82_FR_21944 82 FR 21855 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule

82 FR 21855 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 89 (May 10, 2017)

Page Range21855-21858
FR Document2017-09421

Federal Register, Volume 82 Issue 89 (Wednesday, May 10, 2017)
[Federal Register Volume 82, Number 89 (Wednesday, May 10, 2017)]
[Notices]
[Pages 21855-21858]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-09421]



[[Page 21855]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80592; File No. SR-PEARL-2017-19]


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

May 4, 2017.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on April 26, 2017, MIAX PEARL, LLC (``MIAX PEARL'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX PEARL Fee 
Schedule (the ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/rule-filings/pearl at MIAX 
PEARL's principal office, and at the Commission's Public Reference 
Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Add/Remove Tiered Rebates/Fees 
set forth in Section 1(a) of the Fee Schedule that apply to MIAX PEARL 
Market Makers \3\ to (i) increase the ``Maker'' rebate in Tier 3 for 
transactions of options in Penny classes (as defined below), and (ii) 
add a new, alternative Volume Criteria to Tier 3 based upon the total 
monthly volume executed by a Market Maker solely in SPY options on MIAX 
PEARL, expressed as a percentage of total consolidated national volume 
in SPY options. The Exchange also proposes to make a minor, non-
substantive technical correction to a definition contained in the 
Definitions section of the Fee Schedule, as described below.
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    \3\ ``Market Maker'' means a Member registered with the Exchange 
for the purpose of making markets in options contracts traded on the 
Exchange. See the Definitions Section of the Fee Schedule and 
Exchange Rule 100.
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    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\ expressed as a 
percentage of TCV.\6\ In 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 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 Pilot Program \9\ (``Penny 
classes'') than for order executions in standard option classes which 
are not in the Penny Pilot Program (``Non-Penny classes''), where 
Members are assessed higher transaction fees and receive higher 
rebates.
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    \4\ ``Member'' means an individual or organization that is 
registered with the Exchange pursuant to Chapter II of the Exchange 
Rules for purposes of trading on the Exchange as an ``Electronic 
Exchange Member'' or ``Market Maker.'' Members are deemed 
``members'' under the Exchange Act. See the Definitions Section of 
the Fee Schedule and Exchange Rule 100.
    \5\ ``Excluded Contracts'' means any contracts routed to an away 
market for execution. See the Definitions Section of the Fee 
Schedule.
    \6\ ``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\ ``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 process described in the Fee Schedule. 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\ See Securities Exchange Act Release No. 79778 (January 12, 
2017), 82 FR 6662 (January 19, 2017) (SR-PEARL-2016-01).
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    Transaction rebates and fees applicable to all Market Makers are 
currently assessed according to the following table:

[[Page 21856]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Per contract rebates/fees for   Per contract rebates/fees for
                                                                                                   Penny classes                 Non-Penny classes
              Origin                     Tier                  Volume criteria           ---------------------------------------------------------------
                                                                                               Maker           Taker           Maker           Taker
--------------------------------------------------------------------------------------------------------------------------------------------------------
All MIAX..........................               1  0.00%-0.10%.........................         ($0.25)           $0.50         ($0.30)           $1.05
PEARL.............................               2  Above 0.10%-0.50%...................          (0.40)            0.48          (0.60)            1.03
 Market...........................               3  Above 0.50%-0.75%...................          (0.45)            0.47          (0.65)            1.02
Makers............................               4  Above 0.75%.........................          (0.48)            0.47          (0.70)            1.02
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Exchange proposes to increase the ``Maker'' rebate amount in 
Tier 3 for Penny classes from ($0.45) to ($0.47). The purpose of 
increasing the amount of the rebate is to provide a greater incentive 
to Market Makers to reach Tier 3, thereby increasing the potential for 
executing more volume at the Exchange and consequently receiving a 
higher rebate. The Exchange believes that increased Maker volume by 
Market Makers in Penny classes will attract more liquidity to the 
Exchange, which in turn will benefit all market participants.
    The Exchange also proposes to add a new, alternative Volume 
Criteria to Tier 3 based upon the total monthly volume executed by a 
Market Maker solely in SPY options on MIAX PEARL, expressed as a 
percentage of total consolidated national volume in SPY options. 
Pursuant to this alternative Volume Criteria, a Market Maker can now 
reach the Tier 3 threshold if the Market Maker's total executed monthly 
volume in SPY options on MIAX PEARL is above 2.0% of total consolidated 
national monthly volume in SPY options. To be clear, volume that is 
from resting liquidity (Maker) and taking liquidity (Taker) in SPY 
options are counted towards this alternative Volume Criteria. 
Accordingly, a Market Maker could now qualify for Tier 3 rebates and 
fees which will then be applicable to all volume executed by the Market 
Maker on MIAX PEARL. The two Volume Criteria available for Tier 3 are 
now based upon either: (a) 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 (b) the total monthly volume 
executed by the Market Maker solely in SPY options on MIAX PEARL, not 
including Excluded Contracts, (as the numerator), expressed as a 
percentage of (divided by) SPY TCV (as the denominator). Once either 
Volume Criteria threshold in Tier 3 is reached by the Market Maker, the 
Tier 3 per contract rebates and fees will apply to all volume in all 
options classes executed by that Market Maker on MIAX PEARL.
    In addition to modifying the MIAX PEARL Market Maker table to 
insert the new, alternative Volume Criteria threshold in Tier 3, in 
order to provide a clear explanation of the requirements for achieving 
that alternative Volume Criteria threshold in Tier 3, the Exchange is 
proposing to (i) amend the explanatory paragraph beneath the tables in 
Section 1(a) of the Fee Schedule, and (ii) add a new definition of 
``SPY TCV'' to the Definitions Section of the Fee Schedule. The amended 
explanatory paragraph will clarify that (except as otherwise set forth 
in the Fee Schedule) the existing Volume Criteria threshold measures 
volume in all options classes on MIAX PEARL, and that the new, 
alternative Volume Criteria threshold in Tier 3 for Market Makers 
measures volume solely in SPY options on MIAX PEARL. The new definition 
of SPY TCV in the Definitions Section shall provide the following: 
``SPY TCV'' means total consolidated volume in SPY calculated as the 
total national volume in SPY for the month for which the fees apply, 
excluding consolidated volume executed during the period of time in 
which the Exchange experiences an Exchange System Disruption (solely in 
SPY options).
    The Exchange believes that the proposed alternative Volume Criteria 
threshold in Tier 3 for Market Makers will provide another opportunity 
for those Market Makers that concentrate their trading activity in 
limited options classes such as SPY options to reach a higher tier. The 
Exchange believes that creating this alternative Volume Criteria will 
extend the Tier 3 fee incentives to Market Makers that concentrate 
their trading activity by sending significant volume in SPY options as 
compared to other Market Makers that do trade in the broad range of 
products listed on the Exchange.
    Finally, the Exchange is proposing to make a minor, non-substantive 
technical correction to the definition of ``TCV'' to insert the word 
``of'' in between the words ``period'' and ``time.'' This word was 
inadvertently left out of the sentence when the definition of ``TCV'' 
was initially adopted, on February 6, 2017.\10\
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    \10\ See Securities Exchange Act Release No. 80061 (February 17, 
2017), 82 FR 11676 (February 24, 2017) (SR-PEARL-2017-10).
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    The proposed rule change is scheduled to become operative May 1, 
2017.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \11\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\12\ in that it 
is an equitable allocation of reasonable fees and other charges among 
Exchange members and other persons using its facilities, and 6(b)(5) of 
the Act,\13\ 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(1) and (b)(5).
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    The proposed Maker rebate increase in Penny classes applicable to 
Market Makers that reach the Tier 3 threshold is reasonable, equitable 
and not unfairly discriminatory because all similarly situated Market 
Makers are subject to the same tiered rebates and fees and access to 
the Exchange is offered on terms that are not unfairly discriminatory. 
The Exchange initially set its Maker rebates at the various volume 
levels based upon business determinations and an analysis of current 
Maker rebates and volume levels at other exchanges. For competitive and 
business reasons, the Exchange believes that a higher rebate to Market 
Makers that add liquidity in Penny classes in a higher tier will 
encourage Market Makers to execute more volume as a Maker in Penny 
classes. The Exchange believes for these reasons that offering a higher 
Maker rebate for transactions in Penny classes in Tier 3 for Market 
Makers is equitable, reasonable and not

