2686 Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices 

1See Notice of the United States Postal Service 

of Submission of the Calculation of the FY 2017 

Assumed Federal Income Tax on Competitive 

Products, January 10, 2018. 

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

2 17 CFR 240.19b–4. 

3 ‘‘Market Maker’’ means a Member registered 

with the Exchange for the purpose of making 

markets in options contracts traded on the 

Exchange. See the Definitions Section of the Fee 

Schedule and Exchange Rule 100. 

4 ‘‘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). See Exchange 

Rule 100, including Interpretations and Policies .01. 

5 ‘‘Member’’ means an individual or organization 

that is registered with the Exchange pursuant to 

Chapter II of the 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 

President’s Commission on White House 

Fellowships. 

Elizabeth Pinkerton, 

Director. 

[FR Doc. 2018–00766 Filed 1–17–18; 8:45 am] 

BILLING CODE 6325–44–P 

POSTAL REGULATORY COMMISSION 

[Docket No. T2018–1; Order No. 4368] 

Income Tax Review 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice. 

SUMMARY: The Commission is noticing a 

recent Postal Service filing concerning 

the calculation of the assumed Federal 

income tax on competitive products 

income for Fiscal Year 2017. This notice 

informs the public of the filing, invites 

public comment, and takes other 

administrative steps. 

DATES: Comments are due: February 2, 

2018. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://

www.prc.gov. Those who cannot submit 

comments electronically should contact 

the person identified in the FOR FURTHER

INFORMATION CONTACT section by 

telephone for advice on filing 

alternatives. 

FOR FURTHER INFORMATION CONTACT: 

David A. Trissell, General Counsel, at 

202–789–6820. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Notice of Commission Action 

III. Ordering Paragraphs 

I. Introduction 

In accordance with 39 U.S.C. 3634 

and 39 CFR 3060.40 et seq., the Postal 

Service filed its calculation of the 

assumed Federal income tax on 

competitive products income for fiscal 

year (FY) 2017.1 The calculation details 

the FY 2017 competitive product 

revenue and expenses, the net 

competitive products income before tax, 

and the assumed Federal income tax on 

that income. 

II. Notice of Commission Action 

In accordance with 39 CFR 3060.42, 

the Commission establishes Docket No. 

T2018–1 to review the calculation of the 

assumed Federal income tax and 

supporting documentation. 

The Commission invites comments on 

whether the Postal Service’s filing in 

this docket is consistent with the 

policies of 39 U.S.C. 3634 and 39 CFR 

3060.40 et seq. Comments are due no 

later than February 2, 2018. The Postal 

Service’s filing can be accessed via the 

Commission’s website (http://

www.prc.gov). 

The Commission appoints Jennaca D. 

Upperman to serve as Public 

Representative in this docket. 

III. Ordering Paragraphs 

It is ordered: 

1. The Commission establishes Docket 

No. T2018–1 to consider the calculation 

of the assumed Federal income tax on 

competitive products for FY 2017. 

2. Pursuant to 39 U.S.C. 505, Jennaca 

D. Upperman is appointed to serve as an 

officer of the Commission to represent 

the interests of the general public in this 

proceeding (Public Representative). 

3. Comments are due no later than 

February 2, 2018. 

4. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Stacy L. Ruble, 

Secretary. 

[FR Doc. 2018–00782 Filed 1–17–18; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82490; File No. SR– 

PEARL–2017–40] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX 

PEARL Fee Schedule 

January 11, 2018. 

Pursuant to the provisions of 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 December 29, 2017, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX PEARL Fee Schedule 

(the ‘‘Fee Schedule’’). 

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 Exchange proposes to amend the 

Add/Remove Tiered Rebates/Fees set 

forth in Section (1)(a) of the Fee 

Schedule to (i) modify the monthly 

volume thresholds that apply to MIAX 

PEARL Market Makers 3 in certain tiers, 

and to establish rebates and fees for new 

Tier 2 and new Tier 6 applicable to 

Market Makers, (ii) modify the monthly 

volume thresholds that apply to MIAX 

PEARL Non-Priority Customers, Firms, 

Broker-Dealers and Non-MIAX PEARL 

Market Makers in Tier 4, and to 

establish rebates and fees for a new Tier 

5 applicable to such market participants 

who are not Priority Customers 4 or 

MIAX PEARL Market Makers; and (iii) 

offer Members 5 the Maker Rebate and 


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Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices 2687 

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 6 ‘‘Excluded Contracts’’ means any contracts 

routed to an away market for execution. See the 

Definitions Section of the Fee Schedule. 7 ‘‘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)). The 

term Exchange System Disruption, which is defined 

in the Definitions section of the Fee Schedule, 

means an outage of a Matching Engine or collective 

Matching Engines for a period of two consecutive 

hours or more, during trading hours. The term 

Matching Engine, which is also defined in the 

Definitions section of the Fee Schedule, 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. 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. 

