8428 Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Notices 

18 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 approved to exercise the trading rights 

associated with a Trading Permit. Members are 

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

Exchange Rule 100. 4 ‘‘Waiver Period’’ means, for each applicable fee, 

the period of time from the initial effective date of 

the MIAX Emerald Fee Schedule until such time 

that the Exchange has an effective fee filing 

establishing the applicable fee. The Exchange will 

issue a Regulatory Circular announcing the 

establishment of an applicable fee that was subject 

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

to the termination of the Waiver Period and 

effective date of any such applicable fee. See the 

Definitions Section of the Fee Schedule. 

5See MIAX Emerald Regulatory Circular 2020–41 

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

default/files/circular-files/MIAX_Emerald_RC_

2020_41.pdf. 

6See Securities Exchange Act Release No. 90184 

(October 14, 2020), 85 FR 66636 (October 20, 2020) 

(SR–EMERALD–2020–12) (the ‘‘First Proposed Rule 

Change’’). 

7See id. 

8See Comment Letter from Joseph Ferraro, SVP, 

Deputy General Counsel, the Exchange, dated 

November 20, 2020, notifying the Commission that 

the Exchange would withdraw the First Proposed 

Rule Change. 

9See Securities Exchange Act Release No. 90600 

(December 8, 2020), 85 FR 80831 (December 14, 

2020) (SR–EMERALD–2020–17) (the ‘‘Second 

Proposed Rule Change’’). 

10See id. 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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– 

NYSENAT–2021–01 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to: Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSENAT–2021–01. 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–NYSENAT–2021–01 and 

should be submitted on or before 

February 26, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02409 Filed 2–4–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91032; File No. SR– 

EMERALD–2021–02] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fee 

Schedule To Adopt Port Fees and 

Increase Certain Network Connectivity 

Fees 

February 1, 2021. 

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 January 

22, 2021, MIAX Emerald, LLC (‘‘MIAX 

Emerald’’ 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 Emerald Fee Schedule 

(the ‘‘Fee Schedule’’). 

The text of the proposed rule change 

is available on the Exchange’s website at 

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

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

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: (1) Adopt Port fees; 

and (2) increase the Exchange’s network 

connectivity fees for its 10 gigabit 

(‘‘Gb’’) ultra-low latency (‘‘ULL’’) fiber 

connection for Members 3 and nonMembers (collectively, the ‘‘Proposed 

Access Fees’’). On September 15, 2020, 

the Exchange issued a Regulatory 

Circular which announced, among other 

things, that the Exchange would adopt 

Port fees, thereby terminating the 

Waiver Period 4 for such fees, and 

increase the fees for its 10Gb ULL 

connection for Members and nonMembers, beginning October 1, 2020.5

The Exchange initially filed this 

proposal on October 1, 2020.6 The First 

Proposed Rule Change was published 

for comment in the Federal Register on 

October 20, 2020.7 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 

November 25, 2020 8 and resubmitted a 

replacement proposal.9 The Second 

Proposed Rule Change was published 

for comment in the Federal Register on 

December 14, 2020.10 The Exchange 

notes that the Second Proposed Rule 


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11See Comment Letter from Joseph Ferraro, SVP, 

Deputy General Counsel, the Exchange, dated 

January 15, 2021, notifying the Commission that the 

Exchange would withdraw the Second Proposed 

Rule Change. 12 ‘‘FIX Port’’ means an interface with MIAX 

Emerald systems that enables the Port user to 

submit simple and complex orders electronically to 

MIAX Emerald. See the Definitions Section of the 

Fee Schedule. 13MIAX Emerald Express Interface is a 

connection to the MIAX Emerald System that 

enables Market Makers to submit simple and 

complex electronic quotes to MIAX Emerald. ‘‘Full 

Service MEI Ports’’ means a port which provides 

Market Makers with the ability to send Market 

Maker simple and complex quotes, eQuotes, and 

quote purge messages to the MIAX Emerald System. 

Full Service MEI Ports are also capable of receiving 

administrative information. Market Makers are 

limited to two Full Service MEI Ports per Matching 

Engine. ‘‘Limited Service MEI Ports’’ means a port 

which provides Market Makers with the ability to 

send simple and complex eQuotes and quote purge 

messages only, but not Market Maker Quotes, to the 

MIAX Emerald System. Limited Service MEI Ports 

are also capable of receiving administrative 

information. Market Makers initially receive two 

Limited Service MEI Ports per Matching Engine. 

See the Definitions Section of the Fee Schedule. 

14 ‘‘Market Maker’’ refers to ‘‘Lead Market Maker’’ 

(‘‘LMM’’), ‘‘Primary Lead Market Maker’’ (‘‘PLMM’’) 

and ‘‘Registered Market Maker’’ (‘‘RMM’’), 

collectively. See Exchange Rule 100 and the 

Definitions Section of the Fee Schedule. 

15 ‘‘CTD Port’’ or ‘‘Clearing Trade Drop Port’’ 

provides an Exchange Member with a real-time 

clearing trade updates. The updates include the 

Member’s clearing trade messages on a low latency, 

real-time basis. The trade messages are routed to a 

Member’s connection containing certain 

information. The information includes, among other 

things, the following: (i) Trade date and time; (ii) 

symbol information; (iii) trade price/size 

information; (iv) Member type (for example, and 

without limitation, Market Maker, Electronic 

Exchange Member, Broker-Dealer); and (v) 

Exchange MPID for each side of the transaction, 

including Clearing Member MPID. See the 

Definitions Section of the Fee Schedule. 

16The FIX Drop Copy (‘‘FXD’’) Port is a 

messaging interface that will provide a copy of realtime trade execution, trade correction and trade 

cancellation information to FXD Port users who 

subscribe to the service. FXD Port users are those 

users who are designated by an EEM to receive the 

information and the information is restricted for use 

by the EEM. FXD Port Fees will be assessed in any 

month the Member is credentialed to use the FXD 

Port in the production environment. See Fee 

Schedule, Section 5)d)iv). 

17 ‘‘Electronic Exchange Member’’ or ‘‘EEM’’ 

means the holder of a Trading Permit who is not 

a Market Maker. Electronic Exchange Members are 

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

Exchange Rule 100 and the Definitions Section of 

the Fee Schedule. 

18An example of one such exception where there 

is an additional charge for information that is 

communicated through a Port is for certain market 

data products, such as ToM, AIS, and MOR, that are 

received via a direct connection to the Exchange. 

See Sections 6(a)–(c) of the Fee Schedule. 

19See supra note 13. 

20See id. 

21A ‘‘matching engine’’ is a part of the MIAX 

Emerald electronic system that processes options 

quotes and trades on a symbol-by-symbol basis. 

Some matching engines will process option classes 

with multiple root symbols, and other matching 

engines will be dedicated to one single option root 

symbol (for example, options on SPY will be 

processed by one single matching engine that is 

dedicated only to SPY). A particular root symbol 

may only be assigned to a single designated 

matching engine. A particular root symbol may not 

be assigned to multiple matching engines. See the 

Definitions Section of the Fee Schedule. 

