```

[Federal Register Volume 89, Number 223 (Tuesday, November 19, 2024)]
[Notices]
[Pages 91460-91465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26873]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101605; File No. SR-PEARL-2024-49]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX 
Pearl Options Fee Schedule

November 13, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 31, 2024, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 91461]]

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

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

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

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

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

1. Purpose
    The Exchange proposes to amend Section 1)a) of the Fee Schedule, 
Exchange Rebates/Fees--Add/Remove Tiered Rebates/Fees, to: (1) amend 
the Priority Customer \3\ origin to reduce certain Maker rebates in 
Penny Classes (defined below); and (2) remove the ``Step-Up Maker 
Rebate'' (described below) for the MIAX Pearl Market Maker \4\ origin 
in Non-Penny Classes.
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    \3\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial accounts(s). The number of 
orders shall be counted in accordance with Interpretation and Policy 
.01 of Exchange Rule 100. See the Definitions section of the Fee 
Schedule and Exchange Rule 100, including Interpretation and Policy 
.01.
    \4\ The term ``Market Maker'' means a Member registered with the 
Exchange for the purpose of making markets in options contracts 
traded on the Exchange and that is vested with the rights and 
responsibilities specified in Chapter VI of Exchange Rules. See the 
Definitions section of the Fee Schedule and Exchange Rule 100.
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Background
    The Exchange currently assesses transaction rebates and fees to all 
market participants which are based upon the total monthly volume 
executed by the Member \5\ on MIAX Pearl in the relevant, respective 
origin type (not including Excluded Contracts) \6\ (as the numerator) 
expressed as a percentage of (divided by) TCV \7\ (as the denominator). 
In addition, the per contract transaction rebates and fees are applied 
retroactively to all eligible volume for that origin type once the 
respective threshold tier has been reached by the Member. The Exchange 
aggregates the volume of Members and their Affiliates.\8\ Members that 
place resting liquidity, i.e., orders resting on the Book \9\ of the 
MIAX Pearl System,\10\ are paid the specified ``maker'' rebate (each a 
``Maker''), and Members that execute against resting liquidity are 
assessed the specified ``taker'' fee (each a ``Taker''). For opening 
transactions and ABBO \11\ uncrossing transactions, per contract 
transaction rebates and fees are waived for all market participants. 
Finally, Members are assessed lower transaction fees and receive lower 
rebates for order executions in standard option classes in the Penny 
Interval Program \12\ (``Penny Classes'') than for order executions in 
standard option classes which are not in the Penny Interval Program 
(``Non-Penny Classes''), where Members are assessed higher transaction 
fees and receive higher rebates.
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    \5\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of Exchange 
Rules for purposes of trading on the Exchange as an ``Electronic 
Exchange Member'' or ``Market Maker.'' Members are deemed 
``members'' under the Exchange Act. See the Definitions section of 
the Fee Schedule and Exchange Rule 100.
    \6\ The term ``Excluded Contracts'' means any contracts routed 
to an away market for execution. See the Definitions section of the 
Fee Schedule.
    \7\ The term ``TCV'' means total consolidated volume calculated 
as the total national volume in those classes listed on MIAX Pearl 
for the month for which the fees apply, excluding consolidated 
volume executed during the period time in which the Exchange 
experiences an ``Exchange System Disruption'' (solely in the option 
classes of the affected Matching Engine (as defined below)). See the 
Definitions section of the Fee Schedule. The term ``Exchange System 
Disruption'' means an outage of a Matching Engine or collective 
Matching Engines for a period of two consecutive hours or more, 
during trading hours. Id. A ``Matching Engine'' is a part of the 
MIAX Pearl electronic system that processes options orders and 
trades on a symbol-by-symbol basis. Some Matching Engines will 
process option classes with multiple root symbols, and other 
Matching Engines may be dedicated to one single option root symbol 
(for example, options on SPY may be processed by one single Matching 
Engine that is dedicated only to SPY). A particular root symbol may 
only be assigned to a single designated Matching Engine. A 
particular root symbol may not be assigned to multiple Matching 
Engines. Id. The Exchange believes that it is reasonable and 
appropriate to select two consecutive hours as the amount of time 
necessary to constitute an Exchange System Disruption, as two hours 
equates to approximately 1.4% of available trading time per month. 
