[Federal Register Volume 82, Number 36 (Friday, February 24, 2017)]
[Notices]
[Pages 11676-11689]
[FR Doc No: 2017-03574]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80061; File No. SR-PEARL-2017-10]

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

February 17, 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 February 13, 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 establish the MIAX PEARL Fee
Schedule (the ``Fee Schedule'') by adopting rebates and fees applicable
to participants trading options on and/or using services provided by
MIAX PEARL.
    MIAX PEARL commenced operations as a national securities exchange
registered under Section 6 of the Act \3\ on February 6, 2017.\4\ The
Exchange proposes to establish its Fee Schedule. The Exchange initially
filed the proposal on February 3, 2017 (SR-PEARL-2017-08). That filing
has been withdrawn and replaced with the current filing (SR-PEARL-2017-
10).
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    \3\ 15 U.S.C. 78f.
    \4\ See Securities Exchange Act Release No. 79543 (December 13,
2016), 81 FR 92901 (December 20, 2016) (File No. 10-227) (order
approving application of MIAX PEARL, LLC for registration as a
national securities exchange).
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    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 purpose of the proposed rule change is to establish transaction
rebates and fees, regulatory fees, and certain non-transaction fees
applicable to market participants trading options on and/or using
services provided by the Exchange. These rebates and fees will apply to
all market participants trading options on and/or using services
provided by MIAX PEARL.
Definitions
    The Exchange has included a Definitions section at the beginning of
the Fee Schedule. The purpose of the Definitions section is to
streamline the Fee Schedule by placing many of the defined terms used
in the Fee Schedule in one location at the beginning of the Fee
Schedule. Many of the defined terms are also defined in Exchange Rules,
particularly in Exchange Rule 100. Any defined terms that are also
defined or otherwise explained in Exchange Rules contain a cross
reference to the relevant Exchange Rule. The Exchange notes that other
exchanges have Definitions sections in their respective fee
schedule,\5\ and the Exchange believes that including a Definitions
section in the front of the Exchange's Fee Schedule makes the Fee
Schedule more user-friendly.
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    \5\ See Exchange Act Release Nos. 70200 (August 14, 2013), 78 FR
51242 (August 20, 2013) (SR-Topaz-2013-10); 76453 (November 17,
2015), 80 FR 72999 (November 23, 2015) (SR-EDGX-2015-56).
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i. Transaction Rebates/Fees
    The proposed Fee Schedule sets forth transaction rebates and fees
for all options traded on the Exchange in amounts that vary depending
upon certain factors, including the type of market participant for whom
the transaction is executed (e.g. Market Maker or Priority Customer)
and the amount of volume executed by the Member, as described more
fully below.
Exchange Add/Remove Tiered Rebates/Fees
    In general, the Exchange proposes that Add/Remove Tiered Rebates/
Fees applicable to all market participants will be based upon the total
monthly volume executed by the Member \6\ on MIAX PEARL in the relevant
origin type (not including Excluded Contracts) \7\ expressed as a
percentage of total consolidated volume (``TCV''). TCV, which is
defined in the Definitions section of the Fee Schedule, 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's used
solely for purposes of calculating volume for the threshold tiers in
the Fee Schedule.
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    \6\ ``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 Exchange Rule 100.
    \7\ ``Excluded Contracts'' means any contracts routed to an away
market for execution.
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    In addition, the per contract transaction rebates and fees shall be
applied retroactively to all eligible volume once the threshold tier
(``Tier'') has been reached by the Member. The Exchange additionally
proposes to aggregate the volume of Members and their Affiliates.\8\
Members that place resting liquidity, i.e., orders on the MIAX PEARL
System, will be paid the specified ``maker'' rebate (each a ``Maker'')
and Members that execute against resting liquidity will be assessed the
specified ``taker'' fee (each a ``Taker''). For opening transactions
and ABBO uncrossing transactions, interest from Priority Customer
origin types shall be treated as a Maker, and interest from all origin
types other than Priority Customers shall be treated as a Taker.
Finally, Members shall be assessed lower transaction fees and smaller
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''), for which Members will be assessed a higher
transaction fees and larger rebates.
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    \8\ ``Affiliate'' means an affiliate of a Member of at least 75%
common ownership between the firms as reflected on each firm's Form
BD, Schedule A.
    \9\ See Securities Exchange Act Release Nos. 78080 (June 15,
2016), 81 FR 40377 (June 21, 2016) (SR-MIAX-2016-16); 79432
(November 30, 2016), 81 FR 87990 (December 6, 2016) (SR-MIAX-2016-
45).
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    The Add/Remove Tiered Rebates/Fees proposed by the Exchange are
similar in structure to and in the range of the transaction rebates and
fees charged by BATS BZX Options Exchange (``BATS'') to its market
participants.\10\ The Exchange notes, however, that while the proposed
transaction rebate and fee structure is similar to that of BATS, it is
not identical since the Exchange proposes to use TCV as the denominator
in determining the volume for each Tier and BATS instead uses OCC
Clearing Volume (``OCV'') as its denominator in the volume for each of
its tiers. OCV is the total equity and ETF options volume that clears
in the Customer range at the Options Clearing Corporation (``OCC'') for
the month for which the fees apply, excluding volume on any day that
the Exchange experiences an exchange system disruption and on any day
with a scheduled early market close. TCV encompasses volume from all
clearing types [C,F,M], whereas OCV encompasses only Customer cleared
volume. A further distinction is the fact that the Exchange proposes to
use actual, total monthly volume as the numerator in determining the
volume for each Tier and BATS instead uses an average of daily volume
(``ADV'') as its numerator in the volume for each of its tiers.
Additionally, BATS includes in the volume calculations for certain of
its tiers applicable to its market participants the volume by such
Member on BATS' equities market. Unlike BATS, the Exchange does not
presently offer any such comparable arrangement.\11\
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    \10\ See Bats BZX Options Fee Schedule, Transaction Fees, at
http://www.bats.com/us/options/membership/fee_schedule/bzx/.
    \11\ Id.
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    The Exchange's transaction rebates and fees structure is also
similar to that of ISE Gemini, LLC (``Gemini'').\12\ Gemini has adopted
a maker-taker tiered fee structure based upon volume that is also
further delineated by whether the transaction is in Penny and SPY
classes or Non-Penny classes. Similar to the structure proposed by the
Exchange, the highest tier threshold attained by a Gemini member
applies retroactively in a given month to all eligible traded contracts
and applies to all eligible market participants. All eligible volume
from affiliated members is aggregated in determining applicable tiers,
provided there is at least 75% common ownership between the members as
reflected on each member's Form BD, Schedule A. Non[hyphen]Priority
Customer orders are charged the taker fee for trades executed during
the opening rotation and Priority Customer orders executed during the
opening rotation receive the applicable maker rebate based on the tier
achieved.
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    \12\ See ISE Gemini, LLC Fee Schedule, Section I. Regular Order
Fees and Rebates, at http://www.ise.com/assets/gemini/documents/OptionsExchange/legal/fee/Gemini_Fee_Schedule.pdf.
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A. Orders for Priority Customers

    Transaction rebates/fees applicable to all orders submitted by a
Member for the account of a Priority Customer \13\ will be assessed
according to the following table:
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    \13\ ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100, including Interpretations and Policies .01.

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                                                                                Per contract rebates/fees for   Per contract rebates/fees for
                                                                                penny classes                 non-penny classes
                  Origin                      Tier              Volume criteria          ---------------------------------------------------------------
                                                                                Maker           Taker           Maker           Taker
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Priority Customer.........................         1  0.00%-0.05%.......................         ($0.25)           $0.49         ($0.85)           $0.87
                                                   2  Above 0.05%-0.35%.................          (0.40)            0.49          (1.05)            0.86
                                                   3  Above 0.35%-0.50%.................          (0.50)            0.48          (1.05)            0.85
                                                   4  Above 0.50%-0.75%.................          (0.53)            0.48          (1.05)            0.84
                                                   5  Above 0.75%.......................          (0.54)            0.48          (1.05)            0.84
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    Transactions on behalf of a BATS ``Customer'' are similar to
transactions by a Member on behalf of the Exchange's origin type
``Priority Customer''.\14\ The rebates and fees proposed by the
Exchange for Priority Customer transactions are also similar to those
assessed in select tiers by BATS for transactions on behalf of its
Customers. For example, for a BATS member adding liquidity in a Penny
Pilot class on behalf of the account of a

Customer, BATS pays a rebate of (i) $0.25 for ADV and below of less
than 0.05% of average OCV; (ii) $0.40 for ADV equal to or greater than
0.05% of average OCV; (iii) $0.48 for ADV equal to or greater than
0.40% of average OCV; and (iv) $0.50 for ADV equal to or greater than
1.30% of average OCV. Additionally, for a BATS member taking liquidity
in a Penny Pilot class on behalf of the account of a Customer, BATS
assesses a fee of (i) $0.49 for a member that has an average daily
added volume in Customer orders less than 0.50% of average OCV; and
(ii) $0.48 for a member that has an average daily added volume in
Customer orders equal to or greater than 0.50% of average OCV and has
on BZX Equities an average daily added volume equal to or greater than
0.50% of average TCV.\15\
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    \14\ See supra note 10.
    \15\ Id.
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B. Orders for Market Makers

    Transaction rebates/fees applicable to all Market Makers \16\ will
be assessed according to the following table:
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    \16\ ``Market Maker'' means a Member registered with the
Exchange for the purpose of making markets in options contracts
traded on the Exchange. See Exchange Rule 100.

