
[Federal Register Volume 82, Number 36 (Friday, February 24, 2017)]
[Notices]
[Pages 11676-11689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03574]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80061; File No. SR-PEARL-2017-10]


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

February 17, 2017.
    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 13, 2017, 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 establish the MIAX PEARL Fee 
Schedule (the ``Fee Schedule'') by adopting rebates and fees applicable 
to participants trading options on and/or using services provided by 
MIAX PEARL.
    MIAX PEARL commenced operations as a national securities exchange 
registered under Section 6 of the Act \3\ on February 6, 2017.\4\ The 
Exchange proposes to establish its Fee Schedule. The Exchange initially 
filed the proposal on February 3, 2017 (SR-PEARL-2017-08). That filing 
has been withdrawn and replaced with the current filing (SR-PEARL-2017-
10).
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    \3\ 15 U.S.C. 78f.
    \4\ See Securities Exchange Act Release No. 79543 (December 13, 
2016), 81 FR 92901 (December 20, 2016) (File No. 10-227) (order 
approving application of MIAX PEARL, LLC for registration as a 
national securities exchange).
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/rule-filings/pearl, at MIAX 
PEARL's principal office, and at the Commission's Public Reference 
Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to establish transaction 
rebates and fees, regulatory fees, and certain non-transaction fees 
applicable to market participants trading options on and/or using 
services provided by the Exchange. These rebates and fees will apply to 
all market participants trading options on and/or using services 
provided by MIAX PEARL.
Definitions
    The Exchange has included a Definitions section at the beginning of 
the Fee Schedule. The purpose of the Definitions section is to 
streamline the Fee Schedule by placing many of the defined terms used 
in the Fee Schedule in one location at the beginning of the Fee 
Schedule. Many of the defined terms are also defined in Exchange Rules, 
particularly in Exchange Rule 100. Any defined terms that are also 
defined or otherwise explained in Exchange Rules contain a cross 
reference to the relevant Exchange Rule. The Exchange notes that other 
exchanges have Definitions sections in their respective fee 
schedule,\5\ and the Exchange believes that including a Definitions 
section in the front of the Exchange's Fee Schedule makes the Fee 
Schedule more user-friendly.
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    \5\ See Exchange Act Release Nos. 70200 (August 14, 2013), 78 FR 
51242 (August 20, 2013) (SR-Topaz-2013-10); 76453 (November 17, 
2015), 80 FR 72999 (November 23, 2015) (SR-EDGX-2015-56).
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i. Transaction Rebates/Fees
    The proposed Fee Schedule sets forth transaction rebates and fees 
for all options traded on the Exchange in amounts that vary depending 
upon certain factors, including the type of market participant for whom 
the transaction is executed (e.g. Market Maker or Priority Customer) 
and the amount of volume executed by the Member, as described more 
fully below.
Exchange Add/Remove Tiered Rebates/Fees
    In general, the Exchange proposes that Add/Remove Tiered Rebates/
Fees applicable to all market participants will be based upon the total 
monthly volume executed by the Member \6\ on MIAX PEARL in the relevant 
origin type (not including Excluded Contracts) \7\ expressed as a 
percentage of total consolidated volume (``TCV''). TCV, which is 
defined in the Definitions section of the Fee Schedule, means total 
consolidated volume calculated as the total national volume in those 
classes listed on MIAX PEARL for the month for which the fees apply, 
excluding consolidated volume executed during the period time in which 
the Exchange experiences an ``Exchange System Disruption'' (solely in 
the option classes of the affected Matching Engine (as defined below)). 
The term Exchange System Disruption, which is defined in the 
Definitions section of the Fee Schedule, means an outage of a Matching 
Engine or collective Matching Engines for a period of two consecutive 
hours or more, during trading hours. The term Matching Engine, which is 
also defined in the Definitions section of the Fee Schedule, is a part 
of the MIAX PEARL electronic system that processes options orders and 
trades on a symbol-by-symbol basis. Some Matching Engines will process 
option classes with

[[Page 11677]]

multiple root symbols, and other Matching Engines may be dedicated to 
one single option root symbol (for example, options on SPY may be 
processed by one single Matching Engine that is dedicated only to SPY). 
A particular root symbol may only be assigned to a single designated 
Matching Engine. A particular root symbol may not be assigned to 
multiple Matching Engines. The Exchange believes that it is reasonable 
and appropriate to select two consecutive hours as the amount of time 
necessary to constitute an Exchange System Disruption, as two hours 
equates to approximately 1.4% of available trading time per month. The 
Exchange notes that the term ``Exchange System Disruption'' and its 
meaning have no applicability outside of the Fee Schedule, as it's used 
solely for purposes of calculating volume for the threshold tiers in 
the Fee Schedule.
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    \6\ ``Member'' means an individual or organization that is 
registered with the Exchange pursuant to Chapter II of the Exchange 
Rules for purposes of trading on the Exchange as an ``Electronic 
Exchange Member'' or ``Market Maker.'' Members are deemed 
``members'' under the Exchange Act. See Exchange Rule 100.
    \7\ ``Excluded Contracts'' means any contracts routed to an away 
market for execution.
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    In addition, the per contract transaction rebates and fees shall be 
applied retroactively to all eligible volume once the threshold tier 
(``Tier'') has been reached by the Member. The Exchange additionally 
proposes to aggregate the volume of Members and their Affiliates.\8\ 
Members that place resting liquidity, i.e., orders on the MIAX PEARL 
System, will be paid the specified ``maker'' rebate (each a ``Maker'') 
and Members that execute against resting liquidity will be assessed the 
specified ``taker'' fee (each a ``Taker''). For opening transactions 
and ABBO uncrossing transactions, interest from Priority Customer 
origin types shall be treated as a Maker, and interest from all origin 
types other than Priority Customers shall be treated as a Taker. 
Finally, Members shall be assessed lower transaction fees and smaller 
rebates for order executions in standard option classes in the Penny 
Pilot Program \9\ (``Penny classes'') than for order executions in 
standard option classes which are not in the Penny Pilot Program 
(``Non-Penny classes''), for which Members will be assessed a higher 
transaction fees and larger rebates.
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    \8\ ``Affiliate'' means an affiliate of a Member of at least 75% 
common ownership between the firms as reflected on each firm's Form 
BD, Schedule A.
    \9\ See Securities Exchange Act Release Nos. 78080 (June 15, 
2016), 81 FR 40377 (June 21, 2016) (SR-MIAX-2016-16); 79432 
(November 30, 2016), 81 FR 87990 (December 6, 2016) (SR-MIAX-2016-
45).
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    The Add/Remove Tiered Rebates/Fees proposed by the Exchange are 
similar in structure to and in the range of the transaction rebates and 
fees charged by BATS BZX Options Exchange (``BATS'') to its market 
participants.\10\ The Exchange notes, however, that while the proposed 
transaction rebate and fee structure is similar to that of BATS, it is 
not identical since the Exchange proposes to use TCV as the denominator 
in determining the volume for each Tier and BATS instead uses OCC 
Clearing Volume (``OCV'') as its denominator in the volume for each of 
its tiers. OCV is the total equity and ETF options volume that clears 
in the Customer range at the Options Clearing Corporation (``OCC'') for 
the month for which the fees apply, excluding volume on any day that 
the Exchange experiences an exchange system disruption and on any day 
with a scheduled early market close. TCV encompasses volume from all 
clearing types [C,F,M], whereas OCV encompasses only Customer cleared 
volume. A further distinction is the fact that the Exchange proposes to 
use actual, total monthly volume as the numerator in determining the 
volume for each Tier and BATS instead uses an average of daily volume 
(``ADV'') as its numerator in the volume for each of its tiers. 
Additionally, BATS includes in the volume calculations for certain of 
its tiers applicable to its market participants the volume by such 
Member on BATS' equities market. Unlike BATS, the Exchange does not 
presently offer any such comparable arrangement.\11\
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    \10\ See Bats BZX Options Fee Schedule, Transaction Fees, at 
http://www.bats.com/us/options/membership/fee_schedule/bzx/.
    \11\ Id.
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    The Exchange's transaction rebates and fees structure is also 
similar to that of ISE Gemini, LLC (``Gemini'').\12\ Gemini has adopted 
a maker-taker tiered fee structure based upon volume that is also 
further delineated by whether the transaction is in Penny and SPY 
classes or Non-Penny classes. Similar to the structure proposed by the 
Exchange, the highest tier threshold attained by a Gemini member 
applies retroactively in a given month to all eligible traded contracts 
and applies to all eligible market participants. All eligible volume 
from affiliated members is aggregated in determining applicable tiers, 
provided there is at least 75% common ownership between the members as 
reflected on each member's Form BD, Schedule A. Non[hyphen]Priority 
Customer orders are charged the taker fee for trades executed during 
the opening rotation and Priority Customer orders executed during the 
opening rotation receive the applicable maker rebate based on the tier 
achieved.
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    \12\ See ISE Gemini, LLC Fee Schedule, Section I. Regular Order 
Fees and Rebates, at http://www.ise.com/assets/gemini/documents/OptionsExchange/legal/fee/Gemini_Fee_Schedule.pdf.
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A. Orders for Priority Customers

    Transaction rebates/fees applicable to all orders submitted by a 
Member for the account of a Priority Customer \13\ will be assessed 
according to the following table:
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    \13\ ``Priority Customer'' means a person or entity that (i) is 
not a broker or dealer in securities, and (ii) does not place more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). See Exchange Rule 
100, including Interpretations and Policies .01.

