Document ID: SEC-2021-0263-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2021-02-23T05:00Z

[Federal Register Volume 86, Number 34 (Tuesday, February 23, 2021)]
[Notices]
[Pages 11022-11024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03543]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91146; File No. SR-PEARL-2021-03]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 200, Trading Permits

February 17, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\

[[Page 11023]]

notice is hereby given that on February 11, 2021, MIAX PEARL, LLC 
(``MIAX PEARL'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposed rule change to Exchange Rule 
200(d) requiring membership in another national securities exchange or 
association.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/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 Exchange Rule 
200(d) requiring membership in another national securities exchange or 
association. In sum, Exchange Rule 200(d) currently requires that 
Trading Permit \3\ holders be a member in another registered options 
exchange, other than the Exchange's affiliates, the Miami International 
Securities Exchange, LLC (``MIAX'') or MIAX Emerald, LLC (``Emerald''), 
or the Financial Industry Regulatory Authority, Inc. (``FINRA'') where 
such other registered options exchange has not been designated by the 
Commission, pursuant to Rule 17d-1 under the Exchange Act, to examine 
Members for compliance with financial responsibility rules. Exchange 
Rule 200(d), therefore, does not allow a Trading Permit Holder that is 
not a FINRA member \4\ to satisfy this requirement by being a member of 
a registered equities exchange. The Exchange believes that requiring 
membership in another registered options exchange is unnecessarily too 
restrictive and is also not in line with similar membership 
requirements at other exchanges.\5\ Therefore, to enable more broker-
dealers to become Trading Permit holders, the Exchange proposes to 
amend Exchange Rule 200(d) to require membership in a registered 
national securities exchange, rather than only registered options 
exchanges.\6\ Exchange Rule 200(d) will continue to require Trading 
Permit holders to be FINRA members where the registered national 
securities exchange that they maintain membership is not designated by 
the Commission to examine members for compliance with financial 
responsibility rules pursuant to Rule 17d-1 of the Exchange Act.\7\
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    \3\ The term ``Trading Permit'' means a permit issued by the 
Exchange that confers the ability to transact on the Exchange. See 
Exchange Rule 100.
    \4\ A Trading Permit Holder that does not transact business with 
the public is not required to become a FINRA member. Section 
15(b)(8) of the Act that requires members that transact business 
with the public to be a member of FINRA. 15 U.S.C. 78o(b)(8).
    \5\ See Cboe EDGX Exchange, Inc. (``EDGX'') Rule 2.5(a)(4), Cboe 
EDGA Exchange, Inc. (``EDGA'') Rule 2.5(a)(4), Cboe BZX Exchange, 
Inc. (``BZX'') Rule 2.5(a)(4), Cboe BYX Exchange, Inc. (``BYX'', 
collectively with EDGX, EDGA, and BZX, the ``Cboe Equity 
Exchanges'') Rule 2.5(a)(4), MEMX LLC (``MEMX'') Rule 2.5(a)(4), 
Investors Exchange, Inc. (``IEX'') Rule 2.130(a), Long Term Stock 
Exchange, Inc. (``LTSE'') Rule 2.130 and BOX Exchange LLC (``BOX'') 
Rule 2020(a).
    \6\ The Exchange also propose to include the phrase ``or FINRA'' 
at the end of Exchange Rule 200(d)'s title.
    \7\ Rule 17d-1 of the Act authorizes the Commission to name a 
single Self-Regulatory Organization (``SRO'') as the Designated 
Examining Authority (``DEA'') to examine members of more than one 
SRO (``common member'') for compliance with the financial 
responsibility requirements imposed by the Exchange Act, or by 
Commission or SRO rules. 17 CFR 240.17d-1. The Exchange does not 
currently act as the DEA for any Trading Permit holder.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\8\ in general, and furthers the objectives of Section 6(b)(5),\9\ 
in particular, because 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 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change would remove 
impediments to, and perfect the mechanisms of, a free and open market 
and a national market system and, in general, protect investors and the 
public interest by expanding the number of registered brokers-dealers 
that would be eligible to become Trading Permit holders and trade on 
the Exchange, while maintaining high regulatory standards and a 
comprehensive regulatory regime with respect to such firms. Exchange 
Rule 200(d) was too restrictive by limiting membership in another 
registered national securities exchange to only registered options 
exchanges and, therefore, unnecessarily precluded broker-dealers who 
were members of a registered equities exchange from becoming Trading 
Permit holders. As mentioned above, Exchange Rule 200(d) will continue 
to require Trading Permit holders to be FINRA members where the 
registered national securities exchange that they maintain membership 
is not designated by the Commission to examine members for compliance 
with financial responsibility rules pursuant to Rule 17d-1 of the 
Exchange Act. This will ensure that those Trading Permit holders that 
are not FINRA members maintain membership at a registered options or 
equities exchange that may be designated as their DEA by the 
Commission. The proposed rule change would also contribute to 
perfecting the mechanism of a free and open market and a national 
market system, which outcomes are also consistent with the protection 
of investors and the public interest, by aligning the Exchange's 
membership requirements more closely with those of other national 
securities exchanges.\10\
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    \10\ See supra note 5.
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    The proposed rule change would also not unfairly discriminate 
between or among market participants because both current and 
prospective Trading Permit holders would be subject to the rule. All 
Trading Permit holders would be regulated in the same manner by the 
Exchange should they be a member of another registered national options 
or equities exchange.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose

[[Page 11024]]

any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is 
designed to enhance competition by expanding the number of registered 
brokers-dealers that would be eligible to become Trading Permit holders 
and trade on the Exchange by aligning Exchange Rule 200(d) with that of 
other national securities exchanges.\11\
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    \11\ Id.
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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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \14\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposed rule change may become operative immediately. The Exchange 
states that waiver of the operative delay is consistent with the 
protection of investors and the public interest because it will allow 
the Exchange to immediately expand the number of registered broker-
dealers that would be eligible to become Trading Permit holders on the 
Exchange and align its membership requirements more closely with those 
of other national securities exchanges.\16\ For this reason, and 
because the proposal does not raise any novel regulatory issues, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\17\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra note 5.
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-PEARL-2021-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-PEARL-2021-03. 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-2021-03 and should be submitted on 
or before March 16, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03543 Filed 2-22-21; 8:45 am]
BILLING CODE 8011-01-P