The Exchange notes that the term ``Exchange System Disruption'' and 
its meaning have no applicability outside of the Fee Schedule, as it 
is used solely for purposes of calculating volume for the threshold 
tiers in the Fee Schedule.
    \8\ The term ``Affiliate'' means (i) an affiliate of a Member of 
at least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A, or (ii) the Appointed Market Maker of an 
Appointed EEM (or, conversely, the Appointed EEM of an Appointed 
Market Maker). An ``Appointed Market Maker'' is a MIAX Pearl Market 
Maker (who does not otherwise have a corporate affiliation based 
upon common ownership with an EEM) that has been appointed by an EEM 
and an ``Appointed EEM'' is an EEM (who does not otherwise have a 
corporate affiliation based upon common ownership with a MIAX Pearl 
Market Maker) that has been appointed by a MIAX Pearl Market Maker, 
pursuant to the following process. A MIAX Pearl Market Maker 
appoints an EEM and an EEM appoints a MIAX Pearl Market Maker, for 
the purposes of the Fee Schedule, by each completing and sending an 
executed Volume Aggregation Request Form by email to 
[email protected] no later than 2 business days prior to 
the first business day of the month in which the designation is to 
become effective. Transmittal of a validly completed and executed 
form to the Exchange along with the Exchange's acknowledgement of 
the effective designation to each of the Market Maker and EEM will 
be viewed as acceptance of the appointment. The Exchange will only 
recognize one designation per Member. A Member may make a 
designation not more than once every 12 months (from the date of its 
most recent designation), which designation shall remain in effect 
unless or until the Exchange receives written notice submitted 2 
business days prior to the first business day of the month from 
either Member indicating that the appointment has been terminated. 
Designations will become operative on the first business day of the 
effective month and may not be terminated prior to the end of the 
month. Execution data and reports will be provided to both parties. 
See the Definitions section of the Fee Schedule.
    \9\ The term ``Book'' means the electronic book of buy and sell 
orders and quotes maintained by the System. See Exchange Rule 100.
    \10\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \11\ The term ``ABBO'' means the best bid(s) or offer(s) 
disseminated by other Eligible Exchanges (defined in Exchange Rule 
1400(g)) and calculated by the Exchange based on market information 
received by the Exchange from OPRA. See the Definitions section of 
the Fee Schedule and Exchange Rule 100.
    \12\ See Securities Exchange Act Release No. 88992 (June 2, 
2020), 85 FR 35142 (June 8, 2020) (SR-PEARL-2020-06).
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Proposal To Amend the Priority Customer Origin in the Exchange Rebates/
Fees--Add/Remove Tier Rebates/Fees Table at Section 1)a) of the Fee 
Schedule To Decrease Certain Maker Rebates in Penny Classes
    First, the Exchange proposes to amend the Priority Customer origin 
in the Exchange Rebates/Fees--Add/Remove Tier Rebates/Fees table at 
Section 1)a) of the Fee Schedule to decrease the Maker rebates in tiers 
1 and 2 for Priority Customer Orders \13\ in Penny Classes that trade 
against all origins. Currently, the Priority Customer origin in the 
Exchange Rebates/Fees--Add/Remove Tier Rebates/Fees table at

[[Page 91462]]

Section 1)a) of the Fee Schedule provides certain volume criteria 
thresholds for all tiers that are based upon the total monthly volume 
executed in all option classes by a Priority Customer on MIAX Pearl as 
a percentage of TCV. Pursuant to the Priority Customer origin in the 
Exchange Rebates/Fees--Add/Remove Tier Rebates/Fees table at Section 
1)a) of the Fee Schedule, Priority Customers qualify for the following 
Maker rebates when Priority Customer orders in Penny Classes trade 
against all origins: (i) ($0.31) \14\ per contract in tiers 1 and 2 if 
the Priority Customer executes above 0.00% to at least 0.40% of TCV; 
(ii) ($0.45) per contract in tier 3 if the Priority Customer executes 
above 0.40% to at least 0.85% of TCV; (iii) ($0.49) per contract in 
tier 4 if the Priority Customer executes above 0.85% to at least 1.25% 
of TCV; and (iv) ($0.52) per contract in tiers 5 and 6 if the Priority 
Customer executes above 1.25% of TCV.
