16046 Federal Register / Vol. 87, No. 54 / Monday, March 21, 2022 / Notices 

28For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

29 15 U.S.C. 78s(b)(2)(B). 

30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1.5(p). 

4The Exchange received one comment letter on 

the Initial Proposal, which asserted that the 

Exchange did not address the Exchange’s 

ownership structure and that revenues from 

connectivity services could have a ‘‘disparate 

impact’’ on certain Members. See Letter from Tyler 

Gellasch, Healthy Markets Association, dated 

January 26, 2022. The Exchange notes that the 

ownership of an exchange by members is not 

unprecedented and that the ownership structure of 

the Exchange and related issues were addressed 

during the process of the Exchange’s registration as 

2022 will extend the protections 

provided by the Pilot Rules, which 

would otherwise expire in less than 30 

days. Waiver of the operative delay 

would therefore permit uninterrupted 

continuation of the MWCB pilot while 

the Commission reviews the NYSE’s 

proposed rule change to make the Pilot 

Rules permanent. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposed rule change as operative upon 

filing.28

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 29 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSENAT–2022–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to: Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSENAT–2022–02. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSENAT–2022–02 and 

should be submitted on or before April 

11, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05844 Filed 3–18–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94419; File No. SR–MEMX– 

2022–02] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule To Adopt Connectivity Fees 

March 15, 2022. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on March 1, 

2022, MEMX LLC (‘‘MEMX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposed rule change to 

amend the Exchange’s fee schedule 

applicable to Members 3 and nonMembers (the ‘‘Fee Schedule’’) pursuant 

to Exchange Rules 15.1(a) and (c). The 

Exchange proposes to implement the 

changes to the Fee Schedule pursuant to 

this proposal on March 1, 2022. The text 

of the proposed rule change is provided 

in Exhibit 5. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Background 

The Exchange is re-filing its proposal 

to amend the Fee Schedule regarding 

fees the Exchange charges to Members 

and non-Members for physical 

connectivity to the Exchange and for 

application sessions (otherwise known 

as ‘‘logical ports’’) that a Member 

utilizes in connection with their 

participation on the Exchange (together 

with physical connectivity, collectively 

referred to in this proposal as 

‘‘connectivity services,’’ as described in 

greater detail below and in Exhibit 5). 

The Exchange is proposing to 

implement the proposed fees on March 

1, 2022. 

The Exchange filed its Initial Proposal 

on December 30, 2021,4 and began 


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a national securities exchange. See Securities 

Exchange Act Release No. 88806 (May 4, 2020), 85 

FR 27451 (May 8, 2020) (approval order related to 

the application of MEMX LLC to register as a 

national securities exchange). The Exchange does 

not believe that the Initial Proposal or this proposal 

raises any new issues that have not been previously 

addressed. 

5See Securities Exchange Act Release No. 94332 

(February 28, 2022) (SR–MEMX–2021–22) 

(Suspension of and Order Instituting Proceedings to 

Determine Whether to Approve or Disapprove 

Proposed Rule Change to Amend the Exchange’s 

Fee Schedule to Adopt Connectivity Fees) (the 

‘‘OIP’’). 

6See, e.g., Securities Exchange Act Release No. 

87875 (December 31, 2019), 85 FR 770 (January 7, 

2020) (SR–MIAX–2019–51) (notice of filing and 

immediate effectiveness of changes to the Miami 

International Securities Exchange LLC, or ‘‘MIAX’’, 

fee schedule). The Exchange notes that the MIAX 

filing was the eighth filing by MIAX to adopt the 

fees proposed for certain connectivity services 

following multiple times of withdrawing and refiling the proposal. The Exchange notes that MIAX 

charged the applicable fees throughout this period 

while working to develop a filing that met the new 

standards being applied to fee filings. See also Fee 

Guidance, infra note 13. 

7 15 U.S.C. 78s(b)(1). 

8 17 CFR 240.19b–4. 

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

10 15 U.S.C. 78f(b)(4). 

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78f(b)(8). 

13 In 2019, Commission staff published guidance 

suggesting the types of information that SROs may 

use to demonstrate that their fee filings comply 

with the standards of the Exchange Act (‘‘Fee 

Guidance’’). While MEMX understands that the Fee 

Guidance does not create new legal obligations on 

SROs, the Fee Guidance is consistent with MEMX’s 

view about the type and level of transparency that 

exchanges should meet to demonstrate compliance 

with their existing obligations when they seek to 

charge new fees. See Staff Guidance on SRO Rule 

Filings Relating to Fees (May 21, 2019) available at 

https://www.sec.gov/tm/staff-guidancesro-rulefilings-fees. 

14Types of market participants that obtain 

connectivity services from the Exchange but are not 

Members include service bureaus and extranets. 

Service bureaus offer technology-based services to 

other companies for a fee, including order entry 

services to Members, and thus, may access 

application sessions on behalf of one or more 

Members. Extranets offer physical connectivity 

services to Members and non-Members. 

charging fees for connectivity services 

for the first time in January of 2022. On 

February 28, 2022, the Commission 

suspended the Initial Proposal and 

asked for comments on several 

questions.5 The Exchange has collected 

fees for connectivity services for two 

months now and is thus able to 

supplement its filing with additional 

details that were not available at the 

time of filing of the Initial Proposal and 

is also able to respond to certain 

questions raised in the OIP. As set forth 

below, the Exchange believes that the 

Initial Proposal provided a great deal of 

transparency regarding the cost of 

providing connectivity services and 

anticipated revenue and that the Initial 

Proposal was consistent with the Act 

and associated guidance. The Exchange 

is re-filing this proposal promptly with 

the intention of maintaining the existing 

fees for connectivity services while at 

the same time providing additional 

details responsive to certain questions 

raised in the OIP. The Exchange 

believes that this approach is 

appropriate and fair for competitive 

reasons as several other exchanges 

currently charge for similar services, as 

described below, and because others 

have followed a similar approach when 

adopting fees.6

As set forth in the Initial Proposal and 

this filing, the Exchange does incur 

significant costs related to the provision 

of connectivity services and believes it 

should be permitted to continue 

charging for such services while also 

providing additional time for public 

comment on the level of detail 

contained in this proposal and other 

questions posed in the OIP. Finally, the 

Exchange does not believe that the 

ability to charge fees for connectivity 

services or the level of the Exchange’s 

proposed fees are at issue, but rather, 

that the level of detail required to be 

included by the Exchange when 

adopting such fees is at issue. For these 

reasons, the Exchange believes it is 

appropriate to re-file this proposal and 

to continue charging for connectivity 

services. 

In general, the Exchange believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee increase meets the 

Exchange Act requirements that fees be 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

members and markets. In particular, the 

Exchange believes that each exchange 

should take extra care to be able to 

demonstrate that these fees are based on 

its costs and reasonable business needs. 

In proposing to charge fees for 

connectivity services, the Exchange has 

sought to be especially diligent in 

assessing those fees in a transparent way 

against its own aggregate costs of 

providing the related service, and also 

carefully and transparently assessing the 

impact on Members—both generally and 

in relation to other Members, i.e., to 

assure the fee will not create a financial 

burden on any participant and will not 

have an undue impact in particular on 

smaller Members and competition 

among Members in general. The 

Exchange believes that this level of 

diligence and transparency is called for 

by the requirements of Section 19(b)(1) 

under the Act,7 and Rule 19b–4 

thereunder,8 with respect to the types of 

information self-regulatory 

organizations (‘‘SROs’’) should provide 

when filing fee changes, and Section 

6(b) of the Act,9 which requires, among 

other things, that exchange fees be 

reasonable and equitably allocated,10

not designed to permit unfair 

discrimination,11 and that they not 

impose a burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act.12 This rule 

change proposal addresses those 

requirements, and the analysis and data 

in each of the sections that follow are 

designed to clearly and 

comprehensively show how they are 

met.13

Prior to January 3, 2022, MEMX did 

not charge fees for connectivity to the 

Exchange, including fees for physical 

connections or application sessions for 

order entry purposes or receipt of drop 

copies. The objective of this approach 

was to eliminate any fee-based barriers 

to connectivity for Members when 

MEMX launched as a national securities 

exchange in 2020, and it was successful 

in achieving this objective in that a 

significant number of Members are 

directly or indirectly connected to the 

Exchange. 

As detailed below, MEMX recently 

calculated its aggregate monthly costs 

for providing physical connectivity to 

the Exchange at $795,789 and its 

aggregate monthly costs for providing 

application sessions at $347,936. 

