83 FR 58646 - 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 83, Issue 224 (November 20, 2018)
Federal Register Volume 83, Issue 224 (November 20, 2018)
| Page Range | 58646-58649 | |
| FR Document | 2018-25248 |
[Federal Register Volume 83, Number 224 (Tuesday, November 20, 2018)] [Notices] [Pages 58646-58649] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-25248] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84592; File No. SR-PEARL-2018-23] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule November 14, 2018. 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 October 31, 2018, 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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 website at http://www.miaxoptions.com/rule-filings/pearl at MIAX PEARL's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Add/Remove Tiered Rebates/Fees set forth in Section (a) of the Fee Schedule that apply to MIAX PEARL Market Makers \3\ to (i) add a new, alternative Volume Criteria to Tier 2 based upon the total monthly volume executed by a MIAX PEARL Market Maker in SPY, QQQ, and IWM options (``SPY/QQQ/IWM options'') volume on MIAX PEARL, expressed as a percentage of total consolidated national volume in SPY/QQQ/IWM options; (ii) amend the ``Definitions'' section of the Fee Schedule to add the following definition, ``SPY/QQQ/IWM TCV'' and (iii) amend the explanatory paragraph beneath the tables in Section (a) of the Fee Schedule, as described below. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 generally assessed lower transaction fees and generally 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 generally are assessed higher transaction fees and generally receive higher rebates. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- [[Page 58647]] Transaction rebates and fees in Section (a) of the Fee Schedule are currently assessed for MIAX PEARL Market Makers according to the following table: -------------------------------------------------------------------------------------------------------------------------------------------------------- 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 PEARL Market Makers............... 1 0.00%-0.15%.................... ($0.25) $0.50 ($0.30) $1.10 2 Above 0.15%-0.40%.............. (0.40) 0.50 (0.30) 1.10 3 Above 0.40%-0.65%.............. (0.40) 0.48 (0.60) 1.09 4 Above 0.65%-1.00% or Above (0.47) 0.47 (0.65) 1.08 2.25% in SPY. 5 Above 1.00%-1.40%.............. (0.48) 0.45 (0.70) 1.07 6 Above 1.40%.................... (0.48) 0.44 (0.85) 1.06 -------------------------------------------------------------------------------------------------------------------------------------------------------- The Exchange proposes to add a new, alternative Volume Criteria to Tier 2 based upon the total monthly volume executed by a MIAX PEARL Market Maker collectively in SPY/QQQ/IWM options on MIAX PEARL, expressed as a percentage of total consolidated national volume in SPY/ QQQ/IWM options. Pursuant to this alternative Volume Criteria, a Market Maker can now reach the Tier 2 threshold if the Market Maker's total executed monthly volume, not including Excluded Contracts, in SPY/QQQ/ IWM options on MIAX PEARL is above 0.45% of total consolidated national monthly volume in SPY/QQQ/IWM options. To be clear, volume that is from resting liquidity (Maker) and taking liquidity (Taker) in SPY/QQQ/IWM options is counted towards this alternative Volume Criteria, and the 0.45% threshold does not have to be reached individually in each of the three symbols. Accordingly, a Market Maker could now qualify for Tier 2 rebates and fees which will then be applicable to all volume executed by the MIAX PEARL Market Maker on MIAX PEARL. The two Volume Criteria available for Tier 2 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 MIAX PEARL Market Maker collectively in SPY/QQQ/IWM options on MIAX PEARL, not including Excluded Contracts, (as the numerator), expressed as a percentage of (divided by) SPY/QQQ/IWM TCV (as the denominator). Once either Volume Criteria threshold in Tier 2 is reached by the Market Maker, the Tier 2 per contract rebates and fees will apply to all volume in all options classes executed by that MIAX PEARL Market Maker on MIAX PEARL. The Exchange does not propose to make any changes to the currently existing Tier 2 Volume Criteria threshold of above 0.15% to 0.40% or to the corresponding Maker rebates or Taker fees. Instead, the Exchange is simply adding an alternative method by which a MIAX PEARL Market Maker can reach Tier 2. With the proposed changes, Section (a) of the Fee Schedule for Market Maker orders shall be the following: -------------------------------------------------------------------------------------------------------------------------------------------------------- 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 PEARL Market Makers............... 