Document ID: SEC-2023-0304-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2023-03-17T04:00Z

[Federal Register Volume 88, Number 52 (Friday, March 17, 2023)]
[Notices]
[Pages 16504-16509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05443]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97124; File No. SR-PEARL-2023-10]

Self-Regulatory Organizations: Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by MIAX PEARL, LLC To Amend the 
MIAX Pearl Equities Fee Schedule

March 13, 2023.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on February 28, 2023, 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 (the 
``Fee Schedule'') applicable to MIAX Pearl Equities, an equities 
trading facility of the Exchange.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/pearl at MIAX 
Pearl's principal office, and at the Commission's Public Reference 
Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Exchange's 
Fee Schedule to: (i) reduce the Adding Liquidity Non-Displayed Order 
rebate in Section 1(a); (ii) increase the Removing Liquidity fee in 
Section 1(a); (iii) make conforming reductions to certain associated 
rebates and increases in certain associated fees in the Liquidity 
Indicator Codes and Associated Fees Table in Section 1(b); and (iv) 
amend the Remove Volume Tiers for executions of orders in securities 
priced at or above $1.00 in Section 1(d).
    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 16 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues, to 
which market participants may direct their order flow. Based on 
publicly available information, no single registered equities exchange 
currently has more than approximately 18% of the total market share of 
executed volume of equities trading.\3\
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    \3\ Market share percentage calculated as of February 27, 2023. 
The Exchange receives and processes data made available through 
consolidated data feeds.
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Reduced Standard Rebate for Added Liquidity Non-Displayed Volume
    The Exchange proposes to reduce the standard rebate for executions 
of Added Non-Displayed Volume. Currently, the Exchange provides a 
standard rebate of ($0.0021) per share for executions of Added Non-
Displayed Volume for securities priced at or above $1.00. The Exchange 
now proposes to reduce the standard rebate for executions of Added Non-
Displayed Volume to ($0.00205) per share.\4\ The Exchange notes that 
executions of orders in securities priced below $1.00 per share that 
add non-displayed liquidity to the Exchange will continue to receive 
the standard rebate

[[Page 16505]]

