Document ID: SEC-2022-0587-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2022-04-22T04:00Z

[Federal Register Volume 87, Number 78 (Friday, April 22, 2022)]
[Notices]
[Pages 24214-24218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08568]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94735; File No. SR-PEARL-2022-14]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 2600, Hours of Trading and Trading Days, and Exchange Rule 2615, 
Opening Process for Equity Securities

April 18, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 8, 2022, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposed rule change to amend Exchange 
Rule 2600, Hours of Trading and Trading Days, and Exchange Rule 2615, 
Opening Process for Equity Securities.
    The text of the proposed rule change is available on the Exchange's 
website at https://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 allows for the trading of equity securities on its 
equity trading platform (referred to herein as ``MIAX Pearl 
Equities''). The purpose of the proposed rule change is to: (i) Accept 
prior to 9:30 a.m. Eastern Time orders in equity securities that 
include a Post Only \3\ instruction and a time-in-force of Regular 
Hours Only (``RHO''),\4\ and orders that include a Minimum Execution 
Quantity \5\ instruction and a time-in-force of RHO; and (ii) accept 
and retain such orders when trading in a security is halted. This is 
similar to functionality on other equity exchanges.\6\ Another purpose 
of the proposed rule change is to amend Exchange Rule 2615(a)(1) to 
provide additional specificity concerning the handling of Limit Orders 
\7\ with a Reserve Quantity \8\ during the Exchange's opening process. 
This change is based on the rules of other equity exchanges.\9\
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    \3\ In sum, an order with a Post Only instruction is a non-
routable order that will be ranked and executed on the MIAX Pearl 
Equities Book pursuant to Exchange Rules 2616 and 2617(a)(4). See 
Exchange Rule 2614(c)(2) for a more detailed description of the Post 
Only instruction. Exchange Rule 1901 defines the term ``MIAX Pearl 
Equities Book'' as ``the electronic book of orders in equity 
securities maintained by the System.''
    \4\ In sum, an order with a time-in-force of RHO is designated 
for execution only during Regular Trading Hours, which includes the 
opening process for equity securities. See Exchange Rule 2614(b)(2) 
for a more detailed description of the RHO instruction.
    \5\ In sum, Minimum Execution Quantity is an instruction a User 
may attach to a non-displayed order requiring the System to execute 
the order only to the extent that a minimum quantity can be 
satisfied. See Exchange Rule 2614(c)(7) for a more detailed 
description of the Minimum Execution Quantity instruction.
    \6\ See, e.g., Cboe BYX Exchange, Inc. (``BYX'') Rules 11.1(a) 
and 11.23(a)(1), Cboe BZX Exchange, Inc. (``BZX'') Rules 11.1(a) and 
11.24(a)(1), Cboe EDGA Exchange, Inc. (``EDGA'') and Cboe EDGX 
Exchange, Inc. (``EDGX'', collectively with BYX, BZX, and EDGA, the 
``Cboe Equity Exchanges'') Rules 11.1(a)(1) and 11.7(a)(1) (allowing 
for the entry of Post Only and Minimum Execution Quantity order with 
a time-in-force of Day to be entered prior to 9:30 a.m. Eastern Time 
and not participate in their respective opening processes). See also 
e.g., Investors Exchange LLC (``IEX'') Rules 11.190(b)(11)(B), 
11.190(c)(3), and 11.190(b)(11)(F) (allowing for the entry of 
Minimum Quantity Orders with a time-in-force of Day prior to 9:30 
a.m. Eastern Time and allowing those orders to bypass their opening 
process) and New York Stock Exchange LLC (``NYSE'') Rule 7.18(b)(1), 
NYSE Arca LLC (``NYSE Arca'') Rule 7.18-E(b)(1), NYSE American LLC 
(``NYSE American'') 7.18E(b)(1), NYSE National LLC (``NYSE 
National'') Rule 7.18(b)(1), and NYSE Chicago LLC (``NYSE Chicago'', 
collectively with NYSE, NYSE Arca, NYSE American, NYSE National, and 
NYSE Chicago, the ``NYSE Equity Exchanges'') Rule 7.18(b)(1) (not 
including ALO orders in the list of order types the exchanges would 
cancel during a halt).
