offers risk functionality that 
allows Equity Members to block new orders submitted, to cancel all open 
orders, or both block new orders and cancel all open orders under 
Exchange Rule 2618(a)(7)(A). The Exchange notes that order entry ports 
may be used to enter orders, modify existing orders, and cancel 
existing orders. The Exchange separately offers Purge Ports, which are 
dedicated ports that permits an Equity Member to simultaneously cancel 
all or a subset of its orders through a single cancel message.
    Unlike Purge Ports, Exchange Rule 2618(a)(7)(A) does not provide 
that Equity Members may cancel a subset of orders over an order entry 
port. Due to Equity Member requests, the Exchange now proposes to amend 
Exchange Rule 2618(a)(7)(A) to allow Equity Members to cancel a subset 
of orders over an order entry port. An order cancelation request sent 
over an order entry port, including the proposal to cancel a subset of 
orders, is and would be handled along with other messages sent over 
that same order entry port, such as new orders and order modification 
requests. On a Purge Port, a request to cancel a subset of orders is 
also handled only with other cancelation messages sent over that same 
Purge Port. The Exchange notes that similar functionality is also 
offered on at least on [sic] other national securities exchange.\4\
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    \4\ See Interpretations and Policies .02(b) to MEMX LLC 
(``MEMX'') Rule 11.10.
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* * * * *
    The Exchange does not guarantee that the proposed cancelation 
functionality is sufficiently comprehensive to meet all of an Equity 
Member's risk management needs. Pursuant to Rule 15c3-5 under the 
Act,\5\ a broker-dealer with market access must perform appropriate due 
diligence to assure that controls are reasonably designed to be 
effective, and otherwise consistent with the rule.\6\ Use of the 
Exchange's risk controls included

[[Page 84217]]

in Exchange Rule 2618 does not automatically constitute compliance with 
Exchange or federal rules and responsibility for compliance with all 
Exchange and SEC rules remains with the Equity Member.
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    \5\ 17 CFR 240.15c3-5.
    \6\ See Division of Trading and Markets, Responses to Frequently 
Asked Questions Concerning Risk Management Controls for Brokers or 
Dealers with Market Access, available at https://www.sec.gov/divisions/marketreg/faq-15c-5-risk-management- controls-bd.htm.
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Implementation
    Due to the technological changes associated with this proposed 
change, the Exchange will issue a trading alert publicly announcing the 
implementation date of the proposed enhancements to its risk controls 
set forth herein. The Exchange anticipates that the implementation date 
will be in the first or second quarter of 2025.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\7\ in general, and furthers the objectives of Section 6(b)(5),\8\ 
in particular, because it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in 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. Specifically, the Exchange 
believes the proposed amendments will remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
because the augmented functionality is being proposed in response to 
Equity Member feedback as part of their efforts to appropriately manage 
their risk. The proposed rule change is also similar to functionality 
that is offered on at least on [sic] other national securities 
exchange, which the Commission approved.\9\ Therefore, the Exchange 
does not believe that the proposed rule change raises any new or novel 
issues not already considered by the Commission.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See Interpretations and Policies .02(b) to MEMX Rule 11.10. 
See also Securities Exchange Act Release No. 88806 (May 4, 2020), 85 
FR 27451 (May 8, 2020) (Order approving MEMX's exchange application, 
which included Interpretations and Policies .02(b) to MEMX Rule 
11.10).
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    Specifically, the Exchange believes that the proposed rule change 
is consistent with the protection of investors and the public interest 
because allowing would allow [sic] Equity Members the ability to cancel 
a subset of their orders via an order entry port. This additional 
flexibility would provide Equity Members with additional cancelation 
functionality and further align order entry port cancelation 
functionality with what is currently provided via a Purge Port. Equity 
Members that elect to utilize the proposed cancelation functionality 
may do so over an order entry port rather than needing a separate Purge 
Port. The Exchange believes the proposed amendments will remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because they provide additional functionality 
for an Equity Member to manage its risk.
    Finally, the Exchange believes that the proposed rule change does 
not unfairly discriminate among Equity Members because use of the 
proposed cancelation functionality is optional and is not a 
prerequisite for participation on the Exchange. The proposed 
cancelation functionality is completely voluntary and, as is relates 
solely to optional risk management functionality, no equity Member is 
required or under any regulatory obligation to utilize it.

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.
    The Exchange believes its proposal will not impose any burden on 
inter-market competition because it would provide Equity Members with 
additional flexibility canceling orders in a manner that may better 
suit their risk appetite when they seek to manage their order flow and 
orders that may be resting on the Exchange. The proposal would also 
promote inter-market competition because it would allow the Exchange to 
better compete with at least one other national securities exchange 
that offers similar functionality.\10\ The proposal would impose no 
burden on intra-market competition because each risk setting would be 
applied to all Equity Members' orders equally.
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    \10\ See Interpretations and Policies .02(b) to MEMX Rule 11.10.
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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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ 
thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

    <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#6c1e190009410f0301010902181f2c1f090f420b031a"><span class="__cf_email__" data-cfemail="d9abacb5bcf4bab6b4b4bcb7adaa99aabcbaf7beb6af">[email protected]</span></a>. Please include 
file number SR-PEARL-2024-48 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-2024-48. 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

[[Page 84218]]

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-2024-48 and should be submitted on 
or before November 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-24206 Filed 10-18-24; 8:45 am]
BILLING CODE 8011-01-P


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