9096 Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Notices 

17 15 U.S.C. 78f(b)(8). 

18See Securities Exchange Act Release No. 79318 

(November 15, 2016), 81 FR 84696, 84697 

(November 23, 2016). 19 15 U.S.C. 78s(b)(2)(B). 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

public interest, and Section 6(b)(8) of 

the Act 17 which requires that the 

Exchange’s rules not impose any burden 

on competition that is not necessary or 

appropriate. 

IEX believes that this proposal is 

consistent with the Act because it is 

consistent with, and implements, the 

Allocation Exemption, and is designed 

to assist the Exchange and its Industry 

Members in meeting regulatory 

obligations pursuant to the Plan. In 

approving the Plan, the SEC noted that 

the Plan ‘‘is necessary and appropriate 

in the public interest, for the protection 

of investors and the maintenance of fair 

and orderly markets, to remove 

impediments to, and perfect the 

mechanism of a national market system, 

or is otherwise in furtherance of the 

purposes of the Act.’’ 18 To the extent 

that this proposal implements the Plan, 

and applies specific requirements to 

Industry Members, the Exchange 

believes that this proposal furthers the 

objectives of the Plan, as identified by 

the SEC, and is therefore consistent with 

the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

IEX does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange notes that the proposed rule 

change is consistent with the Allocation 

Exemption, and is designed to assist the 

Exchange in meeting its regulatory 

obligations pursuant to the Plan. The 

Exchange also notes that the proposed 

rule change will apply equally to all 

Industry Members. In addition, all 

national securities exchanges and 

FINRA are proposing this amendment to 

their Compliance Rules. Therefore, this 

is not a competitive rule filing and does 

not impose a burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act and Rule 19b– 

4(f)(6) 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 

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

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

IEX–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–IEX–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–IEX–2021–02, and should 

be submitted on or before March 4, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02778 Filed 2–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91073; File No. SR– 

PEARL–2021–02] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX 

PEARL Equities Fee Schedule To 

Adopt Connectivity Fees, Port Fees, a 

Technical Support Request Fee, and a 

Historical Market Data Fee 

February 5, 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 

29, 2021, MIAX PEARL, LLC (‘‘MIAX 

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

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I, II, and III below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX PEARL Equities Fee 

Schedule (the ‘‘Fee Schedule’’) by 

adopting fees applicable to participants 


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Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Notices 9097 

3See Exchange Rule 1901. The Exchange notes 

that it submitted a separate filing with the 

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

Act to establish the Fee Schedule and adopt 

transaction fees. See Securities Exchange Act 

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

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

4See Securities Exchange Act Release No. 89563 

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

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

Proposed Rule Change, as Modified by Amendment 

No. 1, To Establish Rules Governing the Trading of 

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

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

authorized by the Exchange to transact business on 

MIAX PEARL Equities. See Exchange Rule 1901. 

6The Exchange initially filed the proposed fee 

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

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

Rule Change’’). 

7See Securities Exchange Act Release No. 90186 

(October 14, 2020), 85 FR 66656 (October 20, 2020). 8See id. 

9See letter from Chris Solgan, VP, Senior 

Counsel, the Exchange, dated November 20, 2020, 

notifying the Commission that the Exchange would 

withdraw SR–PEARL–2020–19. 10See Securities Exchange Act Release No. 90651 

(December 11, 2020), 85 FR 81971 (December 17, 

2020). 

11See letter from Joseph W. Ferraro, SVP, Deputy 

General Counsel, the Exchange, dated January 15, 

2021, notifying the Commission that the Exchange 

would withdraw SR–PEARL–2020–33. 

12 In this filing, the Exchange also corrects an 

error in the earlier filings by replacing references to 

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

Ports.’’ 

13See Cboe BZX Exchange, Inc. Fee Schedule, 

Definitions section; Cboe BYX Exchange, Inc., 

Definitions section; Cboe EDGA Exchange, Inc., 

Definitions section; Cboe EDGX Exchange, Inc., 

Definitions section. 

14See the Options Fee Schedule available at 

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

fee_schedule-files/MIAX_PEARL_Fee_Schedule_

11052020.pdf. 

trading equity securities on and/or using 

services provided by MIAX PEARL 

Equities.3

The text of the proposed rule change 

is available on the Exchange’s website at 

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

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On August 14, 2020, the Commission 

approved the Exchange’s proposal to 

adopt rules governing the trading of 

equity securities, referred to as MIAX 

PEARL Equities.4 The Exchange 

launched MIAX PEARL Equities on 

September 25, 2020. The Exchange 

proposes to adopt a Definitions section 

in the Fee Schedule, as well as the 

following fees: (1) Connectivity fees for 

Equity Members 5 and non-Members; (2) 

Port fees (together with the proposed 

connectivity fees, the ‘‘Proposed Access 

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

fee; and (4) a fee for Historical Market 

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

The Exchange initially filed the 

proposal on September 24, 2020.6 The 

Exchange withdrew the First Proposed 

Rule Change on October 5, 2020 and 

submitted SR–PEARL–2020–19 

(‘‘Second Proposed Rule Change’’).7 The 

Second Proposed Rule Change was 

published for comment in the Federal 

Register on October 20, 2020 8 and no 

comment letters were received. The 

Exchange withdrew the Second 

Proposed Rule Change 9 and submitted 

SR–PEARL–2020–33 (‘‘Third Proposed 

Rule Change’’).10 The Third Proposed 

Rule Change was published in the 

Federal Register on December 17, 2020 

and no comment letters were received. 

The Exchange withdrew the Third 

Proposed Rule Change 11 and now 

replaces it with this filing to provide 

further clarification regarding the 

Exchange’s cost justification analysis for 

the Proposed Fees.12

The Exchange believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee increase meets the 

requirements of the Act that fees be 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

members and markets. The Exchange 

believes this high standard is especially 

important when an exchange imposes 

various access fees on market 

participants to access an exchange’s 

marketplace, as well as other nontransaction fees. MIAX PEARL deems 

Port fees and Connectivity fees to be 

access fees, and that Ports and 

Connectivity are inextricably linked 

components of the Exchange’s 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. 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 the Proposed Fees are 

based on its costs to provide the services 

associated with the Proposed Fees and 

reasonable business needs. Accordingly, 

the Exchange believes the Proposed 

Fees, in general, and the Proposed 

Access Fees, in particular, will allow 

the Exchange to offset a portion of the 

expenses the Exchange has and will 

incur, and that the Exchange has 

provided sufficient transparency (as 

described below) into how the Exchange 

determined to charge such fees. 

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. 

Definitions 

The Exchange proposes to include a 

Definitions section at the beginning of 

the Fee Schedule, before the General 

Notes section. The purpose of the 

Definitions section is to provide market 

participants greater clarity and 

transparency regarding the applicability 

of fees and rebates by defining terms 

used within the Fee Schedule in a single 

location. The Exchange notes that other 

equities exchanges include Definitions 

sections in their respective fee 

schedules,13 and the Exchange believes 

that including a Definitions section in 

the front of the Fee Schedule makes the 

Fee Schedule more user-friendly and 

makes the Fee Schedule more 

comprehensive. 

Unless included in the Definition 

section, capitalized terms used in the 

Fee Schedule are defined in the MIAX 

PEARL Equities Rules. Each of the 

definitions proposed to be included in 

the Fee Schedule are based on 

definitions included in the existing 

MIAX PEARL fee schedule applicable to 

options (‘‘Options Fee Schedule’’) 14 or 

those of another exchange. In particular, 

the Exchange propose to offer and 

define ports and interfaces that provide 

connectivity to MIAX PEARL Equities. 

The Exchange notes that each of these 

offerings are not novel or unique, are 

available on other equity exchanges, and 

are currently offered by the Exchange 

for options trading and provided for in 


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9098 Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Notices 

the Exchange’s Options Fee Schedule. 

The Exchange proposes to define the 

following terms in the Fee Schedule: 

• ‘‘Cross-connect’’ occurs when the 

affected third-party system is sited at 

the same data center where MIAX 

PEARL Equities systems are sited, and 

the third-party connects to MIAX 

PEARL Equities through the data center, 

rather than connecting directly to MIAX 

PEARL Equities outside of the data 

center. 

• ‘‘Exchange System Disruption’’ 

means an outage of a Matching Engine 

or collective Matching Engines for a 

period of two consecutive hours or 

more, during trading hours. 

