Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 3151 

10 15 U.S.C. 78s(b)(2)(B). 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Market share percentage calculated as of 

December 22, 2021. The Exchange receives and 

processes data made available through consolidated 

data feeds. 

5The term ‘‘Equity Member’’ is a Member 

authorized by the Exchange to transact business on 

MIAX Pearl Equities. See Exchange Rule 1901. 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 10 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

C2–2022–001 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–C2–2022–001. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–C2– 

2022–001 and should be submitted on 

or before February 10, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–00981 Filed 1–19–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93979; File No. SR– 

PEARL–2022–01] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX Pearl 

Equities Fee Schedule 

January 14, 2022. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on January 

4, 2022, MIAX PEARL, LLC (‘‘MIAX 

Pearl’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the fee schedule (the ‘‘Fee 

Schedule’’) applicable to MIAX Pearl 

Equities, an equities trading facility of 

the Exchange. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/pearl, 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 purpose of the proposed rule 

change is to amend the Exchange’s Fee 

Schedule to (i) adopt new Add and 

Remove Volume Tiers for executions of 

orders in securities priced at or above 

$1.00 that add or remove liquidity from 

the Exchange; (ii) reduce the Adding 

Liquidity Displayed Order rebate; (iii) 

reduce the Adding Liquidity NonDisplayed Order rebate; (iv) increase the 

Removing Liquidity fee; (v) update 

Liquidity Indicator Codes and 

Associated Fees table; (vi) adopt new 

definitions in the Definitions section; 

and (vii) adopt new provisions in the 

General Notes section. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues, 

to which market participants may direct 

their order flow. Based on publicly 

available information, no single 

registered equities exchange currently 

has more than approximately 18% of 

the total market share of executed 

volume of equities trading.4

Add Volume Tiers 

The Exchange is proposing to 

introduce a tiered pricing structure 

applicable to the rebates applied for 

volume added to the Exchange. 

Specifically, the Exchange proposes to 

adopt a new volume-based tier 

structure, referred to as the Add Volume 

Tiers, in which the Exchange will 

provide an enhanced rebate for 

executions of Added Displayed Volume 

for Equity Members 5 (‘‘Members’’) that 

meet the specified volume thresholds on 

the Exchange, as described below. 


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6As proposed, the term ‘‘ADAV’’ means daily 

added volume [sic] calculated as the number of 

shares added per day and ‘‘ADV’’ means average 

daily volume calculated as the number of shares 

added or removed, combined, per day. ADAV and 

ADV are calculated on a monthly basis. The 

Exchange excludes from its calculation of ADAV 

and ADV shares added or removed on any day that 

the Exchange’s system experiences a disruptions 

that lasts for more than 60 minutes during regular 

trading hours (‘‘Exchange System Disruption’’), on 

any day with a scheduled early market close, and 

on the ‘‘Russell Reconstitution Day’’ (typically the 

last Friday in June). Routed shares are not included 

in the ADAV or ADV calculation. 

7As proposed, the term ‘‘TCV’’ means total 

consolidated volume calculated as the volume in 

shares reported by all exchanges and reporting 

facilities to a consolidated transaction reporting 

plan for the month for which the fees apply. The 

Exchange excludes from its calculation of TCV 

volume on any given day that the Exchange’s 

system experiences a disruption that lasts for more 

than 60 minutes during Regular Trading Hours. On 

[sic] any day with a scheduled early market close, 

and on the ‘‘Russell Reconstitution Day’’ (typically 

the last Friday in June). 

8The Exchange notes that excluding routed 

shares from the calculations of ADAV and ADV is 

also consistent with the practice of other exchanges 

when calculating ADAV and ADV. See, e.g., the 

Cboe BZX equities trading fee schedule on its 

public website (available at https://

markets.cboe.com/us/equities/membership/fee_

schedule/bzx/). 

9See MEMX, LLC (‘‘MEMX’’) equities trading fee 

schedule on its public website (available at https:// 

info.memxtrading.com/fee-schedule/) which 

reflects rebates provided under ‘‘Liquidity 

Provision Tiers’’ = tiers based on a member 

achieving certain ADAV thresholds ranging from 

$0.0031 to $0.00335 [sic] per share for adding 

displayed liquidity to the MEMX exchange. 

The Exchange proposes to adopt three 

Add Volume Tiers (Tier 1, Tier 2, and 

Tier 3) in which it will provide an 

enhanced rebate per tier. A Member 

would qualify for an enhanced rebate 

under Tier 1 by achieving an ADAV 6 of 

at least 0.07% of the TCV.7 Members 

that qualify for Tier 1 would receive an 

enhanced rebate of $0.0032 per share for 

executions of Added Displayed Volume 

for executions of orders in securities 

priced at or above $1.00 per share across 

all Tapes. A Member would qualify for 

an enhanced rebate under Tier 2 by 

achieving an ADAV of at least 0.10% of 

the TCV. Members that qualify for Tier 

2 would receive an enhanced rebate of 

$0.0035 per share for executions of 

Added Displayed Volume for executions 

of orders in securities priced at or above 

$1.00 per share across all Tapes. A 

Member would qualify for an enhanced 

rebate under Tier 3 by achieving an 

ADAV of at least 0.20% of the TCV. 

Members that qualify for Tier 3 would 

receive an enhanced rebate of $0.0036 

per share for executions of Added 

Displayed Volume for executions of 

orders in securities priced at or above 

$1.00 per share across all Tapes. 

The Exchange believes that basing the 

qualifications for the Add Volume Tiers 

on an ADAV threshold that is a 

percentage of the TCV is appropriate so 

that the threshold is variable based on 

overall volumes in the equities industry, 

which fluctuate month to month. 

The proposed Add Volume Tier 1 is 

designed to encourage Members to 

maintain or increase their orders that 

add liquidity on the Exchange in order 

to qualify for an enhanced rebate for 

executions of Added Displayed Volume, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. Further, the proposed 

new Add Volume Tier 1 would provide 

Members with a higher enhanced rebate 

($0.0032) over the new proposed 

standard rebate of ($0.0029), as further 

described below, for satisfying more 

stringent criteria. 

The proposed Add Volume Tier 2 is 

designed to encourage Members to 

maintain or increase their orders that 

add liquidity on the Exchange in order 

to qualify for an enhanced rebate for 

executions of Added Displayed Volume, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. Further, the proposed 

new Add Volume Tier 2 would provide 

Members with a higher enhanced rebate 

($0.0035) over Add Volume Tier 1 

($0.0032), for satisfying increasingly 

more stringent criteria. 

The proposed Add Volume Tier 3 is 

designed to encourage Members to 

maintain or increase their orders that 

add liquidity on the Exchange in order 

to qualify for an enhanced rebate for 

executions of Added Displayed Volume, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. Further, the proposed 

new Add Volume Tier 3 would provide 

Members with a higher enhanced rebate 

($0.0036) over Add Volume Tier 2 

($0.0035), for satisfying increasingly 

more stringent criteria. 

