Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 102989 

31 17 CFR 240.17ad–22(e)(7)(ii). For purposes of 

this Rule, ‘‘qualifying liquid resources’’ are defined 

in Rule 17ad–22(a)(14) as including, in part, cash 

held either at the central bank of issue or at 

creditworthy commercial banks. 17 CFR 240.17ad– 

22(a)(14). 

32Supra note 14. 

33 17 CFR 240.17ad–22(a)(14). 

34 17 CFR 240.17ad–22(e)(7)(i). 

35 17 CFR 240.17ad–22(e)(7)(i), (ii). 

36 17 CFR 200.30–3(a)(91). 

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

2 17 CFR 240.19b–4. 

in each relevant currency for which 

DTC has payment obligations owed to 

its Participants.31

As described above, the proposed 

Debt Issuance would provide DTC with 

an additional resource of prefunded 

default liquidity, which it would use to 

complete system-wide settlement every 

business day, including following a 

Participant default. The proceeds of the 

Debt Issuance would be cash held by 

DTC at either its cash deposit account 

at the FRBNY or at a creditworthy 

commercial bank, pursuant to the 

Clearing Agency Investment Policy.32

Therefore, the proceeds of the Debt 

Issuance would be considered a 

qualifying liquid resource, as defined by 

Rule 17ad–22(a)(14).33 As such, the 

proposed Debt Issuance would support 

DTC’s ability to hold sufficient 

qualifying liquid resources to meet its 

minimum liquidity resource 

requirement under Rule 17ad–22(e)(7)(i) 

under the Act.34

For these reasons, DTC believes the 

proposal would support DTC’s 

compliance with Rule 17ad–22(e)(7)(i) 

and (ii) under the Act by providing it 

with an additional qualifying liquid 

resource.35

III. Date of Effectiveness of the Advance 

Notice, and Timing for Commission 

Action 

The proposed change may be 

implemented if the Commission does 

not object to the proposed change 

within 60 days of the later of (i) the date 

that the proposed change was filed with 

the Commission or (ii) the date that any 

additional information requested by the 

Commission is received. The clearing 

agency shall not implement the 

proposed change if the Commission has 

any objection to the proposed change. 

The Commission may extend the 

period for review by an additional 60 

days if the proposed change raises novel 

or complex issues, subject to the 

Commission providing the clearing 

agency with prompt written notice of 

the extension. A proposed change may 

be implemented in less than 60 days 

from the date the advance notice is 

filed, or the date further information 

requested by the Commission is 

received, if the Commission notifies the 

clearing agency in writing that it does 

not object to the proposed change and 

authorizes the clearing agency to 

implement the proposed change on an 

earlier date, subject to any conditions 

imposed by the Commission. 

The clearing agency shall post notice 

on its website of proposed changes that 

are implemented. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the Advance Notice 

is consistent with the Clearing 

Supervision Act. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules-regulations/self-regulatoryorganization-rulemaking); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

DTC–2023–801 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–DTC–2023–801. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the Advance Notice that 

are filed with the Commission, and all 

written communications relating to the 

Advance Notice between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 10 

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

will be available for inspection and 

copying at the principal office of DTC 

and on DTCC’s website (www.dtcc.com/ 

legal/sec-rule-filings). 

Do not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to File Number SR–DTC–2023–801 and 

should be submitted on or before 

January 8, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–29919 Filed 12–17–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101894; File No. SR–MIAX– 

2024–45] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Adopt Fees for Dedicated 

Cross Connection Access to the 

Testing Systems Environment 

December 12, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on November 

29, 2024, Miami International Securities 

Exchange, LLC (‘‘MIAX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

establish a fee for market participants 

that choose to utilize the Exchange’s 

testing systems environment via a 

dedicated cross connection. 

The text of the proposed rule change 

is available on the Exchange’s website at 

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

us-options/all-options-exchanges/rulefilings, at MIAX’s principal office, and 

at the Commission’s Public Reference 

Room. 


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

organization approved to exercise the trading rights 

associated with a Trading Permit. Members are 

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

Exchange Rule 100. 

