Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81971 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1901. The Exchange notes 

that it submitted a separate filing with the 

Commission pursuant to Section 19(b)(3)(A) of the 

Act to establish the Fee Schedule and adopt 

transaction fees. See Securities Exchange Act 

Release No. 90102 (October 6, 2020), 85 FR 64559 

(October 13, 2020) (SR–PEARL–2020–17). 

4See Securities Exchange Act Release No. 89563 

(August 14, 2020), 85 FR 51510 (August 20, 2020) 

(SR–PEARL–2020–03) (Order Approving a 

Proposed Rule Change, as Modified by Amendment 

No. 1, To Establish Rules Governing the Trading of 

Equity Securities) (‘‘Approval Order’’). 

5The term ‘‘Equity Member’’ means a Member 

authorized by the Exchange to transact business on 

MIAX PEARL Equities. See Exchange Rule 1901. 

6The Exchange initially filed the proposed fee 

changes on September 24, 2020 (SR–PEARL–2020– 

18). See SR–PEARL–2020–18 (the ‘‘First Proposed 

Rule Change’’). 

7See Securities Exchange Act Release No. 90186 

(October 14, 2020), 85 FR 66656 (October 20, 2020) 

(SR–PEARL–2020–19) (the ‘‘Second Proposed Rule 

Change’’). 

8See id. 

9See letter from Chris Solgan, VP, Senior 

Counsel, the Exchange, dated November 20, 2020, 

notifying the Commission that the Exchange would 

withdraw SR–PEARL–2020–19. 

10 In this filing, the Exchange also corrects an 

error in the earlier filings by replacing references to 

the term ‘‘Priority Purge Ports’’ with simply ‘‘Purge 

Ports.’’ 

11See Cboe BZX Exchange, Inc. Fee Schedule, 

Definitions section; Cboe BYX Exchange, Inc., 

Definitions section; Cboe EDGA Exchange, Inc., 

Definitions section; Cboe EDGX Exchange, Inc., 

Definitions section. 

submissions should refer to File 

Number SR–CboeEDGX–2020–061 and 

should be submitted on or before 

January 7, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27724 Filed 12–16–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90651; File No. SR– 

PEARL–2020–33] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX 

PEARL Equities Fee Schedule To 

Adopt Connectivity Fees, Port Fees, a 

Technical Support Request Fee, and 

Historical Market Data Fee 

December 11, 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 December 

3, 2020, MIAX PEARL, LLC (‘‘MIAX 

PEARL’’ or ‘‘Exchange’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a 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 PEARL Equities Fee 

Schedule (the ‘‘Fee Schedule’’) by 

adopting fees applicable to participants 

trading equity securities on and/or using 

services provided by MIAX PEARL 

Equities.3

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’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 

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 

On August 14, 2020, the Commission 

approved the Exchange’s proposal to 

adopt rules governing the trading of 

equity securities, referred to as MIAX 

PEARL Equities.4 The Exchange 

launched MIAX PEARL Equities on 

September 25, 2020. The Exchange 

proposes to adopt a Definitions section 

in the Fee Schedule as well as the 

following fees: (1) Connectivity fees for 

Equity Members 5 and non-Members; (2) 

Port fees (together with the proposed 

connectivity fees, the ‘‘Proposed Access 

Fees’’); (3) a Technical Support Request 

fee; and (4) a fee for Historical Market 

Data (collectively, the ‘‘Proposed Fees’’). 

The Exchange initially filed the 

proposal on September 24, 2020.6 The 

Exchange withdrew the First Proposed 

Rule Change on October 5, 2020 and 

submitted SR–PEARL–2020–19.7 The 

Second Proposed Rule Change was 

published for comment in the Federal 

Register on October 20, 2020 8 and no 

comment letters were received. 

Nonetheless, the Exchange withdrew 

the Second Proposed Rule Change 9 and 

now replaces it with this filing to 

provide further clarification regarding 

the Exchange’s cost analysis for the 

Proposed Fees.10

MIAX PEARL Equities, as a new 

entrant into the equity securities 

marketplace, has only begun generating 

revenue and has a very low market 

share. The Exchange believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee increase meets the 

requirements of the Act that fees be 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

members and markets. The Exchange 

believes this high standard is especially 

important when an exchange imposes 

various access fees for market 

participants to access an exchange’s 

marketplace. The Exchange believes that 

it is important to demonstrate that these 

fees are based on its costs and 

reasonable business needs. Accordingly, 

the Exchange believes the Proposed 

Fees in general, and the Proposed 

Access Fees in particular, will allow the 

Exchange to offset a portion of the 

expenses the Exchange has and will 

incur and that the Exchange has 

provided sufficient transparency (as 

described below) into how the Exchange 

determined to charge such fees. 

Definitions 

The Exchange proposes to include a 

Definitions section at the beginning of 

the Fee Schedule, before the General 

Notes section. The purpose of the 

Definitions section is to provide market 

participants greater clarity and 

transparency regarding the applicability 

of fees and rebates by defining terms 

used within the Fee Schedule in a single 

location. The Exchange notes that other 

equities exchanges include Definitions 

sections in their respective fee 

schedules,11 and the Exchange believes 

that including a Definitions section in 

the front of the Fee Schedule makes the 

Fee Schedule more user-friendly and 

makes the Fee Schedule more 

comprehensive. 

Unless included in the Definition 

section, capitalized terms used in the 

Fee Schedule are defined in the MIAX 

PEARL Equities Rules. Each of the 

definitions proposed to be included in 

81972 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

12See the Options Fee Schedule available at 

https://www.miaxoptions.com/sites/default/files/ 

fee_schedule-files/MIAX_PEARL_Fee_Schedule_

11052020.pdf. 

the Fee Schedule are based on 

definitions included in the existing 

MIAX PEARL fee schedule applicable to 

options (‘‘Options Fee Schedule’’) 12 or 

those of another exchange. In particular, 

the Exchange propose to offer and 

define ports and interfaces that provide 

connectivity to MIAX PEARL Equities. 

The Exchange notes that each of these 

offerings are not novel or unique, are 

available on other equity exchanges, and 

are currently offered by the Exchange 

for options trading and provided for in 

the Exchange’s Options Fee Schedule. 

The Exchange proposes to define the 

following terms in the Fee Schedule: 

• ‘‘Cross-connect’’ occurs when the 

affected third-party system is sited at 

the same data center where MIAX 

PEARL Equities systems are sited, and 

the third-party connects to MIAX 

PEARL Equities through the data center, 

rather than connecting directly to MIAX 

PEARL Equities outside of the data 

center. 

• ‘‘Exchange System Disruption’’ 

means an outage of a Matching Engine 

or collective Matching Engines for a 

period of two consecutive hours or 

more, during trading hours. 

• ‘‘Extranet Provider’’ means a 

technology provider that connects with 

MIAX PEARL Equities systems and in 

turn provides such connectivity to 

MIAX PEARL Equities participants that 

do not connect directly with MIAX 

PEARL Equities. 

• ‘‘FIX Order by Order’’ means a type 

of FXD Port that sends all order 

activities other than reject message, 

including Execution Reports and Trade 

Cancel/Correct messages. FIX Order by 

Order is currently offered by the 

Exchange for options trading and 

provided for in the Exchange’s Options 

Fee Schedule. 

• ‘‘FIX Order Interface’’ or ‘‘FOI’’ 

means the Financial Information 

Exchange interface for certain order 

types as set forth in Exchange Rule 

2614. FOI is currently offered by the 

Exchange for options trading and 

provided for in the Exchange’s Options 

Fee Schedule. 

• ‘‘FIX Port’’ means a FIX port that 

allows Equity Members to send orders 

and other messages using the FIX 

protocol. FIX is currently offered by the 

Exchange for options trading and 

provided for in the Exchange’s Options 

Fee Schedule. 

• ‘‘Full Service Port’’ or ‘‘FSP’’ means 

an MEO port that supports all MEO 

order input message types. FSP is 

currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

• ‘‘FIX Drop Port’’ or ‘‘FXD’’ means a 

messaging interface that provides realtime order activities of firms’ MEO and 

FOI orders. MIAX PEARL Equities offers 

two types of FXD ports: (1) Standard 

FIX Drop; and (2) FIX Order by Order 

Drop. FXD Ports may be used by 

Equities Market Makers, Order Entry 

Firms and clearing firms. FXD is 

currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

• ‘‘MENI’’ means the MIAX Express 

Network Interconnect, which is a 

network infrastructure which provides 

Equity Members and non-Members 

network connectivity to the trading 

platforms, market data systems, test 

systems, and disaster recovery facilities 

of the Exchange. The MENI consists of 

the low latency and ultra-low latency 

(‘‘ULL’’) connectivity options set forth 

in the Exchange’s Fee Schedule. MENI 

is currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

• ‘‘MEO Interface’’ or ‘‘MEO’’ means 

a binary order interface for certain order 

types as set forth in Rule 516 into the 

MIAX PEARL System. See Exchange 

Rule 100. 

