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27 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

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

4See Securities Exchange Act Release No. 98180 

(August 21, 2023), 88 FR 58404 (SR–PEARL–2023– 

35) (‘‘Notice’’). Comment on the proposed rule 

change can be found at: https://www.sec.gov/ 

comments/sr-pearl-2023-35/srpearl202335.htm. 

5 15 U.S.C. 78s(b)(3)(C). 

6The term ‘‘Member’’ means an individual or 

organization approved to exercise the trading rights 

associated with a Trading Permit. Members are 

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

Exchange Rule 100. 

7See Notice, supra note 4, at 58408. 

8On January 23, 2023, the Exchange bifurcated 

the Exchange and MIAX’s 10Gb ULL network and 

stated that this bifurcation was due to everincreasing capacity constraints and anticipated 

access needs for Members and market participants. 

See Securities Exchange Act Release Nos. 96545 

(December 20, 2022), 87 FR 79393 (December 27, 

2022) (SR–MIAX–2022–48); and 96553 (December 

20, 2022), 87 FR 79379 (December 27, 2022) (SR– 

PEARL–2022–60). The instant filing would amend 

provisions in the Fee Schedule to reflect the 

bifurcation of the 10Gb ULL network and specify 

that only the 1Gb network provides access to both 

the Exchange and MIAX. See Notice, supra note 4, 

at 58408. 

9The term ‘‘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 

the Definitions Section of the Exchange Fee 

Schedule and Exchange Rule 100. 

10See Notice, supra note 4, at 58409–10. The 

Exchange initially filed the proposed fee change on 

December 30, 2022, with an effective date of 

January 1, 2023. See Securities Exchange Act 

Release No. 96632 (January 10, 2023), 88 FR 2707 

(January 17, 2023) (SR–PEARL–2022–62). That 

filing was withdrawn by the Exchange and the 

Exchange filed a new proposed fee change with 

additional justification (SR–PEARL–2023–05) on 

February 23, 2023. See Securities Exchange Act 

Release No. 97082 (March 8, 2023), 88 FR 15825 

(March 14, 2023). The Exchange subsequently 

withdrew that filing and replaced it with SR– 

PEARL–2023–19 on April 20, 2023. See Securities 

Exchange Act Release No. 97420 (May 2, 2023), 88 

FR 29701 (May 8, 2023). The Exchange 

subsequently withdrew that filing and replaced it 

with SR–PEARL–2023–27 on June 16, 2023. See 

Securities Exchange Act Release No. 97815 (June 

27, 2023), 88 FR 42759 (July 3, 2023). The Exchange 

subsequently withdrew that filing and replaced it 

with the instant filing to provide additional 

information and a revised justification for the 

proposal, which is discussed herein. See Notice, 

supra note 4, at 58405. 

11Full Service MEO Port (Bulk) means an MEO 

port that supports all MEO input message types and 

binary bulk order entry. See the Definitions Section 

of the Exchange Fee Schedule. 12Full Service MEO Port (Single) means an MEO 

port that supports all MEO input message types and 

binary order entry on a single order-by-order basis, 

but not bulk orders. See the Definitions Section of 

the Exchange Fee Schedule. 13See Notice, supra note 4, at 58409. A 

‘‘Matching Engine’’ is a part of the Exchange’s 

electronic system that processes options orders and 

trades on a symbol-by-symbol basis. See the 

Definitions Section of the Fee Schedule. 14See id. 15See id. at 58409, 58411. 

16See id. at 58409. 

17The term ‘‘Market Maker’’ means a Member 

registered with the Exchange for the purpose of 

making markets in options contracts traded on the 

Exchange and that is vested with the rights and 

responsibilities specified in Chapter VI of Exchange 

Rules. See the Definitions Section of the Exchange 

Fee Schedule and Exchange Rule 100. 

18See Notice, supra note 4, at 58409. The term 

‘‘Electronic Exchange Member’’ or ‘‘EEM’’ means 

the holder of a Trading Permit who is a Member 

representing as agent Public Customer Orders or 

Non-Customer Orders on the Exchange and those 

non-Market Maker Members conducting proprietary 

trading. Electronic Exchange Members are deemed 

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

Definitions Section of the Exchange Fee Schedule 

and Exchange Rule 100. 

19See Notice, supra note 4, at 58409. 