4Business continuity and disaster recovery 

testing is performed separately and not within the 

testing systems environment that is the subject of 

this filing. 

5All references to ‘‘MIAX PEARL’’ in this filing 

are to the options trading facility of MIAX PEARL, 

LLC, referred to herein as ‘‘MIAX Pearl Options.’’ 

Members and non-Members that choose to utilize 

the testing systems environment of MIAX Pearl 

Equities, the equities trading facility of MIAX 

PEARL, LLC, must utilize a separate dedicated cross 

connection as MIAX Pearl Equities’ testing systems 

environment operates on a separate network from 

the affiliated options markets. 

6See MIAX Fee Schedule, Sections 5)a)–b) for the 

fees for 1Gb and 10Gb ULL production 

connectivity. 

7See MIAX Options, MIAX Pearl Options and 

MIAX Emerald Options Exchanges—Announcing 

New Extranet Access to Firm Test Beds (FTB1 and 

FTB2) and Decommissioning of Access via 

Production Connections Beginning in October 2024, 

dated September 12, 2024, available at https://

www.miaxglobal.com/alert/2024/09/12/miaxoptions-miax-pearl-options-and-miax-emeraldoptions-exchanges-2?nav=all; and Securities 

Exchange Act Release No. 100854 (August 28, 

2024), 89 FR 71953 (September 4, 2024) (SR– 

MIAX–2024–35). 

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

9 15 U.S.C. 78f(b)(5). 

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

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to establish a 

fee for market participants that choose 

to utilize the Exchange’s testing systems 

environment via a dedicated cross 

connection. The testing systems 

environment is a virtual trading system 

environment for Members 3 and nonMembers to test (i) upcoming Exchange 

software and code releases, (ii) product 

enhancements, and (iii) firm-developed 

software, prior to implementation in the 

Exchange’s production (e.g., live 

trading) environment. Further, the 

testing systems environment allows 

unlimited testing of existing 

functionality, such as order types, order 

entry, order management, order 

throughput, acknowledgements, risk 

settings, mass cancelations, and purge 

requests. The testing systems 

environment is built to closely 

approximate the production 

environment to enable Members and 

non-Members the ability to test their 

systems and mimics the live trading 

environment.4

There are currently three methods by 

which Members and non-Members may 

access the Exchange’s testing systems 

environment. One, Members and nonMembers may access the Exchange’s 

testing systems environment via a 

virtual private network (‘‘VPN’’) that 

operates over the internet and provides 

site-to-site access. VPN access is 

provided for free to all Members and 

non-Members. 

A second method is via a dedicated 

cross connection that allows Members 

and non-Members to access the testing 

systems environment and is available as 

either a 1 gigabit (‘‘Gb’’) or 10Gb 

connection. Members and non-Members 

that utilize a VPN or a dedicated cross 

connection to access the testing systems 

environment of the Exchange are also 

able to access the testing systems 

environments of each of the Exchange’s 

affiliated options markets—MIAX 

Sapphire, LLC (‘‘MIAX Sapphire’’), 

MIAX PEARL, LLC5 (‘‘MIAX Pearl 

Options’’), and MIAX Emerald, LLC 

(‘‘MIAX Emerald’’). This dedicated cross 

connection would provide subscribers 

access to the testing systems 

environment of the Exchange, as well as 

each of its affiliate options exchanges, 

via a single connection. 

Third, access is also provided through 

the production connections for each 

1Gb or 10Gb ULL connection for the 

applicable fee 6 for such connection and 

no additional charge. These 1Gb and 

10Gb ULL connections provide access to 

the Exchange’s production environment 

(i.e., live trading) and allow the receipt 

of proprietary real-time market data. 

