10860 Federal Register / Vol. 87, No. 38 / Friday, February 25, 2022 / Notices 

39See supra note 30. 

40See id. 

41 15 U.S.C. 78s(b)(3)(A)(ii). 42 17 CFR 240.19b–4(f)(2). 

43 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Exchange believes increased Priority 

Customer Complex Order flow benefits 

all market participants by providing 

more trading opportunities and tighter 

spreads. The Exchange also believes that 

increased Priority Customer Complex 

Order flow may attract Market Makers 

and other liquidity providers, thus, 

facilitating price improvement in the 

Complex Order Auction process, 

signaling additional corresponding 

increase in Complex Order flow from 

other market participants, and, as a 

result, increasing liquidity on the 

Exchange. 

Inter-Market Competition 

The Exchange operates in a highly 

competitive market in which market 

participants can readily favor competing 

venues if they deem fee levels at a 

particular venue to be excessive. There 

are currently 16 registered options 

exchanges competing for order flow. 

Based on publicly-available 

information, and excluding index-based 

options, no single exchange has a 

market share of more than 

approximately 12–13% of the equity 

options market.39 Therefore, no 

exchange possesses significant pricing 

power. More specifically, as of January 

26, 2022, the Exchange had a market 

share of approximately 3.96% of 

executed volume of multiply-listed 

equity and ETF options for the month of 

January 2022.40 Therefore, no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity 

and ETF options order flow. In such an 

environment, the Exchange must 

continually adjust its transaction and 

non-transaction fees to remain 

competitive with other exchanges and to 

attract order flow. The Exchange 

believes that the proposed rule changes 

reflect this competitive environment 

because it modifies the Exchange’s fees 

for Complex Order transactions in a 

manner that will allow the Exchange to 

remain competitive. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

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

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

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

EMERALD–2022–07 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–EMERALD–2022–07. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–EMERALD–2022–07, and 

should be submitted on or before March 

18, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–03963 Filed 2–24–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94286; File No. SR– 

PEARL–2022–04] 

Self-Regulatory Organizations; MIAX 

PEARL LLC; Notice of Filing of a 

Proposed Rule Change To Amend the 

MIAX PEARL Options Fee Schedule To 

Increase the Monthly Fees for MIAX 

Express Network Full Service Port; 

Suspension of and Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove the Proposed 

Rule Change 

February 18, 2022. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

15, 2022, MIAX PEARL, LLC (‘‘MIAX 

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

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I and II 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 and is, pursuant 

to Section 19(b)(3)(C) of the Act, hereby: 

(i) Temporarily suspending the rule 

change; and (ii) instituting proceedings 

to determine whether to approve or 

disapprove the proposed rule change. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Pearl Options Fee 

Schedule (the ‘‘Fee Schedule’’) to 

amend the fees for the Exchange’s MIAX 


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3 ‘‘MEO Interface’’ or ‘‘MEO’’ means a binary 

order interface for certain order types as set forth 

in Rule 516 into the MIAX Pearl System. See the 

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 

4 ‘‘Member’’ means an individual or organization 

that is registered with the Exchange pursuant to 

Chapter II of Exchange 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 the 

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 

5See Securities Exchange Act Release No. 92365 

(July 9, 2021), 86 FR 37347 (July 15, 2021) (SR– 

PEARL–2021–33). 

6See id. 

7See Letter from Richard J. McDonald, 

Susquehanna International Group, LLC (‘‘SIG’’), to 

Vanessa Countryman, Secretary, Commission, dated 

September 7, 2021 (‘‘SIG Letter’’). 

8See Securities Exchange Act Release No. 92798 

(August 27, 2021), 86 FR 49360 (September 2, 

2021). 

9See Securities Exchange Act Release No. 93556 

(November 10, 2021), 86 FR 64235 (November 17, 

2021) (SR–PEARL–2021–53). 

10See id. 

11Securities Exchange Act Release No. 93894 

(January 4, 2022), 87 FR 1203 (January 10, 2022) 

(SR–PEARL–2021–58). 

12 Id. 

13 ‘‘Full Service MEO Port—Bulk’’ means an MEO 

port that supports all MEO input message types and 

binary bulk order entry. See the Definitions Section 

of the Fee Schedule. 

14 ‘‘Full Service MEO Port—Single’’ means an 

MEO port that supports all MEO input message 

types and binary order entry on a single order-byorder basis, but not bulk orders. See the Definitions 

Section of the Fee Schedule. 

15 ‘‘Limited Service MEO Port’’ means an MEO 

port that supports all MEO input message types, but 

does not support bulk order entry and only 

supports limited order types, as specified by the 

Exchange via Regulatory Circular. See the 

Definitions Section of the Fee Schedule. 

16A ‘‘Matching Engine’’ is a part of the MIAX 

Pearl electronic system that processes options 

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

Some Matching Engines will process option classes 

with multiple root symbols, and other Matching 

Engines may be dedicated to one single option root 

symbol. A particular root symbol may only be 

assigned to a single designated Matching Engine. A 

particular root symbol may not be assigned to 

multiple Matching Engines. See the Definitions 

Section of the Fee Schedule. 

17See NYSE American Options Fee Schedule, 

Section V.A., Port Fees (each port charged on a per 

matching engine basis, with NYSE American having 

17 match engines). See NYSE Technology FAQ and 

Best Practices: Options, Section 5.1 (How many 

matching engines are used by each exchange?) 

(September 2020) (providing a link to an Excel file 

detailing the number of matching engines per 

options exchange); NYSE Arca Options Fee 

Schedule, Port Fees (each port charged on a per 

matching engine basis, NYSE Arca having 19 match 

engines); and NYSE Technology FAQ and Best 

Practices: Options, Section 5.1 (How many 

matching engines are used by each exchange?) 

(September 2020) (providing a link to an Excel file 

detailing the number of matching engines per 

options exchange). See NASDAQ Fee Schedule, 

Nasdaq Options 7 Pricing Schedule, Section 3, 

Nasdaq Options Market—Ports and Other Services 

(each port charged on a per matching engine basis, 

with Nasdaq having multiple matching engines). 

See Nasdaq Specialized Quote Interface (SQF) 

Specification, Version 6.5b (updated February 13, 

2020), Section 2, Architecture, available at https:// 

www.nasdaq.com/docs/2020/02/18/SpecializedQuote-Interface-SQI-6.5b.pdf (the ‘‘NASDAQ SQF 

Interface Specification’’). The NASDAQ SQF 

Interface Specification also provides that 

NASDAQ’s affiliates, Nasdaq PHLX LLC (‘‘Nasdaq 

Phlx’’) and Nasdaq BX, Inc. (‘‘Nasdaq BX’’), have 

trading infrastructures that may consist of multiple 

matching engines with each matching engine 

trading only a range of option underlyings. Further, 

Continued 

Express Network Full Service (‘‘MEO’’) 3

Ports. 

The text of the proposed rule change 

is available on the Exchange’s website at 

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

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV [sic] below. 

The Exchange has prepared summaries, 

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

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Fee Schedule to increase the fees for its 

Full Service MEO Ports, Bulk and Single 

(the ‘‘Proposed Access Fees’’), which 

allow Members 4 to submit electronic 

orders in all products to the Exchange. 

The Exchange initially filed this 

proposal on July 1, 2021, with the 

proposed fee changes being immediately 

effective (‘‘First Proposed Rule 

Change’’).5 The First Proposed Rule 

Change was published for comment in 

the Federal Register on July 15, 2021.6

The Commission received one comment 

letter on the First Proposed Rule 

Change 7 and subsequently suspended 

the Frist [sic] Proposed Rule Change on 

August 27, 2021.8 The Exchange 

withdrew First Proposed Rule Change 

on October 12, 2021 and re-submitted 

the proposal on November 1, 2021, with 

the proposed fee changes being 

immediately effective (‘‘Second 

Proposed Rule Change’’).9 The Second 

Proposed Rule Change provided 

additional justification for the proposed 

fee changes and addressed certain 

points raised in the single comment 

letter that was submitted on the First 

Proposed Rule Change. The Second 

Proposed Rule Change was published 

for comment in the Federal Register on 

November 17, 2021.10 The Commission 

received no comment letters on the 

Second Proposed Rule Change. 

Nonetheless, the Exchange withdrew 

the Second Proposed Rule Change on 

December 20, 2021 and submitted a 

revised proposal for immediate 

effectiveness (‘‘Third Proposed Rule 

Change’’).11 The Third Proposed Rule 

Change was published for comment in 

the Federal Register on January 10, 

2022.12 The Third Proposed Rule 

Change meaningfully attempted to 

provide additional justification and 

explanation for the proposed fee 

changes, directly respond to the points 

raised in the single comment letter 

submitted on the First Proposed Rule 

Change, and respond to feedback 

provided by Commission Staff during a 

telephone conversation on November 

18, 2021 relating to the Second 

Proposed Rule Change. Although the 

Commission again did not receive any 

comment letters on the Third Proposed 

Rule Change, the Exchange withdrew 

the Third Proposed Rule Change on 

February 15, 2022 and now submits this 

revised proposal for immediate 

effectiveness (‘‘Fourth Proposed Rule 

Change’’). This Fourth Proposed Rule 

Change provides additional justification 

and explanation for the proposed fee 

changes. 

Full Service MEO Port Fee Changes 

The Exchange currently offers 

different types of MEO Ports depending 

on the services required by the Member, 

including a Full Service MEO PortBulk,13 a Full Service MEO PortSingle,14 and a Limited Service MEO 

Port.15 For one monthly price, a Member 

may be allocated two (2) Full-Service 

MEO Ports of either type per matching 

engine 16 and may request Limited 

Service MEO Ports for which MIAX 

Pearl will assess Members Limited 

Service MEO Port fees per matching 

engine based on a sliding scale for the 

number of Limited Service MEO Ports 

utilized each month. The two (2) FullService MEO Ports that may be allocated 

per matching engine to a Member may 

consist of: (a) Two (2) Full Service MEO 

Ports—Bulk; (b) two (2) Full Service 

MEO Ports—Single; or (c) one (1) Full 

Service MEO Port—Bulk and one (1) 

Full Service MEO Port—Single. 

Unlike other options exchanges that 

provide similar port functionality and 

charge fees on a per port basis,17 the 


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the NASDAQ SQF Interface Specification provides 

that the SQF infrastructure is such that the firms 

connect to one or more servers residing directly on 

the matching engine infrastructure. Since there may 

be multiple matching engines, firms will need to 

connect to each engine’s infrastructure in order to 

establish the ability to quote the symbols handled 

by that engine. 

18See Securities Exchange Act Release No. 82867 

(March 13, 2018), 83 FR 12044 (March 19, 2018) 

(SR–PEARL–2018–07). 

19 ‘‘Affiliate’’ means (i) an affiliate of a Member 

of at least 75% common ownership between the 

firms as reflected on each firm’s Form BD, Schedule 

A, or (ii) the Appointed Market Maker of an 

Appointed EEM (or, conversely, the Appointed 

EEM of an Appointed Market Maker). An 

‘‘Appointed Market Maker’’ is a MIAX Pearl Market 

Maker (who does not otherwise have a corporate 

affiliation based upon common ownership with an 

EEM) that has been appointed by an EEM and an 

‘‘Appointed EEM’’ is an EEM (who does not 

otherwise have a corporate affiliation based upon 

common ownership with a MIAX Pearl Market 

Maker) that has been appointed by a MIAX Pearl 

Market Maker, pursuant to the following process. A 

MIAX Pearl Market Maker appoints an EEM and an 

EEM appoints a MIAX Pearl Market Maker, for the 

purposes of the Fee Schedule, by each completing 

and sending an executed Volume Aggregation 

Request Form by email to membership@

miaxoptions.com no later than 2 business days 

prior to the first business day of the month in which 

the designation is to become effective. Transmittal 

of a validly completed and executed form to the 

Exchange along with the Exchange’s 

acknowledgement of the effective designation to 

each of the Market Maker and EEM will be viewed 

as acceptance of the appointment. The Exchange 

will only recognize one designation per Member. A 

Member may make a designation not more than 

once every 12 months (from the date of its most 

recent designation), which designation shall remain 

in effect unless or until the Exchange receives 

written notice submitted 2 business days prior to 

the first business day of the month from either 

Member indicating that the appointment has been 

terminated. Designations will become operative on 

the first business day of the effective month and 

may not be terminated prior to the end of the 

month. Execution data and reports will be provided 

to both parties. See the Definitions Section of the 

Fee Schedule. 

20 ‘‘Excluded Contracts’’ means any contracts 

routed to an away market for execution. See the 

Definitions Section of the Fee Schedule. 

21 ‘‘TCV’’ means total consolidated volume 

calculated as the total national volume in those 

classes listed on MIAX Pearl for the month for 

which the fees apply, excluding consolidated 

volume executed during the period of time in 

which the Exchange experiences an Exchange 

System Disruption (solely in the option classes of 

the affected Matching Engine). See the Definitions 

Section of the Fee Schedule. 

22The term ‘‘Market Maker’’ means a Member 

registered with the Exchange for the purpose of 

Exchange offers Full Service MEO Ports 

as a package and provides Members 

with the option to receive up to two Full 

Service MEO Ports (described above) 

per matching engine to which that 

Member connects. The Exchange 

currently has twelve (12) matching 

engines, which means Members may 

receive up to twenty-four (24) Full 

Service MEO Ports for a single monthly 

fee, that can vary based on certain 

volume percentages, as described below. 

For illustrative purposes and as 

described in more detail below, the 

Exchange currently assesses a fee of 

$5,000 per month for Members that 

reach the highest Full Service MEO 

Port—Bulk Tier, regardless of the 

number of Full Service MEO Ports 

allocated to the Member. For example, 

assuming a Member connects to all 

twelve (12) matching engines during a 

month, with two Full Service MEO 

Ports per matching engine, this results 

in a cost of $208.33 per Full Service 

MEO Port ($5,000 divided by 24) for the 

month. This fee had been unchanged 

since the Exchange adopted Full Service 

MEO Port fees in 2018.18 Beginning 

with the First Proposed Rule Change, 

the Exchange proposes to increase Full 

Service MEO Port fees as further 

described below, with the highest 

monthly fee of $10,000 for the Full 

Service MEO Port—Bulk. Members will 

continue to receive two (2) Full Service 

MEO Ports to each matching engine to 

which they connect for the single flat 

monthly fee. Assuming a Member 

connects to all twelve (12) matching 

engines during the month, with two Full 

Service MEO Ports per matching engine, 

this would result in a cost of $416.67 

per Full Service MEO Port ($10,000 

divided by 24). 

