[Federal Register Volume 89, Number 204 (Tuesday, October 22, 2024)]
[Notices]
[Pages 84406-84423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-24363]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101358; File No. SR-PEARL-2024-47]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Adopt Both an 
Early and Late Trading Session on its Equity Trading Platform

October 16, 2024.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on October 3, 2024, MIAX PEARL, LLC (``MIAX Pearl'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt both an early and late trading 
session on its equity trading platform (referred to herein as ``MIAX 
Pearl Equities'').
    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 operates one trading session which operates 
during Regular Trading Hours, i.e., 9:30 a.m. until 4:00 p.m. Eastern 
Time.\4\ Exchange Rule 2600(a) provides that Equity Members \5\ may 
enter orders into the System \6\ from 7:30 a.m. until 4:00 p.m. Eastern 
Time (or such earlier time as may be designated by the Exchange on a 
day when MIAX Pearl Equities closes early). Exchange Rule 2600(a) 
further provides that orders entered between 7:30 a.m. and 9:30 a.m. 
Eastern Time are not eligible for execution until the start of Regular 
Trading Hours.
---------------------------------------------------------------------------

    \4\ The term ``Regular Trading Hours'' means the time between 
9:30 a.m. and 4:00 p.m. Eastern Time. See Exchange Rule 1901.
    \5\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See id.
    \6\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
---------------------------------------------------------------------------

    The Exchange now proposes to expand its hours of operations by 
adopting both an Early and Late Trading Session. The proposed Early 
Trading Session would operate from 4:00 a.m. until 9:30 a.m. Eastern 
Time. Then the existing Regular Trading Hours \7\ would follow, which 
currently operates from

[[Page 84407]]

9:30 a.m. until 4:00 p.m. Eastern Time. Within Regular Trading Hours, 
the Exchange also operates the existing Regular Trading Session,\8\ 
which operates from the completion of the Exchange's Opening Process 
described in Exchange Rule 2615 until 4:00 p.m. Eastern Time. The 
proposed Late Trading Session would follow and operate from 4:00 p.m. 
until 8:00 p.m. Eastern Time.
---------------------------------------------------------------------------

    \7\ See Exchange Rule 1901.
    \8\ See id.
---------------------------------------------------------------------------

    From the Equity Members' operational perspective, the Exchange's 
goal is to permit trading for those that choose to trade, without 
imposing burdens on those that do not. Thus, for example, the Exchange 
will not require any Equity Member to participate in the Early or Late 
Trading Sessions, including not requiring Equities Market Makers \9\ to 
make two-sided markets outside of Regular Trading Hours. The Exchange 
will minimize Equity Members' preparation efforts to the greatest 
extent possible by allowing Equity Members to trade during the Early 
and Late Trading Sessions with the same equipment, connectivity, order 
types, and data feeds they currently use from 9:30 a.m. Eastern Time 
onwards.
---------------------------------------------------------------------------

    \9\ The term ``Equities Market Maker'' shall mean an Equity 
Member that acts as a Market Maker in equity securities, pursuant to 
Chapter XXVI of the Exchange's rules. See id.
---------------------------------------------------------------------------

    The Exchange will route orders to away markets during the Early and 
Late Trading Sessions, just as it does today during the Regular Trading 
Session. All routing strategies set forth in Exchange Rule 2617(b) will 
remain otherwise unchanged, performing the same instructions they do 
during Regular Trading Hours today. Order processing will operate 
beginning at 4:00 a.m. just as it does today beginning at 9:30 a.m. 
There will be no changes to the ranking, display, and execution 
processes or rules. Trades executed outside of Regular Trading Hours 
will be reported to the appropriate network processor with the ``.T'' 
modifier, just like other exchanges report trades during the same 
timeframes. The Exchange's commitment to high-quality regulation at all 
times will extend to the Early and Late Trading Sessions. The Exchange 
will offer all surveillance coverage currently performed by the 
Exchange's surveillance systems, which will launch by the time trading 
starts at 4:00 a.m.
    To accommodate the proposed Early and Late Trading Sessions, the 
Exchange proposes to amend its rules to define the Early and Late 
Trading Sessions, adopt new Time-in-Force (``TIF'') instructions, and 
modify the operation of its Opening Process. Specifically, the Exchange 
proposes to amend Exchange Rules 1901, Definitions, 2600, Hours of 
Trading and Trading Days, 2614, Orders and Order Instructions, 2615, 
Opening Process for Equity Securities, 2617, Order Execution and 
Routing, 2618, Risk Settings and Trading Risk Metrics, 2621, Clearly 
Erroneous Executions, and 2900, Unlisted Trading Privileges. The 
Exchange also proposes to adopt new Exchange Rule 2120, Customer 
Disclosures, regarding trading during the Early and Late Trading 
Sessions. Each change is based on the rules of other national equity 
exchanges and, therefore, do not present any new or novel issues not 
already considered by the Commission.
Exchange Rule 1901, Definitions
    Exchange Rule 1901, Definitions, would be amended to include 
definitions of the terms ``Early Trading Session'' and ``Late Trading 
Session''. Exchange Rule 1901 would define the ``Early Trading 
Session'' as ``the time between 4:00 a.m. and 9:30 a.m. Eastern Time.'' 
\10\ Exchange Rule 1901 would also define the ``Late Trading Session'' 
as ``the time between 4:00 p.m. and 8:00 p.m. Eastern Time.'' \11\ The 
Exchange also proposes to amend the definition of the ``Regular Trading 
Session'' to account for the proposed re-adoption of the Contingent 
Open under Exchange Rule 2615 and described in more detail below. The 
amended definition of the term ``Regular Trading Session'' would be 
``the time between the completion of the Opening Process or Contingent 
Open as defined in Exchange Rule 2615 and 4:00 p.m. Eastern Time.'' The 
change is described below under the section entitled, Exchange Rule 
2615, Opening Process for Equity Securities.
---------------------------------------------------------------------------

    \10\ See, e.g., NYSE Arca, Inc. (``NYSE Arca'') Rule 7.34-
E(a)(1) and (2) (providing that the Early Trading Session will begin 
at 4:00 a.m. Eastern Time and conclude at the commencement of the 
Core Trading Session and that the Core Trading Session will begin 
for each security at 9:30 a.m. Eastern Time).
    \11\ See, e.g., MEMX LLC (``MEMX'') Rule 1.5 (defining the 
``Post-Market Session'' as the ``time between 4:00 p.m. and 8:00 
p.m. Eastern Time.''); and NYSE Arca Rule 7.34-E(a)(2) and (3) 
(providing that the Late Trading Session will begin following the 
conclusion of the Core Trading Session and conclude at 8:00 p.m. 
Eastern Time and that the Core Trading Session will end at the 
conclusion of Core Trading Hours or the Core Closing Auction, 
whichever comes later).
---------------------------------------------------------------------------

Exchange Rules 2600, Hours of Trading
    Exchange Rule 2600 sets forth when orders may be entered into the 
System and during which timeframes orders are eligible for execution. 
Exchange Rule 2600 currently provides that orders may be entered into 
the System from 7:30 a.m. until 4:00 p.m. Eastern Time (or such earlier 
time as may be designated by the Exchange on a day when MIAX Pearl 
Equities closes early). Today, the Exchange begins to accept orders at 
7:30 a.m. Eastern Time and Exchange Rule 2600 provides that orders 
entered between 7:30 a.m. and 9:30 a.m. Eastern Time are not eligible 
for execution until the start of Regular Trading Hours.
    The Exchange proposes to amend Exchange Rule 2600 to account for 
the addition of the Early and Late Trading Sessions.\12\ First, the 
Exchange proposes to begin to accept orders at 3:30 a.m. Eastern Time. 
The Exchange, therefore, proposes to amend Exchange Rule 2600 to expand 
the timeframe during which orders may be entered into the System from 
7:30 a.m. until 4:00 p.m. Eastern time to 3:30 a.m. until 8:00 p.m. 
Eastern Time (or such earlier time as may be designated by the Exchange 
on a day when MIAX Pearl Equities closes early).\13\
---------------------------------------------------------------------------

    \12\ The proposed amendments to Exchange Rule 2600 are generally 
based on Cboe EDGX Exchange, Inc. (``Cboe EDGX'') Rule 11.1(a). Any 
slight differences are explained below.
    \13\ Cboe EDGX Rule 11.1(a)(1) allows for the acceptance of 
orders beginning at 2:30 a.m. Eastern Time, but, like the Exchange 
proposes herein, no order becomes eligible for execution until 4:00 
a.m. Eastern Time.
---------------------------------------------------------------------------

    Amended Exchange Rule 2600 would also provide that orders entered 
between 3:30 a.m. and 4:00 a.m. Eastern Time would not be eligible for 
execution until the start of the Early Trading Session or Regular 
Trading Session,\14\ depending on the TIF selected by the User.\15\ 
Exchange Rule 2600(a) would also provide that at the commencement of 
the Early Trading Session, orders entered between 3:30 a.m. and 4:00 
a.m. Eastern Time will become eligible for execution and will

[[Page 84408]]

be handled in time sequence, beginning with the order with the oldest 
time stamp, and placed on the MIAX Pearl Equities Book,\16\ routed, 
cancelled, or executed in accordance with the terms of the order.\17\ 
Lastly, Exchange Rule 2600(a) provides that the Exchange will not 
accept Intermarket Sweep Orders (``ISOs''), and all orders with a TIF 
of Immediate-or-Cancel (``IOC'') prior to 9:30 a.m. Eastern Time. The 
Exchange proposes to amend this provision in Exchange Rule 2600(a) to 
account for the Early Trading Session and to include additional order 
types and modifiers. Therefore, as amended, Exchange Rule 2600(a) would 
provide that the Exchange would not accept all orders with a TIF 
instruction of Fill-or-Kill (``FOK''),\18\ in addition to ISOs and 
orders with a TIF instruction of IOC, prior to 4:00 a.m. Eastern Time. 
The Exchange also proposes to amend Exchange Rule 2600(a) to specify 
that it would not accept Market Orders (other than Market Orders that 
include a TIF of RHO that are to be routed to the primary listing 
exchange's opening process pursuant to the PAC routing option under 
Rule 2617(b)(5)(ii)) prior to 9:30 a.m. Eastern Time. This is because 
Market Orders would only be eligible to participate in the Regular 
Trading Session and the Exchange does not think it is appropriate to 
accept and hold Market Orders prior to the commencement of the Regular 
Trading Session due to the nature of the orders type--i.e., it seeks an 
immediate execution at the then available PBBO or better.\19\ During 
the Early Trading Session, the Exchange would continue to accept Market 
Orders that include a TIF of RHO that are to be routed to the primary 
listing exchange's opening process pursuant to the PAC routing option 
under Rule 2617(b)(5)(ii). This is consistent with current 
functionality where such Market Orders are routed to the primary 
listing market's opening process upon receipt and are not eligible for 
execution because the Exchange currently does not offer pre-market 
trading.\20\ Adding this provision regarding Market Orders that are 
coupled with both a TIF of RHO and the PAC routing option adds clarity 
to the Exchange's Rules and would avoid any potential confusion by 
market participants.
---------------------------------------------------------------------------

    \14\ Cboe EDGX Rule 11.1(a)(1) provides that orders entered 
between 2:30 a.m. and 4:00 a.m. Eastern Time would not be eligible 
for execution until the start of the Early Trading Session or 
Regular Trading Hours, depending on the TIF selected by the User. 
The Exchange notes that it proposes for orders to not become 
eligible for execution until the start of the Regular Trading 
Session, rather than Regular Trading Hours, as is the case on Cboe 
EDGX. On the Exchange, the Regular Trading Session commences at the 
conclusion of the Exchange's Opening or Contingent Opening Process 
set forth under Exchange Rule 2615, which is shortly after the 
commencement of Regular Trading Hours at 9:30 a.m. Eastern Time. The 
Exchange, therefore, believes this is not a material difference 
since Equity Members are free to select the TIF of their choosing 
which would determine when their order would become eligible for 
execution. Further, generally, any orders with a TIF of Regular 
Hours Only (``RHO'') are eligible to participate in the Exchange's 
Opening or Contingent Opening Process as described in Exchange Rule 
2615.
    \15\ The term ``User'' shall mean any Member or Sponsored 
Participant who is authorized to obtain access to the System 
pursuant to Exchange Rule 2602. See Exchange Rule 1901.
    \16\ The term ``MIAX Pearl Equities Book'' means the electronic 
book of orders in equity securities maintained by the System. See 
Exchange Rule 1901.
    \17\ But for the start time, this provision mirrors Cboe EDGX 
Rule 11.1(a)(1).
    \18\ The Exchange also proposes herein to adopt a new TIF known 
as FOK, which is based on the rules of other exchanges, and 
described in more detail below. Unlike Cboe EDGX, the Exchange would 
accept orders with a Post Only instruction and orders with a Minimum 
Execution Quantity instruction that also include a TIF instruction 
of RHO prior to 4:00 a.m. Eastern Time. See Exchange Rule 2614(c)(2) 
for a description of Post Only instruction and Exchange Rule 
2614(c)(7) for a description of Minimum Execution Quantity 
instruction.
    \19\ See Cboe EDGX Rule 11.8(a)(5) and Exchange Rule 
2614(a)(2)(ii).
    \20\ Exchange Rule 2617(b)(5)(B)(1)(i) provides that a Market 
Order designated as RHO received before the security has opened on 
the primary listing market will be routed to participate in the 
primary listing market's opening process upon receipt.
---------------------------------------------------------------------------

Exchange Rule 2614, Orders and Order Instructions
    The Exchange proposes to amend Exchange Rule 2614 to account for 
the addition of the proposed Early and Late Trading Sessions, adopt new 
TIF instructions, and to describe which TIF instructions are available 
with each order type.
Time-in-Force Instructions
    The Exchange currently offers two TIF instructions, IOC and RHO, 
the operation of each are described under Exchange Rule 2614(b)(1) and 
(2), respectively. Equity Members entering orders into the System may 
designate such orders to remain in effect and available for display 
and/or potential execution for varying periods of time. Unless 
cancelled earlier, once these time periods expire, the order (or 
unexecuted portion thereof) is cancelled. In sum, IOC is a TIF 
instruction that provides for the order to be executed in whole or in 
part as soon as such order is received. The portion not executed 
immediately on the Exchange or another Trading Center \21\ is treated 
as cancelled and is not posted to the MIAX Pearl Equities Book. RHO is 
a TIF instruction that designates the order for execution only during 
Regular Trading Hours, which includes the Opening Process for equity 
securities.
---------------------------------------------------------------------------