See the Definitions Section of the Fee Schedule. 

8 ‘‘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 process described in the Fee 

Schedule. See the Definitions Section of the Fee 

Schedule. 

9The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

10See Securities Exchange Act Release No. 82391 

(December 22, 2017), 82 FR 61622 (December 28, 

2017) (SR–PEARL–2017–39). 

the Taker Fee associated with the 

highest Tier in Non-Penny classes (as 

defined below) for transactions in NonPenny classes if such Member executes 

more than 0.30% volume in Non-Penny 

classes, not including Excluded 

Contracts,6 as compared to the TCV 7 in 

all MIAX PEARL listed option classes. 

The Exchange currently assesses 

transaction rebates and fees to all 

market participants which are based 

upon the total monthly volume 

executed by the Member on MIAX 

PEARL in the relevant, respective origin 

type (not including Excluded Contracts) 

expressed as a percentage of TCV. 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 (‘‘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 of the MIAX PEARL System,9

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 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 Pilot 

Program 10 (‘‘Penny classes’’) than for 

order executions in standard option 

classes which are not in the Penny Pilot 

Program (‘‘Non-Penny classes’’), where 

Members are assessed higher transaction 

fees and receive higher rebates within 

the same tier. 

Transaction Rebates and Fees for MIAX 

PEARL Market Makers 

Transaction rebates and fees 

applicable to all MIAX PEARL Market 

Makers are currently assessed according 

to the following table: 

Origin Tier Volume criteria 

Per contract rebates/fees 

for penny classes 

Per contract rebates/fees 

for non-penny classes 

Maker Taker Maker Taker 

All MIAX PEARL Market Makers .. 1 0.00%–0.10% ............................... ($0.25) $0.50 ($0.30) $1.05 

2 Above 0.10%–0.50% .................... (0.40) 0.48 (0.60) 1.03 

3 Above 0.50%–0.75% or Above 

2.0% in SPY.

(0.47) 0.47 (0.65) 1.02 

4 Above 0.75% ................................ (0.48) 0.47 (0.70) 1.02 

The Exchange proposes to modify the 

monthly volume thresholds applicable 

to the Exchange’s Market Makers to 

adjust the thresholds in current Tiers 1, 

3 and 4 and to add a new Tier 2 

threshold and corresponding Tier 2 

rebates and fees, as well as to add a new 

Tier 6 threshold and corresponding Tier 

6 rebates and fees. Specifically, the 

Exchange proposes to adjust the 

calculation threshold of Tier 1’s volume 

criteria from 0.00% up to 0.10% of the 

total monthly volume executed by the 

Member on MIAX PEARL, not including 

Excluded Contracts, divided by the 

TCV, to become above 0.00% up to 

0.05% of the total monthly volume 

executed by the Member on MIAX 

PEARL, not including Excluded 

Contracts, divided by the TCV. The 

Exchange then proposes to add a new 

Tier 2 threshold applicable to all MIAX 

PEARL Market Makers. The new Tier 2 

threshold volume criteria shall be 

calculated as above 0.05% up to 0.25% 

of the total monthly volume executed by 

the Member on MIAX PEARL, not 

including Excluded Contracts, divided 

by the TCV. 

Further, the Exchange proposes to 

adjust the calculation threshold of 

former Tier 2 and now Tier 3’s volume 

criteria from above 0.10% up to 0.50% 

of the total monthly volume executed by 

the Member on MIAX PEARL, not 

including Excluded Contracts, divided 

by the TCV, to become above 0.25% up 

to 0.50% of the total monthly volume 

executed by the Member on MIAX 

PEARL, not including Excluded 

Contracts, divided by the TCV. Former 

Tier 3 will now become Tier 4. 

The Exchange additionally proposes 

to adjust the calculation threshold of 

former Tier 4 and now Tier 5’s volume 

criteria from above 0.75% of the total 

monthly volume executed by the 

Member on MIAX PEARL, not including 

Excluded Contracts, divided by the 

TCV, to become above 0.75% up to 

1.00% of the total monthly volume 

executed by the Member on MIAX 

PEARL, not including Excluded 

Contracts, divided by the TCV. 

