[Federal Register Volume 89, Number 95 (Wednesday, May 15, 2024)]
[Notices]
[Pages 42558-42561]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10593]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100092; File No. SR-PEARL-2024-23]


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

May 9, 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 April 30, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 42559]]

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: (1) amend the 
Definitions and General Notes sections of the Fee Schedule to 
consolidate and relocate text regarding certain days and circumstances 
that the Exchange excludes from its calculation each month for purposes 
of determining an Equity Member's \3\ qualification for the Exchange's 
transaction pricing tiers and incentives; and (2) include additional 
days that the Exchange will exclude from its calculation each month for 
purposes of determining an Equity Member's qualification for the 
Exchange's transaction pricing tiers and incentives.
---------------------------------------------------------------------------

    \3\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
---------------------------------------------------------------------------

    Currently, the Definitions section of the Fee Schedule includes a 
sentence that states that the Exchange excludes from its calculation of 
ADAV,\4\ ADV,\5\ and NBBO Set Volume \6\ 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). The Definitions section of the Fee 
Schedule also includes a sentence that states that the Exchange 
excludes from its calculation of TCV \7\ volume on any given day that 
the Exchange's system experiences a disruption that lasts for more than 
60 minutes during Regular Trading Hours,\8\ on any day with a scheduled 
early market close, and on the ``Russell Reconstitution Day'' 
(typically the last Friday in June). The General Notes section of the 
Fee Schedule includes a sentence that states that 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 (referred to herein as the ``NBBO Program''),\9\ 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).\10\
---------------------------------------------------------------------------

    \4\ The term ``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. See 
the Definitions section of the Fee Schedule.
    \5\ See id.
    \6\ See id.
    \7\ The term ``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. See the Definitions section of the 
Fee Schedule.
    \8\ The term ``Regular Trading Hours'' means the time between 
9:30 a.m. and 4:00 p.m. Eastern Time. See Exchange Rule 1901.
    \9\ See Fee Schedule, Section 1)c).
    \10\ See the General Notes section of the Fee Schedule.
---------------------------------------------------------------------------

    The Exchange now proposes to reorganize the Definitions section and 
the General Notes section of the Fee Schedule to consolidate the texts 
of current days and circumstances that the Exchange excludes from its 
calculation of ADAV, ADV, and TCV, and relocate the texts of those 
exclusions from the Definitions section to the General Notes section of 
the Fee Schedule. The Exchange also proposes to delete the reference to 
``Level B and Level C'' of the Market Quality Tier columns of the NBBO 
Program in the final sentence of the General Notes section as all 
Levels of the Market Quality Tier columns of the NBBO Program are 
subject to the same trading days and circumstances for volume 
exclusions currently provided by the Exchange. The Exchange believes 
that the proposed changes would provide greater clarity to market 
participants regarding the days and circumstances that the Exchange 
excludes volume from its calculation of ADAV, ADV, TCV, NBBO Set Volume 
and Levels of the Market Quality Tier columns of the NBBO Program. The 
Exchange notes that these proposed changes do not alter the current 
days or circumstances pursuant to which the Exchange excludes volume 
from its monthly calculation of an Equity Member's qualification for 
the Exchange's transaction pricing tiers and incentives.
    Next, the Exchange proposes to include in the list of days excluded 
from such calculations any day that the MSCI Equities Indexes are 
rebalanced (``MSCI Rebalance Day''), which occur on a quarterly basis 
each year, and any day that the S&P 400, S&P 500, and S&P 600 Indexes 
are rebalanced (``S&P Rebalance Day''), which also occur on a quarterly 
basis each year.
    For the same reasons that the Exchange currently excludes the day 
that Russell Investments reconstitutes its family of indexes (``Russell 
Reconstitution Day'') from these calculations,\11\ the Exchange 
believes it is appropriate to exclude MSCI Rebalance Days and S&P 
Rebalance Days from these calculations in the same manner, as such days 
typically have extraordinarily high and/or abnormally distributed 
trading volumes, which the Exchange believes is attributed to market 
participants who are not generally as active entering the market to 
rebalance their holdings in-line with these rebalances, and the 
Exchange believes this change to normal activity may affect an Equity 
Member's ability to meet the applicable volume thresholds under its 
volume-based tiers and incentive programs, as well as the daily quoting 
requirements under the NBBO Program. The Exchange notes that the 
proposed exclusion of MSCI Rebalance Days and S&P Rebalance Days from 
the relevant calculations would be applied in the same manner that the 
Exchange currently excludes system disruption days, scheduled early 
market close days, and the Russell Reconstitution Day from such 
calculations. The proposed changes are based on substantively similar 
exclusions provided by at least one other competing equities 
exchange.\12\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release Nos. 93979 (January 14, 
2022), 87 FR 3151 (January 20, 2022) (SR-PEARL-2022-01) (excluding 
the Russell Reconstitution Day from the calculation ADAV, ADV and 
TCV); 94926 [sic] (May 17, 2022), 87 FR 31269 (May 23, 2022) (SR-
PEARL-2022-21) (excluding the Russell Reconstitution Day from the 
calculation of certain Market Quality Tiers of the NBBO Program).
    \12\ See MEMX LLC (``MEMX'') Equities Fee Schedule, Notes 
Section (``The Exchange excludes from its calculations of ADAV, ADV 
and TCV, and for purposes of determining qualification for the 
Displayed Liquidity Incentive: (1) any trading day that the 
Exchange's system experiences a disruption that lasts for more than 
60 minutes during regular trading hours; (2) the day that Russell 
Investments reconstitutes its family of indexes (i.e., the last 
Friday in June); (3) any day that the MSCI Equities Indexes are 
rebalanced (i.e., on a quarterly basis); (4) any day that the S&P 
400, S&P 500, and S&P 600 Indexes are rebalanced (i.e., on a 
quarterly basis); and (5) any day with a scheduled early market 
close.''). See Securities Exchange Act Release No. 94590 (April 4, 
2022), 87 FR 20892 (April 8, 2022) (SR-MEMX-2022-05 [sic]).
---------------------------------------------------------------------------

