81242 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

54 15 U.S.C. 78s(b)(3)(A)(ii). 

55 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

exchanges and data vendors are free to 

lower their prices to better compete 

with the Exchange’s offering. Nasdaq’s 

main competitors, in particular, offer 

directly competing enterprise licenses 

for their top-of-book products, and are 

readily able to lower enterprise license 

fees in response to Nasdaq. Indeed, the 

Exchange’s decision to lower its 

enterprise license fee was itself 

generated by the need to compete with 

other exchanges. The Proposal may in 

turn generate competitive responses 

from other exchanges, enhancing overall 

competition. 

Intramarket Competition 

The Proposal will not cause any 

unnecessary or inappropriate burden on 

intramarket competition. In fact, it will 

foster competition among broker-dealers 

by lowering costs for current licensees, 

while at the same time increasing the 

number of broker-dealers able to 

purchase that license. The current 

enterprise license, just like all of the 

enterprise licenses offered by Nasdaq’s 

competitors, does not itself impose an 

unnecessary or inappropriate burden on 

intramarket competition. Relatively 

smaller broker-dealers have fewer 

internal Professional Subscribers and 

therefore operate with lower fixed costs, 

helping them compete with the larger 

broker-dealers. Moreover, the 

underlying fee of $26 per Professional 

Subscriber fee has itself been shown not 

to place an undue burden on 

competition, and, if that fee proves to be 

excessive, broker-dealers would be able 

to purchase top-of-book data from one of 

the Exchange’s competitors offering a 

substitute product. For all of these 

reasons, the Proposal will not place any 

unnecessary or inappropriate burden on 

intramarket competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.54

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2020–086 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2020–086. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2020–086 and 

should be submitted on or before 

January 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.55

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27484 Filed 12–14–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90612; File No. SR– 

EMERALD–2020–16] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fee 

Schedule To Establish Market Data 

Fees 

December 9, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

25, 2020, MIAX Emerald, LLC (‘‘MIAX 

Emerald’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Emerald Fee Schedule 

(the ‘‘Fee Schedule’’) to establish market 

data fees. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/emerald, at MIAX’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81243 

3 15 U.S.C. 78f. 

4See Securities Exchange Act Release No. 84891 

(December 20, 2018), 83 FR 67421 (December 28, 

2018) (File No. 10–233) (order approving 

application of MIAX Emerald, LLC for registration 

as a national securities exchange). 

5See Securities Exchange Act Release No. 85393 

(March 21, 2019), 84 FR 11599 (March 27, 2019) 

(SR–EMERALD–2019–15) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Establish the MIAX Emerald Fee Schedule). 

6 ‘‘Member’’ means an individual or organization 

approved to exercise the trading rights associated 

with a Trading Permit. Members are deemed 

‘‘members’’ under the Exchange Act. See Exchange 

Rule 100 and the Definitions Section of the Fee 

Schedule. 

7 ‘‘Waiver Period’’ means, for each applicable fee, 

the period of time from the initial effective date of 

the MIAX Emerald Fee Schedule until such time 

that the Exchange has an effective fee filing 

establishing the applicable fee. The Exchange will 

issue a Regulatory Circular announcing the 

establishment of an applicable fee that was subject 

to a Waiver Period at least fifteen (15) days prior 

to the termination of the Waiver Period and 

effective date of any such applicable fee. See the 

Definitions Section of the Fee Schedule. 

8See MIAX Emerald Regulatory Circular 2020–41 

available at https://www.miaxoptions.com/sites/ 

default/files/circular-files/MIAX_Emerald_RC_

2020_41.pdf. 

9See SR–EMERALD–2020–10 (the ‘‘First 

Proposed Rule Change’’). 

10See Securities Exchange Act Release No. 90274 

(October 27, 2020), 85 FR 69371 (November 2, 2020) 

(SR–EMERALD–2020–13) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend Its Fee Schedule To Establish Market 

Data Fees) (the ‘‘Second Proposed Rule Change’’). 

11See, e.g., Securities Exchange Act Release No. 

90217 (October 16, 2020), 85 FR 67392 (October 22, 

2020) (SR–NYSENAT–2020–05) (Order Approving a 

Proposed Rule Change To Establish Fees for the 

NYSE National Integrated Feed) (the ‘‘Integrated 

Feed Approval Order’’). 

12See Comment Letter from Joseph W. Ferraro III, 

SVP, Deputy General Counsel, the Exchange, dated 

November 20, 2020, notifying the Commission that 

the Exchange will withdraw the Second Proposed 

Rule Change. 

13See Securities Exchange Act Release No. 85207 

(February 27, 2019), 84 FR 7963 (March 5, 2019) 

(SR–EMERALD–2019–09) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

to Establish MIAX Emerald Top of Market (‘‘ToM’’) 

Data Feed, MIAX Emerald Complex Top of Market 

(‘‘cToM’’) Data Feed, MIAX Emerald Administrative 

Information Subscriber (‘‘AIS’’) Data Feed, and 

MIAX Emerald Order Feed (‘‘MOR’’)). 

