
[Federal Register Volume 88, Number 223 (Tuesday, November 21, 2023)]
[Notices]
[Pages 81125-81130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25669]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98956; File No. SR-PEARL-2023-63]


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

November 15, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on November 8, 2023, MIAX PEARL, LLC (``MIAX Pearl'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. 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 MIAX Pearl Options 
Exchange Fee Schedule (the ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/pearl-options/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 purpose of the proposed rule change is to amend Section 1)a) of 
the Fee Schedule, Exchange Rebates/Fees--Add/Remove Tiered Rebates/
Fees, for the MIAX Pearl Market Maker \3\ origin to: (1) amend and 
clarify the cross-asset volume based requirement contained in Tier 2 
and related footnote ``#'' following the Marker Maker origin table; and 
(2) adopt an alternative volume criteria for the Tier 2 rebates and 
fees for Market Makers with an additional explanatory note. The 
Exchange originally filed this proposal on October 31, 2023 (SR-PEARL-
2023-61). On November 8, 2023, the Exchange withdrew SR-PEARL-2023-61 
and refiled this proposal.
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    \3\ The term ``Market Maker'' means a Member registered with the 
Exchange for the purpose of making markets in options contracts 
traded on the Exchange and that is vested with the rights and 
responsibilities specified in Chapter VI of Exchange Rules. See the 
Definitions section of the Fee Schedule and Exchange Rule 100.
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Background
    The Exchange currently assesses transaction rebates and fees to all 
market participants which are based upon the total monthly volume 
executed by the Member \4\ on MIAX Pearl in the relevant, respective 
origin type (not including Excluded Contracts) \5\ (as the numerator) 
expressed as a percentage of (divided by) TCV \6\ (as the denominator). 
In

[[Page 81126]]

addition, the per contract transaction rebates and fees are applied 
retroactively to all eligible volume for that origin type once the 
respective threshold tier (``Tier'') has been reached by the Member. 
The Exchange aggregates the volume of Members and their Affiliates.\7\ 
Members that place resting liquidity, i.e., orders resting on the book 
of the MIAX Pearl System,\8\ are paid the specified ``maker'' rebate 
(each a ``Maker''), and Members that execute against resting liquidity 
are assessed the specified ``taker'' fee (each a ``Taker''). For 
opening transactions and ABBO \9\ uncrossing transactions, per contract 
transaction rebates and fees are waived for all market participants. 
Finally, Members are assessed lower transaction fees and receive lower 
rebates for order executions in standard option classes in the Penny 
Interval Program \10\ (``Penny Classes'') than for order executions in 
standard option classes which are not in the Penny Interval Program 
(``Non-Penny Classes''), where Members are assessed higher transaction 
fees and receive higher rebates.
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    \4\ The term ``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 the Definitions section of 
the Fee Schedule and Exchange Rule 100.
    \5\ The term ``Excluded Contracts'' means any contracts routed 
to an away market for execution. See the Definitions section of the 
Fee Schedule.
    \6\ The term ``TCV'' 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 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 is used solely for purposes of calculating 
volume for the threshold tiers in the Fee Schedule. See the 
Definitions section of the Fee Schedule.
    \7\ The term ``Affiliate'' means (i) an affiliate of a Member of 
at least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A, or (ii) the Appointed Market Maker of an 
Appointed EEM (or, conversely, the Appointed EEM of an Appointed 
Market Maker). An ``Appointed Market Maker'' is a MIAX Pearl Market 
Maker (who does not otherwise have a corporate affiliation based 
upon common ownership with an EEM) that has been appointed by an EEM 
and an ``Appointed EEM'' is an EEM (who does not otherwise have a 
corporate affiliation based upon common ownership with a MIAX Pearl 
Market Maker) that has been appointed by a MIAX Pearl Market Maker, 
pursuant to the following process. A MIAX Pearl Market Maker 
appoints an EEM and an EEM appoints a MIAX Pearl Market Maker, for 
the purposes of the Fee Schedule, by each completing and sending an 
executed Volume Aggregation Request Form by email to 
[email protected] no later than 2 business days prior to 
the first business day of the month in which the designation is to 
become effective. Transmittal of a validly completed and executed 
form to the Exchange along with the Exchange's acknowledgement of 
the effective designation to each of the Market Maker and EEM will 
be viewed as acceptance of the appointment. The Exchange will only 
recognize one designation per Member. A Member may make a 
designation not more than once every 12 months (from the date of its 
most recent designation), which designation shall remain in effect 
unless or until the Exchange receives written notice submitted 2 
business days prior to the first business day of the month from 
either Member indicating that the appointment has been terminated. 