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                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   penny classes                 non-penny classes
                  Origin                      Tier              Volume criteria          ---------------------------------------------------------------
                                                                                               Maker           Taker           Maker           Taker
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Priority Customer.........................         1  0.00%-0.05%.......................         ($0.25)           $0.49         ($0.85)           $0.87
                                                   2  Above 0.05%-0.35%.................          (0.40)            0.49          (1.05)            0.86
                                                   3  Above 0.35%-0.50%.................          (0.50)            0.48          (1.05)            0.85
                                                   4  Above 0.50%-0.75%.................          (0.53)            0.48          (1.05)            0.84
                                                   5  Above 0.75%.......................          (0.54)            0.48          (1.05)            0.84
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    Transactions on behalf of a BATS ``Customer'' are similar to 
transactions by a Member on behalf of the Exchange's origin type 
``Priority Customer''.\14\ The rebates and fees proposed by the 
Exchange for Priority Customer transactions are also similar to those 
assessed in select tiers by BATS for transactions on behalf of its 
Customers. For example, for a BATS member adding liquidity in a Penny 
Pilot class on behalf of the account of a

[[Page 11678]]

Customer, BATS pays a rebate of (i) $0.25 for ADV and below of less 
than 0.05% of average OCV; (ii) $0.40 for ADV equal to or greater than 
0.05% of average OCV; (iii) $0.48 for ADV equal to or greater than 
0.40% of average OCV; and (iv) $0.50 for ADV equal to or greater than 
1.30% of average OCV. Additionally, for a BATS member taking liquidity 
in a Penny Pilot class on behalf of the account of a Customer, BATS 
assesses a fee of (i) $0.49 for a member that has an average daily 
added volume in Customer orders less than 0.50% of average OCV; and 
(ii) $0.48 for a member that has an average daily added volume in 
Customer orders equal to or greater than 0.50% of average OCV and has 
on BZX Equities an average daily added volume equal to or greater than 
0.50% of average TCV.\15\
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    \14\ See supra note 10.
    \15\ Id.
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B. Orders for Market Makers

    Transaction rebates/fees applicable to all Market Makers \16\ will 
be assessed according to the following table:
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    \16\ ``Market Maker'' means a Member registered with the 
Exchange for the purpose of making markets in options contracts 
traded on the Exchange. See Exchange Rule 100.

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                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   penny classes                 non-penny classes
                  Origin                      Tier              Volume criteria          ---------------------------------------------------------------
                                                                                               Maker           Taker           Maker           Taker
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All MIAX PEARL Market Makers..............         1  0.00%-0.10%.......................         ($0.25)           $0.50         ($0.30)           $1.05
                                                   2  Above 0.10%-0.50%.................          (0.40)            0.48          (0.60)            1.03
                                                   3  Above 0.50%-0.75%.................          (0.45)            0.47          (0.65)            1.02
                                                   4  Above 0.75%.......................          (0.48)            0.47          (0.70)            1.02
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    The Market Maker rebates and fees proposed by the Exchange are 
similar in structure to the transaction rebates and fees charged by 
BATS to its market makers. For example, for a market maker adding 
liquidity in a Penny Pilot class, BATS pays a rebate of (i) $0.35 for 
ADV (and below) of less than 0.40% of average OCV; (ii) $0.40 for 
volume equal to or greater than 0.40% of average OCV; and (iii) $0.42 
if the member has an average daily added volume in market maker and/or 
away market maker orders equal to or greater than 1.30% of average OCV 
and has average daily volume equal to or greater than 2.60% of average 
OCV. For a market maker adding liquidity in a Non-Penny class, BATS 
pays a rebate of (i) $0.42 for volume less than 0.40% of OCV; (ii) 
$0.45 for volume equal to or greater than 0.40% of average OCV; (iii) 
$0.52 for volume equal to or greater than 1.30% of average OCV; and 
(iv) $0.65 if the member has an average daily added volume in market 
maker orders in Non-Penny classes equal to or greater than 0.10% of 
average OCV and has average daily added volume in non-Priority Customer 
orders equal to or greater than 3.00% of average OCV.\17\
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    \17\ See supra note 10.
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    Additionally, for a market maker taking liquidity in a Penny Pilot 
class, BATS assesses a fee of (i) $0.50 for average daily added volume 
of less than 1.30% of average OCV; (ii) $0.47 for average daily added 
volume of equal to or greater than 1.30% of average OCV; and (iii) 
$0.44 for average daily added volume of equal to or greater than 1.70% 
of average OCV.\18\
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    \18\ Id.
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C. Orders for all Other Market Participants

    Transaction rebates/fees applicable to all orders submitted by a 
Member for the account of non-Priority Customers, Firms, Broker-Dealers 
and non-MIAX Pearl Market Makers will be assessed according to the 
following table:

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                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   penny classes                 non-penny classes
                  Origins                     Tier              Volume criteria          ---------------------------------------------------------------
                                                                                               Maker           Taker           Maker           Taker
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Non-Priority Customer, Firm, BD, and Non-          1  0.00%-0.10%.......................         ($0.25)           $0.50         ($0.30)           $1.05
 MIAX PEARL Market Makers.
                                                   2  Above 0.10%-0.50%.................          (0.40)            0.49          (0.60)            1.04
                                                   3  Above 0.50%-0.75%.................          (0.45)            0.48          (0.65)            1.04
                                                   4  Above 0.75%.......................          (0.48)            0.48          (0.70)            1.04
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    The Add/Remove Tiered Rebates and Fees assessable to these market 
participants who are not Priority Customers and who are not MIAX PEARL 
Market Makers proposed by the Exchange are also similar in structure to 
and in the range of the transaction rebates and fees charged by BATS 
for transactions for the accounts of similar market participants. The 
Exchange notes, however, that BATS has three separate groupings for 
these other market participants,\19\ whereas the Exchange is proposing 
to have one combined grouping for such participants. For example, for 
transactions on behalf of firms or broker-dealers adding liquidity in a 
Penny Pilot class, BATS pays a rebate of (i) $0.36 for members with an 
average daily added volume in away market maker/firm/broker-dealer/
joint back office orders less than .50% of average OCV, and has an 
average daily volume of less than .40% of average OCV; (ii) $0.46 for 
members with an average daily added volume in away market maker/firm/
broker-dealer/joint back office orders equal to or greater than 1.05% 
of average OCV, and has an average daily volume equal to or greater 
than 1.95% of average OCV; and (iii) $0.43 for members with an average 
daily volume

[[Page 11679]]

equal to or greater than 0.50% of average OCV, and has an average daily 
added volume in away market maker/firm/broker-dealer/joint back office 
orders equal to or greater than 0.40% of average OCV.\20\
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    \19\ BATS has a separate grouping for (1) Professionals, (2) 
Firm/BD/JBO, and (3) Away Market Maker. See supra note 10.
    \20\ See supra note 10.
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    Additionally, for transactions on behalf of professionals, firm, 
broker-dealer or away market maker taking liquidity in a Penny Pilot 
class, BATS assesses a fee of (i) $0.50 for average daily added volume 
of less than 1.30% of average OCV; (ii) $0.47 for average daily added 
volume of equal to or greater than 1.30% of average OCV; and (iii) 
$0.44 for average daily added volume of equal to or greater than 1.70% 
of average OCV.\21\
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    \21\ Id.
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Routing Fees
    MIAX PEARL proposes to assess Routing Fees in order to recoup costs 
incurred by MIAX PEARL when routing orders to various away markets. The 
amount of the applicable fee, if any, is based upon (i) the origin type 
of the order, (ii) whether or not it is an order for an option in a 
Penny or Non-Penny class (or other explicitly identified classes) and 
(iii) to which away market it is being routed, according to the 
following table: \22\
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    \22\ This is similar to the methodologies utilized by BATS in 
assessing Routing Fees. See Bats Fee Schedule under ``Fee Codes and 
Associated Fees''.

------------------------------------------------------------------------
                       Description                             Fees
------------------------------------------------------------------------
Routed, Priority Customer, Penny Pilot, to: AMEX, BOX,             $0.15
 CBOE, EDGX, MERCURY, MIAX OPTIONS, PHLX (except SPY),
 BX.....................................................
Routed, Priority Customer, Penny Pilot, to: ARCA, BATS,             0.65
 C2, GEMINI, ISE, NOM, PHLX (SPY only)..................
Routed, Priority Customer, Non-Penny Pilot, to: AMEX,               0.15
 BOX, CBOE, EDGX, ISE, MERCURY, MIAX OPTIONS, PHLX, BX..
Routed, Priority Customer, Non-Penny Pilot, to: ARCA,               0.97
 BATS, C2, GEMINI, NOM..................................
Routed, Public Customer that is not a Priority Customer,            0.65
 Penny Pilot, to: AMEX, ARCA, BATS, BOX, CBOE, C2, EDGX,
 GEMINI, ISE, MERCURY, MIAX OPTIONS, NOM, PHLX, BX......
Routed, Public Customer that is not a Priority Customer,            0.65
 Non-Penny Pilot, to: AMEX..............................
Routed, Public Customer that is not a Priority Customer,            1.20
 Non-Penny Pilot, to: ARCA, BATS, C2, GEMINI, MERCURY,
 BX.....................................................
Routed (Public Customer that is not a Priority                      0.97
 Customer), Non-Penny Pilot, to: BOX, CBOE, EDGX, ISE,
 MIAX OPTIONS, NOM, PHLX................................
------------------------------------------------------------------------