Because MEMX has to date offered all 

connectivity free of charge, MEMX has 

borne 100% of all connectivity costs. In 

order to cover the aggregate costs of 

providing connectivity to its Users (both 

Members and non-Members 14) and to 

recoup some of the costs already borne 

by the Exchange to create and offer its 

services, the Exchange is proposing to 

modify its Fee Schedule, pursuant to 

MEMX Rules 15.1(a) and (c), to charge 

a fee of $6,000 per month for each 

physical connection in the data center 

where the Exchange primarily operates 

under normal market conditions 

(‘‘Primary Data Center’’) and a fee of 

$3,000 per month for each physical 

connection in the Exchange’s 

geographically diverse data center, 

which is operated for backup and 

disaster recovery purposes (‘‘Secondary 

Data Center’’), each as further described 

below. The Exchange also proposes to 

modify its Fee Schedule, pursuant to 

MEMX Rules 15.1(a) and (c), to charge 

a fee of $450 per month for each 

application session used for order entry 

(‘‘Order Entry Port’’) and application 

session for receipt of drop copies (‘‘Drop 

Copy Port’’) in the Exchange’s Primary 


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15As proposed, fees for connectivity services 

would be assessed based on each active 

connectivity service product at the close of business 

on the first day of each month. If a product is 

cancelled by a Member’s submission of a written 

request or via the MEMX User Portal prior to such 

fee being assessed then the Member will not be 

obligated to pay the applicable product fee. MEMX 

will not return pro-rated fees even if a product is 

not used for an entire month. 

16The Exchange is not proposing to adopt fees for 

market data in this filing but anticipates filing for 

such fees in the near future. In the meantime, the 

Exchange has proposed noting in Exhibit 5 that the 

Exchange does not charge for market data. MEMX 

notes that it has separately filed a proposal to 

modify transaction pricing (though such changes 

are not directly related to the costs described in this 

filing), which is also to be effective March 1, 2022. 

Data Center, as further described 

below.15

Cost Analysis 

In October 2021, MEMX completed a 

study of its aggregate costs to produce 

market data and connectivity (the ‘‘Cost 

Analysis’’). The Cost Analysis required 

a detailed analysis of MEMX’s aggregate 

baseline costs, including a 

determination and allocation of costs for 

core services provided by the 

Exchange—transaction execution, 

market data, membership services, 

physical connectivity, and application 

sessions (which provide order entry, 

cancellation and modification 

functionality, risk functionality, ability 

to receive drop copies, and other 

functionality).16 MEMX separately 

divided its costs between those costs 

necessary to deliver each of these core 

services, including infrastructure, 

software, human resources (i.e., 

personnel), and selling, general and 

administrative expenses (‘‘cost 

drivers’’). Next, MEMX applied an 

estimated allocation of each cost driver 

to each core service. By allocating 

segmented costs to each core service, 

MEMX was able to estimate by core 

service the potential margin it might 

earn based on different fee models. The 

Exchange notes that as a non-listing 

venue it has four primary sources of 

revenue that it can potentially use to 

fund its operations: Transaction fees, 

fees for connectivity services, 

membership and regulatory fees, and 

market data fees. Accordingly, the 

Exchange must cover its expenses from 

these four primary sources of revenue. 

Based on the analysis described 

above, MEMX estimates that the cost 

drivers to provide connectivity services, 

including both physical connections 

and application sessions, result in an 

aggregate monthly cost of $1,143,715. 

The following chart details the 

individual line-item costs considered by 

MEMX to be related to offering physical 

connectivity. 

Costs drivers Costs 

Human Resources ...................... $262,129 

Infrastructure and Connectivity 

Technology (servers, switches, 

etc.) ......................................... 162,000 

Data Center Costs ...................... 219,000 

Hardware and Software Licenses ..................................... 4,507 

Monthly Depreciation .................. 99,328 

Allocated Shared Expenses ....... 48,826 

Total ........................................ 795,789 

For personnel costs (Human 

Resources), MEMX calculated an 

allocation of employee time for 

employees whose functions include 

providing and maintaining physical 

connectivity and performance thereof 

(primarily the MEMX network 

infrastructure team, which spends most 

of their time performing functions 

necessary to provide physical 

connectivity) as well as a limited subset 

of personnel with ancillary functions 

related to establishing and maintaining 

such connectivity (such as information 

security and finance personnel). The 

Human Resources cost was calculated 

using a blended rate of compensation 

reflecting salary, equity and bonus 

compensation, benefits, payroll taxes, 

and 401(k) matching contributions. The 

Infrastructure and Connectivity 

Technology cost includes servers, 

switches and related hardware required 

to provide physical access to the 

Exchange, some of which is owned by 

the Exchange and some of which is 

leased by the Exchange in order to allow 

efficient periodic technology refreshes. 

Data Center costs includes an allocation 

of the costs the Exchange incurs to 

provide physical connectivity in the 

third party data centers where it 

maintains its equipment as well as 

related costs (the Exchange does not 

own the Primary Data Center or the 

Secondary Data Center, but instead, 

leases space in data centers operated by 

third parties). Hardware and Software 

Licenses includes hardware and 

software licenses used to operate and 

monitor physical assets necessary to 

offer physical connectivity to the 

Exchange. All physical assets and 

software, which also includes assets 

used for testing and monitoring of 

Exchange infrastructure, were valued at 

cost, depreciated or leased over periods 

ranging from three to five years. Finally, 

a limited portion of general shared 

expenses was allocated to overall 

physical connectivity costs as without 

these general shared costs the Exchange 

would not be able to operate in the 

manner that it does and provide 

physical connectivity. The costs 

included in general shared expenses 

include general expenses of the 

Exchange, including office space and 

office expenses, utilities, recruiting and 

training, marketing and advertising 

costs, professional fees for legal, tax and 

accounting services, and 

telecommunications costs. The total 

monthly cost of $795,789 was divided 

by the number of physical connections 

the Exchange maintains (143), to arrive 

at a cost of approximately $5,565 per 

month, per physical connection. 

The following chart details the 

individual line-item costs considered by 

MEMX to be related to offering 

application sessions. 

Costs drivers Costs 

Human Resources ...................... $147,029 

Infrastructure and Connectivity 

Technology (servers, switches, 

etc.) ......................................... 33,358 

Data Center Costs ...................... n/a 

Hardware and Software Licenses ..................................... 108,138 

Monthly Depreciation .................. n/a 

Allocated Shared Expenses ....... 59,400 

Total ........................................ 347,926 

With respect to application sessions, 

MEMX calculated Human Resources 

cost by taking an allocation of employee 

time for employees whose functions 

include providing application sessions 

and maintaining performance thereof 

(including a broader range of employees 

such as technical operations personnel, 

market operations personnel, and 

software engineering personnel) as well 

as a limited subset of personnel with 

ancillary functions related to 

maintaining such connectivity (such as 

sales, membership, and finance 

personnel). The Human Resources cost 

was again calculated using a blended 

rate of compensation reflecting salary, 

equity and bonus compensation, 

benefits, payroll taxes, and 401(k) 

matching contributions. The 

Infrastructure and Connectivity 

Technology cost includes servers and 

switches, and related hardware, and the 

allocation of cost was limited to those 

specifically supporting the provision of 

application sessions. Hardware and 

Software Licenses includes hardware 

and software licenses used to monitor 

the health of the order entry services 

provided by the Exchange. All physical 

assets and software, which also includes 

assets used for testing and monitoring of 

order entry infrastructure, were valued 

at cost, depreciated or leased over 

periods ranging from three to five years. 

Finally, a limited portion of general 

shared expenses was allocated to overall 

application session costs as without 

these general shared costs the Exchange 


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17The Exchange notes that it has charged 

connectivity services for two months and so far the 

average amount expected (because not all February 

bills have yet been paid) is very close to the 

estimated revenue provided in the Initial Proposal. 

Specifically, the Exchange has earned an estimated 

$1,229,125 for connectivity services on an average 

basis over January and February. As such, the 

Exchange will continue to use its original estimated 

revenue of $1,233,750 in this proposal. 

would not be able to operate in the 

manner that it does and provide 

application sessions. The costs included 

in general shared expenses include 

general expenses of the Exchange, 

including office space and office 

expenses, utilities, recruiting and 

training, marketing and advertising 

costs, professional fees for legal, tax and 

accounting services, and 

telecommunications costs. The total 

monthly cost of $347,926 was divided 

by the number of application sessions 

the Exchange maintains (835), to arrive 

at a cost of approximately $417 per 

month, per application session. 

As discussed above, the Exchange 

conducted an extensive Cost Analysis in 

which the Exchange analyzed every 

expense item in the Exchange’s general 

expense ledger to determine whether 

each such expense relates to the 

provision of connectivity services, and, 

if such expense did so relate, what 

portion (or percentage) of such expense 

actually supports the provision of 

connectivity services, and thus bears a 

relationship that is, ‘‘in nature and 

closeness,’’ directly related to network 

connectivity services. In turn, the 

Exchange allocated certain costs more to 

physical connectivity and others to 

applications, while certain costs were 

only allocated to such services at a very 

low percentage or not at all. The sum of 

all such portions of expenses represents 

the total actual baseline cost of the 

Exchange to provide connectivity 

services, or a monthly expense of 

$1,143,715. 