applicable to such executions (i.e., 0.10% of the total dollar value of 
the transaction).
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    \4\ The standard pricing for executions of Added Non-Displayed 
Volume is referred to by the Exchange on its Fee Schedule in section 
1(a) Standard Rates.
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    The purpose of reducing the standard rebate for executions of Added 
Non-Displayed Volume is for business and competitive reasons. The 
Exchange notes that despite the modest reduction proposed herein, the 
proposed standard rebate for execution of Added Non-Displayed Volume 
(i.e., $0.00205 per share) remains higher than, and competitive with, 
the standard rebates provided by other exchanges for executions of 
orders in securities priced at or above $1.00 per share that add 
displayed liquidity.\5\
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    \5\ See e.g., the Nasdaq PSX equities trading fee schedule on 
its public website (available at http://www.nasdaqtrader.com/Trader.aspx?id=PSX_Pricing), which reflects a standard rebate of 
$0.00050 per share to add non-displayed liquidity in securities 
priced at or above $1.00 per share; see also the Cboe BZX equities 
trading fee schedule on its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/), which 
reflects a standard rebate of $0.0010 per share to add non-displayed 
liquidity in securities priced at or above $1.00 per share; see also 
the NYSE equities trading fee schedule on its public website 
(available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf), which reflects a standard 
rebate of $0.00000 per share to add non-displayed liquidity in 
securities priced at or above $1.00 per share.
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Increase Standard Fee for Removed Volume
    The Exchange also proposes to increase the standard fee charged for 
executions of Removed Volume. Currently, the Exchange charges a 
standard fee of $0.0029 per share for executions of Removed Volume in 
securities priced at or above $1.00. The Exchange now proposes to 
increase the standard fee charged for executions of Removed Volume to 
$0.00295 per share.\6\ The fee charged for Removed Volume in securities 
priced below $1.00 will remain unchanged.
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    \6\ The proposed pricing is referred to by the Exchange on the 
Fee Schedule under the existing description ``Removing Liquidity'' 
in Section 1(a) Standard Rates.
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    The purpose of increasing the standard fee for executions of 
Removed Volume is for business and competitive reasons. The Exchange 
notes that despite the modest increase proposed herein, the Exchange's 
proposed standard fee for executions of Removed Volume $0.00295 remains 
competitive with the standard fee to remove liquidity in securities 
priced at or above $1.00 per share charged by other equity 
exchanges.\7\
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    \7\ See e.g., the Cboe BZX equities trading fee schedule on its 
public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/) which reflects a standard fee of 
$0.0030 per share to remove liquidity in securities priced at or 
above $1.00 per share; see also the Cboe EDGX equities trading fee 
schedule on its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/) which reflects a standard 
fee of $0.0030 per share to remove liquidity in securities priced at 
or above $1.00; see also MEMX equities trading fee schedule on its 
public website (available at https://info.memxtrading.com/fee-schedule/) which reflects a standard fee of $0.0030 per share to 
remove liquidity in securities priced at or above $1.00 per share.
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Liquidity Indicator Codes and Associated Fees Table Conforming Changes
    In conjunction with the Exchange's proposal to (i) reduce the 
rebate for Non-Displayed Orders that Add Liquidity from ($0.0021) to 
($0.00205), and (ii) increase the fee for Removing Liquidity from 
$0.0029 to $0.00295, the Exchange now proposes to update the Liquidity 
Indicator Codes and Associated Fees table to reflect the aforementioned 