• ‘‘Extranet Provider’’ means a 

technology provider that connects with 

MIAX PEARL Equities systems and in 

turn provides such connectivity to 

MIAX PEARL Equities participants that 

do not connect directly with MIAX 

PEARL Equities. 

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

of FXD Port that sends all order 

activities other than reject message, 

including Execution Reports and Trade 

Cancel/Correct messages. FIX Order by 

Order is currently offered by the 

Exchange for options trading and 

provided for in the Exchange’s Options 

Fee Schedule. 

• ‘‘FIX Order Interface’’ or ‘‘FOI’’ 

means the Financial Information 

Exchange interface for certain order 

types as set forth in Exchange Rule 

2614. FOI is currently offered by the 

Exchange for options trading and 

provided for in the Exchange’s Options 

Fee Schedule. 

• ‘‘FIX Port’’ means a FIX port that 

allows Equity Members to send orders 

and other messages using the FIX 

protocol. FIX is currently offered by the 

Exchange for options trading and 

provided for in the Exchange’s Options 

Fee Schedule. 

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

an MEO port that supports all MEO 

order input message types. FSP is 

currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

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

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

FOI orders. MIAX PEARL Equities offers 

two types of FXD ports: (1) Standard 

FIX Drop; and (2) FIX Order by Order 

Drop. FXD Ports may be used by 

Equities Market Makers, Order Entry 

Firms and clearing firms. FXD is 

currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

• ‘‘MENI’’ means the MIAX Express 

Network Interconnect, which is a 

network infrastructure which provides 

Equity Members and non-Members 

network connectivity to the trading 

platforms, market data systems, test 

systems, and disaster recovery facilities 

of the Exchange. The MENI consists of 

the low latency and ultra-low latency 

(‘‘ULL’’) connectivity options set forth 

in the Exchange’s Fee Schedule. MENI 

is currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

• ‘‘MEO Interface’’ or ‘‘MEO’’ means 

a binary order interface for certain order 

types as set forth in Rule 516 into the 

MIAX PEARL System. See Exchange 

Rule 100. 

• ‘‘Service Bureau’’ means a 

technology provider that offers and 

supplies technology and technology 

services to a trading firm that does not 

have its own proprietary system. 

• ‘‘Standard FIX Drop’’ means an 

FXD Port that only sends trade 

information, including Execution 

Reports and Trade Cancel/Correct 

messages. Standard FIX Drop is 

currently offered by the Exchange for 

options trading and provided for in the 

Exchange’s Options Fee Schedule. 

• ‘‘Third Party Vendor’’ means a 

subscriber of MIAX PEARL Equities’ 

market and other data feeds, which they 

in turn use for redistribution purposes. 

• ‘‘Waiver Period’’ means, for each 

applicable fee, the period of time from 

the initial effective date of the MIAX 

PEARL Equities Fee Schedule until such 

time that MIAX PEARL has an effective 

fee filing establishing the applicable fee. 

MIAX PEARL Equities will issue a 

Regulatory Circular announcing the 

establishment of an applicable fee that 

was subject to a Waiver Period at least 

fifteen (15) days prior to the termination 

of the Waiver Period and effective date 

of any such applicable fee. 

Proposed Access Fees 

To provide market participants with a 

better understanding of how the 

Exchange has established the levels of 

the Proposed Access Fees, the Exchange 

is providing information in this 

proposal regarding the costs incurred by 

the Exchange to provide services 

associated with the Proposed Access 

Fees, including the Exchange’s cost 

allocation methodology (information 

that explains the Exchange’s rationale 

for determining that it was reasonable to 

allocate certain expenses described in 

this filing towards the total cost to the 

Exchange to provide the services 

associated with the Proposed Access 

Fees). The Exchange is also providing 

an analysis of its expected revenues and 

profitability for the services associated 

with the Proposed Access Fees. 

In order to determine the Exchange’s 

costs for providing the services 

associated with the Proposed Access 

Fees, the Exchange conducted an 

extensive review in which the Exchange 

analyzed every expense item in the 

Exchange’s general expense ledger to 

determine whether each such expense 

relates to the services associated with 

the Proposed Access Fees, and, if such 

expense did so relate, what portion (or 

percentage) of such expense actually 

supports those services. The sum of all 

such portions of expenses represents the 

total cost of the Exchange to provide the 

services associated with the Proposed 

Access Fees. For the avoidance of doubt, 

no expense amount was allocated twice. 

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. 

Since MIAX PEARL Equities did not 

exist in 2019 (operations only just 

launched on September 25, 2020), the 

Exchange’s most recent publicly 

available financial statement (2019 

Audited Unconsolidated Financial 

Statement) is not an accurate reflection 

of the total annual costs associated with 

the development and operation of MIAX 

PEARL Equities. Accordingly, the 

Exchange believes it is more appropriate 

to justify its fees using cost figures that 

are isolated specifically for MIAX 

PEARL Equities on an annualized basis, 

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, 

uncertainty relating to the timing of the 

expiration of certain fee waivers, 

uncertainty relating to the actual fee 

amounts to be established upon 

expiration of said fee waivers, market 

participant consolidation, etc. 

Additionally, the Exchange similarly 

does not factor into its analysis future 

cost growth or decline. The purpose of 

presenting it in this manner is to 

provide greater transparency into the 

Exchange’s actual and expected 

revenues, costs, and profitability 

associated with providing the services 


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Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Notices 9099 

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

Financial Information Exchange interface for certain 

order types as set forth in Exchange Rule 2614. See 

the Definitions section of the Fee Schedule. 

16Each MEO interface will have one Full Service 

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

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

all MEO order input message types. See the 

Definitions section of the Fee Schedule. Purge Ports 

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

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

only sends trade information, including Execution 

Reports and Trade Cancel/Correct messages. See the 

Definitions section of the Fee Schedule. 

18 ‘‘FIX Order by Order’’ means a type of FXD Port 

that sends all order activities other than reject 

message, including Execution Reports and Trade 

Cancel/Correct messages. See the Definitions 

section of the Fee Schedule. 

19The term ‘‘Equities Market Maker’’ shall mean 

an Equity Member that acts as a Market Maker in 

equity securities, pursuant to Chapter XXVI. See 

Exchange Rule 1901. 

20The term ‘‘Equities Order Entry Firm’’, ‘‘Order 

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

Members representing orders as agent on MIAX 

PEARL Equities and those non-Equity Market 

Maker Members conducting proprietary trading. See 

Exchange Rule 1901. 

associated with the Proposed Access 

Fees. Based on this analysis, the 

Exchange believes that the Proposed 

Access Fees are fair and reasonable 

because they will permit recovery of 

less than all of the Exchange’s costs for 

providing the services associated with 

the Proposed Access Fees and will not 

result in excessive pricing or supracompetitive profit when comparing the 

Exchange’s total annual expense 

associated with providing the services 

associated with the Proposed Access 

Fees versus the total projected annual 

revenue the Exchange will collect for 

providing those services. 

Connectivity Fees 

Specifically, proposed Sections (2a) 

and (b) of the Fee Schedule describe 

network connectivity fees for the 1 

Gigabit (‘‘Gb’’) ultra-low latency 

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

ULL fiber connection, which are to be 

charged to both Equity Members and 

non-Members of MIAX PEARL Equities 

for connectivity to the Exchange’s 

primary/secondary facility. The 

Exchange also proposes to adopt 

network connectivity fees for the 1 Gb 

ULL and 10 Gb ULL fiber connections 

for connectivity to the Exchange’s 

disaster recovery facility. 

The Exchange will offer to both 

Equity Members and non-Members 

various bandwidth alternatives for 

connectivity to MIAX PEARL Equities, 

to its primary and secondary facilities, 

which consists of a 1 Gb ULL fiber 

connection and a 10 Gb ULL fiber 

connection. The Exchange also offers to 

both Equity Members and non-Members 

various bandwidth alternatives for 

connectivity to the disaster recovery 

facility of MIAX PEARL Equities, which 

consists of a 1 Gb ULL fiber connection 

and a 10 Gb ULL connection. 

The Exchange proposes to establish 

the monthly network connectivity fees 

for such connections for both Equity 

Members and non-Members. The 

Exchange proposes to adopt the 

following fees for connectivity to MIAX 

PEARL Equities’ primary/secondary 

facility for both Equity Members and 

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

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

10 Gb ULL connection. The Exchange 

proposes to adopt the following fees for 

connectivity to MIAX PEARL Equities’ 

disaster recovery facility for both Equity 

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

for the 1 Gb ULL connection; and (b) 

$3,000 for the 10 Gb ULL connection. 

