23616 Federal Register / Vol. 87, No. 76 / Wednesday, April 20, 2022 / Notices 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5See Securities Exchange Act Release No. 92359 

(July 9, 2021), 86 FR 37393 (July 15, 2021) (SR– 

MIAX–2021–28). 

6 Id. 

https://www.sec.gov/regulatory-actions/ 

how-to-submit-comments. General 

questions regarding the rule filing 

process or logistical questions regarding 

this filing should be directed to the 

Main Office of the Commission’s 

Division of Trading and Markets at 

tradingandmarkets@sec.gov or 202– 

551–5777. 

DTC reserves the right to not respond 

to any comments 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) 16 of the Act and paragraph 

(f) 17 of Rule 19b–4 thereunder. At any 

time within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

DTC–2022–003 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–DTC–2022–003. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of DTC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–DTC– 

2022–003 and should be submitted on 

or before May 11, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–08389 Filed 4–19–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94716; File No. SR–MIAX– 

2022–15] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing of a Proposed 

Rule Change To Establish Fees for the 

Exchange’s cToM Market Data 

Product; Suspension of and Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove the 

Proposed Rule Change 

April 14, 2022 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on April 1, 

2022, Miami International Securities 

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

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Item II below, which Item has been 

prepared by the Exchange. The 

Exchange filed the proposed rule change 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act,3 and Rule 19b–4(f)(2) thereunder.4

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons and is, pursuant to Section 

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

Temporarily suspending the proposed 

rule change; and (ii) instituting 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Options Fee Schedule 

(the ‘‘Fee Schedule’’) to establish fees 

for the market data product known as 

MIAX Complex Top of Market 

(‘‘cToM’’). The fees became operative on 

April 1, 2022. The text of the proposed 

rule change is available on the 

Exchange’s website at http://

www.miaxoptions.com/rule-filings, at 

MIAX’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Description of the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV [sic] below. 

The Exchange has prepared summaries, 

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

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Section 6)a) of the Fee Schedule to 

establish fees for the cToM data 

product. The Exchange initially filed 

this proposal on June 30, 2021 with the 

proposed fees to be effective beginning 

July 1, 2021 (‘‘First Proposed Rule 

Change’’).5 The First Proposed Rule 

Change was published for comment in 

the Federal Register on July 15, 2021.6

Although no comment letters were 

submitted, the Commission suspended 

the First Proposed Rule Change on 


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7See Securities Exchange Act Release No. 92789 

(August 27, 2021), 86 FR 49364 (September 2, 2021) 

(SR–MIAX–2021–28, SR–EMERALD–2021–21) (the 

‘‘Suspension Order’’). 

8See Securities Exchange Act Release No. 93471 

(October 29, 2021), 86 FR 60947 (November 4, 

2021). 

9See SR–MIAX–2021–44. 

10See Securities Exchange Act Release No. 93426 

(October 26, 2021), 86 FR 60314 (November 1, 2021) 

(SR–MIAX–2021–50). 

11 Id. 

12See Securities Exchange Act Release No. 93808 

(December 17, 2021), 86 FR 73011 (December 23, 

2021) (SR–MIAX–2021–62). 

13 Id. 

14See Securities Exchange Act Release No. 94262 

(February 15, 2022), 87 FR 9733 (February 22, 2022) 

(SR–MIAX–2022–10) (Notice of Filing of a Proposed 

Rule Change To Establish Fees for the Exchange’s 

cToM Market Data Product; Suspension of and 

Order Instituting Proceedings To Determine 

Whether To Approve or Disapprove the Proposed 

Rule Change). 15See Exchange Rule 518(a)(5) for the definition 

of Complex Orders. 16The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 17See Securities Exchange Act Release No. 79072 

(October 7, 2016), 81 FR 71131 (October 14, 2016) 

(SR–MIAX–2016–26) (Order Approving a Proposed 

Rule Change to Adopt New Rules to Govern the 

Trading of Complex Orders). 18See Securities Exchange Act Release No. 79146 

(October 24, 2016), 81 FR 75171 (October 28, 2016) 

(SR–MIAX–2016–36) (providing a complete 

description of the cToM data feed). 19The ‘‘Strategy Book’’ is the Exchange’s 

electronic book of complex orders and complex 

quotes. See Exchange Rule 518(a)(17). 

20See supra note 17. 

21A ‘‘Distributor’’ of MIAX Emerald [sic] data is 

any entity that receives a feed or file of data either 

directly from MIAX Emerald [sic] or indirectly 

through another entity and then distributes it either 

internally (within that entity) or externally (outside 

that entity). All Distributors are required to execute 

a MIAX Emerald [sic] Distributor Agreement. See 

Section 6)a) of the Fee Schedule. 

22The Exchange also proposes to make a minor 

related change to remove ‘‘(as applicable)’’ from the 

explanatory paragraph in Section 6)a) as it will not 

change fees for both the ToM and cToM data feeds. 

23See Securities Exchange Act Release Nos. 

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

23, 2021) (SR–EMERALD–2021–05); 73942 

(December 24, 2014), 80 FR 71 (January 2, 2015) 

(SR–MIAX–2014–66). 

August 27, 2021.7 The Exchange 

withdrew the First Proposed Rule 

Change on September 30, 2021 8 and resubmitted the proposal, with the 

proposed fee changes being immediately 

effective (‘‘Second Proposed Rule 

Change’’).9 The Second Proposed Rule 

Change provided additional justification 

for the proposed fee changes and 

addressed comments provided by the 

Commission Staff. On October 14, 2021, 

the Exchange withdrew the Second 

Proposed Rule Change and submitted a 

revised proposal to again provide 

additional justification for the proposed 

fee changes and address additional 

comments provided by the Commission 

Staff (‘‘Third Proposed Rule Change’’).10

The Third Proposed Rule Change was 

published for comment in the Federal 

Register on November 1, 2021.11

Although the Commission did not again 

receive any comment letters on the 

Third Proposed Rule Change, the 

Exchange withdrew the Third Proposed 

Rule Change on December 10, 2021 and 

submitted a revised proposal for 

immediate effectiveness (‘‘Fourth 

Proposed Rule Change’’).12 The Fourth 

Proposed Rule Change was published 

for comment in the Federal Register on 

December 23, 2021.13 Although the 

Commission did not again receive any 

comment letters on the Fourth Proposed 

Rule Change, the Exchange withdrew 

the Fourth Proposed Rule Change on 

February 7, 2022 and submitted a 

revised proposal for immediate 

effectiveness, which was noticed and 

immediately suspended by the 

Commission on February 15, 2022 

(‘‘Fifth Proposed Rule Change’’).14

Although the Commission did not again 

receive any comment letters on the Fifth 

Proposed Rule Change, the Exchange 

withdrew the Fifth Proposed Rule 

Change on March 30, 2022 and submits 

this revised proposal to be effective 

April 1, 2022 (‘‘Sixth Proposed Rule 

Change’’). 

Background 

The Exchange previously adopted 

rules governing the trading of Complex 

Orders 15 on the MIAX System 16 in 

2016.17 At that time, the Exchange also 

adopted the market data product cToM 

and expressly waived fees for cToM to 

incentivize market participants to 

subscribe.18 The Exchange provided 

cToM free of charge for nearly five years 

and absorbed all costs associated with 

producing the cToM data product. 

