84646 Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 

46 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. 100588 

(July 25, 2024), 89 FR 61554 (July 31, 2024) (SR– 

SAPPHIRE–2024–01). 

4The Exchange established the Definitions 

section of the Fee Schedule in a separate rule filing. 

See Securities Exchange Act Release No. 100683 

(August 9, 2024), 89 FR 66467 (August 15, 2024) 

(SR–SAPPHIRE–2024–13). 

5The term ‘‘Initial Waiver Period’’ means, for 

each applicable fee, the period of time from the 

initial effective date of the MIAX Sapphire Fee 

Schedule plus an additional six (6) full calendar 

months after the completion of the partial month of 

the Exchange launch. See the Definitions section of 

the Fee Schedule. 

6The term ‘‘order’’ means a firm commitment to 

buy or sell option contracts. See Exchange Rule 100. 

7The term ‘‘quote’’ or ‘‘quotation’’ The term 

‘‘quote’’ or ‘‘quotation’’ means a bid or offer entered 

by a Market Maker as a firm order that updates the 

Market Maker’s previous bid or offer, if any. When 

the term order is used in the Exchange’s Rules and 

a bid or offer is entered by the Market Maker in the 

option series to which such Market Maker is 

registered, such order shall, as applicable, 

constitute a quote or quotation for purposes of the 

Exchange’s Rules. See Exchange Rule 100. 

8The ‘‘Simple Order Book’’ is the Exchange’s 

regular electronic book of orders and quotes. See 

Exchange Rule 100. 

9The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

10See MIAX Sapphire Options Exchange User 

Manual, Version 1.0.0, Section 5.06, dated 

December 11, 2023, available at https://

www.miaxglobal.com/miax_sapphire_user_

manual.pdf (last visited July 24, 2024). 

11 In sum, a ‘‘Complex Order’’ is ‘‘any order 

involving the concurrent purchase and/or sale of 

two or more different options in the same 

underlying security (the ‘legs’ or ‘components’ of 

the complex order), for the same account. . . .’’ See 

Exchange Rule 518(a). 

12The ‘‘Strategy Book’’ is the Exchange’s 

electronic book of complex orders. See Exchange 

Rule 100. 

13The term ‘‘complex strategy’’ means a 

particular combination of components and their 

ratios to one another. New complex strategies can 

be created as the result of the receipt of a complex 

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–MEMX–2024–40 and should be 

submitted on or before November 13, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–24469 Filed 10–22–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101368; File No. SR– 

SAPPHIRE–2024–31] 

Self-Regulatory Organizations; MIAX 

Sapphire, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Establish Fees for the 

Exchange’s Proprietary Market Data 

Feeds: (i) MIAX Sapphire Top of Market 

Data Feed; (ii) MIAX Sapphire Complex 

Top of Market Data Feed; and (iii) MIAX 

Sapphire Liquidity Feed 

October 17, 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 October 

4, 2024, MIAX Sapphire, LLC (‘‘MIAX 

Sapphire’’ 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 Sapphire Options 

Exchange Fee Schedule (the ‘‘Fee 

Schedule’’) to establish fees for the 

Exchange’s proprietary market data 

feeds: (i) MIAX Sapphire Top of Market 

(‘‘ToM’’) data feed; (ii) MIAX Sapphire 

Complex Top of Market (‘‘cToM’’) data 

feed; and (iii) MIAX Sapphire Liquidity 

Feed (‘‘SLF’’). 

The text of the proposed rule change 

is available on the Exchange’s website at 

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

us-options/all-options-exchanges/rulefilings, at MIAX Sapphire’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 July 19, 2024, the Exchange filed 

a proposal to establish the ToM, cToM 

and SLF data feeds (collectively, the 

‘‘market data feeds’’) 3 for MIAX 

Sapphire. The Exchange now proposes 

to amend the Fee Schedule to establish 

fees for each of these market data feeds.4

The Exchange also proposes to waive 

such fees during an Initial Waiver 

Period,5 which would run for six full 

calendar months from the initial 

effective date (August 12, 2024) of the 

proposed fees to incentivize market 

participants to subscribe and make the 

Exchange’s proprietary market data 

more widely available. The Exchange 

initially filed this proposal on August 8, 

2024 (SR–SAPPHIRE–2024–18). The 

Exchange withdrew SR–SAPPHIRE– 

2024–18 on October 3, 2024 and 

submitted this proposal. 

The ToM data feed contains top of 

book quotations based on options 

orders 6 and quotes 7 resting on the 

Exchange’s Simple Order Book 8 as well 

as administrative messages, such as 

other real-time Exchange System 9

functions.10 The cToM data feed 

includes the same types of information 

as ToM, but for Complex Orders 11 on 

the Exchange’s Strategy Book.12 This 

information includes the Exchange’s 

best bid and offer for a complex 

strategy,13 with aggregate size, based on 


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order or by the Exchange for a complex strategy that 

is not currently in the System. The Exchange may 

limit the number of new complex strategies that 

may be in the System at a particular time and will 

communicate this limitation to Members via 

Regulatory Circular. See Exchange Rule 518(a). 

14The term ‘‘Member’’ means an individual or 

organization that is registered with the Exchange 

pursuant to Chapter II of these Rules for purposes 

of trading on the Exchange as an ‘‘Electronic 

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

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

See Exchange Rule 100. 

15The term ‘‘consolidated Options Information’’ 

means ‘‘consolidated Last Sale Reports combined 

with either consolidated Quotation Information or 

the BBO furnished by OPRA . . .’’ Access to 

consolidated Options Information is deemed 

‘‘equivalent’’ if both kinds of information are 

equally accessible on the same terminal or work 

station. See Limited Liability Company Agreement 

of Options Price Reporting Authority, LLC (‘‘OPRA 

Plan’’), Section 5.2(c)(iii). The Exchange notes that 

this requirement under the OPRA Plan is also 

reiterated under the Cboe Global Markets Global 

Data Agreement and Cboe Global Markets North 

American Data Policies, which subscribers to any 

exchange proprietary product must sign and are 

subject to, respectively. Additionally, the 

Exchange’s Data Order Form (used for requesting 

the Exchange’s market data products) requires 

confirmation that the requesting market participant 

receives data from OPRA. 

16A ‘‘Distributor’’ of MIAX Sapphire data is any 

entity that receives a feed or file of data either 

directly from MIAX Sapphire or indirectly through 

another entity and then distributes it either 

internally (within that entity) or externally (outside 

that entity). All Distributors are required to execute 

an Exchange Data Agreement. See Fee Schedule, 

proposed Section 6)a). 

displayable orders in the complex 

strategy. The cToM data feed also 

provides subscribers with the following 

information: (i) the identification of the 

complex strategies currently trading on 

the Exchange; (ii) complex strategy last 

sale information; and (iii) the status of 

securities underlying the complex 

strategy (e.g., halted, open, or resumed). 

ToM subscribers are not required to 

subscribe to cToM, and cToM 

subscribers are not required to subscribe 

to ToM. 

The Exchange notes that there is no 

requirement that any Member 14 or 

market participant subscribe to either 

the ToM or cToM data feeds. Instead, a 

Member may choose to maintain 

subscriptions to ToM or cToM based on 

their trading strategies and individual 

business decisions. Moreover, persons 

(including broker-dealers) who 

subscribe to any exchange proprietary 

data feed must also have equivalent 

access to consolidated Options 

Information 15 from the Options Price 

Reporting Authority (‘‘OPRA’’) for the 

same classes or series of options that are 

included in the proprietary data feed 

(including for exclusively listed 

products), and proprietary data feeds 

cannot be used to meet that particular 

requirement. The proposed fees 

described below would not apply 

differently based upon the size or type 

of firm, but rather based upon the type 

of subscription a firm has to ToM or 

cToM and their use thereof, which are 

based upon factors deemed relevant by 

each firm. 

The SLF data feed provides market 

participants with a direct data feed that 

allows subscribers to receive real-time 

updates of options orders, products 

traded on MIAX Sapphire, MIAX 

Sapphire System status, and MIAX 

Sapphire underlying trading status. 

When an order is received or an order 

state changes, published order 

information will be transmitted over 

SLF, including time stamp, action, 

product ID, order ID, order side, order 

type, order price, original order size, 

open order size, time in force, origin, 

open or close, and route instruction. For 

complex orders, complex strategy 

definition notification and complex 

order notice are also included. 

Subscribers to the SLF will get a list of 

all options symbols and strategies that 

will be traded and sourced on that feed 

at the start of every session. 

Each of the proposed fees are 

described below. Again, the Exchange 

proposes to not charge the proposed fees 

during the Initial Waiver Period. Even 

though the Exchange proposes to waive 

these particular fees during the Initial 

Waiver Period, the Exchange believes 

that it is appropriate to provide market 

participants with the overall structure of 

the fees by outlining the structure and 

amounts in the Fee Schedule so that 

there is general awareness that the 

Exchange intends to assess such fees 

upon expiration of the defined term of 

the Initial Waiver Period. 