    \7\ In sum, a Limit Order is an order to buy or sell a stated 
amount of a security at a specified price or better. See Exchange 
Rule 2614(a) for a more detailed description of Limit Orders.
    \8\ In sum, Reserve Quantity is an instruction a User may attach 
to an order where a portion of the order is displayed (``Displayed 
Quantity'') and with a portion of the order non-displayed (``Reserve 
Quantity''). See Exchange Rule 2614(c)(8) for a more detailed 
description of the Reserve Quantity instruction.
    \9\ See BZX Rule 11.24(a)(2), BYX Rule 11.23(a)(2), and EDGA and 
EDGX Rules 11.7(a)(2).
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Acceptance of Orders Before 9:30 a.m. Eastern Time
    Exchange Rule 2600(a) provides for the entry of orders starting at 
7:30 a.m. Eastern Time and that orders entered between 7:30 a.m. and 
9:30 a.m. Eastern Time are not eligible for execution until the start 
of Regular Trading Hours.\10\ Exchange Rule 2600(a) further provides 
that the Exchange will not accept the following orders prior to 9:30 
a.m. Eastern Time: Orders designated as Post Only with a time-in-force 
of RHO, Intermarket Sweep Orders (``ISO''),\11\ all orders with a time-
in-force of

[[Page 24215]]

Immediate-or-Cancel (``IOC''),\12\ and orders that include a Minimum 
Execution Quantity instruction.
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    \10\ See Exchange Rule 1901 defines the term ``Regular Trading 
Hours'' as ``the time between 9:30 a.m. and 4:00 p.m. Eastern 
Time.''
    \11\ ISOs are defined under Rule 600(b)(38) of Regulation NMS. 
17 CFR 242.600(b)(38). See Exchange Rule 2614(d) for a more detailed 
description of ISOs on MIAX Pearl Equities.
    \12\ In sum, an order with a time-in-force of IOC is to be 
executed in whole or in part as soon as such order is received. See 
Exchange Rule 2614(b)(1) for a more detailed description of the 
time-in-force instruction of IOC.
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    The Exchange currently offers two time-in-force instructions, IOC 
and RHO. The Exchange understands that some Members now wish to enter 
orders with a time-in-force of RHO that include either a Post Only 
instruction or Minimum Execution Quantity instruction prior to 9:30 
a.m. Eastern Time. The Exchange, therefore, proposes to amend Exchange 
Rule 2600(a) to accept prior to 9:30 a.m. Eastern Time orders that 
include a time-in-force of RHO and either a Post Only instruction or 
Minimum Execution Quantity instruction. The Exchange notes that this 
proposal is limited to Limit Orders and Midpoint Peg Orders \13\ with a 
time-in-force of RHO that include either a Post Only or Minimum 
Execution Quantity instruction. Market Orders \14\ and orders that 
include a time-in-force of IOC and Minimum Execution Quantity 
instruction will continue to be rejected prior to 9:30 a.m. Eastern 
Time.\15\
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    \13\ In sum, a Midpoint Peg Order is a non-displayed Limit Order 
that is assigned a working price pegged to the midpoint of the 
Protected Best Bid and Offer (``PBBO''). See Exchange Rule 
2614(a)(3) for a more detailed description of Midpoint Peg Orders. 
Exchange Rule 1901 defines PBBO with respect to trading of equity 
securities as the national best bid or offer that is a Protected 
Quotation.
    \14\ Market Orders may include a time-in-force of IOC. See 
Exchange Rule 2614(a)(2)(B). Market Orders with a time-in-force of 
IOC are rejected prior to the opening process and cancelled or 
rejected during a halt. See Exchange Rules 2600(a) and 
2615(e)(1)(A). A Market Order may include a time-in-force of RHO 
when coupled with the Route to Primary Auction (``PAC'') routing 
option and such orders are accepted prior to the opening process and 
during a halt. In sum, PAC is a routing option for Market Orders and 
displayed Limit Orders designated as RHO that the entering firm 
wishes to designate for participation in the opening, re-opening 
(following a regulatory halt, suspension, or pause), or closing 
process of a primary listing market. See Exchange Rule 2617(b)(5)(B) 
for a more detailed description of the PAC routing option.