    In analyzing its fees, the Exchange took into account clearing 
costs,\23\ administrative, regulatory, and technical costs associated 
with routing orders to an away market. The Exchange uses unaffiliated 
routing brokers to route orders to the away markets; the costs 
associated with the use of these services are included in the Routing 
Fees specified in the Fee Schedule. This Routing Fees structure is 
comparable to the structures in place at other exchanges, such as 
BATS.\24\ The BATS BZX fee schedule has exchange groupings, whereby 
several exchanges are grouped into the same category, dependent on the 
order's origin type and whether it is a Penny or Non-Penny Pilot class. 
For example, BATS fee code RQ covers routed customer orders in Non-
Penny classes to ARCA, C2, ISE, ISE Gemini, MIAX PEARL or NOM, with a 
single fee of $0.70 per contract. The Exchange is proposing a similar 
structure, however its structure is more granular and thus contains 
more exchange groupings. The Exchange is proposing to have 8 different 
exchange groupings, based on the exchange, order type, and option 
class. The Exchange believes that having more groupings will offer the 
Exchange greater precision in covering its costs associated with 
routing orders to away markets. The per-contract transaction fee amount 
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) to execute that 
corresponding contract at that corresponding exchange. For example, to 
execute a Priority Customer order in a Penny Pilot symbol (other than 
SPY) at AMEX costs the Exchange approximately $0.15 a contract. Since 
this is also the approximate cost to execute that same order at BOX, 
the Exchange is able to group AMEX and BOX together in the same 
grouping. This same logic and structure applies to all of the groupings 
in the Routing Fees table. Other exchanges, like the Exchange's 
affiliate, Miami International Securities Exchange, LLC (``MIAX 
Options''), have routing fee structures that simply pass onto the 
Member the actual charge assessed by the away market where the order is 
executed plus a fixed fee surcharge (which in the case of MIAX Options 
is $0.10).\25\ However, in the Exchange's experience, this structure of 
simply passing on the actual charge plus a mark-up can be 
administratively burdensome, particularly when multiple, third-party, 
unaffiliated routing broker-dealers are used to route and execute the 
orders at the away market. This is because the routing broker-dealers 
have different billing policies and practices, and it often can take 
several hours per month reconciling trades and bills at the end of each 
month. By utilizing the structure proposed by the Exchange, the 
Exchange will know immediately the cost of the execution and it can 
eliminate the administratively burdensome month end reconciliation 
process, as well as provide more certainty and transparency for 
execution costs to its Members for the execution of orders that are 
routed to away markets.
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    \23\ The OCC amended its clearing fee from $0.01 per contract 
side to $0.02 per contract side. See Securities Exchange Act Release 
No. 71769 (March 21, 2014), 79 FR 17214 (March 27, 2014) (SR-OCC-
2014-05).
    \24\ See supra note 10.
    \25\ See MIAX Options Fee Schedule, Section (1) Transaction Fees 
at http://www.miaxoptions.com/sites/default/files/pagefiles/MIAX_Options_Fee_Schedule_02012017.pdf.
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ii. Regulatory Fees
Sales Value Fee
    The Sales Value Fee \26\ is proposed to be assessed by the Exchange 
to each Member for sales on the Exchange with respect to which the 
Exchange is obligated to pay a fee to the Commission pursuant to 
Section 31 of the Exchange Act. The Sales Value Fee is equal to the 
Section 31 fee rate multiplied by the Member's aggregate dollar amount 
of covered sales resulting from options transactions occurring on the 
Exchange during any computational period. The Section 31 fee rate is 
set annually by the United States Securities and Exchange Commission 
(``Commission''). To the extent there may be any excess monies 
collected under this rule, the Exchange may retain those monies to help 
fund general operating expenses. The sales transactions to which the 
fee applies are sales of options (other than options on a security 
index) and the sales of securities resulting from the exercise of 
physical-delivery options. The fee is collected indirectly from Members

[[Page 11680]]

through their clearing firms by the OCC on behalf of MIAX PEARL with 
respect to option sales and options exercises. The Sales Value fee 
proposed by the Exchange is identical to the fee assessed by other 
exchanges, including the Exchange's affiliate MIAX Options.
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    \26\ See Exchange Rule 1207.
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Web CRD \27\ Fees
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    \27\ FINRA operates the Web Central Registration Depository 
(CRD[supreg]), the central licensing and registration system for the 
U.S. securities industry and its regulators. It contains the 
registration records of more than 6,800 registered broker-dealers 
and the qualification, employment, and disclosure histories of more 
than 660,000 active registered individuals.
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    Financial Industry Regulatory Authority (``FINRA''), through the 
Web CRD\SM\ registration system for the registration of associated 
persons of Electronic Exchange Member and Market Maker organizations 
that are not also FINRA members, collects from those MIAX PEARL Members 
general registration fees and fingerprint processing fees. The Fee 
Schedule sets forth both the Web CRD Fees FINRA is currently charging 
and the Web CRD Fees it will begin charging February 6, 2017. The Web 
CRD fees proposed by the Exchange are similar to those assessed by 
other exchanges and identical to the same fees assessed by MIAX 
Options.
iii. Non-Transaction Fees
    The Exchange proposes to establish certain non-transaction fees, 
including membership, testing, system connectivity and market data 
fees, applicable to Members and non-Members using services provided by 
MIAX PEARL.
Membership Fees
    MIAX PEARL proposes to assess Membership fees for Applications and 
Trading Permits.

A. Application for MIAX PEARL Membership

    A one-time application fee based upon the applicant's status as 
either an Electronic Exchange Member (``EEM'') or as a Market Maker 
will be assessed by MIAX PEARL. The Exchange proposes to assess the 
one-time application fee on the earlier of (i) the date the applicant 
is certified in the Exchange's membership system or (ii) once an 
application for MIAX PEARL membership is finally denied. MIAX PEARL 
proposes that the one-time application fee for membership will be 
waived for a period of time, which the Exchange has defined in the Fee 
Schedule as the Waiver Period,\28\ for both EEMs and Market Makers. 
MIAX PEARL believes that this will provide incentive for potential 
applicants to submit early applications, which should result in 
increasing potential order flow and liquidity as MIAX PEARL begins 
trading. The Exchange will submit a rule filing to the Commission to 
establish the fee amount and any related requirements, and provide 
notice to expire the applicable Waiver Period. Even though the Exchange 
is proposing to waive this particular fee during the Waiver Period, the 
Exchange believes that is appropriate to provide market participants 
with the overall structure of the fee by outlining the structure on the 
Fee Schedule without setting forth a specific fee amount, so that there 
is general awareness that the Exchange intends to assess such a fee in 
the future, should the Waiver Period terminate and the Exchange 
establish an applicable fee.
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    \28\ ``Waiver Period'' means, for each applicable fee, the 
period of time from the initial effective date of the MIAX PEARL Fee 
Schedule until such time that the Exchange has an effective fee 
filing establishing the applicable fee. The Exchange will issue a 
Regulatory Circular announcing the establishment of an applicable 
fee that was subject to a Waiver Period at least fifteen (15) days 
prior to the termination of the Waiver Period and effective date of 
any such applicable fee.
---------------------------------------------------------------------------

B. Trading Permits

    MIAX PEARL proposes to issue Trading Permits that confer the 
ability to transact on MIAX PEARL. Trading Permits will be issued to 
EEMs and Market Makers. Members receiving Trading Permits during a 
particular calendar month will be assessed monthly Trading Permit Fees 
as shall be set forth in the Fee Schedule. The Exchange notes that the 
Exchange's affiliate, MIAX Options, charges trading permit fees as 
well, and the Exchange's proposed structure for its Trading Permit fees 
is based on the structure of MIAX Options, particularly as it relates 
to EEMs. As it relates to Market Makers, MIAX Options charges its 
market makers based on the number of options classes to which the 
market maker is appointed. Since the market making structure on the 
Exchange is not identical to the market making structure on MIAX 
Options, the Exchange may propose to charge its Market Makers in a 
different manner than is charged at MIAX Options. The monthly Trading 
Permit Fees assessable to EEMs and Market Makers are being waived by 
the Exchange for the Waiver Period. The Exchange will submit a rule 
filing to the Commission to establish the fee amount and any related 
requirements, and provide notice to terminate the applicable Waiver 
Period. Even though the Exchange is proposing to waive this particular 
fee during the Waiver Period, the Exchange believes that is appropriate 
to provide market participants with the overall structure of the fee by 
outlining the structure on the Fee Schedule without setting forth a 
specific fee amount, so that there is general awareness that the 
Exchange intends to assess such a fee in the future, should the Waiver 
Period terminate and the Exchange establish an applicable fee.
Testing and Certification Fees

A. API Testing and Certification Fee

Members
    MIAX PEARL proposes to assess an Application Programming Interface 
(``API'') testing and certification fee on all Members depending upon 
the type of interface being tested. An API makes it possible for Member 
software to communicate with MIAX PEARL software applications, and is 
subject to Member testing with, and certification by, MIAX PEARL. The 
Exchange proposes to offer four types of interfaces: (i) the Financial 
Information Exchange (``FIX'') Port, which allows Members to 
electronically send orders in all products traded on the Exchange; (ii) 
the MIAX Express Network (``MEO'') Port, which allows EEMs and Market 
Makers to submit electronic orders to the Exchange; (iii) the Clearing 
Trade Drop (``CTD'') Port, which provides real-time trade clearing 
information to the participants to a trade on MIAX PEARL and to the 
participants' respective clearing firms; and (iv) FIX Drop Copy 
(``FXD'') Port, which provides a copy of real-time trade execution, 
correction and cancellation information through a FIX Port to any 
number of FIX Ports designated by an EEM to receive such messages. API 
Testing and Certification Fees will be assessed (i) initially per API 
per interface in the month the Member has been credentialed to use one 
or more ports in the production environment for the tested API, and 
(ii) each time a Member initiates a change to its system that requires 
testing and certification. API Testing and Certification Fees will not 
be assessed in situations where the Exchange initiates a mandatory 
change to the Exchange's system that requires testing and 
certification. The fees represent costs incurred by the Exchange as it 
works with each Member for testing and certifying that the Member's 
software systems communicate properly with MIAX PEARL's interfaces. 
MIAX PEARL has set a one-time fee so that MIAX PEARL Members will know 
the full cost for the service prior to beginning to use