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    \13\ The term ``Priority Customer Order'' means an order for the 
account of a Priority Customer. See Exchange Rule 100.
    \14\ Rebates are denoted in parentheses in the Fee Schedule.
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    The Exchange now proposes to amend the Priority Customer origin in 
the Exchange Rebates/Fees--Add/Remove Tier Rebates/Fees table at 
Section 1)a) of the Fee Schedule to decrease the Maker rebates in tiers 
1 and 2 from ($0.31) to ($0.25) per contract for Priority Customer 
Orders in Penny Classes that trade against all origins. The Exchange 
does not propose to amend any of the volume threshold criteria or the 
Maker rebates or Taker fees in any other tier for Priority Customer 
Orders.
    The purpose of this proposed change is for business and competitive 
reasons. The Exchange previously amended the Priority Customer origin 
in the Exchange Rebates/Fees--Add/Remove Tier Rebates/Fees table at 
Section 1)a) of the Fee Schedule to increase the Maker rebates in tiers 
1 and 2 from ($0.25) to ($0.31) per contract for Priority Customer 
Orders in Penny Classes that trade against all origins in order to 
encourage Members to submit more Priority Customer Orders, which the 
Exchange believed may lead to increased liquidity on the Exchange.\15\ 
The Exchange recently conducted an internal review and analysis of fees 
and rebates and determined that the Exchange has not experienced the 
desired increased liquidity and now proposes to reduce the Maker 
rebates in tiers 1 and 2 from ($0.31) to ($0.25) per contract for 
Priority Customer Orders in Penny Classes that trade against all 
origins. Even with the proposed change, the Exchange believes the Maker 
rebates in tiers 1 and 2 for Priority Customer Orders in Penny classes 
will remain highly competitive such that they should enable the 
Exchange to continue to attract Priority Customer order flow and 
maintain market share. The Exchange notes that the Maker rebate of 
($0.25) per contract in tiers 1 and 2 for Priority Customer Orders in 
Penny Classes are equal to the rebates offered by at least two 
competing options exchanges for their customer orders.\16\
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    \15\ See Securities Exchange Act Release No. 101122 (September 
20, 2024), 89 FR 78920 (September 26, 2024) (SR-PEARL-2024-44).
    \16\ See e.g., NYSE Arca, Inc (``NYSE Arca'') Options Fee 
Schedule, Transaction Fees, Customer Penny Posting Credit Tiers, 
available at https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf (last visited October 28, 
2024) (providing base credit $0.25 applied to electronic executions 
of customer posted interest in penny classes); and Nasdaq GEMX, LLC 
(``GEMX'') Options Fee Schedule, Section 3. Regular Order Fees and 
Rebates, available at https://listingcenter.nasdaq.com/rulebook/gemx/rules/GEMX%20Options%207 (last visited October 28, 2024) 
(providing a standard maker rebate of $0.25 in tier 1 for Priority 
Customer orders in penny classes).
