338 Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices 

16 15 U.S.C. 78s(b)(3)(A)(iii). 17 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has complied with this requirement. 

18 17 CFR 240.19b–4(f)(6). 19 17 CFR 240.19b–4(f)(6)(iii). 20For purposes only of accelerating the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 21 15 U.S.C. 78s(b)(2)(B). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Member’’ means an individual or 

organization that is registered with the Exchange 

pursuant to Chapter II of these Rules for purposes 

of trading on the Exchange as an ‘‘Electronic 

Exchange Member’’ or ‘‘Market Maker.’’ Members 

are deemed ‘‘members’’ under the Exchange Act. 

See Exchange Rule 100. 

19(b)(3)(A)(iii) of the Act 16 and Rule 

19b–4(f)(6)(iii) thereunder.17

A proposed rule change filed under 

Rule 19b–4(f)(6) 18 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),19 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

take effect immediately. The Exchange 

has stated that, because of the rapid 

changes to the New York City-area 

public health conditions, it made the 

determination to close the Trading Floor 

to DMMs with only two business days’ 

notice before such closure would take 

effect. However, the Exchange 

represents that at least three SPACs 

listed on the Exchange are anticipated to 

complete their business combinations 

during the week of December 28, 2020, 

and the Core Open Auctions for such 

securities are expected to be significant 

pricing events. The Exchange has asked 

the Commission to waive the operative 

delay so that the DMM assigned to these 

securities would be able to effect the 

Core Open Auctions manually. The 

Commission believes that waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest because it will allow the 

proposed rules to become effective in 

time for DMMs to manually effect Core 

Open Auctions for those securities that 

are anticipated to have significant price 

discovery events during the week of 

December 28, 2020. Accordingly, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposal operative upon filing.20

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 21 of the Act to 

determine whether the proposed rule 

change 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– 

NYSE–2020–109 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–NYSE–2020–109. 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–NYSE–2020–109 and 

should be submitted on or before 

January 26, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–29131 Filed 1–4–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90812; File No. SR– 

PEARL–2020–35] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX 

PEARL Fee Schedule 

December 29, 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 

21, 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 Fee Schedule 

(the ‘‘Fee Schedule’’) to increase the 

number of additional Limited Service 

MIAX Express Order Interface (‘‘MEO’’) 

Ports available to Members.3 The 

Exchange does not propose to amend 

the fees for additional Limited Service 

MEO Ports. 

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. 


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Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices 339 

4See Securities Exchange Act Release No. 89316 

(July 14, 2020), 85 FR 43898 (July 20, 2020) (SR– 

PEARL–2020–09) (the ‘‘First Proposed Rule 

Change’’). 

5 Id. 

6See Comment Letter from Christopher Solgan, 

VP, Senior Counsel, the Exchange, dated August 24, 

2020, notifying the Commission that the Exchange 

will withdraw the First Proposed Rule Change. 

7See Securities Exchange Act Release No. 89774 

(September 4, 2020), 85 FR 56281 (September 11, 

2020) (SR–PEARL–2020–12) (the ‘‘Second Proposed 

Rule Change’’). 

8 Id. 

9See Comment Letter from Christopher Solgan, 

VP, Senior Counsel, the Exchange, dated October 

19, 2020, notifying the Commission that the 

Exchange would withdraw the Second Proposed 

Rule Change. 

10See Securities Exchange Act Release No. 90449 

(November 18, 2020), 85 FR 75079 (November 24, 

2020) (SR–PEARL–2020–25) (the ‘‘Fifth Proposed 

Rule Change’’). 

11 Id. 

12See Comment Letter from Christopher Solgan, 

VP, Senior Counsel, the Exchange, dated December 

18, 2020, notifying the Commission that the 

Exchange would withdraw the Fifth Proposed Rule 

Change. 

13 ‘‘Full Service MEO Port—Bulk’’ means an MEO 

port that supports all MEO input message types and 

binary bulk order entry. See the Definitions Section 

of the Fee Schedule. 