However, the Exchange previously 

announced that it will phase out the 

ability to connect to the testing systems 

environment via the existing 1Gb and 

10Gb ULL production connections by 

February 28, 2025.7

* * * * * 

The Exchange now proposes to amend 

the Fee Schedule to establish a monthly 

fee for Members and non-Members that 

choose to access the testing systems 

environment via a dedicated cross 

connect. In particular, the Exchange 

proposes to establish a monthly fee of 

$1,000 per dedicated cross connection 

to the testing systems environment for 

Members and non-Members. The 

proposed fee is the same whether a 

Member or non-Member chooses to 

connect to the testing systems 

environment via a 1Gb or 10Gb cross 

connect. The proposed fees would be set 

forth under new Sections 4)e) and 4)f) 

of the Fee Schedule. Proposed Sections 

4)e) and 4)f) would also codify that VPN 

access to the test environment is 

provided for free for all Members and 

non-Members. 

* * * * * 

Members and non-Members that 

access the testing systems environment 

through any one of the available access 

methods, including a dedicated cross 

connection, receive functionally the 

same testing experience. Each Member 

or non-Member is free to decide how to 

access the testing systems environment 

based on their own needs and trading 

architecture or not utilize the testing 

systems environment at all. Again, 

accessing the testing systems 

environment via a dedicated direct 

connection is entirely optional and no 

Member or non-Member is required by 

rule or regulation to make use of the 

testing systems environment via a 

dedicated direct connection. Regardless 

of access method, all Members and nonMembers are provided the same testing 

systems environment experience and 

are able to perform all of the same 

functions. 

Implementation 

The proposed fee change will be 

effective December 1, 2024. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,8 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,9 in particular, in that it is not 

designed to permit unfair 

discrimination among customers, 

brokers, or dealers. The Exchange also 

believes that its proposal is consistent 

with Section 6(b)(4) of the Act 10

because it represents an equitable 

allocation of reasonable dues, fees and 

other charges among market participants 

using any facility or system which the 

Exchange operates or controls. 

Free VPN Access to the Firm Test Bed 

Is a Reasonable Substitute 

In 2019, Commission staff published 

guidance suggesting the types of 

information that self-regulatory 

organizations (‘‘SROs’’) may use to 

demonstrate that their fee filings comply 

with the standards of the Exchange Act 


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11See Staff Guidance on SRO Rule Filings 

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

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

12 Id. 

13See the Exchange’s Membership Directory 

available at https://www.miaxglobal.com/miax_

options_exchange_members.pdf. 

14See, e.g., Securities Exchange Act Release Nos. 

101096 (September 18, 2024), 89 FR 77913 

(September 24, 2024) (SR–ISE–2024–46); 98974 

(November 16, 2023), 88 FR 81468 (November 22, 

2023) (SR–NYSEARCA–2023–78); 87795 (December 

18, 2019), 84 FR 71043 (December 26, 2019) (SR– 

NYSEArca–2019–88); and 90409 (November 12, 

2020), 85 FR 73522 (November 18, 2020) (SR– 

NYSEArca–2020–95). 

15See the ‘‘Market Share’’ section of the 

Exchange’s website, available at https://

www.miaxglobal.com/ (last visited November 5, 

2024). 

16See Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

17The Exchange notes that other exchange 

families offer a similar dedicated connection to 

Continued 

(the ‘‘Staff Guidance’’).11 The Staff 

Guidance provides that in assessing the 

reasonableness of a fee, the Staff would 

consider whether the fee is constrained 

by significant competitive forces. To 

determine whether a proposed fee is 

constrained by significant competitive 

forces, the Staff Guidance further 

provides that the Staff would consider 

whether the evidence provided by an 

SRO in a Fee Filing proposal 

demonstrates (i) that there are 

reasonable substitutes for the product or 

service that is the subject of a proposed 

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

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

revenue and cost analysis provided by 

the SRO otherwise demonstrates that 

the proposed fee would not result in the 

SRO taking supra-competitive profits.12

The proposed fee is reasonable because 

there is a reasonable substitute for the 

service that is the subject of this 

proposed fee as set forth below. 

