FR 2025-06913

General Summary

The Securities and Exchange Commission (SEC) has considered a proposed rule change submitted by MIAX PEARL, LLC. This rule change aims to modify certain billing practices related to the collection of fees from Exchange Members and Equity Members. Specifically, it offers members the flexibility to provide alternative payment instructions, distinct from the traditional requirement to utilize designated clearing account numbers. The intention behind this flexibility is to alleviate the operational burdens that some members might face with the existing payment system. Despite this change, MIAX PEARL, LLC retains the right to revert to conventional payment methods if necessary, ensuring that any due fees are collected effectively. The SEC has opted to forgo the normal 30-day waiting period, allowing the proposal to take effect immediately upon filing.

Significant Issues and Concerns

One of the major concerns with the new rule is the potential for a lack of standardization in the payment process. Allowing alternative payment instructions could complicate accounting and oversight tasks like audits, possibly leading to inconsistencies. Additionally, while the SEC waived the usual 30-day operative delay, the broader implications of how this expedites any benefits to investors or the public remain somewhat unclear, especially given the general rationale about flexibility.

The document uses legal and financial jargon, particularly in sections detailing the statutory basis for change, which might make it difficult for individuals without a legal or financial background to fully comprehend. Additionally, the comparison to similar rules enacted by other exchanges lacks depth in assessing their success or failures, missing a potentially insightful analysis.

Moreover, the proposal does not specifically address how these changes might impact smaller or financially less robust participants, which could be an oversight given the variability in resource levels among market participants.

Impact on the Public and Stakeholders

For the general public, this proposal is unlikely to have a direct impact. However, effective fee collection and financial management indirectly ensure that securities exchanges operate smoothly, thereby maintaining market stability, which benefits all investors.

For specific stakeholders, particularly the Members and Equity Members of MIAX PEARL, LLC, this rule change could bring convenience by allowing them to avoid potentially cumbersome payment procedures. This flexibility could be especially beneficial for those who have particular operational challenges with using clearing account numbers for payments.

On the potential downside, the general lack of clarity on what constitutes acceptable "alternative payment instructions" could lead to inconsistent implementation. This might predominantly affect members who might not have the resources to navigate complex financial arrangements, thus leading to a subtle disadvantage in comparison to more established members.

In terms of competition, the changes are asserted to be equitable, applying uniformly across all members. However, the absence of detailed analysis raises questions about how this equity is measured and whether the flexibility truly levels the playing field or inadvertently tilts it.

In summary, while the proposed rule changes introduce sensible flexibility in theory, the execution and clarity of said changes would be critical in ensuring it benefits all stakeholders effectively.