13784 Federal Register / Vol. 89, No. 37 / Friday, February 23, 2024 / Notices 

30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

would be subject to the same specified 

rules. 

Finally, Nasdaq believes that its 

proposal to impose certain fees on 

Limited Underwriting Members is 

consistent with Section 6(b) of the Act, 

in general, and furthers the objectives of 

Sections 6(b)(4) and 6(b)(5) of the Act, 

in particular, in that it provides for the 

equitable allocation of reasonable dues, 

fees and other charges among members 

and issuers and other persons using any 

facility, and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes that its proposal 

to charge the $2,000 application fee and 

$4,000 yearly membership fee but not 

charge the $1,250 monthly trading rights 

fee is reasonable, equitable and not 

unfairly discriminatory. The Exchange 

would apply fees that are already in 

existence and the Exchange believes 

such fees reflect the value of services it 

provides its applicants and 

membership. By charging Limited 

Underwriting Members the same 

application and yearly membership fee 

as Members, the Exchange believes that 

it would be treating the membership 

equitably. Further, the Exchange 

believes it is reasonable and equitable to 

exempt Limited Underwriting Members 

from the monthly trading rights fee 

because such members would not have 

access to trade on the Exchange. The 

Exchange believes that the fee proposal 

is not designed to permit unfair 

discrimination between Exchange 

members because the fees would be 

applied equally to all similarly situated 

members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. As noted 

above, the proposed changes to the 

Listing Rules will apply equally to all 

similarly situated companies applying 

for initial listing in connection with a 

transaction involving an underwriter on 

the Exchange. Likewise, the proposed 

changes to the General and Equity 

Rules, including to the membership 

rules, will apply equally to all similarly 

situated Applicants and Members and 

they will confer no relative advantage or 

disadvantage upon any category of 

Exchange Applicant or Member. 

Although the Exchange proposes to 

subject Limited Underwriting Members 

to a limited set of rules, the limited 

underwriting membership does not 

confer the same benefits as a standard 

Exchange membership. Namely, a 

Limited Underwriting Member would 

not be permitted to transact on the 

Nasdaq Market Center. Therefore, 

applying a limited ruleset to Limited 

Underwriting Members is justified. All 

Limited Underwriting Members would 

be subject to the same specified rules, as 

noted above. Moreover, the Exchange 

does not expect that its proposal will 

have an adverse impact on competition 

among exchanges for members. The 

Exchange believes the proposed rule 

changes, overall, will strengthen the 

Exchange’s ability to carry out its role 

and responsibilities as a self-regulatory 

organization and deter potential 

violative conduct. As such, the 

Exchange does not believe that the 

proposed rule change will impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether Amendment No. 2 to 

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– 

NASDAQ–2023–022 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–NASDAQ–2023–022. 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–NASDAQ–2023–022 and should be 

submitted on or before March 15, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–03647 Filed 2–22–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99553; File No. SR– 

CboeEDGA–2024–006] 

Self-Regulatory Organizations; Cboe 

EDGA Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fees Schedule Related to Physical 

Port Fees 

February 16, 2024. 

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 February 

9, 2024, Cboe EDGA Exchange, Inc. (the 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


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Federal Register / Vol. 89, No. 37 / Friday, February 23, 2024 / Notices 13785 

3The Exchange initially filed the proposed fee 

changes on July 3, 2023 (SR–CboeEDGA–2023–011). 

On September 1, 2023, the Exchange withdrew that 

filing and submitted SR–CboeEDGA–2023–015. On 

September 29, 2023, the Securities and Exchange 

Commission issued a Suspension of and Order 

Instituting Proceedings to Determine whether to 

Approve or Disapprove a Proposed Rule Change to 

Amend its Fees Schedule Related to Physical Port 

Fees (the ‘‘OIP’’). On September 29, 2023, the 

Exchange filed the proposed fee change (SR– 

CboeEDGA–2023–016). On October 13, 2023, the 

Exchange withdrew that filing and submitted SR– 

CboeEDGA–2023–017. On December 12 2023, the 

Exchange withdrew that filing and submitted SR– 

CboeEDGA–2023–022. On February 9, 2024, the 

Exchange withdrew that filing and submitted this 

filing. 