ToM 

The Exchange proposes to charge a 

monthly fee of $1,200 to Internal 

Distributors 16 and $2,000 to External 

Distributors for the ToM data feed after 

the expiration of the Initial Waiver 

Period. The proposed fees are intended 

to cover the Exchange’s costs with 

compiling and producing the ToM data 

feed described in the Exchange’s cost 

analysis detailed below. The Exchange 

proposes to assess Internal Distributors 

fees that are less than the fees assessed 

for External Distributors because 

External Distributors may monetize 

their receipt of the ToM data feed by 

charging their customers fees for receipt 

of the Exchange’s data. Internal 

Distributors do not have the same 

ability. The Exchange does not propose 

to charge any additional fees based on 

a Distributor’s use of the ToM data feed 

(e.g., displayed versus non-displayed 

use), redistribution fees, or individual 

per user fees. 

cToM 

The Exchange proposes to charge a 

monthly fee of $1,200 to Internal 

Distributors and $2,000 to External 

Distributors for the cToM data feed after 

the expiration of the Initial Waiver 

Period. The proposed fees are intended 

to cover the Exchange’s costs with 

compiling and producing the cToM data 

feed described in the Exchange’s cost 

analysis detailed below. The Exchange 

proposes to assess Internal Distributors 

fees that are less than the fees assessed 

for External Distributors because 

External Distributors may monetize 

their receipt of the cToM data feed by 

charging their customers fees for receipt 

of the Exchange’s data. Internal 

Distributors do not have the same 

ability. The Exchange does not propose 

to charge any additional fees based on 

a Distributor’s use of the cToM data feed 

(e.g., displayed versus non-displayed 

use), redistribution fees, or individual 

per user fees. 

SLF 

The Exchange proposes to charge a 

monthly fee of $3,000 to Internal 

Distributors and $3,500 to External 

Distributors for the SLF data feed after 

the expiration of the Initial Waiver 

Period. The proposed fees are intended 

to cover the Exchange’s costs with 

compiling and producing the SLF data 

feed described in the Exchange’s Cost 

Analysis detailed below. The Exchange 

proposes to assess Internal Distributors 

fees that are less than the fees assessed 

for External Distributors because 

External Distributors may monetize 

their receipt of the SLF data feed by 

charging their customers fees for receipt 

of the Exchange’s data. Internal 

Distributors do not have the same 

ability. The Exchange does not propose 

to charge any additional fees based on 

a Distributor’s use of the SLF data feed 

(e.g., displayed versus non-displayed 

use), redistribution fees, or individual 

per user fees. 

* * * * * 

The Exchange proposes that each 

Distributor would be charged for each 

month it is credentialed to receive ToM, 

cToM, and/or SLF in the Exchange’s 

production environment. Fees for each 

of the market data feeds will be reduced 

for new Distributors who subscribe to a 

market data feed mid-month for the first 

month they subscribe following the 

expiration of the Initial Waiver Period, 

as described above. New Distributors 

who subscribe mid-month for each 

market data feed would be assessed a 

pro-rata percentage of the applicable 


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17See Fee Change Alert, MIAX Sapphire Options 

Exchange—Summary of Proposed Non-Transaction 

Fees (July 23, 2024), available at https://

www.miaxglobal.com/alert/2024/07/23/miaxsapphire-options-exchange-summary-proposednon-transaction-fees?nav=all. 

18 15 U.S.C. 78f. 

19 15 U.S.C. 78f(b)(4). 

20 15 U.S.C. 78f(b)(5). 

21See Staff Guidance on SRO Rule Filings 

Relating to Fees (May 21, 2019), available at https:// 

www.sec.gov/tm/staff-guidance-sro-rule-filings-fees. 22 Id. 

23 15 U.S.C. 78s(b)(1). 

24 17 CFR 240.19b–4. 

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

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

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

28 15 U.S.C. 78f(b)(8). 

29The affiliated markets include Miami 

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

separately, the options and equities markets of 

MIAX PEARL, LLC (‘‘MIAX Pearl’’); and MIAX 

Emerald, LLC (‘‘MIAX Emerald’’). 

30See Securities Exchange Act Release Nos. 

100041 (April 26, 2024), 89 FR 35868 (May 2, 2024) 

(SR–MIAX–2024–25); 100319 (June 12, 2024), 89 FR 

51562 (June 18, 2024) (SR–PEARL–2024–25); 

100042 (April 26, 2024), 89 FR 35879 (May 2, 2024) 

(SR–EMERALD–2024–15). The Exchange frequently 

updates it Cost Analysis as strategic initiatives 

change, costs increase or decrease, and market 

participant needs and trading activity (once live 

trading begins) changes. The Exchange’s most 

recent Cost Analysis was conducted ahead of this 

filing. 

Distribution fee based on the percentage 

of the number of trading days remaining 

in the affected calendar month as of the 

date on which they have been first 

credentialed to receive each of the 

market data feeds in the production 

environment, divided by the total 

number of trading days in the affected 

calendar month. 

The Exchange believes the proposed 

fees will allow the Exchange to offset 

the expenses the Exchange has and will 

continue to incur associated with 

compiling and disseminating the market 

data feeds. Further, the Exchange 

believes it provided sufficient 

transparency in the Cost Analysis 

provided below, which provides a basis 

for how the Exchange determined to 

charge such fees. 

The Exchange issued an alert publicly 

announcing the proposed fees on July 

23, 2024.17

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b) 18 of the 

Act in general, and furthers the 

objectives of Section 6(b)(4) 19 of the 

Act, in particular, in that it is designed 

to provide for the equitable allocation of 

reasonable dues, fees and other charges 

among its Members and other persons 

using its facilities. Additionally, the 

Exchange believes that the proposed 

fees are consistent with the objectives of 

Section 6(b)(5) 20 of the Act in that they 

are designed 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 

a free and open market and national 

market system, and, in general, to 

protect investors and the public interest, 

and, particularly, are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In 2019, Commission staff published 

guidance suggesting the types of 

information that self-regulatory 

organizations (‘‘SROs’’) may use to 

demonstrate that their fee filings comply 

with the standards of the Exchange Act 

(the ‘‘Staff Guidance’’).21 While the 

Exchange understands that the Staff 

Guidance does not create new legal 

obligations on SROs, the Staff Guidance 

is consistent with the Exchange’s view 

about the type and level of transparency 

that exchanges should meet to 

demonstrate compliance with their 

existing obligations when they seek to 

charge new fees. The Staff Guidance 

provides that in assessing the 

reasonableness of a fee, the Staff would 

consider whether the fee is constrained 

by significant competitive forces. To 

determine whether a proposed fee is 

constrained by significant competitive 

forces, the Staff Guidance further 

provides that the Staff would consider 

whether the evidence provided by an 

SRO in a fee filing proposal 

demonstrates (i) that there are 

reasonable substitutes for the product or 

service that is the subject of a proposed 

fee; (ii) that ‘‘platform’’ competition 

constrains the fee; and/or (iii) that the 

revenue and cost analysis provided by 

the SRO otherwise demonstrates that 

the proposed fee would not result in the 

SRO taking supra-competitive profits.22

The Exchange provides sufficient 

evidence below to support the findings 

that the proposed fees are reasonable 

because the projected revenue and cost 

analysis contained herein demonstrates 

that the proposed fees would not result 

in the Exchange taking supracompetitive profits. 

Cost Analysis 

In general, 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 fees for market participants to 

access an exchange’s market data. The 

Exchange believes that it is important to 

demonstrate that these fees are based on 

its costs and reasonable business needs. 

Accordingly, the Exchange included a 

cost analysis below in connection with 

the proposed market data fees and the 

costs associated with compiling and 

providing the ToM, cToM, and SLF 

feeds (the ‘‘Cost Analysis’’). 

Accordingly, in proposing to charge 

fees for market data, the Exchange is 

especially diligent in assessing those 

fees in a transparent way against its own 

aggregate costs of providing the related 

service, and in carefully and 

transparently assessing the impact on 

Members—both generally and in 

relation to other Members—to ensure 

the fees will not create a financial 

burden on any participant and will not 

have an undue impact in particular on 

smaller Members and competition 

among Members in general. The 

Exchange does not believe it needs to 

otherwise address questions about 

market competition in the context of 

this filing because the proposed fees are 

consistent with the Act based on the 

Exchange’s Cost Analysis. The Exchange 

also believes that this level of diligence 

and transparency is called for by the 

requirements of Section 19(b)(1) under 

the Act,23 and Rule 19b–4 thereunder,24

with respect to the types of information 

SROs should provide when filing fee 

changes, and Section 6(b) of the Act,25

which requires, among other things, that 

exchange fees be reasonable and 

equitably allocated,26 not designed to 

permit unfair discrimination,27 and that 

they do not impose a burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act.28 This proposal 

addresses those requirements, and the 

analysis and data in this section are 

designed to clearly and 

comprehensively show how they are 

met. 

The Exchange’s affiliates 29 previously 

completed a study of their aggregate 

costs to produce market data and 

provide connectivity and port services, 

defined above as its Cost Analysis.30

Personnel began to plan for and develop 

the Exchange beginning in early 2023, 

and costs included in this Cost Analysis 

are related to the development and 

buildout of the Exchange since that 

time. During the Exchange’s 

development and buildout that occurred 

throughout 2023 and continues to today, 

the Exchange routinely studied its 


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31For example, MIAX Sapphire maintains 8 

matching engines, MIAX maintains 24 matching 

engines, MIAX Pearl Options maintains 12 

matching engines, MIAX Pearl Equities maintains 

24 matching engines, and MIAX Emerald maintains 

12 matching engines. 