Monthly network connectivity fees for 

Equity Members and non-Members for 

connectivity with the primary/ 

secondary facility will be assessed in 

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

the MIAX PEARL Equities Application 

Programming Interfaces (‘‘APIs’’) or 

market data feeds in the production 

environment and will be pro-rated when 

an Equity Member or non-Member 

makes a change to the connectivity (by 

adding or deleting connections) with 

such pro-rated fees based on the number 

of trading days that the Equity Member 

or non-Member has been credentialed to 

utilize any of the MIAX PEARL Equities’ 

APIs or market data feeds in the 

production environment through such 

connection, divided by the total number 

of trading days in such month 

multiplied by the applicable monthly 

rate. Monthly network connectivity fees 

for Equity Members and non-Members 

for connectivity to the Disaster Recovery 

Facility will be assessed in each month 

during which the Equity Member or 

non-Member has established 

connectivity to the Disaster Recovery 

Facility. 

Proposed Section (2)(c) of the Fee 

Schedule, Pass-Through of External 

Connectivity Fees, provides for the pass 

through of external connectivity fees 

(described below) to Equity Members 

and non-Members that establish 

connections with MIAX PEARL Equities 

through a third-party. Fees assessed to 

MIAX PEARL Equities by third-party 

external vendors on behalf of an Equity 

Member or non-Member connecting to 

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

Equity Member or non-Member. The 

external connectivity fees passed 

through can include one-time set-up 

fees, monthly charges, and other fees 

charged to MIAX PEARL Equities by a 

third-party for the benefit of an Equity 

Member or non-Member. 

Port Fees 

Proposed Section (2)(d), Port Fees, of 

the Fee Schedule describes fees for 

access and services used by Equity 

Members and non-Members. MIAX 

PEARL Equities provides three Port 

types: (i) The Financial Information 

Exchange Port (‘‘FIX Port’’), which 

allows Equity Members to send orders 

and other messages using the FIX 

protocol; 15 (ii) the MIAX Express 

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

allows Equity Members order entry 

capabilities to all MIAX PEARL Equities 

Matching Engines; 16 and (iii) the FIX 

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

real-time order activities firms’ MEO 

and FOI orders. MIAX PEARL Equities 

offers two types of FXD ports: (1) 

Standard FIX Drop; 17 and (2) FIX Order 

by Order.18 FXD Ports may be used by 

Equities Market Makers,19 Order Entry 

Firms 20 and clearing firms. 

The Exchange proposes to assess 

monthly Port fees to Equity Members in 

each month the Equity Member is 

credentialed to use a Port in the 

production environment. MIAX PEARL 

Equities has primary and secondary data 

centers and a disaster recovery center. 

Each Port provides access to all 

Exchange data centers for a single fee. 

The Exchange notes that, unless 

otherwise specifically set forth in the 

Fee Schedule, the Port fees include the 

information communicated through the 

Port. That is, unless otherwise 

specifically set forth in the Fee 

Schedule, there is no additional charge 

for the information that is 

communicated through the Port apart 

from what the user is assessed for each 

Port. The Exchange proposes to assess 

Port Fees for FIX Ports, MEO Ports, and 

FXD Ports as set forth in the following 

table: 

Type of port Monthly port fees 

includes connectivity to the primary, secondary and disaster recovery data centers 

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

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


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21Purge Ports are described in Exchange Rule 

2618(a)(7)(b). 

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

fee, the period of time from the initial effective date 

of the MIAX PEARL Equities Fee Schedule until 

such time that MIAX PEARL has an effective fee 

filing establishing the applicable fee. MIAX PEARL 

Equities will issue a Regulatory Circular 

announcing the establishment of an applicable fee 

that was subject to a Waiver Period at least fifteen 

(15) days prior to the termination of the Waiver 

Period and effective date of any such applicable fee. 

See the Definitions section of the Fee Schedule. 

23See MIAX Fee Schedule, Section (5)(f), Member 

and non-Member Technical Support Request Fee; 

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

and non-Member Technical Support Request Fee; 

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

Member and non-Member Technical Support 

Request Fee. 24See Fee Schedule, Section (3)(c). 

Type of port Monthly port fees 

includes connectivity to the primary, secondary and disaster recovery data centers 

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

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

26th–50th $450. 

51st–75th $400. 

76th–100th $350. 

101st or more $300. 

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

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

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

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

26th–50th $450. 

51st–75th $400. 

76th–100th $350. 

101st or more $300. 

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

∧Each port will have access to all Matching Engines. 

* The rates set forth above for MEO Ports entitle an Equity Member to one (1) FSP and one (1) Purge Port 21 for all Matching Engines for a 

single port fee. 

• MEO and FIX Portsare counted 

separately for the tiers in the table. 

The Exchange proposes to waive the 

fee for the 1st through the 25th FIX 

Ports and MEO Ports that Equity 

Members are credentialed to use, as well 

as the fees for all FXD Ports, for the 

Waiver Period.22 For all Port fees that 

the Exchange initially proposes to be 

subject to the Waiver Period, the 

Exchange will submit a rule filing to the 

Commission to establish the fee amount 

and any related requirements, and 

provide notice to terminate the 

applicable Waiver Period. Even though 

most of the Port fees are waived during 

the Waiver Period, the Exchange 

believes that is appropriate to provide 

market participants with the overall 

structure of the fee by outlining the 

structure on the Fee Schedule without 

setting forth a specific fee amount in 

certain areas, so that there is general 

awareness that the Exchange intends to 

assess such a fee in the future, should 

the Waiver Period terminate and the 

Exchange establish an applicable fee. 

Equity Member and Non-Member 

Technical Support Request Fee 

Proposed Section (2)(e), Member and 

Non-Member Technical Support 

Request Fee, of the Fee Schedule 

describes the technical support request 

fee to be charged to both Equity 

Members and non-Members that request 

technical support at any of the MIAX 

PEARL Equities data centers. MIAX 

PEARL Equities proposes to charge a fee 

of $200 per hour for requested technical 

support. The Exchange intends to 

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

support as a convenience to the Equity 

Members and non-Members to test or 

otherwise assess their connectivity to 

the Exchange. Currently, the Exchange 

charges the same fee amount for the 

same services for options trading, as 

well as at its affiliate option exchanges, 

Miami International Securities 

Exchange, LLC (‘‘MIAX’’) and MIAX 

Emerald, LLC (‘‘MIAX Emerald’’).23

Market Data Fees 

Proposed Sections (3)(a)–(c) describe 

the fee to be charged for the Exchange’s 

proprietary market data products. MIAX 

PEARL Equities intends to offer the 

following three proprietary market data 

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

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

and (c) the Historical Market Data feed. 

The ToM feed is a data feed that 

contains the price and aggregate size of 

displayed top of book quotations, order 

execution information, and 

administrative messages for orders 

entered on MIAX PEARL Equities. The 

DoM feed is a data feed that contains the 

displayed price and size of each order 

entered on MIAX PEARL Equities, as 

well as order execution information, 

order cancellations, order modifications, 

order identification numbers, and 

administrative messages. 

The Exchange proposes to provide 

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

Fee Schedule that the ToM and DoM 

would be offered free of charge during 

the Waiver Period. Even though the fees 

for the ToM and DoM data feeds are 

waived during the Waiver Period, the 

Exchange believes that is appropriate to 

provide market participants with notice 

of these feeds on the Fee Schedule 

without setting forth a specific fee 

amount, so that there is general 

awareness that the Exchange intends to 

assess such a fee in the future, should 

the Waiver Period terminate and the 

Exchange establish an applicable fee. 

The Exchange will also offer 

Historical Data for MIAX PEARL 

Equities, which is a data product that 

offers historical market data for orders 

entered on MIAX PEARL Equities upon 

request. The Exchange proposes to 

charge a fee for the Historical Data, 

which will be based on the cost 

incurred by the Exchange in providing 

that data. Proposed Section (3)(c) of the 

Fee Schedule describes the fee to be 

charged market participants that request 

Historical Data from MIAX PEARL 

Equities. Historical Data is intended to 

aid market participants in analyzing 

trade and volume data, evaluating 

historical trends in the trading activity 

of a particular security, and enabling 

those market participants to test trading 

models and analytical strategies. 

