[Federal Register Volume 84, Number 90 (Thursday, May 9, 2019)]
[Notices]
[Pages 20445-20448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09507]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85771; File No. SR-PEARL-2019-16]


Self-Regulatory Organizations; Miami PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 100, Definitions, Rule 200, Trading Permits, Chapter III, Business 
Conduct, Rule 506, Collection and Dissemination of Quotations, Chapter 
VII, Exercises and Deliveries, Chapter VIII, Records, Reports and 
Audits, Chapter IX, Summary Suspension, Chapter XI, Hearings, Review 
and Arbitration, Chapter XIII, Doing Business With The Public, Chapter 
XIV, Order Protection, Locked and Crossed Markets, Chapter XV, Margins, 
Chapter XVI, Net Capital Requirements, Chapter XVII, Consolidated Audit 
Trail Compliance Rule and Chapter XVIII, Index Options

May 3, 2019.
    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 April 24, 2019, Miami PEARL, LLC (``MIAX 
PEARL'' or the ``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 make a number of minor, non-
substantive edits to Exchange Rule 100, Definitions, Rule 200, Trading 
Permits, Chapter III, Business Conduct, Rule 506, Collection and 
Dissemination of Quotations, Chapter VII, Exercises and Deliveries, 
Chapter VIII, Records, Reports and Audits, Chapter IX, Summary 
Suspension, Chapter XI, Hearings, Review and Arbitration, Chapter XIII, 
Doing Business With The Public, Chapter XIV, Order Protection, Locked 
and Crossed Markets, Chapter XV, Margins, Chapter XVI, Net Capital 
Requirements, Chapter XVII, Consolidated Audit Trail Compliance Rule 
and Chapter XVIII, Index Options for purposes of clarification and 
uniformity.
    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 Exchange proposes to amend Exchange Rule 100, Definitions, to 
make minor non-substantive edits to harmonize the rule text to that of 
the Exchange's affiliate, MIAX Emerald, LLC (``MIAX Emerald''). 
Currently, Exchange Rule 100 does not include a definition for the 
Exchange's affiliate, MIAX Emerald. In order to ensure conformity, the 
Exchange proposes to amend Exchange Rule 100 to adopt the definition 
for MIAX Emerald that is nearly identical to rule text found in

[[Page 20446]]

