Document ID: SEC-2021-0501-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MIAX PEARL, LLC
Posted Date: 2021-04-13T04:00Z

[Federal Register Volume 86, Number 69 (Tuesday, April 13, 2021)]
[Notices]
[Pages 19303-19306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07495]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91496; File No. SR-PEARL-2021-10]

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

April 7, 2021.
    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 March 25 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 add liquidity indicator codes 
to the fee schedule applicable for MIAX Pearl Equities, an equities 
trading facility of the Exchange (the ``Fee Schedule''). The Exchange 
also proposes to add new Section 4 to the Fee Schedule concerning the 
Exchange's obligations under Section 31 of the Act.\3\
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    \3\ 15 U.S.C. 78ee.
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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 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 add liquidity 
indicator codes to the MIAX Pearl Equities Fee Schedule. The Exchange 
also proposes to add new Section 4 to the Fee Schedule concerning the 
Exchange's obligations under Section 31 of the Exchange Act.
Liquidity Indicator Codes
    Liquidity indicator codes would be applied to a transaction so that 
the Equity Member \4\ that entered the order

[[Page 19304]]

may better understand the fee or rebate that will be applied to the 
execution. Each side of a trade would be assigned a liquidity indicator 
code in order to identify the scenario under which the trade occurred. 
This liquidity indicator code will be returned on the real-time trade 
reports sent to the Equity Member that submitted the order. The 
Exchange proposes to add a liquidity indicator code table to the Fee 
Schedule that would identify the liquidity indicator code, describe the 
transaction type, and set forth the applicable fee or rebate.\5\ The 
Exchange also proposes to add the standard liquidity indicator codes to 
the Fee Schedules Standard Rates table. The proposed liquidity 
indicator codes are simply meant to be illustrative and provide Equity 
Members increased clarity as to which fee or rebate may ultimately be 
applied to their execution. The Exchange does not propose to amend any 
fees or rebates.
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    \4\ The term ``Equity Member'' is defined as ``a Member 
authorized by the Exchange to transact business on MIAX Pearl 
Equities. See Exchange Rule 1901.
    \5\ The use of liquidity indicator codes (aka fee codes) is not 
novel and are currently utilized by other equity exchanges. For 
example, see the fee schedules of the Cboe EDGX Exchange, Inc. 
(``EDGX'') available at http://markets.cboe.com/us/equities/membership/fee_schedule/edgx/, Investors Exchange LLC (``IEX'') 
available at https://iextrading.com/trading/fees/, and MEMX LLC. 
(``MEMX'') available at https://info.memxtrading.com/fee-schedule/.
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    The Exchange proposes to describe the below liquidity indicator 
codes in the Fee Schedule.
     Liquidity indicator code AA would be applied to a 
Displayed \6\ order that adds liquidity in Tape A securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code AA would receive the 
existing rebate of $0.0032 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
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    \6\ The term ``Displayed'' is defined as ``[a]n instruction the 
User may attach to an order stating that the order is to be 
displayed by the System on the MIAX Pearl Equities Book. See 
Exchange Rule 2614(c)(3).
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     Liquidity indicator code AB would be applied to a 
Displayed order that adds liquidity in Tape B securities. The Liquidity 
Indicator Code and Associated Fees table would specify that orders that 
yield liquidity indicator code AB would receive the existing rebate of 
$0.0035 per share in securities priced at or above $1.00 and 0.05% of 
the transaction's dollar value in securities priced below $1.00.
     Liquidity indicator code AC would be applied to a 
Displayed order that adds liquidity in Tape C securities. The Liquidity 
Indicator Code and Associated Fees table would specify that orders that 
yield liquidity indicator code AC would receive the existing rebate of 
$0.0032 per share in securities priced at or above $1.00 and 0.05% of 
the transaction's dollar value in securities priced below $1.00.
     Liquidity indicator code Aa would be applied to a Non-