changes. Specifically, the Exchange proposes to reduce certain Adding 
Liquidity Non-Displayed Order rebates in Section 1(b), and increase 
certain Removing Liquidity fees in Section 1(b). The Exchange proposes 
to update the liquidity indicator codes as follows:
     Liquidity indicator code Aa, Adds Liquidity, Non-Displayed 
Order (Tape A). The Liquidity Indicator Code and Associated Fees table 
would specify that orders that yield liquidity indicator code Aa would 
receive a rebate of ($0.00205) per share in securities priced at or 
above $1.00 and 0.10% of the transaction's dollar value in securities 
priced below $1.00.
     Liquidity indicator code Ab, Adds Liquidity, Non-Displayed 
Order (Tape B). The Liquidity Indicator Code and Associated Fees table 
would specify that orders that yield liquidity indicator code Ab would 
receive a rebate of ($0.00205) per share in securities priced at or 
above $1.00 and 0.10% of the transaction's dollar value in securities 
priced below $1.00.
     Liquidity indicator code Ac, Adds Liquidity, Non-Displayed 
Order (Tape C). The Liquidity Indicator Code and Associated Fees table 
would specify that orders that yield liquidity indicator code Ac would 
receive a rebate of ($0.00205) per share in securities priced at or 
above $1.00 and 0.10% of the transaction's dollar value in securities 
priced below $1.00.
     Liquidity indicator code Ap, Adds Liquidity and Executes 
at the Midpoint, Non-Displayed Midpoint Peg Order (All Tapes). The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code Ap would receive a rebate of 
($0.00205) per share in securities priced at or above $1.00 or 0.10% of 
the transaction's dollar value in securities priced below $1.00.
     Liquidity indicator code Ar, Retail Order, Adds Liquidity, 
Non-Displayed Order (All Tapes). The Liquidity Indicator Code and 
Associated Fees table would specify that orders that yield liquidity 
indicator code Ar would receive a rebate of ($0.00205) per share in 
securities priced at or above $1.00 and 0.10% of the transaction's 
dollar value in securities priced below $1.00.
     Liquidity indicator code RA, Removes Liquidity, Displayed 
Order (Tape A). The Liquidity Indicator Code and Associated Fees table 
would specify that orders that yield liquidity indicator code RA would 
be subject to a fee of $0.00295 per share in securities priced at or 
above $1.00 and 0.20% of the transaction's dollar value in securities 
priced below $1.00.
     Liquidity indicator code RB, Removes Liquidity, Displayed 
Order (Tape B). The Liquidity Indicator Code and Associated Fees table 
would specify that orders that yield liquidity indicator code RB would 
be subject to a fee of $0.00295 per share in securities priced at or 
above $1.00 and 0.20% of the transaction's dollar value in securities 
priced below $1.00.
     Liquidity indicator code RC, Removes Liquidity, Displayed 
Order (Tape C). The Liquidity Indicator Code and Associated Fees table 
would specify that orders that yield liquidity indicator code RC would 
be subject to a fee of $0.00295 per share in securities priced at or 
above $1.00 and 0.20% of the transaction's dollar value in securities 
priced below $1.00.
     Liquidity indicator code RR, Retail Order, Removes 
Liquidity, Displayed Order (All Tapes). The Liquidity Indicator Code 
and Associated Fees table would specify that orders that yield 
liquidity indicator code RR would be subject to a fee of $0.00295 per 
share in securities priced at or above $1.00 and 0.20% of the 
transaction's dollar value in securities priced below $1.00.
     Liquidity indicator code Ra, Removes Liquidity, Non-
Displayed Order (Tape A). The Liquidity Indicator Code and Associated 
Fees table would specify that orders that yield liquidity indicator 
code Ra would be subject to a fee of $0.00295 per share in securities 
priced at or above $1.00 and 0.20% of the transaction's dollar value in 
securities priced below $1.00.
     Liquidity indicator code Rb, Removes Liquidity, Non-
Displayed Order (Tape B). The Liquidity Indicator Code and Associated 
Fees table would specify that orders that yield liquidity indicator 
code Rb would be subject to a