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                                                                                Per contract rebates/fees for   Per contract rebates/fees for
                                                                                penny classes                 non-penny classes
                  Origin                      Tier              Volume criteria          ---------------------------------------------------------------
                                                                                Maker           Taker           Maker           Taker
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All MIAX PEARL Market Makers..............         1  0.00%-0.10%.......................         ($0.25)           $0.50         ($0.30)           $1.05
                                                   2  Above 0.10%-0.50%.................          (0.40)            0.48          (0.60)            1.03
                                                   3  Above 0.50%-0.75%.................          (0.45)            0.47          (0.65)            1.02
                                                   4  Above 0.75%.......................          (0.48)            0.47          (0.70)            1.02
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    The Market Maker rebates and fees proposed by the Exchange are
similar in structure to the transaction rebates and fees charged by
BATS to its market makers. For example, for a market maker adding
liquidity in a Penny Pilot class, BATS pays a rebate of (i) $0.35 for
ADV (and below) of less than 0.40% of average OCV; (ii) $0.40 for
volume equal to or greater than 0.40% of average OCV; and (iii) $0.42
if the member has an average daily added volume in market maker and/or
away market maker orders equal to or greater than 1.30% of average OCV
and has average daily volume equal to or greater than 2.60% of average
OCV. For a market maker adding liquidity in a Non-Penny class, BATS
pays a rebate of (i) $0.42 for volume less than 0.40% of OCV; (ii)
$0.45 for volume equal to or greater than 0.40% of average OCV; (iii)
$0.52 for volume equal to or greater than 1.30% of average OCV; and
(iv) $0.65 if the member has an average daily added volume in market
maker orders in Non-Penny classes equal to or greater than 0.10% of
average OCV and has average daily added volume in non-Priority Customer
orders equal to or greater than 3.00% of average OCV.\17\
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    \17\ See supra note 10.
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    Additionally, for a market maker taking liquidity in a Penny Pilot
class, BATS assesses a fee of (i) $0.50 for average daily added volume
of less than 1.30% of average OCV; (ii) $0.47 for average daily added
volume of equal to or greater than 1.30% of average OCV; and (iii)
$0.44 for average daily added volume of equal to or greater than 1.70%
of average OCV.\18\
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    \18\ Id.
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C. Orders for all Other Market Participants

    Transaction rebates/fees applicable to all orders submitted by a
Member for the account of non-Priority Customers, Firms, Broker-Dealers
and non-MIAX Pearl Market Makers will be assessed according to the
following table:

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                                                                                Per contract rebates/fees for   Per contract rebates/fees for
                                                                                penny classes                 non-penny classes
                  Origins                     Tier              Volume criteria          ---------------------------------------------------------------
                                                                                Maker           Taker           Maker           Taker
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Non-Priority Customer, Firm, BD, and Non-          1  0.00%-0.10%.......................         ($0.25)           $0.50         ($0.30)           $1.05
 MIAX PEARL Market Makers.
                                                   2  Above 0.10%-0.50%.................          (0.40)            0.49          (0.60)            1.04
                                                   3  Above 0.50%-0.75%.................          (0.45)            0.48          (0.65)            1.04
                                                   4  Above 0.75%.......................          (0.48)            0.48          (0.70)            1.04
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    The Add/Remove Tiered Rebates and Fees assessable to these market
participants who are not Priority Customers and who are not MIAX PEARL
Market Makers proposed by the Exchange are also similar in structure to
and in the range of the transaction rebates and fees charged by BATS
for transactions for the accounts of similar market participants. The
Exchange notes, however, that BATS has three separate groupings for
these other market participants,\19\ whereas the Exchange is proposing
to have one combined grouping for such participants. For example, for
transactions on behalf of firms or broker-dealers adding liquidity in a
Penny Pilot class, BATS pays a rebate of (i) $0.36 for members with an
average daily added volume in away market maker/firm/broker-dealer/
joint back office orders less than .50% of average OCV, and has an
average daily volume of less than .40% of average OCV; (ii) $0.46 for
members with an average daily added volume in away market maker/firm/
broker-dealer/joint back office orders equal to or greater than 1.05%
of average OCV, and has an average daily volume equal to or greater
than 1.95% of average OCV; and (iii) $0.43 for members with an average
daily volume

equal to or greater than 0.50% of average OCV, and has an average daily
added volume in away market maker/firm/broker-dealer/joint back office
orders equal to or greater than 0.40% of average OCV.\20\
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    \19\ BATS has a separate grouping for (1) Professionals, (2)
Firm/BD/JBO, and (3) Away Market Maker. See supra note 10.
    \20\ See supra note 10.
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    Additionally, for transactions on behalf of professionals, firm,
broker-dealer or away market maker taking liquidity in a Penny Pilot
class, BATS assesses a fee of (i) $0.50 for average daily added volume
of less than 1.30% of average OCV; (ii) $0.47 for average daily added
volume of equal to or greater than 1.30% of average OCV; and (iii)
$0.44 for average daily added volume of equal to or greater than 1.70%
of average OCV.\21\
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    \21\ Id.
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Routing Fees
    MIAX PEARL proposes to assess Routing Fees in order to recoup costs
incurred by MIAX PEARL when routing orders to various away markets. The
amount of the applicable fee, if any, is based upon (i) the origin type
of the order, (ii) whether or not it is an order for an option in a
Penny or Non-Penny class (or other explicitly identified classes) and
(iii) to which away market it is being routed, according to the
following table: \22\
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    \22\ This is similar to the methodologies utilized by BATS in
assessing Routing Fees. See Bats Fee Schedule under ``Fee Codes and
Associated Fees''.

------------------------------------------------------------------------
                       Description                             Fees
------------------------------------------------------------------------
Routed, Priority Customer, Penny Pilot, to: AMEX, BOX,             $0.15
 CBOE, EDGX, MERCURY, MIAX OPTIONS, PHLX (except SPY),
 BX.....................................................
Routed, Priority Customer, Penny Pilot, to: ARCA, BATS,             0.65
 C2, GEMINI, ISE, NOM, PHLX (SPY only)..................
Routed, Priority Customer, Non-Penny Pilot, to: AMEX,               0.15
 BOX, CBOE, EDGX, ISE, MERCURY, MIAX OPTIONS, PHLX, BX..
Routed, Priority Customer, Non-Penny Pilot, to: ARCA,               0.97
 BATS, C2, GEMINI, NOM..................................
Routed, Public Customer that is not a Priority Customer,            0.65
 Penny Pilot, to: AMEX, ARCA, BATS, BOX, CBOE, C2, EDGX,
 GEMINI, ISE, MERCURY, MIAX OPTIONS, NOM, PHLX, BX......
Routed, Public Customer that is not a Priority Customer,            0.65
 Non-Penny Pilot, to: AMEX..............................
Routed, Public Customer that is not a Priority Customer,            1.20
 Non-Penny Pilot, to: ARCA, BATS, C2, GEMINI, MERCURY,
 BX.....................................................
Routed (Public Customer that is not a Priority                      0.97
 Customer), Non-Penny Pilot, to: BOX, CBOE, EDGX, ISE,
 MIAX OPTIONS, NOM, PHLX................................
------------------------------------------------------------------------

    In analyzing its fees, the Exchange took into account clearing
costs,\23\ administrative, regulatory, and technical costs associated
with routing orders to an away market. The Exchange uses unaffiliated
routing brokers to route orders to the away markets; the costs
associated with the use of these services are included in the Routing
Fees specified in the Fee Schedule. This Routing Fees structure is
comparable to the structures in place at other exchanges, such as
BATS.\24\ The BATS BZX fee schedule has exchange groupings, whereby
several exchanges are grouped into the same category, dependent on the
order's origin type and whether it is a Penny or Non-Penny Pilot class.
For example, BATS fee code RQ covers routed customer orders in Non-
Penny classes to ARCA, C2, ISE, ISE Gemini, MIAX PEARL or NOM, with a
single fee of $0.70 per contract. The Exchange is proposing a similar
structure, however its structure is more granular and thus contains
more exchange groupings. The Exchange is proposing to have 8 different
exchange groupings, based on the exchange, order type, and option
class. The Exchange believes that having more groupings will offer the
Exchange greater precision in covering its costs associated with
routing orders to away markets. The per-contract transaction fee amount
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) to execute that
corresponding contract at that corresponding exchange. For example, to
execute a Priority Customer order in a Penny Pilot symbol (other than
SPY) at AMEX costs the Exchange approximately $0.15 a contract. Since
this is also the approximate cost to execute that same order at BOX,
the Exchange is able to group AMEX and BOX together in the same
grouping. This same logic and structure applies to all of the groupings
in the Routing Fees table. Other exchanges, like the Exchange's
affiliate, Miami International Securities Exchange, LLC (``MIAX
Options''), have routing fee structures that simply pass onto the
Member the actual charge assessed by the away market where the order is
executed plus a fixed fee surcharge (which in the case of MIAX Options
is $0.10).\25\ However, in the Exchange's experience, this structure of
simply passing on the actual charge plus a mark-up can be
administratively burdensome, particularly when multiple, third-party,
unaffiliated routing broker-dealers are used to route and execute the
orders at the away market. This is because the routing broker-dealers
have different billing policies and practices, and it often can take
several hours per month reconciling trades and bills at the end of each
month. By utilizing the structure proposed by the Exchange, the
Exchange will know immediately the cost of the execution and it can
eliminate the administratively burdensome month end reconciliation
process, as well as provide more certainty and transparency for
execution costs to its Members for the execution of orders that are
routed to away markets.
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    \23\ The OCC amended its clearing fee from $0.01 per contract
side to $0.02 per contract side. See Securities Exchange Act Release
No. 71769 (March 21, 2014), 79 FR 17214 (March 27, 2014) (SR-OCC-
2014-05).
    \24\ See supra note 10.
    \25\ See MIAX Options Fee Schedule, Section (1) Transaction Fees
at http://www.miaxoptions.com/sites/default/files/pagefiles/MIAX_Options_Fee_Schedule_02012017.pdf.
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ii. Regulatory Fees
Sales Value Fee
    The Sales Value Fee \26\ is proposed to be assessed by the Exchange
to each Member for sales on the Exchange with respect to which the
Exchange is obligated to pay a fee to the Commission pursuant to
Section 31 of the Exchange Act. The Sales Value Fee is equal to the
Section 31 fee rate multiplied by the Member's aggregate dollar amount
of covered sales resulting from options transactions occurring on the
Exchange during any computational period. The Section 31 fee rate is
set annually by the United States Securities and Exchange Commission
(``Commission''). To the extent there may be any excess monies
collected under this rule, the Exchange may retain those monies to help
fund general operating expenses. The sales transactions to which the
fee applies are sales of options (other than options on a security
index) and the sales of securities resulting from the exercise of
physical-delivery options. The fee is collected indirectly from Members