• ‘‘Service Bureau’’ means a 

technology provider that offers and 

supplies technology and technology 

services to a trading firm that does not 

have its own proprietary system. 

• ‘‘Standard FIX Drop’’ means an 

FXD Port that only sends trade 

information, including Execution 

Reports and Trade Cancel/Correct 

messages. Standard FIX Drop is 

currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

• ‘‘Third Party Vendor’’ means a 

subscriber of MIAX PEARL Equities’ 

market and other data feeds, which they 

in turn use for redistribution purposes. 

• ‘‘Waiver Period’’ means, for each 

applicable fee, the period of time from 

the initial effective date of the MIAX 

PEARL Equities Fee Schedule until such 

time that MIAX PEARL has an effective 

fee filing establishing the applicable fee. 

MIAX PEARL Equities 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. 

Proposed Access Fees 

To provide market participants with a 

better understanding of how the 

Exchange has established the levels of 

the Proposed Access Fees, the Exchange 

is providing information in this 

proposal regarding the costs incurred by 

the Exchange to provide services 

associated with the Proposed Access 

Fees, including the Exchange’s cost 

allocation methodology (information 

that explains the Exchange’s rationale 

for determining that it was reasonable to 

allocate certain expenses described in 

this filing towards the total cost to the 

Exchange to provide the services 

associated with the Proposed Access 

Fees). The Exchange is also providing 

an analysis of its expected revenues and 

profitability (following the proposed fee 

change) for the services associated with 

the Proposed Access Fees. 

In order to determine the Exchange’s 

costs for providing the services 

associated with the Proposed Access 

Fees, the Exchange conducted an 

extensive review in which the Exchange 

analyzed every expense item in the 

Exchange’s general expense ledger to 

determine whether each such expense 

relates to the services associated with 

the Proposed Access Fees, and, if such 

expense did so relate, what portion (or 

percentage) of such expense actually 

supports those services. The sum of all 

such portions of expenses represents the 

total cost of the Exchange to provide the 

services associated with the Proposed 

Access Fees. For the avoidance of doubt, 

no expense amount was allocated twice. 

Since MIAX PEARL Equities did not 

exist in 2019 (operations only just 

launched on September 25, 2020), the 

Exchange’s most recent publicly 

available financial statement (2019 

Audited Unconsolidated Financial 

Statement) is not an accurate reflection 

of the total annual costs associated with 

the development and operation of MIAX 

PEARL Equities. Accordingly, the 

Exchange believes it is more appropriate 

to justify its fees using cost figures that 

are isolated specifically for MIAX 

PEARL Equities on an annualized basis, 

utilizing its 2020 actual (to date) and 

projected (for the remainder) costs, as 

described herein. The purpose of 

presenting it in this manner is to 

provide greater transparency into the 

Exchange’s actual and expected 

revenues, costs, and profitability 

associated with providing the services 

associated with the Proposed Access 

Fees. Based on this analysis, the 

Exchange believes that the Proposed 

Access Fees are fair and reasonable 

because they will permit recovery of 

less than all of the Exchange’s costs for 

providing the services associated with 

the Proposed Access Fees and will not 

result in excessive pricing or supracompetitive profit when comparing the 

Exchange’s total annual expense 

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81973 

13 ‘‘FIX Order Interface’’ or ‘‘FOI’’ means the 

Financial Information Exchange interface for certain 

order types as set forth in Exchange Rule 2614. See 

the Definitions section of the Fee Schedule. 

14Each MEO interface will have one Full Service 

Port (‘‘FSP’’) and one Purge Port. ‘‘Full Service 

Port’’ or ‘‘FSP’’ means an MEO port that supports 

all MEO order input message types. See the 

Definitions section of the Fee Schedule. Purge Ports 

are described in Exchange Rule 2618(a)(7)(b). 

15 ‘‘Standard FIX Drop’’ means an FXD Port that 

only sends trade information, including Execution 

Reports and Trade Cancel/Correct messages. See the 

Definitions section of the Fee Schedule. 16 ‘‘FIX Order by Order’’ means a type of FXD Port 

that sends all order activities other than reject 

message, including Execution Reports and Trade 

Cancel/Correct messages. See the Definitions 

section of the Fee Schedule. 

17The term ‘‘Equities Market Maker’’ shall mean 

an Equity Member that acts as a Market Maker in 

equity securities, pursuant to Chapter XXVI. See 

Exchange Rule 1901. 

18The term ‘‘Equities Order Entry Firm’’, ‘‘Order 

Entry Firm’’, or ‘‘OEF’’, shall mean those Equity 

Members representing orders as agent on MIAX 

PEARL Equities and those non-Equity Market 

Maker Members conducting proprietary trading. See 

Exchange Rule 1901. 

19Purge Ports are described in Exchange Rule 

2618(a)(7)(b). 

associated with providing the services 

associated with the Proposed Access 

Fees versus the total projected annual 

revenue the Exchange will collect for 

providing those services. 

Connectivity Fees 

Specifically, proposed Sections 2a) 

and b) of the Fee Schedule describe 

network connectivity fees for the 1 

Gigabit (‘‘Gb’’) ultra-low latency 

(‘‘ULL’’) fiber connection and the 10Gb 

ULL fiber connection, which are to be 

charged to both Equity Members and 

non-Members of MIAX PEARL Equities 

for connectivity to the Exchange’s 

primary/secondary facility. The 

Exchange also proposes to adopt 

network connectivity fees for the 1Gb 

ULL and 10Gb ULL fiber connections 

for connectivity to the Exchange’s 

disaster recovery facility. 

The Exchange will offer to both 

Equity Members and non-Members 

various bandwidth alternatives for 

connectivity to MIAX PEARL Equities, 

to its primary and secondary facilities, 

which consists of a 1Gb ULL fiber 

connection and a 10Gb ULL fiber 

connection. The Exchange also offers to 

both Equity Members and non-Members 

various bandwidth alternatives for 

connectivity to the disaster recovery 

facility of MIAX PEARL Equities, which 

consists of a 1Gb ULL fiber connection 

and a 10Gb ULL connection. 

The Exchange proposes to establish 

the monthly network connectivity fees 

for such connections for both Equity 

Members and non-Members. The 

Exchange proposes to adopt the 

following fees for connectivity to MIAX 

PEARL Equities’ primary/secondary 

facility for both Equity Members and 

non-Members: (a) $1,000 for the 1Gb 

ULL connection; and (b) $3,500 for the 

10Gb ULL connection. The Exchange 

proposes to adopt the following fees for 

connectivity to MIAX PEARL Equities’ 

disaster recovery facility for both Equity 

Members and non-Members: (a) $1,000 

for the 1Gb ULL connection; and (b) 

$3,000 for the 10Gb ULL connection. 

Monthly network connectivity fees for 

Equity Members and non-Members for 

connectivity with the primary/ 

secondary facility will be assessed in 

any month the Equity Member or nonMembers is credentialed to use any of 

the MIAX PEARL Equities Application 

Programming Interfaces (‘‘APIs’’) or 

market data feeds in the production 

environment and will be pro-rated when 

an Equity Member or non-Member 

makes a change to the connectivity (by 

adding or deleting connections) with 

such pro-rated fees based on the number 

of trading days that the Equity Member 

or non-Member has been credentialed to 

utilize any of the MIAX PEARL Equities’ 

APIs or market data feeds in the 

production environment through such 

connection, divided by the total number 

of trading days in such month 

multiplied by the applicable monthly 

rate. Monthly network connectivity fees 

for Equity Members and non-Members 

for connectivity to the Disaster Recovery 

Facility will be assessed in each month 

during which the Equity Member or 

non-Member has established 

connectivity to the Disaster Recovery 

Facility. 