    \21\ The term ``Trading Center'' shall have the same meaning as 
in Rule 600(b)(95) of Regulation NMS. See Exchange Rule 100.
---------------------------------------------------------------------------

    The Exchange now proposes to add the following four additional TIF 
instructions under Exchange Rule 2614(b), Time-in-Force Instructions, 
to account for the addition of the Early and Late Trading Sessions: 
Day, FOK, Good-`til Time (``GTT''), and Good-`til Extended Day 
(``GTX'').\22\ Each of these proposed TIF instructions are described as 
follows:
---------------------------------------------------------------------------

    \22\ Each of these proposed TIF instruction are based on Cboe 
EDGX Rule 11.6(q)(2)-(5).
---------------------------------------------------------------------------

    <bullet> Day. Exchange Rule 2614(b)(3) would describe the Day TIF 
as an instruction the User may attach to an order stating that an order 
to buy or sell which, if not executed, expires at the end of Regular 
Trading Hours. Exchange Rule 2614(b)(3) would further provide that any 
Day order entered into the System before the opening for business on 
the Exchange as determined pursuant to Exchange Rule 2600, or after the 
closing of Regular Trading Hours, will be rejected.
    <bullet> FOK. Exchange Rule 2614(b)(4) would describe the FOK TIF 
as an instruction the User may attach to an order stating that the 
order is to be executed in its entirety as soon as it is received and, 
if not so executed, cancelled. Exchange Rule 2614(b)(4) would further 
provide that an order with a FOK instruction is not eligible for 
routing away pursuant to Exchange Rule 2617(b).
    <bullet> GTT. Exchange Rule 2614(b)(5) would describe the GTT TIF 
as an instruction the User may attach to an order specifying the time 
of day at which the order expires. Exchange Rule 2614(b)(5) would 
further provide that any unexecuted portion of an order with a TIF 
instruction of GTT will be cancelled at the expiration of the User's 
specified time, which can be no later than the close of the Late 
Trading Session.
    <bullet> GTX. Exchange Rule 2614(b)(5) would describe the GTX TIF 
as an instruction the User may attach to an order to buy or sell which, 
if not executed, will be cancelled by the close of the Late Trading 
Session.
Order Types and New Time-in-Force Instructions
    The Exchange currently offers the following order types, Limit 
Orders, Market Orders, and Pegged Orders. Pegged Orders consist of 
Primary Peg Orders and Midpoint Peg Orders. Under the description of 
each order type in Exchange Rule 2614(a), the Exchange enumerates which 
TIF instructions that order type may be combined with. The Exchange 
proposes to amend these provisions in the description of each order 
type under Exchange Rule 2614(a) to account for the proposed TIF 
instructions described above as follows:
    <bullet> Limit Orders. Exchange Rule 2614(a)(1)(ii) currently 
provides that a Limit Order may include a TIF of IOC or RHO. As 
amended, Exchange Rule 2614(a)(1)(ii) would also provide that a Limit 
Order may include a TIF of FOK, Day, GTT, or GTX. Exchange Rule 
2614(a)(1)(ii) also currently provides that a Limit Order is eligible 
to participate in the Regular Trading Session. The Exchange proposes to 
amend this sentence of Exchange Rule 2614(a)(1)(ii) to specify that a 
Limit Order would also be eligible to

[[Page 84409]]

participate in the Early and Late Trading Sessions.\23\
---------------------------------------------------------------------------

    \23\ The Exchange also proposes to amend the rule text for Limit 
Order Price Protection described in Exchange Rule 2614(1)(ix), which 
changes will be described in detail below.
---------------------------------------------------------------------------

    <bullet> Market Orders. Exchange Rule 2614(a)(2)(ii) currently 
provides that a Market Order may include a TIF of IOC. A Market Order 
may only include a TIF of RHO when it is to be routed pursuant to the 
PAC routing option under Rule 2617(b)(5)(ii). As amended, Exchange Rule 
2614(a)(2)(ii) would also provide that a Market Order may include a TIF 
of FOK. Market Orders would not be able to include a TIF of Day, GTT, 
or GTX.\24\ Exchange Rule 2614(b)(5)(ii) also currently provides that a 
Market Order is eligible to participate in the Regular Trading Session. 
Market Orders would not be eligible to participate in the Early and 
Late Trading Sessions. Therefore, the Exchange proposes to amend this 
sentence of Exchange Rule 2614(b)(5)(ii) to specify that a Market Order 
is only eligible to participate in the Regular Trading Session.
---------------------------------------------------------------------------

    \24\ Exchange Rule 2614(a)(1)(iii) also provides that a Market 
Order may only include a TIF of RHO when it is to be routed pursuant 
to the PAC routing option under Rule 2617(b)(5)(ii) and that all 
other Market Orders that include a TIF of RHO will be rejected.
---------------------------------------------------------------------------

    <bullet> Pegged Orders. Exchange Rule 2614(a)(3)(iii) currently 
provides that a Pegged Order may include a TIF of IOC or RHO. As 
amended, Exchange Rule 2614(a)(3)(iii) would also provide that a Pegged 
Order would also be able to include a TIF of FOK, Day, GTT, or GTX. 
Exchange Rule 2614(a)(3)(iii) also currently provides that a Pegged 
Order is eligible to participate in the Regular Trading Session. The 
Exchange proposes to amend this sentence of Exchange Rule 
2614(a)(3)(iii) to specify that a Pegged Order would also be eligible 
to participate in the Early and Late Trading Sessions.
Primary Peg Orders During Early and Late Trading Session
    The Exchange proposes to amend Exchange Rule 2614(a)(3)(iii) to 
restrict the TIF instruction that a displayed Primary Pegged Order with 
a Primary Offset Amount may have to RHO, or if entered during Regular 
Trading Hours, a TIF instruction of RHO or the proposed TIF instruction 
of Day. Exchange Rule 2614(a)(3)(i)(B) describes a Pegged Order as a 
Limit Order to buy (sell) that is assigned a working price pegged to 
the Protected Best Bid (Protected Best Offer),\25\ subject to its limit 
price. Exchange Rule 2614(a)(3)(i)(B)3. states that a User may, but is 
not required to, select an offset equal to or greater than one minimum 
price variation (``MPV'') for the security, as defined in Exchange Rule 
2612 (``Primary Offset Amount''). The Primary Offset Amount for a 
displayed Primary Pegged Order to buy (sell) must result in the working 
price of such order being inferior to or equal to the PBB (PBO), i.e., 
result in the price of such order being inferior to or equal to the 
inside quote on the same side of the market.
---------------------------------------------------------------------------

    \25\ With respect to the trading of equity securities, the term 
``Protected NBB'' or ``PBB'' shall mean the national best bid that 
is a Protected Quotation, the term ``Protected NBO'' or ``PBO'' 
shall mean the national best offer that is a Protected Quotation, 
and the term ``Protected NBBO'' or ``PBBO'' shall mean the national 
best bid and offer that is a Protected Quotation. See Exchange Rule 
1901.
---------------------------------------------------------------------------

    Other exchanges have observed that displayed Primary Pegged Orders 
with non-aggressive Primary Offset Amounts that remain active after the 
end of Regular Trading Hours may be pegged to and repriced off of each 
other during extended hours trading when no other reference price is 
available due to orders expiring or being cancelled at 4:00 p.m. 
Eastern Time.\26\ To prevent this from occurring, the Exchange proposes 
to restrict the TIF instruction that a displayed Primary Pegged Order 
with a Primary Offset Amount may have to RHO, or, if entered during 
Regular Trading Hours, a TIF instruction of Day or RHO. Doing so would 
cause displayed Primary Pegged Orders resting on the MIAX Pearl 
Equities Book to be eligible for execution from 9:30 a.m. to 4:00 p.m. 
Eastern Time. Limiting the TIF instructions to RHO and Day only for 
displayed Primary Pegged Orders with Primary Offset Amounts would 
ensure that these orders are eligible for execution during Regular 
Trading Hours, which is the most liquid portion of the trading day, 
thereby significantly decreasing the possibility that such orders may 
re-price off similar orders entered on away exchanges in the absence of 
additional liquidity at the NBB or NBO. The proposed rule change would 
cause displayed Primary Pegged Orders with Primary Offset Amounts to 
expire at the end of Regular Trading Hours when a vast majority of 
orders expire and do not participate in extended hours trading. As 
amended, Exchange Rule 2614(a)(3)(iii) would be amended to state that a 
displayed Primary Pegged Order with a Primary Offset Amount shall only 
include a TIF of RHO or, if entered during Regular Trading Hours, a TIF 
instruction of Day or RHO.\27\ Users may enter displayed Primary Pegged 
Orders with Primary Offset Amounts and TIF instructions of RHO 
beginning at 3:30 a.m. Eastern Time. However, those orders would not be 
eligible for execution until 9:30 a.m. Eastern Time, the start of 
Regular Trading Hours. Displayed Primary Peg orders with Primary Offset 
Amounts and a TIF of Day will be rejected if entered prior to 9:30 a.m. 
Eastern Time, the start of Regular Trading Hours. Primary Pegged orders 
that do not include a Primary Offset Amount or that are not displayed 
on the MIAX Pearl Equities Book would have no restrictions on the TIF 
instructions that may be attached to the order.
---------------------------------------------------------------------------

    \26\ See, e.g., Securities Exchange Act Release No. 82304 
(December 12, 2017), 82 FR 60075 (December 18, 2024) (SR-CboeBZX-
2017-008).
    \27\ See, e.g., Cboe BZX Exchange, Inc. (``Cboe BZX'') Rule 
11.9(c)(8)(A).
---------------------------------------------------------------------------

ISOs and New Time-in-Force Instructions
    ISO is an order instruction that may be attached to an incoming 
Limit Order. The operation of ISOs will be described in proposed 
Exchange Rule 2614(d) and is consistent with the description of the ISO 
exception in Rules 600(b)(30) and 611(b)(5) of Regulation NMS.\28\ 
Proposed Exchange Rule 2614(d) provides that the System will accept 
incoming ISOs (as such term is defined in Rule 600(b)(31) of Regulation 
NMS).
---------------------------------------------------------------------------

    \28\ 17 CFR 242.600(b)(30), 611(b)(5).
---------------------------------------------------------------------------

    To be eligible for treatment as an ISO, the order must be: (A) a 
Limit Order; (B) marked ``ISO''; and (C) the User entering the order 
must simultaneously route one or more additional Limit Orders marked 
``ISO,'' as necessary, to away Trading Centers to execute against the 
full displayed size of any Protected Quotation for the security as set 
forth below. Such orders, if they meet the requirements of the 
foregoing sentence, may be immediately executed at one or multiple 
price levels in the System without regard to Protected Quotations at 
away Trading Centers consistent with Regulation NMS (i.e., may trade 
through such quotations and will not be rejected or cancelled if it 
will lock, cross, or be marketable against an away Trading Center).
    Exchange Rule 2614(d)(1) provides that an ISO may include a TIF of 
IOC or RHO and the operation of an ISO will differ depending on the TIF 
selected. An ISO that includes a TIF of IOC will immediately trade with 
contra-side interest on the MIAX Pearl Equities Book up to its full 
size and limit price and any unexecuted quantity will be immediately 
cancelled. An ISO that includes a TIF of RHO, if marketable on arrival, 
will also immediately trade with contra-side interest on the MIAX Pearl 
Equities Book up to its full size and limit price. However, any 
unexecuted quantity of a RHO ISO will be displayed

[[Page 84410]]

at its limit price on the MIAX Pearl Equities Book and may lock or 
cross a Protected Quotation that was displayed at the time of arrival 
of the RHO ISO. The Exchange proposes to amend Exchange Rule 2614(d)(1) 
to provide that an ISO may include a TIF of RHO, Day, GTT, or GTX.\29\
---------------------------------------------------------------------------

    \29\ See, e.g., Cboe EDGA Rule 11.9(c)(1) and Cboe EDGX Rule 
11.9(c)(1).
---------------------------------------------------------------------------

    Exchange Rule 2614(d)(1) would also provide that incoming ISOs 
would not be able to include a TIF instruction of FOK.\30\ The Exchange 
also proposes to amend Exchange Rule 2614(d)(1) to provide that an 
incoming ISO with a Displayed, Post Only, and TIF instruction of RHO, 
Day, GTT, or GTX will be cancelled without execution if, when entered, 
it is immediately marketable against a displayed order resting on the 
MIAX Pearl Equities Book unless such order removes liquidity pursuant 
to Rule 2614(c)(2).\31\ This provision is consistent with current 
Exchange functionality that prevents a displayed locked or crossed 
market.\32\ This provision would provide additional specificity 
regarding the operation of incoming ISOs with a Displayed, Post Only, 
and TIF instruction of Day, GTT, or GTX that is also similar to other 
exchanges' rules.\33\
---------------------------------------------------------------------------

