[Federal Register Volume 88, Number 144 (Friday, July 28, 2023)]
[Notices]
[Pages 48937-48941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15980]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97964; File No. SR-PEARL-2023-31]


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

July 24, 2023.
    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 July 11, 2023, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the fee schedule (``Fee 
Schedule'') applicable to MIAX Pearl Equities, an equities trading 
facility of the Exchange.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings, at MIAX Pearl's principal office, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule to: (1) reduce the 
rebate for executions of orders in securities priced at or above $1.00 
per share that add displayed liquidity to the Exchange (``Added 
Displayed Volume''); (2) increase the fees applicable to the Remove 
Volume Tiers \3\ for executions of orders in securities priced at or 
above $1.00 per share that remove liquidity from the Exchange 
(``Removed Volume''); and (3) adopt new Liquidity Indicator Codes and 
for executions of orders in all securities that remove Retail Orders 
\4\ from the Exchange (displayed and non-displayed liquidity).\5\ The 
Exchange originally filed this proposal on June 30, 2023 (SR-PEARL-
2023-29). On July 11, 2023, the Exchange withdrew SR-PEARL-2023-29 and 
refiled this proposal.
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    \3\ See Fee Schedule, Section 1)d).
    \4\ A ``Retail Order'' is an agency or riskless principal order 
that meets the criteria of FINRA Rule 5320.03 that originates from a 
natural person and is submitted to the Exchange by a Retail Member 
Organization, provided that no change is made to the terms of the 
order with respect to price or side of market and the order does not 
originate from a trading algorithm or any other computerized 
methodology. See Exchange Rule 2626(a)(2).
    \5\ The Exchange notes that it is not adopting new fees for 
these types of transactions. The Exchange proposes to adopt the new 
Liquidity Indicator Codes, as described below, for purposes of 
clarification in the Fee Schedule.
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Proposal To Reduce the Rebate for Added Displayed Volume in Securities 
Priced at or Above $1.00 per Share
    The Exchange proposes to reduce the standard rebate for executions 
of orders in securities priced at or above $1.00 per share that add 
displayed liquidity to the Exchange. Currently, the Exchange provides a 
standard rebate of ($0.0029) \6\ per share for executions of Added 
Displayed Volume in all Tapes. The Exchange now proposes to reduce the 
standard rebate for executions of Added Displayed Volume in securities 
priced at or above $1.00 per share from ($0.0029) to ($0.0027) per 
share for all Tapes.\7\ Accordingly, the Exchange proposes to amend 
Section 1)a), Standard Rates, to reflect this proposed change and amend 
Section 1)b), Liquidity Indicator Codes and Associated Fees, to reflect 
the corresponding changes to the applicable Liquidity Indicator Codes, 
AA, AB and AC. The Exchange notes that executions of orders in 
securities priced below $1.00 per share for Added Displayed Volume on 
the Exchange will continue to receive the standard rebate applicable to 
such executions (i.e., 0.15% of the total dollar value of the 
transaction).
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    \6\ Rebates are indicated by parentheses. See the General Notes 
section of the Fee Schedule.
    \7\ See Fee Schedule, Section 1)a), Standard Rates, for the 
standard pricing for executions of Added Displayed Volume, among 
other rates.
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    The purpose of reducing the standard rebate for executions of Added 
Displayed Volume is for business and competitive reasons in light of 
recent volume growth on the Exchange. The Exchange notes that despite 
the modest reduction proposed herein, the proposed standard rebate for 
executions of Added Displayed Volume (i.e., ($0.0027) per share) 
remains higher than, and competitive with, the standard rebates 
provided by other exchanges for executions of orders in securities 
priced at or above $1.00 per share that add displayed liquidity to 
those exchanges.\8\
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    \8\ See e.g., NYSE Arca Equities Fee Schedule, available at 
https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (providing standard rebates of 
$0.0020 per share (Tapes A and C) and $0.0016 per share (Tape B) for 
adding displayed liquidity in securities priced at or above $1.00 
per share); see also Cboe BZX Equities Fee Schedule, available at 
https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ 
(providing a standard rebate of $0.0016 per share for adding 
displayed liquidity in securities priced at or above $1.00 per 
share).
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Proposal To Increase the Fees for the Remove Volume Tiers
    Next, the Exchange proposes to amend Section 1)d) of the Fee 
Schedule to increase the fees applicable to executions of orders in 
securities priced at or above $1.00 per share that qualify for the 
reduced fees of the Exchange's Remove Volume Tiers. Currently, Section 
1)d) of the Fee Schedule provides reduced fees for executions of

