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Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices
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including related amendments to add various definitions and provisions for terms of office, nomination and election, filling of vacancies, and removal and resignation, are consistent with the Act.36 The Commission finds that although the Board may become larger if ERP Directors are added, the composition previously approved by the Commission in connection with MIAX
PEARLs registration as a national securities exchange 37 will remain the same.38 ERP Directors will be Industry Directors,39 and the Board will continue to be comprised of a number of NonIndustry Directors,40 including at least one Independent Director,41 that equals or exceeds the sum of the number of Industry Directors and Member Representative Directors.42 The number of Member Representative Directors will not include ERP Directors, and shall continue to comprise at least 20% of the PEARL Board.43 Additionally, the process for nomination and election of Member Representative Directors is not impacted by the Exchanges proposal.44
Accordingly, the Commission finds that the provisions reflecting the possible addition of ERP Directors to the PEARL
Board are consistent with the Act, and in particular with Section 6b3 of the Act,45 in that the Exchanges By-Laws will continue to provide for the fair representation of members in the selection of directors and the administration of MIAX PEARL, as well as representation of issuers and investors.
36 See Article II, Sections 2.2, 2.3, 2.4, 2.8, and 2.9
of the MIAX PEARL Amended and Restated ByLaws.
37 See Securities Exchange Act Release No. 79543
December 13, 2016, 81 FR 92901 December 20, 2016 File No. 10277 In the Matter of the Application of MIAX PEARL, LLC for Registration as a National Securities Exchange; Findings, Opinion, and Order of the Commission PEARL
Approval Order.
38 See supra note 29 and accompanying text.
39 See supra note 16.
40 See Article Iaa of the MIAX PEARL Amended and Restated By-Laws, defining Non-Industry Directors to mean a Director who is i an Independent Director; or ii any other individual who would not be an Industry Director.
41 See Article Ip of the By-Laws, defining Independent Director to mean a Director who has no material relationship with the Company or any affiliate of the Company, or any Exchange Member or any affiliate of any such Exchange Member; provided, however, that an individual who otherwise qualifies as an Independent Director shall not be disqualified from serving in such capacity solely because such Director is a Director of the Company or its LLC Member.
42 See Article II, Section 2.2bi of the MIAX
PEARL Amended and Restated By-Laws.
43 See Article II, Section 2.2bii of the MIAX
PEARL Amended and Restated By-Laws.
44 See Article V, Section 5.3 of the MIAX PEARL
Amended and Restated By-Laws.
45 15 U.S.C. 78fb3.

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The Commission also notes that ERP
Directors will be subject to the same duties and obligations as any other member of the PEARL Board, including provisions that are designed to help maintain the independence of the regulatory functions of the Exchange and help facilitate MIAX PEARLs ability to carry out its responsibilities and operate in a manner consistent with the Act.46 For example, ERP Directors will be subject to By-Law provisions requiring the PEARL Board, in connection with managing the business and affairs of MIAX PEARL, to consider applicable requirements under Section 6b of the Act governing conflicts of interest; requiring the PEARL Board, when evaluating any proposal, to take into account MIAX PEARLs status as a self-regulatory organization SRO;
and protecting the confidentiality of information and records related to the Exchanges SRO function.47 In this regard, the Commission finds that the provisions reflecting the addition of ERP
Directors to the PEARL Board are consistent with the Act, and in particular with Section 6b1, which requires an exchange to be so organized and have the capacity to carry out the purposes of the Act.48
B. Addition of Observer Positions and Related Provisions The Commission finds that the proposed amendments to the By-Laws that add provisions relating to the appointment of Observers, including related amendments that add various definitions and provisions for appointment and terms of office are consistent with the Act.49 The Commission also finds that the proposed amendments governing the rights and obligations of Observers are consistent with the Act. The Commission finds that although Observers will generally have the right to attend all meetings of the Board and receive materials provided to directors,50 they will have the right to attend those meetings only in a nonvoting capacity and must agree to hold such information in confidence and trust and to act in a fiduciary manner 46 See PEARL Approval Order, supra note 37, 81
FR at 92906.
47 See Article 2.1d and e and Section 2.20, and Article X, Section 10.4 of the MIAX PEARL
Amended and Restated By-Laws. The Exchange represents that the ERP Directors will be subject to the same restrictions as current directors, including the provisions noted above. See Notice, supra note 3, 85 FR at 79266.
48 15 U.S.C. 78fb1.
49 See Article II, Sections 2.2 and 2.3 of the MIAX
PEARL Amended and Restated By-Laws.
50 See supra note 17 and accompanying text.

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with respect to such information.51
Additionally, the Exchange represents that Observers will be subject to the same requirements as members of the Board to maintain the confidentiality of all books and records of the Exchange reflecting confidential information pertaining to the SRO function of the Exchange.52 The Exchange also reserves the right to withhold any information from an Observer and to exclude an Observer from any meeting or portion thereof that could, among other things, result in the disclosure of trade secrets or a conflict of interest.53 The Commission finds that these restrictions on, and obligations of, Observers are consistent with the Act, particularly Section 6b1,54 in that they are designed to ensure that MIAX PEARL
will remain so organized as to have the capacity to carry out the purposes of the Act.
IV. Conclusion For the foregoing reasons, the Commission finds that the proposed rule changes are consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange.
It is therefore ordered, pursuant to Section 19b2 of the Act,55 that the proposed rule change SRPEARL
202030, be, and hereby is, approved.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.56
J. Matthew DeLesDernier, Assistant Secretary.
FR Doc. 202103216 Filed 21721; 8:45 am BILLING CODE 801101P

51 See Article II, Section 2.2giii, and Article X, Sections 10.3 and 10.4 of the MIAX PEARL
Amended and Restated By-Laws; see also supra note 17.
52 See Notice, supra note 3, 85 FR at 79255.
53 See Article II, Section 2.2giii of the MIAX
PEARL Amended and Restated By-Laws; see also supra note 17.
54 15 U.S.C. 78sb1.
55 Id.
56 17 CFR 200.303a12.

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