14 ‘‘Full Service MEO Port—Single’’ means an 

MEO port that supports all MEO input message 

types and binary order entry on a single order-byorder basis, but not bulk orders. See the Definitions 

Section of the Fee Schedule. 

15 ‘‘Limited Service MEO Port’’ means an MEO 

port that supports all MEO input message types, but 

does not support bulk order entry and only 

supports limited order types, as specified by the 

Exchange via Regulatory Circular. See the 

Definitions Section of the Fee Schedule. 

16See Securities Exchange Act Release No. 83867 

(March 13, 2018), 83 FR 12044 (March 19, 2018) 

(SR–PEARL–2018–07). 

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 

The Exchange proposes to amend the 

Fee Schedule to offer two (2) additional 

Limited Service MEO Ports to Members. 

The Exchange does not propose to 

amend the fees charged for the 

additional Limited Service MEO Ports. 

The Exchange initially filed the 

proposal to increase the number of 

Limited Service MEO Ports available to 

Members on June 30, 2020, with no 

change to the actual fee amounts being 

charged.4 The First Proposed Rule 

Change was published for comment in 

the Federal Register on July 20, 2020.5

The Exchange notes that the First 

Proposed Rule Change did not receive 

any comment letters. Nonetheless, the 

Exchange withdrew the First Proposed 

Rule Change on August 24, 2020.6 On 

August 25, 2020, the Exchange refiled 

its proposal to increase the number of 

Limited Service MEO Ports available to 

Members (without increasing the actual 

fee amounts) to provide further 

clarification regarding the Exchange’s 

annual cost for providing additional 

Limited Service MEO Ports.7 The 

Second Proposed Rule Change was 

published for comment in the Federal 

Register on September 11, 2020.8 Like 

the First Proposed Rule Change, the 

Second Proposed Rule Change did not 

receive any comment letters. 

Nonetheless, the Exchange withdrew 

the Second Proposed Rule Change on 

October 23, 2020 9 and submitted SR– 

PEARL–2020–21 (‘‘Third Proposed Rule 

Change’’). On October 26, 2020, the 

Exchange withdrew the Third Proposed 

Rule Change and submitted SR–PEARL– 

2020–22 (‘‘Fourth Proposed Rule 

Change’’). The Fourth Proposed Rule 

Change to increase the number of 

additional Limited Service MEO Ports 

available to Members (without 

increasing the actual fee amounts) 

provides additional information 

regarding the Exchange’s revenues, 

costs, and profitability for the two 

additional Limited Service MEO Ports. 

This additional analysis includes 

information regarding the Exchange’s 

methodology for determining the costs 

and revenues for the two additional 

Limited Service MEO Ports. 

On November 5, 2020, the Exchange 

withdrew the Fourth Proposed Rule 

Change and refiled its proposal to 

increase the number of Limited Service 

MEO Ports available to Members 

(without increasing the actual fee 

amounts) to provide further clarification 

regarding the Exchange’s revenues, 

costs, and profitability for the two 

additional Limited Service MEO Ports 

(including information regarding the 

Exchange’s methodology for 

determining the costs and revenues for 

the two additional Limited Service MEO 

Ports).10 The Fifth Proposed Rule 

Change was published for comment in 

the Federal Register on November 24, 

2020.11 Like the First, Second, Third 

and Fourth Proposed Rule Changes, the 

Fifth Proposed Rule Change did not 

receive any comment letters. 

Nonetheless, the Exchange withdrew 

the Fifth Proposed Rule Change on 

December 21, 2020.12

The Exchange now submits this filing 

to increase the number of additional 

Limited Service MEO Ports available to 

Members (without increasing the actual 

fee amounts) to provide further 

clarification regarding the Exchange’s 

cost analysis for the two additional 

Limited Service MEO Ports. 