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    Proposal To Remove the Step-Up Maker Rebate for Market Maker Orders 
in Non-Penny Classes
    Next, the Exchange proposes to amend the Market Maker origin in the 
Exchange Rebates/Fees--Add/Remove Tier Rebates/Fees table at Section 
1)a) of the Fee Schedule to remove the ``Step-Up Maker Rebate,'' which 
is provided in footnote ``(i)'' following the table of transaction 
rebates and fees for the Market Maker origin in Section 1)a) of the Fee 
Schedule. Currently, pursuant to the Market Maker origin in the 
Exchange Rebates/Fees--Add/Remove Tier Rebates/Fees table at Section 
1)a) of the Fee Schedule, Market Makers qualify for the following Maker 
rebates when Market Maker orders in Non-Penny Classes trade against all 
origins: (i) ($0.30) per contract in tier 1 if the Market Maker 
executes above 0.00% to at least 0.20% of TCV; (ii) ($0.30) per 
contract in tier 2 if the Market Maker executes above 0.20% to at least 
0.50% of TCV, or satisfies one of the two alternative volume criteria 
of tier 2; \17\ (iii) ($0.60) per contract in tier 3 if the Market 
Maker executes above 0.50% to at least 0.85% of TCV, or satisfies the 
alternative volume criteria of tier 3; \18\ (iv) ($0.65) per contract 
in tier 4 if the Market Maker executes above 0.85% to at least 1.25% of 
TCV, or satisfies the alternative volume criteria of tier 4; \19\ (v) 
($0.70) per contract in tier 5 if the Market Maker executes above 1.25% 
to at least 1.40% of TCV; and (vi) ($0.85) per contract in tier 6 if 
the Market Maker executes above 1.40% of TCV.
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    \17\ A Market Maker need only to satisfy one of the following 
two alternative volume criteria in order to receive the rebates or 
fees associated with tier 2 of the Market Maker origin: (i) the 
total monthly volume executed by the Market Maker collectively in 
SPY/QQQ/IWM options on MIAX Pearl, not including Excluded Contracts, 
is above 0.55% of SPY/QQQ/IWM TCV; or (ii) the Market Maker adds 
liquidity collectively in SPY/QQQ/IWM options on MIAX Pearl, not 
including Excluded Contracts, above 0.30% of SPY/QQQ/IWM TCV. See 
Fee Schedule, Section 1)a), Market Maker origin. The term ``SPY/QQQ/
IWM TCV'' means total consolidated volume in SPY, QQQ, and IWM 
calculated as the total national volume in SPY, QQQ, and IWM for the 
month for which the fees apply, excluding consolidated volume 
executed during the period of time in which the Exchange experiences 
an Exchange System Disruption (solely in SPY, QQQ, or IWM options). 
See the Definitions section of the Fee Schedule.
    \18\ Market Makers satisfy the alternative volume criteria of 
tier 3 by adding liquidity in SPY options on MIAX Pearl, not 
including Excluded Contracts, above 1.10% of SPY TCV. The term ``SPY 
TCV'' means total consolidated volume in SPY calculated as the total 
national volume in SPY for the month for which the fees apply, 
excluding consolidated volume executed during the period of time in 
which the Exchange experiences an Exchange System Disruption (solely 
in SPY options). See the Definitions section of the Fee Schedule. 
Further, Market Makers qualify for: (i) Maker rebates of ($0.44) per 
contract in SPY, QQQ and IWM options for their Market Maker origin 
when trading against origins other than Priority Customer, and (ii) 
Maker rebates of ($0.42) per contract in SPY, QQQ and IWM options 
for their Market Maker origin when trading against Priority Customer 
origins, if the Market Maker satisfies the alternative volume 
criteria of tier 3, described above, of at least 1.10% in SPY when 
adding liquidity. See Fee Schedule, Section 1)a), note ``[diams]''.
    \19\ Market Makers satisfy the alternative volume criteria of 
tier 4 if the Market Maker's executions solely in SPY options on 
MIAX Pearl, not including Excluded Contracts, is above 2.50% of SPY 
TCV.