The Exchange assesses Members Full 

Service MEO Port Fees, either for a Full 

Service MEO Port—Bulk and/or for a 

Full Service MEO Port—Single, based 

upon the monthly total volume 

executed by a Member and its 

Affiliates 19 on the Exchange across all 

origin types, not including Excluded 

Contracts,20 as compared to the Total 

Consolidated Volume (‘‘TCV’’),21 in all 

MIAX Pearl-listed options. The 

Exchange adopted a tier-based fee 

structure based upon the volume-based 

tiers detailed in the definition of ‘‘NonTransaction Fees Volume-Based Tiers’’ 

described in the Definitions section of 

the Fee Schedule. The Exchange 

assesses these and other monthly Port 

fees on Members in each month the 

market participant is credentialed to use 

a Port in the production environment. 

Current Full Service MEO Port—Bulk 

Fees. Prior to the First Proposed Rule 

Change, the Exchange assessed 

Members monthly Full Service MEO 

Port—Bulk fees as follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $3,000; 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$4,500; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $5,000. 

Proposed Full Service MEO Port— 

Bulk Fees. Since the First Proposed Rule 

Change, the Exchange proposes to assess 

Members monthly Full Service MEO 

Port—Bulk fees as follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $5,000; 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$7,500; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $10,000. 

Current Full Service MEO Port— 

Single Fees. Prior to the First Proposed 

Rule Change, the Exchange assessed 

Members monthly Full Service MEO 

Port—Single fees as follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $2,000; 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$3,375; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $3,750. 

Proposed Full Service MEO Port— 

Single Fees. Since the First Proposed 

Rule Change, the Exchange proposes to 

assess Members monthly Full Service 

MEO Port—Single fees as follows: 

(i) If its volume falls within the 

parameters of Tier 1 of the NonTransaction Fees Volume-Based Tiers, 

or volume up to 0.30%, $2,500; 

(ii) if its volume falls within the 

parameters of Tier 2 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.30% up to 0.60%, 

$3,500; and 

(iii) if its volume falls with the 

parameters of Tier 3 of the NonTransaction Fees Volume-Based Tiers, 

or volume above 0.60%, $4,500. 

The Exchange offers various types of 

ports with differing prices because each 

port accomplishes different tasks, are 

suited to different types of Members, 

and consume varying capacity amounts 

of the network. For instance, MEO ports 

allow for a higher throughput and can 

handle much higher quote/order rates 

than FIX ports. Members that are Market 

Makers 22 or high frequency trading 


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making markets in options contracts traded on the 

Exchange and that is vested with the rights and 

responsibilities specified in Chapter VI of Exchange 

Rules. See the Definitions Section of the Fee 

Schedule and Exchange Rule 100. 

23See supra note 18. 

24See MIAX Fee Schedule, Section 5)d)ii); MIAX 

Emerald Fee Schedule, Section 5)d)ii). 

25See NYSE American Options Fee Schedule, 

Section V.A., Port Fees; NYSE Arca Options Fee 

Schedule, Port Fees; Nasdaq Stock Market LLC 

(‘‘NASDAQ’’), Options 7, Pricing Schedule, Section 

3. 

26See id. 

27See id. 

28See id. 

29See id. 

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

31 15 U.S.C. 78f(b)(4) and (5). 

32See Securities Exchange Act Release No. 85459 

(March 29, 2019), 84 FR 13363 (April 4, 2019) (SR– 

BOX–2018–24, SR–BOX–2018–37, and SR–BOX– 

2019–04) (Order Disapproving Proposed Rule 

Changes to Amend the Fee Schedule on the BOX 

Market LLC Options Facility to Establish BOX 

Connectivity Fees for Participants and NonParticipants Who Connect to the BOX Network). 

33See Staff Guidance on SRO Rule Filings 

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

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

(the ‘‘Guidance’’). 

firms utilize these ports (typically 

coupled with 10Gb ULL connectivity) 

because they transact in significantly 

higher amounts of messages being sent 

to and from the Exchange, versus FIX 

port users, who are traditionally 

customers sending only orders to the 

Exchange (typically coupled with 1Gb 

connectivity). The different types of 

ports cater to the different types of 

Exchange Memberships and different 

capabilities of the various Exchange 

Members. Certain Members need ports 

and connections that can handle using 

far more of the network’s capacity for 

message throughput, risk protections, 

and the amount of information that the 

System has to assess. Those Members 

may account for the vast majority of 

network capacity utilization and volume 

executed on the Exchange, as discussed 

throughout. 

The Exchange proposes to increase its 

monthly Full Service MEO Port fees 

since it has not done so since the fees 

were adopted in 2018 (prior to the First 

Proposed Rule Change),23 which are 

designed to recover a portion of the 

costs associated with directly accessing 

the Exchange. The Exchange notes that 

its affiliates, Miami International 

Securities Exchange, LLC (‘‘MIAX’’) and 

MIAX Emerald, LLC (‘‘MIAX Emerald’’), 

charge fees for their high throughput, 

low latency MIAX Express Interface 

(‘‘MEI’’) Ports in a similar fashion as the 

Exchange charges for its MEO Ports— 

generally, the more active user the 

Member (i.e., the greater number/greater 

national ADV of classes assigned to 

quote on MIAX and MIAX Emerald), the 

higher the MEI Port fee.24 This concept 

is not new or novel. The Exchange also 

notes that the proposed increased fees 

for the Exchange’s Full Service MEO 

Ports are in line with, or cheaper than, 

the similar port fees for similar 

membership fees charged by other 

options exchanges.25

The Exchange has historically 

undercharged for Full Service MEO 

Ports as compared to other options 

exchanges 26 because the Exchange 

provides Full Service MEO Ports as a 

package for a single monthly fee. As 

described above, this package includes 

two Full Service MEO Ports for each of 

the Exchange’s twelve (12) matching 

engines. The Exchange understands 

other options exchanges charge fees on 

a per port basis. The Exchange believes 

other exchanges’ port fees are a useful 

example of alternative approaches to 

providing and charging for port access 

and provides the below table for 

comparison purposes only to show how 

its proposed fees compare to fees 

currently charged by other options 

exchanges for similar port access. 

Exchange Type of port Monthly fee 

MIAX Pearl (as proposed) ...................................... MEO Full Service—Bulk ........................ Tier 1: $5,000 (or $208.33 per Matching Engine). 

Tier 2: $7,500 (or $312.50 per Matching Engine). 

Tier 3: $10,000 (or $416.66 per Matching Engine). 

MEO Full Service—Single ..................... Tier 1: $2,500 (or $104.16 per Matching Engine). 

Tier 2: $3,500 (or $145.83 per Matching Engine). 

Tier 3: $4,500 (or $187.50 per Matching Engine). 

NYSE American, LLC (‘‘NYSE American’’) 27 ........ Order/Quote Entry ................................. Ports 1–40: $450 each. 

Ports 41 or more: $150 each. 

NYSE Arca, Inc. (‘‘NYSE Arca’’) 28 ......................... Order/Quote Entry ................................. Ports 1–40: $450 each. 

Ports 41 or more: $150 each. 

NASDAQ 29 ............................................................. Specialized Quote Interface .................. Ports 1–5: $1,500 each. 

Ports 6–20: $1,000 each. 

Ports 21 or more: $500. 

Implementation 

The proposed fees are immediately 

effective. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 30

in general, and furthers the objectives of 

Section 6(b)(4) of the Act 31 in 

particular, in that it is an equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

issuers and other persons using its 

facilities. The Exchange also believes 

the proposal furthers the objectives of 

Section 6(b)(5) of the Act in that it is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general to protect investors and the 

public interest and is not designed to 

permit unfair discrimination between 

customers, issuers, brokers and dealers. 

On March 29, 2019, the Commission 

issued an Order disapproving a 

proposed fee change by the BOX Market 

LLC Options Facility to establish 

connectivity fees for its BOX Network 

(the ‘‘BOX Order’’).32 On May 21, 2019, 

the Commission Staff issued guidance 

‘‘to assist the national securities 

exchanges and FINRA . . . in preparing 

Fee Filings that meet their burden to 

demonstrate that proposed fees are 

consistent with the requirements of the 

Securities Exchange Act.’’ 33 Based on 

both the BOX Order and the Guidance, 

the Exchange believes that it has clearly 

met its burden to demonstrate that the 

proposed fees are consistent with the 

Act because they (i) are reasonable, 

equitably allocated, not unfairly 

discriminatory, and not an undue 

burden on competition; (ii) comply with 

the BOX Order and the Guidance; (iii) 

are supported by evidence (including 

comprehensive revenue and cost data 

and analysis) that they are fair and 


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34See Securities Exchange Act Release Nos. 

91145 (February 17, 2021), 86 FR 11033 (February 

23, 2021) (SR–EMERALD–2021–05) (proposal to 

establish market data fees for MIAX Emerald ToM, 

Administrative Information Subscriber feed, and 

MIAX Emerald Order Feed); 90981 (January 25, 

2021), 86 FR 7582 (January 29, 2021) (SR–PEARL– 

2021–01) (proposal to increase connectivity fees); 

91460 (April 2, 2021), 86 FR 18349 (SR–EMERALD– 

2021–11) (proposal to adopt port fees, increase 

connectivity fees, and increase additional limited 

service ports); 91033 (February 1, 2021), 86 FR 8455 

(February 5, 2021) (SR–EMERALD–2021–03) 

(proposal to adopt trading permit fees). 

35See Guidance, supra note 33. 

36 Id. 

37 Id. 

38 Id. 

39 Id. 

40 Id. 

41For example, the Exchange only included the 

costs associated with providing and supporting Full 

Service MEO Ports and excluded from its cost 

calculations any cost not directly associated with 

providing and maintaining such ports. Thus, the 

Exchange notes that this methodology 

underestimates the total costs of providing and 

maintaining Full Service MEO Port access. 

reasonable because they will not result 

in excessive pricing or supracompetitive profit; and (iv) utilize a 

cost-based justification framework that 

is substantially similar to a framework 

previously used by the Exchange, and 

its affiliates MIAX and MIAX Emerald, 

to adopt or amend non-transaction fees 

(including port and connectivity fees) 

and market data fees.34

The Proposed Access Fees Will Not 

Result in a Supra-Competitive Profit 

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 amendment meets the 

requirements of the Act that fees are 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

market participants. The Exchange 

believes this high standard is especially 

important when an exchange imposes 

various access fees for market 

participants to access an exchange’s 

marketplace. The Exchange deems the 

Full Service MEO Port fees to be access 

fees. It records these fees as part of its 

‘‘Access Fees’’ revenue in its financial 

statements. 

In the Guidance, the Commission 

Staff stated that, ‘‘[a]s an initial step in 

assessing the reasonableness of a fee, 

staff considers whether the fee is 

constrained by significant competitive 

forces.’’ 35 The Guidance further states 

that, ‘‘. . . even where an SRO cannot 

demonstrate, or does not assert, that 

significant competitive forces constrain 

the fee at issue, a cost-based discussion 

may be an alternative basis upon which 

to show consistency with the Exchange 

Act.’’ 36 In the Guidance, the 

Commission Staff further states that, 

‘‘[i]f an SRO seeks to support its claims 

that a proposed fee is fair and 

reasonable because it will permit 

recovery of the SRO’s costs, or will not 

result in excessive pricing or supracompetitive profit, specific information, 

including quantitative information, 

should be provided to support that 

argument.’’ 37 The Exchange does not 

assert that the Proposed Access Fees are 

constrained by competitive forces. 

Rather, the Exchange asserts that the 

Proposed Access Fees are reasonable 

because they will permit recovery of the 

Exchange’s costs in providing access via 

Full Service MEO Ports and will not 

result in the Exchange generating a 

supra-competitive profit. 

The Guidance defines ‘‘supracompetitive profit’’ as ‘‘profits that 

exceed the profits that can be obtained 

in a competitive market.’’ 38 The 

Commission Staff further states in the 

Guidance that ‘‘the SRO should provide 

an analysis of the SRO’s baseline 

revenues, costs, and profitability (before 

the proposed fee change) and the SRO’s 

expected revenues, costs, and 

profitability (following the proposed fee 

change) for the product or service in 

question.’’ 39 The Exchange provides 

this analysis below. 

Based on this analysis, the Exchange 

believes the Proposed Access Fees are 

reasonable and do not result in a 

‘‘supra-competitive’’ 40 profit. The 

Exchange believes that it is important to 

demonstrate that these fees are based on 

its costs and reasonable business needs. 

The Exchange believes the Proposed 

Access Fees will allow the Exchange to 

offset expense the Exchange has and 

will incur, and that the Exchange is 

providing sufficient transparency (as 

described below) into how the Exchange 

determined to charge such fees. 

Accordingly, the Exchange is providing 

an analysis of its revenues, costs, and 

profitability associated with the 

Proposed Access Fees. This analysis 

includes information regarding its 

methodology for determining the costs 

and revenues associated with the 

Proposed Access Fees. As a result of this 

analysis, the Exchange believes the 

Proposed Access Fees are fair and 

reasonable as a form of cost recovery 

plus present the possibility of a 

reasonable return for the Exchange’s 

aggregate costs of offering Full Service 

MEO Port access to the Exchange. 

The Proposed Access Fees are based 

on a cost-plus model. In determining the 

appropriate fees to charge, the Exchange 

considered its costs to provide Full 

Service MEO Ports, using what it 

believes to be a conservative 

methodology (i.e., that strictly considers 

only those costs that are most clearly 

directly related to the provision and 

maintenance of Full Service MEO Ports) 

to estimate such costs,41 as well as the 

relative costs of providing and 

maintaining Full Service MEO Ports, 

and set fees that are designed to cover 

its costs with a limited return in excess 

of such costs. However, as discussed 

more fully below, such fees may also 

result in the Exchange recouping less 

than all of its costs of providing and 

maintaining Full Service MEO Ports 

because of the uncertainty of forecasting 

subscriber decision making with respect 

to firms’ port needs and the likely 

potential for increased costs to procure 

the third-party services described 

below. 

To determine the Exchange’s costs to 

provide the access services associated 

with the Proposed Access Fees, the 

Exchange conducted an extensive cost 

review in which the Exchange analyzed 

nearly every expense item in the 

Exchange’s general expense ledger to 

determine whether each such expense 

relates to the Proposed Access Fees, 

and, if such expense did so relate, what 

portion (or percentage) of such expense 

actually supports the access services. 

The sum of all such portions of 

expenses represents the total cost of the 

Exchange to provide the access services 

associated with the Proposed Access 

Fees. 

The Exchange also provides detailed 

information regarding the Exchange’s 

cost allocation methodology—namely, 

information that explains the 

Exchange’s rationale for determining 

that it was reasonable to allocate certain 

expenses described in this filing 

towards the cost to the Exchange to 

provide the access services associated 

with the Proposed Access Fees. The 

Exchange conducted a thorough internal 

analysis to determine the portion (or 

percentage) of each expense to allocate 

to the support of access services 

associated with the Proposed Access 

Fees. This analysis included discussions 

with each Exchange department head to 

determine the expenses that support 

access services associated with the 

Proposed Access Fees. This included 

numerous meetings between the 

Exchange’s Chief Information Officer, 

Chief Financial Officer, Head of 

Strategic Planning and Operations, 

Chief Technology Officer, various 

members of the Legal Department, and 

other group leaders. The Exchange 

reviewed each individual expense to 


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42See, e.g., Securities Exchange Act Release Nos. 