14 cToM provides subscribers with the same 

information as the ToM market data product as it 

relates to the strategy book, i.e., the Exchange’s best 

bid and offer for a complex strategy, with aggregate 

size, based on displayable order and quoting 

interest in the complex strategy on the Exchange. 

cToM also provides subscribers with the 

identification of the complex strategies currently 

trading on MIAX Emerald; complex strategy last 

sale information; and the status of securities 

underlying the complex strategy (e.g., halted, open, 

or resumed). cToM is distinct from ToM, and 

anyone wishing to receive cToM data must 

subscribe to cToM regardless of whether they are 

a current ToM subscriber. ToM subscribers are not 

required to subscribe to cToM, and cToM 

subscribers are not required to subscribe to ToM. 

See id. 

15The term ‘‘Priority Customer’’ means a person 

or entity that (i) is not a broker or dealer in 

securities, and (ii) does not place more than 390 

orders in listed options per day on average during 

a calendar month for its own beneficial account(s). 

The number of orders shall be counted in 

accordance with Interpretation and Policy .01 to 

Exchange Rule 100. See Exchange Rule 100. 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Fee Schedule to establish market data 

fees. MIAX Emerald commenced 

operations as a national securities 

exchange registered under Section 6 of 

the Act 3 on March 1, 2019.4 The 

Exchange adopted its transaction fees 

and certain of its non-transaction fees in 

its filing SR–EMERALD–2019–15.5 In 

that filing, the Exchange expressly 

waived, among others, market data fees 

to provide an incentive to prospective 

market participants to become 

Members 6 of the Exchange. At that 

time, the Exchange waived market data 

fees for the Waiver Period 7 and stated 

that it would provide notice to market 

participants when the Exchange 

intended to terminate the Waiver 

Period. 

On September 15, 2020, the Exchange 

issued a Regulatory Circular which 

announced, among other things, that the 

Exchange would be ending the Waiver 

Period for market data fees, beginning 

October 1, 2020.8

On October 1, 2020, the Exchange 

filed its proposal to assess fees for its 

market data products, MIAX Emerald 

Top of Market (‘‘ToM’’), Administrative 

Information Subscriber (‘‘AIS’’) feed, 

and MIAX Order Feed (‘‘MOR’’).9 On 

October 14, 2020, the Exchange 

withdrew the First Proposed Rule 

Change and refiled its proposal in order 

to provide more description regarding 

the difference in pricing for internal 

distributors and external distributors.10

On November 25, 2020, the Exchange 

withdrew the Second Proposed Rule 

Change and refiled its proposal to assess 

fees for its ToM, AIS and MOR products 

in order to provide sufficient 

information to demonstrate that the 

Exchange is subject to significant 

substitution-based competitive forces 11

in setting the terms of its proposal for 

ToM, AIS and MOR market data fees.12

A more detailed description of the 

ToM, AIS and MOR products can be 

found in the Exchange’s previously filed 

Market Data Product filings.13 The 

Exchange notes that it will not be 

assessing fees for Complex Top of 

Market (‘‘cToM’’) 14 data at this time. 

To summarize, ToM provides market 

participants with a direct data feed that 

includes the Exchange’s best bid and 

offer, with aggregate size, and last sale 

information, based on displayable order 

and quoting interest on the Exchange. 

The ToM data feed includes data that is 

identical to the data sent to the 

processor for the Options Price 

Reporting Authority (‘‘OPRA’’). ToM 

also contains a feature that provides the 

number of Priority Customer 15 contracts 

that are included in the size associated 

with the Exchange’s best bid and offer. 

AIS provides market participants with 

a direct data feed that allows subscribers 

to receive real-time updates of products 

traded on MIAX Emerald, trading status 

for MIAX Emerald and products traded 

on MIAX Emerald, and liquidity seeking 

event notifications. The AIS market data 

feed includes opening imbalance 

condition information, opening routing 

information, expanded quote range 

information, post-halt notifications, and 

liquidity refresh condition information. 

AIS real-time messages are disseminated 

over multicast to achieve a fair delivery 

mechanism. AIS notifications provide 

current electronic system status 

allowing subscribers to take necessary 

actions immediately. 

MOR provides market participants 

with a direct data feed that allows 

subscribers to receive real-time updates 

of options orders, products traded on 

MIAX Emerald, MIAX Emerald Options 

System status, and MIAX Emerald 

Options Underlying trading status. 

Subscribers to the data feed will get a 

list of all options symbols and strategies 

that will be traded and sourced on that 

feed at the start of every session. 

The Exchange proposes to charge 

monthly fees to Distributors (defined 

below) of the ToM, AIS, and MOR 

market data products. MIAX Emerald 

will assess market data fees applicable 

to the market data products on Internal 

and External Distributors in each month 

the Distributor is credentialed to use the 

applicable market data product in the 

production environment. A 

‘‘Distributor’’ of MIAX Emerald data is 

any entity that receives a feed or file of 

data either directly from MIAX Emerald 

or indirectly through another entity and 

then distributes it either internally 

(within that entity) or externally 

(outside that entity). All Distributors are 

required to execute a MIAX Emerald 

Distributor Agreement. Market data fees 

for ToM, AIS, and MOR will be reduced 

for new Distributors for the first month 

during which they subscribe to the 

applicable market data product, based 

on the number of trading days that have 

81244 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

16See Nasdaq PHLX LLC Pricing Schedule, 

Options 7, Section 10, Proprietary Data Feed Fees; 

Cboe BZX Exchange, Inc. Fee Schedule, Market 

Data Fees; Cboe Data Services, LLC, Fee Schedule. 17See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(S7–10–04) (‘‘Reg NMS Adopting Release’’). 