Displayed \7\ order that adds liquidity in Tape A securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code Aa would receive the 
existing rebate of $0.0022 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
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    \7\ The term ``Non-Displayed'' is defined as ``[a]n instruction 
the User may attach to an order stating that any part of the order 
is not to be displayed by the System on the MIAX Pearl Equities 
Book. See Exchange Rule 2614(c)(4).
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     Liquidity indicator code Ab would be applied to a Non-
Displayed order that adds liquidity in Tape B securities. The Liquidity 
Indicator Code and Associated Fees table would specify that orders that 
yield liquidity indicator code Ab would receive the existing rebate of 
$0.0022 per share in securities priced at or above $1.00 and 0.05% of 
the transaction's dollar value in securities priced below $1.00.
     Liquidity indicator code Ac would be applied to a Non-
Displayed order that adds liquidity in Tape C securities. The Liquidity 
Indicator Code and Associated Fees table would specify that orders that 
yield liquidity indicator code Ab would receive the existing rebate of 
$0.0022 per share in securities priced at or above $1.00 and 0.05% of 
the transaction's dollar value in securities priced below $1.00.
     Liquidity indicator code O would be applied to an order 
that is executed during MIAX Pearl Equities' Opening or Re-Opening 
process.\8\ The Liquidity Indicator Code and Associated Fees table 
would specify that orders that yield liquidity indicator code O would 
be subject to the existing rate and provided free of charge in 
securities priced at or above $1.00 and securities priced below $1.00.
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    \8\ See Exchange Rule 2615 for a description of the MIAX Pearl 
Equities Opening and Re-Opening process.
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     Liquidity indicator code RA would be applied to a 
Displayed order \9\ that removes liquidity in Tape A securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code Ra would be subject to the 
existing fee of $0.0028 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
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    \9\ The Exchange notes that, unlike orders that add liquidity, 
whether an order that removes liquidity is either Displayed or Non-
Displayed does not impact the applicable rate. The Exchange proposes 
to provide separate liquidity indicator codes based on whether the 
order that removes liquidity was Displayed or Non-Displayed as a 
convenience to Equity Members.
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     Liquidity indicator code RB would be applied to a 
Displayed order that removes liquidity in Tape B securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code RB would be subject to the 
existing fee of $0.0027 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
     Liquidity indicator code RC would be applied to a 
Displayed order that removes liquidity in Tape C securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code RC would be subject to the 
existing fee of $0.0028 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
     Liquidity indicator code Ra would be applied to a Non-
Displayed order that removes liquidity in Tape A securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code Ra would be subject to the 
existing fee of $0.0028 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
     Liquidity indicator code Rb would be applied to a Non-
Displayed order that removes liquidity in Tape B securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code Rb would be subject to the 
existing fee of $0.0027 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
     Liquidity indicator code Rc would be applied to a Non-
Displayed order that removes liquidity in Tape C securities. The 
Liquidity Indicator Code and Associated Fees table would specify that 
orders that yield liquidity indicator code Rc would be subject to the 
existing fee of $0.0028 per share in securities priced at or above 
$1.00 and 0.05% of the transaction's dollar value in securities priced 
below $1.00.
     Liquidity indicator code X would be applied to an order 
that is routed to and executed on an away market. The Liquidity 
Indicator Code and Associated Fees table would specify that orders that 
yield liquidity indicator code X would be subject to the existing fee 
of $0.0030 per share in securities priced at or above $1.00 and 0.30% 
of the dollar value of

