104254 Federal Register / Vol. 89, No. 245 / Friday, December 20, 2024 / Notices 

5 Id. 

6 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 100539 

(July 15, 2024), 89 FR 58848 (July 19, 2024) (File 

No. 10–240) (the ‘‘Approval Order’’). 

4See MIAX Sapphire News Alert, dated August 

13, 2024, available at https://www.miaxglobal.com/ 

alert/2024/08/13/miami-international-holdingsannounces-successful-launch-miaxsapphire?nav=all. 

5The term ‘‘Member’’ means an individual or 

organization that is registered with the Exchange 

pursuant to Chapter II of the Exchange’s Rules for 

purposes of trading on the Exchange as an 

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

Members are deemed ‘‘members’’ under the 

Exchange Act. See Exchange Rule 100. 

6The Exchange filed a separate rule filing to 

establish fees for Purge Ports. See SR–SAPPHIRE– 

2024–15. ‘‘Purge Ports’’ provide Market Makers 

with the ability to send quote purge messages to the 

MIAX Sapphire System. Purge Ports are not capable 

of sending or receiving any other type of messages 

or information. See the Definitions section of the 

Fee Schedule. Fees for all other types of ports are 

proposed in this filing. 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission shall either 

approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether the proposed rule change 

should be disapproved. The 45th day 

after publication of the notice for this 

proposed rule change is December 21, 

2024. The Commission is extending this 

45-day time period. 

The Commission finds that it is 

appropriate to designate a longer period 

within which to take action on the 

proposed rule change so that it has 

sufficient time to consider the proposed 

rule change and the issues raised 

therein. Accordingly, pursuant to 

Section 19(b)(2) of the Act,5 the 

Commission designates February 4, 

2025, as the date by which the 

Commission shall either approve or 

disapprove, or institute proceedings to 

determine whether to disapprove, the 

proposed rule change (File No. SR– 

Phlx–2024–54). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–30348 Filed 12–19–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101922; File No. SR– 

SAPPHIRE–2024–41] 

Self-Regulatory Organizations; MIAX 

Sapphire, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change by MIAX Sapphire, LLC to 

Adopt Connectivity and Certain Port 

Fees for Members and Non-Members 

December 16, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

6, 2024, MIAX Sapphire, LLC (‘‘MIAX 

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

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I, II, and III below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Sapphire Options 

Exchange Fee Schedule (the ‘‘Fee 

Schedule’’) to adopt connectivity and 

port fees. 

The text of the proposed rule change 

is available on the Exchange’s website at 

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

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

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On July 15, 2024, the U.S. Securities 

and Exchange Commission 

(‘‘Commission’’) approved the 

Exchange’s Form 1 application to 

register as a national securities exchange 

under Section 6 of the Exchange Act.3

The Exchange commenced electronic 

operations on August 12, 2024.4 The 

Exchange proposes to establish the 

following sections of the Fee Schedule, 

including proposed fee structures and 

amounts (the majority of which the 

Exchange proposes to waive for a 

specified time, as discussed further 

below): (1) connectivity fees for 

Members 5 and non-Members; and (2) 

certain port fees for Members and nonMembers.6 The Exchange initially filed 

this proposal on August 9, 2024 (SR– 

SAPPHIRE–2024–21). The Exchange 

withdrew SR–SAPPHIRE–2024–21 on 

August 14, 2024 and submitted SR– 

SAPPHIRE–2024–22. On October 10, 

2024, the Exchange withdrew SR– 

SAPPHIRE–2024–22 and submitted SR– 

SAPPHIRE–2024–32. On December 6, 

2024, the Exchange withdrew SR– 

SAPPHIRE–2024–32 and submitted this 

proposal. 

Connectivity Fees 

The Exchange proposes to establish 

Section 5), System Connectivity Fees, 

which will describe network 

connectivity fees. The Exchange 

proposes to offer to both Members and 

non-Members the choice of a 1 Gigabit 

(‘‘Gb’’) fiber connection or the 10Gb 

ultra-low latency (‘‘ULL’’) fiber 

connection to the Exchange’s primary 

and secondary facilities, as well as its 

disaster recovery facility. The 1Gb and 

10Gb ULL fees will be charged to both 

Members and non-Members for 

connectivity to the Exchange’s primary/ 

secondary facility and to its disaster 

recovery facility. 

The Exchange proposes to establish 

monthly fees of $1,400 per 1Gb 

connection and $13,500 per 10Gb ULL 

connection that will be assessed to 

Members and non-Members for 

connecting to the primary/secondary 

facility. The Exchange proposes to 

establish monthly fees of $550 per 1Gb 

connection and $2,750 per 10Gb ULL 

connection that will be assessed to 

Members and non-Members for 

connecting to the disaster recovery 

facility. 

Monthly network connectivity fees for 

Members and non-Members for 

connectivity with the primary/ 

secondary facility will be assessed in 

any month the Member or non-Member 

is credentialed to use any of the MIAX 

Sapphire Application Programming 

Interfaces (‘‘APIs’’) or market data feeds 

in the production environment. Further, 

the Exchange proposes to pro-rate the 

monthly fees when a Member or nonMember makes a change to the 

connectivity (by adding or deleting 

connections) with such pro-rated fees 

based on the number of trading days 


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7The term ‘‘MENI’’ means the MIAX Express 

Network Interconnect, which is a network 

infrastructure which provides Members and nonMembers network connectivity to the MIAX 

Sapphire trading platform, market data systems, test 

systems, and disaster recovery facilities. When 

utilizing a shared 1Gb cross-connect, the MENI can 

also be configured to offer network connectivity to 

the trading platforms, market data systems, test 

systems, and disaster recovery facilities of the 

Exchange’s affiliates, MIAX, MIAX Pearl and MIAX 

Emerald. When utilizing a Dedicated cross-connect, 

the MENI can only be configured to offer network 

connectivity to the trading platforms, market data 

systems, and test systems of MIAX Sapphire. See 

the Definitions section of the Fee Schedule. 

8The term ‘‘MIAX’’ means Miami International 

Securities Exchange, LLC. See Exchange Rule 100. 

The term ‘‘MIAX Pearl’’ means MIAX PEARL, LLC. 

All references to ‘‘MIAX Pearl’’ in this filing are to 

the options trading facility of MIAX PEARL, LLC. 

References to ‘‘MIAX Pearl Equities’’ are to the 

equities trading facility of MIAX PEARL, LLC. See 

MIAX Pearl Rule 1901. The term ‘‘MIAX Emerald’’ 

means MIAX Emerald, LLC. See Exchange Rule 100. 

MIAX, MIAX Pearl and MIAX Emerald are 

collectively referred to herein as the ‘‘affiliated 

markets.’’ 

9The network switches are the first layer of 

access to the trading platform that firms connect to 

before being able to access the Exchange’s matching 

engines, each of which pertain to a certain list of 

underlying symbols. The Exchange notes that it is 

possible to reach each matching engine from a 

single switch. 

10See Fee Change Alert, MIAX Sapphire Options 

Exchange—Updated Summary of Proposed NonTransaction Fees to Clarify Application of 

Production Connectivity Waiver Period, dated July 

26, 2024, available at https://www.miaxglobal.com/ 

alert/2024/07/26/miax-sapphire-options-exchangeupdated-summary-proposed-non-transaction. 

11See MIAX Fee Schedule, Sections 5)a)–b); 

MIAX Pearl Fee Schedule, Sections 5)a)–b); and 

MIAX Emerald Fee Schedule, Sections 5)a)–b). 

12The Exchange notes that this filing includes 

proposed fees for FIX Ports, Full Service MEO 

Ports, Limited Service MEO Ports, Clearing Trade 

Drop Ports, and FIX Drop Copy Ports. The Exchange 

separately filed to establish fees for Purge Ports. See 

SR–SAPPHIRE–2024–26. The Exhibit 5 reflects the 

separate filing to establish fees for Purge Ports. 

that the Member or non-Member has 

been credentialed to utilize any of the 

MIAX Sapphire APIs or market data 

feeds in the production environment 

through such connection, divided by the 

total number of trading days in such 

month multiplied by the applicable 

monthly rate. Monthly network 

connectivity fees for Members and nonMembers for connectivity to the disaster 

recovery facility will be assessed in each 

month during which the Member or 

non-Member has established 

connectivity to the disaster recovery 

facility. 

The Exchange proposes that Members 

and non-Members utilizing the MENI 7

to connect to the trading platforms, 

market data systems, and disaster 

recovery facilities of the Exchange or its 

affiliated options markets (MIAX, MIAX 

Pearl, and MIAX Emerald) 8 via a single, 

shared 1Gb connection will only be 

assessed one monthly network 

connectivity fee per connection, 

regardless of the trading platforms, 

market data systems, and disaster 

recovery facilities accessed via such 

connection. 

Waiver Period for Connectivity Fees. 

The Exchange proposes to waive the 

monthly Member and non-Member 

network connectivity fees for the 1Gb 

connections to the primary/secondary 

facility and disaster recovery facility, 

and the 10Gb ULL connections to the 

disaster recovery facility for the partial 

month in which the Exchange launches 

operations, plus an additional three full 

calendar months. The proposed 

monthly Member and non-Member 

network connectivity fees for the 1Gb 

connections to the primary/secondary 

facility and disaster recovery facility, 

and 10Gb ULL connections to the 

disaster recovery facility will be 

discounted by 50% for the three full 

calendar months thereafter. 

The Exchange proposes to waive the 

monthly Member and non-Member 

network connectivity fees for the first 

two 10Gb ULL connections on each 

switch 9 to the primary/secondary 

facility for the partial month in which 

the Exchange launches operations, plus 

an additional three full calendar 

months. The Exchange proposes that the 

monthly Member and non-Member 

network connectivity fees for the first 

two 10Gb ULL connections on each 

switch to the primary/secondary facility 

will be discounted by 50% for the three 

full calendar months thereafter. Any 

subsequent 10Gb ULL connections on 

each switch will be charged the full 

monthly rate of $13,500 per 10Gb ULL 

connection. 

For clarity, the Exchange provides the 

below examples regarding connectivity 

fees, utilizing the launch date of August 

12, 2024: 

• Members and non-Members that 

subscribe to the 1Gb connection to the 

primary/secondary facility and/or 

disaster recovery facility, and/or 

subscribe to the 10Gb ULL connection 

to the disaster recovery facility, will not 

be charged the proposed rates (i.e., 

$1,400 for 1Gb connections to the 

primary/secondary facility, $550 for 1Gb 

connections to the disaster recovery 

facility, or $2,750 for 10Gb ULL 

connections to the disaster recovery 

facility) for the remaining days in 

August, as well as for the entire period 

covering the months of September 2024 

through November 2024. Thereafter, 

Members and non-Members will receive 

a 50% discount for each 1Gb connection 

to the primary/secondary facility and 

disaster recovery facility, and for each 

10Gb ULL connection to the disaster 

recovery facility for entire period 

covering December 2024 through 

February 2025. 

• Members and non-Members that 

subscribe to the 10Gb ULL connection 

to the primary/secondary facility will 

not be charged the proposed rate 

($13,500) for the first two 10Gb ULL 

connections on each switch to the 

primary/secondary facility for the 

remaining days in August, as well as the 

entire period covering the months of 

September through November 2024. 

Thereafter, Members and non-Members 

will receive a 50% discount for the first 

two 10Gb ULL connections on each 

switch to the primary/secondary facility 

for entire period covering December 

2024 through February 2025. For each 

10Gb ULL connection on each switch 

greater than two (i.e., three or more), 

Members and non-Members will be 

assessed the entire amount of the 

proposed rate beginning upon the 

launch of the Exchange. 

The Exchange previously 

communicated to market participants 

that the Exchange intends to waive the 

monthly Member and non-Member 

network connectivity fees in the manner 

described above.10 Even though the 

Exchange proposes to waive the 

Member and non-Member network 

connectivity fees for the periods of time 

described above, the Exchange believes 

that it is appropriate to provide market 

participants with the overall structure of 

the fees by outlining the structure and 

amounts in the Fee Schedule, so that 

there is general awareness that the 

Exchange intends to assess such fees in 

the future. The Exchange notes that its 

affiliated markets, MIAX, MIAX Pearl, 

and MIAX Emerald, provide for the 

same structure and amounts, absent the 

waiver and discount periods described 

above, for connectivity fees assessed to 

their Members and non-Members.11

Port Fees 

The Exchange proposes to establish 

Section 5)d), Port Fees, which will 

provide the fee structure and amounts 

for the different types of ports offered by 

the Exchange, which are described 

below.12 MIAX Sapphire has primary 

and secondary data centers and a 

disaster recovery center. Each port 

provides access to all Exchange data 

centers for a single fee. The Exchange 

notes that, unless otherwise specifically 

set forth in the Fee Schedule, the port 

fees include the information 

communicated through the port. That is, 

unless otherwise specifically set forth in 

the Fee Schedule, there is no additional 

charge for the information that is 

communicated through the port apart 


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13The term ‘‘Initial Waiver Period’’ means, for 

each applicable fee, the period of time from the 

initial effective date of the MIAX Sapphire Fee 

Schedule plus an additional six (6) full calendar 

months after the completion of the partial month of 

the Exchange launch. See the Definitions Section of 

the Fee Schedule. 

14The term ‘‘FIX Interface’’ means the Financial 

Information Exchange interface used for submitting 

certain order types (as set forth in Rule 516) to the 

MIAX Sapphire System. See Exchange Rule 100. 

The term ‘‘FIX Port’’ means a FIX port that allows 

Members to send orders and other messages using 

the FIX protocol. See the Definitions section of the 

Fee Schedule. 

15The term ‘‘MEO Interface’’ or ‘‘MEO’’ means a 

binary order interface for certain order types as set 

forth in Rule 516 into the MIAX Sapphire System. 

See Exchange Rule 100 and the Definitions section 

of the Fee Schedule. 

16The term ‘‘Full Service MEO Port’’ means an 

MEO port that supports all MEO input message 

types and binary bulk order entry. See the 

Definitions section of the Fee Schedule. 

17The term ‘‘Market Maker’’ or ‘‘MM’’ means a 

Member registered with the Exchange for the 

purpose of making markets in options contracts 

traded on the Exchange and that is vested with the 

rights and responsibilities specified in Chapter VI 

of the Exchange’s Rules. See Exchange Rule 100. 

18See MIAX Fee Schedule, Section 5)d)ii), note 

‘‘*’’; MIAX Pearl Fee Schedule, Section 5)d), page 

20, note ‘‘**’’; and MIAX Emerald Fee Schedule, 

Section 5)d)ii), note D. 

19See, generally, Chapter VI of the Exchange’s 

Rules. 

20A ‘‘Matching Engine’’ is a part of the MIAX 

Sapphire electronic system that processes options 

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

Some Matching Engines will process option classes 

from what the user is assessed for each 

port. 

Waiver Period. The Exchange 

proposes to waive all port fees during 

the Initial Waiver Period.13 Even though 

the Exchange proposes to fully waive all 

port fees during the Initial Waiver 

Period upon launching operations, the 

Exchange believes that is appropriate to 

provide market participants with the 

overall structure of the fees by outlining 

the structure and amounts in the Fee 

Schedule, so that there is general 

awareness that the Exchange intends to 

assess such fees upon the expiration of 

the defined period of the Initial Waiver 

Period. 

FIX Port Fees 14

The Exchange proposes to establish 

Section 5)d)i), FIX Port Fees, pursuant 

to which the Exchange will assess FIX 

Port fees to Members in each month the 

Member is credentialed to use a FIX 

Port in the production environment and 

based upon the number of credentialed 

FIX Ports. In particular, the Exchange 

proposes to assess Members the 

following monthly FIX Port fees: (i) 

$275 for the 1st FIX Port; (ii) $175 per 

port for the 2nd through 5th FIX Ports; 

and (iii) $75 per port for the 6th FIX 

Port and each additional FIX Port. FIX 

Port fees will be waived during the 

Initial Waiver Period. 

MEO Port Fees 15

The Exchange proposes to establish 

Section 5)d)ii), MEO Port Fees, pursuant 

to which the Exchange will assess MEO 

Port fees based upon the different types 

of MEO Ports offered by the Exchange. 

MIAX Sapphire offers different types of 

MEO Ports depending on the services 

required by Members. 

The Exchange proposes to assess 

monthly Full Service MEO Port 16 fees 

to Market Makers 17 based upon the 

number of classes or class volume 

accessed by the Market Maker. MIAX 

Sapphire will assess monthly Full 

Service MEO Port fees to Market Makers 

in each month the Marker Maker has 

been credentialed to use the Full 

Service MEO Port in the production 

environment and has registered to quote 

in at least one class. 

