Document ID: SEC-2020-0192-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2020-02-12T05:00Z

[Federal Register Volume 85, Number 29 (Wednesday, February 12, 2020)]
[Notices]
[Pages 8053-8074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02750]

[[Page 8053]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88132; File No. SR-PEARL-2020-03]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
of a Proposed Rule Change To Adopt Rules Governing the Trading of 
Equity Securities

February 6, 2020.
    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 January 24, 2020, 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.
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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 proposes to adopt rules to govern the trading of 
equity securities on the Exchange (referred to herein as ``PEARL 
Equities''). 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 Exchange proposes to adopt a series of rules in connection with 
PEARL Equities, which will be a facility of the Exchange. PEARL 
Equities will operate an electronic trading system developed to trade 
equity securities (the ``System'') leveraging the Exchange's existing 
robust and resilient technology platform. The fundamental premise of 
the proposal is that the Exchange will operate its equity market in a 
manner similar to that of other equity exchanges, with a suite of order 
types and deterministic functionality that will provide much needed 
competition to the existing three dominant exchange groups. The 
proposed functionality for PEARL Equities is similar to that offered by 
other equity exchanges, such as the Cboe BYX Exchange, Inc., (``BYX''), 
Cboe BZX Exchange, Inc., (``BZX''), Cboe EDGA Exchange, Inc., 
(``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'', together with BYX, BZX, 
and EDGA, the ``Cboe Equities Exchanges''), the Investors Exchange LLC 
(``IEX''), the New York Stock Exchange LLC (NYSE''), NYSE Arca, Inc. 
(``NYSE Arca''), and the Nasdaq Stock Market LLC (``Nasdaq''). However, 
other than where described below, the text of each of the proposed 
rules described in this proposal may differ from the rules of the other 
equity exchanges to provide additional specificity or to conform to the 
proposed structure of the PEARL Equities rule set.
    The System will provide for the electronic execution of orders in 
equity securities as described below. All Exchange Members will be 
eligible to participate in PEARL Equities, provided that the Exchange 
has specifically authorized them to trade in the System. The System 
will provide a routing service for orders when trading interest is not 
available on PEARL Equities, and will comply with all applicable 
securities laws and regulations, including Regulation NMS,\3\ 
Regulation SHO,\4\ and the Plan to Address Extraordinary Market 
Volatility (the ``LULD Plan'').\5\
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    \3\ 17 CFR 242.600, et seq.
    \4\ 17 CFR 242.200, et seq.
    \5\ See Securities Exchange Act Release Nos. 67091, 77 FR 33498 
(June 6, 2012) (File No. 4-631) (``Plan Approval Order'') (approving 
Plan as amended); and 85623, 84 FR 16086 (April 17, 2019) 
(approving, among other things, the operation of the Plan on a 
permanent basis).
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PEARL Equities Members
    The Exchange will authorize any Exchange Member who meets certain 
enumerated qualification requirements to obtain access to PEARL 
Equities (any such Member, an ``Equity Member''). There will be two 
basic types of Equity Members: Equity Order Entry Firms (``OEF'') and 
Equities Market Makers. OEFs will be those Equity Members representing 
orders as agent on PEARL Equities and non-market maker participants 
conducting proprietary trading as principal. Equities Market Makers are 
Equity Members registered with the Exchange as Equities Market Makers.
    To become an Equities Market Maker, an Equities Member is required 
to register by filing a registration request with the Exchange pursuant 
to proposed Exchange Rule 2605.\6\ Registration as an Equities Market 
Maker will become effective on the day the registration request is 
submitted to the Exchange. An Equities Market Maker's registration in 
an issue will be terminated if the market maker fails to enter 
quotations in the issue within five (5) business days after the market 
makers registration in the issue becomes effective.
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    \6\ Proposed Exchange Rule 2605 is substantially similar to IEX 
Rule 11.150.
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    An unlimited number of Equities Market Makers may be registered in 
each equity security unless the number of Market Makers registered to 
make a market in a particular equity security should be limited 
whenever, in the Exchange's judgement, quotation system capacity in an 
equity security is not sufficient to support additional Market Makers 
in such equity security. The Exchange will not restrict access in any 
particular equity security until such time the Exchange has submitted 
objective standards for restricting access to the Commission for its 
review and approval.
    Equities Market Makers will be required to electronically engage in 
a course of dealing to enhance liquidity available on PEARL Equities 
and to assist in the maintenance of a fair and orderly market. Among 
other things, under proposed Exchange Rule 2606(a)(1),\7\ each Equities 
Market Maker will have to, on a daily basis, maintain a two-sided 
market on a continuous basis during regular market hours for each 
equity security in which it is registered as an Equities Market Maker 
(``Two-Sided Obligation'').
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    \7\ Proposed Exchange Rule 2606 is substantially similar to IEX 
Rule 11.151, BYX and BZX Rules 11.8(d)(2)(D) and (E) and EDGA and 
EDGX Rules 11.20(d)(2)(D) and (E).
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    For each equity security in which it is registered, an Equities 
Market Maker must adhere to the pricing obligations set forth under 
proposed Exchange Rule 2606(a)(2) during Regular Trading Hours. An 
Equities Market Maker's pricing obligations shall not commence until 
the first regular way transaction is reported by the primary listing 
market for the security, as reported by the responsible single plan 
processor, and shall be suspended during a trading

[[Page 8054]]

halt, suspension, or pause, and shall not recommence until after until 
the first regular way transaction is reported by the primary listing 
market for the security, as reported by the responsible single plan 
processor.
    Proposed Exchange Rule 2606(a)(3) and (4) require that at the time 
of entry of bid (sell) interest satisfying the Two-Sided Obligation, 
the price of the bid (sell) interest shall be not more than the 
Designated Percentage, lower (higher) than the then current NBB (NBO), 
or if no NBB (NBO), not more than the Designated Percentage lower 
(higher) than the last reported sale from the responsible single plan 
processor. In the event that the NBB (NBO) (or if no NBB (NBO), the 
last reported sale) increases (decreases) to a level that will cause 
the bid (sell) interest of the Two-Sided Obligation to be more than the 
Defined Limit lower (higher) than the NBB (NBO) (or if no NBB (NBO), 
the last reported sale), or if the bid (sell) is executed or cancelled, 
the Equities Market Maker shall enter new bid (sell) interest at a 
price not more than the Designated Percentage lower (higher) than the 
then current NBB (NBO) (or if no NBB (NBO), the last reported sale), or 
identify to the Exchange current resting interest that satisfies the 
Two-Sided Obligation.
    Proposed Exchange Rule 2606(a)(5) will provide that the NBBO shall 
be determined by the Exchange in accordance with its procedures for 
determining protected quotations under Rule 600 under Regulation NMS.
    Proposed Exchange Rule 2606(a)(6) \8\ provides that the 
``Designated Percentage'' shall be 8% for Tier 1 NMS Stocks under the 
LULD Plan, 28% for Tier 2 NMS Stocks under the LULD Plan with a price 
equal to or greater than $1.00, and 30% for Tier 2 NMS Stocks under the 
LULD Plan with a price less than $1.00, except that between 9:30 a.m. 
and 9:45 a.m. and between 3:35 p.m. and the close of trading, when 
Exchange Rule 2622(b) is not in effect, the Designated Percentage shall 
be 20% for Tier 1 NMS Stocks under the LULD Plan, 28% for Tier 2 NMS 
Stocks under the LULD Plan with a price equal to or greater than $1.00, 
and 30% for Tier 2 NMS Stocks under the LULD Plan with a price less 
than $1.00.
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    \8\ Proposed Exchange Rule 2606(a)(6) is substantially similar 
to IEX Rule 11.151(a)(6).
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    Proposed Exchange Rule 2606(a)(7) \9\ provides that the ``Defined 
Limit'' shall be 9.5% for Tier 1 NMS Stocks under the LULD Plan, 29.5% 
for Tier 2 NMS Stocks under the LULD Plan with a price equal to or 
greater than $1.00, and 31.5% for Tier 2 NMS Stocks under the LULD Plan 
with a price less than $1.00, except that between 9:30 a.m. and 9:45 
a.m. and between 3:35 p.m. and the close of trading, when Exchange Rule 
2622(b) is not in effect, the Defined Limit shall be 21.5% for Tier 1 
NMS Stocks under the LULD Plan, 29.5% for Tier 2 NMS Stocks under the 
LULD Plan with a price equal to or greater than $1.00, and 31.5% for 
Tier 2 NMS Stocks under the LULD Plan with a price less than $1.00.
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    \9\ Proposed Exchange Rule 2606(a)(7) is substantially similar 
to IEX Rule 11.151(a)(7).
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    Proposed Exchange Rule 2606(a)(8) will specify that Equities Market 
Markers will not be precluded from quoting at price levels that are 
closer to the NBBO than the levels required by proposed Exchange Rule 
2606(a).
    Proposed Exchange Rule 2606(a)(9) will specify that the minimum 
quotation increment for quotations of $1.00 or above in all Equity 
Securities shall be $0.01. The minimum quotation increment in the 
System for quotations below $1.00 in Equity Securities shall be 
$0.0001. This provision is consistent with proposed Exchange Rule 2612, 
described below.
    Proposed Exchange Rule 2606(a)(10) will provide that the individual 
Market Participant Identifier (``MPID'') assigned to an Equities Market 
Maker to meet its Two-Sided Obligation pursuant to subparagraph (a)(1) 
of this Exchange Rule shall be referred to as the Equities Market 
Maker's ``Primary MPID.'' Equities Market Makers may request the use of 
additional MPIDs that shall be referred to as ``Supplemental MPIDs.'' 
An Equities Market Maker that ceases to meet the obligations 
appurtenant to its Primary MPID in any security shall not be permitted 
to use a Supplemental MPID for any purpose in that security.
    Proposed Exchange Rule 2606(a)(11) provides that Equities Market 
Makers that are permitted the use of Supplemental MPIDs pursuant to 
proposed Exchange Rule 2606(a)(10) will be subject to the same rules 
applicable to the Equities Market Maker's first quotation under its 
Primary MPID, with one exception: The continuous two-sided quote 
requirement and excused withdrawal procedures described in proposed 
Exchange Rule 2607, described below, do not apply to Equities Market 
Makers' Supplemental MPIDs. Supplemental MPIDs may be identified to the 
Exchange as interest to satisfy an Equities Market Maker's two-sided 
obligation, in which case in order to be satisfactory, the Supplemental 
MPID's interest must be no more than the Designated Percentage from the 
NBBO as described and defined in proposed Exchange Rule 2606(a).
    Proposed Exchange Rule 2606(b) requires that all quotations and 
orders to buy and sell entered into the System by Equities Market 
Makers be firm and automatically executable for their displayed and 
non-displayed size in the System by all Users. A particular Equities 
Market Maker's quotations may be cancelled rather than executed if 
designated with a Self-Trade Prevention (``STP'') modifier which is the 
same as that of an active opposite side order and originating from the 
same group type as the Equities Market Maker's orders to buy or sell, 
as set forth in proposed Exchange Rule 2614(f). Notwithstanding the 
foregoing, Equities Market Makers may not use STP modifiers to evade 
the firm quotation obligation.
    Proposed Exchange Rule 2606(c) provides that in the event that an 
Equities Market Maker's ability to enter or update quotations is 
impaired, the Equities Market Maker shall immediately contact Exchange 
Trading Operations to request the withdrawal of its quotations. In the 
event that an Equities Market Maker's ability to enter or update 
quotations is impaired and the Equities Market Maker elects to remain 
in PEARL Equities, the Equities Market Maker shall execute an offer to 
buy or sell received from another Equity Member at its quotations as 
disseminated through the Exchange.
    Equities Market Makers receive certain benefits for carrying out 
their duties. For example, a lender may extend credit to a broker-
dealer without regard to the restrictions in Regulation T of the Board 
of Governors of the Federal Reserve System if the credit is to be used 
to finance the broker-dealer's activities as a specialist or market 
maker on a national securities exchange. Thus, an Equities Market Maker 
has a corresponding obligation to hold itself out as willing to buy and 
sell equities for its own account on a regular and continuous basis to 
justify this favorable treatment. The Exchange believes that the 
proposed Two-Sided Quotation requirement for all Equities Market Makers 
is consistent with that typically required of market makers of similar 
status on other national securities exchanges.
    Proposed Exchange Rule 2607 provides for Equites Market Makers to 
withdraw their quotations. Proposed Exchange Rule 2608 provides for 
Equities Market Makers to voluntarily terminate their registration with 
the Exchange. Proposed Exchange Rule 2609 will allow the Exchange to, 
pursuant to the procedures set forth in Chapter IX, suspend, condition, 
limit,

[[Page 8055]]

prohibit or terminate the authority of an Equities Market Maker or 
Equity Member to enter quotations in one or more authorized securities 
for violations of applicable requirements or prohibitions. Each of 
these proposed Exchange Rules are consistent with the rules of other 
exchanges regarding the withdrawal or suspension of quotations and 
termination of a market maker's registration.\10\
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    \10\ Proposed Exchange Rules 2607, 2608, and 2609 are 
substantially similar to IEX Rules 11.152, 11.153, and 11.154, 
respectively, except proposed Exchange Rule 2608(b) does not include 
the reinstatement limitations as set forth in IEX Rule 11.153(b). 
See also BYX and BZX Rules 11.5 through 11.8, and EDGA and EDGX 
Rules 11.17 through 11.20, which similarly do not include the 
reinstatement limitations as set forth in IEX Rule 11.153(b).
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    Every Equity Member shall at all times maintain membership in 
another registered exchange that is not registered solely under Section 
6(g) of the Exchange Act or with the Financial Industry Regulatory 
Authority (``FINRA''). OEFs that transact business with customers must 
at all times be members of FINRA.
    Further, proposed Exchange Rule 2604 \11\ provides that an Equity 
Member shall maintain a list of Authorized Traders (``ATs''), defined 
below, who may obtain access to the Trading System on behalf of the 
Equity Member or the Equity Member's Sponsored Participants. The Equity 
Member shall update the list of ATs as necessary. Equity Members must 
provide the list of ATs to the Exchange upon request. An Equity Member 
must have reasonable procedures to ensure that all ATs comply with all 
Exchange Rules and all other procedures related to the System. An 
Equity Member must suspend or withdraw a person's status as an AT if 
the Exchange has determined that the person has caused the Member to 
fail to comply with the Rules of the Exchange and the Exchange has 
directed the Equity Member to suspend or withdraw the person's status 
as an AT. An Equity Member must have reasonable procedures to ensure 
that the ATs maintain the physical security of the equipment for 
accessing the facilities of the Exchange to prevent the improper use or 
access to the systems, including unauthorized entry of information into 
the systems. To be eligible for registration as an AT of an Equity 
Member a person must successfully complete the General Securities 
Representative Examination (Series 7), the Securities Traders 
Qualification Examination (Series 57), or an equivalent foreign 
examination module approved by the Exchange, as defined in 
Interpretation and Policy .09 to Exchange Rule 3100, and any other 
training and/or certification programs as may be required by the 
Exchange.
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    \11\ Proposed Exchange Rule 2604 is substantially similar to IEX 
Rule 11.140 and Rule 11.4 of the Cboe Equity Exchanges.
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    As provided in proposed Exchange Rule 1900, Applicability, existing 
Exchange Rules applicable to the PEARL options market contained in 
Chapters I though XVIII of the Exchange Rules will apply to Equity 
Members unless a specific Exchange Rule applicable to the equities 
market (Chapters XIX through XXX of the Exchange Rules) governs or 
unless the context otherwise requires. Equity Members can therefore 
provide sponsored access to PEARL Equities to a non-Member (``Sponsored 
Participant'') pursuant to Exchange Rule 210, Sponsored Access to the 
Exchange, which is specifically set forth in proposed Exchange Rule 
2606(a).\12\
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    \12\ See proposed Exchange Rule 2602(a) (providing that, ``[t]he 
provisions of Rule 210, Sponsored Access to the Exchange, shall be 
applicable to Equity Members trading on PEARL Equities'').
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    Proposed Exchange Rule 2606(b) will govern conduct on PEARL 
Equities and provide that Equity Members and persons employed by or 
associated with any Equity Member, while using the facilities of PEARL 
Equities, shall not engage in conduct: (1) Inconsistent with the 
maintenance of a fair and orderly market; (2) apt to impair public 
confidence in the operations of the Exchange; or (3) inconsistent with 
the ordinary and efficient conduct of business. Pursuant to the Rules 
and the arrangements referred to in proposed Exchange Rule 2602, the 
Exchange may: Suspend an Equity Member's access to the System following 
a warning; or terminate an Equity Member's access to the System by 
notice in writing. The timing of such notice will depend on the 
severity of the Equity Member's misconduct.
Definitions
    The Exchange proposes to define a series of terms under current 
Exchange Rule 100 and proposed Exchange Rule 1901, Definitions, which 
are to be used in proposed Chapters XIX to XXX relating to the trading 
of equity securities on the Exchange. Each of the terms defined in 
current Exchange Rule 100 and proposed Rule 1901 are either identical 
or substantially similar to definitions included in Rule 1.5 of the 
Cboe Equity Exchanges rules, NYSE Arca Rule 7.36-E(a), or IEX Rule 
1.160.
    Each of the definitions under proposed Exchange Rule 1901 are as 
follows:
     Aggressing Order. The term ``Aggressing Order'' shall mean 
an order to buy (sell) that is or becomes marketable against sell (buy) 
interest on the PEARL Equities Book. A resting order may become an 
Aggressing Order if its working price changes, if the PBBO or NBBO is 
updated, because of changes to other orders on the PEARL Equities Book, 
or when processing inbound messages.\13\
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    \13\ The defined term Aggressing Order is based on NYSE Arca 
Rule 7.36-E(a)(5).
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     Displayed price. The term ``displayed price'' shall mean 
the price at which a Limit Order is displayed, which may be different 
from the limit price or working price of the order.
     Equities Order Entry Firm. The term ``Equities Order Entry 
Firm'', ``Order Entry Firm'', or ``OEF'', shall mean those Equity 
Members representing orders as agent on PEARL Equities and those non-
Equity Market Maker Members conducting proprietary trading.
     Equities Market Maker. The term ``Equities Market Maker'' 
shall mean a Member that acts as a Market Maker in Equity Securities, 
pursuant to Chapter XXVI.
     Equity Member. The term ``Equity Member'' is a Member 
authorized by the Exchange to transact business on PEARL Equities.
     Equity Securities. The term ``Equity Securities'' shall 
include any equity security defined as such pursuant to Rule 3a11-1 
under the Exchange Act.\14\
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    \14\ The defined term Equity Securities is based on NYSE Arca 
Rule 5.1-E(b)(2).
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     NBB, NBO and NBBO. With respect to the trading of Equity 
Securities, the term ``NBB'' shall mean the national best bid, the term 
``NBO'' shall mean the national best offer, and the term ``NBBO'' shall 
mean the national best bid and offer.
     PEARL Equities. The term ``PEARL Equities'' shall mean 
PEARL Equities, a facility of MIAX PEARL, LLC.
     PEARL Equities Book. The term ``PEARL Equities Book'' 
shall mean the electronic book of orders in Equity Securities 
maintained by the Trading System.
     Protected NBB, Protected NBO and Protected NBBO. With 
respect to the trading of Equity Securities, the term ``Protected NBB'' 
or ``PBB'' shall mean the national best bid that is a Protected 
Quotation, the term ``Protected NBO'' or ``PBO'' shall mean the 
national best offer that is a Protected Quotation, and the term 
``Protected NBBO'' or ``PBBO'' shall mean the national best bid and 
offer that is a Protected Quotation.
     Protected Bid, Protected Offer and Protected Quotation. 
With respect to the