This filing includes the following 

evidence that demonstrates that there is 

a reasonable substitute to purchasing a 

dedicated cross connection to access the 

Exchange’s testing systems 

environment. That reasonable substitute 

is VPN access, which is provided for 

free and will continue to be free for all 

Members and non-Members. Members 

and non-Members may access the 

testing systems environment through 

either a VPN or a dedicated cross 

connection and will receive functionally 

the same testing environment and are 

able to perform all of the same 

functions. The testing systems 

environment, whether accessed via a 

dedicated cross connection or VPN, 

provides Members and non-Members 

the same scope of abilities to test their 

systems and software in the Exchange’s 

testing systems environment, which 

replicates the Exchange’s production 

trading environment. Like a dedicated 

cross connection, a VPN provides access 

to the testing systems environment of 

not only the Exchange, but also each of 

its affiliate options exchanges over the 

same single access point. Accessing the 

testing systems environment via a 

dedicated cross connection provides no 

advantage to Members and nonMembers compared to those market 

participants that elect to access the 

testing systems environment via a VPN 

for free. 

Each Member or non-Member is free 

to decide how to access the testing 

systems environment based on their 

own needs and trading architecture. 

Again, accessing the testing systems 

environment via a dedicated direct 

connection is entirely optional and no 

Member or non-Member is required by 

rule or regulation to make use of the 

testing systems environment via a 

dedicated direct connection. Accessing 

the testing systems environment via the 

proposed dedicated cross connection 

may not provide utility to all Members 

and non-Members based on their 

business models and needs, and such 

users may choose to access the testing 

systems environment for free through 

the VPN and perform the same testing 

functions. As such, the Exchange 

believes that the proposed fee for access 

to the testing systems environment is 

reasonable and Members and nonMembers have the choice, but are not 

obligated to access the testing systems 

environment via a dedicated cross 

connection. Otherwise, a user may 

choose to access the test environment 

via a VPN for free to test system 

functionality. For example, of the 

Exchange’s forty-six Members 13 and 

nine non-Members that provide 

connectivity to the Exchange, sixteen 

Members and non-Members currently 

use a VPN to access the Exchange’s 

testing systems environment instead of 

the other two currently available 

options, i.e., a dedicated cross 

connection or their existing 1Gb or 10Gb 

ULL connection to the production 

environment. Some Members and nonMembers also choose not to access the 

testing systems environment at all. 

Lastly, supporting a proposed nontransaction fee change by arguing the 

availability of reasonable substitutes is 

not novel. Commission Staff has 

published for immediate effectiveness 

filings regarding non-transaction fees by 

exchanges who argued that the fees 

were consistent with the Exchange Act 

because of reasonable substitutes were 

available as provided for in the 

Commission Staff Guidance.14

Fee Is Constrained by Competition and 

the Availability of Free VPN Access 

If the Exchange prices the fee for 

dedicated cross connection access to the 

testing systems environment too high, 

Members and non-Members may choose 

not to subscribe and contiue to perform 

the same testing functions via VPN 

internet access for no fee if they do not 

find the fee for accessing the testing 

systems environment via a dedicated 

cross connection to be of value. Again, 

the Exchange notes that accessing the 

testing systems environment via a 

dedicated cross connection would be 

completely voluntary and is simply an 

additional optional means to access the 

test environment. The Exchange also 

has Members and non-Members that do 

not utilize the testing systems 

environment at all. 

The Exchange operates in a highly 

competitive environment in which 18 

U.S. registered equity options exchanges 

compete for market share. Based on 

publicly available information for the 

month of October 2024, no single 

options exchange had more than 

approximately 12–13% of the equity 

options market share and the Exchange 

represented only approximately 6.17% 

of the market share of equity options for 

that month.15 The Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Particularly, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and 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.’’ 16 The proposed fee 

for optional access via a dedicated cross 

connection to the test environment is 

the result of the competitive 

environment of the U.S. options 

industry. 