through their clearing firms by the OCC on behalf of MIAX PEARL with
respect to option sales and options exercises. The Sales Value fee
proposed by the Exchange is identical to the fee assessed by other
exchanges, including the Exchange's affiliate MIAX Options.
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    \26\ See Exchange Rule 1207.
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Web CRD \27\ Fees
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    \27\ FINRA operates the Web Central Registration Depository
(CRD[supreg]), the central licensing and registration system for the
U.S. securities industry and its regulators. It contains the
registration records of more than 6,800 registered broker-dealers
and the qualification, employment, and disclosure histories of more
than 660,000 active registered individuals.
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    Financial Industry Regulatory Authority (``FINRA''), through the
Web CRD\SM\ registration system for the registration of associated
persons of Electronic Exchange Member and Market Maker organizations
that are not also FINRA members, collects from those MIAX PEARL Members
general registration fees and fingerprint processing fees. The Fee
Schedule sets forth both the Web CRD Fees FINRA is currently charging
and the Web CRD Fees it will begin charging February 6, 2017. The Web
CRD fees proposed by the Exchange are similar to those assessed by
other exchanges and identical to the same fees assessed by MIAX
Options.
iii. Non-Transaction Fees
    The Exchange proposes to establish certain non-transaction fees,
including membership, testing, system connectivity and market data
fees, applicable to Members and non-Members using services provided by
MIAX PEARL.
Membership Fees
    MIAX PEARL proposes to assess Membership fees for Applications and
Trading Permits.

A. Application for MIAX PEARL Membership

    A one-time application fee based upon the applicant's status as
either an Electronic Exchange Member (``EEM'') or as a Market Maker
will be assessed by MIAX PEARL. The Exchange proposes to assess the
one-time application fee on the earlier of (i) the date the applicant
is certified in the Exchange's membership system or (ii) once an
application for MIAX PEARL membership is finally denied. MIAX PEARL
proposes that the one-time application fee for membership will be
waived for a period of time, which the Exchange has defined in the Fee
Schedule as the Waiver Period,\28\ for both EEMs and Market Makers.
MIAX PEARL believes that this will provide incentive for potential
applicants to submit early applications, which should result in
increasing potential order flow and liquidity as MIAX PEARL begins
trading. The Exchange will submit a rule filing to the Commission to
establish the fee amount and any related requirements, and provide
notice to expire the applicable Waiver Period. Even though the Exchange
is proposing to waive this particular fee during the Waiver Period, the
Exchange believes that is appropriate to provide market participants
with the overall structure of the fee by outlining the structure on the
Fee Schedule without setting forth a specific fee amount, so that there
is general awareness that the Exchange intends to assess such a fee in
the future, should the Waiver Period terminate and the Exchange
establish an applicable fee.
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    \28\ ``Waiver Period'' means, for each applicable fee, the
period of time from the initial effective date of the MIAX PEARL Fee
Schedule until such time that the Exchange has an effective fee
filing establishing the applicable fee. The Exchange will issue a
Regulatory Circular announcing the establishment of an applicable
fee that was subject to a Waiver Period at least fifteen (15) days
prior to the termination of the Waiver Period and effective date of
any such applicable fee.
---------------------------------------------------------------------------

B. Trading Permits

    MIAX PEARL proposes to issue Trading Permits that confer the
ability to transact on MIAX PEARL. Trading Permits will be issued to
EEMs and Market Makers. Members receiving Trading Permits during a
particular calendar month will be assessed monthly Trading Permit Fees
as shall be set forth in the Fee Schedule. The Exchange notes that the
Exchange's affiliate, MIAX Options, charges trading permit fees as
well, and the Exchange's proposed structure for its Trading Permit fees
is based on the structure of MIAX Options, particularly as it relates
to EEMs. As it relates to Market Makers, MIAX Options charges its
market makers based on the number of options classes to which the
market maker is appointed. Since the market making structure on the
Exchange is not identical to the market making structure on MIAX
Options, the Exchange may propose to charge its Market Makers in a
different manner than is charged at MIAX Options. The monthly Trading
Permit Fees assessable to EEMs and Market Makers are being waived by
the Exchange for the Waiver Period. The Exchange will submit a rule
filing to the Commission to establish the fee amount and any related
requirements, and provide notice to terminate the applicable Waiver
Period. Even though the Exchange is proposing to waive this particular
fee during the Waiver Period, the Exchange believes that is appropriate
to provide market participants with the overall structure of the fee by
outlining the structure on the Fee Schedule without setting forth a
specific fee amount, so that there is general awareness that the
Exchange intends to assess such a fee in the future, should the Waiver
Period terminate and the Exchange establish an applicable fee.
Testing and Certification Fees

A. API Testing and Certification Fee

Members
    MIAX PEARL proposes to assess an Application Programming Interface
(``API'') testing and certification fee on all Members depending upon
the type of interface being tested. An API makes it possible for Member
software to communicate with MIAX PEARL software applications, and is
subject to Member testing with, and certification by, MIAX PEARL. The
Exchange proposes to offer four types of interfaces: (i) the Financial
Information Exchange (``FIX'') Port, which allows Members to
electronically send orders in all products traded on the Exchange; (ii)
the MIAX Express Network (``MEO'') Port, which allows EEMs and Market
Makers to submit electronic orders to the Exchange; (iii) the Clearing
Trade Drop (``CTD'') Port, which provides real-time trade clearing
information to the participants to a trade on MIAX PEARL and to the
participants' respective clearing firms; and (iv) FIX Drop Copy
(``FXD'') Port, which provides a copy of real-time trade execution,
correction and cancellation information through a FIX Port to any
number of FIX Ports designated by an EEM to receive such messages. API
Testing and Certification Fees will be assessed (i) initially per API
per interface in the month the Member has been credentialed to use one
or more ports in the production environment for the tested API, and
(ii) each time a Member initiates a change to its system that requires
testing and certification. API Testing and Certification Fees will not
be assessed in situations where the Exchange initiates a mandatory
change to the Exchange's system that requires testing and
certification. The fees represent costs incurred by the Exchange as it
works with each Member for testing and certifying that the Member's
software systems communicate properly with MIAX PEARL's interfaces.
MIAX PEARL has set a one-time fee so that MIAX PEARL Members will know
the full cost for the service prior to beginning to use

such services and thereby be more cost effective to the Members.
    In order to provide an incentive to prospective Members to apply
early for membership and to engage in API testing and certification
such that they will be able to trade options on MIAX PEARL as soon as
possible, API Testing and Certification fees assessable to Members will
be waived by the Exchange for all interfaces for the Waiver Period. The
Exchange will submit a rule filing to the Commission to establish the
fee amount and any related requirements, and provide notice to
terminate the applicable Waiver Period. Even though the Exchange is
proposing to waive this particular fee during the Waiver Period, the
Exchange believes that is appropriate to provide market participants
with the overall structure of the fee by outlining the structure on the
Fee Schedule without setting forth a specific fee amount, so that there
is general awareness that the Exchange intends to assess such a fee in
the future, should the Waiver Period terminate and the Exchange
establish an applicable fee.
Non-Members
    MIAX PEARL proposes to assess a one-time API Testing and
Certification fee per interface on third-party vendors, Service Bureaus
and other non-Members whose software interfaces with MIAX PEARL
software. As with Members, an API makes it possible for the software of
third-party vendors, Service Bureaus and other non-Members to
communicate with MIAX PEARL software applications, and is subject to
testing with, and certification by, MIAX PEARL. API Testing and
Certification Fees will be assessed (i) initially per API per interface
in the month the non-Member has been credentialed to use one or more
ports in the production environment for the tested API, and (ii) each
time a non-Member initiates a change to its system that requires
testing and certification. API Testing and Certification Fees will not
be assessed in situations where the Exchange initiates a mandatory
change to the Exchange's system that requires testing and
certification.
    Other exchanges, including NASDAQ PHLX, LLC and NASDAQ Stock
Market, charge a fee for similar services to Members and non-
Members.\29\ In order to provide an incentive to non-Members to engage
in early API testing and certification such that they will be able to
utilize the services of MIAX PEARL as soon as possible, API Testing and
Certification fees assessable to non-Members will be waived by the
Exchange for all interfaces for the Waiver Period. The Exchange will
submit a rule filing to the Commission to establish the fee amount and
any related requirements, and provide notice to terminate the
applicable Waiver Period. Even though the Exchange is proposing to
waive this particular fee during the Waiver Period, the Exchange
believes that is appropriate to provide market participants with the
overall structure of the fee by outlining the structure on the Fee
Schedule without setting forth a specific fee amount, so that there is
general awareness that the Exchange intends to assess such a fee in the
future, should the Waiver Period terminate and the Exchange establish
an applicable fee.
---------------------------------------------------------------------------