    \30\ See, e.g., id.
    \31\ Exchange Rule 2614(c)(2) provides that an order designated 
as Post Only will only remove liquidity from the MIAX Pearl Equities 
Book when: (A) the order is for a security priced below $1.00; or 
(B) the value of such execution when removing liquidity equals or 
exceeds the value of such execution if the order instead posted to 
the MIAX Pearl Equities Book and subsequently provided liquidity 
including the applicable fees charged or rebates provided. To 
determine at the time of a potential execution whether the value of 
such execution when removing liquidity equals or exceeds the value 
of such execution if the order instead posted to the MIAX Pearl 
Equities Book and subsequently provided liquidity, the Exchange will 
use the highest possible rebate paid and highest possible fee 
charged for such executions on the Exchange.
    \32\ See Exchange Rule 2617(a)(4)(iii) (providing, in sum, that 
``the System will never display a locked or crossed market'').
    \33\ See, e.g., Cboe EDGA Rule 11.9(c)(1) and Cboe EDGX Rule 
11.9(c)(1). The Exchange notes, however, that the Cboe EDGA and Cboe 
EDGX Rules do not account for an ISO with a Displayed instruction. 
The Exchange proposes to specify in proposed Exchange Rule 
2614(d)(1) that an incoming ISO could include a Displayed 
Instruction to provide additional specificity. This addition should 
make clear that this provision would require an ISO with a 
Displayed, Post Only, and TIF instruction that would be posted at a 
price that would lock or cross displayed contra-side interest 
resting on the MIAX Pearl Equities Book to be cancelled. Doing so, 
is intended to avoid the Exchange displaying a locked or crossed 
market as a result of the ISO with a Displayed instruction. See 
Exchange Rule 2617(a)(4)(iv) (not allowing for a displayed locked or 
crossed market). The Exchange notes that a non-displayed ISO with a 
Post Only instruction that is not fully executed upon entry may lock 
or cross contra-side interest resting on the MIAX Pearl Equities 
Book and the Exchange would handle such orders in accordance with 
Exchange Rule 2617(a)(4)(iii) and (iv). The Exchange believes this 
order handling is consistent with Cboe EDGA and Cboe EDGX Rules 
which also do not allow for a displayed locked or crossed market as 
well as the same order handling for when they experience a non-
displayed locked or crossed book. See Cboe EDGA Rule 11.10(a)(4)(C) 
and (D) and Cboe EDGX Rule 11.10(a)(4)(C) and (D). This 
functionality is also consistent with MEMX Rules 11.10(a)(4)(C) and 
(D). See also MEMX Rule 11.8(b)(3) and (5) (providing that Limit 
Order may include a Displayed, Non-Displayed, or ISO instruction and 
including similar rule text as Cboe EDGA, Cboe EDGX, and as the 
Exchange proposes herein). See also Nasdaq Rule 4703(j) (stating 
that ``[u]pon receipt of an ISO, the System will consider the stated 
price of the ISO to be available for other Orders to be entered at 
that price, unless the ISO is not itself accepted at that price 
level (for example, a Post-Only Order that has its price adjusted to 
avoid executing against an Order on the Nasdaq Book) or the ISO is 
not Displayed'').
---------------------------------------------------------------------------

    Exchange Rule 2614(d)(1)(i) provides that a User entering an ISO 
with a TIF of IOC represents that such User has simultaneously routed 
one or more additional Limit Orders marked ``ISO,'' if necessary, to 
away Trading Centers to execute against the full displayed size of any 
Protected Quotation for the security with a price that is superior to 
the ISO's limit price. Exchange Rule 2614(d)(1)(ii) provides that a 
User entering an ISO with a TIF of RHO makes the same representation 
but further represents that it simultaneously routed one or more 
additional Limit Orders marked ``ISO,'' if necessary, to away Trading 
Centers to execute against the full displayed size of any Protected 
Quotation for the security with a price that is equal to its limit 
price. The Exchange proposes to amend Exchange Rule 2614(d)(1)(ii) to 
include ISOs with a TIF instruction of Day, GTT, or GTX. Orders with a 
TIF of Day or RHO both expire at the end of Regular Trading Hours. 
Because the Exchange did not initially offer a TIF of Day, it proposed 
to handle ISOs with a TIF of RHO the same as Day ISOs are handled on 
other equity exchanges. The Exchange now proposes to amend Exchange 
Rule 2614(d)(1)(ii) to include the TIF of Day.\34\
---------------------------------------------------------------------------

    \34\ See Cboe EDGX Rule 11.9(c)(1) and Cboe EDGA Rule 
11.9(c)(1).
---------------------------------------------------------------------------

    The Exchange also proposes to amend Exchange Rule 2614(d)(1)(ii) to 
include the TIF instructions of GTT or GTX. Each of these TIF 
instructions are similar to Day and RHO because they each allow an 
order to rest on the MIAX Pearl Equities Book for a period of time. 
While both Day and RHO expire at the end of Regular Trading Hours, GTX 
allows for the order to expire at the end of the Late Trading Session 
at 8:00 p.m. Eastern Time. Meanwhile, GTT allows for a User to select a 
time at which the order would expire, which may be before or after the 
end of Regular Trading Hours but must be during the same trading day. A 
User entering an ISO with a TIF of Day, RHO, GTT, or GTX would make the 
same representations, i.e., that it simultaneously routed one or more 
additional Limit Orders marked ``ISO,'' if necessary, to away Trading 
Centers to execute against the full displayed size of any Protected 
Quotation for the security with a price that is equal to its limit 
price. The portion of the ISO with a TIF of Day, GTT, or GTX that is 
not executed upon entry, would rest on the MIAX Pearl Equities Book 
like an ISO with a TIF of RHO may do so today (or an ISO with a TIF of 
Day does so on other equity exchanges).
Exchange Rule 2615, Opening Process for Equity Securities
    The Exchange will not offer an opening process at 4:00 a.m. Eastern 
Time. Instead, at 4:00 a.m., the System will ``wake up'' by loading all 
open trading interest entered after 3:30 a.m. Eastern Time in time 
sequence, beginning with the order with the oldest timestamp onto the 
MIAX Pearl Equities Book. Such orders are then cancelled, executed, or 
routed to away Trading Centers in accordance with the terms of the 
order. Also at 4:00 a.m., the Exchange will open the execution system 
and accept new eligible orders. Equity Members will be permitted to 
enter orders beginning at 3:30 a.m. Eastern Time. Market Makers will be 
permitted, but not required, to open their quotes beginning at 4:00 
a.m. Eastern Time in the same manner they open their quotes today 
beginning at 9:30 a.m. Eastern Time.
    Exchange Rule 2615(b) provides that during the Opening Process, the 
Exchange attempts to match eligible buy and sell orders at the midpoint 
of the NBBO. All orders eligible to trade at the midpoint are processed 
in time sequence, beginning with the order with the oldest timestamp. 
The Opening Process concludes when no remaining orders, if any, can be 
matched at the midpoint of the NBBO. At the conclusion of the Opening 
Process, the unexecuted portion of orders that were eligible to 
participate in the Opening Process are placed on the MIAX Pearl 
Equities Book in time sequence, cancelled, executed, or routed to away 
Trading Centers in accordance with the terms of the order.
    Pursuant to Exchange Rule 2615(c), the Exchange calculates the 
midpoint of the NBBO as follows. When the primary listing exchange is 
the New York Stock Exchange LLC (``NYSE'') or NYSE American LLC (``NYSE 
American''), the

[[Page 84411]]

Opening Process is priced at the midpoint of the: (i) first NBBO 
subsequent to the first reported trade and first two-sided quotation on 
the primary listing exchange after 9:30:00 a.m. Eastern Time; or (ii) 
then prevailing NBBO when the first two-sided quotation is published by 
the primary listing exchange after 9:30:00 a.m. Eastern Time, but 
before 9:45:00 a.m. Eastern Time if no first trade is reported by the 
primary listing exchange within one second of publication of the first 
two-sided quotation by the primary listing exchange. For any other 
primary listing exchange, such as The Nasdaq Stock Market LLC 
(``Nasdaq''), NYSE Arca, LLC (``NYSE Arca''), and Cboe BZX, the Opening 
Process is priced at the midpoint of the first NBBO subsequent to the 
first two-sided quotation published by the primary listing exchange 
after 9:30:00 a.m. Eastern Time.
    Where a security has not begun to trade on the primary listing 
market, a Contingent Open serves an important purpose of prescribing an 
end to the early trading session and beginning of the regular trading 
session on that non-primary listing exchange. A Contingent Open allows 
a non-primary listing exchange that provides an early trading session 
to transition to a regular trading session in a timely manner where a 
security has not opened for trading on the primary listing market.\35\
---------------------------------------------------------------------------

    \35\ See, e.g., Securities Exchange Act Release Nos. 72676 (July 
25, 2014), 79 FR 44520 (July 31, 2014) (Notice); and 73468 (October 
29, 2014), 79 FR 65450 (November 4, 2014) (Notice of Filing of 
Amendment Nos. 1 and 3 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment Nos. 1 and 3, To 
Amend EDGX Rule 1.5 and Chapter XI Regarding Current System 
Functionality Including the Operation of Order Types and Order 
Instructions) (SR-EDGX-2014-18).
---------------------------------------------------------------------------

    Now that the Exchange proposes to offer an Early Trading Session, 
the Contingent Open would serve as a transition from the Early Trading 
Session to the Regular Trading Session. Exchange Rule 2615 previously 
provided for a Contingent Open. Because it did not previously offer an 
early trading session, the Exchange proposed in December 2023 to remove 
references to the Contingent Open from its Rules.\36\ In sum, the 
Exchange proposes to reverse those changes it made to its Rules by 
amending Exchange Rule 2615(d) to provide for a Contingent Open at 9:45 
a.m. Eastern Time. Exchange Rule 2615(d) would again describe the 
Contingent Open and provide that if the conditions to establish the 
price of the Opening Process described above do not occur by 9:45:00 
a.m. Eastern Time, the Exchange will handle all orders in time 
sequence, beginning with the order with the oldest timestamp, and be 
placed on the MIAX Pearl Equities Book, cancelled, executed, or routed 
to away Trading Centers in accordance with the terms of the order. The 
earlier version of the Contingent Open that the Exchange removed in 
December 2023 provided that the Exchange will conduct a Contingent Open 
and match all orders eligible to participate in the Opening Process at 
the midpoint of the then prevailing NBBO. Instead, due to the likely 
lack of liquidity in the security and other factors that would cause it 
to not open on the primary listing exchange, the Exchange proposes to 
simply feed any orders it may have received in time sequence onto the 
MIAX Pearl Equities Book, just as it proposes to do at 4:00 a.m. 
Eastern Time when the Early Trading Session would begin.
---------------------------------------------------------------------------

    \36\ See Securities Exchange Act Release No. 99203 (December 18, 
2023), 88 FR 88689 (December 22, 2023) (SR-PEARL-2023-71).
---------------------------------------------------------------------------

    Exchange Rule 2615(d) would further provide that if the midpoint of 
the NBBO is not available for the Contingent Open, all orders are 
handled in time sequence, beginning with the order with the oldest 
timestamp, and are placed on the MIAX Pearl Equities Book, cancelled, 
executed, or routed to away Trading Centers in accordance with the 
terms of the order. The Exchange also proposes to make a corresponding 
change to reinsert a reference to the Contingent Open in the definition 
of Regular Trading Session in Exchange Rule 1901.
    Next, the Exchange proposes to describe in Exchange Rule 2615 which 
orders may be eligible for execution in the time between the start of 
Regular Trading Hours at 9:30 a.m. and the Exchange's Opening Process 
or Contingent Opening Process. During this time, ISOs designated as RHO 
and all other orders without a TIF instruction of RHO may execute 
against eligible Early Trading Session contra-side interest resting on 
the MIAX Pearl Equities Book in the time period between the start of 
9:30 a.m. Eastern Time and the Exchange's Opening Process or a 
Contingent Open. Any unexecuted portion of an ISO that is designated 
RHO will be converted into a non-ISO and be queued for participation in 
the Opening Process. This provision would be set for under Exchange 
Rule 2615(a)(1) and the subsequent paragraphs would be renumbered 
accordingly.\37\
---------------------------------------------------------------------------

    \37\ See, e.g., Cboe BZX Rule 11.24(a)(1).
---------------------------------------------------------------------------

    Lastly, the Exchange proposes to adopt Exchange Rule 
2615(e)(1)(iii) to describe how the Exchange would re-open a security 
following a halt during the Early and Late Trading Sessions. 
Specifically, proposed Exchange Rule 2615(e)(1)(iii) would provide that 
during the Early Trading Session and Late Trading Session, the Re-
Opening Process will occur at the midpoint of the NBBO after one second 
has passed following: (i) for Tape A securities, the Exchange's receipt 
of the first NBBO following the resumption of trading after a halt, 
suspension, or pause; or (ii) for Tape B and C securities, the 
publication of the first two-sided quotation by the listing exchange 
following the resumption of trading after a halt, suspension, or pause. 
The Exchange believes it is reasonable to have different standards for 
Tape A securities that Tape B and C securities for the following 
reason. Tape A securities are listing on the NYSE, which is only open 
during Regular Trading Hours and, therefore, the Exchange believes it 
is appropriate to look for the first NBBO, which may comprise of quotes 
from other exchanges that are open for trading outside of Regular 
Trading Hours. Meanwhile, Tape B and C securities are listing on 
exchanges that engage in trading outside of Regular Trading Hours and 
may disseminate a two-sided quotation that may be used to calculate the 
midpoint of the NBBO. This proposed rule change is identical to the 
rules of at least one other national securities exchange \38\ and would 
provide clarity to market participants on how the Exchange would re-
open a security that was halted during the Early and Late Trading 
Sessions.
---------------------------------------------------------------------------

    \38\ See, e.g., Cboe BZX Rule 11.24(e)(1)(C).
---------------------------------------------------------------------------

Exchange Rule 2617, Order Execution and Routing
Regulation NMS Compliance
    Exchange Rule 2617(a)(2), Compliance with Regulation NMS and Trade-
Through Protections, includes subparagraph (i), which provides that for 
any execution to occur during Regular Trading Hours, the price of an 
order to buy (sell) must be equal to or lower (greater) than the PBO 
(PBB), unless the order is marked ISO or the execution falls within 
another exception set forth in Rule 611(b) of Regulation NMS. To 
address the addition of the Early and Late Trading Sessions, the 
Exchange proposes to add subparagraph (ii) to Exchange Rule 2617(a)(2). 
Proposed subparagraph (ii) to Exchange Rule 2617(a)(2) would be 
identical to

[[Page 84412]]

the rules of other national securities exchanges,\39\ and provide for 
any execution to occur during the Early Trading Session and Late 
Trading Session, the price must be equal to or better than the highest 
Protected Bid or lowest Protected Offer, unless the order is marked ISO 
or a Protected Bid is crossing a Protected Offer. The addition of 
Exchange Rule 2617(a)(2)(ii) would align the Exchange's rules with 
other national securities exchanges and provide investors certainty 
that the Exchange would execute orders consistent with Regulation NMS's 
Trade Through protections during the Early and Late Trading Sessions.
---------------------------------------------------------------------------

    \39\ See, e.g., Cboe EDGX Rule 11.10(a)(2) and IEX Rule 
11.230(a)(2)(B).
---------------------------------------------------------------------------