MIAX Emerald Rule 100. Accordingly, MIAX PEARL proposes to adopt the 
following definition for MIAX Emerald to be included in Exchange Rule 
100: ``The term `MIAX Emerald' means MIAX Emerald, LLC.'' The Exchange 
believes that adopting the definition of the Exchange's affiliate, MIAX 
Emerald, in Exchange Rule 100 creates consistency between MIAX PEARL 
and MIAX Emerald.
    The Exchange also proposes to amend Exchange Rule 100 to make a 
minor non-substantive edit by deleting the term ``PEARL'' and its 
definition for purposes of clarification and uniformity throughout the 
Exchange's rulebook as well as to conform the term ``MIAX PEARL'' to 
how it is defined by the Exchange's affiliates, Miami International 
Securities Exchange, LLC (``MIAX'') and MIAX Emerald. Currently, the 
Exchange's rulebook makes references to ``MIAX PEARL'' as well as 
``PEARL.'' All references to MIAX PEARL in the rule text of the 
Exchange, as well as the rule text of MIAX and MIAX Emerald, should be 
to ``MIAX PEARL,'' and not the single term ``PEARL.'' Accordingly, the 
Exchange proposes to delete the singular term ``PEARL'' and its 
definition in Exchange Rule 100.
    The Exchange also proposes to amend the definitions for 
``Exchange'' and ``MIAX PEARL'' in Exchange Rule 100 in order to delete 
the part of the definition for ``Exchange'' and ``MIAX PEARL'' which 
currently provide that the singular term ``PEARL'' is a reference to 
MIAX PEARL. Exchange Rule 100 currently defines Exchange as follows: 
``The term `Exchange' means the national securities exchange known as 
MIAX PEARL, LLC, MIAX PEARL or PEARL.'' Pursuant to this proposal, the 
definition for Exchange would be as follows: ``The term `Exchange' 
means the national securities exchange known as MIAX PEARL, LLC, or 
MIAX PEARL.'' Exchange Rule 100 currently defines MIAX PEARL as 
follows: ``The term `MIAX PEARL' means the MIAX PEARL, LLC, the 
Exchange or PEARL.'' Pursuant to this proposal, the definition for MIAX 
PEARL would be as follows: ``The term `MIAX PEARL' means the MIAX 
PEARL, LLC, or the Exchange.''
    Next, the Exchange proposes to amend several rules and chapters to 
make minor non-substantive edits to harmonize the rule text to that of 
the Exchange's affiliates, MIAX and MIAX Emerald. Presently, MIAX is 
referred to in the Exchange's rulebook as ``MIAX Options Exchange.'' 
The Exchange proposes to delete the words ``Options Exchange'' from all 
references to MIAX throughout the Exchange's rulebook. Exchange Rule 
100 currently defines MIAX as follows: ``The term `MIAX Options 
Exchange' means Miami International Securities Exchange, LLC.'' 
Pursuant to this proposal, the definition for MIAX would be as follows: 
``The term `MIAX' means Miami International Securities Exchange, LLC.'' 
The Exchange also proposes that all other references throughout the 
Exchange's rulebook to ``MIAX Options Exchange'' would be amended to 
delete the words ``Options Exchange,'' such that all references will be 
to the singular word ``MIAX.'' The proposed amendments would be to 
``MIAX Options Exchange'' references in Rule 200, Trading Permits, 
Chapter III, Business Conduct, Chapter VII, Exercises and Deliveries, 
Chapter VIII, Records, Reports and Audits, Chapter IX, Summary 
Suspension, Chapter XI, Hearings, Review and Arbitration, Chapter XIII, 
Doing Business With The Public, Chapter XIV, Order Protection, Locked 
and Crossed Markets, Chapter XV, Margins, Chapter XVI, Net Capital 
Requirements, Chapter XVII, Consolidated Audit Trail Compliance Rule 
and Chapter XVIII, Index Options. This proposal is for purposes of 
clarification and uniformity throughout the Exchange's rulebook as well 
as to conform the term ``MIAX'' to how it is defined by the Exchange's 
affiliates, MIAX and MIAX Emerald.\3\
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    \3\ See MIAX Rule 100 and MIAX Emerald Rule 100.
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    Next, the Exchange proposes to amend Exchange Rule 200, Trading 
Permits, to adopt similar rule text for the waive-in application 
process to obtain a trading permit for MIAX PEARL that is currently in 
place on MIAX Emerald for applicants holding a MIAX or MIAX Emerald 
trading permit. MIAX Emerald Rule 200 provides that a holder of a MIAX 
or MIAX PEARL trading permit in good standing is eligible to receive 
one MIAX Emerald trading permit in the same Membership category to 
trade on MIAX Emerald.\4\ Member \5\ applicants of MIAX and MIAX PEARL 
are not required to submit a full application for membership on MIAX 
Emerald, but rather only need to complete selected MIAX Emerald forms 
concerning their election to trade on MIAX Emerald, consent to MIAX 
Emerald's jurisdiction, and other operational matters.\6\ This waive-in 
application process is similar to arrangements in place at other 
exchanges.\7\ The Exchange believes that its affiliate, MIAX, would 
also make a nearly identical change to MIAX Rule 200.\8\
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    \4\ See MIAX Emerald Rule 100.
    \5\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \6\ See MIAX Emerald Rule 100.
    \7\ See, e.g., Nasdaq MRX, LLC Rule 302(a) (containing similar 
expedited waive-in membership process for members of the Nasdaq ISE, 
LLC and Nasdaq GEMX, LLC); MIAX Emerald Rule 200(c) (containing 
similar expedited waive-in membership process for members of MIAX); 
and Cboe C2 Exchange, Inc. Rule 3.1(c)(1) (containing similar 
expedited waive-in membership process for members of Cboe).
    \8\ See SR-MIAX-2019-21.
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    MIAX PEARL Rule 200(c)(1) currently has in place the waive-in 
application process for holders of MIAX trading permits who want to 
apply for a trading permit on MIAX PEARL. Exchange Rule 200(c)(1) 
currently provides as follows:

    Holders of MIAX Options Exchange trading permits. A holder of a 
MIAX Options Exchange trading permit in good standing is eligible to 
receive one MIAX PEARL Trading Permit. A holder of a MIAX Options 
Exchange trading permit who wishes to apply to the Exchange is not 
required to complete and submit an Exchange application. Instead 
only Exchange forms concerning election to trade on the Exchange, 
submitting to Exchange jurisdiction, and operational matters need be 
completed and tendered.