Designations will become operative on the first business day of the 
effective month and may not be terminated prior to the end of the 
month. Execution data and reports will be provided to both parties. 
See the Definitions section of the Fee Schedule.
    \8\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \9\ The term ``ABBO'' means the best bid(s) or offer(s) 
disseminated by other Eligible Exchanges (defined in Exchange Rule 
1400(g)) and calculated by the Exchange based on market information 
received by the Exchange from OPRA. See the Definitions section of 
the Fee Schedule and Exchange Rule 100.
    \10\ See Securities Exchange Act Release No. 88992 (June 2, 
2020), 85 FR 35142 (June 8, 2020) (SR-PEARL-2020-06).
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Volume Calculations for Market Maker Origin Tier 2
    Currently, the Exchange provides three methods in which a Market 
Maker may qualify for the fees and rebates associated with Tier 2 of 
the Market Maker origin. A Market Maker needs only to satisfy one of 
the methods in order to receive the fees and rebates associated with 
Tier 2.
    Pursuant to the first method, Market Makers will qualify for the 
Maker rebates and Taker fees in Tier 2 of the Market Maker origin table 
if the Market Maker executes total monthly volume, not including 
Excluded Contracts, in all classes above 0.20% to 0.50% of TCV.
    The second method is based upon the total monthly volume executed 
by a Market Maker collectively in SPY/QQQ/IWM options on the Exchange, 
expressed as a percentage of total consolidated national volume in SPY/
QQQ/IWM options.\11\ Pursuant to this alternative volume criteria, a 
Market Maker will qualify for the Maker rebates and Taker fees in Tier 
2 if the Market Maker's total executed monthly volume, not including 
Excluded Contracts, in SPY/QQQ/IWM options on MIAX Pearl is above 0.55% 
of total consolidated national monthly volume in SPY/QQQ/IWM options. 
For this calculation, volume that is from adding liquidity (Maker) and 
taking liquidity (Taker) in SPY/QQQ/IWM options is counted towards the 
alternative volume criteria, and the 0.55% threshold does not have to 
be reached individually in each of the three symbols.
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    \11\ See Fee Schedule, Section 1)a), explanatory paragraph below 
the tables and footnotes. See also Securities Exchange Act Release 
Nos. 84592 (November 14, 2018), 83 FR 58646 (November 20, 2018) (SR-
PEARL-2018-23); 90906 (January 21, 2021), 86 FR 5296 (January 19, 
2021) (SR-PEARL-2020-38).
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    The Exchange notes that MIAX Pearl Equities \12\ implemented a fee 
change effective September 1, 2023, which, among other things, 
eliminated the ``Add Volume Tiers'' table and associated rebates on 
MIAX Pearl Equities.\13\ Pursuant to this proposal, the Exchange seeks 
to amend the third method for the volume calculation for Tier 2 of the 
Market Maker origin in light of the elimination of the Add Volume Tiers 
on MIAX Pearl Equities, as described in more detail below. For the sake 
of clarity, the Exchange will describe in the paragraph immediately 
below the third volume calculation method as currently stated in the 
Fee Schedule; the proposed changes to the third volume calculation 
method will be described further below to account for the September 1, 
2023 fee changes on MIAX Pearl Equities that eliminated the Add Volume 
Tiers table and associated rebates.
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    \12\ The term ``MIAX Pearl Equities'' shall mean MIAX Pearl 
Equities, a facility of MIAX PEARL, LLC. See Exchange Rule 1901.
    \13\ See Securities Exchange Act Release No. 98472 (September 
21, 2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-2023-45) 
(eliminating the ``Add Volume Tiers'' table and associated rebates 
due to the adoption of the NBBO Setter Plus Program, which 
incorporated similar aspects and rebate amounts as the Add Volume 
Tiers).