[[Page 11681]]

such services and thereby be more cost effective to the Members.
    In order to provide an incentive to prospective Members to apply 
early for membership and to engage in API testing and certification 
such that they will be able to trade options on MIAX PEARL as soon as 
possible, API Testing and Certification fees assessable to Members will 
be waived by the Exchange for all interfaces for the Waiver Period. The 
Exchange will submit a rule filing to the Commission to establish the 
fee amount and any related requirements, and provide notice to 
terminate the applicable Waiver Period. Even though the Exchange is 
proposing to waive this particular fee during the Waiver Period, the 
Exchange believes that is appropriate to provide market participants 
with the overall structure of the fee by outlining the structure on the 
Fee Schedule without setting forth a specific fee amount, so that there 
is general awareness that the Exchange intends to assess such a fee in 
the future, should the Waiver Period terminate and the Exchange 
establish an applicable fee.
Non-Members
    MIAX PEARL proposes to assess a one-time API Testing and 
Certification fee per interface on third-party vendors, Service Bureaus 
and other non-Members whose software interfaces with MIAX PEARL 
software. As with Members, an API makes it possible for the software of 
third-party vendors, Service Bureaus and other non-Members to 
communicate with MIAX PEARL software applications, and is subject to 
testing with, and certification by, MIAX PEARL. API Testing and 
Certification Fees will be assessed (i) initially per API per interface 
in the month the non-Member has been credentialed to use one or more 
ports in the production environment for the tested API, and (ii) each 
time a non-Member initiates a change to its system that requires 
testing and certification. API Testing and Certification Fees will not 
be assessed in situations where the Exchange initiates a mandatory 
change to the Exchange's system that requires testing and 
certification.
    Other exchanges, including NASDAQ PHLX, LLC and NASDAQ Stock 
Market, charge a fee for similar services to Members and non-
Members.\29\ In order to provide an incentive to non-Members to engage 
in early API testing and certification such that they will be able to 
utilize the services of MIAX PEARL as soon as possible, API Testing and 
Certification fees assessable to non-Members will be waived by the 
Exchange for all interfaces for the Waiver Period. The Exchange will 
submit a rule filing to the Commission to establish the fee amount and 
any related requirements, and provide notice to terminate the 
applicable Waiver Period. Even though the Exchange is proposing to 
waive this particular fee during the Waiver Period, the Exchange 
believes that is appropriate to provide market participants with the 
overall structure of the fee by outlining the structure on the Fee 
Schedule without setting forth a specific fee amount, so that there is 
general awareness that the Exchange intends to assess such a fee in the 
future, should the Waiver Period terminate and the Exchange establish 
an applicable fee.
---------------------------------------------------------------------------

    \29\ See NASDAQ PHLX LLC (``PHLX'') Pricing Schedule, Chapter 
VII, Section E at http://nasdaqphlx.cchwallstreet.com/NASDAQPHLXTools/PlatformViewer.asp?selectednode=chp_1_4_1&manual=%2Fnasdaqomxphlx%2Fphlx%2Fphlx-rulesbrd%2F; see also NASDAQ Stock Market Options 
Pricing, Chapter XV, Section 13 at http://nasdaq.cchwallstreet.com/NASDAQTools/PlatformViewer.asp?selectednode=chp_1_1_15&manual=%2Fnasdaq%2Fmain%2Fnasdaq-optionsrules%2F.
---------------------------------------------------------------------------

B. Member Network Testing and Certification Fee

    As described below under ``System Connectivity Fees'', MIAX PEARL 
will establish electronic communication connections with Members and 
proposes to assess Members a Testing and Certification Fee of $1,000.00 
per Member per one (1) Gigabit (``Gb'') connection, $4,000.00 per 
Member per ten (10) Gb connection and $4,000.00 per Member per ten (10) 
Gb ultra-low-latency (``ULL'') connection. Member Network Connectivity 
Testing and Certification Fees will be assessed (i) initially per 
connection in the month the Member has been credentialed to use any API 
or Market Data feeds in the production environment utilizing the tested 
network connection, and (ii) each time a Member initiates a change to 
its system that requires network connectivity testing and 
certification. Network Connectivity Testing and Certification Fees will 
not be assessed in situations where the Exchange initiates a mandatory 
change to the Exchange's system that requires testing and 
certification. Member Network Connectivity Testing and Certification 
Fees will not be assessed for testing and certification of connectivity 
to the Exchange's Disaster Recovery Facility.
    These proposed fee amounts are identical to the fees currently 
assessed for the same services at MIAX Options. The Exchange notes that 
the MENI, which is defined in the Definitions section of the Fee 
Schedule, is a network infrastructure which provides Members and non-
Members network connectivity to the trading platforms, market data 
systems, test systems, and disaster recovery facility of the Exchange. 
The MENI consists of the low latency and ultra-low latency (``ULL'') 
connectivity options set forth in the Exchange's Fee Schedule. The MENI 
can also be configured to provide network connectivity to the trading 
platforms, market data systems, test systems, and disaster recovery 
facility of the Exchange's affiliate, MIAX Options, via a single, 
shared connection. Accordingly, Members utilizing the MENI to connect 
to the trading platforms, market data systems, test systems, and 
disaster recovery facilities of the Exchange and MIAX Options via a 
single, shared connection will only be assessed one Network 
Connectivity Testing and Certification Fee per connection tested, 
regardless of the trading platforms, market data systems, test systems, 
and disaster recovery facilities accessed via such connection.\30\
---------------------------------------------------------------------------

    \30\ The Exchange notes that MIAX Options has filed with the 
Commission a proposed rule change to adopt similar clarifying rules 
in connection with the launch of trading on MIAX PEARL. See SR-MIAX-
2017-05 filed on February 13, 2017 at http://www.miaxoptions.com/rule-filings.
---------------------------------------------------------------------------

C. Non-Member Network Testing and Certification Fee

    MIAX PEARL will establish electronic connections with and proposes 
to assess Service Bureaus, Extranet Providers and other non-Members a 
Testing and Certification Fee of $1,200.00 per non-Member per one (1) 
Gigabit (``Gb'') connection, $4,200.00 per non-Member per ten (10) Gb 
connection and $4,200.00 per non-Member per ten (10) Gb ultra-low-
latency (``ULL'') connection.
    Non-Member Network Connectivity Testing and Certification Fees will 
be assessed (i) initially per connection in the month the non-Member 
has been credentialed to use any API or Market Data feeds in the 
production environment utilizing the tested network connection, and 
(ii) each time a non-Member initiates a change to its system that 
requires network connectivity testing and certification. Network 
Connectivity Testing and Certification Fees will not be assessed in 
situations where the Exchange initiates a mandatory change to the 
Exchange's system that requires testing and certification. Non-Member 
Network Connectivity Testing and Certification

[[Page 11682]]

Fees will not be assessed for testing and certification of connectivity 
to the Exchange's Disaster Recovery Facility.
    These proposed fee amounts are identical to the fees currently 
assessed for the same services at MIAX Options. As with Member 
subscribers, the MENI can also be configured to provide network 
connectivity to the trading platforms, market data systems, test 
systems, and disaster recovery facility of the Exchange's affiliate, 
MIAX Options, via a single, shared connection. Accordingly, non-Members 
utilizing the MENI to connect to the trading platforms, market data 
systems, test systems, and disaster recovery facilities of the Exchange 
and MIAX Options via a single, shared connection will only be assessed 
one Network Connectivity Testing and Certification Fee per connection 
tested, regardless of the trading platforms, market data systems, test 
systems, and disaster recovery facilities accessed via such 
connection.\31\ The Member and non-Member Network Testing and 
Certification fees represent installation and support costs incurred by 
the Exchange as it works with each Member and non-Member to make sure 
there are appropriate electronic connections with MIAX PEARL. Other 
exchanges, including MIAX Options, charge fees for similar services to 
Members and non-Members.\32\ The Exchange proposes to assess a higher 
Network testing and certification fee to non-Members than to Members 
similar to how MIAX Options assesses such fees to its Members and non-
Members. The higher fee charged to non-Members reflects the greater 
amount of time spent by MIAX PEARL employees testing and certifying 
non-Members. It has been MIAX PEARL's experience that Member network 
connectivity testing takes less time than non-Member network 
connectivity testing because Members have more experience testing these 
systems with exchanges as generally fewer questions and issues arise 
during the testing and certification process.
---------------------------------------------------------------------------

    \31\ Id.
    \32\ See supra note 29. The fees proposed by the Exchange are 
also identical to those assessed by MIAX Options for the same 
services.
---------------------------------------------------------------------------

System Connectivity Fees
    MIAX PEARL proposes to assess fees to Members and non-Members for 
electronic connections between those entities and MIAX PEARL. The 
connectivity fees are generally based upon the amount of bandwidth that 
will be used by the Member or non-Member. MIAX PEARL currently offers 
fiber optic connectivity with a bandwidth of (i) one (1) Gb; (ii) ten 
(10) Gb; and (iii) ten (10) Gb ULL, which connects the user to MIAX 
PEARL using an ultra-low latency switch, which provides faster 
processing of messages sent to it in comparison to the switch used for 
the other types of connectivity. The Exchange offers connectivity to 
its Primary, Secondary and Disaster Recovery Facilities through the 1 
Gb and 10 Gb connections and offers connectivity to its Primary and 
Secondary Facilities through the 10 Gb ULL connection.

A. Member Network Connectivity Fee

    MIAX PEARL proposes to assess a monthly Member Network Connectivity 
fee of (i) $1,100 per one (1) Gb connection to the Exchange's Primary 
and Secondary Facilities; (ii) $500.00 per one (1) Gb connection to the 
Exchange's Disaster Recovery Facility; (iii) $5,500.00 per ten (10) Gb 
connection to the Exchange's Primary and Secondary Facilities; (iv) 
$2,500.00 per ten (10) Gb connection to the Exchange's Disaster 
Recovery Facility; and (v) $8,500 per ten (10) Gb ULL connection to the 
Exchange's Primary and Secondary Facilities. MIAX PEARL charges a 
higher fee for the 10 Gb and 10 Gb ULL connections due the higher costs 
of the bandwidths and the low latency switch in the case of the 10 Gb 
ULL connection. MIAX PEARL's monthly Member Network Connectivity fees 
are identical to those charged by MIAX Options and are comparable to 
the monthly fees charged for similar connectivity at Chicago Board 
Options Exchange, Incorporated (``CBOE''), which are (i) $750 for a 1 
Gb connection, (ii) $4,000 for a 10 Gb connection and (iii) $250 for 1 
Gb connection to CBOE's Disaster Recovery facility,\33\ and at PHLX, 
which are (i) $1,000 for a 1 Gb connection, and (ii) $5,000 for a ten 
(10) Gb connection.\34\
---------------------------------------------------------------------------

    \33\ See CBOE Fee Schedule, CBOE Command Connectivity Charges at 
http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf.
    \34\ See PHLX Fee Schedule, Section XI Direct Connectivity to 
Phlx.
---------------------------------------------------------------------------