For the purposes of calculating ADAV 

the Exchange proposes to exclude from 

the calculation: (1) Any Exchange 

System Disruption Days; (2) any day 

with a scheduled early market close; 

and (3) the Russell Reconstitution day, 

which typically occurs on the last 

Friday in June. The Exchange believes 

that the Exchange system disruptions 

could preclude Members from 

participating on the Exchange to the 

extent that they might have otherwise 

participated on such days, and thus, the 

Exchange believes it is appropriate to 

exclude such days when determining 

whether a Member qualifies for an Add 

Volume Tier to avoid penalizing 

Members that might otherwise have met 

the applicable volume threshold. 

Additionally, the Exchange believes that 

scheduled early market closes, which 

typically are the day before, or the day 

after, a holiday, may preclude some 

Members from submitting orders to the 

Exchange at the same level that they 

might otherwise. For similar reasons, 

the Exchange believes it is appropriate 

to exclude the Russell Reconstitution 

Day, as the Exchange believes the 

change to normal trading activity as a 

result of the Russell Reconstitution may 

skew the calculation of ADAV and TCV. 

The Exchange also proposes to specify 

that routed shares are not included in 

the calculation of ADAV.8

The Exchange will continue to 

provide a rebate of 0.05% of the total 

dollar value of the transaction for 

executions of orders that add liquidity 

to the Exchange in securities priced 

below $1.00 per share. Thus, as under 

the Exchange’s current pricing, the same 

rebate would be applied to all Members 

for executions of orders that add 

liquidity on the Exchange in securities 

priced below $1.00 per share. 

The Exchange notes that the rebates 

provided for executions of Added 

Displayed Volume under the Add 

Volume Tiers ($0.0032 in Tier 1; 

$0.0035 in Tier 2; and $0.0036 in Tier 

3), are comparable to, and competitive 

with, the rebates for executions of 

liquidity adding displayed orders 

provided by at least one other exchange 

under similar volume-based tiers.9

The Exchange believes that the 

proposed tiered pricing structure 

provides an incentive for Members to 

strive for higher ADAV on the Exchange 

to receive the proposed enhanced rebate 

for executions of Added Displayed 

Volume. As such, the proposed Add 

Volume Tiers are designed to encourage 

Members that provide liquidity on the 

Exchange to maintain or increase their 

order flow, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 

Exchange as a trading venue. 

Reduced Standard Rebate for Added 

Displayed Volume 

The Exchange proposes to reduce the 

standard rebate for executions of Added 

Displayed Volume. Currently, the 

Exchange provides a standard rebate of 

$0.0032 per share for executions of 

Added Displayed Volume in Tapes A 

and C, and $0.0035 per share for 

executions of Added Displayed Volume 

in Tape B. The Exchange now proposes 

to reduce the standard rebate for 


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10The standard pricing for executions of Added 

Displayed Volume is referred to by the Exchange on 

its Fee Schedule in section (1)(a) Standard Rates. 

11See e.g., the Nasdaq PSX equities trading fee 

schedule on its public website (available at http:// 

www.nasdaqtrader.com/Trader.aspx?id=PSX_

Pricing), which reflects a standard rebate of $0.0020 

per share to add displayed liquidity in securities 

priced at or above $1.00 per share; see also the 

NYSE ARCA equities trading fee schedule on its 

public website (available at https://www.nyse.com/ 

publicdocs/nyse/markets/nyse-arca/NYSE_Arca_

Marketplace_Fees.pdf), which reflects a standard 

rebate of $0.0020 per share to add displayed 

liquidity in securities priced at or above $1.00 per 

share. 

12See e.g., the Nasdaq PSX equities trading fee 

schedule on its public website (available at http:// 

www.nasdaqtrader.com/Trader.aspx?id=PSX_

Pricing), which reflects a standard rebate of $0.0015 

per share to add non-displayed liquidity in 

securities priced at or above $1.00 per share; see 

also the Cboe BZX equities trading fee schedule on 

its public website (available at https://

www.cboe.com/us/equities/membership/fee_

schedule/bzx/), which reflects a standard rebate of 

$0.0010 per share to add non-displayed liquidity in 

securities priced at or above $1.00 per share. 

13See supra note 6. 14See supra note 8. 

executions of Added Displayed Volume 

to $0.0029 per share for all Tapes.10 The 

Exchange notes that executions of 

orders in securities priced below $1.00 

per share that add displayed liquidity to 

the Exchange will continue to receive 

the standard rebate applicable to such 

executions (i.e., 0.05% of the total dollar 

value of the transaction). 

The purpose of reducing the standard 

rebate for executions of Added 

Displayed Volume is for business and 

competitive reasons, as the Exchange 

believes the reduction of such rebate 

would decrease the Exchange’s 

expenditures with respect to transaction 

pricing and would also offset some of 

the costs associated with the proposed 

enhanced rebates for executions for 

Members that qualify for an Add 

Volume Tier, in a manner that is still 

consistent with the Exchange’s overall 

pricing philosophy of encouraging 

added displayed liquidity. The 

Exchange notes that despite the modest 

reduction proposed herein, the 

proposed standard rebate for execution 

of Added Displayed Volume (i.e., 

$0.0029 per share) remains higher than, 

and competitive with, the standard 

rebates provided by other exchanges for 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity.11

The Exchange proposes to reduce the 

standard rebate to $0.0021 per share for 

executions of Added Non-Displayed 

Volume. Currently, the Exchange 

provides a standard rebate of $0.0025 

per share for executions of nondisplayed orders in securities priced at 

or above $1.00 per share that add 

liquidity to the Exchange. The Exchange 

notes that executions of orders in 

securities priced below $1.00 per share 

that add non-displayed liquidity to the 

Exchange will continue to receive the 

standard rebate applicable to such 

executions (i.e., 0.05% of the total dollar 

value of the transaction). 

The purpose of reducing the standard 

rebate for executions of Added NonDisplayed Volume is for business and 

competitive reasons, as the Exchange 

believes the reduction of such rebate 

would decrease the Exchange’s 

expenditures with respect to transaction 

pricing and would also offset some of 

the costs associated with the proposed 

enhanced rebates for executions for 

Members that qualify for an Add 

Volume Tier, in a manner that is still 

consistent with the Exchange’s overall 

pricing philosophy of encouraging 

added displayed liquidity. The 

Exchange notes that despite the modest 

reduction proposed herein, the 

proposed standard rebate for execution 

of Added Non-Displayed Volume (i.e., 

$0.0021 per share) remains higher than, 

and competitive with, the standard 

rebates provided by other exchanges for 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity.12

Remove Volume Tiers 

The Exchange is proposing to 

introduce a tiered pricing structure 

applicable to the fees charged for 

executions of Removed Volume on the 

Exchange. Specifically, the Exchange 

proposes to adopt a new volume-based 

tier structure, referred to as the Remove 

Volume Tiers, in which the Exchange 

will charge a fee that is lower than the 

standard fee for executions of Removed 

Volume for Members that meet the 

specified volume thresholds on the 

Exchange, as described below. 