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    Footnote ``(i)'' provides that a Market Maker may qualify for a 
Step-Up Maker Rebate of ($0.86) per contract for Market Maker orders 
for Non-Penny Classes, instead of the otherwise applicable standard 
tiered Maker rebate described above for tiers 1 through 6. In order to 
receive the Step-Up Maker Rebate, a Market Maker must have an increase 
in the percentage of their added liquidity in Non-Penny Classes, 
represented as a percentage of TCV, of at least 0.12% as compared to 
the Market Maker's July 2024 \20\ added liquidity in Non-Penny Classes. 
The Step-Up Maker Rebate is currently set to expire no later than 
January 31, 2025.\21\ The Exchange now proposes to remove footnote 
``(i)'' and the corresponding Step-Up Maker Rebate. The Exchange does 
not propose to amend any of the volume threshold criteria or the Maker 
rebates or Taker

[[Page 91463]]

fees in any tier for Market Makers orders in Non-Penny Classes.
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    \20\ The Exchange uses a baseline for added liquidity in Non-
Penny Classes of 0.00% of TCV for market participants that become 
Market Makers of the Exchange after July 2024 for the purpose of the 
Step-Up Maker Rebate calculation.
    \21\ The Exchange notes that at the end of the sunset period, 
the Step-Up Maker Rebate will no longer apply unless the Exchange 
files a rule filing pursuant to Rule 19b-4 of the Exchange Act with 
the Commission to amend the criteria terms or update the baseline 
month to a more recent month.
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    The purpose of this change is for business and competitive reasons. 
The Exchange initially established the Step-Up Maker Rebate in order to 
encourage Market Makers to add more liquidity in Non-Penny Classes, 
thereby promoting price discovery and contributing to a deeper and more 
liquid market.\22\ The Exchange recently conducted an internal review 
and analysis of fees and rebates and determined that the Exchange has 
not experienced the desired increase in liquidity in Non-Penny Classes 
and now proposes to remove the Step-Up Maker Rebate. The Exchange 
believes that the tiered Maker rebates for Market Makers orders in Non-
Penny Classes remain highly competitive such that they should enable 
the Exchange to continue to attract Market Maker order flow and 
maintain market share. The Exchange notes that the tiered Maker rebates 
for Market Makers order in Non-Penny Classes fall within the range of 
similar rebates offered by competing options exchanges for transactions 
by market makers in Non-Penny Classes.\23\
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    \22\ See supra note 15.
    \23\ See GEMX Options 7 Pricing Schedule, Section 3, Regular 
Order Fees and Rebates, available at https://listingcenter.nasdaq.com/rulebook/gemx/rules/GEMX%20Options%207 
(last visited October 28, 2024) (providing tiered rebates ranging 
from $0.40 to $0.75 per contract for market makers that add 
liquidity in non-penny classes); see also Cboe BZX Exchange, Inc. 
(``BZX'') Options Fee Schedule, Transaction Fees, Standard Rates 
table, available at https://www.cboe.com/us/options/membership/fee_schedule/bzx/ (last visited October 28, 2024) (providing tiered 
rebates ranging from $0.40 to $0.88 per contract for market makers 
that add liquidity in non-penny classes).
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Implementation
    The proposed changes are effective beginning November 1, 2024.
2. Statutory Basis
    The Exchange believes that its proposal to amend the Fee Schedule 
is consistent with Section 6(b) of the Act \24\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\25\ in that it 
is an equitable allocation of reasonable dues, fees and other charges 
among Exchange Members and issuers and other persons using its 
facilities, and 6(b)(5) of the Act,\26\ in that 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 facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(4).
    \26\ 15 U.S.C. 78f(b)(5).
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    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \27\
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    \27\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
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    There are currently 18 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange had more than approximately 14-
15% of the multiply-listed equity options market share for the month of 
September 2024.\28\ Therefore, no exchange possesses significant 
pricing power. More specifically, the Exchange had a market share of 
approximately 3.37% of executed volume of multiply-listed equity 
options for the month of September 2024.\29\
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    \28\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/ (last visited October 28, 
2024).