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    As currently provided in the Fee Schedule (prior to this proposal 
and the original proposal), the third method is calculated using cross-
asset volume requirements that require Market Makers to satisfy the 
requirements of Tier 2 of the Add Volume Tiers table in the MIAX Pearl 
Equities fee schedule,\14\ and also the requirements of Tier 2 of the 
Midpoint Peg Order Adding Liquidity at the Midpoint Volume Tiers table 
(referred to herein as the ``Midpoint Volume Tiers'') in the MIAX Pearl 
Equities fee schedule.\15\ A Midpoint Peg Order \16\ on MIAX Pearl 
Equities is a non-displayed limit order that is assigned a working 
price pegged to the midpoint of the PBBO.\17\
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    \14\ See id. (describing the Add Volume Tiers, requirements and 
associated rebate amounts and how the Add Volume Tiers were 
incorporated into the NBBO Setter Plus Program).
    \15\ See MIAX Pearl Equities Fee Schedule, Section 1)e), 
Midpoint Peg Order Adding Liquidity at Midpoint Volume Tiers.
    \16\ See Exchange Rule 2614(a)(3).
    \17\ With respect to the trading of equity securities, the term 
``Protected NBB'' or ``PBB'' shall mean the national best bid that 
is a Protected Quotation, the term ``Protected NBO'' or ``PBO'' 
shall mean the national best offer that is a Protected Quotation, 
and the term ``Protected NBBO'' or ``PBBO'' shall mean the national 
best bid and offer that is a Protected Quotation. See Exchange Rule 
1901.
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Amendment to Cross-Asset Volume Based Requirement
    The Exchange proposes to amend the Add/Remove Tiered Rebates/Fees 
table set forth in Section 1)a) of the Fee Schedule for the Market 
Maker origin to amend the cross-asset volume based requirement 
contained in Tier 2 and related footnote ``#'' following the Marker 
Maker origin table. As described above, prior to implementation of the 
NBBO Setter Plus Program (``NBBO Program'') on MIAX Pearl Equities, 
Market Makers were able to qualify for

[[Page 81127]]

the Maker rebates and Taker fees in Tier 2 of the Market Maker origin 
if the Market Maker satisfied the requirements of Tier 2 of the Add 
Volume Tiers table and Tier 2 of the Midpoint Volume Tiers table in the 
MIAX Pearl Equities fee schedule.\18\
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    \18\ See supra note 13.
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    Beginning September 1, 2023, MIAX Pearl Equities incorporated 
aspects and rebate amounts of the Add Volume Tiers with the 
implementation of the NBBO Program and eliminated the Add Volume Tiers 
table from the MIAX Pearl Equities fee schedule.\19\ In light of the 
elimination of the Add Volume Tiers table in the MIAX Pearl Equities 
fee schedule, the Exchange proposes to amend the cross-asset volume 
based requirement contained in Tier 2 of the Market Maker origin table 
and related footnote ``#'' following the Marker Maker origin table.
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    \19\ See id. (noting that under volume calculation Method 1 of 
the NBBO Program, tiered rebates are based on an Equity Member's 
average daily added volume (``ADAV'') as a percentage of TCV, which 
is the same method that MIAX Pearl Equities used to calculate the 
volume requirements for the Add Volume Tiers table).
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    In particular, the Exchange proposes to replace the words ``Add 
Volume Tiers'' in Tier 2 of the Market Maker origin table with the 
words ``NBBO Setter Plus Program.'' \20\ Under the Add Volume Tiers 
table, MIAX Pearl Equities provided enhanced rebates to Equity Members 
\21\ for executions of orders in securities priced at or above $1.00 
per share that added displayed liquidity (``Added Displayed Volume'') 
to MIAX Pearl Equities that met specified volume thresholds. As it 
pertains to this proposal regarding Tier 2 of the Market Maker origin, 
an Equity Member was able to qualify for MIAX Pearl Equities' Add 
Volume Tiers, Tier 2, by achieving an ADAV \22\ of at least 0.10% of 
total consolidated volume.\23\
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    \20\ The Exchange propose to make the same change to footnote 
``#'' following the Market Maker origin table in Section 1)a) of the 
Fee Schedule.