The Exchange then proposes to add a 

new Tier 6 threshold applicable to all 

MIAX PEARL Market Makers. The new 

Tier 6 threshold volume criteria shall be 

calculated as above 1.00% of the total 

monthly volume executed by the 


sradovich on DSK3GMQ082PROD with NOTICES
2688 Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices 

Member on MIAX PEARL, not including 

Excluded Contracts, divided by the 

TCV. 

The new thresholds for MIAX PEARL 

Market Makers will be as set forth in the 

following table: 

Origin Tier Volume criteria 

Per contract rebates/fees 

for penny classes 

Per contract rebates/fees 

for non-penny classes 

Maker Taker Maker Taker 

All MIAX PEARL Market Makers .. 1 0.00%–0.05% ............................... ($0.25) $0.50 ($0.30) $1.05 

2 Above 0.05%–0.25% .................... (0.40) 0.50 (0.30) 1.05 

3 Above 0.25%–0.50% .................... (0.40) 0.48 (0.60) 1.03 

4 Above 0.50%–0.75% or Above 

2.0% in SPY.

(0.47) 0.47 (0.65) 1.02 

5 Above 0.75%–1.00% .................... (0.48) 0.47 (0.70) 1.02 

6 Above 1.00% ................................ (0.48) 0.47 (0.85) 1.02 

The Exchange believes that the 

proposed new monthly volume tier and 

new rebates/fees in Tier 2 should 

provide incentives for the Exchange’s 

Market Makers to more aggressively 

provide liquidity in Penny classes so 

that they can achieve the higher Maker 

rebate in Penny classes with less 

volume than previously required in the 

former tier. The Exchange additionally 

believes that the proposed new monthly 

volume tier and new rebates/fees in Tier 

6 should provide incentives for the 

Exchange’s Market Makers to more 

aggressively provide liquidity in NonPenny classes so that they can achieve 

a higher Maker rebate in Non-Penny 

classes than previously offered. The 

Exchange believes that increased MIAX 

PEARL Market Maker volume should 

make the MIAX PEARL marketplace an 

attractive venue where the Exchange’s 

Market Makers are incentivized to 

submit orders with narrow spreads and 

with greater size, deepening and 

enhancing the quality of the MIAX 

PEARL marketplace. This should in turn 

provide more trading opportunities and 

tighter spreads for other market 

participants and result in a 

corresponding increase in order flow 

from such other market participants. 

Transaction Rebates and Fees for Other 

Market Participants That Are Not 

Priority Customers or MIAX PEARL 

Market Makers 

Transaction rebates and fees 

applicable to all other market 

participants that are not Priority 

Customers or MIAX PEARL Market 

Makers are currently assessed according 

to the following table: 

Origin Tier Volume criteria 

Per contract rebates/fees 

for penny classes 

Per contract rebates/fees 

for non-penny classes 

Maker Taker Maker Taker 

Non-Priority Customer, Firm, BD, 

and Non-MIAX PEARL Market 

Makers.

1 

2 

3 

0.00%–0.10% ...............................

Above 0.10%–0.50% ....................

Above 0.50%–0.75% ....................

($0.25) 

(0.40) 

(0.45) 

$0.50 

0.49 

0.48 

($0.30) 

(0.60) 

(0.65) 

$1.05 

1.04 

1.04 

4 Above 0.75% ................................ (0.48) 0.48 (0.70) 1.04 

The Exchange proposes to modify the 

monthly volume thresholds applicable 

to all Non-Priority Customers, Firms, 

Broker-Dealers and Non-MIAX PEARL 

Market Makers to adjust the threshold in 

Tier 4 set forth above and to add a new 

Tier 5 threshold and corresponding Tier 

5 rebates and fees. Specifically, the 

Exchange proposes to adjust the 

calculation threshold of Tier 4’s volume 

criteria from above 0.75% of the total 

monthly volume executed by the 

Member on MIAX PEARL, not including 

Excluded Contracts, divided by the 

TCV, to become above 0.75% up to 

1.00% of the total monthly volume 

executed by the Member on MIAX 

PEARL, not including Excluded 

Contracts, divided by the TCV. The 

rebates and fees applicable in the new 

Tier 5 shall be ($0.48) and $0.48 per 

contract for Penny classes, and ($0.85) 

and $1.04 for Non-Penny classes. 

Additionally, the Exchange proposes 

to add a new Tier 5 threshold applicable 

to all such market participants. The new 

Tier 5 threshold volume criteria shall be 

calculated as above 1.00% of the total 

monthly volume executed by the 

Member on MIAX PEARL, not including 

Excluded Contracts, divided by the 

TCV. 