93293 (October 12, 2021), 86 FR 57716 (October 18, 

2021) (SR–PHLX–2021–58) (increasing several 

market data fees and adopting new market data fee 

without providing a cost based justification); 91339 

(March 17, 2021), 86 FR 15524 (March 23, 2021) 

(SR–CboeBZX–2021–020) (increasing fees for a 

market data product while not providing a cost 

based justification for the increase); 93293 (October 

21, 2021), 86 FR 57716 (October 18, 2021) (SR– 

PHLX–2021–058) (increasing fees for historical 

market data while not providing a cost based 

justification for the increase); 92970 (September 14, 

2021), 86 FR 52261 (September 20, 2021) (SR– 

CboeBZX–2021–047) (adopting fees for a market 

data related product while not providing a cost 

based justification for the fees); and 89826 

(September 10, 2021), 85 FR 57900 (September 16, 

2021) (SR–CBOE–2020–086) (increasing 

connectivity fees without including a cost based 

justification). 

43See Securities Exchange Act Release No. 89826 

(September 10, 2020), 85 FR 57900 (September 16, 

2020) (SR–CBOE–2020–086) (increasing 

connectivity fees without including a cost based 

justification). 

44See id. at 57909. 

45See Securities Exchange Act Release No. 93883 

(December 30, 2021), 87 FR 523 (January 5, 2021) 

(SR–IEX–2021–14) (the ‘‘IEX Order’’). 

46See letters to Ms. Venessa A. Countryman, 

Secretary, Commission, from Douglas A. Cifu, Chief 

Executive Officer, Virtu Financial, Inc., dated 

January 26, 2022 (the ‘‘Virtu Letter’’), Tyler 

Gellasch, Executive Director, Healthy Markets 

Association (‘‘HMA’’), dated January 26, 2022 (the 

‘‘HMA Letter 2’’), and Erika Moore, Vice President 

and Corporate Secretary, The Nasdaq Stock Market 

LLC, dated January 27, 2022 (the ‘‘Nasdaq Letter’’). 

47See Virtu Letter at page 3, id. 

48HMA previously expressed their ‘‘worry that 

the Commission’s process for reviewing and 

evaluating exchange filings may be inconsistently 

applied.’’ See letter from Tyler Gellasch, Executive 

Director, HMA, to Hon. Gary Gensler, Chair, 

Commission, dated October 29, 2021 (commenting 

on SR–CboeEDGA–2021–017, SR–CboeBYX–2021– 

020, SR–Cboe–BZX–2021–047, SR–CboeEDGX– 

2021–030, SR–MIAX–2021–41, SR–PEARL–2021– 

45, and SR–EMERALD–2021–29 and stating that 

‘‘MIAX has repeatedly filed to change its 

connectivity fees in a way that will materially lower 

costs for many users, while increasing the costs for 

some of its heaviest of users. These filings have 

been withdrawn and repeatedly refiled. Each time, 

however, the filings contain significantly greater 

information about who is impacted and how than 

other filings that have been permitted to take effect 

without suspension’’) (emphasis added) (‘‘HMA 

Letter 1’’). 

49See HMA Letter 2 at 2–3. The Exchange has 

provided further examples to support HMA’s 

assertion above. See supra note 39 and 

accompanying text. 

determine if such expense was related 

to the proposed fees. Once the expenses 

were identified, the Exchange 

department heads, with the assistance of 

the Exchange’s internal finance 

department, reviewed such expenses 

holistically on an Exchange-wide level 

to determine what portion of that 

expense supports providing access 

services for the Proposed Access Fees. 

The sum of all such portions of 

expenses represents the total cost to the 

Exchange to provide access services 

associated with the Proposed Access 

Fees. For the avoidance of doubt, no 

expense amount was allocated twice. 

The internal cost analysis conducted 

by the Exchange is a proprietary process 

that is designed to make a fair and 

reasonable assessment of costs and 

resources allocated to support the 

provision of services associated with the 

proposed fees. The Exchange 

acknowledges that this assessment can 

only capture a moment in time and that 

costs and resource allocations may 

change. That is why the Exchange has 

historically, and on an ongoing basis, 

periodically revisits its costs and 

resource allocations to ensure it is 

appropriately allocating resources to 

properly provide services to the 

Exchange’s constituents. Any 

requirement that an exchange should 

conduct a periodic re-evaluation on a 

set timeline of its cost justification and 

amend its fees accordingly should be 

established by the Commission 

holistically, applied to all exchanges 

and not just pending fee proposals such 

as this filing. In order to be fairly 

applied, such a mandate should be 

applied to existing market data fees as 

well. 

In accordance with the Guidance, the 

Exchange has provided sufficient detail 

to support a finding that the proposed 

fees are consistent with the Exchange 

Act. The proposal includes a detailed 

description of the Exchange’s costs and 

how the Exchange determined to 

allocate those costs related to the 

proposed fees. In fact, the detail and 

analysis provided in this proposed rule 

change far exceed the level of disclosure 

provided in other exchange fee filings 

that have not been suspended by the 

Commission during its 60-day 

suspension period. A Commission 

determination that it is unable to make 

a finding that this proposed rule change 

is consistent with the Exchange Act 

would run contrary to the Commission 

Staff’s treatment of other recent 

exchange fee proposals that have not 

been suspended and remain in effect 

today.42 For example, a proposed fee 

filing that closely resembles the 

Exchange’s current filing was submitted 

in 2020 by the Cboe Exchange, Inc. 

(‘‘Cboe’’) and increased fees for Cboe’s 

10Gb connections, an access fee.43 This 

filing was submitted on September 2, 

2020, nearly 15 months after the Staff’s 

Guidance was issued. In that filing, the 

Cboe stated that the ‘‘proposed changes 

were not designed with the objective to 

generate an overall increase in access 

fee revenue.’’ 44 This filing provided no 

cost based data to support its assertion 

that the proposal was intended to be 

revenue neutral. Among other things, 

Cboe did not provide a description of 

the costs underlying its provision of 

10Gb connections to show that this 

particular fee did not generate a supracompetitive profit or describe how any 

potential profit may be offset by 

increased costs associated with another 

fee included in its proposal. This filing, 

nonetheless, was not suspended by the 

Commission and remains in effect 

today. 

The Exchange notes that the Investors 

Exchange, Inc. (‘‘IEX’’) recently 

submitted a proposed rule change to 

adopt fees for two real-time proprietary 

market data feeds, TOPS and DEEP 

(‘‘IEX Fee Proposal’’). IEX previously 

provided its TOP and DEEP market data 

feeds for free and proposed to adopt 

modest, below market fees. The IEX Fee 

Proposal included a detailed subscriber 

data and cost-based analysis in 

compliance with the Guidance. 

Nonetheless, on December 30, 2021, the 

Commission suspended the IEX Fee 

Proposal and instituted proceedings to 

determine whether to approve or 

disapprove the IEX Fee Proposal.45

The Commission received three 

comment letters on the IEX Order.46 The 

Virtu Letter and HMA Letter 2 

specifically applaud the amount of 

detail included in the IEX Fee Proposal. 

Specifically, the Virtu Letter states that 

‘‘[i]n significant detail, IEX provides 

data about three cost components: ‘(1) 

direct costs, such as servers, 

infrastructure, and monitoring; (2) 

enhancement initiative costs (e.g., new 

functionality for IEX Data and increased 

capacity for the proprietary market data 

feeds); and (3) personnel costs.’ ’’ 47

HMA Letter 2 similarly commends the 

level of detail included in the IEX Fee 

Proposal and also highlights the 

disparate treatment by Commission Staff 

of exchange fee filings.48 HMA Letter 2 

provides three examples to support this 

assertion.49 The Nasdaq Letter urges the 

Commission to approve the IEX Fee 

Proposal promptly and raises concern 

the questions asked by the Commission 

in the IEX Order imply that they are 

exercising rate making authority that 

they clearly do not possess. The Nasdaq 

Letter states that ‘‘[i]f the Commission 

believes it has authority to conduct costplus ratemaking, the Administrative 

Procedure Act dictates that it must 

propose a rule for notice and comment 

and that its final rule must be prepared 


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50See Nasdaq Letter at page 13, id. 

51See Securities Exchange Act Release No. 91460 

(April 2, 2021), 86 FR 18349 (April 8, 2021) (SR– 

EMERALD–2021–11) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend Its Fee Schedule To Adopt Port Fees, 

Increase Certain Network Connectivity Fees, and 

Increase the Number of Additional Limited Service 

MIAX Emerald Express Interface Ports Available to 

Market Makers) (adopting tiered MEI Port fee 

structure ranging from $5,000 to $20,500 per 

month). 

52The Exchange notes that one Member dropped 

one Full Service MEO Port–Bulk between June 2021 

and November 2021, as a result of the Proposed 

Access Fees. 

53The Exchange notes that this profit margin 

differs from the First and Second Proposed Rule 

Changes because the Exchange now has the benefit 

of using a more recent billing cycle under the 

Proposed Access Fees (November 2021) and 

comparing it to a baseline month (June 2021) from 

before the Proposed Access Fees were in effect. 

54See ‘‘Supply chain chaos is already hitting 

global growth. And it’s about to get worse’’, by 

Holly Ellyatt, CNBC, available at https://

www.cnbc.com/2021/10/18/supply-chain-chaos-ishitting-global-growth-and-could-get-worse.html 

(October 18, 2021); and ‘‘There will be things that 

people can’t get, at Christmas, White House warns’’ 

by Jarrett Renshaw and Trevor Hunnicutt, Reuters, 

available at https://www.reuters.com/world/us/ 

americans-may-not-get-some-christmas-treatswhite-house-officials-warn-2021-10-12/ (October 12, 

2021). 

55For example, on October 20, 2021, ICE Data 

Services announced a 3.5% price increase effective 

January 1, 2022 for most services. The price 

increase by ICE Data Services includes their SFTI 

network, which is relied on by a majority of market 

participants, including the Exchange. See email 

from ICE Data Services to the Exchange, dated 

October 20, 2021. The Exchange further notes that 

on October 22, 2019, the Exchange was notified by 

ICE Data Services that it was raising its fees charged 

to the Exchange by approximately 11% for the SFTI 

network. 

to withstand judicial scrutiny.’’ 50 The 

Exchange agrees. 

The Exchange believes exchanges, 

like all businesses, should be provided 

flexibility when allocating costs and 

resources they deem necessary to 

operate their business, including 

providing market data and access 

services. The Exchange notes that costs 

and resource allocations may vary from 

business to business and, likewise, costs 

and resource allocations may differ from 

exchange to exchange when it comes to 

providing market data and access 

services. It is a business decision that 

must be evaluated by each exchange as 

to how to allocate internal resources and 

what costs to incur internally or via 

third parties that it may deem necessary 

to support its business and its provision 

of market data and access services to 

market participants. An exchange’s 

costs may also vary based on fees 

charged by third parties and periodic 

increases to those fees that may be 

outside of the control of an exchange. 

To determine the Exchange’s 

projected revenues associated with the 

Proposed Access Fees in the instant 

filing, the Exchange analyzed the 

number of Members currently utilizing 

Full Service MEO Ports, and, utilizing a 

recent monthly billing cycle 

representative of 2021 monthly revenue, 

extrapolated annualized revenue on a 

going-forward basis. The Exchange does 

not believe it is appropriate to factor 

into its analysis projected or estimated 

future revenue growth or decline for 

purposes of these calculations, given the 

uncertainty of such projections due to 

the continually changing access needs 

of market participants and potential 

increase in internal and third party 

expenses. The Exchange is presenting 

its revenue and expense associated with 

the Proposed Access Fees in this filing 

in a manner that is consistent with how 

the Exchange presents its revenue and 

expense in its Audited Unconsolidated 

Financial Statements. The Exchange’s 

most recent Audited Unconsolidated 

Financial Statement is for 2020. 

However, since the revenue and 

expense associated with the Proposed 

Access Fees were not in place in 2020 

or for the majority of 2021, the Exchange 

believes its 2020 Audited 

Unconsolidated Financial Statement is 

not representative of its current total 

annualized revenue and costs associated 

with the Proposed Access Fees. 

Accordingly, the Exchange believes it is 

more appropriate to analyze the 

Proposed Access Fees utilizing its 2021 

revenue and costs, as described herein, 

which utilize the same presentation 

methodology as set forth in the 

Exchange’s previously-issued Audited 

Unconsolidated Financial Statements. 

Based on this analysis, the Exchange 

believes that the Proposed Access Fees 

are fair and reasonable because they will 

not result in excessive pricing or supracompetitive profit when comparing the 

Exchange’s total annual expense 

associated with providing the services 

associated with the Proposed Access 

Fees versus the total projected annual 

revenue the Exchange will collect for 

providing those services. The Exchange 

notes that this is the same justification 

process utilized by the Exchange’s 

affiliate, MIAX Emerald, in a filing 

recently noticed and not suspended by 

the Commission when MIAX Emerald 

adopted MEI Port fees.51

As outlined in more detail below, the 

Exchange projects that the final 

annualized expense for 2021 to provide 

Full Service MEO Ports to be 

approximately $897,084 per annum or 

an average of $74,757 per month. The 

Exchange implemented the Proposed 

Access Fees on July 1, 2021 in the First 

Proposed Rule Change. For June 2021, 

prior to the Proposed Access Fees, 

Members and non-Members purchased a 

total of 20 Full Service MEO Ports, for 

which the Exchange charged a total of 

approximately $71,625. This resulted in 

a loss of $3,132 for that month (a margin 

of ¥4.37%). For the month of 

November 2021, which includes the 

Proposed Access Fees, Members and 

non-Members purchased a total of 19 

Full Service MEO Ports,52 for which the 

Exchange charged a total of 

approximately $122,000 for that month. 

This resulted in a profit of $47,243 for 

that month, representing a profit margin 

of approximately 38%. The Exchange 

believes that the Proposed Access Fees 

are reasonable because they are 

designed to approximately generate a 

modest profit margin of 38% permonth.53 The Exchange cautions that 

this profit margin is likely to fluctuate 

from month to month based on the 

uncertainty of predicting how many 

Full Service MEO Ports may be 

purchased from month to month as 

Members and non-Members are able to 

add and drop ports at any time based on 

their own business decisions, which 

they frequently do. This profit margin 

may also decrease due to the significant 

inflationary pressure on capital items 

that the Exchange needs to purchase to 

maintain the Exchange’s technology and 

systems.54 The Exchange has been 

subject to price increases upwards of 

30% during the past year on network 

equipment due to supply chain 

shortages. This, in turn, results in higher 

overall costs for ongoing system 

maintenance, but also to purchase the 

items necessary to ensure ongoing 

system resiliency, performance, and 

determinism. These costs are expected 

to continue to go up as the U.S. 

economy continues to struggle with 

supply chain and inflation related 

issues. 