[[Page 21857]]

unfairly discriminatory, and thus consistent with the Act.
    Furthermore, the proposed increase to the Maker rebate amount in 
Penny classes for Market Makers that reach Tier 3 promotes just and 
equitable principles of trade, fosters cooperation and coordination 
with persons engaged in facilitating transactions in securities, and 
protects investors and the public interest because the proposed 
increase in the rebate amount encourages Market Makers to send more 
orders to the Exchange which add liquidity in order to achieve higher 
thresholds and resulting higher rebates. To the extent that order flow 
which adds liquidity in Penny classes is increased by the proposal, 
market participants will increasingly compete for the opportunity to 
trade on the Exchange, including sending more orders to reach higher 
tiers. The resulting increased volume and liquidity will benefit all 
Exchange participants by providing more trading opportunities and 
tighter spreads.
    The Exchange's proposal to adopt the new, alternative Volume 
Criteria for Tier 3 based on SPY volume executed on the Exchange is 
reasonable, equitable, and not unfairly discriminatory, as it is a form 
of pricing based upon trading activity in a select symbol, which is a 
common practice on many U.S. options exchanges as a means to 
incentivize order flow to be sent to an exchange for execution in 
actively traded options classes. The Exchange's affiliate, Miami 
International Securities Exchange, LLC (``MIAX Options''), offers 
enhanced pricing for transactions in options underlying certain select 
symbols.\14\ SPY options are the most actively traded class. Other 
options exchanges' fee schedules distinguish by symbol and specifically 
assess different fees and rebates for transactions in select symbols 
and some exclusively for transactions in SPY options for the same 
market participants.\15\
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    \14\ See MIAX Options Fee Schedule, Section (1)(a)(iii).
    \15\ See Chicago Board Options Exchange Incorporated (``CBOE'') 
Fees Schedule; see also NASDAQ PHLX LLC (``PHLX'') Pricing Schedule, 
Chapter B, Section I; see further International Securities Exchange 
LLC (``ISE'') Fee Schedule, Sections I and II.
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    The Exchange is offering an alternative Tier 3 Volume Criteria 
threshold based on SPY options volume in Tier 3 because, as previously 
mentioned, SPY options are the most actively traded options in the 
industry, and therefore the Exchange believes that incentivizing Market 
Makers that concentrate their trading activity in SPY options will 
consequently increase order flow sent to the Exchange, which will 
benefit all market participants through increased liquidity, tighter 
markets and order interaction.
    The Exchange believes that the proposed non-substantive, technical 
correction will promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system because it will improve the readability of the 
rules. The proposed change does not alter the application of the rule. 
As such, the proposed change would foster cooperation and coordination 
with persons engaged in facilitating transactions in securities and 
would remove impediments to and perfect the mechanism of a free and 
open market and a national market system. In particular, the Exchange 
believes that the proposed rule change will provide greater clarity to 
Members and the public regarding the Exchange's Rules, and it is in the 
public interest for rules to be accurate and concise so as to eliminate 
the potential for confusion.