Change did not receive any comment 

letters. Nonetheless, the Exchange 

withdrew the Second Proposed Rule 

Change on January 22, 2021 and 

resubmitted this proposal.11

Port Fees 

The Exchange proposes to adopt fees 

for ‘‘Ports’’, which are used by Members 

and non-Members to access the 

Exchange. MIAX Emerald provides four 

Port types: (i) The Financial Information 

Exchange (‘‘FIX’’) Port,12 which allows 

Members to electronically send orders 

in all products traded on the Exchange; 

(ii) the MIAX Emerald Express Interface 

(‘‘MEI’’) Port,13 which allows Market 

Makers 14 to submit electronic orders 

and quotes to the Exchange; (iii) the 

Clearing Trade Drop Port (‘‘CTD’’) 

Port,15 which provides real-time trade 

clearing information to the participants 

to a trade on MIAX Emerald and to the 

participants’ respective clearing firms; 

and (iv) the FIX Drop Copy (‘‘FXD’’) 

Port,16 which provides a copy of realtime trade execution, correction and 

cancellation information through a FIX 

Port to any number of FIX Ports 

designated by an Electronic Exchange 

Member (‘‘EEM’’) 17 to receive such 

messages. The Exchange also proposes 

to increase the monthly fee for each 

additional Limited Service MEI Port per 

matching engine for Market Makers over 

and above the two (2) Limited Service 

MEI Ports per matching engine that are 

allocated with the Full Service MEI 

Ports, as described below. 

Since the launch of the Exchange, all 

Port fees have been waived by the 

Exchange in order to incentivize market 

participants to connect to the Exchange, 

except for additional Limited Service 

MEI Ports. However, also at launch, the 

Exchange introduced the structure of 

Port fees on its Fee Schedule (without 

proposing the actual fee amounts), in 

order to indicate to market participants 

that Port fees would ultimately apply 

upon expiration of the Waiver Period. 

The Exchange now proposes to assess 

monthly Port fees for Members and nonMembers in each month the market 

participant is credentialed to use a Port 

in the production environment and 

based upon the number of credentialed 

Ports that a user is entitled to use. MIAX 

Emerald has Primary and Secondary 

Facilities and a Disaster Recovery 

Facility. Each type of Port provides 

access to all Exchange facilities 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.18

FIX Port Fees 

Since the launch of the Exchange, fees 

for FIX Ports have been waived for the 

Waiver Period. The Exchange now 

proposes to assess a monthly FIX Port 

fee to Members in each month the 

Member is credentialed to use a FIX 

Port in the production environment and 

based upon the number of credentialed 

FIX Ports, as follows: $550 for the first 

FIX Port; $350 for FIX Ports two through 

five; and $150 for each FIX Port over 

five. 

Below is the proposed table showing 

the FIX Port fees: 

FIX port fees 

MIAX Emerald 

monthly port fees 

includes 

connectivity to the 

primary, secondary 

and disaster 

recovery 

data centers 

1st FIX Port .................. $550.00 

FIX Ports 2 through 5 ... 350.00 

Additional FIX Ports 

over 5 ........................ 150.00 

MEI Port Fees 

MIAX Emerald offers different options 

of MEI Ports depending on the services 

required by Market Makers. Since the 

launch of the Exchange, fees for MEI 

Ports have been waived for the Waiver 

Period. The Exchange now proposes to 

assess monthly MEI Port Fees to Market 

Makers based upon the number of 

classes or class volume accessed by the 

Market Maker. Market Makers are 

allocated two (2) Full Service MEI 

Ports 19 and two (2) Limited Service MEI 

Ports 20 per Matching Engine 21 to which 

they connect. The Full Service MEI 

Ports, Limited Service MEI Ports and the 

additional Limited Service MEI Ports all 

include access to the Exchange’s 

Primary and Secondary data centers and 

its Disaster Recovery center. 

Specifically, the Exchange proposes to 

adopt MEI Port fees assessable to Market 

Makers based upon the number of 

classes or class volume accessed by the 

Market Maker. The Exchange proposes 

to adopt the following MEI Port fees: (i) 

$5,000 for Market Maker Assignments in 

up to 5 option classes or up to 10% of 

option classes by volume; (ii) $10,000 

for Market Maker Assignments in up to 


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22See, e.g., Cboe BZX Options Exchange (‘‘BZX 

Options’’) assesses the Participant Fee, which is a 

membership fee, according to a member’s ADV. See 

Cboe BZX Options Exchange Fee Schedule under 

‘‘Membership Fees’’. The Participant Fee is $500 if 

the member ADV is less than 5000 contracts and 

$1,000 if the member ADV is equal to or greater 

than 5000 contracts. 

23The Exchange will use the following formula to 

calculate the percentage of total national average 

daily volume that the Market Maker assignment is 

for purposes of the MEI Port Fee for a given month: 

Market Maker assignment percentage of national 

average daily volume = [total volume during the 

prior calendar quarter in a class in which the 

Market Maker was assigned]/[total national volume 

in classes listed on MIAX in the prior calendar 

quarter]. 

10 option classes or up to 20% of option 

classes by volume; (iii) $14,000 for 

Market Maker Assignments in up to 40 

option classes or up to 35% of option 

classes by volume; (iv) $17,500 for 

Market Maker Assignments in up to 100 

option classes or up to 50% of option 

classes by volume; and (v) $20,500 for 

Market Maker Assignments in over 100 

option classes or over 50% of option 

classes by volume up to all option 

classes listed on MIAX Emerald. 

The Exchange also proposes to adopt 

new footnote ‘‘D’’ for its MEI Port fees 

that will apply to the Market Makers 

who fall within the following MEI Port 

fee levels, which represent the 4th and 

5th levels of the fee table: Market 

Makers who have (i) Assignments in up 

to 100 option classes or up to 50% of 

option classes by volume and (ii) 

Assignments in over 100 option classes 

or over 50% of option classes by volume 

up to all option classes listed on MIAX 

Emerald. Specifically, the Exchange 

proposes for these monthly MEI Port tier 

levels, if the Market Maker’s total 

monthly executed volume during the 

relevant month is less than 0.025% of 

the total monthly executed volume 

reported by OCC in the customer 

account type for MIAX Emerald-listed 

option classes for that month, then the 

fee will be $14,500 instead of the fee 

otherwise applicable to such level. 

The purpose of this proposed lower 

monthly MEI Port fee is to provide a 

lower fixed cost to those Market Makers 

who are willing to quote the entire 

Exchange market (or substantial amount 

of the Exchange market), as objectively 

measured by either number of classes 

assigned or national ADV, but who do 

not otherwise execute a significant 

amount of volume on the Exchange. The 

Exchange believes that, by offering 

lower fixed costs to Market Makers that 

execute less volume, the Exchange will 

retain and attract smaller-scale Market 

Makers, which are an integral 

component of the option industry 

marketplace, but have been decreasing 

in number in recent years, due to 

industry consolidation and lower 

market maker profitability. Since these 

smaller-scale Market Makers utilize less 

Exchange capacity due to lower overall 

volume executed, the Exchange believes 

it is reasonable and appropriate to offer 

such Market Makers a lower fixed cost. 

The Exchange notes that other options 

exchanges assess certain of their fees at 

different rates, based upon a member’s 

participation on that exchange,22 and, as 

such, this concept is not novel. The 

proposed changes to the MEI Port fees 

for Market Makers who fall within the 

4th and 5th levels of the fee table are 

based upon a business determination of 

current Market Maker assignments and 

trading volume. 