4See e.g., The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’), General 8, Connectivity to the 

Exchange. Nasdaq and its affiliated exchanges 

charge a monthly fee of $15,000 for each 10 Gb 

Ultra fiber connection to the respective exchange, 

which is analogous to the Exchange’s 10 Gb 

physical port. See also New York Stock Exchange 

LLC, NYSE American LLC, NYSE Arca, Inc., NYSE 

Chicago Inc., NYSE National, Inc. Connectivity Fee 

Schedule, which provides that 10 Gb LX LCN 

Circuits (which are analogous to the Exchange’s 10 

Gb physical port) are assessed $22,000 per month, 

per port. 

5The Affiliate Exchanges are also submitting 

contemporaneous identical rule filings. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 Id. 

9 15 U.S.C. 78f(b)(4). 

10See Securities and Exchange Release No. 83449 

(June 15, 2018), 83 FR 28890 (June 21, 2018) (SR– 

CboeEDGA–2018–010). 

11See https://www.officialdata.org/us/inflation/

2010?amount=1. 

12See e.g., The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’), General 8, Connectivity to the 

Continued 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe EDGA Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGA’’) proposes to 

amend its Fees Schedule. The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is available on the Exchange’s website 

(http://markets.cboe.com/us/equities/ 

regulation/rule_filings/edga/), at the 

Exchange’s Office of the Secretary, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

fee schedule relating to physical 

connectivity fees.3

By way of background, a physical port 

is utilized by a Member or non-Member 

to connect to the Exchange at the data 

centers where the Exchange’s servers are 

located. The Exchange currently 

assesses the following physical 

connectivity fees for Members and nonMembers on a monthly basis: $2,500 per 

physical port for a 1 gigabit (‘‘Gb’’) 

circuit and $7,500 per physical port for 

a 10 Gb circuit. The Exchange proposes 

to increase the monthly fee for 10 Gb 

physical ports from $7,500 to $8,500 per 

port. The Exchange notes the proposed 

fee change better enables it to continue 

to maintain and improve its market 

technology and services and also notes 

that the proposed fee amount, even as 

amended, continues to be in line with, 

or even lower than, amounts assessed by 

other exchanges for similar 

connections.4 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 

Cboe BZX Exchange, Inc. (options and 

equities), Cboe EDGX Exchange, Inc. 

(options and equities platforms), Cboe 

BYX Exchange, Inc., and Cboe C2 

Exchange, Inc. (‘‘Affiliate Exchanges’’).5

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.6 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 7 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 8 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange also believes the 

proposed rule change is consistent with 

Section 6(b)(4) 9 of the Act, which 

requires that Exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

Members and other persons using its 

facilities. 

The Exchange believes the proposed 

fee change is reasonable as it reflects a 

moderate increase in physical 

connectivity fees for 10 Gb physical 

ports. Further, the current 10 Gb 

physical port fee has remained 

unchanged since June 2018.10 Since its 

last increase over 5 years ago however, 

there has been notable inflation. 

Particularly, the dollar has had an 

average inflation rate of 3.9% per year 

between 2018 and today, producing a 

cumulative price increase of 

approximately 21.1% inflation since the 

fee for the 10 Gb physical port was last 

modified.11 Moreover, the Exchange 

historically does not increase fees every 

year, notwithstanding inflation. 

Accordingly, the Exchange believes the 

proposed fee is reasonable as it 

represents only an approximate 13% 

increase from the rates adopted five 

years ago, notwithstanding the 

cumulative rate of 21.1%. The Exchange 

is also unaware of any standard that 

suggests any fee proposal that exceeds a 

certain yearly or cumulative inflation 

rate is unreasonable, and in any event, 

in this instance the increase is well 

below the cumulative rate. 

Additionally, the Exchange believes 

the proposed fee increase is reasonable 

in light of recent and anticipated 

connectivity-related upgrades and 

changes. For example, the Exchange 

recently performed switch hardware 

upgrades. Particularly, the Exchange 

replaced existing customer access 

switches with newer models, which the 

Exchange believes contributes to 

increased determinism. Additionally, 

effective April 1, 2024, firms will be 

able to connect to a new data center (i.e., 

Secaucus NY6 Data Center (‘‘NY6’’)), in 

addition the current data centers at NY4 

and NY5. The Exchange is adding 

connectivity at NY6 in response to 

Customer demand and requests for 

additional space and capacity. 

