[Federal Register Volume 89, Number 120 (Friday, June 21, 2024)]
[Notices]
[Pages 52141-52147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13541]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100338; File No. SR-PEARL-2024-26]


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

June 14, 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 June 7, 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

[[Page 52142]]

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 Fee Schedule to: (1) increase 
the fee associated with Liquidity Indicator Code ``Rp'' and deactivate 
the Remove Volume Tiers table \3\ and corresponding fee; \4\ and (2) 
establish a new volume calculation method for Equity Members \5\ to 
achieve enhanced rebates pursuant to the NBBO Setter Plus Program 
(referred to in this filing as the ``NBBO Program'').\6\ The Exchange 
originally filed this proposed fee change on May 31, 2024 (SR-PEARL-
2024-24). On June 7, 2024, the Exchange withdrew SR-PEARL-2024-24 and 
refiled this proposal.
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    \3\ See Fee Schedule, Section 1)d). The Exchange proposes to 
insert ``Reserved'' for Section 1)d) following the change to 
deactivate the Remove Volume Tiers table so as to keep the remainder 
of the Fee Schedule as currently formatted.
    \4\ See Fee Schedule, Section 1)d).
    \5\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
    \6\ See, generally, Fee Schedule, Section 1)c).
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Background of Remove Volume Tiers and Liquidity Indicator Code ``Rp''
    The Exchange currently charges a standard fee of $0.00295 per share 
for executions of orders in securities priced at or above $1.00 per 
share that remove liquidity from the Exchange in all Tapes.\7\ On 
January 1, 2022, the Exchange established Section 1)d) of the Fee 
Schedule, Remove Volume Tiers, which provided reduced standard fees for 
executions of orders in securities priced at or above $1.00 per share 
that removed liquidity from the Exchange for Equity Members that met 
specified volume thresholds on the Exchange.\8\ The Remove Volume Tiers 
table was subsequently amended and currently provides only one tier 
with a reduced fee $0.00290 per share for executions of orders in 
securities priced at or above $1.00 per share that remove liquidity 
from the Exchange for Equity Members that meet the specified volume 
threshold on the Exchange.\9\ On December 1, 2022, the Exchange 
established a reduced fee of $0.00265 per share for executions of 
Midpoint Peg Orders \10\ in securities priced at or above $1.00 that 
execute at the midpoint of the NBBO \11\ and remove liquidity from the 
Exchange in all Tapes.\12\
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    \7\ See Fee Schedule, Section 1)a).
    \8\ See Securities Exchange Act Release Nos. 93979 (January 14, 
2022), 87 FR 3151 (January 20, 2022) (SR-PEARL-2022-01) 
(establishing two Remove Volume Tiers of reduced fees for removing 
liquidity in securities priced at or above $1.00 per share); 97124 
(March 13, 2023), 88 FR 16504 (March 17, 2023) (SR-PEARL-2023-10) 
(amending the rates for the Remove Volume Tiers) and 97964 (July 24, 
2023), 88 FR 48937 (July 28, 2023) (SR-PEARL-2023-31) (amending the 
rates for the Remove Volume Tiers).
    \9\ See Securities Exchange Act Release No. 99175 (December 14, 
2023), 88 FR 88186 (December 20, 2023) (SR-PEARL-2023-69).
    \10\ 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 to the midpoint of the PBBO. 
See Exchange Rule 2614(a)(3).
    \11\ 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.
    \12\ See Securities Exchange Act Release No. 96472 (December 9, 
2022), 87 FR 76645 (December 15, 2022) (SR-PEARL-2022-53) 
(establishing new Liquidity Indicator Code ``Rp'').
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Proposal To Amend Remove Volume Tiers Table and Liquidity Indicator 
Code ``Rp''
    The Exchange proposes to amend the fee associated with Liquidity 
Indicator Code ``Rp'' from $0.00265 to now be $0.00295 per share and 
deactivate the Remove Volume Tiers table and corresponding fee such 
that all executions of orders in securities priced at or above $1.00 
per share that remove liquidity from the Exchange will be assessed the 
standard fee of $0.00295 per share. The Exchange does not propose to 
amend the fee for executions of Midpoint Peg Orders in securities 
priced below $1.00 per share that execute at the midpoint of the NBBO 
and remove liquidity from the Exchange in all Tapes, which is currently 
set at 0.25% of the total dollar value of the transaction.\13\
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    \13\ See Fee Schedule, Section 1)b), Liquidity Indicator Codes 
and Associated Fees, Liquidity Indicator Code ``Rp''.
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    The purpose of these proposed changes is for business and 
competitive reasons. The Exchange notes that despite the changes 
proposed herein, the Exchange's proposed standard fee of $0.00295 per 
share for executions of all orders in securities priced at or above 
$1.00 per share and remove liquidity from the Exchange remains 
competitive with the standard fee to remove liquidity in securities 
priced at or above $1.00 per share charged by other equity 
exchanges.\14\
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    \14\ See e.g., MEMX LLC (``MEMX'') Equities Fee Schedule, 
Transaction Fees, Fee Code ``R'' (providing standard remove volume 
fee of $0.0030 per share for executions of orders in securities 
priced at or above $1.00 per share); and Cboe BZX Exchange, Inc. 
(``BZX''), Equities Fee Schedule, Standard Rates (providing standard 
remove volume fee of $0.0030 per share for executions of orders in 
securities priced at or above $1.00 per share).
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Background of the NBBO Program
    The NBBO Program was implemented beginning September 1, 2023 and 
subsequently amended several times.\15\ 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). The NBBO Program 
provides the following additional incentives: (1) an NBBO Setter 
Additive Rebate \16\ applied to executions of orders in securities 
priced at or above $1.00 per share that set the NBB or NBO upon entry; 
(2) an NBBO First Joiner Additive Rebate \17\ applied to executions of 
orders in securities priced at or above $1.00 per share that bring MIAX 
Pearl Equities to the established NBB or NBO; and (3) a Step-Up Rebate 
\18\ for Equity Members that satisfy the (i) minimum displayed