As mentioned above, the Exchange 

projects that the final annualized 

expense for 2021 to provide the services 

associated with the Proposed Access 

Fees to be approximately $897,084 per 

annum or an average of $74,757 per 

month and that these costs are expected 

to increase not only due to anticipated 

significant inflationary pressure, but 

also periodic fee increases by third 

parties.55 The Exchange notes that there 

are material costs associated with 

providing the infrastructure and 

headcount to fully-support access to the 

Exchange. The Exchange incurs 

technology expense related to 

establishing and maintaining 

Information Security services, enhanced 

network monitoring and customer 

reporting, as well as Regulation SCI 

mandated processes, associated with its 


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56The Exchange has incurred a cumulative loss 

of $86 million since its inception in 2017 to 2020, 

the last year for which the Exchange’s Form 1 data 

is available. See Exchange’s Form 1/A, Application 

for Registration or Exemption from Registration as 

a National Securities Exchange, filed July 28, 2021, 

available at https://www.sec.gov/Archives/edgar/ 

vprr/2100/21000461.pdf. 

57The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

58The Exchange has not yet finalized its 2021 

year end results. 

59The percentage allocations used in this 

proposed rule change may differ from past filings 

from the Exchange or its affiliates due to, among 

other things, changes in expenses charged by thirdparties, adjustments to internal resource allocations, 

and different system architecture of the Exchange 

as compared to its affiliates. 

60For example, the Exchange previously noted 

that all third-party expense described in its prior fee 

filing was contained in the information technology 

and communication costs line item under the 

section titled ‘‘Operating Expenses Incurred 

Directly or Allocated From Parent,’’ in the 

Exchange’s 2019 Form 1 Amendment containing its 

financial statements for 2018. See Securities 

Exchange Act Release No. 87876 (December 31, 

2019), 85 FR 757 (January 7, 2020) (SR–PEARL– 

2019–36). Accordingly, the third-party expense 

described in this filing is attributed to the same line 

item for the Exchange’s 2021 Form 1 Amendment, 

which will be filed in 2022. 

61 In fact, on October 20, 2021, ICE Data Services 

announced a 3.5% price increase effective January 

1, 2022 for most services. The price increase by ICE 

Data Services includes their SFTI network, which 

is relied on by a majority of market participants, 

including the Exchange. See email from ICE Data 

Services to the Exchange, dated October 20, 2021. 

This fee increase by ICE data services, while not 

subject to Commission review, has material impact 

on cost to exchanges and other market participants 

that provide downstream access to other market 

participants. The Exchange notes that on October 

22, 2019, the Exchange was notified by ICE Data 

Services that it was raising its fees charged to the 

Exchange by approximately 11% for the SFTI 

network, without having to show that such fee 

change complies with the Act by being reasonable, 

equitably allocated, and not unfairly 

discriminatory. It is unfathomable to the Exchange 

that, given the critical nature of the infrastructure 

services provided by SFTI, that its fees are not 

required to be rule-filed with the Commission 

pursuant to Section 19(b)(1) of the Act and Rule 

19b–4 thereunder. See 15 U.S.C. 78s(b)(1) and 17 

CFR 240.19b–4, respectively. 

network technology. While some of the 

expense is fixed, much of the expense 

is not fixed, and thus increases the cost 

to the Exchange to provide access 

services associated with the Proposed 

Access Fees. For example, new 

Members to the Exchange may require 

the purchase of additional hardware to 

support those Members as well as 

enhanced monitoring and reporting of 

customer performance that the 

Exchange and its affiliates provide. 

Further, as the total number of Members 

increases, the Exchange and its affiliates 

may need to increase their data center 

footprint and consume more power, 

resulting in increased costs charged by 

their third-party data center provider. 

Accordingly, the cost to the Exchange 

and its affiliates to provide access to its 

Members is not fixed and indeed is 

likely to increase rather than decrease 

over time. The Exchange believes the 

Proposed Access Fees are a reasonable 

attempt to offset a portion of the costs 

to the Exchange associated with 

providing access to its network 

infrastructure. 

The Exchange only has four primary 

sources of revenue and cost recovery 

mechanisms to fund all of its 

operations: Transaction fees, access fees 

(which includes the Proposed Access 

Fees), regulatory fees, and market data 

fees. Accordingly, the Exchange must 

cover all of its expenses from these four 

primary sources of revenue and cost 

recovery mechanisms. Until recently, 

the Exchange has operated at a 

cumulative net annual loss since it 

launched operations in 2017.56 This is 

a result of providing a low cost 

alternative to attract order flow and 

encourage market participants to 

experience the high determinism and 

resiliency of the Exchange’s trading 

Systems.57 To do so, the Exchange chose 

to waive the fees for some nontransaction related services or provide 

them at a very marginal cost, which was 

not profitable to the Exchange. This 

resulted in the Exchange forgoing 

revenue it could have generated from 

assessing higher fees. 

The Exchange believes that the 

Proposed Access Fees are fair and 

reasonable because they will not result 

in excessive pricing or supracompetitive profit, when comparing the 

total annual expense that the Exchange 

projects to incur in connection with 

providing these access services versus 

the total annual revenue that the 

Exchange projects to collect in 

connection with services associated 

with the Proposed Access Fees. For 

2021,58 the total annual expense for 

providing the access services associated 

with the Proposed Access Fees for the 

Exchange is projected to be 

approximately $897,084, or 

approximately $74,757 per month. The 

$897,084 in projected total annual 

expense is comprised of the following, 

all of which are directly related to the 

access services associated with the 

Proposed Access Fees: (1) Third-party 

expense, relating to fees paid by the 

Exchange to third-parties for certain 

products and services; and (2) internal 

expense, relating to the internal costs of 

the Exchange to provide the services 

associated with the Proposed Access 

Fees.59 As noted above, the Exchange 

believes it is more appropriate to 

analyze the Proposed Access Fees 

utilizing its 2021 revenue and costs, 

which utilize the same presentation 

methodology as set forth in the 

Exchange’s previously-issued Audited 

Unconsolidated Financial Statements.60

The $897,084 in projected total annual 

expense is directly related to the access 

services associated with the Proposed 

Access Fees, and not any other product 

or service offered by the Exchange. It 

does not include general costs of 

operating matching systems and other 

trading technology, and no expense 

amount was allocated twice. 

As discussed, the Exchange 

conducted an extensive cost review in 

which the Exchange analyzed nearly 

every expense item in the Exchange’s 

general expense ledger (this includes 

over 150 separate and distinct expense 

items) to determine whether each such 

expense relates to the access services 

associated with the Proposed Access 

Fees, and, if such expense did so relate, 

what portion (or percentage) of such 

expense actually supports those 

services, and thus bears a relationship 

that is, ‘‘in nature and closeness,’’ 

directly related to those services. In 

performing this calculation, the 

Exchange considered other services and 

to which the expense may be applied 

and how much of the expense is directly 

or indirectly utilized in providing those 

other services. The sum of all such 

portions of expenses represents the total 

cost of the Exchange to provide access 

services associated with the Proposed 

Access Fees. 

External Expense Allocations 

For 2021, total third-party expense, 

relating to fees paid by the Exchange to 

third-parties for certain products and 

services for the Exchange to be able to 

provide the access services associated 

with the Proposed Access Fees, is 

projected to be $40,166. This includes, 

but is not limited to, a portion of the 

fees paid to: (1) Equinix, for data center 

services, for the primary, secondary, and 

disaster recovery locations of the 

Exchange’s trading system 

infrastructure; (2) Zayo Group Holdings, 

Inc. (‘‘Zayo’’) for network services (fiber 

and bandwidth products and services) 

linking the Exchange’s office locations 

in Princeton, New Jersey and Miami, 

Florida, to all data center locations; (3) 

Secure Financial Transaction 

Infrastructure (‘‘SFTI’’),61 which 

supports connectivity and feeds for the 

entire U.S. options industry; (4) various 

other services providers (including 

Thompson Reuters, NYSE, NASDAQ, 

and Internap), which provide content, 

connectivity services, and infrastructure 

services for critical components of 

options connectivity and network 

services; and (5) various other hardware 


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62As noted above, the percentage allocations used 

in this proposed rule change may differ from past 

filings from the Exchange or its affiliates due to, 

among other things, changes in expenses charged by 

third-parties, adjustments to internal resource 

allocations, and different system architecture of the 

Exchange as compared to its affiliates. Again, as 

part its ongoing assessment of costs and expenses, 

the Exchange recently conducted a periodic 

thorough review of its expenses and resource 

allocations which, in turn, resulted in a revised 

percentage allocations in this filing. 

63 Id. 

64 Id. 

and software providers (including Dell 

and Cisco, which support the 

production environment in which 

Members connect to the network to 

trade, receive market data, etc.). 

For clarity, the Exchange took a 

conservative approach in determining 

the expense and the percentage of that 

expense to be allocated to the providing 

access services in connection with the 

Proposed Access Fees. Only a portion of 

all fees paid to such third-parties is 

included in the third-party expense 

herein, and no expense amount is 

allocated twice. Accordingly, the 

Exchange does not allocate its entire 

information technology and 

communication costs to the access 

services associated with the Proposed 

Access Fees. This may result in the 

Exchange under allocating an expense 

to the provision of access services in 

connection with the Proposed Access 

Fees and such expenses may actually be 

higher or increase above what the 

Exchange utilizes within this proposal. 

Further, the Exchange notes that, with 

respect to the MIAX Pearl expenses 

included herein, those expenses only 

cover the MIAX Pearl options market; 

expenses associated with the MIAX 

Pearl equities market are accounted for 

separately and are not included within 

the scope of this filing. As noted above, 

the percentage allocations used in this 

proposed rule change may differ from 

past filings from the Exchange or its 

affiliates due to, among other things, 

changes in expenses charged by thirdparties, adjustments to internal resource 

allocations, and different system 

architecture of the Exchange as 

compared to its affiliates. Further, as 

part its ongoing assessment of costs and 

expenses, the Exchange recently 

conducted a periodic thorough review 

of its expenses and resource allocations 

which, in turn, resulted in a revised 

percentage allocations in this filing. 

Therefore, the percentage allocations 

used in this proposed rule change may 

differ from past filings from the 

Exchange or its affiliates due to, among 

other things, changes in expenses 

charged by third-parties, adjustments to 

internal resource allocations, and 

different system architecture of the 

Exchange as compared to its affiliates. 

The Exchange believes it is reasonable 

to allocate such third-party expense 

described above towards the total cost to 

the Exchange to provide the access 

services associated with the Proposed 

Access Fees. In particular, the Exchange 

believes it is reasonable to allocate the 

identified portion of the Equinix 

expense because Equinix operates the 

data centers (primary, secondary, and 

disaster recovery) that host the 

Exchange’s network infrastructure. This 

includes, among other things, the 

necessary storage space, which 

continues to expand and increase in 

cost, power to operate the network 

infrastructure, and cooling apparatuses 

to ensure the Exchange’s network 

infrastructure maintains stability. 

Without these services from Equinix, 

the Exchange would not be able to 

operate and support the network and 

provide the access services associated 

with the Proposed Access Fees to its 

Members and their customers. The 

Exchange did not allocate all of the 

Equinix expense toward the cost of 

providing the access services associated 

with the Proposed Access Fees, only 

that portion which the Exchange 

identified as being specifically mapped 

to providing the access services 

associated with the Proposed Access 

Fees. According to the Exchange’s 

calculations, it allocated approximately 

1.80% of the total applicable Equinix 

expense to providing the services 

associated with the proposed fees. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

access services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review.62

The Exchange believes it is reasonable 

to allocate the identified portion of the 

Zayo expense because Zayo provides 

the internet, fiber and bandwidth 

connections with respect to the 

network, linking the Exchange with its 

affiliates, MIAX and MIAX Emerald, as 

well as the data center and disaster 

recovery locations. As such, all of the 

trade data, including the billions of 

messages each day per exchange, flow 

through Zayo’s infrastructure over the 

Exchange’s network. Without these 

services from Zayo, the Exchange would 

not be able to operate and support the 

network and provide the access services 

associated with the Proposed Access 

Fees. The Exchange did not allocate all 

of the Zayo expense toward the cost of 

providing the access services associated 

with the Proposed Access Fees, only the 

portion which the Exchange identified 

as being specifically mapped to 

providing the Proposed Access Fees. 

According to the Exchange’s 

calculations, it allocated approximately 

0.90% of the total applicable Zayo 

expense to providing the services 

associated with the proposed fees. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

access services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review.63

The Exchange believes it is reasonable 

to allocate the identified portions of the 

SFTI expense and various other service 

providers’ (including Thompson 

Reuters, NYSE, NASDAQ, and Internap) 

expense because those entities provide 

connectivity and feeds for the entire 

U.S. options industry, as well as the 

content, connectivity services, and 

infrastructure services for critical 

components of the network. Without 

these services from SFTI and various 

other service providers, the Exchange 

would not be able to operate and 

support the network and provide access 

to its Members and their customers. The 

Exchange did not allocate all of the SFTI 

and other service providers’ expense 

toward the cost of providing the access 

services associated with the Proposed 

Access Fees, only the portions which 

the Exchange identified as being 

specifically mapped to providing the 

access services associated with the 

Proposed Access Fees. According to the 

Exchange’s calculations, it allocated 

approximately 0.90% of the total 

applicable SFTI and other service 

providers’ expense to providing the 

services associated with the proposed 

fees. The Exchange believes this 

allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the access services associated 

with the Proposed Access Fees.64

The Exchange believes it is reasonable 

to allocate the identified portion of the 

other hardware and software provider 

expense because this includes costs for 

dedicated hardware licenses for 

switches and servers, as well as 

dedicated software licenses for security 

monitoring and reporting across the 

network. Without this hardware and 

software, the Exchange would not be 

able to operate and support the network 

and provide access to its Members and 

their customers. The Exchange did not 

allocate all of the hardware and software 

provider expense toward the cost of 

providing the access services associated 

with the Proposed Access Fees, only the 

portions which the Exchange identified 

as being specifically mapped to 


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65 Id. 

66 Id. 

67The Exchange notes that the total depreciation 

expense is different from the total for the 

Exchange’s filing relating to Trading Permits 

because the Exchange factors in the depreciation of 

its own internally developed software when 

assessing costs for Full Service MEO Ports, resulting 

in a higher depreciation expense number in this 

filing. 

68 Id. 

providing the access services associated 

with the Proposed Access Fees. 