[[Page 16506]]

fee of $0.00295 per share in securities priced at or above $1.00 and 
0.20% of the transaction's dollar value in securities priced below 
$1.00.
     Liquidity indicator code Rc, Removes Liquidity, Non-
Displayed Order (Tape C). The Liquidity Indicator Code and Associated 
Fees table would specify that orders that yield liquidity indicator 
code Rc would be subject to a fee of $0.00295 per share in securities 
priced at or above $1.00 and 0.20% of the transaction's dollar value in 
securities priced below $1.00.
     Liquidity indicator code Rr, Retail Order, Removes 
Liquidity, Non-Displayed Order (All Tapes). The Liquidity Indicator 
Code and Associated Fees table would specify that orders that yield 
liquidity indicator code Rr would be subject to a fee of $0.00295 per 
share in securities priced at or above $1.00 and 0.20% of the 
transaction's dollar value in securities priced below $1.00.
Increased Fee for Remove Volume Tiers
    In conjunction with the Exchange's proposal to (i) reduce the 
rebate for Non-Displayed Orders that Add Liquidity from ($0.0021) to 
($0.00205), and (ii) increase the fee for Removing Liquidity from 
$0.0029 to $0.00295, the Exchange also proposes to amend its volume-
based tiered pricing structure applicable to the fees charged for 
executions of Removed Volume on the Exchange. Currently, the Exchange 
charges either: a fee of $0.0028 per share for executions of Removed 
Volume for Equity Members \8\ (``Members'') that qualify for Tier 1 by 
achieving an ADV \9\ that is equal to or greater than 0.10% of TCV \10\ 
and equal to or greater than 1,000 shares of added liquidity; or a fee 
of $0.0027 per share for Members that qualify for Tier 2 by achieving 
an ADV that is equal to or greater than 0.15% of TCV and equal to or 
greater than 1,000 shares of added liquidity. The Exchange now proposes 
to increase the fee to $0.00285 per share for executions of Removed 
Volume Members that qualify for Tier 1 and $0.00275 per share for 
Members that qualify for Tier 2.
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    \8\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
    \9\ The ``ADV'' means average daily volume calculated as the 
number of shares added or removed, combined, per day. ADV is 
calculated on a monthly basis, and the Exchange excludes from its 
calculation of ADV shares added or removed on any day that the 
Exchange's system experiences a disruption that lasts for more than 
60 minutes during regular trading hours, on any day with a scheduled 
early market close, and on the ``Russell Reconstitution Day'' 
(typically the last Friday in June). See the Definitions Section of 
the Exchange Fee Schedule.
    \10\ The ``TCV'' means total consolidated volume calculated as 
the volume in shares reported by all exchanges and reporting 
facilities to a consolidated transaction reporting plan for the 
month for which the fees apply. The Exchange excludes from its 
calculation of TCV volume on any given day that the Exchange's 
system experiences a disruption that lasts for more than 60 minutes 
during Regular Trading Hours, on any day with a scheduled early 
market close, and on the ``Russell Reconstitution Day'' (typically 
the last Friday in June). See the Definitions Section of the 
Exchange Fee Schedule.
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    The Exchange believes that the proposed change to the Remove Volume 
Tiers table provides an incentive for Members to strive for higher ADV 
on the Exchange in order to qualify for the proposed lower fee for 
executions of Removed Volume. As such, the Remove Volume Tiers is 
designed to encourage Members to maintain or increase their order flow 
directed to the Exchange, thereby contributing to a deeper and more 
liquid market to the benefit of all market participants and enhancing 
the attractiveness of the Exchange as a trading venue. The Exchange 
notes that the proposed fees for executions of Remove Volume applicable 
to Members that qualify for one of the Remove Volume Tiers (i.e., 
$0.00285 or $0.00275) is related to the proposed changes to increase 
the fee for Removing Liquidity, discussed above.
Implementation
    The Exchange proposes to implement the changes to the Fee Schedule 
pursuant to this proposal on March 1, 2023.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \11\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \12\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among its Equity Members and issuers and other 
persons using its facilities. The Exchange also believes that the 
proposed rule change is consistent with the objectives of Section 
6(b)(5) \13\ requirements that the rules of an exchange be designed to 
prevent fraudulent and manipulative acts and practices, and to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest, and, particularly, is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange operates in a highly fragmented and competitive market 
in which market participants can readily direct their order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of sixteen registered equities exchanges, and 
there are a number of alternative trading systems and other off-
exchange venues, to which market participants may direct their order 
flow. Based on publicly available information, no single registered 
equities exchange currently has more than approximately 18% of the 
total market share of executed volume of equities trading.\14\ Thus, in 
such a low-concentrated and highly competitive market, no single 
equities exchange possesses significant pricing power in the execution 
of order flow, and the Exchange currently represents less than 2% of 
the overall market share.\15\ The Commission and the courts have 
repeatedly expressed their preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. In Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and 
also recognized that current regulation of the market system ``has been 
remarkably successful in promoting market competition in its broader 
forms that are most important to investors and listed companies.'' \16\
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    \14\ See supra note 3.
    \15\ Id.
    \16\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37499 (June 29, 2005).
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue to reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, and market participants 
can readily trade on competing venues if they deem pricing levels at 
those other venues to be more favorable. The Exchange believes the 
proposal reflects a reasonable and competitive pricing structure 
designed to incentivize market participants to direct their order flow 
to the Exchange, which the Exchange believes would enhance liquidity 
and market quality to

[[Page 16507]]