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

    MIAX PEARL 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. The proposed Maker rebate 
increase is intended to encourage the posting of liquidity. The 
proposed rule change should enable the Exchange to attract and compete 
for order flow with other exchanges and the greater rebate for adding 
liquidity will encourage Market Makers to submit more order flow that 
adds liquidity, not removes it. The Exchange also believes that paying 
greater rebates may create competition among market participants. 
However, this competition does not create an undue burden on 
competition but rather offers all market participants the opportunity 
to receive the benefit of the enhanced pricing.
    Further, the Exchange believes that the proposed alternative Volume 
Criteria threshold in Tier 3 based on SPY options volume applicable to 
Market Makers provides greater incentives to those Market Makers that 
concentrate their trading activity in SPY options to send additional 
SPY orders and creates additional opportunity for additional liquidity 
to the market.
    The Exchange does not believe that the proposed rule change to make 
a technical correction to its rules will impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. The proposed rule change is not designed to address any 
competitive issues but rather is designed to add additional clarity and 
to remedy a minor, non-substantive issue in the text of a definition in 
the Fee Schedule.
    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. In such an 
environment, the Exchange must continually adjust its rebates and fees 
to remain competitive with other exchanges and to attract order flow. 
The Exchange believes that the proposed rule changes reflect this 
competitive environment because they modify the Exchange's fees in a 
manner that encourages market participants to provide liquidity and to 
send order flow to the Exchange.

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,\16\ and Rule 19b-4(f)(2) \17\ 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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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \17\ 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

[[Page 21858]]

     Send an email to [email protected]. Please include 
File Number SR-PEARL-2017-19 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-PEARL-2017-19. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-PEARL-2017-19 and should be 
submitted on or before May 31, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09421 Filed 5-9-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                                                  Federal Register / Vol. 82, No. 89 / Wednesday, May 10, 2017 / Notices                                                          21855