In conducting its Cost Analysis, the 

Exchange did not allocate any of its 

expenses in full to any core services 

(including physical connectivity or 

application sessions) and did not 

double-count any expenses. Instead, as 

described above, the Exchange allocated 

applicable cost drivers across its core 

services and used the same Cost 

Analysis to form the basis of this 

proposal and the filing it intends to 

submit proposing fees for proprietary 

data feeds offered by the Exchange. For 

instance, in calculating the Human 

Resources expenses to be allocated to 

physical connections, the Exchange 

allocated network infrastructure 

personnel with a high percentage of the 

cost of such personnel (75%) given their 

focus on functions necessary to provide 

physical connections. The salaries of 

those same personnel were allocated 

only 2.5% to application sessions and 

the remaining 22.5% was allocated to 

transactions and market data. The 

Exchange did not allocate any other 

Human Resources expense for providing 

physical connections to any other 

employee group outside of a smaller 

allocation (19%) of the cost associated 

with certain specified personnel who 

work closely with and support network 

infrastructure personnel. In contrast, the 

Exchange allocated much smaller 

percentages of costs (11% or less) across 

a wider range of personnel groups in 

order to allocate Human Resources costs 

to providing application sessions. This 

is because a much wider range of 

personnel are involved in functions 

necessary to offer, monitor and maintain 

application sessions but the tasks 

necessary to do so are not a primary or 

full-time function. 

In total, the Exchange allocated 13.8% 

of its personnel costs to providing 

physical connections and 7.7% of its 

personnel costs to providing application 

sessions, for a total allocation of 21.5% 

Human Resources expense to provide 

connectivity services. In turn, the 

Exchange allocated the remaining 

78.5% of its Human Resources expense 

to membership (less than 1%) and 

transactions and market data (77.5%). 

Thus, again, the Exchange’s allocations 

of cost across core services were based 

on real costs of operating the Exchange 

and were not double-counted across the 

core services or their associated revenue 

streams. 

As another example, the Exchange 

allocated depreciation expense to all 

core services, including physical 

connections and application sessions, 

but in different amounts. The Exchange 

believes it is reasonable to allocate the 

identified portion of such expense 

because such expense includes the 

actual cost of the computer equipment, 

such as dedicated servers, computers, 

laptops, monitors, information security 

appliances and storage, and network 

switching infrastructure equipment, 

including switches and taps that were 

purchased to operate and support the 

network. Without this equipment, the 

Exchange would not be able to operate 

the network and provide connectivity 

services to its Members and nonMembers and their customers. However, 

the Exchange did not allocate all of the 

depreciation and amortization expense 

toward the cost of providing 

connectivity services, but instead 

allocated approximately 27% of the 

Exchange’s overall depreciation and 

amortization expense to connectivity 

services (19% attributed to physical 

connections and 8% to application 

sessions). The Exchange allocated the 

remaining depreciation and 

amortization expense (approximately 

73%) toward the cost of providing 

transaction services and market data. 

The Exchange notes that the Cost 

Analysis was based on the Exchange’s 

first year of operations and projections 

for the next year. As such, the Exchange 

believes that its costs will remain 

relatively similar in future years. It is 

possible however that such costs will 

either decrease or increase. To the 

extent the Exchange sees growth in use 

of connectivity services it will receive 

additional revenue to offset future cost 

increases. However, if use of 

connectivity services is static or 

decreases, the Exchange might not 

realize the revenue that it anticipates or 

needs in order to cover applicable costs. 

Accordingly, the Exchange commits to 

periodically review the costs applicable 

to providing connectivity services and 

to propose changes to its fees as 

appropriate. 

Looking at the Exchange’s operations 

holistically, the total monthly costs to 

the Exchange for offering core services 

is $3,954,537. Based on the initial two 

months of billing for connectivity 

services, the Exchange expects to collect 

its original estimate of $1,233,750 on a 

monthly basis for such services.17

Incorporating this amount into the 

Exchange’s overall projected revenue, 

including projections related to market 

data fees that have not yet been 

proposed and which the Exchange will 

not begin collecting until April 2022, 

subject to filing the necessary proposal 

to adopt such fees, the Exchange 

anticipates monthly revenue ranging 

from $4,296,950 to $4,546,950 from all 

sources (i.e., connectivity fees and 

membership fees that were introduced 

in January 2022, transaction fees, and 

revenue from market data, both through 

the fees anticipated to be adopted in 

April 2022 and through the revenue 

received from the SIPs). As such, 

applying the Exchange’s holistic Cost 

Analysis to a holistic view of 

anticipated revenues, the Exchange 

would earn approximately 8.5% to 15% 

margin on its operations as a whole. The 

Exchange believes that this amount is 

reasonable. 

The Exchange notes that its revenue 

estimates are based on projections 

across all potential revenue streams and 

will only be realized to the extent such 

revenue streams actually produce the 

revenue estimated. As a new entrant to 

the hyper-competitive exchange 

environment, and an exchange focused 

on driving competition, the Exchange 

does not yet know whether such 


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18See supra note 14. 

expectations will be realized. For 

instance, in order to generate the 

revenue expected from connectivity, the 

Exchange will have to be successful in 

retaining existing clients that wish to 

maintain physical connectivity and/or 

application sessions or in obtaining new 

clients that will purchase such services. 

Similarly, the Exchange will have to be 

successful in retaining a positive net 

capture on transaction fees in order to 

realize the anticipated revenue from 

transaction pricing. 

To the extent the Exchange is 

successful in gaining market share, 

improving its net capture on transaction 

fees, encouraging new clients to connect 

directly to the Exchange, and other 

developments that would help to 

increase Exchange revenues, the 

Exchange does not believe it should be 

penalized for such success. The 

Exchange, like other exchanges, is, after 

all, a for-profit business. Accordingly, 

while the Exchange believes in 

transparency around costs and potential 

margins, the Exchange does not believe 

that these estimates should form the 

sole basis of whether or not a proposed 

fee is reasonable or can be adopted. 

Instead, the Exchange believes that the 

information should be used solely to 

confirm that an Exchange is not earning 

supra-competitive profits, and the 

Exchange believes its Cost Analysis and 

related projections demonstrate this 

fact. 

Physical Connectivity Fees 

MEMX offers its Members the ability 

to connect to the Exchange in order to 

transmit orders to and receive 

information from the Exchange. 

Members can also choose to connect to 

MEMX indirectly through physical 

connectivity maintained by a third-party 

extranet. Extranet physical connections 

may provide access to one or multiple 

Members on a single connection. Users 

of MEMX physical connectivity services 

(both Members and non-Members 18) 

seeking to establish one or more 

connections with the Exchange submit a 

request to the Exchange via the MEMX 

User Portal or directly to Exchange 

personnel. Upon receipt of the 

completed instructions, MEMX 

establishes the physical connections 

requested by the User. The number of 

physical connections assigned to each 

User as of February 28, 2022, ranges 

from one to ten, depending on the scope 

and scale of the Member’s trading 

activity on the Exchange as determined 

by the Member, including the Member’s 

determination of the need for redundant 

connectivity. The Exchange notes that 

44% of its Members do not maintain a 

physical connection directly with the 

Exchange in the Primary Data Center 

(though many such Members have 

connectivity through a third party 

provider) and another 44% have either 

one or two physical ports to connect to 

the Exchange in the Primary Data 

Center. Thus, only a limited number of 

Members, 12%, maintain three or more 

physical ports to connect to the 

Exchange in the Primary Data Center. 

As described above, in order to cover 

the aggregate costs of providing physical 

connectivity to Users and to recoup 

some of the costs already borne by the 

Exchange to provide physical 

connectivity, the Exchange is proposing 

to charge a fee of $6,000 per month for 

each physical connection in the Primary 

Data Center and a fee of $3,000 per 

month for each physical connection in 

the Secondary Data Center. There is no 

requirement that any Member maintain 

a specific number of physical 

connections and a Member may choose 

to maintain as many or as few of such 

connections as each Member deems 

appropriate. The Exchange notes, 

however, that pursuant to Rule 2.4 

(Mandatory Participation in Testing of 

Backup Systems), the Exchange does 

require a small number of Members to 

connect and participate in functional 

and performance testing as announced 

by the Exchange, which occurs at least 

once every 12 months. Specifically, 

Members that have been determined by 

the Exchange to contribute a meaningful 

percentage of the Exchange’s overall 

volume must participate in mandatory 

testing of the Exchange’s backup 

systems (i.e., such Members must 

connect to the Secondary Data Center). 