[[Page 8056]]

trading of Equity Securities, the term ``Protected Bid'' or ``Protected 
Offer'' shall mean a bid or offer in a stock that is (i) displayed by 
an automated trading center; (ii) disseminated pursuant to an effective 
national market system plan; and (iii) an automated quotation that is 
the best bid or best offer of a national securities exchange or 
association. The term ``Protected Quotation'' shall mean a quotation 
that is a Protected Bid or Protected Offer.
     Qualified Clearing Agency. The term ``Qualified Clearing 
Agency'' means a clearing agency registered with the Commission 
pursuant to Section 17A of the Exchange Act that is deemed qualified by 
the Exchange.
     Registered Broker or Dealer. The term ``registered broker 
or dealer'' means any registered broker or dealer, as defined in 
Section 3(a)(48) of the Exchange Act, that is registered with the 
Commission under the Exchange Act.
     Regular Trading Hours. The term ``Regular Trading Hours'' 
means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
     Regular Trading Session. The term ``Regular Trading 
Session'' shall mean the time between the completion of the Opening 
Process or Contingent Open as defined in Exchange Rule 2615 and 4:00 
p.m. Eastern Time.
     User. The term ``User'' shall mean any Member or Sponsored 
Participant who is authorized to obtain access to the System pursuant 
to Exchange Rule 2602.
     UTP Exchange Traded Products. The term ``UTP Exchange 
Traded Products'' refers to derivative securities products that are not 
listed on the Exchange but that trade on the Exchange pursuant to 
unlisted trading privileges, including the following: Equity Linked 
Notes, Investment Company Units, Index-Linked Exchangeable Notes, 
Equity Gold Shares, Equity Index-Linked Securities, Commodity-Linked 
Securities, Currency-Linked Securities, Fixed-Income Index-Linked 
Securities, Futures-Linked Securities, Multifactor-Index-Linked 
Securities, Trust Certificates, Currency and Index Warrants, Portfolio 
Depository Receipts, Trust Issued Receipts, Commodity-Based Trust 
Shares, Currency Trust Shares, Commodity Index Trust Shares, Commodity 
Futures Trust Shares, Partnership Units, Paired Trust Shares, Trust 
Units, Managed Fund Shares, and Managed Trust Securities.
     UTP Security. The term ``UTP Security'' shall mean an 
Equity Security that is listed on a national securities exchange other 
than on the Exchange and that trades on PEARL Equities pursuant to 
unlisted trading privileges.
     Working price. The term ``Working price'' shall mean the 
price at which an order is eligible to trade at any given time, which 
may be different from the limit price or display price of the order.
    The Exchange proposes to define additional terms under current 
Exchange Rule 100, Definitions, which not only relate to the trading of 
equity securities, but are currently utilized under the Exchange's 
existing rules related to options. The proposed definitions under Rule 
100 will apply equally to the trading of options and equity securities 
on the Exchange. These proposed definitions do not alter the meaning of 
any Exchange Rule related to options. The Exchange simply proposes to 
adopt definitions of these terms under current Exchange Rule 100 to add 
clarity to its rules as these terms are applicable to the trading of 
both types of securities on the Exchange. Each of the proposed 
definitions under Exchange Rule 100 are as follows:
     Authorized Trader. The term ``Authorized Trader'' or 
``AT'' shall mean a person who may submit orders (or who supervises a 
routing engine that may automatically submit orders) to the Exchange's 
trading facilities on behalf of his or her Equity Member or Sponsored 
Participant.
     Broker. The term ``broker'' shall have the same meaning as 
in Section 3(a)(4) of the Exchange Act.
     Dealer. The term ``dealer'' shall have the same meaning as 
in Section 3(a)(5) of the Exchange Act.
     Designated Examining Authority. The term ``designated 
examining authority'' shall mean a self-regulatory organization, other 
than the Exchange, designated by the Commission under Section 17(d) of 
the Exchange Act to enforce compliance by Equity Members with Exchange 
Rules.
     Limit price. The term ``limit price'' shall mean the 
highest (lowest) specified price at which a Limit Order to buy (sell) 
is eligible to trade.
     Timestamp. The term ``timestamp'' shall mean the effective 
time sequence assigned to an order for purposes of determining its 
priority ranking.\15\
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    \15\ The defined term ``timestamp'' is based on the definition 
of ``working time'' under NYSE Arca Rule 7.36-E(a)(4).
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     Trading Center. The term ``Trading Center'' shall have the 
same meaning as in Rule 600(b)(82) of Regulation NMS.
Execution System
    The proposed equity trading system will leverage the Exchange's 
current state of the art technology, including its customer 
connectivity, messaging protocols, quotations and execution engine, 
order router, data feeds, and network infrastructure. Doing so 
minimizes the technical effort required by existing Members to begin 
trading equity securities on PEARL Equities. PEARL Equities will 
operate a fully automated, price/time priority execution model, and 
offer a suite of conventional order types and deterministic 
functionality that is designed to provide for an efficient, robust, and 
transparent order matching process. PEARL Equities will be operated as 
an ``automated market center'' within the meaning of Regulation NMS, 
and in furtherance thereof, will display ``automated quotations'' 
within the meaning of Regulation NMS. The proposed model and 
functionality for PEARL Equities is similar to that offered by other 
equity exchanges, such as the Cboe Equity Exchanges, IEX, NYSE, NYSE 
Arca, and Nasdaq.\16\ Any proposed differences are described below and 
are proposed in response to industry feedback or as a means to improve 
upon existing functionality offered by other equity exchanges.
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    \16\ See Chapter 11 of the Cboe Equity Exchanges' Rules, Chapter 
11 of the IEX Rules, NYSE Rule 7P series, NYSE Arca Rule 7-E series, 
and Nasdaq 4700 series.
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    Like the Exchange system for options, all trading interest entered 
into the System will be automatically executable. Orders entered into 
the System that are to be displayed will either be attributed to the 
Equity Member or displayed anonymously. The Exchange will become a 
member of the Depository Trust Company (``DTC''). The System will be 
linked to DTC for the Exchange to transmit locked-in trades for 
clearance and settlement.
    Hours of Operation. PEARL Equities will begin to accept orders at 
7:30 a.m., Eastern Time, as described below. The System will operate 
between the hours of 9:30 a.m. Eastern Time and 4:00 p.m. Eastern 
Time,\17\ with all orders being available for execution during that 
timeframe.
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    \17\ PEARL Equities may close earlier on certain days, such as 
July 3, the day after Thanksgiving, and December 24.
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    Units of Trading, Odd and Mixed Lots. Proposed Exchange Rule 2610 
\18\ provides that the unit of trading in stocks is one (1) share. 100 
shares constitutes a ``round lot,'' unless specified by the primary 
listing market to be fewer than 100 shares. Any amount less than a 
round lot shall constitute an ``odd lot,'' and any amount greater than 
a round lot that is not a

[[Page 8057]]

multiple of a round lot shall constitute a ``mixed lot.''
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    \18\ Proposed Exchange Rule 2610 is based on IEX Rule 11.180, 
BYX Rule 11.10, BZX Rule 11.10, EDGA Rule 11.6(s), and EDGX Rule 
11.6(s).
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    Proposed Exchange Rule 2611\19\ sets forth the requirements 
relating to odd and mixed lot trading on PEARL Equities. Proposed 
Exchange Rule 2611(b) further provides that round lot, mixed lot, and 
odd lot orders are treated in the same manner on the Exchange, provided 
that, the working and display price of a displayable odd lot order will 
be adjusted both on arrival and when resting on the PEARL Equities 
Book. Proposed Exchange Rule 2611(b)(1)(A) reflects standard behavior 
and provides that if the limit price of an odd lot order to buy (sell) 
is below (above) the PBO (PBB) of an away Trading Center, it will have 
a working and display price equal to the limit price.
---------------------------------------------------------------------------

    \19\ Proposed Exchange Rule 2611 is substantially similar to 
NYSE Rule 7.38, NYSE Arca Rule 7.38-E, NYSE American LLC (``NYSE 
American'') Rule 7.38E, and NYSE National, Inc. (``NYSE National'') 
Rule 7.38.
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    Proposed Exchange Rule 2611(b)(1)(B) and (C) describes how the 
Exchange will re-price an odd-lot order to ensure it is not displayed 
on the Exchange's proprietary data feed at an unexecutable price.\20\ 
Proposed Exchange Rule 2611(b)(1)(B) provides that if the limit price 
of an odd lot order to buy (sell) is at or above (below) the PBO (PBB) 
of an away Trading Center, it will have a working price equal to the 
PBO (PBB). The display price will also be adjusted to one minimum price 
variation lower (higher) than the PBO (PBB).
---------------------------------------------------------------------------

    \20\ Proposed Exchange Rule 2611 would differ from NYSE Rule 
7.38, NYSE Arca Rule 7.38-E, NYSE American Rule 7.38E, and NYSE 
National Rule 7.38 by re-pricing the odd lot order to buy (sell) to 
the PBB (PBO) of the Exchange when the PBB (PBO) of the Exchange was 
previously locked or crossed by an away Trading Center. Like the 
NYSE exchanges, non-displayed odd lot orders would not be subject to 
the above re-pricing mechanism and would be re-priced in accordance 
with the price sliding process for non-displayed orders described 
below.
---------------------------------------------------------------------------

    The following example describes the behavior under proposed 
Exchange Rule 2611(b)(1)(A) and (B). Assume the PBBO of away Trading 
Centers is $10.00 (100 shares) by $10.05 (100 shares) and Exchange's 
BBO is $10.01 (500 shares) by $10.06 (500 shares). A non-routable 
displayed Limit Order to buy at $10.02 (10 shares) is entered (``Order 
1''). Because Order 1's limit price is below the PBO of $10.05 
displayed by an away Trading Center, it is posted to the PEARL Equities 
Book with a working and displayed price of $10.02, its limit price. The 
Exchange's BBO remains unchanged. Next, a non-routable displayed Limit 
Order to buy at $10.05 (10 shares) is entered (``Order 2''). Because 
Order 2's limit price equals the PBO of $10.05 displayed by an away 
Trading Center, it is posted to the PEARL Equities Book with a working 
price of $10.05 and a displayed price of $10.04, one minimum price 
variation (``MPV'') less than the PBO. The Exchange's BBO remains 
unchanged. Assume the PBBO of away Trading Centers changes to $10.00 
(100 shares) by $10.06 (100 shares). To reflect changes in the away 
PBBO, Order 2's displayed price is updated to $10.05 and its working 
price remains unchanged.
    Proposed Exchange Rule 2611(b)(1)(C) provides that if the PBBO is 
locked or crossed and the limit price of an odd lot order to buy (sell) 
resting on the PEARL Equities Book is above (below) the PBO (PBB) of an 
away Trading Center, it will have a working and display price equal to 
the PBB (PBO) of the Exchange, subject to the order's limit price. The 
working and display price of such odd lot order will be adjusted again 
pursuant to proposed Exchange Rule 2611(b)(1)(A) and (B) should the 
PBBO unlock or uncross. Absent this proposed rule, an odd lot bid or 
offer could be displayed on the Exchange's proprietary data feeds at a 
price that appears to cross the PBBO, even if such order would not be 
eligible to trade at that price.
    This following example describes the behavior under proposed 
Exchange Rule 2611(b)(1)(C) and highlights a proposed difference with 
similar functionality available on other equity exchanges. Assume the 
PBBO of away markets is $10.00 (100 shares) by $10.02 (100 shares) and 
further assume there are no orders on the PEARL Equities Book. A non-
routable displayed Limit Order to buy at $9.99 (100 shares) is entered 
(``Order 1'') and is posted to the PEARL Equities Book with a working 
and displayed price of $9.99. The PBBO of the Exchange is now $9.99 
(100 shares) by $0.00. Next, a non-routable displayed Limit Order to 
buy at $10.01 (10 shares) is entered (``Order 2'') and is posted to the 
PEARL Equities Book with a working and displayed price of $10.01. The 
PBBO of the Exchange remains $9.99 (100 shares) by $0.00 because Order 
2 is of odd lot size and does not update the PBB. Assume the PBBO of 
the away markets inverts to become $10.00 (100 shares) by $9.99 (100 
shares). Order 1 holds its ground at $9.99 because it is the Exchange's 
PBB and was locked by an away market. Order 2, however, updates to a 
display and working price of $9.99, the Exchange's PBB, instead of PBB 
of the away markets, which is $10.00.\21\
---------------------------------------------------------------------------

    \21\ In such case, the Exchange understands NYSE, NYSE Arca, 
NYSE American, and NYSE National would price Order 2 to $10.00, the 
PBB of the away Trading Center. See NYSE Rule 7.38, NYSE Arca Rule 
7.38-E, NYSE American Rule 7.38E, and NYSE National Rule 7.38.
---------------------------------------------------------------------------

    Finally, proposed Exchange Rule 2611(b)(2) provides that for an 
order that is partially routed to an away market on arrival, if any 
returned quantity of the order joins resting odd lot quantity of the 
original order and the returned and resting quantity, either alone or 
together with other odd lot sized orders, will be displayed as a new 
BBO, both the returned and resting quantity will be assigned a new 
timestamp in accordance with proposed Exchange Rules 2616, Priority of 
Orders, and 2617(b)(6), Priority of Routed Orders, both of which are 
described below.
    Minimum Quotation and Trading Increments. Quotations and orders 
entered into the equity trading system will comply with the minimum 
price increments requirements of Rule 612 of Regulation NMS.\22\ 
Proposed Exchange Rule 2612,\23\ therefore, provides that bids, offers, 
or orders in securities traded on the Exchange shall not be made in an 
increment smaller than: (i) $0.01 If those bids, offers, or orders are 
priced equal to or greater than $1.00 per share; or (ii) $0.0001 if 
those bids, offers, or orders are priced less than $1.00 per share; or 
(iii) any other increment established by the Commission for any 
security which has been granted an exemption from the minimum price 
increments requirements of Rule 612(a) or (b) of Regulation NMS.\24\
---------------------------------------------------------------------------

    \22\ 17 CFR 242.612.
    \23\ Proposed Exchange Rule 2612 is based on IEX Rule 11.210, 
BYX Rule 11.11, BZX Rule 11.11, EDGA Rule 11.6(i), and EDGX Rule 
11.6(i).
    \24\ 17 CFR 242.612(a) and (b).
---------------------------------------------------------------------------

    Usage of Data Feeds. Proposed Exchange Rule 2613 \25\ identifies 
the data feeds that the Exchange will utilize for the handling, 
execution and routing of orders in Equity Securities, as well as for 
surveillance necessary to monitor compliance with applicable securities 
laws and Exchange Rules. The Exchange will use direct feeds as it 
primary source for BYX, BZX, EDGA, EDGX, Nasdaq, Nasdaq BX, Inc. 
(``Nasdaq BX''), Nasdaq Phlx LLC (``Nasdaq Phlx''), NYSE, NYSE 
American, and NYSE Arca. The Exchange will utilize data from the 
responsible single plan processor as its secondary source of data for 
these markets. The Exchange will utilize data from the responsible 
single plan processor as its primary source of data for FINRA's 
Alternative Display Facility

[[Page 8058]]

(``ADF''), IEX, the Long Term Stock Exchange, Inc., NYSE Chicago, and 
NYSE National.
---------------------------------------------------------------------------

    \25\ Proposed Exchange Rule 2613 is based on BYX Rule 11.26, BZX 
Rule 11.26, EDGA Rule 13.4, EDGX Rule 13.4, NYSE Rule 7.37(e), and 
Nasdaq Rule 4759.
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    Proposed Exchange Rule 2613(b) provides that the Exchange may 
adjust its calculation of the PBBO and NBBO based on information about 
orders sent to other venues with protected quotations, execution 
reports received from those venues, and certain orders received by the 
Exchange. Proposed Exchange Rule 2619(c) provides that the responsible 
single plan processor will be the Primary Source of trade and 
administrative messages such as Limit-up Limit-Down Price Bands, 
Market-Wide Circuit Breaker decline and status messages, Regulation SHO 
state messages, halts and resumes, and last sale information.
    Time-In-Force Instructions. The proposed System will support two 
time-in-force instructions, Immediate-or-Cancel (``IOC'') and Regular 
Hours Only (``RHO''). Equity Members entering orders in to the System 
may designate such orders to remain in force and available for display 
and/or potential execution for varying periods of time. Unless 
cancelled earlier, once these time periods expire, the order (or 
unexecuted portion thereof) is cancelled. A description of the time-in-
force instructions available on the System will be described under 
proposed Exchange Rule 2614(b).
    Immediate-or-Cancel (``IOC''). IOC will be a time-in-force 
instruction that provides for the order to be executed in whole or in 
part as soon as such order is received. The portion not executed 
immediately on the Exchange or another Trading Center is treated as 
cancelled and is not posted to the PEARL Equities Book. Limit Orders 
with a time-in-force of IOC that are not designated as ``Do Not Route'' 
and that cannot be executed in accordance with PEARL Equities Rule 
2617(a)(4) on the System when reaching the Exchange will be eligible 
for routing away pursuant to PEARL Equities Rule 2617(b).
    Regular Hours Only (``RHO''). RHO will be a time-in-force 
instruction that designates the order for execution only during Regular 
Trading Hours, which includes the Opening Process for Equity 
Securities.
    Order Type Modifiers. The proposed System will support the 
following conventional order type modifiers: Do Not Route, Post Only, 
Displayed, Non-Displayed, Attributable, Non-Attributable, and 
Intermarket Sweep Orders (``ISO''). ISOs will be described under 
proposed Exchange Rule 2614(d) and the remaining order type modifiers 
will be described under proposed Exchange Rule 2614(c). A description 
of which order types each modifier is compatible with will be set forth 
under proposed Exchange Rule 2614(a) and is described below. The 
characteristics and functionality of each of these order type modifiers 
is identical to what is currently approved for the other equity 
exchanges. However, as mentioned above, the text of each of the 
proposed rules may differ from the descriptions of similar 
functionality in the rules of the other equity exchanges only to the 
extent to provide additional specificity and/or to conform the proposed 
structure of the PEARL Equities rule set.
    Do Not Route. An order designated as Do Not Route is a non-routable 
order that will be ranked and executed on the PEARL Equities Book 
pursuant to proposed Exchange Rule 2616 and proposed Exchange Rule 
2617(a)(4) or cancelled.\26\ Unless otherwise instructed by the User, 
an order designated as Do Not Route will be subject to the price 
sliding processes set forth in proposed Exchange Rule 2614(g) described 
below.
---------------------------------------------------------------------------