Currently, the Exchange charges a 

standard fee of $0.0025 per share for all 

executions of Removed Volume, which 

the Exchange is proposing to increase to 

$0.0029, as further described below. The 

Exchange now proposes to adopt two 

new Remove Volume Tiers in which it 

will charge a lower fee of $0.0027 per 

share for executions of Removed 

Volume for Members that qualify for 

Tier 1 by achieving an ADV 13 that is 

equal to or greater than 0.10% of TCV; 

and a lower fee of $0.00265 per share for 

Members that qualify for Tier 2 by 

achieving an ADV that is equal to or 

greater than 0.15% of TCV. As 

proposed, the ADV will be calculated on 

a monthly basis, and Members that 

qualify for the Remove Volume Tier 

discount by achieving one of the 

thresholds specified above in a 

particular month will be charged the 

proposed lower fee according to the 

threshold tier achieved instead of the 

standard fee of $0.0029 per share, for all 

executions of Removed Volume in that 

month. 

The Exchange will continue to charge 

Members a fee of 0.05% of the total 

dollar value of the transaction for 

executions of orders that remove 

liquidity from the Exchange in 

securities priced below $1.00 per share. 

Thus, as under the Exchange’s current 

pricing, the same fee would be applied 

to all Members for executions of orders 

that remove liquidity from the Exchange 

in securities priced below $1.00 per 

share. 

For the purposes of calculating ADV 

the Exchange proposes to exclude from 

the calculation: (1) Any Exchange 

System Disruption Days; (2) any day 

with a scheduled early market close; 

and (3) the Russell Reconstitution day, 

which typically occurs on the last 

Friday in June. The Exchange believes 

that Exchange system disruptions could 

preclude Members from participating on 

the Exchange to the extent that they 

might have otherwise participated on 

such days, and thus, the Exchange 

believes it is appropriate to exclude 

such days when determining whether a 

Members qualifies for a Remove Volume 

Tier to avoid penalizing Members that 

might otherwise have met the applicable 

volume threshold. For similar reasons, 

the Exchange believes it is appropriate 

to exclude days with a scheduled early 

market close, which are typically the 

day before, or the day after, a holiday, 

as the early market close may preclude 

some Members from submitting orders 

to the Exchange at the same level that 

they might otherwise. Additionally, the 

Exchange believes excluding the Russell 

Reconstitution day is appropriate as the 

change to normal trading activity as a 

result of the Russell Reconstitution may 

skew the calculation of ADV and TCV. 

The Exchange also proposes to specify 

that routed shares are not included in 

the calculation of ADV.14

The Exchange believes that the 

proposed Remove Volume Tier provides 

an incentive for Members to strive for 

higher ADV on the Exchange in order to 

qualify for the proposed lower fee for 

executions of Removed Volume. As 

such, the proposed Remove Volume 

Tier is designed to encourage Members 

to maintain or increase their order flow 

directed to the Exchange, thereby 

contributing to a deeper and more liquid 

market to the benefit of all market 

participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. The Exchange notes that 


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15See the Cboe EDGX equities trading fee 

schedule on its public website (available at https:// 

www.cboe.com/us/equities/membership/fee_

schedule/edgx/) which reflects fees charged under 

‘‘Remove Volume Tiers’’—tiers based on a member 

achieving certain step-up ADAV and ADV volume 

thresholds of $0.00275 per share for removing 

volume from the Cboe EDGX exchange. 

16The proposed pricing is referred to by the 

Exchange on the Fee Schedule under the existing 

description ‘‘Removing Liquidity’’ in Section (1)(a) 

Standard Rates. 

17See e.g., the Cboe BZX equities trading fee 

schedule on its public website (available at https:// 

www.cboe.com/us/equities/membership/fee_

schedule/bzx/) which reflects a standard fee of 

$0.0030 per share to remove liquidity in securities 

priced at or above $1.00 per share; and the Cboe 

EDGX equities trading fee schedule on its public 

website (available at https://www.cboe.com/us/ 

equities/membership/fee_schedule/edgx/) which 

reflects a standard fee of $0.0030 per share to 

remove liquidity in securities priced at or above 

$1.00. 

the proposed lower fees for executions 

of Remove Volume applicable to 

Members that qualify for one of the 

Remove Volume Tiers (i.e., $0.0027 or 

$0.00265) is comparable to, and 

competitive with, the fees charged for 

executions of liquidity-removing orders 

charged by at least one other exchange 

under similar volume-based tiers.15

Increase Standard Fee for Removed 

Volume 

In connection with the proposed 

adoption of the Remove Volume Tiers, 

the Exchange also proposes to increase 

the standard fee charged for executions 

of Removed Volume. Currently, the 

Exchange charges a standard fee of 

$0.0025 per share for executions of 

Removed Volume. The Exchange now 

proposes to increase the standard fee 

charged for executions of Removed 

Volume to $0.0029 per share.16

The purpose of increasing the 

standard fee for executions of Removed 

Volume is for business and competitive 

reasons, as the Exchange believes that 

increasing such fee as proposed would 

generate additional revenue to offset 

some of the costs associated with the 

Exchange’s proposed pricing structure, 

which provides various rebates for 

liquidity-adding orders and discounted 

fees for liquidity-removing orders, and 

the Exchange’s operations generally, in 

a manner that is consistent with the 

Exchange’s overall pricing philosophy 

of encouraging added liquidity. The 

Exchange notes that despite the modest 

increase proposed herein, the 

Exchange’s proposed standard fee for 

executions of Removed Volume 

($0.0029) remains competitive with the 

standard fee to remove liquidity in 

securities priced at or above $1.00 per 

share charged by other equity 

exchanges.17

Liquidity Indicator Codes and 

Associated Fees Table Conforming 

Changes 

In conjunction with the Exchange’s 

proposal to (i) reduce the rebate for 

Displayed Orders that Add Liquidity 

from $0.0032 for Tapes A and C, and 

$0.0035 for Tape B, to $0.0029 for all 

tapes; (ii) reduce the rebate for NonDisplayed Orders that Add Liquidity 

from $0.0025 to $0.0021; and (iii) 

increase the fee for Removing Liquidity 

from $0.0025 to $0.0029, the Exchange 

now proposes to update the Liquidity 

Indicator Codes and Associated Fees 

table to reflect the aforementioned 

changes. The Exchange proposes to 

update the liquidity indicator codes as 

follows: 

• Liquidity indicator code AA, Adds 

Liquidity, Displayed Order (Tape A). 

The Liquidity Indicator Code and 

Associated Fees table would specify that 

orders that yield liquidity indicator 

code AA would receive a rebate of 

$0.0029 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code AB, Adds 

Liquidity, Displayed Order (Tape B). 

The Liquidity Indicator Code and 

Associated Fees table would specify that 

orders that yield liquidity indicator 

code AB would receive a rebate of 

$0.0029 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code AC, Adds 

Liquidity, Displayed Order (Tape C). 

