8011-01p
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95679; File No. SR-PEARL-2022-34]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Amend Exchange Rule 2614, Orders and Order
Instructions, to Adopt the Primary Peg Order Type
September 6, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),1 and Rule
19b-4 thereunder,2 notice is hereby given that on August 26, 2022 MIAX PEARL, LLC (“MIAX
Pearl” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) a
proposed rule change as described in Items I and II 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.
I.

Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed
Rule Change
The Exchange is filing a proposed rule change to amend Exchange Rule 2614, Orders

and Order Instructions, to adopt the Primary Peg Order Type.
The text of the proposed rule change is available on the Exchange’s website at
http://www.miaxoptions.com/rule-filings/pearl at MIAX PEARL’s principal office, and at the
Commission’s Public Reference Room.
II.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the Exchange included statements concerning the

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

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

A.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1.

Purpose

The Exchange currently offers one type of pegging order on its equity trading platform
(“MIAX Pearl Equities”), the Midpoint Peg Order, which is automatically re-priced in
response to changes in the Protected Best Bid or Offer (“PBBO”).3 Exchange Rule 2614(a)(3)
sets forth the operation of the Midpoint Peg Order and, in sum, defines it as a “non-displayed
Limit Order that is assigned a working price pegged to the midpoint of the PBBO.”
The Exchange now proposes to adopt a second type of pegging order, the Primary
Peg Order. In sum, a Primary Peg Order would be a Limit Order4 that is assigned a
working price pegged to the Protected Best Bid (“PBB”),5 for a buy order, or the Protected
Best Offer (“PBO”),6 for a sell order. The proposed operation of the Primary Peg Order is
well established in the equity markets and is based on similar functionality offered at other
exchanges.7
Some characteristics of the Primary Peg Order would be identical to the Midpoint
Peg Order, such as its operation during a locked or crossed market, and each of these
identical characteristics are described below. Rather than describe identical behavior

See Exchange Rule 1901 (stating “the term ‘Protected NBB’ or ‘PBB’ shall mean the
national best bid that is a Protected Quotation, the term ‘Protected NBO’ or ‘PBO’ shall
mean the national best offer that is a Protected Quotation, and the term ‘Protected
NBBO’ or ‘PBBO’ shall mean the national best bid and offer that is a Protected
Quotation.”).

See Exchange Rule 2614(a)(1) (describing the operation of a Limit Order).

See Exchange Rule 1901, supra note 3.

Id.

See, e.g., Cboe BYX Exchange, Inc. (“BYX”) and Cboe BZX Exchange, Inc. (“BZX”)
Rules 11.9(c)(8)(a), Cboe EDGA Exchange, Inc. (“EDGA”) and Cboe EDGX Exchange,
Inc. (“EDGX”, collectively with BYX, BZX, and EDGA, the “Cboe Equity Exchanges”)
Rules 11.6(j)(2), New York Stock Exchange LLC (“NYSE”) Rule 7.31(h), NYSE Arca,
Inc. (“NYSE Arca”) Rule 7.31-E(h)(1), Investors Exchange, Inc. (“IEX”) Rule
11.190(a)(3), The NASDAQ Stock Market LLC (“NASDAQ”) Rule 4703(d), and
MEMX LLC (“MEMX”) Rule 11.6(h).

separately under different rules, and to ensure its rules are concise, thorough, and easy to
understand, the Exchange proposes to amend Exchange Rule 2614(a)(3) to describe
“Pegged Orders” generally as a standalone order type category and describe the operation
of the existing Midpoint Peg Order and proposed Primary Peg Order. The Exchange
proposes to amend certain provisions of Exchange Rule 2614(a)(3) to cover identical
characteristics shared by both Primary Peg and Midpoint Peg Orders.8
Exchange Rule 2614(a)(3) would define a Pegged Order as “an order that is
automatically re-priced in response to changes in the PBBO.”9 Both the existing Midpoint
Peg Order and proposed Primary Peg Order would be described under Exchange Rule
2614(a)(3)(A), which would be titled “Types of Pegged Orders”. The description of the
Midpoint Peg Order under current Exchange Rule 2614(a)(3) would now be under
Exchange Rule 2614(a)(3)(A)(i) with one change. Exchange Rule 2614(a)(3) currently
provides that “[a] Midpoint Peg Order receives a new timestamp each time its working
price changes in response to changes to the midpoint of the PBBO.” A Primary Peg Order
would also receive a new timestamp each time its working price changes in response to
changes in the PBBO. Therefore, the Exchange proposes to replace this provision with a
general provision under Exchange Rule 2614(a)(3) that would cover all Pegged Orders and
would state, “[a] Pegged Order receives a new timestamp each time its working price
changes in response to changes in the PBBO.”10

The Exchange notes that other exchanges have described pegged order functionality
similarly within their rules and have combined the description of the various pegged
order types they offer under the same rule. See, e.g., IEX Rule 11.190(a)(3), and
NASDAQ Rule 4703(d). The Exchange also proposes to renumber certain provisions in
Exchange Rule 2614(a)(3) as a result of this change.