32MIAX Options Exchange, MIAX Pearl Options 

Exchange, MIAX Pearl Equities Exchange, MIAX 

Emerald Exchange, and the MIAX Sapphire 

Exchange. 

33Additionally, while MIAX Sapphire received 

approval as a national securities exchange on July 

15, 2024, start-up costs associated with the launch 

of MIAX Sapphire were not included in the costs 

used for the 2024 electronic exchange projections. 

aggregate costs to produce and 

disseminate Exchange market data, 

which were used to determine the 

proposed pricing for the market data 

feeds as part of the Exchange’s Cost 

Analysis. The Cost Analysis required a 

detailed analysis of the Exchange’s 

aggregate baseline costs, including a 

determination and allocation of costs for 

core services provided by the 

Exchange—transaction execution, 

market data, membership services, 

physical connectivity, and port access 

(which provide order entry, cancellation 

and modification functionality, risk 

functionality, the ability to receive drop 

copies, and other functionality). The 

Exchange separately divided its costs 

between those costs necessary to deliver 

each of these core services, including 

infrastructure, software, human 

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

general and administrative expenses 

(‘‘cost drivers’’). 

As an initial step, the Exchange 

determined the total cost for the 

Exchange and its affiliated markets for 

each cost driver as part of the 

Exchange’s 2024 budget review process. 

The 2024 budget review is a companywide process that occurs over the course 

of many months, includes meetings 

among senior management, department 

heads, and the Finance Team. Each 

department head is required to send a 

‘‘bottom up’’ budget to the Finance 

Team allocating costs at the profit and 

loss account and vendor levels for the 

Exchange and its affiliated markets 

based on a number of factors, including 

server counts, additional hardware and 

software utilization, current or 

anticipated functional or non-functional 

development projects, capacity needs, 

end-of-life or end-of-service intervals, 

number of members, market model (e.g., 

price time or pro-rata, simple only or 

simple and complex markets, auction 

functionality, etc.), which may impact 

message traffic, individual system 

architectures that impact platform 

size,31 storage needs, dedicated 

infrastructure versus shared 

infrastructure allocated per platform 

based on the resources required to 

support each platform, number of 

available connections, and employees 

allocated time. All of these factors result 

in different allocation percentages 

among the Exchange and its affiliated 

markets, i.e., the different percentages of 

the overall cost driver allocated to the 

Exchange and its affiliated markets will 

cause the dollar amount of the overall 

cost allocated among the Exchange and 

its affiliated markets to also differ. 

Because the Exchange’s parent company 

currently owns and operates five 

separate and distinct marketplaces,32

the Exchange must determine the costs 

associated with each actual market—as 

opposed to the Exchange’s parent 

company simply concluding that all 

cost drivers are the same at each 

individual marketplace and dividing 

total cost by five (evenly for each 

marketplace). Rather, the Exchange’s 

parent company determines an accurate 

cost for each marketplace, which results 

in different allocations and amounts 

across each exchange for the same cost 

drivers, due to the unique factors of 

each marketplace as described above. 

This allocation methodology also 

ensures that no cost would be allocated 

twice or double-counted between the 

Exchange and its affiliated markets. The 

Finance Team then consolidates the 

budget and sends it to senior 

management, including the Chief 

Financial Officer and Chief Executive 

Officer, for review and approval. Next, 

the budget is presented to the Board of 

Directors and the Finance and Audit 

Committees for each exchange for their 

approval. The above steps encompass 

the first step of the cost allocation 

process. For the 2024 budget process for 

MIAX Sapphire, only costs and 

anticipated revenues associated with the 

electronic exchange were considered. 

While MIAX Sapphire plans on opening 

its trading floor in 2025 costs and 

anticipated revenues from the trading 

floor were not included as part of any 

analysis for MIAX Sapphire for 2024.33

The next step involves determining 

what portion of the cost allocated to the 

Exchange pursuant to the above 

methodology is to be allocated to each 

core service, e.g., market data, 

connectivity, ports, and transaction 

services. The Exchange and its affiliated 

markets adopted an allocation 

methodology with thoughtful and 

consistently applied principles to guide 

how much of a particular cost amount 

allocated to the Exchange should be 

allocated within the Exchange to each 

core service. This is the final step in the 

cost allocation process and is applied to 

each of the cost drivers set forth below. 

For instance, fixed costs that are not 

driven by client activity (e.g., message 

rates), such as data center costs, were 

allocated more heavily to the provision 

of physical connectivity (for example, 

62% of the data center total expense 

amount is allocated to all provisions of 

connectivity), with smaller allocations 

to ToM, cToM and SLF (2.0% 

combined), and the remainder to the 

provision of ports, transaction 

execution, and membership services 

(36%). This next level of the allocation 

methodology at the individual exchange 

level also took into account factors 

similar to those set forth under the first 

step of the allocation methodology 

process described above, to determine 

the appropriate allocation to 

connectivity or market data versus 

allocations for other services. This 

allocation methodology was developed 

through an assessment of costs with 

senior management intimately familiar 

with each area of the Exchange’s 

operations. After adopting this 

allocation methodology, the Exchange 

then applied an allocation of each cost 

driver to each core service, resulting in 

the cost allocations described below. 

Each of the below cost allocations is 

unique to the Exchange and represents 

a percentage of overall cost that was 

allocated to the Exchange pursuant to 

the initial allocation described above. 

By allocating segmented costs to each 

core service, the Exchange was able to 

estimate by core service the potential 

margin it might earn based on different 

fee models. The Exchange notes that it 

has five primary sources of revenue that 

it can potentially use to fund its 

operations: transaction fees, 

connectivity and port service fees, 

membership fees, regulatory fees, and 

market data fees. Accordingly, the 

Exchange must cover its expenses from 

these five primary sources of revenue. 

The Exchange also notes that as a 

general matter each of these sources of 

revenue is based on services that are 

interdependent. For instance, the 

Exchange’s system for executing 

transactions is dependent on physical 

hardware and connectivity; only 

Members and parties that they sponsor 

to participate directly on the Exchange 

may submit orders to the Exchange; 

some Members (but not all) consume 

market data from the Exchange in order 

to trade on the Exchange; and, the 

Exchange consumes market data from 

external sources in order to comply with 

regulatory obligations. Accordingly, 

given this interdependence, the 

allocation of costs to each service or 

revenue source required judgment of the 

Exchange and was weighted based on 

estimates of the Exchange that the 


khammond on DSKJM1Z7X2PROD with NOTICES
84650 Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 

34The Exchange notes that in recent nontransaction fee filings by the Exchange’s affiliated 

markets, those exchanges included a comparison 

and explanation where certain cost driver 

allocations and expense amounts materially 

differed for the same cost driver among the 

affiliated markets. See, e.g., Securities Exchange Act 

Release No. 100041 (April 26, 2024), 89 FR 35868 

(May 2, 2024) (SR–MIAX–2024–25). The Exchange 

believes a similar comparison and explanation is 

not appropriate here because the Exchange has yet 

to commence operations and the allocations 

provided herein may change over time as the 

Exchange matures and its operations adjust based 

on its trading volumes and number of market data 

subscribers. In contrast, MIAX and MIAX Emerald 

are more mature markets with a steady market data 

subscriber base and a clearer estimation of their 

costs associated with producing and disseminating 

their market data feeds. Further, as a new exchange, 

MIAX Sapphire proposes to waive the fees for the 

market data feeds for a specified period of time in 

order to build market share, which in turn, should 

attract more market data subscribers. If the 

Exchange does not attract as many market data 

subscribers as currently projected for the Cost 

Analysis, the Exchange may need to reduce its 

market data fees or waive the fees for a longer 

period of time. Accordingly, the Exchange believes 

it is reasonable to not provide a similar comparison 

of cost driver allocations until the Exchange has 

time to build its subscriber base for the market data 

feeds. 

Exchange believes are reasonable, as set 

forth below. While there is no 

standardized and generally accepted 

methodology for the allocation of an 

exchange’s costs, the Exchange’s 

methodology is the result of an 

extensive review and analysis and will 

be consistently applied going forward 

for any other cost-justified potential fee 

proposals. In the absence of the 

Commission attempting to specify a 

methodology for the allocation of 

exchanges’ interdependent costs, the 

Exchange will continue to be left with 

its best efforts to attempt to conduct 

such an allocation in a thoughtful and 

reasonable manner. 

Through the Exchange’s extensive 

Cost Analysis, the Exchange analyzed 

nearly every expense item in the 

Exchange’s general expense ledger to 

determine whether each such expense 

relates to the provision of the market 

data feeds, and, if such expense did so 

relate, what portion (or percentage) of 

such expense actually supports the 

provision of the market data feeds, and 

thus bears a relationship that is, ‘‘in 

nature and closeness,’’ directly related 

to the market data feeds. In turn, the 

Exchange allocated certain costs more to 

physical connectivity and others to 

ports, while certain costs were only 

allocated to such services at a very low 

percentage or not at all, using consistent 

allocation methodologies as described 

above. Based on this analysis, the 

Exchange estimates that the aggregate 

monthly cost to provide ToM, cToM, 

and SLF data feeds is $59,161 (the 

Exchange divided the annual cost for 

each of ToM, cToM, and SLF by 12 

months, then added all three numbers 

together), as further detailed below. 