    \29\ See NASDAQ PHLX LLC (``PHLX'') Pricing Schedule, Chapter
VII, Section E at http://nasdaqphlx.cchwallstreet.com/NASDAQPHLXTools/PlatformViewer.asp?selectednode=chp_1_4_1&manual=%2Fnasdaqomxphlx%2Fphlx%2Fphlx-rulesbrd%2F; see also NASDAQ Stock Market Options
Pricing, Chapter XV, Section 13 at http://nasdaq.cchwallstreet.com/NASDAQTools/PlatformViewer.asp?selectednode=chp_1_1_15&manual=%2Fnasdaq%2Fmain%2Fnasdaq-optionsrules%2F.
---------------------------------------------------------------------------

B. Member Network Testing and Certification Fee

    As described below under ``System Connectivity Fees'', MIAX PEARL
will establish electronic communication connections with Members and
proposes to assess Members a Testing and Certification Fee of $1,000.00
per Member per one (1) Gigabit (``Gb'') connection, $4,000.00 per
Member per ten (10) Gb connection and $4,000.00 per Member per ten (10)
Gb ultra-low-latency (``ULL'') connection. Member Network Connectivity
Testing and Certification Fees will be assessed (i) initially per
connection in the month the Member has been credentialed to use any API
or Market Data feeds in the production environment utilizing the tested
network connection, and (ii) each time a Member initiates a change to
its system that requires network connectivity testing and
certification. Network Connectivity Testing and Certification Fees will
not be assessed in situations where the Exchange initiates a mandatory
change to the Exchange's system that requires testing and
certification. Member Network Connectivity Testing and Certification
Fees will not be assessed for testing and certification of connectivity
to the Exchange's Disaster Recovery Facility.
    These proposed fee amounts are identical to the fees currently
assessed for the same services at MIAX Options. The Exchange notes that
the MENI, which is defined in the Definitions section of the Fee
Schedule, is a network infrastructure which provides Members and non-
Members network connectivity to the trading platforms, market data
systems, test systems, and disaster recovery facility of the Exchange.
The MENI consists of the low latency and ultra-low latency (``ULL'')
connectivity options set forth in the Exchange's Fee Schedule. The MENI
can also be configured to provide network connectivity to the trading
platforms, market data systems, test systems, and disaster recovery
facility of the Exchange's affiliate, MIAX Options, via a single,
shared connection. Accordingly, Members utilizing the MENI to connect
to the trading platforms, market data systems, test systems, and
disaster recovery facilities of the Exchange and MIAX Options via a
single, shared connection will only be assessed one Network
Connectivity Testing and Certification Fee per connection tested,
regardless of the trading platforms, market data systems, test systems,
and disaster recovery facilities accessed via such connection.\30\
---------------------------------------------------------------------------

    \30\ The Exchange notes that MIAX Options has filed with the
Commission a proposed rule change to adopt similar clarifying rules
in connection with the launch of trading on MIAX PEARL. See SR-MIAX-
2017-05 filed on February 13, 2017 at http://www.miaxoptions.com/rule-filings.
---------------------------------------------------------------------------

C. Non-Member Network Testing and Certification Fee

    MIAX PEARL will establish electronic connections with and proposes
to assess Service Bureaus, Extranet Providers and other non-Members a
Testing and Certification Fee of $1,200.00 per non-Member per one (1)
Gigabit (``Gb'') connection, $4,200.00 per non-Member per ten (10) Gb
connection and $4,200.00 per non-Member per ten (10) Gb ultra-low-
latency (``ULL'') connection.
    Non-Member Network Connectivity Testing and Certification Fees will
be assessed (i) initially per connection in the month the non-Member
has been credentialed to use any API or Market Data feeds in the
production environment utilizing the tested network connection, and
(ii) each time a non-Member initiates a change to its system that
requires network connectivity testing and certification. Network
Connectivity Testing and Certification Fees will not be assessed in
situations where the Exchange initiates a mandatory change to the
Exchange's system that requires testing and certification. Non-Member
Network Connectivity Testing and Certification

Fees will not be assessed for testing and certification of connectivity
to the Exchange's Disaster Recovery Facility.
    These proposed fee amounts are identical to the fees currently
assessed for the same services at MIAX Options. As with Member
subscribers, the MENI can also be configured to provide network
connectivity to the trading platforms, market data systems, test
systems, and disaster recovery facility of the Exchange's affiliate,
MIAX Options, via a single, shared connection. Accordingly, non-Members
utilizing the MENI to connect to the trading platforms, market data
systems, test systems, and disaster recovery facilities of the Exchange
and MIAX Options via a single, shared connection will only be assessed
one Network Connectivity Testing and Certification Fee per connection
tested, regardless of the trading platforms, market data systems, test
systems, and disaster recovery facilities accessed via such
connection.\31\ The Member and non-Member Network Testing and
Certification fees represent installation and support costs incurred by
the Exchange as it works with each Member and non-Member to make sure
there are appropriate electronic connections with MIAX PEARL. Other
exchanges, including MIAX Options, charge fees for similar services to
Members and non-Members.\32\ The Exchange proposes to assess a higher
Network testing and certification fee to non-Members than to Members
similar to how MIAX Options assesses such fees to its Members and non-
Members. The higher fee charged to non-Members reflects the greater
amount of time spent by MIAX PEARL employees testing and certifying
non-Members. It has been MIAX PEARL's experience that Member network
connectivity testing takes less time than non-Member network
connectivity testing because Members have more experience testing these
systems with exchanges as generally fewer questions and issues arise
during the testing and certification process.
---------------------------------------------------------------------------

    \31\ Id.
    \32\ See supra note 29. The fees proposed by the Exchange are
also identical to those assessed by MIAX Options for the same
services.
---------------------------------------------------------------------------

System Connectivity Fees
    MIAX PEARL proposes to assess fees to Members and non-Members for
electronic connections between those entities and MIAX PEARL. The
connectivity fees are generally based upon the amount of bandwidth that
will be used by the Member or non-Member. MIAX PEARL currently offers
fiber optic connectivity with a bandwidth of (i) one (1) Gb; (ii) ten
(10) Gb; and (iii) ten (10) Gb ULL, which connects the user to MIAX
PEARL using an ultra-low latency switch, which provides faster
processing of messages sent to it in comparison to the switch used for
the other types of connectivity. The Exchange offers connectivity to
its Primary, Secondary and Disaster Recovery Facilities through the 1
Gb and 10 Gb connections and offers connectivity to its Primary and
Secondary Facilities through the 10 Gb ULL connection.

A. Member Network Connectivity Fee

    MIAX PEARL proposes to assess a monthly Member Network Connectivity
fee of (i) $1,100 per one (1) Gb connection to the Exchange's Primary
and Secondary Facilities; (ii) $500.00 per one (1) Gb connection to the
Exchange's Disaster Recovery Facility; (iii) $5,500.00 per ten (10) Gb
connection to the Exchange's Primary and Secondary Facilities; (iv)
$2,500.00 per ten (10) Gb connection to the Exchange's Disaster
Recovery Facility; and (v) $8,500 per ten (10) Gb ULL connection to the
Exchange's Primary and Secondary Facilities. MIAX PEARL charges a
higher fee for the 10 Gb and 10 Gb ULL connections due the higher costs
of the bandwidths and the low latency switch in the case of the 10 Gb
ULL connection. MIAX PEARL's monthly Member Network Connectivity fees
are identical to those charged by MIAX Options and are comparable to
the monthly fees charged for similar connectivity at Chicago Board
Options Exchange, Incorporated (``CBOE''), which are (i) $750 for a 1
Gb connection, (ii) $4,000 for a 10 Gb connection and (iii) $250 for 1
Gb connection to CBOE's Disaster Recovery facility,\33\ and at PHLX,
which are (i) $1,000 for a 1 Gb connection, and (ii) $5,000 for a ten
(10) Gb connection.\34\
---------------------------------------------------------------------------

    \33\ See CBOE Fee Schedule, CBOE Command Connectivity Charges at
http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf.
    \34\ See PHLX Fee Schedule, Section XI Direct Connectivity to
Phlx.
---------------------------------------------------------------------------

    Monthly Member Network Connectivity fees for connectivity with the
Primary/Secondary Facility will be assessed in any month the Member is
credentialed to use any of the MIAX PEARL APIs or Market Data feeds in
the production environment and will be pro-rated when a Member makes a
change to the connectivity (by adding or deleting connections) with
such pro-rated fees based on the number of trading days that the Member
has been credentialed to utilize any of the MIAX PEARL APIs or Market
Data feeds in the production environment through such connection,
divided by the total number of trading days in such month multiplied by
the applicable monthly rate. Monthly Member Network Connectivity fees
for connectivity with the Disaster Recovery Facility will be assessed
in each month during which the Member has established connectivity with
the Disaster Recovery Facility.
    The Exchange notes that the MENI can be configured to provide
network connectivity to the trading platforms, market data systems,
test systems, and disaster recovery facility of the Exchange's
affiliate, MIAX Options, via a single, shared connection. Accordingly,
Members utilizing the MENI to connect to the trading platforms, market
data systems, test systems, and disaster recovery facilities of the
Exchange and MIAX Options via a single, shared connection will only be
assessed one Member Network Connectivity Fee per connection, regardless
of the trading platforms, market data systems, test systems, and
disaster recovery facilities accessed via such connection.\35\
---------------------------------------------------------------------------

