[Federal Register Volume 89, Number 51 (Thursday, March 14, 2024)]
[Notices]
[Pages 18694-18699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05362]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99695; File No. SR-PEARL-2024-11]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Its 
Equities Fee Schedule Regarding the NBBO Setter Plus Program

March 8, 2024.
    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 February 29, 2024, 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 amend the fee schedule (the 
``Fee Schedule'') applicable to MIAX Pearl Equities, an equities 
trading facility of the Exchange.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-equities/pearl-equities/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

[[Page 18695]]

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 Fee Schedule to adopt an 
alternative method for Equity Members \3\ to achieve an enhanced rebate 
pursuant to the NBBO Setter Plus Program (referred to in this filing as 
the ``NBBO Program'').\4\
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    \3\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
    \4\ See, generally, Fee Schedule, Section 1)c).
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Background of the NBBO Program
    In general, the NBBO Program provides enhanced rebates for Equity 
Members that add displayed liquidity (``Added Displayed Volume'') in 
securities priced at or above $1.00 per share in all Tapes based on 
increasing volume thresholds and increasing market quality levels 
(described below), and provides an additive rebate \5\ applied to 
orders that set the NBB or NBO \6\ upon entry.\7\ The NBBO Program was 
implemented beginning September 1, 2023 and subsequently amended when 
the Exchange adopted two additional tiers of rebates, effective January 
1, 2024.\8\
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    \5\ The Exchange does not propose to amend the NBBO Setter 
Additive Rebate, which is an additive rebate of ($0.0003) per share 
for executions of orders in securities priced at or above $1.00 per 
share that set the NBB or NBO on MIAX Pearl Equities with a minimum 
size of a round lot. See Fee Schedule, Section 1)c).
    \6\ With respect to the trading of equity securities, the term 
``NBB'' shall mean the national best bid, the term ``NBO'' shall 
mean the national best offer, and the term ``NBBO'' shall mean the 
national best bid and offer. See Exchange Rule 1901.
    \7\ See supra note 4.
    \8\ See Securities Exchange Act Release Nos. 98472 (September 
21, 2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-2023-45) and 
99318 (January 11, 2024), 89 FR 3488 (January 18, 2024) (SR-PEARL-
2023-73).
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    Pursuant to the NBBO Setter Plus Table in Section 1)c) of the Fee 
Schedule, the NBBO Program provides six volume tiers enhanced by three 
market quality levels to provide increasing rebates in this segment. 
The six volume tiers are achievable by greater volume from the best of 
three alternative methods. The three market quality levels are 
achievable by greater NBBO participation in a minimum number of 
specific securities (described below).
    MIAX Pearl Equities first determines the applicable NBBO Program 
tier based on three different volume calculation methods. The three 
volume-based methods to determine the Equity Member's tier for purposes 
of the NBBO Program are calculated in parallel in each month, and each 
Equity Member receives the highest tier achieved from any of the three 
methods each month. All three volume calculation methods are based on 
an Equity Member's respective ADAV,\9\ NBBO Set Volume, or ADV, each as 
a percent of industry TCV \10\ as the denominator.
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    \9\ ``ADAV'' means average daily added volume calculated as the 
number of shares added per day and ``ADV'' means average daily 
volume calculated as the number of shares added or removed, 
combined, per day. ADAV and ADV are calculated on a monthly basis. 
``NBBO Set Volume'' means the ADAV in all securities of an Equity 
Member that sets the NBB or NBO on MIAX Pearl Equities. The Exchange 
excludes from its calculation of ADAV, ADV, and NBBO Set Volume 
shares added or removed on any day that the Exchange's system 
