Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices 48253 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Member’’ means an individual or 

organization that is registered with the Exchange 

pursuant to Chapter II of Exchange Rules for 

purposes of trading on the Exchange as an 

‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’ 

Members are deemed ‘‘members’’ under the 

Exchange Act. See the Definitions Section of the 

Fee Schedule and Exchange Rule 100. 

4Exchange participants must record the 

appropriate account origin code on all orders at the 

time of entry in order. The Exchange represents that 

it has surveillances in place to verify that Members 

mark orders with the correct account origin code. 

change. The current agenda and any 

updates will be available on the 

ACMUI’s Meetings and Related 

Documents web page at https://

www.nrc.gov/reading-rm/doccollections/acmui/meetings/2021.html 

or by emailing Ms. Kellee Jamerson at 

the contact information below. 

Purpose: Discuss issues related to 10 

CFR part 35 Medical Use of Byproduct 

Material. 

Date and Time for Open Session: 

October 4, 2021, from 10:00 a.m. to 4:00 

p.m. 

Date Webinar information 

October 4, 2021 Link: https://

usnrc.webex.com. 

Event number: 199 227 

5195. 

Date and Time for Closed Session: 

October 5, 2021, from 12:00 p.m. to 2:00 

p.m. Eastern Standard Time. This 

session will be closed to conduct the 

ACMUI’s required annual training. 

Public Participation: The meeting will 

be held as a webinar using the WebEx 

meeting platform. Any member of the 

public who wishes to participate in any 

open sessions of this meeting should 

register in advance of the meeting by 

visiting the link and entering the event 

number(s) provided above. Upon 

successful registration, a confirmation 

email will be generated providing the 

telephone bridge line and a link to join 

the webinar on the day of the meeting. 

Members of the public should also 

monitor the NRC’s Public Meeting 

Schedule at https://www.nrc.gov/pmns/ 

mtg for any meeting updates. If there are 

any questions regarding the meeting, 

persons should contact Ms. Jamerson 

using the information below. 

Contact Information: Ms. Kellee 

Jamerson, email: Kellee.Jamerson@

nrc.gov, telephone: 301–415–7408. 

Conduct of the Meeting 

Darlene F. Metter, M.D. will chair the 

meeting. Dr. Metter will conduct the 

meeting in a manner that will facilitate 

the orderly conduct of business. The 

following procedures apply to public 

participation in the meeting: 

1. Persons who wish to provide a 

written statement should submit an 

electronic copy to Ms. Jamerson using 

the contact information listed above. All 

submittals must be received by the close 

of business on September 28, 2021, 

three business days before the meeting, 

and must pertain to the topics on the 

agenda for the meeting. 

2. Questions and comments from 

members of the public will be permitted 

during the meeting, at the discretion of 

the Chairman. 

3. The draft transcript and meeting 

summary will be available on ACMUI’s 

website https://www.nrc.gov/readingrm/doc-collections/acmui/meetings/ 

2021.html on or about November 19, 

2021. 

4. Persons who require special 

services, such as those for the hearing 

impaired, should notify Ms. Jamerson of 

their planned participation. 

This meeting will be held in 

accordance with the Atomic Energy Act 

of 1954, as amended (primarily Section 

161a); the Federal Advisory Committee 

Act (5 U.S.C. app); and the 

Commission’s regulations in title 10 of 

the Code of Federal Regulations, part 7. 

Dated at Rockville, Maryland this 24th day 

of August, 2021. 

For the U.S. Nuclear Regulatory 

Commission. 

Russell E. Chazell, 

Federal Advisory Committee Management 

Officer. 

[FR Doc. 2021–18514 Filed 8–26–21; 8:45 am] 

BILLING CODE 7590–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92728; File No. SR– 

PEARL–2021–38] 

Self-Regulatory Organizations: MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX Pearl 

Options Fee Schedule To Adjust the 

Options Regulatory Fee 

August 23, 2021. 

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 August 

12, 2021, 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 MIAX Pearl Options Fee 

Schedule (the ‘‘Fee Schedule’’) to adjust 

the Options Regulatory Fee (‘‘ORF’’). 

