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Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19
J. Matthew DeLesDernier, Assistant Secretary.
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SECURITIES AND EXCHANGE
COMMISSION
Release No. 3491112; File No. SR
PEARL202030

Self-Regulatory Organizations; MIAX
PEARL, LLC; Order Granting Approval of a Proposed Rule Change To Amend the Exchanges By-Laws in Connection With an Equity Rights Program February 11, 2021.

I. Introduction On November 24, 2020, MIAX
PEARL, LLC the Exchange or MIAX
PEARL filed with the Securities and Exchange Commission Commission, pursuant to Section 19b1 of the Securities Exchange Act of 1934
Act,1 and Rule 19b4 thereunder,2 a proposed rule change to amend the Amended and Restated By-Laws of MIAX PEARL as amended, the MIAX
PEARL Amended and Restated ByLaws to correspond with an Equity Rights Program recently established by the Exchange. The proposed rule change was published for comment in the Federal Register on December 9, 2020.3
On January 21, 2021, pursuant to Section 19b2 of the Act,4 the Commission designated a longer period within which to either approve the proposed rule change, disapprove the proposed rule changes, or institute proceedings to determine whether to disapprove the proposed rule changes.5
The Commission received no comments on the proposal. This order approves the proposed rule change.
II. Background and Description of the Proposed Rule Change On August 14, 2020, the Commission approved a proposed rule change to adopt rules governing the trading of equity securities on the Exchange and establish a platform for the trading of 19 17

CFR 200.303a12.
U.S.C. 78sb1.
2 17 CFR 240.19b4.
3 See Securities Exchange Act Release No. 90563
December 3, 2020, 85 FR 79252 Notice.
4 15 U.S.C. 78sb2.
5 See Securities Exchange Act Release No. 90962, 86 FR 7317 January 27, 2021. The Commission designated March 9, 2021, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule changes.

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equity securities referred to as MIAX
PEARL Equities.6 On August 20, 2020, the Exchange filed an immediately effective proposed rule change to establish an Equity Rights Program ERP,7 pursuant to which Units representing the right to acquire equity in the Exchanges parent holding company, Miami International Holdings, Inc. MIH, were issued to participating Exchange Members in exchange for the prepayment of certain Exchange fees and the achievement of certain liquidity volume thresholds on MIAX PEARL Equities over a 42-month period.8 In that August 2020 filing to implement the ERP, the Exchange stated that when a participating Member acquires a certain number of Units, the Member can appoint one director to the MIAX PEARL Board of Directors. 9 In this filing, the Exchange proposes to amend its By-Laws to provide for the right of such Exchange Members 10
participating in the ERP to nominate or appoint a representative to the MIAX
PEARL Board of Directors PEARL
Board or Board, as well as to make other changes, including certain nonsubstantive changes.11
Specifically, the Exchange proposes to amend its By-Laws to provide that an ERP Member 12 either by itself or with 6 See Securities Exchange Act Release Nos. 88132
February 6, 2020, 85 FR 8053 February 12, 2020
SRPEARL202003 Notice of Filing of a Proposed Rule Change to Adopt Rules Governing the Trading of Equity Securities; and 89563
August 14, 2020, 85 FR 51510 August 20, 2020
Order Approving Proposed Rule Change to Establish Rules Governing the Trading of Equity Securities.
7 See Securities Exchange Act Release No. 89730
September 1, 2020, 85 FR 55530 September 8, 2020 SRPEARL202010 Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Implement a Second Equity Rights Program ERP Notice.
8 See ERP Notice, supra note 7, 85 FR at 55530
31. In the ERP Notice, the Commission noted that MIAX PEARL would need to submit a separate proposed rule change to make changes to its corporate governance documents to accommodate aspects of the proposal that involve or affect the MIAX PEARL Board of Directors. See ERP Notice, supra note 7, 85 FR at 55532, n.16.
9 See ERP Notice, supra note 7, 85 FR at 55532.
10 See Article Ip of the MIAX PEARL Amended and Restated By-Laws, defining Exchange Member as any registered broker or dealer that has been admitted to membership in the national securities exchange operated by MIAX PEARL.
11 See Notice, supra note 3, 85 FR at 79255. The non-substantive changes include deletion from the current by-laws of provisions that specifically referenced past deadlines and events that have since occurred and deletion of the definition of the term Exchange Contract in Article Im of the current By-Laws because the term is not used therein or in the MIAX PEARL Amended and Restated By-Laws.
12 See Article In of the MIAX PEARL Amended and Restated By-Laws, defining ERP Member as an Exchange Member who acquired Units pursuant to an ERP Agreement sufficient to acquire
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its affiliates that is not otherwise represented on the PEARL Board may have the right to nominate one ERP
Director 13 or appoint an Observer 14 to the Board, as applicable.15 As proposed, ERP Directors will be classified as Industry Directors 16 with attendant voting rights, while Observers will be invited to attend meetings of the Board in a non-voting Observer capacity.17
an ERP Director or an Observer position. See also Article Il of the MIAX PEARL Amended and Restated By-Laws, defining ERP Agreement as the agreement between the Exchanges parent holding company, MIH, and ERP Members dated September 11, 2020 pursuant to which Units were issued; and Article Ipp of the MIAX PEARL
Amended and Restated By-Laws, defining Unit as the securities issued pursuant to the ERP
Agreement.
13 See Article Im of the MIAX PEARL Amended and Restated By-Laws, defining ERP Director as a MIAX PEARL Equities Industry Director who has been nominated by an ERP Member and appointed to the Board of Directors.
14 See Article Igg of the MIAX PEARL Amended and Restated By-Laws, providing that Observer has the meaning set forth in Article II, Section 2.2
of the MIAX PEARL Amended and Restated ByLaws. As described further below, an Observer is a person, appointed pursuant to Section 2.2 of the MIAX PEARL Amended and Restated By-Laws that may be invited to attend meetings of the Board in a non-voting observer capacity.
15 See Article II, Section 2.2e of the MIAX
PEARL Amended and Restated By-Laws. The ERP
Members right to nominate a Director or appoint an Observer pursuant to amended Section 2.2e will be perpetual, subject to the certain conditions discussed below. See Notice, supra note 3, 85 FR
at 79254.
16 See Article It of the MIAX PEARL Amended and Restated By-Laws, defining Industry Director to mean a Director who i is or has served in the prior three years as an officer, director, or employee of a broker or dealer, excluding an outside director or a director not engaged in the day-to-day management of a broker or dealer; ii is an officer, director excluding an outside director, or employee of an entity that owns more than 10% of the equity of a broker or dealer, and the broker or dealer accounts for more than 5% of the gross revenues received by the consolidated entity; iii owns more than 5% of the equity securities of any broker or dealer, whose investments in brokers or dealers exceed 10% of his or her net worth, or whose ownership interest otherwise permits him or her to be engaged in the day-to-day management of a broker or dealer; iv provides professional services to brokers or dealers, and such services constitute 20% or more of the professional revenues received by the Director or 20% or more of the gross revenues received by the Directors firm or partnership; v provides professional services to a director, officer, or employee of a broker, dealer, or corporation that owns 50% or more of the voting stock of a broker or dealer, and such services relate to the directors, officers, or employees professional capacity and constitute 20% or more of the professional revenues received by the Director or member or 20% or more of the gross revenues received by the Directors or members firm or partnership; or vi has a consulting or employment relationship with or provides professional services to the Company or any affiliate thereof or has had any such relationship or provided any such services at any time within the prior three years.
17 See Article II, Section 2.2giii of the MIAX
PEARL Amended and Restated By-Laws, providing
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