The Liquidity Indicator Code and 

Associated Fees table would specify that 

orders that yield liquidity indicator 

code AC would receive a rebate of 

$0.0029 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code Aa, Adds 

Liquidity, Non-Displayed Order (Tape 

A). The Liquidity Indicator Code and 

Associated Fees table would specify that 

orders that yield liquidity indicator 

code Aa would receive a rebate of 

$0.0021 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code Ab, Adds 

Liquidity, Non-Displayed Order (Tape 

B). The Liquidity Indicator Code and 

Associated Fees table would specify that 

orders that yield liquidity indicator 

code Ab would receive a rebate of 

$0.0021 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code Ac, Adds 

Liquidity, Non-Displayed Order (Tape 

C). The Liquidity Indicator Code and 

Associated Fees table would specify that 

orders that yield liquidity indicator 

code Ac would receive a rebate of 

$0.0021 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code Ar, Retail 

Order, Adds Liquidity, Non-Displayed 

Order (All Tapes). The Liquidity 

Indicator Code and Associated Fees 

table would specify that orders that 

yield liquidity indicator code Ar would 

receive a rebate of $0.0021 per share in 

securities priced at or above $1.00 and 

0.05% of the transaction’s dollar value 

in securities priced below $1.00. 

• Liquidity indicator code RA, 

Removes Liquidity, Displayed Order 

(Tape A). The Liquidity Indicator Code 

and Associated Fees table would specify 

that orders that yield liquidity indicator 

code RA would be subject to a fee of 

$0.0029 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code RB, 

Removes Liquidity, Displayed Order 

(Tape B). The Liquidity Indicator Code 

and Associated Fees table would specify 

that orders that yield liquidity indicator 

code RB would be subject to a fee of 

$0.0029 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code RC, 

Removes Liquidity, Displayed Order 

(Tape C). The Liquidity Indicator Code 

and Associated Fees table would specify 

that orders that yield liquidity indicator 

code RC would be subject to a fee of 

$0.0029 per share in securities priced at 

or above $1.00 and 0.05% of the 

transaction’s dollar value in securities 

priced below $1.00. 

• Liquidity indicator code RR, Retail 

Order, Removes Liquidity, Displayed 

Order (All Tapes). The Liquidity 

Indicator Code and Associated Fees 

table would specify that orders that 

yield liquidity indicator code RR would 

be subject to a fee of $0.0029 per share 

in securities priced at or above $1.00 

and 0.05% of the transaction’s dollar 

value in securities priced below $1.00. 

• Liquidity indicator code Ra, 

Removes Liquidity, Non-Displayed 

Order (Tape A). The Liquidity Indicator 

Code and Associated Fees table would 

specify that orders that yield liquidity 

indicator code Ra would be subject to a 

fee of $0.0029 per share in securities 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 3155 

18See e.g., the Cboe EDGX Exchange, Inc. (‘‘Cboe 

EDGX’’) equities trading fee schedule on its public 

website (available at https://www.cboe.com/us/ 

equities/membership/fee_schedule/edgx/). 

19 Id. 

20 15 U.S.C. 78f(b). 

21 15 U.S.C. 78f(b)(4). 

22 15 U.S.C 78f(b)(5). 

23See supra note 4. 

24Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37499 (June 29, 2005). 

priced at or above $1.00 and 0.05% of 

the transaction’s dollar value in 

securities priced below $1.00. 

• Liquidity indicator code Rb, 

Removes Liquidity, Non-Displayed 

Order (Tape B). The Liquidity Indicator 

Code and Associated Fees table would 

specify that orders that yield liquidity 

indicator code Rb would be subject to a 

fee of $0.0029 per share in securities 

priced at or above $1.00 and 0.05% of 

the transaction’s dollar value in 

securities priced below $1.00. 

• Liquidity indicator code Rc, 

Removes Liquidity, Non-Displayed 

Order (Tape C). The Liquidity Indicator 

Code and Associated Fees table would 

specify that orders that yield liquidity 

indicator code Rc would be subject to a 

fee of $0.0029 per share in securities 

priced at or above $1.00 and 0.05% of 

the transaction’s dollar value in 

securities priced below $1.00. 

• Liquidity indicator code Rr, Retail 

Order, Removes Liquidity, NonDisplayed Order (All Tapes). The 

Liquidity Indicator Code and Associated 

Fees table would specify that orders that 

yield liquidity indicator code Rr would 

be subject to a fee of $0.0029 per share 

in securities priced at or above $1.00 

and 0.05% of the transaction’s dollar 

value in securities priced below $1.00. 

Definitions 

The Exchange proposes to add 

definitions of the terms ADAV, ADV, 

and TCV which are consistent with the 

definitions of those terms above to the 

‘‘Definitions’’ section of the Fee 

Schedule in connection with the 

proposed Add and Remove Volume 

Tiers. The Exchange notes that the 

proposed definitions of ADAV, ADV, 

and TCV are substantially similar to the 

definitions of those terms used by at 

least one other exchange on its fee 

schedule in connection with similar 

volume-based pricing tiers.18

Allow Members To Aggregate Volume 

for Pricing Tiers 

The Exchange proposes to include a 

provision in its definition of ADAV and 

ADV to allow affiliated Members to 

aggregate their volume for purposes of 

the Exchange’s determination of ADAV 

and ADV with respect to pricing tiers if 

such Members provide prior notice to 

the Exchange. Specifically, to the extent 

that two or more affiliated companies 

maintain separate memberships with 

the Exchange and can demonstrate their 

affiliation by showing they control, are 

controlled by, or are under common 

control with each other, the Exchange 

would permit such Members to count 

aggregate volume of such affiliates in 

calculating ADAV and ADV. As 

proposed, the Exchange will verify such 

affiliation using a Member’s Form BD, 

which lists control affiliates. The 

purposes of this proposed change is to 

avoid disparate treatment of firms that 

have divided business activities 

between separate corporate entities as 

compared to firms that operate those 

business activities within a single 

corporate entity, as allowing affiliated 

Member firms to count their aggregate 

volume in calculating ADAV and ADV 

would produce the same result for 

purposes of the Exchange’s volumebased tier pricing as if such affiliated 

Member firms were instead organized as 

a single corporate entity. The Exchange 

notes that this proposed change is 

consistent with the practice of at least 

one other exchange with respect to the 

aggregation of affiliated member firms’ 

volume for purposes of ADAV and ADV 

calculations with respect to pricing 

tiers.19

General Notes 

The Exchange proposes to adopt two 

new provisions to the ‘‘General Notes’’ 

section of its fee schedule. The 

Exchange proposes to add a provision 

that states that, to the extent a Pearl 

Equity Member does not qualify for any 

tiers contained herein, the rates listed in 

the ‘‘Liquidity Indicator Codes and 

Associated Fees’’ table shall apply. 

Additionally, the Exchange proposes to 

add a provision that states that, to the 

extent a Pearl Equity Member qualifies 

for higher rebates and/or lower fees than 

those provided by a tier for which such 

Member qualifies, the higher rebates 

and/or lower fees shall apply. These 

provisions are intended to provide 

additional clarity regarding the 

operation of the Fee Schedule. 