The Exchange notes that Members that 

have been designated are still able to 

use third party providers of connectivity 

to access the Exchange at its Secondary 

Data Center. Nonetheless, because some 

Members are required to connect to the 

Secondary Data Center pursuant to Rule 

2.4 and to encourage Exchange Members 

to connect to the Secondary Data Center 

generally, the Exchange has proposed to 

charge one-half of the fee for a physical 

connection in the Primary Data Center. 

The proposed fee will not apply 

differently based upon the size or type 

of the market participant, but rather 

based upon the number of physical 

connections a User requests, based upon 

factors deemed relevant by each User 

(either a Member, service bureau or 

extranet). The Exchange believes these 

factors include the costs to maintain 

connectivity, business model and 

choices Members make in how to 

participate on the Exchange, as further 

described below. 

The proposed fee of $6,000 per month 

for physical connections at the Primary 

Data Center is designed to permit the 

Exchange to cover the costs allocated to 

providing connectivity services with a 

modest markup (approximately 8%), 

which would also account for costs the 

Exchange has previously borne 

completely on its own and help fund 

future expenditures (increased costs, 

improvements, etc.). The Exchange 

believes it is appropriate to charge fees 

that represent a reasonable markup over 

cost given the other factors discussed 

above, including the lack of other costs 

to participate on the Exchange and the 

need for the Exchange to maintain a 

highly performant and stable platform to 

allow Members to transact with 

determinism. The Exchange also 

reiterates that the Exchange did not 

charge any fees for connectivity services 

prior to January 2022, and its allocation 

of costs to physical connections was 

part of a holistic allocation that also 

allocated costs to other core services 

without double-counting any expenses. 

As such, the proposal only truly 

constitutes a ‘‘markup’’ to the extent the 

Exchange recovers the initial costs of 

building the network and infrastructure 

necessary to offer physical connectivity 

and operating the Exchange for over a 

year without connectivity fees. 

As noted above, the Exchange 

proposes a discounted rate of $3,000 per 

month for physical connections at its 

Secondary Data Center. The Exchange 

has proposed this discounted rate for 

Secondary Data Center connectivity in 

order to encourage Members to establish 

and maintain such connections. Also, as 

noted above, a small number of 

Members are required pursuant to Rule 

2.4 to connect and participate in testing 

of the Exchange’s backup systems, and 

the Exchange believes it is appropriate 

to provide a discounted rate for physical 

connections at the Secondary Data 

Center given this requirement. The 

Exchange notes that this rate is well 

below the cost of providing such 

services and the Exchange will operate 

its network and systems at the 

Secondary Data Center without 

recouping the full amount of such cost 

through connectivity services. 

The proposed fee for physical 

connections is effective on filing and 

will become operative on March 1, 

2022. The Exchange has separately 

proposed to make certain changes to 

Exchange transaction fees effective 

March 1, 2022, and intends to propose 

in a separate filing market data fees 

effective April 1, 2022. 


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Federal Register / Vol. 87, No. 54 / Monday, March 21, 2022 / Notices 16051 

19See supra note 14. 

20The Exchange understands that some Members 

(or service bureaus) may also request more Order 

Entry Ports to enable the ability to send a greater 

number of simultaneous order messages to the 

Exchange by spreading orders over more Order 

Entry Ports, thereby increasing throughput (i.e., the 

potential for more orders to be processed in the 

same amount of time). The degree to which this 

usage of Order Entry Ports provides any throughput 

advantage is based on how a particular Member 

sends order messages to MEMX, however the 

Exchange notes that its architecture reduces the 

impact or necessity of such a strategy. All Order 

Entry Ports on MEMX provide the same throughput, 

and as noted above, the throughput is likely 

adequate even for a Member sending a significant 

amount of volume at a fast pace, and is not 

artificially throttled or limited in any way by the 

Exchange. 

Application Session Fees 

Similar to other exchanges, MEMX 

offers its Members application sessions, 

also known as logical ports, for order 

entry and receipt of trade execution 

reports and order messages. Members 

can also choose to connect to MEMX 

indirectly through a session maintained 

by a third-party service bureau. Service 

bureau sessions may provide access to 

one or multiple Members on a single 

session. Users of MEMX connectivity 

services (both Members and nonMembers 19) seeking to establish one or 

more application sessions with the 

Exchange submit a request to the 

Exchange via the MEMX User Portal or 

directly to Exchange personnel. Upon 

receipt of the completed instructions, 

MEMX assigns the User the number of 

sessions requested by the User. The 

number of sessions assigned to each 

User as of February 28, 2022, ranges 

from one to more than 100, depending 

on the scope and scale of the Member’s 

trading activity on the Exchange (either 

through a direct connection or through 

a service bureau) as determined by the 

Member. For example, by using 

multiple sessions, Members can 

segregate order flow from different 

internal desks, business lines, or 

customers. The Exchange does not 

impose any minimum or maximum 

requirements for how many application 

sessions a Member or service bureau can 

maintain, and it is not proposing to 

impose any minimum or maximum 

session requirements for its Members or 

their service bureaus. 

As described above, in order to cover 

the aggregate costs of providing 

application sessions to Users and to 

recoup some of the costs already borne 

by the Exchange to provide application 

sessions, the Exchange is proposing to 

charge a fee of $450 per month for each 

Order Entry Port and Drop Copy Port in 

the Primary Data Center. The Exchange 

notes that it does not propose to charge 

for: (1) Order Entry Ports or Drop Copy 

Ports in the Secondary Data Center, or 

(2) any Test Facility Ports or MEMOIR 

Gap Fill Ports. The Exchange has 

proposed to provide Order Entry Ports 

and Drop Copy Ports in the Secondary 

Data Center free of charge in order to 

encourage Members to connect to the 

Exchange’s backup trading systems. 

Similarly, because the Exchange wishes 

to encourage Members to conduct 

appropriate testing of their use of the 

Exchange, the Exchange has not 

proposed to charge for Test Facility 

Ports. With respect to MEMOIR Gap Fill 

ports, such ports are exclusively used in 

order to receive information when a 

market data recipient has temporarily 

lost its view of MEMX market data. The 

Exchange has not proposed charging for 

such ports because the costs of 

providing and maintaining such ports is 

more directly related to producing 

market data. 

The proposed fee of $450 per month 

for each Order Entry Port and Drop 

Copy Port in the Primary Data Center is 

designed to permit the Exchange to 

cover the costs allocated to providing 

application sessions with a modest 

markup (approximately 8%), which 

would also account for costs the 

Exchange has previously borne 

completely on its own and help fund 

future expenditures (increased costs, 

improvements, etc.). The Exchange also 

reiterates that the Exchange did not 

charge any fees for connectivity services 

prior to January 2022, and its allocation 

of costs to application sessions was part 

of a holistic allocation that also 

allocated costs to other core services 

without double-counting any expenses. 

As such, the proposal only truly 

constitutes a ‘‘markup’’ to the extent the 

Exchange recovers the initial costs of 

building the network and infrastructure 

necessary to offer application sessions 

and operating the Exchange for over a 

year without connectivity fees. 

The proposed fee is also designed to 

encourage Users to be efficient with 

their application session usage, thereby 

resulting in a corresponding increase in 

the efficiency that the Exchange would 

be able to realize in managing its 

aggregate costs for providing 

connectivity services. There is no 

requirement that any Member maintain 

a specific number of application 

sessions and a Member may choose to 

maintain as many or as few of such 

ports as each Member deems 

appropriate. The Exchange has designed 

its platform such that Order Entry Ports 

can handle a significant amount of 

message traffic (i.e., over 50,000 orders 

per second), and has no application 

flow control or order throttling. As such, 

while several Members maintain a 

relatively high number of ports because 

that is consistent with their usage on 

other exchanges and is preferable for 

their own reasons, the Exchange 

believes that it has designed a system 

capable of allowing such Members to 

significantly reduce the number of 

application sessions maintained. 

The proposed fee will not apply 

differently based upon the size or type 

of the market participant, but rather 

based upon the number of application 

sessions a User requests, based upon 

factors deemed relevant by each User 

(either a Member or service bureau on 

behalf of a Member). The Exchange 

believes these factors include the costs 

to maintain connectivity and choices 

Members make in how to segment or 

allocate their order flow.20

The proposed fee for application 

sessions is effective on filing and will 

become operative on March 1, 2022. The 

Exchange has separately proposed to 

make certain changes to Exchange 

transaction fees effective March 1, 2022, 

and intends to propose in a separate 

filing market data fees effective April 1, 

2022. 