18The OCC publishes options and futures volume 

in a variety of formats, including daily and monthly 

volume by exchange, available here: https://

www.theocc.com/market-data/volume/default.jsp. 19See id. 

20See supra, note 8. 

21See Securities Exchange Act Release Nos. 

60459 (August 7, 2009), 74 FR 41466 (August 17, 

2009) (SR–Phlx–2009–54) (Order Approving a 

Proposed Rule Change to Establish Fees for the Top 

of PHLX Options Direct Data Feed Product); 66993 

(May 15, 2012), 77 FR 30043 (May 21, 2012) (SR– 

PHLX–2012–63). See also Nasdaq GEMX Options 7, 

Pricing Schedule, Section 7, Market Data. 

been held during the month prior to the 

date on which they have been 

credentialed to use the applicable 

market data product in the production 

environment. Such new Distributors 

will be assessed a pro-rata percentage of 

the fees described above, which is the 

percentage of the number of trading 

days remaining in the affected calendar 

month as of the date on which they have 

been credentialed to use the applicable 

market data product in the production 

environment, divided by the total 

number of trading days in the affected 

calendar month. 

Specifically, the Exchange proposes to 

assess Internal Distributors $1,250 per 

month and External Distributors $1,750 

per month for the ToM market data feed. 

The Exchange proposes to assess 

Internal Distributors $1,250 per month 

and External Distributors $1,750 per 

month for the AIS market data feed. The 

Exchange proposes to assess Internal 

Distributors $3,000 per month and 

External Distributors $3,500 per month 

for the MOR market data feed. The 

Exchange notes that its data feed prices 

are generally lower than other options 

exchanges’ data feed prices for their 

comparable data feed products.16

The Exchange operates in a highly 

competitive market. The Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 17

There are currently 16 registered 

options exchanges competing for order 

flow. Based on publicly-available 

information, and excluding index-based 

options, no single exchange has more 

than approximately 16% of the market 

share of executed volume of multiplylisted equity and exchange-traded fund 

(‘‘ETF’’) options trades.18 Therefore, 

currently no exchange possesses 

significant pricing power in the 

execution of multiply-listed equity & 

ETF options order flow. More 

specifically, in October 2020, the 

Exchange had approximately 3.60% 

market share of executed volume of 

multiply-listed equity & ETF options 

trades. 

The recent growth of the Exchange’s 

market share demonstrates this 

competitive marketplace. Up until 

February 28, 2019, the Exchange was 

non-operational, and therefore had a 0% 

market share. On March 1, 2019, the 

Exchange launched its current platform 

as an affiliated exchange of Miami 

International Securities Exchange, LLC 

(‘‘MIAX’’) and MIAX PEARL, LLC 

(‘‘MIAX PEARL’’). Within one month, 

MIAX Emerald began regularly 

executing at least 0.70% of trading 

volume. By September, 2019, MIAX 

Emerald began executing close to 1% of 

trading volume on a more regular basis. 

Beginning March of 2020, the Exchange 

had a regular market share of 

approximately 2–4% of executed 

volume of equity option trades.19

As MIAX Emerald’s transaction 

market share has increased, so has the 

value of its market data. For example, in 

March 2019, when MIAX Emerald 

launched operations, the Exchange had 

only 5 subscribers for its ToM data feed, 

3 subscribers for its AIS data feed, and 

2 subscribers for its MOR data feed—all 

such feeds were free during that time. 

As MIAX Emerald’s market share has 

increased, the number of subscribers of 

the ToM, AIS and MOR data feeds has 

steadily increased and as of September 

2020, prior to the First Proposed Rule 

Change, the Exchange had 14 

subscribers for its ToM data feed, 13 

subscribers for its AIS data feed, and 9 

subscribers for its MOR data feed—all 

such feeds were free during that time. 

However, notwithstanding this 

subscriber growth, only a fraction of the 

total MIAX Emerald Members subscribe 

to MIAX Emerald data feed products. 

For example, as of September 2020, 

MIAX Emerald had 42 Members. 

However, during that same period, only 

14 Members subscribed to MIAX 

Emerald data feed products. That is only 

an approximately 30% subscription 

rate. Accordingly, approximately 70% 

of the MIAX Emerald Members rely on 

substitute market data products to 

satisfy their trading needs on MIAX 

Emerald. 