    Monthly Member Network Connectivity fees for connectivity with the 
Primary/Secondary Facility will be assessed in any month the Member is 
credentialed to use any of the MIAX PEARL APIs or Market Data feeds in 
the production environment and will be pro-rated when a Member makes a 
change to the connectivity (by adding or deleting connections) with 
such pro-rated fees based on the number of trading days that the Member 
has been credentialed to utilize any of the MIAX PEARL APIs or Market 
Data feeds in the production environment through such connection, 
divided by the total number of trading days in such month multiplied by 
the applicable monthly rate. Monthly Member Network Connectivity fees 
for connectivity with the Disaster Recovery Facility will be assessed 
in each month during which the Member has established connectivity with 
the Disaster Recovery Facility.
    The Exchange notes that the MENI can be configured to provide 
network connectivity to the trading platforms, market data systems, 
test systems, and disaster recovery facility of the Exchange's 
affiliate, MIAX Options, via a single, shared connection. Accordingly, 
Members utilizing the MENI to connect to the trading platforms, market 
data systems, test systems, and disaster recovery facilities of the 
Exchange and MIAX Options via a single, shared connection will only be 
assessed one Member Network Connectivity Fee per connection, regardless 
of the trading platforms, market data systems, test systems, and 
disaster recovery facilities accessed via such connection.\35\
---------------------------------------------------------------------------

    \35\ See supra note 30.
---------------------------------------------------------------------------

B. Non-Member Network Connectivity Fee

    MIAX PEARL proposes to assess a monthly non-Member Network 
Connectivity fee of (i) $1,100 per one (1) Gb connection to the 
Exchange's Primary and Secondary Facilities; (ii) $500.00 per one (1) 
Gb connection to the Exchange's Disaster Recovery Facility; (iii) 
$5,500.00 per ten (10) Gb connection to the Exchange's Primary and 
Secondary Facilities; (iv) $2,500.00 per ten (10) Gb connection to the 
Exchange's Disaster Recovery Facility; and (v) $8,500 per ten (10) Gb 
ULL connection to the Exchange's Primary and Secondary Facilities. MIAX 
PEARL charges a higher fee for the 10 Gb and 10 Gb ULL connections due 
the higher costs of the bandwidths and the low latency switch in the 
case of the 10 Gb ULL connection. MIAX PEARL's monthly non-Member 
Network Connectivity fees are identical to those charged by MIAX 
Options and are comparable to the monthly fees charged for similar 
connectivity at CBOE, which are (i) $750 for a 1 Gb connection, (ii) 
$4,000 for a 10 Gb connection and (iii) $250 for 1 Gb connection to 
CBOE's Disaster Recovery facility \36\and at PHLX, which are (i) $1,000 
for a 1 Gb connection, and (ii) $5,000 for a ten (10) Gb 
connection.\37\
---------------------------------------------------------------------------

    \36\ See supra note 33.
    \37\ See supra note 34.

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

[[Page 11683]]

    Monthly non-Member Network Connectivity fees for connectivity with 
the Primary/Secondary Facility will be assessed in each month the non-
Member has been credentialed to use any of the MIAX PEARL APIs or 
Market Data feeds via the network connection in the production 
environment and will be pro-rated when a non-Member makes a change to 
the connectivity (by adding or deleting connections) with such pro-
rated fees based on the number of trading days that the non-Member has 
been credentialed to utilize any one of the two MIAX Exchanges' APIs or 
Market Data feeds in the production environment through such 
connection, divided by the total number of trading days in such month 
multiplied by the applicable monthly rate. Monthly Non-Member Network 
Connectivity fees for connectivity with the Disaster Recovery Facility 
will be assessed in each month during which the non-Member has 
established connectivity with the Disaster Recovery Facility.
    As with Members, the MENI can be configured to provide network 
connectivity to the trading platforms, market data systems, test 
systems, and disaster recovery facility of the Exchange's affiliate, 
MIAX Options, via a single, shared connection. Accordingly, non-Members 
utilizing the MENI to connect to the trading platforms, market data 
systems, test systems, and disaster recovery facilities of the Exchange 
and MIAX Options via a single, shared connection will only be assessed 
one non-Member Network Connectivity Fee per connection, regardless of 
the trading platforms, market data systems, test systems, and disaster 
recovery facilities accessed via such connection.\38\
---------------------------------------------------------------------------

    \38\ See supra note 30.
---------------------------------------------------------------------------

C. Pass-Through of External Connectivity Fees

    MIAX PEARL proposes to assess External Connectivity fees to Members 
and non-Members that establish connections with MIAX PEARL through a 
third-party. Fees charged to MIAX PEARL by third-party external vendors 
on behalf of a Member or non-Member connecting to MIAX PEARL (including 
cross-connects), will be passed through to the Member or non-Member. 
External Connectivity fees include one-time set-up fees and monthly 
charges charged to MIAX PEARL by a third-party.
    The purpose of the External Connectivity fee is to recoup costs 
incurred by MIAX PEARL in establishing connectivity with external 
vendors acting on behalf of a Member or non-Member. MIAX PEARL will 
only pass-through the actual costs it is charged by the third-party 
external vendors. Other exchanges, including MIAX Options, charge a fee 
for similar services to Members and non-Members.

D. Port Fees

    Once network connectivity is established, MIAX PEARL proposes to 
assess fees for access and services used by Members and non-Members via 
connections known as ``Port''. MIAX PEARL provides four (4) Port types, 
including (i) the FIX Port, which allows Members to electronically send 
orders in all products traded on the Exchange; (ii) the MEO Port, which 
allows EEMs and Market Makers to submit electronic orders to the 
Exchange; (iii) the CTD Port, which provides real-time trade clearing 
information to the participants to a trade on MIAX PEARL and to the 
participants' respective clearing firms; and (iv) FXD Port, which 
provides a copy of real-time trade execution, correction and 
cancellation information through a FIX Port to any number of FIX Ports 
designated by an EEM to receive such messages.
    MIAX PEARL will assess monthly Port Fees on Members and non-Members 
in each month the market participant is credentialed to use a Port in 
the production environment and based upon the number of credentialed 
Ports that a user is entitled to use. MIAX PEARL has Primary and 
Secondary Facilities and a Disaster Recovery Facility. Each type of 
Port provides access to all three facilities for a single fee. The 
Exchange notes that, unless otherwise specifically set forth in the Fee 
Schedule, the Port Fees include the information communicated through 
the Port. That is, unless otherwise specifically set forth in the Fee 
Schedule, there is no additional charge for the information that is 
communicated through the Port apart from what the user is assessed for 
each Port.
    The Exchange will offer different options of MEO Ports depending on 
the services required by the Member or non-Member, including a Full 
Service MEO Port--Bulk,\39\ a Full Service MEO Port--Single \40\ and a 
Limited Service MEO Port.\41\ A Member or non-Member may be allocated 
two (2) Full-Service MEO Ports of either type per Matching Engine and 
up to eight (8) Limited Service MEO Ports per Matching Engine. The two 
(2) Full-Service MEO Ports that may be allocated per Matching Engine to 
a Member or non-Member may consist of: (a) Two (2) Full Service MEO 
Ports--Bulk; or (b) two (2) Full Service MEO Ports--Single. Below is 
the table of Port Fees that appears in the Fee Schedule.
---------------------------------------------------------------------------

    \39\ ``Full Service MEO Port--Bulk'' means an MEO port that 
supports all MEO input message types and binary bulk order entry.
    \40\ ``Full Service MEO Port--Single'' means an MEO port that 
supports all MEO input message types and binary order entry on a 
single order-by-order basis, but not bulk orders.
    \41\ ``Limited Service MEO Port'' means an MEO port that 
supports all MEO input message types, but does not support bulk 
order entry and only supports limited order types, as specified by 
the Exchange via Regulatory Circular.

------------------------------------------------------------------------
                                            Monthly port fees includes
                                           connectivity to the Primary,
              Type of port               Secondary and Disaster Recovery
                                                   data centers
------------------------------------------------------------------------
FIX Port...............................  Fee waived for the Waiver
                                          Period.
Full Service MEO Port--Bulk............  Fee waived for the Waiver
                                          Period.
Full Service MEO Port--Single..........  Fee waived for the Waiver
                                          Period.
Limited Service MEO Port...............  Fee waived for the Waiver
                                          Period.
CTD Port...............................  Fee waived for the Waiver
                                          Period.
FXD Port...............................  Fee waived for the Waiver
                                          Period.
------------------------------------------------------------------------

    Other exchanges, including MIAX Options, charge a fee for similar 
services to Members and non-Members. The Exchange's proposed structure 
for its Port Fees is based on the structure of MIAX Options, subject to 
a few differences as discussed below. First, the Exchange is not 
currently proposing to have tiered pricing for FIX Ports, as does MIAX 
Options. If the Exchange determines to adopt a tiered pricing structure 
in the future, the Exchange will submit a proposed rule change with the 
Commission to establish such a structure. Second, the Exchange is 
proposing to have two types of Full Service MEO Port Fees (Bulk and 
Single), whereas MIAX Options only has one type of full service port 
fee (MEI Port Fee). Further, MIAX Options charges for its MEI port fees 
based on the options class assignments, as measured by the national 
volume. Since the market making structure on the Exchange is not 
identical to the market making structure on MIAX Options, the Exchange 
may propose to assess its MEO Port Fees in a different manner than is 
assessed by MIAX Options for its MEI Port Fees. Finally, the amount of 
the CTD Port Fee assessed by MIAX Options is based on the transacted 
volume of the MIAX Options member. The Exchange is proposing to 
structure its CDT Port Fee as a monthly fixed amount, not tied to 
transacted volume of the Member. This fixed fee structure is the same 
structure in place at Nasdaq

[[Page 11684]]

PHLX with respect to CTD port fees.\42\ In order to provide an 
incentive to Members and non-Members to connect to MIAX PEARL through 
the Ports such that they will be able to utilize the services of MIAX 
PEARL as soon as possible, all Port fees assessable to Port users will 
be waived by the Exchange for the Waiver Period for such fees. The 
Exchange will submit a rule filing to the Commission to establish the 
fee amount and any related requirements, and provide notice to 
terminate the applicable Waiver Period. Even though the Exchange is 
proposing to waive this particular fee during the Waiver Period, the 
Exchange believes that is appropriate to provide market participants 
with the overall structure of the fee by outlining the structure on the 
Fee Schedule without setting forth a specific fee amount, so that there 
is general awareness that the Exchange intends to assess such a fee in 
the future, should the Waiver Period terminate and the Exchange 
establish an applicable fee.
---------------------------------------------------------------------------