For the calculation of the monthly 

MEI Port Fees that apply to Market 

Makers, the number of classes is defined 

as the greatest number of classes the 

Market Maker was assigned to quote in 

on any given day within the calendar 

month and the class volume percentage 

is based on the total national average 

daily volume in classes listed on MIAX 

Emerald in the prior calendar quarter.23

Newly listed option classes are 

excluded from the calculation of the 

monthly MEI Port Fee until the calendar 

quarter following their listing, at which 

time the newly listed option classes will 

be included in both the per class count 

and the percentage of total national 

average daily volume. The Exchange 

proposes to assess Market Makers the 

monthly MEI Port Fees based on the 

greatest number of classes listed on 

MIAX Emerald that the Market Maker 

was assigned to quote in on any given 

day within a calendar month and the 

applicable fee rate that is the lesser of 

either the per class basis or percentage 

of total national average daily volume 

measurement. 

The Exchange currently charges $50 

per month for each additional Limited 

Service MEI Port per matching engine 

for Market Makers over and above the 

two (2) Limited Service MEI Ports per 

matching engine that are allocated with 

the Full Service MEI Ports. The Full 

Service MEI Ports, Limited Service MEI 

Ports and the additional Limited Service 

MEI Ports all include access to the 

Exchange’s Primary and Secondary data 

centers and its Disaster Recovery center. 

Currently, footnote ‘‘*’’ in the MEI Port 

Fee table provides that the fees for 

Additional Limited Service MEI Ports 

are not subject to the Waiver Period. 

Accordingly, in connection with this 

proposal, the Exchange proposes to 

delete footnote ‘‘*’’ since the Exchange 

proposes to begin assessing MEI Port 

fees, which will no longer be subject to 

the Waiver Period. The Exchange also 

proposes to increase the monthly fee 

from $50 to $100 for each additional 

Limited Service MEI Port per matching 

engine for Market Makers over and 

above the two (2) Limited Service MEI 

Ports per matching engine that are 

allocated with the Full Service MEI 

Ports. 

Below is the proposed table showing 

the MEI Port fees: 

Monthly MIAX Emerald MEI 

fees 

Market maker assignments 

(the lesser of the applicable measurements below) 

Per class % of national average daily volume 

$5,000.00 .................................. Up to 5 Classes ............................................... Up to 10% of Classes by volume. 

10,000.00 .................................. Up to 10 Classes ............................................. Up to 20% of Classes by volume. 

14,000.00 .................................. Up to 40 Classes ............................................. Up to 35% of Classes by volume. 

$17,500.00 D .............................. Up to 100 Classes ........................................... Up to 50% of Classes by volume. 

$20,500.00 D .............................. Over 100 Classes ............................................ Over 50% of Classes by volume up to all Classes listed on 

MIAX Emerald. 

D For these Monthly MIAX Emerald MEI Port tier levels, if the Market Maker’s total monthly executed volume during the relevant month is less 

than 0.025% of the total monthly executed volume reported by OCC in the customer account type for MIAX Emerald-listed option classes for that 

month, then the fee will be $14,500 instead of the fee otherwise applicable to such level. 


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24 ‘‘Purge Ports’’ provide Market Makers with the 

ability to send quote purge messages to the MIAX 

Emerald System. Purge Ports are not capable of 

sending or receiving any other type of messages or 

information. See the Definitions Section of the Fee 

Schedule. 

25See Nasdaq PHLX Pricing Schedule, Options 7, 

Section 9, Other Member Fees, B. Port Fees. 26 Id. 

Purge Port Fees 

The Exchange also offers Market 

Makers the ability to request and be 

allocated two (2) Purge Ports 24 per 

Matching Engine to which it connects. 

Purge Ports provide Market Makers with 

the ability to send quote purge messages 

to the MIAX Emerald System. Purge 

Ports are not capable of sending or 

receiving any other type of messages or 

information. Since the launch of the 

Exchange, fees for Purge Ports have been 

waived for the Waiver Period. The 

Exchange now proposes to amend its 

Fee Schedule to adopt fees for Purge 

Ports. For each month in which the 

MIAX Emerald Market Maker has been 

credentialed to use Purge Ports in the 

production environment and has been 

assigned to quote in at least one class, 

the Exchange proposes to assess the 

MIAX Emerald Market Maker a flat fee 

$1,500, regardless of the number of 

Purge Ports allocated to the MIAX 

Emerald Market Maker. 

CTD Port Fees 

The Exchange proposes to assess a 

CTD Port fee as a monthly fixed amount, 

not tied to transacted volume of the 

Member. This fixed fee structure is the 

same structure in place at Nasdaq PHLX 

with respect to the proposed CTD Port 

Fees.25 Since the launch of the 

Exchange, CTD Port Fees have been 

waived for the Waiver Period. CTD 

provides Exchange members with realtime clearing trade updates. The 

updates include the Member’s clearing 

trade messages on a low latency, realtime basis. The trade messages are 

routed to a Member’s connection 

containing certain information. The 

information includes, among other 

things, the following: (i) Trade date and 

time; (ii) symbol information; (iii) trade 

price/size information; (iv) Member type 

(for example, and without limitation, 

Market Maker, Electronic Exchange 

Member, Broker-Dealer); (v) Exchange 

Member Participant Identifier (‘‘MPID’’) 

for each side of the transaction, 

including Clearing Member MPID; and 

(vi) strategy specific information for 

complex transactions. CTD Port fees 

will be assessed in any month the 

Member is credentialed to use the CTD 

Port in the production environment. 

The Exchange proposes to assess a CTD 

Port fee of $450 per month. 

Below is the proposed table for the 

CTD Port fees: 

Description Monthly fee 

Real-Time CTD Information $450.00 

FXD Port Fee 

The Exchange proposes to assess an 

FXD Port Fee as a monthly fixed 

amount, not tied to transacted volume of 

the Member. This fixed fee structure is 

the same structure in place at Nasdaq 

PHLX with respect to FXD Port Fees.26

Since the launch of the Exchange, FXD 

Port Fees have been waived for the 

Waiver Period. FXD is a messaging 

interface that will provide a copy of 

real-time trade execution, trade 

correction and trade cancellation 

information to FXD Port users who 

subscribe to the service. FXD Port users 

are those users who are designated by 

an EEM to receive the information and 

the information is restricted for use by 

the EEM. FXD Port fees will be assessed 

in any month the Member is 

credentialed to use the FXD Port in the 

production environment. The Exchange 

proposes to assess an FXD Port fee of 

$500 per month. Below is the proposed 

table for the FXD Port fees: 

Description 

MIAX Emerald 

monthly port 

fees includes 

connectivity 

to the primary, 

secondary and 

disaster recovery 

data centers 

FIX Drop Copy Port ...... $500.00 

10Gb ULL Connectivity Fee 

The Exchange proposes to amend 

Sections (5a) and (b) of the Fee 

Schedule to increase the monthly 

network connectivity fees for the 10Gb 

ULL fiber connection, which is charged 

to both Members and non-Members of 

the Exchange for connectivity to the 

Exchange’s primary/secondary facility. 