The Exchange also believes the 

proposed fee is reasonable as it is still 

in line with, or even lower than, 

amounts assessed by other exchanges 

for similar connections.12 Indeed, the 


ddrumheller on DSK120RN23PROD with NOTICES1
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Exchange. Nasdaq and its affiliated exchanges 

charge a monthly fee of $15,000 for each 10 Gb 

Ultra fiber connection to the respective exchange, 

which is analogous to the Exchange’s 10 Gb 

physical port. See also New York Stock Exchange 

LLC, NYSE American LLC, NYSE Arca, Inc., NYSE 

Chicago Inc., NYSE National, Inc. Connectivity Fee 

Schedule, which provides that 10 Gb LX LCN 

Circuits (which are analogous to the Exchange’s 10 

Gb physical port) are assessed $22,000 per month, 

per port. 

13 Id. 

14See Cboe Global Markets, U.S. Equities Market 

Volume Summary, Month-to-Date (June 29 2023), 

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

market_statistics/. 

15See https://www.nyse.com/markets/nyse/ 

membership. 

16See https://www.iexexchange.io/membership. 17See https://www.miaxglobal.com/sites/default/ 

files/page-files/20230630_MIAX_Pearl_Equities_

Exchange_Members_June_2023.pdf. 18Third-party resellers of connectivity play an 

important role in the capital markets infrastructure 

ecosystem. For example, third-party resellers can 

help unify access for customers who want exposure 

to multiple financial markets that are 

geographically dispersed by establishing 

connectivity to all of the different exchanges, so the 

customers themselves do not have to. Many of the 

third-party connectivity resellers also act as 

distribution agents for all of the market data 

generated by the exchanges as they can use their 

established connectivity to subscribe to, and 

redistribute, data over their networks. This may 

remove barriers that infrastructure requirements 

may otherwise pose for customers looking to access 

multiple markets and real-time data feeds. This 

facilitation of overall access to the marketplace is 

ultimately beneficial for the entire capital markets 

ecosystem, including the Exchange, on which such 

firms transact business. 

19See, e.g., Nasdaq Price List—U.S. Direct 

Connection and Extranet Fees, available at, US 

Direct-Extranet Connection (nasdaqtrader.com); 

and Securities Exchange Act Release Nos. 74077 

(January 16, 2022), 80 FR 3683 (January 23, 2022) 

(SR–NASDAQ–2015–002); and 82037 (November 8, 

2022), 82 FR 52953 (November 15, 2022) (SR– 

NASDAQ–2017–114). 

20For example, a third-party reseller may 

purchase one 10 Gb physical port from the 

Exchange and resell that connectivity to three 

different market participants who may only need 3 

Gb each and leverage the same single port. 

Exchange believes assessing fees that are 

a lower rate than fees assessed by other 

exchanges for analogous connectivity 

(which were similarly adopted via the 

rule filing process and filed with the 

Commission) is reasonable. As noted 

above, the proposed fee is also the same 

as is concurrently being proposed for its 

Affiliate Exchanges. Further, Members 

are able to utilize a single port to 

connect to any of the Affiliate 

Exchanges with no additional fee 

assessed for that same physical port. 

Particularly, the Exchange believes the 

proposed monthly per port fee is 

reasonable, equitable and not unfairly 

discriminatory as it is assessed only 

once, even if it connects with another 

affiliate exchange since only one port is 

being used and the Exchange does not 

wish to charge multiple fees for the 

same port. Indeed, the Exchange notes 

that several ports are in fact purchased 

and utilized across one or more of the 

Exchange’s affiliated Exchanges (and 

charged only once). 

The Exchange also believes that the 

proposed fee change is not unfairly 

discriminatory because it would be 

assessed uniformly across all market 

participants that purchase the physical 

ports. The Exchange believes increasing 

the fee for 10 Gb physical ports and 

charging a higher fee as compared to the 

1 Gb physical port is equitable as the 1 

Gb physical port is 1/10th the size of the 

10 Gb physical port and therefore does 

not offer access to many of the products 

and services offered by the Exchange 

(e.g., ability to receive certain market 

data products). Thus, the value of the 1 

Gb alternative is lower than the value of 

the 10 Gb alternative, when measured 

based on the type of Exchange access it 

offers. Moreover, market participants 

that purchase 10 Gb physical ports 

utilize the most bandwidth and 

therefore consume the most resources 

from the network. As such, the 

Exchange believes the proposed fee 

change for 10 Gb physical ports is 

reasonably and appropriately allocated. 

