22240 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Notices 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘PBBO’’ means the best bid or offer 

on MIAX Pearl. See Exchange Rule 100. 

4A Midpoint Peg Order is a non-displayed Limit 

Order that is assigned a working price pegged to the 

midpoint of the PBBO. A Midpoint Peg Order 

receives a new timestamp each time its working 

price changes in response to changes in the 

midpoint of the PBBO. See Exchange Rule 

2614(a)(3). 

5See MIAX’s ‘‘The Market at a Glance’’, available 

at https://www.miaxoptions.com/ (last visited 

March 24, 2022). 

6The term ‘‘Equity Member’’ is a Member 

authorized by the Exchange to transact business on 

MIAX Pearl Equities. See Exchange Rule 1901. 

7The Exchange notes that the standard rebate of 

$0.0021 per share for executions of Added NonDisplayed Liquidity in securities priced at or above 

$1.00 is not changing under this proposal. 

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 such 

filing also will be available for 

inspection and copying at the principal 

office of OCC and on OCC’s website at 

https://www.theocc.com/CompanyInformation/Documents-and-Archives/ 

By-Laws-and-Rules. 

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–OCC–2022–006 and should 

be submitted on or before May 5, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2022–07948 Filed 4–13–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94652; File No. SR– 

PEARL–2022–10] 

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 

April 8, 2022. 

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 March 31, 2022, 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 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 a new Liquidity 

Code and associated rebate to the 

Liquidity Indicator Codes and 

Associated Fees table; (ii) adopt new 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers to improve 

market quality on the Exchange by 

offering an enhanced rebate for 

executions that Add Liquidity at the 

Midpoint of the PBBO 3 using a 

Midpoint Peg Order 4 in securities 

priced at or above $1.00 per share that 

add liquidity and are pegged to the 

midpoint of the bid and ask; and (iii) 

amend section 1(d) Remove Volume 

Tiers table to increase the fee. 

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 17% of 

the total market share of executed 

volume of equities trading, and the 

Exchange currently represents 

approximately 1% of the overall market 

share.5

Additionally, in response to the 

competitive environment, the Exchange 

also offers tiered pricing, which 

provides Equity Members 6 (‘‘Members’’) 

with opportunities to qualify for higher 

rebates or lower fees when certain 

volume criteria and thresholds are met. 

Tiered pricing provides an incremental 

incentive for Members to strive for 

higher tier levels, which provides 

increasingly higher benefits or discounts 

for satisfying increasingly more 

stringent criteria. 

Adoption of Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tiers 

The Exchange is now proposing to 

introduce a new tiered pricing structure 

applicable to rebates provided for 

executions that add liquidity to the 

Exchange at the Midpoint of the PBBO 

using a Midpoint Peg Order (such 

orders, ‘‘Midpoint Peg Add Orders 

executed at the Midpoint’’). 

Specifically, the Exchange proposes to 

adopt new volume-based tiers, referred 

to by the Exchange as, ‘‘Midpoint Peg 

Order Adding Liquidity at Midpoint 

Volume Tiers,’’ in which the Exchange 

will provide an enhanced rebate for 

executions of Midpoint Peg Add Orders 

executed at the Midpoint for Members 

that meet certain volume thresholds on 

the Exchange. 

The Exchange currently provides a 

standard rebate of $0.0021 per share for 

executions of Added Non-Displayed 

Liquidity.7 The Exchange now proposes 

to introduce a tiered pricing structure in 

which it will provide an enhanced, 

incremental rebate of $0.0004 per share 

for an effective total rebate of $0.0025 


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8For this program, Midpoint ADAV will refer to 

the average daily added volume consisting of 

Midpoint Peg Add Orders executed at the Midpoint 

(as described herein) for the current month 

calculated similarly to ADAV. ‘‘ADAV’’ means 

average daily added volume 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 

disruption 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. With prior notice to the Exchange, an 

Equity Member may aggregate ADAV or ADV with 

other Equity Members that control, are controlled 

by, or are under common control with such Equity 

Member (as evidenced on such Equity Member’s 

Form BD). See MIAX Pearl Equities Fee Schedule, 

‘‘Definitions,’’ available at (https://

www.miaxoptions.com/sites/default/files/fee_

schedule-files/MIAX_Pearl_Equities_Fee_Schedule_

01032022.pdf). 

9See MEMX trading fee schedule on its public 

website (available at https://info.memxtrading.com/ 

fee-schedule/) which reflects a rebate of $0.0028 per 

share for added non-displayed liquidity under Tier 

1 of its Non-Display Add Tiers; and a rebate of 

$0.0024 per share for added non-displayed liquidity 

under Tier 2 of its Non-Display Add Tiers. 