Implementation 

The Exchange proposes to implement 

the changes to the Fee Schedule 

pursuant to this proposal on January 3, 

2022. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 20

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 21 in 

particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among its Equity Members and 

issuers and other persons using its 

facilities. The Exchange also believes 

that the proposed rule change is 

consistent with the objectives of Section 

6(b)(5) 22 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, and to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest, and, 

particularly, is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange operates in a highly 

fragmented and competitive market in 

which market participants can readily 

direct their order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

sixteen registered equities exchanges, 

and there are a number of alternative 

trading systems and other off-exchange 

venues, to which market participants 

may direct their order flow. Based on 

publicly available information, no single 

registered equities exchange currently 

has more than approximately 18% of 

the total market share of executed 

volume of equities trading.23 Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow, 

and the Exchange currently represents 

less than 1% of the overall market share. 

The Commission and the courts have 

repeatedly expressed their preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and also recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 24

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue to 


lotter on DSK11XQN23PROD with NOTICES1
3156 Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 

25See Cboe EDGX equities trading fee schedule 

on its public website (available at https://

www.cboe.com/us/equities/membership/fee_

schedule/edgx/); Cboe BZX equities trading fee 

schedule on its public website (available at https:// 

www.cboe.com/us/equities/membership/fee_

schedule/bzx/); and MEMX equities trading fee 

schedule on its public website (available at https:// 

info.memxtrading.com/fee-schedule/). 

reduce use of certain categories of 

products, in response to new or 

different pricing structures being 

introduced into the market. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees and rebates, and market 

participants can readily trade on 

competing venues if they deem pricing 

levels at those other venues to be more 

favorable. The Exchange believes the 

proposal reflects a reasonable and 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow to the Exchange, 

which the Exchange believes would 

enhance liquidity and market quality to 

the benefit of all Members and market 

participants. 

Add Volume Tier 

The Exchange believes that the 

proposed Add Volume Tier is 

reasonable because it would provide 

Members with an additional incentive 

to achieve certain volume thresholds on 

the Exchange. The Exchange notes that 

volume-based incentives and discounts 

have been widely adopted by 

exchanges,25 and are reasonable, 

equitable, and not unfairly 

discriminatory because they are open to 

all Members on an equal basis and 

provide additional benefits or discounts 

that are reasonably related to the value 

to an exchange’s market quality 

associated with higher levels of market 

activity, such as higher levels of 

liquidity provision and the introduction 

of higher volumes of orders into the 

price and volume discovery processes. 

The Exchange believes the proposed 

Add Volume Tiers are equitable and not 

unfairly discriminatory for these same 

reasons, as they are available to all 

Members and are designed to encourage 

Members to maintain or increase their 

orders that add liquidity on the 

Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 

Exchange as a trading venue. Moreover, 

the Exchange believes the proposed Add 

Volume Tiers are a reasonable means to 

incentivize such increased activity, as it 

provides Members with additional 

opportunities to qualify for an enhanced 

rebate for executions of Added 

Displayed Volume. 

Additionally, the Exchange believes 

that the proposed enhanced rebate for 

executions of Added Displayed Volume 

under Add Volume Tier 1 (i.e., $0.0032 

per share) is reasonable, in that it 

represents only a modest increase from 

the proposed standard rebate for such 

executions (i.e., of $0.0029 per share). 

Thus, the Exchange believes that it is 

reasonable, consistent with an equitable 

allocation of fees, and not unfairly 

discriminatory to provide an enhanced 

rebate for executions of Added 

Displayed Volume to Members that 

qualify for Tier 1 in comparison with 

the standard rebate for such executions 

in recognition of the benefits that such 

Members provide to the Exchange and 

market participants, as described above, 

particularly as the magnitude of the 

enhanced rebate is not unreasonably 

high and is, instead, reasonably related 

to the enhanced market quality it is 

designed to achieve. 

The Exchange believes the proposed 

change for the required criteria for Add 

Volume Tier 1 as an ADAV of at least 

0.07% of TCV is reasonable because, as 

noted above, the Exchange believes that 

basing qualification for the Add Volume 

Tiers on an ADAV threshold that is a 

percentage of the TCV, rather than an 

ADAV threshold that is a specified 

number of shares, is appropriate so that 

the threshold is variable based on 

overall volumes in the equities industry, 

which fluctuate from month to month. 

The Exchange believes the proposed 

change for the required criteria for Add 

Volume Tier 2 as an ADAV of at least 

0.10% of TCV is reasonable because, as 

noted above, the Exchange believes that 

basing qualification for the Add Volume 

Tiers on an ADAV threshold that is a 

percentage of the TCV, rather than an 

ADAV threshold that is a specified 

number of shares, is appropriate so that 

the threshold is variable based on 

overall volumes in the equities industry, 

which fluctuate from month to month. 

The Exchange believes the proposed 

change for the required criteria for Add 

Volume Tier 3 as an ADAV of at least 

0.20% of TCV is reasonable because, as 

noted above, the Exchange believes that 

basing qualification for the Add Volume 

Tiers on an ADAV threshold that is a 

percentage of the TCV, rather than an 

ADAV threshold that is a specified 

number of shares, is appropriate so that 

the threshold is variable based on 

overall volumes in the equities industry, 

which fluctuate from month to month. 

The Exchange further believes the 

proposed new criteria is equitable and 

non-discriminatory because all 

Members will continue to be eligible to 

qualify for Add Volume Tier 3 and have 

the opportunity to receive the 

corresponding enhanced rebate if such 

criteria is achieved. The Exchange notes 

that should a Member not meet the 

proposed new criteria for Add Volume 

Tier 3, such member would merely not 

receive that corresponding enhanced 

rebate, and such Member would still 

have an opportunity to qualify for an 

enhanced rebate, although slightly 

lower than Tier 3, for executions of 

Added Volume under the proposed Add 

Volume Tier 2, which has slightly less 

stringent criteria than Add Volume Tier 

3, as described above. Members that do 

not meet the proposed new criteria for 

Add Volume 2 would still have an 

opportunity to qualify for an enhanced 

rebate, although slightly lower than Add 

Volume Tier 2, for executions of Added 

Volume under the proposed Add 

Volume Tier 1, which has slightly less 

stringent criteria than Add Volume Tier 

2, as described above. 