Specifically, the Exchange proposes to 

establish the following monthly Full 

Service MEO Port fees: (i) $2,500 for 

Market Maker registrations in up to 10 

option classes or up to 20% of option 

classes by volume; (ii) $3,750 for Market 

Maker registrations in up to 40 option 

classes or up to 35% of option classes 

by volume; (iii) $5,000 for Market Maker 

registrations in up to 100 option classes 

or up to 50% of option classes by 

volume; and (iv) $6,000 for Market 

Maker registrations in over 100 option 

classes or over 50% of option classes by 

volume up to all option classes listed on 

MIAX Sapphire. 

The Exchange also proposes to adopt 

footnote ‘‘b.’’ for its Full Service MEO 

Port fees that will apply to the Market 

Makers who fall within the following 

Full Service MEO Port fee levels, which 

represent the 3rd and 4th levels of the 

fee table: Market Makers who have (i) 

registrations in up to 100 option classes 

or up to 50% of option classes by 

volume, and (ii) registrations in over 

100 option classes or over 50% of 

option classes by volume up to all 

option classes listed on MIAX Sapphire. 

The Exchange proposes that for these 

monthly Full Service MEO Port tier 

levels, if the Market Maker’s total 

monthly executed volume during the 

relevant month is less than 0.015% of 

the total monthly executed volume 

reported by OCC in the Market Maker 

account type for MIAX Sapphire–listed 

option classes for that month, then the 

fee will be $4,000 instead of the fee 

otherwise applicable to such level (i.e., 

$5,000 or $6,000). 

The purpose of this proposed lower 

monthly Full Service MEO Port fee is to 

provide a lower fixed cost to those 

Market Makers who quote the entire 

Exchange market (or substantial amount 

of the Exchange market), as objectively 

measured by either number of classes 

assigned or national average daily 

volume (‘‘ADV’’), but who do not 

otherwise execute a significant amount 

of volume on the Exchange. The 

Exchange believes that, by offering 

lower fixed costs to Market Makers that 

execute less volume, the Exchange will 

retain and attract smaller-scale Market 

Makers, which are an integral 

component of the option industry 

marketplace, but have been decreasing 

in number in recent years, due to 

industry consolidation and lower 

market maker profitability. Since these 

smaller-scale Market Makers utilize less 

Exchange capacity due to lower overall 

volume executed, the Exchange believes 

it is reasonable and appropriate to offer 

such Market Makers a lower fixed cost. 

The Exchange notes that its affiliated 

markets, MIAX, MIAX Pearl, and MIAX 

Emerald, offer a similar reduced fee for 

their full service MEO/MEI ports for 

smaller-scale Market Makers.18

Accordingly, this concept is not novel. 

For the calculation of the monthly 

Full Service MEO Port fees, the 

applicable fee rate is the lesser of either 

the per class basis or percentage of total 

national ADV measurement. The 

amount of the monthly Full Service 

MEO Port fee will be based upon the 

number of classes in which the Market 

Maker was registered to quote on any 

given day within the calendar month, or 

upon the class volume percentages set 

forth in the table in Section 5)d)ii) of the 

Fee Schedule. A Market Maker is 

determined to be registered in a class if 

that Market Maker has been registered 

in one or more series in that class.19 The 

Exchange will assess MIAX Sapphire 

Market Makers the monthly Full Service 

MEO Port fee based on the greatest 

number of classes listed on MIAX 

Sapphire that the MIAX Sapphire 

Market Maker registered to quote in on 

any given day within a calendar month. 

The class volume percentage is based on 

the total national average daily volume 

in classes listed on MIAX Sapphire in 

the prior calendar quarter. Newly listed 

option classes are excluded from the 

calculation of the monthly Full Service 

MEO Port fee until the calendar quarter 

following their listing, at which time the 

newly listed option classes will be 

included in both the per class count and 

the percentage of total national average 

daily volume. 

MEO Port users will be allocated two 

(2) Full Service MEO Ports and four (4) 

Limited Service MEO Ports per 

Matching Engine 20 to which they 


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with multiple root symbols, and other Matching 

Engines may be dedicated to one single option root 

symbol (for example, options on SPY may be 

processed by one single Matching Engine that is 

dedicated only to SPY). A particular root symbol 

may only be assigned to a single designated 

Matching Engine. A particular root symbol may not 

be assigned to multiple Matching Engines. See the 

Definitions section of the Fee Schedule. 

21A ‘‘CTD Port’’ or ‘‘Clearing Trade Drop Port’’ 

provides an Exchange Member with a real-time 

clearing trade updates. The updates include the 

Member’s clearing trade messages on a low latency, 

real-time basis. The trade messages are routed to a 

Member’s connection containing certain 

information. The information includes, among other 

things, the following: (i) trade date and time; (ii) 

symbol information; (iii) trade price/size 

information; (iv) Member type (for example, and 

without limitation, Market Maker, Electronic 

Exchange Member, Broker-Dealer); and (v) 

Exchange MPID for each side of the transaction, 

including Clearing Member MPID. See the 

Definitions section of the Fee Schedule. The term 

‘‘Electronic Exchange Member’’ or ‘‘EEM’’ means 

the holder of a Trading Permit who is a Member 

representing as agent Public Customer Orders or 

Non-Customer Orders on the Exchange and those 

non-Market Maker Members conducting proprietary 

trading. Electronic Exchange Members are deemed 

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

Rule 100. 

22See MIAX Emerald Fee Schedule, Section 

5)d)iii). 

23The term ‘‘FXD’’ or ‘‘FIX Drop Copy Port’’ 

means a messaging interface that provides a copy 

of real-time trade execution, trade correction and 

trade cancellation information to FIX Drop Copy 

Port users who subscribe to the service. FXD Port 

users are those users who are designated by an EEM 

to receive the information and the information is 

restricted for use by the EEM only. See the 

Definitions section of the Fee Schedule. 

24See MIAX Emerald Fee Schedule, Section 

5)d)iv). 

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

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

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

28 15 U.S.C. 78s(b)(1). 

29 17 CFR 240.19b–4. 

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

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

32 15 U.S.C. 78f(b)(5). 

33 15 U.S.C. 78f(b)(8). 

34See supra note 31. 

connect. MEO Port fees include MEO 

Ports at the primary, secondary and 

disaster recovery data centers. Market 

Makers may request additional Limited 

Service MEO Ports for which MIAX 

Sapphire proposes to assess Market 

Makers $250 per month per additional 

Limited Service MEO Port for each 

Matching Engine in excess of the four 

(4) Limited Service MEO Ports 

described above. 

Full Service MEO Port fees and 

Limited Service MEO Port fees will be 

waived during the Initial Waiver Period. 

Clearing Trade Drop Port Fees 21

The Exchange proposes to establish 

Section 5)d)iv), Clearing Trade Drop 

Port Fees. The Exchange proposes to 

assess a CTD Port fee of $450 per month. 

This fixed fee structure and amount is 

the same as the CTD Port fee in place 

at the Exchange’s affiliate, MIAX 

Emerald.22 CTD Port fees will be waived 

during the Initial Waiver Period. 

FIX Drop Copy Port Fees 23

The Exchange proposes to establish 

Section 5)d)v), Fix Drop Copy Port Fees. 

The Exchange proposes to assess an 

FXD Port fee of $250 per month. This 

fixed fee structure is the same as the 

FXD Port fee structure in place at the 

Exchange’s affiliate, MIAX Emerald, and 

is half the price of the FXD Port fee for 

MIAX Emerald.24 FXD Port fees will be 

waived during the Initial Waiver Period. 

* * * * * 

As described more fully below, the 

Exchange provides a cost analysis to 

supports its proposed connectivity and 

port fees that includes, among other 

things, descriptions of how the 

Exchange allocated costs among it and 

its affiliated markets (MIAX, MIAX 

Pearl, and MIAX Emerald) to ensure no 

cost was allocated more than once, as 

well as additional detail supporting its 

cost allocation processes. The Exchange 

proposes connectivity and port fees that 

are intended to cover the Exchange’s 

cost of providing connectivity and ports, 

with a reasonable mark-up over those 

costs. 

2. Statutory Basis 

The Exchange believes that the 

proposed fees are consistent with 

Section 6(b) of the Act 25 in general, and 

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

of the Act 26 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among Members and other persons 

using any facility or system which the 

Exchange operates or controls. The 

Exchange also believes the proposed 

fees further the objectives of Section 

6(b)(5) of the Act 27 in that they are 

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 are not designed to permit 

unfair discrimination between 

customers, issuers, brokers and dealers. 

Cost Analysis 

In general, the Exchange believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee increase meets the 

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 and port services, the 

Exchange is especially diligent in 

assessing those fees in a transparent way 

against its own aggregate costs of 

providing the related service, and in 

carefully and transparently assessing the 

impact on Members—both generally and 

in relation to other Members, 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,28 and Rule 19b-4 

thereunder,29 with respect to the types 

of information exchanges should 

provide when filing fee changes, and 

Section 6(b) of the Act,30 which 

requires, among other things, that 

exchange fees be reasonable and 

equitably allocated,31 not designed to 

permit unfair discrimination,32 and that 

they not impose a burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.33 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.34

As detailed below, the Exchange 

recently calculated its aggregate annual 

costs (and approximations for monthly 

costs) for providing 1Gb and 10Gb ULL 

connectivity, Full Service MEO Ports, 

Limited Service MEO Ports, FIX Ports, 

CTD Ports, and FXD Ports. For physical 

1Gb and 10Gb ULL connectivity 

combined, the Exchange calculated its 

aggregate annual cost to equal 

$6,620,300 (or approximately $551,692 

per month, when rounded to the nearest 

dollar when dividing the combined 

annual cost by 12 months). For the 

various port services, the Exchange 

calculated the following annual costs: 

$605,907 for Full Service MEO Ports (or 

approximately $50,491 per month, 

when rounded to the nearest dollar 

when dividing the combined annual 

cost by 12 months); $600,608 for 

Limited Service MEO Ports (or 

approximately $50,050 per month, 

when rounded to the nearest dollar 

when dividing the combined annual 

cost by 12 months); $158,148 for FIX 

Ports (or approximately $13,178 per 

month, when rounded to the nearest 


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35Types 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, and thus, may access ports on behalf of 

one or more Members. Extranets offer physical 

connectivity services to Members and nonMembers. 

36See Securities Exchange Act Release Nos. 

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

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

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

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

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

updates it Cost Analysis as strategic initiatives 

change, costs increase or decrease, and market 

participant needs and trading activity (once live 

trading begins) changes. The Exchange’s most 

recent Cost Analysis was conducted ahead of this 

filing. 

37For example, MIAX Sapphire maintains 8 

matching engines, MIAX Emerald maintains 12 

matching engines, MIAX Pearl Options maintains 

12 matching engines, MIAX Pearl Equities 

maintains 24 matching engines, and MIAX 

maintains 24 matching engines. 38Additionally, while MIAX Sapphire received 

approval as a national securities exchange on July 

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

of MIAX Sapphire were not included in the costs 

used for the 2024 electronic exchange projections. 

dollar when dividing the combined 

annual cost by 12 months); $109,908 for 

CTD Ports (or approximately $9,158 per 

month, when rounded to the nearest 

dollar when dividing the combined 

annual cost by 12 months); and $36,637 

for FXD Ports (or approximately $3,054 

per month, when rounded to the nearest 

dollar when dividing the combined 

annual cost by 12 months). In order to 

cover the aggregate costs of providing 

connectivity and ports to its users (both 

Members and non-Members 35) going 

forward and to make a modest profit for 

connectivity services, as described 

below, the Exchange proposes to modify 

its Fee Schedule to establish the 

connectivity and port fees described 

above, subject to certain fee waiver 

periods. The Exchange does not 

anticipate that it will make an overall 

profit on the various port services 

following the expiration of the Initial 

Waiver Period, on an annual basis, 

based on projected subscriber data. 

The Exchange’s affiliates previously 

completed a study of their aggregate 

costs to provide connectivity and port 

services and produce market data, 

defined above as its Cost Analysis.36

Personnel began to plan for and develop 

the Exchange beginning in early 2023, 

and costs included in this Cost Analysis 

are related to the development and 

buildout of the Exchange since that 

time. During the Exchange’s 

development and buildout that occurred 

throughout 2023 and continues to today, 

the Exchange routinely studied its 

aggregate costs to provide connectivity 

and port services, which were used to 

determine the proposed pricing for the 

provisions of connectivity and port 

services that are part of the Exchange’s 

Cost Analysis. The Cost Analysis 

required a detailed analysis of the 

Exchange’s aggregate baseline costs, 

including a determination and 

allocation of costs for core services 

provided by the Exchange—transaction 

execution, market data, membership 

services, physical connectivity, and port 

access (which provide order entry, 

cancellation and modification 

functionality, risk functionality, the 

ability to receive drop copies, and other 

functionality). The Exchange separately 

divided its costs between those costs 

necessary to deliver each of these core 

services, including infrastructure, 

software, human resources (i.e., 

personnel), and certain general and 

administrative expenses (‘‘cost 

drivers’’). 

As an initial step, the Exchange 

determined the total cost for the 

Exchange and the affiliated markets for 

each cost driver as part of its 2024 

budget review process. The 2024 budget 

review is a company-wide process that 

occurs over the course of many months, 

includes meetings among senior 

management, department heads, and the 

Finance Team. Each department head is 

required to send a ‘‘bottom up’’ budget 

to the Finance Team allocating costs at 

the profit and loss account and vendor 

levels for the Exchange and its affiliated 

markets based on a number of factors, 

including server counts, additional 

hardware and software utilization, 

current or anticipated functional or nonfunctional development projects, 

capacity needs, end-of-life or end-ofservice intervals, number of members, 

market model (e.g., price time or prorata, simple only or simple and complex 

markets, auction functionality, etc.), 

which may impact message traffic, 

individual system architectures that 

impact platform size,37 storage needs, 

dedicated infrastructure versus shared 

infrastructure allocated per platform 

based on the resources required to 

support each platform, number of 

available connections, and employees 

allocated time. For the 2024 budget 

process for MIAX Sapphire, only costs 

and anticipated revenues associated 

with the electronic exchange were 

considered. While MIAX Sapphire plans 

on opening its trading floor in 2025 

costs and anticipated revenues from the 

trading floor were not included as part 

of any analysis for MIAX Sapphire for 

2024.38 All of these factors result in 

different allocation percentages among 

the Exchange and its affiliated markets, 

i.e., the different percentages of the 

overall cost driver allocated to the 

Exchange and its affiliated markets will 

cause the dollar amount of the overall 

cost allocated among the Exchange and 

its affiliated markets to also differ. 

Because the Exchange’s parent company 

currently owns and operates four 

separate and distinct marketplaces, the 

Exchange must determine the costs 

associated with each actual market—as 

opposed to the Exchange’s parent 

company simply concluding that all 

costs drivers are the same at each 

individual marketplace and dividing 

total cost by five (5) (evenly for each 

marketplace). Rather, the Exchange’s 

parent company determines an accurate 

cost for each marketplace, which results 

in different allocations and amounts 

across exchanges for the same cost 

drivers, due to the unique factors of 

each marketplace as described above. 

This allocation methodology also 

ensures that no cost would be allocated 

twice or double-counted between the 

Exchange and its affiliated markets. The 

Finance Team then consolidates the 

budget and sends it to senior 

management, including the Chief 

Financial Officer and Chief Executive 

Officer, for review and approval. Next, 

the budget is presented to the Board of 

Directors and the Finance and Audit 

Committees for each exchange for their 

approval. The above steps encompass 

the first step of the cost allocation 

process. 

The next step involves determining 

what portion of the cost allocated to the 

Exchange pursuant to the above 

methodology is to be allocated to each 

core service, e.g., connectivity and 

ports, market data, and transaction 

services. The Exchange and its affiliated 

markets adopted an allocation 

methodology with thoughtful and 

consistently applied principles to guide 

how much of a particular cost amount 

allocated to the Exchange should be 

allocated within the Exchange to each 

core service. This is the final step in the 

cost allocation process and is applied to 

each of the cost drivers set forth below. 

For instance, fixed costs that are not 

driven by client activity (e.g., message 

rates), such as data center costs, were 

allocated more heavily to the provision 

of 10Gb ULL physical connectivity 

(57.7% of total expense amount 

allocated to 10Gb ULL connectivity), 

with smaller allocations to Full Service 

MEO Ports (1.6%) and Limited Service 

MEO Ports (1.6%), and the remainder to 

the provision of other connectivity, 

other ports, transaction execution, 

membership services and market data 

services (39.1%). This next level of the 

allocation methodology at the 

individual exchange level also took into 


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account factors similar to those set forth 

under the first step of the allocation 

methodology process described above, 

to determine the appropriate allocation 

to connectivity or market data versus 

allocations for other services. This 

allocation methodology was developed 

through an assessment of costs with 

senior management intimately familiar 

with each area of the Exchange’s 

operations. After adopting this 

allocation methodology, the Exchange 

then applied an allocation of each cost 

driver to each core service, resulting in 

the cost allocations described below. 

