[Federal Register Volume 88, Number 179 (Monday, September 18, 2023)]
[Notices]
[Pages 64002-64004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20084]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98363; File No. SR-PEARL-2023-43]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule
September 12, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on September 6, 2023, MIAX PEARL, LLC (``MIAX Pearl'' or
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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 (``Fee Schedule'').
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings 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 the exchange grouping of options
exchanges within the routing fee table in Section 1)b) of the Fee
Schedule, Fees for Customer Orders Routed to Another Options Exchange,
to add applicable Member \3\ orders routed to MEMX LLC (``MEMX''), in
anticipation of the launch of MEMX Options, the new options trading
facility of MEMX.\4\ The Exchange originally filed this proposal on
August 31, 2023 (SR-PEARL-2023-40). On September 6, 2023, the Exchange
withdrew SR-PEARL-2023-40 and refiled this proposal. The proposed
changes are immediately effective.
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\3\ 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.
\4\ See Securities Exchange Act Release No. 95445 (August 8,
2022), 87 FR 49894 (August 12, 2022) (SR-MEMX-2022-10) (Notice of
Filing of Amendment No. 1 and Order Granting Accelerated Approval of
a Proposed Rule Change, as Modified by Amendment No. 1, to Adopt
Rules to Govern the Trading of Options on the Exchange for a New
Facility Called MEMX Options).
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Currently, the Exchange assesses routing fees based upon (i) the
origin type of the order; (ii) whether or not it is an order for
standard option classes in the Penny Interval Program \5\ (``Penny
classes'') or an order for standard option classes which are not in the
Penny Interval Program (``Non-Penny classes'') (or other explicitly
identified classes); and (iii) to which away market it is being routed.
This assessment practice is identical to the routing fees assessment
practice currently utilized by the Exchange's affiliates, Miami
International Securities Exchange, LLC (``MIAX Options'') and MIAX
Emerald, LLC (``MIAX Emerald''). This is also similar to the
methodology utilized by the Cboe BZX Exchange, Inc. (``Cboe BZX
Options''), a competing options exchange, in assessing routing fees.
Cboe BZX Options has exchange groupings in its fee schedule, similar to
those of the Exchange, whereby several exchanges are grouped into the
same category, dependent upon the order's origin type and whether it is
a Penny or Non-Penny class.\6\
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\5\ See Exchange Rule 510(c).
\6\ See Cboe U.S. Options Fee Schedules, BZX Options, ``Fee
Codes and Associated Fees,'' at https://www.cboe.com/us/options/membership/fee_schedule/bzx/(last visited September 6, 2023).
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As a result of the anticipated launch of the options trading
facility of MEMX in the third quarter of 2023, the Exchange has
determined to amend the exchange groupings of options exchanges within
the routing fee table to include MEMX and the anticipated associated
costs of routing customer orders to MEMX for execution.
The impact of this proposed change will be increased routing
options for Members. The Exchange notes that routing through the
Exchange is optional and that Members will continue to be able to
choose where to route applicable Member orders. Under this proposed
change, the Exchange will not amend the fees associated with the
exchange groupings. This proposal merely seeks to add MEMX to the
exchange groupings as described in the routing fee table below.
According, with the proposed change, the routing fee table will be
as follows:
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Description Fees
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Routed, Priority Customer, Penny Program, to: NYSE $0.15
American, BOX, Cboe, Cboe EDGX Options, MIAX, Nasdaq
PHLX (except SPY)......................................
Routed, Priority Customer, Penny Program, to: Nasdaq MRX 0.30
Routed, Priority Customer, Penny Program, to: NYSE Arca 0.65
Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq
ISE, NOM, Nasdaq PHLX (SPY only), MIAX Emerald, Nasdaq
BX Options, MEMX.......................................
Routed, Priority Customer, Non-Penny Program, to: NYSE 0.15
American, BOX, Cboe, Cboe EDGX Options, Nasdaq ISE,
MIAX, Nasdaq PHLX......................................
Routed, Priority Customer, Non-Penny Program, to: Nasdaq 0.50
MRX....................................................
Routed, Priority Customer, Non-Penny Program, to: NYSE 1.00
Arca Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX,
NOM, MIAX Emerald, Nasdaq BX Options, MEMX.............
[[Page 64003]]
Routed, Public Customer that is not a Priority Customer, 0.65
Penny Program, to: NYSE American, NYSE Arca Options,
Cboe BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX
Options, Nasdaq GEMX, Nasdaq ISE, Nasdaq MRX, MIAX
Emerald, MIAX, NOM, Nasdaq PHLX, Nasdaq BX Options,
MEMX...................................................
Routed, Public Customer that is not a Priority Customer, 1.00
Non-Penny Program, to: NYSE American, MIAX, Cboe,
Nasdaq PHLX, Cboe EDGX Options.........................
Routed, Public Customer that is not a Priority Customer, 1.15
Non-Penny Program, to: Cboe C2, NOM, BOX, Nasdaq ISE...
