Document ID: SEC-2021-1299-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2021-09-23T04:00Z

[Federal Register Volume 86, Number 182 (Thursday, September 23, 2021)]
[Notices]
[Pages 52940-52943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20553]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93047; File No. SR-PEARL-2021-42]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX 
Pearl Equities Fee Schedule Relating to Disaster Recovery Facility 1 
Gigabit ULL per Connection Fee for Members

September 17, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 10, 2021, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
proposed rule change as described in Items I, 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 proposal to amend the fee schedule 
applicable for MIAX Pearl Equities, an equities trading facility of the 
Exchange (the ``Fee Schedule'').\3\
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    \3\ See Exchange Rule 1901.
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    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

[[Page 52941]]

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 amend Section 2) of the Fee Schedule to: 
(1) Waive certain monthly connectivity fees for Equity Members \4\ who 
connect to the Exchange's disaster recovery facility; and (2) make a 
minor, non-substantive correction to the headings for Sections 2)a) and 
b). The Exchange originally filed this proposal on September 1, 2021 
(SR-PEARL-2021-39). The Exchange has withdrawn SR-PEARL-2021-39 and 
refiled this proposal.
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    \4\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
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Fee Waiver for Connection to the Disaster Recovery Facility
    The Exchange proposes to amend Section 2)a) of the Fee Schedule to 
waive certain monthly connectivity fees for Equity Members who connect 
to the Exchange's disaster recovery facility for testing purposes only, 
as described below. Currently, the Exchange assesses monthly fees of 
$1,000 per connection and $3,000 per connection for Equity Members that 
connect to the Exchange's disaster recovery facility via a 1 Gigabit 
(``Gb'') ultra-low latency (``ULL'') connection or a 10Gb ULL 
connection, respectively.
    The Exchange now proposes to waive the disaster recovery facility 
1Gb ULL monthly fee for a single 1Gb ULL connection for each Equity 
Member that is designated by the Exchange to participate in required 
testing in accordance with Regulation Systems Compliance and Integrity 
(``Regulation SCI''),\5\ and pursuant to Chapter III of the Exchange's 
Rules, so long as that same single connection is used for Regulation 
SCI testing purposes only. The Exchange proposes that this waiver apply 
to each month in which the designated Equity Member is required to 
maintain that single 1Gb ULL connection to the disaster recovery 
facility for Regulation SCI testing purposes, as described above. 
Accordingly, each Equity Member that is required to connect to the 
Exchange's disaster recovery facility in accordance with Regulation SCI 
and Chapter III of the Exchange's Rules and who uses that connection 
solely to fulfill those testing requirements, will receive the fee 
waiver for a single 1Gb ULL connection. The proposed fee waiver will 
not be available to an Equity Member that utilizes that same 1Gb ULL 
connection to the disaster recovery facility for trading in addition to 
Regulation SCI testing purposes.
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    \5\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR 72252 (December 5, 2014) (``SCI Adopting Release'').
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    The Exchange notes that the proposed waiver will apply uniformly to 