This is consistent with similar provisions in other exchanges’ rules regarding pegged
orders. See, e.g., MEMX Rule 11.6(h), EDGA and EGDX Rules 11.6(j).

This is consistent with similar provisions in other exchanges’ rules regarding pegged
orders. See, e.g., NASDAQ Rule 4703(d), and EDGA and EGDX Rules 11.6(j).

The operation of the Primary Peg Order would be described under Exchange Rule
2614(a)(3)(A)(ii) and provide that a Primary Peg Order would be a Limit Order and include a
limit price. In this case, the limit price would function like a cap on the price at which the
Primary Peg Order may be pegged or executed. Exchange Rule 2614(a)(3)(A)(ii) would define a
Primary Peg Order as “[a] Limit Order to buy (sell) that is assigned a working price pegged to
the PBB (PBO), subject to its limit price.” The Exchange proposes to not allow the working
price of a Primary Peg Order to buy (sell) to be pegged to a displayed Primary Peg Order to buy
(sell) resting on the MIAX Pearl Equities Book.11 Therefore, Exchange Rule 2614(a)(3)(A)(ii)
would further provide that for purposes of determining the working price of a Primary Peg Order
to buy (sell), the Exchange will not take into account a displayed Primary Peg Order to buy (sell)
resting on the MIAX Pearl Equities Book.
Exchange Rule 2614(a)(3)(A)(ii)(a) and (b) would further describe the operation of a
Primary Peg Order’s limit price. Exchange Rule 2614(a)(3)(A)(ii)(a) would provide that a
Primary Peg Order to buy (sell) with a limit price that is equal to or higher (lower) than its
pegged price will be assigned a working price equal to its pegged price and may execute up
(down) to and including its pegged price subject to its limit price. Exchange Rule
2614(a)(3)(A)(ii)(a) would further provide that a Primary Peg Order to buy (sell) with a limit
price that is lower (higher) than its pegged price will be assigned a working price equal to its
limit price and may execute up (down) to its limit price.
Exchange Rule 2614(a)(3)(A)(ii)(b) would provide that an Aggressing Primary Peg
Order12 to buy (sell) will trade with resting orders to sell (buy) with a working price at or below

This is similar to the treatment of Pegged Orders, including Primary Peg Orders, on
EDGA and EDGX. See EDGA and EDGX Rules 11.6(j)(2) (providing that “[f]or
purposes of the Pegged instruction, the System’s calculation of the NBBO does not take
into account any orders with Pegged instructions that are resting on the EDGX Book”).

See Exchange Rule 1901 (stating that “[a]n ‘Aggressing Order’ is an order to buy (sell)
that is or becomes marketable against sell (buy) interest on the MIAX Pearl Equities
Book. A resting order may become an Aggressing Order if its working price changes, if

(above) its working price. A resting Primary Peg Order to buy (sell) will trade at its working
price against all Aggressing Orders to sell (buy) priced at or below (above) its working price.
Primary Peg Orders may be displayed or non-displayed on the MIAX Pearl Equities
Book. The Exchange proposes to allow Primary Peg Orders to include an offset, which would
allow a Primary Peg Order to be pegged to a price that is away from the PBB or PBO that it is
pegged to. Exchange Rule 2614(a)(3)(A)(ii)(c) would provide that a User13 may, but is not
required to, select an offset equal to or greater than one minimum price variation (“MPV”) for
the security, as defined in Exchange Rule 2612.14 The offset would be referred to as the Primary
Offset Amount.15
Non-displayed would be the default behavior for a Primary Peg Order.16 Therefore,
Exchange Rule 2614(a)(3)(A)(ii)(d) would provide that “[a] Primary Peg Order will be nondisplayed on the MIAX Pearl Equities Book, unless the User elects that the order be displayed.”
Exchange Rule 2614(a)(3)(A)(ii)(d) would further provide that “[a] displayed Primary Peg Order
may be designated as Attributable.” In such case, the Exchange would include the User’s

the PBBO or NBBO is updated, because of changes to other orders on the MIAX Pearl
Equities Book, or when processing inbound messages”).
See Exchange Rule 1901 (stating the “term ‘User’ shall mean any Member or Sponsored
Participant who is authorized to obtain access to the System pursuant to Exchange Rule
2602”).

Exchange Rule 2612 provides that “(a) [b]ids, offers, orders or indications of interests in
securities traded on the Exchange shall not be made in an increment smaller than: (1)
$0.01 if those bids, offers or indications of interests are priced equal to or greater than
$1.00 per share; or (2) $0.0001 if those bids, offers or indications of interests are priced
less than $1.00 per share and the security is an NMS stock pursuant to Rule 600(b)(48) of
Regulation NMS and is trading on the Exchange; or (3) Any other increment established
by the Commission for any security which has been granted an exemption from the
minimum price increments requirements of Rule 612(a) or 612(b) of Regulation NMS.”