Additional Discussion 

As discussed above, the proposed fees 

for connectivity services do not by 

design apply differently to different 

types or sizes of Members. As discussed 

in more detail in the Statutory Basis 

section, the Exchange believes that the 

likelihood of higher fees for certain 

Members subscribing to connectivity 

services usage than others is not 

unfairly discriminatory because it is 

based on objective differences in usage 

of connectivity services among different 

Members. The Exchange’s incremental 

aggregate costs for all connectivity 

services are disproportionately related 

to Members with higher message traffic 

and/or Members with more complicated 

connections established with the 

Exchange, as such Members: (1) 

Consume the most bandwidth and 

resources of the network; (2) transact the 

vast majority of the volume on the 

Exchange; and (3) require the hightouch network support services 

provided by the Exchange and its staff, 

including network monitoring, reporting 

and support services, resulting in a 

much higher cost to the Exchange to 

provide such connectivity services. For 

these reasons, MEMX believes it is not 

unfairly discriminatory for the Members 

with higher message traffic and/or 

Members with more complicated 

connections to pay a higher share of the 

total connectivity services fees. While 

Members with a business model that 


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16052 Federal Register / Vol. 87, No. 54 / Monday, March 21, 2022 / Notices 

21 17 CFR 242.1000–1007. 

22 17 CFR 242.1001(a). 

23While some Members might directly connect to 

the Secondary Data Center and incur the proposed 

$3,000 per month fee, there are other ways to 

connect to the Exchange, such as through a service 

bureau or extranet, and because the Exchange is not 

imposing fees for application sessions in the 

Secondary Data Center, a Member connecting 

through another method would not incur any fees 

charged directly by the Exchange. However, the 

Exchange notes that a third party service provider 

providing connectivity to the Exchange likely 

would charge a fee for providing such connectivity; 

such fees are not set by or shared in by the 

Exchange. 

24 15 U.S.C. 78f. 

25 15 U.S.C. 78f(b)(4). 

26 15 U.S.C. 78f(b)(5). 

results in higher relative inbound 

message activity or more complicated 

connections are projected to pay higher 

fees, the level of such fees is based 

solely on the number of physical 

connections and/or application sessions 

deemed necessary by the Member and 

not on the Member’s business model or 

type of Member. The Exchange notes 

that the correlation between message 

traffic and usage of connectivity services 

is not completely aligned because 

Members individually determine how 

many physical connections and 

application sessions to request, and 

Members may make different decisions 

on the appropriate ways based on facts 

unique to their individual businesses. 

Based on the Exchange’s architecture, as 

described above, the Exchange believes 

that a Member even with high message 

traffic would be able to conduct 

business on the Exchange with a 

relatively small connectivity services 

footprint. 

Because the Exchange has already 

adopted fees for connectivity services, 

the Exchange has initial results of the 

impact such fees have had on Member 

and non-Member usage of connectivity 

services. Since the fees went into effect 

as set forth in the Initial Proposal, nine 

(9) customers with physical 

connectivity to the Exchange have 

canceled one or more of their physical 

connections. In each instance, the 

customer told the Exchange that its 

reason for cancelling its connectivity 

was the imposition of fees. Of these 

customers, two (2) customers canceled 

services entirely, three (3) maintained at 

least one physical connection provided 

directly by the Exchange, and the 

remaining four (4) customers migrated 

to alternative sources of connectivity 

through a third-party provider. As such, 

some market participants (one market 

data provider and one extranet) 

determined that they no longer wanted 

to connect to the Exchange directly or 

through a third party as it was not 

necessary for their business and their 

initial connection was only worthwhile 

so long as services were provided free 

of charge. Other market participants 

(one market data provider, one extranet 

and one Member) determined that they 

still wished to be directly connected to 

the Exchange but did not need as many 

connections. Finally, some market 

participants (one market data provider, 

one service bureau and two trading 

participants) determined that there was 

a more affordable alternative through a 

third party provider of connectivity 

services. As a general matter, the 

customers that discontinued use of 

physical connectivity or transitioned to 

a third party provider of connectivity 

services were either connected purely to 

consume market data for their own 

purposes or distribution to others, were 

themselves extranets or service bureaus 

providing alternatives to the Exchange’s 

connectivity services, or were smaller 

trading firms. 

Additionally, since the Exchange 

began charging for application sessions, 

five (5) customers have canceled a total 

of thirty (30) application sessions due to 

the fees adopted by the Exchange. As a 

general matter, these customers 

determined that the number of 

application sessions that they 

maintained was not necessary in order 

to participate on the Exchange. 

Based on its experience since 

adopting the proposed fees in January, 

the Exchange believes that there is 

ample evidence showing that it is 

subject to competitive forces when 

setting fees for physical connectivity 

and application sessions. Indeed, the 

evidence shows that firms can choose 

not to purchase those services, reduce 

consumption, or rely on external thirdparty providers in response to proposed 

fees. These competitive forces ensure 

that the Exchange cannot charge supracompetitive fees for connectivity 

services. In fact, as a new entrant to the 

exchange industry, the Exchange is 

particularly subject to competitive 

forces and has carefully crafted its 

current and proposed fees with the goal 

of growing its business. In this 

environment, the Exchange has no 

ability to set fees at levels that would be 

deemed supra-competitive as doing so 

would limit the Exchange’s ability to 

compete with its larger, established 

competitors. 

Finally, the fees for connectivity 

services will help to encourage 

connectivity services usage in a way 

that aligns with the Exchange’s 

regulatory obligations. As a national 

securities exchange, the Exchange is 

subject to Regulation Systems 

Compliance and Integrity (‘‘Reg SCI’’).21

Reg SCI Rule 1001(a) requires that the 

Exchange establish, maintain, and 

enforce written policies and procedures 

reasonably designed to ensure (among 

other things) that its Reg SCI systems 

have levels of capacity adequate to 

maintain the Exchange’s operational 

capability and promote the maintenance 

of fair and orderly markets.22 By 

encouraging Users to be efficient with 

their usage of connectivity services, the 

proposed fee will support the 

Exchange’s Reg SCI obligations in this 

regard by ensuring that unused 

application sessions are available to be 

allocated based on individual User 

needs and as the Exchange’s overall 

order and trade volumes increase. As 

noted above, based on early results, the 

adoption of fees has led to certain firms 

reducing the number of application 

sessions maintained now that such 

sessions are no longer provided free of 

charge. Additionally, because the 

Exchange will charge a lower rate for a 

physical connection to the Secondary 

Data Center and will not charge any fees 

for application sessions at the 

Secondary Data Center or its Test 

Facility, the proposed fee structure will 

further support the Exchange’s Reg SCI 

compliance by reducing the potential 

impact of a disruption should the 

Exchange be required to switch to its 

Disaster Recovery Facility and 

encouraging Members to engage in any 

necessary system testing with low or no 

cost imposed by the Exchange.23

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b) 24 of the 

Act in general, and furthers the 

objectives of Section 6(b)(4) 25 of the 

Act, in particular, in that it is designed 

to provide for the equitable allocation of 

reasonable dues, fees and other charges 

among its Members and other persons 

using its facilities. Additionally, the 

Exchange believes that the proposed 

fees are consistent with the objectives of 

Section 6(b)(5) 26 of the Act in that they 

are designed to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to 

a free and open market and national 

market system, and, in general, to 

protect investors and the public interest, 

and, particularly, are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission has repeatedly 

expressed its preference for competition 


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Federal Register / Vol. 87, No. 54 / Monday, March 21, 2022 / Notices 16053 

27See Securities Exchange Act Release No. 51808 

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

28See infra notes 35–40 and accompanying text. 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. In 

Regulation NMS, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and also recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 27 One 

of the primary objectives of MEMX is to 

provide competition and to reduce fixed 

costs imposed upon the industry. 

Consistent with this objective, the 

Exchange believes that this proposal 

reflects a simple, competitive, 

reasonable, and equitable pricing 

structure designed to permit the 

Exchange to cover certain fixed costs 

that it incurs for providing connectivity 

services, which are discounted when 

compared to products and services 

offered by competitors.28

Commission staff noted in its Fee 

Guidance that, as an initial step in 

assessing the reasonableness of a fee, 

staff considers whether the fee is 

constrained by significant competitive 

forces. To determine whether a 

proposed fee is constrained by 

significant competitive forces, staff has 

said that it considers whether the 

evidence demonstrates that there are 

reasonable substitutes for the product or 

service that is the subject of a proposed 

fee. There is no regulatory requirement 

that any market participant connect to 

the Exchange, that any participant 

connect in a particular manner, or that 

any participant maintain a certain 

number of connections to the Exchange. 

The Exchange reiterates that a small 

number of Members are required to 

connect to the Exchange for 

participation in mandatory testing of 

backup systems but such connectivity 

does not have to be obtained directly 

from the Exchange but instead can be 

through a third party provider that 

provides connectivity to the Exchange. 