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 

Currently, the Exchange assesses ORF 

in the amount of $0.0028 per contract 

side. The Exchange proposes to reduce 

the amount of ORF from $0.0028 per 

contract side to $0.0018 per contract 

side in order to help ensure that revenue 

collected from the ORF, in combination 

with other regulatory fees and fines, 

does not exceed the Exchange’s total 

regulatory costs. The Exchange’s 

proposed change to the ORF should 

balance the Exchange’s regulatory 

revenue against the anticipated 

regulatory costs. The Exchange initially 

filed this proposal on July 30, 2021 (SR– 

PEARL–2021–37) and withdrew such 

filing on August 12, 2021. The Exchange 

proposes to implement the fee change 

effective August 12, 2021. 

Collection of ORF 

Currently, the Exchange assesses the 

per-contract ORF to each Member 3 for 

all options transactions, including Mini 

Options, cleared or ultimately cleared 

by the Member, which are cleared by 

the Options Clearing Corporation 

(‘‘OCC’’) in the ‘‘customer’’ range,4

regardless of the exchange on which the 

transaction occurs. The ORF is collected 


lotter on DSK11XQN23PROD with NOTICES1
48254 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices 

5 ‘‘CMTA’’ or Clearing Member Trade Assignment 

is a form of ‘‘give-up’’ whereby the position will be 

assigned to a specific clearing firm at OCC. 

6See Securities Exchange Act Release Nos. 85162 

(February 15, 2019), 84 FR 5783 (February 22, 2019) 

(SR–MIAX–2019–01); 85251 (March 6, 2019), 84 FR 

8931 (March 12, 2019) (SR–EMERALD–2019–01). 

7See Securities Exchange Act Release Nos. 91418 

(March 26, 2021), 86 FR 17254 (April 1, 2021) (SR– 

Phlx–2021–16) (reducing the Nasdaq PHLX LLC 

ORF and estimating direct expenses at 58% and 

indirect expenses at 42%); 91420 (March 26, 2021), 

86 FR 17223 (April 1, 2021) (SR–ISE–2021–04) 

(reducing the Nasdaq ISE, LLC ORF and estimating 

direct expenses at 58% and indirect expenses at 

42%). 

by OCC on behalf of the Exchange from 

either: (1) A Member that was the 

ultimate clearing firm for the 

transaction; or (2) a non-Member that 

was the ultimate clearing firm where a 

Member was the executing clearing firm 

for the transaction. The Exchange uses 

reports from OCC to determine the 

identity of the executing clearing firm 

and ultimate clearing firm. 

To illustrate how the Exchange 

assesses and collects ORF, the Exchange 

provides the following set of examples. 

For a transaction that is executed on the 

Exchange and the ORF is assessed, if 

there is no change to the clearing 

account of the original transaction, then 

the ORF is collected from the Member 

that is the executing clearing firm for 

the transaction (the Exchange notes that, 

for purposes of the Fee Schedule, when 

there is no change to the clearing 

account of the original transaction, the 

executing clearing firm is deemed to be 

the ultimate clearing firm). If there is a 

change to the clearing account of the 

original transaction (i.e., the executing 

clearing firm ‘‘gives-up’’ or ‘‘CMTAs’’ 5

the transaction to another clearing firm), 

then the ORF is collected from the 

clearing firm that ultimately clears the 

transaction—the ‘‘ultimate clearing 

firm.’’ The ultimate clearing firm may be 

either a Member or non-Member of the 

Exchange. If the transaction is executed 

on an away exchange and the ORF is 

assessed, then the ORF is collected from 

the ultimate clearing firm for the 

transaction. Again, the ultimate clearing 

firm may be either a Member or nonMember of the Exchange. The Exchange 

notes, however, that when the 

transaction is executed on an away 

exchange, the Exchange does not assess 

the ORF when neither the executing 

clearing firm nor the ultimate clearing 

firm is a Member (even if a Member is 

‘‘given-up’’ or ‘‘CMTAed’’ and then 

such Member subsequently ‘‘gives-up’’ 

or ‘‘CMTAs’’ the transaction to another 

non-Member via a CMTA reversal). 

