Pearl Options
What Is MIAX Pearl Options?
MIAX Pearl Options (Pearl) is an electronic options exchange operating under the Miami International Securities Exchange (MIAX) group, known for its price-time priority matching engine and maker-taker fee structure.
**MIAX Pearl Options** is a fully electronic options exchange launched in 2017 by Miami International Holdings. It was created to complement the original MIAX Options exchange by offering a different market structure to appeal to a broader range of trading strategies. In the fragmented US options market, there are roughly 16 different exchanges. While they all trade the same options contracts (e.g., an Apple call option expiring next Friday), they compete on **execution models** and **pricing**. MIAX Pearl distinguishes itself through: 1. **Maker-Taker Pricing**: Unlike the "Pro-Rata" model of the original MIAX exchange (which favors market makers based on size), Pearl uses a Maker-Taker model. This structure pays a rebate to traders who post limit orders (adding liquidity) and charges a fee to those who execute against them (removing liquidity). This attracts algorithmic traders and market makers who profit from rebates. 2. **Price-Time Priority**: Orders are ranked first by price (best bid/offer) and then by time (first come, first served). This encourages speed and favors traders who are quick to update their quotes.
Key Takeaways
- MIAX Pearl is one of several US options exchanges, competing with CBOE, Nasdaq, and NYSE Arca.
- It uses a "Price-Time Priority" model, meaning orders are filled based on the best price and then the earliest arrival time.
- The exchange employs a "Maker-Taker" fee model, offering rebates to liquidity providers (makers) and charging fees to liquidity takers.
- Pearl lists options on thousands of equities and ETFs, participating in the National Market System (NMS).
- It is designed for high-frequency traders and institutions seeking execution speed and cost efficiency.
How It Fits into the Market
Retail traders rarely choose which exchange their order goes to directly. Instead, their broker's "Smart Order Router" (SOR) scans all exchanges (including Pearl, CBOE, Nasdaq, etc.) to find the best available price. However, MIAX Pearl is significant because its aggressive rebate structure often attracts competitive quotes, tightening the "spread" (the difference between bid and ask prices) for everyone. If Pearl offers a high rebate for posting a quote on SPY options, market makers are incentivized to post tighter spreads there, improving execution quality for retail investors across the entire market.
Exchange Comparison
Comparison of MIAX Pearl with other exchange models:
| Exchange | Matching Algorithm | Fee Structure | Target Audience |
|---|---|---|---|
| MIAX Pearl | Price-Time | Maker-Taker | HFTs, Aggressive Liquidity Providers |
| MIAX Options | Pro-Rata | Traditional (Fees for all) | Market Makers, Institutional Order Flow |
| CBOE | Hybrid (Floor + Electronic) | Varied | Complex Orders, Institutional Hedging |
| Nasdaq PHLX | Pro-Rata | Traditional | Floor Brokers, Market Makers |
Real-World Example: Routing an Order
Scenario: A trader wants to buy 10 call options on XYZ stock.
FAQs
No. Only registered broker-dealers who are members of the exchange can trade directly. Retail investors trade through a broker (like Fidelity, E*TRADE, or Robinhood), which routes orders to exchanges like Pearl on their behalf.
MIAX Pearl participates in the Penny Interval Program, which allows options on actively traded stocks (like Apple or Tesla) and ETFs (like SPY) to be quoted in 1-cent increments (e.g., $1.01, $1.02) rather than the standard 5-cent or 10-cent increments. This reduces transaction costs for investors.
Yes. Following the success of its options exchange, MIAX launched **MIAX Pearl Equities** in 2020, applying a similar price-time, maker-taker model to the trading of stocks.
Competition. Having multiple exchanges fosters innovation in trading technology, order types, and fee structures. It prevents any single monopoly from charging excessive fees for trading and ensures redundancy; if one exchange has a technical glitch, others remain open.
MIAX Pearl supports complex orders (like spreads, straddles, and butterflies) where multiple options legs are executed simultaneously as a single package. The exchange has a specialized "Complex Order Book" to facilitate these multi-leg strategies efficiently.
The Bottom Line
MIAX Pearl Options represents the modern, high-speed evolution of financial markets. By combining efficient technology with a competitive fee structure, it plays a vital role in the ecosystem of US options trading. While often operating behind the scenes for retail investors, its presence helps drive down spreads and execution costs, contributing to the liquidity and efficiency of the broader market.
More in Exchanges
At a Glance
Key Takeaways
- MIAX Pearl is one of several US options exchanges, competing with CBOE, Nasdaq, and NYSE Arca.
- It uses a "Price-Time Priority" model, meaning orders are filled based on the best price and then the earliest arrival time.
- The exchange employs a "Maker-Taker" fee model, offering rebates to liquidity providers (makers) and charging fees to liquidity takers.
- Pearl lists options on thousands of equities and ETFs, participating in the National Market System (NMS).