Exchanges compete for order flow by 

providing testing opportunities and 

robust testing environments. Services 

like a testing environment provide 

Members and non-Members with the 

opportunity to test Exchange 

functionality prior to sending real order 

flow to be executed in the Exchange’s 

production environment. As mentioned 

above, numerous exchanges provide 

testing environments to market 

participants to test functionality and 

gain comfort with their exchange 

offering.17 This is intended to attract 


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their testing environment for their members and 

non-members. See, e.g., Nasdaq Options Test 

Facility (NTF) Abstract, Version 1.4.4 (March 2024), 

available at https://www.nasdaq.com/Nasdaq_Test_

Facility_NTF_Guide (last visited July 16, 2024) 

(‘‘. . . the Nasdaq Test Facility . . . where market 

participants can test their trading applications with 

the INET trading system. The NTF environment 

allows members to test sending and executing 

quotes and orders offered by our six options 

exchanges . . .’’); see also Securities Exchange Act 

Release No. 100442 (June 27, 2024), 89 FR 55296 

(July 3, 2024) (SR–CboeBZX–2024–058) (‘‘. . . the 

Exchange also offers corresponding ports which 

provide Members and non-Members access to the 

Exchange’s certification environment to test 

proprietary systems and applications . . . The 

certification environment facilitates testing using 

replicas of the Exchange’s production environment 

process configurations which provide for a robust 

and realistic testing experience . . .’’). 

18See, e.g., Nasdaq, Options 7: Pricing Schedule, 

Section 13 Testing Facilities, available at https://

listingcenter.nasdaq.com/rulebook/nasdaq/rules/ 

Nasdaq%20Options%207. Nasdaq’s affiliates, like 

Nasdaq PHLX LLC (‘‘PHLX’’), also charge the same 

fee. See e.g., PHLX Options 7: Pricing Schedule, 

Section 9. Other Member Fees, E. Testing Facilities, 

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

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

(assessing a fee of $1,000 per hand-off, per month 

for subscribers to the testing facility via either a 1Gb 

or 10Gb switch port and a one-time installation fee 

of $1,000 per hand-off). See also Securities 

Exchange Act Release No. 76259 (October 26, 2015), 

80 FR 66947 (October 30, 2015) (SR–NASDAQ– 

2015–117) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change to Options 

Testing Facility). Like the Exchange’s testing 

environment, a single connection to Nasdaq’s test 

environment provides access to the other test 

environments of its affiliate options markets, PHLX 

and Nasdaq BX, Inc. 

19See also Cboe BZX Options Fee Schedule, 

Options Logical Port Fees, Certification Logical 

Ports, available at https://www.cboe.com/us/ 

options/membership/fee_schedule/bzx/. See, e.g., 

Cboe EDGX Exchange, Inc. Options Fee Schedule, 

Options Logical Port Fees, Certification Logical 

Ports, available at https://www.cboe.com/us/ 

options/membership/fee_schedule/edgx/. 

20See also Cboe EDGX Exchange, Inc. Options 

Fee Schedule, Options Logical Port Fees, 

Certification Logical Ports, available at https://

www.cboe.com/us/options/membership/fee_

schedule/edgx/; Cboe Exchange, Inc. Fee Schedule, 

Logical Connectivity Fees, Certification Logical 

Ports, available at Cboe_FeeSchedule.pdf; and Cboe 

C2 Exchange, Inc. Options Fee Schedule, Options 

Logical Port Fees, Certification Logical Ports, 

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

membership/fee_schedule/c2/. 

21 15 U.S.C. 78f(b)(5). 

market share by offering a risk free way 

to gain comfort that their orders would 

be handled within the Exchange’s 

production environment as expected. 

Exchanges seek to further encourage 

market participants to utilize their 

testing environments by providing 

multiple methods to connect. Some are 

provided for free while others and 

require a fee. Providing multiple 

methods to connect to a test 

environment provides market 

participants a choice on how to engage 

with the testing environment and a 

choice regarding the access method that 

best meets their business and 

operational needs. 

If the Exchange proposed a fee that 

Members and non-Members viewed as 

excessively high, then the proposed fee 

would simply serve to reduce demand 

for access via a dedicated cross 

connection to the test environment, 

which as noted, is entirely optional as 

the Exchange will continue to provide 

free access to the test environment 

through VPN through the internet for 

site-to-site access. This could, in turn, 

reduce the attractiveness of the 

Exchange’s live trading production 

environment because Members and nonMembers may be unwilling to test 

functionality prior to entering live 

orders. Again, other options exchanges 

currently offer, or are able to introduce 

at their own cost, their own comparable 

testing environments with lower prices 

to better compete with the Exchange’s 

offering and several competing 

exchanges already provide a similar 

service. 