The Exchange currently offers 

different options of MEO Ports 

depending on the services required by 

an Exchange Member, including a Full 

Service MEO Port-Bulk,13 a Full Service 

MEO Port-Single,14 and a Limited 

Service MEO Port.15 Currently, a 

Member may be allocated two (2) FullService MEO Ports of either type, Bulk 

and/or Single, per Matching Engine, and 

up to eight (8) Limited Service MEO 

Ports, per Matching Engine. The two (2) 

Full-Service MEO Ports that may be 

allocated per Matching Engine to a 

Member currently may consist of: (a) 

Two (2) Full Service MEO Ports—Bulk; 

or (b) two (2) Full Service MEO Ports— 

Single. The Exchange also has a third 

option, option (c), which permits a 

Member to have one (1) Full Service 

MEO Port—Bulk, and one (1) Full 

Service MEO Port—Single. 

The Exchange currently provides 

Members the first two (2) requested 

Limited Service MEO Ports free of 

charge and charges $200 per month for 

Limited Service MEO Ports three (3) and 

four (4), $300 per month for Limited 

Service MEO Ports five (5) and six (6), 

and $400 per month for Limited Service 

MEO Ports seven (7) and eight (8). These 

fees have been unchanged since they 

were adopted in 2018.16

The Exchange originally added the 

Limited Service MEO Ports to enhance 

the MEO Port connectivity made 

available to Members. Limited Service 

MEO Ports have been well received by 

Members since their addition. The 

Exchange now proposes to offer to 

Members the ability to purchase an 

additional two (2) Limited Service MEO 

Ports per matching engine over and 

above the current six (6) additional 

Limited Service MEO Ports per 

matching engine that are available for 

purchase by Members. The Exchange 

proposes making a corresponding 

change to the text in the Port Fee table 

and to the text below the Port Fee table 

in Section 5(d) of the Fee Schedule to 

specify that Members will now be 

limited to purchasing eight (8) 


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17 15 U.S.C. 78f(b). 

18 15 U.S.C. 78f(b)(5). 19 15 U.S.C. 78f(b)(5). 

20See supra note 16. 

21 Id. 

additional Limited Service MEO Ports 

per matching engine, for a total of ten 

(10) per matching engine. All fees 

related to MEO Ports shall remain 

unchanged and Members that 

voluntarily purchase the additional 

ninth or tenth Limited Service MEO 

Ports will be subject to the existing $400 

monthly fee per port that is charged to 

Members that request a seventh or 

eighth Limited Service MEO Port. 

The Exchange is increasing the 

number of additional Limited Service 

MEO Ports because the Exchange is 

expanding its network. This network 

expansion is necessary due to increased 

customer demand and increased 

volatility in the marketplace, both of 

which have translated into increased 

message traffic rates across the network. 

Consequently, this network expansion, 

which increases the number of switches 

supporting customer facing systems, is 

necessary in order to provide sufficient 

access to new and existing Members, to 

maintain a sufficient amount of network 

capacity head-room, and to continue to 

provide the same level of service across 

the Exchange’s low-latency, highthroughput technology environment. 

Currently, the Exchange has 8 

network switches that support the entire 

customer base of MIAX PEARL. The 

Exchange plans to increase this to 10 

switches, which will increase the 

number of available customer ports by 

25%. This increase in the number of 

available customer ports will enable the 

Exchange to continue to provide 

sufficient and equal access to the MIAX 

PEARL System to all Members. Absent 

the proposed increase in available MEO 

Ports, the Exchange projects that its 

current inventory will be depleted and 

it will lack sufficient capacity to 

continue to meet Members’ access 

needs. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 17

in general, and furthers the objectives of 

Section 6(b)(5) of the Act 18 in that it is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general to protect investors and the 

public interest and is not designed to 

permit unfair discrimination between 

customers, issuers, brokers and dealers. 

The Exchange believes that its 

proposal is consistent with the 

objectives of Section 6(b)(5) of the Act 19

because the proposed additional 

Limited Service MEO Ports will be 

available to all Members and the current 

fees for the additional Limited Service 

MEO Ports apply equally to all Members 

regardless of type, and access to the 

Exchange is offered on terms that are 

not unfairly discriminatory. The 

Exchange is proposing to increase the 

number of available Limited Service 

MEO Ports because the Exchange is 

expanding its network. This network 

expansion is necessary due to increased 

customer demand and increased 

volatility in the marketplace, both of 

which have translated into increased 

message traffic rates across the network. 