[[Page 48938]]

orders in securities priced at or above $1.00 per share that remove 
liquidity from the Exchange if Equity Members meet certain criteria. 
Equity Members that qualify for the Remove Volume Tiers are charged a 
lower fee of $0.00285 per share in Tier 1 for executions of Removed 
Volume in securities priced at or above $1.00 per share and a lower fee 
of $0.00275 per share in Tier 2 for executions of Removed Volume in 
securities priced at or above $1.00 per share. To achieve the reduced 
fees of the Remove Volume Tiers, Equity Members must, (i) for Tier 1, 
achieve an average daily volume (``ADV'') \9\ that is equal to or 
greater than 0.10% of the total consolidated volume (``TCV'') \10\ and 
execute at least 1,000 shares of added liquidity during the month; and 
(ii) for Tier 2, achieve an ADV that is equal to or greater than 0.15% 
of TCV and execute at least 1,000 shares of added liquidity during the 
month. Equity Members that qualify for the discounted rates of the 
Remove Volume Tiers in a particular month will be charged the lower fee 
according to the threshold tier achieved instead of the standard Remove 
Volume fee of $0.00295 per share for executions of orders in securities 
priced at or above $1.00 per share in that particular month.
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    \9\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day. ADV is calculated on 
a monthly basis. See the Definitions Section of the Fee Schedule. 
The Exchange excludes from its calculation of ADV shares added or 
removed on any day that the Exchange's system experiences a 
disruption that lasts for more than 60 minutes during regular 
trading hours, on any day with a scheduled early market close, and 
on the ``Russell Reconstitution Day'' (typically the last Friday in 
June). Routed shares are also not included in the ADV calculation. 
See id.
    \10\ ``TCV'' means total consolidated volume calculated as the 
volume in shares reported by all exchanges and reporting facilities 
to a consolidated transaction reporting plan for the month for which 
the fees apply. The Exchange excludes from its calculation of TCV 
volume on any given day that the Exchange's system experiences a 
disruption that lasts for more than 60 minutes during Regular 
Trading Hours, on any day with a scheduled early market close, and 
on the ``Russell Reconstitution Day'' (typically the last Friday in 
June). See the Definitions Section of the Fee Schedule.
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    The Exchange now proposes to increase the fees applicable to the 
Remove Volume Tiers. In particular, the Exchange proposes that the fee 
applicable to Tier 1 of the Remove Volume Tiers will be increased from 
$0.00285 to $0.00290 per share and the fee applicable to Tier 2 of the 
Remove Volume Tiers will be increased from $0.00275 to $0.00285 per 
share. The Exchange does not propose to amend the calculation or 
criteria for achieving the reduced rates of the Remove Volume Tiers. 
The purpose of this change is for business and competitive reasons. The 
Exchange notes that despite the modest increases proposed herein, the 
Exchange's fees for its Remove Volume Tiers remain competitive with the 
fees to remove liquidity in securities priced at or above $1.00 per 
share charged by other equity exchanges, including other equity 
exchanges that also have reduced fees for meeting certain criteria for 
removing liquidity.\11\ The Exchange charges Equity Members a fee of 
0.25% of the total dollar value of the transaction for executions of 
orders that remove liquidity from the Exchange in securities priced 
below $1.00 per share, which the Exchange does not propose to change in 
this proposal.
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    \11\ See MEMX LLC (``MEMX'') Fee Schedule, available at https://info.memxtrading.com/fee-schedule/(providing standard remove volume 
fee of $0.0030 per share and reduced remove Liquidity Removal Tier 
fee of $0.00295 per share); see also Cboe EDGX Equities Fee 
Schedule, available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/ (providing a standard fee of $0.0030 per share to 
remove liquidity in securities priced at or above $1.00 per share, 
Remove Volume Tier 1 fee of $0.00285 per share and Remove Volume 
Tier 2 fee of $0.00275 per share to remove liquidity in securities 