                                                  SECURITIES AND EXCHANGE                                    A. Self-Regulatory Organization’s                       transaction rebates and fees are applied
                                                  COMMISSION                                                 Statement of the Purpose of, and                        retroactively to all eligible volume for
                                                                                                             Statutory Basis for, the Proposed Rule                  that origin type once the respective
                                                  [Release No. 34–80592; File No. SR–                        Change                                                  threshold tier (‘‘Tier’’) has been reached
                                                  PEARL–2017–19]                                             1. Purpose                                              by the Member. The Exchange
                                                                                                                                                                     aggregates the volume of Members and
                                                                                                                The Exchange proposes to amend the                   their Affiliates.7 Members that place
                                                  Self-Regulatory Organizations; MIAX
                                                                                                             Add/Remove Tiered Rebates/Fees set                      resting liquidity, i.e., orders resting on
                                                  PEARL, LLC; Notice of Filing and
                                                                                                             forth in Section 1(a) of the Fee Schedule               the book of the MIAX PEARL System,8
                                                  Immediate Effectiveness of a Proposed                      that apply to MIAX PEARL Market
                                                  Rule Change To Amend the MIAX                                                                                      are paid the specified ‘‘maker’’ rebate
                                                                                                             Makers 3 to (i) increase the ‘‘Maker’’                  (each a ‘‘Maker’’), and Members that
                                                  PEARL Fee Schedule                                         rebate in Tier 3 for transactions of                    execute against resting liquidity are
                                                  May 4, 2017.                                               options in Penny classes (as defined                    assessed the specified ‘‘taker’’ fee (each
                                                                                                             below), and (ii) add a new, alternative                 a ‘‘Taker’’). For opening transactions
                                                     Pursuant to the provisions of Section                   Volume Criteria to Tier 3 based upon                    and ABBO uncrossing transactions, per
                                                  19(b)(1) of the Securities Exchange Act                    the total monthly volume executed by a                  contract transaction rebates and fees are
                                                  of 1934 (‘‘Act’’) 1 and Rule 19b–4                         Market Maker solely in SPY options on                   waived for all market participants.
                                                  thereunder,2 notice is hereby given that                   MIAX PEARL, expressed as a percentage                   Finally, Members are assessed lower
                                                  on April 26, 2017, MIAX PEARL, LLC                         of total consolidated national volume in                transaction fees and receive lower
                                                  (‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed                     SPY options. The Exchange also                          rebates for order executions in standard
                                                  with the Securities and Exchange                           proposes to make a minor, non-                          option classes in the Penny Pilot
                                                  Commission (‘‘Commission’’) a                              substantive technical correction to a                   Program 9 (‘‘Penny classes’’) than for
                                                  proposed rule change as described in                       definition contained in the Definitions                 order executions in standard option
                                                  Items I, II, and III below, which Items                    section of the Fee Schedule, as                         classes which are not in the Penny Pilot
                                                  have been prepared by the Exchange.                        described below.                                        Program (‘‘Non-Penny classes’’), where
                                                  The Commission is publishing this                             The Exchange currently assesses
                                                                                                                                                                     Members are assessed higher transaction
                                                                                                             transaction rebates and fees to all
                                                  notice to solicit comments on the                                                                                  fees and receive higher rebates.
                                                                                                             market participants which are based
                                                  proposed rule change from interested                                                                                  Transaction rebates and fees
                                                                                                             upon the total monthly volume
                                                  persons.                                                   executed by the Member 4 on MIAX                        applicable to all Market Makers are
                                                  I. Self-Regulatory Organization’s                          PEARL in the relevant, respective origin                currently assessed according to the
                                                  Statement of the Terms of Substance of                     type (not including Excluded                            following table:
                                                  the Proposed Rule Change                                   Contracts) 5 expressed as a percentage of
                                                                                                             TCV.6 In addition, the per contract                     may be processed by one single Matching Engine
                                                     The Exchange is filing a proposal to                                                                            that is dedicated only to SPY). A particular root
                                                                                                                                                                     symbol may only be assigned to a single designated
                                                  amend the MIAX PEARL Fee Schedule                             3 ‘‘Market Maker’’ means a Member registered
                                                                                                                                                                     Matching Engine. A particular root symbol may not
                                                                                                             with the Exchange for the purpose of making
                                                  (the ‘‘Fee Schedule’’).                                    markets in options contracts traded on the              be assigned to multiple Matching Engines. The
                                                                                                                                                                     Exchange believes that it is reasonable and
                                                     The text of the proposed rule change                    Exchange. See the Definitions Section of the Fee
                                                                                                                                                                     appropriate to select two consecutive hours as the
                                                                                                             Schedule and Exchange Rule 100.
                                                  is available on the Exchange’s Web site                       4 ‘‘Member’’ means an individual or organization     amount of time necessary to constitute an Exchange
                                                  at http://www.miaxoptions.com/rule-                        that is registered with the Exchange pursuant to
                                                                                                                                                                     System Disruption, as two hours equates to
                                                  filings/pearl at MIAX PEARL’s principal                    Chapter II of the Exchange Rules for purposes of        approximately 1.4% of available trading time per
                                                                                                             trading on the Exchange as an ‘‘Electronic Exchange     month. The Exchange notes that the term
                                                  office, and at the Commission’s Public                                                                             ‘‘Exchange System Disruption’’ and its meaning
                                                                                                             Member’’ or ‘‘Market Maker.’’ Members are deemed
                                                  Reference Room.                                            ‘‘members’’ under the Exchange Act. See the             have no applicability outside of the Fee Schedule,
                                                                                                             Definitions Section of the Fee Schedule and             as it is used solely for purposes of calculating
                                                  II. Self-Regulatory Organization’s                         Exchange Rule 100.                                      volume for the threshold tiers in the Fee Schedule.
                                                  Statement of the Purpose of, and                              5 ‘‘Excluded Contracts’’ means any contracts         See the Definitions Section of the Fee Schedule.
                                                                                                                                                                        7 ‘‘Affiliate’’ means (i) an affiliate of a Member of
                                                  Statutory Basis for, the Proposed Rule                     routed to an away market for execution. See the
                                                                                                                                                                     at least 75% common ownership between the firms
                                                  Change                                                     Definitions Section of the Fee Schedule.
                                                                                                                6 ‘‘TCV’’ means total consolidated volume            as reflected on each firm’s Form BD, Schedule A,
                                                                                                             calculated as the total national volume in those        or (ii) the Appointed Market Maker of an Appointed
                                                    In its filing with the Commission, the                   classes listed on MIAX PEARL for the month for          EEM (or, conversely, the Appointed EEM of an
                                                  Exchange included statements                               which the fees apply, excluding consolidated            Appointed Market Maker). An ‘‘Appointed Market
                                                                                                                                                                     Maker’’ is a MIAX PEARL Market Maker (who does
                                                  concerning the purpose of and basis for                    volume executed during the period time in which
                                                                                                                                                                     not otherwise have a corporate affiliation based
                                                  the proposed rule change and discussed                     the Exchange experiences an ‘‘Exchange System
                                                                                                             Disruption’’ (solely in the option classes of the       upon common ownership with an EEM) that has
                                                  any comments it received on the                            affected Matching Engine (as defined below)). The       been appointed by an EEM and an ‘‘Appointed
                                                  proposed rule change. The text of these                    term Exchange System Disruption, which is defined       EEM’’ is an EEM (who does not otherwise have a
                                                                                                             in the Definitions section of the Fee Schedule,         corporate affiliation based upon common
                                                  statements may be examined at the                                                                                  ownership with a MIAX PEARL Market Maker) that
                                                                                                             means an outage of a Matching Engine or collective
                                                  places specified in Item IV below. The                     Matching Engines for a period of two consecutive        has been appointed by a MIAX PEARL Market
                                                  Exchange has prepared summaries, set                       hours or more, during trading hours. The term           Maker, pursuant to the process described in the Fee
                                                                                                             Matching Engine, which is also defined in the           Schedule. See the Definitions Section of the Fee
                                                  forth in sections A, B, and C below, of                                                                            Schedule.
                                                                                                             Definitions section of the Fee Schedule, is a part of
                                                  the most significant aspects of such                       the MIAX PEARL electronic system that processes            8 The term ‘‘System’’ means the automated

                                                  statements.                                                options orders and trades on a symbol-by-symbol         trading system used by the Exchange for the trading
jstallworth on DSK7TPTVN1PROD with NOTICES




                                                                                                             basis. Some Matching Engines will process option        of securities. See Exchange Rule 100.
                                                                                                             classes with multiple root symbols, and other              9 See Securities Exchange Act Release No. 79778
                                                    1 15   U.S.C. 78s(b)(1).                                 Matching Engines may be dedicated to one single         (January 12, 2017), 82 FR 6662 (January 19, 2017)
                                                    2 17   CFR 240.19b–4.                                    option root symbol (for example, options on SPY         (SR–PEARL–2016–01).