The new thresholds for Non-Priority 

Customers, Firms, Broker-Dealers and 

Non-MIAX PEARL Market Makers will 

be as set forth in the following table: 

Origin Tier Volume criteria 

Per contract rebates/fees 

for penny classes 

Per contract rebates/fees 

for non-penny classes 

Maker Taker Maker Taker 

Non-Priority Customer, Firm, BD, 

and Non-MIAX PEARL Market 

Makers.

1 

2 

3 

0.00%–0.10% ...............................

Above 0.10%–0.50% ....................

Above 0.50%–0.75% ....................

($0.25) 

(0.40) 

(0.45) 

$0.50 

0.49 

0.48 

($0.30) 

(0.60) 

(0.65) 

$1.05 

1.04 

1.04 

4 Above 0.75%–1.00% .................... (0.48) 0.48 (0.70) 1.04 

5 Above 1.00% ................................ (0.48) 0.48 (0.85) 1.04 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices 2689 

11 ‘‘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 membership@miaxoptions.com 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. 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(4). 

14 15 U.S.C. 78f(b)(1) and (b)(5). 

The Exchange believes that the 

proposed new monthly volume tier and 

higher rebate in Tier 5 should provide 

incentives for such market participants 

to direct greater volume to the Exchange 

in Non-Penny classes. The Exchange 

believes that increased order flow by 

these market participants should make 

the MIAX PEARL marketplace an 

attractive venue where these market 

participants are incentivized to submit 

orders with narrower spreads and with 

greater size, deepening and enhancing 

the quality of the MIAX PEARL 

marketplace. This should in turn 

provide more trading opportunities and 

tighter spreads for all market 

participants and result in a 

corresponding increase in order flow 

from all market participants. 

Member Transaction Maker Rebates and 

Taker Fees for Non-Penny Classes 

The Exchange proposes to offer 

Members transacting volume in MIAX 

PEARL Market Maker, Non-Priority 

Customer, Firm, Broker Dealer, and 

Non-MIAX PEARL Market Maker origin 

types (the ‘‘Select Origins’’) a new 

method to achieve higher rebates and 

lower fees for transactions in NonPenny classes. Specifically, the 

Exchange proposes to offer Members 

transacting volume in the Select Origins 

the Maker rebate and the Taker fee 

associated with the highest Tier for that 

respective origin type in Non-Penny 

classes for transactions in Non-Penny 

classes if such Member executes more 

than 0.30% volume in Non-Penny 

classes, not including Excluded 

Contracts, as compared to the TCV in all 

MIAX PEARL listed option classes. For 

example, under the proposed tiers, if a 

Market Maker transacted monthly 

volume of 0.45% in both Penny and 

Non-Penny classes, not including 

Excluded Contracts, as divided by TCV, 

such Member would receive proposed 

Tier 3 rebates and fees: Maker rebate of 

($0.40) for orders that placed resting 

liquidity on the book and Taker fee of 

$0.48 for orders that removed liquidity 

from the book in Penny classes; Maker 

rebate of ($0.60) for orders that placed 

resting liquidity on the book and Taker 

fee of $1.03 for orders that removed 

liquidity from the book in Non-Penny 

classes. However, if such Member’s 

volume was heavily concentrated in 

Non-Penny classes where its Non-Penny 

executed volume was above 0.30%, not 

including Excluded Contracts, as 

divided by TCV in all MIAX PEARL 

listed options classes, such Member 

would receive a Maker rebate of ($0.85) 

and Taker fee of $1.02, the proposed 

rates for Tier 6 in Non-Penny classes for 

Market Makers. Its Maker rebate of 

($0.40) and Taker fee of $0.48 will 

continue to apply for Penny classes for 

Market Makers in proposed Tier 3. This 

example would be similar for NonPriority Customers, Firms, Broker 

Dealers, and Non-MIAX PEARL Market 

Makers, except for the variations in the 

rates and thresholds. For example, 

under the proposed tiers, if a Member in 

these origins transacted monthly 

volume of 0.45% in both Penny and 

Non-Penny classes, not including 

Excluded Contracts, as divided by TCV, 

such Member would receive Tier 2 

rebates and fees: Maker rebate of ($0.40) 

for orders that placed resting liquidity 

on the book and Taker fee of $0.49 for 

orders that removed liquidity from the 

book in Penny classes; Maker rebate of 

($0.60) for orders that placed resting 

liquidity on the book and Taker fee of 

$1.04 for orders that removed liquidity 

from the book in Non-Penny classes. 