The Exchange also notes Members 

and non-Members will continue to 

choose the method of connectivity 

based on their specific needs and no 

broker-dealer is required to become a 

Member of, let alone connect directly to, 

the Exchange. There is also no 

regulatory requirement that any market 

participant connect to any one 

particular exchange. Moreover, direct 

connectivity is not a requirement to 

participate on the Exchange. The 

Exchange also believes 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 

within the Over-the-Counter (OTC) 

markets which does not require 

connectivity to the Exchange. Indeed, 

there are currently 16 registered equities 

exchanges that trade equities (12 of 

which are not affiliated with Cboe), 

some of which have similar or lower 

connectivity fees.13 Based on publicly 

available information, no single equities 

exchange has more than approximately 

16% of the market share.14 Further, low 

barriers to entry mean that new 

exchanges may rapidly enter the market 

and offer additional substitute platforms 

to further compete with the Exchange 

and the products it offers. For example, 

in 2020 alone, three new exchanges 

entered the market: Long Term Stock 

Exchange (LTSE), Members Exchange 

(MEMX), and Miami International 

Holdings (MIAX Pearl). 

As noted above, there is no regulatory 

requirement that any market participant 

connect to any one equities exchange, 

nor that any market participant connect 

at a particular connection speed or act 

in a particular capacity on the 

Exchange, or trade any particular 

product offered on an exchange. 

Moreover, membership is not a 

requirement to participate on the 

Exchange. Indeed, the Exchange is 

unaware of any one equities exchange 

whose membership includes every 

registered broker-dealer. By way of 

example, while the Exchange has 103 

members that trade equities, Cboe EDGX 

has 124 members that trade equities, 

Cboe BYX has 110 members and Cboe 

BZX has 132 members. There is also no 

firm that is a Member of EDGA Equities 

only. Further, based on publicly 

available information regarding a 

sample of the Exchange’s competitors, 

NYSE has 143 members,15 IEX has 129 

members,16 and MIAX Pearl has 51 

members.17

A market participant may also submit 

orders to the Exchange via a Member 

broker or a third-party reseller of 

connectivity. The Exchange notes that 

third-party non-Members also resell 

exchange connectivity. This indirect 

connectivity is another viable 

alternative for market participants to 

trade on the Exchange without 

connecting directly to the Exchange 

(and thus not pay the Exchange 

connectivity fees), which alternative is 

already being used by non-Members and 

further constrains the price that the 

Exchange is able to charge for 

connectivity to its Exchange.18 The 

Exchange notes that it could, but 

chooses not to, preclude market 

participants from reselling its 

connectivity. Unlike other exchanges, 

the Exchange also chooses not to adopt 

fees that would be assessed to thirdparty resellers on a per customer basis 

(i.e., fee based on number of Members 

that connect to the Exchange indirectly 

via the third-party).19 Particularly, these 

third-party resellers may purchase the 

Exchange’s physical ports and resell 

access to such ports either alone or as 

part of a package of services. The 

Exchange notes that multiple Members 

are able to share a single physical port 

(and corresponding bandwidth) with 

other non-affiliated Members if 

purchased through a third-party reseller.20 This allows resellers to 


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21See e.g., See e.g., The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’), General 8, Connectivity to the 

Exchange. Nasdaq and its affiliated exchanges 

charge a monthly fee of $15,000 for each 10 Gbps 

Ultra fiber connection to the respective exchange, 

which is analogous to the Exchange’s 10 Gbps 

physical port. See also New York Stock Exchange 

LLC, NYSE American LLC, NYSE Arca, Inc., NYSE 

Chicago Inc., NYSE National, Inc. Connectivity Fee 

Schedule, which provides that 10 Gbps LX LCN 

Circuits (which are analogous to the Exchange’s 10 

Gbps physical port) are assessed $22,000 per 

month, per port. 

22See H.R. Rep. No. 94–229, at 92 (1975) (Conf. 

Rep.) (emphasis added). 

23 15 U.S.C. 78f(b)(5). 

24 15 U.S.C. 78f(8). 