[[Page 52143]]

ADAV \19\ as a percentage of TCV \20\ of 0.35% and (ii) an increase in 
the percentage of displayed ADAV as a percentage of TCV of at least 
0.05% as compared to the Equity Member's February 2024 displayed ADAV 
percentage.
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    \15\ See, e.g., Securities Exchange Act Release Nos. 98472 
(September 21, 2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-
2023-45); 99318 (January 11, 2024), 89 FR 3488 (January 18, 2024) 
(SR-PEARL-2023-73); and 99695 (March 8, 2024), 89 FR 18694 (March 
14, 2024) (SR-PEARL-2024-11).
    \16\ The Exchange does not propose to amend the NBBO Setter 
Additive Rebate, which is an additive rebate of ($0.0004) 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). The Exchange 
notes that rebates are indicated by parentheses in the Fee Schedule. 
See the General Notes section of the Fee Schedule.
    \17\ The Exchange does not propose to amend the NBBO First 
Joiner Additive Rebate, which is an additive rebate of ($0.0002) per 
share for executions of orders in securities priced at or above 
$1.00 per share that bring MIAX Pearl Equities to the established 
NBB or NBO with a minimum size of a round lot. See Fee Schedule, 
Section 1)c).
    \18\ The Exchange does not propose to amend the Step-Up Rebate, 
which is an additive rebate of ($0.0001) per share for executions of 
orders in securities priced at or above $1.00 per share for Equity 
Members that satisfy two volume-based requirements. See id.
    \19\ ``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.
    \20\ ``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 id.
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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, NBBO Set Volume, or ADV, each as a 
percent of industry TCV as the denominator.
    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 0.20% 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 0.20% 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 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 Setter Plus Table as ``Level A'') and two columns of enhanced 
rebates (referred to in the NBBO Setter Plus Table as ``Level B'' and 
``Level C''),\21\ depending on the Equity Member's Percent Time at