experiences a disruption that lasts for more than 60 minutes during 
regular trading hours, on any day with a scheduled early market 
close, and on the ``Russell Reconstitution Day'' (typically the last 
Friday in June). Routed shares are not included in the ADAV or ADV 
calculation. See the Definitions section of the Fee Schedule.
    \10\ ``TCV'' means total consolidated volume calculated as the 
volume in shares reported by all exchanges and reporting facilities 
to a consolidated transaction reporting plan for the month for which 
the fees apply. The Exchange excludes from its calculation of TCV 
volume on any given day that the Exchange's system experiences a 
disruption that lasts for more than 60 minutes during Regular 
Trading Hours, on any day with a scheduled early market close, and 
on the ``Russell Reconstitution Day'' (typically the last Friday in 
June). See id.
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    Under volume calculation Method 1, the Exchange provides tiered 
rebates based on an Equity Member's ADAV as a percentage of TCV. An 
Equity Member qualifies for the base rebates in Tier 1 for executions 
of orders in securities priced at or above $1.00 per share for Added 
Displayed Volume across all Tapes by achieving an ADAV of at least 
0.00% and less than 0.035% of TCV. An Equity Member qualifies for the 
enhanced rebates in Tier 2 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an ADAV of at least 0.035% and less than 0.05% 
of TCV. An Equity Member qualifies for the enhanced rebates in Tier 3 
for executions of orders in securities priced at or above $1.00 per 
share for Added Displayed Volume across all Tapes by achieving an ADAV 
of at least 0.05% and less than 0.08% of TCV. An Equity Member 
qualifies for the enhanced rebates in Tier 4 for executions of orders 
in securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an ADAV of at least 0.08% and less 
than 0.25% of TCV. An Equity Member qualifies for the enhanced rebates 
in Tier 5 for executions of orders in securities priced at or above 
$1.00 per share for Added Displayed Volume across all Tapes by 
achieving an ADAV of at least 0.25% and less than 0.40% of TCV. 
Finally, an Equity Member qualifies for the enhanced rebates in Tier 6 
for executions of orders in securities priced at or above $1.00 per 
share for Added Displayed Volume across all Tapes by achieving an ADAV 
of at least 0.40% of TCV.
    Under volume calculation Method 2, the Exchange provides tiered 
rebates based on an Equity Member's NBBO Set Volume as a percentage of 
TCV. Under volume calculation Method 2, an Equity Member qualifies for 
the base rebates in Tier 1 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an NBBO Set Volume of at least 0.00% and less 
than 0.01% of TCV. An Equity Member qualifies for the enhanced rebates 
in Tier 2 for executions of orders in securities priced at or above 
$1.00 per share for Added Displayed Volume across all Tapes by 
achieving an NBBO Set Volume of at least 0.01% and less than 0.015% of 
TCV. An Equity Member qualifies for the enhanced rebates in Tier 3 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an NBBO Set 
Volume of at least 0.015% and less than 0.02% of TCV. An Equity Member 
qualifies for the enhanced rebates in Tier 4 for executions of orders 
in securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an NBBO Set Volume of at least 
0.02% and less than 0.03% of TCV. An Equity Member qualifies for the 
enhanced rebates in Tier 5 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an NBBO Set Volume of at least 0.03% and less 
than 0.08% of TCV. Finally, an Equity Member qualifies for the enhanced 
rebates in Tier 6 for executions of orders in securities priced at or 
above $1.00 per share for Added Displayed Volume across all Tapes by 
achieving an NBBO Set Volume of at least 0.08% of TCV.
    Under volume calculation Method 3, the Exchange provides tiered 
rebates based on an Equity Member's ADV as a percentage of TCV. An 
Equity Member qualifies for the base rebates in Tier 1 for executions 
of orders in securities priced at or above $1.00 per share for Added 
Displayed Volume across all Tapes by achieving an ADV of at least 0.00% 
and less than 0.15% of TCV. An Equity Member qualifies for the