On September 15, 2020, the Exchange 

issued a Regulatory Circular to 

announce that the Exchange would be 

ending the Waiver Period for its ToM, 

AIS and MOR data feeds, beginning 

October 1, 2020, which provided market 

participants with sufficient advance 

notice of the proposed fees for those 

data feeds. This notice also afforded 

market participants with reasonable 

time to consider the value of the MIAX 

Emerald ToM, AIS and MOR data feeds 

on their businesses, and make a 

determination of whether to continue 

using the products or not, once they 

were no longer provided for free.20

Since the First Proposed Rule Change 

went into effect, 1 subscriber of the ToM 

data feed product (i.e., nearly 7% of the 

prior subscriber base), 2 subscribers of 

the AIS data feed product (i.e., nearly 

16.66% of the prior subscriber base), 

and 1 subscriber of the MOR data feed 

product (i.e., nearly 11% of the prior 

subscriber base) cancelled their 

subscriptions. In each instance, the 

subscribers told the Exchange that their 

reasons for cancelling their 

subscriptions were the imminent 

imposition of fees. The total number of 

subscriptions lost constitute 11.4% of 

the prior subscriber base. 

The Exchange is not required to make 

the ToM, AIS and MOR data feeds 

available or to offer any specific pricing 

alternatives to any customers, nor is any 

firm required to purchase the ToM, AIS 

and MOR data feeds. Firms that choose 

to purchase the ToM, AIS and MOR data 

feeds do so for the primary goals of 

using them to increase their revenues, 

reduce their expenses, and in some 

instances to compete directly with the 

Exchange (including for order flow). 

Those firms are able to determine for 

themselves whether or not the ToM, AIS 

and MOR data feeds or any other similar 

products are attractively priced.21

The Exchange produces and 

disseminates the ToM, AIS and MOR 

data feeds as part of its market data 

offerings to support its transaction 

execution services. Since March 2019, 

when the Exchange launched trading, 

the Exchange has observed a direct 

correlation between the steady increase 

of subscribers to the ToM, AIS and MOR 

data feeds and the increase in the 

Exchange’s transaction market share 

volume over the same period. 

The Exchange determined the level of 

fees to charge for the ToM, AIS and 

MOR data feeds based on the value of 

the Exchange’s transaction services. As 

noted above, over an initial 12-month 

period, the Exchange has grown from 

0% to approximately 2–4% market 

share of consolidated trading volume on 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81245 

22See MIAX Fee Schedule, Section 6, Market 

Data Fees. 

23 15 U.S.C. 78f(b). 24 15 U.S.C. 78f(b)(4) and (5). 25See Cboe Form 1 Amendment, Exhibit M (June 

26, 2020), available at https://www.sec.gov/ 

Archives/edgar/vprr/2001/20012232.pdf. 

a regular monthly basis. During that 

same period, the Exchange had a steady 

increase in the number of subscribers to 

its ToM, AIS and MOR data feeds. 

However, as discussed above, only 

approximately 30% of MIAX Emerald 

Members subscribe to market data 

products from the Exchange. 

Conversely, approximately 70% of the 

MIAX Emerald Members rely on 

substitute market data products to 

satisfy their trading needs on MIAX 

Emerald. 

The proposed fee structure is not 

novel as it is based on the fee structure 

currently in place for the ToM, AIS and 

MOR data feeds at the Exchange’s 

affiliate, MIAX.22 Both MIAX and MIAX 

Emerald trade over approximately 2,700 

equity options. The Exchange now 

proposes fees for its ToM, AIS and MOR 

data feeds that are based on the existing 

fee structure and rates that data 

recipients already pay for the MIAX 

ToM, AIS and MOR data feeds. 

At the time the Exchange filed the 

First Proposed Rule Change, the 

Exchange did not know the full impact 

of the proposed fees on current data 

recipients because subscribers may 

choose to reduce or eliminate their use 

of data. The Exchange anticipated that 

there might be data recipients of the 

ToM, AIS and MOR data feeds that 

subscribed only because they were free 

and might choose to discontinue using 

the products once the fees were 

implemented. The Exchange anticipated 

that data recipients that choose to 

discontinue the ToM, AIS and MOR 

data feeds may also choose to shift order 

flow away from the Exchange, and that, 

given the current competitive 

environment, if data recipients were to 

both discontinue the product and shift 

order flow away from the Exchange, the 

Exchange would reevaluate the fees and 

potentially file a separate proposed rule 

change to amend its fees. Prior to the 

imposition of the First Proposed Rule 

Change, the Exchange could not 

estimate the impact of the proposed fees 

on the Exchange’s transaction services 

business or the number of subscribers 

for the Exchange’s ToM, AIS and MOR 

data feeds. Since October 1, 2020, when 

the fees for the ToM, AIS and MOR data 

feeds took effect, 4 subscribers to the 

ToM, AIS and MOR data feeds have 

cancelled their subscriptions. In each 

instance, the subscribers told the 

Exchange that the reason for ending 

their subscriptions was the imminent 

imposition of fees. Additionally, this 

data must be considered in the context 

that only approximately 30% of MIAX 

Emerald Members subscribe to market 

data products from the Exchange. 