Each of the below cost allocations is 

unique to the Exchange and represents 

a percentage of overall cost that was 

allocated to the Exchange pursuant to 

the initial allocation described above. 

By allocating segmented costs to each 

core service, the Exchange was able to 

estimate by core service the potential 

margin it might earn based on different 

fee models. The Exchange notes that as 

a non-listing venue it has five primary 

sources of revenue that it can 

potentially use to fund its operations: 

transaction fees, fees for connectivity 

and port services, membership fees, 

regulatory fees, and market data fees. 

Accordingly, the Exchange must cover 

its expenses from these five primary 

sources of revenue. The Exchange also 

notes that as a general matter each of 

these sources of revenue is based on 

services that are interdependent. For 

instance, the Exchange’s system for 

executing transactions is dependent on 

physical hardware and connectivity; 

only Members and parties that they 

sponsor to participate directly on the 

Exchange may submit orders to the 

Exchange; many Members (but not all) 

consume market data from the Exchange 

in order to trade on the Exchange; and 

the Exchange consumes market data 

from external sources in order to 

comply with regulatory obligations. 

Accordingly, given this 

interdependence, the allocation of costs 

to each service or revenue source 

required judgment of the Exchange and 

was weighted based on estimates of the 

Exchange that the Exchange believes are 

reasonable, as set forth below. While 

there is no standardized and generally 

accepted methodology for the allocation 

of an exchange’s costs, the Exchange’s 

methodology is the result of an 

extensive review and analysis and will 

be consistently applied going forward 

for any other potential fee proposals. In 

the absence of the Commission 

attempting to specify a methodology for 

the allocation of exchanges’ 

interdependent costs, the Exchange will 

continue to be left with its best efforts 

to attempt to conduct such an allocation 

in a thoughtful and reasonable manner. 

Through the Exchange’s extensive 

updated Cost Analysis, which was again 

recently further refined, 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 

and port services, and, if such expense 

did so relate, what portion (or 

percentage) of such expense actually 

supports the provision of connectivity 

and port services, and thus bears a 

relationship that is, ‘‘in nature and 

closeness,’’ directly related to network 

connectivity and port services. In turn, 

the Exchange allocated certain costs 

more to physical connectivity and 

others to ports, while certain costs were 

only allocated to such services at a very 

low percentage or not at all, using 

consistent allocation methodologies as 

described above. Based on this analysis, 

the Exchange estimates that the 

aggregate monthly costs for connectivity 

and ports are as follows: $532,820 for 

10Gb ULL connectivity; $18,872 for 1Gb 

connectivity; $50,491 for Full Service 

MEO Ports; $50,050 for Limited Service 

MEO Ports; $13,178 for FIX Ports; 

$9,158 for CTD Ports; and $3,054 for 

FXD Ports (all calculations utilized the 

number rounded to the nearest dollar 

when dividing the annual cost for each 

type of connectivity or port by 12 

months), as further detailed below. 

Costs Related to Offering Physical 1Gb 

and 10Gb ULL Connectivity 

The following charts detail the 

individual line-item costs considered by 

the Exchange to be related to offering 

physical dedicated 1Gb and 10Gb ULL 

connectivity as well as the percentage of 

the Exchange’s overall costs that such 

costs represent for each cost driver (e.g., 

as set forth below, the Exchange 

allocated approximately 1.2% of its 

overall Human Resources cost to 

offering 1Gb connectivity and 34.5% to 

offering 10Gb ULL physical 

connectivity). 

1Gb CONNECTIVITY

Cost Drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Human Resources ..................................................................................................... $125,167 $10,431 1.2% 

Connectivity (external fees, cabling, switches, etc.) ................................................. 522 44 2.0 

Internet Services and External Market Data ............................................................. 3,675 306 2.5 

Data Center ............................................................................................................... 12,571 1,048 2.0 

Hardware and Software Maintenance and Licenses ................................................ 9,826 819 2.0 

Depreciation ............................................................................................................... 27,679 2,307 2.3 

Allocated Shared Expenses ...................................................................................... 47,021 3,918 1.7

Total .................................................................................................................... 226,461 18,872 1.5 

aThe Annual Cost includes figures rounded to the nearest dollar. 

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

10Gb ULL CONNECTIVITY

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Human Resources ..................................................................................................... $3,533,950 $294,496 34.5 

Connectivity (external fees, cabling, switches, etc.) ................................................. 14,741 1,228 57.7 

Internet Services and External Market Data ............................................................. 103,750 8,646 69.8 

Data Center ............................................................................................................... 354,917 29,576 57.7 

Hardware and Software Maintenance and Licenses ................................................ 277,415 23,118 55.9 

Depreciation ............................................................................................................... 781,473 65,123 63.6 


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10Gb ULL CONNECTIVITY—Continued 

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Allocated Shared Expenses ...................................................................................... 1,327,593 110,633 47 

Total .................................................................................................................... 6,393,839 532,820 41.1 

aThe Annual Cost includes figures rounded to the nearest dollar. 

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

Below are additional details regarding 

each of the line-item costs considered 

by the Exchange to be related to offering 

physical 1Gb and 10Gb ULL 

connectivity. 

Human Resources 

The Exchange notes that it and its 

affiliated markets anticipate that by 

year-end 2024, there will be 289 

employees (excluding employees at 

non-options/equities exchange 

subsidiaries of Miami International 

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

company of the Exchange and its 

affiliated markets), and each department 

leader has direct knowledge of the time 

spent by each employee with respect to 

the various tasks necessary to operate 

the Exchange. Specifically, twice a year, 

and as needed with additional new 

hires and new project initiatives, in 

consultation with employees as needed, 

managers and department heads assign 

a percentage of time to every employee 

and then allocate that time amongst the 

Exchange and its affiliated markets to 

determine each market’s individual 

Human Resources expense. Then, 

managers and department heads assign 

a percentage of each employee’s time 

allocated to the Exchange into buckets 

including network connectivity, ports, 

market data, and other exchange 

services. This process ensures that every 

employee is 100% allocated, ensuring 

there is no double counting between the 

Exchange and its affiliated markets. 

For personnel costs (Human 

Resources), the Exchange calculated an 

allocation of employee time for 

employees whose functions include 

providing and maintaining physical 

connectivity and performance thereof 

(primarily the Exchange’s network 

infrastructure team, which spends most 

of their time performing functions 

necessary to provide physical 

connectivity). As described more fully 

above, the Exchange’s parent company 

allocates costs to the Exchange and its 

affiliated markets and then a portion of 

the Human Resources costs allocated to 

the Exchange is then allocated to 

connectivity. From that portion 

allocated to the Exchange that applied 

to connectivity, the Exchange then 

allocated weighted averages of 49.1% 

for 10Gb ULL connectivity and 1.7% for 

1Gb connectivity of each employee’s 

time from the above group. 

The Exchange also allocated Human 

Resources costs to provide physical 

connectivity to a limited subset of 

personnel with ancillary functions 

related to establishing and maintaining 

such connectivity (such as information 

security, sales, membership, and finance 

personnel). The Exchange allocated cost 

on an employee-by-employee basis (i.e., 

only including those personnel who 

support functions related to providing 

physical connectivity) and then applied 

a smaller allocation to such employees’ 

time to 10Gb ULL connectivity (18.4%) 

and a smaller allocation to 1Gb 

connectivity (0.6%). This other group of 

personnel with a smaller allocation of 

Human Resources costs also have a 

direct nexus to 10Gb ULL connectivity, 

whether it is a sales person selling a 

connection, finance personnel billing 

for connectivity or providing budget 

analysis, or information security 

ensuring that such connectivity is 

secure and adequately defended from an 

outside intrusion. 

The estimates of Human Resources 

cost were therefore determined by 

consulting with such department 

leaders, determining which employees 

are involved in tasks related to 

providing physical connectivity, and 

confirming that the proposed allocations 

were reasonable based on an 

understanding of the percentage of time 

such employees devote to those tasks. 

This includes personnel from the 

Exchange departments that are 

predominately involved in providing 

1Gb and 10Gb ULL connectivity: 

Business Systems Development, Trading 

Systems Development, Systems 

Operations and Network Monitoring, 

Network and Data Center Operations, 

Listings, Trading Operations, and 

Project Management. Again, the 

Exchange allocated 49.1% for 10Gb ULL 

connectivity and 1.7% for 1Gb 

connectivity of each of their employee’s 

time assigned to the Exchange for 10Gb 

ULL and 1Gb connectivity, as stated 

above. Employees from these 

departments perform numerous 

functions to support 10Gb ULL 

connectivity, such as the installation, relocation, configuration, and 

maintenance of 10Gb ULL connections 

and the hardware they access. This 

hardware includes servers, routers, 

switches, firewalls, and monitoring 

devices. These employees also perform 

software upgrades, vulnerability 

assessments, remediation and patch 

installs, equipment configuration and 

hardening, as well as performance and 

capacity management. These employees 

also engage in research and 

development analysis for equipment 

and software supporting 10Gb ULL 

connectivity and design, and support 

the development and on-going 

maintenance of internally-developed 

applications as well as data capture and 

analysis, and Member and internal 

Exchange reports related to network and 

system performance. The above list of 

employee functions is not exhaustive of 

all the functions performed by Exchange 

employees to support 10Gb ULL and 

1Gb connectivity, but illustrates the 

breadth of functions those employees 

perform in support of the above cost and 

time allocations. 

Lastly, the Exchange notes that senior 

level executives’ time was only 

allocated to the 10Gb ULL and 1Gb 

connectivity related Human Resources 

costs to the extent that they are involved 

in overseeing tasks related to providing 

physical connectivity. The Human 

Resources cost was calculated using a 

blended rate of compensation reflecting 

salary, equity and bonus compensation, 

benefits, payroll taxes, and 401(k) 

matching contributions. 

Connectivity (External Fees, Cabling, 

Switches, etc.) 

The Connectivity cost driver includes 

external fees paid to connect to other 

exchanges and third parties, cabling and 

switches required to operate the 

Exchange. The Connectivity cost driver 

is more narrowly focused on technology 

used to complete connections to the 

Exchange and to connect to external 

markets. The Exchange notes that its 


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connectivity to external markets is 

required in order to receive market data 

to run the Exchange’s matching engine 

and basic operations compliant with 

existing regulations, primarily 

Regulation NMS. 

The Exchange relies on various 

connectivity providers for connectivity 

to the entire U.S. options industry, and 

infrastructure services for critical 

components of the network that are 

necessary to provide and maintain its 

System Networks and access to its 

System Networks via 1Gb and 10Gb 

ULL connectivity. Specifically, the 

Exchange utilizes connectivity 

providers to connect to other national 

securities exchanges and the Options 

Price Reporting Authority (‘‘OPRA’’). 

The Exchange understands that these 

service providers provide services to 

most, if not all, of the other U.S. 

exchanges and other market 

participants. Connectivity provided by 

these service providers is critical to the 

Exchanges daily operations and 

performance of its System Networks to 

which market participants connect to 

via 1Gb and 10Gb ULL connectivity. 

Without these services providers, the 

Exchange would not be able to connect 

to other national securities exchanges, 

market data providers or OPRA and, 

therefore, would not be able to operate 

and support its System Networks. The 

Exchange does not employ a separate 

fee to cover its connectivity provider 

expense and recoups that expense, in 

part, by charging for 1Gb and 10Gb ULL 

connectivity. 

Internet Services and External Market 

Data 

The next cost driver consists of 

internet Services and external market 

data. Internet services includes thirdparty service providers that provide the 

internet, fiber and bandwidth 

connections between the Exchange’s 

networks, primary and secondary data 

centers, and office locations in 

Princeton, New Jersey and Miami, 

Florida. 

External market data includes fees 

paid to third parties, including other 

exchanges, to receive market data. The 

Exchange includes external market data 

fee costs towards the provisions of 

physical connectivity because such 

market data is necessary for certain 

services related to connectivity, 

including pre-trade risk checks and 

checks for other conditions (e.g., repricing of orders to avoid locked or 

crossed markets and trading collars). 

Since external market data from other 

exchanges is consumed at the 

Exchange’s matching engine level, (to 

which physical connectivity provides 

access) in order to validate orders before 

additional orders enter the matching 

engine or are executed, the Exchange 

believes it is reasonable to allocate an 

amount of such costs to 1Gb and 10Gb 

ULL connectivity. 

The Exchange relies on various 

content service providers for data feeds 

for the entire U.S. options industry, as 

well as content for critical components 

of the network that are necessary to 

provide and maintain its System 

Networks and access to its System 

Networks via 1Gb and 10Gb ULL 

connectivity. Specifically, the Exchange 

utilizes content service providers to 

receive market data from OPRA, other 

exchanges and market data providers. 

The Exchange understands that these 

service providers provide services to 

most, if not all, of the other U.S. 

exchanges and other market 

participants. Market data provided by 

these service providers is critical to the 

Exchanges daily operations and 

performance of its System Networks to 

which market participants connect to 

via 1Gb and 10Gb ULL connectivity. 

Without these services providers, the 

Exchange would not be able to receive 

market data and, therefore, would not be 

able to operate and support its System 

Networks. The Exchange does not 

employ a separate fee to cover its 

content service provider expense and 

recoups that expense, in part, by 

charging for 1Gb and 10Gb ULL 

connectivity. 

Data Center 

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 (such as 

dedicated space, security services, 

cooling and power). The Exchange notes 

that it does not own the primary data 

center or the secondary data center, but 

instead, leases space in data centers 

operated by third parties. The Exchange 

has allocated a high percentage of the 

total Data Center cost to physical 1Gb 

and 10Gb ULL connectivity (59.7% 

combined) because the third-party data 

centers and the Exchange’s physical 

equipment contained therein is the most 

direct cost in providing physical access 

to the Exchange. In other words, for the 

Exchange to operate in a dedicated 

space with connectivity by market 

participants to a physical trading 

platform, the data centers are a very 

tangible cost, and in turn, if the 

Exchange did not maintain such a 

presence then physical connectivity 

would be of no value to market 

participants. 

Hardware and Software Maintenance 

and Licenses 

Hardware and Software Licenses 

includes hardware and software licenses 

used to operate and monitor physical 

assets necessary to offer physical 

connectivity to the Exchange. This 

software is necessary for the Exchange 

to operate its options trading platform in 

order to maintain premium network 

performance. This hardware includes 

servers, network switches, cables, 

optics, protocol data units, and cabinets, 

to maintain a state-of-the-art technology 

platform. Accordingly, the Exchange 

allocated a high percentage of the total 

Hardware and Software Maintenance 

and License cost to physical 1Gb and 

10Gb ULL connectivity (57.9% 

combined) because the hardware and 

software licenses are the most direct 

cost in providing physical access to the 

Exchange’s platform. 

Depreciation 

All physical assets, software, and 

hardware used to provide 1Gb and 10Gb 

ULL connectivity, which also includes 

assets used for testing and monitoring of 

Exchange infrastructure, were valued at 

cost, and depreciated or leased over 

periods ranging from three to five years. 

Thus, the depreciation cost primarily 

relates to servers necessary to operate 

the Exchange, some of which are owned 

by the Exchange and some of which are 

leased by the Exchange in order to allow 

efficient periodic technology refreshes. 

The Exchange also included in the 

Depreciation cost driver certain 

budgeted improvements that the 

Exchange intends to capitalize and 

depreciate with respect to 1Gb and 10Gb 

ULL connectivity in the near-term. As 

with the other allocated costs in the 

Exchange’s updated Cost Analysis, the 

Depreciation cost was therefore 

narrowly tailored to depreciation related 

to 1Gb and 10Gb ULL connectivity. As 

noted above, the Exchange allocated 

63.6% of its allocated depreciation costs 

to providing physical 10Gb ULL 

connectivity and 2.3% of all 

depreciation costs to providing 1Gb 

connectivity. 

Allocated Shared Expenses 

Finally, as with other exchange 

products and services, a portion of 

general shared expenses was allocated 

to overall physical connectivity costs. 

These general shared costs are integral 

to exchange operations, including its 

ability to provide physical connectivity. 

Costs included in general shared 

expenses include office space and office 

expenses (e.g., occupancy and overhead 

expenses), utilities, recruiting and 


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39The Exchange notes that MEMX allocated a 

precise amount of 10% of the overall cost for 

directors to providing physical connectivity. See 

Securities Exchange Act Release No. 95936 

(September 27, 2022), 87 FR 59845 (October 3, 

2022) (SR–MEMX–2022–26). The Exchange does 

not calculate is expenses at that granular a level. 