The Exchange also acknowledges that 

certain market participants operate 

businesses that do, in fact, require them 

to be connected to all U.S. equity 

exchanges. For instance, certain 

Members operate as routing brokers for 

other market participants. As an equities 

exchange with 4% volume, these 

routing brokers likely need to maintain 

a connection to the Exchange on behalf 

of their clients. However, it is 

connectivity services provided by the 

Exchange that allow such participants to 

offer their clients a service for which 

they can be compensated (and allowing 

their clients not to directly connect but 

still to access the Exchange), and, as 

such, the Exchange believes it is 

reasonable, equitably allocated and not 

unfairly discriminatory to charge such 

Members for connectivity services. 

As a new entrant to the equities 

market, the Exchange does not have as 

Members many market participants that 

actively trade equities on other 

exchanges nor are such market 

participants directly connected to the 

Exchange. There are also a number of 

the Exchange’s Members that do not 

connect directly to MEMX. For instance, 

of the number of Members that maintain 

application sessions to participate 

directly on the Exchange, many such 

Members do not maintain physical 

connectivity but instead access the 

Exchange through a service bureau or 

extranet. In addition, of the Members 

that are directly connected to MEMX, it 

is generally the individual needs of the 

Member that require whether they need 

one or multiple physical connections to 

the Exchange as well as the number of 

application sessions that they will 

maintain. It is all driven by the business 

needs of the Member, and as described 

above, the Exchange believes it offers 

technology that will enable Members to 

maintain a smaller connectivity services 

footprint than they do on other markets. 

The potential argument that all 

broker-dealers are required to connect to 

all exchanges is not true given the 

Exchange’s experience as a new entrant 

to the market over the past year. Instead, 

many market participants awaited the 

Exchange growing to a certain 

percentage of market share before they 

would join as a Member or connect to 

the Exchange. In addition, many market 

participants still have not connected 

despite the Exchange’s growth in one 

year to more than 4% of the overall 

equities market share. Thus, the 

Exchange recognizes that the decision of 

whether to connect to the Exchange is 

separate and distinct from the decision 

of whether and how to trade on the 

Exchange. This is because there are 

multiple alternatives to directly 

participating on the Exchange (such as 

use of a third-party routing broker to 

access the Exchange) or directly 

connecting to the Exchange (such as use 

of an extranet or service bureau). The 

Exchange acknowledges that many firms 

may choose to connect to the Exchange, 

but ultimately not trade on it, based on 

their particular business needs. The 

decision of which type of connectivity 

to purchase, or whether to purchase 

connectivity at all, is based on the 

business needs of each individual firm. 

There is also competition for 

connectivity to the Exchange. For 

instance, the Exchange competes with 

certain non-Members who provide 

connectivity and access to the 

Exchange, namely extranets and service 

bureaus. These are resellers of MEMX 

connectivity—they are not arrangements 

between broker-dealers to share 

connectivity costs. Those non-Members 

resell that connectivity to multiple 

market participants over the same 

connection. When physical connectivity 

is re-sold by a third-party, the Exchange 

will not receive any connectivity 

revenue from that sale, and without 

connectivity fees for the past year, such 

third parties have been able to re-sell 

something they receive for free. Such 

arrangements are entirely between the 

third-party and the purchaser, thus 

constraining the ability of MEMX to set 

its connectivity pricing as indirect 

connectivity is a substitute for direct 

connectivity. 

Indirect connectivity is a viable 

alternative that is already being used by 

Members and non-Members of MEMX, 

constraining the price that the Exchange 

is able to charge for connectivity to its 

Exchange. As set forth above, nearly half 

of the Exchange’s Members do not have 

a physical connection provided by the 

Exchange and instead must use a third 

party provider. Members who have not 

established any connectivity to the 

Exchange are still able to trade on the 

Exchange indirectly through other 

Members or non-Member extranets or 

service bureaus that are connected. 

These Members will not be forced or 

compelled to purchase physical 

connectivity services, and they retain all 

of the other benefits of membership 

with the Exchange. Accordingly, 

Members have the choice to purchase 

physical connectivity and are not 

compelled to do so. The Exchange notes 

that without an application session, 

specifically an Order Entry Port, a 

Member could not submit orders to the 

Exchange. As such, while application 

sessions too can be obtained from a 

third party reseller (i.e., a service 

bureau) the Exchange will receive 

revenue either from the Member or the 

third party service bureau for each 

application session. However, as noted 

elsewhere, the Exchange has designed 

its platform such that Order Entry Ports 

can handle a significant amount of 

message traffic (i.e., over 50,000 orders 

per second), and has no application 

flow control or order throttling. As such, 

the Exchange believes that it has 

designed a system capable of allowing 

such Members to significantly reduce 


khammond on DSKJM1Z7X2PROD with NOTICES
16054 Federal Register / Vol. 87, No. 54 / Monday, March 21, 2022 / Notices 

29Market share percentage calculated as of 

February 28, 2022. The Exchange receives and 

processes data made available through consolidated 

data feeds (i.e., CTS and UTDF). 

30See NYSE Membership Directory, available at: 

https://www.nyse.com/markets/nyse/membership; 

BZX Form 1 filed November 19, 2021, available at: 

https://www.sec.gov/Archives/edgar/vprr/2100/ 

21009368.pdf; IEX Current Members list, available 

at: https://exchange.iex.io/resources/trading/ 

current-membership/. 

the number of application sessions 

maintained. 

As described above, the Exchange has 

seen certain Members and non-Members 

discontinue or change their usage of 

connectivity services provided by the 

Exchange in response to the fees 

adopted by the Exchange. Specifically, 

nine (9) participants reduced or 

discontinued use of connectivity 

services provided directly by the 

Exchange and five (5) participants 

reduced the number of application 

sessions used to participate on the 

Exchange. The Exchange believes that 

this demonstrates that not all market 

participants are required to use 

connectivity services provided by the 

Exchange but can instead choose to 

participate on the Exchange through a 

third-party provider of connectivity 

services, indirectly through another 

Member of the Exchange, or not at all. 

The Exchange also notes that of the 

participants that reduced or 

discontinued their use of connectivity 

services, several were in fact third-party 

providers of connectivity services, 

which demonstrates that such providers 

will connect to the Exchange to the 

extent they have sufficient clients to 

whom they can provide connectivity 

services and make a profit but they will 

not connect if this is not the case. 

The Exchange believes that the 

proposed fees for connectivity services 

are reasonable, equitable and not 

unfairly discriminatory because, as 

described above, the proposed pricing 

for connectivity services is directly 

related to the relative costs to the 

Exchange to provide those respective 

services, and does not impose a barrier 

to entry to smaller participants. 

Accordingly, the Exchange offers direct 

connectivity alternatives and various 

indirect connectivity (via third-party) 

alternatives, as described above. 

The Exchange recognizes that there 

are various business models and varying 

sizes of market participants conducting 

business on the Exchange. The 

Exchange’s incremental aggregate costs 

for all connectivity services are 

disproportionately related to Members 

with higher message traffic and/or 

Members with more complicated 

connections established with the 

Exchange, as such Members: (1) 

Consume the most bandwidth and 

resources of the network; (2) transact the 

vast majority of the volume on the 

Exchange; and (3) require the hightouch network support services 

provided by the Exchange and its staff, 

including network monitoring, reporting 

and support services, resulting in a 

much higher cost to the Exchange to 

provide such connectivity services. 

Accordingly, the Exchange believes the 

allocation of the proposed fees that 

increase based on the number of 

physical connections or application 

sessions is reasonable based on the 

resources consumed by the respective 

type of market participant (i.e., lowest 

resource consuming Members will pay 

the least, and highest resource 

consuming Members will pay the most), 

particularly since higher resource 

consumption translates directly to 

higher costs to the Exchange. 

With respect to equities trading, the 

Exchange had approximately 4.3% 

market share of the U.S. equities 

industry in February 2022.29 The 

Exchange is not aware of any evidence 

that a market share of approximately 4% 

provides the Exchange with supracompetitive pricing power because, as 

shown above, market participants that 

choose to connect to the Exchange have 

various choices in determining how to 

do so, including third party alternatives. 

This, in addition to the fact that not all 

broker-dealers are required to connect to 

the Exchange, supports the Exchange’s 

conclusion that its pricing is 

constrained by competition. 

Several market participants choose 

not to be Members of the Exchange and 

choose not to access the Exchange, and 

several market participants also access 

the Exchange indirectly through another 

market participant. To illustrate, the 

Exchange currently has 66 Members. 

However, based on publicly available 

information regarding a sample of the 

Exchange’s competitors, the New York 

Stock Exchange LLC (‘‘NYSE’’) has 142 

members, Cboe BZX Exchange, Inc. 