    \21\ The term ``Equity Member'' means a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
    \22\ With respect to MIAX Pearl Equities, the term ``ADAV'' 
means average daily added volume calculated as the number of shares 
added per day and ``ADV'' means average daily volume calculated as 
the number of shares added or removed, combined, per day. ADAV and 
ADV are calculated on a monthly basis. See the Definitions section 
of the MIAX Pearl Equities Fee Schedule.
    \23\ With respect to MIAX Pearl Equities, total consolidated 
volume, or ``TCV,'' means total consolidated volume calculated as 
the volume in shares reported by all exchanges and reporting 
facilities to a consolidated transaction reporting plan for the 
month for which the fees apply. See the Definitions section of the 
MIAX Pearl Equities Fee Schedule.
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    With the implementation of the NBBO Program, MIAX Pearl Equities 
adopted a tiered-rebate structure where Equity Members are able to 
achieve enhanced rebates for executions of orders in securities priced 
at or above $1.00 per share that add displayed liquidity pursuant to 
one of three different methods for calculating volume thresholds. The 
three volume-based methods to determine the Equity Member's tier for 
purposes of the NBBO Program are calculated in parallel in each month, 
and each Equity Member receives the highest tier achieved from any of 
the three methods each month.
    As it pertains to this proposal, volume calculation Method 1 of the 
NBBO Program incorporates the volume calculation method of the Add 
Volume Tiers table, which utilizes an Equity Member's ADAV as a 
percentage of TCV to determine the applicable tier. In particular, an 
Equity Member qualifies for Tier 2 of the NBBO Program by achieving an 
ADAV of at least 0.08% and less than 0.25% of TCV. Under volume 
calculation Method 2 of the NBBO Program, MIAX Pearl Equities 
calculates the tier achieved based on an Equity Member's ``NBBO Set 
Volume'' \24\ as a percentage of TCV. In particular, an Equity Member 
qualifies for the Tier 2 of the NBBO Program by achieving an NBBO Set 
Volume of at least 0.02% and less than 0.03% of TCV. Under volume 
calculation Method 3 of the NBBO Program, MIAX Pearl Equities 
calculates the tier achieved based on an Equity Member's ADV as a 
percentage of TCV. In particular, an Equity Member qualifies for Tier 2 
of the NBBO Program by achieving an ADV of at least 0.20% and less than 
0.60% of TCV.
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    \24\ The term ``NBBO Set Volume'' means the ADAV in all 
securities of an Equity Member that sets the NBB or NBO on MIAX 
Pearl Equities. See the Definitions section of the MIAX Pearl 
Equities Fee Schedule.
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    With the proposed change to replace the words ``Add Volume Tiers'' 
in Tier 2 of the Market Maker origin table with the words ``NBBO Setter 
Plus Program,'' Market Makers will be able to qualify for the Maker 
rebates and Taker fees in Tier 2 of the Market Maker origin table if 
the Market Maker satisfies the requirements of Tier 2 of both the NBBO 
Program and Tier 2 of the Midpoint Volume Tiers table in the MIAX Pearl 
Equities fee schedule.\25\
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    \25\ See also Securities Exchange Act Release No. 98472 
(September 21, 2023), 88 FR 66533 (September 27, 2023) (SR-PEARL-
2023-45) (describing the three alternative volume calculation 
methods for an Equity Member to achieve Tier 2 of the NBBO Program). 
Equity Members may qualify for Tier 2 of the Midpoint Volume Tiers 
table by achieving an ADAV for the current month consisting of 
midpoint peg orders in securities priced at or above $1.00 per share 
that execute at the midpoint of the PBBO and add liquidity to MIAX 
Pearl Equities in an amount equal to or greater than 1,000,000 
shares. See MIAX Pearl Equities Fee Schedule, Section 1)e).
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    The purpose of this change is to provide consistency and clarity in 
the Fee Schedule as the Add Volume Tiers table has been eliminated in 
the MIAX Pearl Equities fee schedule. The Exchange believes that this 
change provides more opportunities for market participants to satisfy 
this cross-asset volume requirement because there are three volume 
calculation methods (described above) available for an Equity Member to 
achieve Tier 2 of the NBBO Program, as opposed to the Add Volume Tiers 
table, which only provided one volume calculation method.