The Exchange offers to both Members 

and non-Members two bandwidth 

alternatives for connectivity to the 

Exchange, to its primary and secondary 

facilities, consisting of a 1Gb fiber 

connection and a 10Gb ULL fiber 

connection. The 10Gb ULL offering uses 

an ultra-low latency switch, which 

provides faster processing of messages 

sent to it in comparison to the switch 

used for the other types of connectivity. 

The Exchange now proposes to increase 

its monthly network connectivity fee for 

its 10Gb ULL connection to $10,000 for 

Members and non-Members. 

* * * * * 

MIAX Emerald 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. MIAX Emerald 

believes this high standard is especially 

important when an exchange imposes 

various access fees for market 

participants to access an exchange’s 

marketplace. MIAX Emerald deems Port 

fees and Connectivity fees to be access 

fees, and that Ports and Connectivity are 

inextricably linked components of the 

network. Accordingly, the Exchange 

believes that it is reasonable and 

appropriate that the costs and revenues 

for both should be considered together, 

as the services associated with 

connectivity and ports are linked pieces 

of the network’s infrastructure, both of 

which are necessary for a market 

participant to access and use the trading 

System of the Exchange. Finally, both 

Connectivity fee and Port fee revenue 

are consolidated into a single line item 

(‘‘Access Fees’’) on the Exchange’s 

financial statements. The Exchange 

believes that it is important to 

demonstrate that these fees are based on 

its costs to provide access to the 

Exchange’s network and reasonable 

business needs. Accordingly, the 

Exchange believes the Proposed Access 

Fees will allow the Exchange to offset 

expense the Exchange has and will 

incur, and that the Exchange is 

providing sufficient transparency (as 

described below) into how the Exchange 

determined to charge such fees. 

Accordingly, the Exchange is providing 

an analysis of its revenues, costs, and 

profitability associated with the 

Proposed Access Fees. This analysis 

includes information regarding its 

methodology for determining the costs 

and revenues associated with the 

Proposed Access Fees. 

In order to determine the Exchange’s 

costs associated with providing the 

Proposed Access Fees, the Exchange 

conducted an extensive cost 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 

Proposed Access Fees, and, if such 

expense did so relate, what portion (or 

percentage) of such expense actually 

supports the services included in the 

Proposed Access Fees. The sum of all 


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8432 Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Notices 

27See 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). 

28See 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’’). 

29See Securities Exchange Act Release No. 87877 

(December 31, 2019), 84 FR 738 (January 7, 2020) 

(SR–EMERALD–2019–39). 

30 15 U.S.C. 78f(b). 

31 15 U.S.C. 78f(b)(4). 

32 15 U.S.C. 78f(b)(5). 

33See The Options Clearing Corporation (‘‘OCC’’) 

publishes options and futures volume in a variety 

of formats, including daily and monthly volume by 

exchange, available here: https://www.theocc.com/ 

market-data/volume/default.jsp. 

34See Letter from Stefano Durdic, R2G, to 

Vanessa Countryman, Acting Secretary, 

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

Letter’’). 

such portions of expenses represents the 

total cost of the Exchange to provide the 

Proposed Access Fees. For the 

avoidance of doubt, no expense amount 

was allocated twice. The Exchange is 

also providing detailed information 

regarding the Exchange’s cost allocation 

methodology—namely, 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 Proposed 

Access Fees. 

In order to determine the Exchange’s 

projected revenues associated with 

providing the Proposed Access Fees, the 

Exchange analyzed the number of 

Members and non-Members currently 

utilizing the Exchange’s services 

associated with the Proposed Access 

Fees, and, utilizing a recent monthly 

billing cycle representative of 2020 

monthly revenue, extrapolated 

annualized revenue on a going-forward 

basis. The Exchange does not believe it 

is appropriate to factor into its analysis 

future revenue growth or decline into its 

projections for purposes of these 

calculations, given the uncertainty of 

such projections due to the continually 

changing access needs of market 

participants, discounts that can be 

achieved through reaching certain tiers, 

market participant consolidation, etc. 

Additionally, the Exchange similarly 

does not factor into its analysis future 

cost growth or decline. 

The Exchange is presenting its 

revenue and expense associated with 

the Proposed Access Fees in this filing 

in a manner that is consistent with how 

the Exchange presents its revenue and 

expense in its Audited Unconsolidated 

Financial Statements. The Exchange’s 

most recent Audited Unconsolidated 

Financial Statement is for 2019. 

However, since the revenue and 

expense associated with the Proposed 

Access Fees were not in place in 2019 

or for the first three quarters of 2020, the 

Exchange believes its 2019 Audited 

Unconsolidated Financial Statement is 

not useful for analyzing the 

reasonableness of the total annual 

revenue and costs associated with the 

Proposed Access Fees. Accordingly, the 

Exchange believes it is more appropriate 

to analyze the Proposed Access Fees 

utilizing its 2020 revenue and costs, as 

described herein, which utilize the same 

presentation methodology as set forth in 

the Exchange’s previously-issued 

Audited Unconsolidated Financial 

Statements. Based on this analysis, the 

Exchange believes that the Proposed 

Access Fees are fair and reasonable 

because they will not result in excessive 

pricing or supra-competitive profit 

when comparing the Exchange’s total 

annual expense 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. 

* * * * * 

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’’).27 On 

May 21, 2019, the Commission issued 

the Staff Guidance on SRO Rule Filings 

Relating to Fees.28 On December 20, 

2019, the Exchange adopted 

Connectivity Fees in a filing utilizing a 

cost-based justification framework that 

is substantially similar to the cost-based 

justification framework utilized for the 

instant Proposed Access Fees.29

Accordingly, the Exchange believes that 

the Proposed Access 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 comprehensive 

revenue and cost data and analysis) that 

they are fair and reasonable because 

they do not result in excessive pricing 

or supra-competitive profit; and (iv) 

utilize a cost-based justification 

framework that is substantially similar 

to a framework previously used by the 

Exchange to establish Connectivity Fees. 

Accordingly, the Exchange believes that 

the Commission should find that the 

Proposed Fees are consistent with the 

Act. 

The proposed rule change is 

immediately effective upon filing with 

the Commission pursuant to Section 

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

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 30

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 31 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 32 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. 

The Exchange launched trading on 

March 1, 2019. For the month of 

December 2020, the Exchange had a 

market share of only approximately 

3.58% of the U.S. options industry.33

The Exchange is not aware of any 

evidence that a market share of 

approximately 3.6% provides the 

Exchange with anti-competitive 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 options market participant 

is required by rule, regulation, or 

competitive forces to be a Member of the 

Exchange. 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).34 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 


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35See id. 

relationship. The cost benefit analysis 

just didn’t make any sense for us at 

those new levels.’’ 35 Since the Exchange 

issued its notice for the Proposed 

Access Fees, one Member discontinued 

the use of the Exchange’s connectivity 

and port services as a result of the 

Proposed Access Fees. Accordingly, 

these examples show that if an exchange 

sets too high of a fee for connectivity 

and/or other non-transaction fees for its 

relevant marketplace, market 

participants can choose to disconnect 

from such exchange. 