    \42\ See Phlx Fee Schedule, Section VII Other Member Fees B. 
Port Fees.
---------------------------------------------------------------------------

E. MPID Fees

    MIAX PEARL proposes to assess monthly Member Participant Identifier 
(``MPID'') fees on Members based upon the type of MPID. Type of MPID 
will be either FIX MPID, using the FIX Port interface, or MEO MPID, 
using the MEO Port interface. MIAX PEARL intends to assess MPID fees in 
order to cover the administrative costs it incurs in assigning and 
managing these identifiers for each Member.
    Other exchanges, including MIAX Options, charge a fee for similar 
services to Members, however there are the following differences 
between the structure proposed by the Exchange and the structure at 
MIAX Options, as discussed below. First, as discussed above, the 
Exchange is proposing to distinguish between MPIDs associated with FIX 
and MPIDs associated with MEO, and thus both types of MPIDs will 
respectively have their own associated fee amount. MIAX Options does 
not make that distinction, and thus has only one type of MPID fee. The 
Exchange has determined to make this distinction (between FIX MPIDs and 
MEO MPIDs) due to the difference in market structure between the 
Exchange and MIAX Options, as the Exchange believes that its maker-
taker, price time market structure makes it appropriate to for having a 
dual MPID fee structure, given the expected trading behavior of Members 
over the respective interface and the Exchange's costs associated with 
maintaining each type of interface. Further, MIAX Options only assesses 
MPID fees on EEMs, whereas the Exchange proposes to assess MPID fees on 
all Members. Again, the Exchange has determined to make this 
distinction (assessing MPID fees on all Members versus only on EEMs) 
because it believes that its maker-taker, price time market structure 
makes it appropriate for assessing all Members based on expected 
trading behavior of Members on the Exchange and the Exchange's costs 
associated with maintaining each type of interface. Second, the 
Exchange is not currently proposing to have tiered pricing for MPIDs, 
as does MIAX Options. The Exchange has determined to make this 
distinction (not offering tiered pricing versus offering tiered 
pricing) because it believes that its maker-taker, price time market 
structure will result in Members needing fewer MPIDs, therefore 
lessening the need for a tiered pricing structure. If the Exchange 
determines to adopt a tiered pricing structure in the future, the 
Exchange will submit a proposed rule change with the Commission to 
establish such a structure. In order to provide an incentive to Members 
to start trading on MIAX PEARL as soon as possible, all MPID fees 
assessable to Members will be waived by the Exchange for the Waiver 
Period for such fees. The Exchange will submit a rule filing to the 
Commission to establish the fee amount and any related requirements, 
and provide notice to terminate the applicable Waiver Period. Even 
though the Exchange is proposing to waive this particular fee during 
the Waiver Period, the Exchange believes that is appropriate to provide 
market participants with the overall structure of the fee by outlining 
the structure on the Fee Schedule without setting forth a specific fee 
amount, so that there is general awareness that the Exchange intends to 
assess such a fee in the future, should the Waiver Period terminate and 
the Exchange establish an applicable fee.

F. Technical Support Request Fee

    MIAX PEARL proposes to assess a technical support request fee to 
both Members and non-Members that request MIAX PEARL technical support 
at any of the MIAX PEARL data centers. MIAX PEARL proposes that such 
fee will be $200 per hour for such technical support. The purpose of 
the proposed fee is to permit users to request the use of Exchange's 
on-site data center personnel as technical support as a convenience to 
the users to test or otherwise assess the user's connectivity to the 
Exchange. Other exchanges, including MIAX Options, charge a fee for 
similar services to Members and non-Members.
Market Data Fees
    The Exchange proposes to assess fees for its market data products, 
MIAX PEARL Top of Market (``ToM'') and MIAX PEARL Liquidity Feed 
(``PLF''). The Exchange notes that it has separately filed with the 
Commission a proposed rule change to establish the ToM and PLF products 
(the ``Market Data Product Filing'').\43\ More information about the 
ToM and PLF products can be found in the Market Data Product Filing. To 
summarize, ToM provides market participants with a direct data feed 
that includes the Exchange's best bid and offer, with aggregate size, 
and last sale information, based on displayable order and quoting 
interest on the Exchange. The ToM data feed includes data that is 
identical to the data sent to the processor for the Options Price 
Reporting Authority (``OPRA''). ToM will also contain a feature that 
provides the number of Priority Customer contracts that are included in 
the size associated with the Exchange's best bid and offer.
---------------------------------------------------------------------------

    \43\ See Securities Exchange Act Release No. 79913 (February 1, 
2017) (SR-PEARL-2017-01) Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change to Establish MIAX PEARL Top 
of Market (``ToM'') and MIAX PEARL Liquidity Feed (``PLF'') Data 
Products.
---------------------------------------------------------------------------

    PLF is a real-time full order book data feed that provides 
information for orders on the MIAX PEARL order book. PLF will provide 
real-time information to enable users to keep track of the simple order 
book for all symbols listed on MIAX PEARL. PLF will provide the 
following real-time data to its users with respect to each order for 
the entire order book: Origin, limit price, side, size, and time-in-
force (e.g., day, GTC). It is a compilation of data for orders residing 
on the Exchange's order book for options traded on the Exchange that 
the Exchange provides through a real-time multi-cast data feed. The 
Exchange believes the PLF is a valuable tool that subscribers can use 
to gain comprehensive insight into the limit order book in a particular 
option.
    The Exchange proposes to charge monthly fees to Distributors of the 
ToM and/or PLF market data products. MIAX PEARL will assess market data 
fees applicable to the market data products on Internal and External 
Distributors in each month the Distributor is credentialed to use the 
applicable market data product in the production environment. A 
``Distributor'' of MIAX PEARL data is any entity that receives a feed 
or file of data either directly from

[[Page 11685]]

MIAX PEARL or indirectly through another entity and then distributes it 
either internally (within that entity) or externally (outside that 
entity). All Distributors are required to execute a MIAX PEARL 
Distributor Agreement. Market data fees for ToM and PLF will be reduced 
for new Distributors for the first month during which they subscribe to 
the applicable market data product, based on the number of trading days 
that have been held during the month prior to the date on which they 
have been credentialed to use the applicable market data product in the 
production environment. Such new Distributors will be assessed a pro-
rata percentage of the fees described above, which is the percentage of 
the number of trading days remaining in the affected calendar month as 
of the date on which they have been credentialed to use the applicable 
market data product in the production environment, divided by the total 
number of trading days in the affected calendar month.
    Other exchanges, including MIAX Options, charge fees for market 
data products to Members and non-Members. In order to provide an 
incentive to Members and non-Members to receive the market data feeds 
as soon as possible, all market data fees assessable to Distributors 
for ToM and PLF will be waived by the Exchange for the Waiver Period 
for such fees. The Exchange will submit a rule filing to the Commission 
to establish the fee amount and any related requirements, and provide 
notice to terminate the applicable Waiver Period. Even though the 
Exchange is proposing to waive this particular fee during the Waiver 
Period, the Exchange believes that is appropriate to provide market 
participants with the overall structure of the fee by outlining the 
structure on the Fee Schedule without setting forth a specific fee 
amount, so that there is general awareness that the Exchange intends to 
assess such a fee in the future, should the Waiver Period terminate and 
the Exchange establish an applicable fee.
    The Exchange does not propose to adopt any other fees at this time. 
The Exchange expects to adopt additional fees after the terminations of 
applicable Waiver Periods as determined by the Exchange, which shall be 
at a later date. The Exchange will submit rule filings with the 
Commission prior to any such fees becoming effective.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \44\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \45\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among its members and issuers and other persons using 
its facilities. The Exchange also believes the proposal furthers the 
objectives of Section 6(b)(5) of the Act in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest and is not designed to permit unfair discrimination between 
customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78f(b).
    \45\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

i. Transaction Fees
Add/Remove Tiered Transaction Rebates/Fees
    The Exchange believes the rebates and fees proposed for 
transactions on MIAX PEARL are reasonable, equitable and not unfairly 
discriminatory. MIAX PEARL operates within a highly competitive market 
in which market participants can readily send order flow to several 
other competing venues if, among other things, they deem fees at a 
particular venue to be unreasonable or excessive. The proposed fee 
structure is intended to attract order flow to MIAX PEARL by offering 
market participants incentives to submit their orders to MIAX PEARL.
    Volume-based pricing models such as those proposed on the Exchange 
have been widely adopted by options exchanges and are equitable and not 
unfairly discriminatory because they are open to all Members and 
provide additional benefits or discounts that are reasonably related to 
the value of an exchange's market quality associated with higher levels 
of market activity, such as higher levels of liquidity provision and/or 
growth patterns, and introduction of higher volumes of orders into the 
price and volume discovery processes.
    The Exchange's proposal to offer a rebate to Makers that provide 
liquidity in Penny and Non-Penny classes is also equitable and not 
unfairly discriminatory under the Act. The Exchange believes that the 
proposed maker-taker model is an important competitive tool for 
exchanges and directly or indirectly can provide better prices for 
investors. The proposed fee structure may incentivize the MIAX PEARL 
Bid and Offer (``MBBO'') because the rebate payable to Makers 
effectively subsidizes, and thus encourages, the posting of liquidity. 
The Exchange believes that the Maker rebate will also provide MIAX 
PEARL Market Makers with greater incentive to either match or improve 
upon the best price displayed on MIAX PEARL, all to the benefit of 
investors and the public in the form of improved execution prices. MIAX 
PEARL believes the proposed Add/Remove Tiered transaction rebates and 
fees assessed to Market Makers are reasonable because they are 
comparable to transaction fees charged by other options exchanges.
    The Exchange believes that its proposed Add/Remove Tiered 
transaction rebates and fees are equitable and not unfairly 
discriminatory because they are available to all Market Makers and are 
reasonably related to the value to the Exchange that comes with higher 
market quality and higher levels of liquidity in the price and volume 
discovery processes. Such increased liquidity at the Exchange should 
allow it to spread its administrative and infrastructure costs over a 
greater number of transactions leading to lower costs per transaction.
    The Exchange believes it is equitable and not unfairly 
discriminatory for MIAX PEARL Market Makers to be assessed generally 
lower fees than other professional market participants (referred to as 
non-Priority Customers, Non-Member Broker-Dealers, non-MIAX PEARL 
Market Makers and Firms in the Fee Schedule). Market Makers have 
obligations that other professional market participants do not. In 
particular, they must maintain continuous two-sided markets in the 
classes in which they are registered to trade, and must meet certain 
minimum quoting requirements. Therefore, the Exchange believes it is 
appropriate that Market Makers be assessed lower Add/Remove Tiered 
transaction fees since they have the potential to provide greater 
volumes of liquidity to the market.
    The Exchange believes the proposed Add/Remove Tiered rebates and 
fees assessed on Priority Customers are reasonable, equitable, and not 
unfairly discriminatory because they are, as detailed in the Purpose 
section above, comparable to fees that Priority Customers are assessed 
at other competing exchanges.\46\ The Exchange believes charging lower 
fees and providing higher rebates to Priority Customer orders attracts 
that order flow to the Exchange and thereby creates liquidity to the 
benefit of all market participants who trade on the Exchange.