Consequently, this network expansion, 

which increases the number of switches 

supporting customer facing systems, is 

necessary in order to provide sufficient 

and equal access to new and existing 

Members, to maintain a sufficient 

amount of network capacity head-room, 

and to continue to provide the same 

level of service across the Exchange’s 

low-latency, high-throughput 

technology environment. 

Currently, the Exchange has 8 

network switches that support the entire 

customer base of MIAX PEARL. The 

Exchange plans to increase this to 10 

switches, which will increase the 

number of available customer ports by 

25%. This increase in the number of 

available customer ports will enable the 

Exchange to continue to provide 

sufficient and equal access to MIAX 

PEARL Systems for all Members. Absent 

the proposed increase in available MEO 

Ports, the Exchange projects that its 

current inventory will be depleted and 

it will lack sufficient capacity to 

continue to meet Members’ access 

needs. Further, the Exchange notes that 

decision of whether to purchase two 

additional Limited Service MEO Ports is 

completely optional and it is a business 

decision for each Member to determine 

whether the additional Limited Service 

MEO Ports are necessary to meet their 

business requirements. 

The Exchange further believes that the 

availability of the additional Limited 

Service MEO Ports is equitable and not 

unfairly discriminatory because it will 

enable Members to maintain 

uninterrupted access to the MIAX 

PEARL System and consequently 

enhance the marketplace by helping 

Members to better manage risk, thus 

preserving the integrity of the MIAX 

markets, all to the benefit of and 

protection of investors and the public as 

a whole. 

The Exchange also believes that its 

proposal is consistent with Section 

6(b)(4) of the Act because only Members 

that voluntarily purchase the two 

additional Limited Service MEO Ports 

will be charged the existing $400 

monthly fee per port applicable to ports 

seven (7) and eight (8), which has been 

unchanged since adopted 2018.20 The 

Exchange does not propose to amend 

the fees applicable to additional Limited 

Service MEO Ports which have been 

previously filed with the Commission 

and become effective after notice and 

public comment.21 As stated above, the 

Exchange proposes to expand its 

network by making available two 

additional Limit Service MEO Ports due 

to increased customer demand and 

increased volatility in the marketplace, 

both of which have translated into 

increased message traffic rates across 

the network. The cost to expand the 

network in this manner is greater than 

the revenue the Exchange anticipates 

the additional Limited Service MEO 

Ports will generate. Specifically, the 

Exchange estimates it will incur a onetime cost of approximately $175,000 in 

capital expenditures (‘‘CapEx’’) on 

hardware, software, and other items to 

expand the network to make available 

the two additional Limited Service MEO 

Ports. This estimated cost also includes 

expense associated with providing the 

necessary engineering and support 

personnel to transition those Members 

who wish to acquire the two additional 

Limited Service MEO Ports. 

The Exchange projects that 

approximately six to seven Members 

will purchase the additional Limited 

Service MEO Ports, which will be 

subject to the existing monthly fee of 

$400 per port applicable to ports seven 

(7) and eight (8). Accordingly, the 

Exchange projects that the annualized 

revenue from the two additional 

Limited Service MEO Ports will be 

approximately $67,200 (assuming seven 

Members purchase the two additional 

Limited Service MEO Ports). Therefore, 

the Exchange’s upfront cost in 

expanding its network to provide its 

Members with the two additional 

Limited Service MEO Ports— 

approximately $175,000—is significant 

relative to the anticipated annualized 

revenue the Exchange expects to bring 

in from the two additional Limited 

Service MEO Ports—approximately 

$67,200. Further, the Exchange 

anticipates it will incur approximately 

$77,712 in annualized ongoing 

operating expense in order to support 

the expanded network and the two 


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22See Securities Exchange Act Release No. 87876 

(December 31, 2019), 85 FR 757 (January 7, 2020) 

(SR–PEARL–2019–36). 