    \26\ The Do Not Route modifier is based on the rules of the Cboe 
Equity Exchanges. See BYX and BZX Rules 11.9(c)(4) and EDGA and EDGX 
Rules 11.6(n)(3).
---------------------------------------------------------------------------

    Post Only. An order designated as Post Only is a non-routable order 
that will be ranked and executed on the PEARL Equities Book pursuant to 
proposed Exchange Rule 2616 and proposed Exchange Rule 2617(a)(4).\27\ 
An order designated as Post Only will only remove liquidity from the 
PEARL Equities Book when: (A) The order is for a security priced below 
$1.00; or (B) the value of such execution when removing liquidity 
equals or exceeds the value of such execution if the order instead 
posted to the PEARL Equities Book and subsequently provided liquidity 
including the applicable fees charged or rebates paid.\28\
---------------------------------------------------------------------------

    \27\ The Post Only modifier is based on the rules of the Cboe 
Equity Exchanges. See BYX and BZX Rules 11.9(c)(6) and EDGA and EDGX 
Rules 11.6(n)(4).
    \28\ As is the case on Nasdaq, the Cboe Equity Exchanges, and as 
proposed by Members Exchange, Inc. (``MEMX''), an incoming order 
designated as Post Only entered with a limit price that would lock 
or cross a resting contra-side Midpoint Peg Order resting on the 
PEARL Equities Book may post and display at the locking or crossing 
price (if the difference in price between the incoming order 
designated as Post Only and the resting midpoint is less than the 
forgone net rebate/fee). See EDGA and EDGX Rules 11.6(n)(4), and BYX 
and BZX Rules 11.9(c)(6) (providing that a Post Only order will 
remove contra-side liquidity from the book if the order is an order 
to buy or sell a security priced below $1.00 or if the value of such 
execution when removing liquidity equals or exceeds the value of 
such execution if the order instead posted to the EDGX Book and 
subsequently provided liquidity, including the applicable fees 
charged or rebates provided). See proposed MEMX Rule 11.6(l)(2) 
(proposing to adopt Post Only functionality identical to that of the 
Cboe Equity Exchanges). See also Nasdaq Rule 4702(b)(4)(A) 
(providing that if the adjusted price of the Post-Only Order would 
lock or cross a non-displayed price on the Nasdaq Book, the Post-
Only Order will be posted . . .; provided, however, the Post-Only 
Order will execute if. . . it is priced at $1.00 or more and the 
value of price improvement associated with executing against an 
Order on the Nasdaq Book (as measured against the original limit 
price of the Order) equals or exceeds $0.01 per share). If such a 
lock or cross exists, new incoming orders may remove liquidity 
against the locked or crossed midpoint orders, but only at a price 
equal to the NBBO midpoint consistent with the Exchange's proposed 
price priority scheme under proposed Exchange Rule 2616. See also 
Nasdaq and BX Post-Only Functionality Modifications, available at 
https://www.nasdaqtrader.com/content/newsalerts/2016/postonlymodifications.pdf.
---------------------------------------------------------------------------

    To determine at the time of a potential execution whether the value 
of such execution when removing liquidity equals or exceeds the value 
of such execution if the order instead posted to the PEARL Equities 
Book and subsequently provided liquidity, the Exchange will use the 
highest possible rebate paid and highest possible fee charged for such 
executions on the Exchange.
    Like an order designated as Do Not Route, an order designated as 
Post Only will be subject to the price sliding processes set forth in 
proposed Exchange Rule 2614(g) described below, unless otherwise 
instructed by the User.
    Displayed. ``Displayed'' is an instruction a User may attach to an 
order stating that the order is to be displayed by the System on the 
PEARL Equities Book. Unless the User elects otherwise, all orders 
eligible to be displayed on the PEARL Equities Book will be 
automatically defaulted by the System to Displayed.\29\
---------------------------------------------------------------------------

    \29\ The Displayed modifier is based on the rules EDGA and EDGX. 
See EDGA and EDGX Rules 11.6(e)(1).
---------------------------------------------------------------------------

    Non-Displayed. ``Non-Displayed'' is an instruction the User may 
attach to an order stating that any part of the order is not to be 
displayed by the System on the PEARL Equities Book.\30\
---------------------------------------------------------------------------

    \30\ The Non-Displayed modifier is based on the rules EDGA and 
EDGX. See EDGA and EDGX Rules 11.6(e)(2).
---------------------------------------------------------------------------

    Attributable. ``Attributable'' is an instruction to include the 
User's market participant identifier (``MPID'') with an order that is 
designated for display (price and size) on an Exchange proprietary data 
feed.
    Non-Attributable. ``Non-Attributable'' is an instruction on an 
order that is designated for display (price and size) on an Exchange 
proprietary data feed to display that order on an anonymous basis.\31\
---------------------------------------------------------------------------

    \31\ The Attributable and Non-Attributable modifiers are based 
on rules of the Cboe Equity Exchanges. See BYX and BZX Rules 
11.9(c)(13) and (14), and EDGA and EDGX Rules 11.6(a).
---------------------------------------------------------------------------

    ISOs. ISO is an order instruction that may be attached to an 
incoming Limit

[[Page 8059]]

Order. The operation of ISOs will be described in proposed Exchange 
Rule 2614(d) and is consistent with the description of the ISO 
exception in Rules 600(b)(30) and 611(b)(5) of Regulation NMS.\32\ 
Proposed Exchange Rule 2614(d) provides that the System will accept 
incoming ISOs (as such term is defined in Rule 600(b)(31) of Regulation 
NMS). The Exchange does not intend to initially support the outbound 
routing of orders designated as ISO on behalf of Equity Members. 
Therefore, proposed Exchange Rule 2614(d) provides that ISOs are not 
eligible for routing pursuant to Exchange Rule 2617(b).
---------------------------------------------------------------------------

    \32\ 17 CFR 242.600(b)(30), 611(b)(5).
---------------------------------------------------------------------------

    To be eligible for treatment as an ISO, the order must be: (A) A 
Limit Order; (B) marked ``ISO''; and (C) the User entering the order 
must simultaneously route one or more additional Limit Orders marked 
``ISO,'' as necessary, to away Trading Centers to execute against the 
full displayed size of any Protected Quotation for the security as set 
forth below. Such orders, if they meet the requirements of the 
foregoing sentence, may be immediately executed at one or multiple 
price levels in the System without regard to Protected Quotations at 
away Trading Centers consistent with Regulation NMS (i.e., may trade 
through such quotations and will not be rejected or cancelled if it 
will lock, cross, or be marketable against an away Trading Center).
    An ISO may include a time-in-force of IOC or RHO and the operation 
of an ISO will differ depending on the time-in-force selected. An ISO 
that includes a time-in-force of IOC will immediately trade with 
contra-side interest on the PEARL Equities Book up to its full size and 
limit price and any unexecuted quantity will be immediately cancelled. 
An ISO that includes a time-in-force of RHO, if marketable on arrival, 
will also immediately trade with contra-side interest on the PEARL 
Equities Book up to its full size and limit price. However, any 
unexecuted quantity of a RHO ISO will be displayed at its limit price 
on the PEARL Equities Book and may lock or cross a Protected Quotation 
that was displayed at the time of arrival of the RHO ISO.\33\
---------------------------------------------------------------------------

    \33\ Orders with a time-in-force of Day or RHO both expire at 
the end of Regular Trading Hours. Because the Exchange will not 
initially offer a time-in-force of Day, it proposes to handle ISOs 
with a time-in-force of RHO the same as Day ISOs are handled on 
other equity exchanges.
---------------------------------------------------------------------------

    A User entering an ISO with a time-in-force of IOC represents that 
such User has simultaneously routed one or more additional Limit Orders 
marked ``ISO,'' if necessary, to away Trading Centers to execute 
against the full displayed size of any Protected Quotation for the 
security with a price that is superior to the ISO's limit price. A User 
entering an ISO with a time-in-force of RHO makes the same 
representation but further represents that it simultaneously routed one 
or more additional Limit Orders marked ``ISO,'' if necessary, to away 
Trading Centers to execute against the full displayed size of any 
Protected Quotation for the security with a price that is equal to its 
limit price.
    Proposed Exchange Rule 2614(d)(2) specifies that the Exchange will 
rely on the marking of an order as an ISO order when handling such 
order, and thus, it is the entering Equity Member's responsibility, not 
the Exchange's responsibility, to comply with the requirements of 
Regulation NMS relating to ISOs.
    Re-Pricing Mechanisms. Like other equity exchanges, the System 
proposes to offer re-pricing mechanisms to Users of PEARL Equities to 
comply with Rule 610(d) of Regulation NMS and Rule 201 of Regulation 
SHO. These re-pricing mechanisms are Display Price Sliding, Non-Display 
Order Price Sliding, and Short Sale Price Sliding. Under Display Price 
Sliding and Short Sale Price Sliding, Users will be able to select 
between either single price sliding or multiple price sliding. The 
Exchange will offer Display Price Sliding (including multiple Display 
Price Sliding) and Non-Displayed Order Price Sliding (including 
multiple Non-Displayed Order Price Sliding) to comply with locked/
crossed market and trade through restriction of Regulation NMS. The 
Exchange will offer Short Sale Price Sliding to comply with the tick 
provisions of Rule 201 of Regulation SHO.
    Each of the Exchange's proposed re-pricing mechanisms is identical 
to functionality on other equity exchanges. However, as mentioned 
above, the text of each of the proposed rules may differ from the 
descriptions of similar functionality in the rules of the other equity 
exchanges only to the extent to provide additional specificity and/or 
to conform the proposed structure of the PEARL Equities rule set. The 
Exchange's re-pricing mechanisms will be described under proposed 
Exchange Rule 2614(g).
    Display Price Sliding. Display Price Sliding is designed to prevent 
the display of a quotation that would lock or cross an away Trading 
Center in violation of Rule 610(d) of Regulation NMS.\34\ Proposed 
Exchange Rule 2614(g)(1)(A) provides that an order to buy (sell) 
designated as Displayed that, if displayed at its limit price on the 
PEARL Equities Book upon entry, would create a violation of Rule 610(d) 
of Regulation NMS by locking or crossing the PBO (PBB) of an away 
Trading Center will be assigned a working price equal to the PBO (PBB) 
and a displayed price one (1) minimum price variation below (above) the 
current PBO (PBB). A User may elect to have the System only apply the 
Display Price Sliding Process to the extent a display-eligible order to 
buy (sell) at the time of entry would create a violation of Rule 610(d) 
of Regulation NMS by locking the PBO (PBB) of an away Trading Center. 
For Users that select this order handling, any order to buy (sell) will 
be cancelled if, upon entry, such order would create a violation of 
Rule 610(d) of Regulation NMS by crossing the PBO (PBB) of an away 
Trading Center.
---------------------------------------------------------------------------

    \34\ Display Price Sliding would operate identically to Display 
Price Sliding on the Cboe Equity Exchanges. See BYX and BZX Rules 
11.9(g)(1) and EDGA and EDGX Rules 11.6(l)(1)(B). The only 
difference is that the proposed text describing the operation of 
Display Price Sliding in proposed Exchange Rule 2614(g)(1) is 
written to provide additional specificity regarding its operation 
by, among other things, adding directional references to describe 
how orders subject to Display Price Sliding are to be handled.
---------------------------------------------------------------------------

    Proposed Exchange Rule 2614(g)(1)(B) provides that an order subject 
to the Display Price Sliding Process will retain its original limit 
price irrespective of the working and displayed price assigned to the 
order. In the event the PBBO changes such that an order to buy (sell) 
subject to the Display Price Sliding Process would no longer lock or 
cross the PBO (PBB) of an away Trading Center, the order will receive a 
new timestamp and will be assigned a working and displayed price at the 
most aggressive permissible price. All orders that are assigned new 
working and displayed prices pursuant to the Display Price Sliding 
Process will retain their priority as compared to other orders subject 
to the Display Price Sliding Process based upon the time such orders 
were initially received by the Exchange. Following the initial ranking 
and display of an order subject to the Display Price Sliding Process, 
an order will only be assigned a new working and displayed price to the 
extent it achieves a more aggressive price, provided, however, that the 
Exchange will assign an order a working price equal to the displayed 
price of the order in the event such order's displayed price is locked 
or crossed by a Protected Quotation of an away Trading Center. Such 
event will not result in a change in priority for the order at its 
displayed price.

[[Page 8060]]

    Proposed Exchange Rule 2614(g)(1)(C) provides that the working and 
displayed prices of an order subject to the Display Price Sliding 
Process may be adjusted once or multiple times depending upon the 
instructions of a User and changes to the prevailing PBBO. Unless 
otherwise instructed by the User, the System will only adjust the 
working and displayed prices of an order upon entry and then the 
displayed price one additional time following a change to the 
prevailing PBBO. The working and displayed prices of orders subject to 
the optional multiple price sliding process will be adjusted, as 
permissible, based on changes to the prevailing PBBO.
    Proposed Exchange Rule 2614(g)(1)(D) provides that any display-
eligible order to buy (sell) designated as Post Only that locks or 
crosses the PBO (PBB) displayed by the Exchange upon entry will be 
executed as set forth in Exchange Rule 2614(c)(2) or cancelled. 
Depending on User instructions, a display-eligible order to buy (sell) 
designated as Post Only that locks or crosses the PBO (PBB) displayed 
by an away Trading Center upon entry will be subject to the Display 
Price Sliding Process. In the event the PBBO changes such that an order 
designated as Post Only subject to the Display Price Sliding Process 
will be assigned a working price at which it could remove displayed 
liquidity from the PEARL Equities Book, the order will be executed as 
set forth in proposed Exchange Rule 2614(c)(2) or cancelled.
    Finally, Proposed Exchange Rule 2614(g)(1)(E) provides that orders 
to buy (sell) designated as Post Only will be permitted to post and be 
displayed opposite the working price of orders to sell (buy) subject to 
the Display Price Sliding Process. In the event an order subject to the 
Display Price Sliding Process is ranked on the PEARL Equities Book with 
a working price equal to an opposite side order displayed by the 
Exchange, it will be subject to processing as set forth in proposed 
Exchange Rule 2617(a)(4).
    Non-Displayed Price Sliding. Non-Displayed Price Sliding is 
designed to avoid potentially trading through Protected Quotations of 
an away Trading Center in violation of Rule Regulation NMS.\35\ 
Proposed Exchange Rule 2614(g)(2) provides a non-displayed, non-
routable order to buy (sell) that, upon entry, would cross the PBO 
(PBB) of an away Trading Center will be assigned a working price by the 
System equal to the PBO (PBB). In the event the PBO (PBB) changes such 
that the working price of a non-displayed, non-routable order to buy 
(sell) resting on the PEARL Equities Book would again cross the PBO 
(PBB) of an external market, the working price of the non-displayed 
order to buy (sell) will be adjusted by the System to be equal to the 
updated PBO (PBB) and will receive new timestamp. In the event a non-
displayed, non-routable order to buy (sell) has been re-priced by the 
System pursuant to proposed Exchange Rule 2614(g)(2), such non-
displayed order to buy (sell) will not be re-priced by the System 
unless it again crosses the PBO (PBB) of an away Trading Center or it 
achieves a more aggressive price, due to an update to the PBO (PBB) of 
an away Trading Center.\36\ Unlike under Display Price Sliding, non-
displayed, non-routable buy (sell) orders will be re-priced not only 
upon entry, but each time the price of the order crosses the PBO (PBB) 
of an away Trading Center. This proposed multiple price sliding 
functionality under Non-Displayed Price Sliding would be mandatory, and 
not optional behavior.
---------------------------------------------------------------------------

    \35\ Non-Displayed Price Sliding would operate identically to 
Non-Displayed Price Sliding on the Cboe Equity Exchanges. See BYX 
and BZX Rules 11.9(g)(4) and EDGA and EDGX Rules 11.6(l)(3). The 
only difference is that the proposed text describing the operation 
of Non-Displayed Price Sliding in proposed Exchange Rule 2614(g)(2) 
is written to provide additional specificity regarding its operation 
by, among other things, adding directional references to describe 
how orders subject to Non-Displayed Price Sliding are to be handled.
    \36\ Repricing non-displayed orders subject to Non-Displayed 
Price Sliding to a more aggressive price is consistent with standard 
functionality and the proposed Display Price Sliding process. This 
specificity is not included in the rules of the Cboe Equity 
Exchanges but is in IEX rules. See IEX Rule 11.190(h)(2).
---------------------------------------------------------------------------

    Short Sale Price Sliding Process. Short Sale Price Sliding is 
designed to comply with Rule 201 of Regulation SHO by re-pricing short 
sale orders to a price above the NBB.\37\ Proposed Exchange Rule 
2614(g)(3)(A) provides that a short sale order that, at the time of 
entry, could not be executed or displayed at its limit price due to a 
short sale price test restriction under Rule 201 of Regulation SHO 
(``Short Sale Period'') will be assigned a working and displayed price 
by the System equal to one (1) minimum price variation above the 
current NBB (``Permitted Price''). Unless otherwise instructed by the 
User, the System will only adjust the working and displayed price of a 
short sale order upon entry. To reflect declines in the NBB during a 
Short Sale Period, a User may elect that the System continue to adjust 
the working and displayed price of a displayed short sale order to the 
Permitted Price down to the order's original limit price.
---------------------------------------------------------------------------