The Exchange further believes that the 

proposed new criteria for Add Volume 

Tier 1, Add Volume Tier 2, and Add 

Volume Tier 3, are reasonable, in that 

the proposed new criteria for Add 

Volume Tier 2 is incrementally more 

difficult to achieve than that of Add 

Volume Tier 1, and the proposed new 

criteria for Add Volume Tier 3 is 

incrementally more difficult to achieve 

than Add Volume Tier 2 thus, Add 

Volume Tier 3 appropriately offers the 

highest rebate commensurate with the 

corresponding highest volume 

threshold. Similarly, the Exchange 

believes that the proposed new criteria 

for Add Volume Tier 2 is incrementally 

more difficult to achieve than that for 

Add Volume Tier 1, and thus Add 

Volume Tier 2 appropriately offers a 

higher rebate commensurate with the 

higher volume threshold. Therefore, the 

Exchange believes the Add Volume 

Tiers, as proposed, are consistent with 

an equitable allocation of fees and 

rebates, as the more stringent criteria 

correlates with the corresponding tier’s 

higher rebate. The Exchange further 

believes that the rebates provided under 

the Add Volume Tiers, as proposed, 

(i.e., $0.0032 for Tier 1; $0.0035 for Tier 

2; and $0.0036 for Tier 3) are 

reasonable, consistent with an equitable 

allocation of fees, and not unfairly 

discriminatory to pay such higher 

rebates for executions of Added 

Displayed Volume to Members that 

qualify for an Add Volume Tier in 

comparison with the standard rebate in 

recognition of the benefits to the 

Exchange and market participants 

described above, particularly as the 

magnitude of the enhanced rebate is not 

unreasonably high and is, instead, 

reasonably related to the enhanced 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 3157 

26See the Cboe BZX Exchange, Inc. (‘‘Cboe BZX’’) 

equities trading fee schedule on its public website 

(available at https://www.cboe.com/us/equities/ 

membership/fee_schedule/bzx/) which reflects 

rebates provided under ‘‘Add Volume Tiers’’—tiers 

based on a member achieving certain ADAV 

thresholds—ranging from $0.0020 to $0.0031 per 

share for adding displayed liquidity to the Cboe 

BZX exchange. 

27See e.g., Cboe BZX equities trading fee 

schedule on its public website available at https:// 

www.cboe.com/us/equities/membership/fee_

schedule/bzx/). 28See MEMX Exchange equities trading fee 

schedule on its public website (available at https:// 

info.memxtrading.com/fee-schedule/) which 

reflects a rebate of $0.0028 for Added Displayed 

Volume and a rebate of $0.0020 for Added Non 

Displayed Volume. 29See supra note 25. 

30See Cboe EDGX equities trading fee schedule 

on its public website (available at https://

www.cboe.com/us/equities/membership/fee_

schedule/edgx/). 

31 Id. 

32 Id. 

market quality it is designed to achieve. 

Additionally, the Exchange believes the 

proposed rebates are reasonable as such 

rebates are comparable to, and 

competitive with, the rebates for 

executions of liquidity-adding displayed 

orders provided by at least one other 

exchange under similar volume-based 

tiers.26

Additionally, the Exchange believes 

that excluding Exchange System 

Disruption Days, any day with a 

scheduled early market close, and the 

Russell Reconstitution Day when 

determining whether a Member 

qualifies for the proposed Add Volume 

Tier during a month is reasonable, 

equitable, and non-discriminatory 

because, as explained above, the 

Exchange believes doing so would help 

to avoid penalizing Members that might 

otherwise have met the requirements to 

qualify for the proposed Add Volume 

Tier due to Exchange system 

disruptions, reduced trading hours, and/ 

or abnormal market conditions. The 

Exchange notes that the exclusion of the 

Exchange System Disruption Days, any 

day with a scheduled early market 

close, and the Russell Reconstitution 

Day is consistent with the methodology 

used by at least one other exchange 

when calculating certain member 

trading and other volume metrics for 

purposes of determining whether 

members qualify for certain pricing 

incentives, including calculations of 

ADAV for Volume Tiers specifically.27

Reduce Standard Rebate for Added 

Displayed and Non-Displayed Volume 

The Exchange believes that the 

proposed reduced standard rebate for 

executions of Added Displayed Volume 

($0.0029 per share) and Added NonDisplayed Volume ($0.0021 per share) is 

reasonable and appropriate because it 

represents a modest decrease from the 

current standard rebate for executions of 

Added Displayed Volume and Added 

Non-Displayed Volume, and remains 

competitive with the standard rebates 

provided by at least one other exchange 

for orders in securities priced at or 

above $1.00 per share that add 

liquidity.28 The Exchange further 

believes that the proposed reduced 

standard rebate for executions of Added 

Displayed Volume and Added NonDisplayed Volume are equitably 

allocated and not unfairly 

discriminatory because each will apply 

equally to all Members. 

Remove Volume Tier 

The Exchange believes that the 

proposed Remove Volume Tier is 

reasonable because it would provide 

Members with an additional incentive 

to achieve certain volume thresholds on 

the Exchange. Volume-based incentives 

and discounts have been widely 

adopted by exchanges,29 and are 

reasonable, equitable, and not unfairly 

discriminatory because they are open to 

all Members on an equal basis and 

provide additional benefits or discounts 

that are reasonably related to the value 

to an exchange’s market quality 

associated with higher levels of market 

activity, such as higher levels of 

liquidity provision and the introduction 

of higher volumes of orders into the 

price and volume discovery processes. 

The Exchange believes the proposed 

Remove Volume Tier is equitable and 

not unfairly discriminatory for these 

same reasons, as it is open to all 

Members and is designed to encourage 

Members to maintain or increase their 

order flow directed to the Exchange, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. Moreover, the Exchange 

believes the proposed Remove Volume 

Tier is a reasonable means to incentivize 

such increased activity, as it provides 

two different thresholds that a Member 

may achieve by increasing their ADV to 

an amount equal to or greater than the 

specified TCV threshold. 

Additionally, the Exchange believes 

the proposed lower fee for executions of 

Removed Volume for a qualifying 

Member (i.e., $0.0027 and $0.00265 

dependent upon the Tier) is reasonable, 

in that it represents only a modest 

decrease from the proposed standard fee 

for such executions (i.e., $0.0029 per 

share). The Exchange believes that it is 

reasonable, consistent with an equitable 

allocation of fees, and not unfairly 

discriminatory to charge such lower fees 

for executions of Removed Volume to 

Members that qualify for the Remove 

Volume Tier in comparison with the 

standard fee in recognition of the 

benefits that such Members provide to 

the Exchange and market participants, 

as described above, particularly as the 

magnitude of the lower fee is not 

unreasonably high and is, instead, 

reasonably related to the enhanced 

market quality it is designed to achieve. 

Further, as noted above, competing 

exchanges offer tiered pricing structures 

similar to the proposed Remove Volume 

Tier, including schedules of rebates and 

fees that apply based upon Members 

achieving certain volume thresholds, 

and the Exchange believes the proposed 

Remove Volume Tier’s criteria are 

reasonable when compared to such tiers 

provided for by other exchanges. For 

example, Cboe EDGX charges lower fees 

for removing volume from the Cboe 

EDGX exchange under its ‘‘Remove 

Volume Tiers’’ at $0.00275 per share, 

compared to its standard fee of $0.0030 

per share, but requires different, but 

similar, criteria than the Exchange’s 

proposed Remove Volume Tier, which 

are also based upon a Member’s 

volume.30

The Exchange further believes the 

proposed Remove Volume Tier is fair, 

equitable and not unfairly 

discriminatory because it is available to 

all Members. Further, the proposed 

Remove Volume Tier is comparable to 

the fees charged for executions of 

liquidity-removing orders charged by 

Cboe EDGX under similar volume based 

tiers.31

The Exchange believes that adding the 

proposed definitions for the terms, 

ADAV, ADV, and TCV, is reasonable, 

equitable, and non-discriminatory 

because such definitions are 

substantially similar to the definitions 

of such terms used by other exchanges 

in connection with similar volumebased pricing tiers, as described 

above,32 and their placement on the Fee 

Schedule is designed to ensure that the 

Fee Schedule is as clear and 

understandable as possible with respect 

to applicable pricing. Similarly, the 

Exchange believes that specifying that 

routed shares are not included in the 

calculation of ADAV or ADV and that 

Exchange System Disruptions, any day 

with a scheduled early market close, 

and the Russell Reconstitution Day are 

excluded from the calculation of ADAV, 

ADV, and TCV is reasonable, equitable, 

and non-discriminatory as this further 

clarifies the Exchange’s calculation 

practices with respect to its volumebased pricing tiers, and such practices 


lotter on DSK11XQN23PROD with NOTICES1
3158 Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 

33See Cboe EDGX equities trading fee schedule 

on its public website (available at https://

www.cboe.com/us/equities/membership/fee_

schedule/edgx/). 