[[Page 11686]]

Further, the Exchange believes that it is equitable and not unfairly 
discriminatory to assess lower fees to Priority Customer orders than to 
non-Priority Customer orders. A Priority Customer is by definition not 
a broker or dealer in securities, and does not place more than 390 
orders in listed options per day on average during a calendar month for 
its own beneficial account(s). This limitation does not apply to 
participants on the Exchange whose behavior is substantially similar to 
that of market professionals, including non-Priority Customers, non-
MIAX PEARL Market Makers, Firm, and Broker-Dealers, who will generally 
submit a higher number of orders (many of which do not result in 
executions) than Priority Customers.
---------------------------------------------------------------------------

    \46\ See supra notes 10 and 12.
---------------------------------------------------------------------------

Routing Fees
    The Exchange believes that the proposed Routing Fees are 
reasonable, equitable and not unfairly discriminatory because they seek 
to recoup costs that are incurred by the Exchange when routing Public 
Customer orders to away markets on behalf of Members. Each destination 
market's transaction charge varies and there is a cost incurred by the 
Exchange when routing orders to away markets. The costs to the Exchange 
include clearing costs, administrative, regulatory and technical costs 
associated with routing options. The Exchange believes that the 
proposed Routing Fees would enable the Exchange to recover the costs it 
incurs to route orders to away markets in addition to transaction fees 
assessed to market participants for the execution of Public Customer 
orders by the away market. The Exchange is proposing to have 8 
different exchange groupings, based on the exchange, order type, and 
option class. The Exchange believes that having more groupings will 
offer the Exchange greater precision in covering its costs associated 
with routing orders to away markets. The per-contract transaction fee 
amount associated with each grouping closely approximates the 
Exchange's all-in cost (plus an additional, non-material amount) to 
execute that corresponding contract at that corresponding exchange. For 
example, to execute a Priority Customer order in a Penny Pilot symbol 
(other than SPY) at AMEX costs the Exchange approximately $0.15 a 
contract. Since this is also the approximate cost to execute that same 
order at BOX, the Exchange is able to group AMEX and BOX together in 
the same grouping. This same logic and structure applies to all of the 
groupings in the Routing Fees table. Other exchanges, like the 
Exchange's affiliate, Miami International Securities Exchange, LLC 
(``MIAX Options''), have routing fee structures that simply pass onto 
the Member the actual charge assessed by the away market where the 
order is executed plus a fixed fee surcharge (which in the case of MIAX 
Options is $0.10). However, in the Exchange's experience, this 
structure of simply passing on the actual charge plus a mark-up can be 
administratively burdensome, particularly when multiple, third-party, 
unaffiliated routing broker-dealers are used to route and execute the 
orders at the away market. By utilizing the structure proposed by the 
Exchange, the Exchange will know immediately the cost of the execution 
and it can eliminate the administratively burdensome month end 
reconciliation process, as well as provide more certainty and 
transparency for execution costs to its Members for the execution of 
orders that are routed to away markets.
    In addition, the Exchange believes that it is equitable and not 
unfairly discriminatory to assess lower routing fees to Priority 
Customer orders than to non-Priority Customer orders. A Priority 
Customer is by definition not a broker or dealer in securities, and 
does not place more than 390 orders in listed options per day on 
average during a calendar month for its own beneficial account(s). This 
limitation does not apply to non-Priority Customers, who will generally 
submit a higher number of orders (many of which do not result in 
executions) than Priority Customers. Further, the routing fees for 
Priority Customer orders are based on the fees charged by the away 
market for the execution of such orders, therefore it is reasonable and 
appropriate for the routing fees to be lower than the routing fees for 
non-Priority Customer orders, as this is fee construct at the away 
markets.
ii. Regulatory Fees
Sales Value Fee
    The assessment by the Exchange of the proposed Sales Value Fee is 
reasonable, equitable and not unfairly discriminatory since it allows 
the Exchange to offset the cost it incurs in payment to the Commission 
of a transaction fee that is designed to recover the costs related to 
the government's supervision and regulation of the securities markets 
and securities professionals. The amount of the fee is the same amount 
assessed to the Exchange pursuant to Section 31 of the Exchange Act. 
The Exchange believes it is reasonable to recover the actual costs 
associated with the payment of Section 31 fees and other exchanges, 
including MIAX Options, charge the same fee to their market 
participants.
Web CRD Fees
    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory for the proposed FINRA fees to be included on the Fee 
Schedule because these fees are not being assessed or set by MIAX 
PEARL, but by FINRA, and will be assessed to broker-dealers that 
register associated persons through FINRA's Web CRD system, and other 
exchanges, including MIAX Options, charge the same fees to their market 
participants.
iii. Non-Transaction Fees
Membership Fees
    The Exchange believes that the assessment of one-time Membership 
Application fees is reasonable, equitable and not unfairly 
discriminatory. As described in the Purpose section, the one-time 
application fees are charged by other options exchanges, including MIAX 
Options, and are designed to recover costs associated with the 
processing of such applications. MIAX PEARL believes it is reasonable 
and equitable to waive the fee to applicants who apply for membership 
during the Waiver Period since the waiver of such fees provides 
incentives to interested applicants to apply early for MIAX PEARL 
membership. This in turn provides MIAX PEARL with potential order flow 
and liquidity providers as it begins operations. The waiver will apply 
equally to all applicants during the Waiver Period for the membership 
application fee.
Trading Permit Fees
    The Exchange believes that the assessment of Trading Permit fees is 
reasonable, equitable and not unfairly discriminatory. The assessment 
of Trading Permit fees is done by the Exchange's affiliate, MIAX 
Options, and is commonly done by other exchanges as described in the 
Purpose section above. MIAX PEARL believes it is reasonable and 
equitable to waive the fee to Members during the Waiver Period since 
the waiver of such fees provides incentives to interested Members to 
apply early for trading permits. This in turn provides MIAX PEARL with 
potential order flow and liquidity providers as it begins operations. 
The waiver of the Trading Permit fees will apply equally to all Members 
during the Waiver Period.

[[Page 11687]]