The Exchange believes that its 

proposal is consistent with Section 

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

Access Fees will not result in excessive 

or supra-competitive profit. The costs 

associated with providing access to 

Exchange Members and non-Members, 

as well as the general expansion of a 

state-of-the-art infrastructure, are 

extensive, have increased year-overyear, and are projected to increase yearover-year in the future. In particular, the 

Exchange has experienced a material 

increase in its costs in 2020, in 

connection with a project to make its 

network environment more transparent 

and deterministic, based on customer 

demand. This project will allow the 

Exchange to enhance its network 

architecture with the intent of ensuring 

a best-in-class, transparent and 

deterministic trading system while 

maintaining its industry leading latency 

and throughput capabilities. In order to 

provide this greater amount of 

transparency and higher determinism, 

MIAX Emerald has made significant 

capital expenditures (‘‘CapEx’’), 

incurred increased ongoing operational 

expenditures (‘‘OpEx’’), and undertaken 

additional engineering research and 

development (‘‘R&D’’) in the following 

areas: (i) Implementing an improved 

network design to ensure the minimum 

latency between multicast market data 

signals disseminated by the Exchange 

across the extranet switches, improving 

the unicast jitter profile to reduce the 

occurrence of message sequence 

inversions from Members to the 

Exchange quoting gateway processors, 

and introducing a new optical fiber 

network infrastructure that ensures the 

optical fiber path for participants within 

extremely tight tolerances; (ii) 

introducing a re-architected and 

engineered participant quoting gateway 

that ensures the delivery of messages to 

the match engine with absolute 

determinism, eliminating the message 

processing inversions that can occur 

with messages received nanoseconds 

apart; and (iii) designing an improved 

monitoring platform to better measure 

the performance of the network and 

systems at extremely tight tolerances 

and to provide Members with reporting 

on the performance of their systems. 

The CapEx associated with only phase 

1 of this project in 2020 was 

approximately $1.85 million. This 

expense does not include the significant 

increase in employee time and other 

resources necessary to maintain and 

service this network, which expense is 

captured in the operating expense 

discussed below. This project, which 

results in a material increase in expense 

of the Exchange, is a primary driver for 

the increase in network connectivity 

fees proposed by the Exchange. 

The Exchange believes the proposed 

increase to the 10Gb ULL connection is 

an equitable allocation of reasonable 

fees because 10Gb ULL purchasers: (1) 

Consume the most bandwidth and 

resources of the network; (2) transact the 

vast majority of the volume on the 

Exchange; and (3) require the high touch 

network support services provided by 

the Exchange and its staff, including 

more costly network monitoring, 

reporting and support services, resulting 

in a much higher cost to the Exchange. 

Further, the Exchange believes the 

Proposed Access Fees are equitably 

allocated because of customer demand 

for an even more transparent and 

deterministic network, as described 

above, which has resulted in higher 

CapEx, increasingly higher OpEx, and 

increased costs to engineering R&D. The 

Proposed Access Fees are equitably 

allocated in this regard because the 

majority of customer demand is coming 

from purchasers of the 10Gb ULL 

connections, which Member and nonMember firms transact the vast majority 

of volume on the Exchange. 

Accordingly, the Exchange believes it is 

reasonable, equitably allocated and not 

unfairly discriminatory to recoup the 

majority of its costs associated with the 

project to make the network more 

transparent and deterministic from 

market participants utilizing 10Gb ULL 

connections on the Exchange. 

The Exchange believes that the 

proposed increase to the 10Gb ULL fees 

are equitably allocated among users of 

the network connectivity alternatives, as 

the users of the 10Gb ULL connections 

consume the most bandwidth and 

resources of the network. Specifically, 

the Exchange notes that these users 

account for approximately greater than 

99% of message traffic over the network, 

while the users of the 1Gb connections 

account for approximately less than 1% 

of message traffic over the network. In 

the Exchange’s experience, users of the 

1Gb connections do not have a business 

need for the high performance network 

solutions required by 10Gb ULL users. 

The Exchange’s high performance 

network solutions and supporting 

infrastructure (including employee 

support), provides unparalleled system 

throughput and the capacity to handle 

approximately 18 million quote 

messages per second. On an average 

day, the Exchange handles over 

approximately 3 billion total messages. 

Of those, users of the 10Gb ULL 

connections generate approximately 3 

billion messages, and users of the 1Gb 

connections generate 500,000 messages. 

However, in order to achieve a 

consistent, premium network 

performance, the Exchange must build 

out and maintain a network that has the 

capacity to handle the message rate 

requirements of its most heavy network 

consumers. These billions of messages 

per day consume the Exchange’s 

resources and significantly contribute to 

the overall network connectivity 

expense for storage and network 

transport capabilities. Given this 

difference in network utilization rate, 

the Exchange believes that it is 

reasonable, equitable, and not unfairly 

discriminatory that the 10Gb ULL users 

pay for the vast majority of the shared 

network resources from which all 

Member and non-Member users benefit, 

but is designed and maintained from a 

capacity standpoint to specifically 

handle the message rate and 

performance requirements of 10Gb ULL 

users. 

The Exchange also believes that the 

connectivity fees are equitably allocated 

amongst users of the network 

connectivity alternatives, when these 

fees are viewed in the context of the 

overall trading volume on the Exchange. 

To illustrate, the purchasers of the 10Gb 

ULL connectivity account for 

approximately 98% of the volume on 

the Exchange for the month of October 

2020. This overall volume percentage 

(98% of total Exchange volume) is in 

line with the amount of network 

connectivity revenue collected from 

10Gb ULL purchasers (99% of total 

Exchange connectivity revenue). For 

example, utilizing a recent billing cycle, 

Exchange Members and non-Members 

that purchased 10Gb ULL connections 

accounted for approximately 99% of the 

total network connectivity revenue 

collected by the Exchange from all 

connectivity alternatives; and (ii) 

Members and non-Members that 

purchased 1Gb connections accounted 

for approximately 1% of the revenue 

collected by the Exchange from all 

connectivity alternatives. 

The Exchange further believes that the 

increased fee for the 10Gb ULL 


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connection is an equitable allocation of 

reasonable fees as the fees for the 

various connectivity alternatives are 

directly related to the actual costs 

associated with providing the respective 

connectivity alternatives. That is, the 

cost to the Exchange of providing a 1Gb 

network connection is significantly 

lower than the cost to the Exchange of 

providing a 10Gb ULL network 

connection. Pursuant to its extensive 

cost review described above and in 

connection with the Exchange’s new 

project to increase transparency and 

determinism, the Exchange believes that 

the average cost to provide a 10Gb ULL 

network connection is approximately 8 

times more than the average cost to 

provide a 1Gb connection. The simple 

hardware and software component costs 

alone of a 10Gb ULL connection are not 

8 times more than the 1Gb connection. 

Rather, it is the associated premiumproduct level network monitoring, 

reporting, and support services costs 

that accompany a 10Gb ULL connection 

which cause it to be 8 times more costly 

to provide than the 1Gb connection. 

Accordingly, the Exchange believes it is 

equitable to allocate those network 

infrastructure costs that accompany a 

10Gb ULL connection to the purchasers 

of those connections, and not to 

purchasers of 1Gb connections. 