23The Exchange notes that the total 2019 expense 

figures for each of the external and internal 

expenses described herein relate only to the 

Exchange’s options market. No expense relating to 

the Exchange’s equities market is included in this 

filing. 

24 In fact, on October 22, 2019, the Exchange was 

notified by SFTI that it is again raising its fees 

charged to the Exchange by approximately 11%, 

without having to show that such fee change 

complies with the Act by being reasonable, 

equitably allocated, and not unfairly 

discriminatory. It is unfathomable to the Exchange 

that, given the critical nature of the infrastructure 

services provided by SFTI, that its fees are not 

required to be rule-filed with the Commission 

pursuant to Section 19(b)(1) of the Act and Rule 

19b–4 thereunder. See 15 U.S.C. 78s(b)(1) and 17 

CFR 240.19b–4, respectively. 

additional Limited Service MEO Ports. 

Thus, even excluding the upfront CapEx 

expense of $175,000, the Exchange is 

not generating a supra-competitive 

profit from the provision of these two 

additional Limited Service MEO Ports. 

In fact, even excluding the one-time 

CapEx expense $175,000, the Exchange 

anticipates generating an annual loss 

from the provision of these two 

additional Limited Service MEO Ports of 

($10,512)—that is, $67,200 in revenue 

minus $77,712 in expense equates to a 

loss of ($10,512) to support the 

additional ports annually. 

The Exchange conducted an extensive 

cost 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 

additional Limited Service MEO Ports, 

and, if such expense did so relate, what 

portion (or percentage) of such expense 

actually supports the additional Limited 

Service MEO Ports, 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 services 

associated with the two additional 

Limited Service MEO Ports. For the 

avoidance of doubt, none of the 

expenses included herein relating to the 

services associated with providing the 

two additional Limited Service MEO 

Ports also relate to the provision of any 

other services offered by the Exchange. 

Stated differently, no expense amount of 

the Exchange is allocated twice. The 

Exchange notes that it made certain 

representations in a previous filing 22

regarding its expense allocation for the 

provision of network connectivity 

services. The Exchange represents that 

none of the expenses allocated to the 

provision of network connectivity 

services are also allocated to the 

provision of ports—that is, there is no 

overlap of any such expenses that are 

included in the costs associated with 

services the Exchange provides for 

connectivity and for the services the 

Exchange provides for ports. 

Specifically, utilizing 2019 expense 

figures,23 total 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 two additional Limited 

Service MEO Ports, was approximately 

$10,701. 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 Exchange’s 

trading system infrastructure; (2) Zayo 

Group Holdings, Inc. (‘‘Zayo’’) for 

network services (fiber and bandwidth 

products and services) linking the 

Exchange’s office locations in Princeton, 

NJ and Miami, FL to all data center 

locations; (3) Secure Financial 

Transaction Infrastructure (‘‘SFTI’’),24

which supports network feeds for the 

entire U.S. options industry; (4) various 

other services providers (including 

Thompson Reuters, NYSE, Nasdaq, and 

Internap), which provide content, 

network services, and infrastructure 

services for critical components of 

options network services; and (5) 

various other hardware and software 

providers (including Dell and Cisco, 

which support the production 

environment in which Members and 

non-Members connect to the network to 

trade, receive market data, etc.). 

For clarity, only a portion of all fees 

paid to such third-parties is included in 

the third-party expense herein, 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 providing 

the two additional Limited Service MEO 

Ports. 

The Exchange believes it is reasonable 

to allocate such third-party expense 

described above towards the total cost to 

the Exchange to provide the services 

associated with the two additional 

Limited Service MEO Ports. In 

particular, the Exchange believes it is 

reasonable to allocate the identified 

portion of the Equinix expense because 

Equinix operates the data centers 

(primary, secondary, and disaster 

recovery) that host the Exchange’s 

network infrastructure. 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 two 

additional Limited Service MEO Ports to 

its 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 two additional 

Limited Service MEO Ports, only that 

portion which the Exchange identified 

as being specifically mapped to 

providing the services associated with 

the two additional Limited Service MEO 

Ports, approximately 0.5% of the total 

Equinix expense. The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

two additional Limited Service MEO 

Ports, and not any other service, as 

supported by its cost review. 