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                                                  21856                                 Federal Register / Vol. 82, No. 89 / Wednesday, May 10, 2017 / Notices

                                                                                                                                                          Per contract rebates/fees            Per contract rebates/fees
                                                                                                                                                             for Penny classes                  for Non-Penny classes
                                                                    Origin                              Tier                Volume criteria
                                                                                                                                                              Maker          Taker              Maker              Taker

                                                  All MIAX ...................................                    1    0.00%–0.10% .................            ($0.25)              $0.50          ($0.30)             $1.05
                                                  PEARL .....................................                     2    Above 0.10%–0.50% .....                   (0.40)               0.48           (0.60)              1.03
                                                  Market ......................................                   3    Above 0.50%–0.75% .....                   (0.45)               0.47           (0.65)              1.02
                                                  Makers .....................................                    4    Above 0.75% .................             (0.48)               0.47           (0.70)              1.02



                                                     The Exchange proposes to increase                                   In addition to modifying the MIAX                  was initially adopted, on February 6,
                                                  the ‘‘Maker’’ rebate amount in Tier 3 for                           PEARL Market Maker table to insert the                2017.10
                                                  Penny classes from ($0.45) to ($0.47).                              new, alternative Volume Criteria                        The proposed rule change is
                                                  The purpose of increasing the amount of                             threshold in Tier 3, in order to provide              scheduled to become operative May 1,
                                                  the rebate is to provide a greater                                  a clear explanation of the requirements               2017.
                                                  incentive to Market Makers to reach Tier                            for achieving that alternative Volume                 2. Statutory Basis
                                                  3, thereby increasing the potential for                             Criteria threshold in Tier 3, the
                                                  executing more volume at the Exchange                               Exchange is proposing to (i) amend the                   The Exchange believes that its
                                                  and consequently receiving a higher                                 explanatory paragraph beneath the                     proposal to amend its Fee Schedule is
                                                  rebate. The Exchange believes that                                                                                        consistent with Section 6(b) of the Act 11
                                                                                                                      tables in Section 1(a) of the Fee
                                                  increased Maker volume by Market                                                                                          in general, and furthers the objectives of
                                                                                                                      Schedule, and (ii) add a new definition
                                                  Makers in Penny classes will attract                                                                                      Section 6(b)(4) of the Act,12 in that it is
                                                                                                                      of ‘‘SPY TCV’’ to the Definitions Section
                                                  more liquidity to the Exchange, which                                                                                     an equitable allocation of reasonable
                                                                                                                      of the Fee Schedule. The amended
                                                  in turn will benefit all market                                                                                           fees and other charges among Exchange
                                                                                                                      explanatory paragraph will clarify that
                                                  participants.                                                                                                             members and other persons using its
                                                                                                                      (except as otherwise set forth in the Fee             facilities, and 6(b)(5) of the Act,13 in that
                                                     The Exchange also proposes to add a                              Schedule) the existing Volume Criteria
                                                  new, alternative Volume Criteria to Tier                                                                                  it is designed to prevent fraudulent and
                                                                                                                      threshold measures volume in all                      manipulative acts and practices, to
                                                  3 based upon the total monthly volume
                                                                                                                      options classes on MIAX PEARL, and                    promote just and equitable principles of
                                                  executed by a Market Maker solely in
                                                                                                                      that the new, alternative Volume                      trade, to foster cooperation and
                                                  SPY options on MIAX PEARL,
                                                                                                                      Criteria threshold in Tier 3 for Market               coordination with persons engaged in
                                                  expressed as a percentage of total
                                                                                                                      Makers measures volume solely in SPY                  facilitating transactions in securities, to
                                                  consolidated national volume in SPY
                                                                                                                      options on MIAX PEARL. The new                        remove impediments to and perfect the
                                                  options. Pursuant to this alternative
                                                                                                                      definition of SPY TCV in the Definitions              mechanisms of a free and open market
                                                  Volume Criteria, a Market Maker can
                                                  now reach the Tier 3 threshold if the                               Section shall provide the following:                  and a national market system and, in
                                                  Market Maker’s total executed monthly                               ‘‘SPY TCV’’ means total consolidated                  general, to protect investors and the
                                                  volume in SPY options on MIAX PEARL                                 volume in SPY calculated as the total                 public interest.
                                                  is above 2.0% of total consolidated                                 national volume in SPY for the month                     The proposed Maker rebate increase
                                                  national monthly volume in SPY                                      for which the fees apply, excluding                   in Penny classes applicable to Market
                                                  options. To be clear, volume that is from                           consolidated volume executed during                   Makers that reach the Tier 3 threshold
                                                  resting liquidity (Maker) and taking                                the period of time in which the                       is reasonable, equitable and not unfairly
                                                  liquidity (Taker) in SPY options are                                Exchange experiences an Exchange                      discriminatory because all similarly
                                                  counted towards this alternative                                    System Disruption (solely in SPY                      situated Market Makers are subject to
                                                  Volume Criteria. Accordingly, a Market                              options).                                             the same tiered rebates and fees and
                                                  Maker could now qualify for Tier 3                                     The Exchange believes that the                     access to the Exchange is offered on
                                                  rebates and fees which will then be                                 proposed alternative Volume Criteria                  terms that are not unfairly
                                                  applicable to all volume executed by the                            threshold in Tier 3 for Market Makers                 discriminatory. The Exchange initially
                                                  Market Maker on MIAX PEARL. The                                     will provide another opportunity for                  set its Maker rebates at the various
                                                  two Volume Criteria available for Tier 3                            those Market Makers that concentrate                  volume levels based upon business
                                                  are now based upon either: (a) The total                            their trading activity in limited options             determinations and an analysis of
                                                  monthly volume executed by the Market                               classes such as SPY options to reach a                current Maker rebates and volume levels
                                                  Maker in all options classes on MIAX                                                                                      at other exchanges. For competitive and
                                                                                                                      higher tier. The Exchange believes that
                                                  PEARL, not including Excluded                                                                                             business reasons, the Exchange believes
                                                                                                                      creating this alternative Volume Criteria
                                                  Contracts, (as the numerator), expressed                                                                                  that a higher rebate to Market Makers
                                                                                                                      will extend the Tier 3 fee incentives to
                                                  as a percentage of (divided by) TCV (as                                                                                   that add liquidity in Penny classes in a
                                                                                                                      Market Makers that concentrate their
                                                  the denominator); or (b) the total                                                                                        higher tier will encourage Market
                                                                                                                      trading activity by sending significant
                                                  monthly volume executed by the Market                                                                                     Makers to execute more volume as a
                                                                                                                      volume in SPY options as compared to                  Maker in Penny classes. The Exchange
                                                  Maker solely in SPY options on MIAX                                 other Market Makers that do trade in the
                                                  PEARL, not including Excluded                                                                                             believes for these reasons that offering a
                                                                                                                      broad range of products listed on the                 higher Maker rebate for transactions in
                                                  Contracts, (as the numerator), expressed                            Exchange.
                                                  as a percentage of (divided by) SPY TCV                                                                                   Penny classes in Tier 3 for Market
jstallworth on DSK7TPTVN1PROD with NOTICES