The Exchange differentiates itself by 

offering a ‘‘premium-product’’ network 

experience, as an operator of a high 

performance, ultra-low latency network 

with unparalleled system throughput, 

which network can support access to 

three distinct options markets and 

multiple competing market-makers 

having affirmative obligations to 

continuously quote over 750,000 

distinct trading products (per exchange), 

and the capacity to handle 

approximately 18 million quote 

messages per second. The ‘‘premiumproduct’’ network experience enables 

users of 10Gb ULL connections to 

receive the network monitoring and 

reporting services for those 

approximately 750,000 distinct trading 

products. There is a significant, 

quantifiable amount of R&D effort, 

employee compensation and benefits 

expense, and other expense associated 

with providing the high touch network 

monitoring and reporting services that 

are utilized by the 10Gb ULL 

connections offered by the Exchange. 

These value add services are fullydiscussed herein, and the actual costs 

associated with providing these services 

are the basis for the differentiated 

amount of the fees for the various 

connectivity alternatives. 

In order to provide more detail and to 

quantify the Exchange’s costs associated 

with providing access to the Exchange 

in general, the Exchange notes that there 

are material costs associated with 

providing the infrastructure and 

headcount to fully-support access to the 

Exchange. The Exchange incurs 

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 

services associated with the Proposed 

Access Fees increase. For example, new 

10Gb ULL connections and Ports require 

the purchase of additional hardware to 

support those connections as well as 

enhanced monitoring and reporting of 

customer performance that MIAX 

Emerald and its affiliates provide. 

Further, as the total number of all 

connections and Ports increase, MIAX 

Emerald and its affiliates need to 

increase their data center footprint and 

consume more power, resulting in 

increased costs charged by their thirdparty data center provider. Accordingly, 

the cost to MIAX Emerald and its 

affiliates is not fixed. The Exchange 

believes the Proposed Access Fees are 

reasonable in order to offset the costs to 

the Exchange associated with providing 

access to its network infrastructure. 

Further, because the costs of operating 

its own data center are significant and 

not economically feasible for the 

Exchange at this time, the Exchange 

does not operate its own data centers, 

and instead contracts with a third-party 

data center provider. The Exchange 

notes that other competing 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. 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. 

The Exchange invests significant 

resources in network R&D to 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 the Exchange’s 

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 a 

Member (and the SIPs) when the 

Exchange detects a problem with a 

Member’s connectivity. In fact, the 

Exchange often receives 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. 

Additionally, certain Exchangedeveloped network aggregation and 

monitoring tools provide the Exchange 

with the ability to measure network 

traffic with a much more granular level 

of variability. This is important as 

Exchange Members demand a higher 

level of network determinism and the 

ability to measure variability in terms of 

single digit nanoseconds. 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-ofthe-art exchange network in the U.S. 

options industry is a significant expense 

for the Exchange that also increases 

year-over-year, and thus the Exchange 

believes that it is reasonable to offset 

those costs through the Proposed Access 

Fees. The Exchange invests in and offers 

a superior network infrastructure as part 

of its overall options 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 believes it is reasonable 

to consider the expense and revenue for 

ports and connectivity alternatives 

together because ports and connectivity 

are inextricably linked components of 

the network infrastructure, and that 

both are necessary for a market 

participant to access the Exchange. The 

various types of connectivity and port 

alternatives that the Exchange offers 

provide a wide array of access 

alternatives necessary for a market 

participant to conduct its business using 

the Exchange, which is a business 

decision to be made by each particular 

type of market participant. The different 

types of connectivity and port 


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36See supra page 64 (discussing how purchasers 

of the 10Gb ULL connectivity accounted for 

approximately 98% of the volume on the Exchange 

for the month of October 2020; 99% of total 

Exchange connectivity revenue; Members and nonMembers that purchased 10Gb ULL connections 

accounted for approximately 99% of the total 

network connectivity revenue collected by the 

Exchange from all connectivity alternatives; and 

Members and non-Members that purchased 1Gb 

connections accounted for approximately 1% of the 

revenue collected by the Exchange from all 

connectivity alternatives). 

37The Exchange has not yet finalized its 2020 

year end results. 

38See supra note 36. 

39For example, the Exchange previously noted 

that all third-party expense described in its prior fee 

filing was contained in the information technology 

and communication costs line item under the 

section titled ‘‘Operating Expenses Incurred 

Directly or Allocated From Parent,’’ in the 

Exchange’s 2019 Form 1 Amendment containing its 

financial statements for 2018. See Securities 

Exchange Act Release No. 87877 (December 31, 

2019), 85 FR 738 (January 7, 2020) (SR–EMERALD– 

2019–39). Accordingly, the third-part expense 

described in this filing is attributed to the same line 

item for the Exchange’s 2020 Form 1 Amendment, 

which will be filed in 2021. 

40 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. 

alternatives allows Members to conduct 

their different business strategies—some 

Members put an emphasis on speed, 

while others emphasize other strategies, 

such as redundancy and certainty of 

execution. The Exchange does not 

require a Member to have a certain 

framework for accessing the Exchange, 

but provides various connectivity and 

port alternatives for each Member’s 

distinct business lines. 

The Exchange offers various types of 

ports with differing prices because each 

port accomplishes different tasks, are 

suited to different types of Members, 

and consume varying capacity amounts 

of the network. For instance, MEI ports 

allow for a higher throughput and can 

handle much higher quote/order rates 

than FIX ports. Members that are Market 

Makers or high frequency trading firms 

utilize these ports (typically coupled 

with 10Gb ULL connectivity) because 

they transact in significantly higher 

amounts of messages being sent to and 

from the Exchange, versus FIX port 

users, who are traditionally customers 

sending only orders to the Exchange 

(typically coupled with 1Gb 

connectivity). The different types of 

ports cater to the different types of 

Exchange Memberships and different 

capabilities of the various Exchange 

Members. Market Makers have quoting 

and other obligations that traditional 

customers do not. Market Makers, 

therefore, need ports and connections 

that can handle using far more of the 

network’s capacity for message 

throughput, risk protections, and the 

amount of information that has to be 

assessed. Market Makers account for the 

vast majority of network capacity 

utilization and volume executed on the 

Exchange, as discussed throughout.36

Accordingly, the Exchange believes that 

it is reasonable and appropriate to 

charge market participants more for MEI 

ports versus FIX ports and other lower 

capacity ports. 

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 that the Exchange 

projects to incur in connection with 

providing these services versus the total 

annual revenue that the Exchange 

projects to collect in connection with 

providing these services. For 2020,37 the 

total annual expense for providing the 

services associated with the Proposed 

Access Fees for MIAX Emerald is 

projected to be approximately $9.3 

million. The $9.3 million in expense 

includes expense associated with 

providing all ports and all connectivity 

alternatives. The Exchange is unable to 

separate out its expense by connectivity 

alternative, as all connectivity 

alternatives are intricately combined in 

a single network infrastructure. 

Nevertheless, the Exchange attributes 

the majority of connectivity expense to 

the 10Gb ULL connections because the 

majority of network capacity is used by 

10Gb ULL purchasers.38 The $9.3 

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: (1) Third-party expense, 

relating to fees paid by MIAX Emerald 

to third-parties for certain products and 

services; and (2) internal expense, 

relating to the internal costs of MIAX 

Emerald to provide the services 

associated with the Proposed Access 

Fees. As noted above, the Exchange 

believes it is more appropriate to 

analyze the Proposed Access Fees 

utilizing its 2020 revenue and costs, 

which utilize the same presentation 

methodology as set forth in the 

Exchange’s previously-issued Audited 

Unconsolidated Financial Statements.39

The $9.3 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 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 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 services 

associated with the Proposed Access 

Fees. 