In summary, cToM provides 

subscribers with the same information 

as the MIAX Top of Market (‘‘ToM’’) 

data product as it relates to the Strategy 

Book,19 i.e., the Exchange’s best bid and 

offer for a complex strategy, with 

aggregate size, based on displayable 

order and quoting interest in the 

complex strategy on the Exchange. 

However, cToM provides subscribers 

with the following additional 

information that is not included in ToM: 

(i) The identification of the complex 

strategies currently trading on the 

Exchange; (ii) complex strategy last sale 

information; and (iii) the status of 

securities underlying the complex 

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

cToM is therefore a distinct market data 

product from ToM in that it includes 

additional information that is not 

available to subscribers that receive only 

the ToM data feed. ToM subscribers are 

not required to subscribe to cToM, and 

cToM subscribers are not required to 

subscribe to ToM.20

Proposal 

The Exchange now proposes to amend 

Section 6)a) of the Fee Schedule to 

charge monthly fees to Distributors 21 of 

cToM. Specifically, the Exchange 

proposes to assess Internal Distributors 

$1,250 per month and External 

Distributors $1,750 per month for the 

cToM data feed.22 The Exchange notes 

that the proposed monthly cToM fees 

for Internal and External Distributors are 

identical to the prices the Exchange 

currently charges for its ToM data 

product and the prices the Exchange’s 

affiliate, MIAX Emerald, charges for its 

ToM product, both of which were 

previously published by the 

Commission and remain in effect 

today.23

As it does today for ToM, the 

Exchange proposes to assess cToM fees 

on Internal and External Distributors in 

each month the Distributor is 

credentialed to use cToM in the 

production environment. Also, as the 

Exchange does today for ToM, market 

data fees for cToM will be reduced for 

new Distributors for the first month 

during which they subscribe to cToM, 

based on the number of trading days 

that have been held during the month 

prior to the date on which that 

subscriber has been credentialed to use 

cToM in the production environment. 

Such new Distributors will be assessed 

a pro-rata percentage of the fees in the 

table in Section 6)a) of the Fee 

Schedule, which is the percentage of the 

number of trading days remaining in the 

affected calendar month as of the date 

on which they have been credentialed to 

use cToM in the production 

environment, divided by the total 

number of trading days in the affected 

calendar month. 

The Exchange believes that other 

exchanges’ fees for complex market data 

are useful examples and provides the 

below table for comparison purposes 

only to show how the Exchange’s 

proposed fees compare to fees currently 

charged by other options exchanges for 

similar complex market data. As shown 

by the below table, the Exchange’s 

proposed fees for cToM are similar to or 

less than fees charged for similar data 

products provided by other options 

exchanges. 


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24See NYSE American Options Proprietary 

Market Data Fees, American Options Complex Fees, 

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

NYSE_American_Options_Market_Data_Fee_

Schedule.pdf. 25See NYSE Arca Options Proprietary Market 

Data Fees, Arca Options Complex Fees, at https:// 

www.nyse.com/publicdocs/nyse/data/NYSE_Arca_

Options_Proprietary_Data_Fee_Schedule.pdf. 26See PHLX Price List—U.S. Derivatives Data, 

PHLX Orders Fees, at http://www.nasdaqtrader.

com/Trader.aspx?id=DPPriceListOptions#PHLX. 27See MIAX website, Market Data & Offerings, at 

https://www.miaxoptions.com/market-dataofferings (last visited April 1, 2022). In general, 

MOR provides real-time ulta-low latency updates 

on the following information: New Simple Orders 

added to the MIAX Order Book; updates to Simple 

Orders resting on the MIAX Order Book; new 

Complex Orders added to the Strategy Book (i.e., 

the book of Complex Orders); updates to Complex 

Orders resting on the Strategy Book; MIAX listed 

series updates; MIAX Complex Strategy definitions; 

the state of the MIAX System; and MIAX’s 

underlying trading state. 

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

29 15 U.S.C. 78f(b)(4). 

30 15 U.S.C. 78f(b)(5). 

31See Securities Exchange Act Release No. 85459 

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

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

2019–04) (Order Disapproving Proposed Rule 

Changes to Amend the Fee Schedule on the BOX 

Market LLC Options Facility to Establish BOX 

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

32See Staff Guidance on SRO Rule Filings 

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

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

(the ‘‘Guidance’’). 

33See supra note 23. 

Exchange Monthly fee 

MIAX (as proposed) ........................ $1,250—Internal Distributor; $1,750—External Distributor. 

NYSE American, LLC (‘‘Amex’’) 24 .. $1,500 Access Fee; $1,000 Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

NYSE Arca, Inc. (‘‘Arca’’) 25 ............ $1,500 Access Fee; $1,000 Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

NASDAQ PHLX LLC (‘‘PHLX’’) 26 ... $3,000—Internal Distributor; $3,500—External Distributor. 

The Exchange also proposes to amend 

the paragraph below the table of fees for 

ToM and cToM in Section 6)a) of the 

Fee Schedule to make a minor, nonsubstantive correction by deleting the 

phrase ‘‘(as applicable)’’ in the first 

sentence following the table of fees for 

ToM and cToM. The purpose of this 

proposed change is to remove 

unnecessary text from the Fee Schedule. 

cToM Content Is Available From 

Alternative Sources 

cToM is also not the exclusive source 

for Complex Order information from the 

Exchange and market participants may 

choose to subscribe to the Exchange’s 

other data products to receive such 

information. It is a business decision of 

market participants whether to 

subscribe to the cToM data product or 

not. Market participants that choose not 

to subscribe to cToM can derive much, 

if not all, of the same information 

provided in the cToM feed from other 

Exchange sources, including, for 

example, the MIAX Order Feed 

(‘‘MOR’’).27 The following cToM 

information is provided to subscribers 

of MOR: The Exchange’s best bid and 

offer for a complex strategy, with 

aggregate size, based on displayable 

order and quoting interest in the 

complex strategy on the Exchange; the 

identification of the complex strategies 

currently trading on the Exchange; and 

the status of securities underlying the 

complex strategy (e.g., halted, open, or 

resumed). In addition to the cToM 

information contained in MOR, complex 

strategy last sale information can be 

derived from the Exchange’s ToM data 

feed. Specifically, market participants 

may deduce that last sale information 

for multiple trades in related options 

series that are disseminated via the ToM 

data feed with the same timestamp are 

likely part of a Complex Order 

transaction and last sale. 

Implementation 

The proposed rule change will be 

effective April 1, 2022. 

2. Statutory Basis 

The Exchange believes that the 

proposed fees are consistent with 

Section 6(b) of the Act 28 in general, and 

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

of the Act 29 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 30 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. 