Costs Related To Offering ToM, cToM, 

and SLF Data Feeds 34

The following chart details the 

individual line-item (annual) costs 

considered by the Exchange to be 

related to offering the ToM, cToM, and 

SLF data feeds to its Members and other 

customers, as well as the percentage of 

the Exchange’s overall costs that such 

costs represent for such area (e.g., as set 

forth below, the Exchange allocated 

approximately 6.2% of its overall 

Human Resources cost to offering ToM, 

cToM, and SLF data feeds). 

Cost drivers Allocated 

annual cost a

Allocted 

monthly cost b % of all 

Human Resources ....................................................................................................................... $631,203 $52,600 6.2 

Connectivity (external fees, cabling, switches, etc.) ................................................................... 511 43 2.0 

Internet Services and External Market Data ............................................................................... 0.00 0.00 0.0 

Data Center ................................................................................................................................. 12,298 1,025 2.0 

Hardware and Software Maintenance & Licenses ...................................................................... 9,933 828 2.0

Depreciation ................................................................................................................................. 13,656 1,138 1.1 

Allocated Shared Expenses ........................................................................................................ 42,326 3,527 1.5 

Total ...................................................................................................................................... 709,927 59,161 4.6 

aThe Annual Cost includes figures rounded to the nearest dollar. 

bThe Monthly Cost was determined by dividing the Annual Cost for each line item by twelve (12) months and rounding up or down to the nearest dollar. 

Below are additional details regarding 

each of the line-item costs considered 

by the Exchange to be related to offering 

the market data feeds. 

Human Resources 

The Exchange notes that it and its 

affiliated markets anticipate that by 

year-end 2024, there will be 289 

employees (excluding employees at 

non-options/equities exchange 

subsidiaries of Miami International 

Holdings, Inc. (‘‘MIH’’), the holding 

company of the Exchange and its 

affiliated markets), and each department 

leader has direct knowledge of the time 

spent by each employee with respect to 

the various tasks necessary to operate 

the Exchange. Specifically, twice a year, 

and as needed with additional new 

hires and new project initiatives, in 

consultation with employees as needed, 

managers and department heads assign 

a percentage of time to every employee 

and then allocate that time amongst the 

Exchange and its affiliated markets to 

determine each market’s individual 

Human Resources expense. Then, 

managers and department heads assign 

a percentage of each employee’s time 

allocated to the Exchange into buckets 

including network connectivity, ports, 

market data, and other exchange 

services. This process ensures that every 

employee is 100% allocated, ensuring 

there is no double counting between the 

Exchange and its affiliated markets. 

For personnel costs (Human 

Resources), the Exchange calculated an 

allocation of employee time for 

employees whose functions include 

providing and maintaining the market 

data feeds and performance thereof 

(primarily the Exchange’s network 

infrastructure team, which spends a 

portion of their time performing 

functions necessary to provide market 

data). As described more fully above, 

the Exchange’s parent company 

allocates costs to the Exchange and its 

affiliated markets and then a portion of 

the Human Resources costs allocated to 

the Exchange is then allocated to the 

market data feeds. From that portion 

allocated to the Exchange that applied 

to the market data feeds, the Exchange 

then allocated a weighted average of 

7.3% of each employee’s time from the 

above group to the market data feeds 

(which excludes an allocation for the 

recently hired Head of Data Services for 

the Exchange and its affiliates). 

The Exchange also allocated Human 

Resources costs to provide the market 

data feeds to a limited subset of 

personnel with ancillary functions 


khammond on DSKJM1Z7X2PROD with NOTICES
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35The Exchange understands that the Investors 

Exchange, Inc. (‘‘IEX’’) and MEMX LLC (‘‘MEMX’’) 

both allocated a percentage of their servers to the 

production and dissemination of market data to 

support market data fee proposals in 2022 and 

2023. See Securities Exchange Act Release Nos. 

94630 (April 7, 2022), 87 FR 21945, at page 21949 

(April 13, 2022) (SR–IEX–2022–02) and 97130 

(March 13, 2023), 88 FR 16491 (March 17, 2023) 

(SR–MEMX–2023–04). The Exchange does not have 

insight into either IEX’s or MEMX’s technology 

infrastructure or what their determinations were 

based on. However, the Exchange reviewed its own 

technology infrastructure and believes based on its 

design, it is more appropriate for the Exchange to 

allocate a portion of its Connectivity cost driver to 

market data based on a percentage of overall cost, 

not on a per server basis. 

related to establishing and maintaining 

such market data feeds (such as 

information security, sales, 

membership, and finance personnel). 

The Exchange allocated cost on an 

employee-by-employee basis (i.e., only 

including those personnel who support 

functions related to providing market 

data feeds) and then applied a smaller 

allocation to such employees’ time to 

the market data feeds (4.9%, which 

includes an allocation for the Head of 

Data Services). This other group of 

personnel with a smaller allocation of 

Human Resources costs also have a 

direct nexus to providing the market 

data feeds, whether it is a sales person 

selling a market data feed, finance 

personnel billing for market data feeds 

or providing budget analysis, or 

information security ensuring that such 

market data feeds are secure and 

adequately defended from an outside 

intrusion. 

The estimates of Human Resources 

cost were therefore determined by 

consulting with such department 

leaders, determining which employees 

are involved in tasks related to 

providing market data feeds, and 

confirming that the proposed allocations 

were reasonable based on an 

understanding of the percentage of time 

such employees devote to those tasks. 

This includes personnel from the 

Exchange departments that are 

predominately involved in providing 

the market data feeds: Business Systems 

Development, Trading Systems 

Development, Systems Operations and 

Network Monitoring, Network and Data 

Center Operations, Listings, Trading 

Operations, and Project Management. 

Again, the Exchange allocated 7.3% of 

each of their employee’s time assigned 

to the Exchange for the market data 

feeds, as stated above. Employees from 

these departments perform numerous 

functions to support the market data 

feeds, such as the configuration and 

maintenance of the hardware necessary 

to support the market data feeds. This 

hardware includes servers, routers, 

switches, firewalls, and monitoring 

devices. These employees also perform 

software upgrades, vulnerability 

assessments, remediation and patch 

installs, equipment configuration and 

hardening, as well as performance and 

capacity management. These employees 

also engage in research and 

development analysis for equipment 

and software supporting the market data 

feeds and design, and support the 

development and on-going maintenance 

of internally-developed applications as 

well as data capture and analysis, and 

Member and internal Exchange reports 

related to network and system 

performance. The above list of employee 

functions is not exhaustive of all the 

functions performed by Exchange 

employees to support the market data 

feeds, but illustrates the breath of 

functions those employees perform in 

support of the above cost and time 

allocations. 

Lastly, the Exchange notes that senior 

level executives’ time was only 

allocated to the market data feeds 

related Human Resources costs to the 

extent that they are involved in 

overseeing tasks related to providing 

market data. The Human Resources cost 

was calculated using a blended rate of 

compensation reflecting salary, equity 

and bonus compensation, benefits, 

payroll taxes, and 401(k) matching 

contributions. 

Connectivity (External Fees, Cabling, 

Switches, Etc.) 

The Connectivity cost driver includes 

cabling and switches required to 

generate and disseminate the market 

data feeds and operate the Exchange. 

The Connectivity cost driver is more 

narrowly focused on technology used to 

complete Member subscriptions to the 

market data feeds and the servers used 

at the Exchange’s primary and back-up 

data centers specifically for the market 

data feeds. Further, as certain servers 

are only partially utilized to generate 

and disseminate the market data feeds, 

only the percentage of such servers 

devoted to generating and disseminating 

the market data feeds was included (i.e., 

the capacity of such servers allocated to 

the ToM, cToM, and SLF data feeds).35

Internet Services and External Market 

Data 

The next cost driver consists of 

internet services and external market 

data. Internet services includes thirdparty service providers that provide the 

internet, fiber and bandwidth 

connections between the Exchange’s 

networks, primary and secondary data 

centers, and office locations in 

Princeton and Miami. External market 

data includes fees paid to third parties, 

including other exchanges, to receive 

market data. The Exchange did not 

allocate any costs associated with 

internet services or external market data 

to the ToM, cToM or SLF data feeds. 

Data Center 

Data Center costs includes an 

allocation of the costs the Exchange 

incurs to provide the market data feeds 

in the third-party data centers where the 

Exchange maintains its equipment (such 

as dedicated space, security services, 

cooling and power). The Exchange does 

not own the primary data center or the 

secondary data center, but instead leases 

space in data centers operated by third 

parties. As the Data Center costs are 

primarily for space, power, and cooling 

of servers, the Exchange allocated 2.0% 

to the applicable Data Center costs to 

the market data feeds. The Exchange 

believes it is reasonable to apply the 

same proportionate percentage of Data 

Center costs to that of the Connectivity 

cost driver. 

Hardware and Software Maintenance 

and Licenses 

Hardware and Software Maintenance 

and Licenses includes hardware and 

software licenses used to operate and 

monitor physical assets necessary to 

offer the market data feeds. Because the 

hardware and software license fees are 

correlated to the servers used by the 

Exchange, the Exchange again applied 

an allocation of 2.0% of its costs for 

Hardware and Software Maintenance 

and Licenses to the market data feeds. 