Equity Members who currently maintain a 1Gb ULL connection to the 
disaster recovery facility and those Equity Members that newly elect to 
connect to the disaster recovery facility. Again, both current and 
future 1Gb ULL connections must be used for Regulation SCI testing 
purposes only. The proposed fee waiver will only apply to a single 1Gb 
ULL connection to the disaster recovery facility and each additional 
1Gb ULL connection to the disaster recovery facility will continue to 
be charged the current monthly rate of $1,000 per connection. The 
Exchange does not propose to waive the monthly network connectivity fee 
for the 10Gb ULL connection to the disaster recovery facility or make 
any other changes to network connectivity fees.
Technical Corrections to the Fee Schedule
    Next, the Exchange proposes to amend the headings for Sections 2)a) 
and b) of the Fee Schedule to make minor, non-substantive edits. 
Currently, the headings for Sections 2)a) and b) of the Fee Schedule 
read as follows, ``Monthly Member Network Connectivity Fee,'' and 
``Monthly Non-Member Network Connectivity Fee,'' respectively. The 
Exchange now proposes to make a minor, non-substantive correction to 
amend each heading to make the word ``Fee'' plural to reflect that more 
than one fee is provided for in each section. With the proposed 
changes, the headings for Sections 2)a) and b) of the Fee Schedule will 
read as follows, ``Monthly Member Network Connectivity Fees,'' and 
``Monthly Non-Member Network Connectivity Fees,'' respectively.
Implementation
    The proposed changes are immediately effective. The Exchange does 
not propose any other changes to the MIAX Pearl Equities Fee Schedule.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \6\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act,\7\ in that it is an 
equitable allocation of reasonable dues, fees and other charges among 
Exchange members and issuers and other persons using its facilities, 
and 6(b)(5) of the Act,\8\ in that it is designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanisms of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(1) and (b)(5).
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    Equity Members connect to the disaster recovery facility for 
several reasons, including: (1) To fulfill the requirement to 
participate in the Exchange's annual business continuity and disaster 
recovery (``BC/DR'') testing in connection with the requirements of 
Regulation SCI; \9\ and (2) for redundancy and trading purposes in a 
fail over situation. With respect to the BC/DR plans of the Exchange 
(defined as an ``SCI entity'' under Regulation SCI), including the 
Exchange's backup systems, paragraph (a) of Rule 1004 of Regulation SCI 
requires each SCI entity to, ``[e]stablish standards for the 
designation of those members or participants that the SCI entity 
reasonably determines are, taken as a whole, the minimum necessary for 
the maintenance of fair and orderly markets in the event of the 
activation of such plans.'' \10\ Paragraph (b) of Rule 1004 further 
requires each SCI entity to ``[d]esignate members or participants 
pursuant to the standards established in paragraph (a) of [Rule 1004] 
and require participation by such designated members or participants in 
scheduled functional and performance testing of the operation of such 
plans, in the manner and frequency specified by the SCI entity, 
provided that such frequency shall not be less than once every 12 
months.'' \11\ Pursuant to Rule 1004 of Regulation SCI, each Equity 
Member of the Exchange is required to connect to the disaster recovery 
facility and take part in the annual testing. This means that, as 
currently contemplated in the Fee Schedule, each Equity Member must 
utilize and purchase at least one 1Gb ULL connection to the disaster