PAC Routing Option
    The Exchange offers the PAC routing option that enables an Equity 
Member to designate that their order be routed to the primary listing 
market to participate in the primary listing market's opening, re-
opening or closing process. Specifically, Exchange Rule 2617(b)(5)(ii) 
describes PAC as a routing option for Market Orders and displayed Limit 
Orders designated with a TIF of RHO that the entering firm wishes to 
designate for participation in the opening, re-opening (following a 
regulatory halt, suspension, or pause), or closing process of a primary 
listing market if received before the opening, re-opening, or closing 
process of such market. Exchange Rule 2617(b)(5)(B)2. provides that if 
a Limit Order designated as IOC is entered after the security has 
opened on the primary listing market, the Exchange will check the 
System for available shares and then route the remaining shares 
pursuant to the PI routing option described under Exchange Rule 
2617(b)(5)(iii). Any shares that remain unexecuted after routing will 
be cancelled in accordance with the terms of the order. The Exchange 
proposes to amend Exchange Rule 2617(b)(5)(B)2. to describe how the 
Exchange would handle Limit Orders designated as IOC and coupled with 
the PAC routing option received during the Early and Late Trading 
Session. Specifically, the Exchange proposes to handle such Limit 
Orders as it would if not coupled with the PAC routing option by 
checking the System for any available shares and any shares that remain 
unexecuted would be cancelled in accordance with the terms of the 
order. Limit Orders with a time-in-force of IOC that are not designated 
as ``Do Not Route'' pursuant to Exchange Rule 2614(c)(1) and that 
cannot be executed when reaching the Exchange will be eligible for 
routing away pursuant to Exchange Rule 2617(b). Exchange Rule 
2617(b)(5)(B)2. would, therefore, be amended to provide that if a Limit 
Order designated as IOC is entered during the Early or Late Trading 
Sessions, the Exchange will check the System for available shares and 
any shares that remain unexecuted will be routed pursuant to Exchange 
Rule 2617(b)(4)(ii) or cancelled in accordance with the terms of the 
order.
Amendments to Risk Controls
    To help Equity Members manage their risk, the Exchange currently 
offers the Trading Collar, Limit Order Price Protection, and other risk 
controls that authorize the Exchange to take automated action if 
certain conditions are met. Such risk controls provide Equity Members 
with enhanced abilities to manage their risk when trading on the 
Exchange. All of the Exchange's existing risk controls would be 
available during the proposed Early and Late Trading Sessions. To 
account for the different trading environment that occurs during 
trading outside of Regular Trading Hours described above, the Exchange 
proposes to adopt one new risk control and to augment the operation of 
Limit Order Price Protection under Exchange Rule 2614(a)(1)(ix) and 
Trading Collars under Exchange Rule 2618(b)(1) to provide Equity 
Members with the proper tools to manage their risk and control their 
order flow during these times. Each of these changes are described 
below.
Trading Collar
    The Exchange prevents all incoming orders, including those marked 
as Intermarket Sweep Orders (``ISO''), from executing at a price 
outside the Trading Collar price range as described in Exchange Rule 
2618(b). The Trading Collar prevents buy orders from trading or routing 
at prices above the collar and prevents sell orders from trading or 
routing at prices below the collar.
    The Exchange's default behavior is to calculate the Trading Collar 
price range for a security by applying the numerical guidelines for 
Clearly Erroneous Executions or a specified dollar value established by 
the Exchange.\40\ The result is added to the Trading Collar Reference 
Price to determine the Trading Collar Price for buy orders, while the 
result is subtracted from the Trading Collar Reference Price to 
determine the Trading Collar Price for sell orders. Exchange Rule 
2618(b)(1)(B) provides that the Trading Collar Reference Price is equal 
to the following: (i) consolidated last sale price disseminated during 
the Regular Trading Hours on trade date; or (ii) if (i) is not 
available, the prior day's Official Closing Price identified as such by 
the primary listing exchange, adjusted to account for events such as 
corporate actions and news events. Exchange Rule 2618(b)(1)(F) provides 
Equity Members the ability to override the Exchange's default behavior 
and provides that Equity Members may select a dollar value lower, 
higher, or equal to the Exchange-specified percentages and dollar value 
on an order-by-order basis.\41\ In other words, Equity Members may 
select a dollar value equal to, more, or less conservative than the 
Exchange's specified percentages and dollar value.
---------------------------------------------------------------------------

    \40\ Although the Exchange applies the numerical guidelines for 
Clearly Erroneous Executions, no order would be executed outside of 
the prescribed Price Bands pursuant to the Plan to Address 
Extraordinary Market Volatility.
    \41\ See Securities Exchange Act Release No. 99954 (April 12, 
2024), 89 FR 27824 (April 18, 2024) (SR-PEARL-2024-17). See also 
MIAX Pearl Equities Exchange Regulatory Circular 2024-10, Changes to 
Certain Risk Controls on MIAX Pearl Equities, dated July 1, 2024, 
available at https://www.miaxglobal.com/sites/default/files/circular-files/MIAX_Pearl_Equities_RC_2024_10.pdf.
---------------------------------------------------------------------------

    The Exchange proposes to amend Exchange Rule 2618(b)(1)(B) to 
update the hierarchy of reference prices used by the Exchange for 
Trading Collars due to the adoption of the Early and Late Trading 
Sessions. Each of the below proposed changes are based on the rules of 
another national securities exchange.\42\ First, the Exchange proposes 
to amend Exchange Rule 2618(b)(1)(B) to provide that the Trading Collar 
Reference Price is equal to the most current of the references prices 
outlined in the Rule. As a result of this change, the Exchange proposes 
to remove language from current Exchange Rule 2618(b)(1)(B)(ii) that 
provides that the prior day's Official Closing Price identified as such 
by the primary listing exchange, adjusted to account for events such as 
corporate actions and news events, would be used where the consolidated 
last sale price disseminated during the Regular Trading Hours on trade 
date under Exchange Rule 2618(b)(1)(B)(i) is unavailable. The Exchange 
notes that this change does not amend existing functionality because 
the sequence of reference prices to be used to calculate the Trading 
Collar would remain the same and the proposed language is simply 
intended to align the Exchange's Rule with that of another national 
securities exchange. This proposed change provides clarity that the 
Exchange would use a reference price that is most current and reflects 
the

[[Page 84413]]

trading behavior of the security at the time the Trading Collar is to 
be applied.
---------------------------------------------------------------------------

    \42\ See IEX Rule 11.190(f)(1)(A).
---------------------------------------------------------------------------

    The Exchange proposes to amend the current hierarchy to add an 
additional data point that may be used as a reference price that is 
used by at least one other exchange that offers Limit Order Price 
Protection and trading outside of Regular Trading Hours.\43\ 
Specifically, the Exchange proposes to amend Exchange Rule 
2618(b)(1)(B) to add new paragraph (ii) to provide that the Exchange 
may use the last trade price for the security on trade date that 
occurred outside of Regular Trading Hours (Form T, as communicated by 
the relevant SIP) on trade date which other than for the Form T 
designation would have been considered a valid last sale price as the 
reference price. Current Exchange Rule 2618(b)(1)(B)(ii) would be 
renumbered to paragraph (iii) to reflect the above addition and 
continue to provide that the prior day's Official Closing Price 
identified as such by the primary listing exchange, adjusted to account 
for events such as corporate actions and news events may be used as a 
reference price.
---------------------------------------------------------------------------

    \43\ See IEX Rule 11.190(f)(1)(B).
---------------------------------------------------------------------------

    The Exchange also proposes to make a related change to Exchange 
Rule 2618(b)(1)(A). Exchange Rule 2618(b)(1)(A) describes when the 
Trading Collar would not be applied and specifically provides that, 
upon entry, any portion of an order to buy (sell) that would execute at 
a price above (below) the Trading Collar price range \44\ is cancelled, 
unless: (i) the prior day's Official Closing Price identified as such 
by the primary listing exchange, i.e., the price listed under Exchange 
Rule 2618(b)(1)(B)(iii) described above, is to be applied and a 
regulatory halt has been declared by the primary listing market during 
that trading day; (ii) or if no consolidated last sale price has been 
disseminated following the conclusion of a regulatory halt declared by 
the primary listing market on that trading day. The Exchange proposes 
to amend Exchange Rule 2618(b)(1)(A)(ii) to further provide that, upon 
entry, any portion of an order to buy (sell) that would execute at a 
price above (below) the Trading Collar Price would not be cancelled 
where no last trade price for the security that occurred outside of 
Regular Trading Hours (Form T, as communicated by the relevant SIP) on 
trade date, which other than for the Form T designation would have been 
considered a valid last sale price, has been disseminated following the 
conclusion of a regulatory halt declared by the primary listing market 
on that trading day. This proposed change would ensure that the Trading 
Collar is not applied where the applicable Trading Collar Reference 
Price is unavailable. Again, each of the above changes are based on the 
rules of another national securities exchange.\45\
---------------------------------------------------------------------------

    \44\ The Exchange proposes to make a clarifying change to 
Exchange Rule 2618(b)(1)(A) to change the term ``Price'' to ``price 
range'' to more accurately reflect the price at which an order 
priced outside the Trading Collar would be cancelled.
    \45\ See IEX Rule 11.190(f)(1)(A).
---------------------------------------------------------------------------

    Exchange Rule 2618(b)(1)(E) sets forth the numerical guidelines 
used in the Trading Collar Price calculation to account for the 
proposed Early and Late Trading Sessions. Specifically, Exchange Rule 
2618(b)(1)(E) provides the following numerical guidelines table used in 
the Trading Collar Price calculation:

------------------------------------------------------------------------
                                                        Regular trading
            Trading collar reference price              hours numerical
                                                         guidelines (%)
------------------------------------------------------------------------
Greater than $0.00 up to and including $25.00........                 10
Greater than $25.00 up to and including $50.00.......                  5
Greater than $50.00..................................                  3
------------------------------------------------------------------------

    The Exchange proposes to amend the explanatory paragraph below the 
numerical guidelines table in Exchange Rule 2618(b)(1)(E) to provide 
the default dollar and percentage values will be subject to a 
multiplier established by the Exchange during the Early and Late 
Trading Sessions (the ``Extended Hours Multiplier''). Exchange Rule 
2618(b)(1)(E) provides that the specified dollar values will be posted 
to the Exchange's website and the Exchange will announce in advance any 
changes to the dollar value via a Regulatory Circular. Similarly, the 
Exchange proposes to amend Exchange Rule 2618(b)(1)(E) to also provide 
that the amount of the Extended Hours Multiplier would also be posted 
to the Exchange's website and the Exchange will announce in advance any 
changes to the Extended Hours Multiplier via a Regulatory Circular. To 
start, the Exchange would establish the value of the Extended Hours 
Multiplier to be 2, which make its numerical guideline to be applied 
during the Early and Late Trading Sessions identical to that of another 
national securities exchange.\46\ Further, the Exchange notes that 
applying a multiplier to a risk protection outside of Regular Trading 
Hours is not unique and currently in place on at least one other 
national securities exchange.\47\ Doing so enables the Exchange to 
better tailor its Trading Collar to reflect the trading conditions that 
are in place outside of Regular Trading Hours and provide necessary 
protections to Equity Members without unnecessarily preventing an 
otherwise acceptable execution. Furthermore, as discussed above, 
Exchange Rule 2618(b)(1)(F) provides Equity Members the ability to 
override the Exchange's default behavior and provides that Equity 
Members may select a dollar value lower, higher, or equal to the 
Exchange-specified percentages and dollar value on an order-by-order 
basis. Therefore, Equity Members would have the ability to tailor the 
Trading Collar to consider the Extended Hours Multiplier in line with 
their risk appetite during the Early and Late Trading Sessions.
---------------------------------------------------------------------------

    \46\ The proposed numerical guidelines for the Early and Late 
Trading Sessions are based on IEX Rule 11.190(f)(1)(D).
    \47\ The proposed Extended Hours Multiplier is based on the 
similar functionality offered by NYSE Arca utilized outside of 
Regular Trading Hours. See NYSE Pillar Risk Controls Manual 
(document version 4.0), Section 5.5, available at https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Risk_Controls.pdf (``Arca 
Risk Controls Manual'') (Early/Late Trading Multiplier (optional; 
Equities Markets)--may be configured to apply a double-wide price 
check to orders that first become eligible to trade in the Early or 
Late Trading Sessions (calculated as Price Protection Limit x Early/
Late Trading Multiplier)).
---------------------------------------------------------------------------

Limit Order Price Protection
    Limit Order Price Protection is set forth under Exchange Rule 
2614(a)(1)(ix) and provides for the rejection of Limit Orders priced 
too far away from a specified reference price at the time the order 
first becomes eligible to trade. A Limit Order entered before Regular 
Trading Hours that becomes eligible to trade during Regular Trading 
Hours (e.g., a Limit Order that contains a TIF of RHO) will be subject 
to Limit

[[Page 84414]]

Order Price Protection at the time Regular Trading Hours begins.\48\
---------------------------------------------------------------------------

    \48\ Further, a Limit Order in a security that is subject to a 
trading halt becomes first eligible to trade when the halt is lifted 
and continuous trading has resumed. See Exchange Rule 
2614(a)(1)(ix)(C).
---------------------------------------------------------------------------

    Currently, Exchange Rule 2614(a)(1)(ix)(A) provides that a Limit 
Order to buy (sell) will be rejected if it is priced at or above 
(below) the greater of a specified dollar and percentage away \49\ from 
the following: 1. PBO for Limit Orders to buy, the PBB for Limit Orders 
to sell; 2. if the PBBO is unavailable, then the consolidated last sale 
price disseminated during the Regular Trading Hours on trade date; or 
3. if neither 1. nor 2. are available, then the prior day's Official 
Closing Price identified as such by the primary listing exchange, 
adjusted to account for events such as corporate actions and news 
events.
---------------------------------------------------------------------------

    \49\ See MIAX Pearl Equities Regulatory Circular 2020-06, Limit 
Order Price Protection Default Values (dated September 14, 2020), 
available at https://www.miaxglobal.com/sites/default/files/circular-files/MIAX_PEARL_Equities_RC_2020_06.pdf (providing default 
specified dollar and percentage values for Limit Order Price 
Protection in the event that Equity Members do not customize the 
dollar and percentage values on a per session basis).
---------------------------------------------------------------------------

