MIAX Pearl, LLC, an equities trading facility, filed a proposed rule change with the Securities and Exchange Commission on December 31, 2025, to amend its fee schedule by introducing a Market Quoting Program. This program provides an enhanced rebate for members adding displayed liquidity in securities priced at or above $1.00 per share, provided they meet specific quoting thresholds at the national best bid and offer. The filing, effective immediately under Section 19(b)(3)(A) of the Securities Exchange Act of 1934, seeks to promote price discovery and market quality. Published in the Federal Register on January 16, 2026, the notice invites public comments and underscores the competitive dynamics of equities markets.
Background and Purpose of the Proposal
MIAX Pearl Equities operates as a national securities exchange, facilitating trading in equities across early, regular, and late sessions. The exchange already offers various incentives, such as the NBBO Setter Plus Program, which provides tiered rebates based on volume and market quality metrics. The new Market Quoting Program builds on these by targeting broader quoting activity. According to the filing, the program encourages members to quote at the NBBO for at least 50% of the time in a minimum of 750 multi-listed securities during regular trading hours. This threshold applies across all tapes, aiming to deepen liquidity and narrow bid-ask spreads.
The proposal replaces a reserved section in the fee schedule with details of the program. It specifies an enhanced rebate of ($0.0026) per share for qualifying added displayed liquidity in securities priced at or above $1.00. Members achieving this rebate are ineligible for certain additive rebates under existing programs, receiving instead the higher of the applicable incentives. The exchange justifies this by noting similarities to programs at competitors like MEMX, which offer rebates for quoting in a set number of securities.
Key Players and Statutory Framework
The primary entities involved include MIAX Pearl as the self-regulatory organization, the SEC as the oversight body, and equity members who are authorized traders on the platform. The filing cites Section 6(b)(4) and 6(b)(5) of the Securities Exchange Act, emphasizing equitable fee allocation and the prevention of unfair discrimination. It argues the program fosters just and equitable trade principles while protecting investors.
Relevant precedents include prior SEC approvals of quoting incentives. For instance, MEMX's additive rebate for 50% NBBO time in at least 500 Tape C securities, as noted in SEC Release No. 102789 (April 8, 2025), mirrors this structure. Similarly, historical filings like SEC Release No. 77846 (May 17, 2016) for Bats BZX's Tape B Quoting Tier demonstrate a pattern of approving targeted incentives to enhance market quality without imposing undue burdens.
Analysis of Incentives and Market Impact
The program's core incentive is the ($0.0026) rebate, applicable to liquidity-adding orders with specific indicator codes such as AA, EA, and FA. This exceeds base rebates but requires substantial quoting commitment, defined as 'Percent Time at NBBO' of at least 50% in 750 securities. The exchange calculates this metric solely during regular hours, focusing on displayed orders of at least one round lot at the NBB or NBO.
From a market quality perspective, the proposal could increase depth at the NBBO, benefiting all participants through improved price discovery. The filing highlights the fragmented equities market, where no exchange exceeds 14.55% share as of November 2025, and MIAX Pearl holds about 0.96%. By incentivizing quoting in a large number of securities, the program addresses competitive pressures, potentially drawing order flow from venues like MEMX or Bats BZX.
Different viewpoints emerge on its equity. Proponents, including the exchange, view it as a reasonable allocation, rewarding members for enhancing liquidity without favoring any group unfairly. Critics might argue it could concentrate benefits among larger members capable of meeting high thresholds, though the filing asserts openness to all qualifying members. The proposal does not apply to sub-dollar securities, maintaining consistency with existing fee structures.
Potential Implications
Short-term effects may include increased quoting activity on MIAX Pearl, potentially boosting its market share and liquidity in targeted securities. Over the longer term, this could contribute to a more resilient national market system, aligning with Regulation NMS goals of promoting competition and efficient pricing.
Perspectives vary: investors and retail traders might welcome tighter spreads, while competing exchanges could see it as intensifying rivalry. The filing maintains no undue burden on competition, citing the ability of members to shift order flow. If successful, it could inspire similar programs elsewhere, further evolving fee structures in response to market dynamics.
Forward-Looking Considerations
The program's implementation on January 1, 2026, positions MIAX Pearl to monitor its impact on trading volumes and quality metrics. Ongoing debates may center on whether such incentives truly enhance investor protection or risk creating imbalances. Future challenges include adapting to evolving SEC regulations or market conditions, with potential adjustments based on comment feedback or performance data.