However, if such Member’s volume was 

heavily concentrated in Non-Penny 

classes where its Non-Penny executed 

volume was above 0.30%, not including 

Excluded Contracts, as divided by TCV 

in all MIAX PEARL listed options 

classes, such Member would receive a 

Maker rebate of ($0.85) and Taker fee of 

$1.04, the proposed rates for Tier 5 in 

Non-Penny classes for these origins. Its 

Maker rebate of ($0.40) and Taker fee of 

$0.49 will continue to apply for Penny 

classes in that origin type in proposed 

Tier 2. 

Lastly, the Exchange proposes to offer 

Members an alternative method to 

achieve such higher rebates and lower 

fees for transactions in Non-Penny 

classes by permitting the Member to 

aggregate its volume in Non-Penny 

classes with that of its Affiliates 11 in the 

Select Origins. For avoidance of doubt, 

volume from Priority Customer in NonPenny classes will not be aggregated 

toward the 0.30% volume threshold. 

Specifically, any Member and its 

Affiliates will be credited the Maker 

rebate associated with the highest tier 

for transactions in Non-Penny classes 

and will be assessed the lowest Taker 

fee associated with the highest tier for 

transactions in Non-Penny classes if 

such Member together with its Affiliates 

in the Select Origins executes more than 

0.30% volume in Non-Penny classes, 

not including Excluded Contracts, as 

compared to TCV in all MIAX PEARL 

option classes. The Exchange believes 

that these incentives will encourage 

Members to transact a greater number of 

contracts in Non-Penny classes on the 

Exchange. 

The proposed rule change is 

scheduled to become operative January 

2, 2018. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 12

in general, and furthers the objectives of 

Section 6(b)(4) of the Act,13 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,14 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. 

The Exchange believes that the 

proposed new tier structure applicable 

to the Exchange’s Market Makers is 

consistent with Section 6(b)(4) of the 

Act in that it is fair, equitable and not 

unreasonably discriminatory and should 

improve market quality for the 

Exchange’s Market Makers and 


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2690 Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices 

15See NYSE Arca Options Fees and Charges 

under ‘‘NYSE Arca Options: Trade-Related Charges 

For Standard Options’’; see also Cboe BZX Options 

Exchange Fee Schedule under ‘‘Transaction Fees’’. 16 Id. 

consequently all market participants. 

The proposed changes to the MIAX 

PEARL Market Maker tier structure and 

rebates and fees are fair and equitable 

and not unreasonably discriminatory 

because they apply equally to all MIAX 

PEARL Market Maker orders. All 

similarly situated MIAX PEARL Market 

Maker orders are subject to the same 

rebate and fee schedule, and access to 

the Exchange is offered on terms that are 

not unfairly discriminatory. 

The Exchange believes that the 

proposed rule changes applicable to 

MIAX PEARL Market Makers are 

consistent with Section 6(b)(5) of the 

Act in that they promote equitable 

access to the Exchange for all market 

participants. To the extent that MIAX 

PEARL Market Maker volume is 

increased by the proposal, market 

participants will increasingly compete 

for the opportunity to trade on the 

Exchange including sending more 

orders that are narrower and largersized. The resulting increased volume 

and liquidity will benefit all Exchange 

participants by providing more trading 

opportunities and tighter spreads. 

The specific volume thresholds of the 

Tiers and the rebates and fees set forth 

in new Tiers 2 and 6 applicable to the 

Exchange’s Market Makers were set 

based upon business determinations 

and an analysis of current volume 

levels. The Exchange believes that the 

proposed new monthly volume tier and 

new rebates/fees in Tier 2 should 

provide incentives for the Exchange’s 

Market Makers to more aggressively 

provide liquidity so that they can 

achieve the higher Maker rebate in 

Penny classes with less volume than 

previously required in the former tier. 

The Maker Rebates and Taker Fees set 

forth in new Tier 6 are within the range 

of rebates and fees at other exchanges 

that have a Maker-Taker fee structure.15

The volume thresholds are intended to 

incentivize MIAX PEARL Market 

Makers to increase the number of orders 

they send to the Exchange so that they 

can achieve the next threshold, and to 

encourage all market participants to 

send more orders as well. Increasing the 

number of orders sent to the Exchange 

will in turn provide tighter and more 

liquid markets, and therefore attract 

more business overall. Similarly, the 

different rebate rates at the different tier 

levels are based on an analysis of 

current revenue and volume levels and 

are intended to provide increasing 

incentives to MIAX PEARL Market 

Makers for increasing the volume of 

orders sent to, and contracts executed 

on, the Exchange. The specific amounts 

of the tiers and rates are set in order to 

encourage MIAX PEARL Markets 

Makers to reach for higher tiers. 