Proposed Section 2)c) of the Fee 

Schedule, Pass-Through of External 

Connectivity Fees, provides for the pass 

through of external connectivity fees 

(described below) to Equity Members 

and non-Members that establish 

connections with MIAX PEARL Equities 

through a third-party. Fees assessed to 

MIAX PEARL Equities by third-party 

external vendors on behalf of an Equity 

Member or non-Member connecting to 

MIAX PEARL Equities (including crossconnects), will be passed through to the 

Equity Member or non-Member. The 

external connectivity fees passed 

through can include one-time set-up 

fees, monthly charges, and other fees 

charged to MIAX PEARL Equities by a 

third-party for the benefit of an Equity 

Member or non-Member. 

Port Fees 

Proposed Section 2)d), Port Fees, of 

the Fee Schedule describes fees for 

access and services used by Equity 

Members and non-Members. MIAX 

PEARL Equities provides three Port 

types: (i) The Financial Information 

Exchange Port (‘‘FIX Port’’), which 

allows Equity Members to send orders 

and other messages using the FIX 

protocol; 13 (ii) the MIAX Express 

Orders Interface (‘‘MEO Port’’), which 

allows Equity Members order entry 

capabilities to all MIAX PEARL Equities 

Matching Engines; 14 and (iii) the FIX 

Drop Port (‘‘FXD Port’’), which provides 

real-time order activities firms’ MEO 

and FOI orders. MIAX PEARL Equities 

offers two types of FXD ports: (1) 

Standard FIX Drop; 15 and (2) FIX Order 

by Order.16 FXD Ports may be used by 

Equities Market Makers 17, Order Entry 

Firms 18 and clearing firms. 

The Exchange proposes to assess 

monthly Port fees to Equity Members in 

each month the Equity Member is 

credentialed to use a Port in the 

production environment. MIAX PEARL 

Equities has primary and secondary data 

centers and a disaster recovery center. 

Each Port provides access to all 

Exchange data centers for a single fee. 

The Exchange notes that, unless 

otherwise specifically set forth in the 

Fee Schedule, the Port fees include the 

information communicated through the 

Port. That is, unless otherwise 

specifically set forth in the Fee 

Schedule, there is no additional charge 

for the information that is 

communicated through the Port apart 

from what the user is assessed for each 

Port. The Exchange proposes to assess 

Port Fees for FIX Ports, MEO Ports, and 

FXD Ports as set forth in the following 

table: 

Type of port Monthly port fees includes connectivity to the primary, 

secondary and disaster recovery data centers 

FIX Port ∧ ........................................................................................................................... Per Port: 

1st–5th Fee Waived for the Waiver Period. 

6th–10th Fee Waived for the Waiver Period. 

11th–25th Fee Waived for the Waiver Period. 

26th–50th $450. 

81974 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

20 ‘‘Waiver Period’’ means, for each applicable 

fee, the period of time from the initial effective date 

of the MIAX PEARL Equities Fee Schedule until 

such time that MIAX PEARL has an effective fee 

filing establishing the applicable fee. MIAX PEARL 

Equities 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. 

21See MIAX Fee Schedule, Section 5)f), Member 

and non-Member Technical Support Request Fee; 

MIAX PEARL Fee Schedule, Section 5)f), Member 

and non-Member Technical Support Request Fee; 

and MIAX Emerald Fee Schedule, Section 5)f), 

Member and non-Member Technical Support 

Request Fee. 22See Fee Schedule, Section 3)c). 

Type of port Monthly port fees includes connectivity to the primary, 

secondary and disaster recovery data centers 

51st–75th $400. 

76th–100th $350. 

101st or more $300. 

MEO Port ∧* ....................................................................................................................... Per Port: 

1st–5th Fee Waived for the Waiver Period. 

6th–10th Fee Waived for the Waiver Period. 

11th–25th Fee Waived for the Waiver Period. 

26th–50th $450. 

51st–75th $400. 

76th–100th $350. 

101st or more $300. 

FXD Port ∧ .......................................................................................................................... Fee Waived for the Waiver Period. 

∧Each port will have access to all Matching Engines. 

* The rates set forth above for MEO Ports entitle an Equity Member to one (1) FSP and one (1) Purge Port 19 for all Matching Engines for a 

single port fee. 

• MEO and FIX Ports are counted 

separately for the tiers in the table. 

The Exchange proposes to waive the 

fee for the 1st through the 25th FIX 

Ports and MEO Ports that Equity 

Members are credentialed to use, as well 

as the fees for all FXD Ports, for the 

Waiver Period.20 For all Port fees that 

the Exchange initially proposes to be 

subject to the Waiver Period, the 

Exchange will submit a rule filing to the 

Commission to establish the fee amount 

and any related requirements, and 

provide notice to terminate the 

applicable Waiver Period. Even though 

most of the Port fees are waived during 

the Waiver Period, the Exchange 

believes that is appropriate to provide 

market participants with the overall 

structure of the fee by outlining the 

structure on the Fee Schedule without 

setting forth a specific fee amount in 

certain areas, so that there is general 

awareness that the Exchange intends to 

assess such a fee in the future, should 

the Waiver Period terminate and the 

Exchange establish an applicable fee. 

Equity Member and Non-Member 

Technical Support Request Fee 

Proposed Section 2)e), Member and 

Non-Member Technical Support 

Request Fee, of the Fee Schedule 

describes the technical support request 

fee to be charged to both Equity 

Members and non-Members that request 

technical support at any of the MIAX 

PEARL Equities data centers. MIAX 

PEARL Equities proposes to charge a fee 

of $200 per hour for requested technical 

support. The Exchange intends to 

provide Equity Members and nonMembers access to the Exchange’s onsite data center personnel for technical 

support as a convenience to the Equity 

Members and non-Members to test or 

otherwise assess their connectivity to 

the Exchange. Currently, the Exchange 

charges the same fee amount for the 

same services for options trading, as 

well as at its affiliate option exchanges, 

Miami International Securities 

Exchange, LLC (‘‘MIAX’’) and MIAX 

Emerald, LLC (‘‘MIAX Emerald’’).21

Market Data Fees 

Proposed Sections 3)a)–c) describe the 

fee to be charged for the Exchange’s 

proprietary market data products. MIAX 

PEARL Equities intends to offer the 

following three proprietary market data 

products: (a) Top of Market (‘‘ToM’’) 

feed; (b) Depth of Market (‘‘DoM’’) feed; 

and (c) the Historical Market Data feed. 

The ToM feed is a data feed that 

contains the price and aggregate size of 

displayed top of book quotations, order 

execution information, and 

administrative messages for orders 

entered on MIAX PEARL Equities. The 

DOM feed is a data feed that contains 

the displayed price and size of each 

order entered on MIAX PEARL Equities, 

as well as order execution information, 

order cancellations, order modifications, 

order identification numbers, and 

administrative messages. 

The Exchange proposes to provide 

under Sections 3)a) and 3)b) of the Fee 

Schedule that the ToM and DoM would 

be offered free of charge during the 

Waiver Period. Even though the fees for 

the ToM and DoM data feeds are waived 

during the Waiver Period, the Exchange 

believes that is appropriate to provide 

market participants with notice of these 

feeds on the Fee Schedule without 

setting forth a specific fee amount, so 

that there is general awareness that the 

Exchange intends to assess such a fee in 

the future, should the Waiver Period 

terminate and the Exchange establish an 

applicable fee. 

The Exchange will also offer 

Historical Data for MIAX PEARL 

Equities, which is a data product that 

offers historical market data for orders 

entered on MIAX PEARL Equities upon 

request. The Exchange proposes to 

charge a modest fee for the Historical 

Data, which will be based on the cost 

incurred by the Exchange in providing 

that data. Proposed Section 3)c) of the 

Fee Schedule describes the fee to be 

charged market participants that request 

Historical Data from MIAX PEARL 

Equities. Historical Data is intended to 

aid market participants in analyzing 

trade and volume data, evaluating 

historical trends in the trading activity 

of a particular security, and enabling 

those market participants to test trading 

models and analytical strategies. 

Specifically, Historical Data includes all 

data that is captured and disseminated 

on ToM and DoM feeds and is available 

on a T+1 basis.22

The Exchange will only assess the fee 

for Historical Data on a user (whether 

Equity Member or non-Member) that 

specifically requests such Historical 

Data. Historical Data will be uploaded 

onto an Exchange-provided device, 

which the Exchange will incur a cost to 

procure and provide to those that 

request the data. 

The Exchange proposed to charge a 

flat fee of $500 per device requested. 