Instead, director costs are included as part of the 

overall general allocation. 

training, marketing and advertising 

costs, professional fees for legal, tax and 

accounting services (including external 

and internal audit expenses), and 

telecommunications. Similarly, the cost 

of paying directors to serve on the 

Exchange’s Board of Directors is also 

included in the Exchange’s general 

shared expense cost driver.39 These 

general shared expenses are incurred by 

the Exchange’s parent company, MIH, as 

a direct result of operating the Exchange 

and its affiliated markets. 

The Exchange employed a process to 

determine a reasonable percentage to 

allocate general shared expenses to 1Gb 

and 10Gb ULL connectivity pursuant to 

its multi-layered allocation process. 

First, general expenses were allocated 

among the Exchange and affiliated 

markets as described above. Then, the 

general shared expense assigned to the 

Exchange was allocated across core 

services of the Exchange, including 

connectivity. Then, these costs were 

further allocated to sub-categories 

within the final categories, i.e., 1Gb and 

10Gb ULL connectivity as sub-categories 

of connectivity. In determining the 

percentage of general shared expenses 

allocated to connectivity that ultimately 

apply to 1Gb and 10Gb ULL 

connectivity, the Exchange looked at the 

percentage allocations of each of the 

cost drivers and determined a 

reasonable allocation percentage. The 

Exchange also held meetings with 

senior management, department heads, 

and the Finance Team to determine the 

proper amount of the shared general 

expense to allocate to 1Gb and 10Gb 

ULL connectivity. The Exchange, 

therefore, believes it is reasonable to 

assign allocations, in the range of 

allocations for other cost drivers, while 

continuing to ensure that these expenses 

are only allocated once. Again, the 

general shared expenses are incurred by 

the Exchange’s parent company as a 

result of operating the Exchange and its 

affiliated markets and it is therefore 

reasonable to allocate a percentage of 

those expenses to the Exchange and 

ultimately to specific product offerings 

such as 1Gb and 10Gb ULL 

connectivity. 

Again, a portion of all shared 

expenses were allocated to the Exchange 

(and its affiliated markets) which, in 

turn, allocated a portion of that overall 

allocation to all physical connectivity 

on the Exchange. The Exchange then 

allocated 47% of the portion allocated 

to physical connectivity to 10Gb ULL 

connectivity and 1.7% of the portion 

allocated to physical connectivity to 

1Gb connectivity. The Exchange 

believes these allocation percentages are 

reasonable because, while the overall 

dollar amounts may be higher than 

other cost drivers, the percentages are 

based on and in line with the percentage 

allocations of each of the Exchange’s 

other cost drivers for each provision of 

connectivity. The percentage allocated 

to 10Gb ULL connectivity also reflects 

its importance to the Exchange’s 

strategy and necessity towards the 

nature of the Exchange’s overall 

operations, which is to provide a 

resilient, highly deterministic trading 

system that relies on faster 10Gb ULL 

connectivity than the Exchange’s 

competitors to maintain premium 

performance. This allocation reflects the 

Exchange’s focus on providing and 

maintaining high performance network 

connectivity, of which 10Gb ULL 

connectivity is a main contributor. The 

Exchange intends to differentiate itself 

by offering a ‘‘premium-product’’ 

network experience, as an operator of a 

high performance, ultra-low latency 

network with unparalleled system 

throughput, which system networks can 

support access to four distinct options 

markets and multiple competing market 

makers having affirmative obligations to 

continuously quote over 1,100,000 

distinct trading products (per exchange), 

and the capacity to handle 

approximately 8 million quote messages 

per second. The ‘‘premium-product’’ 

network experience enables users of 

10Gb ULL connections to receive the 

network monitoring and reporting 

services for those approximately 

1,100,000 distinct trading products. 

These value add services are part of the 

Exchange’s strategy for offering a high 

performance trading system, which 

utilizes 10Gb ULL connectivity. 

The Exchange notes that the 47% 

allocation of general shared expenses for 

physical 10Gb ULL connectivity is 

higher than that allocated to general 

shared expenses for all other types of 

connectivity and ports. This is based on 

its allocation methodology that 

weighted costs attributable to each core 

service. While physical connectivity has 

several areas where certain tangible 

costs are heavily weighted towards 

providing such service (e.g., Data 

Center, as described above), other types 

of connectivity and ports do not require 

as many broad or indirect resources as 

other core services. 

* * * * * 

Approximate Cost per 1Gb and 10Gb 

ULL Connection per Month 

The Exchange divided the total 

monthly cost for 10Gb ULL connectivity 

of $532,820 by the number of physical 

10Gb ULL connections the Exchange 

anticipates maintaining upon expiration 

of the full length of the waiver period 

for 10Gb ULL connections at the time 

the proposed pricing was determined 

(40), to arrive at a cost of approximately 

$13,321 per month (rounded to the 

nearest dollar), per physical 10Gb ULL 

connection. 

Similarly, the Exchange divided the 

total monthly cost for 1Gb connectivity 

of $18,872 by the number of physical 

1Gb connections the Exchange 

anticipates maintaining upon expiration 

of the waiver period at the time the 

proposed pricing was determined (12), 

to arrive at a cost of approximately 

$1,573 per month (rounded to the 

nearest dollar), per physical 1Gb 

connection. 

* * * * * 

Costs Related to Offering Full Service 

MEO Ports 

The following chart details the 

individual line-item costs considered by 

the Exchange to be related to offering 

Full Service MEO Ports as well as the 

percentage of the Exchange’s overall 

costs such costs represent for such area 

(e.g., as set forth below, the Exchange 

allocated approximately 5.1% of its 

overall Human Resources cost to 

offering Full Service MEO Ports). 

FULL SERVICE MEO PORTS

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Human Resources ..................................................................................................... $517,369 $43,114 5.1% 

Connectivity (external fees, cabling, switches, etc.) ................................................. 160 13 0.6 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 245 / Friday, December 20, 2024 / Notices 104263 

40The Exchange notes that MEMX separately 

allocated 7.5% of its external market data costs to 

providing physical connectivity. See Securities 

Exchange Act Release No. 95936 (September 27, 

2022), 87 FR 59845 (October 3, 2022) (SR–MEMX– 

2022–26). 

FULL SERVICE MEO PORTS—Continued 

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Internet Services and External Market Data ............................................................. 929 77 0.6 

Data Center ............................................................................................................... 9,615 801 1.6 

Hardware and Software Maintenance and Licenses ................................................ 3,106 259 0.6 

Depreciation ............................................................................................................... 27,745 2,312 2.3 

Allocated Shared Expenses ...................................................................................... 46,983 3,915 1.7

Total .................................................................................................................... 605,907 50,491 3.9 

aThe Annual Cost includes figures rounded to the nearest dollar. 

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

Below are additional details regarding 

each of the line-item costs considered 

by the Exchange to be related to offering 

Full Service MEO Ports. 

Human Resources 

With respect to Full Service MEO 

Ports, the Exchange calculated Human 

Resources cost by taking an allocation of 

employee time for employees whose 

functions include providing Full 

Service MEO Ports 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). Just as described above for 

connectivity, the estimates of Human 

Resources cost were again determined 

by consulting with department leaders, 

determining which employees are 

involved in tasks related to providing 

Full Service MEO Ports and maintaining 

performance thereof, and confirming 

that the proposed allocations were 

reasonable based on an understanding 

of the percentage of their time such 

employees devote to tasks related to 

providing Full Service MEO Ports and 

maintaining performance thereof. This 

includes personnel from the following 

Exchange departments that are 

predominately involved in providing 

Full Service MEO Ports: Business 

Systems Development, Trading Systems 

Development, Systems Operations and 

Network Monitoring, Network and Data 

Center Operations, Listings, Trading 

Operations, and Project Management. 

The Exchange notes that senior level 

executives were allocated Human 

Resources costs to the extent they are 

involved in overseeing tasks specifically 

related to providing Full Service MEO 

Ports. Senior level executives were only 

allocated Human Resources costs to the 

extent that they are involved in 

managing personnel responsible for 

tasks integral to providing Full Service 

MEO Ports. 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. 

Connectivity (External Fees, Cabling, 

Switches, Etc.) 

The Connectivity cost driver includes 

external fees paid to connect to other 

exchanges and cabling and switches, as 

described above. 

Internet Services and External Market 

Data 

The next cost driver consists of 

internet services and external market 

data. Internet services includes thirdparty service providers that provide the 

internet, fiber and bandwidth 

connections between the Exchange’s 

networks, primary and secondary data 

centers, and office locations in 

Princeton and Miami. For purposes of 

Full Service MEO Ports, the Exchange 

also includes a portion of its costs 

related to external market data. External 

market data includes fees paid to third 

parties, including other exchanges, to 

receive and consume market data from 

other markets. The Exchange includes 

external market data costs towards the 

provision of Full Service MEO Ports 

because such market data is necessary 

(in addition to physical connectivity) to 

offer certain services related to such 

ports, such as validating orders on entry 

against the NBBO and checking for 

other conditions (e.g., halted 

securities).40 Thus, since market data 

from other exchanges is consumed at 

the Exchange’s Full Service MEO Port 

level in order to validate orders, before 

additional processing occurs with 

respect to such orders, the Exchange 

believes it is reasonable to allocate a 

small amount of such costs to Full 

Service MEO Ports. 

Data Center 

Data Center costs includes an 

allocation of the costs the Exchange 

incurs to provide Full Service MEO 

Ports in the third-party data centers 

where it maintains its equipment as 

well as related costs for market data to 

then enter the Exchange’s system via 

Full Service MEO Ports (the Exchange 

does not own the primary data center or 

secondary date center, but instead leases 

space in data centers operated by third 

parties). 

Hardware and Software Maintenance 

and Licenses 

Hardware and Software Licenses 

includes hardware and software licenses 

used to monitor the health of the order 

entry services provided by the 

Exchange, as described above. 

Depreciation 

The vast majority of the software the 

Exchange uses to provide Full Service 

MEO Ports has been developed in-house 

and the cost of such development, 

which takes place over an extended 

period of time and includes not just 

development work, but also quality 

assurance and testing to ensure the 

software works as intended, is 

depreciated over time once the software 

is activated in the production 

environment. Hardware used to provide 

Full Service MEO Ports includes 

equipment used for testing and 

monitoring of order entry infrastructure 

and other physical equipment the 

Exchange purchased and is also 

depreciated over time. 

All hardware 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. Thus, the depreciation cost 

primarily relates to servers necessary to 

operate the Exchange, some of which is 


ddrumheller on DSK120RN23PROD with NOTICES1
104264 Federal Register / Vol. 89, No. 245 / Friday, December 20, 2024 / Notices 

owned by the Exchange and some of 

which is leased by the Exchange in 

order to allow efficient periodic 

technology refreshes. The Exchange 

allocated 2.3% of all depreciation costs 

to providing Full Service MEO Ports. 

The Exchange allocated depreciation 

costs for depreciated software necessary 

to operate the Exchange to Full Service 

MEO Ports because such software is 

related to the provision of Full Service 

MEO Ports. As with the other allocated 

costs in the Exchange’s updated Cost 

Analysis, the Depreciation cost driver 

was therefore narrowly tailored to 

depreciation related to Full Service 

MEO Ports. 

Allocated Shared Expenses 

Finally, a portion of general shared 

expenses was allocated to overall Full 

Service MEO Port costs as without these 

general shared costs the Exchange 

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 (e.g., occupancy and overhead 

expenses), utilities, recruiting and 

training, marketing and advertising 

costs, professional fees for legal, tax and 

accounting services (including external 

and internal audit expenses), and 

telecommunications costs. The 

Exchange again notes that the cost of 

paying directors to serve on its Board of 

Directors is included in the calculation 

of Allocated Shared Expenses, and thus 

a portion of such overall cost amounting 

to less than 4% of the overall cost for 

directors was allocated to providing Full 

Service MEO Ports. The Exchange notes 

that the 1.7% allocation of general 

shared expenses for Full Service MEO 

Ports is lower than that allocated to 

general shared expenses for physical 

connectivity based on its allocation 

methodology that weighted costs 

attributable to each Core Service based 

on an understanding of each area. While 

Full Service MEO Ports have several 

areas where certain tangible costs are 

heavily weighted towards providing 

such service (e.g., data centers, as 

described above), 10Gb ULL 

connectivity requires a broader level of 

support from Exchange personnel in 

different areas, which in turn leads to a 

broader general level of cost to the 

Exchange. 

* * * * * 

Approximate Cost per Full Service MEO 

Port per Month 

The Exchange divided the total 

monthly cost for Full Service MEO Ports 

of $50,491 by the number of Full 

Service MEO Ports the Exchange 

anticipates maintaining upon expiration 

of the Initial Waiver Period at the time 

the proposed pricing was determined 

(112), to arrive at a cost of 

approximately $451 per month 

(rounded to the nearest dollar), per Full 

Service MEO Port. 

* * * * * 

Costs Related to Offering Limited 

Service MEO Ports 

The following chart details the 

individual line-item costs considered by 

the Exchange to be related to offering 

Limited Service MEO Ports as well as 

the percentage of the Exchange’s overall 

costs such costs represent for such area 

(e.g., as set forth below, the Exchange 

allocated approximately 5% of its 

overall Human Resources cost to 

offering Limited Service MEO Ports). 

LIMITED SERVICE MEO PORTS

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Human Resources ..................................................................................................... $512,844 $42,737 5% 

Connectivity (external fees, cabling, switches, etc.) ................................................. 158 13 0.6 

Internet Services and External Market Data ............................................................. 921 77 0.6 

Data Center ............................................................................................................... 9,531 794 1.6 

Hardware and Software Maintenance and Licenses ................................................ 3,079 256 0.6 

Depreciation ............................................................................................................... 27,503 2,292 2.2 

Allocated Shared Expenses ...................................................................................... 46,572 3,881 1.7

Total .................................................................................................................... 600,608 50,050 3.9 

aThe Annual Cost includes figures rounded to the nearest dollar. 

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

Below are additional details regarding 

each of the line-item costs considered 

by the Exchange to be related to offering 

Limited Service MEO Ports. 

Human Resources 

With respect to Limited Service MEO 

Ports, the Exchange calculated Human 

Resources cost by taking an allocation of 

employee time for employees whose 

functions include providing Limited 

Service MEO Ports 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). Just as described above for 

connectivity, the estimates of Human 

Resources cost were again determined 

by consulting with department leaders, 

determining which employees are 

involved in tasks related to providing 

Limited Service MEO Ports and 

maintaining performance thereof, and 

confirming that the proposed allocations 

were reasonable based on an 

understanding of the percentage of their 

time such employees devote to tasks 

related to providing Limited Service 

MEO Ports and maintaining 

performance thereof. This includes 

personnel from the following Exchange 

departments that are predominately 

involved in providing Limited Service 

MEO Ports: Business Systems 

Development, Trading Systems 

Development, Systems Operations and 

Network Monitoring, Network and Data 

Center Operations, Listings, Trading 

Operations, and Project Management. 

The Exchange notes that senior level 

executives were allocated Human 

Resources costs to the extent they are 

involved in overseeing tasks specifically 

related to providing Limited Service 

MEO Ports. Senior level executives were 

only allocated Human Resources costs 

to the extent that they are involved in 

managing personnel responsible for 

tasks integral to providing and 

maintaining Limited Service MEO Ports. 

The Human Resources cost was again 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 245 / Friday, December 20, 2024 / Notices 104265 

41The Exchange notes that MEMX separately 

allocated 7.5% of its external market data costs to 

providing physical connectivity. See Securities 

Exchange Act Release No. 95936 (September 27, 

2022), 87 FR 59845 (October 3, 2022) (SR–MEMX– 

2022–26). 

calculated using a blended rate of 

compensation reflecting salary, equity 

and bonus compensation, benefits, 

payroll taxes, and 401(k) matching 

contributions. 

Connectivity (External Fees, Cabling, 

Switches, Etc.) 

The Connectivity cost includes 

external fees paid to connect to other 

exchanges and cabling and switches, as 

described above. 

Internet Services and External Market 

Data 

The next cost driver consists of 

internet services and external market 

data. Internet services includes thirdparty service providers that provide the 

internet, fiber and bandwidth 

connections between the Exchange’s 

networks, primary and secondary data 

centers, and office locations in 

Princeton and Miami. For purposes of 

Limited Service MEO Ports, the 

Exchange also includes a portion of its 

costs related to external market data. 