                                                  (as the denominator). Once either                                      Finally, the Exchange is proposing to              Makers is equitable, reasonable and not
                                                  Volume Criteria threshold in Tier 3 is                              make a minor, non-substantive technical
                                                  reached by the Market Maker, the Tier                               correction to the definition of ‘‘TCV’’ to              10 See Securities Exchange Act Release No. 80061

                                                                                                                      insert the word ‘‘of’’ in between the                 (February 17, 2017), 82 FR 11676 (February 24,
                                                  3 per contract rebates and fees will                                                                                      2017) (SR–PEARL–2017–10).
                                                  apply to all volume in all options                                  words ‘‘period’’ and ‘‘time.’’ This word                11 15 U.S.C. 78f(b).

                                                  classes executed by that Market Maker                               was inadvertently left out of the                       12 15 U.S.C. 78f(b)(4).

                                                  on MIAX PEARL.                                                      sentence when the definition of ‘‘TCV’’                 13 15 U.S.C. 78f(b)(1) and (b)(5).




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                                                                               Federal Register / Vol. 82, No. 89 / Wednesday, May 10, 2017 / Notices                                                21857

                                                  unfairly discriminatory, and thus                       options will consequently increase                    of the purposes of the Act. The
                                                  consistent with the Act.                                order flow sent to the Exchange, which                proposed rule change is not designed to
                                                     Furthermore, the proposed increase to                will benefit all market participants                  address any competitive issues but
                                                  the Maker rebate amount in Penny                        through increased liquidity, tighter                  rather is designed to add additional
                                                  classes for Market Makers that reach                    markets and order interaction.                        clarity and to remedy a minor, non-
                                                  Tier 3 promotes just and equitable                         The Exchange believes that the                     substantive issue in the text of a
                                                  principles of trade, fosters cooperation                proposed non-substantive, technical                   definition in the Fee Schedule.
                                                  and coordination with persons engaged                   correction will promote just and                        The Exchange notes that it operates in
                                                  in facilitating transactions in securities,             equitable principles of trade, remove                 a highly competitive market in which
                                                  and protects investors and the public                   impediments to and perfect the                        market participants can readily favor
                                                  interest because the proposed increase                  mechanism of a free and open market                   competing venues if they deem fee
                                                  in the rebate amount encourages Market                  and a national market system because it               levels at a particular venue to be
                                                  Makers to send more orders to the                       will improve the readability of the rules.            excessive. In such an environment, the
                                                  Exchange which add liquidity in order                   The proposed change does not alter the                Exchange must continually adjust its
                                                  to achieve higher thresholds and                        application of the rule. As such, the                 rebates and fees to remain competitive
                                                  resulting higher rebates. To the extent                 proposed change would foster                          with other exchanges and to attract
                                                  that order flow which adds liquidity in                 cooperation and coordination with                     order flow. The Exchange believes that
                                                  Penny classes is increased by the                       persons engaged in facilitating                       the proposed rule changes reflect this
                                                  proposal, market participants will                      transactions in securities and would                  competitive environment because they
                                                  increasingly compete for the                            remove impediments to and perfect the                 modify the Exchange’s fees in a manner
                                                  opportunity to trade on the Exchange,                   mechanism of a free and open market                   that encourages market participants to
                                                  including sending more orders to reach                  and a national market system. In                      provide liquidity and to send order flow
                                                  higher tiers. The resulting increased                   particular, the Exchange believes that                to the Exchange.
                                                  volume and liquidity will benefit all                   the proposed rule change will provide
                                                  Exchange participants by providing                      greater clarity to Members and the                    C. Self-Regulatory Organization’s
                                                  more trading opportunities and tighter                  public regarding the Exchange’s Rules,                Statement on Comments on the
                                                  spreads.                                                and it is in the public interest for rules            Proposed Rule Change Received From
                                                     The Exchange’s proposal to adopt the                 to be accurate and concise so as to                   Members, Participants, or Others
                                                  new, alternative Volume Criteria for                    eliminate the potential for confusion.
                                                                                                                                                                  Written comments were neither
                                                  Tier 3 based on SPY volume executed
                                                                                                          B. Self-Regulatory Organization’s                     solicited nor received.
                                                  on the Exchange is reasonable,
                                                                                                          Statement on Burden on Competition
                                                  equitable, and not unfairly                                                                                   III. Date of Effectiveness of the
                                                  discriminatory, as it is a form of pricing                 MIAX PEARL does not believe that                   Proposed Rule Change and Timing for
                                                  based upon trading activity in a select                 the proposed rule changes will impose                 Commission Action
                                                  symbol, which is a common practice on                   any burden on competition not
                                                                                                          necessary or appropriate in furtherance                  The foregoing rule change has become
                                                  many U.S. options exchanges as a
                                                                                                          of the purposes of the Act. The                       effective pursuant to Section
                                                  means to incentivize order flow to be
                                                                                                          proposed Maker rebate increase is                     19(b)(3)(A)(ii) of the Act,16 and Rule
                                                  sent to an exchange for execution in
                                                                                                          intended to encourage the posting of                  19b–4(f)(2) 17 thereunder. At any time
                                                  actively traded options classes. The
                                                                                                          liquidity. The proposed rule change                   within 60 days of the filing of the
                                                  Exchange’s affiliate, Miami International
                                                                                                          should enable the Exchange to attract                 proposed rule change, the Commission
                                                  Securities Exchange, LLC (‘‘MIAX
                                                                                                          and compete for order flow with other                 summarily may temporarily suspend
                                                  Options’’), offers enhanced pricing for
                                                                                                          exchanges and the greater rebate for                  such rule change if it appears to the
                                                  transactions in options underlying
                                                                                                          adding liquidity will encourage Market                Commission that such action is
                                                  certain select symbols.14 SPY options
                                                                                                          Makers to submit more order flow that                 necessary or appropriate in the public
                                                  are the most actively traded class. Other
                                                                                                          adds liquidity, not removes it. The                   interest, for the protection of investors,
                                                  options exchanges’ fee schedules
                                                                                                          Exchange also believes that paying                    or otherwise in furtherance of the
                                                  distinguish by symbol and specifically
                                                                                                          greater rebates may create competition                purposes of the Act. If the Commission
                                                  assess different fees and rebates for
                                                                                                          among market participants. However,                   takes such action, the Commission shall
                                                  transactions in select symbols and some
                                                                                                          this competition does not create an                   institute proceedings to determine
                                                  exclusively for transactions in SPY
                                                                                                          undue burden on competition but rather                whether the proposed rule should be
                                                  options for the same market
                                                                                                          offers all market participants the                    approved or disapproved.
                                                  participants.15
                                                     The Exchange is offering an                          opportunity to receive the benefit of the             IV. Solicitation of Comments
                                                  alternative Tier 3 Volume Criteria                      enhanced pricing.
                                                  threshold based on SPY options volume                      Further, the Exchange believes that                  Interested persons are invited to
                                                  in Tier 3 because, as previously                        the proposed alternative Volume                       submit written data, views, and
                                                  mentioned, SPY options are the most                     Criteria threshold in Tier 3 based on                 arguments concerning the foregoing,
                                                  actively traded options in the industry,                SPY options volume applicable to                      including whether the proposed rule
                                                  and therefore the Exchange believes that                Market Makers provides greater                        change is consistent with the Act.
                                                  incentivizing Market Makers that                        incentives to those Market Makers that                Comments may be submitted by any of
                                                  concentrate their trading activity in SPY               concentrate their trading activity in SPY             the following methods:
jstallworth on DSK7TPTVN1PROD with NOTICES