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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NASDAQ–2023–016 and should be 

submitted on or before October 25, 

2023. Rebuttal comments should be 

submitted by November 8, 2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–21948 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98658; File No. SR– 

PEARL–2023–35] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Suspension of and Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove 

Proposed Rule Change To Amend the 

Fee Schedule To Modify Certain 

Connectivity and Port Fees 

September 29, 2023. 

I. Introduction 

On August 8, 2023, MIAX PEARL LLC 

(‘‘MIAX Pearl Options’’ 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 (File No. SR–PEARL–2023–35) 

to amend certain connectivity and port 

fees. The proposed rule change was 

immediately effective upon filing with 

the Commission pursuant to Section 

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

rule change was published for comment 

in the Federal Register on August 25, 

2023.4 Pursuant to Section 19(b)(3)(C) of 

the Act,5 the Commission is hereby: (1) 

temporarily suspending the proposed 

rule change; and (2) instituting 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change. 

II. Background and Description of the 

Proposed Rule Change 

As described in more detail in the 

Notice, the Exchange proposes to: (1) 

increase fees for a 10 gigabit (‘‘Gb’’) 

ultra-low latency (‘‘ULL’’) fiber 

connection for Members 6 and nonMembers from $10,000 to $13,500 per 

month; 7 (2) remove provisions in the 

Exchange’s Fee Schedule that provide 

for a shared 10Gb ULL network with the 

Exchange’s affiliate Miami International 

Securities Exchange, LLC (‘‘MIAX’’); 8

and (3) amend the calculation method 

and increase the amount of fees for 

MIAX Express Network Full Service 9

(‘‘MEO’’) Ports.10

The Exchange currently offers two 

types of Full Service MEO Ports— 

Bulk 11 and Single 12—and, for one 

monthly price, a Member may be 

allocated two Full-Service MEO Ports of 

either type per Matching Engine.13 The 

Exchange now proposes to modify both 

the calculation method and amount of 

fees for each type of Full Service MEO 

Port.14 Notwithstanding these changes 

to the calculation method and amount 

of fees, all Members will continue to be 

entitled to two Full Service MEO Ports 

(Bulk or Single) for each Matching 

Engine for the applicable fee.15

With respect to the Full Service MEO 

Ports (Bulk), prior to the proposed fee 

change, all Members were charged a 

monthly fee pursuant to a volume tierbased fee structure with fees ranging 

from $3,000 to $5,000.16 The Exchange 

now proposes to amend the calculation 

and amount of Full Service MEO Port 

(Bulk) fees for all Members, with 

different fee structures depending on 

whether the Member is a Market 

Maker 17 or an Electronic Exchange 

Member (‘‘EEM’’).18 The Exchange 

proposes to charge all EEMs that utilize 

MIAX Pearl Full Service MEO Ports 

(Bulk) a flat monthly fee of $7,500.19 For 

Market Makers, the Exchange proposes 


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20The amount of monthly Market Maker Full 

Service MEO Port (Bulk) fee would be based upon 

the number of classes in which the Market Maker 

was registered to quote on any given day within the 

calendar month, or upon the class volume 

percentages. The Exchange states that this change 

in how Full Service MEO Port (Bulk) will be 

calculated is identical to how the Exchange assesses 

Market Makers Trading Permit fees. See Notice, 

supra note 4, at 58409. 

21See id. at 58409–10. For additional information 

on how these fees will be calculated please see the 

Notice. 

22See id. at 58410. 

23 ‘‘TCV’’ means total consolidated volume 

calculated as the total national volume in those 

classes listed on MIAX Pearl for the month for 

which the fees apply, excluding consolidated 

volume executed during the period of time in 

which the Exchange experiences an Exchange 

System Disruption (solely in the option classes of 

the affected Matching Engine). See the Definitions 

Section of the Fee Schedule. 

24See Notice, supra note 4, at 58410. 

25See id. 

26See id. at 58411. 

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

28 15 U.S.C. 78s(b)(1). 

29See Notice, supra note 4, at 58412. 

30See id. at 58425. 

31See id. at 58417, 58418. The Exchange states 

that its cost analysis is based on the Exchange’s 

2023 fiscal year of operations and projections. See 

id. at 58425. 

32See id. at 58418. 

33The Exchange defines ‘‘cost drivers’’ within the 

filing as the costs necessary to deliver each of the 

core services, including infrastructure, software, 

human resources (i.e., personnel), and certain 

general and administrative expenses. See Notice, 

supra note 4, at 58417. 