    \35\ See supra note 30.
---------------------------------------------------------------------------

B. Non-Member Network Connectivity Fee

    MIAX PEARL proposes to assess a monthly non-Member Network
Connectivity fee of (i) $1,100 per one (1) Gb connection to the
Exchange's Primary and Secondary Facilities; (ii) $500.00 per one (1)
Gb connection to the Exchange's Disaster Recovery Facility; (iii)
$5,500.00 per ten (10) Gb connection to the Exchange's Primary and
Secondary Facilities; (iv) $2,500.00 per ten (10) Gb connection to the
Exchange's Disaster Recovery Facility; and (v) $8,500 per ten (10) Gb
ULL connection to the Exchange's Primary and Secondary Facilities. MIAX
PEARL charges a higher fee for the 10 Gb and 10 Gb ULL connections due
the higher costs of the bandwidths and the low latency switch in the
case of the 10 Gb ULL connection. MIAX PEARL's monthly non-Member
Network Connectivity fees are identical to those charged by MIAX
Options and are comparable to the monthly fees charged for similar
connectivity at CBOE, which are (i) $750 for a 1 Gb connection, (ii)
$4,000 for a 10 Gb connection and (iii) $250 for 1 Gb connection to
CBOE's Disaster Recovery facility \36\and at PHLX, which are (i) $1,000
for a 1 Gb connection, and (ii) $5,000 for a ten (10) Gb
connection.\37\
---------------------------------------------------------------------------

    \36\ See supra note 33.
    \37\ See supra note 34.

---------------------------------------------------------------------------

    Monthly non-Member Network Connectivity fees for connectivity with
the Primary/Secondary Facility will be assessed in each month the non-
Member has been credentialed to use any of the MIAX PEARL APIs or
Market Data feeds via the network connection in the production
environment and will be pro-rated when a non-Member makes a change to
the connectivity (by adding or deleting connections) with such pro-
rated fees based on the number of trading days that the non-Member has
been credentialed to utilize any one of the two MIAX Exchanges' APIs or
Market Data feeds in the production environment through such
connection, divided by the total number of trading days in such month
multiplied by the applicable monthly rate. Monthly Non-Member Network
Connectivity fees for connectivity with the Disaster Recovery Facility
will be assessed in each month during which the non-Member has
established connectivity with the Disaster Recovery Facility.
    As with Members, the MENI can be configured to provide network
connectivity to the trading platforms, market data systems, test
systems, and disaster recovery facility of the Exchange's affiliate,
MIAX Options, via a single, shared connection. Accordingly, non-Members
utilizing the MENI to connect to the trading platforms, market data
systems, test systems, and disaster recovery facilities of the Exchange
and MIAX Options via a single, shared connection will only be assessed
one non-Member Network Connectivity Fee per connection, regardless of
the trading platforms, market data systems, test systems, and disaster
recovery facilities accessed via such connection.\38\
---------------------------------------------------------------------------

    \38\ See supra note 30.
---------------------------------------------------------------------------

C. Pass-Through of External Connectivity Fees

    MIAX PEARL proposes to assess External Connectivity fees to Members
and non-Members that establish connections with MIAX PEARL through a
third-party. Fees charged to MIAX PEARL by third-party external vendors
on behalf of a Member or non-Member connecting to MIAX PEARL (including
cross-connects), will be passed through to the Member or non-Member.
External Connectivity fees include one-time set-up fees and monthly
charges charged to MIAX PEARL by a third-party.
    The purpose of the External Connectivity fee is to recoup costs
incurred by MIAX PEARL in establishing connectivity with external
vendors acting on behalf of a Member or non-Member. MIAX PEARL will
only pass-through the actual costs it is charged by the third-party
external vendors. Other exchanges, including MIAX Options, charge a fee
for similar services to Members and non-Members.

D. Port Fees

    Once network connectivity is established, MIAX PEARL proposes to
assess fees for access and services used by Members and non-Members via
connections known as ``Port''. MIAX PEARL provides four (4) Port types,
including (i) the FIX Port, which allows Members to electronically send
orders in all products traded on the Exchange; (ii) the MEO Port, which
allows EEMs and Market Makers to submit electronic orders to the
Exchange; (iii) the CTD Port, which provides real-time trade clearing
information to the participants to a trade on MIAX PEARL and to the
participants' respective clearing firms; and (iv) FXD Port, which
provides a copy of real-time trade execution, correction and
cancellation information through a FIX Port to any number of FIX Ports
designated by an EEM to receive such messages.
    MIAX PEARL will assess monthly Port Fees on Members and non-Members
in each month the market participant is credentialed to use a Port in
the production environment and based upon the number of credentialed
Ports that a user is entitled to use. MIAX PEARL has Primary and
Secondary Facilities and a Disaster Recovery Facility. Each type of
Port provides access to all three facilities for a single fee. The
Exchange notes that, unless otherwise specifically set forth in the Fee
Schedule, the Port Fees include the information communicated through
the Port. That is, unless otherwise specifically set forth in the Fee
Schedule, there is no additional charge for the information that is
communicated through the Port apart from what the user is assessed for
each Port.
    The Exchange will offer different options of MEO Ports depending on
the services required by the Member or non-Member, including a Full
Service MEO Port--Bulk,\39\ a Full Service MEO Port--Single \40\ and a
Limited Service MEO Port.\41\ A Member or non-Member may be allocated
two (2) Full-Service MEO Ports of either type per Matching Engine and
up to eight (8) Limited Service MEO Ports per Matching Engine. The two
(2) Full-Service MEO Ports that may be allocated per Matching Engine to
a Member or non-Member may consist of: (a) Two (2) Full Service MEO
Ports--Bulk; or (b) two (2) Full Service MEO Ports--Single. Below is
the table of Port Fees that appears in the Fee Schedule.
---------------------------------------------------------------------------

    \39\ ``Full Service MEO Port--Bulk'' means an MEO port that
supports all MEO input message types and binary bulk order entry.
    \40\ ``Full Service MEO Port--Single'' means an MEO port that
supports all MEO input message types and binary order entry on a
single order-by-order basis, but not bulk orders.
    \41\ ``Limited Service MEO Port'' means an MEO port that
supports all MEO input message types, but does not support bulk
order entry and only supports limited order types, as specified by
the Exchange via Regulatory Circular.

------------------------------------------------------------------------
                                            Monthly port fees includes
                                           connectivity to the Primary,
              Type of port               Secondary and Disaster Recovery
                                                   data centers
------------------------------------------------------------------------
FIX Port...............................  Fee waived for the Waiver
                                          Period.
Full Service MEO Port--Bulk............  Fee waived for the Waiver
                                          Period.
Full Service MEO Port--Single..........  Fee waived for the Waiver
                                          Period.
Limited Service MEO Port...............  Fee waived for the Waiver
                                          Period.
CTD Port...............................  Fee waived for the Waiver
                                          Period.
FXD Port...............................  Fee waived for the Waiver
                                          Period.
------------------------------------------------------------------------

    Other exchanges, including MIAX Options, charge a fee for similar
services to Members and non-Members. The Exchange's proposed structure
for its Port Fees is based on the structure of MIAX Options, subject to
a few differences as discussed below. First, the Exchange is not
currently proposing to have tiered pricing for FIX Ports, as does MIAX
Options. If the Exchange determines to adopt a tiered pricing structure
in the future, the Exchange will submit a proposed rule change with the
Commission to establish such a structure. Second, the Exchange is
proposing to have two types of Full Service MEO Port Fees (Bulk and
Single), whereas MIAX Options only has one type of full service port
fee (MEI Port Fee). Further, MIAX Options charges for its MEI port fees
based on the options class assignments, as measured by the national
volume. Since the market making structure on the Exchange is not
identical to the market making structure on MIAX Options, the Exchange
may propose to assess its MEO Port Fees in a different manner than is
assessed by MIAX Options for its MEI Port Fees. Finally, the amount of
the CTD Port Fee assessed by MIAX Options is based on the transacted
volume of the MIAX Options member. The Exchange is proposing to
structure its CDT Port Fee as a monthly fixed amount, not tied to
transacted volume of the Member. This fixed fee structure is the same
structure in place at Nasdaq

PHLX with respect to CTD port fees.\42\ In order to provide an
incentive to Members and non-Members to connect to MIAX PEARL through
the Ports such that they will be able to utilize the services of MIAX
PEARL as soon as possible, all Port fees assessable to Port users will
be waived by the Exchange for the Waiver Period for such fees. The
Exchange will submit a rule filing to the Commission to establish the
fee amount and any related requirements, and provide notice to
terminate the applicable Waiver Period. Even though the Exchange is
proposing to waive this particular fee during the Waiver Period, the
Exchange believes that is appropriate to provide market participants
with the overall structure of the fee by outlining the structure on the
Fee Schedule without setting forth a specific fee amount, so that there
is general awareness that the Exchange intends to assess such a fee in
the future, should the Waiver Period terminate and the Exchange
establish an applicable fee.
---------------------------------------------------------------------------

    \42\ See Phlx Fee Schedule, Section VII Other Member Fees B.
Port Fees.
---------------------------------------------------------------------------