    \29\ See id.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
discontinue or reduce use of certain categories of products and 
services, terminate an existing membership or determine to not become a 
new member, and/or shift order flow, in response to transaction fee 
changes.
Proposal To Amend the Priority Customer Origin in the Exchange Rebates/
Fees--Add/Remove Tier Rebates/Fees Table at Section 1)a) of the Fee 
Schedule To Decrease Certain Maker Rebates in Penny Classes
    The Exchange believes its proposal to amend the Priority Customer 
origin to decrease the Maker rebates in tiers 1 and 2 from ($0.31) to 
($0.25) per contract for Priority Customer orders in Penny Classes that 
trade against all origins is reasonable, equitable and not unfairly 
discriminatory. The Exchange previously increased the Maker rebates in 
tiers 1 and 2 from ($0.25) to ($0.31) per contract for Priority 
Customer orders in Penny Classes that trade against all origins in 
order to encourage Members to submit more Priority Customer orders.\30\ 
The Exchange recently conducted an internal review and analysis of fees 
and rebates and determined that the Exchange has not experienced the 
desired increased liquidity and believes it is reasonable to reduce the 
enhanced Maker rebates in tiers 1 and 2 from ($0.31) to ($0.25) per 
contract for Priority Customer orders in Penny Classes. With the 
proposed decrease, the Exchange's Maker rebate of ($0.25) per contract 
in tiers 1 and 2 for Priority Customer orders in Penny classes are 
equal to the rebates offered by at least two other competing options 
exchanges for their customer orders.\31\ Accordingly, the Exchange 
believes that the proposed change should enable the Exchange to 
continue to attract Priority Customer order flow and maintain market 
share. The Exchange believes the proposed Maker rebate in tiers 1 and 2 
for Priority Customer orders in Penny Classes is equitable and not 
unfairly discriminatory because it will apply equally to all market 
participants who provide Priority Customer orders in Penny Classes.
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    \30\ See supra note 15.
    \31\ See supra note 16.
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Proposal To Remove the Step-Up Maker Rebate for Market Maker Orders in 
Non-Penny Classes
    The Exchange believes its proposal to remove the Step-Up Maker 
Rebate is reasonable, equitably allocated and not unfairly 
discriminatory. The Exchange initially established Step-Up Maker Rebate 
in order to encourage Market Makers to add more liquidity in Non-Penny 
Classes, thereby promoting price discovery and contributing to a deeper 
and more liquid market.\32\ The Exchange recently conducted an internal 
review and analysis of fees and rebates and determined that the 
Exchange has not experienced the desired increased liquidity and 
believes it is reasonable to remove the Step-Up Maker Rebate. The 
Exchange's tiered Maker rebates for Market Makers order in Non-Penny 
Classes fall within the range of similar rebates offered by competing 
options exchanges for transactions by market makers in Non-Penny 
Classes,\33\ and therefore, the Exchange believes that the Exchange's 
tiered Maker rebates for Market Makers orders in Non-Penny Classes 
remain highly competitive such that they should enable the Exchange to 
continue to attract Market Makers order flow and maintain market share. 
The Exchange

[[Page 91464]]

also believes its proposal to remove the Step-Up Maker Rebate is 
equitable and not unfairly discriminatory because the tiered Maker 
rebates for Market Makers orders in Non-Penny Classes will continue to 
apply to all Market Makers. The Exchange further believes that the 
removal of the Step-Up Maker Rebate will reduce complexity within the 
Fee Schedule and provide greater clarity to all Members. Less 
complexity and greater clarity in the Fee Schedule helps promote just 
and equitable principles of trade and removes impediments to and 
perfects the mechanisms of a free and open market and a national market 
system.
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    \32\ See supra note 15.
    \33\ See supra note 23.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
Intra-Market Competition
    The Exchange does not believe that any of the proposed changes will 
impose any burden on intra-market competition.
