Document ID: SEC-2021-1635-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2021-11-22T05:00Z

[Federal Register Volume 86, Number 222 (Monday, November 22, 2021)]
[Notices]
[Pages 66361-66363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25360]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93594; File No. SR-PEARL-2021-55]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX 
Pearl Options Fee Schedule and the MIAX Pearl Equities Fee Schedule To 
Establish a Policy Relating to Billing Errors

November 16, 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 November 5, 2021, MIAX PEARL, LLC (``MIAX Pearl'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Pearl Options 
Fee Schedule and the MIAX Pearl Equities Fee Schedule to establish a 
policy relating to billing errors.
    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 MIAX's Pearl 
Fee Schedule and the MIAX Pearl Equities Fee Schedule to establish a 
policy relating to billing errors. More specifically, the Exchange 
proposes to amend the footer on the Title page of each Fee Schedule to 
adopt language that would provide that all fees and rebates assessed 
prior to the three full calendar months before the month in which the 
Exchange becomes aware of a billing error shall be considered final. 
Particularly, the Exchange will resolve an error by crediting or 
debiting Members \3\ and non-Members based on the fees or rebates that 
should have been applied in the three full calendar months preceding 
the month in which the Exchange became aware of the error, which 
includes all impacted transactions that occurred during those 
months.\4\ The Exchange will apply the three month look back regardless 
of whether the error was discovered by the Exchange or by a Member or 
non-Member that submitted a fee dispute to the Exchange.\5\
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    \3\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of the MIAX 
Pearl Rules for purposes of trading on the Exchange as an 
``Electronic Exchange Member'' or ``Market Maker.'' Members are 
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
    \4\ For example, if the Exchange becomes aware of a transaction 
fee billing error on December 1, 2021, the Exchange will resolve the 
error by crediting or debiting Members and non-Members based on the 
fees or rebates that should have been applied to any impacted 
transactions during September, October and November 2021. The 
Exchange notes that because it bills in arrears, the Exchange would 
be able to correct the error in advance of issuing the December 2021 
invoice and therefore, transactions impacted through the date of 
discovery (in this example, December 1, 2021) and thereafter, would 
be billed correctly.
    \5\ The Exchange notes that the current policy which states that 
all fee disputes must be submitted no later than sixty (60) days 
after receipt of a billing invoice will remain in place.
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    The purpose of the proposed change is to encourage Members and non-
Members to promptly review their Exchange invoices so that any disputed 
charges can be addressed in a timely manner. The Exchange notes that it 
provides Members with both daily and monthly fee reports and thus 
believes they should be aware of any potential billing errors within 
three months. Further, any fees assessed on non-Members are sent as 
monthly invoices, and thus these firms will likewise receive sufficient 
notice of any potential billing errors. The requirement that Members 
and non-Members submit disputes in writing and provide supporting 
documentation in a timely manner while the information and data 
underlying those charges (e.g., applicable fees and order information) 
is still easily and readily available is not changing under this 
proposal.
    The proposed rule change to provide all fees and rebates assessed 
prior to the three full calendar months before the month in which the 
Exchange becomes aware of a billing error shall be considered final 
provides both the Exchange and Members and non-Members finality and the 
ability to close their books after a known period of time. The proposed 
change encourages Members and non-Members to provide a timely review of 
their billing invoices.
    The Exchange notes that it routinely conducts audits of its Members 
and non-Members to ensure that each is complying with the terms and 
conditions of the subscriber agreement they have signed. The audit 
process is independent of the billing process. The audit function is 
administered by the Exchange's Member Services Group and the billing 
function is administered by the Exchange's Trading Operations Group. 
Each group is charged with distinct responsibilities that do not 
overlap. The proposed billing fee finality provision is not intended to 
circumvent the audit process in any manner and the adoption of the 
three month look back period, beyond which billing errors would be 
considered final, would not affect a Member or non-Member's ability to 
take a position with respect to billing charges identified through the 
audit process.

[[Page 66362]]

    Further, the Exchange notes that the proposed change is similar to 
a policy currently in place at another exchange.\6\
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    \6\ See Securities Exchange Act Release No. 91836 (May 11, 
2021), 86 FR 26765 (May 17, 2021) (SR-BOX-2021-08).
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedules 
is consistent with Section 6(b) of the Act.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(5) \8\ requirements that the rules of an exchange be designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. Additionally, the Exchange 
believes the proposed rule change is consistent with the Section 
6(b)(5) \9\ requirement that the rules of an exchange not be designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
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    The Exchange believes that establishing a policy that all fees and 
rebates are final after three months (i.e., resolving billing errors 
only for the three full calendar months preceding the month in which 
the Exchange became aware of the error), is reasonable as both the 
Exchange and Members and non-Members have an interest in knowing when 
its fee assessments are final and when reliance can be placed upon 
those assessments. Indeed, without some deadline on billing errors, the 
Exchange and Members and non-Members would never be able to close their 
books with any confidence. Furthermore, as noted above, another 
exchange similarly considers its fees final after a similar period of 
time. The proposed change is also equitable, and not unfairly 
discriminatory because it will apply equally to all Members (and non-
Members that pay Exchange fees) and apply in cases where either the 
Member (or non-Member) discovers the error or the Exchange discovers 
the error.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change would 
establish a policy that provides clarity regarding billing errors that 
would apply equally to all Members. Additionally, the proposed rule 
change is similar to the rules of another exchange.\10\ The Exchange 
does not believe such proposed changes would impair the ability of 
Members or competing order execution venues to maintain their 
competitive standing in the financial markets. Moreover, because the 
proposed changes would apply equally to all Members, the proposal does 
not impose any burden on competition.
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    \10\ Supra note 6.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days 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 \11\ and Rule 19b-4(f)(6) \12\ 
thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative for 30 days after the date of its filing. 
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has asked the 
Commission to waive the 30-day operative delay. The Exchange states 
that waiver of the operative delay is consistent with the protection of 
investors and the public interest because such a waiver would allow 
Members and non-Members to immediately benefit from having a clearly 
stated policy regarding fee finality for billing disputes and provide 
certainty and finality to current and prospective billing errors. In 
addition, the Exchange states that the proposed rule change is 
comparable to other policies and practices that are already established 
at another exchange.
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to modify its Fee Schedules to 
immediately adopt a policy relating to billing errors that is designed 
to provide clarity and certainty with respect to when Exchange fees and 
rebates may be considered final. Further, the proposed rule change is 
substantially similar to provisions currently in effect on other 
national securities exchanges \15\ and therefore does not raise any new 
or novel regulatory issues. Accordingly, the Commission waives the 
operative delay and designates the proposed rule change operative upon 
filing.\16\
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    \15\ See, e.g., supra note 6.
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-PEARL-2021-55 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-2021-55. This file

[[Page 66363]]

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-2021-55 and should be submitted on 
or before December 13, 2021.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25360 Filed 11-19-21; 8:45 am]
BILLING CODE 8011-01-P