1 0.00%-0.15%.................... ($0.25) $0.50 ($0.30) $1.10 2 Above 0.15%-0.40% or Above (0.40) 0.50 (0.30) 1.10 0.45% in SPY/QQQ/IWM. 3 Above 0.40%-0.65%.............. (0.40) 0.48 (0.60) 1.09 4 Above 0.65%-1.00% or Above (0.47) 0.47 (0.65) 1.08 2.25% in SPY. 5 Above 1.00%-1.40%.............. (0.48) 0.45 (0.70) 1.07 6 Above 1.40%.................... (0.48) 0.44 (0.85) 1.06 -------------------------------------------------------------------------------------------------------------------------------------------------------- In addition to modifying the MIAX PEARL Market Maker table to insert the new, alternative Volume Criteria threshold in Tier 2, and in order to provide a clear explanation of the requirements for achieving that alternative Volume Criteria threshold in Tier 2, 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/QQQ/IWM 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 new, alternative Volume Criteria threshold in Tier 2 for MIAX PEARL Market Makers measures volume in SPY/QQQ/IWM options on MIAX PEARL not including Excluded Contracts, as the numerator, and the SPY/QQQ/IWM TCV as the denominator. The new definition of SPY/QQQ/IWM TCV in the Definitions Section shall provide the following: ``SPY/QQQ/IWM TCV'' means total consolidated volume in SPY, QQQ, and IWM calculated as the total national volume in SPY, QQQ, and IWM 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, QQQ, or IWM options). The Exchange believes that the proposed alternative Volume Criteria threshold in Tier 2 for MIAX PEARL Market Makers will provide another opportunity for those Market Makers that concentrate their trading activity in [[Page 58648]] specific options classes such as SPY/QQQ/IWM options to reach a higher tier. The Exchange believes that creating this alternative Volume Criteria will extend the Tier 2 fee incentives to Market Makers that concentrate their trading activity by sending significant volume in SPY/QQQ/IWM options as compared to other Market Makers that do trade in the broad range of products listed on the Exchange. The proposed change is scheduled to become operative November 1, 2018. 2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act \10\ in general, and furthers the objectives of Section 6(b)(4) of the Act,\11\ in that it is an equitable allocation of reasonable dues, fees and other charges among Exchange members and issuers and other persons using its facilities, and 6(b)(5) of the Act,\12\ 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. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 15 U.S.C. 78f(b)(4). \12\ 15 U.S.C. 78f(b)(1) and (b)(5). --------------------------------------------------------------------------- The Exchange's proposal to adopt the new, alternative Volume Criteria for Tier 2 based on SPY, QQQ, and IWM 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 group of symbols, 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 differentiated pricing for transactions in options underlying certain select symbols.\13\ Other options exchanges' fee schedules distinguish by symbol and specifically assess different fees and rebates for transactions in select symbols for the same market participants.\14\ --------------------------------------------------------------------------- \13\ See MIAX Options Fee Schedule, Section 1(a)(iii). \14\ See Cboe Options Exchange Fee Schedule; see also Nasdaq PHLX LLC Pricing Schedule, Chapter B, Section I; see further Nasdaq ISE, LLC Fee Schedule, Sections I and II. --------------------------------------------------------------------------- The Exchange is offering an alternative Tier 2 Volume Criteria threshold based on SPY/QQQ/IWM options volume in Tier 2 because the Exchange believes that incentivizing Market Makers that concentrate their trading activity in SPY/QQQ/IWM 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 changes to (i) amend the ``Definitions'' section of the Fee Schedule and (ii) amend the explanatory paragraph beneath the tables in Section 1(a) of the Fee Schedule, 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 add more detail and clarity to the Fee Schedule with respect to the application of the proposed method to reach the alternative Tier 2 Volume Criteria threshold. 