According to the Exchange’s 

calculations, it allocated approximately 

0.90% of the total applicable hardware 

and software provider expense to 

providing the services associated with 

the proposed fees. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

actual cost to provide the access 

services associated with the Proposed 

Access Fees.65

Internal Expense Allocations 

For 2021, total projected internal 

expenses relating to the Exchange 

providing the access services associated 

with the Proposed Access Fees, is 

projected to be $856,918. This includes, 

but is not limited to, costs associated 

with: (1) Employee compensation and 

benefits for full-time employees that 

support the access services associated 

with the Proposed Access Fees, 

including staff in network operations, 

trading operations, development, system 

operations, business, as well as staff in 

general corporate departments (such as 

legal, regulatory, and finance) that 

support those employees and functions; 

(2) depreciation and amortization of 

hardware and software used to provide 

the access services associated with the 

Proposed Access Fees, including 

equipment, servers, cabling, purchased 

software and internally developed 

software used in the production 

environment to support the network for 

trading; and (3) occupancy costs for 

leased office space for staff that provide 

the access services associated with the 

Proposed Access Fees. The breakdown 

of these costs is more fully-described 

below. 

For clarity, and as stated above, the 

Exchange took a conservative approach 

in determining the expense and the 

percentage of that expense to be 

allocated to providing the access 

services in connection with the 

Proposed Access Fees. Only a portion of 

all such internal expenses are included 

in the internal expense herein, and no 

expense amount is allocated twice. 

Accordingly, the Exchange does not 

allocate its entire costs contained in 

those items to the access services 

associated with the Proposed Access 

Fees. This may result in the Exchange 

under allocating an expense to the 

provision of access services in 

connection with the Proposed Access 

Fees and such expenses may actually be 

higher or increase above what the 

Exchange utilizes within this proposal. 

Further, as part its ongoing assessment 

of costs and expenses (described above), 

the Exchange recently conducted a 

periodic thorough review of its expenses 

and resource allocations which, in turn, 

resulted in a revised percentage 

allocations in this filing. 

The Exchange believes it is reasonable 

to allocate such internal expense 

described above towards the total cost to 

the Exchange to provide the access 

services associated with the Proposed 

Access Fees. In particular, the 

Exchange’s employee compensation and 

benefits expense relating to providing 

the access services associated with the 

Proposed Access Fees is projected to be 

$783,513, which is only a portion of the 

$9,163,894 total projected expense for 

employee compensation and benefits. 

The Exchange believes it is reasonable 

to allocate the identified portion of such 

expense because this includes the time 

spent by employees of several 

departments, including Technology, 

Back Office, Systems Operations, 

Networking, Business Strategy 

Development (who create the business 

requirement documents that the 

Technology staff use to develop network 

features and enhancements), Trade 

Operations, Finance (who provide 

billing and accounting services relating 

to the network), and Legal (who provide 

legal services relating to the network, 

such as rule filings and various license 

agreements and other contracts). As part 

of the extensive cost review conducted 

by the Exchange, the Exchange reviewed 

the amount of time spent by each 

employee on matters relating to the 

provision of access services associated 

with the Proposed Access Fees. Without 

these employees, the Exchange would 

not be able to provide the access 

services associated with the Proposed 

Access Fees to its Members and their 

customers. The Exchange did not 

allocate all of the employee 

compensation and benefits expense 

toward the cost of the access services 

associated with the Proposed Access 

Fees, only the portions which the 

Exchange identified as being 

specifically mapped to providing the 

access services associated with the 

Proposed Access Fees. According to the 

Exchange’s calculations, it allocated 

approximately 8.55% of the total 

applicable employee compensation and 

benefits expense to providing the 

services associated with the proposed 

fees. The Exchange believes this 

allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the access services associated 

with the Proposed Access Fees, and not 

any other service, as supported by its 

cost review.66

The Exchange’s depreciation and 

amortization expense relating to 

providing the access services associated 

with the Proposed Access Fees is 

projected to be $64,456, which is only 

a portion of the $2,864,716 67 total 

projected expense for depreciation and 

amortization. The Exchange believes it 

is reasonable to allocate the identified 

portion of such expense because such 

expense includes the actual cost of the 

computer equipment, such as dedicated 

servers, computers, laptops, monitors, 

information security appliances and 

storage, and network switching 

infrastructure equipment, including 

switches and taps that were purchased 

to operate and support the network and 

provide the access services associated 

with the Proposed Access Fees. Without 

this equipment, the Exchange would not 

be able to operate the network and 

provide the access services associated 

with the Proposed Access Fees to its 

Members and their customers. The 

Exchange did not allocate all of the 

depreciation and amortization expense 

toward the cost of providing the access 

services associated with the Proposed 

Access Fees, only the portion which the 

Exchange identified as being 

specifically mapped to providing the 

access services associated with the 

Proposed Access Fees. According to the 

Exchange’s calculations, it allocated 

approximately 2.25% of the total 

applicable depreciation and 

amortization expense to providing the 

services associated with the proposed 

fees, as these access services would not 

be possible without relying on such. 

The Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to provide the 

access services associated with the 

Proposed Access Fees, and not any 

other service, as supported by its cost 

review.68

The Exchange’s occupancy expense 

relating to providing the access services 

associated with the Proposed Access 

Fees is projected to be $8,949, which is 

only a portion of the $497,180 total 

projected expense for occupancy. The 

Exchange believes it is reasonable to 

allocate the identified portion of such 

expense because such expense 


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69 Id. 70See supra note 54. 

represents the portion of the Exchange’s 

cost to rent and maintain a physical 

location for the Exchange’s staff who 

operate and support the network, 

including providing the access services 

associated with the Proposed Access 

Fees. This amount consists primarily of 

rent for the Exchange’s Princeton, New 

Jersey office, as well as various related 

costs, such as physical security, 

property management fees, property 

taxes, and utilities. The Exchange 

operates its Network Operations Center 

(‘‘NOC’’) and Security Operations 

Center (‘‘SOC’’) from its Princeton, New 

Jersey office location. A centralized 

office space is required to house the 

staff that operates and supports the 

network. The Exchange currently has 

approximately 200 employees. 

Approximately two-thirds of the 

Exchange’s staff are in the Technology 

department, and the majority of those 

staff have some role in the operation 

and performance of the access services 

associated with the Proposed Access 

Fees. Without this office space, the 

Exchange would not be able to operate 

and support the network and provide 

the access services associated with the 

Proposed Access Fees to its Members 

and their customers. Accordingly, the 

Exchange believes it is reasonable to 

allocate the identified portion of its 

occupancy expense because such 

amount represents the Exchange’s actual 

cost to house the equipment and 

personnel who operate and support the 

Exchange’s network infrastructure and 

the access services associated with the 

Proposed Access Fees. The Exchange 

did not allocate all of the occupancy 

expense toward the cost of providing 

the access services associated with the 

Proposed Access Fees, only the portion 

which the Exchange identified as being 

specifically mapped to operating and 

supporting the network. According to 

the Exchange’s calculations, it allocated 

approximately 1.80% of the total 

applicable occupancy expense to 

providing the services associated with 

the proposed fees. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

cost to provide the access services 

associated with the Proposed Access 

Fees, and not any other service, as 

supported by its cost review.69

The Exchange notes that a material 

portion of its total overall expense is 

allocated to the provision of access 

services (including connectivity, ports, 

and trading permits). The Exchange 

believes this is reasonable and in line, 

as the Exchange operates a technologybased business that differentiates itself 

from its competitors based on its trading 

systems that rely on access to a high 

performance network, resulting in 

significant technology expense. Over 

two-thirds of Exchange staff are 

technology-related employees. The 

majority of the Exchange’s expense is 

technology-based. As described above, 

the Exchange has only four primary 

sources of fees in to recover its costs, 

thus the Exchange believes it is 

reasonable to allocate a material portion 

of its total overall expense towards 

access fees. 

Based on the above, the Exchange 

believes that its provision of access 

services associated with the Proposed 

Access Fees will not result in excessive 

pricing or supra-competitive profit. As 

discussed above, the Exchange projects 

that the annualized expense for 2021 to 

provide Full Service MEO Ports to be 

approximately $897,084 per annum or 

an average of $74,757 per month. The 

Exchange implemented the Proposed 

Access Fees on July 1, 2021 in the First 

Proposed Rule Change. For June 2021, 

prior to the Proposed Access Fees, 

Members and non-Members purchased a 

total of 20 Full Service MEO Ports, for 

which the Exchange charged a total of 

approximately $71,625. This resulted in 

a loss of $3,132 for that month (a margin 

of ¥4.37%). For the month of 

November 2021, which includes the 

Proposed Access Fees, Members and 

non-Members purchased a total of 19 

Full Service MEO Ports, for which the 

Exchange charged a total of 

approximately $122,000 for that month. 

This resulted in a profit of $47,243 for 

that month, representing a profit margin 

of 38%. The Exchange believes that the 

Proposed Access Fees are reasonable 

because they are designed to generate an 

approximate profit margin of 38% permonth. The Exchange believes this 

modest profit margin will allow it to 

continue to recoup its expenses and 

continue to invest in its technology 

infrastructure. Therefore, the Exchange 

also believes that this proposed profit 

margin increase is reasonable because it 

represents a reasonable rate of return. 

Again, the Exchange cautions that this 

profit margin is likely to fluctuate from 

month to month based in the 

uncertainty of predicting how many 

Full Service MEO Ports may be 

purchased from month to month as 

Members and non-Members are free to 

add and drop ports at any time based on 

their own business decisions. 

Notwithstanding that the revenue (and 

profit margin) may vary from month to 

month due to changes in the number of 

ports utilized and volume conducted on 

the Exchange, as well as changes to the 

Exchange’s expenses, the number of 

ports utilized has not materially 

changed over previous months. 

Consequently, the Exchange believes 

that the months it has used as a baseline 

to perform its assessment are 

representative of reasonably anticipated 

costs and expenses. This profit margin 

may also decrease due to the significant 

inflationary pressure on capital items 

that it needs to purchase to maintain the 

Exchange’s technology and systems.70

Accordingly, the Exchange believes its 

total projected revenue for providing the 

access services associated with the 

Proposed Access Fees will not result in 

excessive pricing or supra-competitive 

profit. 

The Exchange believes that 

conducting the above analysis on a per 

month basis is reasonable as the revenue 

generated from access services subject to 

the proposed fee generally remains 

static from month to month. The 

Exchange also conducted the above 

analysis on a per month basis to comply 

with the Guidance which requires a 

baseline analysis to assist in 

determining whether the proposal 

generates a supra-competitive profit. 

This monthly analysis was also 

provided in response to comment 

received on prior submissions of this 

proposed rule change. 

The Exchange reiterates that it only 

has four primary sources of revenue and 

cost recovery mechanisms: Transaction 

fees, access fees, regulatory fees, and 

market data fees. Accordingly, the 

Exchange must cover all of its expenses 

from these four primary sources of 

revenue and cost recovery mechanisms. 

As a result, each of these fees cannot be 

‘‘flat’’ and cover only the expenses 

directly related to the fee that is 

charged. The above revenue and 

associated profit margin therefore are 

not solely intended to cover the costs 

associated with providing services 

subject to the proposed fees. 

The Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to allocate the respective 

percentages of each expense category 

described above towards the total cost to 

the Exchange of operating and 

supporting the network, including 

providing the access services associated 

with the Proposed Access Fees because 

the Exchange performed a line-by-line 

item analysis of nearly every expense of 

the Exchange, and has determined the 

expenses that directly relate to 

providing access to the Exchange. 

Further, the Exchange notes that, 

without the specific third-party and 

internal items listed above, the 

Exchange would not be able to provide 


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the access services associated with the 

Proposed Access Fees to its Members 

and their customers. Each of these 

expense items, including physical 

hardware, software, employee 

compensation and benefits, occupancy 

costs, and the depreciation and 

amortization of equipment, have been 

identified through a line-by-line item 

analysis to be integral to providing 

access services. The Proposed Access 

Fees are intended to recover the 

Exchange’s costs of providing access to 

Exchange Systems. Accordingly, the 

Exchange believes that the Proposed 

Access Fees are fair and reasonable 

because they do not result in excessive 

pricing or supra-competitive profit, 

when comparing the actual costs to the 

Exchange versus the projected annual 

revenue from the Proposed Access Fees. 

The Proposed Tiered-Pricing Structure 

Is Not Unfairly Discriminatory and 

Provides for the Equitable Allocation of 

Fees, Dues, and Other Charges 

The Exchange believes the proposed 

tiered-pricing structure is reasonable, 

fair, equitable, and not unfairly 

discriminatory because it is the model 

adopted by the Exchange when it 

launched operations for its Full Service 

MEO Port fees. Moreover, the tiered 

pricing structure for Full Service MEO 

Ports is not a new proposal and has 

been in place since 2018, well prior to 

the filing of the First Proposed Rule 

Change. The proposed tiers of Full 

Service MEO Port fees will continue to 

apply to all Members and non-Members 

in the same manner based upon the 

monthly total volume executed by a 

Member and its Affiliates on the 

Exchange across all origin types, not 

including Excluded Contracts, as 

compared to the TCV in all MIAX Pearllisted options. Members and nonMembers may choose to purchase more 

than the two Full Service MEO Ports the 

Exchange currently provides upfront 

based on their own business decisions 

and needs. All similarly situated 

Members and non-Members would be 

subject to the same fees. The fees do not 

depend on any distinction between 

Members and non-Members because 

they are solely determined by the 

individual Members’ or non-Members’ 

business needs and their impact on 

Exchange resources. 

The proposed tiered-pricing structure 

is not unfairly discriminatory and 

provides for the equitable allocation of 

fees, dues, and other charges because it 

is designed to encourage Members and 

non-Members to be more efficient and 

economical when determining how to 

access the Exchange and the amount of 

the fees are based on the number of Full 

Service MEO Ports utilized, in addition 

to the amount of volume conducted on 

the Exchange. The proposed tiered 

pricing structure should also enable the 

Exchange to better monitor and provide 

access to the Exchange’s network to 

ensure sufficient capacity and headroom 

in the System. 

The proposed tiered-pricing structure 

is not unfairly discriminatory and 

provides for the equitable allocation of 

fees, dues, and other charges because 

the amount of the fee is directly related 

to the Member or non-Member’s TCV 

resulting in higher fees for greater TCV. 

The higher the volume, the greater pull 

on Exchange resources. The Exchange’s 

high performance network solutions and 

supporting infrastructure (including 

employee support), provides 

unparalleled system throughput and the 

capacity to handle approximately 10.7 

million order messages per second. On 

an average day, the Exchange handles 

over approximately 2.7 billion total 

messages. However, in order to achieve 

a consistent, premium network 

performance, the Exchange must build 

out and maintain a network that has the 

capacity to handle the message rate 

requirements of its most heavy network 

consumers. These billions of messages 

per day consume the Exchange’s 

resources and significantly contribute to 

the overall expense for storage and 

network transport capabilities. 

There are material costs associated 

with providing the infrastructure and 

headcount to fully-support access to the 

Exchange. The Exchange incurs 

technology expense related to 

establishing and maintaining 

Information Security services, enhanced 

network monitoring and customer 

reporting, as well as Regulation SCI 

mandated processes, associated with its 

network technology. While some of the 

expense is fixed, much of the expense 

is not fixed, and thus increases as the 

services associated with the Proposed 

Access Fees increase. For example, new 

Members to the Exchange may require 

the purchase of additional hardware to 

support those Members as well as 

enhanced monitoring and reporting of 

customer performance that the 

Exchange and its affiliates provide. 