the benefit of all Members and market participants.
Reduce Standard Rebate for Added Non-Displayed Volume
    The Exchange believes that the proposed reduced standard rebate for 
executions of Added Non-Displayed Volume ($0.00205 per share) is 
reasonable and appropriate because it represents a modest decrease from 
the current standard rebate for executions of Added Non-Displayed 
Volume, and remains competitive with the standard rebates provided by 
at least one other exchange for orders in securities priced at or above 
$1.00 per share that add liquidity.\17\ The Exchange further believes 
that the proposed reduced standard rebate for executions of Added Non-
Displayed Volume are equitably allocated and not unfairly 
discriminatory because each will apply equally to all Members.
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    \17\ See supra notes 5 and 7.
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Increased Standard Fee for Removed Volume
    The Exchange believes the proposed increased standard fee for 
executions of Removed Volume is reasonable and appropriate because it 
represents a modest increase from the current standard fee and, as 
noted above, remains lower than, and competitive with, the standard fee 
charged by several other exchanges to remove liquidity in securities 
priced at or above $1.00 per share.\18\ The Exchange further believes 
that the proposed increased standard fee for executions of Removed 
Volume is equitably allocated and not unfairly discriminatory because 
it will apply to all Members.
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    \18\ See the MEMX equities trading fee schedule on its public 
website (available at https://info.memxtrading.com/fee-schedule/) 
which reflects a standard fee of $0.0029; Cboe EDGX equities trading 
fee schedule on it its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/) which 
reflects a standard fee of $0.0030; and Cboe BZX equities trading 
fee schedule on its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/) which 
reflects a standard fee of $0.0030.
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Conforming Changes to Liquidity Indicator Codes
    The Exchange believes its proposal to decrease the rebate provided 
for Non-Displayed Orders that add liquidity in securities priced at or 
above $1.00 from ($0.0021) to ($0.00205) per share is reasonable and 
equitably allocated among all Members of the Exchange. Liquidity 
indicator codes Aa, Ab, Ac, Ap, and Ar are appended to orders that add 
non-displayed liquidity. The Exchange believes its proposal is 
equitable and not unfairly discriminatory as it will apply to all 
Members equally.
    The Exchange believes its proposal to increase the fee applied for 
orders that remove liquidity in securities priced at or above $1.00 per 
share is reasonable and equitably allocated among all Members of the 
Exchange. The Exchange believes its proposal to update the Liquidity 
Indicator Codes and Associated Fees table to reflect the new rate of 
$0.00295 per share for securities priced at or above $1.00 with 
liquidity indicator codes RA, RB, RC, RR, Ra, Rb, Rc, and Rr is 
equitable and reasonable because it will apply equally to all Members 
of the Exchange. Additionally, the Exchange believes its proposed 
change is reasonable as the Exchange is also proposing to amend the 
Remove Volume Tiers by which a Member can achieve reduced fees of 
$0.00285 or $0.0275 per share for securities priced at or above $1.00 
upon satisfying certain criteria.
Increased Fee for Remove Volume Tiers
    The Exchange believes that the proposed change to the Remove Volume 
Tiers is reasonable because it would provide Members with an additional 
incentive to achieve certain volume thresholds on the Exchange. The 
modest increase in the fee to $0.00285 per share for executions of 
Removed Volume Members that qualify for Tier 1 and $0.00275 per share 
for Members that qualify for Tier 2 are reasonable, equitable, and not 
unfairly discriminatory because they are open to all Members on an 
equal basis and provide additional benefits or discounts that are 
reasonably related to the value to an exchange's market quality 
associated with higher levels of market activity, such as higher levels 
of liquidity provision and the introduction of higher volumes of orders 
into the price and volume discovery processes. The Exchange believes 
the proposed change to the Remove Volume Tier is equitable and not 
unfairly discriminatory for these same reasons, as it is open to all 
Members and is designed to encourage Members to maintain or increase 
their order flow directed to the Exchange, thereby contributing to a 
deeper and more liquid market to the benefit of all market participants 
and enhancing the attractiveness of the Exchange as a trading venue. 
Moreover, the Exchange believes the proposed change to the Remove 
Volume Tiers is a reasonable means to incentivize such increased 
activity, as it provides two different thresholds that a Member may 
achieve by increasing their ADV to an amount equal to or greater than 
the specified TCV threshold.
    For the reasons discussed above, the Exchange submits that the 
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act in that it provides for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities and is not designed to unfairly discriminate between 
customers, issuers, brokers, or dealers. As described more fully below 
in the Exchange's statement regarding the burden on competition, the 
Exchange believes that its transaction pricing is subject to 
significant competitive forces, and that the proposed fees and rebates 
described herein are appropriate to address such forces.