    The Exchange now proposes to amend Exchange Rule 2614(a)(1)(ix)(A) 
to amend the hierarchy of reference prices that would be used to 
account for the Early and Late Trading Sessions and align with the 
changes to the Trading Collar reference prices under Exchange Rule 
2618(b)(1)(B) described above. The Exchange proposes to amend the 
current hierarchy to add an additional data point that may be used as a 
reference price that is used by at least one other exchange that offers 
trading outside of Regular Trading Hours.\50\ First, the Exchange 
proposes to amend Exchange Rule 2614(a)(1)(ix)(A) to include the 
language in subparagraph 1. and provide that a Limit Order to buy 
(sell) will be rejected if it is priced at or above (below) the greater 
of a specified dollar and percentage away from the PBO for Limit Orders 
to buy, the PBB for Limit Orders to sell. As a result of this change, 
the Exchange proposes to renumber Exchange Rule 2614(a)(1)(ix)(A)2. as 
Exchange Rule 2614(a)(1)(ix)(A)1. Exchange Rule 2614(a)(1)(ix)(A) would 
further be amended to provide that if the PBBO is unavailable, a Limit 
Order to buy (sell) will be rejected if it is priced at or above 
(below) the greater of a specified dollar and percentage away from the 
most current of the following prices currently set forth in the Rule: 
the consolidated last sale price disseminated during Regular Trading 
Hours on trade date described under Exchange Rule 2614(a)(1)(ix)(A)1.; 
or the prior day's Official Closing Price identified as such by the 
primary listing exchange, adjusted to account for events such as 
corporate actions and news events described under Exchange Rule 
2614(a)(1)(ix)(A)2. (proposed to be renumbered as subparagraph 3. 
Described immediately below). The Exchange proposes to further amend 
Exchange Rule 2614(a)(1)(ix)(A) to include an additional price under 
subparagraph 2. that would align the prices used for Limit Order Price 
Protection with those to be used for the Trading Collar during the 
Early and Late Trading Sessions. Specifically, Exchange Rule 
2614(a)(1)(ix)(A)2. would provide that the last trade price for the 
security on trade date that occurred outside of Regular Trading Hours 
(Form T, as communicated by the relevant SIP) on trade date which other 
than for the Form T designation would have been considered a valid last 
sale price would be applied where is it more current than the prices 
set forth under Exchange Rule 2614(a)(1)(ix)(A)1. and 3. described 
above. Again, each of the above changes are based on the rules of 
another national securities exchange \51\ and other than using the 
PBBO, are designed to align the waterfall of reference prices with the 
changes proposed herein to the Trading Collar risk protection under 
Exchange Rule 2618(b)(1)(B), described above.
---------------------------------------------------------------------------

    \50\ See IEX Rule 11.190(f)(1)(A).
    \51\ See IEX Rule 11.190(f)(1)(A).
---------------------------------------------------------------------------

    As a result of the above proposed changes, the Exchange proposes to 
remove language from current Exchange Rule 2614(a)(1)(ix)(A)2. and 3. 
that the reference price set forth in each Rule would be applied where 
a preceding reference price is unavailable. The Exchange notes that 
this change does not amend existing functionality because the sequence 
of reference prices to be used to calculate Limit Order Price 
Protection would remain the same and the proposed language is simply 
intended to align the Exchange's Rule with that of another national 
securities exchange and to account for the addition of the Early and 
Late Trading Sessions. The proposed change provides clarity that the 
Exchange would use a reference price that is most current and reflects 
the trading behavior of the security at the time Limit Order Price 
Protection is to be applied and is consistent with the same change 
proposed above for the Exchange's Trading Collar risk protection.
    The Exchange believes its use of the amended reference price 
waterfall is reasonable because it would ensure that Limit Order Price 
Protection would continue to be applied when one or more reference 
prices are unavailable. Unlike on other exchanges,\52\ this would 
provide added protections to Equity Members when trading outside of 
Regular Trading Hours. The Exchange also believes it is reasonable to 
use the last trade price for the security on trade date that occurred 
outside of Regular Trading Hours as a reference price when the PBO 
(PBB) and consolidated last sale are unavailable because it would 
ensure that the Exchange is using a reference price that most 
accurately reflects the security's current trading behavior. Without 
this ability, the Exchange would use the prior day's official closing 
price as a reference price, which may be unrelated to the security's 
current trading behavior, especially during the Late Trading Session 
due to the official closing price and application of Limit Order Price 
Protection being separated by almost a complete trading day.
---------------------------------------------------------------------------

    \52\ See NYSE Arca Rule 7.31-E(a)(2)(B)(ii) (stating that 
``[d]uring the Early and Late Trading Sessions, Limit Order Price 
Protection will not be applied to an incoming Limit Order to buy 
(sell) if there is no NBO (NBB)'').
---------------------------------------------------------------------------

    Next, the Exchange proposes to amend Exchange Rule 
2614(a)(1)(ix)(B) regarding specified percentage elections for Limit 
Order Price Protection. Exchange Rule 2614(a)(1)(ix)(B) provides that 
Equity Members may customize the Limit Order Price Protection specified 
dollar and percentage values on an MPID and/or per session basis. If an 
Equity Member does not provide MIAX Pearl Equities specified dollar and 
percentage values for their order(s), default specified dollar and 
percentage values established by the Exchange will be applied.\53\
---------------------------------------------------------------------------

    \53\ The default specified dollar and percentage values are 
posted to the Exchange's website. See supra note 6. The Exchange 
will announce in advance any changes to those dollar and percentage 
values via a Regulatory Circular.
---------------------------------------------------------------------------

    Like the proposed changes described above for the Trading Collar 
under Exchange Rule 2618(b)(1)(B), the Exchange proposes to apply a 
multiplier to the Limit Order Price Protection specified dollar and 
percentage values during the Early and Late Trading Sessions. 
Specifically, the Exchange proposes to amend Exchange Rule 
2614(a)(1)(ix)(B) to provide that during the Early Trading Session and 
Late Trading Session, the default dollar and percentage values will be 
subject to a multiplier established by the Exchange (referred to as the 
``LOPP Extended Hours Multiplier''). This functionality is available on 
at least one other national

[[Page 84415]]

securities exchange.\54\ Exchange Rule 2614(a)(1)(ix)(B) would further 
provide that the default amount of the LOPP Extended Hours Multiplier 
will be posted to the Exchange's website and the Exchange will announce 
in advance any changes to the LOPP Extended Hours Multiplier via a 
Regulatory Circular, which is the case today for the default specified 
dollar and percentage established by the Exchange.
---------------------------------------------------------------------------

    \54\ The proposed LOPP Extended Hours Multiplier is based on the 
similar functionality offered by NYSE Arca during its early and late 
trading sessions. See NYSE Pillar Risk Controls Manual (document 
version 4.0), Section 5.5, available at https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Risk_Controls.pdf (``Arca Risk Controls 
Manual'') (Early/Late Trading Multiplier (optional; Equities 
Markets)--may be configured to apply a double-wide price check to 
orders that first become eligible to trade in the Early or Late 
Trading Sessions (calculated as Price Protection Limit x Early/Late 
Trading Multiplier)).
---------------------------------------------------------------------------

    Lastly, Exchange Rule 2614(a)(1)(ix)(B) would also provide that 
Equity Members may select a LOPP Extended Hours Multiplier that is 
higher than, equal to, or lower than the default LOPP Extended Hours 
Multiplier established by the Exchange. This proposed rule change would 
allow Equity Members to select their own LOPP Extended Hours 
Multiplier, enabling them to customize Limit Order Price Protection 
based on their own risk appetite during the Early and Late Trading 
Sessions. Importantly, the proposed rule change would not only allow 
Equity Members to select a LOPP Extended Hours Multiplier more 
aggressive than the Exchange's defaults, but also more conservative in 
cases where they seek to apply a tighter Limit Order Price Protection 
thresholds in line with their risk appetite. The ability to override 
the Exchange's LOPP Extended Hours Multiplier would be completely 
voluntary and all orders would continue to be subject to other risk 
protections provided by the Exchange.
    Lastly, the Exchange proposes to amend Exchange Rule 
2614(a)(1)(ix)(C) regarding when Limit Order Price Protection would be 
applied to account for the addition of the Early and Late Trading 
Sessions as well as align with the reference prices set forth under 
amended Exchange Rule 2614(a)(1)(ix)(B) described above. Currently, 
Exchange Rule 2614(a)(1)(ix)(C) provides that Limit Order Price 
Protection will not be applied if: the prices listed under paragraphs 
(a)(1)(ix)(A)1., 2., or 3 of Exchange Rule 2614 are unavailable; or 2. 
the price listed under paragraph (a)(1)(ix)(A)3. of Exchange Rule 2614. 
is to be applied and a regulatory halt has been declared by the primary 
listing market during that trading day; or 3. if no consolidated last 
sale price or the last trade price for the security has been 
disseminated following the conclusion of a regulatory halt declared by 
the primary listing market during that trading day. The Exchange 
proposes to delete Exchange Rule 2614(a)(1)(ix)(C)3. and remove 
references to subparagraphs 1., 2., and 3. of Exchange Rule 
2614(a)(1)(ix)(A) to account for the above changes and the result that 
Limit Order Price Protection would not be applied when any of the 
prices listed under Exchange Rule 2614(a)(1)(ix)(A) are not available. 
Deleting Exchange Rule 2614(a)(1)(ix)(C)3. is not a substantive change 
because Exchange Rule 2614(a)(1)(ix)(C)1. accounts for there being no 
consolidated last sale price (or even no last trade price for the 
security on trade date that occurred outside of Regular Trading Hours). 
These changes to Exchange Rule 2614(a)(1)(ix)(C) would align it with 
the reference prices set forth under Exchange Rule 2614(a)(1)(ix)(B), 
as well as when the Trading Collar would be applied under Exchange Rule 
2618(b)(1)(A), both of which are described above.
Early/Late Trading Session Pre-Order Risk Control
    The Exchange offers Equity Members the ability to establish certain 
risk control parameters that assist Equity Members in managing their 
market risk on a per order basis. These optional risk controls are set 
forth under Exchange Rule 2618(a)(1) and offer Equity Members 
protection from entering orders outside of certain size and price 
parameters, and selected order type and modifier combinations, as well 
as protection from the risk of duplicative executions. The Exchange 
also permits Equity Members to block new orders, to cancel all open 
orders, block both new orders and cancel all open orders, and 
automatically cancel all orders to the extent the Equity Member loses 
its connection to MIAX Pearl Equities.\55\ The risk controls are 
available to all Equity Members, but are particularly useful to Equity 
Market Makers, who are required to continuously quote in the equity 
securities to which they are assigned.
---------------------------------------------------------------------------

    \55\ See Exchange Rule 2618(a)(7)(a) (proposed herein to be 
renumbered as Exchange Rule 2618(a)(7)(A)). The Exchange also 
proposes to renumber Exchange Rule 2618(a)(7)(b) as Exchange Rule 
2618(a)(7)(B).
---------------------------------------------------------------------------

    Pursuant to Exchange Rule 2618(a)(1)(C), the risk controls include, 
among others, controls related to the order types or modifiers that can 
be utilized (including short sales and ISOs). The Exchange proposes to 
amend Exchange Rule 2618(a)(1)(C) to include pre-market and post-market 
in the list of risk controls for certain orders and is based on the 
rules of another national securities exchange.\56\ With the proposed 
change, Equity Members would have the ability to instruct the Exchange 
to block any orders entered during the proposed Early and Late Trading 
Sessions.\57\ Use of this pre-order risk control would be completely 
voluntary. Equity Members who do not wish to trade outside of Regular 
Trading Hours may use this risk control to ensure that an order that 
they may have inadvertently entered during the Early or Late Trading 
Sessions would be rejected by the Exchange.
---------------------------------------------------------------------------

    \56\ The inclusion of pre-market and post-market in the list of 
risk control settings is based on EDGX Rule 11.10(c).
    \57\ The configuration to block/reject orders from the proposed 
Early and Late Trading Sessions is also based on a similar 
configuration available on NYSE Arca. See the Arca Risk Controls 
Manual, Section 5.3 (Order Restriction), supra note 52.
---------------------------------------------------------------------------

* * * * *
    The Exchange does not guarantee that the risk settings in this 
proposal are sufficiently comprehensive to meet all of an Equity 
Member's risk management needs. Pursuant to Rule 15c3-5 under the 
Act,\58\ 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.\59\ Use of the 
Exchange's risk settings will not automatically constitute compliance 
with Exchange or federal rules and responsibility for compliance with 
all Exchange and Commission rules remains with the Equity Member.
---------------------------------------------------------------------------

    \58\ 17 CFR 240.15c3-5.
    \59\ 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.
---------------------------------------------------------------------------

Exchange Rule 2621, Clearly Erroneous Executions
    Clearly Erroneous Trade Processing. The Exchange will process trade 
breaks beginning at 4:00 a.m. pursuant to amended Exchange Rule 2621, 
Clearly Erroneous Executions. The Exchange proposes to amend Exchange 
Rule 2621 to account for the Early and Late Trading Sessions by 
adopting provisions that are substantially identical with those of 
other equity exchanges, all of which adopted and enforce identical 
rules regarding clearly erroneous executions.\60\ This includes 
amending the title of Exchange Rule 2621(c)(2) and

[[Page 84416]]

subparagraphs (A), (B), (C), and (D) to include the Early and Late 
Trading Sessions, as well as further amending subparagraph (A) to 
include numerical guidelines for the Early and Late Trading Sessions, 
which are identical to those of other equities exchanges.\61\ This also 
includes amending Exchange Rule 2621(d)(3) to mirror other equities 
exchange by including the Early and Late Trading Sessions.\62\
---------------------------------------------------------------------------

    \60\ See, e.g., Cboe BZX Rule 11.17 and MEMX Rule 11.15.
    \61\ Id.
    \62\ Id.
---------------------------------------------------------------------------

Exchange Rule 2120, Customer Disclosures
    The Exchange proposes to adopt new Exchange Rule 2120, Customer 
Disclosures, which require Equity Members to make certain disclosures 
regarding the risk of trading outside of Regular Trading Hours. 
Proposed Exchange Rule 2120 is substantially identical to the rules of 
other equity exchanges,\63\ and includes provisions requiring 
disclosures concerning the risk of lower liquidity, high volatility, 
changing prices, unlinked markets, news announcement, wider spreads, 
and the lack of calculation or dissemination of underlying Index Values 
or Intraday Indicative Values (``IIV'').
---------------------------------------------------------------------------

    \63\ See, e.g., Cboe BZX Rule 3.21 and MEMX Rule 3.21.
---------------------------------------------------------------------------