Further, as the total number of Members 

increases, the Exchange and its affiliates 

may need to increase their data center 

footprint and consume more power, 

resulting in increased costs charged by 

their third-party data center provider. 

Accordingly, the cost to the Exchange 

and its affiliates to provide access to its 

Members is not fixed. The Exchange 

believes the Proposed Access Fees are 

reasonable in order to offset a portion of 

the costs to the Exchange associated 

with providing access to its network 

infrastructure. 

The Exchange notes that the firms that 

purchase more than two Full Service 

MEO Ports that the Exchange initially 

provides essentially do so for 

competitive reasons amongst themselves 

and choose to utilize numerous ports 

based on their business needs and 

desire to attempt to access the market 

quicker by using the port with the least 

amount of latency. These firms are 

generally engaged in sending liquidity 

removing orders to the Exchange and 

seek to add more ports so they can 

access resting liquidity ahead of their 

competitors. For instance, a Member 

may have just sent numerous messages 

and/or orders over one of their Full 

Service MEO Ports that are in queue to 

be processed. That same Member then 

seeks to enter an order to remove 

liquidity from the Exchange’s Book. 

That Member may choose to send that 

order over one or more of their other 

Full Service MEO Ports with less 

message and/or order traffic to ensure 

that their liquidity taking order accesses 

the Exchange quicker because that port’s 

queue is shorter. These firms also tend 

to frequently add and drop ports midmonth to determine which have the 

least latency, which results in increased 

costs to the Exchange to constantly 

make changes in the data center. 

The firms that engage in the abovedescribed liquidity removing and 

advanced trading strategies typically 

require more than two Full Service MEO 

Ports and, therefore, generate higher 

costs by utilizing more of the 

Exchange’s resources. Those firms may 

also conduct other latency 

measurements over their ports and drop 

and simultaneously add ports midmonth based on their own assessment of 

their performance. This results in 

Exchange staff processing such requests, 

potentially purchasing additional 

equipment, and performing the 

necessary network engineering to 

replace those ports in the data center. 

Therefore, the Exchange believes it is 

equitable for these firms to experience 

increased port costs based on their 

disproportionate pull on Exchange 

resources to provide the additional 

ports. 

In addition, the proposed tieredpricing structure is equitable because it 

is designed to encourage Members and 

non-Members to be more efficient and 

economical when determining how to 

connect to the Exchange. Section 6(b)(5) 

of the Exchange Act requires the 

Exchange to provide access on terms 


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71 15 U.S.C. 78f(b)(5). 

72See ‘‘The market at a glance,’’ available at 

https://www.miaxoptions.com/ (last visited 

December 15, 2021). 

73See supra note 25. 

74See supra note 17. 

75See supra note 72. 

76See supra note 25. 

77See supra note 17. 

78See supra note 17. 

79See supra note 18. 

that are not unfairly discriminatory.71

As stated above, Full Service MEO Ports 

are not an unlimited resource and the 

Exchange’s network is limited in the 

amount of ports it can provide. 

However, the Exchange must 

accommodate requests for additional 

ports and access to the Exchange’s 

System to ensure that the Exchange is 

able to provide access on nondiscriminatory terms and ensure 

sufficient capacity and headroom in the 

System. To accommodate requests for 

additional ports on top of current 

network capacity constraints, requires 

that the Exchange purchase additional 

equipment to satisfy these requests. The 

Exchange also needs to provide 

personnel to set up new ports and to 

maintain those ports on behalf of 

Members and non-Members. The 

proposed tiered-pricing structure is 

equitable because it is designed to 

encourage Members and non-Members 

to be more efficient and economical in 

selecting the amount of ports they 

request while balancing that against the 

Exchange’s increased expenses when 

expanding its network to accommodate 

additional port access. 

The Proposed Fees Are Reasonable 

When Compared to the Fees of Other 

Options Exchanges With Similar Market 

Share 

The Exchange does not have visibility 

into other equities exchanges’ costs to 

provide ports and port access or their 

fee markup over those costs, and 

therefore cannot use other exchanges’ 

port fees as a benchmark to determine 

a reasonable markup over the costs of 

providing port access. Nevertheless, the 

Exchange believes the other exchanges’ 

port fees are a useful example of 

alternative approaches to providing and 

charging for port access. To that end, the 

Exchange believes the proposed tieredpricing structure for its Full Service 

MEO Ports is reasonable because the 

proposed highest tier is still less than or 

similar to fees charged for similar port 

access provided by other options 

exchanges with comparable market 

shares. For example, NASDAQ (equity 

options market share of 8.38% as of 

December 15, 2021 for the month of 

December) 72 charges $1,500 per port for 

SQF ports 1–5, $1,000 per SQF port for 

ports 6–20, and $500 per SQF port for 

ports 21 and greater,73 all on a per 

matching engine basis, with NASDAQ 

having multiple matching engines.74

NYSE American (equity options market 

share of 6.74% as of December 15, 2021 

for the month of December) 75 charges 

$450 per port for order/quote entry ports 

1–40 and $150 per port for ports 41 and 

greater,76 all on a per matching engine 

basis, with NYSE American having 17 

match engines.77 The below table 

further illustrates this comparison. 

Exchange Type of port Monthly fee 

MIAX Pearl (as proposed) .............................. MEO Full Service—Bulk ................................ Tier 1: $5,000 (or $208.33 per Matching Engine). 

Tier 2: $7,500 (or $312.50 per Matching Engine). 

Tier 3: $10,000 (or $416.66 per Matching Engine). 

MEO Full Service—Single ............................. Tier 1: $2,500 (or $104.16 per Matching Engine). 

Tier 2: $3,500 (or $145.83 per Matching Engine). 

Tier 3: $4,500 (or $187.50 per Matching Engine). 

NYSE American ............................................. Order/Quote Entry ......................................... Ports 1–40: $450 each. 

Ports 41 or more: $150 each. 

NYSE Arca ..................................................... Order/Quote Entry ......................................... Ports 1–40: $450 each. 

Ports 41 or more: $150 each. 

NASDAQ ........................................................ Specialized Quote Interface .......................... Ports 1–5: $1,500 each. 

Ports 6–20: $1,000 each. 

Ports 21 or more: $500. 

In the each of the above cases, the 

Exchange’s highest tiered port fee, as 

proposed, is similar to or less than the 

port fees of competing options 

exchanges with like market share. 

Further, as described in more detail 

below, many competing exchanges 

generate higher overall operating profit 

margins and higher ‘‘access fees’’ than 

the Exchange, inclusive of the projected 

revenues associated with the proposed 

fees. The Exchange believes that it 

provides a premium network experience 

to its Members and non-Members via a 

highly deterministic system, enhanced 

network monitoring and customer 

reporting, and a superior network 

infrastructure than markets with higher 

market shares and more expensive 

access fees. Each of the port fee rates in 

place at competing options exchanges 

were filed with the Commission for 

immediate effectiveness and remain in 

place today. 

The Exchange further believes that the 

proposed fees are reasonable, equitably 

allocated and not unfairly 

discriminatory because, for the flat fee, 

the Exchange provides each Member 

two (2) Full Service MEO Ports for each 

matching engine to which that Member 

is connected. Unlike other options 

exchanges that provide similar port 

functionality and charge fees on a per 

port basis,78 the Exchange offers Full 

Service MEO Ports as a package and 

provides Members with the option to 

receive up to two Full Service MEO 

Ports per matching engine to which it 

connects. The Exchange currently has 

twelve (12) matching engines, which 

means Members may receive up to 

twenty-four (24) Full Service MEO Ports 

for a single monthly fee, that can vary 

based on certain volume percentages. 

The Exchange currently assesses 

Members a fee of $5,000 per month in 

the highest Full Service MEO Port— 

Bulk Tier, regardless of the number of 

Full Service MEO Ports allocated to the 

Member. Assuming a Member connects 

to all twelve (12) matching engines 

during a month, with two Full Service 

MEO Ports per matching engine, this 

results in a cost of $208.33 per Full 

Service MEO Port—Bulk ($5,000 

divided by 24) for the month. This fee 

has been unchanged since the Exchange 

adopted Full Service MEO Port fees in 

2018.79 The Exchange now proposes to 

increase the Full Service MEO Port fees, 

with the highest Tier fee for a Full 

Service MEO Port—Bulk of $10,000 per 

month. Members will continue to 

receive two (2) Full Service MEO Ports 

to each matching engine to which they 

are connected for the single flat monthly 

fee. Assuming a Member connects to all 


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80See supra note 72. 

81See supra note 7. 

82 17 CFR 201.700(b)(3). 

83See supra note 56. 

84See Securities Exchange Act Release Nos. 

91858 (May 12, 2021), 86 FR 26967 (May 18, 2021) 

(SR–PEARL–2021–23) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

to Amend the MIAX Pearl Fee Schedule to Remove 

the Cap on the Number of Additional Limited 

Continued 

twelve (12) matching engines during the 

month, and achieves the highest Tier for 

that month, with two Full Service MEO 

Ports—Bulk per matching engine, this 

would result in a cost of $416.67 per 

Full Service MEO Port ($10,000 divided 

by 24). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would place 

certain market participants at the 

Exchange at a relative disadvantage 

compared to other market participants 

or affect the ability of such market 

participants to compete. 

Intra-Market Competition 

The Exchange believes that the 

Proposed Access Fees do not place 

certain market participants at a relative 

disadvantage to other market 

participants because the Proposed 

Access Fees do not favor certain 

categories of market participants in a 

manner that would impose a burden on 

competition; rather, the allocation of the 

Proposed Access Fees reflects the 

network resources consumed by the 

various size of market participants— 

lowest bandwidth consuming members 

pay the least, and highest bandwidth 

consuming members pays the most, 

particularly since higher bandwidth 

consumption translates to higher costs 

to the Exchange. 

Inter-Market Competition 

The Exchange believes the Proposed 

Access Fees do not place an undue 

burden on competition on other options 

exchanges that is not necessary or 

appropriate. In particular, options 

market participants are not forced to 

connect to (and purchase MEO Ports 

from) all options exchanges. The 

Exchange also notes that it has far less 

Members as compared to the much 

greater number of members at other 

options exchanges. Not only does MIAX 

Pearl have less than half the number of 

members as certain other options 

exchanges, but there are also a number 

of the Exchange’s Members that do not 

connect directly to MIAX Pearl. There 

are a number of large users of the MEO 

Interface and broker-dealers that are 

members of other options exchange but 

not Members of MIAX Pearl. The 

Exchange is also unaware of any 

assertion that its existing fee levels or 

the Proposed Access Fees would 

somehow unduly impair its competition 

with other options exchanges. To the 

contrary, if the fees charged are deemed 

too high by market participants, they 

can simply disconnect. 

The Exchange operates in a highly 

competitive market in which market 

participants can readily favor one of the 

15 competing options venues if they 

deem fee levels at a particular venue to 

be excessive. Based on publiclyavailable information, and excluding 

index-based options, no single exchange 

has more than approximately 16% 

market share. Therefore, no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity 

and ETF options order flow. Over the 

course of 2021, the Exchange’s market 

share has fluctuated between 

approximately 3–6% of the U.S. equity 

options industry.80 The Exchange is not 

aware of any evidence that a market 

share of approximately 3–6% provides 

the Exchange with anti-competitive 

pricing power. If the Exchange were to 

attempt to establish unreasonable 

pricing, then no market participant 

would join or connect, and existing 

market participants would disconnect. 

The Exchange believes that the evershifting market share among exchanges 

from month to month demonstrates that 

market participants can discontinue or 

reduce use of certain categories of 

products, or shift order flow, in 

response to fee changes. In such an 

environment, the Exchange must 

continually adjust its fees and fee 

waivers to remain competitive with 

other exchanges and to attract order 

flow to the Exchange. 

Regrettably, the Exchange believes 

that the application of the Guidance to 

date has adversely affected inter-market 

competition by impeding the ability of 

smaller, low cost exchanges to adopt or 

increase fees for their market data and 

access services (including connectivity 

and port products and services). Since 

the adoption of the Guidance, and even 

more so recently, it has become harder, 

particularly for smaller, low cost 

exchanges, to adopt or increase fees to 

generate revenue necessary to invest in 

systems, provide innovative trading 

products and solutions, and improve 

competitive standing to the benefit of 

the affected exchanges’ market 

participants. Although the Guidance has 

served an important policy goal of 

improving disclosures in proposed rule 

changes and requiring exchanges to 

more clearly justify that their market 

data and access fee proposals are fair 

and reasonable, it has also been 

inconsistently applied and therefore 

negatively impacted exchanges, and 

particularly many smaller, low cost 

exchanges, that seek to adopt or increase 

fees despite providing enhanced 

disclosures and rationale to support 

their proposed fee changes. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

As described above, the Exchange 

received one comment letter on the First 

Proposed Rule Change 81 and no 

comment letters on the Second or Third 

Proposed Rule Changes. The Exchange 

now responds to the one comment letter 

in this filing. The SIG Letter cites Rule 

700(b)(3) of the Commission’s Rules of 

Fair Practice which places ‘‘the burden 

to demonstrate that a proposed rule 

change is consistent with the Act on the 

self-regulatory organization that 

proposed the rule change’’ and states 

that a ‘‘mere assertion that the proposed 

rule change is consistent with those 

requirements . . . is not sufficient.’’ 82

The SIG Letter’s assertion that the 

Exchange has not met this burden is 

without merit, especially considering 

the overwhelming amounts of revenue 

and cost information the Exchange 

included in the First and Second 

Proposed Rule Changes and this filing. 

Until recently, the Exchange has 

operated at a net annual loss since it 

launched operations in 2017.83 As 

stated above, 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 

market participants. The Exchange 

believes this high standard is especially 

important when an exchange imposes 

various access fees for market 

participants to access an exchange’s 

marketplace. The Exchange believes it 

has achieved this standard in this filing 

and in the First and Second Proposed 

Rules Changes. Similar justifications for 

the proposed fee change included in the 

First and Second Proposed Rule 

Changes, but also in this filing, were 

previously included in similar fee 

changes filed by the Exchange and its 

affiliates, MIAX Emerald and MIAX, 

and SIG did not submit a comment 

letter on those filings.84 Those filings 


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Service Ports Available to Market Makers); 91460 

(April 2, 2021), 86 FR 18349 (April 8, 2021) (SR– 

EMERALD–2021–11) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend Its Fee Schedule To Adopt Port Fees, 

Increase Certain Network Connectivity Fees, and 

Increase the Number of Additional Limited Service 

MIAX Emerald Express Interface Ports Available to 

Market Makers); and 91857 (May 12, 2021), 86 FR 

26973 (May 18, 2021) (SR–MIAX–2021–19) (Notice 

of Filing and Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fee Schedule To 

Remove the Cap on the Number of Additional 

Limited Service Ports Available to Market Makers). 