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NBBO \22\ on MIAX Pearl Equities in a certain amount of specified 
securities (``Market Quality Securities'' or ``MQ Securities'').\23\ 
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.\24\
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    \21\ For the purpose of determining qualification for the 
rebates described in all Levels of the Market Quality Tier columns 
in the NBBO Setter Plus Table, 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 General Notes section of the Fee 
Schedule.
    \22\ ``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 the Definitions 
section of the Fee Schedule.
    \23\ ``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.
    \24\ See e.g, MIAX Pearl Equities Exchange--Market Quality 
Securities (MQ Securities) List, effective May 1 through May 31, 
2024, available at https://www.miaxglobal.com/markets/us-equities/pearl-equities/fees (last visited May 30, 2024).
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    The base rebates (``Level A'') are as follows: ($0.00220) 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; ($0.00335) per share in Tier 5; and 
($0.00340) 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: ($0.00225) 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; ($0.00340) per share in Tier 5; and 
($0.00345) 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: ($0.00230) 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; 
($0.00345) per share in Tier 5; \25\ and ($0.00350) per share in Tier 
6.
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    \25\ The Exchange provides an alternative method for Equity 
Members to qualify for the enhanced rebate of Tier 5, Level C by 
satisfying the following three requirements in the relevant month: 
(1) Midpoint ADAV of at least 2,500,000 shares; (2) displayed ADAV 
of at least 10,000,000 shares; and (3) Percent Time at the NBBO of 
at least 50% in 200 or more symbols from the list of MQ Securities. 
See Fee Schedule, Section 1)c), note 3. The Exchange does not 
propose to amend these alternative requirements pursuant to this 
proposal.
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Proposal To Amend the NBBO Program To Establish a New Volume 
Calculation Method
    The Exchange proposes to amend the NBBO Setter Plus Table in 
Section 1)c) of the Fee Schedule to establish new volume calculation 
Method 4, which will be provide another volume calculation method for 
Equity Members to qualify for the enhanced rebates of the NBBO 
Program.\26\ Proposed volume calculation Method 4 will be represented 
with a new column in the NBBO Setter Plus Table immediately following 
the column for volume calculation Method 3. Under proposed volume 
calculation Method 4, the Exchange will provide tiered rebates based on 
an Equity Member's ADAV as a percentage of TCV exclusive of executions 
of orders in securities priced below $1.00 per share across all Tapes. 
The Exchange proposes to establish new footnote #6 to the NBBO Setter 
Plus Table, which will state that ``[f]or volume calculation Method 4, 
when calculating both the numerator (ADAV) and the denominator (TCV), 
executions of orders in securities priced below $1.00 per share across 
all Tapes will be excluded.''
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    \26\ The Exchange proposes to make minor updates to the 
introductory paragraph above the NBBO Setter Plus Table and footnote 
#1 of the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule 
to change all references to ``three'' volume calculation methods to 
now be ``four'' volume calculation methods.
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    Under proposed volume calculation Method 4, an Equity Member will 
qualify 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, exclusive of executions of orders in securities 
priced below $1.00 per share across all Tapes. An Equity Member will 
qualify 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, exclusive of executions of orders in securities 
priced below $1.00 per share across all Tapes. An Equity Member will 
qualify 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, exclusive of executions of orders in securities 
priced below $1.00 per share across all Tapes. An Equity Member will 
qualify 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 0.20% of TCV, exclusive of executions of orders in securities 
priced below $1.00 per share across all Tapes. An Equity Member will 
qualify 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 0.20% and less 
than 0.40% of TCV, exclusive of executions of orders in securities 
priced below $1.00 per share across all Tapes. Finally, an Equity 
Member will qualify 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, exclusive of executions of orders in securities priced 
below $1.00 per share across all Tapes.
    MIAX Pearl Equities will continue to first determine the applicable 
NBBO Program tier based on the four different volume calculation 
methods. The Exchange will continue to calculate the four volume-based 
methods to determine the Equity Member's tier for purposes of the NBBO 
Program in parallel in each month, and each Equity Member will receive 
the highest tier achieved from any of the four methods each month. The 
Exchange does not propose any other changes to the NBBO Program tiers, 
rebates or additional incentives.
    The purpose of establishing proposed volume calculation Method 4, 
which excludes volume in sub-dollar securities from the calculation, is 
for business and competitive reasons. Generally, the ratio of 
consolidated volumes in securities priced at or above $1.00 per share 
relative to consolidated volumes inclusive of securities priced below 
$1.00 per share is usually stable from month to month, such that TCV 
has been a reasonable baseline for determining tiered incentives for 
Equity Members that execute order in securities priced at or above 
$1.00 per share on the Exchange. However, there have been recent months 
where volumes in securities priced below $1.00 per share

[[Page 52145]]