The Exchange believes that the 

proposed new tier structure applicable 

to the Exchange’s other market 

participants who are not Priority 

Customers or MIAX PEARL Market 

Makers, i.e. Non-Priority Customers, 

Firms, Broker-Dealers and Non-MIAX 

PEARL Market Makers, is consistent 

with Section 6(b)(4) of the Act in that it 

is fair, equitable and not unreasonably 

discriminatory and should improve 

market quality for such market 

participants as well as MIAX PEARL 

Market Makers and Priority Customers. 

The proposed changes to the tier 

structure and rebates and fees 

applicable to such market participants 

are fair and equitable and not 

unreasonably discriminatory because 

they apply equally to all orders of such 

market participants. All similarly 

situated orders of such market 

participants are subject to the same 

rebate and fee schedule, and access to 

the Exchange is offered on terms that are 

not unfairly discriminatory. 

The Exchange believes that the 

proposed rule changes applicable to 

Non-Priority Customers, Firms, BrokerDealers and Non-MIAX PEARL Market 

Makers are consistent with Section 

6(b)(5) of the Act in that they promote 

equitable access to the Exchange for all 

market participants. To the extent order 

flow by these market participants is 

increased by the proposal, other market 

participants will increasingly compete 

for the opportunity to trade on the 

Exchange including sending more 

orders that are narrower and larger 

sized. The resulting increased volume 

and liquidity will benefit all Exchange 

participants by providing more trading 

opportunities and tighter spreads. 

The specific volume thresholds of 

Tiers 4 and 5 and the rebates and fees 

set forth in new Tier 5 applicable to 

Non-Priority Customers, Firms, BrokerDealers and Non-MIAX PEARL Market 

Makers were set based upon business 

determinations and an analysis of 

current volume levels. The Maker 

Rebates and Taker Fees set forth in new 

Tier 5 are within the range of rebates 

and fees at other exchanges that have a 

Maker-Taker fee structure.16 The 

volume thresholds are intended to 

incentivize such market participants to 

increase the number of orders they send 

to the Exchange so that they can achieve 

the next threshold, and to encourage all 

market participants to send more orders 

as well. Increasing the number of orders 

sent to the Exchange will in turn 

provide tighter and more liquid markets, 

and therefore attract more business 

overall. Similarly, the different rebate 

rates at the different tier levels are based 

on an analysis of current revenue and 

volume levels and are intended to 

provide increasing incentives to NonPriority Customers, Firms, BrokerDealers and Non-MIAX PEARL Market 

Makers for increasing the volume of 

orders sent to, and contracts executed 

on, the Exchange. The specific amounts 

of the tiers and rates are set in order to 

encourage such market participants to 

reach for higher tiers. 

The Exchange believes that the 

proposed rule change applicable to 

Members’ volume in Non-Penny classes 

is consistent with Section 6(b)(4) of the 

Act in that it is fair, equitable and not 

unreasonably discriminatory and should 

improve market quality for the 

Exchange’s order flow in Non-Penny 

classes which will benefit all market 

participants. The proposed changes are 

fair and equitable and not unreasonably 

discriminatory because they apply 

equally to all Member orders in NonPenny classes. All similarly situated 

Member orders in Non-Penny classes 

are subject to the same rebates and fees 

if they achieve the specified volume in 

Non-Penny classes, and access to the 

Exchange is offered on terms that are 

not unfairly discriminatory. The 

Exchange’s proposal to offer Members 

and its Affiliates the opportunity to 

achieve such higher rebates and lower 

fees for transactions in Non-Penny 

classes by permitting the Member to 

aggregate its volume in Non-Penny 

classes with that of its Affiliates in the 

Select Origins, is equitable and not 

unfairly discriminatory because the 

Exchange will offer such market 

participants a means to reduce 

transaction fees by qualifying for higher 

volume in Non-Penny classes. The 

Exchange believes that offering all such 

market participants the opportunity to 

lower transaction fees by incentivizing 

them to transact order flow in NonPenny classes in turn benefits all market 

participants. To the extent that this 

purpose is achieved, all the Exchange’s 

market participants should benefit from 

the improved market liquidity. 

Enhanced market quality and increased 

transaction volume that results from the 

anticipated increase in order flow in 

Non-Penny classes directed to the 

Exchange will benefit all market 

participants and improve competition 

on the Exchange. 

The Exchange believes that the 

proposal to allow the aggregation of 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices 2691 

17See MIAX Options Fee Schedule, Section 

(1)(a)(i). 