Exchange Rule 2900, Unlisted Trading Privileges
    Exchange Rule 2900(a) provides that the Exchange may extend 
unlisted trading privileges (``UTP'') to any security that is an NMS 
Stock that is listed on another national securities exchange or with 
respect to which unlisted trading privileges may otherwise be extended 
in accordance with Section 12(f) of the Act \64\ and any such security 
shall be subject to all Exchange rules applicable to trading on the 
Exchange, unless otherwise noted. Pursuant to Exchange Rule 2900(n)(1), 
the Exchange distributes an information circular prior to the 
commencement of trading in each such UTP Exchange Traded Product that 
generally includes the same information as is contained in the 
information circular provided by the listing exchange, including (a) 
the special risks of trading the new Exchange Traded Product, (b) the 
Exchange Rules that will apply to the new Exchange Traded Product, and 
(c) information about the dissemination of value of the underlying 
assets or indices. The Exchange proposes to amend Exchange Rule 
2900(b)(1) to provide that the information circular distributed by the 
Exchange also include risk of trading during the Early Trading Session 
(4:00 a.m.-9:30 a.m. Eastern Time) and Late Trading Session (4:00 p.m.-
8:00 p.m. Eastern Time) due to the lack of calculation or dissemination 
of the Intraday Indicative Value (``IIV'') or a similar value. The 
proposed text is identical to the rules of at least one other national 
securities exchange.\65\
---------------------------------------------------------------------------

    \64\ 17 CFR 78l.12(f).
    \65\ See, e.g., Cboe EDGX Rule 14.1(c)(1).
---------------------------------------------------------------------------

    Exchange Rule 2900(b)(3) provides that the Exchange will halt 
trading in a UTP Exchange Traded Product as provided for in Exchange 
Rule 2622. The Exchange proposes to amend Exchange Rule 2900(b)(3) to 
include language that is identical to at least one other national 
securities exchange \66\ that describes how the Exchange would halt or 
continue trading during its proposed extended hours trading sessions. 
First, the Exchange proposes to add subparagraph (A) to Exchange Rule 
2900(b)(3) entitled, Early Trading Session and Late Trading Session, 
which would provide that if a UTP Derivative Security begins trading on 
the Exchange in the Early Trading Session or Late Trading Session and 
subsequently a temporary interruption occurs in the calculation or wide 
dissemination of the IIV or the value of the underlying index, as 
applicable, to such UTP Derivative Security, by a major market data 
vendor, the Exchange may continue to trade the UTP Derivative Security 
for the remainder of the Early Trading Session and Late Trading 
Session. Then, the Exchange proposes to add subparagraph (B) to 
Exchange Rule 2900(b)(3), entitled, Late Trading Session and Next 
Business Day's Early Trading Session. Proposed subparagraph (i) to 
Exchange Rule 2900(b)(3)(B) would provide that if the IIV or the value 
of the underlying index became unavailable during the Early Trading 
Session or Regular Trading Hours and continues not to be calculated or 
widely available after the close of Regular Trading Hours, the Exchange 
may trade the UTP Derivative Security in the Late Trading Session only 
if the listing market traded such securities until the close of its 
regular trading session without a halt. Lastly, proposed subparagraph 
(ii) of Exchange Rule 2900(b)(3)(B), subsection (ii) would provide that 
if the IIV or the value of the underlying index became unavailable as 
discussed under proposed paragraph (A) of proposed Exchange Rule 
2900(b)(3) discussed above and continues not to be calculated or widely 
available as of the commencement of the Early Trading Session on the 
next business day, the Exchange shall not commence trading of the UTP 
Derivative Security in the Early Trading Session that day. If an 
interruption in the calculation or wide dissemination of the IIV or the 
value of the underlying index continues, the Exchange may resume 
trading in the UTP Derivative Security only if calculation and wide 
dissemination of the IIV or the value of the underlying index resumes 
or trading in the UTP Derivative Security resumes in the listing 
market.
---------------------------------------------------------------------------

    \66\ See, e.g., Cboe EDGX Rule 14.1, Interpretations and 
Policies .01(a) and (b).
---------------------------------------------------------------------------

    Again, each of the above proposed changes to Exchange Rule 2900 are 
identical to those of at least one other national securities exchange. 
Codifying these provisions in its rules would ensure that the 
Exchange's rules are aligned with other national securities exchanges 
and describe that the Exchange will continue to disseminate information 
circulars for, and halt trading in, UTP Derivative Securities in 
accordance with industry practice.
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,\67\ in general, and furthers the objectives of Section 
6(b)(5),\68\ 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 it would provide market participants an additional pool of 
liquidity outside of Regular Trading Hours. The Exchange simply 
proposes to expand the hours

[[Page 84417]]

during which trading occurs on the Exchange as well as expand 
functionality and risk controls in a manner that either mirrors or is 
substantially similar to what is currently available on other 
exchanges. The Exchange also believes that the proposed rule change is 
non-discriminatory as it would apply to all Equity Members uniformly. 
In other words, any Equity Member that wishes to participate in the 
proposed Early or Late Trading Sessions may do so equally. The proposed 
rule change in whole is designed to attract more order flow to the 
Exchange between 4:00 a.m. and 9:30 a.m. Eastern Time and 4:00 p.m. and 
8:00 p.m. Eastern Time. Increased liquidity during these times should 
lead to improved price discovery and increased execution opportunities 
on the Exchange, therefore, promoting just and equitable principles of 
trade, and removing impediments to and perfecting the mechanism of a 
free and open market and a national market system.
---------------------------------------------------------------------------

    \67\ 15 U.S.C. 78f(b).
    \68\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Early and Late Trading Sessions
    The Exchange believes its proposal to adopt the Early and Late 
Trading Sessions promotes just and equitable principles of trade, 
removes impediments to and perfects the mechanism of a free and open 
market and a national market system, prevents fraudulent and 
manipulative acts and practices, and, in general, protects investors 
and the public interest. The Exchange believes that the Early and Late 
Trading Sessions will benefit investors, the national market system, 
Equity Members, and the Exchange market by increasing competition for 
order flow and executions, and thereby spur product enhancements and 
lower prices. The Early and Late Trading Sessions will benefit Equity 
Members and the Exchange market by increasing trading opportunities 
between 4:00 a.m. and 9:30 p.m. and 4:00 p.m. and 8:00 p.m. Eastern 
Time without increasing ancillary trading costs (telecommunications, 
market data, connectivity, etc.) and, thereby, decreasing average 
trading costs per share. The Exchange notes that trading during the 
proposed Early and Late Trading Session is currently available on MEMX, 
NYSE Arca, and elsewhere and its proposed definitions under Exchange 
Rule 1901 are based on the rules of these exchanges.\69\ The Exchange 
believes that the availability of trading between 4:00 a.m. and 9:30 
p.m. and 4:00 p.m. and 8:00 p.m. Eastern Time has been beneficial to 
market participants including investors and issuers on other markets. 
Introduction of the Early and Late Trading Sessions on the Exchange 
will further expand these benefits.
---------------------------------------------------------------------------

    \69\ See supra notes 9 and 10.
---------------------------------------------------------------------------

    Additionally, the Exchange Act's goal of creating an efficient 
market system includes multiple policies such as price discovery, order 
interaction, and competition among markets. The Exchange believes that 
offering competing trading sessions will promote all of these policies 
and will enhance quote competition, improve liquidity in the market, 
support the quality of price discovery, promote market transparency, 
and increase competition for trade executions while reducing spreads 
and transaction costs. Additionally, increasing liquidity during the 
Early and Late Trading Sessions will raise investors' confidence in the 
fairness of the markets and their transactions, particularly due to the 
lower volume of trading occurring prior to opening.
    The expansion of trading hours through the creation of the Early 
and Late Trading Sessions promotes just and equitable principles of 
trade by providing market participants with additional options in 
seeking executions on the Exchange. The Exchange will report the best 
bid and offer on the Exchange to the appropriate network processor and 
via the Exchange's proprietary data feeds beginning at 4:00 a.m. 
Eastern Time.\70\ The proposal will, therefore, facilitate a well-
regulated, orderly, and efficient market during a period of time that 
is currently underserved.
---------------------------------------------------------------------------

    \70\ See, e.g., 17 CFR 242.603(a).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices because all 
surveillance coverage currently performed by the Exchange's 
surveillance systems will launch by the time trading starts at 4:00 
a.m. Eastern Time and continue until 8:00 p.m. Eastern Time. Proposed 
Exchange Rule 2120 is substantially identical to the rules of other 
equity exchanges,\71\ and includes provisions requiring disclosures 
concerning the risk of lower liquidity, high volatility, changing 
prices, unlinked markets, news announcement, wider spreads, and the 
lack of calculation or dissemination of underlying Index Values or IIV. 
The Exchange believes that the proposed rule change will protect 
investors and the public interest because the Exchange is adopting 
customer disclosure requirements under proposed Exchange Rule 2120 to 
prohibit equity Members from accepting an order from a customer for 
execution in the Early and Late Trading Session without disclosing to 
their customer that extended hours trading involves material trading 
risks, including the possibility of lower liquidity, high volatility, 
changing prices, unlinked markets, an exaggerated effect from news 
announcements, wider spreads and any other relevant risk.
---------------------------------------------------------------------------

    \71\ See, e.g., Cboe BZX Rule 3.21 and MEMX Rule 3.21.
---------------------------------------------------------------------------

Exchange Rules 2600, Hours of Trading
    The Exchange believes its proposed amendments to Exchange Rule 2600 
promote just and equitable principles of trade and remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system. Exchange Rule 2600 sets forth when orders may be entered 
into the System and during which timeframes orders are eligible for 
execution. The Exchange proposes to amend Exchange Rule 2600 to account 
for the addition of the Early and Late Trading Sessions and is based on 
the rules of other exchanges,\72\ with slight immaterial differences. 
For example, Cboe EDGX Rule 11.1(a)(1) provides that orders entered 
between 2:30 a.m. and 4:00 a.m. Eastern Time would not be eligible for 
execution until the start of the Early Trading Session or Regular 
Trading Hours, depending on the TIF selected by the User. The Exchange 
notes that, in addition to becoming eligible for execution at the start 
of the Early Trading Session, it proposes to state that orders may also 
become eligible for execution at the start of the Regular Trading 
Session, rather than Regular Trading Hours, as is the case on Cboe 
EDGX. On the Exchange, the Regular Trading Session commences at the 
conclusion of the Exchange's Opening or Contingent Opening Process set 
forth under Exchange Rule 2615, which is shortly after the commencement 
of Regular Trading Hours at 9:30 a.m. Eastern Time. The Exchange, 
therefore, believes this is not a material difference since Equity 
Members are free to select the TIF of their choosing which would 
determine when their order would become eligible for execution. 
Further, generally, any order with a TIF of RHO becomes eligible for 
execution at the start of Regular Trading Hours at 9:30 a.m. Eastern 
Time \73\ and is eligible to participate in the Exchange's Opening or 
Contingent Opening Process as described in Exchange Rule 2615.
---------------------------------------------------------------------------

    \72\ Cboe EDGX Rule 11.1(a) and (a)(1).
    \73\ See, e.g., proposed Exchange Rule 2615(a)(1).

---------------------------------------------------------------------------

[[Page 84418]]

    Exchange Rule 2600(a) would also provide that the Exchange would 
not accept all orders with a TIF instruction of FOK, in addition to 
ISOs and orders with a TIF instruction of IOC, prior to 4:00 a.m. 
Eastern Time. Unlike Cboe EDGX, the Exchange would accept orders with a 
Post Only instruction and orders with a Minimum Execution Quantity 
instruction that also include a TIF instruction of RHO prior to 4:00 
a.m. Eastern Time.
    Exchange Rule 2600(a) would also provide that the Exchange would 
not accept Market Orders (other than Market Orders that include a TIF 
of RHO that are to be routed to the primary listing exchange's opening 
process pursuant to the PAC routing option under Rule 2617(b)(5)(ii)) 
prior to 9:30 a.m. Eastern Time. The Exchange believes this is 
reasonable because Market Orders would only be eligible to participate 
in the Regular Trading Session and the Exchange does not think it is 
appropriate to accept and hold Market Orders prior to the commencement 
of the Regular Trading Session due to the nature of the orders type--
i.e., it seeks an immediate execution at the then available PBBO or 
better.\74\ Also unlike Cboe EDGX, the Exchange would continue to 
accept Market Orders that include a TIF of RHO during the Early Trading 
Session that are to be routed to the primary listing exchange's opening 
process pursuant to the PAC routing option under Rule 2617(b)(5)(ii). 
The Exchange again believes that this difference is immaterial. The 
proposal to continue to accept Market Orders that are coupled with both 
a TIF of RHO and the PAC routing option is consistent with current 
functionality where such Market Orders are routed to the primary 
listing market's opening process upon receipt and are not eligible for 
execution because the Exchange currently does not offer pre-market 
trading.\75\ Adding this provision in Exchange Rule 2600 regarding 
Market Orders that are coupled with both a TIF of RHO and the PAC 
routing option generally repeats what is already set forth in Exchange 
Rule 2617(b)(5)(ii)(A)1. This proposed change would add clarity to the 
Exchange's Rules as well as would avoid any potential confusion by 
market participants.
---------------------------------------------------------------------------

    \74\ See Cboe EDGX Rule 11.8(a)(5) and Exchange Rule 
2614(a)(2)(ii).
    \75\ Exchange Rule 2617(b)(5)(B)(1)(i) provides that a Market 
Order designated as RHO received before the security has opened on 
the primary listing market will be routed to participate in the 
primary listing market's opening process upon receipt.
---------------------------------------------------------------------------

    Today, the Exchange also does not accept orders with a Post Only 
instruction and orders with a Minimum Execution Quantity instruction 
that also include a TIF instruction of RHO prior to 9:30 a.m. Eastern 
Time, the time after which the Exchange would conduct its Opening 
Process and begin to execute orders. At such time, the Exchange would 
begin to accept Post Only instruction and orders with a Minimum 
Execution Quantity instruction that also include a TIF instruction of 
RHO. The Exchange is simply updating its Exchange Rule 2600 to reflect 
the new time it would begin to execute orders and at which it would 
begin to accept Post Only instruction and orders with a Minimum 
Execution Quantity instruction that also include a TIF instruction of 
RHO. Doing so would provide market participants seeking to utilize 
those order types during the Early Trading Session with an additional 
exchange to send those orders for potential execution.
Exchange Rule 2614, Orders and Order Instructions
    The Exchange proposes to amend Exchange Rule 2614 to account for 
the addition of the proposed Early and Late Trading Sessions, adopt new 
TIF instructions, describe which TIF instructions are available with 
each order type, and adopt other similar functionality as other 
exchanges that provide trading outside of Regular Trading Hours. Each 
of these changes remove impediments to and perfect the mechanism of a 
free and open market and a national market system because they would 
allow the Exchange to provide efficient trading modifiers and 
functionality that is in place on other exchanges and would provide for 
efficient executions and order interactions during the Early and Late 
Trading Sessions.
Time-in-Force Instructions
    The Exchange believes its proposed TIF instructions promote just 
and equitable principles of trade, and remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system. The Exchange believes that the proposed TIF instructions will 
benefit investors by providing them with greater control over their 
orders. The proposed TIF instructions simply provide market 
participants with additional functionality they may use to instruct the 
Exchange when their orders may be or are to become eligible for 
execution.
    In addition, Equity Members will maintain the ability to cancel or 
modify the terms of their order at any time, including during the Early 
and Late Trading Sessions. As a result, an Equity Member who utilizes 
the proposed TIF instructions, but later determines that market 
conditions favor execution during another trading session, such as 
Regular Trading Hours, can cancel the order resting on the MIAX Pearl 
Equities Book and enter a separate order with a TIF instruction that 
would provide that the order be eligible for execution during the 
trading session(s) they prefer.
    The ability to select the trading sessions or time upon which an 
order is to be eligible for execution is not novel and is currently 
available on the Exchange and other market centers. For example, on the 
Exchange, a User may currently enter an order starting at 7:30 a.m. 
Eastern Time and select that such order not be eligible for execution 
until 9:30 a.m., the start of Regular Trading Hours, using TIF 
instructions of Regular Hours Only.\76\ In addition, each of the 
proposed TIF instructions are well established in the equities markets 
and available on most other national securities exchanges.\77\
---------------------------------------------------------------------------