Adopt Alternative Volume Criteria in Tier 2 of the Market Maker Origin
    The Exchange also proposes to amend the Add/Remove Tiered Rebates/
Fees table set forth in Section 1)a) of the Fee Schedule for the Market 
Maker origin to adopt a fourth method by which a Market Maker may 
qualify for the fees and rebates in Tier 2 of the Market Maker origin 
table. In particular, the Exchange proposes that a Market Maker will 
qualify for the Maker rebates and Taker fees in Tier 2 if the Market 
Maker's total executed monthly volume, not including Excluded 
Contracts, in SPY/QQQ/IWM options on MIAX Pearl is above 0.30% of SPY/
QQQ/IWM TCV when adding liquidity. The Exchange proposes to amend the 
explanatory paragraph below the origin tables in Section 1)a) of the 
Fee Schedule to add a sentence for the new alternative volume criteria. 
Specifically, in Tier 2 for MIAX Pearl Market Makers, the proposed 
alternative volume criteria (above 0.30% in SPY/QQQ/IWM when adding 
liquidity) will be calculated based on the total monthly volume that 
added liquidity executed by the Market Maker collectivity in SPY, QQQ, 
and IWM options on MIAX Pearl in the relevant origin type, not 
including Excluded Contracts (as the numerator), expressed as a 
percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator).
    The purpose of this proposed change is for business and competitive 
reasons. The Exchange notes that at least one other competing exchange 
has a similar alternative volume calculation method to achieve a higher 
rebate that is based on a member's combined posted interest in SPY, 
QQQ, IWM options expressed as a percentage of industry-wide average 
daily volume in SPY/QQQ/IWM options.\26\
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    \26\ See NYSE Arca Options Fee Schedule, Market Maker Penny and 
SPY Posting Credit Tiers, Super Tier II, available at https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf (providing additional ($0.03) 
credit per contract to electronic executions of market maker posted 
interest in Penny Issues provided an OTP Holder or OTP Firm achieves 
(i) at least 0.55% of total combined IWM, QQQ, and SPY industry ADV 
from Market Maker posted interest in IWM, QQQ, and SPY, and (ii) ETP 
Holder and Market Maker posted volume in Tape B Adding ADV that is 
equal to at least 1.50% of US Tape B CADV executed on NYSE Arca 
Equity Market for the billing month).

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[[Page 81128]]

    With the proposed change, the four different volume criteria 
available for Tier 2 of the Market Maker origin are based upon either: 
(1) the total monthly volume executed by the Market Maker in all 
options classes on MIAX Pearl, not including Excluded Contracts, (as 
the numerator), expressed as a percentage of (divided by) TCV (as the 
denominator); or (2) the total monthly volume executed by the MIAX 
Pearl Market Maker collectively in SPY/QQQ/IWM options on MIAX Pearl, 
not including Excluded Contracts, (as the numerator), expressed as a 
percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator); or (3) 
the Market Maker is in Tier 2 of the NBBO Program on MIAX Pearl 
Equities and is also in Tier 2 of the Midpoint Volume Tiers program on 
MIAX Pearl Equities; or (4) the added liquidity by the MIAX Pearl 
Market Maker collectively in SPY/QQQ/IWM options on MIAX Pearl, not 
including Excluded Contracts, (as the numerator), expressed as a 
percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator). Once 
any one of the aforementioned four volume criteria thresholds in Tier 2 
of the Market Maker origin is reached by the Market Maker, the Tier 2 
per contract rebates and fees apply to all volume in all options 
classes executed by that MIAX Pearl Market Maker.
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 \27\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\28\ in that it 
is an equitable allocation of reasonable dues, fees and other charges 
among Exchange Members and issuers and other persons using its 
facilities, and 6(b)(5) of the Act,\29\ in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(4).
    \29\ 15 U.S.C. 78f(b)(1) and (b)(5).