Each device shall have a maximum 

storage capacity of 8 terabytes. Users 

may request up to six months of 

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81975 

23 15 U.S.C. 78f(b). 

24 15 U.S.C. 78f(b)(4). 

25 15 U.S.C. 78f(b)(5). 

26See Securities Exchange Act Release No. 85459 

(March 29, 2019), 84 FR 13363 (April 4, 2019) (SR– 

BOX–2018–24, SR–BOX–2018–37, and SR–BOX– 

2019–04). 

27See Staff Guidance on SRO Rule Filings 

Relating to Fees (May 21, 2019), at https://

www.sec.gov/tm/staff-guidance-sro-rule-filings-fees 

(the ‘‘Guidance’’). 

28See U.S. Equities Market Volume Summary 

available at https://markets.cboe.com/us/equities/ 

market_statistics/ (last visited November 30, 2020). 

29See Letter from Stefano Durdic, R2G, to 

Vanessa Countryman, Acting Secretary, 

Commission, dated March 27, 2019 (the ‘‘R2G 

Letter’’). 

30See id. 

Historical Data per device, subject to the 

device’s storage capacity. Historical 

Data will be made available beginning 

from the time of launch of MIAX PEARL 

Equities on September 25, 2020 (always 

on a T+1 basis). However, only the most 

recent six months of Historical Data 

shall be available for purchase from the 

request date. 

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 provides for the 

equitable allocation of reasonable dues, 

fees and other charges among Exchange 

Members and issuers and other persons 

using any facility or system which the 

Exchange operates or controls. The 

Exchange also believes the proposal 

furthers the objectives of Section 6(b)(5) 

of the Act 25 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 customer, 

issuers, brokers and dealers. 

On March 29, 2019, the Commission 

issued its Order Disapproving Proposed 

Rule Changes to Amend the Fee 

Schedule on the BOX Market LLC 

Options Facility to Establish BOX 

Connectivity Fees for Participants and 

Non-Participants Who Connect to the 

BOX Network (the ‘‘BOX Order’’).26 On 

May 21, 2019, the Commission issued 

the Staff Guidance on SRO Rule Filings 

Relating to Fees.27

The Exchange believes that the 

Proposed Fees are consistent with the 

Act because they (i) are reasonable, 

equitably allocated, not unfairly 

discriminatory, and not an undue 

burden on competition; (ii) comply with 

the BOX Order and the Guidance; (iii) 

are supported by evidence (including 

data and analysis), constrained by 

significant competitive forces; and (iv) 

are supported by specific information 

(including quantitative information), 

fair and reasonable because they will 

permit recovery of the Exchange’s costs 

(less than all) and will not result in 

excessive pricing or supra-competitive 

profit. Accordingly, the Exchange 

believes that the Commission should 

find that the Proposed Fees are 

consistent with the Act. 

MIAX PEARL Equities launched 

trading on September 25, 2020. As of 

November 2020, MIAX PEARL Equities 

averaged only 0.05% daily market share 

of the U.S. equities market.28 The 

Exchange is not aware of any evidence 

that a market share of approximately 

0.05% provides the Exchange with anticompetitive pricing power. If the 

Exchange were to attempt to establish 

unreasonable pricing, then no market 

participant would join or connect, and 

existing market participants would 

disconnect. 

Separately, the Exchange is not aware 

of any reason why market participants 

could not simply drop their connections 

to an exchange (or not connect to an 

exchange) if an exchange were to 

establish prices for its non-transaction 

fees that, in the determination of such 

market participant, did not make 

business or economic sense for such 

market participant to connect to such 

exchange. No market participant is 

required by rule, regulation, or 

competitive forces to be a Member of the 

Exchange or MIAX PEARL Equities. As 

evidence of the fact that market 

participants can and do disconnect from 

exchanges based on non-transaction fee 

pricing, R2G Services LLC (‘‘R2G’’) filed 

a comment letter after BOX’s proposed 

rule changes to increase its connectivity 

fees (SR–BOX–2018–24, SR–BOX– 

2018–37, and SR–BOX–2019–04).29 The 

R2G Letter stated, ‘‘[w]hen BOX 

instituted a $10,000/month price 

increase for connectivity; we had no 

choice but to terminate connectivity 

into them as well as terminate our 

market data relationship. The cost 

benefit analysis just didn’t make any 

sense for us at those new levels.’’ 30

Accordingly, this example shows that if 

an exchange sets too high of a fee for 

connectivity and/or other nontransaction fees for its relevant 

marketplace, market participants can 

choose to disconnect from such 

exchange. 

The Exchange believes its proposal to 

include a Definitions section in the Fee 

Schedule promotes just and equitable 

principles of trade, removes 

impediments to and perfects the 

mechanism of a free and open market 

and a national market system, and, in 

general protects investors and the public 

interest and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers and dealers. 

The Exchange believes that the proposal 

to adopt a Definitions section in the 

beginning of the Fee Schedule will 

provide greater clarity to Equity 

Members, non-Members, market 

participants and the public regarding 

the Exchange’s fees and rebates, and it 

is in the public interest for the Fee 

Schedule to be transparent, 

comprehensive and user-friendly so as 

to eliminate the potential for confusion. 

The Exchange believes that its 

proposal is consistent with Section 

6(b)(4) of the Act, in that the Proposed 

Fees are fair, equitable and not 

unreasonably discriminatory, because 

the fees, as proposed, are constrained by 

significant competitive forces. The U.S. 

equity securities markets are highly 

competitive (there are currently 16 

equity markets) and a reliance on 

competitive markets is an appropriate 

means to ensure equitable and 

reasonable prices. 

The Exchange believes that its 

proposal is consistent with Section 

6(b)(4) of the Act because the Proposed 

Access Fees will permit recovery (less 

than all) of the Exchange’s costs and 

will not result in excessive or supracompetitive profit. The Proposed Access 

Fees will allow the Exchange to recover 

a portion (less than all) of the costs 

incurred by the Exchange associated 

with providing and maintaining the 

necessary hardware and other 

infrastructure as well as network 

monitoring and support services in 

order to provide the services associated 

with the Proposed Access Fees. The 

Exchange believes that it is reasonable 

and appropriate to establish its fees 

charged for the services associated with 

the Proposed Access Fees at levels that 

will partially offset the costs to the 

Exchange associated with maintaining 

and enhancing a state-of-the-art 

exchange network infrastructure in the 

U.S. equities industry. 

The costs associated with building out 

and maintaining a state-of-the-art 

network infrastructure are extensive. 

This is due to several factors, including 

costs associated with maintaining and 

expanding a team of highly-skilled 

network engineers, fees charged by the 

Exchange’s third-party data center 

operator, costs associated with projects 

and initiatives designed to improve 

overall network performance and 

stability through the Exchange’s 

81976 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

31The Exchange notes that the total expense 

figures for each of the external and internal 

expenses described herein relate only to the 

Exchange’s equities market. No expense relating to 

the Exchange’s options market is included in this 

filing. 

research and development (‘‘R&D’’) 

efforts, and costs associated with fullysupporting advances in infrastructure 

and expansion of network level services, 

including customer monitoring, alerting 

and reporting. The Exchange incurs 

significant technology expense related 

to establishing and maintaining 

Information Security services, enhanced 

network monitoring and customer 

reporting, as well as Regulation SCI 

mandated processes, associated with its 

network technology. While some of the 

expense is fixed, much of the expense 

is not fixed, and thus increases as the 

number of connections and ports 

increase. For example, new 1Gb ULL 

and 10Gb ULL connections require the 

purchase of additional hardware to 

support those connections as well as 

enhanced monitoring and reporting of 

customer performance that the 

Exchange and its affiliates provide. 

Further, 10Gb ULL connections require 

the purchase of specialized, more costly 

hardware. As the total number of all 

connections increase, the Exchange 

needs to increase its data center 

footprint and consume more power, 

resulting in increased costs charged by 

its third-party data center providers. 

Accordingly, the cost to the Exchange to 

provide access to its network and 

trading infrastructure is not entirely 

fixed. 

Further, because the costs of operating 

a data center are significant and not 

economically feasible for the Exchange, 

the Exchange does not operate its own 

data centers, and instead contracts with 

a third-party data center provider. The 

Exchange notes that larger, wellestablished exchange operators own/ 

operate their data centers, which offers 

them greater control over their data 

center costs. Because those exchanges 

own and operate their data centers as 

profit centers, the Exchange is subject to 

additional costs. Fees for the services 

associated with the Proposed Access 

Fees, which are charged for accessing 

the Exchange’s data center network 

infrastructure, are directly related to the 

network and offset such costs. 