25See also 15 U.S.C. 78k–l(a)(1)(C)(ii) (purposes 

of Exchange Act include to promote ‘‘fair 

competition among brokers and dealers, among 

exchange markets, and between exchange markets 

and markets other than exchange markets’’); Order, 

73 FR at 74781 (‘‘The Exchange Act and its 

legislative history strongly support the 

Commission’s reliance on competition, whenever 

possible, in meeting its regulatory responsibilities 

for overseeing the SROs and the national market 

system.’’). 

mutualize the costs of the ports for 

market participants and provide such 

ports at a price that may be lower than 

the Exchange charges due to this 

mutualized connectivity. These thirdparty sellers may also provide an 

additional value to market participants 

in addition to the physical port itself as 

they may also manage and monitor 

these connections, and clients of these 

third-parties may also be able to connect 

from the same colocation facility either 

from their own racks or using the thirdparty’s managed racks and 

infrastructure which may provide 

further cost-savings. The Exchange 

believes such third-party resellers may 

also use the Exchange’s connectivity as 

an incentive for market participants to 

purchase further services such as 

hosting services. That is, even firms that 

wish to utilize a single, dedicated 10 

Gbps port (i.e., use one single 10 Gbps 

port themselves instead of sharing a port 

with other firms), may still realize cost 

savings via a third-party reseller as it 

relates to a physical port because such 

reseller may be providing a discount on 

the physical port to incentivize the 

purchase of additional services and 

infrastructure support alongside the 

physical port offering (e.g., providing 

space, hosting, power, and other longhaul connectivity options). This is 

similar to cell phone carriers offering a 

new iPhone at a discount (or even at no 

cost) if purchased in connection with a 

new monthly phone plan. These 

services may reevaluate reselling or 

offering Cboe’s direct connectivity if 

they deem the fees to be excessive. 

Further, as noted above, the Exchange 

does not receive any connectivity 

revenue when connectivity is resold by 

a third-party, which often is resold to 

multiple customers, some of whom are 

agency broker-dealers that have 

numerous customers of their own. For 

example, there are approximately 12 

third parties who resell Exchange 

connectivity across the 7 Affiliated 

Exchanges, which are all accessible on 

the same network. These third-party 

resellers collectively maintain 

approximately 48 physical ports from 

the Exchange, but have collectively 

almost 200 unique customers 

downstream, connected through these 

multi-Exchange ports. Therefore, given 

the availability of third-party providers 

that also offer connectivity solutions, 

the Exchange believes participation on 

the Exchange remains affordable 

(notwithstanding the proposed fee 

change) for all market participants, 

including trading firms that may be able 

to take advantage of lower costs that 

result from mutualized connectivity 

and/or from other services provided 

alongside the physical port offerings. 

Because third-party resellers also act as 

a viable alternative to direct 

connectivity to the Exchange, the price 

that the Exchange is able to charge for 

direct connectivity to its Exchange is 

constrained. Moreover, if the Exchange 

were to assess supracompetitve rates, 

members and non-members (such as 

third-party resellers) alike, may decide 

not to purchase, or to reduce its use of, 

the Exchange’s direct connectivity. 

Disincentivizing market participants 

from purchasing Exchange connectivity 

would only serve to discourage 

participation on the Exchange which 

ultimately does not benefit the 

Exchange. Further, the Exchange 

believes its offerings are more affordable 

as compared to similar offerings at 

competitor exchanges.21

Accordingly, the vigorous 

competition among national securities 

exchanges provides many alternatives 

for firms to voluntarily decide whether 

direct connectivity to the Exchange is 

appropriate and worthwhile, and as 

noted above, no broker-dealer is 

required to become a Member of the 

Exchange, let alone connect directly to 

it. In the event that a market participant 

views the Exchange’s proposed fee 

change as more or less attractive than 

the competition, that market participant 

can choose to connect to the Exchange 

indirectly or may choose not to connect 

to that exchange and connect instead to 

one or more of the other 12 non-Cboe 

affiliated equities markets. Indeed, 

market participants are free to choose 

which exchange or reseller to use to 

satisfy their business needs. Moreover, 

if the Exchange charges excessive fees, 

it may stand to lose not only 

connectivity revenues but also revenues 

associated with the execution of orders 

routed to it, and, to the extent 

applicable, market data revenues. The 

Exchange believes that this competitive 

dynamic imposes powerful restraints on 

the ability of any exchange to charge 

unreasonable fees for connectivity. 

Notwithstanding the foregoing, the 

Exchange still believes that the 

proposed fee increase is reasonable, 

equitably allocated and not unfairly 

discriminatory, even for market 

participants that determine to connect 

directly to the Exchange for business 

purposes, as those business reasons 

should presumably result in revenue 

capable of covering the proposed fee. 