The Exchange believes that the 

information provided to justify the 

proposed fees meets or exceeds the 

amount of detail required in respect of 

proposed fee changes as set forth in 

recent Commission and Commission 

Staff guidance. On March 29, 2019, the 

Commission issued an Order 

disapproving a proposed fee change by 

the BOX Market LLC Options Facility to 

establish connectivity fees for its BOX 

Network (the ‘‘BOX Order’’).31 On May 

21, 2019, the Commission Staff issued 

guidance ‘‘to assist the national 

securities exchanges and FINRA . . . in 

preparing Fee Filings that meet their 

burden to demonstrate that proposed 

fees are consistent with the 

requirements of the Securities Exchange 

Act.’’ 32 Based on both the BOX Order 

and the Guidance, the Exchange 

believes that the proposed fees are 

consistent with the Act because they 

are: (i) Reasonable, equitably allocated, 

not unfairly discriminatory, and not an 

undue burden on competition; (ii) 

comply with the BOX Order and the 

Guidance; (iii) supported by evidence 

(including comprehensive revenue and 

cost data and analysis) that they are fair 

and reasonable and will not result in 

excessive pricing or supra-competitive 

profit; and (iv) identical to the prices the 

Exchange currently charges for its ToM 

data product and the prices the 

Exchange’s affiliate, MIAX, charges for 

its ToM product, both of which were 

previously published by the 

Commission and remain in effect 

today.33

In adopting Regulation NMS, the 

Commission granted self-regulatory 

organizations (‘‘SROs’’) and brokerdealers increased authority and 

flexibility to offer new and unique 

market data to the public. It was 

believed that this authority would 

expand the amount of data available to 

consumers, and also spur innovation 

and competition for the provision of 

market data. Particularly, cToM further 

broadens the availability of U.S. option 

market data to investors consistent with 

the principles of Regulation NMS. The 

data product also promotes increased 

transparency through the dissemination 

of cToM. Particularly, cToM provides 

subscribers with the same information 

as ToM, but includes the following 

additional information: (i) The 

identification of the complex strategies 

currently trading on the Exchange; (ii) 

complex strategy last sale information; 


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34See supra notes 24 through 26. 

35See Guidance, supra note 32. 

36 Id. 

37 Id. 

38 Id. 39 Id. 

and (iii) the status of securities 

underlying the complex strategy (e.g., 

halted, open, or resumed). The 

Exchange believes cToM provides a 

valuable tool that subscribers can use to 

gain substantial insight into the trading 

activity in Complex Orders, but also 

emphasizes such data is not necessary 

for trading. Moreover, other exchanges 

offer similar data products.34

The Proposed Fees Will Not Result in a 

Supra-Competitive Profit 

The Exchange believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee amendment meets the 

requirements of the Act that fees be 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

market participants. The Exchange 

believes this high standard is especially 

important when an exchange imposes 

various fees for market participants to 

access an exchange’s marketplace. 

In the Guidance, the Commission 

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

assessing the reasonableness of a fee, 

staff considers whether the fee is 

constrained by significant competitive 

forces.’’ 35 The Guidance further states 

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

demonstrate, or does not assert, that 

significant competitive forces constrain 

the fee at issue, a cost-based discussion 

may be an alternative basis upon which 

to show consistency with the Exchange 

Act.’’ 36 In the Guidance, the 

Commission Staff further states that, 

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

that a proposed fee is fair and 

reasonable because it will permit 

recovery of the SRO’s costs, or will not 

result in excessive pricing or supracompetitive profit, specific information, 

including quantitative information, 

should be provided to support that 

argument.’’ 37 The Exchange does not 

assert that the proposed fees are 

constrained by competitive forces. 

Rather, the Exchange asserts that the 

proposed fees are reasonable because 

they will permit recovery of the 

Exchange’s costs in providing cToM 

data and will not result in the Exchange 

generating a supra-competitive profit. 

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

exceed the profits that can be obtained 

in a competitive market.’’ 38 The 

Commission Staff further states in the 

Guidance that ‘‘the SRO should provide 

an analysis of the SRO’s baseline 

revenues, costs, and profitability (before 

the proposed fee change) and the SRO’s 

expected revenues, costs, and 

profitability (following the proposed fee 

change) for the product or service in 

question.’’ 39 The Exchange provides 

this analysis below. 

The proposed fees are based on a costplus model. The Exchange believes that 

it is important to demonstrate that the 

proposed fees are based on its costs and 

reasonable business needs and believes 

the proposed fees will allow the 

Exchange to begin to offset expenses. 

However, as discussed more fully 

below, such fees may also result in the 

Exchange recouping less than all of its 

costs of providing the cToM data feed 

because of the uncertainty of forecasting 

subscriber decision making with respect 

to firms’ market data needs. The 

Exchange believes that the proposed 

fees will not result in excessive pricing 

or supra-competitive profit based on the 

total expenses the Exchange incurs 

versus the total revenue the Exchange 

projects to collect, and therefore meets 

the standards in the Act as interpreted 

by the Commission and the Commission 

Staff in the BOX Order and the 

Guidance. 

The Exchange conducted an extensive 

cost review in which the Exchange 

analyzed nearly every expense item in 

the Exchange’s general expense ledger 

to determine whether each such 

expense relates to the cToM data feed, 

and, if such expense did so relate, what 

portion (or percentage) of such expense 

actually supports t [sic] providing the 

cToM data feed. In determining what 

portion (or percentage) to allocate to 

access services, each Exchange 

department head, in coordination with 

other Exchange personnel, determined 

the expenses that support access 

services and System Networks 

associated with the cToM data feed. 

This included numerous meetings 

between the Exchange’s Chief 

Information Officer, Chief Financial 

Officer, Head of Strategic Planning and 

Operations, Chief Technology Officer, 

various members of the Legal 

Department, and other group leaders. 

The analysis also included each 

department head meeting with the 

divisions of teams within each 

department to determine the amount of 

time and resources allocated by 

employees within each division towards 

the access services and System 

Networks associated with the cToM data 

feed. The Exchange reviewed each 

individual expense to determine if such 

expense was related to providing the 

cToM data feed. Once the expenses 

were identified, the Exchange 

department heads, with the assistance of 

our internal finance department, 

reviewed such expenses holistically on 

an Exchange-wide level to determine 

what portion of that expense supports 

providing access services and the 

System Networks. The sum of all such 

portions of expenses represents the total 

cost to the Exchange to provide access 

services associated with the cToM 

market data feed. For the avoidance of 

doubt, no expense amount is allocated 

twice. In the Suspension Order, the 

Commission questioned whether further 

explanation of the Exchange’s cost 

analysis was necessary. The Exchange 

provides further details concerning its 

cost analysis in response to this 

question. 

The analysis conducted by the 

Exchange is a proprietary process that is 

designed to make a fair and reasonable 

assessment of costs and resources 

allocated to support the provision of 

access services associated with the 

cToM data feed. The Exchange 

acknowledges that this assessment can 

only capture a moment in time and that 

costs and resource allocations may 

change. That is why the Exchange 

historically, and on an ongoing annual 

basis, will continue to review its costs 

and resource allocations to ensure it 

appropriately allocates resources to 

properly provide services to the 

Exchange’s constituents. 

The Exchange believes exchanges, 

like all businesses, should be provided 

flexibility when developing and 

applying a methodology to allocate costs 

and resources they deem necessary to 

operate their business, including 

providing market data and access 

services. The Exchange notes that costs 

and resource allocations may vary from 

business to business and, likewise, costs 

and resource allocations may differ from 

exchange to exchange when it comes to 

providing market data and access 

services. It is a business decision that 

must be evaluated by each exchange as 

to how to allocate internal resources and 

what costs to incur internally or via 

third parties that it may deem necessary 

to support its business and its provision 

of market data and access services to 

market participants. 