    The Exchange proposes to amend Exchange Rule 200(c)(1) to provide 
that holders of MIAX Emerald trading permits may also utilize the 
waive-in application process to obtain a MIAX PEARL trading permit as 
MIAX Emerald is an affiliate of the Exchange. This proposal also 
includes adopting explanatory rule text in parenthesis similar to rule 
text adopted by MIAX Emerald. Accordingly, the Exchange proposes to 
amend Exchange Rule 200(c)(1) to provide as follows:

    Holders of MIAX or MIAX Emerald Trading Permits. A holder of a 
MIAX or MIAX Emerald trading permit in good standing is eligible to 
receive one MIAX PEARL Trading Permit in the same Membership 
category to trade on MIAX PEARL (i.e., a MIAX Registered Market 
Maker or a MIAX Emerald Registered Market Maker is eligible to 
become a MIAX PEARL Market Maker and a MIAX Electronic Exchange 
Member or a MIAX Emerald Electronic Exchange Member is eligible to 
become a MIAX PEARL Electronic Exchange Member). A holder of a MIAX 
or MIAX Emerald trading permit who wishes to apply to the Exchange 
is not required to complete and submit an Exchange application. 
Instead only Exchange forms concerning election to trade on the 
Exchange, submitting to Exchange jurisdiction, and operational 
matters need be completed and tendered.

    The Exchange also proposes to amend the rule text of Exchange Rule 
200(c)(2) for applicants of a MIAX PEARL trading

[[Page 20447]]

permit who do not already hold a MIAX or MIAX Emerald trading permit. 
Exchange Rule 200(c)(2) currently provides as follows:

    Applicants Not Holding MIAX Options Exchange trading permits. An 
applicant not holding a MIAX Options Exchange trading permit seeking 
to hold a MIAX PEARL Trading Permit (``Applicant'') must submit an 
application to the Exchange in accordance with such procedures as 
shall be established by the Exchange. In addition, the following 
shall apply:

    The Exchange proposes to amend Exchange Rule 200(c)(2) to include a 
provision for applicants of a MIAX PEARL trading permit who do not 
already hold a MIAX Emerald trading permit to conform to the rule text 
of MIAX Emerald. Accordingly, the Exchange proposes to amend Exchange 
Rule 200(c)(2) as follows:

    Applicants Not Holding MIAX Trading Permits. An applicant not 
holding a MIAX or MIAX Emerald trading permit seeking to hold a MIAX 
PEARL Trading Permit (``Applicant'') must submit an application to 
the Exchange in accordance with such procedures as shall be 
established by the Exchange. In addition, the following shall apply:

    Next, the Exchange proposes to amend the rule text of Exchange Rule 
200(d) to make a minor non-substantive corrective edit. Exchange Rule 
200(d) currently provides as follows:

    Every Trading Permit holder must have and maintain membership in 
another registered options exchange other than the MIAX Options 
Exchange (that is not registered solely under Section 6(g) of the 
Exchange Act). If such other registered options exchange has not 
been designated by the Commission, pursuant to Rule 17d-1 under the 
Exchange Act, to examine Members for compliance with financial 
responsibility rules, then such Applicant must have and maintain a 
membership in FINRA.

    The Exchange proposes to amend Exchange Rule 200(d) to adopt rule 
text to provide that every trading permit holder of MIAX PEARL must 
have and maintain membership in another options exchange other than 
MIAX or MIAX Emerald to conform to the rule text of the Exchange's 
affiliate, MIAX Emerald. Accordingly, the Exchange proposes to amend 
Exchange Rule 200(d) as follows:

    Membership in Another Registered Options Exchange. Every Trading 
Permit holder must have and maintain membership in another 
registered options exchange other than the MIAX or MIAX Emerald 
(that is not registered solely under Section 6(g) of the Exchange 
Act). If such other registered options exchange has not been 
designated by the Commission, pursuant to Rule 17d-1 under the 
Exchange Act, to examine Members for compliance with financial 
responsibility rules, then such Applicant must have and maintain a 
membership in FINRA.