This is consistent with similar provisions in other exchanges’ rules regarding Primary Peg
Orders. See, e.g., EDGA and EDGX Rules 11.6(j)(2).

This is consistent with similar provisions in other exchanges’ rules regarding Primary Peg
Orders. See, e.g., IEX Rule 11.190(a)(3).

Market Participant Identifier (“MPID”) with the displayed Primary Peg Order or identify such
order as Retail on an Exchange proprietary data feed.17
The direction of the Primary Offset Amount would depend on whether the Primary Peg
Order was displayed or non-displayed. Exchange Rule 2614(a)(3)(A)(ii)(c) would, therefore,
describe the Primary Offset Amount behavior for non-displayed Primary Peg Orders and provide
that the Primary Offset Amount for a non-displayed Primary Peg Order may be above or below
the PBB or PBO that the order is pegged to. Exchange Rule 2614(a)(3)(A)(ii)(c) would also
describe the Primary Offset Amount behavior for displayed Primary Peg Orders and further
provide that the Primary Offset Amount for a displayed Primary Peg Order to buy (sell) must
result in the working price of such order being inferior to or equal to the PBB (PBO).18
Conversely, the Primary Offset Amount for a non-displayed order will have no such requirement
and may result in the working price of a Primary Peg Order to buy (sell) being superior or better
than the PBB (PBO). Lastly with regard to Primary Offset Amounts, the Exchange proposes to
engage in standard rounding where the Primary Offset Amounts are not in an applicable MPV.
Therefore, Exchange Rule 2614(a)(3)(A)(ii)(c) would provide that the Primary Offset Amount
for an order to buy (sell) that is not in the applicable MPV for the security will be rounded down
(up) to the nearest price at the applicable MPV.19

See Exchange Rule 2614(c)(5) (describing the term “Attributable” as “[a]n instruction to
include the User’s MPID with an order that is designated for display (price and size) on
an Exchange proprietary data feed”). See also Exchange Rule 2626(f) (providing, in
sum, that “[a] Retail Member Organization may designate a Retail Order to be identified
as Retail on the Exchange’s proprietary data feeds …”).

This is consistent with similar provisions in other exchange’s rules regarding Primary Peg
Orders. See, e.g., BYX and BYX Rules 11.9(c)(8)(a), and EDGA and EDGX Rules
11.6(j)(2).

This is consistent with similar provisions in the Exchange’s Rules regarding rounding.
See Exchange Rules 2614(a)(1)(I)(iv) (providing that “Limit Order Price Protection
thresholds for an order to buy (sell) that is not in the minimum price variation (‘MPV’)
for the security, as defined in Exchange Rule 2616, will be rounded down (up) to the
nearest price at the applicable MPV”); and 2618(b)(1)(C) (providing that “[t]he Trading
Collar Price for an order to buy (sell) that is not in the minimum price variation (‘MPV’)
for the security, as defined in Exchange Rule 2612, will be rounded down (up) to the
nearest price at the applicable MPV”). The Exchange notes that for securities priced at or

Re-Pricing for Regulatory Compliance
As stated above, a Primary Peg Order would be a Limit Order. Therefore, Primary Peg
Orders would be subject to the same existing re-pricing processes that apply to Limit Orders to
comply with certain regulatory requirements, such as Rule 610 of Regulation NMS’s prohibition
on locked or crossed markets, Rule 201 of Regulation SHO’s price requirements, and the LimitUp Limit-Down Plan.20 The Exchange proposes to set forth these requirements under Exchange
Rule 2614(a)(3)(A)(ii)(e) through (h) for clarity and to ensure the Exchange’s Rules fully
describe the operation of Primary Peg Orders.
Proposed Exchange Rule 2614(a)(3)(A)(ii)(e) would link the re-pricing of Primary Peg
Orders to avoid a locked and crossed market in compliance with Rule 610 of Regulation NMS to
the Exchange’s Displayed Price Sliding Process described under Exchange Rule 2614(g)(1).
One example of when a Primary Peg Order would be re-priced pursuant to the Exchange’s
Displayed Price Sliding Process is when the market is locked upon entry or becomes locked
when the Primary Peg Order is resting on the MIAX Pearl Equities Book, the Exchange is not
displaying an order to buy (sell) at the PBB (PBO), and the Primary Peg Order is eligible for
execution during a locked market. In this scenario, a Primary Peg Order to buy (sell) would
normally be pegged to the PBB (PBO) of an away market that is displaying an order at the

above $1.00, a Primary Offset Amount that is not in the applicable MPV for the security
could result in the Primary Offset Amount being rounded to zero when zero is the nearest
price at the applicable MPV.
This is consistent with similar provisions in other exchanges’ rules regarding Primary Peg
Orders. See, e.g., NASDAQ’s Price to Comply Order, Price To Display Order, NonDisplayed Order, and Post Only Order under NASDAQ Rule 4702, all of which may
include a Primary Pegging instruction and require that the order be re-priced in
compliance with Rule 610 of Regulation NMS or to avoid a non-displayed internally
crossed book. See also NASDAQ Rule 4702 (providing that “[a]ll Orders are also
subject to cancellation and/or repricing and reentry onto the NASDAQ Book in the
circumstances described in Rule 4120(a)(12) (providing for compliance with Plan to
Address Extraordinary Market Volatility) and Rule 4763 (providing for compliance with
Regulation SHO)”). See, e.g., EDGA and EDGX Rules 11.6(j)(2) (providing that when
their book “is crossed by another market, an order with a Primary Peg instruction will be
automatically adjusted to the current NBO (for bids) or the current NBB (for offers)”).