    The Exchange also proposes to relocate the following two sentences 
from the Definitions section to the General Notes section of the Fee 
Schedule:
     Routed shares are not included in the ADAV or ADV 
calculation.
     With prior notice to the Exchange, an Equity Member may 
aggregate ADAV or ADV with other Equity Members that control, are 
controlled by, or are under common control with such Equity Member (as 
evidenced on such Equity Member's Form BD).
    The Exchange does not propose to amend the text of either of the 
above

[[Page 42560]]

sentences. The purpose of this change is to provide consistency and 
clarity within the Fee Schedule so that all notes regarding exclusions 
and volume aggregation are now included in the General Notes section of 
the Fee Schedule, while keeping definitions for defined terms solely in 
the Definitions section of the Fee Schedule.
Implementation
    The proposed changes are effective beginning May 1, 2024.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
provisions of Section 6 of the Act,\13\ in general, and with Sections 
6(b)(4) and 6(b)(5) of the Act,\14\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees and other charges 
among its Equity Members and other persons using its facilities and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule changes to consolidate 
and relocate text regarding certain excluded trading days is reasonable 
and not designed to permit unfair discrimination between customers and 
market participants because the changes will provide greater clarity 
regarding the days that the Exchange excludes from its calculation of 
ADAV, ADV, TCV, and NBBO Set Volume for purposes of determining an 
Equity Member's qualification for the Exchange's transaction pricing 
tiers and incentives. The Exchange believes it is reasonable and not 
unfairly discriminatory to ensure that the Fee Schedule is clear and 
concise to all market participants. The Exchange also notes that these 
proposed changes do not alter the current method by which the Exchange 
excludes certain days and circumstances.
    The Exchange believes that the proposed exclusion of MSCI Rebalance 
Days and S&P Rebalance Days from the relevant calculations is 
reasonable and appropriate because, as described above, MSCI Rebalance 
Days and S&P Rebalance Days typically have extraordinarily high and/or 
abnormally distributed trading volumes which, in turn, may affect an 
Equity Member's ability to meet the applicable volume thresholds and/or 
daily quoting requirements under its transaction pricing tiers/
incentives, and the Exchange believes that excluding such days from the 
relevant calculations for purposes of determining an Equity Member's 
qualification for such tiers/incentives. Additionally, the Exchange 
believes that the proposed rule change is equitable and not unfairly 
discriminatory because it will apply to all Equity Members uniformly, 
in that each Equity Member's volume and quoting activities for purposes 
of pricing tiers/incentives would continue to be calculated in a 
uniform manner and would now exclude MSCI Rebalance Days and S&P 
Rebalance Days, in addition to the exclusions the Exchange currently 
provides.
    The Exchange believes its proposal to relocate certain text from 
the Definitions section to the General Notes section of the Fee 
Schedule regarding the exclusion for routed shares from ADAV and ADV 
calculations and the ability of an Equity Member to aggregate certain 
volume is reasonable because it will provide consistency and clarity 
within the Fee Schedule such that all exclusions and volume aggregation 
notes will now be located in the General Notes section of the Fee 
Schedule.
    For the reasons discussed above, the Exchange submits that the 
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act \15\ in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its Equity Members and 
other persons using its facilities and is not designed to unfairly 
discriminate between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal will result in any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. Rather, as described above, the 
proposed rule changes are designed to provide greater clarity regarding 
the days that the Exchange excludes from its calculation of ADAV, ADV, 
TCV, and NBBO Set Volume for the purpose of determining and Equity 
Member's qualification for the Exchange's transaction pricing tiers and 
incentives. In addition, the proposed exclusion of MSCI Rebalance Days 
and S&P Rebalance Days from the relevant calculations is intended to 
avoid affecting Equity Members' ability to meet the applicable volume 
thresholds and/or quoting requirements to qualify for the Exchange's 
transaction pricing tiers/incentives due to the abnormal trading 
volumes and market conditions typically experienced in the equities 
markets on MSCI Rebalance Days and S&P Rebalance Days.
Inter-Market Competition
    The Exchange does not believe the proposal would impose any burden 
on inter-market competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as the Exchange believes the 
proposal is not concerned with competitive issues, but rather relates 
to calculation methodologies applicable to its pricing tiers/
incentives.
Intra-Market Competition
    Additionally, the Exchange believes the proposal would not impose 
any burden on intra-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because, as 
described above, the proposal will apply to all Equity Members 
uniformly and in the same manner that the Exchange currently excludes 
system disruption days and the Russell Reconstitution Day from such 
calculations.
    The Exchange believes its proposal to relocate certain text from 
the Definitions section to the General Notes section of the Fee 
Schedule regarding the exclusion for routed shares from ADAV and ADV 
calculations and the ability of an Equity Member to aggregate certain 
volume will result in any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act because it 
will provide consistency and clarity within the Fee Schedule such that 
all exclusions and volume aggregation notes will now be located in the 
General Notes section of the Fee Schedule.

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 interest, for the protection of investors,

[[Page 42561]]

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.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2024-23 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-2024-23. 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-2024-23 and should be 
submitted on or before June 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-10593 Filed 5-14-24; 8:45 am]
BILLING CODE 8011-01-P