    \37\ Short Sale Price Sliding would operate identically to Short 
Sale Price Sliding on the Cboe Equity Exchanges. See BYX and BZX 
Rules 11.9(g)(5) and EDGA and EDGX Rules 11.6(l)(2). The only 
difference is that the proposed text describing the operation of 
Short Sale Price Sliding in proposed Exchange Rule 2614(g)(3) is 
written to provide additional specificity regarding its operation.
---------------------------------------------------------------------------

    Proposed Exchange Rule 2614(g)(3)(B) provides that in the event the 
NBB changes during a Short Sale Period such that the working price of a 
non-displayed short sale order would lock or cross the NBB, the order 
will be assigned a working price by the System equal to the Permitted 
Price and receive a new timestamp. To reflect changes in the NBB during 
a Short Sale Period, the System will continue to adjust the working 
price of a non-displayed short sale order subject to the order's limit 
price.
    Proposed Exchange Rule 2614(g)(3)(C) provides that during a Short 
Sale Period, a short sale order will be executed and displayed without 
regard to price if, at the time of initial display of the short sale 
order, the order was at a price above the then current NBB. Short sale 
orders that are entered into the Exchange prior to the Short Sale 
Period but are not displayed will be adjusted to a Permitted Price.\38\ 
Proposed Exchange Rule 2614(g)(3)(D) provides that short sale orders 
marked ``short exempt'' will not be subject to the Short Sale Price 
Sliding Process.
---------------------------------------------------------------------------

    \38\ See NYSE Arca Rule 7.16(f)(6).
---------------------------------------------------------------------------

    Proposed Exchange Rule 2614(g)(3)(E) provides that during a Short 
Sale Period, a short sale order will be subject to the Short Sale Price 
Sliding Process, even if such order is also eligible for the Display 
Price Sliding Process.
    Order Types. The proposed System will make available to Equities 
Members the following three order types: Limit Orders, Market Orders, 
and Midpoint Peg Orders. A description of the order types available on 
the System will be described under proposed Exchange Rule 2614(a). 
Proposed Exchange Rule 2614 provides that order, instruction, and 
parameter combinations which are disallowed by the Exchange or 
incompatible by their terms, will be rejected, ignored, or overridden 
by the Exchange, as determined by the Exchange to facilitate the most 
orderly handling of User instructions. For example, a Limit Order that 
includes a time-in-force of IOC and a Post Only instruction will be 
rejected.
    The characteristics and functionality of each of these order types 
is identical or substantially similar to what is currently approved for 
the other equity exchanges. However, as mentioned above, the text of 
each of the proposed

[[Page 8061]]

rules may differ from the descriptions of similar functionality in the 
rules of the other equity exchanges only to the extent to provide 
additional specificity and to conform the proposed structure of the 
PEARL Equities rule set.
    Limit Orders. Proposed Exchange Rule 2614(a)(1) \39\ provides that 
Limit Orders are orders to buy or sell a stated amount of a security at 
a specified price or better. A ``marketable'' Limit Order to buy (sell) 
will trade with all orders to sell (buy) priced at or below (above) the 
PBO (PBB) for the security. Once no longer marketable, the Limit Order 
will be ranked on the PEARL Equities Book pursuant to proposed Exchange 
Rule 2616, described below.
---------------------------------------------------------------------------

    \39\ The description of Limit Orders under proposed Exchange 
Rule 2614(a)(1) is based on EDGA and EDGX Rules 11.8(b).
---------------------------------------------------------------------------

    Proposed Exchange Rule 2614(a)(1) will set forth which order type 
modifiers are compatible with Limit Orders. First, an incoming Limit 
Order may be designated as ISO. A Limit Order may also be displayed or 
non-displayed. A Limit Order will be displayed on the PEARL Equities 
Book unless the User elects that the Limit Order be non-displayed.\40\ 
A Limit Order may be entered as an odd lot, round lot, or mixed lot and 
include a time-in-force of IOC or RHO. A Limit Order with a time-in-
force of RHO is eligible to participate in the Opening Process 
described under proposed Exchange Rule 2615. A Limit Order is eligible 
to participate in the Regular Trading Session.
---------------------------------------------------------------------------

    \40\ The Exchange does not propose to offer reserve quantity 
functionality for Limit Orders at this time. Reserve functionality 
is commonly understood to allow a Limit Order to have both a 
displayed and non-displayed quantity. See, e.g., EDGA and EDGX Rules 
11.6(m).
---------------------------------------------------------------------------

    A Limit Order may be designated as Post Only or Do Not Route. 
Further, a Limit Order that is designated as ISO and includes a time-
in-force of RHO may also be designated as Post Only. Unless designated 
as Post Only or Do Not Route, a marketable Limit Order to buy (sell) 
will be eligible to be routed away to prices equal to or higher (lower) 
than the PBO (PBB) pursuant to proposed Exchange Rule 2717(b) only 
after trading with orders to sell (buy) on the PEARL Equities Book at 
each price point.
    Proposed Rule 2614(a)(1) will also describe default behavior for 
re-pricing Limit Orders to comply with Rule 610 of Regulation NMS,\41\ 
Rule 201 of Regulation SHO,\42\ and the LULD Plan.\43\ Each of these 
re-pricing options are described in detail further below.
---------------------------------------------------------------------------

    \41\ 17 CFR 242.610.
    \42\ 17 CFR 242.201.
    \43\ See supra note 5.
---------------------------------------------------------------------------

    To comply with Rule 610 of Regulation NMS, a non-routable Limit 
Order to buy (sell) that, if displayed at its limit price on the PEARL 
Equities Book upon entry, would lock or cross the PBO (PBB) of an away 
Trading Center will be re-priced pursuant to the Display Price Sliding 
instruction, unless the User affirmatively elects to have the order 
immediately cancelled. A non-routable Limit Order to buy (sell) with a 
limit price that would cross the PBO (PBB) of an away Trading Center 
upon entry will not execute at a price that is higher (lower) than the 
PBO (PBB).
    To avoid potentially trading through the PBBO of an away Trading 
Center, a non-displayed Limit Order to buy (sell) that, if posted to 
the PEARL Equities Book, would cross the PBO (PBB) of an away Trading 
Center will be re-priced pursuant to the Non-Displayed Order Price 
Sliding Process.\44\
---------------------------------------------------------------------------

    \44\ Unlike the Cboe Equity Exchanges, PEARL Equities does not 
proposes to provide Users with the option to automatically cancel a 
non-displayed order that is to be repriced pursuant to the Non-
Displayed Price Sliding Process. See EDGA and EDGX Rules 
11.8(b)(12).
---------------------------------------------------------------------------

    To comply with Rule 201 of Regulation SHO, when a Short Sale Period 
\45\ is in effect, a Limit Order to sell that is designated as short 
and cannot be executed or displayed on the PEARL Equities Book at its 
limit price pursuant to Rule 201 of Regulation SHO will be re-priced to 
a Permitted Price pursuant to the Short Sale Price Sliding Process, 
unless the User affirmatively elects to have the order immediately 
cancelled. During a Short Sale Period, as defined in Exchange Rule 
2614(g)(3)(A), the System will immediately cancel any portion of an 
incoming Limit Order designated as ISO and short that includes a time-
in-force instruction RHO that cannot be executed or displayed at its 
limit price at the time of entry pursuant to Rule 201 of Regulation 
SHO.\46\
---------------------------------------------------------------------------

    \45\ A Short Sale Period is the time during which a displayable 
short sale order, at the time of entry, could not be executed or 
displayed at its limit price due to a short sale price test 
restriction under Rule 201 of Regulation SHO. 17 CFR 201. See also 
proposed Exchange Rule 2614(g)(3)(A).
    \46\ See EDGA and EDGX Rule 11.8(c)(6).
---------------------------------------------------------------------------

    To comply with the LULD Plan, a Limit Order to buy (sell) that is 
priced above (below) the Upper (Lower) Price Band shall be re-priced 
pursuant to proposed Exchange Rule 2622(e) (described below), unless 
the User affirmatively elects to have the order immediately cancelled.
    The Exchange also proposes to offer Limit Order Price Protection 
which will provide for the cancellation of Limit Orders priced too far 
away from a specified reference price at the time the order first 
becomes eligible to trade.\47\ A Limit Order entered before Regular 
Trading Hours that becomes eligible to trade during Regular Trading 
Hours will be subject to Limit Order Price Protection at the time 
Regular Trading Hours begins.\48\
---------------------------------------------------------------------------

    \47\ The Exchange's proposed Limit Order Price Protection is 
based on NYSE Rule 7.31(a)(2)(B) and Nasdaq Rule 4757(c).
    \48\ Further, a Limit Order in a security that is subject to a 
trading halt will become first eligible to trade when the halt is 
lifted and continuous trading has resumed.
---------------------------------------------------------------------------

    A Limit Order to buy (sell) will be rejected if it is priced at or 
above (below) a specified dollar value and percentage away from the 
following: (1) The PBO for Limit Orders to buy, the PBB for Limit 
Orders to sell; (2) if the PBO or PBB is unavailable, the consolidated 
last sale price disseminated during the Regular Trading Hours on trade 
date; (3) if the PBO, PBB, and a consolidated last sale price are 
unavailable, the prior day's Official Closing Price identified as such 
by the primary listing exchange, adjusted to account for events such as 
corporate actions and news events. This differs from Limit Order Price 
Protection offered by Nasdaq,\49\ which only utilizes the PBBO as a 
reference price, and the NYSE,\50\ which only calculates reference 
prices based on the corresponding ``numerical guideline'' percentages 
set forth in NYSE Rule 7.10(c)(1), Clearly Erroneous Executions. The 
Exchange believes this difference is reasonable because utilizing a 
waterfall of reference prices should result in specified percentages 
that are more reflective of the current trading environment for the 
security and provide an alternative reference price when the NBBO and/
or last sale price are unavailable.
---------------------------------------------------------------------------

    \49\ Nasdaq Rule 4757(c).
    \50\ NYSE Rule 7.31(a)(2)(B).
---------------------------------------------------------------------------

    Also unlike Limit Order Price Protection offered by NYSE and 
Nasdaq, Equity Members will be able to customize the specified dollar 
and percentages on a per session basis. If an Equity Member does not 
provide PEARL Equities specified dollar values or percentages for their 
order(s), default specified dollar and percentages established by the 
Exchange will be applied. The default specified dollar and percentages 
will be posted to the Exchange's website and the Exchange will announce 
any changes to those dollar and percentages via a Regulatory Circular. 
The Exchange believes this difference is also reasonable because it 
provides Equity Members with greater flexibility in establishing 
protections that better reflect their risk profile.

[[Page 8062]]

    Limit Order Price Protection thresholds for buy (sell) orders that 
are not entered at a permissible MPV for the security, as defined in 
proposed Exchange Rule 2612, will be rounded down (up) to the nearest 
price at the applicable MPV.
    Market Orders. Proposed Rule 2614(a)(2) \51\ provides that a Market 
Order is an order to buy (sell) a stated amount of a security that is 
to be executed at the PBO (PBB) or better upon entry. A Market Order 
shall not trade through a Protected Quotation. The System will only 
execute a Market Order upon entry and, if eligible, route the Market 
Order to an away Trading Center. The System will never post a Market 
Order to the PEARL Equities Book, unlike as is done by other national 
securities exchanges.\52\
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    \51\ The description of Market Orders under proposed Exchange 
Rule 2614(a)(2) is based on EDGA and EDGX Rules 11.8(a).
    \52\ See, e.g., EDGA and EDGX Rules 11.8(a)(4) (providing for 
the posting of Market Orders when the NBO (NBB) is greater (less) 
than the Upper (Lower) Price Band or when an Short Sale Circuit 
Breaker is in effect). See also NYSE Rule 7.31(a)(1).
---------------------------------------------------------------------------

    A Market Order may be entered as an odd, round, or mixed lot. A 
Market Order may only include a time-in-force of IOC. A Market Order 
with a time-in-force of RHO will be rejected. A Market Order is not 
eligible to participate in the Opening Process under proposed Exchange 
Rule 2615 described below. A Market Order is eligible to participate in 
the Regular Trading Session.
    A Market Order may also be designated as Do Not Route. For a Market 
Order that is not designated as Do Not Route, any portion of that 
Market Order that cannot be executed in accordance with Rule 2617(a)(4) 
upon entry will be eligible to be routed away pursuant to Rule 2617(b). 
Any returned quantity of a routed Market Order will be immediately 
cancelled. A Market Order that is designated as Post Only will be 
rejected. A Market Order that is designated as Do Not Route will be 
cancelled if, when reaching the Exchange, it cannot be executed on the 
System in accordance with Rule 2617(a)(4). Equity Members may also 
elect that their Market Order to buy (sell) be cancelled if the PBO 
(PBB) an away Trading Center is not available upon entry.
    The System will cancel a non-routable Market Order that cannot be 
executed at a price that complies with Rule 201 of Regulation SHO and 
the Limit-Up Limit-Down Plan. During a Short Sale Period, a short sale 
Market Order designated as Do Not Route that cannot be executed at a 
Permitted Price or better upon entry will be cancelled. This may occur 
when there are no orders to buy priced above the NBB resting on the 
PEARL Equities Book against which the incoming Market Order to sell 
could execute against in compliance with Rule 201 of Regulation SHO.
    Further, any portion of a Market Order to buy (sell) will be 
cancelled if it cannot be executed because at the time it is received 
by the System the NBO (NBB) is greater (less) than the Upper (Lower) 
Price Band in accordance with the LULD Plan. In such case, a Market 
Order to buy (sell) cannot execute against the NBO (NBB) because the 
NBO (NBB) is outside of the applicable Price Band and, therefore, not 
available for execution.
    Midpoint Peg Orders. Proposed Rule 2614(a)(3) \53\ provides that a 
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 
to buy (sell) with a limit price that is equal to or higher (lower) 
than the midpoint of the PBBO will be assigned a working price at the 
midpoint of the PBBO and may execute at the midpoint of the PBBO or 
better subject to its limit price. A Midpoint Peg Order to buy (sell) 
with a limit price that is lower (higher) than the midpoint of the PBBO 
will be assigned a working price equal to its limit price and may 
execute at its limit price or better.
---------------------------------------------------------------------------

    \53\ The description of Midpoint Peg Orders under proposed 
Exchange Rule 2614(a)(3) is based on EDGA Rule 11.8(d), EDGX Rule 
11.8(d), NYSE Rule 7.31(d)(3), and NYSE Arca Rule 7.31-E(d)(3).
---------------------------------------------------------------------------

    An Aggressing Midpoint Peg Order to buy (sell) will trade with 
resting orders to sell (buy) with a working price at or below (above) 
the midpoint of the PBBO at the working price of the resting 
orders.\54\ Resting Midpoint Peg Orders to buy (sell) will trade at the 
midpoint of the PBBO against all Aggressing Orders to sell (buy) priced 
at or below (above) the midpoint of the PBBO.\55\
---------------------------------------------------------------------------

    \54\ See NYSE Rule 7.31(d)(3)(C).
    \55\ Id.
---------------------------------------------------------------------------

    A Midpoint Peg Order will be accepted but will not be eligible for 
execution when the PBB or PBO is not available, the PBBO is crossed, 
and, if instructed by the User, when the PBBO is locked. A Midpoint Peg 
Order that is eligible for execution when the PBBO is locked will be 
executable at the locking price.\56\ A Midpoint Peg Order will become 
eligible for execution and receive a new timestamp when the PBB and/or 
PBO both become available, or the PBBO unlocks or uncrosses and a new 
midpoint of the PBBO is established. In such case, pursuant to proposed 
Exchange Rule 2616, all such Midpoint Peg Orders will retain their 
priority as compared to each other based upon the time priority of such 
orders immediately prior to being deemed not eligible for execution as 
set forth above.\57\
---------------------------------------------------------------------------

    \56\ See IEX Rule 11.190(h)(3)(C)(i) (stating that in the event 
the market becomes locked, the Exchange shall consider the midpoint 
price to be equal to the locking price).
    \57\ Describing when a Midpoint Peg Orders would not be eligible 
for execution is based on NYSE Rule 7.31(d)(3) and NYSE Arca Rule 
7.31-E(d)(3).
---------------------------------------------------------------------------

    A Midpoint Peg Order may include a time-in-force of IOC or RHO. A 
Midpoint Peg Order with a time-in-force of RHO is eligible to 
participate in the Opening Process under proposed Exchange Rule 2615 
described above. A Midpoint Peg Order is eligible to participate in the 
Regular Trading Session. A Midpoint Peg Order may be entered as an odd 
lot, round lot, or mixed lot. Midpoint Peg Orders are not eligible for 
routing pursuant to Exchange Rule 2617(b). A Midpoint Peg Order may be 
designated as Post Only.
    Cancel/Replace Messages. Like other equity exchanges, the Exchange 
will allow a User to cancel or replace their existing order resting on 
the PEARL Equities Book. However, orders may only be cancelled or 
replaced if the order has a time-in-force term other than IOC and if 
the order has not yet been executed in full. If an order has been 
routed to another Trading Center, the order will be placed in a 
``Pending'' state until the routing process is completed. Executions 
that are completed when the order is in the ``Pending'' state will be 
processed normally. Further, only the price, sell long, sell short, or 
short exempt indicator, and size terms of the order may be changed by a 
Replace Message. If a User desires to change any other terms of an 
existing order the existing order must be cancelled and a new order 
must be entered. No cancellation or replacement of an order will be 
effective until such message has been received and processed by the 
System. The Exchange's proposed cancel/replace functionality will be 
described under proposed Exchange Rule 2614(e).
    Self-Trade Protection Modifiers. Like PEARL Options and other 
equity exchanges, the Exchange will allow Equity Members to use STP 
modifiers. Any order designated with an STP modifier will be prevented 
from executing against a contra-side order also designated with an STP 
modifier and originating from the same MPID, Exchange Member 
identifier, or trade group identifier (any such identifier, a ``Unique 
Identifier''). The Exchange proposes to offer the following four (4) 
STP modifiers to Equity Members:

[[Page 8063]]