Specifically, Historical Data includes all 

data that is captured and disseminated 

on ToM and DoM feeds and is available 

on a T+1 basis.24

The Exchange will only assess the fee 

for Historical Data on a user (whether 

Equity Member or non-Member) that 

specifically requests such Historical 

Data. Historical Data will be uploaded 


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

26 15 U.S.C. 78f(b)(4). 

27 15 U.S.C. 78f(b)(5). 

28See 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). 

29See 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’’). 

30See Letter from Stefano Durdic, R2G, to 

Vanessa Countryman, Acting Secretary, 

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

Letter’’). 

31See id. 

onto an Exchange-provided device, 

which the Exchange will incur a cost to 

procure and provide to those that 

request the data. 

The Exchange proposed to charge a 

flat fee of $500 per device requested. 

Each device shall have a maximum 

storage capacity of 8 terabytes. Users 

may request up to six months of 

Historical Data per device, subject to the 

device’s storage capacity. Historical 

Data will be made available beginning 

from the time of launch of MIAX PEARL 

Equities on September 25, 2020 (always 

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

recent six months of Historical Data 

shall be available for purchase from the 

request date. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 25

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 26 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 27 in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest and is 

not designed to permit unfair 

discrimination between customer, 

issuers, brokers and dealers. 

On March 29, 2019, the Commission 

issued its Order Disapproving Proposed 

Rule Changes to Amend the Fee 

Schedule on the BOX Market LLC 

Options Facility to Establish BOX 

Connectivity Fees for Participants and 

Non-Participants Who Connect to the 

BOX Network (the ‘‘BOX Order’’).28 On 

May 21, 2019, the Commission issued 

the Staff Guidance on SRO Rule Filings 

Relating to Fees.29

The Exchange believes that the 

Proposed Fees are consistent with the 

Act because they (i) are reasonable, 

equitably allocated, not unfairly 

discriminatory, and not an undue 

burden on competition; (ii) comply with 

the BOX Order and the Guidance; (iii) 

are supported by evidence (including 

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 (and 

its affiliates) to establish comparable 

access fees, including connectivity fees 

and port fees, for its options market. 

Accordingly, the Exchange believes that 

the Commission should find that the 

Proposed Fees are consistent with the 

Act. 

The Exchange is not aware of any 

reason why market participants could 

not simply drop their connections to an 

exchange (or not connect to an 

exchange) if an exchange were to 

establish prices for its non-transaction 

fees that, in the determination of such 

market participant, did not make 

business or economic sense for such 

market participant to connect to such 

exchange. No market participant is 

required by rule, regulation, or 

competitive forces to be a Member of the 

Exchange or MIAX PEARL Equities. As 

evidence of the fact that market 

participants can and do disconnect from 

exchanges based on non-transaction fee 

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

a comment letter after BOX’s proposed 

rule changes to increase its connectivity 

fees (SR–BOX–2018–24, SR–BOX– 

2018–37, and SR–BOX–2019–04).30 The 

R2G Letter stated, ‘‘[w]hen BOX 

instituted a $10,000/month price 

increase for connectivity; we had no 

choice but to terminate connectivity 

into them as well as terminate our 

market data relationship. The cost 

benefit analysis just didn’t make any 

sense for us at those new levels.’’ 31 As 

further evidence of the fact that market 

participants can and do disconnect from 

exchanges based on non-transaction fee 

pricing, a member of the Exchange’s 

affiliate, MIAX Emerald, recently 

discontinued the use of MIAX Emerald’s 

connectivity and port services as a 

result of MIAX Emerald increasing 

connectivity fees and establishing 

certain port 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 its proposal to 

include a Definitions section in the Fee 

Schedule promotes just and equitable 

principles of trade, removes 

impediments to and perfects the 

mechanism of a free and open market 

and a national market system, and, in 

general protects investors and the public 

interest and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers and dealers. 

The Exchange believes that the proposal 

to adopt a Definitions section in the 

beginning of the Fee Schedule will 

provide greater clarity to Equity 

Members, non-Members, market 

participants and the public regarding 

the Exchange’s fees and rebates, and it 

is in the public interest for the Fee 

Schedule to be transparent, 

comprehensive and user-friendly so as 

to eliminate the potential for confusion. 

The Exchange believes that its 

proposal is consistent with Section 

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

Access Fees will permit recovery (less 

than all) of the Exchange’s costs and 

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

Fees will allow the Exchange to recover 

a portion (less than all) of the costs 

incurred by the Exchange associated 

with providing and maintaining the 

necessary hardware and other 

infrastructure as well as network 

monitoring and support services in 

order to provide the services associated 

with the Proposed Access Fees. The 

Exchange believes that it is reasonable 

and appropriate to establish its fees 

charged for the services associated with 

the Proposed Access Fees at levels that 

will partially offset the costs to the 

Exchange associated with maintaining 

and enhancing a state-of-the-art 

exchange network infrastructure in the 

U.S. equities industry. 

The costs associated with building out 

and maintaining a state-of-the-art 

network infrastructure are extensive. 

This is due to several factors, including 

costs associated with maintaining and 

expanding a team of highly-skilled 

network engineers, fees charged by the 

Exchange’s third-party data center 

operator, costs associated with projects 

and initiatives designed to improve 

overall network performance and 

stability through the Exchange’s 

research and development (‘‘R&D’’) 

efforts, and costs associated with fullysupporting advances in infrastructure 

and expansion of network level services, 

including customer monitoring, alerting 

and reporting. The Exchange incurs 

significant technology expense related 

to establishing and maintaining 


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32The Exchange has not yet finalized its 2020 

year end results. 

33The Exchange notes that the total expense 

figures for each of the external and internal 

expenses described herein relate only to the 

Exchange’s equities market. No expense relating to 

the Exchange’s options market is included in this 

filing. 

Information Security services, enhanced 

network monitoring and customer 

reporting, as well as Regulation SCI 

mandated processes, associated with its 

network technology. While some of the 

expense is fixed, much of the expense 

is not fixed, and thus increases as the 

number of connections and ports 

increase. For example, new 1Gb ULL 

and 10Gb ULL connections require the 

purchase of additional hardware to 

support those connections as well as 

enhanced monitoring and reporting of 

customer performance that the 

Exchange and its affiliates provide. 

Further, 10Gb ULL connections require 

the purchase of specialized, more costly 

hardware. As the total number of all 

connections increase, the Exchange 

needs to increase its data center 

footprint and consume more power, 

resulting in increased costs charged by 

its third-party data center providers. 

Accordingly, the cost to the Exchange to 

provide access to its network and 

trading infrastructure is not entirely 

fixed. 

Further, because the costs of operating 

a data center are significant and not 

economically feasible for the Exchange, 

the Exchange does not operate its own 

data centers, and instead contracts with 

a third-party data center provider. The 

Exchange notes that larger, wellestablished exchange operators own/ 

operate their data centers, which offers 

them greater control over their data 

center costs. Because those exchanges 

own and operate their data centers as 

profit centers, the Exchange is subject to 

additional costs. Fees for the services 

associated with the Proposed Access 

Fees, which are charged for accessing 

the Exchange’s data center network 

infrastructure, are directly related to the 

network and offset such costs. 

Further, the Exchange invests 

significant resources in network R&D to 

continuously improve the overall 

performance and stability of its network. 

For example, the Exchange has a 

number of network monitoring tools 

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

from third-parties), that continually 

monitor, detect, and report network 

performance, many of which serve as 

significant value-adds to Equity 

Members and enable the Exchange to 

provide a high level of customer service. 

These tools detect and report 

performance issues, and thus enable the 

Exchange to proactively notify an Equity 

Member (and the SIPs) when the 

Exchange detects a problem with an 

Equity Member’s connectivity. In fact, 

the Exchange’s affiliate options 

exchanges, MIAX and MIAX Emerald, 

often receive inquiries from other 

industry participants regarding the 

status of networking issues outside of 

the Exchange’s own network 

environment that are impacting the 

industry as a whole via the SIPs, 

including inquiries from regulators, 

because the Exchange has a superior, 

state-of the-art network that, through its 

enhanced monitoring and reporting 

solutions, often detects and identifies 

industry-wide networking issues ahead 

of the SIPs. The Exchange also incurs 

costs associated with the maintenance 

and improvement of existing tools and 

the development of new tools. 