Routed, Public Customer that is not a Priority Customer, 1.25
Non-Penny Program, to: Cboe BZX Options, NYSE Arca
Options, Nasdaq GEMX, Nasdaq MRX, Nasdaq BX Options,
MIAX Emerald, MEMX.....................................
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In determining to amend its routing fee table to determine which
category MEMX belongs to the Exchange took into account anticipated
transaction fees and rebates assessed by the away markets to which the
Exchange routes orders, as well as the Exchange's clearing costs,
administrative, regulatory, and technical costs associated with routing
orders to an away market. The Exchange uses unaffiliated routing
brokers to route orders to the away markets; the costs associated with
the use of these services are included in the routing fees specified in
the Fee Schedule. This routing fees structure is not only similar to
the Exchange's affiliates, MIAX Options and MIAX Emerald, but is also
comparable to the structure in place on at least one other competing
options exchange, such as Cboe BZX Options.\7\ The Exchange's routing
fee structure approximates the Exchange's costs associated with routing
orders to away markets. The per-contract transaction fee amount
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) \8\ to execute that
corresponding contract(s) at that corresponding exchange. The Exchange
notes that in determining whether to include certain exchanges in a
certain groupings of options exchanges in the routing fee table, the
Exchange considered the transaction fees and rebates assessed by away
markets, and determined to amend the grouping of exchanges that assess
transaction fees for routed orders within a similar range. This same
logic and structure applies to all of the groupings in the routing fee
table. By utilizing the same structure that is utilized by the
Exchange's affiliates, MIAX Options and MIAX Emerald, the Exchange's
Members will be assessed routing fees in a similar manner. The Exchange
believes that this structure will minimize any confusion as to the
method of assessing routing fees between the three exchanges. The
Exchange notes that its affiliates, MIAX Options and MIAX Emerald, will
file to make the same proposed routing fee changes contained herein.
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\7\ The Cboe BZX Options fee schedule is similar to the
Exchange's Fee Schedule in that it has exchange groupings, whereby
several exchanges are grouped into the same category. See supra note
6. Furthermore, Cboe BZX Options recently filed with the Commission
a proposal to amend fee codes RQ and RR to include MEMX in those
exchange groupings. See Securities Exchange Act Release No. 98126
(August 14, 2023), 88 FR 56681 (August 18, 2023) (SR-CboeBZX-2023-
056) (Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee Schedule).
\8\ This amount is to cover de minimis differences/changes to
away market fees (i.e., minor increases or decreases) that would not
necessitate a fee filing by the Exchange to re-categorize the away
exchange into a different grouping. Routing fees are not intended to
be a profit center for the Exchange and the Exchange's target
regarding routing fees and expenses is to be as close as possible to
net neutral.
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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 \9\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \10\ in particular, in
that it is an equitable allocation of reasonable dues, fees, and other
charges among its Members and issuers and other persons using its
facilities. The Exchange also believes the proposal furthers the
objectives of Section 6(b)(5) of the Act \11\ in that it is designed to
promote just and equitable principles of trade, 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 is not designed to permit unfair discrimination between
customers, issuers, brokers and dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed change to add the new options
facility of MEMX to the exchange groupings of options exchanges within
the routing fee table furthers the objectives of Section 6(b)(4) of the
Act and is reasonable, equitable and not unfairly discriminatory
because the proposed change will continue to apply in the same manner
to all Members that are subject to routing fees. The Exchange believes
the proposed change to add the new options facility of MEMX to the
routing fee table of exchange groupings furthers the objectives of
Section 6(b)(5) of the Act and is designed to promote just and
equitable principles of trade and is not unfairly discriminatory
because the proposed change seeks to recoup costs that will be incurred
by the Exchange when routing customer orders to MEMX on behalf of
Members and does so in the same manner to all Members that are subject
to routing fees. The costs to the Exchange to route orders to away
markets for execution primarily includes transaction fees and rebates
assessed by the away markets to which the Exchange routes orders, in
addition to the Exchange's clearing costs, administrative, regulatory
and technical costs. The Exchange believes that the proposed addition
of MEMX to the exchange groupings would increase the routing options
available to Members. The per-contract transaction fee amount
associated with each grouping approximates the Exchange's all-in cost
(plus an additional, non-material amount) to execute the corresponding
contract at the corresponding exchange.
The Exchange believes that the proposed rule change is equitable
and not unfairly discriminatory because all Members' orders in Penny
classes and Non-Penny classes routed to MEMX will be uniformly assessed
the corresponding fee.
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 Exchange does not believe
the proposed rule change to add MEMX to the routing fee table will
impose any burden on intramarket competition. Rather, the Exchange
believes that the proposal will promote competition by increasing the
available away markets to which Members can route orders to. The
Exchange notes that another options exchange recently added MEMX to its
routing fee tables.\12\
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\12\ See supra note 7.
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[[Page 64004]]
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,\13\ and Rule 19b-4(f)(2) \14\ 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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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
\14\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-PEARL-2023-43 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-2023-43. 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 (https://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
a.m. and 3 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-2023-43 and should be
submitted on or before October 10, 2023.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-20084 Filed 9-15-23; 8:45 am]
BILLING CODE 8011-01-P