Cancel Newest, Cancel Oldest, Decrement and Cancel, and Cancel Both. 
The STP modifier on the order with the most recent time stamp controls 
the interaction between two orders marked with STP modifiers. The 
Exchange's proposed STP modifiers will be described under proposed 
Exchange Rule 2614(f).
    Cancel Newest. An order marked with the Cancel Newest modifier will 
not execute against a contra-side order marked with any STP modifier 
originating from the same Unique Identifier. The order with the most 
recent time stamp marked with the Cancel Newest modifier will be 
cancelled back to the originating User(s). The contra-side order with 
the older timestamp marked with an STP modifier will remain on the 
PEARL Equities Book.
    Cancel Oldest. An order marked with the Cancel Oldest modifier will 
not execute against a contra-side order marked with any STP modifier 
originating from the same Unique Identifier. The order with the older 
time stamp marked with the STP modifier will be cancelled back to the 
originating User(s). The contra-side order with the most recent 
timestamp marked with the STP modifier will remain on the PEARL 
Equities Book.
    Decrement and Cancel. An order marked with the Decrement and Cancel 
modifier will not execute against contra-side interest marked with any 
STP modifier originating from the same Unique Identifier. If both 
orders are equivalent in size, both orders will be cancelled back to 
the originating User(s). If both orders are not equivalent in size, the 
equivalent size will be cancelled back to the originating User(s) and 
the larger order will be decremented by the size of the smaller order, 
with the balance remaining on the PEARL Equities Book.
    Cancel Both. An order marked with the Cancel Both modifier will not 
execute against contra-side interest marked with any STP modifier 
originating from the same Unique Identifier. The entire size of both 
orders will be cancelled back to the originating User(s).
    Opening Procedures. The Exchange will open trading in Equities 
Securities at the start of Regular Trading Hours and following a halt 
by matching buy and sell orders at the midpoint of the NBBO, as 
described below. The Exchange's opening process will be described under 
proposed Exchange Rule 2615,\58\ which provides that prior to the 
beginning of Regular Trading Hours,\59\ Users who wish to participate 
in the Opening Process may enter orders to buy or sell that are 
designated as RHO. Orders cancelled before the Opening Process will not 
participate in the Opening Process.
---------------------------------------------------------------------------

    \58\ Proposed Exchange Rule 2615 is based on BZX Rule 11.24, BYX 
Rule 11.23, and EDGA and EDGX Rules 11.7.
    \59\ According to proposed Exchange Rule 2600(a), Users may 
begin to enter orders starting at 7:30 a.m. Eastern Time.
---------------------------------------------------------------------------

    Only orders that include a time-in-force of RHO may participate in 
the Opening Process. Orders designated as Post Only, ISOs, and orders 
that include a time-in-force other than RHO are not eligible to 
participate in the Opening Process. As described above, because Market 
Orders may only include a time-in-force of IOC, they are not eligible 
to participate in the Opening Process. Meanwhile, Limit Orders and 
Midpoint Peg orders that include a time-in-force of RHO are eligible to 
participate in the Opening Process. Like PEARL Options, all STP 
modifiers, as defined in proposed Exchange Rule 2614(f), will be 
honored during the Opening Process.\60\
---------------------------------------------------------------------------

    \60\ See Exchange Rule 503 (not stating that self-trade 
prevention modifiers are ignored during the opening process). The 
Cboe Equity Exchanges ignore self-trade protection modifiers during 
their opening and re-opening processes. See BZX Rule 11.24(b), BYX 
Rules 11.23(b), and EDGA and EDGX Rules 11.7(b).
---------------------------------------------------------------------------

    Proposed Exchange Rule 2615(b) provides that during the Opening 
Process, the Exchange attempts to match eligible buy and sell orders at 
the midpoint of the NBBO, the calculation of which is described below. 
All orders eligible to trade at the midpoint will be processed in time 
sequence, beginning with the order with the oldest timestamp. The 
Opening Process will conclude when no remaining orders, if any, can be 
matched at the midpoint of the NBBO. At the conclusion of the Opening 
Process, the unexecuted portion of orders that were eligible to 
participate in the Opening Process will be placed on the PEARL Equities 
Book in time sequence, cancelled, executed, or routed to away Trading 
Centers in accordance with the terms of the order.
    Proposed Exchange Rule 2615(c) will describe how the Exchange 
calculates the midpoint of the NBBO. When the primary listing exchange 
is the NYSE or NYSE American, the Opening Process will be priced at the 
midpoint of the: (i) First NBBO subsequent to the first reported trade 
and first two-sided quotation on the primary listing exchange after 
9:30:00 a.m. Eastern Time; or (ii) then prevailing NBBO when the first 
two-sided quotation is published by the primary listing exchange after 
9:30:00 a.m. Eastern Time, but before 9:45:00 a.m. Eastern Time if no 
first trade is reported by the primary listing exchange within one 
second of publication of the first two-sided quotation by the primary 
listing exchange. For any other primary listing exchange, such as 
Nasdaq, Arca, and BZX, the Opening Process will be priced at the 
midpoint of the first NBBO subsequent to the first two-sided quotation 
published by the primary listing exchange after 9:30:00 a.m. Eastern 
Time.
    If the conditions to establish the price of the Opening described 
above do not occur by 9:45:00 a.m. Eastern Time, the Exchange may 
conduct a Contingent Open and match all orders eligible to participate 
in the Opening Process at the midpoint of the then prevailing NBBO.\61\ 
The Exchange believes matching orders at the midpoint of the NBBO as 
part of the Contingent Open provides consistent order handling to Users 
that wish to participate in the PEARL Equities Opening Process by 
executing their eligible orders at the midpoint of the NBBO, regardless 
of whether the opening process occurs at or near 9:30 a.m. Eastern 
Time, or later as part of a Contingent Open. Those Users that do not 
wish to participate in the Contingent Open are free to cancel their 
orders at any time and to resubmit those orders after the Contingent 
Open occurs and continuous trading begins.
---------------------------------------------------------------------------

    \61\ The Cboe Equity Exchanges do not attempt to match orders at 
the midpoint to the NBBO in such a situation. They handle orders in 
time sequence, beginning with the order with the oldest timestamp, 
and place orders on the book, and such orders are routed, cancelled, 
or executed in accordance with the terms of the order. See BZX Rule 
11.24(d), BYX Rule 11.23(d), EDGA and EDGX Rules 11.7(d).
---------------------------------------------------------------------------

    If the midpoint of the NBBO is not available for the Contingent 
Open, all orders will be handled in time sequence, beginning with the 
order with the oldest timestamp, and be placed on the PEARL Equities 
Book, cancelled, executed, or routed to away Trading Centers in 
accordance with the terms of the order. Users not seeking an execution 
at the midpoint of the NBBO during the Contingent Open may cancel their 
orders before 9:45 a.m. and re-enter those orders after the Contingent 
Open occurs.
    While an Equity Security is subject to a halt, suspension, or pause 
in trading, the Exchange will accept orders for queuing prior to the 
resumption of trading in the security for participation in the Re-
Opening Process. The Re-Opening Process following a halt will occur in 
the same manner as the Opening Process with the following two

[[Page 8064]]

exceptions. First, ISOs, orders that include a time-in-force of IOC and 
orders designated as Post Only will be cancelled or rejected, as 
applicable. Second, the Re-Opening Process will occur at the midpoint 
of the: (i) First NBBO subsequent to the first reported trade and first 
two-sided quotation on the primary listing exchange following the 
resumption of trading after a halt, suspension, or pause; or (ii) NBBO 
when the first two-sided quotation is published by the primary listing 
exchange following the resumption of trading after a halt, suspension, 
or pause if no first trade is reported by the listing exchange within 
one second of publication of the first two-sided quotation by the 
listing exchange.
    Where neither of the above conditions required to establish the 
price of the Re-Opening Process have occurred, the Equity Security may 
be opened for trading at the discretion of the Exchange. For example, 
the Exchange would exercise this discretion where the primary listing 
exchange lifted the halt but has not disseminated a reported trade or 
two-sided quotation and other non-primary listing exchanges have begun 
trading the security. In such case, all orders will be handled in time 
sequence, beginning with the order with the oldest timestamp, and be 
placed on the PEARL Equities Book, cancelled, executed, or routed to 
away Trading Centers in accordance with the terms of the order.
    Order Priority. After the opening process, trades on PEARL Equities 
will occur when a buy order and a sell order are matched for execution 
on the PEARL Equities Book. All non-marketable orders resting on the 
PEARL Equities Book will be ranked and maintained based on price/time 
priority in the following manner: (1) Price; (2) priority category; (3) 
time; and (4) ranking restrictions applicable to an order or modifier 
condition. As such, the System will execute trading interest within a 
priority category in the System in price/time priority, meaning it will 
execute all trading interest at the best price level within a priority 
category in time sequence before executing trading interest within the 
next priority category. Once all trading interest at that price is 
exhausted, the System will execute trading interest in the same fashion 
at the next best price level. Proposed Exchange Rule 2616 will describe 
the priority of orders resting on the PEARL Equities Book and is 
consistent with other equity exchanges that employ a price/time 
priority model, such as the Cboe Equity Exchanges and NYSE Arca.\62\
---------------------------------------------------------------------------

    \62\ See BZX and BYX Rules 11.12 and EDGA and EDGX Rules 11.9. 
See also NYSE Arca Rule 7.36-E.
---------------------------------------------------------------------------

    Proposed Exchange Rule 2616(a)(1) provides that all orders will be 
ranked based on the working price of an order. Orders to buy will be 
ranked from highest working price to lowest working price. Orders to 
sell will be ranked from lowest working price to highest working price. 
If the working price of an order changes, the price priority of the 
order will also change.
    In general, displayed orders at their displayed prices have 
priority over non-displayed orders at that same price. Proposed 
Exchange Rule 2616(a)(1)(A) provides the priority categories and 
proposed Exchange Rule 2616(a)(2)(A) specifies that within each 
priority category, where orders to buy (sell) are entered into the 
Trading System and resting in the PEARL Equities Book at the same 
working price, the order clearly established as the first entered into 
the Trading System at such particular price shall have precedence at 
that price, up to the number of shares specified in the order. Equally 
priced orders within each priority category will be ranked in time 
priority with displayed Limit Orders for which their working price is 
displayed having first priority. Non-marketable Limit Orders for which 
their working price is non-displayed have second priority.\63\ Proposed 
Exchange Rule 2616(a)(2)(B) provides that for purposes of order 
priority, ISOs will be treated like Limit Orders.
---------------------------------------------------------------------------

    \63\ This second priority category would include the non-
displayed working price of an order with a different displayed price 
due to the order having been re-priced pursuant to the Display Price 
Sliding Process under proposed Exchange Rule 2614(g)(1). This second 
priority category would also include Midpoint Peg Orders at their 
working price.
---------------------------------------------------------------------------

    Proposed Exchange Rule 2616(a)(3) provides that within each 
priority category, orders will be ranked based on time with each order 
being assigned a timestamp equal to the time the order is first placed 
on the PEARL Equities Book. An order is assigned a timestamp based on 
its original entry time, which is the time when an order is first 
placed in the PEARL Equities Book. Proposed Exchange Rule 
2616(a)(3)(A)(i) provides that an order that is fully routed to an away 
Trading Center on arrival will not be assigned a timestamp time unless 
and until any unexecuted portion of the order returns to the PEARL 
Equities Book. Proposed Exchange Rule 2616(a)(3)(A)(ii) provides that 
for an order that is partially routed to an away Trading Center on 
arrival, the portion that is not routed will be assigned a timestamp. 
If any unexecuted portion of the order returns to the PEARL Equities 
Book and joins any remaining resting portion of the original order, the 
returned portion of the order will be assigned the same timestamp as 
the resting portion of the order.\64\ If the resting portion of the 
original order has already executed and any unexecuted portion of the 
order returns to the PEARL Equities Book, the returned portion of the 
order will be assigned a new timestamp. Proposed Exchange Rule 
2616(a)(3)(B) provides that an order will be assigned a new timestamp 
any time the working price of an order changes.
---------------------------------------------------------------------------

    \64\ See NYSE Arca Rule 7.36-E(f)(1)(B).
---------------------------------------------------------------------------

    Proposed Exchange Rule 2616(a)(4) provides that when Users elect 
that their orders not execute against an order with the same Unique 
Identifier by using an STP modifier described above, the Trading System 
will not permit such orders to execute against one another, regardless 
of priority ranking.
    Proposed Exchange Rule 2616(a)(5) describes the priority treatment 
where a User cancels or replaces an order resting on the PEARL Equities 
Book. Proposed Exchange Rule 2616(a)(5) provides that the order will 
retain its timestamp and retain its priority only where the 
modification involves a decrease in the size of the order or a change 
in position from (A) sell to sell short; (B) sell to sell short exempt; 
(C) sell short to sell; (D) sell short to sell short exempt; (E) sell 
short exempt to sell; and (F) sell short exempt to sell short. Any 
other modification to an order, including an increase in the size of 
the order and/or price change, will result in such order losing time 
priority as compared to other orders in the PEARL Equities Book and the 
timestamp for such order being revised to reflect the time of the 
modification.
    Proposed Exchange Rule 2616(a)(6) provides that the remainder of an 
order that is partially executed against an incoming order or 
Aggressing Order will retain its timestamp.
    Lastly, proposed Exchange Rule 2616(b) sets forth the information 
that will be collected and made available to quotation vendors for 
dissemination pursuant to the requirements of Rule 602 of Regulation 
NMS,\65\ which will include the best-ranked order(s) to buy and the 
best-ranked order(s) to sell that are displayed on the PEARL Equities 
Book and the aggregate displayed size of such orders. Proposed Exchange 
Rule 2616(b) further provides that PEARL

[[Page 8065]]

Equities will transmit for display to the appropriate network processor 
for each equity security: (1) The highest price to buy wherein the 
aggregate size of all displayed buy interest in the Trading System 
greater than or equal to that price is one round lot or greater; (2) 
the aggregate size of all displayed buy interest in the Trading System 
greater than or equal to the price in (1) above, rounded down to the 
nearest round lot; (3) the lowest price to sell wherein the aggregate 
size of all displayed sell interest in the Trading System less than or 
equal to that price is one round lot or greater; and (4) the aggregate 
size of all displayed sell interest in the Trading System less than or 
equal to the price in paragraph (3) above, rounded down to the nearest 
round lot.
---------------------------------------------------------------------------

    \65\ Proposed Exchange Rule 2616(c) is based on Nasdaq Rule 
4756(b)(2).
---------------------------------------------------------------------------

    Order Execution. The System will utilize technology currently used 
by the Exchange's options trading system for purposes of order 
execution in Equity Securities. The order execution process for equity 
securities is based on functionality currently approved for use on the 
Cboe Equities Exchanges, NYSE, NYSE Arca, and NASDAQ. As discussed 
above, the System will allow Equity Members to enter Market Orders, 
Limit Orders, and Midpoint Peg Orders to buy and sell Equity Securities 
on PEARL Equities. The orders will be designated for display or non-
display in the System.
    Proposed Exchange Rule 2617(a) provides that any order falling 
within the below parameters shall be referred to as executable. Like on 
other equity exchanges, an order will be cancelled back to the User if, 
based on market conditions, User instructions, applicable Exchange 
Rules and/or the Exchange Act and the rules and regulations thereunder, 
such order is not executable, cannot be routed to another Trading 
Center and cannot be posted to the PEARL Equities Book.\66\
---------------------------------------------------------------------------

    \66\ See BYX and BZX Rules 11.13(a) and EDGA and EDGX Rules 
11.10(a).
---------------------------------------------------------------------------

    Proposed Exchange Rule 2617(a) will further provide that the System 
will comply with all applicable securities laws and regulations, 
including Regulation NMS,\67\ Regulation SHO,\68\ and the LULD 
Plan.\69\ Proposed Exchange Rule 2617(a)(4)(A) and (B) describe the 
process for matching incoming and Aggressing Orders for execution 
against contra-side orders resting on the PEARL Equities Book.\70\ An 
Aggressing Order and an incoming order to buy (sell) will be 
automatically executed to the extent that it is priced at an amount 
that equals or exceeds (is less than) any order to sell (buy) in the 
PEARL Equities Book and is executable. Such order to buy (sell) will be 
matched for execution against sell (buy) orders resting on the PEARL 
Equities Book according to the price-time priority ranking of the 
resting orders.
---------------------------------------------------------------------------

    \67\ 17 CFR 242.600, et seq.
    \68\ 17 CFR 242.200, et seq.
    \69\ See supra note 5.
    \70\ Proposed Exchange Rule 2617(a)(4)(A) and (B) are based on 
NYSE Rule 7.37(a), BZX and BYX Rules 11.13(a)(4)(A) and (B), and 
EDGA and EDGX Rules 11.10(a)(4)(A) and (B).
---------------------------------------------------------------------------

    Proposed Exchange Rule 2617(a)(4)(C) provides that certain orders, 
based on their operation and User instructions, are permitted to post 
and rest on the PEARL Equities Book at prices that lock contra-side 
liquidity, provided, however, that the System will never display a 
locked market.\71\ Proposed Exchange Rule 2617(a)(4)(C) further 
provides that if an Aggressing Order or an incoming order to buy (sell) 
will execute upon entry against an order to sell (buy) at the same 
price as such displayed order to buy (sell), the Aggressing Order or 
incoming order to buy (sell) will be cancelled or posted to the PEARL 
Equities Book and ranked in accordance with Exchange Rule 2616.
---------------------------------------------------------------------------

    \71\ Proposed Exchange Rule 2617(a)(4)(C) is based on BZX and 
BYX Rules 11.13(a)(4)(C), and EDGA and EDGX Rules 11.10(a)(4)(C).
---------------------------------------------------------------------------

    Proposed Exchange Rule 2617(a)(4)(D) governs the price at which an 
order is executable when it is posted non-displayed on the PEARL 
Equities Book and there is a contra-side displayed order at a price 
which results in an internally locked book.\72\ Specifically, for 
securities priced equal to or greater than $1.00 per share, in the case 
where a non-displayed order to sell (buy) is posted on the PEARL 
Equities Book at a price that locks a displayed order to buy (sell) 
pursuant to proposed Exchange Rule 2617(a)(4)(C) described above, an 
Aggressing Order or an incoming order to buy (sell) described in 
proposed Exchange Rules 2617(a)(4)(A) and (B) described above is a 
Market Order or a Limit Order priced more aggressively than the order 
to buy (sell) displayed on the PEARL Equities Book will execute against 
the non-displayed order to sell (buy) resting on the PEARL Equities 
Book at one-half minimum price variation greater (less) than the price 
of the resting displayed order to buy (sell). Proposed Exchange Rule 
2617(a)(4)(D) will not be applicable for bids or offers under $1.00 per 
share.
---------------------------------------------------------------------------