Also, routine R&D projects to improve 

the performance of the network’s 

hardware infrastructure result in 

additional cost. In sum, the costs 

associated with maintaining and 

enhancing a state-of-the-art exchange 

network in the U.S. equity securities 

industry is a significant expense for the 

Exchange that is projected to increase 

year-over-year, and thus the Exchange 

believes that it is reasonable to offset a 

portion of those costs through 

establishing the Proposed Access Fees, 

which are designed to recover those 

costs, as described herein. Overall, the 

Proposed Access Fees are projected to 

offset only a portion of the Exchange’s 

services associated with the Proposed 

Access Fees. The Exchange invests in 

and offers a superior network 

infrastructure as part of its overall 

exchange services offering, resulting in 

significant costs associated with 

maintaining this network infrastructure, 

which are directly tied to the amount of 

the Proposed Access Fees that must be 

charged to access it, in order to recover 

those costs. 

The Exchange 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 

alternatives allows Equity Members to 

conduct their different business 

strategies—some Equity Members put an 

emphasis on speed, while others 

emphasize other strategies, such as 

redundancy and certainty of execution. 

The Exchange does not require an 

Equity Member to have a certain 

framework for accessing the Exchange, 

but provides various connectivity and 

port alternatives for each Equity 

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 Equity 

Members, and consume varying 

capacity amounts of the network. For 

instance, MEO ports allow for a higher 

throughput and can handle much higher 

order rates than FIX ports. Equity 

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. 

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 the services associated with 

the Proposed Access Fees versus the 

total annual revenue of the Exchange 

projects to collect in connection with 

providing those services. For 2020,32 the 

total annual expense 33 for providing the 

services associated with the Proposed 

Access Fees for MIAX PEARL Equities 

is projected to be approximately $8.4 


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34The Exchange notes the that the below 

allocation percentages are the percentage of the 

total cost incurred by MIAX PEARL Equities and 

not costs related to operating the Exchange’s 

options trading platform. See also id. 

million. The $8.4 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. The $8.4 million 

in projected total annual expense is 

comprised of the following, all of which 

are directly related to the services 

associated with the Proposed Access 

Fees by MIAX PEARL Equities to its 

Equity Members and non-Members: (1) 

Third-party expense, relating to fees 

paid by MIAX PEARL Equities to thirdparties for certain products and services; 

and (2) internal expense, relating to the 

internal costs of MIAX PEARL Equities 

to provide the services associated with 

the Proposed Access Fees. The $8.4 

million in projected total annual 

expense is directly related to the 

services associated with the Proposed 

Access Fees and not any other product 

or service offered by the Exchange. It 

does not include general costs of 

operating matching systems and other 

trading technology, and no expense 

amount was allocated twice. 

As discussed, the Exchange 

conducted an extensive review in which 

the Exchange analyzed every expense 

item in the Exchange’s general expense 

ledger (this includes over 150 separate 

and distinct expense items) to 

determine whether each such expense 

relates to the services associated with 

the Proposed Access Fees, and, if such 

expense did so relate, what portion (or 

percentage) of such expense actually 

supports those services, and thus bears 

a relationship that is, ‘‘in nature and 

closeness,’’ directly related to those 

services. The sum of all such portions 

of expenses represents the total cost of 

the Exchange to provide the services 

associated with the Proposed Access 

Fees. 

For 2020, total actual and projected 

third-party expense, relating to fees paid 

by the Exchange to third-parties for 

certain products and services for the 

Exchange to be able to provide the 

services associated with the Proposed 

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

includes, but is not limited to, a portion 

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

center services, for the primary, 

secondary, and disaster recovery 

locations of the MIAX PEARL Equities 

trading system infrastructure; (2) Zayo 

Group Holdings, Inc. (‘‘Zayo’’) for 

connectivity services (fiber and 

bandwidth connectivity) linking MIAX 

PEARL Equities’ office locations in 

Princeton, New Jersey and Miami, 

Florida to all data center locations; (3) 

Secure Financial Transaction 

Infrastructure (‘‘SFTI’’), which supports 

connectivity and feeds for the entire 

equity securities industry; (4) various 

other services providers (including 

Thompson Reuters, NYSE, Nasdaq, 

Internap, and Options IT), which 

provide content, connectivity services, 

infrastructure services, and market data 

services; and (5) various other hardware 

and software providers (including Dell 

and Cisco, which support the 

production environment). 

For clarity, only a portion of all fees 

paid to such third-parties is included in 

the third-party expense herein (only the 

portions that actually support the 

services associated with the Proposed 

Access Fees), and no expense amount is 

allocated twice. Accordingly, the 

Exchange does not allocate its entire 

information technology and 

communication costs to the services 

associated with the Proposed Access 

Fees. 

The Exchange believes it is reasonable 

to allocate such third-party expense 

described above towards the total cost to 

the Exchange to operate and support the 

network, including providing the 

services associated with the Proposed 

Access Fees.34 In particular, the 

Exchange believes it is reasonable to 

allocate the identified portions of the 

Equinix expense because Equinix 

operates the data centers (primary, 

secondary, and disaster recovery) that 

host the Exchange’s network 

infrastructure, which enables the 

services associated with the Proposed 

Access Fees. This includes, among other 

things, the necessary storage space, 

which continues to expand and increase 

in cost, power to operate the network 

infrastructure, and cooling apparatuses 

to ensure the Exchange’s network 

infrastructure maintains stability. 

Without these services from Equinix, 

the Exchange would not be able to 

operate and support the network and 

provide the services associated with the 

Proposed Access Fees to Equity 

Members and non-Members and their 

customers. The Exchange did not 

allocate all of the Equinix expense 

toward the cost of providing the services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to operating and 

supporting the network, approximately 

73% of the total Equinix expense (68% 

allocated towards the cost of providing 

the provision of network connectivity 

and 5% allocated towards the cost of 

providing ports). The Exchange believes 

these allocations are reasonable because 

they represent the Exchange’s actual 

cost to 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 

Zayo expense because Zayo provides 

the internet, fiber and bandwidth 

connections with respect to the 

network, linking MIAX PEARL Equities 

with the Exchange’s affiliates, MIAX 

and MIAX Emerald, as well as the data 

center and disaster recovery locations. 

As such, all of the trade data flow 

through Zayo’s infrastructure over the 

Exchange’s network. Without these 

services from Zayo, the Exchange would 

not be able to operate and support the 

network and provide the services 

associated with the Proposed Access 

Fees to Equity Members and nonMembers and their customers. The 

Exchange did not allocate all of the 

Zayo expense toward the cost of 

providing the services associated with 

the Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 

providing the services associated with 

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 these allocations are 

reasonable because they represent 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, Internap, and 

Options IT) expense because those 

entities provide connectivity and feeds 

for the entire U.S. securities industry as 

well as the content, connectivity 

services, infrastructure services, and 

market data services for critical 

components of the network. Without 

these services from SFTI and various 

other service providers, the Exchange 

would not be able to operate and 

support the network and provide the 

services associated with the Proposed 

Access Fees to Equity Members and 

non-Members and their customers. The 

Exchange did not allocate all of the SFTI 


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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). The 

Exchange believes these allocations are 

reasonable because they represent 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 

other hardware and software provider 

expense because this includes costs for 

dedicated hardware licenses for 

switches and servers, as well as 

dedicated software licenses for security 

monitoring and reporting across the 

network. Without this hardware and 

software, the Exchange would not be 

able to operate and support the network 

and provide the services associated with 

the Proposed Access Fees to Equity 

Members and non-Members and their 

customers. The Exchange did not 

allocate all of the hardware and software 

provider expense toward the cost of 

providing the services associated with 

the Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 

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 these allocations are 

reasonable because they represent 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. 

For 2020, total projected internal 

expense, relating to the internal costs of 

the Exchange to provide the services 

associated with the Proposed Access 

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

includes, but is not limited to, costs 

associated with: (1) Employee 

compensation and benefits for full-time 

employees that support the services 

associated with the Proposed Access 

Fees, including staff in network 

operations, trading operations, 

development, system operations, 

business, etc., as well as staff in general 

corporate departments (such as legal, 

regulatory, and finance) that support 

those employees and functions; (2) 

depreciation and amortization of 

hardware and software used to provide 

the services associated with the 

Proposed Access Fees, including 

equipment, servers, cabling, purchased 

software and internally developed 

software used in the production 

environment to support those services 

for trading; and (3) occupancy costs for 

leased office space for staff that support 

the services associated with the 

Proposed Access Fees. The breakdown 

of these costs is more fully-described 

below. 