[[Page 18696]]

enhanced rebates in Tier 2 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an ADV of at least 0.15% and less than 0.18% of 
TCV. An Equity Member qualifies for the enhanced rebates in Tier 3 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADV of at 
least 0.18% and less than 0.20% of TCV. An Equity Member qualifies for 
the enhanced rebates in Tier 4 for executions of orders in securities 
priced at or above $1.00 per share for Added Displayed Volume across 
all Tapes by achieving an ADV of at least 0.20% and less than 0.60% of 
TCV. An Equity Member qualifies for the enhanced rebates in Tier 5 for 
executions of orders in securities priced at or above $1.00 per share 
for Added Displayed Volume across all Tapes by achieving an ADV of at 
least 0.60% and less than 1.00% of TCV. Finally, an Equity Member 
qualifies for the enhanced rebates in Tier 6 for executions of orders 
in securities priced at or above $1.00 per share for Added Displayed 
Volume across all Tapes by achieving an ADV of at least 1.00% of TCV.
    After the volume calculation is performed to determine highest tier 
achieved by the Equity Member, the applicable rebate is calculated 
based on two different measurements based on the Equity Member's 
participation at the NBBO on the Exchange in certain securities 
(referenced below).
    The Exchange provides one column of base rebates (referred to in 
the NBBO Program table as ``Level A'') and two columns of enhanced 
rebates (referred to in the NBBO Program table as ``Level B'' and 
``Level C''),\11\ depending on the Equity Member's Percent Time at NBBO 
\12\ on MIAX Pearl Equities in a certain amount of specified securities 
(``Market Quality Securities'' or ``MQ Securities'').\13\ The NBBO 
Setter Plus Table specifies the percentage of time that the Equity 
Member must be at the NBB or NBO on MIAX Pearl Equities in at least 200 
symbols out of the full list of 1,000 MQ Securities (which symbols may 
vary from time to time based on market conditions). The list of MQ 
Securities is generally based on the top multi-listed 1,000 symbols by 
ADV across all U.S. securities exchanges. The list of MQ Securities is 
updated monthly by the Exchange and published on the Exchange's 
website.\14\
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    \11\ For the purpose of determining qualification for the 
rebates described in Level B and Level C of the Market Quality Tier 
columns in the NBBO Setter Plus Program, the Exchange will exclude 
from its calculation: (1) any trading day that the Exchange's system 
experiences a disruption that lasts for more than 60 minutes during 
regular trading hours; (2) any day with a scheduled early market 
close; and (3) the ``Russell Reconstitution Day'' (typically the 
last Friday in June). See the Definitions section of the Fee 
Schedule.
    \12\ ``Percent Time at NBBO'' means the aggregate of the 
percentage of time during regular trading hours where a Member has a 
displayed order of at least one round lot at the national best bid 
(``NBB'') or national best offer (``NBO''). See id.
    \13\ ``Market Quality Securities'' or ``MQ Securities'' shall 
mean a list of securities designated as such, that are used for the 
purposes of qualifying for the rebates described in Level B and 
Level C of the Market Quality Tier columns in the NBBO Setter Plus 
Program. The universe of these securities will be determined by the 
Exchange and published on the Exchange's website. See id.
    \14\ See e.g, MIAX Pearl Equities Exchange--Market Quality 
Securities (MQ Securities) List, effective February 1 through 