For 2020, total third-party expense, 

relating to fees paid by MIAX Emerald 

to third-parties for certain products and 

services for the Exchange to be able to 

provide the services associated with the 

Proposed Access Fees, is projected to be 

$1,932,519. 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 Emerald 

trading system infrastructure; (2) Zayo 

Group Holdings, Inc. (‘‘Zayo’’) for 

network services (fiber and bandwidth 

products and services) linking MIAX 

Emerald’s office locations in Princeton, 

NJ and Miami, FL to all data center 

locations; (3) Secure Financial 

Transaction Infrastructure (‘‘SFTI’’),40

which supports connectivity and feeds 

for the entire U.S. options industry; (4) 

various other services providers 

(including Thompson Reuters, NYSE, 

Nasdaq, and Internap), which provide 

content, connectivity services, and 

infrastructure services for critical 

components of options connectivity and 

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 


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41The Exchange notes an increase to the SFTI and 

other service providers’ expense percentage 

contained herein versus the same expense category 

percentage the Exchange used in its initial filing to 

adopt connectivity fees. See Securities Exchange 

Act Release No. 87877 (December 31, 2019), 85 FR 

738 (January 7, 2020) (SR–EMERALD–2019–39). 

This is because at the time the Exchange performed 

its cost analysis for the initial connectivity fee 

filing, the Exchange was operational for only part 

of the year. Since that time, the Exchange has been 

fully operational, increased market share and 

number of market participants, and undertaken 

significant performance upgrades, resulting in 

increased expense. Accordingly, the Exchange 

believes it is appropriate to analyze its SFTI and 

other service providers’ expense more in line with 

its affiliate options exchanges, MIAX and MIAX 

PEARL. 

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, MIAX Emerald 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 provide the services 

associated with the Proposed Access 

Fees. 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 

Proposed Access Fees 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 Proposed Access Fees, only that 

portion which the Exchange identified 

as being specifically mapped to 

providing the services associated with 

the Proposed Access Fees, 

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 this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

services associated with the Proposed 

Access Fees, 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 MIAX Emerald with its 

affiliates, Miami International Securities 

Exchange, LLC (‘‘MIAX’’) and MIAX 

PEARL, LLC (‘‘MIAX PEARL’’), 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 

Proposed Access Fees. 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 portion which the 

Exchange identified as being 

specifically mapped to providing the 

Proposed Access Fees, 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 

this allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

Proposed Access Fees, 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, connectivity services, and 

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 Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 

providing the services associated with 

the Proposed Access Fees, 

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).41 The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

services associated with the Proposed 

Access Fees. 

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 

Proposed Access Fees, only the portions 

which the Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access Fees, 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 this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

services associated with the Proposed 

Access Fees. 

For 2020, total projected internal 

expense, relating to the internal costs of 

MIAX Emerald to provide the services 

associated with the Proposed Access 

Fees, is projected to be $7,367,259. 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, 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 

Proposed Access Fees, 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 


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the services associated with the 

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, and no 

expense amount is allocated twice. 

Accordingly, MIAX Emerald does not 

allocate its entire costs contained in 

those 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 provide the services 

associated with the Proposed Access 

Fees. In particular, MIAX Emerald’s 

employee compensation and benefits 

expense relating to providing the 

services associated with the Proposed 

Access Fees is projected to be 

$4,489,924, which is only a portion of 

the $9,354,009 total projected 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 

Proposed Access Fees. Without these 

employees, the Exchange would not be 

able to provide the services associated 

with the Proposed Access Fees 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 the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access Fees, approximately 48% of the 

total employee compensation and 

benefits expense (39% allocated 

towards the cost of providing the 

provision of network connectivity and 

9% allocated towards the cost of 

providing ports). The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review. 

MIAX Emerald’s depreciation and 

amortization expense relating to 

providing the services associated with 

the Proposed Access Fees is projected to 

be $2,630,687, which is only a portion 

of the $3,812,590 total projected 

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 

Proposed Access Fees. Without this 

equipment, the Exchange would not be 

able to operate the network and provide 

the services associated with the 

Proposed Access Fees 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 Proposed Access 

Fees, only the portion which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access Fees, approximately 69% of the 

total depreciation and amortization 

expense, as these services would not be 

possible without relying on such 

equipment (65% allocated towards the 

cost of providing the provision of 

network connectivity and 4% allocated 

towards the cost of providing ports). 

The Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

services associated with the Proposed 

Access Fees, and not any other service, 

as supported by its cost review. 

MIAX Emerald’s occupancy expense 

relating to providing the services 

associated with the Proposed Access 

Fees is projected to be $246,648, which 

is only a portion of the $474,323 total 

projected 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 Proposed Access 

Fees. 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 

150 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 the Proposed 

Access Fees. 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 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 Proposed Access 

Fees. The Exchange did not allocate all 

of the occupancy expense toward the 

cost of providing the services associated 

with the Proposed Access Fees, only the 

portion 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 

this allocation is reasonable because it 

represents the Exchange’s cost to 

provide the services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review. 

The Exchange notes that a material 

portion of its total overall expense is 

allocated to the provision of services 

associated with the Proposed Access 

Fees. The Exchange believes this is 

reasonable and in line, as the Exchange 

operates a technology-based business 

that differentiates itself from its 

competitors based on its trading systems 

that rely on its high performance 

network, resulting in significant 

technology expense. Over two-thirds of 

Exchange staff are technology-related 

employees. The majority of the 

Exchange’s expense is technologybased. As described above, the 

Exchange has only four primary sources 


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42The Exchange’s projections included 9 firms or 

their affiliates purchasing Full Service MEI Ports. 

Of those firms, the Exchange projects that 6 firms 

will achieve the highest tier in the MEI Port fee 

table, 2 firms will achieve the lowest tier in the MEI 

Port fee table, and 1 firm will achieve the middle 

tier in the MEI Port fee table. 

43This $10.2 million revenue projection includes 

revenue from all connectivity sources, including all 

10Gb ULL connections discussed above (after giving 

effect to the recent cancellation), two 1Gb 

connections (the Exchange is not increasing fees for 

1Gb connections, however, those connections are 

included in total connectivity revenue in order to 

have a true comparison between all connectivity 

revenue and all connectivity expense), and all port 

types discussed above (after giving effect to the 

recent cancellation). 

44See https://www.miaxoptions.com/exchangemembers/emerald. 

of fees in to recover its costs, thus the 

Exchange believes it is reasonable to 

allocate a material portion of its total 

overall expense towards the Proposed 

Access Fees. 