For clarity, only a portion of all such 

internal expenses are included in the 

internal expense herein (only the 

portions that support the services 

associated with the Proposed Access 

Fees), and no expense amount is 

allocated twice. Accordingly, the 

Exchange does not allocate its entire 

costs contained in those line items to 

the services associated with the 

Proposed Access Fees. 

The Exchange believes it is reasonable 

to allocate such internal expense 

described above towards the total cost to 

the Exchange to operate and support the 

network, including providing the 

services associated with the Proposed 

Access Fees. In particular, MIAX PEARL 

Equities’ employee compensation and 

benefits expense relating to providing 

the services associated with the 

Proposed Access Fees is projected to be 

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

the $13,492,708 total projected expense 

for employee compensation and 

benefits. The Exchange believes it is 

reasonable to allocate the identified 

portions of each expense because they 

include the time spent by employees of 

several departments, including 

Technology, Back Office, Systems 

Operations, Networking, Business 

Strategy Development (who create the 

business requirement documents that 

the Technology staff use to develop 

network features and enhancements), 

Trade Operations, Finance (who provide 

billing and accounting services), and 

Legal (who provide legal services, such 

as rule filings and various license 

agreements and other contracts). As part 

of the extensive cost review conducted 

by the Exchange, the Exchange reviewed 

the amount of time spent by each 

employee on matters relating to the 

operation and support of the network, 

including the services associated with 

the Proposed Access Fees. Without 

these employees, the Exchange would 

not be able to operate and support the 

network and provide the services 

associated with the Proposed Access 

Fees to Equity Members and nonMembers and their customers. The 

Exchange did not allocate all of the 

employee compensation and benefits 

expense toward the cost of providing 

the services associated with the 

Proposed Access Fees, only that portion 

which the Exchange identified as being 

specifically mapped to providing the 

services associated with Proposed 

Access Fees, approximately 32% of the 

total employee compensation and 

benefits expense (29% allocated 

towards the cost of providing the 

provision of network connectivity and 

3% allocated towards the cost of 

providing ports). The Exchange believes 

these allocations are reasonable because 

they represent the Exchange’s actual 

cost to provide the services associated 

with the Proposed Access Fees, and not 

any other service, as supported by its 

cost review. 

MIAX PEARL Equities’ depreciation 

and amortization expense relating to 

providing the services associated with 

the Proposed Access Fees is projected to 

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

of the $2,664,264 total projected 

expense for depreciation and 

amortization. The Exchange believes it 

is reasonable to allocate the identified 

portions of such projected expense 

because such expense includes the 

actual cost of the computer equipment, 

such as dedicated servers, computers, 

laptops, monitors, information security 

appliances and storage, and network 

switching infrastructure equipment, 

including switches and taps that were 

purchased to operate and support the 

network. Without this equipment, the 

Exchange would not be able to operate 

the network and provide the services 

associated with the Proposed Access 

Fees to Equity Members and nonMembers and their customers. The 

Exchange did not allocate all of the 

projected depreciation and amortization 

expense toward the cost of providing 

the services associated with the 

Proposed Access Fees, only the portions 

which the Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access Fees, approximately 80% of the 

total depreciation and amortization 

expense (76% allocated towards the cost 

of providing the provision of network 

connectivity and 4% allocated towards 

the cost of providing ports). The 

services associated with the Proposed 

Access Fees would not be possible 

without relying on such equipment. The 

Exchange believes these allocations are 

reasonable because they represent the 

Exchange’s actual cost to provide the 

services associated with the Proposed 


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Access Fees, and not any other service, 

as supported by its cost review. 

MIAX PEARL Equities’ occupancy 

expense relating to providing the 

services associated with the Proposed 

Access Fees is projected to be $456,780, 

which is only a portion of the $878,423 

total projected expense for occupancy. 

The Exchange believes it is reasonable 

to allocate the identified portions of 

such projected expense because such 

expense represents the portion of the 

Exchange’s cost to rent and maintain a 

physical location for the Exchange’s 

staff who operate and support the 

network, including providing the 

services associated with the Proposed 

Access Fees. These amounts consist 

primarily of rent for the Exchange’s 

Princeton, New Jersey office, as well as 

various related costs, such as physical 

security, property management fees, 

property taxes, and utilities. The 

Exchange operates its Network 

Operations Center (‘‘NOC’’) and 

Security Operations Center (‘‘SOC’’) 

from its Princeton, New Jersey office 

location. A centralized office space is 

required to house the staff that operates 

and supports the network. The 

Exchange currently has approximately 

150 employees (and continues to 

increase its headcount to support the 

network as the Exchange, and its 

affiliates, grow the network). 

Approximately two-thirds of the 

Exchange’s staff are in the Technology 

department, and the majority of those 

staff members have some role in the 

operation and performance of the 

network. Without this office space, the 

Exchange would not be able to operate 

and support the network and provide 

the services associated with the 

Proposed Access Fees to Equity 

Members and non-Members and their 

customers. Accordingly, the Exchange 

believes it is reasonable to allocate the 

identified portions of its occupancy 

expense because such amounts 

represent the Exchange’s actual cost to 

house the equipment and personnel 

who operate and support the Exchange’s 

network infrastructure for the services 

associated with the Proposed Access 

Fees. The Exchange did not allocate all 

of the projected occupancy expense 

toward the cost of providing the services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to providing the 

services associated with the Proposed 

Access, approximately 52% of the total 

occupancy expense (48% allocated 

towards the cost of providing the 

provision of network connectivity and 

4% allocated towards the cost of 

providing ports). The Exchange believes 

these allocations are reasonable because 

they represent the Exchange’s actual 

cost to 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 

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 revenue for 

the Proposed Access Fees is based on 

the following purchases by Equity 

Members and non-Members during a 

recent billing cycle: (i) 12 1Gb ULL 

connections; (ii) 81 10Gb ULL 

connections; and (iii) 103 MEO Ports. 

The monthly revenue from Port fees is 

subject to change from month to month 

depending on the number of Ports 

purchased. Accordingly, the Exchange’s 

total monthly Port revenue was $22,800 

and total 1 Gb and 10Gb ULL 

connectivity revenue was $295,500. The 

Exchange notes that the port revenue 

projections are subject to change 

depending on market participant needs 

and the tiers achieved. As such, the 

projection of $295,500 per month is not 

a static number and may fluctuate from 

month to month. 

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 $3,600,000 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 

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

a fully-annualized basis, the Exchange 

believes its total projected revenue for 

the providing the services associated 

with the Proposed Access Fees will not 

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

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

Proposed Access Fees ($3.6 million ¥ 

$8.4 million = ($4.8 million per 

annum)). 

For the avoidance of doubt, none of 

the expenses included herein relating to 

the services associated with the 

Proposed Access Fees relate to any other 

services offered by MIAX PEARL 

Equities. Stated differently, no expense 

amount of the Exchange is allocated 

twice. The Exchange notes that, with 

respect to MIAX PEARL Equities 

expenses included herein, those 

expenses only cover the MIAX PEARL 

Equities market; expenses associated 

with the Exchange’s options trading 

platform, its affiliate exchanges, MIAX 

and MIAX Emerald, 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 its options 

trading platform, MIAX or MIAX 

Emerald. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to allocate the respective 

percentages of each expense category 

described above towards the total cost to 

the Exchange of operating and 

supporting the network, including 

providing the services associated with 

the Proposed Access Fees, because the 

Exchange performed a line-by-line item 

analysis of all the expenses of the 

Exchange, and has determined the 

expenses that directly relate to 

operation and support of the network, 

including the services associated with 

the Proposed Access Fees. Further, the 

Exchange notes that, without the 

specific third-party and internal items 

listed above, the Exchange would not be 

able to operate and support the network, 

including the services associated with 

the Proposed Access Fees to Equity 

Members and non-Members and their 

customers. Each of these expense items, 

including physical hardware, software, 

employee compensation and benefits, 

occupancy costs, and the depreciation 

and amortization of equipment, have 

been identified through a line-by-line 

item analysis to be integral to the 

operation and support of the network. 

The Proposed Access Fees are intended 

to recover the Exchange’s costs (less 

than all) of operating and supporting the 

network, including providing the 

services associated with the Proposed 

Access Fees. 