February 29, 2024, available at https://www.miaxglobal.com/markets/us-equities/pearl-equities/fees (last visited February 26, 2024).
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    The base rebates (``Level A'') are as follows: ($0.00240) \15\ per 
share in Tier 1; ($0.00290) per share in Tier 2; ($0.00300) per share 
in Tier 3; ($0.00310) per share in Tier 4; ($0.00345) per share in Tier 
5; and ($0.00350) per share in Tier 6. Under Level B, the Exchange 
provides enhanced rebates for executions of orders in securities priced 
at or above $1.00 per share for Added Displayed Volume across all Tapes 
if the Equity Member's Percent Time at NBBO is at least 25% and less 
than 50% in at least 200 MQ Securities per trading day during the 
month. The Level B rebates are as follows: ($0.00250) per share in Tier 
1; ($0.00295) per share in Tier 2; ($0.00305) per share in Tier 3; 
($0.00315) per share in Tier 4; ($0.00350) per share in Tier 5; and 
($0.00355) per share in Tier 6. Under Level C, the Exchange provides 
enhanced rebates for executions of orders in securities priced at or 
above $1.00 per share for Added Displayed Volume across all Tapes if 
the Equity Member's Percent Time at NBBO is at least 50% in at least 
200 MQ Securities per trading day during the month. The Level C rebates 
are as follows: ($0.00260) per share in Tier 1; ($0.00300) per share in 
Tier 2; ($0.00310) per share in Tier 3; ($0.00320) per share in Tier 4; 
($0.00355) per share in Tier 5; and ($0.00360) per share in Tier 6.
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    \15\ Rebates are indicated by parentheses. See the General Notes 
section of the Fee Schedule.
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Proposal To Adopt Alternative Method To Achieve Tier 5, Level C Rebate 
for the NBBO Program
    The Exchange proposes to amend the NBBO Setter Plus Table in 
Section 1)c) of the Fee Schedule to adopt an alternative method for 
Equity Members to qualify for the Tier 5, Level C rebate of ($0.00355) 
per share for the NBBO Program. In particular, the Exchange proposes to 
adopt new footnote 4 below the NBBO Setter Plus table, which will 
provide that an Equity Member may qualify for the enhanced rebate of 
Tier 5, Level C via an alternative method by satisfying the following 
three requirements in the relevant month: (1) Midpoint ADAV \16\ of at 
least 2,500,000 shares; (2) Displayed ADAV of at least 10,000,000 
shares; and (3) Percent Time at the NBB or NBO of at least 50% in 200 
or more symbols from the list of MQ Securities. The volume calculation 
tier thresholds and rebate levels will remain unchanged.
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    \16\ Midpoint ADAV means the ADAV for the current month 
consisting of Midpoint Peg Orders in securities priced at or above 
$1.00 per share that execute at the midpoint of the Protected NBBO 
and add liquidity to the Exchange. A Midpoint Peg Order is a non-
displayed Limit Order that is assigned a working price pegged to the 
midpoint of the PBBO. A Midpoint Peg Order receives a new timestamp 
each time its working price changes in response to changes in the 
midpoint of the PBBO. See Exchange Rule 2614(a)(3). With respect to 
the trading of equity securities, the term ``Protected NBB'' or 
``PBB'' shall mean the national best bid that is a Protected 
Quotation, the term ``Protected NBO'' or ``PBO'' shall mean the 
national best offer that is a Protected Quotation, and the term 
``Protected NBBO'' or ``PBBO'' shall mean the national best bid and 
offer that is a Protected Quotation. See Exchange Rule 1901.