Further, the Exchange invests 

significant resources in network R&D to 

continuously improve the overall 

performance and stability of its network. 

For example, the Exchange has a 

number of network monitoring tools 

(some of which were developed inhouse, and some of which are licensed 

from third-parties), that continually 

monitor, detect, and report network 

performance, many of which serve as 

significant value-adds to Equity 

Members and enable the Exchange to 

provide a high level of customer service. 

These tools detect and report 

performance issues, and thus enable the 

Exchange to proactively notify an Equity 

Member (and the SIPs) when the 

Exchange detects a problem with an 

Equity Member’s connectivity. In fact, 

the Exchange’s affiliate options 

exchanges, MIAX and MIAX Emerald, 

often receive inquiries from other 

industry participants regarding the 

status of networking issues outside of 

the Exchange’s own network 

environment that are impacting the 

industry as a whole via the SIPs, 

including inquiries from regulators, 

because the Exchange has a superior, 

state-of the-art network that, through its 

enhanced monitoring and reporting 

solutions, often detects and identifies 

industry-wide networking issues ahead 

of the SIPs. The Exchange also incurs 

costs associated with the maintenance 

and improvement of existing tools and 

the development of new tools. 

Also, routine R&D projects to improve 

the performance of the network’s 

hardware infrastructure result in 

additional cost. In sum, the costs 

associated with maintaining and 

enhancing a state-of-the-art exchange 

network in the U.S. equity securities 

industry is a significant expense for the 

Exchange that is projected to increase 

year-over-year, and thus the Exchange 

believes that it is reasonable to offset a 

portion of those costs through 

establishing the Proposed Access Fees, 

which are designed to recover those 

costs, as described herein. Overall, the 

Proposed Access Fees are projected to 

offset only a portion of the Exchange’s 

services associated with the Proposed 

Access Fees. The Exchange invests in 

and offers a superior network 

infrastructure as part of its overall 

exchange services offering, resulting in 

significant costs associated with 

maintaining this network infrastructure, 

which are directly tied to the amount of 

the Proposed Access Fees that must be 

charged to access it, in order to recover 

those costs. The Exchange only has four 

primary sources of revenue: Transaction 

fees, access fees (of which the Proposed 

Access Fees constitute the majority), 

regulatory fees, and market data fees. 

Accordingly, the Exchange must cover 

all of its expenses from these four 

primary sources of revenue. 

The Exchange believes that the 

Proposed Access Fees are fair and 

reasonable because they will not result 

in excessive pricing or supracompetitive profit, when comparing the 

total annual expense of MIAX PEARL 

Equities for providing the services 

associated with the Proposed Access 

Fees versus the total projected annual 

revenue of the Exchange for providing 

those services. For 2020, the total 

annual expense 31 for providing the 

services associated with the Proposed 

Access Fees for MIAX PEARL Equities 

is projected to be approximately $8.4 

million. The $8.4 million in projected 

total annual expense is comprised of the 

following, all of which are directly 

related to the services associated with 

the Proposed Access Fees by MIAX 

PEARL Equities to its Equity Members 

and non-Members: (1) Third-party 

expense, relating to fees paid by MIAX 

PEARL Equities to third-parties for 

certain products and services; and (2) 

internal expense, relating to the internal 

costs of MIAX PEARL Equities to 

provide the services associated with the 

Proposed Access Fees. The $8.4 million 

in projected total annual expense is 

directly related to the services 

associated with the Proposed Access 

Fees and not any other product or 

service offered by the Exchange. It does 

not include general costs of operating 

matching systems and other trading 

technology, and no expense amount was 

allocated twice. 

As discussed, the Exchange 

conducted an extensive review in which 

the Exchange analyzed every expense 

item in the Exchange’s general expense 

ledger (this includes over 150 separate 

and distinct expense items) to 

determine whether each such expense 

relates to the services associated with 

the Proposed Access Fees, and, if such 

expense did so relate, what portion (or 

percentage) of such expense actually 

supports those services, and thus bears 

a relationship that is, ‘‘in nature and 

closeness,’’ directly related to those 

services. The sum of all such portions 

of expenses represents the total cost of 

the Exchange to provide the services 

associated with the Proposed Access 

Fees. 

For 2020, total actual and projected 

third-party expense, relating to fees paid 

by the Exchange to third-parties for 

certain products and services for the 

Exchange to be able to provide the 

services associated with the Proposed 

Access Fees, was $1,492,112. This 

includes, but is not limited to, a portion 

of the fees paid to: (1) Equinix, for data 

center services, for the primary, 

secondary, and disaster recovery 

locations of the MIAX PEARL Equities 

trading system infrastructure; (2) Zayo 

Group Holdings, Inc. (‘‘Zayo’’) for 

connectivity services (fiber and 

bandwidth connectivity) linking MIAX 

PEARL Equities’ office locations in 

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81977 

Princeton, New Jersey and Miami, 

Florida to all data center locations; (3) 

Secure Financial Transaction 

Infrastructure (‘‘SFTI’’), which supports 

connectivity and feeds for the entire 

equity securities industry; (4) various 

other services providers (including 

Thompson Reuters, NYSE, Nasdaq, 

Internap, and Options IT), which 

provide content, connectivity services, 

infrastructure services, and market data 

services; and (5) various other hardware 

and software providers (including Dell 

and Cisco, which support the 

production environment). 

For clarity, only a portion of all fees 

paid to such third-parties is included in 

the third-party expense herein (only the 

portions that actually support the 

services associated with the Proposed 

Access Fees), and no expense amount is 

allocated twice. Accordingly, the 

Exchange does not allocate its entire 

information technology and 

communication costs to the services 

associated with the Proposed Access 

Fees. 

The Exchange believes it is reasonable 

to allocate such third-party expense 

described above towards the total cost to 

the Exchange to operate and support the 

network, including providing the 

services associated with the Proposed 

Access Fees. In particular, the Exchange 

believes it is reasonable to allocate the 

identified portions of the Equinix 

expense because Equinix operates the 

data centers (primary, secondary, and 

disaster recovery) that host the 

Exchange’s network infrastructure, 

which enables the services associated 

with the Proposed Access Fees. This 

includes, among other things, the 

necessary storage space, which 

continues to expand and increase in 

cost, power to operate the network 

infrastructure, and cooling apparatuses 

to ensure the Exchange’s network 

infrastructure maintains stability. 

Without these services from Equinix, 

the Exchange would not be able to 

operate and support the network and 

provide the services associated with the 

Proposed Access Fees to Equity 

Members and non-Members and their 

customers. The Exchange did not 

allocate all of the Equinix expense 

toward the cost of providing the services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

73% of the total Equinix expense (68% 

allocated towards the cost of providing 

the provision of network connectivity 

and 5% allocated towards the cost of 

providing ports). The Exchange believes 

these allocations are reasonable because 

they represent the Exchange’s actual 

cost to operate and support the network, 

and not any other service, as supported 

by its cost review. 

The Exchange believes it is reasonable 

to allocate the identified portions of the 

Zayo expense because Zayo provides 

the internet, fiber and bandwidth 

connections with respect to the 

network, linking MIAX PEARL Equities 

with the Exchange’s affiliates, MIAX 

and MIAX Emerald, as well as the data 

center and disaster recovery locations. 

As such, all of the trade data flow 

through Zayo’s infrastructure over the 

Exchange’s network. Without these 

services from Zayo, the Exchange would 

not be able to operate and support the 

network and provide the services 

associated with the Proposed Access 

Fees to Equity Members and nonMembers and their customers. The 

Exchange did not allocate all of the 

Zayo expense toward the cost of 

providing the services associated with 

the Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 

operating and supporting the network, 

approximately 66% of the total Zayo 

expense (62% allocated towards the cost 

of providing the provision of network 

connectivity and 4% allocated towards 

the cost of providing ports). The 

Exchange believes these allocations are 

reasonable because they represent the 

Exchange’s actual cost to operate and 

support the network, and not any other 

service, as supported by its cost review. 