Selling different products and 

services, such as proposed herein, is a 

means by which exchanges compete to 

attract business. To the extent that the 

Exchange is successful in attracting 

market participants to purchase the 

dedicated cross connection to the test 

environment proposed herein, the 

Exchange may earn revenue and further 

enhance market participants’ 

interactions on the Exchange, which 

would increase value of its other 

products and services to all market 

participants. If the market deems the 

proposed fee to be too high, Members 

and non-Members can choose not to use 

or discontinue their use of dedicated 

cross connection to the test environment 

and perform the same testing functions 

via the VPN internet access for free. The 

Exchange, therefore, believes that the 

proposed fee for dedicated cross 

connection to the test environment 

reflects the competitive environment of 

U.S. options exchanges and would be 

properly assessed to Members and nonMembers that subscribe. 

The Proposed Fee Is Reasonable 

Because it Is Similar to or Lower Than 

Like Fees Charged by Other Exchanges 

The Exchange believes the proposed 

fees are reasonable as the proposed fees 

are similar to or lower than fees charged 

by competing exchanges for similar 

services. For example, The Nasdaq 

Stock Market, LLC assesses a fee of 

$1,000 per hand-off, per month for 

subscribers to the testing facility via 

either a 1Gb or 10Gb switch port plus 

a one-time installation fee of $1,000 per 

hand-off.18 The Exchange’s proposed fee 

is, therefore, lower because it does not 

charge a separate installation fee. Cboe 

BZX Exchange, Inc. (‘‘Cboe BZX’’) 

Options assesses a lower fee of $250 per 

month for each certification logical port, 

which only provides access to the Cboe 

BZX testing environment, and not to the 

testing environment of any of Cboe 

BZX’s affiliates.19 The fee to access the 

Cboe BZX testing environment and the 

testing environment of each of its three 

affiliated options exchange becomes 

incrementally higher with each Cboe 

BZX affiliate charging a $250 monthly 

fee to access each testing environment, 

totaling as much as $1,000.00 per 

month.20 Accordingly, the Exchange 

believes that comparable and 

competitive pricing are key factors in 

determining whether a proposed fee 

meets the requirements of the Act. 

The Proposed Fee Is Not Unfairly 

Discriminatory 

The Exchange also believes the 

proposed fee is equitable and not 

unfairly discriminatory as the fee would 

apply equally to all Members and nonMembers who choose to subscribe. It is 

a business and operational decision of 

each Member or non-Member that 

chooses to subscribe. The Exchange’s 

proposed fee would not differentiate 

between Members and non-Members or 

connectivity types and is set at a modest 

level that would allow any interested 

Member and non-Member to subscribe 

based on their business and operational 

needs. 

The Exchange also believes the 

proposal furthers the objectives of 

Section 6(b)(5) of the Act 21 in that it is 

designed to promote just and equitable 

principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general protect investors and the public 

interest and is not designed to permit 

unfair discrimination between 

customer, issuers, brokers and dealers. 

The Exchange does not believe that the 

proposed fee is unfairly discriminatory 

to subscribers to the test environment 

via a dedicated cross connection 

because, unlike the live trading 

environment where the capacity of 

connectivity to the Exchange may confer 

a competitive advantage to a market 

participant and therefore price 

differentiation is appropriate for the 

benefit conferred, there is no such 

benefit conferred in the testing systems 

environment. 

The Exchange does not believe that 

the proposed fee is unfairly 

discriminatory among subscribers to the 

test environment because all Members 

and non-Members that subscribe to the 

service will be assessed the same fee. 


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Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 102993 

22See supra note 18. 

23 15 U.S.C. 78s(b)(3)(A)(ii). 

24 17 CFR 240.19b–4(f)(2). 