priced at or above $1.00 per share); and Cboe BZX Equities Fee 
Schedule, available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ (providing a fee of $0.0030 per share to remove 
liquidity in securities priced at or above $1.00 per share).
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Proposal To Adopt New Liquidity Indicator Codes for Removing Retail 
Order Liquidity
    Next, the Exchange proposes to adopt new Liquidity Indicator Codes 
for executions of orders in all securities that remove Retail Order 
liquidity \12\ from the Exchange (displayed and non-displayed 
liquidity). The current fees for orders that remove liquidity (other 
than Retail Orders that remove liquidity) will continue to apply to the 
proposed Liquidity Indicator Codes for executions of orders in all 
securities that remove Retail Orders from the Exchange (displayed and 
non-displayed).\13\ The purpose of this change is to provide additional 
clarity in the Fee Schedule regarding these particular types of 
transactions.
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    \12\ The Exchange notes that the proposed description in the Fee 
Schedule capitalizes the word ``Liquidity'' in the proposed new 
Liquidity Indicator Codes; however, the Exchange notes that this is 
solely for purposes of uniformity throughout the Liquidity Indicator 
Codes and Associated Fees table and is not meant to be a newly 
defined term.
    \13\ See Fee Schedule, Section 1)a). Currently, displayed and 
non-displayed orders that remove liquidity (other than Retail Orders 
that remove liquidity) in securities at or above $1.00 per share are 
charged $0.00295 per share (Liquidity Indicator Codes RA, RB, RC, 
Ra, Rb and Rc).
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    The Exchange proposes to amend the Liquidity Indicator Codes and 
Associated Fees table in Section 1)b) of the Fee Schedule to adopt 
Retail Order liquidity indicator codes ``RT'' and ``Rt,'' as follows:
     Add new liquidity indicator code RT, Removes Retail Order 
Liquidity, Displayed Order (All Tapes). The Liquidity Indicator Codes 
and Associated Fees table would specify that orders that yield 
liquidity indicator code RT would be subject to a fee $0.00295 per 
share in securities priced at or above $1.00 and 0.25% of the 
transaction's dollar value in securities priced below $1.00.
     Add new liquidity indicator code Rt, Removes Retail Order 
Liquidity, Non-Displayed Order (All Tapes). The Liquidity Indicator 
Codes and Associated Fees table would specify that orders that yield 
liquidity indicator code Rt would be subject to a fee of $0.00295 per 
share in securities priced at or above $1.00 and 0.25% of the 
transaction's dollar value in securities priced below $1.00.
    The Exchange also proposes to add the new Liquidity Indicator Codes 
to the Standard Rates table in Section 1)a) of the Fee Schedule. 
Specifically, Liquidity indicator codes RT and Rt would be added to the 
``Removing Liquidity'' column of the Standard Rates table. The Exchange 
also proposes to add the new Liquidity Indicator Codes RT and Rt to the 
Liquidity Indicator Codes applicable to the Remove Volume Tiers in 
Section 1)d) of the Fee Schedule.
    The purpose of these changes is to provide greater clarity in the 
Fee Schedule. The Exchange believes that adding the new proposed 
Liquidity Indicator Codes RT and Rt to the Liquidity Indicator Codes 
and Associated Fees table will provide greater clarity in the Fee 
Schedule regarding the fees for these types of transactions, which 
benefits all market participants. The Exchange notes that the proposed 
fees for Liquidity Indicator Codes RT and Rt are the same as the 
current rates for removing liquidity in other types of orders that are 
not Retail Orders, i.e., $0.00295 per share in securities priced at or 
above $1.00 per share and 0.25% of the transaction's total dollar value 
in securities priced below $1.00 per share. The Exchange notes that the 
use of Liquidity Indicator Codes is not unique to the Exchange and are 
currently utilized and described in the fee schedules of other equity 
exchanges.\14\
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    \14\ See, e.g., Investors Exchange LLC (``IEX'') Fee Schedule, 
available at https://iextrading.com/trading/fees/ and MEMX Fee 
Schedule, supra note 11.