34See Notice, supra note 4, at 58417. The 

Exchange states that because the Exchange’s parent 

company currently owns and operates four separate 

and distinct marketplaces, the Exchange’s parent 

company determines an accurate cost for each 

marketplace, which results in different allocations 

and amounts across exchanges for the same cost 

drivers. See id. at 58418. According to the 

Exchange, its allocation methodology ensures that 

no cost would be allocated twice or double-counted 

between the Exchange and its affiliated markets. 

See id. 

35See id. The Exchange describes ‘‘core services’’ 

as services provided by the Exchange, including 

transaction execution, market data, membership 

services, physical connectivity, and port access 

(which provides order entry, cancellation and 

modification functionality, risk functionality, the 

ability to receive drop copies, and other 

functionality). See id. at 58417. 

36 Id. at 58418. 

that the amount of the monthly Full 

Service MEO Ports (Bulk) fee would be 

based on the lesser of either the per 

class traded or percentage of total 

national average daily volume (‘‘ADV’’) 

measurement based on classes traded by 

volume.20

Specifically, the Exchange proposes to 

adopt the following Full Service MEO 

Port (Bulk) fees for Market Makers: (i) 

$5,000 for Market Maker registrations in 

up to 10 option classes or up to 20% of 

option classes by national ADV; (ii) 

$7,500 for Market Maker registrations in 

up to 40 option classes or up to 35% of 

option classes by ADV; (iii) $10,000 for 

Market Maker registrations in up to 100 

option classes or up to 50% of option 

classes by ADV; and (iv) $12,000 for 

Market Maker registrations in over 100 

option classes or over 50% of option 

classes by ADV up to all option classes 

listed on MIAX Pearl.21 In addition, the 

Exchange proposes to adopt an 

alternative lower Full Service MEO Port 

(Bulk) fee for Market Makers who fall 

within the second, third, and fourth 

levels of the proposed Market Maker 

Full Service MEO Port (Bulk) fee table— 

i.e., (i) Market Maker registrations in up 

to 40 option classes or up to 35% of 

option classes by volume; (ii) Market 

Maker registrations in up to 100 option 

classes or up to 50% of option classes 

by volume; and (iii) Market Maker 

registrations in over 100 option classes 

or over 50% of option classes by volume 

up to all option classes listed on MIAX 

Pearl Options.22 For these Market 

Makers, if the Market Maker’s total 

monthly executed volume during the 

relevant month is less than 0.040% of 

the total monthly TCV 23 for MIAX 

Pearl–listed option classes for that 

month, then the fee will be $6,000 

instead of the fee otherwise applicable 

to such level.24

With respect to the Full Service MEO 

Ports (Single), prior to the proposed fee 

change, all Members were charged a 

monthly fee pursuant to a volume tierbased fee structure with fees ranging 

from $2,000 to $3,750.25 The Exchange 

now proposes to charge all Members 

that utilize Full Service MEO Ports 

(Single) a flat monthly fee of $4,000.26

III. Suspension of the Proposed Rule 

Change 

Pursuant to Section 19(b)(3)(C) of the 

Act,27 at any time within 60 days of the 

date of filing of an immediately effective 

proposed rule change pursuant to 

Section 19(b)(1) of the Act,28 the 

Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) 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. The Commission believes a 

temporary suspension of the proposed 

rule change is necessary and 

appropriate to allow for additional 

analysis of the proposed rule change’s 

consistency with the Act and the rules 

thereunder. 