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 change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change should enable the Exchange to attract and compete for order flow with other exchanges and will encourage Market Makers to submit more volume. Further, the Exchange believes that the proposed alternative Volume Criteria threshold in Tier 2 based on SPY/QQQ/IWM options volume applicable to MIAX PEARL Market Makers will continue to provide incentives to those Market Makers that concentrate their trading activity in SPY/QQQ/IWM options to send additional SPY, QQQ, and IWM orders and creates more opportunity for additional liquidity to the market. The Exchange does not believe that the proposed rule change to make non-substantive clarifications to its rules will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed clarification to the rule text is not designed to address any competitive issues but rather is designed to add additional 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. 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 change reflects this competitive environment because it modifies the Exchange's fees in a manner that encourages market participants to continue 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,\15\ and Rule 19b-4(f)(2) \16\ 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. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A)(ii). \16\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: [[Page 58649]] Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-PEARL-2018-23 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-2018-23. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-PEARL-2018-23 and should be submitted on or before December 11, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ --------------------------------------------------------------------------- \17\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-25248 Filed 11-19-18; 8:45 am] BILLING CODE 8011-01-P
![58646 Federal Register / Vol. 83, No. 224 / Tuesday, November 20, 2018 / Notices
Please direct your written comments I. Self-Regulatory Organization’s total consolidated national volume in
to: Charles Riddle, Acting Director/Chief Statement of the Terms of Substance of SPY/QQQ/IWM options; (ii) amend the
Information Officer, Securities and the Proposed Rule Change ‘‘Definitions’’ section of the Fee
Exchange Commission, c/o Candace The Exchange is filing a proposal to Schedule to add the following
Kenner, 100 F Street NE, Washington, amend the MIAX PEARL Fee Schedule definition, ‘‘SPY/QQQ/IWM TCV’’ and
DC 20549, or send an email to: PRA_ (the ‘‘Fee Schedule’’). (iii) amend the explanatory paragraph
Mailbox@sec.gov. The text of the proposed rule change beneath the tables in Section (a) of the
is available on the Exchange’s website at Fee Schedule, as described below.
Dated: November 14, 2018.
http://www.miaxoptions.com/rule- The Exchange currently assesses
Eduardo A. Aleman, filings/pearl at MIAX PEARL’s principal transaction rebates and fees to all
Assistant Secretary. office, and at the Commission’s Public market participants which are based
[FR Doc. 2018–25218 Filed 11–19–18; 8:45 am] Reference Room. upon the total monthly volume
BILLING CODE 8011–01–P executed by the Member 4 on MIAX
II. Self-Regulatory Organization’s
Statement of the Purpose of, and PEARL in the relevant, respective origin
Statutory Basis for, the Proposed Rule type (not including Excluded
SECURITIES AND EXCHANGE Change Contracts) 5 expressed as a percentage of
COMMISSION TCV.6 In addition, the per contract
In its filing with the Commission, the
Exchange included statements transaction rebates and fees are applied
[Release No. 34–84592; File No. SR– retroactively to all eligible volume for
concerning the purpose of and basis for
PEARL–2018–23] that origin type once the respective
the proposed rule change and discussed
any comments it received on the threshold tier (‘‘Tier’’) has been reached
Self-Regulatory Organizations; MIAX by the Member. The Exchange
proposed rule change. The text of these
PEARL, LLC; Notice of Filing and aggregates the volume of Members and
statements may be examined at the
Immediate Effectiveness of a Proposed their Affiliates.7 Members that place
places specified in Item IV below. The
Rule Change To Amend the MIAX Exchange has prepared summaries, set resting liquidity, i.e., orders resting on
PEARL Fee Schedule forth in sections A, B, and C below, of the book of the MIAX PEARL System,8
November 14, 2018. the most significant aspects of such are paid the specified ‘‘maker’’ rebate
statements. (each a ‘‘Maker’’), and Members that
Pursuant to the provisions of Section execute against resting liquidity are
19(b)(1) of the Securities Exchange Act A. Self-Regulatory Organization’s
Statement of the Purpose of, and assessed the specified ‘‘taker’’ fee (each
of 1934 (‘‘Act’’),1 and Rule 19b–4 a ‘‘Taker’’). For opening transactions
thereunder,2 notice is hereby given that Statutory Basis for, the Proposed Rule
Change and ABBO uncrossing transactions, per
on October 31, 2018, MIAX PEARL, LLC contract transaction rebates and fees are
(‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed 1. Purpose waived for all market participants.
