Document ID: SEC-2023-0525-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2023-05-12T04:00Z

[Federal Register Volume 88, Number 92 (Friday, May 12, 2023)]
[Notices]
[Pages 30815-30817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10127]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97454; File No. SR-PEARL-2023-21]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 2622, Limit Up-Limit Down Plan and Trading Halts

May 8, 2023.
    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 May 3, 2023, 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 proposes to make a correction to a recently filed 
proposal to amend Exchange Rule 2622, which sets forth common criteria 
and procedures for halting and resuming trading in equity securities on 
the Exchange's equity trading platform (referred to herein as ``MIAX 
Pearl Equities'') in the event of regulatory or operational issues.
    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
    In conjunction with the adoption of an amended Nasdaq UTP Plan 
proposed by its participants (``Amended Nasdaq UTP Plan''),\3\ the 
Exchange recently amended Exchange Rule 2622 to integrate several 
definitions and concepts from the Amended Nasdaq UTP Plan and to 
reorganize the rule in light of the Exchange's experience with applying 
the rule over the past few years as a national securities exchange.\4\ 
In sum, the proposal amended Exchange Rule 2622 to set forth common 
criteria and procedures for halting and resuming trading in equity 
securities on MIAX Pearl Equities in the event of regulatory or 
operational issues. As part of that proposal, the Exchange adopted 
paragraph (h)(3)(C)(ii) of Exchange Rule 2622, which provides that 
``orders entered during the Operational Halt \5\ will not be accepted, 
unless subject to instructions that the order will be directed to 
another Trading Center.'' The text of paragraph (h)(3)(C)(ii) of 
Exchange Rule 2622 was adopted in error since the Exchange does accept 
orders during an Operational Halt, as set forth under Exchange Rule 
2615(e),\6\ described below. Paragraph (h)(3)(C)(ii) of Exchange Rule 
2622, therefore, conflicts with existing provisions in Exchange Rule 
2615(e). The Exchange proposes to amend paragraph (h)(3)(C)(ii) of 
Exchange Rule 2622 to clarify how the Exchange handles orders during an 
operational halt and to be consistent with current Exchange Rule 
2615(e).
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    \3\ On February 11, 2021, the Nasdaq UTP Plan participants filed 
Amendment 50 to the Plan, to revise provisions governing regulatory 
and operational halts. See Letter from Robert Brooks, Chairman, UTP 
Operating Committee, Nasdaq UTP Plan, to Vanessa Countryman, 
Secretary, Securities and Exchange Commission, dated February 11, 
2021. The Nasdaq UTP Plan subsequently filed two partial amendments 
to the 50th Amendment, on March 31, 2021 and on April 7, 2021. The 
Commission approved the amendments on May 28, 2021. See Securities 
Exchange Act Release No. 34-92071 (May 28, 2021), 86 FR 29846 (June 
3, 2021) (S7-24-89). The Amended Nasdaq UTP Plan includes provisions 
requiring participant self-regulatory organizations (``SROs'') to 
honor a Regulatory Halt declared by the Primary Listing Market. The 
provisions in the Nasdaq UTP Plan, and the plan for consolidation of 
data for non-Nasdaq-listed securities, the Consolidated Tape System 
and Consolidated Quotations System (collectively, the ``CTA/CQS 
Plan''), include provisions similar to the changes proposed by the 
Exchange in this filing.
    \4\ See Securities Exchange Act Release No. 97093 (March 9, 
2023), 88 FR 16045 (March 15, 2023) (SR-PEARL-2023-11).
    \5\ Exchange Rule 2622(h)(1)(D) defines ``Operational Halt'' as 
having the same meaning as in Section X.A.7 of the Amended Nasdaq 
UTP Plan. Specifically, the Exchange defined Operational Halt to 
mean a halt in trading in one or more securities only on the market 
declaring the halt and is not a Regulatory Halt. An Operational Halt 
is effective only on the Exchange; other markets are not required to 
halt trading in the impacted securities. See also id.
    \6\ See Securities Exchange Act Release No. 89563 (August 14, 
2020), 85 FR 51510 (August 20, 2020) (SR-PEARL-2020-03) (adopting 
Exchange Rule 2615(e)).
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    Exchange Rule 2615(e) describes the Exchange's Re-Opening Process 
and provides, in sum, that while an equity security is subject to a 
halt, other than a halt initiated pursuant to Exchange Rule 2622(b)(2) 
following a Level 3 Market Decline, suspension, or pause in trading, 
the Exchange will accept orders for queuing prior to the resumption of 
trading in the security for participation in the Re-Opening Process. 
Exchange Rule 2615(e)(1) further provides, in sum, that the Re-Opening 
Process will occur in the same manner as the Exchange's Opening 
Process,\7\ and enumerates certain exceptions. One exception is set 
forth under Exchange Rule 2615(e)(1)(A), which provides that