Depreciation 

All physical assets, software, and 

hardware used to provide the market 

data feeds, which also includes assets 

used for testing and monitoring of 

Exchange infrastructure to provide 

market data, were valued at cost, and 

depreciated or leased over periods 

ranging from three to five years. Thus, 

the depreciation cost primarily relates to 

servers necessary to operate the 

Exchange, some of which are owned by 

the Exchange and some of which are 

leased by the Exchange in order to allow 

efficient periodic technology refreshes. 

The vast majority of the software the 

Exchange uses for its operations to 

generate and disseminate the market 

data feeds has been developed in-house 

over an extended period. This software 

development also requires quality 

assurance and thorough testing to 

ensure the software works as intended. 

The Exchange also included in the 

Depreciation cost driver certain 

budgeted improvements that the 


khammond on DSKJM1Z7X2PROD with NOTICES
84652 Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 

36The Exchange notes that MEMX allocated a 

precise amount of 10% of the overall cost for 

directors in a similar non-transaction fee filing. See 

Securities Exchange Act Release No. 97130 (March 

13, 2023), 88 FR 16491 (March 17, 2023) (SR– 

MEMX–2023–04). The Exchange does not calculate 

is expenses at that granular a level. Instead, director 

costs are included as part of the overall general 

allocation. 

37The methodology used by the Exchange to 

project the number of subscribers for each of the 

market data feeds once the Initial Waiver Period 

expires can be found under the section titled 

‘‘Projected Revenue’’, below. 

Exchange intends to capitalize and 

depreciate with respect to the market 

data feeds in the near-term. As with the 

other allocated costs in the Exchange’s 

updated Cost Analysis, the Depreciation 

cost was therefore narrowly tailored to 

depreciation related to the market data 

feeds. As noted above, the Exchange 

allocated 1.1% of its allocated 

depreciation costs to providing the 

market data feeds. 

Allocated Shared Expenses 

Finally, as with other exchange 

products and services, a portion of 

general shared expenses was allocated 

to the provision of the market data 

feeds. These general shared costs are 

integral to exchange operations, 

including its ability to provide the 

market data feeds. Costs included in 

general shared expenses include office 

space and office expenses (e.g., 

occupancy and overhead expenses), 

utilities, recruiting and training, 

marketing and advertising costs, 

professional fees for legal, tax and 

accounting services (including external 

and internal audit expenses), and 

telecommunications. Similarly, the cost 

of paying directors to serve on the 

Exchange’s Board of Directors is also 

included in the Exchange’s general 

shared expense cost driver.36 These 

general shared expenses are incurred by 

the Exchange’s parent company, MIH, as 

a direct result of operating the Exchange 

and its affiliated markets. 

The Exchange employed a process to 

determine a reasonable percentage to 

allocate general shared expenses to the 

market data feeds pursuant to its multilayered allocation process. First, general 

expenses were allocated among the 

Exchange and affiliated markets as 

described above. Then, the general 

shared expense assigned to the 

Exchange was allocated across core 

services of the Exchange, including 

market data. Then, these costs were 

further allocated to sub-categories 

within the final categories, i.e., ToM, 

cToM, and SLF, as sub-categories of 

market data. In determining the 

percentage of general shared expenses 

allocated to market data that ultimately 

apply to the market data feeds, the 

Exchange looked at the percentage 

allocations of each of the cost drivers 

and determined a reasonable allocation 

percentage. The Exchange also held 

meetings with senior management, 

department heads, and the Finance 

Team to determine the proper amount of 

the shared general expense to allocate to 

the market data feeds. The Exchange, 

therefore, believes it is reasonable to 

assign an allocation, in the range of 

allocations for other cost drivers, while 

continuing to ensure that this expense is 

only allocated once. Again, the general 

shared expenses are incurred by the 

Exchange’s parent company as a result 

of operating the Exchange and its 

affiliated markets and it is therefore 

reasonable to allocate a percentage of 

those expenses to the Exchange and 

ultimately to specific product offerings 

such as ToM, cToM and SLF. 

Again, a portion of all shared 

expenses were allocated to the Exchange 

(and its affiliated markets) which, in 

turn, allocated a portion of that overall 

allocation to all market data products 

offered by the Exchange. The Exchange 

believes this allocation percentage is 

reasonable because, while the overall 

dollar amount may be higher than other 

cost drivers, the 1.5% is based on and 

in line with the percentage allocations 

of each of the Exchange’s other cost 

drivers. The percentage allocated to the 

market data feeds also reflects its 

importance to the Exchange’s strategy 

and necessity towards the nature of the 

Exchange’s overall operations, which is 

to provide a resilient, highly 

deterministic trading system that relies 

on faster market data feeds than the 

Exchange’s competitors to maintain 

premium performance. This allocation 

reflects the Exchange’s focus on 

providing and maintaining high 

performance market data services, of 

which ToM, cToM, and SLF are main 

contributors. 

* * * * * 

Approximate Cost for ToM, cToM, and 

SLF per Month 

After determining the approximate 

allocated monthly cost related to the 

market data feeds combined, the total 

monthly cost for the market data feeds 

of $59,161 was divided by the total 

number of projected subscribers 37 to 

ToM, cToM and SLF that the Exchange 

anticipates will maintain market data 

subscriptions following the expiration 

of the waiver periods for each respective 

market data feed (29 Internal 

Distributors + 4 External Distributors = 

33 total Distributors), to arrive at a cost 

of approximately $1,793 per month per 

subscription (rounded to the nearest 

dollar). Due to the nature of this 

particular cost, this allocation 

methodology results in an allocation 

among the Exchange and its affiliated 

markets based on set quantifiable 

criteria, i.e., projected number of ToM, 

cToM, and SLF subscribers. 

Cost Analysis—Additional Discussion 

In conducting its Cost Analysis, the 

Exchange did not allocate any of its 

expenses in full to any core service 

(including market data) and did not 

double-count any expenses. Instead, as 

described above, the Exchange allocated 

applicable cost drivers across its core 

services and used the same Cost 

Analysis to form the basis of this 

proposal. For instance, in calculating 

the Human Resources expenses to be 

allocated to market data based upon the 

above described methodology, the 

Exchange allocated a higher percentage 

of dedicated network infrastructure 

personnel (7.3%) due to their focus on 

functions necessary to provide market 

data. The remaining 92.7% of the 

Human Resources expense was then 

allocated to connectivity services, port 

services, transaction services, and 

membership services. The Exchange did 

not allocate any other Human Resources 

expense for providing market data to 

any other employee group, outside of a 

smaller allocation of 4.9% for costs 

associated with certain specified 

personnel who work closely with and 

support network infrastructure 

personnel. 

In total, the Exchange allocated 6.2% 

of its personnel costs (Human 

Resources) to providing the market data 

feeds. In turn, the Exchange allocated 

the remaining 93.8% of its Human 

Resources expense to membership 

services, transaction services, 

connectivity services, and port services. 

Thus, again, the Exchange’s allocations 

of cost across core services were based 

on real costs of operating the Exchange 

and were not double-counted across the 

core services or their associated revenue 

streams. 

As another example, the Exchange 

allocated depreciation expense to all 

core services, including market data, but 

in different amounts. The Exchange 

believes it is reasonable to allocate the 

identified portion of such expense 

because such expense includes the 

actual cost of the computer equipment, 

such as dedicated servers, computers, 

laptops, monitors, information security 

appliances and storage, and network 

switching infrastructure equipment, 

including switches and taps that were 

purchased to operate and support the 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 84653 

38For purposes of calculating projected 

annualized revenue for the market data feeds, the 

Exchange used projected monthly revenues for the 

market data feeds once the Initial Waiver Period 

expires. 

39See MIAX Fee Schedule, Sections (6)(a) and (c); 

and MIAX Emerald Fee Schedule, Sections (6)(a) 

and (c). 

network. Without this equipment, the 

Exchange would not be able to operate 

the network and provide the market 

data feeds to its Members and their 

customers. However, the Exchange did 

not allocate all of the depreciation and 

amortization expense toward the cost of 

providing the market data feeds, but 

instead allocated approximately 1.1% of 

the Exchange’s overall depreciation and 

amortization expense to the market data 

feeds combined. The Exchange allocated 

the remaining depreciation and 

amortization expense (98.9%) toward 

the cost of providing transaction 

services, membership services, 

connectivity services, and port services. 

The Exchange notes that its revenue 

estimates are based on projections 

across all potential revenue streams and 

will only be realized to the extent such 

revenue streams actually produce the 

revenue estimated. The revenue 

estimates are based upon the Exchange’s 

projected number of Internal and 

External Distributors for each of the 

ToM, cToM, and SLF data feeds upon 

the expiration of the fee waiver periods 

for each market data feed and then 

annualized. The Exchange does not yet 

know whether such expectations will be 

realized. For instance, in order to 

generate the revenue expected from the 

market data feeds, the Exchange will 

have to be successful in attracting 

customers to a new exchange and then 

successfully retain those customers that 

wish to maintain subscriptions to the 

market data feeds or obtain new 

customers that will purchase such 

services. Similarly, the Exchange will 

have to be successful in retaining a 

positive net capture on transaction fees 

in order to realize the anticipated 

revenue from transaction pricing. 