The Exchange lastly notes that it is 

not required by the Exchange Act, nor 

any other rule or regulation, to 

undertake a cost-of-service or ratemaking approach with respect to fee 

proposals. Moreover, Congress’s intent 

in enacting the 1975 Amendments to the 

Act was to enable competition—rather 

than government order—to determine 

prices. The principal purpose of the 

amendments was to facilitate the 

creation of a national market system for 

the trading of securities. Congress 

intended that this ‘‘national market 

system evolve through the interplay of 

competitive forces as unnecessary 

regulatory restrictions are removed.’’ 22

Other provisions of the Act confirm that 

intent. For example, the Act provides 

that an exchange must design its rules 

‘‘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.’’ 23 Likewise, the Act 

grants the Commission authority to 

amend or repeal ‘‘[t]he rules of [an] 

exchange [that] impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of this chapter.’’ 24 In short, 

the promotion of free and open 

competition was a core congressional 

objective in creating the national market 

system.25 Indeed, the Commission has 

historically interpreted that mandate to 

promote competitive forces to determine 

prices whenever compatible with a 

national market system. Accordingly, 

the Exchange believes it has met its 

burden to demonstrate that its proposed 

fee change is reasonable and consistent 

with the immediate filing process 

chosen by Congress, which created a 

system whereby market forces 

determine access fees in the vast 

majority of cases, subject to oversight 

only in particular cases of abuse or 

market failure. Lastly, and importantly, 


ddrumheller on DSK120RN23PROD with NOTICES1
13788 Federal Register / Vol. 89, No. 37 / Friday, February 23, 2024 / Notices 

26See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

27NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSEArca–2006–21)). 

28 15 U.S.C. 78s(b)(3)(A). 

29 17 CFR 240.19b–4(f). 

the Exchange believes that, even if it 

were possible as a matter of economic 

theory, cost-based pricing for the 

proposed fee would be so complicated 

that it could not be done practically. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed fee change will not impact 

intramarket competition because it will 

apply to all similarly situated Members 

equally (i.e., all market participants that 

choose to purchase the 10 Gb physical 

port). Additionally, the Exchange does 

not believe its proposed pricing will 

impose a barrier to entry to smaller 

participants and notes that its proposed 

connectivity pricing is associated with 

relative usage of the various market 

participants. For example, market 

participants with modest capacity needs 

can continue to buy the less expensive 

1 Gb physical port (which cost is not 

changing) or may choose to obtain 

access via a third-party re-seller. While 

pricing may be increased for the larger 

capacity physical ports, such options 

provide far more capacity and are 

purchased by those that consume more 

resources from the network. 

Accordingly, the proposed connectivity 

fees do not favor certain categories of 

market participants in a manner that 

would impose a burden on competition; 

rather, the allocation reflects the 

network resources consumed by the 

various size of market participants— 

lowest bandwidth consuming members 

pay the least, and highest bandwidth 

consuming members pays the most. 

The Exchange’s proposed fee is also 

still lower than some fees for similar 

connectivity on other exchanges and 

therefore may stimulate intermarket 

competition by attracting additional 

firms to connect to the Exchange or at 

least should not deter interested 

participants from connecting directly to 

the Exchange. Further, if the changes 

proposed herein are unattractive to 

market participants, the Exchange can, 

and likely will, see a decline in 

connectivity via 10 Gb physical ports as 

a result. The Exchange operates in a 

highly competitive market in which 

market participants can determine 

whether or not to connect directly to the 

Exchange based on the value received 

compared to the cost of doing so. 

Indeed, market participants have 

numerous alternative venues that they 

may participate on and direct their 

order flow, including 12 non-Cboe 

affiliated equities markets, as well as 

off-exchange venues, where competitive 

products are available for trading. 

Moreover, the Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 26 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’. . . .’’.27 Accordingly, the 

Exchange does not believe its proposed 

change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

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) 

of the Act 28 and paragraph (f) of Rule 

19b–4 29 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 will institute proceedings 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeEDGA–2024–006 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–CboeEDGA–2024–006. 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 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 37 / Friday, February 23, 2024 / Notices 13789 

30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

organization approved to exercise the trading rights 

associated with a Trading Permit. Members are 

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

Exchange Rule 100. 

4See Exchange Rule 100. 

5 Id. 

6The Exchange also proposes to renumber 

existing footnotes ‘‘*’’ as ‘‘c.’’ and ‘‘**’’as ‘‘d.’’ to 

Continued 

submissions should refer to file number 

SR–CboeEDGA–2024–006 and should 

be submitted on or before March 15, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–03643 Filed 2–22–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99554; File No. SR– 

PEARL–2024–08] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fee 

Schedule Regarding the Open-Close 

Report Data 

February 16, 2024. 