External market data includes fees paid 

to third parties, including other 

exchanges, to receive and consume 

market data from other markets. The 

Exchange includes external market data 

costs towards the provision of Limited 

Service MEO Ports because such market 

data is necessary (in addition to 

physical connectivity) to offer certain 

services related to such ports, such as 

validating orders on entry against the 

NBBO and checking for other conditions 

(e.g., halted securities).41 Thus, since 

market data from other exchanges is 

consumed at the Exchange’s Limited 

Service MEO Port level in order to 

validate orders, before additional 

processing occurs with respect to such 

orders, the Exchange believes it is 

reasonable to allocate a small amount of 

such costs to Limited Service MEI MEO. 

Data Center 

Data Center costs includes an 

allocation of the costs the Exchange 

incurs to provide Limited Service MEO 

Ports in the third-party data centers 

where it maintains its equipment as 

well as related costs for market data to 

then enter the Exchange’s System via 

Limited Service MEO Ports (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 Maintenance 

and Licenses 

Hardware and Software Licenses 

includes hardware and software licenses 

used to monitor the health of the order 

entry services provided by the 

Exchange, as described above. 

Depreciation 

The vast majority of the software the 

Exchange uses to provide Limited 

Service MEO Ports has been developed 

in-house and the cost of such 

development, which takes place over an 

extended period of time and includes 

not just development work, but also 

quality assurance and testing to ensure 

the software works as intended, is 

depreciated over time once the software 

is activated in the production 

environment. Hardware used to provide 

Limited Service MEO Ports includes 

equipment used for testing and 

monitoring of order entry infrastructure 

and other physical equipment the 

Exchange purchased and is also 

depreciated over time. 

All hardware 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. Thus, the depreciation cost 

primarily relates to servers necessary to 

operate 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. The Exchange 

allocated 2.2% of all depreciation costs 

to providing Limited Service MEO 

Ports. The Exchange allocated 

depreciation costs for depreciated 

software necessary to operate the 

Exchange because such software is 

related to the provision of Limited 

Service MEO Ports. As with the other 

allocated costs in the Exchange’s 

updated Cost Analysis, the Depreciation 

cost driver was therefore narrowly 

tailored to depreciation related to 

Limited Service MEO Ports. 

Allocated Shared Expenses 

Finally, a portion of general shared 

expenses was allocated to overall 

Limited Service MEO Port costs as 

without these general shared costs the 

Exchange would not be able to operate 

in the manner that it does and provide 

Limited Service MEO Ports. The costs 

included in general shared expenses 

include general expenses of the 

Exchange, including office space and 

office expenses (e.g., occupancy and 

overhead expenses), utilities, recruiting 

and training, marketing and advertising 

costs, professional fees for legal, tax and 

accounting services (including external 

and internal audit expenses), and 

telecommunications costs. The 

Exchange again notes that the cost of 

paying directors to serve on its Board of 

Directors is included in the calculation 

of Allocated Shared Expenses, and thus 

a portion of such overall cost amounting 

to less than 4% of the overall cost for 

directors was allocated to providing 

Limited Service MEO Ports. The 

Exchange notes that the 1.7% allocation 

of general shared expenses for Limited 

Service MEO Ports is lower than that 

allocated to general shared expenses for 

physical connectivity based on its 

allocation methodology that weighted 

costs attributable to each Core Service 

based on an understanding of each area. 

While Limited Service MEO Ports have 

several areas where certain tangible 

costs are heavily weighted towards 

providing such service (e.g., data center, 

as described above), Limited Service 

MEO Ports require a broader level of 

support from Exchange personnel in 

different areas, which in turn leads to a 

broader general level of cost to the 

Exchange. 

* * * * * 

Approximate Cost Per Limited Service 

MEO Port Per Month 

The Exchange divided the total 

monthly cost for Limited Service MEO 

Ports of $50,050 by the number of 

Limited Service MEO Ports the 

Exchange anticipates maintaining upon 

expiration of the Initial Waiver Period at 

the time the proposed pricing was 

determined (208, for charged ports, 

without the cap on the number of 

Limited Service MEO Ports), to arrive at 

a cost of approximately $241 per month 

(rounded to the nearest dollar), per 

Limited Service MEO Port. 

* * * * * 

Costs Related to Offering FIX, CTD and 

FXD Ports 

The following charts detail the 

individual line-item costs considered by 

the Exchange to be related to offering 

FIX, CTD and FXD Ports as well as the 

percentage of the Exchange’s overall 

costs such costs represent for such area 

(e.g., as set forth below, the Exchange 

allocated approximately 1.3%, 0.9%, 

and 0.3% of its overall Human 

Resources cost to offering FIX Ports, 

CTD Ports, and FXD Ports, respectively). 


ddrumheller on DSK120RN23PROD with NOTICES1
104266 Federal Register / Vol. 89, No. 245 / Friday, December 20, 2024 / Notices 

FIX PORTS

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Human Resources ..................................................................................................... $135,037 $11,253 1.3% 

Connectivity (external fees, cabling, switches, etc.) ................................................. 42 4 0.2 

Internet Services and External Market Data ............................................................. 243 20 0.2 

Data Center ............................................................................................................... 2,510 209 0.4 

Hardware and Software Maintenance and Licenses ................................................ 811 66 0.2 

Depreciation ............................................................................................................... 7,242 604 0.6 

Allocated Shared Expenses ...................................................................................... 12,263 1,022 0.4

Total .................................................................................................................... 158,148 13,178 1 

aThe Annual Cost includes figures rounded to the nearest dollar. 

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

CTD PORTS

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Human Resources ..................................................................................................... $93,848 $7,821 0.9% 

Connectivity (external fees, cabling, switches, etc.) ................................................. 29 2 0.1 

Internet Services and External Market Data ............................................................. 169 14 0.1 

Data Center ............................................................................................................... 1,744 145 0.3 

Hardware and Software Maintenance and Licenses ................................................ 563 47 0.1 

Depreciation ............................................................................................................... 5,033 419 0.4 

Allocated Shared Expenses ...................................................................................... 8,522 710 0.3 

Total .................................................................................................................... 109,908 9,158 0.7 

aThe Annual Cost includes figures rounded to the nearest dollar. 

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

FXD PORTS

Cost drivers Allocated annual 

cost a

Allocated monthly 

cost b Percentage of all 

Human Resources ..................................................................................................... $31,283 $2,607 0.3% 

Connectivity (external fees, cabling, switches, etc.) ................................................. 10 1 0.04 

Internet Services and External Market Data ............................................................. 56 5 0.04 

Data Center ............................................................................................................... 581 48 0.1 

Hardware and Software Maintenance and Licenses ................................................ 188 16 0.04 

Depreciation ............................................................................................................... 1,678 140 0.1 

Allocated Shared Expenses ...................................................................................... 2,841 237 0.1 

Total .................................................................................................................... 36,637 3,054 0.2 

aThe Annual Cost includes figures rounded to the nearest dollar. 

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

Below are additional details regarding 

each of the line-item costs considered 

by the Exchange to be related to offering 

FIX, CTD and FXD Ports. 

Human Resources 

With respect to FIX, CTD and FXD 

Ports, the Exchange calculated Human 

Resources cost by taking an allocation of 

employee time for employees whose 

functions include providing FIX, CTD 

and FXD Ports 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). Just as described above for 

connectivity, the estimates of Human 

Resources cost were again determined 

by consulting with department leaders, 

determining which employees are 

involved in tasks related to providing 

FIX, CTD and FXD Ports and 

maintaining performance thereof, and 

confirming that the proposed allocations 

were reasonable based on an 

understanding of the percentage of their 

time such employees devote to tasks 

related to providing FIX, CTD and FXD 

Ports and maintaining performance 

thereof. This includes personnel from 

the following Exchange departments 

that are predominately involved in 

providing FIX, CTD and FXD Ports: 

Business Systems Development, Trading 

Systems Development, Systems 

Operations and Network Monitoring, 

Network and Data Center Operations, 

Listings, Trading Operations, and 

Project Management. The Exchange 

notes that senior level executives were 

allocated Human Resources costs to the 

extent they are involved in overseeing 

tasks specifically related to providing 

FIX, CTD and FXD Ports. Senior level 

executives were only allocated Human 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 245 / Friday, December 20, 2024 / Notices 104267 

42The Exchange notes that MEMX separately 

allocated 7.5% of its external market data costs to 

providing physical connectivity. See Securities 

Exchange Act Release No. 95936 (September 27, 

2022), 87 FR 59845 (October 3, 2022) (SR–MEMX– 

2022–26). 

Resources costs to the extent that they 

are involved in managing personnel 

responsible for tasks integral to 

providing and maintaining FIX, CTD 

and FXD Ports. 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. 

Lastly, the Exchange notes that the 

Human Resource allocations for Full 

Service MEO Ports and Limited Service 

MEO Ports are greater than the Human 

Resource allocations for FIX, CTD and 

FXD Ports. For its Human Resource cost 

driver, the Exchange allocated 5.1% to 

Full Service MEO Ports, 5% to Limited 

Service MEO Ports, 1.3% to FIX Ports, 

0.9% to CTD Ports, and 0.3% to FXD 

Ports. This is because the MEO interface 

is a customized binary interface that the 

Exchange developed in-house and 

maintains on its own. The FIX interface 

is the industry standard for simple order 

entry which requires less development, 

maintenance, and support than the MEO 

interface. Likewise, the CTD and FXD 

interfaces only provide information 

concerning clearing trade updates and 

trade execution, respectively, which 

also require less development, 

maintenance and support than the MEO 

interface. The MEO interface is 

performance oriented and designed to 

meet the needs of more latency sensitive 

Members. Due to the in-house 

development of the MEO interface, the 

Exchange was required to expend more 

internal personnel to support the MEO 

interface than the FIX, CTD or FXD 

interfaces. Because of the materially 

higher cost associated with maintaining 

and supporting MEO Ports (Full Service 

and Limited Service) versus FIX, CTD 

and FXD Ports, the Exchange allocates 

a materially higher percentage of 

Human Resource expense to MEO Ports 

versus FIX, CTD and FXD Ports. 

Connectivity (External Fees, Cabling, 

Switches, Etc.) 

The Connectivity cost includes 

external fees paid to connect to other 

exchanges and cabling and switches, as 

described above. 

Internet Services and External Market 

Data 

The next cost driver consists of 

internet services and external market 

data. Internet services includes thirdparty service providers that provide the 

internet, fiber and bandwidth 

connections between the Exchange’s 

networks, primary and secondary data 

centers, and office locations in 

Princeton and Miami. For purposes of 

FIX, CTD and FXD Ports, the Exchange 

also includes a portion of its costs 

related to external market data. External 

market data includes fees paid to third 

parties, including other exchanges, to 

receive and consume market data from 

other markets. The Exchange includes 

external market data costs towards the 

provision of FIX, CTD and FXD Ports 

because such market data is necessary 

(in addition to physical connectivity) to 

offer certain services related to such 

ports, such as validating orders on entry 

against the NBBO and checking for 

other conditions (e.g., halted 

securities).42 Thus, as market data from 

other exchanges is consumed at the port 

level in order to validate orders before 

additional processing occurs with 

respect to such orders, the Exchange 

believes it is reasonable to allocate a 

small amount of such costs to FIX, CTD 

and FXD Ports. 

Data Center 

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 for market data to then 

enter the Exchange’s System via FIX, 

CTD and FXD Ports (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 Maintenance 

and Licenses 

Hardware and Software Licenses 

includes hardware and software licenses 

used to monitor the health of the order 

entry services provided by the 

Exchange, as described above. 

Depreciation 

The vast majority of the software the 

Exchange uses to provide FIX, CTD and 

FXD Ports has been developed in-house 

and the cost of such development, 

which takes place over an extended 

period of time and includes not just 

development work, but also quality 

assurance and testing to ensure the 

software works as intended, is 

depreciated over time once the software 

is activated in the production 

environment. Hardware used to provide 

FIX, CTD and FXD Ports includes 

equipment used for testing and 

monitoring of order entry infrastructure 

and other physical equipment the 

Exchange purchased and is also 

depreciated over time. 

All hardware 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. Thus, the depreciation cost 

primarily relates to servers necessary to 

operate 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. The Exchange 

allocated 0.6%, 0.4% and 0.1% of all 

depreciation costs to providing FIX, 

CTD and FXD Ports, respectively. The 

Exchange allocated depreciation costs 

for depreciated software necessary to 

operate the Exchange because such 

software is related to the provision of 

FIX, CTD and FXD Ports. As with the 

other allocated costs in the Exchange’s 

updated Cost Analysis, the Depreciation 

cost driver was therefore narrowly 

tailored to depreciation related to FIX, 

CTD and FXD Ports. 

Lastly, the Exchange notes that the 

Depreciation allocations for MEO Ports 

(Full Service and Limited Service) are 

greater than the Depreciation allocations 

for FIX, CTD and FXD Ports. For its 

Depreciation cost driver, the Exchange 

allocated 2.3% to Full Service MEO 

Ports, 2.2% to Limited Service MEO 

Ports, 0.6% to FIX Ports, 0.4% to CTD 

Ports, and 0.1% to FXD Ports. As 

discussed above, this is because the 

MEO interface is a customized binary 

interface that the Exchange developed 

in-house and maintains on its own. The 

FIX interface is the industry standard 

for simple order entry which requires 

less development, maintenance, and 

support than the MEO interface. 

Likewise, the CTD and FXD interfaces 

only provide information concerning 

clearing trade updates and trade 

execution, respectively, which also 

require less development, maintenance 

and support than the MEO interface. 

The Exchange maintains more dedicated 

hardware per port for the MEO interface 

compared to the FIX, CTD and FXD 

interfaces. As a result, the MEO 

interface is supported by more 

dedicated in-house hardware and 

software than the FIX, CTD and FXD 

interfaces that is subject to depreciation. 

Thus, there is a greater amount of 

equipment supporting the MEO 

interface than the FIX, CTD and FXD 

interfaces, resulting in higher 

depreciation costs. 

Allocated Shared Expenses 

Finally, a portion of general shared 

expenses was allocated to overall FIX, 

CTD and FXD Port costs as without 


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these general shared costs the Exchange 

would not be able to operate in the 

manner that it does and provide FIX, 

CTD and FXD Ports. The costs included 

in general shared expenses include 

general expenses of the Exchange, 

including office space and office 

expenses (e.g., occupancy and overhead 

expenses), utilities, recruiting and 

training, marketing and advertising 

costs, professional fees for legal, tax and 

accounting services (including external 

and internal audit expenses), and 

telecommunications costs. The 

Exchange again notes that the cost of 

paying directors to serve on its Board of 

Directors is included in the calculation 

of Allocated Shared Expenses, and thus 

a portion of such overall cost amounting 

to less than 2% of the overall cost for 

directors was allocated to providing 

FIX, CTD and FXD Ports. The Exchange 

notes that the 0.4%, 0.3% and 0.1% 

allocations of general shared expenses 

for FIX, CTD and FXD Ports, 

respectively, are lower than that 

allocated to general shared expenses for 

physical connectivity based on its 

allocation methodology that weighted 

costs attributable to each Core Service 

based on an understanding of each area. 

While MEO Ports (Full Service and 

Limited Service) have several areas 

where certain tangible costs are heavily 

weighted towards providing such 

service (e.g., data center, as described 

above), FIX, CTD and FXD Ports require 

a broader level of support from 

Exchange personnel in different areas, 

which in turn leads to a broader general 

level of cost to the Exchange. 

Lastly, the Exchange notes that the 

Allocated Shared Expense allocations 

for MEO Ports (Full Service and Limited 

Service) are greater than the same 

allocations for FIX, CTD and FXD Ports. 

For its Allocated Shared Expense cost 

driver, the Exchange allocated 1.7% to 

Full Service MEO Ports, 1.7% to 

Limited Service MEO Ports, 0.4% to FIX 

Ports, 0.3% to CTD Ports, and 0.1% to 

FXD Ports. As discussed above, this is 

because the MEO interface is a 

customized binary interface that the 

Exchange developed in-house and 

maintains on its own. The FIX interface 

is the industry standard for simple order 

entry which requires less development, 

maintenance, and support than the MEO 

interface. Likewise, the CTD and FXD 

interfaces only provide information 

concerning clearing trade updates and 

trade execution, respectively, which 

also require less development, 

maintenance and support than the MEO 

interface. The FIX interface is the 

industry standard for simple order entry 

which requires less development, 

maintenance, and support than the MEO 

interface. The MEO interface is 

performance oriented and designed to 

meet the needs of more latency sensitive 

Members. This required more internal 

personnel and resources to support than 

the FIX, CTD and FXD interfaces. 

Because of the materially higher cost 

associated with maintaining and 

supporting MEO Ports versus FIX, CTD 

and FXD Ports, the Exchange allocates 

a materially higher percentage of 

Allocated Shared expense to MEO Ports 

versus FIX, CTD and FXD Ports, which 

are less complex, standardized 

solutions. 