Finally, the Exchange does not assess 

the ORF on outbound linkage trades, 

whether executed at the Exchange or an 

away exchange. ‘‘Linkage trades’’ are 

tagged in the Exchange’s system, so the 

Exchange can readily tell them apart 

from other trades. A customer order 

routed to another exchange results in 

two customer trades, one from the 

originating exchange and one from the 

recipient exchange. Charging ORF on 

both trades could result in doublebilling of ORF for a single customer 

order; thus, the Exchange does not 

assess ORF on outbound linkage trades 

in a linkage scenario. This assessment 

practice is identical to the assessment 

practice currently utilized by the 

Exchange’s affiliates, Miami 

International Securities Exchange, LLC 

(‘‘MIAX’’) and MIAX Emerald, LLC 

(‘‘MIAX Emerald’’).6

As a practical matter, when a 

transaction that is subject to the ORF is 

not executed on the Exchange, the 

Exchange lacks the information 

necessary to identify the order-entering 

member for that transaction. There are 

a multitude of order-entering market 

participants throughout the industry, 

and such participants can make changes 

to the market centers to which they 

connect, including dropping their 

connection to one market center and 

establishing themselves as participants 

on another. For these reasons, it is not 

possible for the Exchange to identify, 

and thus assess fees such as ORF, on 

order-entering participants on away 

markets on a given trading day. Clearing 

members, however, are distinguished 

from order-entering participants because 

they remain identified to the Exchange 

on information the Exchange receives 

from OCC regardless of the identity of 

the order-entering participant, their 

location, and the market center on 

which they execute transactions. 

Therefore, the Exchange believes it is 

more efficient for the operation of the 

Exchange and for the marketplace as a 

whole to collect the ORF from clearing 

members. 

ORF Revenue and Monitoring of ORF 

The Exchange monitors the amount of 

revenue collected from the ORF to 

ensure that it, in combination with other 

regulatory fees and fines, does not 

exceed regulatory costs. In determining 

whether an expense is considered a 

regulatory cost, the Exchange reviews 

all costs and makes determinations if 

there is a nexus between the expense 

and a regulatory function. The Exchange 

notes that fines collected by the 

Exchange in connection with a 

disciplinary matter offset ORF. 

As discussed below, the Exchange 

believes it is appropriate to charge the 

ORF only to transactions that clear as 

customer at the OCC. The Exchange 

believes that its broad regulatory 

responsibilities with respect to a 

Member’s activities supports applying 

the ORF to transactions cleared but not 

executed by a Member. The Exchange’s 

regulatory responsibilities are the same 

regardless of whether a Member enters 

a transaction or clears a transaction 

executed on its behalf. The Exchange 

regularly reviews all such activities, 

including performing surveillance for 

position limit violations, manipulation, 

front-running, contrary exercise advice 

violations and insider trading. These 

activities span across multiple 

exchanges. 

Revenue generated from ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, is 

designed to recover a material portion of 

the regulatory costs to the Exchange of 

the supervision and regulation of 

Members’ customer options business 

including performing routine 

surveillances, investigations, 

examinations, financial monitoring, and 

policy, rulemaking, interpretive, and 

enforcement activities. Regulatory costs 

include direct regulatory expenses and 

certain indirect expenses in support of 

the regulatory function. The direct 

expenses include in-house and third 

party service provider costs to support 

the day-to-day regulatory work such as 

surveillances, investigations and 

examinations. The indirect expenses 

include support from such areas as the 

Office of the General Counsel, 

technology, and internal audit. Indirect 

expenses are estimated to be 

approximately 50% of the total 

regulatory costs for 2021. Thus, direct 

expenses are estimated to be 

approximately 50% of total regulatory 

costs for 2021. The Exchange notes that 

its estimated direct and indirect expense 

percentages are in the range and similar 

to those at other options exchanges.7

The ORF is designed to recover a 

material portion of the costs to the 

Exchange of the supervision and 

regulation of its members, including 

performing routine surveillances, 

investigations, examinations, financial 

monitoring, and policy, rulemaking, 

interpretive, and enforcement activities. 

Proposal 

Based on the Exchange’s most recent 

review, the Exchange proposes to 

reduce the amount of ORF that will be 

collected by the Exchange from $0.0028 

per contract side to $0.0018 per contract 

side. The Exchange issued an Options 

Regulatory Fee Announcement on July 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices 48255 

8See https://www.miaxoptions.com/sites/default/ 

files/circular-files/MIAX_Pearl_Options_RC_2021_

29.pdf. 