(``sub-dollar volume'') have been elevated, thereby impacting the ratio 
mentioned above.
    Anomalous rises in sub-dollar volume may have a material adverse 
impact on Equity Members' qualifications for the pricing tiers and 
enhanced rebates in the NBBO Program because such qualifications depend 
upon Equity Members achieving threshold percentages of volumes as a 
percentage of TCV, and an extraordinary rise in sub-dollar volume may 
significantly elevate TCV. As a result, Equity Members may find it more 
difficult to qualify for or to continue to qualify for their existing 
incentives during months where there are such rises in sub-dollar 
volumes, even if their volume of executions of orders in securities 
priced at or above $1.00 per share have not diminished relative to 
prior months. The Exchange believes that it would be unfair for its 
Equity Members that execute significant volumes in securities priced at 
or above $1.00 per share on the Exchange to fail to achieve or to lose 
their existing incentives for such volumes due to anomalous behavior 
that is extraneous to them. Therefore, the Exchange proposes to amend 
the NBBO Program to establish new volume calculation Method 4 to 
provide an alternative option when extraordinary spikes in sub-dollar 
volumes from adversely affecting an Equity Member's qualification of 
incentives for their executions of orders in securities priced at or 
above $1.00 per share.
    The Exchange notes that at least one other competing equities 
exchange calculates their members' volume for purposes of pricing tiers 
and incentives by excluding sub-dollar volumes from one calculation and 
utilizing the most advantageous volume calculation for such pricing 
tiers and incentives.\27\ Accordingly, this proposal is not new or 
novel.
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    \27\ See the Nasdaq Stock Market LLC (``Nasdaq'') Rules, Equity 
7: Pricing Schedule, Section 114. Market Quality Incentive Programs, 
Section (h)(5) (``For purposes of calculating a member's 
qualifications for Tiers 1 and 2 of the QMM Program credits . . . 
the Exchange will calculate a member's volume and total Consolidated 
Volume twice. First, the Exchange will calculate a member's volume 
and total Consolidated Volume inclusive of volume that consists of 
executions in securities priced less than $1. Second, the Exchange 
will calculate a member's volume and total Consolidated Volume 
exclusive of volume that consists of executions in securities priced 
less than $1, while also applying distinct qualifying volume 
thresholds to each Tier. . . . The Exchange will then assess which 
of these two calculations would qualify the member for the most 
advantageous credits for the month and then it will apply those 
credits to the member.''). See also Securities Exchange Act Release 
No. 99535 (February 14, 2024), 89 FR 13125 (February 21, 2024) (SR-
NASDAQ-2024-005).
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Implementation
    The proposed fee changes are immediately effective.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \28\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \29\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among its Equity Members and issuers and other 
persons using its facilities. The Exchange also believes that the 
proposed rule change is consistent with the objectives of Section 
6(b)(5) \30\ requirements that the rules of an exchange be designed to 
prevent fraudulent and manipulative acts and practices, and 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 mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest, and, particularly, is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(4).
    \30\ 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. For the month of May 2024, based on publicly available 
information, no single registered equities exchange had more than 
approximately 14-15% of the total market share of executed volume of 
equities trading.\31\ Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. For the month of May 
2024, the Exchange represented 1.68% of the total market share of 
executed volume of equities trading.\32\ 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.'' \33\
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    \31\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/.
    \32\ Id.
    \33\ 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 to 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 continue to incentivize market participants to direct their 
order flow to the Exchange, which the Exchange believes would continue 
to enhance liquidity and market quality to the benefit of all Equity 
Members and market participants.
Proposal To Amend Remove Volume Tiers Table and Liquidity Indicator 
Code ``Rp''
    The Exchange believes the proposed changes to amend the fee 
associated with Liquidity Indicator Code ``Rp'' and deactivate the 
Remove Volume Tiers table and corresponding fee such that all 
executions of orders in securities priced at or above $1.00 per share 
that remove liquidity from the Exchange will now be assessed the 
standard fee of $0.00295 per share are reasonable. This is because the 
Exchange's standard fee for removing liquidity in securities priced at 
or above $1.00 per share, as noted above, remains lower than, and 
competitive with, the standard fee charged by competing exchanges to 
remove liquidity in securities priced at or above $1.00 per share.\34\ 
The Exchange further believes that the proposed changes are equitably 
allocated and not unfairly discriminatory because the standard fee

[[Page 52146]]