    \15\ The Exchange notes that orders that include a Post Only 
instruction and time-in-force of IOC are always rejected regardless 
of time of entry as these two order instructions are incompatible by 
their terms. See preamble to Exchange Rule 2614 (providing that 
``[o]rder, instruction, and parameter combinations which are 
disallowed by the Exchange or incompatible by their terms, will be 
rejected . . .'').
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    Pursuant to its opening process described under Exchange Rule 2615, 
the Exchange opens trading at the start of Regular Trading Hours by 
matching buy and sell orders at the midpoint of the national best bid 
and offer (``NBBO'').\16\ Only orders that include a time-in-force of 
RHO may participate in the opening process. Exchange Rule 2615(a)(1) 
provides that orders designated as Post Only, ISOs, orders with a 
Minimum Execution Quantity instruction, and orders that include a time-
in-force other than RHO are not eligible to participate in the Opening 
Process. As such, orders that include a time-in-force of RHO that 
include either a Post Only instruction or Minimum Execution Quantity 
instruction entered prior to 9:30 a.m. Eastern Time would continue to 
not be eligible for execution until after the Exchange's opening 
process is complete and continuous trading has begun. The operation of 
the Post Only and Minimum Execution Quantity instructions are 
incompatible with the operation of the opening process as each order 
instruction places a contingency on the order that may prevent an 
execution. This also reflects current functionality and the Exchange 
understands this is consistent with how Equity Members \17\ who would 
submit such orders prior to 9:30 a.m. Eastern Time would want their 
orders to be handled and with their expectations of the types of orders 
and order instructions that are eligible to participate in an opening 
process. Exchange Rule 2615(a)(1) would be amended to specify that 
while orders with a time-in-force of RHO that include a Post Only or 
Minimum Execution Quantity instruction are accepted prior to the 
opening process pursuant to Exchange Rule 2600(a) (as amended herein), 
such orders would not be eligible to participate in the opening 
process.\18\ As they are today, such orders, along with the unexecuted 
portion of orders that were eligible to participate in the opening 
process, will be placed on the MIAX Pearl Equities Book in time 
sequence, beginning with the order with the oldest timestamp, 
cancelled, executed, or routed to away Trading Centers in accordance 
with the terms of the order at the conclusion of the opening 
process.\19\
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    \16\ See Exchange Rule 1901.
    \17\ The term ``Equity Member'' means a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
    \18\ The Exchange proposes to make non-substantive conforming 
changes to Exchange Rule 2615(a)(1) regarding what orders are not 
eligible to participate in the opening process to account for the 
proposed new text.
    \19\ See Exchange Rule 2615(b).
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Acceptance and Retention of Orders During a Halt
    Exchange Rule 2615(e)(1) provides that the re-opening process will 
occur in the same manner as the opening process, with the following 
differences: ISOs, orders that include a time-in-force of IOC, orders 
that include a Minimum Execution Quantity instruction, and orders 
designated as Post Only will be cancelled or rejected, as 
applicable.\20\ As such, during a halt the Exchange cancels or rejects 
orders that include a time-in-force of RHO and either a Post Only 
instruction or Minimum Execution Quantity instruction. Equity Members 
may then choose to resubmit such orders at the conclusion of the 
Exchange's re-opening process when continuous trading resumes. The 
Exchange understands that some Equity Members prefer the Exchange 
accept or retain orders that include a time-in-force of RHO and either 
a Post Only instruction or Minimum Execution Quantity instruction when 
the security is halted so that such order would be placed on the MIAX 
Pearl Equities Book when the re-opening process concludes and they 
would not need to resubmit the order at that time. The Exchange, 
therefore, proposes to amend Exchange Rule 2615(e)(1)(A) to no longer 
cancel or reject orders that include a time-in-force of RHO and either 
a Minimum Execution Quantity instruction or Post Only instruction when 
trading in a security is halted. As is the case with the above proposal 
regarding the opening process, this portion of the proposal is also 
limited to Limit Orders and Midpoint Peg Orders with a time-in-force of 
RHO that include either a Post Only or Minimum Execution Quantity 
instruction.\21\
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    \20\ An order that is cancelled is first accepted by the System 
and then immediately cancelled back to the Member. An order that is 
rejected is not accepted by the System and immediately returned to 
the Member.