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[[Page 48939]]

Implementation
    The proposed changes are immediately effective.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with section 6(b) of the Act \15\ in general, and 
furthers the objectives of section 6(b)(4) of the Act \16\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among its Equity Members and issuers and other 
persons using its facilities and is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4).
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    The Exchange operates in a highly fragmented and competitive market 
in which market participants can readily direct their order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of sixteen registered equities exchanges, and 
there are a number of alternative trading systems and other off-
exchange venues, to which market participants may direct their order 
flow. As of June 23, 2023, based on publicly available information, no 
single registered equities exchange has more than approximately 14-17% 
of the total market share of executed volume of equities trading for 
the month of June 2023.\17\ Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow, and the Exchange 
represents approximately 1.90% of the overall market share as of June 
23, 2023 for the month of June 2023.\18\ The Commission and the courts 
have repeatedly expressed their preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and also recognized that current regulation of the market 
system ``has been remarkably successful in promoting market competition 
in its broader forms that are most important to investors and listed 
companies.'' \19\
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    \17\ See the ``Market Share'' Section of the Exchange's website, 
available at https://www.miaxglobal.com/ (last visited June 23, 
2023).
    \18\ See id.
    \19\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37499 (June 29, 2005).
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue or reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, and market participants 
can readily trade on competing venues if they deem pricing levels at 
those other venues to be more favorable. The Exchange believes the 
proposal reflects a reasonable and competitive pricing structure 
designed to incentivize market participants to direct additional orders 
that add liquidity to the Exchange, which the Exchange believes would 
deepen liquidity and promote market quality on the Exchange to the 
benefit of all market participants.
Reduce Standard Rebate for Added Displayed Volume
    The Exchange believes that the proposal to reduce the standard 
rebate for executions of Added Displayed Volume ($0.0027) per share is 
reasonable, equitably allocated and not unfairly discriminatory because 
it represents a modest decrease from the current standard rebate for 
executions of Added Displayed Volume and remains competitive with the 
standard rebates provided by competing exchanges for orders in 
securities priced at or above $1.00 per share that add liquidity.\20\ 
The Exchange believes its proposal to reduce the standard rebate for 
executions of Added Displayed Volume is reasonable and not unfairly 
discriminatory because this change is for business and competitive 
reasons in light of recent volume growth on the Exchange. The Exchange 
notes that despite the modest reduction proposed herein, the proposed 
standard rebate for executions of Added Displayed Volume (i.e., 
($0.0027) per share) remains higher than, and competitive with, the 
standard rebates provided by other exchanges for executions of orders 
in securities priced at or above $1.00 per share that add displayed 
liquidity to those exchanges.\21\
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    \20\ See supra note 8.
    \21\ See id.
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    The Exchange further believes that the proposed reduced standard 
rebate for executions of Added Displayed Volume is equitably allocated 
and not unfairly discriminatory because each will apply equally to all 
Members who are similarly situated. The Exchange also believes its 
proposal to amend Section 1)b), Liquidity Indicator Codes and 
Associated Fees, to reflect the proposed decreased rebate for Added 
Displayed Volume in the corresponding Liquidity Indicator Codes AA, AB 
and AC is reasonable because it provides uniformity and clarity in the 
Fee Schedule.
Increase Fees for the Remove Volume Tiers
    The Exchange believes that its proposal to increase the fees 
applicable to the Remove Volume Tiers is reasonable, equitably 
allocated and not unfairly discriminatory because, even with the 
proposed increase, the Remove Volume Tiers continue to provide 
incentives for Equity Members to strive for higher ADV on the Exchange 
in order to qualify for the lower fees for executions of Removed 
Volume. As such, with the proposed increased fees, the Exchange 
believes that the Remove Volume Tiers are designed to continue to 
encourage Equity Members to maintain their order flow directed to the 
Exchange, thereby contributing to a deeper and more liquid market to 
the benefit of all market participants and enhancing the attractiveness 
of the Exchange as a trading venue. The Exchange notes that the 
proposed fees for executions of Remove Volume applicable to Equity 
Members that qualify for one of the Remove Volume Tiers (i.e., $0.00290 
or $0.00285) is comparable to, and competitive with, the fees charged 
for executions of liquidity-removing orders charged by competing 
exchanges under similar volume-based tiers.\22\ The Exchange further 
believes the proposed increased fees for the Remove Volume Tiers is 
fair, equitable and not unfairly discriminatory because the Remove 
Volume Tiers will continue to be available to all Equity Members that 
meet the requisite criteria.
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    \22\ See supra note 11.
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New Liquidity Codes for Executions of Orders That Remove Retail Order 
Liquidity (Displayed and Non-Displayed)
    The Exchange believes its proposal to adopt two new Liquidity 
Indicator Codes for orders that remove Retail Order liquidity is 
reasonable and not unfairly discriminatory as they will apply to all 
Equity Members equally that submit orders to remove Retail Orders. The 
Exchange notes that the current fees attributed to these types of 
transactions is not changing with this proposal; \23\ rather, the 
proposal