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    The Commission has repeatedly expressed its 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.'' \30\
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    \30\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
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    There are currently 17 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, as of October 30, 2023, no single exchange has 
more than approximately 12-13% of the multiply-listed equity options 
market share for the month of October 2023.\31\ Therefore, no exchange 
possesses significant pricing power. More specifically, as of October 
30, 2023, the Exchange had a market share of approximately 6.13% of 
executed volume of multiply-listed equity options for the month of 
October 2023.\32\
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    \31\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/ (last visited October 30, 
2023).
    \32\ See id.
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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 
discontinue or reduce use of certain categories of products and 
services, terminate an existing membership or determine to not become a 
new member, and/or shift order flow, in response to transaction fee 
changes. For example, on February 28, 2019, the Exchange filed with the 
Commission a proposal to increase Taker fees in certain Tiers for 
options transactions in certain Penny Classes for Priority Customers 
and decrease Maker rebates in certain Tiers for options transactions in 
Penny Classes for Priority Customers (which fee was to be effective 
March 1, 2019).\33\ The Exchange experienced a decrease in total market 
share for the month of March 2019, after the proposal went into effect. 
Accordingly, the Exchange believes that its March 1, 2019, fee change, 
to increase certain transaction fees and decrease certain transaction 
rebates, may have contributed to the decrease in MIAX Pearl's market 
share and, as such, the Exchange believes competitive forces constrain 
the Exchange's, and other options exchanges, ability to set transaction 
fees and market participants can shift order flow based on fee changes 
instituted by the exchanges.
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    \33\ See Securities Exchange Act Release No. 85304 (March 13, 
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
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    The Exchange believes that its proposal represents an equitable 
allocation of fees and is not unfairly discriminatory because it 
applies uniformly to all Market Makers, in that all Market Makers have 
the opportunity to compete for and achieve the proposed new alternative 
volume criteria of Tier 2, and the Tier 2 fees and rebates will apply 
uniformly to all Market Makers that achieve Tier 2. While the Exchange 
has no way of knowing whether this proposed rule change would 
definitively result in any particular Market Maker achieving the 
proposed alternative volume criteria, the proposed alternative volume 
criteria is available for any Market Maker. To the extent a Member 
participates on the Exchange but not on MIAX Pearl Equities, the 
Exchange believes that the proposal is still reasonable, equitably 
allocated and not unfairly discriminatory with respect to such Member 
based on the overall benefit to the Exchange resulting from the success 
of its equities platform. Particularly, the Exchange believes that 
additional such success allows the Exchange to continue to provide and 
potentially expand its existing incentive programs to the benefit of 
all participants on the Exchange, whether they participate on MIAX 
Pearl Equities or not. Additionally, a Market Maker that is not a 
Member of MIAX Pearl Equities may still satisfy the current primary 
volume criteria or the two other alternative volume criteria (including 
the newly proposed alternative volume criteria) that are not based on 
meeting certain volume thresholds on MIAX Pearl Equities, to be 
eligible for Tier 2 fees and rebates for the Market Maker origin.
    Additionally, the Exchange believes its proposal represents a 
reasonable attempt to continue to incentivize market participants to 
increase the number and variety of orders sent to the Exchange for 
execution. Specifically, the Exchange believes its proposal to amend 
the cross-asset volume requirements to require Market Makers to achieve 
Tier 2 of the NBBO Program and Midpoint Volume Tiers table on MIAX 
Pearl Equities will continue to

[[Page 81129]]

incentivize participation in greater volume from cross-asset activity, 
which would improve the overall quality of the Exchange's marketplace 
to the benefit of all market participants, both on the options and 
equities platforms of MIAX Pearl. The Exchange notes that such cross-
asset volume requirements is not new or novel and at least one other 
competing exchanges offers a similar method to achieve higher rebates 
on its options market.\34\
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    \34\ See NYSE Arca Options Fee Schedule, Market Maker Penny and 
SPY Posting Credit Tiers, Super Tier II, available at https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf (providing a credit of $0.42 when 
a Firm has at least 0.15% of TCADV from Market Maker posted interest 
in all issues, plus ETP Holder and Market Maker posted volume in 
Tape B Securities (``Tape B Adding ADV'') that is equal to at least 
1.40% of US Tape B consolidated average daily volume (``CADV'') for 
the billing month executed on NYSE Arca Equity Market).