    \21\ See supra notes 14 and 15 as [sic] accompanying text.
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    Pursuant to its re-opening process described under Exchange Rule 
2615(e), the Exchange re-opens trading following a halt by matching buy 
and sell orders at the midpoint of the NBBO. Exchange Rule 2615(e)(1) 
provides that the re-opening process will occur in the same manner as 
the opening process, with certain differences described above. As such, 
only orders that include a time-in-force of RHO may participate in the 
re-opening process. As with the opening process, orders that include 
either a Post Only instruction or Minimum Execution Quantity 
instruction are not eligible to participate in the Exchange's re-
opening process because such orders are currently cancelled or rejected 
during a halt. The Exchange proposes to amend Exchange Rule 
2615(e)(1)(A) to specify that orders with a time-in-force of RHO that 
include a Post Only instruction or a Minimum Execution Quantity 
instruction would be accepted and

[[Page 24216]]

retained during a halt but will continue to not be eligible to 
participate in the Exchange's re-opening process. The operation of the 
Post Only and Minimum Execution Quantity instructions are incompatible 
with the operation of the re-opening process as each order instruction 
places a contingency on the order that may prevent an execution. 
Further, such orders not being eligible to participate in the 
Exchange's re-opening process reflects current functionality and the 
Exchange understands this is consistent with how Equity Members would 
want their orders to be handled and with their expectations of the 
types of orders and order instructions that are eligible to participate 
in a re-opening process. As they are today, such orders, along with the 
unexecuted portion of orders that were eligible to participate in the 
re-opening process, will be placed on the MIAX Pearl Equities Book in 
time sequence, beginning with the order with the oldest timestamp, 
cancelled, executed, or routed to away Trading Centers in accordance 
with the terms of the order at the conclusion of the re-opening 
process.
Reserve Quantity Clarification
    The Exchange currently offers the Reserve Quantity instruction, 
which enables a User \22\ to specify that a portion of their Limit 
Order be displayed and another portion of their order be non-displayed. 
The Reserve Quantity instruction may only be attached to a Limit 
Order.\23\ Today, Limit Orders that include a time-in-force of RHO and 
a Reserve Quantity are eligible to participate in the Exchange's 
opening or re-opening process.\24\ The Exchange proposes to amend 
Exchange Rule 2615(a)(1) to specify that Limit Orders with a Reserve 
Quantity instruction may participate to the full extent of their 
Displayed Quantity and Reserve Quantity. This added language would 
allow the rule to reflect current functionality, provide market 
participants with additional specificity regarding the handling of 
Limit Orders with a Reserve Quantity during the opening and re-opening 
processes, and is substantially similar to the rules of other 
exchanges.\25\
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    \22\ Exchange Rule 1901 defines the term ``User'' as ``any 
Member or Sponsored Participant who is authorized to obtain access 
to the System pursuant to Exchange Rule 2602.''
    \23\ Exchange Rule 2614(a)(1)(A)(i).
    \24\ See Exchange Rule 2615(a)(1) (providing that orders that 
include a time-in-force of RHO may participate in the opening 
process and not specifying that orders with a Reserve Quantity are 
not eligible to participate in the opening process).
    \25\ See supra note 9.
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Implementation
    Due to the technological changes associated with this proposed 
change, the Exchange will issue a trading alert publicly announcing the 
implementation date of this proposed rule change to provide Equity 
Members with adequate time to prepare for the associated technological 
changes. The Exchange anticipates that the implementation date will be 
in the second quarter of 2022.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\26\ in general, and furthers the objectives of Section 
6(b)(5),\27\ in particular, because it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, facilitate transactions in securities, 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The proposed rule change would 
remove impediments to a free and open market and promote just and 
equitable principles of trade because it would provide market 
participants with another venue to which to send orders that include a 
time-in-force of RHO and either a Post Only instruction or Minimum 
Execution Quantity instruction prior to 9:30 a.m. Eastern Time. Because 
the Exchange does not have this functionality, the Exchange believes 
that market participants have refrained from sending orders that 
include a time-in-force of RHO and either a Post Only instruction or 
Minimum Execution Quantity instruction prior to 9:30 a.m. Eastern Time. 
