The Securities and Exchange Commission (SEC) has issued notice of a proposed rule change filed by MIAX Pearl, LLC, an equities trading facility, to amend its fee schedule. The filing, submitted on January 30, 2026, seeks to adjust the quoting requirements for the Market Quoting Program, increasing the minimum number of multi-listed securities in which equity members must achieve at least 50% time at the national best bid and offer (NBBO) from 750 to 900. This change, effective February 1, 2026, is designed to encourage improved market quality through enhanced quoting activity. Published in the Federal Register on February 11, 2026, the proposal operates under immediate effectiveness provisions of the Securities Exchange Act of 1934, while inviting public comments. This development reflects ongoing efforts by exchanges to refine incentive structures amid a competitive landscape, potentially influencing liquidity provision and price discovery in U.S. equities markets.
Background on the Market Quoting Program
MIAX Pearl introduced the Market Quoting Program in January 2026 to offer enhanced rebates for equity members adding displayed liquidity in securities priced at or above $1 per share across all trading sessions—early (4:00 a.m. to 9:30 a.m. ET), regular (post-opening to 4:00 p.m. ET), and late (4:00 p.m. to 8:00 p.m. ET). The program provides a rebate of ($0.0026) per share for qualifying executions in securities across all tapes (A, B, and C), provided members meet specific market quality criteria. Originally, eligibility required members to maintain at least 50% time at the NBBO in a minimum of 750 multi-listed securities during the month. This metric, defined as the aggregate percentage of time during regular trading hours where a member has a displayed order of at least one round lot at the national best bid or offer, focuses solely on orders at the NBBO in the regular session.
The program excludes rebates for securities below $1 per share and disqualifies participants from other incentives like the NBBO Setter Additive Rebate ($0.00035 per share for setting the NBBO with a round lot) or the NBBO First Joiner Additive Rebate ($0.0001 per share for joining the established NBBO). Members receive the higher rebate between this program and the tiered rebates under the NBBO Setter Plus Program, which rewards based on volume thresholds and market quality levels. As noted in the filing, the program was adopted via Securities Exchange Act Release No. 104583 (January 13, 2026), emphasizing its role in promoting liquidity and price discovery.
Details of the Proposed Amendment
The core change raises the securities threshold for the 50% NBBO quoting requirement from 750 to 900 multi-listed securities. This adjustment applies to the same rebate structure and liquidity indicator codes (AA, EA, FA, AB, EB, FB, AC, EC, FC), maintaining the focus on adding displayed liquidity. The filing states that the amendment aims to incentivize members to quote at the NBBO more consistently in a broader array of securities, fostering narrower bid-ask spreads and deeper liquidity. Implementation begins February 1, 2026, but due to amendments in Regulation NMS Rule 610(d)—adopted September 18, 2024, and detailed in Securities Exchange Act Release No. 101070 (89 FR 81620, October 8, 2024)—rebates for February qualifiers will not apply until March 1, 2026. Rule 610(d) prohibits fees or rebates not determinable at execution time, necessitating this delay.
MIAX Pearl compares the revised program to similar incentives at other exchanges, such as MEMX LLC's additive rebate of $0.0002 per share for members achieving 50% NBBO time in at least 500 Tape C securities, as referenced in Securities Exchange Act Release No. 102789 (April 8, 2025). This positions the program as a competitive tool in a fragmented market where no exchange exceeds 14.63% market share, based on December 2025 data.
Statutory Basis and Regulatory Context
The proposal aligns with Section 6(b)(4) of the Securities Exchange Act of 1934, ensuring an equitable allocation of fees, and Section 6(b)(5), promoting just and equitable trade principles without unfair discrimination. MIAX Pearl argues the change removes impediments to a free and open market by enhancing competition and market quality. It cites the highly competitive equities landscape, with 17 registered exchanges and off-exchange venues, where market share fluctuates—evidenced by MIAX Pearl's 0.75% share in December 2025.
This filing operates under Section 19(b)(3)(A)(ii) for immediate effectiveness, allowing swift implementation while soliciting comments. It draws on Regulation NMS precedents, including Release No. 51808 (June 9, 2005), which underscores market forces in pricing. The exchange asserts no undue burden on competition, as the program is open to all members meeting criteria, similar to volume-based incentives elsewhere.
Potential Implications and Perspectives
Short-term, the higher threshold may challenge smaller members to scale quoting activity, potentially concentrating benefits among larger firms with advanced technology. This could lead to improved liquidity in more securities, benefiting investors through better execution prices. Long-term, it might influence overall market structure by encouraging sustained NBBO participation, aligning with SEC goals for efficient pricing as in Regulation NMS.
Perspectives vary: proponents, including MIAX Pearl, view it as a pro-competitive measure enhancing depth, akin to programs at MEMX or historical BZX incentives (Release No. 77846, May 17, 2016). Critics might argue it favors high-volume quoters, potentially disadvantaging retail-focused brokers, though the filing notes broad accessibility. Regulators, via the comment period, will assess alignment with public interest, echoing debates in NetCoalition v. SEC (615 F.3d 525, D.C. Cir. 2010) on fierce order flow competition.
In summary, this amendment seeks to bolster MIAX Pearl's position in a dynamic market, with outcomes hinging on member adaptation and regulatory feedback.