10The Exchange notes that the standard fee of 

$0.0029 for orders removing liquidity in securities 

priced at or above $1.00 is not changing under this 

proposal. 

11See supra note 8. 

12 ‘‘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 this 

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 any day with a scheduled early 

market close, and on the ‘‘Russell Reconstitution 

Day’’ (typically the last Friday in June). See MIAX 

Pearl Equities Fee Schedule, ‘‘Definitions,’’ 

available at https://www.miaxoptions.com/fees/ 

pearl-equities). 

13See 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; See also 

Continued 

for executions of Midpoint Peg Add 

Orders executed at the Midpoint for 

Members that qualify for Tier 1 of the 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers by achieving a 

Midpoint ADAV 8 equal to or greater 

than 500,000 shares. The Exchange also 

proposes to provide an enhanced, 

incremental rebate of $0.0006 per share 

for an effective total rebate of $0.0027 

for executions of Midpoint Peg Add 

Orders executed at the Midpoint for 

Members that qualify for Tier 2 of the 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers by achieving a 

Midpoint ADAV equal to or greater than 

1,000,000 shares. The rebates provided 

for by the Midpoint Peg Order Adding 

Liquidity at Midpoint Volume Tiers will 

be applicable to executions of orders 

that yield fee code ‘‘Ap’’ as described 

below and will be provided in place of 

the standard rebate of $0.0021 per share 

for executions of Added Non-Displayed 

Volume. The Exchange notes that the 

rebates described above will not apply 

to executions of orders in securities 

priced below $1.00 per share. 

The purpose of the proposed 

enhanced rebate for executions of 

Midpoint Peg Add Orders executed at 

the Midpoint is to encourage Members 

that provide liquidity through nondisplayed orders to strive for a higher 

Midpoint ADAV on the Exchange in 

order to qualify for the enhanced rebates 

for executions of Midpoint Peg Add 

Orders executed at the Midpoint, and as 

such, encourages Members to maintain 

or increase their order flow (particularly 

in the form of liquidity adding nondisplayed Midpoint Peg Orders that 

execute at the Midpoint) to the 

Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants. 

The Exchange’s pricing structure is 

generally designed to encourage the 

provision of liquidity, thus the proposed 

enhanced rebates for executions of 

Midpoint Peg Add Orders executed at 

the Midpoint is designed to encourage 

Members that use non-displayed orders 

to provide additional non-displayed 

liquidity through the use of orders that 

are designed to execute at the midpoint 

of the PBBO. The Exchange believes that 

providing enhanced rebates for 

executions of Midpoint Peg Add Orders 

executed at the Midpoint is a reasonable 

means to incentivize Members to 

provide additional liquidity at the 

midpoint of the PBBO, which in turn 

would increase the attractiveness of the 

Exchange as a destination venue, as 

Members seeking price improvement 

would be more motivated to direct their 

orders to the Exchange because they 

would have a heightened expectation of 

the availability of liquidity at the 

midpoint of the PBBO. The Exchange 

notes that the proposed enhanced rebate 

is comparable to, and competitive with, 

the rebate provided by at least one other 

exchange for executions of nondisplayed orders in securities priced at 

or above $1.00 per share that are pegged 

to the midpoint.9

New Liquidity Indicator Code 

In conjunction with the Exchange’s 

proposal to (i) provide an enhanced, 

incremental rebate of $0.0004 per share 

for Midpoint Peg Orders that Add 

Liquidity and meet the Tier 1 

requirements of the Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tiers; and (ii) provide an enhanced, 

incremental rebate of $0.0006 per share 

for Midpoint Peg Orders that Add 

Liquidity and meet the Tier 2 

requirements of the Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tiers, the Exchange proposes to update 

the Liquidity Indicator Code and 

Associated Fees Table as follows: 

• Add new liquidity indicator code 

Ap, Adds Liquidity and Executes at the 

Midpoint, Non-Displayed Midpoint Peg 

Order (All Tapes). The Liquidity 

Indicator Code and Associated Fees 

table would specify that orders that 

yield liquidity indicator code Ap 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. 

The Exchange also proposes to add 

the above liquidity indicator code to the 

Standard Rates table. Specifically, 

liquidity indicator code Ap would be 

added to the ‘‘Added Liquidity NonDisplayed Order’’ column. 