In support of the proposal, the 

Exchange states its belief that the 

proposed fees overall are reasonable 

because they promote parity among 

exchange pricing for access, which 

promotes competition, while allowing 

the Exchange to recover its costs to 

provide dedicated access via 10Gb ULL 

connectivity and Full Service MEO 

Ports.29 The Exchange further states that 

the proposed fees are fair and 

reasonable because they will not result 

in pricing that deviates from that of 

other exchanges or a ‘‘supra-competitive 

profit,’’ when comparing the total 

expense of the Exchange associated with 

providing 10Gb ULL connectivity and 

Full Service MEO Port services versus 

the total projected revenue of the 

Exchange associated with these 

services.30 According to the Exchange, 

employing a methodology that is the 

‘‘result of an extensive review and 

analysis,’’ it estimates the total projected 

annual cost of providing 10Gb ULL 

connectivity to be $11,567,509 and for 

providing Full Service MEO Ports to be 

$1,644,132.31

To arrive at these figures, the 

Exchange states that it undertook an 

extensive cost analysis to analyze every 

expense in the Exchange’s general 

expense ledger to determine whether 

each such expense related to the 

provision of connectivity and port 

services, and, if such expense did so 

relate, what portion (or percentage) of 

such expense supported the provision of 

connectivity and port services.32 The 

Exchange states that it determined the 

total cost for the Exchange and its 

affiliated markets for each cost driver 33

through a company-wide process that 

included discussions with senior 

management, Exchange department 

heads, and the Finance Team.34 The 

Exchange further states that it 

determined what portion of the cost 

allocated to the Exchange pursuant to 

this methodology is to be allocated to 

each core service, including the 

appropriate allocation to connectivity 

and ports.35 The Exchange states that 

through this allocation methodology, 

the Exchange ‘‘applied an allocation of 

each cost driver to each core service’’ 

and ‘‘[e]ach of the [resulting] cost 

allocations is unique to the Exchange 

and represents a percentage of overall 

cost that was allocation to the Exchange 

pursuant to the initial allocation.’’ 36

The Exchange states that the 

$11,567,509 aggregate annual costs for 

providing physical dedicated 10Gb ULL 

connectivity via an unshared network is 

the sum of the following individual 

line-item costs: (1) Human Resources at 

$3,675,098; (2) Connectivity (external 

fees, cabling, switches, etc.) at $70,163; 

(3) internet Services and External 

Market Data at $322,388; (4) Data Center 


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37See id. at 58419. 38See id. at 58425. 39See Notice, supra note 4, at 58422. 40See id. at 58425. 41 Id. at 58426. 42See id. 43See id. at 58427. 44 Id. 

45 Id. 46 Id. at 58428. 47 Id. at 58428–29. 48See id. at 58428. 49See Letter from Gerald D. O’Connell, Executive 

Director, Susquehanna International Group, LLP, to 

Vanessa Countryman, Secretary, Commission, dated 

September 18, 2023 (‘‘SIG Letter’’). 

50 Id. 

51See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

52See id. 

53 15 U.S.C. 78f(b)(4). 

54 15 U.S.C. 78f(b)(5). 

55 15 U.S.C. 78f(b)(8). 

56See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 

57For purposes of temporarily suspending the 

proposed rule change, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

at $739,983; (5) Hardware and Software 

Maintenance and Licenses at $959,157; 

(6) Depreciation at $1,885,969; and (7) 

Allocated Shared Expenses at 

$3,914,751.37 The Exchange represents 

that it estimates that the proposed fees 

will result in an annual revenue of 

approximately $17,496,000, which is a 

potential profit margin of 34% over the 

cost of providing 10Gb ULL 

connectivity services.38

The Exchange states that the 

$1,644,132 aggregate annual costs for 

offering Full Service MEO Ports is the 

sum of the following individual lineitem costs: (1) Human Resources at 

$1,159,831; (2) Connectivity (external 

fees, cabling, switches, etc.) at $1,589; 

(3) internet Services and External 

Market Data at $6,033; (4) Data Center 

at $41,881; (5) Hardware and Software 

Maintenance and Licenses at $22,438; 

(6) Depreciation at $127,986; and (7) 