34See the MEMX equities trading fee schedule on 

its public website (available at https://

info.memxtrading.com/fee-schedule/) which 

reflects a standard fee of $0.0029; Cboe EDGX 

equities trading fee schedule on it its public website 

(available at https://www.cboe.com/us/equities/ 

membership/fee_schedule/edgx/) which reflects a 

standard fee of $0.0030; and Cboe BZX equities 

trading fee schedule on its public website (available 

at https://www.cboe.com/us/equities/membership/ 

fee_schedule/bzx/) which reflects a standard fee of 

$0.0030. 

35See Cboe EDGX equities trading fee schedule 

on its public website (available at https://

www.cboe.com/us/equities/membership/fee_

schedule/edgx/). 

are consistent with those of at least one 

other exchange in this regard.33

Increased Standard Fee for Removed 

Volume 

The Exchange believes that the 

proposed change to increase the 

standard fee for executions of Removed 

Volume is reasonable, equitable, and 

consistent with the Act because such a 

change is designed to generate 

additional revenue and decrease the 

Exchange’s expenditures with respect to 

transaction pricing in order to offset 

some of the costs associated with the 

various rebates provided by the 

Exchange for liquidity-adding orders 

and the Exchange’s operations 

generally, in a manner that is consistent 

with the Exchange’s overall pricing 

philosophy of encouraging added 

liquidity, as described above. The 

Exchange also believes the proposed 

increased standard fee for executions of 

Removed Volume is reasonable and 

appropriate because it represents a 

modest increase from the current 

standard fee and, as noted above, 

remains lower than, and competitive 

with, the standard fee charged by 

several other exchanges to remove 

liquidity in securities priced at or above 

$1.00 per share.34 The Exchange further 

believes that the proposed increased 

standard fee for executions of Removed 

Volume is equitably allocated and not 

unfairly discriminatory because it will 

apply to all Members. 

Allow Members To Aggregate Volume 

for Pricing Tiers 

As noted above, the proposed 

language permitting aggregation of 

volume amongst affiliated Members for 

purposes of the ADAV and ADV 

calculations is intended to avoid 

disparate treatment of firms that divided 

their various business activities between 

separate corporate entities as compared 

to firms that operate those business 

activities within a single corporate 

entity, as allowing affiliated Member 

firms to count their aggregate volume in 

calculating ADAV and ADV would 

produce the same result for purposes of 

the Exchange’s volume-based tier 

pricing as if such affiliated Member 

firms were instead organized as a single 

corporate entity. By way of example, 

subject to appropriate information 

barriers, many firms that are Members of 

the Exchange operate both a market 

making desk and a public customer 

business within the same corporate 

entity. In contrast, other firms may be 

part of a corporate structure that 

separates those business lines into 

different corporate affiliates, either for 

business, compliance or historical 

reasons. Those corporate affiliates, in 

turn, are required to maintain separate 

memberships with the Exchange. 

Absent the proposed policy, such 

corporate affiliates would not receive 

the same treatment as firms operating 

similar business lines within a single 

entity that is a Member of the Exchange. 

Accordingly, the Exchange believes that 

its proposed policy is fair and equitable, 

and not unreasonably discriminatory. In 

addition to ensuring fair and equal 

treatment of its Members, the Exchange 

does not want to create incentives for its 

Members to restructure their business 

operations or compliance functions 

simply due to the Exchange’s pricing 

structure. Moreover, as noted above, this 

proposed policy is consistent with the 

practice of other exchanges with respect 

to the aggregation of affiliated Members’ 

volume for purposes of determining 

ADAV and ADV with respect to pricing 

tiers.35

Conforming Changes to Liquidity 

Indicator Codes 

The Exchange believes its proposal to 

decrease the rebate provided for 

Displayed Orders that add liquidity in 

securities priced at or above $1.00 from 

$0.0032 in Tapes A and C, and $0.0035 

in Tape B, to $0.0029 per share is 

reasonable and equitably allocated 

among all Members of the Exchange. 

Liquidity indicator codes AA, AB, and 

AC are appended to orders that add 

displayed non-retail liquidity. The 

Exchange believes that the proposed 

decrease to $0.0029 per share is 

reasonable in that it represents a modest 

decrease from the current rebate for 

such executions. 

Additionally, the Exchange believes 

its proposal to decrease the rebate 

provided for Non-Displayed Orders that 

add liquidity in securities priced at or 

above $1.00 from $0.0025 to $0.0021 per 

share is reasonable and equitably 

allocated among all Members of the 

Exchange. Liquidity indicator codes Aa, 

Ab, Ac, and Ar are appended to orders 

that add non-displayed liquidity. The 

Exchange believes its proposal is 

equitable and not unfairly 

discriminatory as it will apply to all 

Members equally. Additionally, the 

Exchange believes its proposed change 

is reasonable as the Exchange is also 

proposing new Add Volume Tiers by 

which a Member can achieve rebates of 

$0.0032, $0.0035, and $0.0036 per share 

for securities priced at or above $1.00 

upon satisfying certain criteria. 

The Exchange believes its proposal to 

increase the fee applied for orders that 

remove liquidity in securities priced at 

or above $1.00 per share is reasonable 

and equitably allocated among all 

Members of the Exchange. The 

Exchange believes its proposal to update 

the Liquidity Indicator Codes and 

Associated Fees table to reflect the new 

rate of $0.0029 per share for securities 

priced at or above $1.00 with liquidity 

indicator codes RA, RB, RC, RR, Ra, Rb, 

Rc, and Rr is equitable and reasonable 

because it will apply equally to all 

Members of the Exchange. Additionally, 

the Exchange believes its proposed 

change is reasonable as the Exchange is 

also proposing new Remove Volume 

Tiers by which a Member can achieve 

reduced fees of $0.0027 or $00.0265 per 

share for securities priced at or above 

$1.00 upon satisfying certain criteria. 

For the reasons discussed above, the 

Exchange submits that the proposal 

satisfies the requirements of Sections 

6(b)(4) and 6(b)(5) of the Act in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among its Members and other persons 

using its facilities and is not designed to 

unfairly discriminate between 

customers, issuers, brokers, or dealers. 