In this regard, the Exchange notes that the proposed new functionality 
may improve the Exchange's market by attracting more order flow. The 
Exchange also believes that its proposal to accept new orders that 
include a time-in-force of RHO and either a Post Only instruction or 
Minimum Execution Quantity instruction and to retain such orders during 
a halt would also improve the Exchange's market by attracting more 
order flow. Such new order flow will further enhance the depth and 
liquidity on the Exchange, which supports just and equitable principles 
of trade and benefits all market participants.
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    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
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    Orders that include a time-in-force of RHO and either a Post Only 
instruction or Minimum Execution Quantity instruction entered prior to 
9:30 a.m. Eastern Time or during a halt would not receive any priority 
advantage vis-[agrave]-vis the unexecuted portion of orders that are 
eligible for execution in the Exchange's opening or re-opening process. 
All orders, including orders that include a time-in-force of RHO and 
either a Post Only instruction or Minimum Execution Quantity 
instruction, and the unexecuted portion of orders that were eligible to 
participate in the opening or re-opening process will be placed on the 
MIAX Pearl Equities Book in time sequence based on their timestamp at 
the conclusion of the opening or re-opening process.\28\ For example, 
assume a Limit Order to sell 100 shares with a Post Only instruction 
and time-in-force of RHO is entered at 8:45 a.m. Eastern Time (``Order 
1''), then a Limit Order to sell 100 shares with a time-in-force of RHO 
is entered at 9:00 a.m. Eastern Time (``Order 2''), and then a Limit 
Order to sell 100 shares with a Minimum Execution Quantity instruction 
and time-in-force of RHO is entered at 9:15 a.m. Eastern Time (``Order 
3''). 50 shares of Order 2 are executed during the Exchange's opening 
process. These orders would be fed onto the MIAX Pearl Equities Book in 
the following order: Order 1 for 100 shares, Order 2 for 50 shares, and 
Order 3 for 100 shares. Assume Order 1 increased its size to 200 shares 
via a Cancel/Replace message at 9:20 a.m. causing its timestamp to be 
updated to time of the modification. In this case, these orders would 
be fed onto the MIAX Pearl Equities Book in the following order: Order 
2 for 50 shares, Order 3 for 100 shares, then Order 1 for 200 shares. 
Therefore, the proposal promotes just and equitable principles of trade 
because orders that include a time-in-force of RHO and either a Post 
Only instruction or Minimum Execution Quantity instruction entered 
prior to 9:30 a.m. Eastern Time would not receive any priority 
advantage vis-[agrave]-vis other orders when being fed onto the MIAX 
Pearl Equities Book following the conclusion of the Exchange's opening 
or re-opening process.
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    \28\ The order's timestamp is the time of order entry unless the 
order is canceled or replaced pursuant to Exchange Rule 2614(e) and 
its timestamp is updated pursuant to Exchange Rule 2616(a)(5).
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    The Exchange believes its proposal to allow for the entry of orders 
that include a time-in-force of RHO and either a Post Only instruction 
or Minimum Execution Quantity instruction prior to 9:30 a.m. Eastern 
Time promotes just and equitable principles of trade because it is 
similar to functionality at other exchanges that allow for orders to be 
entered prior to 9:30 a.m. Eastern Time with a time-in-force 
instruction that

[[Page 24217]]

allows the order to bypass that exchange's opening process. The Cboe 
Equity Exchanges allow for the entry of Post Only and Minimum Execution 
Quantity orders with a time-in-force of Day prior to 9:30 a.m. Eastern 
Time and allow those orders to bypass their respective opening 
processes.\29\ For example, on EDGX, orders that include a time-in-
force of Day that also include a Post Only instruction or a Minimum 
Execution Quantity instruction are accepted prior to 9:30 a.m. Eastern 
Time. EDGX Rule 11.7(a) further provides that only orders with a time-
in-force of RHO may participate in their opening. As a result, orders 
that include a time-in-force of Day that also include a Post Only 
instruction or a Minimum Execution Quantity instruction bypass EDGX's 
opening processes. The Exchange notes that, unlike on the Exchange, 
orders that include a time-in-force of Day that also include a Post 
Only instruction or a Minimum Execution Quantity are eligible for 
execution prior to 9:30 a.m. Eastern Time on EDGX because EDGX provides 
pre-market trading and the Exchange does not. In addition, the Exchange 
would process such orders in time priority following the opening 
process, which is the same manner in which EDGX would process orders 
that include a time-in-force of Day and a Post Only instruction or a 
Minimum Execution Quantity that were not fully executed during EDGX's 
pre-market trading session following their opening process.
