[Federal Register Volume 86, Number 132 (Wednesday, July 14, 2021)]
[Notices]
[Pages 37200-37202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-14904]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92348; File No. SR-PEARL-2021-28]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX 
Pearl Options Fee Schedule To Remove References and Fees Associated 
With the 10Gb Fiber Connection

July 8, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 28, 2021, 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 proposes to amend the MIAX Pearl Options Fee Schedule 
(the ``Fee Schedule'') to remove text pertaining to 10 gigabit (``Gb'') 
connectivity that will no longer be offered by the Exchange and the 
corresponding fees for those services.
    The text of the proposed rule change is available on the Exchange's 
website 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 Exchange proposes to amend the Fee Schedule to remove 
references and fees for the 10Gb fiber connection for Members \3\ and 
non-Members. The Exchange will cease offering 10Gb connectivity as of 
July 1, 2021. The Exchange will continue to offer 10Gb ultra-low 
latency (``ULL'') connectivity.
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    \3\ ``Member'' means an individual or organization that is 
registered with the Exchange pursuant to Chapter II of 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.
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    The Exchange currently offers various bandwidth alternatives for 
connectivity to the Exchange, including its primary and secondary 
facilities. These connectivity offerings consist of a 1Gb fiber 
connection, a 10Gb fiber connection, and a 10Gb ULL fiber connection. 
The Exchange's MIAX Express Network Interconnect (``MENI'') can be 
configured to provide Members and non-Members of the Exchange network 
connectivity to the trading platforms, market data systems, test 
systems, and disaster recovery facilities of both the Exchange and its 
affiliate, Miami International Securities Exchange, LLC (``MIAX''), via 
a single, shared connection.
    On February 4, 2021, the Exchange issued a notice that MIAX Pearl 
and MIAX would decommission the 10Gb fiber connection in June 2021.\4\ 
This

[[Page 37201]]