Because the proposed fee does not 

discriminate between 1Gb and 10Gb 

cross connection options, Members and 

non-Members are able to subscribe to 

the test environment without regard to 

the cost of their capacity election. The 

Exchange believes that not 

discriminating on this basis will 

encourage participants to connect to the 

test environment in the same manner as 

they do to the live trading environment, 

and thereby help the test environment 

more closely mirror the live trading 

environment. Providing a more useful 

and accurate test environment will serve 

to improve live trading on the Exchange 

and the national market system by 

permitting Members and non-Members 

the ability to accurately test changes 

prior to implementing them in the live 

trading environment, thereby reducing 

the likelihood of a potentially disruptive 

system failure in the live trading 

environment, which has the potential to 

affect all market participants. 

The Proposed Fee Is Equitable 

The Exchange believes that the 

proposed fee is equitably allocated 

because all Members and non-Members 

that choose to connect to the test 

environment will be assessed a uniform 

fee for those services. The Exchange 

believes that offering subscribers the 

option to subscribe to either a 1Gb or 

10Gb dedicated cross connection for the 

same fee is an equitable allocation of 

fees because, unlike the live trading 

environment, there is no competitive 

advantage to possessing a higher 

capacity connection in the test 

environment. The test environment is 

designed to closely mirror the live 

trading environment for Members and 

non-Members, including matching the 

capacity of the live trading environment 

connection of each Member and nonMember. In the absence of any 

competitive advantage, charging a 

uniform fee for both a 1Gb or 10Gb 

dedicated cross connection is an 

equitable allocation of fees. The 

Exchange believes that charging a 

uniform fee rather than mirroring the 

fees for the live trading environment 

will encourage Members and nonMembers to subscribe to the test 

environment and further encourage 

those that subscribe to use the same 

hardware as is used by them for 

connectivity to the live trading 

environment. 

* * * * * 

Finally, and as noted above, the 

Exchange’s test environment provides a 

robust and realistic testing experience 

using a replica of the Exchange’s 

production environment process 

configurations. This environment 

enables market participants to test 

upcoming Exchange software and code 

releases, product enhancements, as well 

as test firm software prior to 

implementation in the production 

environment. Further, the test 

environment allows unlimited firmlevel testing of order types, order entry, 

order management, order throughput, 

acknowledgements, risk settings, mass 

cancelations, and purge requests. By 

providing firms the ability to test all of 

these features in the test environment 

prior to implementing them in the live 

trading environment, the Exchange 

believes this will reduce the likelihood 

of a potentially disruptive system failure 

in the live trading environment, which 

has the potential to affect all market 

participants. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange made connectivity access to 

the test environment available to keep 

pace with technological changes in the 

industry and evolving customer needs 

and demands, and believes the product 

will contribute to robust competition 

among national securities exchanges. As 

a result, the Exchange believes this 

proposed rule change permits fair 

competition among national securities 

exchanges. 

The Exchange believes the proposed 

fee would not cause any unnecessary or 

inappropriate burden on intermarket 

competition as other exchanges are free 

to introduce their own comparable 

testing environments for free or lower 

prices, which several competing 

exchanges already provide.22 The 

Exchange operates in a highly 

competitive environment, and its ability 

to price access to the test environment 

is constrained by the optional nature of 

accessing the test environment via a 

dedicated cross connect. Providing 

access to the test environment via 

dedicated cross connection is provided 

purely for convenience, in response to 

Member demand, and, again, would be 

entirely optional. The Exchange notes 

that use of accessing the test 

environment via a dedicated cross 

connection would be completely 

voluntary and is simply an additional 

optional means to access the test 

environment. Members who do not 

prefer the to access the test environment 

via a dedicated cross connection and 

pay the applicable fee will be able to 

continue to perform the same testing 

functions when accessing the test 

environment via the existing VPN 

internet access for free. The Exchange 

must consider this in its pricing 

discipline in order to attract subscribers. 

The Exchange believes that if it were to 

propose a fee that is excessively high, it 

would simply serve to reduce demand 

for the Exchange’s product, which as 

discussed, Members and non-Members 

are under no obligation to utilize. 