Increase Fee for Remove Volume Tiers 

Currently, the Exchange charges a 

standard fee of $0.0029 for all 

executions of Removed Volume.10 The 

Exchange also offers a two-tiered pricing 

structure for fees charged for executions 

of Removed Volume on the Exchange 

for Members that meet certain 

thresholds. Members that qualify for 

Tier 1 by achieving an ADV 11 that is 

equal to or greater than 0.10% of TCV 12

are charged $0.0027 per share for 

executions of Removed Volume. 

Members that qualify for Tier 2 by 

achieving an ADV that is equal to or 

greater than 0.15% of TCV are charged 

a fee of $0.00265 per share for 

Executions of Removed Volume. 

The Exchange now proposes to 

increase the fees charged for Removed 

Volume in Tier 1 and Tier 2 to $0.0028 

and $0.0027 respectively, an increase of 

$0.0001 and $0.00005 respectively. The 

purpose of increasing the fee for 

executions of Removed Volume is for 

business and competitive reasons. The 

requirements necessary to qualify for 

Tier 1 and Tier 2 will remain unchanged 

under this proposal. The Exchange 

notes that despite the proposed increase 

the proposed fee changes for Removed 

Volume Tiers remain comparable to, 

and competitive with, the fees charged 

for executions of liquidity-removing 

orders charged by other exchanges 

under similar volume-based tiers.13


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22242 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Notices 

MEMX fee schedule on its public website (available 

at https://info.memxtrading.com/fee-schedule/) 

which reflects a fee per share charge of $0.00285 

under ‘‘Liquidity Removal Tier’’ for a Member that 

has (1) an ADAV ≥0.30% of the TCV; or (2) an ADV 

≥0.60% of the TCV. 

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

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

16 15 U.S.C 78f(b)(5). 

17See supra note 5. 

18Securities Exchange Act Release No. 51808 

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

19See 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/). 

20The Exchange notes that Members that do not 

qualify for one of the Midpoint Peg Order Adding 

Liquidity at Midpoint Volume Tier will receive the 

standard rebate of $0.0021 for Non-Displayed 

Midpoint Peg Orders that Add Liquidity in 

securities priced at or above $1.00. 

Additionally, the Exchange notes that 

the Remove Volume Tiers, as modified, 

would continue to be available to all 

Members. 

Implementation 

The Exchange proposes to implement 

the changes to the Fee Schedule 

pursuant to this proposal on April 1, 

2022. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 14

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 15 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) 16 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 17% of 

the total market share of executed 

volume of equities trading.17 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.’’ 18

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 

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. 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers 

The Exchange believes that the 

proposed Midpoint Peg Order Adding 

Liquidity at Midpoint Volume Tiers are 

reasonable because they 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,19 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 that the proposal 

reflects a reasonable and competitive 

pricing structure designed to incentivize 

market participants to direct their order 

flow to the Exchange, to enhance market 

quality and to provide price 

improvement through the use of orders 

that are designed to execute at the 

midpoint of the PBBO through the 

provision of enhanced rebates for 

executions of Midpoint Peg Add Orders 

executed at the Midpoint for Members 

that qualify for one of the Midpoint Peg 

Order Adding Liquidity at Midpoint 

Volume Tiers.20 The Exchange believes 

its proposal will promote price 

improvement and increased liquidity on 

the Exchange which will benefit all 

market participants. 

Additionally, the Exchange believes 

that the proposed enhanced, 

incremental rebate for executions of 

Midpoint Peg Add Orders executed at 

the Midpoint under Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tier 1 (i.e., $0.0004 per share) is 

reasonable, in that it does not reflect a 

disproportionate increase above the 

standard rebate of $0.0021 per share 

provided to all Members with respect to 

Added Non-Displayed Liquidity. 

Additionally, the Exchange believes that 

the proposed enhanced, incremental 

rebate for executions of Midpoint Peg 

Add Orders executed at the Midpoint 

under Midpoint Peg Order Adding 

Liquidity at Midpoint Volume Tier 2 

(i.e., $0.0006 per share) is reasonable, in 

that it does not reflect a 

disproportionate increase above the 

enhanced rebate of $0.0004 per share 

provided to Members that satisfy the 

requirements of Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tier 1. 

The Exchange believes the proposed 

new criteria is equitable and nondiscriminatory because all Members 

will continue to be eligible to qualify for 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers 1 and 2 and 

have the opportunity to receive the 

corresponding enhanced rebate if such 

criteria is achieved. 


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21See supra note 9. 

22See the fee schedule of MEMX LLC (‘‘MEMX’’) 

available on their public website at https://

info.memxtrading.com/fee-schedule/; and the fee 

schedule of the Investors Exchange LLC (‘‘IEX’’) 

available on their public website at https://

exchange.iex.io/resources/trading/fee-schedule/. 