The Exchange notes that there are 

material costs associated with providing 

the infrastructure and headcount to 

fully support access to the cToM data 

feed. The Exchange incurs technology 

expense related to establishing and 

maintaining Information Security 

services, enhanced network monitoring 

and customer reporting, as well as 


khammond on DSKJM1Z7X2PROD with NOTICES
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40The percentage allocations used in this 

proposed rule change may differ from past filings 

from the Exchange or its affiliates due to, among 

other things, changes in expenses charged by third 

parties, adjustments to internal resource allocations, 

and different system architecture of the Exchange 

as compared to its affiliates. 41For example, the Exchange previously noted 

that all third-party expense described in its prior fee 

filing was contained in the information technology 

and communication costs line item under the 

section titled ‘‘Operating Expenses Incurred 

Directly or Allocated From Parent,’’ in the 

Exchange’s 2019 Form 1 Amendment containing its 

financial statements for 2018. See Securities 

Exchange Act Release No. 87877 (December 31, 

2019), 85 FR 738 (January 7, 2020) (SR–EMERALD– 

2019–39). Accordingly, the third-party expense 

described in this filing is attributed to the same line 

item for the Exchange’s 2022 Form 1 Amendment, 

which will be filed in 2023. In its Suspension 

Order, the Commission also asked should the 

Exchange to use cost estimates or actual costs 

estimated for 2021 in a filing made in 2022, or make 

cost estimates for 2022. The Exchange utilized 

expenses from its most recent audited financial 

statement as those numbers are more reliable than 

more recent unaudited numbers, which may be 

subject to change. 

42The Exchange does not believe it is appropriate 

to disclose the actual amount it pays to each 

individual third-party provider as those fee 

arrangements are competitive or the Exchange is 

contractually prohibited from disclosing that 

number. 

Regulation SCI-mandated processes 

associated with its network technology. 

Both fixed and variable expenses have 

significant impact on the Exchange’s 

overall costs to provide the cToM data 

feed. For example, to accommodate new 

Members, the Exchange may need to 

purchase additional hardware to 

support those Members and provide the 

cToM data feed. Further, as the total 

number of Members increases, the 

Exchange and its affiliates may need to 

increase their data center footprint and 

consume more power, resulting in 

increased costs charged by their thirdparty data center provider. Accordingly, 

the cost to the Exchange and its 

affiliates to provide access to its 

Members is not fixed. The Exchange 

believes the cToM market data feed is a 

reasonable attempt to offset a portion of 

those costs associated with providing 

access to and maintaining its System 

Networks’ infrastructure. 

The Exchange estimated its total 

annual expense to provide the cToM 

data feed based on the following general 

expense categories: (1) External 

expenses, which include fees paid to 

third parties for certain products and 

services; (2) internal expenses relating 

to the internal costs to provide the 

services associated with the cToM data 

feed; and (3) general shared expenses.40

The Guidance does not include any 

information regarding the methodology 

that an exchange should use to 

determine its cost associated with a 

proposed fee change. The Exchange 

utilized a methodology in this proposed 

fee change that it believes is reasonable 

because the Exchange analyzed its 

entire cost structure, allocated a 

percentage of each cost attributable to 

providing the cToM data feed, then 

divided those costs according to the cost 

methodology outlined below. 

For 2022, the total annual expense for 

providing the access services associated 

with providing the cToM data feed is 

estimated to be $299,228, or $24,935 per 

month. The Exchange believes it is more 

appropriate to analyze the cToM market 

data feed utilizing its estimated 2022 

revenue and costs, which utilize the 

same presentation methodology as set 

forth in the Exchange’s previouslyissued Audited Unconsolidated 

Financial Statements.41 The $299,228 

estimated total annual expense is 

directly related to the access to the 

cToM data feed, and not any other 

product or service offered by the 

Exchange. For example, it does not 

include general costs of operating 

matching engines and other trading 

technology. No expense amount was 

allocated twice. Each of the categories of 

expenses are set forth in the following 

table and details of the individual lineitem costs considered by the Exchange 

for each category are described further 

below. 

External expenses 

Category 

Percentage of 

total expense 

amount allocated 

Data Center Provider ................................................................................................................................................................... 0.20% 

Fiber Connectivity Provider ......................................................................................................................................................... 0.20% 

Security Financial Transaction Infrastructure (‘‘SFTI’’), and Other Connectivity and Content Service Providers ...................... 0% 

Hardware and Software Providers .............................................................................................................................................. 0.20% 

Total of External Expenses .................................................................................................................................................. 42 $5,379 

Internal expenses 

Category Expense amount 

allocated 

Employee Compensation ............................................................................................................................................................. $270,825 

Depreciation and Amortization .................................................................................................................................................... 3,830 

Occupancy ................................................................................................................................................................................... 13,925 

Total of Internal Expenses ................................................................................................................................................... 288,580 

Allocated Shared Expenses .......................................................................................................................................... 5,268 

In its Suspension Order, the 

Commission solicited commenters’ 

views on whether the Exchange has 

provided sufficient detail on the 

identity and nature of services provided 

by third parties. The Commission 

further solicited commenters’ views on 

whether the Exchange has provided 

sufficient detail on the elements that go 

into connectivity costs, including how 

shared costs are allocated and attributed 

to connectivity expenses, to permit an 

independent review and assessment of 

the reasonableness of purported costbased fees and the corresponding profit 

margin thereon. Based on the below 

analysis, the Exchange believes that the 

cToM data fees are fair and reasonable 

and that the Exchange has provided 

sufficient detail surrounding the 

Commission’s questions. In accordance 

with the Guidance, the Exchange has 

provided sufficient detail to support a 

finding that the proposed fees are 


khammond on DSKJM1Z7X2PROD with NOTICES
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consistent with the Exchange Act. The 

proposal includes a detailed description 

of the Exchange’s costs and how the 

Exchange determined to allocate those 

costs related to the proposed fees. The 

Exchange notes that it only has a single 

source of revenue, distribution fees, to 

recover those costs associated with 

providing the cToM data feed. The 

Exchange notes that, without the 

specific third-party and internal 

expense items, the Exchange would not 

be able to provide and maintain the 

System Networks and access to the 

System Networks. Each of these expense 

items, including physical hardware, 

software, employee compensation and 

benefits, occupancy costs, and the 

depreciation and amortization of 

equipment, has been identified through 

a line-by-line item analysis to be 

integral to providing the cToM data 

feed. 

For clarity, the Exchange took a 

conservative approach in determining 

the expense and the percentage of that 

expense to be allocated to providing the 

cToM data feed. The Exchange describes 

the analysis conducted for each expense 

and the resources or determinations that 

were considered when determining the 

amount necessary to allocate to each 

expense. Only a portion of all fees paid 

to such third-parties is included in the 

third-party expenses described herein, 

and no expense amount is allocated 

twice. Accordingly, the Exchange does 

not allocate its entire information 

technology and communication costs to 

providing the cToM data feed. This may 

result in the Exchange under allocating 

an expense to provide the cToM data 

feed, and such expenses may actually be 

higher than what the Exchange allocated 

as part of this proposal. The Exchange 

notes that expenses associated with its 

affiliates, MIAX Emerald and MIAX 

Pearl (the options and equities markets), 

are accounted for separately and are not 

included within the scope of this filing. 

Further, as part its ongoing 

assessment of costs and expenses, the 

Exchange recently conducted a periodic 

thorough review of its expenses and 

resource allocations, which resulted in 

revised percentage allocations in this 

filing. The revised percentages are, 

among other things, the result of the 

shuffling of internal resources in 

response to business objectives and 

changes to fees charged and services 

provided by third parties. Therefore, the 

percentage allocations used in this 

proposed rule change may differ from 

past filings from the Exchange or its 

affiliates due to, among other things, 

changes in expenses charged by third 

parties, adjustments to internal resource 

allocations, and different system 

architecture of the Exchange as 

compared to its affiliates. 