As described more fully below in the 

Exchange’s statement regarding the 

burden on competition, the Exchange 

believes that its transaction pricing is 

subject to significant competitive forces, 

and that the proposed fees and rebates 

described herein are appropriate to 

address such forces. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed change will impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. The Exchange 

believes the proposed change would 

encourage Members to maintain or 

increase their order flow to the 

Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 


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Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 3159 

36See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 47396 (June 29, 2005). 

37See supra notes 9, 11, 12, 15, 17, 26, 28, and 

34. 

38See supra note 18. 

39See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

40NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSE–2006–21)). 

Exchange as a trading venue. As a 

result, the Exchange believes the 

proposal would enhance its 

competitiveness as a market that attracts 

actionable orders, thereby making it a 

more desirable destination venue for its 

customers. For these reasons, the 

Exchange believes that the proposal 

furthers the Commission’s goal in 

adopting Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 36

Intramarket Competition 

The Exchange believes that the 

proposed changes would incentivize 

market participants to direct order flow 

to the Exchange, thereby contributing to 

a deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 

Exchange as a trading venue, which the 

Exchange believes, in turn, would 

continue to encourage market 

participants to direct additional order 

flow to the Exchange. Greater liquidity 

benefits all Members by providing more 

trading opportunities and encourages 

Members to send orders to the 

Exchange, thereby contributing to robust 

levels of liquidity, which benefits all 

Members. The opportunity to qualify for 

the Add Volume Tiers and thus receive 

the corresponding enhanced rebate for 

executions of Added Displayed Volume 

would be available to all Members that 

meet the associated requirements in any 

month. Further, as noted above, the 

Exchange believes that the proposed 

criteria for the Add Volume Tiers are 

reasonably related to the enhanced 

market quality that such tiers are 

designed to promote. 

The opportunity to qualify for the 

Remove Volume Tier, and thus receive 

the proposed lower fee for executions of 

Removed Volume, would be available to 

all Members that meet the associated 

volume requirement in any month. The 

Exchange believes that meeting the 

volume requirement of the Remove 

Volume Tier is attainable for market 

participants, as the Exchange believes 

the thresholds are relatively low and 

reasonably related to the enhanced 

liquidity and market quality that the 

Remove Volume Tier is designed to 

promote. Similarly, the proposed 

increased standard fee for executions of 

Removed Volume and the ability for 

Members to aggregate volume amongst 

affiliated Member firms for purposes of 

the Exchange’s determination of ADAV 

and ADV with respect to pricing tiers 

would apply equally to all Members. As 

such, the Exchange believes the 

proposed changes would not impose 

any burden on intramarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Intermarket Competition 

The Exchange believes its proposal 

will benefit competition as the 

Exchange operates in a highly 

competitive market. Members have 

numerous alternative venues they may 

participate on and direct their order 

flow to, including fifteen other equities 

exchanges and numerous alternative 

trading systems and other off-exchange 

venues. As noted above, no single 

registered equities exchange currently 

has more than 18% of the total market 

share of executed volume of equities 

trading. Thus, in such a lowconcentrated and highly competitive 

market, no single equities exchange 

possesses significant pricing power in 

the execution of order flow. Moreover, 

the Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow in response to new 

or different pricing structures being 

introduced to the market. Accordingly, 

competitive forces constrain the 

Exchange’s transaction fees and rebates 

generally, including with respect to 

executions of Removed Volume, and 

market participants can readily choose 

to send their orders to other exchanges 

and off-exchange venues if they deem 

fee levels at those other venues to be 

more favorable. 

As described above, the proposed 

changes are competitive proposals 

through which the Exchange is seeking 

to encourage additional order flow to 

the Exchange and to generate additional 

revenue to offset some of the costs 

associated with the Exchange’s current 

pricing structure and its operations 

generally, and such proposed rates 

applicable to executions of Added and 

Removed Volume are comparable to, 

and competitive with, rates charged by 

other exchanges.37

Additionally, the proposed change to 

allow affiliated Members to aggregate 

their volume for purposes of the 

Exchange’s determination of ADAV and 

ADV with respect to pricing tiers is 

designed to avoid disparate treatment of 

firms that have divided their various 

business activities between separate 

corporate entities as compared to firms 

that operate those business activities 

within a single corporate entity, which 

is consistent with the practice of other 

exchanges, as discussed above.38

Accordingly, the Exchange believes the 

proposal would not burden, but rather 

promote, intermarket competition by 

enabling it to better compete with other 

exchanges that offer similar volumebased incentives and pricing with 

respect to executions of Removed 

Volume and volume aggregation 

amongst affiliates with respect to 

pricing tiers. 

Additionally, the Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 39 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. circuit 

stated: ‘‘[n]o one disputes that 

competition for order flow is ‘fierce.’ 

. . . As the SEC explained, ‘[i]n the U.S. 

national market system, buyers and 

sellers of securities, and the brokerdealers that act as their routing agents, 

have a wide range of choices of where 

to route orders for execution’; [and] ‘no 

exchange can afford to take its market 

share percentages for granted’ because 

‘no exchange possess a monopoly, 

regulatory or otherwise, in the execution 

of order flow from broker dealers’ 

. . .’’.40 Accordingly, the Exchange does 

not believe its proposed pricing changes 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

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 


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3160 Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices 

41 15 U.S.C. 78s(b)(3)(A)(ii). 

42 17 CFR 240.19b–4(f)(2). 

43 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 92635 

(August 11, 2021), 86 FR 46028 (August 17, 2021) 

(SR–CboeBZX–2021–055). 

4 15 U.S.C. 78f. 

5 15 U.S.C. 78f(b)(4). 

19(b)(3)(A)(ii) of the Act,41 and Rule 

19b–4(f)(2) 42 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. 

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–2022–01 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–2022–01. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–PEARL–2022–01, and 

should be submitted on or before 

February 10, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01065 Filed 1–19–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93974; File No. SR– 

CboeBZX–2022–002] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

January 13, 2022. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 4, 

2022, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) proposes to 

amend its Fee Schedule. The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (https://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

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 update its 

Fee Schedule for its equity options 

platform (‘‘BZX Options’’) to reflect a 

recent change in connection with the 

rates under its Customer Non-Penny 

Add Volume Tiers. Specifically, the 

Exchange submitted a rule filing on 

August 2, 2021 to amend the Fee 

Schedule (‘‘August Filing’’),3 which, 

among other things, amended the rates 

provided under the Customer NonPenny Add Volume Tiers to range from 

between $0.92 and $1.06 per contract 

across five tiers, to between $0.90 and 

$1.05 across eight tiers. The Exchange, 

however, inadvertently omitted to also 

update the rates listed in the Standard 

Rates table of the Fees Schedule 

applicable to Customer orders that add 

volume in Non-Penny Program 

Securities to reflect the new rates 

provided under the Customer NonPenny Add Volume Tiers. The Exchange 

now proposes to update the rates listed 

in the Standard Rates table for Customer 

orders that add volume in Non-Penny 

Program Securities to reflect the rates 

applicable to such orders provided 

under the Customer Non-Penny Add 

Volume Tiers, as adopted in the August 

Filing. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,4

in general, and furthers the objectives of 

Section 6(b)(4),5 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 


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