The Exchange believes it is reasonable 

to allocate the identified portion of the 

Zayo expense because Zayo provides 

the internet, fiber and bandwidth 

connections with respect to the 

network, linking the Exchange with its 

affiliates, MIAX and MIAX Emerald, as 

well as the data center and disaster 

recovery locations. As such, all of the 

trade data, including the billions of 

messages each day per exchange, 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 two additional 

Limited Service MEO Ports. The 

Exchange did not allocate all of the 

Zayo expense toward the cost of 

providing the services associated with 

the two additional Limited Service MEO 

Ports, only the portion which the 

Exchange identified as being 

specifically mapped to providing the 

two additional Limited Service MEO 

Ports, approximately 0.4% of the total 

Zayo expense. The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

two additional Limited Service MEO 

Ports, 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, and Internap) 

expense because those entities provide 

connectivity and feeds for the entire 

U.S. options industry, as well as the 

content, network services, and 


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342 Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices 

infrastructure 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 access 

to its 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 two additional Limited Service MEO 

Ports, only the portions which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the two 

additional Limited Service MEO Ports, 

approximately 0.5% of the total SFTI 

and other service providers’ expense. 

The Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

services associated with the two 

additional Limited Service MEO Ports. 

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 access to its 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 two 

additional Limited Service MEO Ports, 

only the portions which the Exchange 

identified as being specifically mapped 

to providing the services associated 

with the two additional Limited Service 

MEO Ports, approximately 0.3% of the 

total hardware and software provider 

expense. The Exchange believes this 

allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

two additional Limited Service MEO 

Ports. 

For 2019, total internal expense, 

relating to the internal costs of the 

Exchange to provide the services 

associated with the two additional 

Limited Service MEO Ports was 

$67,011. 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 providing the 

two additional Limited Service MEO 

Ports, including staff in network 

operations, trading operations, 

development, system operations, 

business, as well as staff in general 

corporate departments (such as legal, 

regulatory, and finance) that support 

those employees and functions 

(including an increase as a result of the 

higher determinism project); (2) 

depreciation and amortization of 

hardware and software used to provide 

the services associated with the two 

additional Limited Service MEO Ports, 

including equipment, servers, cabling, 

purchased software and internally 

developed software used in the 

production environment to support the 

network for trading; and (3) occupancy 

costs for leased office space for staff that 

provide the services associated with the 

two additional Limited Service MEO 

Ports. 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, and no expense amount 

is allocated twice. Accordingly, the 

Exchange does not allocate its entire 

costs contained in those items to the 

services associated with providing the 

two additional Limited Service MEO 

Ports. 

The Exchange believes it is reasonable 

to allocate such internal expense 

described above towards the total cost to 

the Exchange to provide the services 

associated with the two additional 

Limited Service MEO Ports. In 

particular, the Exchange’s employee 

compensation and benefits expense 

relating to providing the services 

associated with the two additional 

Limited Service MEO Ports was 

approximately $49,067, which is only a 

portion of the $8,177,821 total expense 

for employee compensation and 

benefits. The Exchange believes it is 

reasonable to allocate the identified 

portion of such expense because this 

includes 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 

provision of services associated with the 

two additional Limited Service MEO 

Ports. Without these employees, the 

Exchange would not be able to provide 

the services associated with the two 

additional Limited Service MEO Ports to 

its Members and non-Members and their 

customers. The Exchange did not 

allocate all of the employee 

compensation and benefits expense 

toward the cost of the services 

associated with providing the two 

additional Limited Service MEO Ports, 

only the portions which the Exchange 

identified as being specifically mapped 

to providing the services associated 

with the two additional Limited Service 

MEO Ports, approximately 0.6% of the 

total employee compensation and 

benefits expense. The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

two additional Limited Service MEO 

Ports, and not any other service, as 

supported by its cost review. 