23See Cboe EDGX equities trading fee schedule 

on its public website (available at https://

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

schedule/edgx/). 

24See MEMX trading fee schedule on its public 

website (available at https://info.memxtrading.com/ 

fee-schedule/). 

25See supra notes 23 and 24. 

The Exchange further believes that the 

proposed new criteria for Midpoint Peg 

Order Adding Liquidity at Midpoint 

Volume Tier 1, and Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tier 2, are reasonable, in that the 

proposed new criteria for Midpoint Peg 

Order Adding Liquidity at Midpoint 

Volume Tier 2 is incrementally more 

difficult to achieve than that of 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tier 1, thus, Midpoint 

Peg Order Adding Liquidity at Midpoint 

Volume Tier 2 appropriately offers a 

higher rebate commensurate with the 

corresponding higher Midpoint ADAV 

requirement. Therefore, the Exchange 

believes the Midpoint Peg Order Adding 

Liquidity at Midpoint 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 

enhanced rebates provided under the 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers, as proposed, 

(i.e., $0.0004 per share for Tier 1; and 

$0.0006 per share for Tier 2) are 

reasonable, consistent with an equitable 

allocation of fees, and that it is not 

unfairly discriminatory to pay such 

higher rebates for executions of 

Midpoint Peg Add Orders executed at 

the Midpoint to Members that qualify 

for either Tier 1 or Tier 2 under the 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers in comparison 

with the standard rebate in recognition 

of the benefits to the Exchange and 

market participants as described above, 

particularly as the magnitude of the 

enhanced rebate is not unreasonably 

high and is reasonably related to the 

enhanced market quality it is designed 

to achieve. Additionally, the Exchange 

believes that the proposed rebates are 

reasonable as such rebates are 

comparable to, and competitive with, 

the rebates for executions of liquidityadding non-displayed orders provided 

by at least one other exchange under 

similar volume-based tiers.21

The Exchange believes that providing 

an enhanced rebate for Midpoint Peg 

Add Orders executed at the Midpoint 

that is higher than the standard rebate 

for executions of other non-displayed 

orders in securities priced at or above 

$1.00 per share that add liquidity to the 

Exchange is reasonable, as the Exchange 

believes this would encourage Members 

that provide liquidity through nondisplayed orders to do so, to a greater 

extent, through orders designed to 

execute at the midpoint of the PBBO. 

Because such orders provide price 

improvement to the benefit of other 

market participants, the Exchange 

believes it is reasonable and consistent 

with an equitable allocation of fees to 

provide an enhanced rebate to 

encourage their use, while still 

maintaining an overall pricing structure 

that places greater emphasis on the 

value of liquidity in advancing 

transparency and price discovery. 

New Liquidity Indicator Code 

The Exchange believes its proposal to 

add new liquidity indicator code ‘‘Ap’’ 

to the Liquidity Indicator Codes and 

Associated Fees table and to add 

liquidity indicator code ‘‘Ap’’ to the 

‘‘Adding Liquidity Non-Displayed 

Order’’ column, is reasonable and 

equitable because it will apply equally 

to all Members of the Exchange that 

submit Midpoint Peg Orders. This 

liquidity indicator code would be 

returned on the real-time trade reports 

sent to the Member that submitted the 

order. The use of liquidity indicator 

codes is not unique to the Exchange as 

liquidity indicator codes are currently 

utilized and described in the fee 

schedules of other equity exchanges.22

Remove Volume Tier 

The Exchange believes that the 

proposed fee change to the Remove 

Volume Tiers is reasonable, consistent 

with an equitable allocation of fees, and 

not unfairly discriminatory to provide a 

discounted fee for executions of Remove 

Volume for Members that satisfy the 

requirements associated with Tier 1 and 

Tier 2. The Exchange believes the 

proposed fee changes are reasonable 

because the magnitude of the increase is 

not unreasonably high and is also 

reasonably related to the enhanced 

market quality it is designed to achieve. 