Allocated Shared Expenses at 

$284,374.39 The Exchange represents 

that it estimates that the proposed fees 

will result in an annual revenue of 

approximately $1,644,000, which would 

result in a small negative profit margin 

after the cost of providing Full Service 

MEO Port services.40

The Exchange states its belief that the 

proposed fees are reasonable because 

they allow the Exchange to ‘‘recoup the 

Exchange’s costs of providing dedicated 

10Gb ULL connectivity and Full Service 

MEO Ports’’ and that the cost analysis 

and related projections demonstrate that 

the Exchange is not earning ‘‘supracompetitive profits.’’ 41 In addition, the 

Exchange states that the proposed fees 

are comparable to or lower than the fees 

charged by competing options 

exchanges for similar products.42

In further support of the proposal, the 

Exchange states its belief that the 

proposed fees are reasonable, fair, 

equitable, and not unfairly 

discriminatory, because they are 

designed to align fees with services 

provided and will apply equally to all 

subscribers.43 Moreover, the Exchange 

asserts that the proposed fees are 

equitably allocated among users of the 

network connectivity and port 

alternatives, as the ‘‘users of 10Gb ULL 

connections consume substantially 

more bandwidth and network resources 

than the users of 1Gb ULL 

connection.’’ 44 The Exchange also states 

that with respect to Full Service MEO 

Ports, Members that are frequently in 

the highest tier for Full Service MEO 

Ports consume the most bandwidth and 

resources of the network.45

Finally, the Exchange asserts that the 

proposed fees would not cause any 

unnecessary or inappropriate burden on 

inter-market competition because if the 

fee is set too high it would make it 

easier for other exchanges to compete 

with the Exchange, and only if the 

proposed fees were a ‘‘substantial fee 

decrease could this be considered a 

form of predatory pricing.’’ 46

Furthermore, the Exchange asserts that 

the proposed fee change for 10Gb ULL 

connectivity is a ‘‘technology driven 

change designed to meet customer 

needs’’ and that separating the 10Gb 

ULL network from MIAX enables the 

Exchange to ‘‘better compete with other 

exchanges’’ by continuing to provide 

adequate connectivity to current and 

new Members, which ‘‘may increase 

[its] ability to compete for order flow 

and deepen its liquidity pool, improving 

the overall quality of its market.’’ 47 The 

Exchange also asserts that the proposed 

rule change would not cause any 

unnecessary or inappropriate burden on 

intra-market competition because the 

proposed fees will allow the Exchange 

to recoup some of its costs in providing 

10Gb ULL connectivity and Full Service 

MEO Ports at below market rates since 

the Exchange launched operations.48

To date, the Commission has received 

one comment letter on the revised 

justifications for the proposed increase 

in fees for 10Gb ULL connectivity and 

Full Service MEO Ports.49 This 

commenter states that the revisions 

reflected in the Exchange’s instant 

proposal as compared to its earlier 

filings ‘‘do[ ] not fundamentally redress 

the valid critiques that SIG raised in its 

prior letters objecting to the subject fee 

increases.’’ 50

When exchanges file their proposed 

rule changes with the Commission, 

including fee filings like the Exchange’s 

present proposal, they are required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.51 The 

instructions to Form 19b–4, on which 

exchanges file their proposed rule 

changes, specify that such statement 

‘‘should be sufficiently detailed and 

specific to support a finding that the 

proposed rule change is consistent with 

[those] requirements.’’ 52

Section 6 of the Act, including 

Sections 6(b)(4), (5), and (8), require the 

rules of an exchange to: (1) provide for 

the equitable allocation of reasonable 

fees among members, issuers, and other 

persons using the exchange’s 

facilities; 53 (2) perfect the mechanism of 

a free and open market and a national 

market system, protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers; 54 and (3) not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.55

In temporarily suspending the 

Exchange’s proposed rule change, the 

Commission intends to further consider 

whether the proposal to increase fees for 

10Gb ULL connectivity (to be provided 

via an unshared network) and modify 

the pricing structure for Full Service 

MEO Ports is consistent with the 

statutory requirements applicable to a 

national securities exchange under the 

Act. In particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; not permit unfair 

discrimination between customers, 

issuers, brokers or dealers; and do not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act.56

Therefore, the Commission finds that 

it is appropriate in the public interest, 

for the protection of investors, and 

otherwise in furtherance of the purposes 

of the Act, to temporarily suspend the 

proposed rule change.57

IV. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Rule Change 

In addition to temporarily suspending 

the proposal, the Commission also 


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58 15 U.S.C. 78s(b)(3)(C). Once the Commission 

temporarily suspends a proposed rule change, 

Section 19(b)(3)(C) of the Act requires that the 

Commission institute proceedings under Section 

19(b)(2)(B) to determine whether a proposed rule 

change should be approved or disapproved. 

59 15 U.S.C. 78f(b)(5). 

60 Id. Section 19(b)(2)(B) of the Act also provides 

that proceedings to determine whether to 

disapprove a proposed rule change must be 

concluded within 180 days of the date of 

publication of notice of the filing of the proposed 

rule change. See id. The time for conclusion of the 

proceedings may be extended for up to 60 days if 

the Commission finds good cause for such 

extension and publishes its reasons for so finding, 

or if the exchange consents to the longer period. See 

id. 

61 15 U.S.C. 78f(b)(4). 

62 15 U.S.C. 78f(b)(5). 