The Exchange notes that the Cost 

Analysis is based on the Exchange’s 

2024 fiscal year of operations and 

projections, which will only be for part 

of the year. It is possible, however, that 

actual costs may be higher or lower. The 

proposed fee waivers for the market data 

feeds mean that the Exchange will 

receive no revenue from market data 

distribution in 2024. To the extent the 

Exchange sees growth in use of market 

data services in 2025, following the 

expiration of the Initial Waiver Period, 

it will begin to receive revenue to offset 

future cost increases. However, if use of 

market data services is static or 

decreases, the Exchange might not 

realize the revenue that it anticipates or 

needs in order to cover applicable costs. 

Accordingly, the Exchange is 

committing to conduct a one-year 

review after implementation of these 

fees and expiration of the fee waivers. 

The Exchange expects that it may 

propose to adjust fees at that time, to 

increase fees in the event that revenues 

fail to cover costs and a reasonable 

mark-up of such costs. Similarly, the 

Exchange may propose to decrease fees 

in the event that revenue materially 

exceeds our current projections. In 

addition, the Exchange will periodically 

conduct a review to inform its decision 

making on whether a fee change is 

appropriate (e.g., to monitor for costs 

increasing/decreasing or subscribers 

increasing/decreasing, etc. in ways that 

suggest the then-current fees are 

becoming dislocated from the prior costbased analysis) and would propose to 

increase fees in the event that revenues 

fail to cover its costs and a reasonable 

mark-up, or decrease fees in the event 

that revenue or the mark-up materially 

exceeds our current projections. In the 

event that the Exchange determines to 

propose a fee change, the results of a 

timely review, including an updated 

cost estimate, will be included in the 

rule filing proposing the fee change. 

More generally, the Exchange believes 

that it is appropriate for an exchange to 

refresh and update information about its 

relevant costs and revenues in seeking 

any future changes to fees, and the 

Exchange commits to do so. 

Projected Revenue 38

The proposed fees will allow the 

Exchange to cover certain costs incurred 

by the Exchange associated with 

creating, generating, and disseminating 

the market data feeds and the fact that 

the Exchange will need to fund future 

expenditures (increased costs, 

improvements, etc.). The Exchange 

routinely works to improve the 

performance of the network’s hardware 

and software. The costs associated with 

maintaining and enhancing a state-ofthe-art exchange network is a significant 

expense for the Exchange, and thus the 

Exchange believes that it is reasonable 

and appropriate to help offset those 

costs by establishing fees for market 

data subscribers. Subscribers to the 

ToM, cToM and SLF data feeds expect 

the Exchange to provide this level of 

support so they continue to receive the 

performance they expect. This 

differentiates the Exchange from its 

competitors. As detailed above, the 

Exchange has five primary sources of 

revenue that it can potentially use to 

fund its operations: transaction fees, 

connectivity service fees, membership 

and regulatory fees, and market data 

fees. Accordingly, the Exchange must 

cover its expenses from these five 

primary sources of revenue. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide the 

market data feeds will equal $709,927. 

Based on projected ToM, cToM and SLF 

subscribers once the waiver periods 

expire for the market data feeds, the 

Exchange projects to generate annual 

revenue of approximately $726,000 for 

the market data feeds combined. The 

Exchange believes this represents a 

modest profit of 2.2% when compared 

to the cost of providing the market data 

feeds on an annualized basis once the 

waiver periods expire, which the 

Exchange believes is fair and reasonable 

after taking into account the costs 

related to creating, generating, and 

disseminating the market data feeds and 

the fact that the Exchange will need to 

fund future expenditures (increased 

costs, improvements, etc.). To determine 

the projected number of Distributors for 

each of the market data feeds, the 

Exchange reviewed its anticipated 

Distributor population from July 2024 

based on Distributor on-boarding 

documents the Exchange received that 

showed interest in the market data 

products in the month preceding when 

the Exchange filed its proposal to 

implement the proposed fees, and 

assumed a 5% attrition rate. The 5% 

attrition rate is based upon the 

Exchange’s experience on its affiliate 

exchanges where it has been observed 

that a percentage of subscribers do not 

continue their market data subscriptions 

after the expiration of fee waivers. 

Based on the above discussion, the 

Exchange believes that even if the 

Exchange earns the above revenue or 

incrementally more or less, 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 the 

market data feeds versus the total 

projected revenue of the Exchange 

associated with the market data feeds. 

The Exchange’s affiliated markets, 

MIAX and MIAX Emerald, charge 

similar or higher rates for their 

respective ToM, cToM and MOR data 

feeds.39 The Exchange’s proposed fees 

for its market data feeds are also 

comparable to, or lower than, the fees 

for similar products charged by 

competing options exchanges. For 

example, for Internal Distributors of 

ToM and cToM, the Exchange proposes 

a lower fee than the fees charged by 


khammond on DSKJM1Z7X2PROD with NOTICES
84654 Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 

40See ISE Options 7: Pricing Schedule, Section 

10, Market Data, Section H. Nasdaq ISE Top Quote 

Feed, available at https://listingcenter.nasdaq.com/ 

rulebook/ise/rules/ISE%20Options%207 (last 

visited June 13, 2024) (assessing Professional 

internal and external distributors $3,000 per month, 

plus $20 per month per controlled device). 

41See NYSE Proprietary Market Data Pricing 

Guide, Section 6.3, NYSE Arca Options (dated May 

4, 2022), available at: https://www.nyse.com/ 

publicdocs/nyse/data/NYSE_Market_Data_

Pricing.pdf (last visited June 13, 2024). Fees for the 

NYSE Arca Options Top Datafeed, which is the 

comparable product to ToM, are $3,000 per month 

for access (internal use) and an additional $2,000 

per month for redistribution (external distribution), 

compared to the Exchange’s proposed fees of $1,200 

and $2,000 for Internal and External Distributors, 

respectively. In addition, for its NYSE Arca Options 

Top Datafeed, NYSE Arca charges for three different 

categories of non-display usage, and user fees, both 

of which the Exchange does not propose to charge, 

causing the overall cost of NYSE Arca Options Top 

Datafeed to far exceed the Exchange’s proposed 

rates. 

42See NYSE Proprietary Market Data Pricing 

Guide, Section 6.4, NYSE Arca Options Complex 

Order Book (dated May 4, 2022), available at: 

https://www.nyse.com/publicdocs/nyse/data/ 

NYSE_Market_Data_Pricing.pdf (last visited June 

13, 2024) (assessing an access fee of $1,500 per 

month, plus a $1,000 redistribution fee, $1,000 nondisplay fee, and $20 fee per professional user). 

43See PHLX Options 7: Pricing Schedule, Section 

10. Proprietary Data Feed Fees, PHLX Orders, 

available at https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules/Phlx%20Options%207 (last 

visited June 13, 2024) (assessing internal 

distributors $3,000 per month and external 

distributors $3,500 per month for the PHLX Orders 

data feed). 

44The Exchange acknowledges that IEX included 

in its proposal to adopt market data fees after 

offering market data for free an analysis of what its 

projected revenue would be if all of its existing 

customers continued to subscribe versus what its 

projected revenue would be if a limited number of 

customers subscribed due to the new fees. See 

Securities Exchange Act Release No. 94630 (April 

7, 2022), 87 FR 21945 (April 13, 2022) (SR–IEX– 

2022–02). MEMX did not include a similar analysis 

in either of its recent non-transaction fee proposals. 

See, e.g., supra notes 35 and 36. The Exchange does 

not believe a similar analysis would be useful here 

because it is part of a holding company that 

operates five different markets. 

Nasdaq ISE, LLC (‘‘ISE’’) for ISE’s Top 

Quote Feed 40 and NYSE Arca, Inc. 

(‘‘Arca’’) for Arca’s Top Datafeed 41 and 

Complex Order Book data feed.42

Additionally, Nasdaq PHLX LLC 

(‘‘PHLX’’) assesses the same fees for the 

PHLX Orders data feed as proposed by 

the Exchange for its SLF data feed.43

Accordingly, the Exchange believes 

that comparable and competitive pricing 

are key factors in determining whether 

a proposed fee meets the requirements 

of the Act, regardless of whether that 

same fee across the Exchange’s affiliated 

markets leads to slightly different profit 

margins due to factors outside of the 

Exchange’s control (i.e., more 

subscribers to ToM, cToM, and/or SLF). 