External Expense Allocations 

For 2022, expenses relating to fees 

paid by the Exchange to third parties for 

products and services necessary to 

provide the cToM data feed are 

estimated to be $5,379. This includes, 

but is not limited to, a portion of the 

fees paid to: (1) A third party data center 

provider, including for the primary, 

secondary, and disaster recovery 

locations of the Exchange’s trading 

system infrastructure; (2) a fiber 

connectivity provider for network 

services (fiber and bandwidth products 

and services) linking the Exchange’s and 

its affiliates’ office locations in 

Princeton, New Jersey and Miami, 

Florida, to all data center locations; (3) 

various other content and connectivity 

service providers, which provide 

content, connectivity services, and 

infrastructure services for critical 

components of options connectivity and 

network services; and (4) various other 

hardware and software providers which 

support the production environment in 

which Members and non-Members 

connect to the network to trade and 

receive market data. 

Data Center Space and Operations 

Provider 

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 

where the Exchange houses servers, 

switches and related equipment. Data 

center costs include an allocation of the 

costs the Exchange incurs to provide 

physical connectivity in the third party 

data centers where it maintains its 

equipment as well as related costs. The 

data center provider operates the data 

centers (primary, secondary, and 

disaster recovery) that host the 

Exchange’s network infrastructure. 

Without the retention of a third party 

data center, the Exchange would not be 

able to operate its systems and provide 

a trading platform for market 

participants. The Exchange does not 

employ a separate fee to cover its data 

center expense and recoups that 

expense, in part, by charging for the 

cToM data feed. 

The Exchange reviewed its data center 

footprint, including its total rack space, 

cage usage, number of servers, switches, 

cabling within the data center, heating 

and cooling of physical space, storage 

space, and monitoring and divided its 

data center expenses among providing 

transaction services, market data, and 

connectivity. Based on this review, the 

Exchange determined that 0.20% of the 

total applicable data center provider 

expense is applicable to providing the 

cToM data feed. The Exchange believes 

this allocation is reasonable because it 

represents the costs associated with the 

Exchange’s servers and internal cabling 

dedicated to processing and 

disseminating market data. The 

Exchange excluded from this allocation 

portion of the Exchange’s data center 

expense that is due to providing and 

maintaining connectivity to the 

Exchange’s System Networks, including 

providing cabling within the data center 

between market participants and the 

Exchange. The Exchange also did not 

allocate the remainder of the data center 

expense because it pertains to other 

areas of the Exchange’s operations, such 

as ports and transaction services. 

Fiber Connectivity Provider 

The Exchange engages a third-party 

service provider that provides the 

internet, fiber and bandwidth 

connections between the Exchange’s 

networks, primary and secondary data 

center, and office locations in Princeton 

and Miami. Fiber connectivity is 

necessary for the Exchange to switch to 

its secondary data center in the case of 

an outage in its primary data center. 

Fiber connectivity also allows the 

Exchange’s National Operations & 

Control Center (‘‘NOCC’’) and Security 

Operations Center (‘‘SOC’’) in Princeton 

to communicate with the Exchange’s 

primary and secondary data centers. As 

such, all trade data, including the 

billions of messages each day, flow 

through this third-party provider’s 

infrastructure over the Exchange’s 

network. Without these services, the 

Exchange would not be able to operate 

and support the network and provide 

the cToM data feed. Without the 

retention of a third party fiber 

connectivity provider, they Exchange 

would not be able to communicate 

between its data centers and office 

locations. The Exchange does not 

employ a separate fee to cover its fiber 

connectivity expense and recoups that 

expense, in part, by charging for cToM 

data feeds. 

The Exchange reviewed it costs to 

retain fiber connectivity from a third 

party, including the ongoing costs to 

support fiber connectivity, ensuring 

adequate bandwidth and infrastructure 

maintenance to support exchange 

operations, and ongoing network 

monitoring and maintenance and 

determined that 0.20% of the total fiber 

connectivity expense was applicable to 

providing the cToM data feed. The 

Exchange believes this allocation is 

reasonable because it reflects the 

portion of the fiber connectivity expense 


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43For purposes of this allocation, the Exchange 

did not consider expenses related to supporting 

employees who support cToM data feeds, such as 

office space and supplies. The Exchange 

determined cost allocation for employees who 

perform work in support of offering access services 

and System Networks to arrive at a full time 

equivalent (‘‘FTE’’) of 0.8 FTEs across all the 

identified personnel. The Exchange then multiplied 

the FTE times a blended compensation rate for all 

relevant Exchange personnel to determine the 

personnel costs associated with providing the 

access services and System Networks associated 

with the cToM data feeds. 

that relates to maintaining and 

providing the cToM data feed. The 

Exchange excluded a large portion of 

the Exchange’s fiber connectivity 

expense that is due to providing and 

maintaining connectivity between the 

Exchange’s System Networks, data 

centers, and office locations and is core 

to the daily operation of the Exchange. 

Fiber connectivity is a necessary 

integral means to disseminate 

information from the Exchange’s 

primary data center to other Exchange 

locations. The Exchange excluded from 

this allocation fiber connectivity usage 

related to system connectivity or other 

business lines. The Exchange also did 

not allocate the remainder of this 

expense because it pertains to other 

areas of the Exchange’s operations and 

does not directly relate to providing the 

cToM data feed. The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s actual cost to 

provide the cToM data feed. 

Connectivity and Content Services 

Provided by SFTI and Other Providers 

The Exchange did not allocate any 

expense associated with the proposed 

fees towards SFTI and various other 

service providers’ because the 

Exchange’s architecture takes advantage 

of an advance in design to eliminate the 

need for a market data distribution 

gateway layer. The computation and 

dissemination via an API is done solely 

within the match engine environment 

and is then delivered via the Member 

and non-Member connectivity 

infrastructure. This architecture delivers 

a market data system that is more 

efficient both in cost and performance. 

Accordingly, the Exchange determined 

not to allocate any expense associated 

with SFTI and various other service 

providers. 

Hardware and Software Providers 

The Exchange relies on dozens of 

third-party hardware and software 

providers for equipment necessary to 

operate is System Networks. This 

includes either the purchase or 

licensing of physical equipment, such as 

servers, switches, cabling, and 

monitoring devices. It also includes the 

purchase or license of software 

necessary for security monitoring, data 

analysis and Exchange operations. 

Hardware and software providers are 

necessary to maintain its System 

Networks and provide the cToM data 

feed. Hardware and software equipment 

and licenses for that equipment are also 

necessary to operate and monitor 

physical assets necessary to offer the 

cToM data feed. Hardware and software 

equipment and licenses are key to the 

operation of the Exchange and without 

them the Exchange would not be able to 

operate and support the cToM data feed. 

The Exchange does not employ a 

separate fee to cover its hardware and 

software expense and recoups that 

expense, in part, by charging for cToM 

data feed dissemination. 

The Exchange reviewed its hardware 

and software related costs, including 

software patch management, 

vulnerability management, 

administrative activities related to 

equipment and software management, 

professional services for selection, 

installation and configuration of 

equipment and software supporting 

exchange operations and determined 

that 0.20% of the total applicable 

hardware and software expense is 

allocated to providing the cToM data 

feed. Hardware and software equipment 

and licenses are key to the operation of 

the Exchange and its System Networks. 