means that all Members and non-Members utilizing the 10Gb fiber 
connection would have to migrate their connections to either the 1Gb 
fiber connection or the 10Gb ULL fiber connection. Members and non-
Members utilizing the 10Gb fiber connection could perform the migration 
from April 12, 2021 until June 30, 2021.
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    \4\ See https://www.miaxoptions.com/alerts/2021/02/04/miax-options-and-miax-pearl-options-deprecation-10g-ll-infrastructure-and. The Exchanged issued two subsequent alerts on March 4, 2021 and 
March 29, 2021 reminding market participants of its intent to 
decommission 10 Gb connectivity in June 2021. See https://www.miaxoptions.com/alerts/2021/03/04/miax-options-and-miax-pearl-options-reminder-and-updates-deprecation-10g-ll and https://www.miaxoptions.com/alerts/2021/03/29/miax-options-and-miax-pearl-options-3rd-reminder-deprecation-10g-ll.
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    The Exchange now proposes to amend the Fee Schedule to remove 
references and fees associated with the 10Gb fiber connection. The 
Exchange proposes to remove the references to the 10Gb fiber connection 
from the tables in Sections 4)c)-d) of the Fee Schedule, which are 
related to Member and non-Member network connectivity testing and 
certification fees. The Exchange will continue to offer the 10 Gb ULL 
connection and does not propose to amend the fees for Member and non-
Member network connectivity testing and certification. The Exchange 
also proposes to amend the tables in Sections 5)a)-b) of the Fee 
Schedule, related to Member and non-Member monthly network connectivity 
fees, to remove the fee columns for the 10Gb fiber connection.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \5\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \6\ 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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes the elimination of the 10Gb fiber connection 
fee and related rule text is reasonable because the Exchange will no 
longer offer this functionality as of July 1, 2021, thus making the 
fees irrelevant going forward. The Exchange notes that, because the 
10Gb fiber connection is outdated technology and that Members and non-
Members have other connectivity options, the Exchange planned to phase 
out this connectivity service in its entirety on or before July 1, 
2021.\7\
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    \7\ See supra note 4.
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    The Exchange believes the proposed change is reasonable, equitably 
allocated and not unfairly discriminatory because the Exchange has 
experienced a steady decrease in the number of Members and non-Members 
that purchase the 10Gb connection over the past few years. Further, as 
a consequence of more firms choosing to purchase the 10Gb ULL 
connection over the 10Gb connection, the Exchange believes that, if it 
did not decommission the 10Gb connections, it would be unable to 
provide the current level of support to those firms that have such 
connections. The Exchange notes that from the time the Exchange 
initially issued its notice that it would decommission the 10Gb 
connection to now, 11 Members and 2 non-Members migrated their 10Gb 
connections to 10Gb ULL connections.\8\ The Exchange also believes the 
proposed changes are reasonable as the Exchange provided Members and 
non-Members six months' notice that the Exchange planned to make these 
changes. During that time, Members and non-Members had the ability to 
make the business decision to: (1) Switch to the Exchange's 1Gb or 10Gb 
ULL connections; (2) access the Exchange through another Exchange 
Member as a Sponsored User; \9\ or (3) no longer access the Exchange. 
Market participants can also choose from 15 competing options markets. 
In the event that a market participant views the Exchange's 
connectivity and access fees as more or less attractive than competing 
markets, that market participant can choose to connect to the Exchange 
indirectly or may choose not to connect to the Exchange and connect 
instead to one or more of the other 15 options markets.
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    \8\ The Exchange notes that no Member or non-Member transferred 
from the 10Gb connection to a 1Gb connection and no Member or non-
Member disconnected from the Exchange.
    \9\ See Exchange Rule 210.
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    Further, the Exchange notes that there is no regulatory or legal 
requirement for any Member or non-Member to connect to the Exchange. It 
is a business decision of each Member and non-Member whether to connect 
to the Exchange and, if so, whether to connect via 1Gb, 10Gb, or 10Gb 
ULL connection. The Exchange believes the proposed rule change to 
remove the fees and rule text related to the 10Gb fiber connection is 
reasonable as the Exchange has observed a minimal amount of Members and 
non-Members utilize the 10Gb fiber connection and, therefore, the 
continuation of this connectivity alternative does not warrant the 
infrastructure and ongoing Systems maintenance required to support this 
connectivity alternative. The Exchange notes that its affiliate, MIAX 
Emerald, LLC (``MIAX Emerald''), never offered the 10Gb fiber 
connection as a connectivity alternative. The Exchange believes that 
the proposed rule change is equitable and not unfairly discriminatory 
because the Exchange will no longer offer the 10Gb connection to all 
Members and non-Members while continuing to offer both 1Gb and 10Gb ULL 
connectivity to all.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed changes eliminate 
the fees and related rule text that apply to the 10Gb fiber connection, 
which the Exchange will no longer offer as of July 1, 2021. As noted 
above, while there are a very small number of Members and non-Members 
that utilized the 10Gb fiber connection, Members and non-Members are 
not required to utilize this connectivity alternative. As discussed 
above, decommissioning of the 10Gb connection should have minimal to no 
impact on Members and non-Members as those Members that utilize a 10Gb 
connection have other means to access the Exchange, either by to 
transitioning to the 1Gb or 10Gb ULL connection, or access the Exchange 
through a Sponsored User. Accordingly, the Exchange does not believe 
that its proposal imposes any burden on intra-market competition, or 
places certain market participants at a relative disadvantage compared 
to other market participants.
    In terms of inter-market competition, the Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges. Because competitors are free to modify their own fees in 
response, the Exchange believes that the degree to which fee changes in 
this market may impose any burden on competition is extremely limited.

[[Page 37202]]

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ 
thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    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.

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-2021-28 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-2021-28. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-PEARL-2021-28 and should be submitted on 
or before August 4, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-14904 Filed 7-13-21; 8:45 am]
BILLING CODE 8011-01-P