85See, e.g., Securities Exchange Act Release No. 

90196 (October 15, 2020), 85 FR 67064 (October 21, 

2020) (SR–EMERALD–2020–11) (Notice of Filing 

and Immediate Effectiveness of a Proposed Rule 

Change To Amend Its Fee Schedule To Adopt OneTime Membership Application Fees and Monthly 

Trading Permit Fees). See Securities Exchange Act 

Release Nos. 90601 (December 8, 2020), 85 FR 

80864 (December 14, 2020) (SR–EMERALD–2020– 

18) (re-filing with more detail added in response to 

Commission Staff’s feedback and after withdrawing 

SR–EMERALD–2020–11); and 91033 (February 1, 

2021), 86 FR 8455 (February 5, 2021) (SR– 

EMERALD–2021–03) (re-filing with more detail 

added in response to Commission Staff’s feedback 

and after withdrawing SR–EMERALD–2020–18). 

The Exchange initially filed a proposal to remove 

the cap on the number of additional Limited 

Service MEO Ports available to Members on April 

9, 2021. See SR–PEARL–2021–17. On April 22, 

2021, the Exchange withdrew SR–PEARL–2021–17 

and refiled that proposal (without increasing the 

actual fee amounts) to provide further clarification 

regarding the Exchange’s revenues, costs, and 

profitability any time more Limited Service MEO 

Ports become available, in general, (including 

information regarding the Exchange’s methodology 

for determining the costs and revenues for 

additional Limited Service MEO Ports). See SR– 

PEARL–2021–20. On May 3, 2021, the Exchange 

withdrew SR–PEARL–2021–20 and refiled that 

proposal to further clarify its cost methodology. See 

SR–PEARL–2021–22. On May 10, 2021, the 

Exchange withdrew SR–PEARL–2021–22 and 

refiled that proposal as SR–PEARL–2021–23. See 

Securities Exchange Act Release No. 91858 (May 

12, 2021), 86 FR 26967 (May 18, 2021) (SR–PEARL– 

2021–23). 

86See letter from Tyler Gellasch, Executive 

Director, Healthy Markets Association, to Hon. Gary 

Gensler, Chair, Commission, dated October 29, 

2021. 87 Id. (providing examples where non-transaction 

fee filings by other exchanges have been permitted 

to remain effective and not suspended by the 

Commission despite less disclosure and 

justification). 88See SIG Letter, supra note 7. 

89The rates set forth for Full Service MEO Ports 

under Section 5)d) of the Exchange’s Fee Schedule 

entitle a Member to two (2) Full Service MEO Ports 

for each Matching Engine for a single monthly fee. 

90Members may be allocated two (2) Full-Service 

MEO Ports per Matching Engine and may request 

Limited Service MEO Ports for which the Exchange 

will assess no fee for the first two Limited Service 

MEO Ports requested by the Member. See Fee 

Schedule, Section 5)d). 

91See SIG Letter, supra note 7. 

were not suspended by the Commission 

and continue to remain in effect. The 

justification included in each of the 

prior filings was the result of numerous 

withdrawals and re-filings of the 

proposals to address comments received 

from Commission Staff over many 

months. The Exchange and its affiliates 

have worked diligently with 

Commission Staff on ensuring the 

justification included in past fee filings 

fully supported an assertion that those 

proposed fee changes were consistent 

with the Act.85 The Exchange leveraged 

its past work with Commission Staff to 

ensure the justification provided herein 

and in the First, Second and Third 

Proposed Rule Changes included the 

same level of detail (or more) as the 

prior fee changes that survived 

Commission scrutiny. The Exchange’s 

detailed disclosures in fee filings have 

also been applauded by one industry 

group which noted, ‘‘[the Exchange’s] 

filings contain significantly greater 

information about who is impacted and 

how than other filings that have been 

permitted to take effect without 

suspension.’’ 86 That same industry 

group also noted their ‘‘worry that the 

Commission’s process for reviewing and 

evaluating exchange filings may be 

inconsistently applied.’’ 87

Therefore, a finding by the 

Commission that the Exchange has not 

met its burden to show that the 

proposed fee change is consistent with 

the Act would be different than the 

Commission’s treatment of similar past 

filings, would create further ambiguity 

regarding the standards exchange fee 

changes should satisfy, and is not 

warranted here. 

In addition, the arguments in the SIG 

Letter do not support their claim that 

the Exchange has not met its burden to 

show the proposed rule change is 

consistent with the Act. Prior to, and 

after submitting the First Proposed Rule 

Change, the Exchange solicited feedback 

from its Members, including SIG. SIG 

relayed their concerns regarding the 

proposed change. The Exchange then 

sought to work with SIG to address their 

concerns and gain a better 

understanding of the access/ 

connectivity/quoting infrastructure of 

other exchanges. In response, SIG 

provided no substantive suggestions on 

how to amend the First Proposed Rule 

Change to address their concerns and 

instead chose to submit a comment 

letter. One could argue that SIG is using 

the comment letter process not to raise 

legitimate regulatory concerns regarding 

the proposal, but to inhibit or delay 

proposed fee changes by the Exchange. 

Nonetheless, the Exchange has 

enhanced its cost and revenue analysis 

and data in this Third [sic] Proposed 

Rule Change to further justify that the 

Proposed Access Fees are reasonable in 

accordance with the Commission Staff’s 

Guidance. Among other things, these 

enhancements include providing 

baseline information in the form of data 

from the month before the Proposed 

Access Fees became effective. 

General 

First, the SIG Letter states that 10Gb 

ULL ‘‘lines are critical to Exchange 

members to be competitive and to 

provide essential protection from 

adverse market events’’ (emphasis 

added).88 The Exchange notes that this 

statement is generally not true for Full 

Service MEO Ports as those ports are 

used primarily for order entry and not 

risk protection activities like purging 

quotes resting on the MIAX Pearl 

Options Book. Full Service MEO Ports 

are essentially used for competitive 

reasons and Members may choose to 

utilize one or two Full Service MEO 

Ports 89 based on their business needs 

and desire to attempt to access the 

market quicker by using one port that 

may have less latency. For instance, a 

Member may have just sent numerous 

messages and/or orders over one of their 

Full Service MEO Ports that are in 

queue to be processed. That same 

Member then seeks to enter an order to 

remove liquidity from the Exchange’s 

Book. That Member may choose to send 

that order over one of their other Full 

Service MEO Ports with less message 

and/or order traffic or any of their 

optional additional Limit Service MEO 

Ports 90 to ensure that their liquidity 

taking order accesses the Exchange 

quicker because that port’s queue is 

shorter. 

The Tiered Pricing Structure for Full 

Service MEO Ports Provides for the 

Equitable Allocation of Reasonable 

Dues, Fees, and Other Charges 

The SIG Letter challenges the below 

two bases the Exchange set forth in its 

Initial Proposed Fee Change and herein 

to support the assertion that the 

proposal provides for the equitable 

allocation of reasonable dues, fees, and 

other charges: 

• ‘‘If the Exchanges were to attempt to 

establish unreasonable pricing, then no 

market participant would join or 

connect to the Exchanges, and existing 

market participants would disconnect. 

• The fees will not result in excessive 

pricing or supra-competitive profit.’’ 91

The Exchange responds to each of 

SIG’s challenges in turn below. 

If the Exchanges Were To Attempt To 

Establish Unreasonable Pricing, Then 

No Market Participant Would Join or 

Connect to the Exchange, and Existing 

Market Participants Would Disconnect 

SIG asserts that ‘‘the prospect that a 

member may withdraw from the 

Exchanges if a fee is too costly is not a 

basis for asserting that the fee is 


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92 Id. 

93See Guidance, supra note 33. 94See supra note 56. 

95 15 U.S.C. 78s(b)(3)(C). 

96 15 U.S.C. 78s(b)(1). 

97See Securities Exchange Act Release No. 92365 

(July 9, 2021), 86 FR 37347 (July 15, 2021) (SR– 

PEARL–2021–33). The Commission received one 

comment letter on that proposal. Comment for SR– 

PEARL–2021–33 can be found at: https://

www.sec.gov/comments/sr-pearl-2021-33/ 

srpearl202133-9208443-250011.pdf. 

98See Securities Exchange Act Release No. 93556 

(August 27, 2021), 86 FR 49360 (September 2, 

2021). 

99See Securities Exchange Act Release No. 93556 

(November 19, 2021), 86 FR 64235 (November 17, 

2021) (SR–PEARL–2021–53). 

reasonable.’’ 92 SIG misinterprets the 

Exchange’s argument here. The 

Exchange provided the examples of 

firms terminating access to certain 

markets due to fees to support its 

assertion that firms, including market 

makers, are not required to connect to 

all markets and may drop access if fees 

become too costly for their business 

models and alternative or substitute 

forms of connectivity are available to 

those firms who choose to terminate 

access. The Commission Staff Guidance 

also provides that ‘‘[a] statement that 

substitute products or services are 

available to market participants in the 

relevant market (e.g., equities or 

options) can demonstrate competitive 

forces if supported by evidence that 

substitute products or services exist.’’ 93

Nonetheless, the Third [sic] Proposed 

Rule Change no longer makes this 

assertion as a basis for the proposed fee 

change and, therefore, the Exchange 

believes it is not necessary to respond 

to this portion of the SIG Letter. 

The Proposed Fees Will Not Result in 

Excessive Pricing or Supra-Competitive 

Profit 

Next, SIG asserts that the Exchange’s 

‘‘profit margin comparisons do not 

support the Exchange’s claims that they 

will not realize a supracompetitive 

profit,’’ that ‘‘the Exchanges’ respective 

profit margins of 30% (for MIAX and 

Pearl) and 51% (for Emerald) in relation 

to connectivity fees are high in any 

event,’’ and ‘‘comparisons to competing 

exchanges’ overall operating profit 

margins are an inapt ‘apples-to-oranges’ 

comparison.’’ 

The Exchange has provided ample 

data that the proposed fees would not 

result in excessive pricing or a supracompetitive profit. In this Third [sic] 

Proposed Rule Change, the Exchange no 

longer utilizes a comparison of its profit 

margin to that of other options 

exchanges as a basis that the Proposed 

Access Fees are reasonable. Rather, the 

Exchange has enhanced its cost and 

revenue analysis and data in this Third 

[sic] Proposed Rule Change to further 

justify that the Proposed Access Fees are 

reasonable in accordance with the 

Commission Staff’s Guidance. 

Therefore, the Exchange believes it is no 

longer necessary to respond to this 

portion of the SIG Letter. 

The Proposed Tiered Pricing Structure 

Is Not Unfairly Discriminatory 

SIG challenges the proposed fees by 

arguing that ‘‘the Exchange[ ] provide[s] 

no support for [its] claim that [the] 

proposed tiered pricing structure is 

needed to encourage efficiency in 

connectivity usage and the Exchange[ ] 

provided no support for [the] claim that 

the tiered pricing structure allows them 

to better monitor connectivity usage, nor 

that this is an appropriate basis for the 

pricing structure in any event.’’ The 

tiered pricing structure for Full Service 

MEO Ports is not a new proposal and 

has been in place since 2018, well prior 

to the filing of the First Proposed Rule 

Change. Nonetheless, the Exchange 

provided additional justification to 

support that the Proposed Access Fees 

are equitable and not unfairly 

discriminatory above in response to 

SIG’s assertions. 

Recoupment of Exchange Infrastructure 

Costs 

Nowhere in this proposal or in the 

First Proposed Rule Change did the 

Exchange assert that it benefits 

competition to allow a new exchange 

entrant to recoup their infrastructure 

costs. Rather, the Exchange asserts 

above that its ‘‘proposed fees are 

reasonable, equitably allocated and not 

unfairly discriminatory because the 

Exchange, and its affiliates, are still 

recouping the initial expenditures from 

building out their systems while the 

legacy exchanges have already paid for 

and built their systems.’’ The Exchange 

no longer makes this assertion in this 

filing and, therefore, does not believe it 

is necessary to respond to SIG’s 

assertion here. 

Nonetheless, the Exchange notes that 

until recently it has operated at a net 

annual loss since it launched operations 

in 2017.94 This is a result of providing 

a low cost alternative to attract order 

flow and encourage market participants 

to experience the determinism and 

resiliency of the Exchange’s trading 

systems. To do so, the Exchange chose 

to offer some non-transaction related 

services for little to no cost. This 

resulted in the Exchange forgoing 

revenue it could have generated from 

assessing higher fees. Further, a vast 

majority of the Exchange’s Members, if 

not all, benefited from these lower fees. 

The Exchange could have sought to 

charge higher fees at the outset, but that 

could have served to discourage 

participation on the Exchange. Instead, 

the Exchange chose to provide a low 

cost exchange alternative to the options 

industry which resulted in lower initial 

revenues. The SIG Letter chose to ignore 

this reality and instead criticize the 

Exchange for initially charging lower 

fees or providing a moratorium on 

certain non-transaction fees to the 

benefit of all market participants. The 

Exchange is now trying to amend its fee 

structure to enable it to continue to 

maintain and improve its overall market 

and systems while also providing a 

highly reliable and deterministic trading 

system to the marketplace. 

III. Suspension of the Proposed Rule 

Change 

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

Act,95 at any time within 60 days of the 

date of filing of a proposed rule change 

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

Act,96 the Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) if it appears to the Commission 

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. As discussed below, the 

Commission believes a temporary 

suspension of the proposed rule change 

is necessary and appropriate to allow for 

additional analysis of the proposed rule 

change’s consistency with the Act and 

the rules thereunder. 

As the Exchange further details above, 

the Exchange first filed a proposed rule 

change proposing fee changes as 

proposed herein on July 1, 2021, with 

the proposed fee changes being 

immediately effective. That proposal, 

SR–PEARL–2021–33, was published for 

comment in the Federal Register on July 

15, 2021.97 On August 27, 2021, 

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

Act, the Commission: (1) Temporarily 

suspended the proposed rule change 

(SR–PEARL–2021–33) and (2) instituted 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change.98 On October 12, 2021, the 

Exchange withdrew SR–PEARL–2021– 

33. On November 1, 2021, the Exchange 

filed a proposed rule change proposing 

fee changes as proposed herein. That 

proposal, SR–PEARL–2021–53, was 

published for comment in the Federal 

Register on November 17, 2021.99 On 

December 20, 2021, the Exchange 

withdrew SR–PEARL–2021–53 and filed 

a proposed rule change proposing fee 


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100See text accompanying supra note 12. 

101See Securities Exchange Act Release No. 

93894 (January 4, 2022), 87 FR 1203 (January 10, 

2022) (SR–PEARL–2021–58). 

102See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

103 Id. 

104 15 U.S.C. 78f(b)(4). 

105 15 U.S.C. 78f(b)(5). 

106 15 U.S.C. 78f(b)(8). 

107See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 

108For purposes of temporarily suspending the 

proposed rule change, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

109 15 U.S.C. 78s(b)(3)(C). Once the Commission 

temporarily suspends a proposed rule change, 

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

Commission institute proceedings under Section 

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

change should be approved or disapproved. 