Without them, the Exchange would not 

be able to develop and market 

participants would not be able to 

purchase the cToM data feed. The 

Exchange only allocated the portion of 

this expense to the hardware and 

software that is related to the cToM data 

feed, such as operating servers and 

equipment necessary to produce the 

cToM data feed. The Exchange, 

therefore, did not allocate portions of its 

hardware and software expense that 

related to other areas of the Exchange’s 

business, such as hardware and software 

used for connectivity or unrelated 

administrative services. The Exchange 

also did not allocate the remainder of 

this expense because it pertains to other 

areas of the Exchange’s operations, such 

as ports or transaction services, and 

does not directly relate to providing the 

cToM data feed. The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s cost to the 

cToM data feed, and not any other 

service, as supported by its cost review. 

Internal Expense Allocations 

For 2022, total internal expenses 

relating to the Exchange providing and 

maintaining its System Networks and 

access to its System Networks for cToM 

data feeds are estimated to be $288,580. 

This includes, but is not limited to, 

costs associated with: (1) Employee 

compensation and benefits for full-time 

employees that support the System 

Networks and access to System 

Networks, including staff in network 

operations, trading operations, 

development, system operations, 

business, as well as staff in general 

corporate departments (such as legal, 

regulatory, and finance) that support 

those employees and functions as well 

as important system upgrades; (2) 

depreciation and amortization of 

hardware and software used to provide 

and maintain access services and 

System Networks associated with the 

cToM data feed, including equipment, 

servers, cabling, purchased software and 

internally developed software used in 

the production environment to support 

the network for trading; and (3) 

occupancy costs for leased office space 

for staff that provide the cToM data 

feed. The breakdown of these costs is 

more fully described below. 

Employee Compensation and Benefits 

Human personnel are key to exchange 

operations and supporting the 

Exchange’s ongoing provision the cToM 

data feed. The Exchange’s reviewed its 

employee compensation and benefits 

expense and the portion of that expense 

allocated to providing the cToM data 

feed. As part of this review, the 

Exchange considered employees whose 

functions include providing and 

maintaining the cToM data feed and 

used a blended rate of compensation 

reflecting salary, stock and bonus 

compensation, bonuses, benefits, 

payroll taxes, and 401K matching 

contributions.43

Based on this review, the Exchange 

determined to allocate $270,825 in 

employee compensation and benefits 

expense to providing the cToM data 

feeds. To determine the appropriate 

allocation the Exchange reviewed the 

time employees allocated to supporting 

the cToM data feeds. Senior staff also 

reviewed these time allocations with 

department heads and team leaders to 

determine whether those allocations 

were appropriate. These employees are 

critical to the Exchange to provide the 

cToM data feed. The Exchange 

determined the above allocation based 

on the personnel whose work focused 

on functions necessary to provide and 

maintain the cToM data feeds. The 

Exchange does not charge a separate fee 

regarding employees who support the 

cToM data feeds and the Exchange seeks 

to recoup that expense, in part, by 

charging for the cToM data feed. 


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44All of the expenses outlined in this proposed 

fee change refer to the operating expenses of the 

Exchange. The Exchange did not included any 

future capital expenditures within these costs. 

Depreciation and amortization represent the 

expense of previously purchased hardware and 

internally developed software spread over the 

useful life of the assets. Due to the fact that the 

Exchange has only included operating expense and 

historical purchases, there is no double counting of 

expenses in the Exchange’s cost estimates. 

Depreciation and Amortization 

A key expense incurred by the 

Exchange relates to the depreciation and 

amortization of equipment that the 

Exchange procured to provide and 

maintain the cToM data feeds. The 

Exchange reviewed all of its physical 

assets and software, owned and leased, 

and determined whether each asset is 

related to providing and maintaining the 

cToM data feeds, and added up the 

depreciation of those assets. All 

physical assets and software, which 

includes assets used for testing and 

monitoring of Exchange infrastructure, 

were valued at cost, depreciated or 

leased over periods ranging from three 

to five years. In determining the amount 

of depreciation and amortization to 

apply to providing the cToM data feeds, 

the Exchange considered the 

depreciation of hardware and software 

that are key to the operation of the 

Exchange and its provision of the cToM 

data feeds. This includes servers, 

computers, laptops, monitors, 

information security appliances and 

storage, and network switching 

infrastructure equipment, including 

switches and taps, that were previously 

purchased to maintain and provide the 

cToM data feeds. Without them, market 

participants would not be able to 

receive the cToM data feeds. The 

Exchange seeks to recoup a portion of 

its depreciation expense by charging for 

the cToM data feeds. 

Based on this review, the Exchange 

determined to allocate $3,830 in 

depreciation and amortization expense 

to providing the cToM data feeds. The 

Exchange only allocated the portion of 

this depreciation expense to the 

hardware and software related to 

providing the cToM data feeds. The 

Exchange, therefore, did not allocate 

portions of depreciation expense that 

relates to other areas of the Exchange’s 

business, such as the depreciation of 

hardware and software used for 

connectivity or unrelated administrative 

services.44

Occupancy 

The Exchange rents and maintains 

multiple physical locations to house 

staff and equipment necessary to 

support access services, System 

Networks, and exchange operations. The 

Exchange’s occupancy expense is not 

limited to the housing of personnel and 

includes locations used to store 

equipment necessary for Exchange 

operations. In determining the amount 

of its occupancy related expense, the 

Exchange considered actual physical 

space used to house employees whose 

functions include providing and 

maintaining the cToM data feeds. 

Similarly, the Exchange also considered 

the actual physical space used to house 

hardware and other equipment 

necessary to provide and maintain the 

cToM data feeds. This equipment 

includes computers, servers, and 

accessories necessary to support the 

System Networks and cToM data feeds. 

Based on this review, the Exchange 

determined to allocate $13,925 of its 

occupancy expense to provide and 

maintain the cToM data feeds. The 

Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s cost to rent and maintain a 

physical location for the Exchange’s 

staff who operate and support the cToM 

data feeds. The Exchange considered the 

rent paid for the Exchange’s Princeton 

and Miami offices, as well as various 

related costs, such as physical security, 

property management fees, property 

taxes, and utilities at each of those 

locations. The Exchange did not include 

occupancy expenses related to housing 

employees and equipment related to 

other Exchange operations, such as 

transaction and administrative services. 

Allocated Shared Expense 

Finally, a limited portion of general 

shared expenses was allocated to overall 

cToM data feed costs as without these 

general shared costs, the Exchange 

would not be able to operate in the 

manner that it does and provide the 

cToM data feeds. The costs included in 

general shared expenses include 

recruiting and training, marketing and 

advertising costs, professional fees for 

legal, tax and accounting services, and 

telecommunications costs. For 2022, the 

Exchange’s general shared expense 

allocated to the cToM data feeds is 

estimated to be $5,268. The Exchange 

used the weighted average of the above 

allocations to determine the amount of 

general shared expenses to allocate to 

the Exchange. Next, based on additional 

management and expense analysis, 

these fees are allocated to the proposal. 

Revenue and Estimated Profit Margin 

The Exchange only has four primary 

sources of revenue and cost recovery 

mechanisms to fund all of its 

operations: Transaction fees, access fees, 

regulatory fees, and market data fees. 

Accordingly, the Exchange must cover 

all of its expenses from these four 

primary sources of revenue and cost 

recovery mechanisms. 