locking price. However, the Exchange would not peg the Primary Peg Order to its pegged price
as that would result in the Primary Peg Order joining the locked market. The order would
instead be re-priced pursuant to the Exchange’s Displayed Price Sliding Process.
The re-pricing would be identical to that for Limit Orders with two differences.21
Exchange Rule 2614(g)(1)(A) provides that “[t]he working and displayed prices of an order
subject to the Display Price Sliding Process may be adjusted once or multiple times depending
upon the instructions of a User and changes to the prevailing PBBO.” Primary Peg Orders that
are re-priced pursuant to the Display Price Sliding Process would have their working and
displayed prices adjusted multiple times in response to changes to the PBBO. The Exchange
believes this behavior is appropriate given that Primary Peg Orders by their nature are to be repriced multiple times. Specifically, a Primary Peg Order to buy (sell) would have its working
price adjusted each time there is a change to the PBB (PBO) when not being re-priced pursuant
to the Display Price Sliding Process. Unlike for Limit Orders, the Exchange does not propose to
allow Users to instruct the Exchange to cancel their orders if the order is to be re-priced pursuant
to the Displayed Price Sliding Process because such orders are not eligible for execution when
the market is crossed and, when elected by the User, not eligible for execution when the market
is locked. A User may cancel their order at any time, including when the market is locked or
crossed. The Exchange also believes these differences are consistent with Equity Members’22
expectations and with the operation of Primary Peg Orders that are to be continuously re-priced
in response to changes in the PBBO. The Exchange also understands Equity Members are likely
not to elect automatic cancellation. These differences are also consistent with the treatment of
Primary Peg Orders on other equity exchanges.23 To codify this behavior, proposed Exchange

See Exchange Rule 2614(a)(1)(E).

The term “Equity Member” is a Member authorized by the Exchange to transact business
on MIAX Pearl Equities. See Exchange Rule 1901.

See, e.g., EDGX Rule 11.6(j)(2) (providing for re-pricing each time the price of the
Primary Peg Order locks or crosses an away market and not including a provision
allowing for the automatic cancellation of a Primary Peg Order when it is to be re-

Rule 2614(a)(3)(A)(ii)(e) would provide that “[a] Primary Peg Order to buy (sell) that, if
displayed at its pegged price on the MIAX Pearl Equities Book, would lock or cross the PBO
(PBB) of an away Trading Center will be re-priced multiple times pursuant to the Display Price
Sliding Process.”
Next, proposed Exchange Rule 2614(a)(3)(A)(ii)(f) would link the re-pricing of Primary
Peg Orders to the Exchange’s Short Sale Price Sliding Process designed to comply with Rule
201 of Regulation SHO described under Exchange Rule 2614(g)(3) during a time when a short
sale price test restriction under Rule 201 of Regulation SHO is in effect (“Short Sale Period”).
An example of when a displayed Primary Peg Order would be re-priced pursuant to the
Exchange’s Short Sale Price Sliding Process upon entry24 is when the market is locked and the
Primary Peg Order is eligible for execution during a locked market and its pegged price would
result in its being executed or displayed at a price equal to the PBB. Another example of when a
Primary Peg Order would be re-priced pursuant to the Exchange’s Short Sale Price Sliding
Process when resting on the MIAX Pearl Equities Book is when the Primary Peg Order to sell is
non-displayed and includes a Primary Offset Amount that would result in its being executable at
a price equal to or below the PBB. The re-pricing would be identical to that for Limit Orders
with one difference.25 Unlike for Limit Orders, the Exchange does not propose to allow Users to

priced). This is consistent with similar provisions in other exchanges’ rules regarding
Primary Peg Orders. See also, e.g., NASDAQ’s Price to Comply Order which may
include a Primary Pegging instruction under NASDAQ Rule 4702(b)(1)(B) (providing
that “[i]f the entered limit price of the Price to Comply Order locked or crossed a
Protected Quotation and the NBBO changes, the displayed and non-displayed price of the
Price to Comply Order will be adjusted repeatedly in accordance with changes to the
NBBO”).
A displayed Primary Peg Order resting on the MIAX Pearl Equities Book would stand its
ground and not be re-priced pursuant to the Exchange’s Short Sale Price Sliding Process
if the PBB changes so that it would be priced below the PBB. See Exchange Rule
2614(g)(3)(C) (providing that “[d]uring a Short Sale Period, a short sale order will be
executed and displayed without regard to price if, at the time of initial display of the short
sale order, the order was at a price above the then current National Best Bid”).