Conversely, approximately 70% of the 

MIAX Emerald Members rely on 

substitute market data products to 

satisfy their trading needs on MIAX 

Emerald. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 23

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 24 in 

particular, in that it is an equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

issuers and other persons using its 

facilities. The Exchange also believes 

the proposal furthers the objectives of 

Section 6(b)(5) of the Act in that it is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general to protect investors and the 

public interest and is not designed to 

permit unfair discrimination between 

customers, issuers, brokers and dealers. 

Exchange Market Data Fees Are 

Constrained by the Availability of 

Substitute Platforms 

The fierce competition for order flow 

constrains any exchange from pricing its 

market data at a supracompetitive price, 

and constrains the Exchange in setting 

its fees for the ToM, AIS and MOR data 

feeds. The proposed fees are therefore 

reasonable because in setting them, the 

Exchange is constrained by the 

availability of 15 substitute options 

exchanges offering market data products 

and trading capabilities. Such 

substitutes need not be identical, but 

only substantially similar to the product 

at hand. 

More specifically, in setting fees for 

ToM, AIS and MOR data feeds, the 

Exchange is constrained by the fact that, 

if its pricing is unattractive to 

customers, customers have their pick of 

an increasing number of alternative 

options exchanges to use instead of the 

Exchange. To illustrate, MIAX Emerald 

has 42 Exchange Members. The Cboe 

Exchange, Inc. (‘‘Cboe’’) has 

approximately 229 exchange 

members.25 The Exchange believes that 

it has considered all relevant factors and 

has not considered irrelevant factors in 

order to establish fees. The existence of 

numerous alternative options exchanges 

to the Exchange’s trading system 

ensures that the Exchange cannot set 

unreasonable market data fees without 

suffering the negative effects of that 

decision in the fiercely competitive 

market in which it operates as a 

platform. 

MIAX Emerald ToM, AIS and MOR Data 

Feeds Are Optional Market Data 

Products 

The decision to subscribe to the 

Exchange’s ToM, AIS and/or MOR data 

feeds is entirely optional and is a 

business decision that is made by each 

firm. The Exchange is not required to 

make the ToM, AIS and MOR data feeds 

available to any customers, nor is any 

customer required to purchase the ToM, 

AIS and MOR data feeds. A customer’s 

decision whether to purchase the ToM, 

AIS and MOR data feeds is entirely 

discretionary. Most firms that choose to 

subscribe to the ToM, AIS and MOR 

data feeds do so for the primary goals 

of using it to increase their revenues, 

reduce their expenses, and in some 

instances to compete directly with the 

Exchange for order flow. Such firms are 

able to determine for themselves 

whether the ToM, AIS and MOR data 

feeds are necessary for their business 

needs, and if so, whether or not they are 

attractively priced. If the ToM, AIS and 

MOR data feeds do not provide 

sufficient value to firms based on the 

uses those firms may have for them, 

those firms may simply choose to 

conduct their business operations in 

ways that do not use the ToM, AIS and 

MOR data feeds. If they do not choose 

to use the ToM, AIS and MOR data 

feeds, they could also choose not to 

direct order flow to the Exchange. 

As noted above, after the First 

Proposed Rule Change, current 

subscribers to the ToM, AIS and MOR 

data feeds began changing their 

behavior in response to the imposition 

of fees for those data feed products. 

Since October 1, 2020, when the First 

Proposed Rule Change took effect, 4 

subscribers to the ToM, AIS and MOR 

data feeds cancelled their subscriptions. 

In each instance, the subscriber told the 

Exchange that the reason for ending its 

subscription was the imminent 

imposition of fees. These cancellations 

are evidence that subscribing to the 

ToM, AIS and MOR data feeds is 

discretionary, that each customer makes 

the decision whether to subscribe based 

on its own analysis of the benefits and 

costs to itself, and that customers can 

and do make those decisions quickly 

based on reactions to fee changes. 

However, only a fraction of total 

MIAX Emerald Members subscribe to 

MIAX Emerald data feed products. For 

81246 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

26See OPRA Fee Schedule, available at https://

assets.website-files.com/5ba40927ac854

d8c97bc92d7/5bf2f4661faec762fa07826a_OPRA_

Fee_Schedule.pdf (charging professional subscriber 

device-based fees of $31.50 per display device and 

non-professional subscriber fees starting at $1.25 

per non-professional subscriber, up to 75,000, for 

OPRA’s Basis Service). 

27See the list of OPRA Vendors, available at 

https://assets.website-files.com/ 

5ba40927ac854d8c97bc92d7/5c671220ff4c

29504e423d0d_190215R2_OPRA_Vendors.pdf. 28See the MIAX Options Fee Schedule. 

29See Exchange Data Agreement, available at 

https://miaxweb2.pairsite.com/sites/default/files/ 

page-files/MIAX_Exchange_Group_Data_

Agreement_09032020.pdf. 

30See id. 

31See id. 

example, as of September 2020, MIAX 

Emerald had 42 Members. However, 

during that same period, only 14 

Members subscribed to MIAX Emerald 

data feed products. That is only an 

approximately 30% subscription rate. 