The Exchange believes it is reasonable 

to allocate the identified portions of the 

SFTI expense and various other service 

providers’ (including Thompson 

Reuters, NYSE, Nasdaq, Internap, and 

Options IT) expense because those 

entities provide connectivity and feeds 

for the entire U.S. securities industry as 

well as the content, connectivity 

services, infrastructure services, and 

market data services for critical 

components of the network. Without 

these services from SFTI and various 

other service providers, the Exchange 

would not be able to operate and 

support the network and provide the 

services associated with the Proposed 

Access Fees to Equity Members and 

non-Members and their customers. The 

Exchange did not allocate all of the SFTI 

and other service providers’ expense 

toward the cost of providing the services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

94% of the total SFTI and other service 

providers’ expense (89% allocated 

towards the cost of providing the 

provision of network connectivity and 

5% allocated towards the cost of 

providing ports). The Exchange believes 

these allocations are reasonable because 

they represent the Exchange’s actual 

cost to operate and support the network, 

and not any other service, as supported 

by its cost review. 

The Exchange believes it is reasonable 

to allocate the identified portion of the 

other hardware and software provider 

expense because this includes costs for 

dedicated hardware licenses for 

switches and servers, as well as 

dedicated software licenses for security 

monitoring and reporting across the 

network. Without this hardware and 

software, the Exchange would not be 

able to operate and support the network 

and provide the services associated with 

the Proposed Access Fees to Equity 

Members and non-Members and their 

customers. The Exchange did not 

allocate all of the hardware and software 

provider expense toward the cost of 

providing the services associated with 

the Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 

operating and supporting the network, 

approximately 57% of the total 

hardware and software provider 

expense (54% allocated towards the cost 

of providing the provision of network 

connectivity and 3% allocated towards 

the cost of providing ports). The 

Exchange believes these allocations are 

reasonable because they represent the 

Exchange’s actual cost to operate and 

support the network, and not any other 

service, as supported by its cost review. 

For 2020, total projected internal 

expense, relating to the internal costs of 

the Exchange to provide the services 

associated with the Proposed Access 

Fees, is projected to be $6,905,858. This 

includes, but is not limited to, costs 

associated with: (1) Employee 

compensation and benefits for full-time 

employees that support the services 

associated with the Proposed Access 

Fees, including staff in network 

operations, trading operations, 

development, system operations, 

business, etc., as well as staff in general 

corporate departments (such as legal, 

regulatory, and finance) that support 

those employees and functions; (2) 

depreciation and amortization of 

hardware and software used to provide 

the services associated with the 

Proposed Access Fees, including 

equipment, servers, cabling, purchased 

software and internally developed 

software used in the production 

environment to support those services 

for trading; and (3) occupancy costs for 

leased office space for staff that support 

the services associated with the 

81978 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

Proposed Access Fees. The breakdown 

of these costs is more fully-described 

below. 

For clarity, only a portion of all such 

internal expenses are included in the 

internal expense herein (only the 

portions that support the services 

associated with the Proposed Access 

Fees), and no expense amount is 

allocated twice. Accordingly, the 

Exchange does not allocate its entire 

costs contained in those line items to 

the services associated with the 

Proposed Access Fees. 

The Exchange believes it is reasonable 

to allocate such internal expense 

described above towards the total cost to 

the Exchange to operate and support the 

network, including providing the 

services associated with the Proposed 

Access Fees. In particular, MIAX PEARL 

Equities’ employee compensation and 

benefits expense relating to providing 

the services associated with the 

Proposed Access Fees is projected to be 

$4,317,667, which is only a portion of 

the $13,492,708 total projected expense 

for employee compensation and 

benefits. The Exchange believes it is 

reasonable to allocate the identified 

portions of each expense because they 

include the time spent by employees of 

several departments, including 

Technology, Back Office, Systems 

Operations, Networking, Business 

Strategy Development (who create the 

business requirement documents that 

the Technology staff use to develop 

network features and enhancements), 

Trade Operations, Finance (who provide 

billing and accounting services relating 

to the network), and Legal (who provide 

legal services relating to the network, 

such as rule filings and various license 

agreements and other contracts). As part 

of the extensive cost review conducted 

by the Exchange, the Exchange reviewed 

the amount of time spent by each 

employee on matters relating to the 

operation and support of the network, 

including the services associated with 

the Proposed Access Fees. Without 

these employees, the Exchange would 

not be able to operate and support the 

network and provide the services 

associated with the Proposed Access 

Fees to Equity Members and nonMembers and their customers. The 

Exchange did not allocate all of the 

employee compensation and benefits 

expense toward the cost of providing 

the services associated with the 

Proposed Access Fees, only that portion 

which the Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

32% of the total employee 

compensation and benefits expense 

(29% allocated towards the cost of 

providing the provision of network 

connectivity and 3% allocated towards 

the cost of providing ports). The 

Exchange believes these allocations are 

reasonable because they represent the 

Exchange’s actual cost to operate and 

support the network, and not any other 

service, as supported by its cost review. 

MIAX PEARL Equities’ depreciation 

and amortization expense relating to 

providing the services associated with 

the Proposed Access Fees is projected to 

be $2,131,411, which is only a portion 

of the $2,664,264 total projected 

expense for depreciation and 

amortization. The Exchange believes it 

is reasonable to allocate the identified 

portions of such projected expense 

because such expense includes the 

actual cost of the computer equipment, 

such as dedicated servers, computers, 

laptops, monitors, information security 

appliances and storage, and network 

switching infrastructure equipment, 

including switches and taps that were 

purchased to operate and support the 

network. Without this equipment, the 

Exchange would not be able to operate 

the network and provide the services 

associated with the Proposed Access 

Fees to Equity Members and nonMembers and their customers. The 

Exchange did not allocate all of the 

projected depreciation and amortization 

expense toward the cost of providing 

the services associated with the 

Proposed Access Fees, only the portions 

which the Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

80% of the total depreciation and 

amortization expense (76% allocated 

towards the cost of providing the 

provision of network connectivity and 

4% allocated towards the cost of 

providing ports). The services 

associated with the Proposed Access 

Fees would not be possible without 

relying on such equipment. The 

Exchange believes these allocations are 

reasonable because they represent the 

Exchange’s actual cost to operate and 

support the network, and not any other 

service, as supported by its cost review. 

MIAX PEARL Equities’ occupancy 

expense relating to providing the 

services associated with the Proposed 

Access Fees is projected to be $456,780, 

which is only a portion of the $878,423 

total projected expense for occupancy. 

The Exchange believes it is reasonable 

to allocate the identified portions of 

such projected expense because such 

expense represents the portion of the 

Exchange’s cost to rent and maintain a 

physical location for the Exchange’s 

staff who operate and support the 

network, including providing the 

services associated with the Proposed 

Access Fees. These amounts consist 

primarily of rent for the Exchange’s 

Princeton, New Jersey office, as well as 

various related costs, such as physical 

security, property management fees, 

property taxes, and utilities. The 

Exchange operates its Network 

Operations Center (‘‘NOC’’) and 

Security Operations Center (‘‘SOC’’) 

from its Princeton, New Jersey office 

location. A centralized office space is 

required to house the staff that operates 

and supports the network. The 

Exchange currently has approximately 

150 employees (and continues to 

increase its headcount to support the 

network as the Exchange, and its 

affiliates, grow the network). 

Approximately two-thirds of the 

Exchange’s staff are in the Technology 

department, and the majority of those 

staff members have some role in the 

operation and performance of the 

network. Without this office space, the 

Exchange would not be able to operate 

and support the network and provide 

the services associated with the 

Proposed Access Fees to Equity 

Members and non-Members and their 

customers. Accordingly, the Exchange 

believes it is reasonable to allocate the 

identified portions of its occupancy 

expense because such amounts 

represent the Exchange’s actual cost to 

house the equipment and personnel 

who operate and support the Exchange’s 

network infrastructure for the services 

associated with the Proposed Access 

Fees. The Exchange did not allocate all 

of the projected occupancy expense 

toward the cost of providing the services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

52% of the total occupancy expense 

(48% allocated towards the cost of 

providing the provision of network 

connectivity and 4% allocated towards 

the cost of providing ports). The 

Exchange believes these allocations are 

reasonable because they represent the 

Exchange’s actual cost to operate and 

support the network, and not any other 

service, as supported by its cost review. 

The Exchange’s monthly revenue for 

the Proposed Access Fees is based on 

the following purchases by Equity 

Members and non-Members during the 

most recent billing cycle: (i) 12 1Gb ULL 

connections; (ii) 81 10Gb ULL 

connections; and (iii) 103 MEO Ports. 