Pursuant to the provisions of 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 February 5, 2024, 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 proposes to amend the 

MIAX Pearl Options Exchange Fee 

Schedule (the ‘‘Fee Schedule’’) 

regarding the Open-Close Report to 

allow subscribers who purchase IntraDay Open Close data the ability to 

request End-of-Day Open-Close data for 

no additional charge. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/miax-options/rule-filings, at 

the Exchange’s principal office, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange offers a data product 

known as the Open-Close Report that is 

available for purchase by Exchange 

Members 3 and non-Members. The 

Open-Close Report is described under 

Exchange Rule 531(b)(1). The data 

contained in the Open-Close Report is 

proprietary Exchange trade data and 

does not include trade data from any 

other exchange. It is also a historical 

data product and not a real-time data 

feed. The Exchange now proposes to 

amend fees for the Open-Close Report to 

allow subscribers who purchase IntraDay Open Close data the ability to 

request End-of-Day Open-Close data for 

no additional charge. 

By way of background, the Exchange 

offers two versions of the Open-Close 

Report, an end-of-day summary and 

intra-day report. The End-of-Day version 

is a volume summary of trading activity 

on the Exchange at the option level by 

origin (Priority Customer,4 Non-Priority 

Customer, Firm, Broker-Dealer, and 

Market Maker 5), side of the market (buy 

or sell), contract volume, and 

transaction type (opening or closing). 

The customer and professional customer 

volume is further broken down into 

trade size buckets (less than 100 

contracts, 100–199 contracts, greater 

than 199 contracts). 

The Intra-Day Open-Close Report 

provides similar information to that of 

the End-of-Day version but is produced 

and updated every 10 minutes during 

the trading day. Data is captured in 

‘‘snapshots’’ taken every 10 minutes 

throughout the trading day and is 

available to subscribers within five 

minutes of the conclusion of each 10- 

minute period. Each update represents 

the aggregate data captured from the 

current ‘‘snapshot’’ and all previous 

‘‘snapshots.’’ The Intra-Day Open-Close 

data provides a volume summary of 

trading activity on the Exchange at the 

option level by origin (Priority 

Customer, Non-Priority Customer, Firm, 

Broker-Dealer, and Market Maker), side 

of the market (buy or sell), and 

transaction type (opening or closing). 

All volume is further broken down into 

trade size buckets (less than 100 

contracts, 100–199 contracts, greater 

than 199 contracts). 

The Exchange assesses a monthly fee 

of $600 per month for subscribing to the 

End-of-Day summary Open-Close Report 

and $2,000 per month for subscribing to 

the Intra-Day Open-Close Report. The 

Exchange also assesses a fee of $500 per 

request per month for ad-hoc requests 

for historical End-of-Day Open-Close 

data. An ad-hoc request for historical 

End-of-Day Open-Close data can be for 

any number of months beginning with 

June 2021 for which the data is 

available. The Exchange also assesses a 

fee of $1,000 per request per month for 

ad-hoc requests for historical Intra-Day 

Open-Close data. An ad-hoc request for 

historical Intra-Day Open-Close data can 

be for any number of months beginning 

with March 2017 for which the data is 

available. 

The Exchange now proposes to amend 

fees for the Open-Close Report to allow 

subscribers who purchase Intra-Day 

Open Close data the ability to request 

End-of-Day Open-Close data for no 

additional charge. This proposal is akin 

to a fee break for subscribers because it 

would decrease the cost to purchase a 

broader scope of Open-Close Report 

data from the Exchange by allowing 

Intra-Day subscribers to request End-ofDay data for no additional charge 

Specifically, the Exchange proposes to 

allow subscribers who purchase an 

Intra-Day monthly subscription to 

request an End-of-Day monthly 

subscription for no additional charge. 

Similarly, the Exchange proposes to also 

allow subscribers who purchase an 

Intra-Day Ad-hoc Request (historical 

data) to submit an End-of-Day Ad-hoc 

Request (historical data) for the same 

date or date range for no additional 

charge upon request. The Exchange 

proposes to codify these proposed 

changes under new footnotes a. and b. 

under Section 6 of its Fee Schedule.6


ddrumheller on DSK120RN23PROD with NOTICES1