What's the definition of Primitive Notion? I'm inclined to say Set Equality is not a Primitive Notion if the latter is defined as the most primitive terms in an axiomatic system.
Any axiomatic system will have fundamental terms which can't be defined, otherwise you get an infinite regress. Further, you can't get more fundamental than the undefined terms. Consider defining Point, Set, and Plane in Euclidean Geometry.
In matters of set theory, we accept as undefined terms Set, Member/Element of. You can't get more primitive than that.
The question can be rephrased, is Set Equality as primitive as "Set"?
Both Formulation 1 and Formulation 2 stipulate a relationship using undefined terms. I'm thinking the need of stipulating the notion of Set Equality with those undefined terms necessarily implies the notion is less primitive than those basic terms. Thus we have Set Equality as a definition and not a Primitive Notion.
Other answers tell us that Set Equality can be represented as a modification of Extensionality, but Extensionality itself is stated in terms of more fundamental notions.
Definitions name a relationship between undefined terms necessarily specifying a subset of the fundamental structures involved.
Axioms establish relationships between fundamental entities without necessarily specifying a new term for entities.
So both Definitions and Axioms are less primitive than the undefined terms.
Theorems are proven using references to Definitions and Axioms, so they are less primitive than those.
So Set Equality is not among the most primitive notions in Set Theory, but is more primitive than any theorems.
I'm inclined to think Formulation 2 is unavoidable. Again, this all rests on the definition of "Primitive Notion".