API and Network Testing and Certification Fees
    MIAX PEARL believes that the assessment of API and Network Testing 
and Certification fees is a reasonable allocation of its costs and 
expenses among its Members and other persons using its facilities since 
it is recovering the costs associated with providing such 
infrastructure testing and certification services. Other exchanges, 
including MIAX Options, charge a fee for similar services to Members 
and non-Members.
    MIAX PEARL believes it is reasonable and equitable to waive the API 
Testing and Certification fee assessable to Members and non-Members 
during the Waiver Period since the waiver of such fees provides 
incentives to interested Members and non-Members to test their APIs 
early. Determining system operability with the Exchange's system early 
will in turn provide MIAX PEARL with potential order flow and liquidity 
providers as it begins operations. The waiver of API Testing and 
Certification fees will apply equally to all Members and non-Members 
during the Waiver Period.
    Additionally, MIAX PEARL believes it is reasonable, equitable and 
not unfairly discriminatory to assess different Network Testing and 
Certification fees to Members and non-Members. The higher fee charged 
to non-Members reflects the greater amount of time spent by MIAX PEARL 
employees testing and certifying non-Members. It has been MIAX PEARL's 
experience that Member testing takes less time than non-Member testing 
because Members have more experience testing these systems with 
exchanges; generally fewer questions and issues arise during the 
testing and certification process.
System Connectivity Fees
    The Exchange believes that the proposed System Connectivity Fees 
constitute an equitable allocation of fees, and are not unfairly 
discriminatory, because they allow the Exchange to recover costs 
associated with offering access through the network connections and 
access and services through the Ports, responding to customer requests, 
configuring MIAX PEARL systems, programming API user specifications and 
administering the various services. Access to the MIAX PEARL market 
will be offered on fair and non-discriminatory terms. The proposed 
System Connectivity Fees are also expected to offset the costs MIAX 
PEARL incurs in maintaining, and implementing ongoing improvements to 
the trading systems, including connectivity costs, costs incurred on 
gateway software and hardware enhancements and resources dedicated to 
gateway development, quality assurance, and technology support. The 
Exchange believes that its proposed fees are reasonable in that they 
are competitive with those charged by other exchanges and are identical 
to those charged by MIAX Options for the same connectivity.
    MIAX PEARL believes it is reasonable, equitable and not unfairly 
discriminatory to pass-through External Connectivity fees to Members 
and non-Members that establish connections with MIAX PEARL through a 
third-party. MIAX PEARL will only pass-through the actual costs it is 
charged by third-party external vendors. MIAX PEARL believes it is 
reasonable and equitable to recover costs charged it on behalf of a 
Member or non-Member that establishes connections with MIAX PEARL 
through a third party. Other exchanges, including MIAX Options, charge 
a fee for similar services to Members and non-Members.
    MIAX PEARL believes it is reasonable, equitable and not unfairly 
discriminatory to assess Port fees on both Members and non-Members who 
use such services. In particular, the Exchange believes that it is 
reasonable, equitable and not unfairly discriminatory to assess Port 
fees on Members since the Ports enable Members to submit orders and to 
receive information regarding transactions. Specifically, the FIX Port 
and the various MEO Ports enable Members to submit orders 
electronically to the Exchange for processing. The Exchange believes 
that its proposed fees are reasonable in that other exchanges offer 
similar ports with similar services and charge fees for the use of such 
ports, including MIAX Options.
    MIAX PEARL believes it is reasonable and equitable to waive the 
Port fees assessable to Members and non-Members during the Waiver 
Period since the waiver of such fees provides incentives to Members and 
non-Members to connect to the Ports early. Determining connectivity and 
system operability with the Exchange's system early will in turn 
provide MIAX PEARL with potential order flow and liquidity providers as 
it begins operations. The waiver of Port fees will apply equally to all 
Members and non-Members during the Waiver Period.
    The Exchange believes that its fees for MPIDs are reasonable, 
equitable and not unfairly discriminatory in that they apply to all 
Members using either FIX or MEO equally and allow the Exchange to 
recover operational and administrative costs in assigning and 
maintaining such services. The Exchange believes that its proposed fees 
are reasonable in that other exchanges charge fees for similar 
services, including MIAX Options, subject to the differences discussed 
above, which the Exchange believes are reasonable given the different 
market structure between the Exchange and MIAX Options.
    MIAX PEARL believes it is reasonable and equitable to waive the 
MPID fee to Members during the Waiver Period since the waiver of such 
fees provides incentives to Members to apply early. This in turn 
provides MIAX PEARL with potential order flow and liquidity providers 
as it begins operations. The waiver of the MPID fees will apply equally 
to all Members during the Waiver Period.
    The Exchange believes that the proposed Technical Support fee is 
fair, equitable and not unreasonably discriminatory, because it is 
assessed equally to all Members and Non-Members who request technical 
support. Furthermore, Members and Non-Members are not required to use 
the service but instead it is offered as a convenience to all Members 
and Non-Members. The proposed fee is reasonably designed because it 
will permit both Members and Non-Members to request the use of the 
Exchange's on-site data center personnel as technical support and as a 
convenience in order to test or otherwise assess the User's 
connectivity to the Exchange and the fee is within the range of the fee 
charged by other exchanges for similar services and is identical to the 
same fee assessed by MIAX Options.
Market Data Fees
    The Exchange believes that its proposal to assess market data fees 
is consistent with the provisions of Section 6(b)(4) of the Act in that 
it provides an equitable allocation of reasonable fees among 
distributors of ToM and PLF, because all Distributors in each of the 
respective category of Distributor (i.e., Internal and External) will 
be assessed the same fees as other Distributors in their category for 
the applicable market data product.
    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data:

    ``[E]fficiency is promoted when broker-dealers who do not need 
the data beyond the

[[Page 11688]]

prices, sizes, market center identifications of the NBBO and 
consolidated last sale information are not required to receive (and 
pay for) such data when broker-dealers may choose to receive (and 
pay for) additional market data based on their own internal analysis 
of the need for such data.'' \47\
---------------------------------------------------------------------------

    \47\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496 (June 29, 2005).

    By removing ``unnecessary regulatory restrictions'' on the ability 
of exchanges to sell their own data, Regulation NMS advanced the goals 
of the Act and the principles reflected in its legislative history. If 
the free market should determine whether proprietary data is sold to 
broker-dealers at all, it follows that the price at which such data is 
sold should be set by the market as well.
    In July, 2010, Congress adopted H.R. 4173, the Dodd-Frank Wall 
Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act''), 
which amended Section 19 of the Act. Among other things, Section 916 of 
the Dodd-Frank Act amended paragraph (A) of Section 19(b)(3) of the Act 
by inserting the phrase ``on any person, whether or not the person is a 
member of the self-regulatory organization'' after ``due, fee or other 
charge imposed by the self-regulatory organization.'' As a result, all 
SRO rule proposals establishing or changing dues, fees or other charges 
are immediately effective upon filing regardless of whether such dues, 
fees or other charges are imposed on members of the SRO, non-members, 
or both. Section 916 further amended paragraph (C) of Section 19(b)(3) 
of the Act to read, in pertinent part, ``At any time within the 60-day 
period beginning on the date of filing of such a proposed rule change 
in accordance with the provisions of paragraph (1) [of Section 19(b)], 
the Commission summarily may temporarily suspend the change in the 
rules of the self-regulatory organization made thereby, 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 this title. If the Commission takes such 
action, the Commission shall institute proceedings under paragraph 
(2)(B) [of Section 19(b)] to determine whether the proposed rule should 
be approved or disapproved.''
    The Exchange believes that these amendments to Section 19 of the 
Act reflect Congress's intent to allow the Commission to rely upon the 
forces of competition to ensure that fees for market data are 
reasonable and equitably allocated. Although Section 19(b) had formerly 
authorized immediate effectiveness for a ``due, fee or other charge 
imposed by the self-regulatory organization,'' the Commission adopted a 
policy and subsequently a rule stating that fees for data and other 
products available to persons that are not members of the self-
regulatory organization must be approved by the Commission after first 
being published for comment. At the time, the Commission supported the 
adoption of the policy and the rule by pointing out that unlike 
members, whose representation in self-regulatory organization 
governance was mandated by the Act, non-members should be given the 
opportunity to comment on fees before being required to pay them, and 
that the Commission should specifically approve all such fees. MIAX 
PEARL believes that the amendment to Section 19 reflects Congress's 
conclusion that the evolution of self-regulatory organization 
governance and competitive market structure have rendered the 
Commission's prior policy on non-member fees obsolete. Specifically, 
many exchanges have evolved from member-owned, not-for-profit 
corporations into for-profit, investor-owned corporations (or 
subsidiaries of investor-owned corporations). Accordingly, exchanges no 
longer have narrow incentives to manage their affairs for the exclusive 
benefit of their members, but rather have incentives to maximize the 
appeal of their products to all customers, whether members or non-
members, so as to broaden distribution and grow revenues. Moreover, the 
Exchange believes that the change also reflects an endorsement of the 
Commission's determinations that reliance on competitive markets is an 
appropriate means to ensure equitable and reasonable prices. Simply 
put, the change reflects a presumption that all fee changes should be 
permitted to take effect immediately, since the level of all fees are 
constrained by competitive forces. The Exchange therefore believes that 
the assessment of fees for the use of ToM and PLF is proper for non-
member Distributors.
    The decision of the United States Court of Appeals for the District 
of Columbia Circuit in NetCoaliton v. SEC, No. 09-1042 (D.C. Cir. 
2010), although reviewing a Commission decision made prior to the 
effective date of the Dodd-Frank Act, upheld the Commission's reliance 
upon competitive markets to set reasonable and equitably allocated fees 
for market data:

    ``In fact, the legislative history indicates that the Congress 
intended that the market system `evolve through the interplay of 
competitive forces as unnecessary regulatory restrictions are 
removed' and that the SEC wield its regulatory power `in those 
situations where competition may not be sufficient,' such as in the 
creation of a `consolidated transactional reporting system.' '' \48\
---------------------------------------------------------------------------

    \48\ NetCoaltion, at 15 (quoting H.R. Rep. No. 94-229, at 92 
(1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323).

    The court's conclusions about Congressional intent are therefore 
reinforced by the Dodd-Frank Act amendments, which create a presumption 
that exchange fees, including market data fees, may take effect 
immediately, without prior Commission approval, and that the Commission 
should take action to suspend a fee change and institute a proceeding 
to determine whether the fee change should be approved or disapproved 
only where the Commission has concerns that the change may not be 
consistent with the Act.
    MIAX PEARL believes that the assessment of the proposed market data 
fees for ToM and PF is fair and equitable in accordance with Section 
6(b)(4) of the Act, and not unreasonably discriminatory in accordance 
with Section 6(b)(5) of the Act. As described above, market data fees 
are assessed by other exchanges, including MIAX Options.
    Moreover, the decision as to whether or not to subscribe to ToM or 
PLF is entirely optional to all parties. Potential subscribers are not 
required to purchase the ToM or PLF market data feed, and MIAX PEARL is 
not required to make the ToM or PLF market data feed available. 
Subscribers can discontinue their use at any time and for any reason, 
including due to their assessment of the reasonableness of fees 
charged. The allocation of fees among subscribers is fair and 
reasonable because, if the market deems the proposed fees to be unfair 
or inequitable, firms can diminish or discontinue their use of this 
data.
    MIAX PEARL believes it is reasonable and equitable to waive the 
market data fees to Distributors during the Waiver Period since the 
waiver of such fees provides incentives to interested Distributors to 
receive the data feeds early. This in turn provides MIAX PEARL with 
potential order flow and liquidity providers as it begins operations. 
The waiver of the market data fees will apply equally to all 
Distributors during the Waiver Period.
    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must

[[Page 11689]]

establish fees that are competitive with other exchanges. For the 
reasons described above, the Exchange believes that the proposed fees 
in the MIAX PEARL Fee Schedule appropriately reflect this competitive 
environment.

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

    MIAX PEARL does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. Unilateral action by MIAX PEARL 
in establishing rebates and fees for services provided to its Members 
and others using its facilities will not have an impact on competition. 
As a new entrant in the already highly competitive environment for 
equity options trading, MIAX PEARL does not have the market power 
necessary to set prices for services that are unreasonable or unfairly 
discriminatory in violation of the Act. MIAX PEARL's proposed rebates 
and fees, as described herein, are comparable to rebates and fees 
charged by other options exchanges for the same or similar services, 
including those rebates and fees assessed by its affiliate, MIAX 
Options.

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,\49\ and Rule 19b-4(f)(2) \50\ 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.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \50\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-PEARL-2017-10 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-2017-10. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-PEARL-2017-10 and should be 
submitted on or before March 17, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\51\
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    \51\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03574 Filed 2-23-17; 8:45 am]
BILLING CODE 8011-01-P