See Exchange Rule 2614(a)(1)(F).

instruct the Exchange to cancel their orders if the order is to be re-priced pursuant to the Short
Sale Price Sliding Process. The Exchange believes this difference is consistent with Equity
Members’ expectations and with the operation of Primary Peg Orders that are to be continuously
re-priced in response to changes in the PBBO. The Exchange also understands Equity Members
are likely not to elect automatic cancellation. It is also consistent with the proposed treatment of
Primary Peg Orders that are to be re-priced pursuant to the Displayed Price Sliding Process
described above. The Exchange notes that a User may cancel their order at any time, including
during a Short Sale Period. Proposed Exchange Rule 2614(a)(3)(A)(ii)(f) would provide that
“[d]uring a Short Sale Period, as defined in Exchange Rule 2614(g)(3)(A), a Primary Peg Order
to sell that is designated as short and cannot be executed or displayed on the MIAX Pearl
Equities Book at its pegged price pursuant to Rule 201 of Regulation SHO will be re-priced
multiple times to a Permitted Price, as defined in Exchange Rule 2614(g)(3)(A), pursuant to the
Short Sale Price Sliding Process.”
Next, proposed Exchange Rule 2614(a)(3)(A)(ii)(g) would link the re-pricing of nondisplayed Primary Peg Orders to the Exchange’s Non-Displayed Price Sliding Process described
under Exchange Rule 2614(g)(2). An example of when a Primary Peg Order would be re-priced
pursuant to the Exchange’s Non-Displayed Price Sliding Process is when a non-displayed
Primary Peg Order to buy (sell) contains a Primary Offset Amount that would result in the
Primary Peg Order crossing a displayed sell (buy) order of an away market. In such case, the
Primary Peg Order would be re-priced to the locking price. The re-pricing would be identical to
that for non-displayed Limit Orders with no differences.26 Proposed Exchange Rule
2614(a)(3)(A)(ii)(g) would provide that “[a] non-displayed Primary Peg Order to buy (sell) that,

See Exchange Rule 2614(a)(1)(G). The Exchange notes that Exchange Rule
2614(a)(1)(G) does not provide that the User may affirmatively elect to cancel their order
where it is to be re-priced pursuant to the Non-Displayed Price Sliding Process.

if posted to the MIAX Pearl Equities Book, would cross the PBO (PBB) of an away Trading
Center will be re-priced pursuant to the Non-Displayed Order Price Sliding Process.”
Lastly with regard to re-pricing, proposed Exchange Rule 2614(a)(3)(A)(ii)(h) would link
the re-pricing of Primary Peg Orders to the Exchange’s re-pricing to comply with the Limit-Up
Limit-Down Plan described under Exchange Rule 2622(h). The re-pricing would be identical to
that for Limit Orders with one difference.27 Unlike for Limit Orders, the Exchange does not
propose to allow Users to instruct the Exchange to cancel their orders if the order is to be repriced pursuant to Exchange Rule 2622(h). The Exchange believes this difference is consistent
with Equity Members’ expectations and with the operation of Primary Peg Orders that are to be
continuously re-priced in response to changes in the PBBO. The Exchange also understands
Equity Members are likely not to elect automatic cancellation. It is also consistent with the
proposed treatment of Primary Peg Orders that are to be re-priced pursuant to the Displayed
Price Sliding and Short Sale Price Sliding Processes described above. The Exchange notes that a
User may cancel their order at any time, including when the order is re-priced pursuant to
Exchange Rule 2622(h). Proposed Exchange Rule 2614(a)(3)(A)(ii)(h) would provide that “[a]
Primary Peg Order to buy (sell) that is priced above (below) the Upper (Lower) Price Band shall
be re-priced pursuant to Exchange Rule 2622(h).”
Other Proposed Changes to Exchange Rules 2614(a)(3)
The Exchange also proposes a series of changes to Exchange Rules 2614(a)(3)(C)
through (F) that apply to Midpoint Peg Orders to include proposed behavior for Primary Peg
Orders that would be similar or identical to that of Midpoint Peg Orders and, where appropriate,
to apply to Pegged Orders generally. The Exchange also proposes to renumber these paragraphs
due to the proposal to describe both Primary Peg Orders and Midpoint Peg Orders under the
same rule.

See Exchange Rule 2614(a)(1)(H).