9See data from OCC at: https://

www.businesswire.com/news/home/ 

20210504005178/en/OCC-April-2021-TotalVolume-Up-29.7-Percent-from-a-Year-Ago, https://

www.businesswire.com/news/home/ 

20210602005174/en/OCC-May-2021-Total-VolumeUp-32.7-Percent-from-a-Year-Ago, and https://

apnews.com/press-release/business-wire/ 

778385e696f4407590cc6ff9cb64db03. 

10The Exchange notes that notwithstanding the 

potential excess ORF revenue the Exchange 

anticipates it would collect utilizing the current 

rate, it would not use such revenue for nonregulatory purposes. 

11The Exchange notes that its regulatory 

responsibilities with respect to Member compliance 

with options sales practice rules have been 

allocated to the Financial Industry Regulatory 

Authority (‘‘FINRA’’) under a 17d–2 Agreement. 

The ORF is not designed to cover the cost of options 

sales practice regulation. 

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

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

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

2, 2021, indicating the proposed rate 

change for August 1, 2021.8

The proposed decrease is based on 

recent options volumes, which included 

an increase in retail investors. With 

respect to options volume, the 

Exchange, and the options industry as a 

whole, experienced a significant 

increase between 2020 and 2021. For 

example, total options contract volumes 

in April, May and June 2021 were 

29.7%, 32.7% and 25.6% higher than 

the total options contract volumes in 

April, May and June 2020, respectively.9

There can be no assurance that the 

Exchange’s final costs for 2021 will not 

differ materially from these 

expectations, nor can the Exchange 

predict with certainty whether options 

volume will remain at the current level 

going forward. The Exchange notes 

however, that when combined with 

regulatory fees and fines, the revenue 

being generated utilizing the current 

ORF rate may result in revenue that will 

run in excess of the Exchange’s 

estimated regulatory costs for the year.10

Particularly, as noted above, the options 

market has seen a substantial increase in 

volume throughout 2020 and 2021, due 

in large part to the extreme volatility in 

the marketplace as a result of the 

COVID–19 pandemic. This 

unprecedented spike in volatility 

resulted in significantly higher volume 

than was originally projected by the 

Exchange (thereby resulting in 

substantially higher ORF revenue than 

projected). The Exchange therefore 

proposes to decrease the ORF in order 

to ensure it does not exceed its 

regulatory costs for the year. 

Particularly, the Exchange believes that 

decreasing the ORF when combined 

with all of the Exchange’s other 

regulatory fees and fines, would allow 

the Exchange to continue covering a 

material portion of its regulatory costs, 

while lessening the potential for 

generating excess revenue that may 

otherwise occur using the current rate.11

The Exchange will continue to 

monitor the amount of revenue 

collected from the ORF to ensure that it, 

in combination with its other regulatory 

fees and fines, does not exceed the 

Exchange’s total regulatory costs. The 

Exchange will continue to monitor 

MIAX Pearl regulatory costs and 

revenues at a minimum on a semiannual basis. If the Exchange 

determines regulatory revenues exceed 

or are insufficient to cover a material 

portion of its regulatory costs, the 

Exchange will adjust the ORF by 

submitting a fee change filing to the 

Commission. The Exchange will notify 

Members of adjustments to the ORF via 

regulatory circular at least 30 days prior 

to the effective date of the change. 

In connection with this filing, the 

Exchange notes that its affiliates, MIAX 

and MIAX Emerald, will also be 

adjusting the ORF fees that each of those 

exchanges charge. 

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 

particular, in that it is an equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

issuers and other persons using its 

facilities. The Exchange also believes 

the proposal furthers the objectives of 

Section 6(b)(5) of the Act 14 in that it is 

designed to promote just and equitable 

principles of trade, 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 is not designed to 

permit unfair discrimination between 

customers, issuers, brokers and dealers. 

The Exchange believes the proposed 

fee change is reasonable because 

customer transactions will be subject to 

a lower ORF fee than the current rate. 

Moreover, the proposed reduction is 

necessary in order for the Exchange to 

not collect revenue in excess of its 

anticipated regulatory costs, in 

combination with other regulatory fees 

and fines, which is consistent with the 

Exchange’s practices. 