                                                                                                          options to send additional SPY orders                 Electronic Comments
                                                    14 See   MIAX Options Fee Schedule, Section           and creates additional opportunity for
                                                  (1)(a)(iii).                                            additional liquidity to the market.                     • Use the Commission’s Internet
                                                    15 See Chicago Board Options Exchange                    The Exchange does not believe that                 comment form (http://www.sec.gov/
                                                  Incorporated (‘‘CBOE’’) Fees Schedule; see also         the proposed rule change to make a                    rules/sro.shtml); or
                                                  NASDAQ PHLX LLC (‘‘PHLX’’) Pricing Schedule,
                                                  Chapter B, Section I; see further International
                                                                                                          technical correction to its rules will
                                                  Securities Exchange LLC (‘‘ISE’’) Fee Schedule,         impose any burden on competition not                    16 15   U.S.C. 78s(b)(3)(A)(ii).
                                                  Sections I and II.                                      necessary or appropriate in furtherance                 17 17   CFR 240.19b–4(f)(2).



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                                                  21858                            Federal Register / Vol. 82, No. 89 / Wednesday, May 10, 2017 / Notices

                                                    • Send an email to rule-                                SECURITIES AND EXCHANGE                                A. Self-Regulatory Organization’s
                                                  comments@sec.gov. Please include File                     COMMISSION                                             Statement of the Purpose of, and
                                                  Number SR–PEARL–2017–19 on the                                                                                   Statutory Basis for, the Proposed Rule
                                                  subject line.                                             [Release No. 34–80594; File No. SR–BX–                 Change
                                                  Paper Comments                                            2017–021]                                              1. Purpose
                                                                                                                                                                     BX proposes to amend Rule 4703
                                                    • Send paper comments in triplicate                     Self-Regulatory Organizations;
                                                                                                            NASDAQ BX, Inc.; Notice of Filing and                  (Order Attributes) to specify the
                                                  to Secretary, Securities and Exchange
                                                                                                            Immediate Effectiveness of Proposed                    behavior of Orders with Midpoint
                                                  Commission, 100 F Street NE.,                                                                                    Pegging that are cancelled or rejected
                                                  Washington, DC 20549–1090.                                Rule Change To Amend Rule 4703
                                                                                                            (Order Attributes)                                     when the market is crossed, or when
                                                  All submissions should refer to File                                                                             there is no best bid and/or offer after
                                                  Number SR–PEARL–2017–19. This file                        May 4, 2017.                                           initial entry and posting to the Exchange
                                                  number should be included on the                             Pursuant to Section 19(b)(1) of the                 Book. BX also proposes to change a
                                                  subject line if email is used. To help the                Securities Exchange Act of 1934                        reference to cancelling or rejecting
                                                  Commission process and review your                        (‘‘Act’’),1 and Rule 19b–4 thereunder,2                orders in Rule 4703.
                                                  comments more efficiently, please use                     notice is hereby given that on April 21,                 Rule 4703(d) describes the Pegging
                                                  only one method. The Commission will                      2017, NASDAQ BX, Inc. (‘‘BX’’ or                       Order Attribute, including Midpoint
                                                  post all comments on the Commission’s                     ‘‘Exchange’’) filed with the Securities                Pegging. Pegging is an Order Attribute
                                                  Internet Web site (http://www.sec.gov/                    and Exchange Commission (‘‘SEC’’ or                    that allows an Order to have its price
                                                                                                            ‘‘Commission’’) the proposed rule                      automatically set with reference to the
                                                  rules/sro.shtml). Copies of the
                                                                                                            change as described in Items I and II                  NBBO. Midpoint Pegging means Pegging
                                                  submission, all subsequent
                                                                                                            below, which Items have been prepared                  with reference to the midpoint between
                                                  amendments, all written statements
                                                                                                            by the Exchange. The Commission is                     the Inside Bid and the Inside Offer (the
                                                  with respect to the proposed rule                                                                                ‘‘Midpoint’’).3 An Order with Midpoint
                                                  change that are filed with the                            publishing this notice to solicit
                                                                                                            comments on the proposed rule change                   Pegging is not displayed.
                                                  Commission, and all written                                                                                        BX recently proposed changes to
                                                  communications relating to the                            from interested persons.
                                                                                                                                                                   Orders with Midpoint Pegging, which
                                                  proposed rule change between the                          I. Self-Regulatory Organization’s                      were approved by the SEC on November
                                                  Commission and any person, other than                     Statement of the Terms of Substance of                 10, 2016.4 With this change, if the
                                                  those that may be withheld from the                       the Proposed Rule Change                               Inside Bid and Inside Offer are crossed
                                                  public in accordance with the                                                                                    or if there is no Insider Bid and Inside
                                                  provisions of 5 U.S.C. 552, will be                          The Exchange proposes to amend                      Offer, any existing Order with Midpoint