E. MPID Fees

    MIAX PEARL proposes to assess monthly Member Participant Identifier
(``MPID'') fees on Members based upon the type of MPID. Type of MPID
will be either FIX MPID, using the FIX Port interface, or MEO MPID,
using the MEO Port interface. MIAX PEARL intends to assess MPID fees in
order to cover the administrative costs it incurs in assigning and
managing these identifiers for each Member.
    Other exchanges, including MIAX Options, charge a fee for similar
services to Members, however there are the following differences
between the structure proposed by the Exchange and the structure at
MIAX Options, as discussed below. First, as discussed above, the
Exchange is proposing to distinguish between MPIDs associated with FIX
and MPIDs associated with MEO, and thus both types of MPIDs will
respectively have their own associated fee amount. MIAX Options does
not make that distinction, and thus has only one type of MPID fee. The
Exchange has determined to make this distinction (between FIX MPIDs and
MEO MPIDs) due to the difference in market structure between the
Exchange and MIAX Options, as the Exchange believes that its maker-
taker, price time market structure makes it appropriate to for having a
dual MPID fee structure, given the expected trading behavior of Members
over the respective interface and the Exchange's costs associated with
maintaining each type of interface. Further, MIAX Options only assesses
MPID fees on EEMs, whereas the Exchange proposes to assess MPID fees on
all Members. Again, the Exchange has determined to make this
distinction (assessing MPID fees on all Members versus only on EEMs)
because it believes that its maker-taker, price time market structure
makes it appropriate for assessing all Members based on expected
trading behavior of Members on the Exchange and the Exchange's costs
associated with maintaining each type of interface. Second, the
Exchange is not currently proposing to have tiered pricing for MPIDs,
as does MIAX Options. The Exchange has determined to make this
distinction (not offering tiered pricing versus offering tiered
pricing) because it believes that its maker-taker, price time market
structure will result in Members needing fewer MPIDs, therefore
lessening the need for a tiered pricing structure. If the Exchange
determines to adopt a tiered pricing structure in the future, the
Exchange will submit a proposed rule change with the Commission to
establish such a structure. In order to provide an incentive to Members
to start trading on MIAX PEARL as soon as possible, all MPID fees
assessable to Members will be waived by the Exchange for the Waiver
Period for such fees. The Exchange will submit a rule filing to the
Commission to establish the fee amount and any related requirements,
and provide notice to terminate the applicable Waiver Period. Even
though the Exchange is proposing to waive this particular fee during
the Waiver Period, the Exchange believes that is appropriate to provide
market participants with the overall structure of the fee by outlining
the structure on the Fee Schedule without setting forth a specific fee
amount, so that there is general awareness that the Exchange intends to
assess such a fee in the future, should the Waiver Period terminate and
the Exchange establish an applicable fee.

F. Technical Support Request Fee

    MIAX PEARL proposes to assess a technical support request fee to
both Members and non-Members that request MIAX PEARL technical support
at any of the MIAX PEARL data centers. MIAX PEARL proposes that such
fee will be $200 per hour for such technical support. The purpose of
the proposed fee is to permit users to request the use of Exchange's
on-site data center personnel as technical support as a convenience to
the users to test or otherwise assess the user's connectivity to the
Exchange. Other exchanges, including MIAX Options, charge a fee for
similar services to Members and non-Members.
Market Data Fees
    The Exchange proposes to assess fees for its market data products,
MIAX PEARL Top of Market (``ToM'') and MIAX PEARL Liquidity Feed
(``PLF''). The Exchange notes that it has separately filed with the
Commission a proposed rule change to establish the ToM and PLF products
(the ``Market Data Product Filing'').\43\ More information about the
ToM and PLF products can be found in the Market Data Product Filing. To
summarize, ToM provides market participants with a direct data feed
that includes the Exchange's best bid and offer, with aggregate size,
and last sale information, based on displayable order and quoting
interest on the Exchange. The ToM data feed includes data that is
identical to the data sent to the processor for the Options Price
Reporting Authority (``OPRA''). ToM will also contain a feature that
provides the number of Priority Customer contracts that are included in
the size associated with the Exchange's best bid and offer.
---------------------------------------------------------------------------

    \43\ See Securities Exchange Act Release No. 79913 (February 1,
2017) (SR-PEARL-2017-01) Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Establish MIAX PEARL Top
of Market (``ToM'') and MIAX PEARL Liquidity Feed (``PLF'') Data
Products.
---------------------------------------------------------------------------

    PLF is a real-time full order book data feed that provides
information for orders on the MIAX PEARL order book. PLF will provide
real-time information to enable users to keep track of the simple order
book for all symbols listed on MIAX PEARL. PLF will provide the
following real-time data to its users with respect to each order for
the entire order book: Origin, limit price, side, size, and time-in-
force (e.g., day, GTC). It is a compilation of data for orders residing
on the Exchange's order book for options traded on the Exchange that
the Exchange provides through a real-time multi-cast data feed. The
Exchange believes the PLF is a valuable tool that subscribers can use
to gain comprehensive insight into the limit order book in a particular
option.
    The Exchange proposes to charge monthly fees to Distributors of the
ToM and/or PLF market data products. MIAX PEARL will assess market data
fees applicable to the market data products on Internal and External
Distributors in each month the Distributor is credentialed to use the
applicable market data product in the production environment. A
``Distributor'' of MIAX PEARL data is any entity that receives a feed
or file of data either directly from

MIAX PEARL or indirectly through another entity and then distributes it
either internally (within that entity) or externally (outside that
entity). All Distributors are required to execute a MIAX PEARL
Distributor Agreement. Market data fees for ToM and PLF will be reduced
for new Distributors for the first month during which they subscribe to
the applicable market data product, based on the number of trading days
that have been held during the month prior to the date on which they
have been credentialed to use the applicable market data product in the
production environment. Such new Distributors will be assessed a pro-
rata percentage of the fees described above, which is the percentage of
the number of trading days remaining in the affected calendar month as
of the date on which they have been credentialed to use the applicable
market data product in the production environment, divided by the total
number of trading days in the affected calendar month.
    Other exchanges, including MIAX Options, charge fees for market
data products to Members and non-Members. In order to provide an
incentive to Members and non-Members to receive the market data feeds
as soon as possible, all market data fees assessable to Distributors
for ToM and PLF will be waived by the Exchange for the Waiver Period
for such fees. The Exchange will submit a rule filing to the Commission
to establish the fee amount and any related requirements, and provide
notice to terminate the applicable Waiver Period. Even though the
Exchange is proposing to waive this particular fee during the Waiver
Period, the Exchange believes that is appropriate to provide market
participants with the overall structure of the fee by outlining the
structure on the Fee Schedule without setting forth a specific fee
amount, so that there is general awareness that the Exchange intends to
assess such a fee in the future, should the Waiver Period terminate and
the Exchange establish an applicable fee.
    The Exchange does not propose to adopt any other fees at this time.
The Exchange expects to adopt additional fees after the terminations of
applicable Waiver Periods as determined by the Exchange, which shall be
at a later date. The Exchange will submit rule filings with the
Commission prior to any such fees becoming effective.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \44\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \45\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among its members and issuers and other persons using
its facilities. The Exchange also believes the proposal furthers the
objectives of Section 6(b)(5) of the Act in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest and is not designed to permit unfair discrimination between
customers, issuers, brokers and dealers.
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78f(b).
    \45\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

i. Transaction Fees
Add/Remove Tiered Transaction Rebates/Fees
    The Exchange believes the rebates and fees proposed for
transactions on MIAX PEARL are reasonable, equitable and not unfairly
discriminatory. MIAX PEARL operates within a highly competitive market
in which market participants can readily send order flow to several
other competing venues if, among other things, they deem fees at a
particular venue to be unreasonable or excessive. The proposed fee
structure is intended to attract order flow to MIAX PEARL by offering
market participants incentives to submit their orders to MIAX PEARL.
    Volume-based pricing models such as those proposed on the Exchange
have been widely adopted by options exchanges and are equitable and not
unfairly discriminatory because they are open to all Members and
provide additional benefits or discounts that are reasonably related to
the value of an exchange's market quality associated with higher levels
of market activity, such as higher levels of liquidity provision and/or
growth patterns, and introduction of higher volumes of orders into the
price and volume discovery processes.
    The Exchange's proposal to offer a rebate to Makers that provide
liquidity in Penny and Non-Penny classes is also equitable and not
unfairly discriminatory under the Act. The Exchange believes that the
proposed maker-taker model is an important competitive tool for
exchanges and directly or indirectly can provide better prices for
investors. The proposed fee structure may incentivize the MIAX PEARL
Bid and Offer (``MBBO'') because the rebate payable to Makers
effectively subsidizes, and thus encourages, the posting of liquidity.
The Exchange believes that the Maker rebate will also provide MIAX
PEARL Market Makers with greater incentive to either match or improve
upon the best price displayed on MIAX PEARL, all to the benefit of
investors and the public in the form of improved execution prices. MIAX
PEARL believes the proposed Add/Remove Tiered transaction rebates and
fees assessed to Market Makers are reasonable because they are
comparable to transaction fees charged by other options exchanges.
    The Exchange believes that its proposed Add/Remove Tiered
transaction rebates and fees are equitable and not unfairly
discriminatory because they are available to all Market Makers and are
reasonably related to the value to the Exchange that comes with higher
market quality and higher levels of liquidity in the price and volume
discovery processes. Such increased liquidity at the Exchange should
allow it to spread its administrative and infrastructure costs over a
greater number of transactions leading to lower costs per transaction.
    The Exchange believes it is equitable and not unfairly
discriminatory for MIAX PEARL Market Makers to be assessed generally
lower fees than other professional market participants (referred to as
non-Priority Customers, Non-Member Broker-Dealers, non-MIAX PEARL
Market Makers and Firms in the Fee Schedule). Market Makers have
obligations that other professional market participants do not. In
particular, they must maintain continuous two-sided markets in the
classes in which they are registered to trade, and must meet certain
minimum quoting requirements. Therefore, the Exchange believes it is
appropriate that Market Makers be assessed lower Add/Remove Tiered
transaction fees since they have the potential to provide greater
volumes of liquidity to the market.
    The Exchange believes the proposed Add/Remove Tiered rebates and
fees assessed on Priority Customers are reasonable, equitable, and not
unfairly discriminatory because they are, as detailed in the Purpose
section above, comparable to fees that Priority Customers are assessed
at other competing exchanges.\46\ The Exchange believes charging lower
fees and providing higher rebates to Priority Customer orders attracts
that order flow to the Exchange and thereby creates liquidity to the
benefit of all market participants who trade on the Exchange.