The monthly revenue from Port fees is 

subject to change from month to month 

depending on the number of Ports 

purchased. Accordingly, the Exchange’s 

total monthly Port revenue was $22,800 

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81979 

32See Nasdaq, Phlx and ISE General Rules, 

General 8, Section 1(b). Nasdaq, Phlx and ISE each 

charge a monthly fee of $2,500 for each 1Gb 

connection, $10,000 for each 10Gb connection and 

$15,000 for each 10Gb Ultra connection, which is 

the equivalent of the Exchange’s 10Gb ULL 

connection. 33See NYSE American Fee Schedule, NYSE Arca 

Fee Schedule, NYSE Chicago Fee Schedule and 

NYSE National Fee Schedule, Co-Location Fees. 

NYSE American, NYSE Arca, NYSE Chicago and 

NYSE National each charge a monthly fee of $5,000 

for each 1Gb circuit and $22,000 for each 10Gb LX 

circuit, which is the equivalent of the Exchange’s 

10Gb ULL connection. 

34See Cboe EDGA Exchange, Inc. (‘‘EDGA’’) and 

Cboe EDGX Exchange, Inc. (‘‘EDGX’’) Fee 

Schedules, Physical Connectivity Fees, (charging a 

monthly fee of $2,000 for a 1Gb disaster recovery 

network access port and a monthly fee of $6,000 for 

a 10Gb disaster recovery network access port). 

35See Nasdaq Fee Schedule, Equity Rules, Equity 

7, Pricing Schedule, Ports (charging $575 per FIX 

port per month); Phlx Fee Schedule, Equity Rules, 

Equity 7, Pricing Schedule, Section 3 Nasdaq PSX 

Fees (charging $400 per FIX port per month); EDGX 

Fee Schedule, Logical Port Fees (charging $550 per 

Logical Port per month and $650 per Purge port per 

month). 

and total 1 Gb and 10Gb ULL 

connectivity was $288,000. 

Accordingly, based on the facts and 

circumstances presented, the Exchange 

believes that its provision of the services 

associated with the Proposed Access 

Fees will not result in excessive pricing 

or supra-competitive profit. To 

illustrate, the Exchange’s monthly 

revenue associated with the Proposed 

Access Fees was approximately 

$310,800 for its most recent billing cycle 

($22,800 + 288,000 = $310,800). Total 

projected revenue associated with the 

Proposed Access Fees for the remaining 

one month of 2020 is approximately 

$300,000. Therefore, total revenue for 

the Exchange’s most recent billing cycle 

for the provision of services associated 

with the Proposed Access Fees is 

$310,800. Total projected expense for 

the Exchange for the provision of 

services associated with the Proposed 

Access Fees is approximately $700,000. 

Accordingly, the provision of the 

services associated with the Proposed 

Access Fees will not result in excessive 

pricing or supra-competitive profit 

(rather, it will result in a monthly loss 

of $389,200 for its most recent billing 

cycle). 

On a going-forward, fully-annualized 

basis, the Exchange projects that its 

annualized revenue for providing the 

services associated with the Proposed 

Access Fees would be approximately 

$3,600,000 per annum, based on a most 

recently completed billing cycle. The 

Exchange projects that its annualized 

expense for providing the services 

associated with the Proposed Access 

Fees would be approximately 

$8,400,000 per annum. Accordingly, on 

a fully-annualized basis, the Exchange 

believes its total projected revenue for 

the providing the services associated 

with the Proposed Access Fees will not 

result in excessive pricing or supracompetitive profit, as the Exchange will 

incur a loss of $4,800,000 on the 

Proposed Access Fees ($3.6 

million¥$8.4 million = ($4.8 million 

per annum)). 

For the avoidance of doubt, none of 

the expenses included herein relating to 

the services associated with the 

Proposed Access Fees relate to any other 

services offered by MIAX PEARL 

Equities. Stated differently, no expense 

amount of the Exchange is allocated 

twice. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to allocate the respective 

percentages of each expense category 

described above towards the total cost to 

the Exchange of operating and 

supporting the network, including 

providing the services associated with 

the Proposed Access Fees, because the 

Exchange performed a line-by-line item 

analysis of all the expenses of the 

Exchange, and has determined the 

expenses that directly relate to 

operation and support of the network, 

including the services associated with 

the Proposed Access Fees. Further, the 

Exchange notes that, without the 

specific third-party and internal items 

listed above, the Exchange would not be 

able to operate and support the network, 

including the services associated with 

the Proposed Access Fees to Equity 

Members and non-Members and their 

customers. Each of these expense items, 

including physical hardware, software, 

employee compensation and benefits, 

occupancy costs, and the depreciation 

and amortization of equipment, have 

been identified through a line-by-line 

item analysis to be integral to the 

operation and support of the network. 

The Proposed Access Fees are intended 

to recover the Exchange’s costs (less 

than all) of operating and supporting the 

network, including providing the 

services associated with the Proposed 

Access Fees. 

Accordingly, the Proposed Access 

Fees are fair and reasonable because 

they do not result in excessive pricing 

or supra-competitive profit, when 

comparing the actual network operation 

and support costs to the Exchange 

versus the projected revenue for the 

services associated with the Proposed 

Access Fees. 

The Exchange notes that other 

equities exchanges have similar 

connectivity alternatives for their 

participants, including similar lowlatency connectivity. For example, the 

Nasdaq Stock Market LLC (‘‘Nasdaq’’), 

Nasdaq PHLX LLC (‘‘Phlx’’), and Nasdaq 

ISE, LLC (‘‘ISE’’) all offer a 1Gb, 10Gb 

and 10Gb low latency ethernet 

connectivity alternatives to each of their 

participants.32 NYSE Arca, Inc. (‘‘NYSE 

Arca’’), NYSE American LLC (‘‘NYSE 

American’’), NYSE Chicago, Inc. 

(‘‘NYSE Chicago’’) and NYSE National, 

Inc. (‘‘NYSE National’’) all offer a 1Gb 

and 10Gb low latency ethernet 

connectivity alternatives to each of their 

participants.33 The Exchange notes that 

all the other equities exchanges 

described above charge higher rates for 

such similar connectivity to primary 

and secondary facilities. While the 

Exchange’s proposed connectivity fees 

are substantially lower than the fees 

charged by Nasdaq, Phlx, ISE, NYSE 

America, NYSE Arca, NYSE Chicago 

and NYSE National, the Exchange 

believes that it can offer significant 

value to Equity Members over other 

exchanges in terms of network 

monitoring and reporting, which the 

Exchange believes is a competitive 

advantage, and differentiates its access 

services versus access services at other 

exchanges. Additionally, the Exchange’s 

proposed connectivity fees to its 

disaster recovery facility are within the 

range of the fees charged by other 

exchanges for similar connectivity 

alternatives.34 The Exchange also notes 

that other equities exchanges have 

similar port alternatives for their 

participants, with similar or 

substantially higher fees.35

Historical Data 

The Exchange believes the proposed 

fee for Historical Data is a reasonable 

allocation of its costs and expenses 

among its Equity Members and other 

persons using its facilities since it is 

recovering the costs associated with 

distributing such data should an Equity 

Member request Historical Data. Access 

to the Exchange is provided on fair and 

non-discriminatory terms. The 

Exchange believes the proposed fee for 

Historical Data is 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 Historical Data is entirely 

optional to all users. Potential 

purchasers are not required to purchase 

the Historical Data, and the Exchange is 

not required to make the Historical 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 

81980 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

36See, e.g., Cboe BZX Exchange, Inc. fee schedule 

available at https://markets.cboe.com/us/equities/ 

membership/fee_schedule/bzx/. 

37See Securities Exchange Act Release No. 51808 

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

38See Sec. Indus. Fin. Mkts. Ass’n (SIFMA), 

Initial Decision Release No. 1015, 2016 SEC LEXIS 

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

inequitable, firms can diminish or 

discontinue their use of this data. 