(‘‘BZX’’) has 140 members, and 

Investors Exchange LLC (‘‘IEX’’) has 133 

members.30 If all market participants 

were required to be Members of the 

Exchange and connect directly to the 

Exchange, the Exchange would have 

over 130 Members, in line with these 

other exchanges. But it does not. The 

Exchange currently has approximately 

half of the number of members as 

compared to these other exchanges. 

Separately, the Exchange is not aware 

of any reason why market participants 

could not simply drop their connections 

and cease being Members of the 

Exchange if the Exchange were to 

establish unreasonable and 

uncompetitive prices for its connectivity 

services. Market participants choose to 

connect to a particular exchange and 

because it is a choice, MEMX must set 

reasonable pricing for connectivity 

services, otherwise prospective 

Members would not connect and 

existing Members would disconnect, 

connect through a third-party reseller of 

connectivity, or otherwise access the 

Exchange indirectly. The Exchange 

reiterates that several Members and nonMembers did in fact reduce or 

discontinue use of connectivity services 

provided directly by the Exchange in 

response to the fees adopted by the 

Exchange. No market participant is 

required by rule or regulation to be a 

Member of or connect directly to the 

Exchange, though again, the Exchange 

acknowledges that certain types of 

broker-dealers might be compelled by 

their business model to connect and 

also notes that pursuant to Rule 2.4, 

certain Members with significant 

volume on the Exchange are required to 

connect to the Exchange’s backup 

systems for testing on at least an annual 

basis. 

With regard to reasonableness, the 

Exchange understands that the 

Commission has traditionally taken a 

market-based approach to examine 

whether the SRO making the proposal 

was subject to significant competitive 

forces in setting the terms of the 

proposal. In looking at this question, the 

Commission considers whether the SRO 

has demonstrated in its filing that: (i) 

There are reasonable substitutes for the 

product or service; (ii) ‘‘platform’’ 

competition constrains the ability to set 

the fee; and/or (iii) revenue and cost 

analysis shows the fee would not result 

in the SRO taking supra-competitive 

profits. If the SRO demonstrates that the 

fee is subject to significant competitive 

forces, the Commission will next 

consider whether there is any 

substantial countervailing basis to 

suggest the fee’s terms fail to meet one 

or more standards under the Exchange 

Act. If the filing fails to demonstrate that 

the fee is constrained by competitive 

forces, the SRO must provide a 

substantial basis, other than 

competition, to show that it is 

consistent with the Exchange Act, 

which may include production of 

relevant revenue and cost data 

pertaining to the product or service. 

As described above, the Exchange 

believes that competitive forces are in 

effect and that if the proposed fees for 

connectivity services were unreasonable 

that the Exchange would lose current or 

prospective Members and market share. 

The Exchange does not yet have 

comprehensive data of the impact of the 


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31See supra note 17. 

32See Fee Guidance, supra note 13. 

33 15 U.S.C. 78f(b)(4). 34See supra note 17. 

proposed fees but, as discussed, several 

market participants have in fact 

modified the way that they connect to 

the Exchange in response to the 

Exchange’s pricing proposal. Further, 

the Exchange has conducted a 

comprehensive Cost Analysis in order to 

determine the reasonability of its 

proposed fees, including that the 

Exchange will not take supracompetitive profits. 

MEMX believes the proposed fees for 

connectivity services are fair and 

reasonable as a form of cost recovery for 

the Exchange’s aggregate costs of 

offering connectivity services to 

Members and non-Members. The 

proposed fees are expected to generate 

monthly revenue of $1,233,750 

providing cost recovery to the Exchange 

for the aggregate costs of offering 

connectivity services, based on a 

methodology that narrowly limits the 

aggregate cost elements considered to 

those closely and directly related to the 

particular product offering.31 In 

addition, this revenue will allow the 

Exchange to continue to offer, to 

enhance, and to continually refresh its 

infrastructure as necessary to offer a 

state-of-the-art trading platform. The 

Exchange believes that, consistent with 

the Act, it is appropriate to charge fees 

that represent a reasonable markup over 

cost given the other factors discussed 

above, including the lack of other costs 

to participate on the Exchange and the 

need for the Exchange to maintain a 

highly performant and stable platform to 

allow Members to transact with 

determinism. The Exchange also 

believes the proposed fee is a reasonable 

means of encouraging Users to be 

efficient in the connectivity services 

they reserve for use, with the benefits to 

overall system efficiency to the extent 

Members and non-Members consolidate 

their usage of connectivity services or 

discontinue subscriptions to unused 

physical connectivity. 

The Exchange further believes that the 

proposed fees, as they pertain to 

purchasers of each type of connectivity 

alternative, constitute an equitable 

allocation of reasonable fees charged to 

the Exchange’s Members and nonMembers and are allocated fairly 

amongst the types of market participants 

using the facilities of the Exchange. 

As described above, the Exchange 

believes the proposed fees are equitably 

allocated because the Exchange’s 

incremental aggregate costs for all 

connectivity services are 

disproportionately related to Members 

with higher message traffic and/or 

Members with more complicated 

connections established with the 

Exchange, as such Members: (1) 

Consume the most bandwidth and 

resources of the network; (2) transact the 

vast majority of the volume on the 

Exchange; and (3) require the hightouch network support services 

provided by the Exchange and its staff, 

including network monitoring, reporting 

and support services, resulting in a 

much higher cost to the Exchange to 

provide such connectivity services. 

Commission staff previously noted 

that the generation of supra-competitive 

profits is one of several potential factors 

in considering whether an exchange’s 

proposed fees are consistent with the 

Act.32 As described in the Fee 

Guidance, the term ‘‘supra-competitive 

profits’’ refers to profits that exceed the 

profits that can be obtained in a 

competitive market. The proposed fee 

structure would not result in excessive 

pricing or supra-competitive profits for 

the Exchange. The proposed fee 

structure is merely designed to permit 

the Exchange to cover the costs 

allocated to providing connectivity 

services with a modest markup 

(approximately 8%), which would also 

account for costs the Exchange has 

previously borne completely on its own 

and help fund future expenditures 

(increased costs, improvements, etc.). 

The Exchange believes that this is fair, 

reasonable, and equitable. Accordingly, 

the Exchange believes that its proposal 

is consistent with Section 6(b)(4) 33 of 

the Act because the proposed fees will 

permit recovery of the Exchange’s costs 

and will not result in excessive pricing 

or supra-competitive profit. 

The proposed fees for connectivity 

services will allow the Exchange to 

cover certain costs incurred by the 

Exchange associated with providing and 

maintaining necessary hardware and 

other network infrastructure as well as 

network monitoring and support 

services; without such hardware, 

infrastructure, monitoring and support 

the Exchange would be unable to 

provide the connectivity services. The 

Exchange routinely works to improve 

the performance of the network’s 

hardware and software. The costs 

associated with maintaining and 

enhancing a state-of-the-art exchange 

network is a significant expense for the 

Exchange, and thus the Exchange 

believes that it is reasonable and 

appropriate to help offset those costs by 

adopting fees for connectivity services. 

As detailed above, the Exchange has 

four primary sources of revenue that it 

can potentially use to fund its 

operations: Transaction fees, fees for 

connectivity services, membership and 

regulatory fees, and market data fees. 

Accordingly, the Exchange must cover 

its expenses from these four primary 

sources of revenue. The Exchange’s Cost 

Analysis estimates the costs to provide 

connectivity services at $1,143,715. 

Based on current connectivity services 

usage, the Exchange would generate 

monthly revenues of approximately 

$1,233,750.34 This represents a modest 

profit when compared to the cost of 

providing connectivity services. 

However, the Exchange does anticipate 

(and encourages) Members and nonMembers to more closely evaluate their 

connectivity services usage now that 

such services are no longer free, and 

thus, it is possible that the revenue 

actually received by the Exchange will 

be less than $1,233,750. Even if the 

Exchange earns that amount or 

incrementally more, the Exchange 

believes the proposed fees for 

connectivity services are fair and 

reasonable because they will not result 

in excessive pricing or supracompetitive profit, when comparing the 

total expense of MEMX associated with 

providing connectivity services versus 

the total projected revenue of the 

Exchange associated with network 

connectivity services. As noted above, 

when incorporating the projected 

revenue from connectivity services into 

the Exchange’s overall projected 

revenue, including projections related to 

market data fees that have not yet been 

proposed and which the Exchange will 

not begin collecting until April 2022, 

subject to filing the necessary proposal 

to adopt such fees, the Exchange 

anticipates monthly revenue ranging 

from $4,296,950 to $4,546,950 from all 

sources. As such, applying the 

Exchange’s holistic Cost Analysis to a 

holistic view of anticipated revenues, 

the Exchange would earn approximately 

8.5% to 15% margin on its operations 

as a whole. The Exchange believes that 

this amount is reasonable and is again 

evidence that the Exchange will not 

earn a supra-competitive profit. 