of $0.00295 per share for executions of all orders in securities priced 
at or above $1.00 per share and remove liquidity from the Exchange will 
apply equally to all Equity Members that remove liquidity.
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    \34\ See supra note 14.
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Proposal To Amend the NBBO Program To Establish a New Volume 
Calculation Method
    The Exchange believes its proposal to amend the NBBO Setter Plus 
Table to establish new volume calculation Method 4 is reasonable and 
equitable because, in its absence, Equity Members may experience 
material adverse impacts on their ability to qualify for the enhanced 
rebates of the NBBO Program during a month with an anomalous rise in 
sub-dollar volumes. The Exchange believes it is reasonable and 
equitable to not inadvertently penalize Equity Members that execute 
significant volumes on the Exchange due to anomalous and extraneous 
trading activities in sub-dollar securities. The proposed new volume 
calculation Method 4 would provide a means for Equity Members that add 
displayed liquidity an alternative method by determining whether 
calculating volume (e.g., ADAV, NBBO Set Volume, or ADV) as a 
percentage of TCV to include or exclude sub-dollar volume would result 
in Equity Members qualifying for the most advantageous rebates. The 
Exchange would then be able to apply the most advantageous volume 
calculation that would result in the highest tier achieved for enhanced 
rebates of the NBBO Program for each Equity Member. The Exchange 
believes that the proposed rule change is equitable and not unfairly 
discriminatory because the Exchange does not intend for the proposal to 
advantage any particular Equity Member. The Exchange will continue to 
calculate all four volume calculation methods in parallel each month to 
ensure that each Equity Member receives the most advantageous volume 
calculation for purposes of determining tiers for the NBBO Program.
    The Exchange believes that the proposal to establish volume 
calculation Method 4 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 
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 notes that at least one other competing equities 
exchange calculates their members' volume for purposes of pricing tiers 
and incentives by excluding sub-dollar volumes from one calculation and 
utilizing the most advantageous volume calculation for such pricing 
tiers and incentives.\35\
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    \35\ See supra note 27.
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    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 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. As described more 
fully below in the Exchange's statement regarding the burden on 
competition, the Exchange believes that its transaction pricing is 
subject to significant competitive forces, and that the proposed fees 
and rebates described herein are appropriate to address such forces.

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

    The Exchange does not believe that the proposed changes will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act.
Intramarket Competition
    The Exchange believes that the proposed changes to make the fee of 
$0.00295 per share for all executions of orders in securities priced at 
or above $1.00 per share that remove liquidity from the Exchange will 
not impose any burden on intramarket competition because it represents 
a modest increase from the current Remove Volume Tier fee and fee for 
executions of Midpoint Peg Orders in securities priced at or above 
$1.00 per share that remove liquidity from the Exchange. The Exchange 
believes the proposed changes to increase the fee associated with 
Liquidity Indicator Code ``Rp'' from $0.00265 per share to $0.00295 per 
share and to deactivate the Remove Volume Tiers table and corresponding 
fee do not impose any burden on intramarket competition because, with 
the proposed changes, all executions of orders in securities priced at 
or above $1.00 per share that remove liquidity from the Exchange will 
now be assessed the standard fee of $0.00295 per share. Accordingly, 
the standard fee for executions of orders in securities priced at or 
above $1.00 per share that remove liquidity from the Exchange will 
apply equally to all Equity Members.
    The Exchange intends for its proposal to establish new volume 
calculation Method 4 to provide an alternative option for Equity 
Members to achieve the enhanced rebates of the NBBO Program due to 
anomalous spikes in sub-dollar volumes and is not intended to provide a 
competitive advantage to any particular Equity Member. Proposed volume 
calculation Method 4 will be eligible to all Equity Members equally in 
that the Exchange will calculate all four volume calculation methods in 
parallel each month and apply the most advantageous calculation to each 
Equity Member's volume to qualify for the enhanced rebates of the NBBO 
Program. 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.
    For the foregoing reasons, the Exchange believes the proposed 
changes would not impose any burden on intramarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act.
Intermarket Competition
    The Exchange believes its proposal will benefit competition as the

[[Page 52147]]

Exchange 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 has more than 
approximately 14-15% of the total market share of executed volume of 
equities trading. 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 all orders in securities priced at or above 
$1.00 per share that remove liquidity from the Exchange, 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. As described above, the proposed changes are 
competitive proposals and the standard fee of $0.00295 per share for 
removing liquidity in securities priced at or above $1.00 per share 
remains lower than, or similar to, the standard fee to remove liquidity 
in securities priced at or above $1.00 per share charged by competing 
equities exchanges.\36\ Further, the standard removal fee will apply to 
all Equity Members equally. In addition, the Exchange notes that at 
least one other competing equities exchange calculates their members' 
volume for purposes of pricing tiers and incentives by excluding sub-
dollar volumes from one calculation and utilizing the most advantageous 
volume calculation for such pricing tiers and incentives.\37\
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    \36\ See supra note 14.
    \37\ See supra note 27.
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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 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.'' \38\ 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' . . . .'' \39\ 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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    \38\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \39\ See 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,\40\ and Rule 19b-4(f)(2) \41\ 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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    \40\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \41\ 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-2024-26 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-2024-26. 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-2024-26 and should be 
submitted on or before July 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
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    \42\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13541 Filed 6-20-24; 8:45 am]
BILLING CODE 8011-01-P