Further, the Exchange believes that it is equitable and not unfairly
discriminatory to assess lower fees to Priority Customer orders than to
non-Priority Customer orders. A Priority Customer is by definition not
a broker or dealer in securities, and does not place more than 390
orders in listed options per day on average during a calendar month for
its own beneficial account(s). This limitation does not apply to
participants on the Exchange whose behavior is substantially similar to
that of market professionals, including non-Priority Customers, non-
MIAX PEARL Market Makers, Firm, and Broker-Dealers, who will generally
submit a higher number of orders (many of which do not result in
executions) than Priority Customers.
---------------------------------------------------------------------------

    \46\ See supra notes 10 and 12.
---------------------------------------------------------------------------

Routing Fees
    The Exchange believes that the proposed Routing Fees are
reasonable, equitable and not unfairly discriminatory because they seek
to recoup costs that are incurred by the Exchange when routing Public
Customer orders to away markets on behalf of Members. Each destination
market's transaction charge varies and there is a cost incurred by the
Exchange when routing orders to away markets. The costs to the Exchange
include clearing costs, administrative, regulatory and technical costs
associated with routing options. The Exchange believes that the
proposed Routing Fees would enable the Exchange to recover the costs it
incurs to route orders to away markets in addition to transaction fees
assessed to market participants for the execution of Public Customer
orders by the away market. The Exchange is proposing to have 8
different exchange groupings, based on the exchange, order type, and
option class. The Exchange believes that having more groupings will
offer the Exchange greater precision in covering its costs associated
with routing orders to away markets. The per-contract transaction fee
amount associated with each grouping closely approximates the
Exchange's all-in cost (plus an additional, non-material amount) to
execute that corresponding contract at that corresponding exchange. For
example, to execute a Priority Customer order in a Penny Pilot symbol
(other than SPY) at AMEX costs the Exchange approximately $0.15 a
contract. Since this is also the approximate cost to execute that same
order at BOX, the Exchange is able to group AMEX and BOX together in
the same grouping. This same logic and structure applies to all of the
groupings in the Routing Fees table. Other exchanges, like the
Exchange's affiliate, Miami International Securities Exchange, LLC
(``MIAX Options''), have routing fee structures that simply pass onto
the Member the actual charge assessed by the away market where the
order is executed plus a fixed fee surcharge (which in the case of MIAX
Options is $0.10). However, in the Exchange's experience, this
structure of simply passing on the actual charge plus a mark-up can be
administratively burdensome, particularly when multiple, third-party,
unaffiliated routing broker-dealers are used to route and execute the
orders at the away market. By utilizing the structure proposed by the
Exchange, the Exchange will know immediately the cost of the execution
and it can eliminate the administratively burdensome month end
reconciliation process, as well as provide more certainty and
transparency for execution costs to its Members for the execution of
orders that are routed to away markets.
    In addition, the Exchange believes that it is equitable and not
unfairly discriminatory to assess lower routing fees to Priority
Customer orders than to non-Priority Customer orders. A Priority
Customer is by definition not a broker or dealer in securities, and
does not place more than 390 orders in listed options per day on
average during a calendar month for its own beneficial account(s). This
limitation does not apply to non-Priority Customers, who will generally
submit a higher number of orders (many of which do not result in
executions) than Priority Customers. Further, the routing fees for
Priority Customer orders are based on the fees charged by the away
market for the execution of such orders, therefore it is reasonable and
appropriate for the routing fees to be lower than the routing fees for
non-Priority Customer orders, as this is fee construct at the away
markets.
ii. Regulatory Fees
Sales Value Fee
    The assessment by the Exchange of the proposed Sales Value Fee is
reasonable, equitable and not unfairly discriminatory since it allows
the Exchange to offset the cost it incurs in payment to the Commission
of a transaction fee that is designed to recover the costs related to
the government's supervision and regulation of the securities markets
and securities professionals. The amount of the fee is the same amount
assessed to the Exchange pursuant to Section 31 of the Exchange Act.
The Exchange believes it is reasonable to recover the actual costs
associated with the payment of Section 31 fees and other exchanges,
including MIAX Options, charge the same fee to their market
participants.
Web CRD Fees
    The Exchange believes it is reasonable, equitable and not unfairly
discriminatory for the proposed FINRA fees to be included on the Fee
Schedule because these fees are not being assessed or set by MIAX
PEARL, but by FINRA, and will be assessed to broker-dealers that
register associated persons through FINRA's Web CRD system, and other
exchanges, including MIAX Options, charge the same fees to their market
participants.
iii. Non-Transaction Fees
Membership Fees
    The Exchange believes that the assessment of one-time Membership
Application fees is reasonable, equitable and not unfairly
discriminatory. As described in the Purpose section, the one-time
application fees are charged by other options exchanges, including MIAX
Options, and are designed to recover costs associated with the
processing of such applications. MIAX PEARL believes it is reasonable
and equitable to waive the fee to applicants who apply for membership
during the Waiver Period since the waiver of such fees provides
incentives to interested applicants to apply early for MIAX PEARL
membership. This in turn provides MIAX PEARL with potential order flow
and liquidity providers as it begins operations. The waiver will apply
equally to all applicants during the Waiver Period for the membership
application fee.
Trading Permit Fees
    The Exchange believes that the assessment of Trading Permit fees is
reasonable, equitable and not unfairly discriminatory. The assessment
of Trading Permit fees is done by the Exchange's affiliate, MIAX
Options, and is commonly done by other exchanges as described in the
Purpose section above. MIAX PEARL believes it is reasonable and
equitable to waive the fee to Members during the Waiver Period since
the waiver of such fees provides incentives to interested Members to
apply early for trading permits. This in turn provides MIAX PEARL with
potential order flow and liquidity providers as it begins operations.
The waiver of the Trading Permit fees will apply equally to all Members
during the Waiver Period.