with the Securities and Exchange The Exchange proposes to amend the Finally, Members are generally assessed
Commission (‘‘Commission’’) a Add/Remove Tiered Rebates/Fees set lower transaction fees and generally
proposed rule change as described in forth in Section (a) of the Fee Schedule receive lower rebates for order
Items I, II, and III below, which Items that apply to MIAX PEARL Market executions in standard option classes in
have been prepared by the Exchange. Makers 3 to (i) add a new, alternative the Penny Pilot Program 9 (‘‘Penny
The Commission is publishing this Volume Criteria to Tier 2 based upon classes’’) than for order executions in
notice to solicit comments on the the total monthly volume executed by a standard option classes which are not in
proposed rule change from interested MIAX PEARL Market Maker in SPY, the Penny Pilot Program (‘‘Non-Penny
persons. QQQ, and IWM options (‘‘SPY/QQQ/ classes’’), where Members generally are
IWM options’’) volume on MIAX assessed higher transaction fees and
PEARL, expressed as a percentage of generally receive higher rebates.
1 15 U.S.C. 78s(b)(1). term Exchange System Disruption, which is defined volume for the threshold tiers in the Fee Schedule.
2 17 CFR 240.19b–4. in the Definitions section of the Fee Schedule, See the Definitions Section of the Fee Schedule.
3 ‘‘Market Maker’’ means a Member registered means an outage of a Matching Engine or collective 7 ‘‘Affiliate’’ means (i) an affiliate of a Member of
with the Exchange for the purpose of making Matching Engines for a period of two consecutive at least 75% common ownership between the firms
markets in options contracts traded on the hours or more, during trading hours. The term as reflected on each firm’s Form BD, Schedule A,
Exchange. See the Definitions Section of the Fee Matching Engine, which is also defined in the
or (ii) the Appointed Market Maker of an Appointed
Schedule and Exchange Rule 100. Definitions section of the Fee Schedule, is a part of
the MIAX PEARL electronic system that processes EEM (or, conversely, the Appointed EEM of an
4 ‘‘Member’’ means an individual or organization
options orders and trades on a symbol-by-symbol Appointed Market Maker). An ‘‘Appointed Market
that is registered with the Exchange pursuant to Maker’’ is a MIAX PEARL Market Maker (who does
basis. Some Matching Engines will process option
Chapter II of the Exchange Rules for purposes of not otherwise have a corporate affiliation based
classes with multiple root symbols, and other
trading on the Exchange as an ‘‘Electronic Exchange upon common ownership with an EEM) that has
Matching Engines may be dedicated to one single
Member’’ or ‘‘Market Maker.’’ Members are deemed been appointed by an EEM and an ‘‘Appointed
option root symbol (for example, options on SPY
‘‘members’’ under the Exchange Act. See the
may be processed by one single Matching Engine EEM’’ is an EEM (who does not otherwise have a
Definitions Section of the Fee Schedule and
that is dedicated only to SPY). A particular root corporate affiliation based upon common
Exchange Rule 100. symbol may only be assigned to a single designated
5 ‘‘Excluded Contracts’’ means any contracts
ownership with a MIAX PEARL Market Maker) that
Matching Engine. A particular root symbol may not has been appointed by a MIAX PEARL Market
routed to an away market for execution. See the be assigned to multiple Matching Engines. The Maker, pursuant to the process described in the Fee
Definitions Section of the Fee Schedule. Exchange believes that it is reasonable and
6 ‘‘TCV’’ means total consolidated volume
Schedule. See the Definitions Section of the Fee
appropriate to select two consecutive hours as the Schedule.