[[Page 52942]]

recovery facility to fulfill this testing requirement. Accordingly, the 
Exchange believes it is reasonable to waive the monthly fee for Equity 
Members that are designated by the Exchange for required testing in 
accordance with Regulation SCI, and pursuant to Chapter III of the 
Exchange's Rules, where that same single connection is used for 
Regulation SCI testing purposes only.
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    \9\ See supra note 5.
    \10\ 17 CFR 242.1004(a).
    \11\ 17 CFR 242.1004(b).
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    The Exchange believes that its proposal is reasonable because it 
waives the monthly fee for Equity Members that are required to connect 
to the disaster recovery facility and only utilize one 1Gb ULL 
connection solely to fulfill the annual BC/DR testing requirements 
under Rule 1004 of Regulation SCI and do not use that same connection 
for trading purposes. The Exchange believes that the proposed waiver is 
reasonable to further ensure Equity Members that need to participate in 
Exchange testing are able to do so without also incurring a charge for 
the required connection. As set forth in the SCI Adopting Release, 
``SROs have the authority, and legal responsibility, under Section 6 of 
the Exchange Act, to adopt and enforce rules (including rules to comply 
with Regulation SCI's requirements relating to BC/DR testing) 
applicable to their members or participants that are designed to, among 
other things, 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.'' \12\ The Exchange believes that this proposal is consistent 
with such authority and legal responsibility.
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    \12\ See SCI Adopting Release, supra note 5, at 72350.
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    The Exchange believes that the proposal represents an equitable 
allocation of reasonable dues, fees, and other charges and is not 
unreasonably discriminatory in that it applies uniformly to all 
similarly situated Equity Members. The proposed waiver for a single 1Gb 
ULL connection to the disaster recovery facility will apply uniformly 
to Equity Members designated by the Exchange to fulfill their 
Regulation SCI testing requirements. Specifically, an Equity Member who 
currently has a 1Gb ULL connection to the disaster recovery facility 
and only utilizes such connection for Regulation SCI testing purposes 
will receive the fee waiver for that single connection going forward. 
Likewise, any Equity Member newly designated by the Exchange for 
Regulation SCI testing who does not currently have a 1Gb ULL connection 
will now be able to utilize a single 1Gb ULL connection to the disaster 
recovery facility for free, so long as that Equity Member only utilizes 
the new connection for Regulation SCI testing purposes only, as 
described herein. The Exchange does not propose to amend any of the 
rates for its connectivity fees.
    Further, the Exchange believes that the proposal represents an 
equitable allocation of reasonable dues, fees, and other charges and is 
not unreasonably discriminatory to firms that utilize the 10Gb ULL 
connection to the disaster recovery facility because those firms likely 
not only utilize those connections for testing, but also trading and 
redundancy purposes due to the increased size of the connection. Each 
Equity Member that has a 10Gb ULL connection to the disaster recovery 
facility is able to utilize a single 1Gb ULL connection solely for 
Regulation SCI testing purposes if that firm so desired.
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \13\ in general, and furthers the objectives of Section 
6(b)(4) of the Act \14\ in particular, in that it is an equitable 
allocation of reasonable fees and not unfairly discriminatory because 
non-Members do not have the same requirements as Equity Members 
relating to Regulation SCI's requirements for BC/DR testing. As such, 
non-Members are not required to connect to the disaster recovery 
facility at all. It is a business decision of each non-Member whether 
to connect to the disaster recovery facility and, if so, whether to 
utilize a 1Gb ULL connection and/or a 10Gb ULL connection. Further, 
non-Members themselves can and often do have their own customer base 
that utilizes the non-Member's connection to the Exchange. However, 
that non-Member can charge its customers any amount it wants and recoup 
its costs to connect to the Exchange.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed fee change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
Inter-Market Competition
    The Exchange believes that the proposed rule change will not impose 
any burden on inter-market competition. The proposed rule change is not 
a competitive filing but rather is designed to ensure that Equity 
Members that are designated by the Exchange and required to connect to 
the disaster recovery facility solely to fulfill their annual BC/DR 
testing requirements under Rule 1004 of Regulation SCI are able to do 
so. Accordingly, the Exchange believes that the proposed change will 
not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposal is not a competitive proposal but rather is necessary for the 
Exchange and designated Equity Members to comply with annual testing 
requirements of Regulation SCI.
Intra-Market Competition
    The Exchange believes that its proposal will not impose any undue 
burden on intra-market competition because the fee waiver applies 
equally to all Equity Members that only utilize a single 1Gb ULL 
connection to the disaster recovery facility to participate in 
Regulation SCI testing. The fee waiver will apply to designated Equity 
Members who currently have at least one 1Gb ULL connection to the 
disaster recovery facility and to newly designated Equity Members who 
all have to participate in Regulation SCI testing. The Exchange 
believes the proposal does not impose any undue burden on intra-market 
competition between Equity Members who utilize 10Gb ULL connections to 
the disaster recovery facility because those firms utilize the 10Gb ULL 
connections for redundancy and trading purposes throughout the course 
of the year. Each Equity Member with a 10Gb ULL connection that is 
designated by the Exchange to participate in the annual BC/DR testing 
already uses that connection for the Regulation SCI testing. 
Additionally, the Exchange believes that its proposal will not impose 
any undue burden on intra-market competition on non-Members because 
non-Members do not have the same requirements as Equity Members 
relating to Regulation SCI's requirements for BC/DR testing. Non-
Members are not required to connect to the disaster recovery facility 
at all and it is a business decision of each non-Member whether to 
connect to the disaster recovery facility and, if so, whether to 
utilize a 1Gb ULL

[[Page 52943]]

connection and/or a 10Gb ULL connection.

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

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\15\ and Rule 19b-4(f)(2) \16\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-PEARL-2021-42 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-PEARL-2021-42. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-PEARL-2021-42 and should be submitted on 
or before October 14, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-20553 Filed 9-22-21; 8:45 am]
BILLING CODE 8011-01-P