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[[Page 18697]]

    The purpose of adding an alternative method for Equity Members to 
achieve the enhanced Tier 5, Level C rebate is for business and 
competitive reasons in light of recent volume growth on the Exchange. 
The Exchange believes the proposed alternative method for Equity 
Members to achieve the enhanced rebate of Tier 5, Level C of the NBBO 
Program is a reasonable means to incentivize additional liquidity at 
the midpoint of the Protected NBBO and Added Displayed Volume, which in 
turn should increase the attractiveness of the Exchange as a 
destination venue as Equity Members seeking price improvement would be 
more motivated to direct their orders to the Exchange because they 
would have a heightened expectation of the availability of liquidity at 
the midpoint of the Protected NBBO.
    The Exchange notes that the base rebates, enhanced rebates and 
volume requirements of the NBBO Program remain competitive with, or 
better than, the rebates and volume requirements provided by other 
exchanges for executions of orders in securities priced at or above 
$1.00 per share that add displayed liquidity to those exchanges.\17\
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    \17\ See Cboe BZX Equities Fee Schedule, Add/Remove Volume Tiers 
section, available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ (providing an enhanced rebate in Tier 4 of 
($0.0028) per share for executions of added displayed volume in 
securities priced at or above $1.00 per share, so long as the member 
meets all three volume requirements, including minimum NBBO Time and 
NBBO Size requirements from a list of specified securities); see 
also NYSE Arca Equities Fee Schedule, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (providing standard rebates of 
($0.0020) per share (Tapes A and C) and ($0.0016) per share (Tape B) 
for adding displayed liquidity in securities priced at or above 
$1.00 per share).
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Implementation
    The proposed changes are effective beginning March 1, 2024.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \18\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \19\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its Equity Members and 
issuers and other persons using its facilities. Additionally, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \20\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers or dealers.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4).
    \20\ 15 U.S.C. 78f(b)(5).
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    The Exchange operates in a highly fragmented and competitive market 
in which market participants can readily direct their order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of sixteen registered equities exchanges, and 
there are a number of alternative trading systems and other off-
exchange venues, to which market participants may direct their order 
flow. Based on publicly available information, no single registered 
equities exchange had more than approximately 15-16% of the total 
market share of executed volume of equities trading for the month of 
January 2024.\21\ Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow, and the Exchange 
represented approximately 1.90% of the overall market share for the 
month of January 2024. The Commission and the courts have repeatedly 
expressed their preference for competition over regulatory intervention 
in determining prices, products, and services in the securities 
markets. In Regulation NMS, the Commission highlighted the importance 
of market forces in determining prices and SRO revenues and also 
recognized that current regulation of the market system ``has been 
remarkably successful in promoting market competition in its broader 
forms that are most important to investors and listed companies.'' \22\
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    \21\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/ (last visited February 26, 
2024).
    \22\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37499 (June 29, 2005).
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue or reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, and market participants 
can readily trade on competing venues if they deem pricing levels at 
those other venues to be more favorable. The Exchange believes the 
proposal reflects a reasonable and competitive pricing structure 
designed to incentivize market participants to direct their order flow 
to the Exchange, which the Exchange believes would enhance liquidity 
and market quality in both a broad manner and in a targeted manner with 
respect to the MQ Securities and the modified NBBO Program.
    The Exchange believes that the proposal to add an alternative 
method for Equity Members to achieve the enhanced rebate in Tier 5, 
Level C of the NBBO Program provides a reasonable means to continue to 
encourage Equity Members to not only increase their order flow to the 
Exchange but also to contribute to price discovery and market quality 
on the Exchange by submitting aggressively priced displayed liquidity 
(including Midpoint Peg Orders) in securities priced at or above $1.00 
per share. The Exchange believes that the NBBO Program, as modified 
with this proposal, continues to be equitable and not unfairly 
discriminatory because it is open to all Equity Members on an equal 
basis and provides enhanced rebates that are reasonably related to the 
value of the Exchange's market quality associated with greater order 
flow by Equity Members that set the NBBO, and the introduction of 
higher volumes of orders into the price and volume discovery process. 
The Exchange believes the proposal is equitable and not unfairly 
discriminatory because it is designed to incentivize the entry of 
aggressively priced displayed liquidity that will create tighter 
spreads, thereby promoting price discovery and market quality on the 
Exchange to the benefit of all Equity Members and public investors.
    The Exchange believes that the proposal is reasonable because it is 
designed to incentivize market participants to direct additional order 
flow to the Exchange, which should enhance the Exchange's market 
quality and provide price improvement through the use of orders that 
are designed to execute at the midpoint of the Protected NBBO as part 
of the alternative method requirements to achieve the enhanced rebate 
of Tier 5, Level C of the NBBO Program.\23\ The Exchange believes its 
proposal will promote price improvement and increased liquidity on the 
Exchange, which will benefit all market participants.
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    \23\ The Exchange notes that Equity Members that do not satisfy 
the higher Midpoint ADAV requirement of the proposed alternative 
method (i.e., Midpoint ADAV of at least 2,500,000 shares) for the 
enhanced rebate in Tier 5, Level C of the NBBO Program may still 
qualify for other enhanced rebates applicable to Equity Members that 
satisfy lower Midpoint ADAV requirements of the Midpoint Peg Order 
Adding Liquidity at Midpoint Volume Tiers table. See Fee Schedule, 
Section 1)e).
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    The Exchange believes that its proposal is reasonable and not 
unfairly discriminatory because the base rebates,