    Finally, MIAX PEARL proposes to amend Exchange Rule 506, Collection 
and Dissemination of Quotations, to make minor corrective changes to 
the numerical and alphabetical list item identifiers to properly 
conform to the hierarchical heading scheme used throughout the 
Exchange's rulebook. Accordingly, Exchange Rule 506 sub-paragraphs 
(d)(i) through (d)(ii) will be renumbered as (d)(1) through (d)(2).
2. Statutory Basis
    MIAX PEARL believes that its proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \10\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in, securities, to remove impediments to and 
perfect the mechanisms of a free and open market and a national market 
system and, in general, to protect investors and the public interest.
    The Exchange believes the proposed changes promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because the proposed rule changes make a number of minor, non-
substantive corrective changes for purposes of clarification and 
uniformity.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed changes promote just and 
equitable principles of trade and remove impediments to and perfect the 
mechanism of a free and open market and a national market system 
because the proposed rule changes correct errors in the hierarchical 
heading scheme to provide uniformity in the Exchange's rulebook. The 
Exchange notes that the proposed changes to Rule 100, Chapter III, Rule 
506, Chapter VII, Chapter VIII, Chapter IX, Chapter XI, Chapter XIII, 
Chapter XIV, Chapter XV, Chapter XVI, Chapter XVII and Chapter XVIII do 
not alter the application of each rule. As such, the proposed 
amendments would foster cooperation and coordination with persons 
engaged in facilitating transactions in securities and would remove 
impediments to and perfect the mechanism of a free and open market and 
a national exchange system. In particular, the Exchange believes that 
the proposed changes will provide greater clarity to Members and the 
public regarding the Exchange's Rules. It is in the public interest for 
rules to be accurate and concise so as to eliminate the potential for 
confusion.
    The Exchange believes the proposed changes to Exchange Rule 200 
promotes just and equitable principles of trade and removes impediments 
to and perfects the mechanism of a free and open market and a national 
market system because the proposed changes will align MIAX PEARL Rule 
200 with MIAX Emerald Rule 200 regarding trading permits. The Exchange 
believes this consistency across exchanges would remove impediments to 
and perfect the mechanism of a free and open market by ensuring that 
members, regulators and the public can more easily navigate the 
Exchange's rulebook and better understand the application process for 
trading permits. The Exchange also believes that although MIAX Emerald 
rules may, in certain instances, intentionally differ from MIAX PEARL 
rules, the proposed changes will promote uniformity with MIAX PEARL 
with respect to rules that are intended to be identical. The Exchange 
believes that this proposal will reduce the potential for confusion by 
its Members that are also Members of MIAX Emerald if the only 
differences between MIAX Emerald rules and MIAX PEARL rules are those 
that are specific to each exchange.
    The Exchange also believes the proposed changes to Exchange Rule 
200 promote just and equitable principles of trade and removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system because MIAX PEARL and its affiliates, MIAX 
and MIAX Emerald, have substantially the same Members, and by adopting 
the waive-in application process for those Members already holding 
trading permits on MIAX and/or MIAX Emerald, promotes the more 
effective utilization of time and resources of the Exchange. 
Furthermore, because MIAX and MIAX Emerald trading permit holders have 
already been vetted, the Exchange's proposal to amend the waive-in 
application process in Exchange Rule 200 aligns the trading permit 
application process with that of the Exchange's affiliate, MIAX 
Emerald, preventing unnecessary regulatory burdens and promoting the 
efficient administration of the Exchange's rules.

[[Page 20448]]

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 changes will 
have no impact on competition as they are not designed to address any 
competitive issues but rather are designed to add additional clarity to 
existing rules and to remedy minor non-substantive issues in the text 
of various rules identified in this proposal.
    The Exchange does not believe that the proposed rule changes to 
Exchange Rule 200 will impose any burden on intermarket competition not 
necessary or appropriate in furtherance of the purposes of the Act 
because MIAX PEARL and its affiliates, MIAX and MIAX Emerald, have 
substantially the same Members, and by adopting the waive-in 
application process for those Members already holding trading permits 
on MIAX and/or MIAX Emerald promotes the more effective utilization of 
time and resources of the Exchange. Furthermore, because MIAX and MIAX 
Emerald trading permit holders have already been vetted, the Exchange's 
proposal to amend the waive-in application process in Exchange Rule 200 
aligns the trading permit application process with that of the 
Exchange's affiliate, MIAX Emerald, preventing unnecessary regulatory 
burdens and promoting the efficient administration of the Exchange's 
rules.

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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    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-2019-16 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-2019-16. 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-2019-16, and should be submitted 
on or before May 30, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09507 Filed 5-8-19; 8:45 am]
 BILLING CODE 8011-01-P