Approximate Cost Per FIX, CTD and 

FXD Port Per Month 

The Exchange divided the total 

monthly cost for FIX Ports of $13,178 by 

the number of FIX Ports the Exchange 

anticipates maintaining upon expiration 

of the Initial Waiver Period at the time 

the proposed pricing was determined 

(25), to arrive at a cost of approximately 

$527 per month (rounded to the nearest 

dollar), per FIX Port. 

Similarly, the Exchange divided the 

total monthly cost for CTD Ports of 

$9,158 by the number of CTD Ports the 

Exchange anticipates maintaining upon 

expiration of the Initial Waiver Period at 

the time the proposed pricing was 

determined (10), to arrive at a cost of 

approximately $916 per month 

(rounded to the nearest dollar), per CTD 

Port. 

Finally, the Exchange divided the 

total monthly cost for FXD Ports of 

$3,054 by the number of FXD Ports the 

Exchange anticipates maintaining upon 

expiration of the Initial Waiver Period at 

the time the proposed pricing was 

determined (6), to arrive at a cost of 

approximately $509 per month 

(rounded to the nearest dollar), per FXD 

Port. 

* * * * * 

Cost Analysis—Additional Discussion 

In conducting its Cost Analysis, the 

Exchange did not allocate any of its 

expenses in full to any core services 

(including physical connectivity or 

ports) 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 separate filings 

the Exchange submitted (or plans to 

submit) proposing fees for proprietary 

market data feeds offered by the 

Exchange, as well as for Purge Ports. For 

instance, in calculating the Human 

Resources expenses to be allocated to 

physical connections based upon the 

above described methodology, the 

Exchange has a team of employees 

dedicated to network infrastructure and 

with respect to such employees the 

Exchange allocated network 

infrastructure personnel with a high 

percentage of the cost of such personnel 

(49.1%) given their focus on functions 

necessary to provide 10Gb ULL physical 

connections. The salaries of those same 

personnel were allocated only 6.8% to 

Full Service MEO Ports and 6.7% to 

Limited Service MEO Ports and the 

remaining 37.4% was allocated to 1Gb 

connectivity, other port services, 

transaction services, membership 

services 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 of 18.4% for 10Gb ULL 

connectivity and 0.6% for 1Gb ULL, 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 (3.1% for Full Service MEO Ports 

and 0.6% for Limited Service MEO 

Ports) across a wider range of personnel 

groups in order to allocate Human 

Resources costs to providing Full 

Service MEO Ports and Limited Service 

MEO Ports (0.2% for FIX Ports, 0.1% for 

CTD Ports, and 0.04% for FXD Ports). 

This is because a much wider range of 

personnel are involved in functions 

necessary to offer, monitor and maintain 

Full Service MEO Ports and Limited 

Service MEO Ports but the tasks 

necessary to do so are not a primary or 

full-time function. 

In total, the Exchange allocated 35.7% 

of its personnel costs to providing 10Gb 

ULL and 1Gb ULL connectivity, 5.1% of 

its personnel costs to providing Full 

Service MEO Ports, 5% of its personnel 

costs to providing Limited Service MEO 

Ports, 1.3% of its personnel costs to 

providing FIX Ports, 0.9% of its 

personnel costs to providing CTD Ports, 

and 0.3% of its personnel costs to 

providing FXD Ports, for a total 

allocation of 48.3% Human Resources 

expense to provide these specific 

connectivity and port services. In turn, 

the Exchange allocated the remaining 

51.7% of its Human Resources expense 

to membership services, transaction 

services, other port services and market 

data. 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 


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connections and ports, 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 and 

port 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 65.9% of the 

Exchange’s overall depreciation and 

amortization expense to connectivity 

services (63.6% attributed to 10Gb ULL 

physical connections, 2.3% to 1Gb 

physical connections, and 5.6% 

attributed to Full Service MEO Ports, 

Limited Service MEO Ports, FIX Ports, 

CTD Ports, and FXD Ports, combined). 

The Exchange allocated the remaining 

depreciation and amortization expense 

(approximately 28.5%) toward the cost 

of providing transaction services, 

membership services, other port 

services, and market data. 

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 once the waiver 

periods expire for each applicable 

proposed fee. The Exchange does not 

yet know whether such 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 ports 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. 

The Exchange notes that personnel 

began to plan for and develop the 

Exchange beginning in early 2023, and 

costs included in this Cost Analysis are 

related to the development and buildout 

of the Exchange since that time. During 

the Exchange’s development and 

buildout that occurred throughout 2023 

and continues to today, the Exchange 

routinely studied its aggregate costs to 

provide connectivity and port services, 

which were used to determine the 

proposed pricing for the provisions of 

connectivity and port services that are 

part of the Exchange’s Cost Analysis, 

including projections. It is possible, 

however, that actual costs may be higher 

or lower. To the extent the Exchange 

sees growth in use of connectivity or 

port services it will receive additional 

revenue to offset future cost increases. 

However, if use of connectivity or port 

services is static or decreases, the 

Exchange might not realize the revenue 

that it anticipates or needs in order to 

cover applicable costs. Accordingly, the 

Exchange is committing to conduct a 

one-year review after implementation of 

these fees. The Exchange expects that it 

may propose to adjust fees at that time, 

to increase fees in the event that 

revenues fail to cover costs and a 

reasonable mark-up of such costs. 

Similarly, the Exchange may propose to 

decrease fees in the event that revenue 

materially exceeds our current 

projections. In addition, the Exchange 

will periodically conduct a review to 

inform its decision making on whether 

a fee change is appropriate (e.g., to 

monitor for costs increasing/decreasing 

or subscribers increasing/decreasing, 

etc. in ways that suggest the thencurrent fees are becoming dislocated 

from the prior cost-based analysis) and 

would propose to increase fees in the 

event that revenues fail to cover its costs 

and a reasonable mark-up, or decrease 

fees in the event that revenue or the 

mark-up materially exceeds our current 

projections. In the event that the 

Exchange determines to propose a fee 

change, the results of a timely review, 

including an updated cost estimate, will 

be included in the rule filing proposing 

the fee change. More generally, the 

Exchange believes that it is appropriate 

for an exchange to refresh and update 

information about its relevant costs and 

revenues in seeking any future changes 

to fees, and the Exchange commits to do 

so. 

Projected Revenue 

The proposed fees 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 and port services. Much of 

the cost relates to monitoring and 

analysis of data and performance of the 

network via the subscriber’s 

connection(s). The above costs, namely 

those associated with hardware, 

software, and human capital, enable the 

Exchange to measure network 

performance with nanosecond 

granularity. These same costs are also 

associated with time and money spent 

seeking to continuously improve the 

network performance, improving the 

subscriber’s experience, based on 

monitoring and analysis activity. 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 

amending fees for connectivity services. 

Subscribers, particularly those of 10Gb 

ULL connectivity, expect the Exchange 

to provide this level of support to 

connectivity so they continue to receive 

the performance they expect. This 

differentiates the Exchange from its 

competitors. As detailed above, the 

Exchange has five primary sources of 

revenue that it can potentially use to 

fund its operations: transaction fees, 

fees for connectivity services, 

membership and regulatory fees, and 

market data fees. Accordingly, the 

Exchange must cover its expenses from 

these five primary sources of revenue. 

All revenue projections are based 

upon an annual return for each of the 

proposed fees once the relevant waiver 

periods expire. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide 1Gb 

connectivity services will equal 

$226,461. Based on projected 1Gb 

connectivity services usage, the 

Exchange would generate annual 

revenue of approximately $241,200. The 

Exchange believes this represents a 

modest profit of 6.1% when compared 

to the cost of providing 1Gb 

connectivity services. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide 

10Gb ULL connectivity services will 

equal $6,393,839. Based on projected 

10Gb ULL connectivity services usage, 

the Exchange would generate annual 

revenue of approximately $6,810,000. 

The Exchange believes this represents a 

modest profit of 6.1% when compared 

to the cost of providing 10Gb 

connectivity services. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide 

Full Service MEO Port services will 

equal $605,907. Based on projected Full 

Service MEO Port service usage, the 

Exchange would generate annual 

revenue of approximately $399,000. The 

Exchange believes this represents a loss 

of 51.9% when compared to the cost of 


ddrumheller on DSK120RN23PROD with NOTICES1
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43See Securities Exchange Act Release Nos. 

99822 (March 21, 2024), 89 FR 21337 (March 27, 

2024) (SR–MIAX–2024–16) (raising monthly 10Gb 

ULL connectivity fee to $13,500 per connection and 

raising fee for Limited Service MEI Ports to $275 

per month per port); 99823 (March 21, 2024), 89 FR 

21312 (March 27, 2024) (SR–PEARL–2024–14) 

(raising monthly 10Gb ULL connectivity fee to 

$13,500 per connection and establishing tiered fees 

for Full Service MEO Ports ranging from $5,000 to 

$12,000 per month); and 99824 (March 21, 2024), 

89 FR 21379 (March 27, 2024) (SR–EMERALD– 

2024–12) (raising monthly 10Gb ULL connectivity 

fee to $13,500 per connection and raising fee for 

Limited Service MEI Ports to $420 per month per 

port). 

providing Full Service MEO Port 

services. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide 

Limited Service MEO Port services will 

equal $600,608. Since launch, taking 

into account the proposal to remove the 

cap on the number of Limited Service 

MEO Ports available and based on 

projected Limited Service MEO Port 

service usage, the Exchange would 

generate annual revenue of 

approximately $624,000. The Exchange 

believes this represents a modest profit 

of 3.7% for providing Limited Service 

MEO Port services. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide FIX 

Port services will equal $158,148. Based 

on projected FIX Port service usage, the 

Exchange would generate annual 

revenue of approximately $77,700. The 

Exchange estimates that its costs to 

provide FIX Port services will exceed its 

revenues by 103.5%. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide 

CTD Port services will equal $109,908. 

Based on projected CTD Port service 

usage, the Exchange would generate 

annual revenue of approximately 

$54,000. The Exchange estimates that its 

costs to provide CTD Port services will 

exceed its revenues by 103.5%. 

The Exchange’s Cost Analysis 

estimates the annual cost to provide 

FXD Port services will equal $36,637. 

Based on projected FXD Port service 

usage, the Exchange would generate 

annual revenue of approximately 

$18,000. The Exchange estimates that its 

costs FXD Port services will exceed its 

revenues by 103.5%. 

Based on the above discussion, the 

Exchange believes that even if the 

Exchange earns the above revenue or 

incrementally more or less, the 

proposed fees are fair and reasonable 

because they will not result in pricing 

that deviates from that of other 

exchanges or a supra-competitive profit, 

when comparing the total expense of the 

Exchange associated with providing 

each of the proposed connectivity and 

port services versus the total projected 

revenue of the Exchange associated with 

connectivity and port services. The 

Exchange’s affiliated options markets 

recently filed to raise certain 

connectivity and port fees to the same, 

or similar, rates as proposed herein and 

those filings were not suspended by the 

Commission.43

* * * * * 

The Exchange notes that its revenue 

estimate is based on projections and 

will only be realized to the extent 

customer activity produces the revenue 

estimated. As a competitor in the hypercompetitive exchange environment, and 

an exchange focused on driving 

competition, the Exchange does not yet 

know whether such projections will be 

realized. For instance, in order to 

generate the revenue expected from 

10Gb ULL connectivity and Ports, the 

Exchange will have to be successful in 

retaining existing clients that wish to 

utilize 10Gb ULL connectivity and Ports 

and/or obtaining new clients that will 

purchase such access. To the extent the 

Exchange is successful in encouraging 

new clients to utilize 10Gb ULL 

connectivity and Ports, the Exchange 

does not believe it should be penalized 

for such success. To the extent the 

Exchange has mispriced and 

experiences a net loss in connectivity 

clients or in transaction activity, the 

Exchange could experience a net 

reduction in revenue. While the 

Exchange is supportive of transparency 

around costs and potential margins 

(applied across all exchanges), as well 

as periodic review of revenues and 

applicable costs (as discussed below), 

the Exchange does not believe that these 

estimates should form the sole basis of 

whether or not a proposed fee is 

reasonable or can be adopted. Instead, 

the Exchange believes that the 

information should be used solely to 

confirm that an Exchange is not 

earning—or seeking to earn—supracompetitive profits. The Exchange 

believes the Cost Analysis and related 

projections in this filing demonstrate 

this fact. 

The Exchange is owned by a holding 

company that is the parent company of 

five exchange markets and, therefore, 

the Exchange and its affiliated markets 

must allocate shared costs across all of 

those markets accordingly, pursuant to 

the above-described allocation 

methodology. In contrast, the IEX, 

which currently operates only one 

exchange, and MEMX, which just 

started operating two exchanges, in their 

recent non-transaction fee filings 

allocate the entire amount of that same 

cost to a single exchange. This can 

result in lower profit margins for the 

non-transaction fees established by IEX 

and MEMX because the single allocated 

cost does not experience the efficiencies 

and synergies that result from sharing 

costs across multiple exchanges. The 

Exchange and its affiliated markets often 

share a single cost, which results in cost 

efficiencies that can cause a broader gap 

between the allocated cost amount and 

projected revenue, even though the fee 

levels being proposed are lower or 

competitive with competing markets (as 

described above). To the extent that the 

application of a cost-based standard 

results in Commission Staff making 

determinations as to the appropriateness 

of certain profit margins, the Exchange 

believes that Commission Staff should 

also consider whether the proposed fee 

level is comparable to, or competitive 

with, the same fee charged by 

competing exchanges and how different 

cost allocation methodologies (such as 

across multiple markets) may result in 

different profit margins for comparable 

fee levels. Further, if Commission Staff 

is making determinations as to 

appropriate profit margins in their 

approval of exchange fees, the Exchange 

believes that the Commission should be 

clear to all market participants as to 

what they have determined is an 

appropriate profit margin and should 

apply such determinations consistently 

and, in the case of certain legacy 

exchanges, retroactively, if such 

standards are to avoid having a 

discriminatory effect. 

Further, as is reflected in the 

proposal, the Exchange continuously 

and aggressively works to control its 

costs as a matter of good business 

practice. A potential profit margin 

should not be evaluated solely on its 

size; that assessment should also 

consider cost management and whether 

the ultimate fee reflects the value of the 

services provided. For example, a profit 

margin on one exchange should not be 

deemed excessive where that exchange 

has been successful in controlling its 

costs, but not excessive on another 

exchange where that exchange is 

charging comparable fees but has a 

lower profit margin due to higher costs. 

Doing so could have the perverse effect 

of not incentivizing cost control where 

higher costs alone could be used to 

justify fees increases. 

The Proposed Pricing Is Not Unfairly 

Discriminatory and Provides for the 

Equitable Allocation of Fees, Dues, and 

Other Charges 

The Exchange believes that the 

proposed fees for connectivity and ports 

are reasonable, fair, equitable, and not 

unfairly discriminatory because they are 


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44 17 CFR 240.17a–1 (recordkeeping rule for 

national securities exchanges, national securities 

associations, registered clearing agencies and the 

Municipal Securities Rulemaking Board). 

45See MIAX Fee Schedule, Section 5)d)ii), MIAX 

Pearl Fee Schedule, Section 5)d), and MIAX 

Emerald Fee Schedule, Section 5)d)ii). 46See Securities Exchange Act Release No. 99823 

(March 21, 2024), 89 FR 21312 (March 27, 2024) 

(SR–PEARL–2024–14). 47 Id. 48 17 CFR 240.17a–1 (recordkeeping rule for 

national securities exchanges, national securities 

associations, registered clearing agencies and the 

Municipal Securities Rulemaking Board). 

49See NASDAQ Pricing Schedule, Options 7, 

Section 3, Ports and Other Services and NASDAQ 

Rules, General 8: Connectivity, Section 1. CoLocation Services (similar to the MIAX Pearl 

Options’ MEO Ports, SQF ports are primarily 

utilized by Market Makers); ISE Pricing Schedule, 

Options 7, Section 7, Connectivity Fees and ISE 

Rules, General 8: Connectivity; NYSE American 

Options Fee Schedule, Section V.A. Port Fees and 

Section V.B. Co-Location Fees; GEMX Pricing 

Schedule, Options 7, Section 6, Connectivity Fees 

and GEMX Rules, General 8: Connectivity. 

designed to align fees with services 

provided and will apply equally to all 

subscribers. 