    \72\ Proposed Exchange Rule 2617(a)(4)(D) is based on BZX and 
BYX Rules 11.13(a)(4)(D), and EDGA and EDGX Rules 11.10(a)(4)(D). 
See also Securities Exchange Act Release No. 82087 (November 15, 
2017), 82 FR 55472 (November 21, 2017) (SR-BatsEDGA-2017-29) 
(describing the operation of this same functionality on EDGA).
---------------------------------------------------------------------------

    For example, assume the PBBO was $16.10 by $16.11 resulting in a 
midpoint of $16.105. An order to buy at $16.11 is resting non-displayed 
on the PEARL Equities Book. A Limit Order to sell at $16.11 designated 
as Post Only is subsequently entered. Assume that the order to sell 
designated as Post Only will not remove any liquidity upon entry 
pursuant to the Exchange's proposed economic best interest 
functionality under proposed Exchange Rule 2614(c)(2), and will post to 
the PEARL Equities Book and be displayed at $16.11. The display of this 
order will, in turn, make the resting non-displayed bid not executable 
at $16.11. If an incoming order to sell at $16.10 is entered into the 
PEARL Equities Book, the resting non-displayed order to buy originally 
priced at $16.11 will execute against the incoming order to sell at 
$16.105 per share, thus providing a half-penny of price improvement as 
compared to the order's limit price of $16.11.
    Also consider the following example where the execution occurs at a 
sub-penny price that is not at the midpoint of the PBBO. Assume the 
PBBO is $16.08 by $16.10 resulting in a midpoint of $16.09. An order to 
sell at $16.08 is resting non-displayed on the PEARL Equities Book. A 
Limit Order to buy at $16.08 designated as Post Only is subsequently 
entered. Assume that the order to buy designated as Post Only will not 
remove any liquidity upon entry pursuant to the Exchange's economic 
best interest functionality under proposed Exchange Rule 2614(c)(2), 
and will post to the PEARL Equities Book and be displayed at $16.08. 
The display of this order will, in turn, make the resting non-displayed 
order to sell not executable at $16.08. If an incoming order to buy is 
entered into the PEARL Equities Book at a price greater than $16.08, 
the resting non-displayed order to sell originally priced at $16.08 
will execute against the incoming order to buy at $16.085 per share, 
thus providing a half-penny of price improvement as compared to the 
order's limit price of $16.08.
    Routing. PEARL Equities routing functionality is described in 
proposed Exchange Rule 2617(b).\73\ PEARL Equities will support orders 
that are designated to be routed to the PBBO as well as orders that 
will execute only within PEARL Equities. Routable orders that are 
designated to execute at the PBBO will be routed to other equity 
markets to be executed when PEARL Equities is not at the PBBO 
consistent

[[Page 8066]]

with Rules 610(d) and 611 of Regulation NMS.\74\ The System will ensure 
that an order will not be executed at a price that trades through 
another equities Trading Center. An order that is designated as 
routable by a User will be routed in compliance with the applicable 
trade through restrictions. As described above, any order entered with 
a price that will lock or cross a Protected Quotation that is not 
eligible for routing will be subject to the Display Price Sliding 
process under proposed Exchange Rule 2614(g), unless the User elected 
that the order be cancelled.
---------------------------------------------------------------------------

    \73\ Proposed Exchange Rule 2617(b) is based various portions of 
BZX and BYX Rule 11.13(b), EDGA and EDGX Rule 11.11, and NYSE Rule 
7.36(f)(1)(B).
    \74\ 17 CFR 242.610(d), 611.
---------------------------------------------------------------------------

    In addition, an order marked ``short'' when a short sale price test 
restriction pursuant to Rule 201 of Regulation SHO is in effect is not 
eligible for routing by the Exchange. An order that is ineligible for 
routing due to a short sale price test restriction that includes a 
time-in-force of IOC will be cancelled upon entry, while a non-routable 
short sale order with a time-in-force of RHO will be subject to the 
Short Sale Price Sliding process under proposed Exchange Rule 
2614(g)(3). The Exchange will handle routable orders in connection with 
the Limit-Up Limit-Down Plan as described in proposed Exchange Rule 
2622, described below.
    As the Exchange currently does for options, PEARL Equities will 
route orders in Equity Securities via one or more routing brokers that 
are not affiliated with the Exchange.\75\ This routing process will be 
described under proposed Exchange Rule 2617(b)(1), which is identical 
to current Exchange Rule 529 that is applicable to options. For each 
routing broker used by the Exchange, an agreement will be in place 
between the Exchange and the routing broker that will, among other 
things, restrict the use of any confidential and proprietary 
information that the routing broker receives to legitimate business 
purposes necessary for routing orders at the direction of the 
Exchange.\76\
---------------------------------------------------------------------------

    \75\ See Exchange Rule 529.
    \76\ The Exchange's routing logic will not provide any advantage 
to Users when routing orders to away Trading Centers as compared to 
other routing methods.
---------------------------------------------------------------------------

    The function of the routing broker will be to route orders in 
Equity Securities trading on PEARL Equities to other equity Trading 
Centers pursuant to PEARL Equities rules on behalf of PEARL Equities 
(``Routing Services''). Use of Routing Services to route orders to 
other market centers is optional. Parties that do not desire to use the 
Routing Services provided by the Exchange must designate their orders 
as not available for routing.
    The System will designate routable Market Orders and marketable 
Limit Orders as IOC and will cause such orders to be routed for 
execution to one or more Trading Centers for potential execution, per 
the entering User's instructions, in compliance with Rule 611 under 
Regulation NMS, Regulation SHO, and the Limit-Up Limit-Down Plan. After 
the System receives responses to Market Orders that were routed away, 
to the extent an order is not executed in full through the routing 
process, the System will cancel any unexecuted portion back to the 
User.
    For marketable Limit Orders, after the System receives responses to 
orders that were routed away, to the extent an order is not executed in 
full through the routing process, the System will process the balance 
of such order in accordance with the parameters set by the User when 
the order was originally entered. As such, the System will either: (i) 
Cancel the unfilled balance of the order back to the User; (ii) process 
the unfilled balance of an order as an order designated as Do Not Route 
subject to the price sliding processes described in proposed Exchange 
Rules 2614(g) and 2622(e); or (iii) by executing against the PEARL 
Equities Book and/or re-routing orders to other Trading Centers until 
the original incoming order is executed in its entirety or its limit 
price is reached. If the order's limit price is reached, the order will 
be posted in the PEARL Equities Book, subject to the price sliding 
processes set forth proposed Exchange Rules 2614(g) and 2622(e). 
Proposed Exchange Rule 2617(b)(4)(C) would specify that to the extent 
the System is unable to access a Protected Quotation and there are no 
other accessible Protected Quotations at the NBBO, the System will 
treat the order as non-routable, provided, however, that this provision 
will not apply to Protected Quotations published by a Trading Center 
against which the Exchange has declared self-help pursuant to proposed 
Exchange Rule 2617(d).\77\
---------------------------------------------------------------------------

    \77\ Proposed Exchange Rule 2617(b)(4)(C) is based on BZX and 
BYX Rule 11.13(b)(2)(E) with the only difference being that BZX and 
BYX will cancel the order in the scenario covered by the rule while 
the Exchange proposed to treat the order as non-routable.
---------------------------------------------------------------------------

    To start, the Trading System provides a single routing option named 
``Order Protection''. Order Protection is a routing option under which 
an order checks the Trading System for available shares and then is 
routed to attempt to execute against Protected Quotations at away 
Trading Centers. For purposes of clarity and should additional routing 
options be offered in the future,\78\ proposed Exchange Rule 
2617(b)(5)(A) specifies that all routable orders will be defaulted to 
the Order Protection routing option.
---------------------------------------------------------------------------

    \78\ The Exchange will file a proposed rule change with the 
Commission pursuant to Section 19(b) of the Exchange Act prior to 
offering additional routing options.
---------------------------------------------------------------------------

    Proposed Exchange Rule 2617(b)(5) provides that routing options may 
be combined with all available order types and times-in-force 
instructions, with the exception of order types and times-in-force 
instructions whose terms are inconsistent with the terms of a 
particular routing option. For example, a routing option would be 
incompatible with a designation that the order also include a Post Only 
or Do Not Route instruction and an order that includes such a 
combination will be rejected. The Trading System will consider the 
quotations only of accessible Trading Centers. The term ``Trading 
System routing table'' will refer to the proprietary process for 
determining the specific trading venues to which the Trading System 
routes orders and the order in which it routes them. The Exchange 
reserves the right to maintain a different Trading System routing table 
for different routing options and to modify the Trading System routing 
table at any time without notice.
    Proposed Exchange Rule 2617(b)(6) sets forth the priority of routed 
orders and provides that orders routed by the Trading System to other 
Trading Centers are not ranked and maintained in the PEARL Equities 
Book pursuant to proposed Exchange Rule 2616, and therefore are not 
available for execution against incoming orders and Aggressing Orders 
pursuant to proposed Exchange Rule 2617(a), described above. Once 
routed by the Trading System, an order becomes subject to the rules and 
procedures of the destination Trading Center. The request to cancel an 
order routed to another Trading Center will not be processed unless and 
until all or a portion of the order returns unexecuted. For an order 
that is partially routed to another Trading Center on arrival, the 
portion that is not routed is assigned a timestamp. If any unexecuted 
portion of the order returns to the PEARL Equities Book and joins any 
remaining resting portion of the original order, the returned portion 
of the order is assigned the same timestamp as the resting portion of 
the order.\79\ If the resting portion of the original order has already 
executed and any unexecuted portion of the order returns to the 
Exchange Book, the

[[Page 8067]]

returned portion of the order is assigned a new timestamp. Following 
the routing process described above, unless the terms of the order 
direct otherwise, any unfilled portion of the order shall be ranked in 
the PEARL Equities Book in accordance with the terms of such order 
under proposed Exchange Rule 2616 and such order shall be eligible for 
execution under proposed Exchange Rule 2617.
---------------------------------------------------------------------------

    \79\ See NYSE Rule 7.36(f)(1)(B).
---------------------------------------------------------------------------

    Risk Settings and Trade Risk Metrics. The Exchange also proposes to 
offer to all Users of PEARL Equities the ability to establish certain 
risk control parameters that are intended to assist Users in managing 
their market risk. The proposed risk controls are set forth under 
proposed Exchange Rule 2618(a) and are based on those of other equity 
exchanges.\80\ The proposed risk controls are designed to offer Users 
protection from entering orders outside of certain size and price 
parameters, as well as selected order type and modifier combinations. 
The proposed risk controls are also designed to offer Users protection 
from the risk of duplicative executions.
---------------------------------------------------------------------------

    \80\ See Interpretation and Policy .01 to BYX and BZX Rules 
11.13, and Interpretation and Policy .01 to EDGA and EDGX Rules 
11.10. See also IEX Rule 11.190(f).
---------------------------------------------------------------------------

    In addition to the proposed risk settings described above, the 
Exchange proposes to offer risk functionality that permits Users to 
block new orders, to cancel all open orders, or to both block new 
orders and cancel all open orders. Furthermore, the Exchange proposes 
to offer risk functionality that automatically cancels a User's orders 
to the extent the User loses its connection to PEARL Equities.
    Like other equity exchanges, the Exchange proposes to also offer 
Purge Ports, which will be a dedicated port that permits a User to 
simultaneously cancel all or a subset of its orders across multiple 
logical ports by requesting the Exchange to effect such cancellation. A 
User initiating such a request may also request that the Exchange block 
all or a subset of its new inbound orders across multiple logical 
ports. The block will remain in effect until the earlier of the time at 
which the User requests the Exchange remove the block or the end of the 
current trading day.
    In particular, the risk control parameters will be useful to 
Equities Market Makers, who are required to continuously quote in the 
Equity Securities to which they are assigned. Though the proposed risk 
controls will be most useful to Equities Market Makers, the Exchange 
proposes to offer the functionality to all participant types.
    In addition to the optional risk control parameters described 
above, the Exchange proposes to prevent all incoming orders, including 
those marked ISO, from executing at a price outside the Trading Collar 
price range.\81\ The Trading Collar functionality will not apply to 
orders eligible for execution during the Opening Process proposed under 
Exchange Rule 2615. The Trading Collar functionality will be described 
in proposed Exchange Rule 2618(b). Like other equity exchanges,\82\ the 
Trading Collar will prevent buy orders from trading or routing at 
prices above the collar and prevents sell orders from trading or 
routing at prices below the collar. The Trading Collar price range will 
be calculated using the greater of numerical guidelines for clearly 
erroneous executions under proposed Exchange Rule 2621 or a specified 
dollar value established by the Exchange. One difference from other 
equity exchanges, for Market Orders only, the Exchange proposes to 
allow Users to select a dollar value lower than the Exchange specified 
percentages and dollar values on an order by order basis. In such case, 
the dollar value selected by the User will override the Exchange's 
default percentage and dollar values. Allowing Users to select a dollar 
value lower than the Exchange specified percentages and dollar values 
for their Market Orders provides Users with the ability to augment 
their risk settings to levels that are commensurate with their risk 
appetite.
---------------------------------------------------------------------------

    \81\ The Exchange will apply the proposed Trading Collar price 
ranges during continuous trading including times when the market for 
a security is crossed.
    \82\ See IEX Rule 11.190(f).
---------------------------------------------------------------------------

    Executions will be permitted at prices within the Trading Collar 
price range, inclusive of the boundaries. Upon entry, any portion of an 
order to buy (sell) that will execute, post, or route at a price above 
(below) the Trading Collar Price will be cancelled.
    The Trading Collar price range will be calculated based on a 
Trading Collar Reference Price. The Exchange proposes a sequence of 
prices to determine the Trading Collar Reference Price to be used if a 
certain reference price is unavailable. The Exchange will first utilize 
the consolidated last sale price disseminated during the Regular 
Trading Hours on trade date as the Trading Collar Reference Price. If 
not available, the prior day's Official Closing Price identified as 
such by the primary listing exchange, adjusted to account for events 
such as corporate actions and news events will be used. If neither are 
available to use as the Trading Collar Reference Price, the Exchange 
will suspend the Trading Collar function, in the interest of 
maintaining a fair and orderly market in the impacted security.
    The Exchange will calculate the Trading Collar price range for a 
security by applying the Numerical Guideline and reference price to the 
Trading Collar Reference Price. The result is added to the Trading 
Collar Reference Price to determine the Trading Collar Price for buy 
orders, while the result is subtracted from the Trading Collar 
Reference Price to determine the Trading Collar Price for sell orders. 
The Trading Collar Price for an order to buy (sell) that is not in the 
minimum price variation (``MPV'') for the security, as defined in 
Exchange Rule 2616, will be rounded down (up) to the nearest price at 
the applicable MPV. The appropriate Trading Collar Price is applied to 
all orders upon entry. Unlike IEX, the Trading Collar Price is not 
enforced throughout the life of the order and will not be updated once 
the order is resting on the PEARL Equities Book.
    As stated above, the Trading Collar price range will be calculated 
using the greater of numerical guidelines for clearly erroneous 
executions under proposed Exchange Rule 2621 or a specified default 
dollar value established by the Exchange. The Numerical Guideline to be 
used in the Trading Collar Price calculation are set forth in the 
following table.

------------------------------------------------------------------------
                                                               Regular
                                                               trading
                                                                hours
               Trading collar reference price                 numerical
                                                              guidelines
                                                                 (%)
------------------------------------------------------------------------
Greater than $0.00 up to and including $25.00..............           10
Greater than $25.00 up to and including $50.00.............            5
Greater than $50.00........................................            3
------------------------------------------------------------------------

    The Exchange proposes to utilize dollar values in addition to the 
above percentages to ensure that the Trading Collars do not necessarily 
constrict the Trading Collars for low priced securities. The Exchange 
does not propose to specify its default dollar values in proposed 
Exchange Rule 2621, but rather to post these values on its website.\83\ 
The Exchange believes not including the specified dollar values in its 
Rules will enable it to modify these

[[Page 8068]]

values in response to changing market conditions, but in no event will 
the Exchange adjust these dollar values intra-day. In all 
circumstances, the Exchange will announce in advance any changes to the 
specified dollar value via a Regulatory Circular to be distributed to 
all Equity Members and via its website. As noted above, Users who find 
the Exchange's specified dollar values as too great can select a dollar 
value lower for their Market Orders on an order-by-order basis.
---------------------------------------------------------------------------

    \83\ The Exchange notes that the Cboe Equity Exchanges post 
their dollar values on their website, rather than their rules. See 
page 9 of the Cboe US Equities/Options Web Port Controls 
Specification available at https://cdn.batstrading.com/resources/membership/bats_web_portal_port_controls_specification.pdf.
---------------------------------------------------------------------------

    Clearly Erroneous Executions. The Exchange proposes to adopt 
Exchange Rule 2621 regarding clearly erroneous executions, which will 
be identical in all material respects to the standardized rules of 
other equity exchanges governing clearly erroneous executions.\84\
---------------------------------------------------------------------------

    \84\ See IEX Rule 11.270, Clearly Erroneous Executions.
---------------------------------------------------------------------------

LULD Plan and Trading Halts
    Market-Wide Circuit Breakers. The Exchange proposes to adopt Rule 
2622, paragraphs (a) through (d) of which provides for the market-wide 
circuit breaker pilot program and be identical to that of other equity 
exchanges.\85\ Proposed Exchange Rule 2622(a)-(d) will operate on a 
pilot basis set to expire at the close of business on October 18, 2020 
and will be identical in all material respects to the standardized 
market-wide circuit breaker rules of other equity exchanges. If the 
pilot is not either extended or approved permanently at the end of the 
pilot period, the Exchange shall amend proposed Exchange Rule 2622 to 
be consistent with similar rules of other equity exchanges.
---------------------------------------------------------------------------

    \85\ See IEX Rule 11.280, BYX and BZX Rules 11.18, and EDGA and 
EDGX Rules 11.16.
---------------------------------------------------------------------------