[[Page 30816]]

Intermarket Sweep Orders (``ISOs'') \8\ and orders that include a time-
in-force of Immediate-or-Cancel (``IOC'') \9\ will be cancelled or 
rejected, as applicable.\10\ These provisions conflict with recently 
adopted paragraph (h)(3)(C)(ii) of Exchange Rule 2622. The Exchange, 
therefore, proposes to amend paragraph (h)(3)(C)(ii) of Exchange Rule 
2622 to be consistent with Exchange Rule 2615(e)(1).\11\
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    \7\ See Exchange Rule 2615(a)-(c) for a description of the 
Exchange's Opening Process.
    \8\ See Exchange Rule 2614(d) for a description of ISOs.
    \9\ See Exchange Rule 2614(b)(1) for a description of the IOC 
time-in-force.
    \10\ Exchange Rule 2615(e)(1)(A) also provides that Orders with 
a time-in-force of Regular Hours Only (``RHO'') that include a Post 
Only instruction or a Minimum Execution Quantity instruction will be 
accepted and retained during a halt but are not eligible to 
participate in the Re-Opening Process. See Exchange Rule 2614(b)(2) 
for a description of the RHO time-in-force. See Exchange Rule 
2614(c)(2) for a description of the Post Only instruction. See 
Exchange Rule 2614(c)(7) for a description of the Minimum Execution 
Quantity instruction.
    \11\ MIAX Pearl Equities has not experienced an Operational Halt 
since the proposed amendments to Exchange Rule 2622 were filed on 
February 28, 2023.
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    As amended, paragraph (h)(3)(C)(ii) of Exchange Rule 2622 would 
provide that, ``[d]uring any Operational Halt, the System will accept 
all orders, except orders designated as ISO and orders that include a 
time-in-force of IOC, for queuing and participation in the Re-Opening 
Process pursuant to Rule 2615(e).'' As amended, paragraph (h)(3)(C)(ii) 
of Exchange Rule 2622 would reflect current functionality that is 
currently set forth under Exchange Rule 2615(e) and the proposed 
amendments would remove any chance for potential investor confusion 
regarding how the Exchange handles orders in equity securities during 
an Operational Halt. The Exchange does not propose any other changes to 
Exchange Rule 2622.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of section 6(b) of the Act.\12\ Specifically, the 
proposal is consistent with section 6(b)(5) of the Act \13\ because it 
would promote just and equitable principles of trade, remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system, and, in general, protect investors and 
the public interest because it proposes to correct paragraph 
(h)(3)(C)(ii) of Exchange Rule 2622 to reflect current functionality 
that is set for under Exchange Rule 2615(e) and remove any conflict 
between the two rules. The Exchange does not propose any other changes 
to Exchange Rule 2622. The proposed rule change would prevent any 
potential investor confusion by providing clarity within the rule text 
and make the Exchange's rules easier to understand, thereby removing 
impediments to and perfecting the mechanism of a free and open market 
and a national market system.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
proposed rule change would not have any impact on inter-market 
competition or intra-market competition because it simply updates 
paragraph (h)(3)(C)(ii) of Exchange Rule 2622 to reflect current 
functionality that is set forth under Exchange Rule 2615(e) and removes 
any conflict between the two rules. The proposed rule change does not 
propose any new functionality, products, or services, and thus, would 
not have any impact on competition.

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 \14\ and Rule 19b-4(f)(6) \15\ 
thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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, 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) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investor and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative upon filing. The Exchange states that 
the proposed rule change would remove potential investor confusion 
regarding how the Exchange handles orders in equity securities during 
an Operational Halt. For this reason, and because the proposed rule 
change does not raise any novel regulatory issues, the Commission 
believes waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission 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 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-2023-21 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-2023-21. This file 
number should be included on the subject line if email is used. To help 
the

[[Page 30817]]

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. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-PEARL-2023-21 and should be submitted on 
or before June 2, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10127 Filed 5-11-23; 8:45 am]
BILLING CODE 8011-01-P