The Exchange also reiterates that it 

proposes to waive the fees for the 

market data feeds for a defined period 

of time. The Exchange is owned by a 

holding company that is the parent 

company of five exchange markets and, 

therefore, the Exchange and its affiliated 

markets must allocate shared costs 

across all of those markets accordingly, 

pursuant to the above-described 

allocation methodology. In contrast, 

IEX, which currently operates only one 

exchange, in its recent non-transaction 

fee filing allocated the entire amount of 

that same cost to a single exchange. This 

can result in lower profit margins for the 

non-transaction fees proposed by IEX 

because the single allocated cost does 

not experience the efficiencies and 

synergies that result from sharing costs 

across multiple platforms.44 The 

Exchange and its affiliated markets often 

share a single cost, which results in cost 

efficiencies that can cause a broader gap 

between the allocated cost amount and 

projected revenue, even though the fee 

levels being proposed are lower or 

competitive with competing markets (as 

described above). To the extent that the 

application of a cost-based standard 

results in Commission Staff making 

determinations as to the appropriateness 

of certain profit margins, the 

Commission Staff should consider 

whether the proposed fee level is 

comparable to, or competitive with, the 

same fee charged by competing 

exchanges and how different cost 

allocation methodologies (such as across 

multiple markets) may result in 

different profit margins for comparable 

fee levels. If Commission Staff is making 

determinations as to appropriate profit 

margins, the Exchange believes that the 

Commission should be clear to all 

market participants as to what they have 

determined is an appropriate profit 

margin and should apply such 

determinations consistently and, in the 

case of certain legacy exchanges, 

retroactively, if such standards are to 

avoid having a discriminatory effect. 

Further, the proposal reflects the 

Exchange’s efforts to control its costs, 

which the Exchange does on an ongoing 

basis as a matter of good business 

practice. A potential profit margin 

should not be judged alone based on its 

size, but is also indicative of costs 

management and whether the ultimate 

fee reflects the value of the services 

provided. For example, a profit margin 

on one exchange should not be deemed 

excessive where that exchange has been 

successful in controlling its costs, but 

not excessive where on another 

exchange where that exchange is 

charging comparable fees but has a 

lower profit margin due to higher costs. 

Doing so could have the perverse effect 

of not incentivizing cost control where 

higher costs alone are used to justify 

fees increases. 

Accordingly, while the Exchange is 

supportive of transparency around costs 

and potential margins (applied across 

all exchanges), as well as periodic 

review of revenues and applicable costs 

(as discussed below), the Exchange does 

not believe that these estimates should 

form the sole basis of whether or not a 

proposed fee is reasonable or can be 

adopted. Instead, the Exchange believes 

that the information should be used 

solely to confirm that an Exchange is 

not earning—or seeking to earn—supracompetitive profits, the standard set 

forth in the Staff Guidance. The 

Exchange believes the Cost Analysis and 

related projections in this filing 

demonstrate this fact. 

Reasonableness 

Overall. With regard to 

reasonableness, the Exchange 

understands that the Commission has 

traditionally taken a market-based 

approach to examine whether the 

exchange making the fee proposal was 

subject to significant competitive forces 

in setting the terms of the proposal. The 

Exchange understands that in general 

the analysis considers whether the 

exchange has demonstrated in its filing 

that (i) there are reasonable substitutes 

for the product or service; (ii) 

‘‘platform’’ competition constrains the 

ability to set the fee; and/or (iii) revenue 

and cost analysis shows the fee would 

not result in the exchange taking supracompetitive profits. If the exchange 

demonstrates that the fee is subject to 

significant competitive forces, the 

Exchange understands that in general 

the analysis will next consider whether 

there is any substantial countervailing 

basis to suggest the fee’s terms fail to 

meet one or more standards under the 

Exchange Act. The Exchange further 

understands that if the filing fails to 

demonstrate that the fee is constrained 

by competitive forces, the exchange 

must provide a substantial basis, other 

than competition, to show that it is 

consistent with the Exchange Act, 

which may include production of 

relevant revenue and cost data 

pertaining to the product or service. 

The Exchange has not determined its 

proposed overall market data fees based 

on assumptions about market 

competition, instead relying upon a 

cost-plus model to determine a 

reasonable fee structure that is informed 

by the Exchange’s understanding of 

different uses of the products by 

different types of participants. In this 

context, the Exchange believes the 

proposed fees overall are fair and 

reasonable as a form of cost recovery 


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Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 84655 

45See supra notes 42 and 43. 

46See Exchange Data Agreement, available at 

https://www.miaxglobal.com/markets/us-options/ 

all-options/market-data-vendor-agreements. 

47See id. 

48See id. 

plus the possibility of a reasonable 

return for the Exchange’s aggregate costs 

of offering the market data feeds. The 

Exchange believes the proposed fees are 

reasonable because they are designed to 

generate annual revenue to recoup some 

or all of Exchange’s annual costs of 

providing the market data feeds with a 

reasonable mark-up. As discussed 

above, the Exchange estimates this fee 

filing will result in annual revenue of 

approximately $726,000 once the fee 

waivers expire for the market data feeds, 

representing a potential mark-up of just 

2.2% over the cost of providing the 

market data feeds. Accordingly, the 

Exchange believes that this fee 

methodology is reasonable because it 

allows the Exchange to recoup all of its 

expenses for providing the market data 

feeds (with any additional revenue 

representing no more than what the 

Exchange believes to be a reasonable 

rate of return). The Exchange also 

believes that the proposed fees are 

reasonable because they are generally 

less than the fees charged by competing 

options exchanges for comparable 

market data products, notwithstanding 

that the competing exchanges may have 

different system architectures that may 

result in different cost structures for the 

provision of market data. 

The Exchange believes the proposed 

fees for the market data products are 

reasonable when compared to fees for 

comparable products, compared to 

which the Exchange’s proposed fees are 

generally lower, as well as other 

comparable data feeds priced 

significantly higher than the Exchange’s 

proposed fees for the market data feeds. 

Internal Distribution Fees. The 

Exchange believes it is reasonable to 

charge Internal Distribution fees because 

such data assists Internal Distributors in 

their profit-generating activities. The 

Exchange also believes that the 

proposed monthly Internal Distribution 

fees for ToM, cToM, and SLF are 

reasonable as they are similar to the 

amounts charged by at least one other 

exchange of comparable size for 

comparable data products, and lower 

than the fees charged by other 

exchanges for comparable data 

products.45

External Distribution Fees. The 

Exchange believes that it is reasonable 

to charge External Distribution fees for 

the market data feeds because vendors 

receive enumeration from redistributing 

the data in their business products 

provided to their customers. The 

Exchange believes that charging 

External Distribution fees is reasonable 

because the vendors that would be 

charged such fees profit by retransmitting the Exchange’s market data 

to their customers. These fees would be 

charged only once per month to each 

vendor account that redistributes any 

ToM, cToM, or SLF data feeds, 

regardless of the number of customers to 

which that vendor redistributes the 

data. 

For all of the foregoing reasons, the 

Exchange believes that the proposed 

fees for the market data feeds are 

reasonable. 

Equitable Allocation and Not Unfairly 

Discriminatory 

Overall. The Exchange believes that 

its proposed fees are reasonable, 

equitable, and not unfairly 

discriminatory because they are 

designed to align the proposed fees with 

services provided. The Exchange 

believes the proposed fees for the 

market data feeds are allocated fairly 

and equitably among the various 

categories of users of the feeds, and any 

differences among categories of users 

are justified and appropriate. 

The Exchange believes that the 

proposed fees are equitably allocated 

because they will apply uniformly to all 

data recipients that choose to subscribe 

to the market data feeds. Any subscriber 

or vendor that chooses to subscribe to 

the market data feeds is subject to the 

same Fee Schedule, regardless of what 

type of business they operate, and the 

decision to subscribe to one or more of 

the ToM, cToM or SLF data feeds is 

based on objective differences in usage 

of each market data feed among 

different Members, which are still 

ultimately in the control of any 

particular Member. The Exchange 

believes the proposed pricing of the 

market data feeds is equitably allocated 

because it is based, in part, upon the 

amount of information contained in 

each data feed, which may have 

additional value to market participants. 

Internal Distribution Fees. The 

Exchange believes the proposed 

monthly fees for Internal Distribution of 

the market data feeds are equitably 

allocated and not unfairly 

discriminatory because they would be 

charged on an equal basis to all data 

recipients that receive the market data 

feeds for internal distribution, 

regardless of what type of business they 

operate. 

External Distribution Fees. The 

Exchange believes the proposed 

monthly fees for External Distribution of 

the market data feeds are equitably 

allocated and not unfairly 

discriminatory because they would be 

charged on an equal basis to all data 

recipients that receive the market data 

feeds that choose to redistribute the 

feeds externally, regardless of what 

business they operate. The Exchange 

also believes that the proposed monthly 

fees for External Distribution are 

equitably allocated when compared to 

lower proposed fees for Internal 

Distribution because data recipients that 

are externally distributing ToM, cToM, 

and/or SLF data feeds are able to 

monetize such distribution and spread 

such costs amongst multiple third party 

data recipients, whereas the Internal 

Distribution fee is applicable to use by 

a single data recipient (and its affiliates). 

The Exchange believes that it is 

reasonable, equitable and not unfairly 

discriminatory to assess Internal 

Distributors fees that are less than the 

fees assessed for External Distributors 

for subscriptions to the ToM, cToM and 

SLF data feeds because Internal 

Distributors have limited, restricted 

usage rights to the market data, as 

compared to External Distributors, 

which have more expansive usage 

rights. All Members and non-Members 

that decide to receive any market data 

feed of the Exchange (or its affiliates, 

MIAX, MIAX Pearl and MIAX Emerald), 

must first execute, among other things, 

the MIAX Exchange Group Data 

Agreement (the ‘‘Exchange Data 

Agreement’’).46 Pursuant to the 

Exchange Data Agreement, Internal 

Distributors are restricted to the 

‘‘internal use’’ of any market data they 

receive. This means that Internal 

Distributors may only distribute the 

Exchange’s market data to the 

recipient’s officers and employees and 

its affiliates.47 External Distributors may 

distribute the Exchange’s market data to 

persons who are not officers, employees 

or affiliates of the External Distributor,48

and may charge their own fees for the 

redistribution of such market data. 