calculated as the total national volume in those amount of time necessary to constitute an Exchange 8 The term ‘‘System’’ means the automated
classes listed on MIAX PEARL for the month for System Disruption, as two hours equates to
which the fees apply, excluding consolidated approximately 1.4% of available trading time per trading system used by the Exchange for the trading
volume executed during the period time in which month. The Exchange notes that the term of securities. See Exchange Rule 100.
9 See Securities Exchange Act Release No. 79778
the Exchange experiences an ‘‘Exchange System ‘‘Exchange System Disruption’’ and its meaning
Disruption’’ (solely in the option classes of the have no applicability outside of the Fee Schedule, (January 12, 2017), 82 FR 6662 (January 19, 2017)
affected Matching Engine (as defined below)). The as it is used solely for purposes of calculating (SR–PEARL–2016–01).
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![Federal Register / Vol. 83, No. 224 / Tuesday, November 20, 2018 / Notices 58649
Electronic Comments SECURITIES AND EXCHANGE provide greater detail regarding the
COMMISSION quoting obligations of Market Makers
• Use the Commission’s internet and the manner in which they are
comment form (http://www.sec.gov/ [Release No. 34–84580; File No. SR–ISE–
2018–90]
calculated, and to restructure the
rules/sro.shtml); or current rules to conform to rule text
• Send an email to rule-comments@ Self-Regulatory Organizations; Nasdaq used on its affiliated options market,
sec.gov. Please include File Number SR– ISE, LLC; Notice of Filing and Nasdaq Phlx (‘‘Phlx’’).3 The Exchange
PEARL–2018–23 on the subject line. Immediate Effectiveness of Proposed seeks to make conforming changes to
Rule Change To Amend Its Rules Rule 804(e) to promote structural
Paper Comments Related to Market Maker Quoting consistency of the Exchange’s rules with
Obligations those of its affiliated options markets,
• Send paper comments in triplicate and to allow its members to quickly
to Secretary, Securities and Exchange November 14, 2018. compare quoting obligations across the
Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the Nasdaq, Inc. affiliated options markets.4
Washington, DC 20549–1090. Securities Exchange Act of 1934 The Exchange notes that it is generally
All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2 including additional detail in its rules
notice is hereby given that on October on the existing obligations and process
Number SR–PEARL–2018–23. This file
30, 2018, Nasdaq ISE, LLC (‘‘ISE’’ or using the same format as Phlx Rule
number should be included on the
‘‘Exchange’’) filed with the Securities 1081(c). Other than one modification to
subject line if email is used. To help the and Exchange Commission allow the Exchange to announce in
Commission process and review your (‘‘Commission’’) the proposed rule advance a higher percentage of quoting
comments more efficiently, please use change as described in Items I, II, and compliance standards as further
only one method. The Commission will III, below, which Items have been described below, no changes to the
post all comments on the Commission’s prepared by the Exchange. The current practice or to the current
internet website (http://www.sec.gov/ Commission is publishing this notice to quoting obligations are being
rules/sro.shtml). Copies of the solicit comments on the proposed rule contemplated by this rule change.
submission, all subsequent change from interested persons. Accordingly, to the extent there are
amendments, all written statements other differences between the proposed
I. Self-Regulatory Organization’s
with respect to the proposed rule rule text and the current language, the
Statement of the Terms of Substance of
change that are filed with the the Proposed Rule Change Exchange is in those cases either
Commission, and all written conforming to Phlx Rule 1081(c) or
communications relating to the The Exchange proposes to amend its codifying current practice explicitly
proposed rule change between the rules related to Market Maker (i.e., within the proposed rule, as further
Primary Market Maker and Competitive discussed below.