    LULD Plan Compliance. Proposed Exchange Rule 2622(e) sets forth the 
Exchange's mechanism for complying with the LULD Plan and is identical 
in all material respects to the rules of other equities exchanges.\86\ 
In sum, proposed Exchange Rule 2622(e) states that the Exchange is a 
Participant in the LULD Plan \87\ and requires that Equity Members 
comply with the LULD Plan's provisions.
---------------------------------------------------------------------------

    \86\ See BYX and BZX Rule 11.18(e), and EDGA and EDGX Rule 
11.16(e). See also IEX Rule 11.280.
    \87\ See supra note 5. The Exchange intends to become a 
Participant in the LULD Plan prior to launching PEARL Equities.
---------------------------------------------------------------------------

    Proposed Exchange Rule 2622(e) also describes the Exchange's order 
handling procedures to comply with the LULD Plan. In sum, depending on 
a User's instructions, the System will re-price and/or cancel buy 
(sell) interest that is priced or could be executed above (below) the 
Upper (Lower) Price Band. When re-pricing resting orders because such 
orders are above (below) the Upper (Lower) Price Band, the Exchange 
will provide new timestamps to such orders.\88\ The Exchange will also 
provide new timestamps to resting orders at the less aggressive price 
to which such orders are re-priced. Like other equity exchanges, any 
resting interest that is re-priced pursuant to proposed Exchange Rule 
2622(e) will maintain priority ahead of interest that was originally 
less aggressively priced, regardless of the original timestamps for 
such orders.
---------------------------------------------------------------------------

    \88\ As proposed, only limit priced interest with a time-in-
force of RHO may rest on the PEARL Equities Book.
---------------------------------------------------------------------------

    The System will only execute Market Orders or orders that include a 
time-in-force of IOC at or within the LULD Price Bands. The Exchange 
proposes to re-price limit-priced interest that is priced outside of 
the LULD Price Bands as follows: Limit-priced interest to buy (sell) 
that is priced above (below) the Upper (Lower) Price Band will be re-
priced to the Upper (Lower) Price Band. The System will re-price 
resting limit-priced interest to buy (sell) to the Upper (Lower) Price 
Band if Price Bands move such that the price of resting limit-priced 
interest to buy (sell) would be above (below) the Upper (Lower) Price 
Band. If the Price Bands move again and a User has opted into the 
Exchange's optional multiple price sliding process, as described in 
proposed Exchange Rule 2614(g)(1)(C), the System shall re-price such 
limit-priced interest to the most aggressive permissible price to the 
order's limit price. Otherwise, the order will not be re-priced again. 
All other displayed and non-displayed limit interest repriced pursuant 
to proposed Exchange Rule 2622(e) will remain at its new price unless 
the Price Bands move such that the price of resting limit-priced 
interest to buy (sell) would again be above (below) the Upper (Lower) 
Price Band. Limit-priced interest priced above (below) the Upper 
(Lower) Price Band will be cancelled if the User elected that the order 
not be re-priced pursuant to the above described process.
    The Exchange will not route buy (sell) interest at a price above 
(below) the Upper (Lower) Price Band. During a Short Sale Period, as 
defined in proposed Exchange Rule 2614(g)(3)(A), short sale orders not 
marked short exempt priced below the Lower Price Band shall be repriced 
to the higher of the Lower Price Band or the Permitted Price, as 
defined in proposed Exchange Rule 2614(g)(3)(A).
    At the end of the Trading Pause (as defined in the LULD Plan), the 
Exchange will re-open the security in a manner similar to its opening 
procedures set forth in proposed Exchange Rule 2615, described above. 
On the occurrence of any trading halt pursuant to proposed market-wide 
circuit breaker mechanism or LULD Plan, all outstanding orders in the 
System will remain on the PEARL Equities Book, unless the User has 
designated that its orders be cancelled.
    Proprietary Market Data. The Exchange will offer two standard 
proprietary market data products for PEARL Equites, the Top of Market 
feed and the Depth of Market feed. Each of these proprietary market 
data products are described in proposed Exchange Rule 2625.
    Proposed Exchange Rule 2625(a) provides that the Depth of Market 
feed is a data feed that contains the displayed price and size of each 
order in an Equity Security entered in the Trading System, as well as 
order execution information, order cancellations, order modifications, 
order identification numbers, and administrative messages.\89\ Proposed 
Exchange Rule 2625(b) provides that the Top of Market Feed is a data 
feed that contains the price and aggregate size of displayed top of 
book quotations, order execution information, and administrative 
messages for Equity Securities entered into the Trading System.\90\
---------------------------------------------------------------------------

    \89\ The description of the Depth of Market feed under proposed 
Exchange Rule 2625(a) is based on EDGA Rule 13.8(a), EDGX Rule 
13.8(a), and IEX Rule 11.330(a)(3).
    \90\ The description of the Top of Market feed under proposed 
Exchange Rule 2625(b) is based on EDGA Rule 13.8(c), EDGX Rule 
13.8(c), and IEX Rule 11.330(a)(1).
---------------------------------------------------------------------------

    The Exchange will also offer historical data for PEARL Equities 
upon request. As such, proposed Exchange Rule 2625(c) provides that 
Historical Data is a data product that offers historical equity 
security data for orders entered into the System upon request.\91\
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    \91\ The description of Historical Data under proposed Exchange 
Rule 2625(b) is based on BYX Rule 11.22(h), BZX Rule 11.22(h), and 
IEX Rule 11.330(a)(5).
---------------------------------------------------------------------------

    Retail Order Attribution Program. As described above, the Exchange 
proposes to allow Users to attach an ``Attributable'' instruction to 
their displayed orders so that their MPID is included with their order 
on the Exchange's proprietary market data feeds. The Exchange also 
proposes to offer another form of attribution to Equity Members that 
qualify as Retail Member Organizations (``RMOs'') (defined below). In 
sum, under the

[[Page 8069]]

proposed Retail Order Attribution Program (``Program''), RMOs will be 
able to designate that their Retail Orders (defined below) be 
identified as ``Retail'', rather than by their MPID, on the Exchange's 
proprietary data feeds.\92\ Proposed Exchange Rule 2626(f) describes 
the Retail Order Attribution and provides that RMOs may designate that 
their Retail Orders be identified as Retail on an order-by-order basis.
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    \92\ The Exchange's proposed Retail Order Attribution Program is 
substantially similar to EDGX Rule 11.21, with the only differences 
being that (1) proposed Exchange Rule 2622(e) will not provide for 
dedicated ports for Retail Orders, (2) Exchange Rule 2626(e) will be 
marked ``Reserved'' and not account for dedicated retail order ports 
as is done on EDGX, and (3) Exchange Rule 2626(f) will not account 
for Retail Priority Orders, as this functionality would not be 
offered by PEARL Equites.
---------------------------------------------------------------------------

    Proposed Exchange Rule 2626(a) sets forth definitions applicable to 
the Program. Retail Member Organization or RMO is be defined as ``an 
Equity Member (or a division thereof) that has been approved by the 
Exchange under this Rule to submit Retail Orders.'' A ``Retail Order'' 
is defined as an agency or riskless principal order that meets the 
criteria of FINRA Rule 5320.03 that originates from a natural person 
and is submitted to the Exchange by a Retail Member Organization, 
provided that no change is made to the terms of the order with respect 
to price or side of market and the order does not originate from a 
trading algorithm or any other computerized methodology.
    Proposed Exchange Rule 2626(b) through (d) sets forth the 
qualification and application process for Equity Members to become RMOs 
and participate in the Program, how an Equity Member's RMO status may 
be revoked, and the process to appeal a denial or revocation of RMO 
status.
    Proposed Exchange Rule 2626(b) sets forth the RMO qualification and 
application process. To qualify as an RMO, an Equity Member must 
conduct a retail business or route retail orders on behalf of another 
broker-dealer. For purposes of this Exchange Rule, conducting a retail 
business shall include carrying retail customer accounts on a fully 
disclosed basis.
    To become a Retail Member Organization, a Member must submit: (A) 
An application form; (B) supporting documentation, which may include 
sample marketing literature, website screenshots, other publicly 
disclosed materials describing the Equity Member's retail order flow, 
and any other documentation and information requested by the Exchange 
in order to confirm that the applicant's order flow will meet the 
requirements of the Retail Order definition; and (C) an attestation, in 
a form prescribed by the Exchange, that substantially all orders 
submitted as Retail Orders will qualify as such under this Exchange 
Rule.
    After an applicant submits the application form, supporting 
documentation, and attestation, the Exchange shall notify the applicant 
of its decision in writing. A disapproved applicant may: (A) Request an 
appeal of such disapproval by the Exchange as provided in proposed 
Exchange Rule 2626(d), described below; and/or (B) reapply for RMO 
status 90 days after the disapproval notice is issued by the Exchange. 
An RMO may voluntarily withdraw from such status at any time by giving 
written notice to the Exchange.
    An RMO must have written policies and procedures reasonably 
designed to assure that it will only designate orders as Retail Orders 
if all requirements of a Retail Order are met. Such written policies 
and procedures must require the Equity Member to: (i) Exercise due 
diligence before entering a Retail Order to assure that entry as a 
Retail Order is in compliance with the requirements of this Exchange 
Rule, and (ii) monitor whether orders entered as Retail Orders meet the 
applicable requirements. If an RMO does not itself conduct a retail 
business but routes Retail Orders on behalf of another broker-dealer, 
the RMO's supervisory procedures must be reasonably designed to assure 
that the orders it receives from such other broker-dealer that are 
designated as Retail Orders meet the definition of a Retail Order. The 
RMO must: (i) Obtain an annual written representation, in a form 
acceptable to the Exchange, from each other broker-dealer that sends 
the RMO orders to be designated as Retail Orders that entry of such 
orders as Retail Orders will be in compliance with the requirements of 
this Exchange Rule; and (ii) monitor whether Retail Order flow routed 
on behalf of such other broker-dealers meets the applicable 
requirements.
    Proposed Exchange Rule 2626(c) states that if an RMO designates 
orders submitted to the Exchange as Retail Orders and the Exchange 
determines, in its sole discretion, that such orders fail to meet any 
of the requirements set forth in proposed Exchange Rule 2626(a) 
described above, the Exchange may disqualify an Equity Member from its 
status as an RMO. The Exchange shall determine if and when an Equity 
Member is disqualified from its status as an RMO. When disqualification 
determinations are made, the Exchange shall provide a written 
disqualification notice to the Equity Member.
    Exchange Rule 2626(d) provides for an appeal process for RMOs that 
are disqualified or denied RMO status. An RMO that is disqualified 
under proposed Exchange Rule 2626(c) may appeal the disqualification, 
and/or reapply for RMO status 90 days after the date of the 
disqualification notice from the Exchange. If an Equity Member disputes 
the Exchange's decision to disapprove its RMO application or disqualify 
it as an RMO, the Equity Member (``appellant'') may request, within 
five business days after notice of the decision is issued by the 
Exchange, that the Retail Attribution Panel (the ``Panel'') review the 
decision to determine if it was correct. The Panel will consist of the 
Exchange's Chief Regulatory Officer (``CRO''), or a designee of the 
CRO, and two officers of the Exchange designated by the Chief 
Information Officer (``CIO''). The Panel will review the facts and 
render a decision within the time frame prescribed by the Exchange and 
may overturn or modify an action taken by the Exchange under proposed 
Exchange Rule 2626. A determination by the Panel shall constitute final 
action by the Exchange.
    Miscellaneous Rules based on other Equity Exchanges. The Exchange 
also proposes to adopt the following rules, which are identical in all 
material respects to those of other equities exchanges: Rule 2619, 
Trade Reporting and Execution,\93\ Rule 2620, Clearance and Settlement, 
Anonymity,\94\ Rule 2623, Short Sales,\95\ and Rule 2624, Locking or 
Crossing Quotations in NMS Stocks.\96\
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    \93\ See BYX and BZX Rules 11.14, and EDGA and EDGX Rules 11.12.
    \94\ See BYX and BZX Rules 11.15, and EDGA and EDGX Rules 11.13. 
See also IEX Rule 11.250.
    \95\ See BYX and BZX Rules 11.19. See also IEX Rule 11.290.
    \96\ See BYX and BZX Rules 11.20. See also IEX Rule 11.310.
---------------------------------------------------------------------------

Conduct and Operational Rules for Equity Members
    The Exchange proposes to adopt rules that are identical in all 
material respects to the approved rules of other equity exchanges,\97\ 
including rules covering similar subject matter as existing Exchange 
Rules and, the Exchange's affiliate, Miami International Securities

[[Page 8070]]

Exchange, LLC (``MIAX'') applicable to options.\98\ Thus, the Exchange 
proposes to adopt rules regarding: Rules of Fair Practice (Chapter 
XXI), Books, Records, and Reports (Chapter XXII), Supervision (Chapter 
XXIII), Margin (Chapter XXIV), Chapter XXVII (Trading Practice Rules), 
and other miscellaneous provisions (Chapter XXVIII). At times, certain 
proposed Rules for PEARL Equities cross reference an existing Exchange 
Rule applicable to options where the subject matter is either identical 
or substantially similar. In other cases, the Exchange proposes to 
adopt a standalone Rule for PEARL Equities where an existing Exchange 
Rule for options contained terminology specific for options trading.
---------------------------------------------------------------------------

    \97\ See, e.g., IEX Chapter 3 (Rules of Fair Practice), Rule 
4.200 (Margin), Chapter 5 (Supervision), Chapter 6 (Miscellaneous 
Provisions), and Chapter 10 (Trading Practice Rules). The Exchange 
will request an exemption from the rule filing requirements of 
Section 19(b) of the Exchange Act for those rules of another self-
regulatory organization (``SRO'') that it proposes to incorporate by 
reference and to the extent such rules are effected solely by virtue 
of a change to any of those rules.
    \98\ Under the proposed rules for PEARL Equities, the Exchange 
incorporated by reference an existing Exchange rule applicable 
options where that rule did not solely incorporate a rule of the 
Exchange's affiliate, MIAX, by reference, but also included 
substantive requirements. In the case where an existing Exchange 
Rule applicable to options incorporated by reference a MIAX Rule, 
the Exchange proposed a rule for equities that directly incorporated 
the same MIAX rule by reference.
---------------------------------------------------------------------------

    The Exchange notes that certain requirements that will be 
applicable to Equity Members are contained in other sections of the 
Exchange's existing Rules. For example, the Exchange has included rules 
regarding equity participation into proposed Exchange Rule 2000, but 
also proposed to include references to applicable registration 
requirements that are already contained in Chapter II of the Exchange's 
existing Rules.
Unlisted Trading Privileges
    The Exchange proposes to adopt Chapter XXIX regarding securities 
traded pursuant to unlisted trading privileges and setting standards 
for certain equity derivative securities that are identical to the 
rules of equity exchanges.\99\ Proposed Exchange Rule 2900, Unlisted 
Trading Privileges, provide that the Exchange may extend unlisted 
trading privileges (``UTP'') to any NMS Stock that is listed on another 
national securities exchange or with respect to which UTP may otherwise 
be extended in accordance with Section 12(f) of the Exchange Act and 
any such security shall be subject to all Exchange rules applicable to 
trading on the Exchange, unless otherwise noted.
---------------------------------------------------------------------------

    \99\ See, e.g., proposed MEMX Rule 14.1. See also BYX, EDGA, and 
EDGX Rules 14.1.
---------------------------------------------------------------------------

    Any UTP security that is a UTP Exchange Traded Product, as defined 
in proposed Exchange Rule 1901, will be subject to the additional 
following requirements set forth in proposed Exchange Rule 2900 and 
based on the rules of other equity exchanges.
    Proposed Exchange Rule 2900(b)(1) provides that the Exchange will 
distribute an information circular prior to the commencement of trading 
in each such UTP Exchange Traded Product that generally includes the 
same information as is contained in the information circular provided 
by the listing exchange, including (a) the special risks of trading the 
new Exchange Traded Product, (b) the Exchange Rules that will apply to 
the new Exchange Traded Product, and (c) information about the 
dissemination of value of the underlying assets or indices.
    Proposed Exchange Rule 2900(b)(2) sets forth requirements regarding 
the product's description and applies only to UTP Exchange Traded 
Products that are the subject of an order by the Commission exempting 
such series from certain prospectus delivery requirements under Section 
24(d) of the Investment Company Act of 1940 and are not otherwise 
subject to prospectus delivery requirements under the Securities Act of 
1933.
    The Exchange will inform Equity Members of the application of the 
provisions of proposed Exchange Rule 2900(b)(2)(B) to UTP Exchange 
Traded Products by means of an information circular. Proposed Exchange 
Rule 2900(b)(2)(B) requires that Equity Members provide each purchaser 
of UTP Exchange Traded Products a written description of the terms and 
characteristics of those securities, in a form approved by the Exchange 
or prepared by the open-ended management company issuing such 
securities, not later than the time a confirmation of the first 
transaction in such securities is delivered to such purchaser. In 
addition, Equity Members will include a written description with any 
sales material relating to UTP Exchange Traded Products that is 
provided to customers or the public. Any other written materials 
provided by an Equity Member to customers or the public making specific 
reference to the UTP Exchange Traded Products as an investment vehicle 
must include a statement substantially in the following form:
    ``A circular describing the terms and characteristics of [the UTP 
Exchange Traded Products] has been prepared by the [open-ended 
management investment company name] and is available from your broker. 
It is recommended that you obtain and review such circular before 
purchasing [the UTP Exchange Traded Products].''
    An Equity Member carrying an omnibus account for a non-Member is 
required to inform such non-Member that execution of an order to 
purchase UTP Exchange Traded Products for such omnibus account will be 
deemed to constitute an agreement by the non-Member to make such 
written description available to its customers on the same terms as are 
directly applicable to the Equity Member under this Rule.
    Proposed Exchange Rule 2900(b)(2)(C) provides that upon request of 
a customer, an Equity Member will also provide a prospectus for the 
particular UTP Exchange Traded Product.
    Proposed Exchange Rule 2900(b)(3) governs trading halts and 
provides that the Exchange will halt trading in a UTP Exchange Traded 
Product as provided for in proposed Exchange Rule 2622. Nothing in 
proposed Exchange Rule 2900(b)(3) is intended to limit the power of the 
Exchange under the Rules or procedures of the Exchange with respect to 
the Exchange's ability to suspend trading in any securities if such 
suspension is necessary for the protection of investors or in the 
public interest.
    Proposed Exchange Rule 2900(b)(4) sets forth restriction on Equity 
Members acting as Equities Market Makers on the Exchange in a UTP 
Exchange Traded Product that derives its value from one or more 
currencies, commodities, or derivatives based on one or more currencies 
or commodities, or is based on a basket or index composed of currencies 
or commodities (collectively, ``Reference Assets''):
    First, Equities Market Makers must file with the Exchange, in a 
manner prescribed by the Exchange, and keep current a list identifying 
all accounts for trading the underlying physical asset or commodity, 
related futures or options on futures, or any other related derivatives 
(collectively with Reference Assets, ``Related Instruments''), which 
the Equity Member acting as a registered Equites Market Maker on the 
Exchange may have or over which it may exercise investment discretion. 
No Equities Market Maker will be permitted to trade in the underlying 
physical asset or commodity, related futures or options on futures, or 
any other related derivatives, in an account in which an Equity Member 
acting as a registered Equities Market Maker on the Exchange, directly 
or indirectly, controls trading activities, or has a direct interest in 
the profits or losses thereof, which has not been reported to the 
Exchange as required by proposed Exchange Rule 2900.
    Second, an Equities Market Maker on the Exchange will, in a manner 
prescribed by the Exchange, be required to file with the Exchange and 
keep current a list identifying any accounts (``Related Instrument 
Trading