Accordingly, approximately 70% of the 

MIAX Emerald Members rely on 

substitute market data products to 

satisfy their trading needs on MIAX 

Emerald. 

But even if such firms determine that 

the fees for the ToM, AIS and MOR data 

feeds are too high, customers can access 

much of the same data by subscribing to 

the data feed of the Options Price 

Reporting Authority (‘‘OPRA’’), which 

consists of: last sale reports (price, 

volume and related information with 

respect to completed transactions); 

quotation information (bids and offers 

and related information pertaining to 

quotations in eligible securities 

available for trading); and other related 

information with respect to trading and 

administrative messages. Although not 

free of charge, the fees for subscribing to 

OPRA’s substitute data feeds are 

significantly discounted.26 Customers 

can also access much of this same data 

through one of the numerous OPRA 

Vendors.27 In this way, OPRA and 

OPRA Vendors are substitutes for a 

significant portion of the data available 

on the ToM, AIS and MOR data feeds. 

This is clear evidence that the 

availability of these substitute products 

constrains the Exchange’s ability to 

charge supracompetitive prices for the 

ToM, AIS and MOR data feeds. 

Further, in the case of data that is 

redistributed through OPRA Vendors, of 

which there are numerous firms, the 

vendors themselves provide additional 

price discipline for proprietary data 

products because they control the 

primary means of access to certain end 

users. These vendors impose price 

discipline based upon their business 

models. For example, vendors that 

assess a surcharge on data they sell are 

able to refuse to offer proprietary 

products that their end users do not or 

will not purchase in sufficient numbers. 

In setting the proposed fees for the 

ToM, AIS and MOR data feeds, the 

Exchange considered the 

competitiveness of the market for 

proprietary data and all of the 

implications of that competition. The 

Exchange believes that it has considered 

all relevant factors and has not 

considered irrelevant factors in order to 

establish reasonable fees. The existence 

of alternatives to the Exchange’s trading 

system and the continued availability of 

the Exchange’s separate data feeds at a 

steep discount ensure that the Exchange 

cannot set unreasonable fees when 

vendors and subscribers can elect these 

alternatives or choose not to purchase a 

specific proprietary data product if the 

attendant fees are not justified by the 

returns that any particular vendor or 

data recipient would achieve through 

the purchase. 

Further, the Exchange no longer 

believes it is necessary to waive its 

market data fees to attract market 

participants to the MIAX Emerald 

market since this market is now 

established and MIAX Emerald no 

longer needs to rely on such waivers to 

attract market participants. The 

Exchange believes that the proposed 

change is equitable and not unfairly 

discriminatory because the elimination 

of the fee waiver for market data fees 

will uniformly apply to all market 

participants and market participants are 

not required to purchase any market 

data feed from the Exchange. As 

described above, the Exchange does not 

offer trading in any proprietary or 

singly-list options products. 

Accordingly, the Exchange is not the 

sole source of market data for any 

products listed on the Exchange. 

Therefore, it is a business decision as to 

whether a firm purchases the 

Exchange’s market data feeds. 

Additionally, the Exchange believes its 

proposal to establish market data fees is 

reasonable and well within the range of 

fees assessed among other exchanges, 

including the Exchange’s affiliate, 

MIAX.28

The Exchange believes that it is 

reasonable, equitable and not unfairly 

discriminatory to assess internal 

distributors fees that are less than the 

fees assessed for external distributors for 

subscriptions to the Exchange’s ToM, 

AIS and MOR data feeds because 

internal distributors have limited, 

restricted usage rights to the market 

data, as compared to external 

distributors which have more expansive 

usage rights. All Members and nonMembers that determine to receive any 

market data feed of the Exchange (or its 

affiliates, MIAX and MIAX PEARL), 

must first execute, among other things, 

the MIAX Exchange Group Exchange 

Data Agreement (the ‘‘Exchange Data 

Agreement’’).29 Pursuant to the 

Exchange Data Agreement, internal 

distributors are restricted to the 

‘‘internal use’’ of any market data they 

receive. This means that internal 

distributors may only distribute the 

Exchange’s market data to the 

recipient’s officers and employees and 

its affiliates.30 External distributors may 

distribute the Exchange’s market data to 

persons who are not officers, employees 

or affiliates of the external distributor,31

and may charge their own fees for the 

distribution of such market data. 

Accordingly, the Exchange believes it is 

fair, reasonable and not unfairly 

discriminatory to assess external 

distributors a higher fee for the 

Exchange’s market data products as 

external distributors have greater usage 

rights to commercialize such market 

data. The Exchange believes the 

proposed fees are a reasonable 

allocation of its costs and expenses 

among its Members and other persons 

using its facilities since it is recovering 

the costs associated with distributing 

such data. Access to the Exchange is 

provided on fair and non-discriminatory 

terms. The Exchange believes the 

proposed fees are equitable and not 

unfairly discriminatory because the fee 

level results in a reasonable and 

equitable allocation of fees amongst 

users for similar services. Moreover, the 

decision as to whether or not to 

purchase market data is entirely 

optional to all users. Potential 

purchasers are not required to purchase 

the market data, and the Exchange is not 

required to make the market data 

available. Purchasers may request the 

data at any time or may decline to 

purchase such data. The allocation of 

fees among users is fair and reasonable 

because, if the market deems the 

proposed fees to be unfair or 

inequitable, firms can diminish or 

discontinue their use of this data. 