Connectivity 

The Exchange believes that the 

proposed fees are equitably allocated 

among anticipated users of the network 

connectivity and port alternatives, as 

the Exchange expects that users of 10Gb 

ULL connections will consume 

substantially more bandwidth and 

network resources than users of 1Gb 

ULL connection. It is the experience of 

the Exchange’s affiliates that this is the 

case as 10Gb ULL connection users 

account for more than 99% of message 

traffic over the network on those 

markets, which drives other costs that 

are linked to capacity utilization, as 

described above, while the users of the 

1Gb ULL connections account for less 

than 1% of message traffic over the 

network. In the experience of the 

Exchange’s affiliates, users of the 1Gb 

connections do not have the same 

business needs for the high-performance 

network as 10Gb ULL users. 

The Exchange’s high-performance 

network and supporting infrastructure 

(including employee support), will 

provide unparalleled system throughput 

with the network ability to support 

access to several distinct options 

markets. To achieve a consistent, 

premium network performance, the 

Exchange must build out and maintain 

a network that has the capacity to 

handle the message rate requirements of 

its most heavy network consumers. 

These billions of messages per day will 

consume the Exchange’s resources and 

significantly contribute to the overall 

network connectivity expense for 

storage and network transport 

capabilities, just as they do for the 

Exchange’s affiliate markets. The 

Exchange must then purchase 

additional storage capacity on an 

ongoing basis to ensure it has sufficient 

capacity to store these messages to 

satisfy its record keeping requirements 

under the Exchange Act.44 Thus, as the 

number of messages an entity increases, 

certain other costs incurred by the 

Exchange that are correlated to, though 

not directly affected by, connection 

costs (e.g., storage costs, surveillance 

costs, service expenses) will likely also 

increase. Given this anticipated 

difference in network utilization rate, 

the Exchange believes that it is 

reasonable, equitable, and not unfairly 

discriminatory that the 10Gb ULL users 

pay for the vast majority of the shared 

network resources from which all 

market participants’ will benefit. 

Full Service MEO Ports 

The proposed fees for Full Service 

MEO Ports are not unfairly 

discriminatory because they would 

apply to all Market Makers equally. The 

Exchange proposes a pricing structure 

for Full Service MEO Ports that is the 

same as that used by the Exchange’s 

affiliates, MIAX, MIAX Pearl, and MIAX 

Emerald, except with lower pricing for 

each tier.45 In the experience of the 

Exchange’s affiliated markets, Members 

that are frequently in the highest tier for 

Full Service MEO/MEI Ports consume 

the most bandwidth and resources of 

the network. For example, the 

Exchange’s affiliate, MIAX Pearl, 

recently noted that Market Makers who 

reach the highest tier for Full Service 

MEO Ports accounted for greater than 

84% of ADV on MIAX Pearl, while 

Market Makers that are typically in the 

lowest Tier for Full Service MEO Ports, 

accounted for less than 14% of ADV on 

the Exchange.46 Further, as noted by 

MIAX Pearl, the remaining 1% was 

accounted for by Market Makers who 

are frequently in the middle Tier for 

Full Service MEO Ports.47

To achieve a consistent, premium 

network performance, the Exchange 

must build out and maintain a network 

that has the capacity to handle the 

message rate requirements of its most 

heavy network consumers during 

anticipated peak market conditions. The 

need to support billions of messages per 

day will consume the Exchange’s 

resources and significantly contribute to 

the overall network connectivity 

expense for storage and network 

transport capabilities. The Exchange 

may have to purchase additional storage 

capacity on an ongoing basis to ensure 

it has sufficient capacity to store these 

messages as part of it surveillance 

program and to satisfy its record 

keeping requirements under the 

Exchange Act.48 Thus, as the number of 

connections a Market Maker has 

increases, the related pull on Exchange 

resources may also increase once the 

Exchange launches operations. The 

Exchange sought to design the proposed 

tiered-pricing structure to set the 

amount of the fees to relate to the 

number of ports a firm purchases. The 

more ports purchased by a Market 

Maker likely results in greater 

expenditure of Exchange resources and 

increased cost to the Exchange. 

The Exchange further believes that the 

proposed fees are reasonable, equitably 

allocated and not unfairly 

discriminatory because, for the flat fee 

in each tier, the Exchange provides each 

Member two (2) Full Service MEO Ports 

for each matching engine to which that 

Member is connected. Unlike other 

options exchanges that provide similar 

port functionality and charge fees on a 

per port basis,49 the Exchange offers 

Full Service MEO Ports as a package 

and provides Market Makers with the 

option to receive up to two Full Service 

MEO Ports per matching engine to 

which it connects. The Exchange 

currently has eight matching engines, 

which means Market Makers may 

receive up to sixteen Full Service MEO 

Ports for a single monthly fee, that can 

vary based on certain volume 

percentages or classes the Market Maker 

is registered in. Assuming a Market 

Maker connects to all eight matching 

engines during the month, and achieves 

the highest Tier for that month, with 

two Full Service MEO Ports per 

matching engine, this would result in a 

cost of $375 per Full Service MEO Port 

($6,000 divided by 16). 

The Exchange believes its proposal to 

provide a reduced Full Service MEO 

Port fee to Market Makers that fall 

within the 3rd and 4th levels of the 

proposed fee table is not unfairly 

discriminatory because this proposed 

lower monthly fee is designed to 

provide a lower fixed cost to those 

Market Makers who are willing to quote 

the entire Exchange market (or 

substantial amount of the Exchange 

market), as objectively measured by 

either number of classes assigned or 

national ADV, but who do not otherwise 

execute a significant amount of volume 

on the Exchange. The Exchange believes 

that, by offering lower fixed costs to 

Market Makers that execute less volume, 

the Exchange will retain and attract 

smaller-scale Market Makers, which are 

an integral component of the option 

industry marketplace, but have been 


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50See MIAX Fee Schedule, Section 5)d)ii), note 

‘‘*’’; MIAX Pearl Fee Schedule, Section 5)d), page 

20, note ‘‘**’’; and MIAX Emerald Fee Schedule, 

Section 5)d)ii), note D. 

51The following rationale to support providing a 

certain number of Limited Service MEI Ports for 

free prior to applying a fee is similar to that used 

by the IEX in a 2020 proposal to do the same as 

proposed herein. See Securities Exchange Act 

Release No. 86626 (August 9, 2019), 84 FR 41793 

(August 15, 2019) (SR–IEX–2019–07). 

52See NASDAQ Pricing Schedule, Options 7, 

Section 3, Ports and Other Services and NASDAQ 

Rules, General 8: Connectivity, Section 1. CoLocation Services (similar to the Exchange’s MEI 

Ports, SQF ports are primarily utilized by Market 

Makers); ISE Pricing Schedule, Options 7, Section 

7, Connectivity Fees and ISE Rules, General 8: 

Connectivity; NYSE American Options Fee 

Schedule, Section V.A. Port Fees and Section V.B. 

Co-Location Fees; GEMX Pricing Schedule, Options 

7, Section 6, Connectivity Fees and GEMX Rules, 

General 8: Connectivity. 

53Assuming a Member selects five Limited 

Service MEO Ports based on their business needs 

that Member on MIAX Sapphire would be charged 

only for the fifth Limited Service MEO Port and pay 

only the $250 monthly fee, as the first four Limited 

Service MEO Ports would be free. Meanwhile, a 

Member that purchases five ports on NYSE Arca 

Options would pay $450 per port per month, 

resulting in a total charge of $2,250 per month. On 

Cboe BZX Options, that same member would pay 

$750 per port per month, resulting in a total charge 

of $3,750 per months for five ports. See NYSE Arca 

Options Fees and Charges, dated March 1, 2024, 

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

nyse/markets/arca-options/NYSE_Arca_Options_

Fee_Schedule.pdf and Cboe BZX Options Fee 

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

options/membership/fee_schedule/. 

decreasing in number in recent years, 

due to industry consolidation and lower 

market maker profitability. The 

Exchange believes it is beneficial to 

incentivize these additional Market 

Makers to register to make markets on 

the Exchange to increase liquidity as the 

Exchange begins operations. Increased 

liquidity from a diverse set of market 

participants helps facilitate price 

discovery and the interaction of orders, 

which benefits all market participants of 

the Exchange. Since these smaller-scale 

Market Makers may utilize less 

Exchange capacity due to lower overall 

volume executed, the Exchange believes 

it is reasonable, equitably allocated and 

not unfairly discriminatory to offer such 

Market Makers a lower fixed cost. The 

Exchange notes that its affiliated 

markets, MIAX, MIAX Pearl, and MIAX 

Emerald, offer a similar reduced fee for 

their Full Service MEO/MEI Ports for 

smaller-scale Market Makers.50

Limited Service MEO Ports 

The proposed fees for Limited Service 

MEO Ports are not unfairly 

discriminatory because they would 

apply to all Market Makers equally. All 

Market Makers will be eligible to receive 

four (4) free Limited Service MEO Ports 

per matching engine and those that elect 

to purchase more would be subject to 

the same monthly rate upon the 

expiration of the Initial Waiver Period, 

regardless of the number of additional 

Limited Service MEO Ports they 

purchase. In the experience of the 

Exchange’s affiliated markets, certain 

market participants choose to purchase 

additional Limited Service MEO Ports 

based on their own particular trading/ 

quoting strategies and feel they need a 

certain number of connections to the 

Exchange to execute on those strategies. 

Other market participants may continue 

to choose to only utilize the free Limited 

Service MEO Ports to accommodate 

their own trading or quoting strategies, 

or other business models. All market 

participants elect to receive or purchase 

the amount of Limited Service MEO 

Ports they require based on their own 

business decisions and all market 

participants would be subject to the 

same fee structure and flat fee. Every 

market participant may receive up to 

four (4) free Limited Service MEO Ports 

and those that choose to purchase 

additional Limited Service MEO Ports 

may elect to do so based on their own 

business decisions and would continue 

to be subject to the same monthly fee. 

The Exchange believes that its 

proposed fee for Limited Service MEO 

Ports is reasonable, equitable, and not 

unfairly discriminatory because it is 

designed to align fees with services 

provided, will apply equally to all 

Members that are assigned Limited 

Service MEO Ports (either directly or 

through a Service Bureau), and will 

minimize barriers to entry by providing 

all Members with four free Limited 

Service MEO Ports from the time the 

Exchange launches operations.51 As a 

result of the proposed fee structure, a 

significant majority of Members may not 

be subject to any fee. In contrast, other 

exchanges generally charge in excess of 

$450 per port without providing any 

free ports.52 Even for Members that 

choose to maintain more than four 

Limited Service MEI Ports, the 

Exchange believes that the cost-based 

fee proposed herein is low enough that 

it will not operate to restrain any 

Member’s ability to maintain the 

number of Limited Service MEO Ports 

that it determines are consistent with its 

business objectives. Although the 

Exchange projects that no Members will 

utilize more than the four free Limited 

Service MEO Ports, if there is a small 

number of Members that do utilize more 

ports and are subject to the proposed fee 

of $250 per port, those Members will 

still pay considerably less for such ports 

as compared to the fees that competing 

exchanges charge.53 Further, the 

number of assigned Limited Service 

MEO Ports will continue to be based on 

decisions by each Member, including 

the ability to reduce fees by 

discontinuing unused Limited Service 

MEO Ports. 

The Exchange believes that providing 

four free Limited Service MEO Ports is 

reasonable, equitable, and not unfairly 

discriminatory because it will enable 

Members to access the Exchange on this 

basis without having to pay for Limited 

Service MEO Ports, thereby encouraging 

order flow and liquidity from a diverse 

set of market participants, facilitating 

price discovery and the interaction of 

orders. The Exchange believes that four 

Limited Service MEO Ports is an 

appropriate number to provide for free 

because it aligns with the maximum 

number of free Limited Service MEO/ 

MEI Ports offered by each of the 

Exchange’s affiliated options markets, 

and the Exchange believes will align 

with the amount of such ports that will 

be maintained by a substantial majority 

of Members once the Exchange launches 

operations. 

Based on an initial survey of market 

participants that the Exchange 

anticipates will utilize Limited Service 

MEO Ports, the Exchange projects that 

only a few Members will be subject to 

any Limited Service MEO Port fees 

following the expiration of the Initial 

Waiver Period. In determining the 

appropriate number of Limited Service 

MEO Ports to provide for free, the 

Exchange considered several factors. 

First, the Exchange believes that, with 

respect to Limited Service MEO Port 

usage, Members will prefer at least two 

Limited Service MEO Ports, for 

redundancy purposes. Second, from a 

review of the number of Limited Service 

MEI Ports currently requested, the 

median number of ports per Member 

that will utilize Limited Service MEO 

Ports upon the launch of the Exchange 

is approximately eight. Thus, the 

Exchange believes that having four ports 

appears to be reasonably sufficient for 

the majority of Members to access the 

Exchange. On that basis, the Exchange 

chose four Limited Service MEO Ports 

as the maximum number of ports for 

which it will not charge to access the 

Exchange. The Exchange notes that 

some Members may use more Limited 

Service MEO Ports than other Members 

(and the four provided for free), which 

will be driven by the nature and volume 

of the business they conduct on the 

Exchange, and the choices they make in 

segmenting that business across 

different Limited Service MEO Ports. 

Allowing for this expansive use of 

Exchange capacity represents an 

aggregate cost that the Exchange seeks to 


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54 17 CFR 240.17a–1 (recordkeeping rule for 

national securities exchanges, national securities 

associations, registered clearing agencies and the 

Municipal Securities Rulemaking Board). 

55 17 CFR 242.1000–1007. 

56 17 CFR 242.1001(a). 

recover through charging for ports five 

and higher. 

The proposed fee structure is also 

designed to encourage Members to be 

efficient with their Limited Service 

MEO Port 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 Limited Service MEO 

Ports. There is no requirement that any 

Member maintain a specific number of 

Limited Service MEO Ports and a 

Member may choose to maintain as 

many or as few of such ports as each 

Member deems appropriate. 

The Exchange assessed the impact of 

the structure and amount of the 

proposed fee on all Members that the 

Exchange anticipates will utilize 

Limited Service MEO Ports. The 

Exchange believes that the proposed fee 

is fair and equitably allocated across all 

Members. As a threshold matter, the fee 

will not by design apply differently to 

different types or sizes of Members. 

Nonetheless, upon launch, the Exchange 

will be able to assess whether there may 

be any differences in the amount of the 

projected fee that correlates to the type 

and/or size of different Members. This 

assessment will help determine whether 

the number of assigned Limited Service 

MEO Ports, and thus projected fees, 

correlates closely to a Member’s 

inbound message volume to the 

Exchange. This is a similar assessment 

as that performed by the Exchange’s 

affiliates, MIAX and MIAX Emerald, 

prior to changing their respective 

Limited Service MEI Port fees recently. 

Based on the experience of the 

Exchange’s affiliates, as inbound 

message volume increases per Member, 

the number of requested and assigned 

Limited Service MEO Ports increases. 

As the Exchange has not launched 

operations at the time of this filing, the 

Exchange does not have data to show 

any correlation between a Member’s 

inbound message volume and the 

number of Limited Service MEO Port 

assigned to the Member. However, 

based on the experience of the 

Exchange’s affiliates, MIAX and MIAX 

Emerald, Members with relatively 

higher inbound message volume were 

projected to pay higher fees because 

they requested more Limited Service 

MEI Ports for those exchanges. 

To achieve consistent, premium 

network performance, the Exchange 

must build and maintain a network that 

has the capacity to handle the message 

rate requirements of its heaviest 

network consumers during anticipated 

peak market conditions. The resultant 

need to support the anticipated amount 

of billions of messages per day will 

consume the Exchange’s resources and 

significantly contribute to the overall 

network connectivity expense for 

storage and network transport 

capabilities. This need will also require 

the Exchange to purchase additional 

storage capacity on an ongoing basis to 

ensure it has sufficient capacity to store 

these messages as part of it surveillance 

program and to satisfy its record 

keeping requirements under the 

Exchange Act.54 Thus, as the number of 

connections per Market Maker 

increases, other costs incurred by the 

Exchange will likely also increase, e.g., 

storage costs, surveillance costs, service 

expenses. 

The Exchange further believes that the 

proposed fees are reasonable, fair and 

equitable, and non-discriminatory 

because they will apply to all Members 

in the same manner and are not targeted 

at a specific type or category of market 

participant engaged in any particular 

trading strategy. All Members will 

receive four free Limited Service MEO 

Ports and pay the same proposed fee per 

Limited Service MEO Port for each 

additional Limited Service MEO Port. 