Exchange Rule 2614(a)(3)(C) currently discusses the handling of Midpoint Peg Orders
when the PBB and/or PBO is unavailable and when the PBBO is locked or crossed. Primary Peg
Orders would be treated similarly when the PBB and/or PBO is unavailable and when the PBBO
is locked or crossed. Therefore, the Exchange proposes to amend Exchange Rule 2614(a)(3)(C)
to also cover Primary Peg Orders as follows. First, Exchange Rule 2614(a)(3)(C) currently
provides that a Midpoint Peg Order will be accepted but will not be eligible for execution when
the PBB and/or PBO is not available.28 Similarly, the Exchange proposes to amend Exchange
Rule 2614(a)(3)(C) to further provide that a Primary Peg Order will be accepted but will not be
eligible for execution when the PBB or PBO it is pegged to is not available.29
Next, Exchange Rule 2614(a)(3)(C) currently provides that a Midpoint Peg Order will be
accepted but will not be eligible for execution when the PBBO is crossed and, if instructed by the
User, when the PBBO is locked. This would also be true for Primary Peg Orders. Therefore, the
Exchange proposes to amend this portion of Exchange Rule 2614(a)(3)(C) to apply to Pegged
Orders generally, which would include both Midpoint Peg and Primary Peg Orders, and provide
that all Pegged Orders will be accepted but will not be eligible for execution when the PBBO is
crossed, and, if instructed by the User, when the PBBO is locked.
Next, Exchange Rule 2614(a)(3)(C) currently provides a Midpoint Peg Order that is
eligible for execution when the PBBO is locked will be executable at the locking price. This
would also be true for Primary Peg Orders that are eligible for execution during a locked market.
Therefore, the Exchange proposes to amend this portion of Exchange Rule 2614(a)(3)(C) to
apply to Pegged Orders generally by replacing “Midpoint Peg Orders” with “Pegged Orders.”
Next, Exchange Rule 2614(a)(3)(C) currently provides a Midpoint Peg Order will
become eligible for execution and receive a new timestamp when the PBB and/or PBO both

A Primary Peg Order to buy (sell) with a time-in-force of IOC will be cancelled if
received during a time when the PBB (PBO) is not available.

This is consistent with similar provisions in other exchanges’ rules regarding Primary Peg
Orders. See, e.g., EDGA and EDGX Rules 11.6(j)(2).

become available, or the PBBO unlocks30 or uncrosses and a new midpoint of the PBBO is
established. This would also be true for Primary Peg Orders, other than the requirement that a
new midpoint of the PBBO be established following when the market unlocks or uncrosses
because this requirement is unique to the operation of Midpoint Peg Orders whose working price
is pegged to the midpoint of the PBBO. Therefore, the Exchange proposes to amend this portion
of Exchange Rule 2614(a)(3)(C) to apply to Pegged Orders generally by replacing “Midpoint
Peg Orders” with “Pegged Orders” and retain the requirement for Midpoint Peg Orders to
provide that a Pegged Order will become eligible for execution and receive a new timestamp
when the PBBO or [sic] uncrosses and to further specify when a Pegged Order would receive a
new timestamp. Exchange Rule 2614(a)(3)(C) would specify that a Pegged Order that was not
eligible for execution during a locked market will become eligible for execution and receive a
new timestamp when the PBBO unlocks. 31 Exchange Rule 2614(a)(3)(C) would further specify
that a Primary Peg Order will become eligible for execution and receive a new timestamp when
the PBB or PBO it is pegged to becomes available and that a Midpoint Peg Order will become
eligible for execution and receive a new timestamp when a new midpoint of the PBBO is
established.
Lastly, Exchange Rule 2614(a)(3)(C) further provides that in such case, pursuant to
Exchange Rule 2616, all such Midpoint Peg Orders will retain their priority as compared to each
other based upon the time priority of such orders immediately prior to being deemed not eligible
for execution as set forth in this subparagraph (C). Again, the same would be true for Primary
Peg Orders. Therefore, the Exchange proposes to amend this portion of Exchange Rule
2614(a)(3)(C) to apply to Pegged Orders generally by replacing “Midpoint Peg Orders” with
“Pegged Orders” and to specify that this provision would apply to each of the scenarios set forth

This would apply to a Midpoint Peg Order and Primary Peg Order that the User elects not
be eligible for execution when the PBBO is locked.

The Exchange notes that a Primary Peg Order that is eligible for execution when the
PBBO is locked will not receive a new timestamp.

in the preceding paragraph. The Exchange also proposes to renumber Exchange Rule
2614(a)(3)(C) as Exchange Rule 2614(a)(3)(B) and update a cross-reference within this
paragraph.
Exchange Rule 2614(a)(3)(D) sets forth which time-in-force instructions may be included
for a Midpoint Peg Order. Specifically, Exchange Rule 2614(a)(3)(D) provides that Midpoint
Peg Order may include a time-in-force of Immediate-or-Cancel (“IOC”)32 or Regular Hours Only
(“RHO”)33 and that a Midpoint Peg Order with a time-in-force of RHO is eligible to participate
in the Opening Process under Exchange Rule 2615. Exchange Rule 2614(a)(3)(D) further
provides that a Midpoint Peg Order is eligible to participate in the Regular Trading Session.
Each of these above provisions would be true for Primary Peg Orders.34 Therefore, the
Exchange proposes to amend Exchange Rule 2614(a)(3)(D) to apply to Pegged Orders generally
by replacing “Midpoint Peg Orders” with “Pegged Orders.” The Exchange also proposes to
renumber Exchange Rule 2614(a)(3)(D) as Exchange Rule 2614(a)(3)(C).
Exchange Rule 2614(a)(3)(E) provides that a Midpoint Peg Order may be entered as an
odd lot, round lot, or mixed lot. Again, the same would be true for Primary Peg Orders.
Therefore, the Exchange proposes to amend this portion of Exchange Rule 2614(a)(3)(E) to
apply to Pegged Orders generally by replacing “Midpoint Peg Orders” with “Pegged Orders.”
Exchange Rule 2614(a)(3)(E) further provides that a Midpoint Peg Order may include a