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    \29\ See supra note 6. EDGX Rule 11.6(q)(2) provide that the Day 
time-in-force is an ``instruction the User may attach to an order 
stating that an order to buy or sell which, if not executed, expires 
at the end of Regular Trading Hours.'' Orders with a time-in-force 
of Day on EDGX or RHO on the Exchange both expire at the end of 
Regular Trading Hours and are not meaningfully different other than 
the fact that on EDGX, orders with a time-in-force of Day are 
eligible for execution during EDGX's pre-market trading sessions. 
The Exchange does not currently offer pre-market trading. EDGX Rule 
11.1(a)(1) provides that EDGX will not accept orders with a Post 
Only instruction, orders with a Minimum Execution Quantity 
instruction that also include a time-in-force of Regular Hours Only, 
and all orders with a TIF instruction of IOC or FOK prior to either 
4:00 a.m. Eastern Time or 7:00 a.m. Eastern Time, as applicable. The 
Exchange understands that orders with a Post Only instruction and 
orders with a Minimum Execution Quantity instruction that also 
include a time-in-force of Regular Hours Only are accepted after 
either 4:00 a.m. Eastern Time or 7:00 a.m. Eastern Time, as 
applicable, and bypass EDGX's opening process. See EDGX Rule 
11.7(a). The Exchange notes that its Post Only instruction and 
Minimum Execution Quantity instruction are substantially similar to 
EDGX's Post Only instruction and Minimum Execution Quantity 
instruction.
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    IEX similarly allows for the entry of Minimum Quantity Orders with 
a time-in-force of Day \30\ prior to 9:30 a.m. Eastern Time and allows 
those orders to bypass their opening process. IEX's Minimum Quantity 
Order, which is substantially similar to the Exchange's Minimum 
Execution Quantity instruction, may be entered but not eligible for 
execution prior to 9:30 a.m. Eastern Time and bypass IEX's opening 
process.\31\ This is similar to the Exchange's proposal to accept 
orders that include a time-in-force of RHO and a Minimum Execution 
Quantity instruction prior to 9:30 a.m. Eastern Time and for those 
orders to not be eligible for execution prior to 9:30 a.m. Eastern Time 
and bypass the opening process.
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    \30\ See IEX Rule 11.190(b)(11)(B).
    \31\ See IEX Rules 11.190(c)(3) and 11.190(b)(11)(F).
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    The Exchange also believes its proposal to allow for the retention 
of orders that include a time-in-force of RHO and a Post Only 
instruction during a halt promotes just and equitable principles of 
trade because it is similar to functionality at other exchanges. The 
NYSE Equity Exchanges do not cancel ALO Orders,\32\ which are similar 
to the Exchange's Post Only instruction, during a halt.\33\ For 
example, NYSE Rule 7.18(b) lists the order types that NYSE cancels or 
rejects when trading in a non-NYSE listed security is halted. NYSE Rule 
7.18(b) does not include ALO orders in the list of order types that 
NYSE will cancel during a halt. Therefore, the Exchange believes NYSE 
retains ALO orders when trading in a non-NYSE listed security is 
halted.
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    \32\ See e.g., NYSE Rule 7.31(e)(2) for a description of the 
NYSE Equity Exchange's ALO Order.
    \33\ See supra note 6.
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    The Exchange believes that, unlike as proposed by the Exchange, the 
NYSE Equity Exchanges do not accept ALO orders when trading in a non-
NYSE listed security is halted. The Exchange also believes that the 
NYSE Equity Exchanges do not accept new orders with a Minimum Trade 
Size (``MTS'') modifier \34\ and cancel existing ones during a halt. 