Each Limited Service MEO Port is 

identical, providing connectivity to the 

Exchange on identical terms. While the 

proposed fee will result in a different 

effective ‘‘per unit’’ rate for different 

Members after factoring in the four free 

Limited Service MEO Ports, the 

Exchange does not believe that this 

difference is material given the overall 

low proposed fee per Limited Service 

MEO Port. Because the first four Limited 

Service MEO Ports are free of charge, 

each entity will have a ‘‘per unit’’ rate 

of less than the proposed fee. Further, 

the fee is not connected to volume based 

tiers. All Members will be subject to the 

same fee schedule, regardless of the 

volume sent to or executed on the 

Exchange. The fee also does not depend 

on any distinctions between Members, 

customers, broker-dealers, or any other 

entity. The fee will be assessed solely 

based on the number of Limited Service 

MEO Ports an entity selects and not on 

any other distinction applied by the 

Exchange. While entities that send 

relatively more inbound messages to the 

Exchange may select more Limited 

Service MEO Ports, thereby resulting in 

higher fees, that distinction is based on 

decisions made by each Member and the 

extent and nature of the Member’s 

business on the Exchange rather than 

application of the fee by the Exchange. 

Members can determine how many 

Limited Service MEO Ports they need to 

implement their trading strategies 

effectively. The Exchange proposes to 

offer additional Limited Service MEO 

Ports at a low fee to enable all Members 

to purchase as many Limited Service 

MEO Ports as their business needs 

dictate in order to optimize throughput 

and manage latency across the 

Exchange. 

Notwithstanding that Members with 

the highest number of Limited Service 

MEO Ports will pay a greater percentage 

of the total projected fees than is 

represented by their Limited Service 

MEO Port usage, the Exchange does not 

believe that the proposed fee is unfairly 

discriminatory. It is not possible to fully 

synchronize the Exchange’s objective to 

provide four free Limited Service MEO 

Ports to all Members, thereby 

minimizing barriers to entry and 

incentivizing liquidity on the Exchange, 

with an approach that exactly aligns the 

projected per Member fee with each 

Member’s number of requested Limited 

Service MEO Ports. As proposed, the 

Exchange is providing a reasonable 

number of Limited Service MEO Ports to 

each Member without charge. Any 

variance between projected fees and 

Limited Service MEO Port usage is 

attributable to objective differences 

among Members in terms of the number 

of Limited Service MEO Ports they 

determine are appropriate based on 

their trading on the Exchange. Further, 

the Exchange believes that the low 

amount of the proposed fee (which in 

the aggregate is projected to only 

partially recover the Exchange’s 

directly-related costs as described 

herein) mitigates any disparate impact. 

Further, the fee will help to encourage 

Limited Service MEO Port 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’’).55

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.56 By 

encouraging Members to be efficient 

with their Limited Service MEO Ports 

usage, the proposed fee will support the 

Exchange’s Reg SCI obligations in this 

regard by ensuring that unused Limited 

Service MEO Ports are available to be 

allocated based on individual Members 


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57By comparison, some other exchanges charge 

less to connect to their disaster recovery facilities, 

but still charge an amount that could both recoup 

costs and potentially be a source of profits. See, e.g., 

Nasdaq Stock Market LLC Equity 7, Section 115 

(Ports and other Services). 

58 17 CFR 240.17a–1 (recordkeeping rule for 

national securities exchanges, national securities 

associations, registered clearing agencies and the 

Municipal Securities Rulemaking Board). 

59 15 U.S.C. 78f(b)(4). 

60The port fees the Exchange proposes to waive 

during the Initial Waiver Period are Fix Port Fees 

(See Section d)i) of the Fee Schedule); MEO Port 

Fees (See Section d)ii) of the Fee Schedule); 

Clearing Trade Drop Port Fees (See Section d)iv) of 

the Fee Schedule); and FIX Drop Copy Port Fees 

(See Section d)v) of the Fee Schedule). 

61See supra note 13. 

needs and as the Exchange’s overall 

order and trade volumes increase. 

Additionally, because the Exchange will 

continue not to charge connectivity 

testing and certification fees to its 

disaster recovery facility or where the 

Exchange requires testing and 

certification, 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 without 

incurring any port fee costs.57

Finally, the Exchange believes that 

the proposed fee is consistent with 

Section 11A of the Exchange Act in that 

it is designed to facilitate the 

economically efficient execution of 

securities transactions, fair competition 

among brokers and dealers, exchange 

markets and markets other than 

exchange markets, and the practicability 

of brokers executing investors’ orders in 

the best market. Specifically, the 

proposed low, cost-based fee will enable 

a broad range of the Exchange Members 

to continue to connect to the Exchange, 

thereby facilitating the economically 

efficient execution of securities 

transactions on the Exchange, fair 

competition between and among such 

Members, and the practicability of 

Members that are brokers executing 

investors’ orders on the Exchange when 

it is the best market. 

FIX, CTD, and FXD Ports 

To achieve consistent, premium 

network performance, the Exchange 

must build and maintain a network that 

has the capacity to handle the message 

rate requirements of its heaviest 

network consumers during anticipated 

peak market conditions. The resultant 

need to support the anticipated amount 

of billions of messages per day will 

consume the Exchange’s resources and 

significantly contribute to the overall 

network connectivity expense for 

storage and network transport 

capabilities. This need will also require 

the Exchange to purchase additional 

storage capacity on an ongoing basis to 

ensure it has sufficient capacity to store 

these messages as part of it surveillance 

program and to satisfy its record 

keeping requirements under the 

Exchange Act.58 Thus, as the number of 

connections per Market Maker 

increases, other costs incurred by the 

Exchange will likely also increase, e.g., 

storage costs, surveillance costs, service 

expenses. 

The Exchange further believes that the 

proposed fees for FIX, CTD and FXD 

Ports are reasonable, fair and equitable, 

and non-discriminatory because they 

will apply to all Members in the same 

manner and are not targeted at a specific 

type or category of market participant 

engaged in any particular trading 

strategy. The fee for each type of port 

does not depend on any distinctions 

between Members, customers, brokerdealers, or any other entity. The fee will 

be assessed solely based on the number 

of FIX, CTD or FXD Ports an entity 

selects and not on any other distinction 

applied by the Exchange. 

Waiver Period for Connectivity Fees 

The Exchange believes its proposal is 

consistent with Section 6(b)(4) of the 

Act,59 which requires that Exchange 

rules provide for the equitable 

allocation of reasonable dues, fees, and 

other charges. Specifically, under the 

Exchange’s proposal the monthly 

Member and non-Member network 

connectivity fees for the 1Gb 

connections to the primary/secondary 

facility and disaster recovery facility, 

and the 10Gb ULL connections to the 

disaster recovery facility for the partial 

month in which the Exchange launches 

operations, plus an additional three full 

calendar months. The proposed 

monthly Member and non-Member 

network connectivity fees for the 1Gb 

connections to the primary/secondary 

facility and disaster recovery facility, 

and 10Gb ULL connections to the 

disaster recovery facility will be 

discounted by 50% for the three full 

calendar months thereafter. 

The Exchange believes its proposal is 

reasonable, equitable and not unfairly 

discriminatory as the proposed fee 

waivers are equally available and will 

apply uniformly to all participants. 

The Exchange also proposes that the 

monthly Member network connectivity 

fees for the first two 10Gb ULL 

connections on each switch to the 

primary/secondary facility will be 

waived for the partial month in which 

the Exchange launches operations, plus 

an additional three full calendar 

months. Additionally, the monthly 

Member network connectivity fees for 

the first two 10Gb ULL connections on 

each switch to the primary/secondary 

facility will be discounted by 50% for 

the three full calendar months 

thereafter. 

The Exchange believes that waiving 

the fees for the first two 10Gb ULL 

connections on each switch is 

reasonable, equitable and not unfairly 

discriminatory as all Exchange 

participants have an equal opportunity 

to take advantage of the proposed 

discount under the proposal. 

Additionally, the Exchange believes its 

proposal represents a balanced 

approach designed to incentivize 

connectivity to the Exchange and to also 

prevent oversubscription to ensure that 

the Exchange has the physical capacity 

necessary to support its proposal. 

Initial Waiver Period 

MIAX Sapphire proposes to assess 

monthly Financial Information 

Exchange (‘‘FIX’’) Port fees to Members 

in each month the Member is 

credentialed to use a FIX Port in the 

production environment and based 

upon the number of credentialed FIX 

Ports. However, the Exchange proposes 

that all port fees 60 will be waived 

during the Initial Waiver Period.61 The 

Exchange believes its proposal is 

reasonable, equitable and not unfairly 

discriminatory as the proposed fee 

waivers are equally available and will 

apply uniformly to all participants. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intra-Market Competition 

The Exchange believes the proposed 

fees will not result in any burden on 

intra-market competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because the 

proposed fees will allow the Exchange 

to recoup its costs with a small profit for 

providing 1Gb and 10Gb ULL 

connectivity, while recouping some of 

its costs for a negative margin for 

providing Full Service MEO Ports, 

Limited Service MEO Ports, FIX Ports, 

CTD Ports and FXD Ports, following 

expiration of the respective waiver 

periods for each fee. As described 

above, the Exchange anticipates 

operating at a loss for the majority of the 


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62The Exchange acknowledges that IEX included 

in its proposal to adopt market data fees after 

offering market data for free an analysis of what its 

projected revenue would be if all of its existing 

customers continued to subscribe versus what its 

projected revenue would be if a limited number of 

customers subscribed due to the new fees. See 

Securities Exchange Act Release No. 94630 (April 

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

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

in its recent non-transaction fee proposal. See supra 

note 41. The Exchange does not believe a similar 

analysis would be useful here because it is 

amending existing fees, not proposing to charge a 

new fee where existing subscribers may terminate 

connections because they are no longer enjoying the 

service at no cost. 

63 15 U.S.C. 78s(b)(3)(A)(ii). 

64 17 CFR 240.19b–4(f)(2). 

above services in order to provide a lowcost alternative to attract order flow and 

encourage market participants to 

experience the high determinism and 

resiliency of the Exchange’s trading 

Systems. To do so, the Exchange 

chooses to waive the fees for all of the 

connectivity and port services for a 

specified time period. This will likely 

result in the Exchange forgoing revenue 

it could generate from assessing any fees 

without a waiver period or higher fees 

upon expiration of the waiver periods. 

The Exchange could seek to charge 

higher fees upon launch, but that could 

serve to discourage participation on the 

Exchange. Instead, the Exchange 

chooses to provide a low-cost exchange 

alternative to the options industry, 

which may result in lower initial 

revenues. 

Further, the Exchange does not 

believe that the proposed fees 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. The proposed 

fees will apply uniformly to all market 

participants regardless of the number of 

1Gb or 10Gb ULL connections they 

choose to purchase. The proposed fees 

do not favor certain categories of market 

participants in a manner that would 

impose an undue burden on 

competition. 

The Exchange does not believe that 

the proposed rule change would place 

certain market participants at the 

Exchange at a relative disadvantage 

compared to other market participants 

or affect the ability of such market 

participants to compete. In particular, 

Exchange personnel has been informally 

discussing potential fees for 

connectivity services with a diverse 

group of market participants that are 

likely to connect to the Exchange for 

launch (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 

does not believe the proposed fees for 

connectivity services would negatively 

impact the ability of Members, nonMembers (extranets or service bureaus), 

third-parties that purchase the 

Exchange’s connectivity and resell it, 

and customers of those resellers to 

compete with other market participants 

or that they are placed at a 

disadvantage. 

The Exchange does anticipate, 

however, that some market participants 

may reduce or discontinue use of 

connectivity services provided directly 

by the Exchange once the relevant 

waiver periods expire. The Exchange’s 

affiliates have experienced similar 

reductions in use by their members for 

similar non-transaction fee increases. 

For example, one MIAX Pearl Options 

Market Maker terminated their MIAX 

Pearl Options membership on January 1, 

2023 as a direct result of the similar 

proposed fee changes by MIAX Pearl 

Options.62

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. The Exchange 

believes its proposed pricing is 

reasonable and, when coupled with the 

availability of third-party providers that 

also offer connectivity solutions, that 

participation on the Exchange is 

affordable for all market participants, 

including smaller trading firms. 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 

Exchange of providing such 

connectivity services. 

The Exchange does not believe its 

proposed fees for Limited Service MEO 

Ports will place certain market 

participants at a relative disadvantage to 

other market participants. All market 

participants would be eligible to receive 

four (4) free Limited Service MEO Ports 

and those that elect to purchase more 

would be subject to the same flat fee 

regardless of the number of additional 

Limited Service MEO Ports they 

purchase. All firms purchase the 

amount of Limited Service MEO Ports 

they require based on their own 

business decisions and similarly 

situated firms are subject to the same 

fees. 

Inter-Market Competition 

The Exchange also does not believe 

that the proposed rule change and price 

increase will result in any burden on 

inter-market competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. As this is a 

fee increase, arguably if set too high, 

this fee would make it easier for other 

exchanges to compete with the 

Exchange. Only if this were a 

substantial fee decrease could this be 

considered a form of predatory pricing. 

In contrast, the Exchange believes that, 

without this fee increase, we are 

potentially at a competitive 

disadvantage to certain other exchanges 

that have in place higher fees for similar 

services. As we have noted, the 

Exchange believes that connectivity fees 

can be used to foster more competitive 

transaction pricing and additional 

infrastructure investment and there are 

other options markets of which market 

participants may connect to trade 

options at higher rates than the 

Exchange’s. Accordingly, the Exchange 

does not believe its proposed fee 

changes impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

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,63 and Rule 

19b–4(f)(2) 64 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, 


ddrumheller on DSK120RN23PROD with NOTICES1
104276 Federal Register / Vol. 89, No. 245 / Friday, December 20, 2024 / Notices 

65 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 100337 

(June 14, 2024), 89 FR 52148 (‘‘Notice’’). 

4See Securities Exchange Act Release No. 

100649, 89 FR 65420 (August 9, 2024). The 

Commission has received no comment letters on the 

proposed rule change. 

5Amendment No. 1 modifies the proposed rule 

change by: (1) amending rule text relating to 

Exchange Match Trade Prevention functionality 

when entering Periodic Auction Orders onto the 

Exchange for execution; and (2) adding new rule 

text describing how the Exchange will handle 

Periodic Auction Orders entered as a Minimum 

Quantity Order with a Match Trade Prevention 

modifier. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 

101105, 89 FR 78418 (September 25, 2024). 

8 15 U.S.C. 78s(b)(2). 

9See Notice, supra note 3. 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(57). 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

SAPPHIRE–2024–41 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–SAPPHIRE–2024–41. 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–SAPPHIRE–2024–41 and should be 

submitted on or before January 10, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.65

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–30350 Filed 12–19–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101927; File No. SR– 

CboeBYX–2024–009] 

Self-Regulatory Organizations; Cboe 

BYX Exchange, Inc.; Notice of 

Designation of a Longer Period for 

Commission Action on Proceedings To 

Determine Whether To Approve or 

Disapprove a Proposed Rule Change, 

as Modified by Amendment No. 1, To 

Amend Exchange Rule 11.25(e) To 

Allow Users To Utilize the Exchange’s 

Match Trade Prevention Functionality 

When Entering Periodic Auction 

Orders Onto the Exchange for 

Execution 

December 16, 2024. 

On June 6, 2024, Cboe BYX Exchange, 

Inc. (‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend Exchange Rule 11.25(e) to allow 

Users to utilize the Exchange’s Match 

Trade Prevention functionality when 

entering Periodic Auction Orders onto 

the Exchange for execution. The 

proposed rule change was published for 

comment in the Federal Register on 

June 21, 2024.3 On August 5, 2024, the 

Commission extended the time period 

within which to approve, disapprove 

the proposed rule change, or institute 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change to September 19, 2024.4 On 

September 18, 2024, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.5 On September 19, 2024, the 

Commission issued notice of the 

proposed rule change, as modified by 

Amendment No. 1, and simultaneously 

instituted proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change, as modified by 

Amendment No. 1 (‘‘Order Instituting 

Proceedings’’).7

Section 19(b)(2) of the Act 8 provides 

that, after initiating proceedings, the 

Commission shall issue an order 

approving or disapproving the proposed 

rule change not later than 180 days after 

the date of publication of notice of filing 

of the proposed rule change. The 

Commission may extend the period for 

issuing an order approving or 

disapproving the proposed rule change, 

however, by not more than 60 days if 

the Commission determines that a 

longer period is appropriate and 

publishes the reasons for such 

determination. The proposed rule 

change was published for notice and 

comment in the Federal Register on 

June 21, 2024.9 December 18, 2024 is 

180 days from that date, and February, 

16, 2025 is 240 days from that date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule change, 

as modified by Amendment No. 1, so 

that it has sufficient time to consider the 

proposed rule change, as modified by 

Amendment No. 1. Accordingly, the 

Commission, pursuant to Section 

19(b)(2) of the Act,10 designates 

February 16, 2025 as the date by which 

the Commission shall either approve or 

disapprove the proposed rule change, as 

modified by Amendment No. 1 (File No. 

SR–CboeBYX–2024–009). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–30352 Filed 12–19–24; 8:45 am] 

BILLING CODE 8011–01–P 


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