The Exchange believes the proposed 

increased fee for executions of Removed 

Volume for a qualifying Member (i.e., 

$0.0028 and $0.0027 for Tier 1 and Tier 

2 respectively) is reasonable, as 

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 Cboe EDGX 

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.23 MEMX also 

charges a lower fee for removing volume 

from MEMX under its ‘‘Liquidity 

Removal Tier’’ at $0.00285 per share, 

compared to its standard fee of $0.0030 

per share, but requires different, but 

similar, criteria than the Exchange’s 

Remove Volume Tier, which are also 

based upon a Member’s volume.24

The Exchange further believes the 

proposed Remove Volume Tier fees are 

fair, equitable and not unfairly 

discriminatory because they are 

available to all Members. Further, the 

proposed Remove Volume Tier fee 

changes are comparable to the fees 

charged for executions of liquidityremoving orders charged by Cboe EDGX 

and MEMX under similar volume based 

tiers.25

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 

Exchange as a trading venue. As a 


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22244 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Notices 

26See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 47396 (June 29, 2005). 27See supra note 5. 

28See supra notes 9, 13, 19, 23 and 24. 

29See Securities Exchange Act Release No. 51808 

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

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.’’ 26

Intramarket Competition 

The Exchange believes that the 

proposal would incentivize Members to 

maintain or increase their order flow, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhance the 

attractiveness of the Exchange as a 

trading venue, and to provide price 

improvement through the use of orders 

that are designed to execute at the 

midpoint of the PBBO, which the 

Exchange believes, in turn, would 

continue to encourage participants to 

direct 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 market participants. The opportunity 

to qualify for enhanced, incremental 

rebates under the Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tiers would be available to all Members 

that meet the associated requirements in 

any month. The Exchange believes the 

requirements in the Midpoint Peg Order 

Adding Liquidity at Midpoint Volume 

Tiers are reasonably related to the 

enhanced market quality that the 

Midpoint Peg Order Adding Liquidity at 

Midpoint Volume Tiers are designed to 

promote. Similarly, the proposed 

enhanced rebate for executions of 

Midpoint Peg Orders 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. 

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. 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, and the 

Exchange notes that it 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 17% of the total 

market share of executed volume of 

equities trading.27 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 proposal is 

designed to enhance market quality on 

the Exchange and to encourage more 

Members 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, and to 

encourage Members to provide price 

improvement through the use of orders 

that are designed to execute at the 

midpoint of the PBBO. In turn, the 

Exchange believes that the proposed 

enhanced rebates for executions of 

Midpoint Peg Add Orders executed at 

the Midpoint that qualify for an 

enhanced rebate under the Midpoint 

Peg Order Adding Liquidity at Midpoint 

Volume Tiers would encourage the 

submission of additional order flow to 

the Exchange, particularly in the form of 

Midpoint Peg Add Orders executed at 

the Midpoint, thereby promoting market 

depth, enhanced execution 

opportunities, price improvement, and 

price discovery to the benefit of all 

Members and market participants. The 

opportunity to qualify for discounted 

fees for Removed Volume under the 

Exchange’s Remove Volume Tiers 

continues to be available to all Members 

that meet the associated volume criteria. 

The Exchange believes the discounted 

fees provided under the Remove 

Volume Tiers are reasonably related to 

the enhanced market quality that such 

tiers are designed to promote. 

As described above the Exchange’s 

proposal is a competitive proposal 

designed to encourage additional order 

flow to the Exchange through a 

combination of volume based incentives 

and discounts, which have been widely 

adopted by exchanges, and standard 

pricing that is comparable to, and/or 

competitive with, pricing for similar 

executions in place at other 

exchanges.28

Accordingly, the Exchange believes 

its proposal would not burden, but 

rather promote, intermarket competition 

by enabling it to better compete with 

other exchanges that offer similar 

standard pricing for Added Midpoint 

Volume and Removed Volume, as well 

as similar pricing incentives and 

discounts to market participants that 

achieves certain volume criteria and 

thresholds. 

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.’’ 29 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 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Notices 22245 

30NetCoalition 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)). 

31 15 U.S.C. 78s(b)(3)(A)(ii). 

32 17 CFR 240.19b–4(f)(2). 33 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

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’ 

. . .’’.30 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 

19(b)(3)(A)(ii) of the Act,31 and Rule 

19b–4(f)(2) 32 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–2022–10 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Vanessa Countryman, Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2022–10. 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–2022–10 and 

should be submitted on or before May 

5, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2022–07952 Filed 4–13–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94643; File No. SR–FINRA– 

2022–007] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend FINRA Rule 

2360 (Options) To Increase the 

Position and Exercise Limits for 

Conventional Options on Certain 

Exchange-Traded Funds 

April 8, 2022. 

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 March 29, 

2022, the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by the Commission. 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 

FINRA is proposing to amend Rule 

2360 (Options) to increase the position 

and exercise limits for conventional 

options on certain exchange-traded 

funds (‘‘ETFs’’). 

The text of the proposed rule change 

is available on FINRA’s website at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA has prepared 

summaries, set forth in sections A, B, 


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