[[Page 8071]]

Accounts'') for which Related Instruments are traded: (i) In which the 
Equities Market Maker holds an interest; (ii) over which it has 
investment discretion; or (iii) in which it shares in the profits and/
or losses. An Equities Market Maker on the Exchange will not be 
permitted to have an interest in, exercise investment discretion over, 
or share in the profits and/or losses of a Related Instrument Trading 
Account that has not been reported to the Exchange as required by 
proposed Exchange Rule 2900.
    Third, in addition to the existing obligations under Exchange rules 
regarding the production of books and records under proposed Chapter 
XXII described above, an Equities Market Maker on the Exchange will be 
required to, upon request by the Exchange, make available to the 
Exchange any books, records, or other information pertaining to any 
Related Instrument Trading Account or to the account of any registered 
or non-registered employee affiliated with the Equities Market Maker on 
the Exchange for which Related Instruments are traded.
    Lastly, proposed Exchange Rule 2900(b)(4) provides that an Equities 
Market Maker on the Exchange will not use any material nonpublic 
information in connection with trading a Related Instrument.
    Proposed Exchange Rule 2900(b)(5) provides that the Exchange will 
enter into comprehensive surveillance sharing agreements with markets 
that trade components of the index or portfolio on which the UTP 
Exchange Traded Product is based to the same extent as the listing 
exchange's rules require the listing exchange to enter into 
comprehensive surveillance sharing agreements with such markets.
Dues, Fees, Assessments, and Other Charges
    The Exchange proposes to adopt rules with regard to fees it may 
charge that are identical or substantially similar to the rules of the 
Cboe Equity Exchanges and IEX.\100\ Proposed Exchange Rule 3000(a) will 
set forth the Exchange's general ability to prescribe dues, fees, 
assessments and other charges.
---------------------------------------------------------------------------

    \100\ See Chapter 15 of IEX Rules and Chapter 15 of the Rules of 
each of the Cboe Equity Exchanges. The Exchange will file a separate 
proposed rule change with the Commission to establish its fee 
structure.
---------------------------------------------------------------------------

    Proposed Exchange Rule 3000(b) describes the manner in which the 
Exchange will assess fees related to Section 31 of the Exchange Act to 
Member transactions on PEARL Equities. Proposed Exchange Rule 3000(c) 
provides that the Exchange will provide Equity Members notice of all 
relevant dues, fees, assessment and other charges and that such notice 
will be made via the Exchange's website or other reasonable method. 
Proposed Exchange Rule 3000(d) provides that to the extent the Exchange 
is charged a fee by a third party that results directly from an Equity 
Member cross-connecting its trading hardware to the Exchange's System 
from another Trading Center's system that is located in the same data 
center as the Exchange, the Exchange will pass that fee on, in full, to 
the Equity Member.\101\
---------------------------------------------------------------------------

    \101\ Proposed Exchange Rule 3000(d) is based on IEX Rule 
15.110(d).
---------------------------------------------------------------------------

    Proposed Exchange Rule 3001 provides that any revenues received by 
the Exchange from fees derived from its regulatory function or 
regulatory fines related to PEARL Equities will not be used for non-
regulatory purposes or distributed to the stockholder, but rather, 
shall be applied to fund the legal and regulatory operations of the 
Exchange (including surveillance and enforcement activities), or, as 
the case may be, shall be used to pay restitution and disgorgement of 
funds intended for customers (except in the event of liquidation of the 
Exchange, in which case Miami International Holdings, Inc. will be 
entitled to the distribution of the remaining assets of the 
Exchange).\102\
---------------------------------------------------------------------------

    \102\ Proposed Exchange Rule 3001 is based on Rule 15.2 of each 
of the Cboe Equity Exchanges.
---------------------------------------------------------------------------

    Proposed Exchange Rule 3002(a) provides that each Equity Member, 
and all applicants for registration as such, shall be required to 
provide a clearing account number for an account at the National 
Securities Clearing Corporation (``NSCC'') for purposes of permitting 
the Exchange to debit any undisputed or final fees, fines, charges and/
or other monetary sanctions or other monies due and owing to the 
Exchange or other charges pursuant to Exchange Rule 3000, including the 
Exchange Fee Schedule thereto; Regulatory Transaction Fees pursuant to 
Exchange Rule 3000(b); dues, assessments and other charges pursuant to 
Exchange Rules 1202 and 1203 to the extent the Exchange were to 
determine to charge such fees; and fines, sanctions and other charges 
pursuant to Chapters IX, X, and XI of the Exchange Rulebook which are 
due and owing to the Exchange.\103\
---------------------------------------------------------------------------

    \103\ Proposed Exchange Rule 3002 is based on IEX Rule 15.120.
---------------------------------------------------------------------------

    Proposed Exchange Rule 3002(b) provides that all disputes 
concerning fees, dues or charges assessed by the Exchange must be 
submitted to the Exchange in writing and must be accompanied by 
supporting documentation. All disputes related to fees, dues or other 
charges must be submitted to the Exchange no later than sixty (60) days 
after the date of the monthly invoice. All Exchange invoices are due in 
full on a timely basis and payable in accordance with proposed Exchange 
Rule 3002(a). Any disputed amount resolved in the Member's favor will 
be subsequently credited to the clearing account number for an account 
at the NSCC.
National Market System Plans
    The Exchange will operate as a full and equal participant in the 
national market system for equity trading established under Section 11A 
of the Exchange Act, just as its options market participates today. The 
Exchange is currently a member of the National Market System Plan for 
the Selection and Reservation of Securities Symbols. The Exchange will 
also become a member of the following national market systems plans 
applicable to the trading of equity securities:
     The National Market System Plan to Address Extraordinary 
Market Volatility;
     The Joint Self-Regulatory Organization Plan Governing the 
Collection, Consolidation and Dissemination of Quotation and 
Transaction Information for Nasdaq-Listed Securities Traded on 
Exchanges on an Unlisted Trading Privileges Basis (``NASDAQ/UTP Plan,'' 
``UTP Plan'');
     The Second Restatement of the Consolidated Tape 
Association (``CTA'') Plan and the Restated Consolidated Quotation 
(``CQ'') Plan (``CTA/CQ Plans''); and
     The National Market System Plan Establishing Procedures 
Under Rule 605 of Regulation NMS.
    The Exchange expects to participate in those plans on the same 
terms currently applicable to current members of those plans, and it 
expects little or no plan impact due to the proposed operation of PEARL 
Equities is similar to several other existing equity exchanges.
Regulation
    The Exchange will leverage many of the structures it established to 
operate as a national securities exchange in compliance with Section 6 
of the Exchange Act. As described in more detail below, there will be 
three elements of that regulation: (1) The Exchange will join the 
existing equities industry agreements and establish new agreements, as 
necessary, pursuant to Section 17(d) of the Exchange Act, as it has 
with respect to its options market, (2) the Exchange's Regulatory 
Services Agreement (``RSA'') with FINRA will

[[Page 8072]]

govern many aspects of the regulation and discipline of Members that 
participate in equities trading, just as it does for options market 
regulation, and (3) the Exchange will authorize Equity Members to trade 
on PEARL Equities and conduct surveillance of equity trading as it does 
today for options.
    Section 17(d) of the Exchange Act and the related Exchange Act 
rules permit SROs to allocate certain regulatory responsibility to 
avoid duplicative oversight and regulation. Under Exchange Act Rule 
17d-1, the Commission designates one SRO to be the Designated Examining 
Authority, or DEA, for each broker-dealer that is a member of more than 
one SRO. The DEA is responsible for the financial aspects of that 
broker-dealer's regulatory oversight. Because Members also must be 
members of at least one other SRO, the Exchange will generally not be 
designated as the DEA for any of its Members.
    Rule 17d-2 of the Exchange Act permits SROs to file with the 
Commission plans under which the SROs allocate among each other the 
responsibility to receive regulatory reports from, and examine and 
enforce compliance with specified provisions of the Exchange Act and 
rules thereunder and SRO rules by, firms that are members of more than 
one SRO (``common members''). If such plan is declared effective by the 
Commission, an SRO that is a party to the plan is relieved of 
regulatory responsibility as to any common member for whom 
responsibility is allocated under the plan to another SRO. The Exchange 
will establish 17d-2 Plans for Allocation of Regulatory 
Responsibilities, including, subject to Commission approval, (i) a plan 
with FINRA pursuant to which the Exchange and FINRA will agree to 
allocate to FINRA, with respect to common members, regulatory 
responsibility for overseeing and enforcing certain applicable laws, 
rules, and regulations of PEARL Equities, (ii) joining the multi-party 
plan with FINRA and other national securities exchanges for the 
surveillance, investigation, and enforcement of common insider trading 
rules, and (iii) joining the multi-party plan with FINRA and other 
national securities exchanges for the allocation of regulatory 
responsibilities with respect to certain Regulation NMS Rules. In 
addition, the Exchange will (i) expand its existing RSA with FINRA, 
pursuant to which FINRA performs various regulatory services on behalf 
of the Exchange, subject to the Exchange's ultimate responsibility, 
including the review of membership applications and the conduct of 
investigations, disciplinary and hearing services, (ii) join the 
Intermarket Surveillance Group (``ISG''), and (iii) submit a Minor Rule 
Violation Plan to the Commission under Rule 19d-1(c)(2) of the Exchange 
Act.
    FINRA also currently surveils options trading on behalf of the 
Exchange pursuant to an existing RSA designed to detect violations of 
Exchange rules and applicable federal securities laws. This existing 
RSA will be expanded to provide for FINRA to also surveil equities 
trading on PEARL Equities on behalf of the Exchange and the Exchange 
will remain responsible for FINRA's performance under this RSA. The 
Exchange represents that these procedures are adequate to properly 
monitor Exchange trading of equity securities and to deter and detect 
violations of Exchange rules and applicable federal securities laws. 
The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    Pursuant to proposed Exchange Rule 2900(b)(5), with respect to 
securities traded under proposed Chapter 14 of the Exchange Rules 
pursuant to unlisted trading privileges, the Exchange shall enter into 
a comprehensive surveillance sharing agreement with markets trading 
components of the index or portfolio on which shares of an exchange-
traded product is based to the same extent as the listing exchange's 
rules require the listing exchange to enter into a comprehensive 
surveillance sharing agreement with such markets. FINRA, on behalf of 
the Exchange, may obtain information, and will communicate information 
as needed, regarding trading in the shares of the exchange-traded 
products, as well as in the underlying exchange-traded securities and 
instruments with other markets and other entities that are members of 
ISG. In addition, the Exchange may obtain information regarding trading 
in such shares and underlying securities and instruments from markets 
and other entities that are members of ISG or with which the Exchange 
has in place a comprehensive surveillance sharing agreement. In 
addition, FINRA, on behalf of the Exchange, is able to access, as 
needed, trade information for certain fixed income securities held by 
the Fund reported to FINRA's Trade Reporting and Compliance Engine 
(``TRACE'').
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \104\ and 11A of the Act \105\ in general, 
and furthers the objectives of Sections 6(b)(5) \106\ and 11A(a)(1) of 
the Act \107\ in particular, in that it is designed 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 are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \104\ 15 U.S.C. 78f(b).
    \105\ 15 U.S.C. 78k-1.
    \106\ 15 U.S.C. 78f(b)(5).
    \107\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

    As described above, the fundamental premise of the proposal is that 
the Exchange will operate its equity market in a manner similar to that 
of other equity exchanges, with a suite of order types and 
deterministic functionality leveraging the Exchange's existing robust 
and resilient technology platform. The Exchange believes PEARL Equities 
will benefit individual investors, equity trading firms, and the 
equities market generally by providing much needed competition to the 
existing three dominant exchange groups. The entry of an innovative, 
cost competitive market such as PEARL Equities will promote 
competition, spurring existing exchanges to improve their own 
executions systems and reduce trading costs.
    The Exchange proposes to offer a suite of conventional order types 
and order type modifiers that are designed to provide for an efficient, 
robust, and transparent order matching process. The basis for a 
majority of the rules of PEARL Equities are the approved rules of other 
equity exchanges, which have already been found consistent with the 
Exchange Act. Therefore, the Exchange does not believe that any of the 
proposed order types and order type functionality raise any new or 
novel issues that have not been previously considered by the 
Commission.
    In few instances where the Exchange proposed functionality that 
differs from that of other equities exchanges, it has done so either to 
improve upon an existing process, such as in the case of the proposed 
Opening Process \108\ and

[[Page 8073]]

proposed risk controls,\109\ or to adopt functionality to address and 
maintain a fair and orderly market, such as re-pricing of odd lot sized 
orders.\110\
---------------------------------------------------------------------------

    \108\ See proposed Exchange Rule 2615.
    \109\ See proposed Exchange Rules 2614(a)(1)(I) and 2618.
    \110\ See proposed Exchange Rule 2611.
---------------------------------------------------------------------------

    Specifically, the Exchange believes proposed Exchange Rules 2611(b) 
describing how the Exchange will re-price an odd-lot order removes 
impediments to and perfect the mechanism of a free and open market and 
a national market system by reducing the potential for an odd lot order 
to appear on the Exchange's proprietary data feeds as though it is 
locking or crossing the PBBO. The proposed re-pricing of odd lot orders 
is also similar to that of other equity exchanges.\111\
---------------------------------------------------------------------------

    \111\ Proposed Exchange Rule 2611 would differ from NYSE Rule 
7.38, NYSE Arca Rule 7.38-E, NYSE American Rule 7.38E, and NYSE 
National Rule 7.38 by re-pricing the odd lot order to buy (sell) to 
the PBB (PBO) of the Exchange when the PBB (PBO) of the Exchange was 
previously locked or crossed by an away Trading Center.
---------------------------------------------------------------------------

    The Exchange further believes that the functionality that it 
proposes to offer is consistent with Section 6(b)(5) of the Act \112\ 
because the System is designed to be efficient and its operation 
transparent, thereby facilitating transactions in securities, removing 
impediments to and perfecting the mechanisms of a free and open 
national market system. As noted above, the Exchange's proposed rules, 
order type functionality, and order matching process are designed to 
comply with all applicable regulatory requirements, including 
Regulation NMS, Regulation SHO, and the LULD Plan.
---------------------------------------------------------------------------

    \112\ 15 U.S.C. 78(f)(5).
---------------------------------------------------------------------------

    The Exchange believes that the rules of PEARL Equities as well as 
the proposed method of monitoring for compliance with and enforcing 
such rules is also consistent with the Exchange Act, particularly 
Sections 6(b)(1), 6(b)(5) and 6(b)(6) of the Act, which require, in 
part, that an exchange have the capacity to enforce compliance with, 
and provide appropriate discipline for, violations of the rules of the 
Commission and of the exchange.\113\ The Exchange has proposed to adopt 
rules necessary to regulate Equity Members that are nearly identical to 
the approved rules of other equities exchanges. The Exchange proposes 
to regulate activity on PEARL Equities in the same way it regulates 
activity on its options market, specifically through various Exchange 
specific functions, an RSA with FINRA, as well as participation in 
industry plans, including plans pursuant to Rule 17d-2 under the 
Exchange Act.
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    \113\ 15 U.S.C. 78f(b)(1), 78f(b)(5) and 78f(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
operates in an intensely competitive global marketplace for transaction 
services. Relying on its array of services and benefits, the Exchange 
competes for the privilege of providing market services to broker-
dealers. The Exchange's ability to compete in this environment is based 
in large part on the quality of its trading systems, the overall 
quality of its market and its attractiveness to the largest number of 
investors, as measured by speed, likelihood and cost of executions, as 
well as spreads, fairness, and transparency.
    Consolidation amongst U.S. equities exchanges has led to nearly all 
being owned and operated by three primary exchange groups,\114\ thereby 
diminishing the competitive landscape among equities exchanges. This 
proposal will enhance competition by allowing the Exchange to leverage 
its existing robust technology platform to provide a resilient, 
deterministic, and transparent execution platform for equity 
securities. The proposed rule change will insert an additional, much 
needed, competitive dynamic to existing equities landscape by allowing 
the Exchange to compete with existing equity exchanges on order types, 
order type functionality, risk controls, and order matching processes.
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    \114\ Currently, 12 of the 14 registered U.S. equity exchanges 
are owned by three groups: Cboe Holdings, Inc. operates four 
equities exchanges, BYX, BZX, EDGA, and EDGX; the Intercontinental 
Exchange Group, Inc. (``ICE'') operates five equities exchanges, 
NYSE, NYSE American, NYSE Arca, NYSE National, and NYSE Chicago; and 
Nasdaq, Inc. operates three equities exchanges, Nasdaq, Nasdaq Phlx, 
and Nasdaq BX. IEX and the Long Term Stock Exchange, Inc. (``LTSE'') 
are the only two independently operated equities exchanges. The LTSE 
has yet to commence operations.
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    The proposed rule change will reduce overall trading costs and 
increase price competition, both pro-competitive developments, and will 
promote further initiative and innovation among market centers and 
market participants.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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-2020-03 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-2020-03. 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

[[Page 8074]]

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-2020-03 
and should be submitted on or before March 4, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\115\
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    \115\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-02750 Filed 2-11-20; 8:45 am]
 BILLING CODE 8011-01-P