Accordingly, the Proposed Access 

Fees are fair and reasonable because 


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35See Nasdaq, Phlx and ISE General Rules, 

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

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

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

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

the equivalent of the Exchange’s 10Gb ULL 

connection. 

36See NYSE American Fee Schedule, NYSE Arca 

Fee Schedule, NYSE Chicago Fee Schedule and 

NYSE National Fee Schedule, Co-Location Fees. 

NYSE American, NYSE Arca, NYSE Chicago and 

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

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

circuit, which is the equivalent of the Exchange’s 

10Gb ULL connection. 

37See Cboe EDGA Exchange, Inc. (‘‘EDGA’’) and 

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

Schedules, Physical Connectivity Fees, (charging a 

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

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

a 10Gb disaster recovery network access port). 

38See Nasdaq Fee Schedule, Equity Rules, Equity 

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

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

Equity 7, Pricing Schedule, Section 3 Nasdaq PSX 

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

Fee Schedule, Logical Port Fees (charging $550 per 

Logical Port per month and $650 per Purge port per 

month). 

39See, e.g., Cboe BZX Exchange, Inc. fee schedule 

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

membership/fee_schedule/bzx/. 

they do not result in excessive pricing 

or supra-competitive profit, when 

comparing the actual network operation 

and support costs to the Exchange 

versus the projected revenue for the 

services associated with the Proposed 

Access Fees. 

The Exchange notes that other 

equities exchanges have similar 

connectivity alternatives for their 

participants, including similar lowlatency connectivity. For example, the 

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

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

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

and 10Gb low latency ethernet 

connectivity alternatives to each of their 

participants.35 NYSE Arca, Inc. (‘‘NYSE 

Arca’’), NYSE American LLC (‘‘NYSE 

American’’), NYSE Chicago, Inc. 

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

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

and 10Gb low latency ethernet 

connectivity alternatives to each of their 

participants.36 The Exchange notes that 

all the other equities exchanges 

described above charge higher rates for 

such similar connectivity to primary 

and secondary facilities. While the 

Exchange’s proposed connectivity fees 

are substantially lower than the fees 

charged by Nasdaq, Phlx, ISE, NYSE 

America, NYSE Arca, NYSE Chicago 

and NYSE National, the Exchange 

believes that it can offer significant 

value to Equity Members over other 

exchanges in terms of network 

monitoring and reporting, which the 

Exchange believes is a competitive 

advantage, and differentiates its access 

services versus access services at other 

exchanges. Additionally, the Exchange’s 

proposed connectivity fees to its 

disaster recovery facility are within the 

range of the fees charged by other 

exchanges for similar connectivity 

alternatives.37 The Exchange also notes 

that other equities exchanges have 

similar port alternatives for their 

participants, with similar or 

substantially higher fees.38

Historical Data 

The Exchange believes the proposed 

fee for Historical Data is a reasonable 

allocation of its costs and expenses 

among its Equity Members and other 

persons using its facilities since it is 

recovering the costs associated with 

distributing such data should an Equity 

Member request Historical Data. Access 

to the Exchange is provided on fair and 

non-discriminatory terms. The 

Exchange believes the proposed fee for 

Historical Data is equitable and not 

unfairly discriminatory because the fee 

level results in a reasonable and 

equitable allocation of fees amongst 

users for similar services. Moreover, the 

decision as to whether or not to 

purchase Historical Data is entirely 

optional to all users. Potential 

purchasers are not required to purchase 

the Historical Data, and the Exchange is 

not required to make the Historical Data 

available. Purchasers may request the 

data at any time or may decline to 

purchase such data. The allocation of 

fees among users is fair and reasonable 

because, if the market deems the 

proposed fees to be unfair or 

inequitable, firms can diminish or 

discontinue their use of this data. 

The Exchange believes that the 

proposed fee for Historical Data is 

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

Act because the Proposed Access Fees 

will permit recovery of the Exchange’s 

costs and will not result in excessive or 

supra-competitive profit. The proposed 

fee for Historical Data will allow the 

Exchange to recover a portion (less than 

all) of the costs incurred by the 

Exchange associated with providing and 

maintaining the necessary hardware and 

other infrastructure as well as network 

monitoring and support services in 

order to provide Historical Data. The 

Exchange believes that it is reasonable 

and appropriate to establish a fee for 

Historical Data at a level that will 

partially offset the costs to the Exchange 

associated with maintaining and 

providing Historical Data. For example, 

Historical Market Data is uploaded onto 

an Exchange-provided device. Each 

device shall have a maximum storage 

capacity of 8 terabytes. The Exchange 

incurs costs in providing the device, 

storing the historical data, and utilizing 

resources to upload the data onto the 

device. Specifically, the device 

provided by the Exchange costs 

approximately $200 to $300. Moreover, 

the Exchange tracks the number of 

hours spent by Exchange personnel 

procuring Historical Market Data. Based 

on the average number of person hours 

spent by the Exchange on procuring 

Historical Market Data, and based on the 

Exchange’s average cost per full-time 

employee (‘‘FTE’’) of approximately 

$250,000 (inclusive of all compensation 

and employee benefits) per year, the 

Exchange represents that its cost to 

provide this service is reasonably 

related to (and often exceeds) the 

amount of the Historical Market Data fee 

the Exchange proposes to charge for 

such service. Therefore, the FTE cost to 

the Exchange on average $130 an hour 

and it takes approximately four FTE 

hours to process a request for Historical 

Market Data. Accordingly, the proposed 

Historical Market Data fee would enable 

the Exchange to recover a material 

portion of its costs to provide Historical 

Market Data. The Exchange believes this 

is a conservative cost allocation because 

the Exchange is not allocating any 

additional costs beyond the employee 

compensation for employees directly 

involved in this process and the cost of 

the device. These unallocated addition 

costs include technology costs of 

employees, office space costs of 

employees, costs associated with 

supporting departments’ time for things 

such as internal meetings, project 

management coordination among the 

individuals who indirectly support the 

provision of Historical Market Data, and 

various other indirectly-related costs. 

The Exchange also notes that its 

proposed fee is identical to that it 

charges today for options historical data 

and less than that charged by other 

exchanges for their own historical data. 

For example, all four of the Cboe equity 

exchanges charge a fee of $500 for one 

month of historical data and $2,500 for 

one terabyte drive of data.39

Pass-Through of External Connectivity 

Fees 

The Exchange believes that the 

proposed pass-through of external 

connectivity fees constitutes an 

equitable allocation of fees, and is not 

unfairly discriminatory, because it 

allows the Exchange to recover costs 

associated with offering access through 

the network connections, responding to 

customer requests, configuring MIAX 

PEARL Equities’ systems, programming 


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40See supra notes 35 through 38. 

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

42 17 CFR 240.19b–4(f)(2). 

API user specifications and 

administering the various services. 

Access to the MIAX PEARL Equities 

market is offered on fair and nondiscriminatory terms. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to pass-through External 

Connectivity fees to Equity Members 

and non-Members that establish 

connections with MIAX PEARL Equities 

through a third-party. MIAX PEARL 

Equities will only pass-through the 

actual costs it is charged by third-party 

external vendors. The Exchange believes 

it is reasonable and equitable to recover 

costs charged it on behalf of an Equity 

Member or non-Member that establishes 

connections with MIAX PEARL Equities 

through a third party. Other exchanges, 

including EDGX and EDGA, charge a fee 

for similar services to their members 

and non-members. 

Technical Support Request Fee 

The Exchange believes that the 

proposed Technical Support Request fee 

is fair, equitable and not unreasonably 

discriminatory, because it is assessed 

equally to all Equity Members and nonMembers who request technical 

support. Furthermore, Equity Members 

and non-Members are not required to 

use the service but instead it is offered 

as a convenience to all Equity Members 

and non-Members. The proposed fee is 

reasonably designed because it will 

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

Exchange’s on-site data center personnel 

as technical support and as a 

convenience in order to test or 

otherwise assess their connectivity to 

the Exchange and the fee is within the 

range of the fee charged by other 

exchanges for similar services and is 

identical to the same fee assessed by the 

Exchange today for options as well as 

the Exchange’s affiliates, MIAX and 

MIAX Emerald. 