Notwithstanding these differences, the Exchange believes the Exchange's 
proposal to accept and retain orders with a Post Only instruction or 
Minimum Execution Quantity instruction during a halt would promote just 
and equitable principles of trade by providing such orders with 
increased execution opportunities once the re-opening process 
concludes. The Exchange also believes that its proposal promotes 
efficiency because the Exchange would accept or retain orders that 
include a time-in-force of RHO and either a Post Only instruction or 
Minimum Execution Quantity instruction when not engaged in continuous 
trading and an Equity Member would not need to resubmit such orders 
when continuous trading commences following a halt. The Exchange also 
believes that its proposal to accept new orders that include a time-in-
force of RHO and either a Post Only instruction or Minimum Execution 
Quantity instruction and to retain such orders during a halt would also 
improve the Exchange's market by attracting more order flow. Such new 
order flow will further enhance the depth and liquidity on the 
Exchange, which supports just and equitable principles of trade and 
benefits all market participants.
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    \34\ See e.g., NYSE Rule 7.31(i)(3) for a description of the 
NYSE Equity Exchange's MTS modifier including that an MTS modifier 
may be included on a Non-Displayed Limit Order. NYSE Rule 7.18(b)(1) 
states that NYSE will cancel any unexecuted portion of a Non-
Displayed Limit Order in a UTP security during a halt.
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    The Exchange believes its proposal to amend Exchange Rule 
2615(a)(1) to specify that Limit Orders with a Reserve Quantity may 
participate in the opening and re-opening processes to the full extent 
of their Displayed Quantity and Reserve Quantity promotes just and 
equitable principles of trade and removes impediments to and perfects 
the mechanism of a free and open market and a national market system 
because this added language provides market participants with 
additional specificity within the rule regarding the handling of Limit 
Orders with a Reserve Quantity during the opening and re-opening 
processes, thereby avoiding any potential investor confusion. Further, 
this proposed change does not raise any new or novel issues because it 
is based on the rules of other exchanges.\35\
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    \35\ See supra note 9.
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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 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    The Exchange believes that the proposal will not impose any burden 
on inter-market competition, but rather promote competition by 
enhancing the Exchange's functionality and expanding the times when 
certain orders may be submitted. The proposed rule change would improve 
inter-market competition because it will enable the Exchange to offer 
functionality substantially similar to that offered by the Cboe Equity 
Exchanges, NYSE Equity Exchanges, and IEX.\36\ The Exchange believes 
its lack of this functionality has put it at a competitive

[[Page 24218]]

disadvantage as market participants that seek to enter orders with a 
Post Only or Minimum Execution Quantity instruction prior to 9:30 a.m. 
Eastern Time or during a halt have avoided sending orders to the 
Exchange. The Exchange believes that its proposal promotes competition 
because it is designed to attract liquidity to the Exchange and improve 
the overall quality of the MIAX Pearl Equities Book.
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    \36\ See supra note 6.
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    The Exchange believes that the proposal will not impose any burden 
on intra-market competition because it would be available to all Equity 
Members. Any Equity Member that seeks to enter orders that include a 
time-in-force of RHO and either a Post Only instruction or Minimum 
Execution Quantity instruction prior to 9:30 a.m. Eastern Time or 
during a halt would be free to do so on the Exchange. All orders that 
include a time-in-force of RHO and either a Post Only instruction or 
Minimum Execution Quantity instruction entered prior to 9:30 a.m. 
Eastern Time or during a halt would be treated equally and no order 
would receive any priority advantage vis-[agrave]-vis other orders when 
being fed onto the MIAX Pearl Equities Book following the conclusion of 
the Exchange's opening or re-opening process.
    Finally, the proposed clarification to Exchange Rule 2615(a)(1) 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because it better 
aligns the rule with System functionality by providing additional 
specificity and avoiding potential investor confusion.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \37\ and Rule 19b-4(f)(6) \38\ 
thereunder.
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    \37\ 15 U.S.C. 78s(b)(3)(A).
    \38\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-PEARL-2022-14 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-2022-14. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-PEARL-2022-14, and should be 
submitted on or before May 13, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-08568 Filed 4-21-22; 8:45 am]
BILLING CODE 8011-01-P