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

    The Exchange does not believe that the proposed change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. The Exchange believes the proposed change 
would encourage Members to maintain or increase their order flow to the 
Exchange, thereby contributing to a deeper and more liquid market to 
the benefit of all market participants and enhancing the attractiveness 
of the Exchange as a trading venue. As a result, the Exchange believes 
the proposal would enhance its competitiveness as a market that 
attracts actionable orders, thereby making it a more desirable 
destination venue for its customers. For these reasons, the Exchange 
believes that the proposal furthers the Commission's goal in adopting 
Regulation NMS of fostering competition among orders, which promotes 
``more efficient pricing of individual stocks for all types of orders, 
large and small.'' \19\
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    \19\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 47396 (June 29, 2005).
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Intramarket Competition
    The Exchange believes that the proposed changes would incentivize 
market participants to direct order flow to the Exchange, thereby 
contributing to a deeper and more liquid market to the benefit of all 
market participants and enhancing the attractiveness of the Exchange as 
a trading venue, which the Exchange believes, in turn, would continue 
to encourage market participants to direct additional order flow to the 
Exchange. Greater liquidity benefits all Members by providing more 
trading opportunities and encourages Members to send orders to the

[[Page 16508]]

Exchange, thereby contributing to robust levels of liquidity, which 
benefits all Members.
    The opportunity to qualify for the Remove Volume Tiers, and thus 
receive the proposed lower fees for executions of Removed Volume, would 
be available to all Members that meet the associated volume requirement 
in any month. The Exchange believes that meeting the volume requirement 
of the Remove Volume Tiers is attainable for market participants, as 
the Exchange believes the thresholds are relatively low and reasonably 
related to the enhanced liquidity and market quality that the Remove 
Volume Tiers is designed to promote. Similarly, the proposed increased 
standard fee for executions of Removed Volume would apply equally to 
all Members. As such, the Exchange believes the proposed changes would 
not impose any burden on intramarket competition that is not necessary 
or appropriate in furtherance of the purposes of the Act.
Intermarket Competition
    The Exchange believes its proposal will benefit competition as the 
Exchange operates in a highly competitive market. Members have numerous 
alternative venues they may participate on and direct their order flow 
to, including fifteen other equities exchanges and numerous alternative 
trading systems and other off-exchange venues. As noted above, no 
single registered equities exchange currently has more than 18% of the 
total market share of executed volume of equities trading.\20\ Thus, in 
such a low-concentrated and highly competitive market, no single 
equities exchange possesses significant pricing power in the execution 
of order flow. Moreover, the Exchange believes that the ever-shifting 
market share among the exchanges from month to month demonstrates that 
market participants can shift order flow in response to new or 
different pricing structures being introduced to the market. 
Accordingly, competitive forces constrain the Exchange's transaction 
fees and rebates generally, including with respect to executions of 
Removed Volume, and market participants can readily choose to send 
their orders to other exchanges and off-exchange venues if they deem 
fee levels at those other venues to be more favorable.
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    \20\ See supra note 3.
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    As described above, the proposed changes are competitive proposals 
through which the Exchange is seeking to encourage additional order 
flow to the Exchange. Such proposed changes to (i) reduce the Adding 
Liquidity Non-Displayed Order rebate and (ii) increase the Removing 
Liquidity fee are comparable to, and competitive with, rates charged by 
other exchanges.\21\ The proposed change to (iii) update the Liquidity 
Indicator Codes and Associated Fees table and (iv) increase the fee for 
Remove Volume Tiers is in conjunction with the Exchange's 
abovementioned proposed changes.
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    \21\ See supra notes 5 and 7.
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    Additionally, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \22\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. Securities and Exchange Commission, the D.C. 
Circuit stated: ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their routing agents, have a wide range of choices of where to 
route orders for execution'; [and] `no exchange can afford to take its 
market share percentages for granted' because `no exchange possess a 
monopoly, regulatory or otherwise, in the execution of order flow from 
broker dealers' . . . .'' \23\ Accordingly, the Exchange does not 
believe its proposed pricing changes impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.
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    \22\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \23\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\24\ and Rule 19b-4(f)(2) \25\ 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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    \24\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \25\ 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 [email protected]. Please include 
File Number SR-PEARL-2023-10 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-2023-10. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for

[[Page 16509]]

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-2023-10, and should be 
submitted on or before April 7, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05443 Filed 3-16-23; 8:45 am]
BILLING CODE 8011-01-P