The ORF is designed to recover a 

material portion of the costs of 

supervising and regulating Members’ 

customer options business including 

performing routine surveillances and 

investigations, as well as policy, 

rulemaking, interpretive and 

enforcement activities. The Exchange 

will monitor the amount of revenue 

collected from the ORF to ensure that it, 

in combination with its other regulatory 

fees and fines, does not exceed the 

Exchange’s total regulatory costs. The 

Exchange has designed the ORF to 

generate revenues that, when combined 

with all of the Exchange’s other 

regulatory fees, will be less than or 

equal to the Exchange’s regulatory costs, 

which is consistent with the 

Commission’s view that regulatory fees 

be used for regulatory purposes and not 

to support the Exchange’s business side. 

In this regard, the Exchange believes 

that the proposed decrease to the fee is 

reasonable. 

The Exchange believes that 

continuing to limit changes to the ORF 

to twice a year on specific dates with 

advance notice is reasonable because it 

gives participants certainty on the 

timing of changes, if any, and better 

enables them to properly account for 

ORF charges among their customers. 

The Exchange believes that continuing 

to limit changes to the ORF to twice a 

year on specific dates is equitable and 

not unfairly discriminatory because it 

will apply in the same manner to all 

Members that are subject to the ORF and 

provide them with additional advance 

notice of changes to that fee. 

The Exchange believes that collecting 

the ORF from non-Members when such 

non-Members ultimately clear the 

transaction (that is, when the nonMember is the ‘‘ultimate clearing firm’’ 

for a transaction in which a Member 

was assessed the ORF) is an equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

issuers and other persons using its 

facilities. The Exchange notes that there 

is a material distinction between 

‘‘assessing’’ the ORF and ‘‘collecting’’ 

the ORF. The ORF is only assessed to 

a Member with respect to a particular 

transaction in which it is either the 

executing clearing firm or ultimate 

clearing firm. The Exchange does not 

assess the ORF to non-Members. Once, 

however, the ORF is assessed to a 

Member for a particular transaction, the 

ORF may be collected from the Member 

or a non-Member, depending on how 

the transaction is cleared at OCC. If 

there was no change to the clearing 

account of the original transaction, the 

ORF would be collected from the 

Member. If there was a change to the 

clearing account of the original 

transaction and a non-Member becomes 

the ultimate clearing firm for that 

transaction, then the ORF will be 


lotter on DSK11XQN23PROD with NOTICES1
48256 Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices 

15 If the OCC clearing member is an Exchange 

Member, ORF is assessed and collected on all 

cleared customer contracts (after adjustment for 

CMTA); and if the OCC clearing member is not an 

Exchange Member, ORF is collected only on the 

cleared customer contracts executed at the 

Exchange, taking into account any CMTA 

instructions which may result in collecting the ORF 

from a non-Member. 

16When a transaction is executed on an away 

exchange, the Exchange does not assess the ORF 

when neither the executing clearing firm nor the 

ultimate clearing firm is a Member (even if a 

Member is ‘‘given-up’’ or ‘‘CMTAed’’ and then such 

Member subsequently ‘‘gives-up’’ or ‘‘CMTAs’’ the 

transaction to another non-Member via a CMTA 

reversal). 

17 ISG is an industry organization formed in 1983 

to coordinate intermarket surveillance among the 

SROs by cooperatively sharing regulatory 

information pursuant to a written agreement 

between the parties. The goal of the ISG’s 

information sharing is to coordinate regulatory 

efforts to address potential intermarket trading 

abuses and manipulations. 

18 15 U.S.C. 78s(b)(3)(A)(ii). 

19 17 CFR 240.19b–4(f)(2). 

collected from that non-Member. The 

Exchange believes that this collection 

practice continues to be reasonable and 

appropriate, and was originally 

instituted for the benefit of clearing 

firms that desired to have the ORF be 

collected from the clearing firm that 

ultimately clears the transaction. 

The Exchange designed the ORF so 

that revenue generated from the ORF, in 

combination with its other regulatory 

fees and fines, does not exceed 

regulatory costs, which is consistent 

with the view of the Commission that 

regulatory fees be used for regulatory 

purposes and not to support the 

Exchange’s business operations. As 

discussed above, however, after review 

of its regulatory costs and regulatory 

revenues, which includes revenues from 

ORF and other regulatory fees and fines, 

the Exchange determined that absent a 

reduction in ORF, it may be collecting 

revenue in excess of its regulatory costs. 