API and Network Testing and Certification Fees
    MIAX PEARL believes that the assessment of API and Network Testing
and Certification fees is a reasonable allocation of its costs and
expenses among its Members and other persons using its facilities since
it is recovering the costs associated with providing such
infrastructure testing and certification services. Other exchanges,
including MIAX Options, charge a fee for similar services to Members
and non-Members.
    MIAX PEARL believes it is reasonable and equitable to waive the API
Testing and Certification fee assessable to Members and non-Members
during the Waiver Period since the waiver of such fees provides
incentives to interested Members and non-Members to test their APIs
early. Determining system operability with the Exchange's system early
will in turn provide MIAX PEARL with potential order flow and liquidity
providers as it begins operations. The waiver of API Testing and
Certification fees will apply equally to all Members and non-Members
during the Waiver Period.
    Additionally, MIAX PEARL believes it is reasonable, equitable and
not unfairly discriminatory to assess different Network Testing and
Certification fees to Members and non-Members. The higher fee charged
to non-Members reflects the greater amount of time spent by MIAX PEARL
employees testing and certifying non-Members. It has been MIAX PEARL's
experience that Member testing takes less time than non-Member testing
because Members have more experience testing these systems with
exchanges; generally fewer questions and issues arise during the
testing and certification process.
System Connectivity Fees
    The Exchange believes that the proposed System Connectivity Fees
constitute an equitable allocation of fees, and are not unfairly
discriminatory, because they allow the Exchange to recover costs
associated with offering access through the network connections and
access and services through the Ports, responding to customer requests,
configuring MIAX PEARL systems, programming API user specifications and
administering the various services. Access to the MIAX PEARL market
will be offered on fair and non-discriminatory terms. The proposed
System Connectivity Fees are also expected to offset the costs MIAX
PEARL incurs in maintaining, and implementing ongoing improvements to
the trading systems, including connectivity costs, costs incurred on
gateway software and hardware enhancements and resources dedicated to
gateway development, quality assurance, and technology support. The
Exchange believes that its proposed fees are reasonable in that they
are competitive with those charged by other exchanges and are identical
to those charged by MIAX Options for the same connectivity.
    MIAX PEARL believes it is reasonable, equitable and not unfairly
discriminatory to pass-through External Connectivity fees to Members
and non-Members that establish connections with MIAX PEARL through a
third-party. MIAX PEARL will only pass-through the actual costs it is
charged by third-party external vendors. MIAX PEARL believes it is
reasonable and equitable to recover costs charged it on behalf of a
Member or non-Member that establishes connections with MIAX PEARL
through a third party. Other exchanges, including MIAX Options, charge
a fee for similar services to Members and non-Members.
    MIAX PEARL believes it is reasonable, equitable and not unfairly
discriminatory to assess Port fees on both Members and non-Members who
use such services. In particular, the Exchange believes that it is
reasonable, equitable and not unfairly discriminatory to assess Port
fees on Members since the Ports enable Members to submit orders and to
receive information regarding transactions. Specifically, the FIX Port
and the various MEO Ports enable Members to submit orders
electronically to the Exchange for processing. The Exchange believes
that its proposed fees are reasonable in that other exchanges offer
similar ports with similar services and charge fees for the use of such
ports, including MIAX Options.
    MIAX PEARL believes it is reasonable and equitable to waive the
Port fees assessable to Members and non-Members during the Waiver
Period since the waiver of such fees provides incentives to Members and
non-Members to connect to the Ports early. Determining connectivity and
system operability with the Exchange's system early will in turn
provide MIAX PEARL with potential order flow and liquidity providers as
it begins operations. The waiver of Port fees will apply equally to all
Members and non-Members during the Waiver Period.
    The Exchange believes that its fees for MPIDs are reasonable,
equitable and not unfairly discriminatory in that they apply to all
Members using either FIX or MEO equally and allow the Exchange to
recover operational and administrative costs in assigning and
maintaining such services. The Exchange believes that its proposed fees
are reasonable in that other exchanges charge fees for similar
services, including MIAX Options, subject to the differences discussed
above, which the Exchange believes are reasonable given the different
market structure between the Exchange and MIAX Options.
    MIAX PEARL believes it is reasonable and equitable to waive the
MPID fee to Members during the Waiver Period since the waiver of such
fees provides incentives to Members to apply early. This in turn
provides MIAX PEARL with potential order flow and liquidity providers
as it begins operations. The waiver of the MPID fees will apply equally
to all Members during the Waiver Period.
    The Exchange believes that the proposed Technical Support fee is
fair, equitable and not unreasonably discriminatory, because it is
assessed equally to all Members and Non-Members who request technical
support. Furthermore, Members and Non-Members are not required to use
the service but instead it is offered as a convenience to all Members
and Non-Members. The proposed fee is reasonably designed because it
will permit both Members and Non-Members to request the use of the
Exchange's on-site data center personnel as technical support and as a
convenience in order to test or otherwise assess the User's
connectivity to the Exchange and the fee is within the range of the fee
charged by other exchanges for similar services and is identical to the
same fee assessed by MIAX Options.
Market Data Fees
    The Exchange believes that its proposal to assess market data fees
is consistent with the provisions of Section 6(b)(4) of the Act in that
it provides an equitable allocation of reasonable fees among
distributors of ToM and PLF, because all Distributors in each of the
respective category of Distributor (i.e., Internal and External) will
be assessed the same fees as other Distributors in their category for
the applicable market data product.
    In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to the public. It was believed that
this authority would expand the amount of data available to consumers,
and also spur innovation and competition for the provision of market
data:

    ``[E]fficiency is promoted when broker-dealers who do not need
the data beyond the

prices, sizes, market center identifications of the NBBO and
consolidated last sale information are not required to receive (and
pay for) such data when broker-dealers may choose to receive (and
pay for) additional market data based on their own internal analysis
of the need for such data.'' \47\
---------------------------------------------------------------------------

    \47\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496 (June 29, 2005).

    By removing ``unnecessary regulatory restrictions'' on the ability
of exchanges to sell their own data, Regulation NMS advanced the goals
of the Act and the principles reflected in its legislative history. If
the free market should determine whether proprietary data is sold to
broker-dealers at all, it follows that the price at which such data is
sold should be set by the market as well.
    In July, 2010, Congress adopted H.R. 4173, the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act''),
which amended Section 19 of the Act. Among other things, Section 916 of
the Dodd-Frank Act amended paragraph (A) of Section 19(b)(3) of the Act
by inserting the phrase ``on any person, whether or not the person is a
member of the self-regulatory organization'' after ``due, fee or other
charge imposed by the self-regulatory organization.'' As a result, all
SRO rule proposals establishing or changing dues, fees or other charges
are immediately effective upon filing regardless of whether such dues,
fees or other charges are imposed on members of the SRO, non-members,
or both. Section 916 further amended paragraph (C) of Section 19(b)(3)
of the Act to read, in pertinent part, ``At any time within the 60-day
period beginning on the date of filing of such a proposed rule change
in accordance with the provisions of paragraph (1) [of Section 19(b)],
the Commission summarily may temporarily suspend the change in the
rules of the self-regulatory organization made thereby, 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 this title. If the Commission takes such
action, the Commission shall institute proceedings under paragraph
(2)(B) [of Section 19(b)] to determine whether the proposed rule should
be approved or disapproved.''
    The Exchange believes that these amendments to Section 19 of the
Act reflect Congress's intent to allow the Commission to rely upon the
forces of competition to ensure that fees for market data are
reasonable and equitably allocated. Although Section 19(b) had formerly
authorized immediate effectiveness for a ``due, fee or other charge
imposed by the self-regulatory organization,'' the Commission adopted a
policy and subsequently a rule stating that fees for data and other
products available to persons that are not members of the self-
regulatory organization must be approved by the Commission after first
being published for comment. At the time, the Commission supported the
adoption of the policy and the rule by pointing out that unlike
members, whose representation in self-regulatory organization
governance was mandated by the Act, non-members should be given the
opportunity to comment on fees before being required to pay them, and
that the Commission should specifically approve all such fees. MIAX
PEARL believes that the amendment to Section 19 reflects Congress's
conclusion that the evolution of self-regulatory organization
governance and competitive market structure have rendered the
Commission's prior policy on non-member fees obsolete. Specifically,
many exchanges have evolved from member-owned, not-for-profit
corporations into for-profit, investor-owned corporations (or
subsidiaries of investor-owned corporations). Accordingly, exchanges no
longer have narrow incentives to manage their affairs for the exclusive
benefit of their members, but rather have incentives to maximize the
appeal of their products to all customers, whether members or non-
members, so as to broaden distribution and grow revenues. Moreover, the
Exchange believes that the change also reflects an endorsement of the
Commission's determinations that reliance on competitive markets is an
appropriate means to ensure equitable and reasonable prices. Simply
put, the change reflects a presumption that all fee changes should be
permitted to take effect immediately, since the level of all fees are
constrained by competitive forces. The Exchange therefore believes that
the assessment of fees for the use of ToM and PLF is proper for non-
member Distributors.
    The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoaliton v. SEC, No. 09-1042 (D.C. Cir.
2010), although reviewing a Commission decision made prior to the
effective date of the Dodd-Frank Act, upheld the Commission's reliance
upon competitive markets to set reasonable and equitably allocated fees
for market data:

    ``In fact, the legislative history indicates that the Congress
intended that the market system `evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.' '' \48\
---------------------------------------------------------------------------

    \48\ NetCoaltion, at 15 (quoting H.R. Rep. No. 94-229, at 92
(1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323).

    The court's conclusions about Congressional intent are therefore
reinforced by the Dodd-Frank Act amendments, which create a presumption
that exchange fees, including market data fees, may take effect
immediately, without prior Commission approval, and that the Commission
should take action to suspend a fee change and institute a proceeding
to determine whether the fee change should be approved or disapproved
only where the Commission has concerns that the change may not be
consistent with the Act.
    MIAX PEARL believes that the assessment of the proposed market data
fees for ToM and PF is fair and equitable in accordance with Section
6(b)(4) of the Act, and not unreasonably discriminatory in accordance
with Section 6(b)(5) of the Act. As described above, market data fees
are assessed by other exchanges, including MIAX Options.
    Moreover, the decision as to whether or not to subscribe to ToM or
PLF is entirely optional to all parties. Potential subscribers are not
required to purchase the ToM or PLF market data feed, and MIAX PEARL is
not required to make the ToM or PLF market data feed available.
Subscribers can discontinue their use at any time and for any reason,
including due to their assessment of the reasonableness of fees
charged. The allocation of fees among subscribers is fair and
reasonable because, if the market deems the proposed fees to be unfair
or inequitable, firms can diminish or discontinue their use of this
data.
    MIAX PEARL believes it is reasonable and equitable to waive the
market data fees to Distributors during the Waiver Period since the
waiver of such fees provides incentives to interested Distributors to
receive the data feeds early. This in turn provides MIAX PEARL with
potential order flow and liquidity providers as it begins operations.
The waiver of the market data fees will apply equally to all
Distributors during the Waiver Period.
    Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues. In such an environment, the Exchange must

establish fees that are competitive with other exchanges. For the
reasons described above, the Exchange believes that the proposed fees
in the MIAX PEARL Fee Schedule appropriately reflect this competitive
environment.

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. Unilateral action by MIAX PEARL
in establishing rebates and fees for services provided to its Members
and others using its facilities will not have an impact on competition.
As a new entrant in the already highly competitive environment for
equity options trading, MIAX PEARL does not have the market power
necessary to set prices for services that are unreasonable or unfairly
discriminatory in violation of the Act. MIAX PEARL's proposed rebates
and fees, as described herein, are comparable to rebates and fees
charged by other options exchanges for the same or similar services,
including those rebates and fees assessed by its affiliate, MIAX
Options.

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,\49\ and Rule 19b-4(f)(2) \50\ 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.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \50\ 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:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-PEARL-2017-10 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-2017-10. 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-2017-10 and should be
submitted on or before March 17, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
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    \51\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03574 Filed 2-23-17; 8:45 am]
BILLING CODE 8011-01-P