In adopting Regulation NMS, the 

Commission granted self-regulatory 

organizations and broker-dealers 

increased authority and flexibility to 

offer new and unique market data to the 

public. It was believed that this 

authority would expand the amount of 

data available to consumers, and also 

spur innovation and competition for the 

provision of market data: 

‘‘[E]fficiency is promoted when brokerdealers who do not need the data beyond the 

prices, sizes, market center identifications of 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81247 

32See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496 (June 29, 2005). 

33See Sec. Indus. Fin. Mkts. Ass’n (SIFMA), 

Initial Decision Release No. 1015, 2016 SEC LEXIS 

2278 (ALJ June 1, 2016) (finding the existence of 

vigorous competition with respect to non-core 

market data). 

34NetCoalition, at 15 (quoting H.R. Rep. No. 94– 

229, at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 

321, 323). 

the NBBO and consolidated last sale 

information are not required to receive (and 

pay for) such data when broker-dealers may 

choose to receive (and pay for) additional 

market data based on their own internal 

analysis of the need for such data.’’ 32

By removing ‘‘unnecessary regulatory 

restrictions’’ on the ability of exchanges 

to sell their own data, Regulation NMS 

advanced the goals of the Act and the 

principles reflected in its legislative 

history. If the free market should 

determine whether proprietary data is 

sold to broker-dealers at all, it follows 

that the price at which such data is sold 

should be set by the market as well. 

In July, 2010, Congress adopted H.R. 

4173, the Dodd-Frank Wall Street 

Reform and Consumer Protection Act of 

2010 (‘‘Dodd-Frank Act’’), which 

amended Section 19 of the Act. Among 

other things, Section 916 of the DoddFrank Act amended paragraph (A) of 

Section 19(b)(3) of the Act by inserting 

the phrase ‘‘on any person, whether or 

not the person is a member of the selfregulatory organization’’ after ‘‘due, fee 

or other charge imposed by the selfregulatory organization.’’ As a result, all 

SRO rule proposals establishing or 

changing dues, fees or other charges are 

immediately effective upon filing 

regardless of whether such dues, fees or 

other charges are imposed on members 

of the SRO, non-members, or both. 

Section 916 further amended paragraph 

(C) of Section 19(b)(3) of the Act to read, 

in pertinent part, ‘‘At any time within 

the 60-day period beginning on the date 

of filing of such a proposed rule change 

in accordance with the provisions of 

paragraph (1) [of Section 19(b)], the 

Commission summarily may 

temporarily suspend the change in the 

rules of the self-regulatory organization 

made thereby, if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of this title. If the Commission 

takes such action, the Commission shall 

institute proceedings under paragraph 

(2)(B) [of Section 19(b)] to determine 

whether the proposed rule should be 

approved or disapproved.’’ 

The Exchange believes that these 

amendments to Section 19 of the Act 

reflect Congress’s intent to allow the 

Commission to rely upon the forces of 

competition to ensure that fees for 

market data are reasonable and 

equitably allocated. Although Section 

19(b) had formerly authorized 

immediate effectiveness for a ‘‘due, fee 

or other charge imposed by the selfregulatory organization,’’ the 

Commission adopted a policy and 

subsequently a rule stating that fees for 

data and other products available to 

persons that are not members of the selfregulatory organization must be 

approved by the Commission after first 

being published for comment. At the 

time, the Commission supported the 

adoption of the policy and the rule by 

pointing out that unlike members, 

whose representation in self-regulatory 

organization governance was mandated 

by the Act, non-members should be 

given the opportunity to comment on 

fees before being required to pay them, 

and that the Commission should 

specifically approve all such fees. The 

Exchange believes that the amendment 

to Section 19 reflects Congress’s 

conclusion that the evolution of selfregulatory organization governance and 

competitive market structure have 

rendered the Commission’s prior policy 

on non-member fees obsolete. 

Specifically, many exchanges have 

evolved from member-owned, not-forprofit corporations into for-profit, 

investor-owned corporations (or 

subsidiaries of investor-owned 

corporations). Accordingly, exchanges 

no longer have narrow incentives to 

manage their affairs for the exclusive 

benefit of their members, but rather 

have incentives to maximize the appeal 

of their products to all customers, 

whether members or non-members, so 

as to broaden distribution and grow 

revenues. Moreover, the Exchange 

believes that the change also reflects an 

endorsement of the Commission’s 

determinations that reliance on 

competitive markets is an appropriate 

means to ensure equitable and 

reasonable prices. Simply put, the 

change reflects a presumption that all 

fee changes should be permitted to take 

effect immediately, since the level of all 

fees are constrained by competitive 

forces. 