External Distributors may monetize 

their receipt of the ToM, cToM and SLF 

data feeds by charging their customers 

fees for receipt of the Exchange’s market 

data. Internal Distributors do not have 

the same ability to monetize the 

Exchange’s market data feeds. 

Accordingly, the Exchange believes it is 

fair, reasonable and not unfairly 

discriminatory to assess External 

Distributors a higher fee for the 

Exchange’s market data feeds as 

External Distributors have greater usage 

rights to commercialize such market 


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84656 Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 

49See supra note 43. 

50See Section 6 of the Exchange’s Market Data 

Policies, available at https://www.miaxglobal.com/ 

sites/default/files/page-files/MIAX_Exchange_

Group_Market_Data_Policies_07202021.pdf. 

51 15 U.S.C. 78f(b)(8). 

52See supra notes 42 and 43. 

53 15 U.S.C. 78s(b)(3)(A)(ii). 54 17 CFR 240.19b–4(f)(2). 

data and can adjust their own fee 

structures if necessary. 

The Exchange believes it is reasonable 

and equitable to charge different fees for 

different market data products. While 

the ToM and cToM feeds provide top of 

market data for the Simple Order Book 

and Strategy Book respectively and have 

identical fees, the SLF provides a 

different data set and is thus priced 

accordingly to properly compete with 

comparable products offered by 

competing exchanges.49

The Exchange also utilizes more 

resources to support External 

Distributors versus Internal Distributors, 

as External Distributors have reporting 

and monitoring obligations that Internal 

Distributors do not have, thus requiring 

additional time and effort of Exchange 

staff. For example, External Distributors 

have monthly reporting requirements 

under the Exchange’s Market Data 

Policies.50 Exchange staff must then, in 

turn, process and review information 

reported by External Distributors to 

ensure the External Distributors are 

redistributing market data in 

compliance with the Exchange Data 

Agreement and Market Data Policies. 

The Exchange believes the proposed 

market data fees are equitable and not 

unfairly discriminatory because the fee 

level results in a reasonable and 

equitable allocation of fees amongst 

subscribers for similar services, 

depending on whether the subscriber is 

an Internal or External Distributor. 

Moreover, the decision as to whether or 

not to purchase market data is entirely 

optional to all market participants. 

Potential purchasers are not required to 

purchase the market data, and the 

Exchange is not required to make the 

market 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 market 

participants decide not to subscribe to 

the data feed, firms can discontinue 

their use of any of the market data feeds. 

For all of the foregoing reasons, the 

Exchange believes that the proposed 

fees are equitably allocated and not 

unfairly discriminatory. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,51 the Exchange does not believe 

that the proposed rule change would 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Intra-Market Competition 

The Exchange does not believe that 

the proposed fees place certain market 

participants at a relative disadvantage to 

other market participants because, as 

noted above, the proposed fees are 

associated with usage of the data feed by 

each market participant based on 

whether the market participant 

internally or externally distributes the 

Exchange data, which are still 

ultimately in the control of any 

particular Member, and such fees do not 

impose a barrier to entry to smaller 

participants. Accordingly, 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 types of data consumed 

by various market participants and their 

usage thereof. 

Inter-Market Competition 

The Exchange does not believe the 

proposed fees place an undue burden on 

competition on other exchanges that is 

not necessary or appropriate. In 

particular, market participants are not 

forced to subscribe to any of the market 

data feeds. Additionally, other 

exchanges have similar market data fees 

with comparable rates in place for their 

participants.52 The proposed fees are 

based on actual costs and are designed 

to enable the Exchange to recoup its 

applicable costs with the possibility of 

a reasonable profit on its investment as 

described in the Purpose and Statutory 

Basis sections. Competing exchanges are 

free to adopt comparable fee structures 

subject to the Commission’s rule filing 

process. Allowing the Exchange, or any 

new market entrant, to waive fees (as 

the Exchange proposes here for all three 

of its market data feeds) for a period of 

time to allow it to become established 

encourages market entry and thereby 

ultimately promotes competition. 

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,53 and Rule 

19b–4(f)(2) 54 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

SAPPHIRE–2024–31 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–SAPPHIRE–2024–31. 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 


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Federal Register / Vol. 89, No. 205 / Wednesday, October 23, 2024 / Notices 84657 

55 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

change on October 1, 2024 (SR–CboeEDGX–2024– 

062). On October 9, 2024, the Exchange withdrew 

that filing and submitted this filing. 

4See Cboe Global Markets, U.S. Equities Market 

Volume Summary, Month-to-Date (September 23, 

2024), available at https://www.cboe.com/us/ 

equities/market_statistics/. 

5See EDGX Equities Fee Schedule, Standard 

Rates. 

6 Id. 

7Fee code BB is appended to orders that remove 

liquidity from EDGX (Tape B). 

8Fee code N is appended to orders that remove 

liquidity from EDGX (Tape C). 

9Fee code W is appended to orders that remove 

liquidity from EDGX (Tape A). 

10ADAV means average daily added volume 

calculated as the number of shares added per day. 

ADAV is calculated on a monthly basis. 

11TCV means total consolidated volume 

calculated as the volume reported by all exchanges 

and trade reporting facilities to a consolidated 

transaction reporting plan for the month for which 

the fees apply. The Exchange excludes from its 

calculation of TCV volume on any day that the 

Exchange experiences an Exchange System 

Disruption, on any day with a scheduled early 

market close, and the Russell Reconstitution Day. 

12ADV means average daily volume calculated as 

the number of shares added to, removed from, or 

routed by, the Exchange, or any combination or 

Continued 

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–SAPPHIRE–2024–31 and should be 

submitted on or before November 13, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.55

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–24472 Filed 10–22–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101377; File No. SR– 

CboeEDGX–2024–063] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend 

Remove Volume Tier 2 of the Fee 

Schedule 

October 17, 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 October 

9, 2024, Cboe EDGX Exchange, Inc. 

(‘‘Exchange’’ or ‘‘EDGX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe EDGX Exchange, Inc. (‘‘EDGX’’ 

or the ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) a proposed 

rule change to amend its Fee Schedule. 

The text of the proposed rule change is 

provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

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

options/regulation/rule_filings/edgx/), 

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 applicable to its equities 

trading platform (‘‘EDGX Equities’’) by 

changing the required criteria applicable 

to Remove Volume Tier 2.3 The 

Exchange proposes to implement these 

changes effective October 1, 2024. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues 

that do not have similar self-regulatory 

responsibilities under the Act, to which 

market participants may direct their 

order flow. Based on publicly available 

information,4 no single registered 

equities exchange has more than 16% of 

the market share. Thus, in such a lowconcentrated and highly competitive 

market, no single equities exchange 

possesses significant pricing power in 

the execution of order flow. The 

Exchange in particular operates a 

‘‘Maker-Taker’’ model whereby it pays 

rebates to members that add liquidity 

and assesses fees to those that remove 

liquidity. The Exchange’s Fee Schedule 

sets forth the standard rebates and rates 

applied per share for orders that provide 

and remove liquidity, respectively. 

Currently, for orders in securities priced 

at or above $1.00, the Exchange 

provides a standard rebate of $0.00160 

per share for orders that add liquidity 

and assesses a fee of $0.0030 per share 

for orders that remove liquidity.5 For 

orders in securities priced below $1.00, 

the Exchange provides a standard rebate 

of $0.00003 per share for orders that add 

liquidity and assesses a fee of 0.30% of 

the total dollar value for orders that 

remove liquidity.6 Additionally, in 

response to the competitive 

environment, the Exchange also offers 

tiered pricing which provides Members 

opportunities to qualify for higher 

rebates or reduced fees where certain 

volume criteria and thresholds are met. 

Tiered pricing provides an incremental 

incentive for Members to strive for 

higher tier levels, which provides 

increasingly higher benefits or discounts 

for satisfying increasingly more 

stringent criteria. 

Under footnote 1 of the Fee Schedule, 

the Exchange currently offers various 

Add/Remove Volume Tiers. In 

particular, the Exchange offers two 

Remove Volume Tiers that each assess 

a reduced fee for Members’ qualifying 

orders yielding fee codes BB,7 N,8 and 

W9 where a Member reaches certain 

add volume-based criteria. The 

Exchange now proposes to amend the 

criteria of Remove Volume Tier 2. 

Currently, the criteria for Remove 

Volume Tier 2 is as follows: 

• Remove Volume Tier 2 provides a 

reduced fee of $0.00285 per share for 

securities priced at or above $1.00 to 

qualifying orders (i.e., orders yielding 

fee codes BB, N, or W) and a reduced 

fee of 0.28% of total dollar value for 

securities priced below $1.00 where: (1) 

Member has an ADAV 10 of greater than 

or equal to 0.30% of the TCV; 11 (2) 

Member has a total remove ADV 12


khammond on DSKJM1Z7X2PROD with NOTICES