    \76\ See Exchange Rule 2600(a). See also Nasdaq Rule 4703(a) 
(outlining TIF instructions that do not activate orders until 9:30 
a.m. Eastern Time).
    \77\ Each of these proposed TIF instruction are based on Cboe 
EDGX Rule 11.6(q)(2)--(5).
---------------------------------------------------------------------------

Primary Peg Orders During Early and Late Trading Session
    The proposed rule change removes impediments to and perfects the 
mechanism of a free and open market and a national market system by 
ensuring that Primary Pegged Orders with Primary Offset Amounts 
displayed on the MIAX Pearl Equities Book do not inadvertently re-price 
off similar orders on away exchanges in absence of other liquidity 
creating the illusion of aberrant prices for the security. The proposed 
rule change would restrict the use of the order type to Regular Trading 
Hours only, the most liquid part of the trading day, thereby 
significantly decreasing the possibility of such orders re-pricing off 
of each other in the absence of additional liquidity. The Exchange does 
not propose to amend or alter the operation of Primary Pegged Orders in 
any other manner. The proposed rule change also promotes just and 
equitable principles of trade by limiting the times at which such 
orders are active so as to ensure that the order pegs to prices that 
reflect the true NBBO of the security and not the Primary Offset Amount 
of a pegged order in the absence of other liquidity. The proposed rule 
change also removes impediments to and perfects the mechanism of a free 
and open market and a national market system because also it aligns 
with

[[Page 84419]]

similar functionality availability on other national securities 
exchanges.\78\
---------------------------------------------------------------------------

    \78\ See, e.g., Securities Exchange Act Release No. 82304 
(December 12, 2017), 82 FR 60075 (December 18, 2024) (SR-CboeBZX-
2017-008).
---------------------------------------------------------------------------

Exchange Rule 2615, Opening Process for Equity Securities
    Opening and Re-Opening Processes. The Exchange believes its 
proposed amendments to Exchange Rule 2615(a)(1) promotes just and 
equitable principles of trade removes impediments to and perfects the 
mechanism of a free and open market and a national market system. 
Amended Exchange Rule 2615(a)(1) would provide market participants 
clarity as to how the Exchange would handle orders between 9:30 a.m. 
Eastern Time and its Opening or Contingent Opening Process. This 
proposal is also identical to the rules of at least one other national 
securities exchange \79\ and would, therefore, provide for consistent 
functionality across exchanges.
---------------------------------------------------------------------------

    \79\ See, e.g., Cboe BZX Rule 11.24(a)(1).
---------------------------------------------------------------------------

    Likewise, the Exchange believes its proposal to adopt Exchange Rule 
2615(e)(1)(iii) to describe how the Exchange would re-open a security 
following a halt during the Early and Late Trading Sessions promotes 
just and equitable principles of trade because it would provide clarity 
to market participants on how the Exchange would re-open a security 
that was halted during the Early of Late Trading Sessions. This 
proposal is also identical to the rules of at least one other national 
securities exchange \80\ and would, therefore, provide for consistent 
functionality across exchanges.
---------------------------------------------------------------------------

    \80\ See, e.g., Cboe BZX Rule 11.24(e)(1)(iii).
---------------------------------------------------------------------------

    Contingent Open. The Exchange believes its proposed amendments to 
Exchange Rule 2615(d) to reinstate the Contingent Opening Process 
promotes just and equitable principles of trade because a Contingent 
Open serves an important purpose of prescribing an end to the early 
trading session and beginning of the regular trading session on that 
non-primary listing exchange where a security has not begun to trade on 
the primary listing market. A Contingent Open allows a non-primary 
listing exchange that provides an early trading session to transition 
to a regular trading session in a timely manner where a security has 
not opened for trading on the primary listing market.
    Because it did not previously offer an early trading session, the 
Exchange proposed in December 2023 to remove references to the 
Contingent Open from its Rules.\81\ Now that the Exchange proposes to 
offer an Early Trading Session, the Contingent Open would serve as a 
transition from the Early Trading Session to the Regular Trading 
Session. Also, other exchanges that provide for pre-market trading also 
conduct a Contingent Open.\82\
---------------------------------------------------------------------------

    \81\ See Securities Exchange Act Release No. 99203 (December 18, 
2023), 88 FR 88689 (December 22, 2023) (SR-PEARL-2023-71).
    \82\ See, e.g., Securities Exchange Act Release Nos. 72676 (July 
25, 2014), 79 FR 44520 (July 31, 2014) (Notice); and 73468 (October 
29, 2014), 79 FR 65450 (November 4, 2014) (Notice of Filing of 
Amendment Nos. 1 and 3 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment Nos. 1 and 3, To 
Amend EDGX Rule 1.5 and Chapter XI Regarding Current System 
Functionality Including the Operation of Order Types and Order 
Instructions) (SR-EDGX-2014-18).
---------------------------------------------------------------------------

    The Exchange notes, however, that the earlier version of the 
Contingent Open that the Exchange removed in December 2023 provided 
that the Exchange will conduct a Contingent Open and match all orders 
eligible to participate in the Opening Process at the midpoint of the 
then prevailing NBBO. The Exchange no longer proposes to do so and 
rather, in cases where the conditions to establish the price of the 
Opening Process described in Exchange Rule 2615(c) do not occur by 
9:45:00 a.m. Eastern Time, handle all orders in time sequence, 
beginning with the order with the oldest timestamp, and be placed on 
the MIAX Pearl Equities Book, cancelled, executed, or routed to away 
Trading Centers in accordance with the terms of the order. The Exchange 
proposes this change to simply feed any orders it may have received in 
time sequence onto the MIAX Pearl Equities Book due to the likely lack 
of liquidity in the security and other factors that would cause it to 
not open on the primary listing exchange by 9:45 a.m. Eastern Time. 
This change is not material because it would be identical to how the 
Exchange proposes to handle orders at 4:00 a.m. Eastern Time when the 
Early Trading Session would begin as well as how other non-primary 
listing exchanges that do not perform an opening process handle orders 
when they commence trading. Therefore, the Exchange's proposal to 
reinstitute the Contingent Opening Process, as proposed, is consistent 
with the Act because it would allow for orders to be fed onto the MIAX 
Pearl Equities Book in a consistent manner when the Exchange does not 
conduct an Opening Process because the conditions in Exchange Rule 
2615(c) have not been satisfied.
Exchange Rule 2617, Order Execution and Routing
Regulation NMS Compliance
    The Exchange believes its proposed adoption of Exchange Rule 
2617(a)(2)(ii) promotes just and equitable principles of trade and 
removes impediments to and perfects the mechanism of a free and open 
market and a national market system because provide investors certainty 
that the Exchange would execute orders consistent with Regulation NMS's 
Trade Through protections during the Early and Late Trading Sessions. 
It is also identical to the rules of other national securities 
exchanges \83\ and would, therefore, align the Exchange's rules with 
other national securities exchanges, thereby avoiding potential 
investor confusion by providing for consistent rules across exchanges.
---------------------------------------------------------------------------

    \83\ See, e.g., Cboe EDGX Rule 11.10(a)(2) and IEX Rule 
11.230(a)(2)(B)
---------------------------------------------------------------------------

PAC Routing Option
    The Exchange believes its proposal to amend Exchange Rule 
2617(b)(5)(B)2. to describe how the Exchange would handle Limit Orders 
designated as IOC and coupled with the PAC routing option received 
during the Early and Late Trading Session promotes just and equitable 
principles of trade and removes impediments to and perfects the 
mechanism of a free and open market and a national market system. The 
Exchange simply proposes to handle such Limit Orders as it would if not 
coupled with the PAC routing option by checking the System for any 
available shares and any shares that remain unexecuted would either be 
routed or cancelled in accordance with the terms of the order, and not 
in a different manner.
    Adding this provision in Exchange Rule 2617(b)(5)(B)2. generally 
repeats what is already set forth in Exchange Rule 2614(b)(1) which 
describes the TIF instruction of IOC. Amending Exchange Rule 
2617(b)(5)(B)2. to include the treatment of an order coupled with a TIF 
instruction of IOC, albeit also coupled with the PAC routing option, 
would provide added clarity to the Rule to the benefit of investors and 
national market system by seeking to avoid potential investor 
confusion.
Amendments to Risk Controls
    The proposed changes to select risk controls during the Early and 
Late Trading Session are consistent with Section 6(b) of the Act,\84\ 
in general, and further the objectives of Section

[[Page 84420]]

6(b)(5),\85\ in particular, because they are 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.
---------------------------------------------------------------------------

    \84\ 15 U.S.C. 78f(b).
    \85\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes the proposed changes will 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system because they provide additional 
functionality that is calibrated to account for the different trading 
environment so that Equity Members may appropriately manage their risk 
during the Early and Late Trading Sessions. The Exchange believes that 
the proposed changes would protect investors and the public interest 
because the proposed additional functionality is a form of risk 
mitigation that will aid Equity Members in minimizing their financial 
exposure and reduce the potential for disruptive, market-wide events 
during the Early and Late Trading Sessions. In turn, the application of 
such risk management functionality could enhance the integrity of 
trading on the securities markets and help to assure the stability of 
the financial system, particularly during the Early and Late Trading 
Sessions. The proposed rule changes would provide an additional option 
for Equity Members seeking to further tailor their risk management 
capability while transacting on the Exchange outside of Regular Trading 
Hours.
Trading Collars
    The Exchange's proposal to amend Exchange Rule 2618(b)(1)(B) to 
update the hierarchy of reference prices used by the Exchange for 
Trading Collars due to the adoption of the Early and Late Trading 
Sessions perfects the mechanism of a free and open market and a 
national market system because it would provide clarity within Exchange 
Rule 2618(b)(1)(B) and align the Exchange's Rule with that of another 
national securities exchange.\86\ This proposed change does not amend 
existing functionality as the sequence of reference prices to be used 
to calculate the Trading Collar would generally remain the same. The 
proposed rule change would also provide consistent rules across 
exchanges on how the Trading Collar and like risk controls would 
operate. The proposed rule change, therefore, removes impediments to 
and perfects the mechanism of a free and open market and a national 
market system.
---------------------------------------------------------------------------

    \86\ See IEX Rule 11.190(f)(1)(A).
---------------------------------------------------------------------------

    The Exchange believes its proposal to amend Exchange Rule 
2618(b)(1)(B) to update the current hierarchy to add an additional data 
point that may be used as a reference price for Trading Collars removes 
impediments to and perfects the mechanism of a free and open market. To 
account for the addition of the Early and Late Trading Sessions, the 
Exchange proposes to also use the last trade price for the security on 
trade date that occurred outside of Regular Trading Hours on trade date 
as the Trading Collar Reference Price in the scenario where it was the 
most current price as compared to the consolidated last sale price 
disseminated during Regular Trading Hours on trade date and the prior 
day's Official Closing Price. This proposed change removes impediments 
to and perfects the mechanism of a free and open market by providing 
the Exchange with a more recent reference price to use for Trading 
Collars outside of Regular Trading Hours, where reference prices may be 
more stale using the two data points outlined in current Exchange Rule 
2618(b)(1)(B). This proposed change will also align the Exchange's Rule 
with that of another national securities exchange \87\ and, therefore, 
avoid potential investor confusion regarding how the Trading Collar and 
like risk controls would be calculated.
---------------------------------------------------------------------------

    \87\ See IEX Rule 11.190(f)(1)(A).
---------------------------------------------------------------------------

    The Exchange also believes its proposal to make a related change to 
Exchange Rule 2618(b)(1)(A) regarding when the Trading Collar would not 
be applied perfects the mechanism of a free and open market and a 
national market system because it would ensure that the Trading Collar 
is not applied where the applicable Trading Collar Reference Price is 
unavailable as set forth under amended Exchange Rule 2618(b)(1)(B) 
described above. As amended, both Exchange Rules 2618(b)(1)(A) and (B) 
would be consistent and not apply the Trading Collar where there is not 
only no Official Closing Price or consolidated last sale price, but no 
last trade price for the security on trade date that occurred outside 
of Regular Trading Hours on trade date following the conclusion of a 
regulatory halt on that trading day. In such cases, there would be no 
reference price to use to calculate the Trading Collar and, therefore, 
the Trading Collar should not be applied. Again, each of the above 
changes are based on the rules of another national securities 
exchange.\88\
---------------------------------------------------------------------------

    \88\ See id.
---------------------------------------------------------------------------