Commission and any person, other than
Market Maker) quoting obligations.
those that may be withheld from the The text of the proposed rule change Rule 804(e)
public in accordance with the is available on the Exchange’s website at
provisions of 5 U.S.C. 552, will be The Exchange first proposes to
http://ise.cchwallstreet.com/, at the remove the word ‘‘continuous’’ from the
available for website viewing and principal office of the Exchange, and at title of Rule 804(e) and retitle the Rule
printing in the Commission’s Public the Commission’s Public Reference as ‘‘Intra-day Quotes.’’ The Exchange is
Reference Room, 100 F Street NE, Room. replacing the word ‘‘continuous’’ with
Washington, DC 20549, on official ‘‘intra-day’’ because the Exchange notes
business days between the hours of II. Self-Regulatory Organization’s
Statement of the Purpose of, and that Market Makers quote a percentage
10:00 a.m. and 3:00 p.m. Copies of the of the day and therefore the word
Statutory Basis for, the Proposed Rule
filing also will be available for ‘‘continuous’’ may not accurately reflect
Change
inspection and copying at the principal the manner in which Market Makers
office of the Exchange. All comments In its filing with the Commission, the
quote on ISE. The Exchange also
received will be posted without change. Exchange included statements
proposes related changes to replace the
Persons submitting comments are concerning the purpose of and basis for
word ‘‘continuous’’ with ‘‘intra-day’’
cautioned that we do not redact or edit the proposed rule change and discussed
within the Rulebook, specifically in
personal identifying information from any comments it received on the
Rules 701(c)(3) and (4), Rule 702(d)(4),
comment submissions. You should proposed rule change. The text of these
and Rule 1614(b)(10).5
statements may be examined at the The Exchange also proposes to amend
submit only information that you wish
places specified in Item IV below. The Rule 804(e) by deleting the introductory
to make available publicly. All
Exchange has prepared summaries, set sentence: ‘‘A market maker must enter
submissions should refer to File forth in sections A, B, and C below, of
Number SR–PEARL–2018–23 and continuous quotations for the options
the most significant aspects of such classes to which it is appointed
should be submitted on or before statements.
December 11, 2018.
3 See Phlx Rule 1081(c). See also Securities
A. Self-Regulatory Organization’s
For the Commission, by the Division of Exchange Act Release No. 83209 (May 10, 2018), 83
Statement of the Purpose of, and FR 22717 (May 16, 2018) (SR–Phlx–2018–22) (order
Trading and Markets, pursuant to delegated
Statutory Basis for, the Proposed Rule granting approval of proposed rule change to amend
authority.17
Change Phlx’s quoting requirements, among other changes).
Eduardo A. Aleman, 4 Nasdaq GEMX, LLC (‘‘GEMX’’) and Nasdaq
Assistant Secretary.
1. Purpose MRX, LLC (‘‘MRX’’) will file similar proposals.
5 The Exchange notes that Chapter 16 of the ISE
[FR Doc. 2018–25248 Filed 11–19–18; 8:45 am] The purpose of the proposed rule
Rulebook, including Rule 1614, is incorporated by
BILLING CODE 8011–01–P
change is to amend Rule 804(e) to reference into the rulebooks of GEMX and MRX. As
such, the amendment to ISE Rule 1614 as proposed
1 15 U.S.C. 78s(b)(1). herein will also apply to GEMX and MRX Rules
17 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. 1614.
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Document Created: 2018-11-20 07:58:58
Document Modified: 2018-11-20 07:58:58
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 58646 |
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