The Exchange’s monthly projected 

revenue for the Proposed Access Fees is 

based on the following projected 

purchases by Members and nonMembers, which is based on a recent 

billing cycle: (i) 63 10Gb ULL 

connections; (ii) 14 CTD Ports; (iii) 8 

FXD Ports; (iv) 113 FIX Ports; (v) 352 

Limited Service MEI Ports; (vi) 37 Full 

Service MEI Ports; 42 and (vii) 10 Purge 

Ports. As described above, the fee 

charged to each Market Maker for MEI 

Ports can vary from month to month 

depending on the number of classes in 

which the Market Maker was assigned 

to quote on any given day within the 

calendar month, and upon certain class 

volume percentages. The Exchange also 

provides a further discount for a Market 

Maker’s MEI Port fees if the Market 

Maker’s total monthly executed volume 

during the relevant month is less than 

0.025% of the total monthly executed 

volume reported by OCC in the 

customer account type for MIAX 

Emerald-listed option classes for that 

month. The Exchange has at least one 

Member consistently quoting in the 

highest tier for MEI Port fees, but 

receiving this discount, resulting in 

lower revenue for the Exchange. 

Further, the projected revenue from FIX 

Port fees is subject to change from 

month to month depending on the 

number of FIX Ports purchased. 

Accordingly, based on current 

assumptions and approximations, the 

Exchange projects total monthly Port 

revenue of approximately $251,600 and 

total 10Gb ULL connectivity revenue of 

approximately $630,000. The Exchange 

notes that the port revenue projections 

are subject to change depending on the 

number of classes that Market Makers 

are quoting in and the tiers achieved. As 

such, the projection of $251,600 per 

month is not a static number and 

fluctuates month to month. Further, as 

noted above, one Member recently 

dropped its connections and ports as a 

direct result of the introduction of the 

Proposed Access Fees. Accordingly, 

reflecting that cancellation, which took 

effect following the recent billing cycle, 

the Exchange projects annualized 

revenue of $10.2 million from all 

connectivity alternatives and port 

types.43

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, on a going-forward, fullyannualized basis, the Exchange projects 

that its annualized revenue for 

providing the services associated with 

the Proposed Access Fees would be 

approximately $10.2 million per annum, 

based on a recent billing cycle. The 

Exchange projects that its annualized 

expense for providing the services 

associated with the Proposed Access 

Fees would be approximately $9.3 

million 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 

make only a 9% profit margin on the 

Proposed Access Fees ($10.2 

million¥$9.3 million = $900,000 per 

annum). This profit margin does not 

take into account the cost of the CapEx 

the Exchange is projected to spend in 

2020 of $1.85 million, or the amounts 

the Exchange is projected to spend each 

year on CapEx going forward. 

For the avoidance of doubt, none of 

the expenses included herein relating to 

the services associated with the 

Proposed Access Fees relate to the 

provision of any other services offered 

by MIAX Emerald. Stated differently, no 

expense amount of the Exchange is 

allocated twice. The Exchange notes 

that, with respect to the MIAX Emerald 

expenses included herein, those 

expenses only cover the MIAX Emerald 

market; expenses associated with the 

Exchange’s affiliate exchanges, MIAX 

and MIAX PEARL, are accounted for 

separately and are not included within 

the scope of this filing. Stated 

differently, no expense amount of the 

Exchange is also allocated to MIAX or 

MIAX PEARL. 

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. 

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 Proposed Access Fees 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. 

The Proposed Access Fees are intended 

to recover the Exchange’s costs of 

operating and supporting the network. 

Accordingly, the Exchange believes that 

the Proposed Access Fee Increases are 

fair and reasonable because they do not 

result in excessive pricing or supracompetitive profit, when comparing the 

actual network operation and support 

costs to the Exchange versus the 

projected annual revenue from the 

Proposed Access Fees, including the 

increased amount. 

The Exchange also points out that it 

is not seeking to recoup any of its past 

costs associated with the provision of 

any Ports during the Waiver Period. The 

Exchange currently has 35 Members,44

all of whom did not pay Port fees during 

the Waiver Period from the time these 

firms all became Members of the 

Exchange. Further, the majority of firms 

that are Members of the Exchange’s 

affiliate options exchanges, MIAX and 

MIAX PEARL, also became Members of 

those exchanges during similar Waiver 

Periods for the MIAX and MIAX PEARL 

Port fees. Accordingly, the Exchange 

(and MIAX and MIAX PEARL) have 

assumed approximately 100% of the 

costs associated with providing Ports for 

the majority of Member firms of the 

Exchange, MIAX, and MIAX PEARL 

during their respective Waiver Periods. 

Accordingly, the Exchange believes that 

it is reasonable, equitable, and not 

unfairly discriminatory to now adopt 

Port fees that are reasonably related to 

(and designed to recover) the 


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45See supra note 33. 

46 15 U.S.C. 78s(b)(3)(A)(ii). 

47 17 CFR 240.19b–4(f)(2). 48 17 CFR 200.30–3(a)(12). 

Exchange’s cost associated with the 

provision of such Ports. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would place 

certain market participants at the 

Exchange at a relative disadvantage 

compared to other market participants 

or affect the ability of such market 

participants to compete. 

Intra-Market Competition 

The Exchange believes that the 

Proposed Access Fees do not place 

certain market participants at a relative 

disadvantage to other market 

participants because the Proposed 

Access 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 Access Fees reflects the 

network resources consumed by the 

various size of market participants— 

lowest bandwidth consuming members 

pay the least, and highest bandwidth 

consuming members pays the most, 

particularly since higher bandwidth 

consumption translates to higher costs 

to the Exchange. 

Inter-Market Competition 

The Exchange believes the Proposed 

Access Fees do not place an undue 

burden on competition on other SROs 

that is not necessary or appropriate. In 

particular, options market participants 

are not forced to connect to (and 

purchase market data from) all options 

exchanges. The Exchange had one of its 

member firms cancel its membership 

with the Exchange as a direct result of 

the Proposed Access Fees. The 

Exchange also notes that it has far less 

Members as compared to the much 

greater number of members at other 

options exchanges. Not only does MIAX 

Emerald have less than half the number 

of members as certain other options 

exchanges, but there are also a number 

of the Exchange’s Members that do not 

connect directly to MIAX Emerald. 

There are a number of large market 

makers and broker-dealers that are 

members of other options exchange but 

not Members of MIAX Emerald. The 

Exchange is also unaware of any 

assertion that its existing fee levels or 

the Proposed Access Fees would 

somehow unduly impair its competition 

with other options exchanges. To the 

contrary, if the fees charged are deemed 

too high by market participants, they 

can simply disconnect, as described 

above. 

The Exchange operates in a highly 

competitive market in which market 

participants can readily favor one of the 

15 competing options venues if they 

deem fee levels at a particular venue to 

be excessive. Based on publiclyavailable information, and excluding 

index-based options, no single exchange 

has more than 16% market share. 

Therefore, no exchange possesses 

significant pricing power in the 

execution of multiply-listed equity and 

ETF options order flow. For the month 

of December 2020, the Exchange had a 

market share of approximately 3.58% of 

executed multiply-listed equity 

options 45 and the Exchange believes 

that the ever-shifting market share 

among exchanges from month to month 

demonstrates that market participants 

can discontinue or reduce use of certain 

categories of products, or shift order 

flow, in response to fee changes. In such 

an environment, the Exchange must 

continually adjust its fees and fee 

waivers to remain competitive with 

other exchanges and to attract order 

flow to the Exchange. 

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,46 and Rule 

19b–4(f)(2) 47 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

EMERALD–2021–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–EMERALD–2021–02. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–EMERALD–2021–02 and 

should be submitted on or before 

February 26, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.48

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02404 Filed 2–4–21; 8:45 am] 

BILLING CODE 8011–01–P 


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