The Exchange does not believe the 

proposed rule change would cause any 

unnecessary or inappropriate burden on 

intramarket competition. Particularly, 

the proposed fee applies uniformly to 

any purchaser in that the Exchange does 

not differentiate between subscribers 

that wish to access the testing systems 

environment via a dedicated cross 

connect via either a 1Gb or 10Gb 

connection. The proposed fee is set at a 

modest level that would allow any 

interested market participant to 

purchase access to the test environment 

based on their business needs. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act,23 and Rule 

19b–4(f)(2) 24 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 


khammond on DSK9W7S144PROD with NOTICES
102994 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 

25 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3On October 31, 2024, SR–NASDAQ–2024–058 

was filed to amend ORF. On November 27, 2024, 

SR–NASDAQ–2024–058 was withdrawn and this 

rule change was filed. The current proposal amends 

the ORF Rate for Local Customer ‘‘C’’ Origin Code 

transactions executed on NOM, Local Firm ‘‘F’’ 

Origin Code transactions executed on NOM, and 

Away ORF Rate Firm ‘‘F’’ Origin Code multi-list 

transactions executed on non-NOM exchanges. 

4Today, ORF is collected from Customers, 

Professionals and broker-dealers that are not 

affiliated with a clearing member that clear in the 

‘‘C’’ range at OCC. See supra notes 18 and 19 for 

descriptions of Customers and Professionals. 

5The term ‘‘Options Participant’’ or ‘‘Participant’’ 

mean a firm, or organization that is registered with 

the Exchange pursuant to Options 2A of these Rules 

for purposes of participating in options trading on 

NOM as a ‘‘Nasdaq Options Order Entry Firm’’ or 

‘‘Nasdaq Options Market Maker’’. See Options 1, 

Section 1(a)(39). 

6Participants must record the appropriate 

account origin code on all orders at the time of 

entry of the order. The Exchange represents that it 

has surveillances in place to verify that Participants 

mark orders with the correct account origin code. 

7The Exchange uses reports from OCC when 

assessing and collecting the ORF. 

8CMTA or Clearing Member Trade Assignment is 

a form of ‘‘give-up’’ whereby the position will be 

assigned to a specific clearing firm at OCC. 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

MIAX–2024–45 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–MIAX–2024–45. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

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

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–MIAX–2024–45 and should be 

submitted on or before January 8, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–29923 Filed 12–17–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101892; File No. SR– 

NASDAQ–2024–078] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Lower the 

Options Regulatory Fee (ORF) and 

Adopt a New Approach to ORF in 2025 

December 12, 2024. 

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 November 

27, 2024, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘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 Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend The 

Nasdaq Options Market LLC (‘‘NOM’’) 

Pricing Schedule at Options 7, Section 

5, Options Regulatory Fee.3

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated certain amendments to 

be operative on November 1, 2024, and 

other amendments to be operative on 

January 1, 2025, as noted in the Exhibit 

5 and herein. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, 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 

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 

NOM proposes to amend its current 

ORF in several respects. In summary, 

first, NOM proposes to reduce its ORF 

from $0.0016 to $0.0014 per contract 

side from November 1, 2024, through 

December 31, 2024. Second, as of 

January 1, 2025, NOM proposes to 

amend its methodology of collection to: 

(1) exclude options transactions in 

proprietary products; and (2) assess ORF 

in all clearing ranges except market 

makers who clear as ‘‘M’’ at The 

Options Clearing Corporation (‘‘OCC’’). 

Additionally, NOM will assess a 

different rate for trades executed on 

NOM (‘‘Local ORF Rate’’) and trades 

executed on non-NOM exchanges 

(‘‘Away ORF Rate’’). Each change will 

be described below in greater detail. 

Background on Current ORF 

Today, NOM assesses its ORF for each 

Customer 4 option transaction that is 

either: (1) executed by a Participant 5 on 

NOM; or (2) cleared by a NOM 

Participant at OCC in the Customer 

range,6 even if the transaction was 

executed by a non-member of NOM, 

regardless of the exchange on which the 

transaction occurs.7 If the OCC clearing 

member is a NOM Participant, ORF is 

assessed and collected on all ultimately 

cleared Customer contracts (after 

adjustment for CMTA 8); and (2) if the 

OCC clearing member is not a NOM 

Participant, ORF is collected only on the 

cleared Customer contracts executed at 


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