110 15 U.S.C. 78s(b)(2)(B). 

111 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of 

the Act also provides that proceedings to determine 

whether to disapprove a proposed rule change must 

be concluded within 180 days of the date of 

publication of notice of the filing of the proposed 

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

proceedings may be extended for up to 60 days if 

the Commission finds good cause for such 

extension and publishes its reasons for so finding, 

or if the exchange consents to the longer period. See 

id. 

112 15 U.S.C. 78f(b)(4). 

113 15 U.S.C. 78f(b)(5). 

114 15 U.S.C. 78f(b)(8). 

115See supra Section II.A.2. 

changes as proposed herein on 

December 20, 2021. That filing, SR– 

PEARL–2021–58,100 was published for 

comment in the Federal Register on 

January 10, 2022.101 On February 15, 

2022, the Exchange withdrew SR– 

PEARL–2021–58 and filed the instant 

filing, which is substantially similar. 

When exchanges file their proposed 

rule changes with the Commission, 

including fee filings like the Exchange’s 

present proposal, they are required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.102 The 

instructions to Form 19b–4, on which 

exchanges file their proposed rule 

changes, specify that such statement 

‘‘should be sufficiently detailed and 

specific to support a finding that the 

proposed rule change is consistent with 

[those] requirements.’’ 103

Among other things, exchange 

proposed rule changes are subject to 

Section 6 of the Act, including Sections 

6(b)(4), (5), and (8), which requires the 

rules of an exchange to: (1) Provide for 

the equitable allocation of reasonable 

fees among members, issuers, and other 

persons using the exchange’s 

facilities; 104 (2) perfect the mechanism 

of a free and open market and a national 

market system, protect investors and the 

public interest, and not permit unfair 

discrimination between customers, 

issuers, brokers, or dealers; 105 and (3) 

not impose any burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the 

Act.106

In temporarily suspending the 

Exchange’s fee change, the Commission 

intends to further consider whether the 

proposal to increase the monthly fees 

for MIAX Express Network Full Service 

Ports is consistent with the statutory 

requirements applicable to a national 

securities exchange under the Act. In 

particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; not be designed to 

permit unfair discrimination between 

customers, issuers, brokers or dealers; 

and not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.107

Therefore, the Commission finds that 

it is appropriate in the public interest, 

for the protection of investors, and 

otherwise in furtherance of the purposes 

of the Act, to temporarily suspend the 

proposed rule change.108

IV. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Rule Change 

The Commission is instituting 

proceedings pursuant to Sections 

19(b)(3)(C) 109 and 19(b)(2)(B) 110 of the 

Act to determine whether the 

Exchange’s proposed rule change 

should be approved or disapproved. 

Institution of such proceedings is 

appropriate at this time in view of the 

legal and policy issues raised by the 

proposed rule change. Institution of 

proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. Rather, as described 

below, the Commission seeks and 

encourages interested persons to 

provide comments on the proposed rule 

change to inform the Commission’s 

analysis of whether to approve or 

disapprove the proposed rule change. 

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

Act,111 the Commission is providing 

notice of the grounds for possible 

disapproval under consideration. The 

Commission is instituting proceedings 

to allow for additional analysis of 

whether the Exchange has sufficiently 

demonstrated how the proposed rule 

change is consistent with Sections 

6(b)(4),112 6(b)(5),113 and 6(b)(8) 114 of 

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

requires that the rules of a national 

securities exchange provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members and issuers and other persons 

using its facilities. Section 6(b)(5) of the 

Act requires that the rules of a national 

securities exchange be designed, among 

other things, to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

Section 6(b)(8) of the Act requires that 

the rules of a national securities 

exchange not impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following aspects of the 

proposal and asks commenters to 

submit data where appropriate to 

support their views: 

1. Cost Estimates and Allocation. The 

Exchange states that it is not asserting 

that the Proposed Access Fees are 

constrained by competitive forces, but 

rather set forth a ‘‘cost-plus model,’’ 

employing a ‘‘conservative 

methodology’’ that ‘‘strictly considers 

only those costs that are most clearly 

directly related to the provision and 

maintenance of the Full Service MEO 

Ports.’’ 115 Setting forth its costs in 

providing the Proposed Access Fees, 

and as summarized in greater detail 

above, the Exchange projects $897,084 

in aggregate annual estimated costs for 

2021 as the sum of: (1) $40,166 in thirdparty expenses paid in total to Equinix 

(1.80% of the total applicable expense) 

for data center services; Zayo Group 

Holdings, for network services (0.90% 

of the total applicable expense); SFTI for 

connectivity support, Thompson 

Reuters, NYSE, Nasdaq, and Internap 

and others (0.90% of the total applicable 

expense) for content, connectivity 

services, and infrastructure services; 

and various other hardware and 

software providers (0.90% of the total 


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116See supra Section II.A.2. 

117See id. 118See supra Section II.A.2. 

applicable expense) supporting the 

production environment, and (2) 

$856,918 in internal expenses, allocated 

to (a) employee compensation and 

benefit costs ($783,513, approximately 

8.55% of the Exchange’s total applicable 

employee compensation and benefits 

expense); (b) depreciation and 

amortization ($64,456, approximately 

2.25% of the Exchange’s total applicable 

depreciation and amortization expense); 

and (c) occupancy costs ($8,949, 

approximately 1.80% of the Exchange’s 

total applicable occupancy expense). Do 

commenters believe that the Exchange 

has provided sufficient detail about how 

it determined which costs are most 

clearly directly associated with 

providing and maintaining the Proposed 

Access Fees? The Exchange describes a 

‘‘proprietary’’ process involving all 

Exchange department heads, including 

the finance department and numerous 

meetings between the Exchange’s Chief 

Information Officer, Chief Financial 

Officer, Head of Strategic Planning and 

Operations, Chief Technology Officer, 

various members of the Legal 

Department, and other group leaders, 

but do not specify further what 

principles were applied in making these 

determinations or arriving at particular 

allocations. Do commenters believe 

further explanation is necessary? For 

employee compensation and benefit 

costs, for example, the Exchange 

calculated an allocation of employee 

time in several departments, including 

Technology, Back Office, Systems 

Operations, Networking, Business 

Strategy Development, Trade 

Operations, Finance, and Legal, but do 

not provide the job titles and salaries of 

persons whose time was accounted for, 

or explain the methodology used to 

determine how much of an employee’s 

time is devoted to that specific activity. 

What are commenters’ views on 

whether the Exchange has provided 

sufficient detail on the identity and 

nature of services provided by third 

parties? Across all of the Exchange’s 

projected costs, what are commenters’ 

views on whether the Exchange has 

provided sufficient detail on the 

elements that go into Full Service MEO 

Port costs, including how shared costs 

are allocated and attributed to Full 

Service MEO Port expenses, to permit 

an independent review and assessment 

of the reasonableness of purported costbased fees and the corresponding profit 

margin thereon? Should the Exchange 

be required to identify for what services 

or fees the remaining percentage of unallocated expenses are attributable to? 

Do commenters believe that the costs 

projected for 2021 are generally 

representative of expected costs going 

forward (to the extent commenters 

consider 2021 to be a typical or atypical 

year), or should an exchange present an 

estimated range of costs with an 

explanation of how profit margins could 

vary along the range of estimated costs? 

Should the Exchange use cost 

projections or actual costs estimated for 

2021 in a filing made in 2022, or make 

cost projections for 2022? 

2. Revenue Estimates and Profit 

Margin Range. The Exchange provides a 

single monthly revenue figure as the 

basis for calculating the profit margin of 

38%. Do commenters believe this is 

reasonable? If not, why not? The 

Exchange states that their proposed fee 

structure is ‘‘designed to cover its costs 

with a limited return in excess of such 

costs,’’ and that ‘‘revenue and associated 

profit margin [ ] are not solely intended 

to cover the costs associated with 

providing services subject to the 

proposed fees,’’ and believes that a 38% 

margin is a limited return over such 

costs.116 The profit margin is also 

dependent on the accuracy of the cost 

projections which, if inflated 

(intentionally or unintentionally), may 

render the projected profit margin 

meaningless. The Exchange 

acknowledges that this margin may 

fluctuate from month to month due to 

changes in the number of ports 

purchased, and that costs may increase. 

They also state that the number of ports 

has not materially changed over the 

prior months and so the months that the 

Exchange has used as a baseline to 

perform its assessment are 

representative of reasonably anticipated 

costs and expenses.117 The Exchange 

does not account for the possibility of 

cost decreases, however. What are 

commenters’ views on the extent to 

which actual costs (or revenues) deviate 

from projected costs (or revenues)? Do 

commenters believe that the Exchange’s 

methodology for estimating the profit 

margin is reasonable? Should the 

Exchange provide a range of profit 

margins that they believe are reasonably 

possible, and the reasons therefor? 

3. Reasonable Rate of Return. Do 

commenters agree with the Exchange 

that its expected 38% profit margin 

would constitute a reasonable rate of 

return over cost for Full Service MEO 

Ports? If not, what would commenters 

consider to be a reasonable rate of return 

and/or what methodology would they 

consider to be appropriate for 

determining a reasonable rate of return? 

What are commenters’ views regarding 

what factors should be considered in 

determining what constitutes a 

reasonable rate of return for Full Service 

MEO Ports? Do commenters believe it 

relevant to an assessment of 

reasonableness that the Exchange’s 

proposed fees for Full Service MEO 

Ports, even at the highest tier, are still 

less than or similar to those of other 

options exchanges to which the 

Exchange has compared the Proposed 

Access Fees? Should an assessment of 

reasonable rate of return include 

consideration of factors other than costs; 

and if so, what factors should be 

considered, and why? 

4. Periodic Reevaluation. The 

Exchange has addressed whether it 

believes a material deviation from the 

anticipated profit margin would warrant 

the need to make a rule filing pursuant 

to Section 19(b) of the Act to increase 

or decrease the fees accordingly, stating 

that ‘‘[a]ny requirement that an 

exchange should conduct a periodic reevaluation on a set timeline of its cost 

justification and amend its fees 

accordingly should be established by 

the Commission holistically, applied to 

all exchanges and not just pending fee 

proposals, such as this filing,’’ and that 

‘‘[i]n order to be fairly applied, such a 

mandate should be applied to existing 

market data fees as well.’’ 118 In light of 

the impact that the number of 

subscribers has on Full Service MEO 

Port profit margins, and the potential for 

costs to decrease (or increase) over time, 

what are commenters’ views on the 

need for exchanges to commit to 

reevaluate, on an ongoing and periodic 

basis, their cost-based Full Service MEO 

Port fees to ensure that they stay in line 

with their stated profitability target and 

do not become unreasonable over time, 

for example, by failing to adjust for 

efficiency gains, cost increases or 

decreases, and changes in subscribers? 

How formal should that process be, how 

often should that reevaluation occur, 

and what metrics and thresholds should 

be considered? How soon after a new 

Full Service MEO Port fee change is 

implemented should an exchange assess 

whether its subscriber estimates were 

accurate and at what threshold should 

an exchange commit to file a fee change 

if its estimates were inaccurate? Should 

an initial review take place within the 

first 30 days after a Full Service MEO 

Port fee is implemented? 60 days? 90 

days? Some other period? 

5. Tiered Structure for Full Service 

MEO Ports Fees. The Exchange states 

that proposed tiered-pricing structure is 

reasonable, fair, equitable, and not 

unfairly discriminatory because it is the 

model adopted by the Exchange when it 


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119See id. 

120 17 CFR 201.700(b)(3). 

121See id. 

122See id. 

123See Susquehanna Int’l Group, LLP v. 

Securities and Exchange Commission, 866 F.3d 

442, 446–47 (D.C. Cir. 2017) (rejecting the 

Commission’s reliance on an SRO’s own 

determinations without sufficient evidence of the 

basis for such determinations). 

124 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act 

grants the Commission flexibility to determine what 

type of proceeding—either oral or notice and 

opportunity for written comments—is appropriate 

for consideration of a particular proposal by an 

SRO. See Securities Acts Amendments of 1975, 

Report of the Senate Committee on Banking, 

Housing and Urban Affairs to Accompany S. 249, 

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

125 15 U.S.C. 78s(b)(3)(C). 

126 17 CFR 200.30–3(a)(12), (57) and (58). 

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

2 17 CFR 240.19b–4. 

launched operations for its Full Service 

MEO Port fees, and further, that the 

amount of the fee is directly related to 

the Member or non-Member’s TCV 

resulting in higher fees for greater 

TCV.119 What are commenters’ views on 

the adequacy of the information the 

Exchange provides regarding the 

proposed differentials in fees? Do 

commenters believe that the proposed 

price differences are supported by the 

Exchange’s assertions that it set the 

level of each proposed new fee in a 

manner that it equitable and not 

unfairly discriminatory? 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the Exchange Act and 

the rules and regulations issued 

thereunder . . . is on the [SRO] that 

proposed the rule change.’’ 120 The 

description of a proposed rule change, 

its purpose and operation, its effect, and 

a legal analysis of its consistency with 

applicable requirements must all be 

sufficiently detailed and specific to 

support an affirmative Commission 

finding,121 and any failure of an SRO to 

provide this information may result in 

the Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Act and the applicable rules 

and regulations.122 Moreover, 

‘‘unquestioning reliance’’ on an SRO’s 

representations in a proposed rule 

change would not be sufficient to justify 

Commission approval of a proposed rule 

change.123

The Commission believes it is 

appropriate to institute proceedings to 

allow for additional consideration and 

comment on the issues raised herein, 

including as to whether the proposal is 

consistent with the Act, any potential 

comments or supplemental information 

provided by the Exchange, and any 

additional independent analysis by the 

Commission. 

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. In 

particular, the Commission invites the 

written views of interested persons 

concerning whether the proposal is 

consistent with Sections 6(b)(4), 6(b)(5), 

and 6(b)(8), or any other provision of the 

Act, or the rules and regulations 

thereunder. The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.124

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by March 18, 2022. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by April 1, 2022. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR– 

PEARL–2022–04 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2022–04. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–PEARL–2022–04 and 

should be submitted on or before March 

18, 2022. Rebuttal comments should be 

submitted by April 1, 2022. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,125 that 

File Numbers SR–PEARL–2022–04 be, 

and hereby is, temporarily suspended. 

In addition, the Commission is 

instituting proceedings to determine 

whether the proposed rule change 

should be approved or disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.126

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–03964 Filed 2–24–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94280; File No. SR–ICEEU– 

2022–004] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of Filing 

of Proposed Rule Change Relating to 

Amendments to the ICE Clear Europe 

CDS Clearing Stress Testing Policy 

and CDS Clearing Back-Testing Policy 

February 18, 2022. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on February 

10, 2022, ICE Clear Europe Limited 

(‘‘ICE Clear Europe’’ or the ‘‘Clearing 

House’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 


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