[[Page 48940]]

provides Liquidity Indicator Codes for certain types of transactions 
thereby providing additional clarity in the Fee Schedule, which 
benefits all market participants.
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    \23\ See Securities Exchange Act Release Nos. 97124 (March 13, 
2023), 88 FR 16504 (March 17, 2023) (SR-PEARL-2023-10); 97308 (April 
13, 2023), 88 FR 24249 (April 19, 2023) (SR-PEARL-2023-16).
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    The Exchange believes that adding the new proposed Liquidity 
Indicator Codes of RT and Rt to the Liquidity Indicator Codes and 
Associated Fees table will make the Fee Schedule clearer and eliminate 
the potential for confusion in regard to fees charged and rebates 
earned, thereby removing impediments to, and perfecting the mechanism 
of a free and open market and a national market system, and, in 
general, protecting investors and the public interest. Further, as 
noted above, this practice is consistent with the pricing practices of 
other exchanges.\24\
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    \24\ See supra note 11.
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    The Exchange believes its proposal provides for the equitable 
allocation of reasonable dues and fees and is not unfairly 
discriminatory. For the reasons discussed above, the Exchange submits 
that the proposal satisfies the requirements of sections 6(b)(4) and 
6(b)(5) of the Act in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its Equity Members and 
other persons using its facilities and is not designed to unfairly 
discriminate between customers, issuers, brokers, or dealers. As 
described more fully below in the Exchange's statement regarding the 
burden on competition, the Exchange believes that its transaction 
pricing is subject to significant competitive forces, and that the 
proposed fees and rebates described herein are appropriate to address 
such forces.