See Exchange Rule 2614(b)(1) (describing IOC as “[a]n order that is to be executed in
whole or in part as soon as such order is received. The portion not executed immediately
on the Exchange or another Trading Center is treated as cancelled and is not posted to the
MIAX Pearl Equities Book”).

See Exchange Rule 2614(b)(2) (describing RHO as “[a]n order that is designated for
execution only during Regular Trading Hours, which includes the Opening Process for
equity securities”).

A Primary Peg Order would be treated like a Limit Order during the Opening Process and
would be executable at the midpoint of the PBBO subject to its limit price. Primary Peg
Orders with a time-in-force of RHO and a Post Only or Minimum Execution Quantity
instruction would not be eligible to participate in the Opening Process. See Exchange
Rule 2615(a)(1).

Minimum Execution Quantity35 instruction. Midpoint Peg Orders are non-displayed and the
Minimum Execution Quantity instruction is only available to non-displayed orders. The
Minimum Execution Quantity instruction would, likewise, be available to a non-displayed
Primary Peg Order. Therefore, the Exchange proposes to amend this portion of Exchange Rule
2614(a)(3)(E) to apply to non-displayed Pegged Orders generally by replacing “Midpoint Peg
Orders” with “non-displayed Pegged Orders”, which would include both Midpoint Peg and nondisplayed Primary Peg Orders. The Exchange also proposes to renumber Exchange Rule
2614(a)(3)(E) as Exchange Rule 2614(a)(3)(D).
Finally, Exchange Rule 2614(a)(3)(F) provides that Midpoint Peg Orders are not eligible
for routing pursuant to Exchange Rule 2617(b) and Midpoint Peg Orders may be designated as
Post Only. Again, both would be true for Primary Peg Orders. Therefore, the Exchange
proposes to amend Exchange Rule 2614(a)(3)(F) to apply to Pegged Orders generally by
replacing “Midpoint Peg Orders” with “Pegged Orders.” The Exchange also proposes to
renumber Exchange Rule 2614(a)(3)(F) as Exchange Rule 2614(a)(3)(E).
Priority
MIAX Pearl Equities provides a price/time priority execution model under which all nonmarketable orders resting on the MIAX Pearl Equities Book are ranked and maintained based in
following manner: (1) price; (2) priority category; (3) time; and (4) ranking restrictions
applicable to an order or modifier condition. As such, trading interest within a priority category
is executed in price/time priority, meaning all trading interest at the best price level within a
priority category is executed in time sequence before executing trading interest within the next
priority category. The Exchange maintains two priority categories, displayed and non-displayed
orders, where a displayed Limit Order at its displayed price has priority over a non-displayed

See Exchange Rule 2614(c)(11) (describing Minimum Execution Quantity as “[a]n
instruction a User may attach to a non-displayed order requiring the System to execute
the order only to the extent that a minimum quantity can be satisfied”).

Limit Order at that same price. As discussed above, Primary Peg Orders would be Limit Orders
and, therefore, subject to the same priority treatment. A displayed Primary Peg Order would be
provided displayed priority pursuant to Exchange Rule 2616(a)(2)(A)(i) and a non-displayed
Primary Peg Order would be provided non-displayed priority pursuant to Exchange Rule
2616(a)(2)(A)(ii). The Exchange does not propose to make any changes to Exchange Rule 2616
regarding the priority of displayed and non-displayed orders and simply seeks to provide clarity
in this proposal regarding the priority treatment of Primary Peg Orders.
Implementation
Due to the technological changes associated with this proposed change, the Exchange
will issue a trading alert publicly announcing the implementation date of this proposed rule
change. The Exchange anticipates that the implementation date will be in either the fourth
quarter of 2022 or first quarter of 2023.
2.