Selling proprietary market data is a 

means by which exchanges compete to 

attract business. To the extent that 

exchanges are successful in such 

competition, they earn trading revenues 

and also enhance the value of their data 

products by increasing the amount of 

data they provide. The need to compete 

for business places substantial pressure 

upon exchanges to keep their fees for 

both executions and data reasonable.33

The Exchange therefore believes that the 

fees for market data are properly 

assessed on Members and Non-Member 

users. 

The decision of the United States 

Court of Appeals for the District of 

Columbia Circuit in NetCoalition v. 

SEC, No. 09–1042 (D.C. Cir. 2010), 

although reviewing a Commission 

decision made prior to the effective date 

of the Dodd-Frank Act, upheld the 

Commission’s reliance upon 

competitive markets to set reasonable 

and equitably allocated fees for market 

data: 

‘‘In fact, the legislative history indicates 

that the Congress intended that the market 

system ‘evolve through the interplay of 

competitive forces as unnecessary regulatory 

restrictions are removed’ and that the SEC 

wield its regulatory power ‘in those 

situations where competition may not be 

sufficient,’ such as in the creation of a 

‘consolidated transactional reporting 

system.’ ’’ 34

The court’s conclusions about 

Congressional intent are therefore 

reinforced by the Dodd-Frank Act 

amendments, which create a 

presumption that exchange fees, 

including market data fees, may take 

effect immediately, without prior 

Commission approval, and that the 

Commission should take action to 

suspend a fee change and institute a 

proceeding to determine whether the fee 

change should be approved or 

disapproved only where the 

Commission has concerns that the 

change may not be consistent with the 

Act. 

The Exchange notes that it operates in 

a highly competitive market in which 

market participants can readily favor 

competing venues if they deem fee 

levels at a particular venue to be 

excessive. In such an environment, the 

Exchange must continually adjust its 

fees for services and products, in 

addition to order flow, to remain 

competitive with other exchanges. The 

Exchange believes that the proposed 

changes reflect this competitive 

environment. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intra-Market Competition 

The Exchange believes that the 

proposed fees do not put any market 

participants at a relative disadvantage 

compared to other market participants. 

81248 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

35See the MIAX Options Fee Schedule. 

36 15 U.S.C. 78s(b)(3)(A)(ii). 

37 17 CFR 240.19b–4(f)(2). 

38 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

As noted above, the proposed fee 

schedule would apply to all subscribers 

of the ToM, AIS and MOR data feeds, 

and customers may choose whether to 

subscribe to any or all of the feeds. The 

Exchange also believes that the 

proposed fees neither favor nor penalize 

one or more categories of market 

participants in a manner that would 

impose an undue market on 

competition. Further, the Exchange’s 

proposed market data fee levels, as 

described herein, are comparable to fee 

levels charged by other options 

exchanges for the same or similar 

services, including those fees assessed 

by the Exchange’s affiliate, MIAX.35

The Exchange believes that the 

proposed market data fees do not place 

certain market participants at a relative 

disadvantage to other market 

participants because the fees do not 

apply unequally to different size market 

participants, but instead would allow 

the Exchange charge for the time and 

resource necessary for providing market 

data to the market participants that 

request such data. Accordingly, the 

Exchange believes that the proposed 

market data fees do not favor certain 

categories of market participants in a 

manner that would impose a burden on 

competition. 

Inter-Market Competition 

The Exchange believes that the 

proposed fees do not impose a burden 

on competition or on other SROs that is 

not necessary or appropriate. In setting 

the proposed fees, the Exchange was 

constrained by the availability of 

numerous substitute trading platforms 

and services also offering market data 

products and trading capabilities, and 

low barriers to entry mean new 

exchanges are frequently introduced. In 

addition, the Exchange believes that the 

proposed fees do not impose a burden 

on competition or on other exchanges 

that is not necessary or appropriate 

because of the availability of numerous 

substitute market data products. Many 

other exchanges offer proprietary data 

feeds similar to the Exchange’s ToM, 

AIS and MOR data feeds. Because 

market data users can find suitable 

substitute feeds, an exchange that 

overprices its market data products 

stands a high risk that users may 

substitute another platform, in which 

case the platform would stand to lose 

both market data and trading fees. These 

competitive pressures ensure that no 

one exchange’s market data fees can 

impose an unnecessary burden on 

competition, and the Exchange’s 

proposed fees do not do so here. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act,36 and Rule 

19b–4(f)(2) 37 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

EMERALD–2020–16 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–EMERALD–2020–16. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–EMERALD–2020–16, and 

should be submitted on or before 

January 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27488 Filed 12–14–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90611; File No. SR–MSRB– 

2020–08] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Order Granting Approval of a 

Proposed Rule Change To Amend 

MSRB Form G–32 

December 9, 2020. 

I. Introduction 

On October 13, 2020, the Municipal 

Securities Rulemaking Board (the 

‘‘MSRB’’ or ‘‘Board’’) filed with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to amend MSRB Form G–32 to 

clarify that brokers, dealers, and 

municipal securities dealers 

(collectively, ‘‘dealers’’ and, 

individually, each a ‘‘dealer’’) acting as 

underwriters in the primary offering of 

municipal securities are obligated to 

manually complete three data fields 

(collectively, the ‘‘Amended Data