To determine the Exchange’s 

estimated revenue associated with the 

cToM data feed, the Exchange analyzed 

the number of Members and nonMembers currently receiving the cToM 

data feed and used a recent monthly 

billing cycle representative of current 

monthly revenue. The Exchange also 

provided its baseline by analyzing 

March 2022, the monthly billing cycle 

prior to the proposed cToM data fee, 

and compared this to its expenses for 

that month. As discussed below, the 

Exchange does not believe it is 

appropriate to factor into its analysis 

future revenue growth or decline into its 

estimates for purposes of these 

calculations, given the uncertainty of 

such estimates due to the continually 

changing access needs of market 

participants and potential changes in 

internal and third party expenses. 

For March 2022, prior to the proposed 

the cToM data fee, Members and nonMembers purchased a total of 13 cToM 

data feeds, for which the Exchange 

anticipates charging $0. This will result 

in a loss of $24,935 for that month. For 

April 2022, the Exchange anticipates 

Members and non-Members purchasing 

a total of 13 cToM data feeds. Assuming 

the Exchange charges its proposed fees 

for Distributors, the Exchange would 

generate revenue of $16,250 for that 

month. This would result in a loss of 

$8,685 ($16,250 minus $24,935) for that 

month (a negative 53% margin from 

March 2022 to April 2022). 

The Exchange believes that 

conducting the above analysis on a per 

month basis is reasonable as the revenue 

generated from access services subject to 

the proposed fee generally remains 

static from month to month. The 

Exchange also conducted the above 

analysis on a per month basis to comply 

with the Commission Staff’s Guidance, 

which requires a baseline analysis to 

assist in determining whether the 

proposal generates a supra-competitive 

profit. The Exchange cautions that this 

profit margin may also fluctuate from 

month to month based on the 

uncertainty of predicting how many 

connections may be purchased from 

month to month as Members and nonMembers are free to add and drop 

connections at any time based on their 

own business decisions. 

The Exchange believes the proposed 

margin is reasonable and will not result 

in a ‘‘supra-competitive’’ profit. The 

Guidance defines ‘‘supra-competitive 

profit’’ as ‘‘profits that exceed the profits 

that can be obtained in a competitive 


khammond on DSKJM1Z7X2PROD with NOTICES
23624 Federal Register / Vol. 87, No. 76 / Wednesday, April 20, 2022 / Notices 

45See supra note 32. 

46The Exchange has incurred a cumulative loss 

of $175 million since its inception in 2008 to 2020, 

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

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

for Registration or Exemption from Registration as 

a National Securities Exchange, filed July 28, 2021, 

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

vprr/2100/21000460.pdf. 

47See NYSE American Options Proprietary 

Market Data Fees, American Options Complex Fees, 

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

NYSE_American_Options_Market_Data_Fee_

Schedule.pdf. 

48See NYSE Arca Options Proprietary Market 

Data Fees, Arca Options Complex Fees, at https:// 

www.nyse.com/publicdocs/nyse/data/NYSE_Arca_

Options_Proprietary_Data_Fee_Schedule.pdf. 

49See PHLX Price List—U.S. Derivatives Data, 

PHLX Orders Fees, at http://

www.nasdaqtrader.com/ 

Trader.aspx?id=DPPriceListOptions#PHLX. 

50See Exchange Data Agreement, available at 

https://miaxweb2.pairsite.com/sites/default/files/ 

page-files/MIAX_Exchange_Group_Data_

Agreement_09032020.pdf. 

51See id. 

52See id. 

market.’’ 45 Until recently, the Exchange 

has operated at a cumulative net annual 

loss since it launched operations in 

2008.46 The Exchange has operated at a 

net loss due to a number of factors, one 

of which is choosing to forgo revenue by 

offering certain products, such as 

market data, at lower rates than other 

options exchanges to attract order flow 

and encourage market participants to 

experience the high determinism, low 

latency, and resiliency of the Exchange’s 

trading systems. The Exchange 

previously provided the cToM data feed 

free of charge and absorbed all costs 

associated with providing the cToM 

data feed to market participants. In this 

proposal, the Exchange would continue 

to offer the cToM data feed for a fee that 

that still falls short of covering the 

Exchange’s expenses. The Exchange is 

not generating a profit, and therefore, 

cannot be deemed to be generating a 

‘‘supra-competitive’’ profit by now 

charging for the cToM data feed. The 

Exchange should not now be penalized 

for now seeking to raise it fees to at least 

cover a portion of its costs after offering 

the cToM data feed free of charge. 

The Exchange notes that its revenue 

estimate are based on projections and 

will only be realized to the extent such 

revenue actually produces the revenue 

estimated. As a generally new entrant to 

the hyper-competitive exchange 

environment, and an exchange focused 

on driving competition, the Exchange 

does not yet know whether such 

expectations will be realized. For 

instance, in order to generate the 

revenue expected from the cToM data 

feed, the Exchange will have to be 

successful in retaining existing clients 

that wish to receive the cToM data feed 

or obtaining new clients that will 

purchase such data. To the extent the 

Exchange is successful in encouraging 

new clients to receive the cToM data 

feed, the Exchange does not believe it 

should be penalized for such success. 

The Exchange, like other exchanges, is, 

after all, a for-profit business. While the 

Exchange believes in transparency 

around costs and potential margins, the 

Exchange does not believe that these 

estimates should form the sole basis of 

whether or not a proposed fee is 

reasonable or can be adopted. Instead, 

the Exchange believes that the 

information should be used solely to 

confirm that an Exchange is not earning 

supra-competitive profits, and the 

Exchange believes its cost analysis and 

related estimates demonstrate this fact. 

The Proposed Fees Are Reasonable 

When Compared to the Fees of Other 

Options Exchanges With Similar Market 

Share 

The Exchange does not have visibility 

into other equities exchanges’ costs to 

provide market data or their fee markup 

over those costs, and therefore cannot 

use other exchange’s market data fees as 

a benchmark to determine a reasonable 

markup over the costs of providing 

market data. Nevertheless, the Exchange 

believes the other exchanges’ market 

data fees are a useful example of 

alternative approaches to providing and 

charging for connectivity 

notwithstanding that the competing 

exchanges may have different system 

architectures that may result in different 

cost structures for the provision of 

market data. To that end, the Exchange 

believes the proposed cToM market data 

fees are reasonable because the 

proposed fees are still less than fees 

charged for similar connectivity 

provided by other options exchanges 

with comparable market shares. 

As described in the below table, the 

Exchange’s proposed fee remains less 

than fees charged for similar market 

data products provided by other options 

exchanges with similar market share. In 

the each of the above cases, the 

Exchange’s proposed fees are still 

significantly lower than that of 

competing options exchanges with 

similar market share. Each of the market 

data rates in place at competing options 

exchanges were filed with the 

Commission for immediate effectiveness 

and remain in place today. 

Exchange Monthly fee 

MIAX (as proposed) ........................ $1,250—Internal Distributor; $1,750—External Distributor. 

NYSE American, LLC (‘‘Amex’’) 47 .. $1,500 Access Fee; $1,000 Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

NYSE Arca, Inc. (‘‘Arca’’) 48 ............ $1,500 Access Fee; $1,000 Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

NASDAQ PHLX LLC (‘‘PHLX’’) 49 ... $3,000—Internal Distributor; $3,500—External Distributor. 