Proposal To Amend the Priority Customer Origin in the Exchange Rebates/
Fees--Add/Remove Tier Rebates/Fees Table at Section 1)a) of the Fee 
Schedule To Decrease Certain Maker Rebates in Penny Classes
    The Exchange believes its proposal to amend the Priority Customer 
origin to decrease the Maker rebates in tiers 1 and 2 from ($0.31) to 
($0.25) per contract for Priority Customer orders in Penny Classes that 
trade against all origins will not impose any burden on intra-market 
competition. The Exchange previously increased the Maker rebates in 
tiers 1 and 2 from ($0.25) to ($0.31) per contract for Priority 
Customer orders in Penny Classes that trade against all origins in 
order to encourage Members to submit more Priority Customer orders.\34\ 
The Exchange recently conducted an internal review and analysis of fees 
and rebates and determined that the Exchange has not experienced the 
desired increased liquidity and it believes reducing the Maker rebates 
in tiers 1 and 2 from ($0.31) to ($0.25) per contract for Priority 
Customer orders in Penny Classes will not impose any burden on 
competition. The Exchange notes that even with the proposed change, the 
Exchange's Maker rebate of ($0.25) per contract for tiers 1 and 2 for 
Priority Customer orders in Penny classes are equal to the rebates 
offered by at least two other competing options exchanges for their 
customer orders in their base tiers.\35\
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    \34\ See supra note 15.
    \35\ See supra note 16.
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Proposal To Remove the Step-Up Maker Rebate for Market Maker Orders in 
Non-Penny Classes
    The Exchange believes its proposal to establish the Step-Up Maker 
Rebate will not impose any burden on intra-market competition. The 
Exchange initially established Step-Up Maker Rebate in order to 
encourage Market Makers to add more liquidity in Non-Penny Classes, 
thereby promoting price discovery and contributing to a deeper and more 
liquid market, which benefits all market participants and enhances the 
attractiveness of the Exchange as a trading venue.\36\ The Exchange 
recently conducted an internal review and analysis of fees and rebates 
and determined that the Exchange has not experienced the desired 
increased liquidity and believes that removing the Step-Up Maker Rebate 
will not impose any burden on competition. The Exchange's tiered Maker 
rebates for Market Maker orders in Non-Penny Classes fall within the 
range of similar rebates offered by competing options exchanges for 
transactions by market makers in Non-Penny Classes,\37\ and therefore, 
the Exchange believes that the Exchange's tiered Maker rebates for 
Market Makers orders in Non-Penny Classes remain highly competitive 
such that they should enable the Exchange to continue to attract Market 
Makers order flow and maintain market share.
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    \36\ See supra note 15.
    \37\ See supra note 23.
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Inter-Market Competition
    The Exchange does not believe that the proposed changes will impose 
any burden on inter-market competition and the Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. There are currently 18 registered 
options exchanges competing for order flow. Based on publicly-available 
information, and excluding index-based options, no single exchange had 
more than approximately 14-15% of the multiply-listed equity options 
market share for the month of September 2024.\38\ Therefore, no 
exchange possesses significant pricing power. More specifically, the 
Exchange had a market share of approximately 3.37% of executed volume 
of multiply-listed equity options for the month of September 2024.\39\
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    \38\ See supra note 28.
    \39\ See id.
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    In such an environment, the Exchange must continually adjust its 
rebates and tiers to remain competitive with other options exchanges. 
Because competitors are free to modify their own fees and tiers in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. The Exchange believes that the proposed rule changes 
reflect this competitive environment because they modify the Exchange's 
tiers and rebates in a manner that encourages market participants to 
continue to provide liquidity and to send order flow to the Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\40\ and Rule 19b-4(f)(2) \41\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \40\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \41\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or

[[Page 91465]]

     Send an email to [email protected]. Please include 
file number SR-PEARL-2024-49 on the subject line.

Paper Comments

     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-2024-49. 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-2024-49 and should be 
submitted on or before December 10, 2024.
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    \42\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-26873 Filed 11-18-24; 8:45 am]
BILLING CODE 8011-01-P
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