The Exchange’s depreciation and 

amortization expense relating to 

providing the services associated with 

the two additional Limited Service MEO 

Ports was $15,584, which is only a 

portion of the $3,116,781 total expense 

for depreciation and amortization. The 

Exchange believes it is reasonable to 

allocate the identified portion of such 

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 and 

provide the services associated with the 

two additional Limited Service MEO 

Ports. Without this equipment, the 

Exchange would not be able to operate 

the network and provide the services 

associated with the two additional 

Limited Service MEO Ports to its 

Members and non-Members and their 

customers. The Exchange did not 

allocate all of the depreciation and 

amortization expense toward the cost of 

providing the services associated with 

the two additional Limited Service MEO 

Ports, only the portion which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the two 

additional Limited Service MEO Ports, 

approximately 0.5% of the total 

depreciation and amortization expense, 

as these services would not be possible 

without relying on such equipment. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

services associated with the two 

additional Limited Service MEO Ports, 

and not any other service, as supported 

by its cost review. 


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Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices 343 

25 17 CFR 242.1000–1007. 

26 17 CFR 242.1001(a). 

The Exchange’s occupancy expense 

relating to providing the services 

associated with providing the two 

additional Limited Service MEO Ports 

was approximately $2,360, which is 

only a portion of the $590,157 total 

expense for occupancy. The Exchange 

believes it is reasonable to allocate the 

identified portion of such 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 two additional Limited Service MEO 

Ports. This amount consists primarily of 

rent for the Exchange’s Princeton, NJ 

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 

160 employees. Approximately twothirds of the Exchange’s staff are in the 

Technology department, and the 

majority of those staff have some role in 

the operation and performance of the 

services associated with providing the 

two additional Limited Service MEO 

Ports. Without this office space, the 

Exchange would not be able to operate 

and support the network and provide 

the services associated with the two 

additional Limited Service MEO Ports to 

its Members and non-Members and their 

customers. Accordingly, the Exchange 

believes it is reasonable to allocate the 

identified portion of its occupancy 

expense because such amount 

represents the Exchange’s actual cost to 

house the equipment and personnel 

who operate and support the Exchange’s 

network infrastructure and the services 

associated with the two additional 

Limited Service MEO Ports. The 

Exchange did not allocate all of the 

occupancy expense toward the cost of 

providing the services associated with 

the two additional Limited Service MEO 

Ports, only the portion which the 

Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

0.4% of the total occupancy expense. 

The Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s cost to provide the services 

associated with the two additional 

Limited Service MEO Ports, and not any 

other service, as supported by its cost 

review. 

Accordingly, based on the facts and 

circumstances presented, the Exchange 

believes that its provision of the services 

associated with the two additional 

Limited Service MEO Ports will not 

result in excessive pricing or supracompetitive profit. 

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 two additional Limited Service MEO 

Ports 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. 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 

providing the services associated with 

the two additional Limited Service MEO 

Ports to its 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. Providing 

the two additional Limited Service MEO 

Ports at the existing rates is intended to 

recover the Exchange’s costs of 

operating and supporting the network. 

Accordingly, the Exchange believes 

that providing the two additional 

Limited Service MEO Ports at the 

existing rate is fair and reasonable 

because it does not result in excessive 

pricing or supra-competitive profit, 

when comparing the actual network 

operation and support costs to the 

Exchange versus the projected annual 

revenue from providing the two 

additional Limited Service MEO Ports. 

Further, subjecting the two additional 

Limited Service MEO Ports to the 

existing $400 monthly fee per port 

applicable to ports seven (7) and eight 

(8) is also designed to encourage 

Members to be efficient with their port 

usage, thereby resulting in a 

corresponding increase in the efficiency 

that the Exchange would be able to 

realize in managing its aggregate costs 

for providing the two additional ports. 

There is no requirement that any 

Member maintain a specific number of 

Limited Service MEO Ports and a 

Member may choose to maintain as 

many or as few of such ports as each 

Member deems appropriate. 