As discussed above, the Exchange’s 

average cost per FTE of approximately 

$250,000 (inclusive of all compensation 

and employee benefits) per year, the 

Exchange represents that its cost to 

provide this service is reasonably 

related to (and often exceeds) the 

amount of the Technical Support fee the 

Exchange proposes to charge for such 

service. Therefore, the cost to the 

Exchange to provide an employee to 

provide technical support is 

approximately $130 per FTE. Also, more 

than one FTE may be involved 

depending on the nature of the request. 

Accordingly, the proposed per hour fee 

for technical support would enable the 

Exchange to recover a material portion 

of such cost. The Exchange believes this 

is a conservative cost allocation because 

the Exchange is not allocating any 

additional costs beyond the employee 

compensation costs for employees 

directly involved in this process. These 

unallocated addition costs include costs 

associated with potential management 

review and sign off, technology costs of 

employees, office space costs of 

employees, costs associated with 

supporting departments’ time for things 

such as internal meetings, project 

management coordination among the 

individuals who indirectly support the 

technology support process, and various 

other indirectly-related costs. 

* * * * * 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues. In such 

an environment, the Exchange must 

establish fees that are competitive with 

other exchanges. For the reasons 

described above, the Exchange believes 

that the proposed fees in the MIAX 

PEARL Equities Fee Schedule 

appropriately reflect this competitive 

environment. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes that the 

Proposed Fees do not place certain 

market participants at a relative 

disadvantage to other market 

participants because the pricing of the 

Proposed Fees is associated with 

relative usage of the various market 

participants and does not impose a 

barrier to entry to smaller participants. 

The Exchange believes the Proposed 

Fees do not favor certain categories of 

market participants in a manner that 

would impose a burden on competition; 

rather, the allocation of the Proposed 

Fees reflects the network and access 

resources consumed by various market 

participants. 

The Exchange believes the Proposed 

Fees do not place an undue burden on 

competition on other SROs that is not 

necessary or appropriate. Additionally, 

other equity exchanges have similar 

connectivity and port alternatives for 

their participants, including similar 

low-latency connectivity, but with 

much higher rates to connect.40 The 

Exchange is also unaware of any 

assertion that the Proposed Fees would 

somehow unduly impair its competition 

with other equities exchanges. To the 

contrary, if the fees charged are deemed 

too high by market participants, they 

can simply not connect to the Exchange 

or not use the services associated with 

the Proposed Access Fees. 

While the Exchange recognizes the 

distinction between connecting to an 

exchange and trading at the exchange, 

the Exchange notes that it plans to 

operate in a highly competitive market 

in which market participants can 

readily connect and trade with venues 

they desire. In such an environment, the 

Exchange must continually adjust its 

fees to remain competitive with other 

exchanges. The Exchange believes that 

the Proposed Fees reflect this 

competitive environment. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act,41 and Rule 

19b–4(f)(2) 42 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–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. 


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43 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90749 

(December 21, 2020), 85 FR 85752 (‘‘Notice’’). 

4 In Amendment No. 1, the Exchange (i) 

represented that its existing surveillance and 

reporting safeguards in place are adequate to deter 

and detect possible manipulative behavior which 

might arise from listing and trading P.M.-settled 

MRUT options and (ii) stated that the trading of 

P.M.-settled MRUT options will be subject to 

Exchange Rules governing customer accounts, 

position and exercise limits, margin requirements 

and trading halt procedures. Because Amendment 

No. 1 to the proposed rule change does not 

materially alter the substance of the proposed rule 

change and makes conforming and technical 

changes, Amendment No. 1 is not subject to notice 

and comment. Amendment No. 1 is available at: 

https://www.sec.gov/comments/sr-cboe-2020-116/ 

srcboe2020116-8302266-228358.pdf. 

5See Securities Exchange Act Release No. 90263 

(October 23, 2020), 85 FR 68611 (October 29, 2020) 

(CBOE–2020–100). See also Securities Exchange 

Act Release No. 70087 (July 31, 2013), 78 FR 47809 

(August 6, 2013) (SR–CBOE–2013–055) (‘‘P.M.- 

settled XSP Approval Order’’). 

6 See Notice, supra note 3, fn. 3 at 85753. The 

Exchange represents that its existing surveillance 

and reporting safeguards in place are adequate to 

deter and detect possible manipulative behavior 

which might arise from listing and trading P.M.- 

settled MRUT options. See Amendment No. 1, 

supra note 4. 

7See P.M.-settled XSP Approval Order supra note 

4. 

8See P.M.-settled XSP Approval Order, supra 

note 4. 

All submissions should refer to File 

Number SR–PEARL–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–PEARL–2021–02 and 

should be submitted on or before March 

4, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02776 Filed 2–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91067; File No. SR–CBOE– 

2020–116] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Order Approving a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Add Options on 

the Mini-Russell 2000 Index to Its P.M. 

Pilot Program 

February 5, 2021. 

I. Introduction 

On December 18, 2020, Cboe 

Exchange, Inc. (‘‘Cboe’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’),1 and 

Rule 19b–4 thereunder,2 a proposed rule 

change to add Mini-Russell 2000 Index 

(‘‘Mini-RUT’’ or ‘‘MRUT’’) options to 

the Exchange’s pilot program for P.M. 

settled options with third-Friday-of-themonth expiration dates (‘‘Expiration 

Friday’’). The proposed rule change was 

published for comment in the Federal 

Register on December 29, 2020.3 On 

January 28, 2021, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.4 The Commission received no 

comment letters on the proposed rule 

change. The Commission is approving 

the proposed rule change. 

II. Description of the Proposal, as 

Modified by Amendment No. 1 

The Exchange is proposing to amend 

its rules to permit it to list and trade, on 

a pilot basis, cash-settled MRUT options 

with Expiration Friday expiration dates, 

for which the exercise settlement value 

will be based on the index value derived 

from the closing prices of the 

component securities (‘‘P.M.-settled’’). 

MRUT options are options on the MiniRUT Index, the value of which is 1/10th 

the value of the Russell 2000 (‘‘RUT’’) 

Index. 

The Exchange proposes to add P.M.- 

settled MRUT options to the Exchange’s 

pilot program under Interpretation and 

Policy .13 to Rule 4.13 that allows the 

listing of P.M. settled options that 

expire on Expiration Friday (‘‘P.M. Pilot 

Program’’). The Exchange notes that the 

existing P.M. Pilot Program, which is set 

to end on May 3, 2021, includes options 

on the Mini-SPX Index (‘‘XSP’’), the 

value of which is 1/10th the value of the 

S&P 500 Index.5 Cboe has proposed to 

add P.M.-settled MRUT options to that 

pilot so that the end of the pilot period 

for P.M.-settled MRUT options would 

also be May 3, 2021. 

The Exchange notes that trading in 

P.M.-settled MRUT options would 

operate in the same manner as provided 

in the proposal to list and trade MiniRUT options on the Exchange. That is, 

P.M.-settled MRUT options would have 

the same European-style exercise, same 

number of permissible expirations, same 

exercise interval prices and limitations, 

same position and exercise limits, and 

will trade in the same minimum price 

increment.6

The Exchange proposes to abide by 

the same reporting requirements for the 

trading of P.M.-settled MRUT options 

that it does for the trading of P.M.- 

settled XSP options.7 The Exchange 

proposes to include data regarding P.M.- 

settled MRUT options as it does for 

P.M.-settled XSP options in the pilot 

program report that it submits to the 

Commission at least two months prior to 

the expiration date of the P.M. Pilot 

Program (the ‘‘annual report’’).8

Specifically, the Exchange submits 

annual reports to the Commission that 

contain an analysis of volume, open 

interest, and trading patterns in 

connection with products in the P.M. 

Pilot Program. The analysis examines 

trading in products in the P.M. Pilot 

Program, as well as trading in the 

securities that comprise the underlying 

index. Additionally, for series that 

exceed certain minimum open interest 

parameters, the annual reports provide 

analysis of index price volatility and 

share trading activity. 

Going forward, the Exchange would 

include the same analysis of P.M.- 

settled MRUT options, as well as trading 

in securities that comprise the RUT 

Index (as MRUT options are based on 1/ 

10th the value of the RUT Index), in the 

annual reports. Also, like it currently 

does for P.M.-settled XSP options, the 

Exchange would submit periodic 

interim reports for P.M.-settled MRUT 

options that contain some, but not all, 

of the information contained in the 

annual reports. 

The pilot reports will both contain the 

following volume and open interest 

data: 


khammond on DSKJM1Z7X2PROD with NOTICES