18See Cboe BZX Options Exchange Fee Schedule 

(Firm, Broker Dealer, and Joint Back Office NonPenny Pilot Add Volume Tiers). 

19 15 U.S.C. 78s(b)(3)(A)(ii). 20 17 CFR 240.19b–4(f)(2). 

trading activity of Members and their 

Affiliates for purposes of the fee 

reduction is fair, equitable and not 

unreasonably discriminatory. The 

Exchange believes the proposed rule 

change is reasonable because it would 

allow aggregation of the trading activity 

of Members and their Affiliates in the 

Select Origins for purposes of the fee 

reduction only in very narrow 

circumstances, namely, where the firm 

is an Affiliate as defined in the 

Exchange’s Fee Schedule. Furthermore, 

other exchanges, including MIAX 

PEARL’s affiliate, Miami International 

Securities Exchange, LLC (‘‘MIAX 

Options,’’), as well as the Exchange, 

have rules that permit the aggregation of 

the trading activity of affiliated entities 

for the purposes of calculating and 

assessing certain fees.17 The Exchange 

believes that offering all such market 

participants the opportunity to lower 

transaction fees by incentivizing them to 

transact order flow in Non-Penny 

classes in turn benefits all market 

participants. 

The Exchange believes that the 

proposal, which would only include 

volume transacted in Non-Penny classes 

of Members and their Affiliates from the 

Select Origins for purposes of the 

threshold aggregation, is fair, equitable 

and not unreasonably discriminatory. 

The Exchange believes that not 

including Priority Customer volume 

transacted in Non-Penny classes is 

reasonable because Priority Customers 

already receive a higher level of rebates 

offered by the Exchange for transactions 

in Non-Penny classes, higher than the 

rebate amounts proposed for the Select 

Origins. In Non-Penny classes, Priority 

Customers can receive Maker rebates of 

between ($0.85) to ($1.05) compared to 

the proposed highest tier rebate of 

($0.85) for Select Origins. Other 

exchanges use similar qualifications for 

use in tier thresholds. For example, on 

Cboe BZX, for Firm, Broker Dealer, and 

Joint Back Office, a member would be 

required to have an ADAV (average 

daily added volume) in Non-Customer 

Non-Penny Orders >=0.20% of average 

OCV (OCC Customer Volume), as one of 

the criteria (criteria 3) to reach tier 3 or 

tier 4.18 Accordingly, the Exchange 

believes that it is fair, equitable, and not 

unreasonably discriminatory to not 

include the Priority Customer volume of 

Members and their Affiliates from the 

Select Origins for purposes of the 

threshold aggregation. 

The Exchange believes that the 

proposed rule changes applicable to 

Members’ volume in Non-Penny classes 

are consistent with Section 6(b)(5) of the 

Act in that they to promote just and 

equitable principles of trade of options 

in Non-Penny classes. To the extent 

Member volume in Non-Penny classes is 

increased by the proposal, market 

participants will increasingly compete 

for the opportunity to trade on the 

Exchange in Non-Penny classes which 

could result in more orders that are 

narrower and larger-sized. The resulting 

increased volume and liquidity will 

benefit all Exchange participants by 

providing more trading opportunities 

and tighter spreads. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

MIAX PEARL 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. The 

Exchange believes that the proposed 

changes would increase both 

intermarket and intramarket 

competition by encouraging MIAX 

PEARL Market Makers as well as NonPriority Customers, Firms, BrokerDealers and Non-MIAX PEARL Market 

Makers to direct their orders to the 

Exchange, which should provide 

liquidity to the marketplace and 

increase the volume of contracts traded 

on MIAX PEARL. The Exchange 

believes that the proposed changes in 

the tier structure for these market 

participants should provide additional 

liquidity that enhances the quality of 

the Exchange’s markets and increases 

the number of trading opportunities on 

MIAX PEARL for all participants who 

will be able to compete for such 

opportunities. The Exchange 

additionally believes that the proposed 

changes in volume associated with NonPenny classes and the opportunity to 

receive higher rebates and lower fees as 

a result of achieving the specified 

volume in Non-Penny classes should 

provide additional liquidity in NonPenny classes and encourage order flow 

for such classes. To the extent that there 

are market participants that are not able 

to aggregate order flow with Affiliates, 

the Exchange believes that this should 

incent such market participants to direct 

additional order flow to the Exchange 

and thus provide additional liquidity 

that enhances the quality of its markets 

and increases the volume of contracts 

traded here especially in Non-Penny 

classes. This should benefit all market 

participants and improve competition 

on the Exchange. 