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35One significant differentiation between the 

Exchanges is that while it offers different types of 

physical connections, including 10Gb, 25Gb, 40Gb, 

and 100Gb connections, the Exchange does not 

propose to charge different prices for such 

connections. In contrast, most of the Exchange’s 

competitors provide scaled pricing that increases 

depending on the size of the physical connection. 

The Exchange does not believe that its costs 

increase incrementally based on the size of a 

physical connection but instead, that individual 

connections and the number of such separate and 

disparate connections are the primary drivers of 

cost for the Exchange. 

36See the Nasdaq equities fee schedule, available 

at: http://www.nasdaqtrader.com/ 

trader.aspx?id=pricelisttrading2; the NYSE fee 

schedule, available at: https://www.nyse.com/ 

publicdocs/nyse/markets/nyse/NYSE_Price_

List.pdf; the NYSE Arca equities fee schedule, 

available at: https://www.nyse.com/publicdocs/ 

nyse/markets/nyse-arca/NYSE_Arca_Marketplace_

Fees.pdf; the BZX equities fee schedule, available 

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

membership/fee_schedule/bzx/; the EDGX equities 

fee schedule, available at: https://

markets.cboe.com/us/equities/membership/fee_

schedule/edgx/. This range is based on a review of 

the fees charged for 10–40Gb connections at each 

of these exchanges and relates solely to the physical 

port fee or connection charge, excluding co-location 

fees and other fees assessed by these exchanges. 

The Exchange notes that it does not offer physical 

connections with lower bandwidth than 10Gb and 

that Members and non-Members with lower 

bandwidth requirements typically access the 

Exchange through third-party extranets or service 

bureaus. 

37See id. 

38See id. 

39As noted above, all physical connections 

offered by MEMX are at least 10Gb capable and 

physical connections provided with larger 

bandwidth capabilities will be provided at the same 

rate as such connections. MEMX application 

sessions are capable of handling significant amount 

of message traffic (i.e., over 50,000 orders per 

second), and have no application flow control or 

order throttling. 

40See supra note 36. 

41 15 U.S.C. 78f(b)(4) and (5). 

42 15 U.S.C. 78f(b)(8). 

The Exchange notes that other 

exchanges offer similar connectivity 

options to market participants and that 

the Exchange’s fees are a discount as 

compared to the majority of such fees.35

With respect to physical connections, 

each of the Nasdaq Stock Market LLC 

(‘‘Nasdaq’’), NYSE, NYSE Arca, Inc. 

(‘‘Arca’’), BZX and Cboe EDGX 

Exchange, Inc. (‘‘EDGX’’) charges 

between $7,500–$22,000 per month for 

physical connectivity at their primary 

data centers that is comparable to that 

offered by the Exchange.36 Nasdaq, 

NYSE and Arca also charge installation 

fees, which are not proposed to be 

charged by the Exchange. With respect 

to application sessions, each of Nasdaq, 

NYSE, Arca, BZX and EDGX charges 

between $500–$575 per month for order 

entry and drop ports.37 The Exchange 

further notes that several of these 

exchanges each charge for other logical 

ports that the Exchange will continue to 

provide for free, such as application 

sessions for testing and disaster 

recovery purposes.38 While the 

Exchange’s proposed connectivity fees 

are lower than the fees charged by 

Nasdaq, NYSE, Arca, BZX and EDGX, 

MEMX believes that it offers significant 

value to Members over these other 

exchanges in terms of bandwidth 

available over such connectivity 

services, which the Exchanges believes 

is a competitive advantage, and 

differentiates its connectivity versus 

connectivity to other exchanges.39

Additionally, the Exchange’s proposed 

connectivity fees to its disaster recovery 

facility are within the range of the fees 

charged by other exchanges for similar 

connectivity alternatives.40 The 

Exchange believes that its proposal to 

offer certain application sessions free of 

charge is reasonable, equitably allocated 

and not unfairly discriminatory because 

such proposal is intended to encourage 

Member connections and use of backup 

and testing facilities of the Exchange, 

and, with respect to MEMOIR Gap Fill 

ports, such ports are used exclusively in 

connection with the receipt and 

processing of market data from the 

Exchange. 

In conclusion, the Exchange submits 

that its proposed fee structure satisfies 

the requirements of Sections 6(b)(4) and 

6(b)(5) of the Act 41 for the reasons 

discussed above in that it provides for 

the equitable allocation of reasonable 

dues, fees and other charges among its 

Members and other persons using its 

facilities, does not permit unfair 

discrimination between customers, 

issuers, brokers, or dealers, and 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, particularly as the 

proposal neither targets nor will it have 

a disparate impact on any particular 

category of market participant. As 

described more fully below in the 

Exchange’s statement regarding the 

burden on competition, the Exchange 

believes that it is subject to significant 

competitive forces, and that the 

proposed fee structure is an appropriate 

effort to address such forces. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

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

the Act,42 the Exchange does not believe 

that the proposed rule change would 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Intra-Market Competition 

The Exchange does not believe that 

the proposed 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. In particular, 

while the Exchange did not officially 

proposed fees until late December of 

2021 when it filed the Initial Proposal, 

Exchange personnel had been 

informally discussing potential fees for 

connectivity services with a diverse 

group of market participants that are 

connected to the Exchange (including 

large and small firms, firms with large 

connectivity service footprints and 

small connectivity service footprints, as 

well as extranets and service bureaus) 

for several months leading up to that 

time. The Exchange received no official 

complaints from Members, nonMembers (extranets or service bureaus), 

third-parties that purchase the 

Exchange’s connectivity and resell it, 

and customers of those resellers, that 

the Exchange’s fees or the proposed fees 

for connectivity services would 

negatively impact their abilities to 

compete with other market participants 

or that they are placed at a 

disadvantage. 

As expected, the Exchange did, 

however, have several market 

participants reduce or discontinue use 

of connectivity services provided 

directly by the Exchange in response to 

the fees adopted by the Exchange. The 

Exchange does not believe that the 

proposed fees for connectivity services 

place certain market participants at a 

relative disadvantage to other market 

participants because the proposed 

connectivity pricing is associated with 

relative usage of the Exchange by each 

market participant and does not impose 

a barrier to entry to smaller participants. 

As described above, the connectivity 

services purchased by market 

participants typically increase based on 

their additional message traffic and/or 

the complexity of their operations. The 

market participants that utilize more 

connectivity services typically utilize 

the most bandwidth, and those are the 

participants that consume the most 

resources from the network. 

Accordingly, the proposed fees for 

connectivity services do not favor 

certain categories of market participants 

in a manner that would impose a 

burden on competition; rather, the 

allocation of the proposed connectivity 

fees reflects the network resources 

consumed by the various size of market 

participants and the costs to the 


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Federal Register / Vol. 87, No. 54 / Monday, March 21, 2022 / Notices 16057 

43See supra notes 35–40 and accompanying text. 

44 15 U.S.C. 78s(b)(3)(A)(ii). 

45 17 CFR 240.19b–4(f)(2). 46 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

Exchange of providing such 

connectivity services. 

Inter-Market Competition 

The Exchange does not believe the 

proposed fees place an undue burden on 

competition on other SROs that is not 

necessary or appropriate. In particular, 

market participants are not forced to 

connect to all exchanges, as shown by 

the number of Members of the Exchange 

as compared to the much greater 

number of members at other exchanges, 

as described above. Not only does 

MEMX have less than half the number 

of members as certain other exchanges, 

but there are also a number of the 

Exchange’s Members that do not 

connect directly to the Exchange. 

Additionally, other exchanges have 

similar connectivity alternatives for 

their participants, but with higher rates 

to connect.43 The Exchange is also 

unaware of any assertion that the 

proposed fees for connectivity services 

would somehow unduly impair its 

competition with other exchanges. To 

the contrary, if the fees charged are 

deemed too high by market participants, 

they can simply disconnect. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 44 and Rule 

19b–4(f)(2) 45 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 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

MEMX–2022–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MEMX–2022–02. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MEMX–2022–02 and 

should be submitted on or before April 

11, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–05842 Filed 3–18–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94417; File No. SR– 

NYSEARCA–2022–12] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend the Pilot 

Related to the Market-Wide Circuit 

Breaker in Rule 7.12–E 

March 15, 2022. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on March 8, 

2022, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

pilot related to the market-wide circuit 

breaker in Rule 7.12–E to the close of 

business on April 18, 2022. The 

proposed rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, 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 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to extend the 

pilot related to the market-wide circuit 


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