[[Page 18698]]

enhanced rebates and volume requirements of the NBBO Program remain 
competitive with, or better than, the rebates and volume requirements 
provided by other exchanges for executions of orders in securities 
priced at or above $1.00 per share that add displayed liquidity to 
those exchanges.\24\
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    \24\ See supra note 17.
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.
Intra-Market Competition
    The Exchange believes the proposed rule change does not impose any 
burden on intra-market competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the proposed 
alternative method for Equity Members to achieve the enhanced rebate of 
Tier 5, Level C of the NBBO Program will be eligible to all Equity 
Members equally in that all Equity Members have the opportunity to 
participate and therefore qualify for the proposed enhanced rebate via 
the proposed alternative method. Furthermore, the Exchange believes 
that the NBBO Program, as modified by this proposal, will continue to 
incentivize Equity Members to submit additional aggressively priced 
displayed liquidity to the Exchange, and to increase their order flow 
on the Exchange generally, thereby contributing to a deeper and more 
liquid market and promoting price discovery and market quality on the 
Exchange to the benefit of all market participants and enhancing the 
attractiveness of the Exchange as a trading venue. The Exchange 
believes that this, in turn, would continue to encourage market 
participants to direct additional order flow to the Exchange. Greater 
liquidity benefits all Equity Members by providing more trading 
opportunities and encourages Equity Members to send additional orders 
to the Exchange, thereby contributing to robust levels of liquidity, 
which benefits all market participants.
Intermarket Competition
    The Exchange believes its proposal will benefit competition, and 
the Exchange notes that it operates in a highly competitive market. 
Equity Members have numerous alternative venues they may participate on 
and direct their order flow to, including fifteen other equities 
exchanges and numerous alternative trading systems and other off-
exchange venues. As noted above, no single registered equities exchange 
currently had more than 15-16% of the total market share of executed 
volume of equities trading for the month of January 2024.\25\ Thus, in 
such a low-concentrated and highly competitive market, no single 
equities exchange possesses significant pricing power in the execution 
of order flow. Moreover, the Exchange believes that the ever-shifting 
market share among the exchanges from month to month demonstrates that 
market participants can shift order flow in response to new or 
different pricing structures being introduced to the market. 
Accordingly, competitive forces constrain the Exchange's transaction 
fees and rebates generally, including with respect to executions of 
Added Displayed Volume, and market participants can readily choose to 
send their orders to other exchanges and off-exchange venues if they 
deem fee levels at those other venues to be more favorable.
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    \25\ See supra note 21.
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    Additionally, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and self-regulatory organization (``SRO'') 
revenues and, also, recognized that current regulation of the market 
system ``has been remarkably successful in promoting market competition 
in its broader forms that are most important to investors and listed 
companies.'' \26\ The fact that this market is competitive has also 
long been recognized by the courts. In NetCoalition v. Securities and 
Exchange Commission, the D.C. circuit stated: ``[n]o one disputes that 
competition for order flow is `fierce.' . . . As the SEC explained, 
`[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their routing agents, 
have a wide range of choices of where to route orders for execution'; 
[and] `no exchange can afford to take its market share percentages for 
granted' because `no exchange possess a monopoly, regulatory or 
otherwise, in the execution of order flow from broker dealers' . . 
.''.\27\ Accordingly, the Exchange does not believe its proposed 
pricing changes impose any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act.
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    \26\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \27\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\28\ and Rule 19b-4(f)(2) \29\ 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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    \28\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \29\ 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-2024-11 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-2024-11. 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

[[Page 18699]]

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-2024-11 and should be submitted on 
or before April 4, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-05362 Filed 3-13-24; 8:45 am]
BILLING CODE 8011-01-P