Finally, subjecting the two additional 

Limited Service MEO Ports to the 

existing $400 monthly fee applicable to 

ports seven (7) and eight (8) will help 

to encourage Limited Service MEO Port 

usage in a way that aligns with the 

Exchange’s regulatory obligations. As a 

national securities exchange, the 

Exchange is subject to Regulation 

Systems Compliance and Integrity 

(‘‘Reg. SCI’’).25 Reg. SCI Rule 1001(a) 

requires that the Exchange establish, 

maintain, and enforce written policies 

and procedures reasonably designed to 

ensure (among other things) that its Reg. 

SCI systems have levels of capacity 

adequate to maintain the Exchange’s 

operational capability and promote the 

maintenance of fair and orderly 

markets.26 By encouraging Members to 

be efficient with their usage of Limited 

MEO Ports, the current fee that will 

continue to apply to the proposed two 

(2) additional Limited Service MEO 

Ports will support the Exchange’s Reg. 

SCI obligations in this regard by 

ensuring that unused ports are available 

to be allocated based on individual 

Members needs and as the Exchange’s 

overall order and trade volumes 

increase. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

MIAX PEARL does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

The proposed rule change will not 

impose a burden on competition but 

will benefit competition by enhancing 

the Exchange’s ability to compete by 

providing additional services to market 

participants. It is not intended to 

address a competitive issue. Rather, the 

proposed increase in the number of 

additional Limited Service MEO Ports 

available per Member is intended to 

allow the Exchange to increase its 

inventory of MEO Ports to meet 

increased Member demand. The 

Exchange is increasing the number of 

available additional Limited Service 

MEO Ports in response to Member 

demand for increased connectivity to 

the MIAX PEARL System. The 

Exchange’s current inventory may soon 

be insufficient to meet those needs. 

Again, the Exchange is not proposing to 

amend the fees for MEO Ports, just to 

increase the number of MEO Ports 

available per Member. The Exchange 

also does not believe that the proposed 


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344 Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Notices 

27 15 U.S.C. 78s(b)(3)(A)(ii). 

28 17 CFR 240.19b–4(f)(2). 

29 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Market Makers’’ refers to Lead Market 

Makers (‘‘LMMs’’), Primary Lead Market Makers 

(‘‘PLMMs’’), and Registered Market Makers 

(‘‘RMMs’’) collectively. See Exchange Rule 100. 

4See Securities Exchange Act Release No. 89317 

(July 14, 2020), 85 FR 43918 (July 20, 2020) (SR– 

MIAX–2020–23) (the ‘‘First Proposed Rule 

Change’’). 

rule change will impose a burden on 

intramarket competition because the 

two additional Limited Service MEO 

Ports will be available to all Members 

on an equal basis. It is a business 

decision of each Member whether to pay 

for the additional Limited Service MEO 

Ports. 

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,27 and Rule 

19b–4(f)(2) 28 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–2020–35 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–2020–35. 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–2020–35 and 

should be submitted on or before 

January 26, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–29133 Filed 1–4–21; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90811; File No. SR–MIAX– 

2020–41] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Its Fee Schedule To 

Increase the Number of Additional 

Limited Service MIAX Express 

Interface Ports Available to Market 

Makers 

December 29, 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 

21, 2020, Miami International Securities 

Exchange, LLC (‘‘MIAX Options’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

increase the number of additional 

Limited Service MIAX Express Interface 

(‘‘MEI’’) Ports available to Market 

Makers.3 The Exchange does not 

propose to amend the fees for additional 

Limited Service MEI Ports. 

The text of the proposed rule change 

is available on the Exchange’s website at 

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

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Fee Schedule to offer two (2) additional 

Limited Service MEI Ports to Market 

Makers. The Exchange does not propose 

to amend the fees charged for the 

additional Limited Service MEI Ports. 

The Exchange initially filed the 

proposal to increase the number of 

Limited Service MEI Ports available to 

Market Makers on June 30, 2020, with 

no change to the actual fee amounts 

being charged.4 The First Proposed Rule 


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