Indeed, the Exchange notes that when 

taking into account the recent options 

volume, which included an increase in 

customer options transactions, it 

estimates the ORF will generate 

revenues that may cover more than the 

approximated Exchange’s projected 

regulatory costs. Moreover, when 

coupled with the Exchange’s other 

regulatory fees and revenues, the 

Exchange estimates ORF to generate 

over 100% of the Exchange’s projected 

regulatory costs. As such, the Exchange 

believes it is reasonable and appropriate 

to decrease the ORF amount from 

$0.0028 to $0.0018 per contract side. 

The Exchange also believes the 

proposed fee change is equitable and 

not unfairly discriminatory in that it is 

charged to all Members on all their 

transactions that clear in the customer 

range at the OCC,15 with an exception.16

The Exchange believes the ORF ensures 

fairness by assessing higher fees to those 

members that require more Exchange 

regulatory services based on the amount 

of customer options business they 

conduct. Regulating customer trading 

activity is much more labor intensive 

and requires greater expenditure of 

human and technical resources than 

regulating non-customer trading 

activity, which tends to be more 

automated and less labor-intensive. For 

example, there are costs associated with 

main office and branch office 

examinations (e.g., staff expenses), as 

well as investigations into customer 

complaints and the terminations of 

registered persons. As a result, the costs 

associated with administering the 

customer component of the Exchange’s 

overall regulatory program are 

materially higher than the costs 

associated with administering the noncustomer component (e.g., member 

proprietary transactions) of its 

regulatory program. Moreover, the 

Exchange notes that it has broad 

regulatory responsibilities with respect 

to activities of its Members, irrespective 

of where their transactions take place. 

Many of the Exchange’s surveillance 

programs for customer trading activity 

may require the Exchange to look at 

activity across all markets, such as 

reviews related to position limit 

violations and manipulation. Indeed, 

the Exchange cannot effectively review 

for such conduct without looking at and 

evaluating activity regardless of where it 

transpires. In addition to its own 

surveillance programs, the Exchange 

also works with other SROs and 

exchanges on intermarket surveillance 

related issues. Through its participation 

in the Intermarket Surveillance Group 

(‘‘ISG’’) 17 the Exchange shares 

information and coordinates inquiries 

and investigations with other exchanges 

designed to address potential 

intermarket manipulation and trading 

abuses. Accordingly, there is a strong 

nexus between the ORF and the 

Exchange’s regulatory activities with 

respect to customer trading activity of 

its Members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. This 

proposal does not create an unnecessary 

or inappropriate intra-market burden on 

competition because the ORF applies to 

all customer activity, thereby raising 

regulatory revenue to offset regulatory 

expenses. It also supplements the 

regulatory revenue derived from noncustomer activity. The Exchange notes, 

however, the proposed change is not 

designed to address any competitive 

issues. Indeed, this proposal does not 

create an unnecessary or inappropriate 

inter-market burden on competition 

because it is a regulatory fee that 

supports regulation in furtherance of the 

purposes of the Act. The Exchange is 

obligated to ensure that the amount of 

regulatory revenue collected from the 

ORF, in combination with its other 

regulatory fees and fines, does not 

exceed regulatory costs. 

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,18 and Rule 

19b–4(f)(2) 19 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 No. SR– 

PEARL–2021–38 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. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices 48257 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Capitalized terms used but not defined herein 

shall have the meaning specified in the Rule Book, 

the Clearing Supplement, the Procedures and the 

Clearing Regulations, as applicable. 

4LCH Limited is a recognized central 

counterparty supervised in the United Kingdom by 

the Bank of England and a derivatives clearing 

organization registered with the Commodity 

Futures Trading Commission. 

5The additional non-Euro Eligible Collateral, 

identified as ‘‘New Instruments’’ in the Clearing 

Notice, include: (i) Australian Treasury Bills and 

Government Bonds; (ii) Canadian Treasury Bills 

and Government Bonds; (iii) Danish Treasury Bills 

and Government Bonds; (iv) Japanese Treasury 

Bills, Treasury Discount Bills, and Government 

Bonds; (v) Norwegian Treasury Bills and 

Government Bonds; (vi) Swedish Treasury Bills and 

Government Bonds; and (vii) Swiss Treasury Bills 

and Government Bonds. The complete list of 

Eligible Collateral, together with all applicable 

haircuts, is also found on LCH SA’s website as set 

out in Paragraph 3.9 of the Procedures. 