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. In such an environment, the 

Exchange must continually adjust its 

rebates and fees to remain competitive 

with other exchanges and to attract 

order flow. The Exchange believes that 

the proposed rule changes reflect this 

competitive environment because they 

modify the Exchange’s fees in a manner 

that encourages all market participants 

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,19 and Rule 

19b–4(f)(2) 20 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–2017–40 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. 


sradovich on DSK3GMQ082PROD with NOTICES
2692 Federal Register / Vol. 83, No. 12 / Thursday, January 18, 2018 / Notices 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A ‘‘Bona fide Error’’ is defined as (i) the 

inaccurate conveyance or execution of any term of 

an order including, but not limited to, price, 

number of shares or other unit of trading; 

identification of the security; identification of the 

account for which securities are purchased or sold; 

lost or otherwise misplaced order tickets; short 

sales that were instead sold long or vice versa; or 

the execution of an order on the wrong side of a 

market; (ii) the unauthorized or unintended 

purchase, sale, or allocation of securities, or the 

failure to follow specific client instructions; (iii) the 

incorrect entry of data into relevant systems, 

including reliance on incorrect cash positions, 

withdrawals, or securities positions reflected in an 

account; or (iv) a delay, outage, or failure of a 

communication system used to transmit market 

data prices or to facilitate the delivery or execution 

of an order. See Securities Exchange Act Release 

No. 55884 (June 8, 2007), 72 FR 32926 (June 14, 

2007) (Order Exempting Certain Error Correction 

Transactions from Rule 611 of Regulation NMS 

under the Securities Exchange Act of 1934). 

All submissions should refer to File 

Number SR–PEARL–2017–40. 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–2017–40 and 

should be submitted on or before 

February 8, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–00724 Filed 1–17–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82491; File No. SR–BOX– 

2018–01] 

Self-Regulatory Organizations; BOX 

Options Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Amend 

BOX Rule 3030 To Establish Rules 

Related to the Use of Floor Broker 

Error Accounts 

January 11, 2018. 

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 2, 

2018, BOX Options Exchange LLC (the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. 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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend 

BOX Rule 3030 to establish rules related 

to the use of Floor Broker error 

accounts. The text of the proposed rule 

change is available from the principal 

office of the Exchange, at the 

Commission’s Public Reference Room 

and also on the Exchange’s internet 

website at http://boxoptions.com. 

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 

self-regulatory organization 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 self-regulatory organization 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 

BOX Rule 3030 to establish rules related 

to the use of Floor Broker error 

accounts. First, the Exchange proposes 

that each Participant who conducts a 

business as a Floor Broker on the 

Exchange and who is not self-clearing 

must establish and maintain an account 

with a clearing Participant of the 

Exchange, for the sole purpose of 

carrying positions resulting from bona 

fide errors made in the course of its 

floor brokerage business.3 Further, with 

respect to Floor Brokers only, such an 

account for option transactions must be 

maintained with an entity that is also a 

member of the Options Clearing 

Corporation. 

In practice, a Floor Broker will 

remedy a bona fide error by entering a 

subsequent trade on behalf of the 

customer on the correct terms of the 

original order. These types of 

transactions are transactions which 

broker-dealers place to remedy the 

execution of customer orders that have 

been placed in error or mishandled due 

to an error involving any term of an 

order, including but not limited to, for 

example, price, number of contracts, 

identification of security, or execution 

of a transaction on the wrong side of the 

market. 

Next, the Exchange proposes that each 

Participant which conducts business as 

a Floor Broker must make available to 

the Exchange, upon request, accurate 

and complete records of all trades 

cleared in such Participant’s error 

account. These records must include the 

following audit trail data elements: (1) 

Name or identifying symbol of the 

security; (2) number of shares or 

quantity of security; (3) transaction 

price; (4) time of trade execution; (5) 

executing Floor Broker badge number, 

or alpha symbol as may be used from 

time to time, in regard to its side of the 

contract; (6) executing Floor Broker 

badge number, or alpha symbol as may 

be used from time to time, of the contra 

side to the contract; (7) clearing firm 

number, or alpha symbol as may be 

used from time to time, in regard to its 

side of the contract; (8) clearing firm 

number, or alpha symbol as may be 

used from time to time, in regard to the 

contra side of the contract; (9) 

designation of whether the account for 

which the order was executed was that 

of a Participant; (10) the nature and 

amount of the error; (11) the Participant 

that cleared the error trade on the 

Participant’s behalf; (12) an explanation 

of the means by which the Participant 

resolved the error; (13) the aggregate 

amount of liability that the Participant 


sradovich on DSK3GMQ082PROD with NOTICES