63 15 U.S.C. 78f(b)(8). 

64 17 CFR 201.700(b)(3). 

65See id. 

66See id. 

67See 15 U.S.C. 78f(b)(4), (5), and (8). 

68 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act 

grants the Commission flexibility to determine what 

type of proceeding—either oral or notice and 

opportunity for written comments—is appropriate 

for consideration of a particular proposal by an 

SRO. See Securities Acts Amendments of 1975, 

Report of the Senate Committee on Banking, 

Housing and Urban Affairs to Accompany S. 249, 

S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 

hereby institutes proceedings pursuant 

to Sections 19(b)(3)(C) 58 and 19(b)(2)(B) 

of the Act 59 to determine whether the 

Exchange’s proposed rule change 

should be approved or disapproved. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, the 

Commission seeks and encourages 

interested persons to provide additional 

comment on the proposed rule change 

to inform the Commission’s analysis of 

whether to approve or disapprove the 

proposed rule change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,60 the Commission is providing 

notice of the grounds for possible 

disapproval under consideration: 

• Whether the Exchange has 

demonstrated how the proposed fees are 

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

Act, which requires that the rules of a 

national securities exchange ‘‘provide 

for the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other persons 

using its facilities;’’ 61

• Whether the Exchange has 

demonstrated how the proposed fees are 

consistent with Section 6(b)(5) of the 

Act, which requires, among other 

things, that the rules of a national 

securities exchange not be ‘‘designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers;’’ 62 and 

• Whether the Exchange has 

demonstrated how the proposed fees are 

consistent with Section 6(b)(8) of the 

Act, which requires that the rules of a 

national securities exchange ‘‘not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of [the Act].’’ 63

As discussed in Section III above, the 

Exchange made various arguments in 

support of its proposal. The 

Commission believes that there are 

questions as to whether the Exchange 

has provided sufficient information to 

demonstrate that the proposed fees are 

consistent with the Act and the rules 

thereunder. 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the [Act] and the rules 

and regulations issued thereunder . . . 

is on the [SRO] that proposed the rule 

change.’’ 64 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,65 and 

any failure of an SRO to provide this 

information may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Act and the applicable rules 

and regulations.66

The Commission is instituting 

proceedings to allow for additional 

consideration and comment on the 

issues raised herein, including as to 

whether the proposed fees are 

consistent with the Act, and 

specifically, with its requirements that 

exchange fees be reasonable and 

equitably allocated, not be unfairly 

discriminatory, and not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act.67

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. Such 

comments should be submitted by 

October 25, 2023. Rebuttal comments 

should be submitted by November 8, 

2023. Although there do not appear to 

be any issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.68

The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

PEARL–2023–35 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–PEARL–2023–35. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–PEARL–2023–35 and should be 

submitted on or before October 25, 

2023. Rebuttal comments should be 

submitted by November 8, 2023. 


lotter on DSK11XQN23PROD with NOTICES1
68774 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

69 15 U.S.C. 78s(b)(3)(C). 

70 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

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

4See Securities Exchange Act Release No. 98396 

(September 14, 2023), 88 FR 64960 (‘‘Notice’’). 

5 15 U.S.C. 78s(b)(3)(C). 

6The term ‘‘Member’’ means any registered 

broker or dealer that has been admitted to 

membership in the Exchange. See Exchange Rule 

1.5(n). 

7A physical port is utilized by a Member or nonMember to connect to the Exchange at the data 

centers where the Exchange’s servers are located. 

8 15 U.S.C. 78s(b)(3)(C). 

9 15 U.S.C. 78s(b)(1). 

10See Notice, supra note 4, at 64960. 

11See id. 12See id. 13See id. at 64961. 14See id. 15See id. 16See id. 17See id. 18See id. 19See id. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,69 that File 

No. SR–PEARL–2023–35, be and hereby 

is, temporarily suspended. In addition, 

the Commission is instituting 

proceedings to determine whether the 

proposed rule change should be 

approved or disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.70

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22034 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98653; File No. SR– 

CboeEDGX–2023–057] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Suspension of 

and Order Instituting Proceedings To 

Determine Whether To Approve or 

Disapprove Proposed Rule Change To 

Amend its Fee Schedule Related to 

Physical Port Fees 

September 29, 2023. 