6Only instruments with a minimum outstanding 

amount of Ö500 million or greater will be eligible 

to be posted with LCH SA. 

All submissions should refer to File No. 

SR–PEARL–2021–38. 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 No. 

SR–PEARL–2021–38, and should be 

submitted on or before September 17, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–18463 Filed 8–26–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92723; File No. SR–LCH 

SA–2021–002] 

Self-Regulatory Organizations; LCH 

SA; Notice of Filing of Proposed Rule 

Change Relating to Eligible Collateral 

and Liquidity Risk Management 

August 23, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 

18, 2021, Banque Centrale de 

Compensation, which conducts 

business under the name LCH SA (‘‘LCH 

SA’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change (‘‘Proposed 

Rule Change’’) described in Items I, II 

and III below, which Items have been 

primarily prepared primarily by LCH 

SA. The Commission is publishing this 

notice to solicit comments on the 

Proposed Rule Change from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

(a) Banque Centrale de Compensation, 

which conducts business under the 

name LCH SA, is proposing to expand 

the non-cash collateral that a Clearing 

Member 3 may post with LCH SA to 

meet the member’s margin requirements 

(the ‘‘Eligible Collateral’’) to include 

certain additional non-Euro government 

bonds by (i) amending its CDS Clearing 

Rulebook (the ‘‘Rule Book’’) to clarify 

that such additional non-Euro 

government bonds are excluded from 

the Pledged Eligible Collateral, and (ii) 

publishing a new Clearing Notice, in 

accordance with Article 4.2.6.1 of the 

CDS Clearing Rule Book, specifying the 

additional acceptable non-Euro 

government bonds. LCH SA is also 

proposing to expand the custodians at 

which Clearing Members may deposit 

Eligible Collateral by adding 

Clearstream Banking Luxembourg as a 

central securities depository for LCH SA 

in Section 3 of the CDS Clearing 

Procedures—Collateral, Variation 

Margin and Cash Payment. Finally, LCH 

SA is proposing to amend its Liquidity 

Risk Modelling Framework (the 

‘‘Framework’’) to take into account the 

expanded list of Eligible Collateral. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

LCH SA 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. LCH 

SA has prepared summaries, set forth in 

sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

The Proposed Rule Change is being 

adopted to expand the non-Euro 

government bonds that a Clearing 

Member may post with LCH SA in order 

to satisfy the clearing member’s margin 

requirements. Currently, the only nonEuro Eligible Collateral are Gilts, issued 

by the United Kingdom, and Treasury 

Bills, issued by the United States. LCH 

SA is proposing to expand the list of 

Eligible Collateral in response to 

clearing member requests and in order 

to harmonize permitted Eligible 

Collateral with the Eligible Collateral 

permitted to satisfy clearing member 

margin requirements at LCH SA’s 

affiliate LCH Limited.4

To effect this change, LCH SA is 

proposing to issue a new Clearing 

Notice identifying the additional nonEuro Eligible Collateral, defined as 

‘‘New Instruments’’ in the Clearing 

Notice.5 LCH SA has determined that (i) 

each of the non-Euro jurisdictions 

whose bonds have been added have a 

high credit score, and (ii) each of the 

New Instruments has sufficient 

liquidity.6 However, because the 

European Central Bank will not convert 

the additional non-Euro Eligible 

Collateral to Euros and LCH SA 

currently does not otherwise have the 

operational capacity to convert the 

additional non-Euro Eligible Collateral 

to Euros, the Clearing Notice will also 

provide that non-Euro Eligible Collateral 

may satisfy no more than 15 percent 

(15%) of a Clearing Member’s total 

margin requirements. 

In addition, the Clearing Notice will 

provide that the New Instruments will 

not be eligible as ‘‘Pledged Eligible 

Collateral’’ and, therefore, may not be 

pledged in accordance with a pledge 

agreement entered into between LCH SA 


lotter on DSK11XQN23PROD with NOTICES1