[[Page 19305]]

a transaction in securities priced below $1.00.
    The Exchange also proposes to add the above liquidity indicator 
codes to the Standard Rates table. Specifically, liquidity indicator 
codes AA, AB, and AC would be added to the ``Added Liquidity Displayed 
Order'' column, liquidity indicator codes Aa, Ab, and Ac would be added 
to the ``Added Liquidity Non-Displayed Order'' column, liquidity 
indicator codes RA, RB, RC, Ra, Rb, and Rc would be added to the 
``Removing Liquidity'' column, liquidity indicator code X would be 
added to the ``Routing and Removing Liquidity'' column, and liquidity 
indicator code O would be added to the ``Opening and Re-Opening 
Process'' column.
    Due to the technological changes associated with the proposed 
liquidity indicator codes, the Exchange will issue a trading alert 
publicly announcing the implementation date of when the liquidity 
indicator codes would be available. The Exchange anticipates that the 
implementation date will be in either the second or third quarter of 
2021.
Section 31
    The Exchange also proposes to add new Section 4 to the Fee Schedule 
concerning the Exchange's obligations under Section 31 of the Act. 
Exchange Rule 3000(b) describes the Exchange's obligations under 
Section 31 of the Act and provides that ``[e]ach Equity Member engaged 
in executing transactions on MIAX Pearl Equities shall pay, in such 
manner and at such times as the Exchange shall direct, a Regulatory 
Transaction Fee equal to (i) the rate determined by the Commission to 
be applicable to covered sales occurring on the Exchange in accordance 
with Section 31 of the Exchange Act multiplied by (ii) the Equity 
Member's aggregate dollar amount of covered sales occurring on MIAX 
Pearl Equities during any computational period. Exchange Rule 3000(c) 
provides that ``[t]o the extent the Exchange is charged a fee by a 
third party that results directly from an Equity Member cross-
connecting its trading hardware to the Exchange's System from another 
Trading Center's system that is located in the same data center as the 
Exchange, the Exchange will pass that fee on, in full, to the Equity 
Member.''
    The Exchange proposed to add Section 4 to the Fee Schedule to 
reference the fees described under Exchange Rule 3000. Proposed Section 
4 would provide that ``[a]dditional fees are set forth in Rule 3000 of 
the MIAX Pearl Rule book.'' Proposed Section 4 would further provide 
that ``[s]uch fees include Regulatory Transaction Fees collected to 
fund the Exchange's Section 31 obligations.'' The Exchange notes that 
this proposed addition is to provide additional specificity to the Fee 
Schedule. The Exchange currently includes a similar provision in its 
fee schedule for its options trading facility.\10\ The Exchange's 
affiliates, the Miami International Securities Exchange, LLC (``MIAX'') 
and MIAX Emerald, LLC (``Emerald''), also include similar provisions in 
their respective fee schedules.\11\
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    \10\ See Section 2(a) of the Exchange's options fee schedule 
available at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_PEARL_Options_Fee_Schedule_03012021.pdf.
    \11\ See, e.g., Section 2(a) of the MIAX fee schedule available 
at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_01_13_21.pdf, and Section 2(a) of 
Emerald's fee schedule available at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_03_24_2021.pdf.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \12\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \13\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among its members and issuers and other persons using 
its facilities. The Exchange repeats that is does not propose to amend 
any fees or rebates. The proposal simply seek to provide additional 
specificity within the Fee Schedule to provide Equity Members greater 
certainty about what fee or rebate would apply to their transaction and 
to reference the applicable Exchange Rules regarding the Exchange's 
obligations under Section 31 of the Act.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposed liquidity indicator codes are equitable and reasonable 
because they are simply meant to be illustrative and provide Equity 
Members increased clarity as to which fee or rebate may ultimately be 
applied to their execution. As discussed above, each side of a trade 
would be assigned a liquidity indicator code in order to identify the 
scenario under which the trade occurred. This liquidity indicator code 
would be returned on the real-time trade reports sent to the Equity 
Member that submitted the order. The use of liquidity indicator codes 
is not unique to the Exchange and are currently utilized and described 
in the fee schedules of other equity exchanges.\14\
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    \14\ See supra note 5.
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    The Exchange's proposal to add new Section 4 referencing Exchange 
Rule 3000 regarding fee charged pursuant to Section 31 of the Act is 
also equitable and reasonable because it is simple intended to provide 
additional information regarding the Exchange's obligations under 
Section 31 of the Act and how fees may be passed through to the Equity 
Member. The Exchange currently includes a similar provision in its fee 
schedule for its options trading facility and similar language is in 
the fee schedules of other exchanges.\15\
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    \15\ See supra notes 10 and 11.
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    Lastly, both of the proposed changes are not unfairly 
discriminatory because they will apply equally to all Equity Members.

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. Rather, the proposed change is 
not designed to have a competitive impact and does not seek to amend 
any of the Exchange's current fees or rebates. The proposal is simply 
intended to provide additional specificity in the Fee Schedule so that 
Equity Members may connect an execution to the applicable fee or 
rebate. The proposal also seeks to reference the Exchange's obligations 
under Section 31 of the Act by reference the applicable Exchange Rule 
3000 so that the Exchange's Section 31 obligations are referenced in 
the Fee Schedule making the Fee Schedule more comprehensive.

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,\16\ and Rule 19b-4(f)(2) \17\ 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

[[Page 19306]]

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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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 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-2021-10 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-2021-10. 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 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-2021-10, and should be submitted 
on or before May 4, 2021.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-07495 Filed 4-12-21; 8:45 am]
BILLING CODE 8011-01-P