I. Introduction 

On September 1, 2023, Cboe EDGX 

Exchange, Inc. (the ‘‘Exchange’’ or 

‘‘EDGX’’) 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 (File Number SR– 

CboeEDGX–2023–057) to amend its fee 

schedule to increase the monthly fee for 

10 gigabit (‘‘Gb’’) physical ports. The 

proposed rule change was immediately 

effective upon filing with the 

Commission pursuant to Section 

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

rule change was published for comment 

in the Federal Register on September 

20, 2023.4 Pursuant to Section 

19(b)(3)(C) of the Act,5 the Commission 

is hereby: (1) temporarily suspending 

the proposed rule change; and (2) 

instituting proceedings to determine 

whether to approve or disapprove the 

proposed rule change. 

II. Background and Description of the 

Proposed Rule Change 

The Exchange proposes to amend its 

fee schedule for its equities platform 

(‘‘EDGX Equities’’) relating to physical 

connectivity fees. The Exchange 

proposes to increase the monthly fee for 

10 Gb physical ports from $7,500 to 

$8,500 per port. The Exchange currently 

assesses the following physical 

connectivity fees for Members 6 and 

non-Members on a monthly basis: 

$2,500 per physical port for a 1 Gb 

circuit and $7,500 per physical port for 

a 10 Gb circuit.7 According to the 

Exchange, the physical ports may also 

be used to access the systems for the 

following affiliate exchanges and only 

one monthly fee currently (and will 

continue) to apply per port: the 

Exchange’s options platform (EDGX 

Options), Cboe BZX Exchange, Inc. 

(options and equities platforms), Cboe 

BYX Exchange, Inc., Cboe EDGA 

Exchange, Inc., and Cboe C2 Exchange, 

Inc. 

III. Suspension of the Proposed Rule 

Change 

Pursuant to Section 19(b)(3)(C) of the 

Act,8 at any time within 60 days of the 

date of filing of an immediately effective 

proposed rule change pursuant to 

Section 19(b)(1) of the Act,9 the 

Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) 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. The Commission believes a 

temporary suspension of the proposed 

rule change is necessary and 

appropriate to allow for additional 

analysis of the proposed rule change’s 

consistency with the Act and the rules 

thereunder. 

In support of the proposal, the 

Exchange states its belief that the 

proposed fee change is reasonable as it 

reflects a moderate increase in physical 

connectivity fees for 10 Gb physical 

ports.10 The Exchange states that the 

current 10 Gb physical port fee has 

remained unchanged since June 2018.11

The Exchange states that during this 5- 

year span there has been an average 

inflation rate of 3.9%, producing a 

cumulative price increase of 

approximately 21.1% inflation since the 

fee for the 10 Gb physical port was last 

modified.12 In support of its claim of 

reasonableness, the Exchange compares 

its proposed rate increase from the rates 

adopted five years ago of approximately 

13% to the cumulative inflation rate of 

21.1%.13

In further support of the proposal, the 

Exchange states that the proposed fee is 

reasonable, fair, and equitable, and not 

unfairly discriminatory.14 The Exchange 

believes that the proposed fee is 

reasonable as it is still in line with, or 

even lower than, amounts assessed by 

other exchanges for similar 

connections.15 The Exchange also states 

its belief that the fee is not unfairly 

discriminatory, because the fee would 

be assessed uniformly across all market 

participants that purchase the physical 

ports.16 The Exchange states that the fee 

is equitable because increasing the fee 

for 10 Gb physical ports and charging a 

higher fee as compared to the 1 Gb 

physical port as the 1 Gb physical port 

is 1/10 the size of the 10 Gb physical 

port and does not offer access to many 

of the products and services offered by 

the Exchange.17 The Exchange also 

states its belief the proposed fee is 

reasonably and appropriately allocated 

because, the Exchange states, market 

participants that purchase 10 Gb 

physical ports use the most bandwidth 

and therefore consume the most 

resources from the network.18

In further support of its proposed fee, 

the Exchange states that Members and 

non-Members will continue to choose 

the method of connectivity based on 

their specific needs and no brokerdealer is required to become a Member 

of, or connect directly to, the 

Exchange.19 The Exchange also states its 

belief that substitutable products and 

services are available to market 

participants, including, among other 

things, other equities exchanges that a 

market participant may connect to in 

lieu of the Exchange, indirect 

connectivity to the Exchange via a thirdparty reseller of connectivity, and/or 

trading of any equities product, such as 


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