    The Exchange believes its proposal to provide an Extended Hours 
Multiplier for the Trading Collar Reference Price calculation to be 
used during the proposed Early and Late Trading Sessions also removes 
impediments to and perfects the mechanism of a free and open market, 
and promotes just and equitable principles of trade because it provides 
appropriate risk setting parameters to be applied outside of Regular 
Trading Hours under Exchange Rule 2618(b)(1)(E). Today, Exchange Rule 
2618(b)(1)(E) provides that the specified dollar values are posted to 
the Exchange's website and the Exchange announces in advance any 
changes to the dollar value via a Regulatory Circular. Similarly, 
amended Exchange Rule 2618(b)(1)(E) would also provide that the amount 
of the Extended Hours Multiplier would be posted to the Exchange's 
website and the Exchange will likewise announce in advance any changes 
to the Extended Hours Multiplier via a Regulatory Circular. Doing so 
enables the Exchange to better tailor its Trading Collar to reflect the 
trading conditions that are in place outside or Regular Trading Hours 
and provide necessary protections to Equity Members without 
unnecessarily preventing an otherwise acceptable execution. 
Furthermore, as discussed above, Exchange Rule 2618(b)(1)(F) provides 
Equity Members the ability to override the Exchange's default behavior 
and provides that Equity Members may select a dollar value lower, 
higher, or equal to the Exchange-specified percentages and dollar value 
on an order-by-order basis. Therefore, Equity Members would have the 
ability to tailor the Trading Collar to consider the Extended Hours 
Multiplier in line with their risk appetite during the Early and Late 
Trading Sessions.
    The Exchange notes that applying a multiplier to a risk protection 
outside of Regular Trading Hours is not unique and currently in place 
on at least one other national securities exchange.\89\ Therefore, like 
the above changes, this

[[Page 84421]]

proposed change will also align the Exchange's Rule with that of 
another national securities exchange, and therefore, avoid potential 
investor confusion regarding how the Trading Collar and like risk 
controls would be calculated outside of Regular Trading Hours.
---------------------------------------------------------------------------

    \89\ The proposed Extended Hours Multiplier is based on the 
similar functionality offered by NYSE Arca utilized outside of 
Regular Trading Hours. See NYSE Pillar Risk Controls Manual 
(document version 4.0), Section 5.5, available at https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Risk_Controls.pdf (``Arca 
Risk Controls Manual'') (Early/Late Trading Multiplier (optional; 
Equities Markets)--may be configured to apply a double-wide price 
check to orders that first become eligible to trade in the Early or 
Late Trading Sessions (calculated as Price Protection Limit x Early/
Late Trading Multiplier)).
---------------------------------------------------------------------------

    The Exchange believes that the proposed Extended Hours Multiplier 
to be used during Early and Late Trading Sessions for Trading Collars 
is designed to protect investors and the public interest because it is 
an additional risk setting parameter and form of risk mitigation that 
can aid Equity Members in minimizing their financial exposure and 
reduce the potential for disruptive, market-wide events during 
irregular trading hours. In turn, this enhances the integrity of 
trading on the securities markets during the Early and Late Trading 
Sessions and helps to assure the stability of the financial system.
Limit Order Price Protection
    The Exchange's proposal to amend Exchange Rule 2614(a)(1)(ix)(A) is 
also designed to protect investors and the public interest because it 
would align the Exchange's Rule with that of another national 
securities exchange \90\ and is consistent with the same change 
proposed above for the Exchange's Trading Collar risk protection.
---------------------------------------------------------------------------

    \90\ The proposed Extended Hours Multiplier is based on the 
similar functionality offered by NYSE Arca utilized outside of 
Regular Trading Hours. See NYSE Pillar Risk Controls Manual 
(document version 4.0), Section 5.5, available at https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Risk_Controls.pdf (``Arca 
Risk Controls Manual'') (Early/Late Trading Multiplier (optional; 
Equities Markets)--may be configured to apply a double-wide price 
check to orders that first become eligible to trade in the Early or 
Late Trading Sessions (calculated as Price Protection Limit x Early/
Late Trading Multiplier)).
---------------------------------------------------------------------------

    The Exchange believes its proposal to amend Exchange Rule 
2614(a)(1)(ix)(A) to update the current hierarchy and to add an 
additional data point that may be used as a reference price for Limit 
Order Price Protection removes impediments to and perfects the 
mechanism of a free and open market. Each of these proposed changes are 
based on the rules of another national securities exchange \91\ and 
other than using the PBBO, are designed to align the waterfall of 
reference prices with the changes proposed herein to the Trading Collar 
risk protection under Exchange Rule 2618(b)(1)(B), described above.
---------------------------------------------------------------------------

    \91\ See IEX Rule 11.190(f)(1)(A).
---------------------------------------------------------------------------

    The Exchange would continue to reject a Limit Order to buy (sell) 
that is priced at or above (below) the greater of a specified dollar 
and percentage away from the PBO for Limit Orders to buy, the PBB for 
Limit Orders to sell. To account for the addition of the Early and Late 
Trading Sessions, the Exchange proposes to then use as the Limit Order 
Price Protection Reference Price the most current of the: (i) 
consolidated last sale trade price for the security disseminated during 
Regular Trading Hours on trade date; (ii) the last trade price for the 
security that occurred outside of Regular Trading Hours on trade date; 
or (iii) the prior day's Official Closing Price. The proposed reference 
price waterfall would ensure that the Exchange uses the most recent 
reference price that most accurately reflects the security's current 
trading behavior. Without this ability, the Exchange may use a stale 
reference price and possibly not reflective of the security's current 
trading behavior. The proposed change to Exchange Rule 
2614(a)(1)(ix)(A)2. removes impediments to and perfects the mechanism 
of a free and open market by providing the Exchange with a more recent 
reference price to use for Limit Order Price Protection outside of 
Regular Trading Hours, where reference prices may be more stale using 
the two data points outlined in current Exchange Rule 
2614(a)(1)(ix)(A). This proposed change will also align the Exchange's 
Rule with that of another national securities exchange \92\ and, 
therefore, help mitigate potential investor confusion regarding how the 
Limit Order Price Protection and like risk controls would be calculated 
in light of the proposed addition of the Early and Late Trading 
Sessions. Unlike on other exchanges who do not apply Limit Order Price 
Protection when certain reference prices are unavailable and allow 
trades to occur at prices that would otherwise been prevented,\93\ the 
Exchange's proposal would provide added reasonable protections to 
Equity Members when trading outside of Regular Trading Hours, which 
perfects the mechanism of a free and open market.
---------------------------------------------------------------------------

    \92\ See IEX Rule 11.190(f)(1)(A).
    \93\ See NYSE Arca Rule 7.31-E(a)(2)(B)(ii) (stating that 
``[d]uring the Early and Late Trading Sessions, Limit Order Price 
Protection will not be applied to an incoming Limit Order to buy 
(sell) if there is no NBO (NBB)'').
---------------------------------------------------------------------------

    This proposed change also aligns the waterfall of reference prices 
with the changes described above for the Trading Collar risk protection 
under Exchange Rule 2618(b)(1)(B). The proposed changes also provide 
clarity that the Exchange would use a reference price that is most 
current and reflects the trading behavior of the security at the time 
Limit Order Price Protection is to be applied and is consistent with 
the same change proposed above for the Exchange's Trading Collar risk 
protection.
    The Exchange believes its proposal to establish the LOPP Extended 
Hours Multiplier during the proposed Early and Late Trading Sessions 
removes impediments to and perfects the mechanism of a free and open 
market, and promotes just and equitable principles of trade because it 
provides additional risk setting parameters during irregular trading 
hours. The Exchange notes that Equity Members may select a LOPP 
Extended Hours Multiplier that is higher than, equal to, or lower than 
the default LOPP Extended Hours Multiplier established by the Exchange. 
The Exchange believes its proposal is designed to protect investors and 
the public interest because the proposed additional risk setting 
parameters are forms of risk mitigation that can aid Equity Members in 
minimizing their financial exposure and reduce the potential for 
disruptive, market-wide events outside of Regular Trading Hours. In 
turn, this enhances the integrity of trading on the securities markets 
during the Early and Late Trading Sessions and help to assure the 
stability of the financial system. This functionality is also available 
on at least one other national securities exchange.\94\
---------------------------------------------------------------------------

    \94\ The proposed LOPP Extended Hours Multiplier is based on the 
similar functionality offered by NYSE Arca during its early and late 
trading sessions. See NYSE Pillar Risk Controls Manual (document 
version 4.0), Section 5.5, available at https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Risk_Controls.pdf (``Arca Risk Controls 
Manual'') (Early/Late Trading Multiplier (optional; Equities 
Markets)--may be configured to apply a double-wide price check to 
orders that first become eligible to trade in the Early or Late 
Trading Sessions (calculated as Price Protection Limit x Early/Late 
Trading Multiplier)).
---------------------------------------------------------------------------

    As described above, Exchange Rule 2614(a)(1)(ix)(B) would provide 
that the default amount of the LOPP Extended Hours Multiplier will be 
posted to the Exchange's website and the Exchange will announce in 
advance any changes to the LOPP Extended Hours Multiplier via a 
Regulatory Circular, which is the case today for the default specified 
dollar and percentage established by the Exchange. The Exchange 
believes its proposal to allow Equity Members to select a LOPP Extended 
Hours Multiplier that is higher than, equal to, or lower than the 
default LOPP Extended Hours Multiplier established by the Exchange 
promotes just and equitable principles of trade because it would 
provide Equity Members with additional flexibility in constructing a 
Limit Order Price Protection range (tighter or wider) that better suits 
their risk appetite when trading outside of

[[Page 84422]]

Regular Trading Hours. Importantly, the proposed rule change would not 
only allow Equity Members to select a LOPP Extended Hours Multiplier 
more aggressive than the Exchange's defaults, but also more 
conservative in cases where they seek to apply a tighter Limit Order 
Price Protection thresholds in line with their risk appetite. The 
ability to override the Exchange's LOPP Extended Hours Multiplier would 
be completely voluntary and all orders would continue to be subject to 
other risk protections provided by the Exchange. Market participants' 
ability to adjust risk settings to a more restrictive range is not 
unique and was recently proposed for Trading Collars in another 
proposed rule change filed with the Commission that will be effective 
shortly.\95\
---------------------------------------------------------------------------

    \95\ See Securities Exchange Act Release No. 99954 (April 12, 
2024), 89 FR 27824 (April 18, 2024) (SR-PEARL-2024-17). See also 
MIAX Pearl Equities Exchange Regulatory Circular 2024-10, Changes to 
Certain Risk Controls on MIAX Pearl Equities, dated July 1, 2024, 
available at https://www.miaxglobal.com/sites/default/files/circular-files/MIAX_Pearl_Equities_RC_2024_10.pdf.
---------------------------------------------------------------------------

Early/Late Trading Session Pre-Order Risk Control
    The Exchange believes its proposal to amend Exchange Rule 
2618(a)(1)(C) to include pre-market and post-market in the list of risk 
controls for certain orders is designed to protect investors and the 
public interest. With the proposed change, Equity Members would be able 
to instruct the Exchange to block any orders from it entered during the 
proposed Early and Late Trading Sessions. The Exchange believes this 
aspect of the proposal provides a risk mitigation tool that can aid 
Equity Members in minimizing their financial exposure and ensure that 
an order that they may have inadvertently entered during the Early or 
Late Trading Session would be rejected by the Exchange. Use of this 
pre-order risk control would be completely voluntary and is based on 
the rules of another national securities exchange.\96\
---------------------------------------------------------------------------

    \96\ The inclusion of pre-market and post-market in the list of 
risk control settings is based on EDGX Rule 11.10(c).
---------------------------------------------------------------------------

Exchange Rule 2621, Clearly Erroneous Executions
    The Exchange believes its proposed changes to Exchange Rule 2621 
promote just and equitable principles of trade removes impediments to 
and perfects the mechanism of a free and open market and a national 
market system because they would amend Exchange Rule 2621 to account 
for the Early and Late Trading Sessions by adopting provisions that are 
substantially identical with those of other equity exchanges, all of 
which adopted and enforce identical rules regarding clearly erroneous 
executions.\97\ Doing so would also protects investors and the public 
interest by setting forth in the Exchange's rules the Clearly Erroneous 
Execution the standards for how potentially erroneous executions would 
be handled outside of Regular Trading Hours when LULD price protections 
are not in effect.
---------------------------------------------------------------------------

    \97\ See, e.g., Cboe BZX Rule 11.17 and MEMX Rule 11.15.
---------------------------------------------------------------------------

Exchange Rule 2900, Unlisted Trading Privileges
    The Exchange believes its proposed changes to Exchange Rule 2900 
promote just and equitable principles of trade and removes impediments 
to and perfects the mechanism of a free and open market and a national 
market system because they would codify in its rules provisions that 
provide for the Exchange including a description of the risk of trading 
UTP Derivative Securities outside of Regular Trading Hours in its 
information circulars, and describe when the Exchange would halt 
trading in a UTP Derivative Security that is consistent with industry 
practice. The proposed changes would also ensure the Exchange's rules 
are identical to and aligned with other national securities 
exchanges.\98\
---------------------------------------------------------------------------

    \98\ See, e.g., Cboe EDGX Rule 14.1(c)(1). See also, e.g., Cboe 
EDGX Rule 14.1, Interpretations and Policies .01(a) and (b).
---------------------------------------------------------------------------

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, but rather foster it by providing an 
additional pool of liquidity outside of Regular Trading Hours for 
investors and other market participant to access. The Exchange believes 
that the proposed rule change will benefit investors and the national 
market system by increasing competition for order flow and executions 
during outside of Regular Trading Hours, thereby spurring product 
enhancements and potentially lowering prices. The Exchange believes the 
proposed Early and Late Trading Sessions would enhance competition by 
enabling the Exchange to directly compete for order flow and executions 
outside of Regular Trading Hours with other national securities 
exchanges that provide extended hours trading. In addition, the 
proposed functionality during the Early and Late Trading Session, such 
the as the proposed TIF instructions, will enhance competition by 
enabling the Exchange to offer functionality to that of other national 
securities exchanges. The fact that the extending of the proposed Early 
Trading Session and related functionality are themselves a response to 
the competition provided by other markets and is evidence of the 
proposals pro-competitive nature.
    The Exchange believes its proposal will not impose any burden on 
intra-market competition because all Equity Members would be able to 
trade during the Early and Late Trading Session and may choose to do so 
based on their own business decisions and risk appetite. All of the 
proposed functionality would be available to all Equity Members who 
choose to participate in the proposed Early and Late Trading Sessions.

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 from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 
19b-4(f)(6) thereunder.\99\
---------------------------------------------------------------------------

    \99\ 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.
---------------------------------------------------------------------------

    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.

[[Page 84423]]

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#2250574e470f414d4f4f474c5651625147410c454d54"><span class="__cf_email__" data-cfemail="89fbfce5eca4eae6e4e4ece7fdfac9faeceaa7eee6ff">[email protected]</span></a>. Please include 
file number SR-PEARL-2024-47 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-2024-47. 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-2024-47 and should be 
submitted on or before November 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\100\
---------------------------------------------------------------------------

    \100\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-24363 Filed 10-21-24; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>