Statutory Basis

The proposed rule change is consistent with Section 6(b) of the Act,36 in general, and
furthers the objectives of Section 6(b)(5),37 in particular, because it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions in securities, 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. The proposed rule change
would remove impediments to and promote just and equitable principles of trade because it
would provide market participants with optional functionality that would provide them with
better control over their orders. The proposed Primary Peg Order would allow Equity Members
to rest passively on the MIAX Pearl Equities Book at or near the same-side of the PBBO and

15 U.S.C. 78f(b).

15 U.S.C. 78f(b)(5).

remain available to execute against an incoming order seeking to cross the spread and execute at
prices equal to or more aggressive (from the taker’s perspective) than such quote. The proposed
Primary Peg Order would also provide price improvement opportunities to incoming orders
where the Primary Peg Order is non-displayed and included a Primary Offset Amount superior to
the PBB or PBO it is pegged to. The Exchange believes that adding a Primary Peg Order would
incentivize Equity Members and their customers to post more passive resting liquidity on the
Exchange that is priced to execute at or near the primary quote, and consequently may result in
greater execution opportunities at the far side quote for Equity Members entering spread crossing
orders. Therefore, the Exchange believes the proposal promotes just and equitable principles of
trade, removes impediments to and perfect the mechanism of a free and open market and a
national market system.
Because the Exchange does not have this functionality, the Exchange believes that
market participants have avoided sending order flow to the Exchange in favor of other equity
exchanges that provide Primary Peg Order functionality. In this regard, the Exchange notes that
the proposed new optional Primary Peg Order may improve the Exchange’s market by attracting
more order flow. Such new order flow will further enhance the depth and liquidity on the
Exchange, which supports just and equitable principles of trade and benefits all market
participants. Furthermore, the proposed Primary Peg Order is consistent with providing market
participants with greater flexibility over their orders so that they may achieve their trading goals
and improve the quality of their executions.
Lastly, the Exchange believes its proposal promotes just and equitable principles of trade
because the proposed operation of the Primary Peg Order presents no new or novel issues
because this order type is well established in the equity markets and its proposed operation is
based on the same order type offered by other exchanges.38 The Exchange does not propose to

See supra note 7.

include any unique functionality as part of its proposed Primary Peg Order. For example, the
Exchange does not propose any unique priority treatment for Primary Peg Orders as they are
considered Limit Orders and will be provided the same priority treatment under existing
Exchange Rule 2616(a). As described throughout the proposal, all portions of the proposed rule
text are based on existing Exchange Rules regarding Midpoint Peg Orders and the rules of other
equity exchanges. To the extent the Exchange proposes to include a provision that is not
included in another equity exchanges’ rules, it proposes to do so simply to align the behavior
with the existing Midpoint Peg Order handling or to provide additional transparency while not
deviating from functionality offered by other equity exchanges, but perhaps not fully described
in their rules. Therefore, the Exchange believes the proposed rule change is consistent with the
Act.
B.

Self-Regulatory Organization’s Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on
competition that is not necessary or appropriate in furtherance of the purposes of the Act. In
fact, the Exchange believes that the proposal may have a positive effect on competition because
it will enable the Exchange to offer functionality substantially similar to that offered by the Cboe
Equity Exchanges, the NYSE Exchanges, NASDAQ, MEMX, and IEX.39 As noted above, the
Exchange believes its lack of this functionality has put it at a competitive disadvantage as market
participants have avoided sending passively priced resting orders to the Exchange. This proposal
is designed to allow the Exchange to directly compete with other exchanges that offer similar
Primary Peg Order functionality. The Exchange believes that its proposal promotes competition
because it is designed to attract liquidity to the Exchange by incentivizing Equity Members and
their customers to post more passive resting liquidity on the Exchange that is priced to execute at
the primary quote, and consequently may result in greater execution opportunities at the far side

Id.

quote for Equity Members entering spread crossing orders. The proposed Primary Peg Order
would have no unfair impact on intra-market competition because it would be available to all
Equity Members equally.
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
Because the foregoing proposed rule change does not: (i) significantly affect the

protection of investors or the public interest; (ii) impose any significant burden on competition;
and (iii) become operative for 30 days after the date of the filing, or such shorter time as the
Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act40 and
Rule 19b-4(f)(6)41 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.
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:

15 U.S.C. 78s(b)(3)(A).

17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory
organization to give the Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange has satisfied this requirement.

Electronic Comments:
ï‚·

Use the Commission’s Internet comment form (http://www.sec.gov/rules/sro.shtml); or

ï‚·

Send an email to rule-comments@sec.gov. Please include File Number SR-PEARL-202234 on the subject line.

Paper Comments:
ï‚·

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-2022-34. This file number should be
included on the subject line if e-mail is used. To help the Commission process and review your
comments more efficiently, please use only one method. The Commission will post all
comments on the Commission’s Internet website (http://www.sec.gov/rules/sro.shtml). Copies
of the submission, all subsequent amendments, all written statements with respect to the
proposed rule change that are filed with the Commission, and all written communications
relating to the proposed rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission’s Public Reference Room, 100 F
Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m.
and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted without change.
Persons submitting comments are cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number SR-PEARL-2022-34 and
should be submitted on or before [insert date 21 days from publication in the Federal Register].

For the Commission, by the Division of Trading and Markets, pursuant to delegated
authority.42

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19581 Filed: 9/9/2022 8:45 am; Publication Date: 9/12/2022]

17 CFR 200.30-3(a)(12).