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

    The Exchange believes that the proposed change will not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
Intramarket Competition
    The Exchange believes that its proposal to reduce the standard 
rebate for Added Displayed Volume for executions of orders in 
securities priced at or above $1.00 per share will not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes its 
proposal to reduce the standard rebate for executions of Added 
Displayed Volume will not impose any burden on intramarket competition 
that is not necessary or appropriate because this change is for 
business and competitive reasons in light of recent volume growth on 
the Exchange. The Exchange notes that despite the modest reduction 
proposed herein, the proposed standard rebate for executions of Added 
Displayed Volume (i.e., ($0.0027) per share) remains higher than, and 
competitive with, the standard rebates provided by other exchanges for 
executions of orders in securities priced at or above $1.00 per share 
that add displayed liquidity to those exchanges.\25\
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    \25\ See supra note 8.
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    The Exchange believes that, even with the proposed decrease to the 
standard Added Displayed Volume rebate, the Exchange's standard rebate 
for such orders will continue to incentivize market participants to 
direct order flow to the Exchange, thereby contributing to a deeper and 
more liquid market to the benefit of all market participants and 
enhancing the attractiveness of the Exchange as a trading venue. The 
Exchange believes that this, in turn, will continue to encourage market 
participants to direct additional Added Displayed Volume in securities 
priced at or above $1.00 per share to the Exchange. Greater liquidity 
benefits all Equity Members by providing more trading opportunities and 
encourages Equity Members to send orders to the Exchange, thereby 
contributing to robust levels of liquidity, which benefits all market 
participants.
    The Exchange believes that its proposal to increase the fees for 
the Remove Volume Tiers will not impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The opportunity to qualify for the Remove Volume 
Tiers, and thus receive the proposed lower fees for executions of 
Removed Volume, will continue to be available to all Equity Members 
that meet the associated requirements in any month. The Exchange 
believes that meeting the volume requirements of the Remove Volume 
Tiers will continue to be attainable for market participants, as the 
Exchange believes the thresholds are relatively low and reasonably 
related to the enhanced liquidity and market quality that the Remove 
Volume Tiers are designed to promote. The Exchange notes that it does 
not propose to change the volume requirements for the Remove Volume 
Tiers pursuant to this proposal. Even with the modest increase proposed 
herein, the Exchange's fees for its Remove Volume Tiers will remain 
competitive with the fees to remove liquidity in securities priced at 
or above $1.00 per share charged by other equity exchanges.\26\
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    \26\ See supra note 11.
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    The Exchange believes that the proposed change to adopt new 
Liquidity Indicator Codes for executions of orders in all securities 
that remove Retail Orders from the Exchange (displayed and non-
displayed liquidity) will not impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange believes that the new Liquidity 
Indicator Codes RT and Rt will provide additional clarity in the Fee 
Schedule, which benefits all market participants. The use of Liquidity 
Indicator Codes is not new or novel as they are used on other equity 
exchanges.\27\ Additionally, the proposed new Liquidity Indicator Codes 
will be applied equally to all Equity Members that submit orders to 
remove Retail Orders and the new Liquidity Indicator Codes of RT and Rt 
will provide additional specificity in the Fee Schedule so that Equity 
Members may connect an execution to the applicable fee. As such, the 
Exchange believes the proposed changes would not impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \27\ See supra note 14.
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Intermarket Competition
    The Exchange believes the proposed changes will benefit competition 
as the Exchange operates in a highly competitive market. Equity Members 
have numerous alternative venues that they may participate on and 
direct their order flow to, including fifteen other equities exchanges 
and numerous alternative trading systems and other off-exchange venues. 
As noted above, no single registered equities exchange currently has 
more than approximately 14-17% of the total market share of executed 
volume of equities trading. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. Moreover, the Exchange 
believes that the ever-shifting market share among the exchanges from 
month to month demonstrates that market participants can shift order 
flow in response to new or different pricing structures being 
introduced to the market. Accordingly, competitive forces constrain the 
Exchange's transaction fees and rebates generally, including with 
respect to Added Displayed Volume, orders to remove Retail Order

[[Page 48941]]

liquidity, and Removed Volume, as market participants can readily 
choose to send their orders to other exchanges and off-exchange venues 
if they deem fee levels at those other venues to be more favorable. As 
described above, the proposed changes are competitive proposals through 
which the Exchange is seeking to encourage certain order flow to the 
Exchange and to promote market quality through pricing incentives that 
are similar in structure and purpose to pricing programs at other 
Exchanges.\28\ Accordingly, the Exchange believes the proposal would 
not burden, but rather promote, intermarket competition by enabling it 
to better compete with other exchanges that offer similar incentives to 
market participants that enhance market quality.
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    \28\ See supra notes 8 and 11.
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    Additionally, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \29\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. Securities and Exchange Commission, the D.C. 
circuit stated: ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their routing agents, have a wide range of choices of where to 
route orders for execution'; [and] `no exchange can afford to take its 
market share percentages for granted' because `no exchange possess a 
monopoly, regulatory or otherwise, in the execution of order flow from 
broker dealers' . . .''.\30\ Accordingly, the Exchange does not believe 
its proposed pricing changes impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the Act.
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    \29\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \30\ See NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act,\31\ and Rule 19b-4(f)(2) \32\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \31\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \32\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-PEARL-2023-31 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-2023-31. 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 a.m. and 3 p.m. 
Copies of the filing also will be available for inspection and copying 
at the principal office of the Exchange. Do not include personal 
identifiable information in submissions; you should submit only 
information that you wish to make available publicly. We may redact in 
part or withhold entirely from publication submitted material that is 
obscene or subject to copyright protection. All submissions should 
refer to file number SR-PEARL-2023-31 and should be submitted on or 
before August 18, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-15980 Filed 7-27-23; 8:45 am]
BILLING CODE 8011-01-P