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    The Exchange believes its proposal to replace the Add Volume Tiers, 
Tier 2 requirement with the new requirement to achieve Tier 2 in the 
NBBO Program as an alternative method to achieve Tier 2 in the Market 
Maker origin table is reasonable because it provides more opportunities 
for market participants to satisfy this cross-asset volume requirement 
since there are three volume calculation methods (described above) 
available for an Equity Member to achieve Tier 2 of the NBBO Program, 
as opposed to the Add Volume Tiers table, which only provided one 
volume calculation method. Further, volume calculation Method 1 under 
the NBBO Program is nearly identical to the Add Volume Tier requirement 
prior to it being eliminated. An Equity Member was able to qualify for 
Add Volume Tier 2 by achieving an ADAV of at least 0.10% of TCV. An 
Equity Member qualifies for Tier 2 of the NBBO Program by achieving an 
ADAV of at least 0.08% and less than 0.25% of TCV. Accordingly, the 
Exchange believes this proposed change is reasonable because it is 
provides additional opportunities to Equity Members to achieve Tier 2 
of the NBBO Program through three volume calculation methods, including 
one volume calculation method that is the similar in calculation and 
required threshold as Add Volume Tier 2 prior to its elimination.
    The Exchange also believes that its new proposed qualifications for 
the Tier 2 alternative volume criteria for MIAX Pearl Market Makers is 
equitable and not unfairly discriminatory because the Exchange will 
uniformly assess the rebates and fees for any Market Makers qualifying 
for Tier 2. Finally, encouraging Market Makers to add greater liquidity 
benefits all market participants, both on the options and equities 
platforms of MIAX Pearl, in the quality of order interaction.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
Intra-Market Competition
    The Exchange does not believe that its proposal will impose any 
burden on intra-market competition as the Exchange believes that its 
proposal will not place any market participant at a competitive 
disadvantage as Market Makers may satisfy any of the volume criteria 
requirements to be eligible for the Tier 2 fees and rebates for the 
Market Maker origin. Further, for Market Makers that are Members of 
only the options trading facility of MIAX Pearl, and not the equities 
trading facility, those Market Makers may achieve the rebates and fees 
associated with Tier 2 of the Market Maker origin table by executing 
volume that does not require them to be MIAX Pearl Equity Members via 
the alternative methods described above. The Exchange believes that the 
proposed changes should continue to encourage the provision of 
liquidity in options that enhances the quality of the Exchange's market 
and increases the number of trading opportunities on the Exchange for 
all participants who will be able to compete for such opportunities. 
Additionally, as discussed, the proposed changes are ultimately aimed 
at attracting greater order flow to the Exchange, which benefits all 
market participants by providing more trading opportunities.
Inter-Market Competition
    The Exchange does not believe that its proposal will impose any 
burden on inter-market competition and 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.
    There are currently 17 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than approximately 12-
13% of the market share of executed volume of multiply-listed equity 
and ETF options trades as of October 30, 2023, for the month of October 
2023.\35\ Therefore, no exchange possesses significant pricing power in 
the execution of multiply-listed equity and ETF options order flow. 
More specifically, as of October 30, 2023, the Exchange had a market 
share of approximately 6.13% of executed volume of multiply-listed 
equity and ETF options for the month of October 2023.\36\ In such an 
environment, the Exchange must continually adjust its fees and tiers to 
remain competitive with other options exchanges. Because competitors 
are free to modify their own fees and tiers in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited. The 
Exchange believes that the proposed rule changes reflect this 
competitive environment because they modify the Exchange's fees and 
Tiers in a manner that encourages market participants to continue to 
provide liquidity and to send order flow to the Exchange
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    \35\ See supra note 31.
    \36\ See id.
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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,\37\ and Rule 19b-4(f)(2) \38\ 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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    \37\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \38\ 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.

[[Page 81130]]

Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-PEARL-2023-63 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-2023-63. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-PEARL-2023-63 and should be 
submitted on or before December 12, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25669 Filed 11-20-23; 8:45 am]
BILLING CODE 8011-01-P