The Exchange believes that the 

proposed fee for Historical Data is 

consistent with Section 6(b)(4) of the 

Act because the Proposed Access Fees 

will permit recovery of the Exchange’s 

costs and will not result in excessive or 

supra-competitive profit. The proposed 

fee for Historical Data will allow the 

Exchange to recover a portion (less than 

all) of the costs incurred by the 

Exchange associated with providing and 

maintaining the necessary hardware and 

other infrastructure as well as network 

monitoring and support services in 

order to provide Historical Data. The 

Exchange believes that it is reasonable 

and appropriate to establish a fee for 

Historical Data at a level that will 

partially offset the costs to the Exchange 

associated with maintaining and 

providing Historical Data. For example, 

Historical Market Data is uploaded onto 

an Exchange-provided device. Each 

device shall have a maximum storage 

capacity of 8 terabytes. The Exchange 

incurs costs in providing the device, 

storing the historical data, and utilizing 

resources to upload the data onto the 

device. Specifically, the device 

provided by the Exchange costs 

approximately $200 to $300. Moreover, 

the Exchange tracks the number of 

hours spent by Exchange personnel 

procuring Historical Data. Based on the 

Exchange’s average cost per full-time 

employee (‘‘FTE’’), the Exchange 

represents that its cost to provide this 

service is reasonably related to (and 

often exceeds) the amount of the 

Historical Data fee the Exchange 

proposes to charge. Accordingly, the 

proposed fee would enable the 

Exchange to recover a material portion 

of such cost. 

The Exchange also notes that its 

proposed fee is identical to that it 

charges today for options historical data 

and less than that charged by other 

exchanges for their own historical data. 

For example, all four of the Cboe equity 

exchanges charge a fee of $500 for one 

month of historical data and $2,500 for 

one terabyte drive of data.36

Further, 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 

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.37

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, such 

as Historical 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.38

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81981 

vigorous competition with respect to non-core 

market data). 

39NetCoalition, at 15 (quoting H.R. Rep. No. 94– 

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

321, 323). 

40See supra notes 32 through 36. 

41 15 U.S.C. 78s(b)(3)(A)(ii). 

The Exchange therefore believes that the 

fees for Historical 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.’ 39

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. 

Pass-Through of External Connectivity 

Fees 

The Exchange believes that the 

proposed pass-through of external 

connectivity fees constitutes an 

equitable allocation of fees, and is not 

unfairly discriminatory, because it 

allows the Exchange to recover costs 

associated with offering access through 

the network connections, responding to 

customer requests, configuring MIAX 

PEARL Equities’ systems, programming 

API user specifications and 

administering the various services. 

Access to the MIAX PEARL Equities 

market is offered on fair and nondiscriminatory terms. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to pass-through External 

Connectivity fees to Equity Members 

and non-Members that establish 

connections with MIAX PEARL Equities 

through a third-party. MIAX PEARL 

Equities will only pass-through the 

actual costs it is charged by third-party 

external vendors. The Exchange believes 

it is reasonable and equitable to recover 

costs charged it on behalf of an Equity 

Member or non-Member that establishes 

connections with MIAX PEARL Equities 

through a third party. Other exchanges, 

including EDGX and EDGA, charge a fee 

for similar services to their members 

and non-members. 

Technical Support Request Fee 

The Exchange believes that the 

proposed Technical Support Request fee 

is fair, equitable and not unreasonably 

discriminatory, because it is assessed 

equally to all Equity Members and nonMembers who request technical 

support. Furthermore, Equity Members 

and non-Members are not required to 

use the service but instead it is offered 

as a convenience to all Equity Members 

and non-Members. The proposed fee is 

reasonably designed because it will 

permit both Equity Members and nonMembers to request the use of the 

Exchange’s on-site data center personnel 

as technical support and as a 

convenience in order to test or 

otherwise assess their connectivity to 

the Exchange and the fee is within the 

range of the fee charged by other 

exchanges for similar services and is 

identical to the same fee assessed by the 

Exchange today for options as well as 

the Exchange’s affiliates, MIAX and 

MIAX Emerald. 

Further, The Exchange tracks the 

number of hours spent by Exchange 

personnel providing the aforementioned 

services. Based on the Exchange’s 

average cost per FTE, the Exchange 

represents that its cost to provide this 

service is reasonably related to (and 

often exceeds) the amount of the 

proposed fee. Accordingly, the proposed 

fee would enable the Exchange to 

recover a material portion of such cost. 

* * * * * 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues. In such 

an environment, the Exchange must 

establish fees that are competitive with 

other exchanges. For the reasons 

described above, the Exchange believes 

that the proposed fees in the MIAX 

PEARL Equities Fee Schedule 

appropriately reflect this competitive 

environment. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes that the 

Proposed Fees do not place certain 

market participants at a relative 

disadvantage to other market 

participants because the pricing of the 

Proposed Fees is associated with 

relative usage of the various market 

participants and does not impose a 

barrier to entry to smaller participants. 

The Exchange believes the Proposed 

Fees do not favor certain categories of 

market participants in a manner that 

would impose a burden on competition; 

rather, the allocation of the Proposed 

Fees reflects the network and access 

resources consumed by various market 

participants. 

The Exchange believes the Proposed 

Fees do not place an undue burden on 

competition on other SROs that is not 

necessary or appropriate. MIAX PEARL 

Equities launched trading operations on 

September 25, 2020 and has a market 

share of only approximately 0.05%, 

with significantly less members than 

other SROs. Additionally, other equity 

exchanges have similar connectivity and 

port alternatives for their participants, 

including similar low-latency 

connectivity, but with much higher 

rates to connect.40 The Exchange is also 

unaware of any assertion that the 

Proposed Fees would somehow unduly 

impair its competition with other 

equities exchanges. To the contrary, if 

the fees charged are deemed too high by 

market participants, they can simply not 

connect to the Exchange or not use the 

services associated with the Proposed 

Access Fees. 

While the Exchange recognizes the 

distinction between connecting to an 

exchange and trading at the exchange, 

the Exchange notes that it plans to 

operate in a highly competitive market 

in which market participants can 

readily connect and trade with venues 

they desire. In such an environment, the 

Exchange must continually adjust its 

fees to remain competitive with other 

exchanges. The Exchange believes that 

the Proposed Fees reflect this 

competitive environment. 

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,41 and Rule 

81982 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

42 17 CFR 240.19b–4(f)(2). 

43 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 15 U.S.C. 78s(b)(1). 

5 17 CFR 240.19b–4. 

6See IEX Rule 1.160(qq). 

7See IEX Rule 1.160(nn). 

8See IEX Rule 2.220(a). 

19b–4(f)(2) 42 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– 

PEARL–2020–33 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–PEARL–2020–33. 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–PEARL–2020–33 and 

should be submitted on or before 

January 7, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27730 Filed 12–16–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90645; File No. SR–IEX– 

2020–18] 

Self-Regulatory Organizations; 

Investors Exchange LLC; Notice of 

Filing of Proposed Rule Change To 

Amend IEX Rule 11.510 To Reduce the 

Outbound Latency That Presently 

Applies to All Trading Messages Sent 

From IEX Back to Users of the 

Exchange 

December 11, 2020. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

9, 2020, the Investors Exchange LLC 

(‘‘IEX’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. 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 

Pursuant to the provisions of Section 

19(b)(1) under the Act,4 and Rule 19b– 

4 thereunder,5 IEX is filing with the 

Commission a proposed rule change to 

amend IEX Rule 11.510 to reduce the 

outbound latency that presently applies 

to all trading messages sent from IEX 

back to Users 6 of the Exchange to 

include only the actual geographic 

distance and related network 

connectivity, as well as to make 

conforming changes to the outbound 

latency that applies to all trading 

messages sent from the IEX System 7 to 

the System routing logic 8 with respect 

to routable orders. The text of the 

proposed rule change is available at the 

Exchange’s website at 

www.iextrading.com, at the principal 

office of the Exchange, 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 

self-regulatory organization 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 self-regulatory organization 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 IEX 

Rule 11.510 to reduce the outbound 

latency that presently applies to all 

trading messages sent from the IEX 

System at its primary data center back 

to Users of the Exchange to include only 

the actual geographic distance and 

related network connectivity, as well as 

to make conforming changes to the 

outbound latency that applies to all 

trading messages sent from the IEX 

System to the System routing logic with 

respect to routable orders. 

The Exchange is not proposing to 

make any changes to the additional 

latency that applies in a symmetrical 

manner to all inbound order messages 

(i.e., orders, modifications or 

cancellations) regardless of whether 

such orders are to make or take 

liquidity. This additional latency on 

inbound order messages, commonly 

referred to as the ‘‘IEX Speedbump,’’ 

continues to be a critical part of the IEX 

system and is designed to protect the 

interests of investors, brokers, and 

market makers that rest orders on IEX. 

As described in more detail below, 

the additional latencies that are 

currently applied to both inbound and