                                                  available for Web site viewing and                        Rule 4703 (Order Attributes) to specify                Pegging would be cancelled and any
                                                  printing in the Commission’s Public                       the behavior of Orders with Midpoint                   new Order with Midpoint Pegging
                                                  Reference Room, 100 F Street NE.,                         Pegging after initial entry and posting to             would be rejected.5
                                                  Washington, DC 20549, on official                         the Exchange Book when the market is
                                                                                                                                                                     BX now proposes to add language to
                                                                                                            crossed, or when there is no best bid
                                                  business days between the hours of                                                                               Rule 4703(d) to specify the treatment of
                                                                                                            and/or offer. The Exchange also
                                                  10:00 a.m. and 3:00 p.m. Copies of the                                                                           Orders with Midpoint Pegging after
                                                                                                            proposes to change a reference to
                                                  filing also will be available for                                                                                initial entry and posting to the Exchange
                                                                                                            cancelling or rejecting orders in Rule
                                                  inspection and copying at the principal                                                                          Book when the Inside Bid and Inside
                                                                                                            4703.
                                                  office of the Exchange. All comments                                                                             Offer are subsequently crossed, or if
                                                  received will be posted without change;                      The text of the proposed rule change                there is subsequently no Inside Bid and/
                                                  the Commission does not edit personal                     is available on the Exchange’s Web site                or Inside Offer. Specifically, for Orders
                                                  identifying information from                              at http://nasdaqbx.cchwallstreet.com/,                 with Midpoint Pegging entered through
                                                                                                            at the principal office of the Exchange,               RASH or FIX, if the Order is on the
                                                  submissions. You should submit only
                                                                                                            and at the Commission’s Public                         Exchange Book and subsequently the
                                                  information that you wish to make
                                                                                                            Reference Room.                                        Inside Bid and Inside Offer become
                                                  available publicly. All submissions
                                                                                                            II. Self-Regulatory Organization’s                     crossed, or if there is no Inside Bid and/
                                                  should refer to File Number SR–
                                                                                                            Statement of the Purpose of, and                       or Inside Offer, the Order will be
                                                  PEARL–2017–19 and should be
                                                                                                            Statutory Basis for, the Proposed Rule                 removed from the Exchange Book and
                                                  submitted on or before May 31, 2017.
                                                                                                            Change                                                 will be re-entered at the new midpoint
                                                    For the Commission, by the Division of                                                                         once there is a valid Inside Bid and
                                                  Trading and Markets, pursuant to delegated                  In its filing with the Commission, the               Inside Offer that is not crossed.
                                                  authority.18                                              Exchange included statements                             As stated in the filing proposing the
                                                  Eduardo A. Aleman,                                        concerning the purpose of and basis for                new Midpoint Pegging functionality, BX
                                                  Assistant Secretary.                                      the proposed rule change and discussed                 believes that the midpoint of a crossed
                                                  [FR Doc. 2017–09421 Filed 5–9–17; 8:45 am]                any comments it received on the                        market, or where there is no Inside Bid
                                                                                                            proposed rule change. The text of these                and Inside Offer, is not a clear and
                                                  BILLING CODE 8011–01–P
                                                                                                            statements may be examined at the                      accurate indication of a valid price, and
                                                                                                            places specified in Item IV below. The                 may produce sub-optimal execution
jstallworth on DSK7TPTVN1PROD with NOTICES




                                                                                                            Exchange has prepared summaries, set
                                                                                                            forth in sections A, B, and C below, of                  3 Thus, if the Inside Bid was $11 and the Inside

                                                                                                            the most significant aspects of such                   Offer was $11.06, an Order with Midpoint Pegging
                                                                                                                                                                   would be priced at $11.03.
                                                                                                            statements.                                              4 See Securities Exchange Act Release No. 79290

                                                                                                                                                                   (November 10, 2016), 81 FR 81184 (November 17,
                                                                                                             1 15   U.S.C. 78s(b)(1).                              2016) (SR–BX–2016–046).
                                                    18 17   CFR 200.30–3(a)(12).                             2 17   CFR 240.19b–4.                                   5 Id.




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Document Created: 2017-05-10 00:00:43
Document Modified: 2017-05-10 00:00:43
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 21855 

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