The Proposed Pricing Is Not Unfairly 

Discriminatory and Provides for the 

Equitable Allocation of Fees, Dues, and 

Other Charges 

The Exchange believes that it is 

reasonable, equitable and not unfairly 

discriminatory to assess Internal 

Distributors fees that are less than the 

fees assessed for External Distributors 

for subscriptions to the cToM data feed 

because Internal Distributors have 

limited, restricted usage rights to the 

market data, as compared to External 

Distributors, which have more 

expansive usage rights. All Members 

and non-Members that determine to 

receive any market data feed of the 

Exchange (or its affiliates, MIAX Pearl 

and MIAX Emerald), must first execute, 

among other things, the MIAX Exchange 

Group Exchange Data Agreement (the 

‘‘Exchange Data Agreement’’).50

Pursuant to the Exchange Data 

Agreement, Internal Distributors are 

restricted to the ‘‘internal use’’ of any 

market data they receive. This means 

that Internal Distributors may only 

distribute the Exchange’s market data to 

the recipient’s officers and employees 

and its affiliates.51 External Distributors 

may distribute the Exchange’s market 

data to persons who are not officers, 

employees or affiliates of the External 

Distributor,52 and may charge their own 

fees for the redistribution of such 

market data. Accordingly, the Exchange 


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53See supra note 49. 

54See supra note 17. 

55See supra notes 24 through 26. 56 15 U.S.C. 78s(b)(3)(C). 

believes it is fair, reasonable and not 

unfairly discriminatory to assess 

External Distributors a higher fee for the 

Exchange’s market data products as 

External Distributors have greater usage 

rights to commercialize such market 

data and can adjust their own fee 

structures if necessary. The Exchange 

also utilizes more resources to support 

External Distributors versus Internal 

Distributors, as External Distributors 

have reporting and monitoring 

obligations that Internal Distributors do 

not have, thus requiring additional time 

and effort of Exchange staff. The 

Exchange believes the proposed cToM 

fees are equitable and not unfairly 

discriminatory because the fee level 

results in a reasonable and equitable 

allocation of fees amongst subscribers 

for similar services, depending on 

whether the subscriber is an Internal or 

External Distributor. Moreover, the 

decision as to whether or not to 

purchase market data is entirely 

optional to all market participants. 

Potential purchasers are not required to 

purchase the market data, and the 

Exchange is not required to make the 

market data available. Purchasers may 

request the data at any time or may 

decline to purchase such data. The 

allocation of fees among users is fair and 

reasonable because, if market 

participants determine not to subscribe 

to the data feed, firms can discontinue 

their use of the cToM data. 

Further, the Exchange believes that 

the proposal is equitable and not 

unfairly discriminatory because the 

proposed cToM fees will apply to all 

market participants of the Exchange on 

a uniform basis. The Exchange also 

notes that the proposed monthly cToM 

fees for Internal and External 

Distributors are the same prices that the 

Exchange charges for its ToM data 

product. 

The Exchange believes the proposed 

change to delete certain text from 

Section 6)a) of the Fee Schedule 

promotes just and equitable principles 

of trade and removes impediments to 

and perfects the mechanism of a free 

and open market and a national market 

system because the proposed change is 

a non-substantive edit to the Fee 

Schedule to remove unnecessary text. 

The Exchange believes that this 

proposed change will provide greater 

clarity to Members and the public 

regarding the Exchange’s Fee Schedule 

and that it is in the public interest for 

the Fee Schedule to be accurate and 

concise so as to eliminate the potential 

for confusion. 

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 some of its costs in providing 

cToM to market participants. As 

described above, the Exchange has 

operated at a cumulative net annual loss 

since it launched operations in 2008 53

due to providing a low cost alternative 

to attract order flow and encourage 

market participants to experience the 

high determinism and resiliency of the 

Exchange’s trading Systems. To do so, 

the Exchange chose to waive the fees for 

some non-transaction related services 

and Exchange products or provide them 

at a very marginal cost, which was not 

profitable to the Exchange. This resulted 

in the Exchange forgoing revenue it 

could have generated from assessing any 

fees or higher fees. The Exchange could 

have sought to charge higher fees at the 

outset, but that could have served to 

discourage participation on the 

Exchange. Instead, the Exchange chose 

to provide a low cost exchange 

alternative to the options industry, 

which resulted in lower initial 

revenues. An example of this is cToM, 

for which the Exchange only now seeks 

to adopt fees at a level similar to or 

lower than those of other options 

exchanges. 

Since the Exchange launched 

Complex Order functionality in 2016, 

all Exchange Members and nonMembers have had the ability to receive 

the Exchange’s cToM data free of charge 

for the past five years.54 Since 2016, 

when the Exchange adopted Complex 

Order functionality, the Exchange has 

spent time and resources building out 

various Complex Order functionality in 

its System to provide better trading 

strategies and risk functionality for 

market participants in order to better 

compete with other exchanges’ complex 

functionality and similar data products 

focused on complex orders.55 The 

Exchange now seeks to recoup its costs 

for providing cToM to market 

participants and believes the proposed 

fees will not result in excessive pricing 

or supra-competitive profit. 

Inter-Market Competition 

The Exchange also does not believe 

the proposed fees would cause any 

unnecessary or in appropriate burden 

on intermarket competition as other 

exchanges are free to introduce their 

own comparable data product and lower 

their prices to better compete with the 

Exchange’s offering. There is no reason 

to believe that the newly proposed fees 

for receive the cToM data feed would 

impair other exchange’s ability to 

compete or cause any unnecessary or 

inappropriate burden on inter-market 

competition. Particularly, the proposed 

product and fees apply uniformly to any 

purchaser, in that it does not 

differentiate between subscribers that 

purchase cToM. The proposed fees are 

set at a modest level that would allow 

any interested Member or non-Member 

to purchase such data based on their 

business needs. 

The Exchange does not believe that 

the proposed rule change to make a 

minor, non-substantive edit to Section 

6)a) of the Fee Schedule by deleting 

unnecessary text will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. This 

proposed rule change is not being made 

for competitive reasons, but rather is 

designed to remedy a minor nonsubstantive issue and will provide 

added clarity to the Fee Schedule. The 

Exchange believes that it is in the public 

interest for the Fee Schedule to be 

accurate and concise so as to eliminate 

the potential for confusion on the part 

of market participants. In addition, the 

Exchange does not believe the proposal 

will impose any burden on inter-market 

competition as the proposal does not 

address any competitive issues and is 

intended to protect investors by 

providing further transparency 

regarding the Exchange’s Fee Schedule. 

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. Suspension of the Proposed Rule 

Change 

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

Act,56 at any time within 60 days of the 

date of filing of a proposed rule change 

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


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57 15 U.S.C. 78s(b)(1). 

58See supra note 5, and accompanying text. 

59See Securities Exchange Act Release No. 92789, 

86 FR 49364 (September 2, 2021). 

60See Securities Exchange Act Release No. 93471 

(October 29, 2021), 86 FR 60947 (November 4, 

2021). 

61See Securities Exchange Act Release Nos. 

93426 (October 26, 2021), 86 FR 60314 (November 

1, 2021); 93808 (December 17, 2021), 86 FR 73011 

(December 23, 2021). 

62See Securities Exchange Act Release No. 94262 

(February 15, 2022), 87 FR 9733 (February 22, 

2022). 

63See id. 

64See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

65 Id. 

66 15 U.S.C. 78f(b)(4). 

67 15 U.S.C. 78f(b)(5). 

68 15 U.S.C. 78f(b)(8). 

69See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 

70For purposes of temporarily suspending the 

proposed rule change, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

71 15 U.S.C. 78s(b)(3)(C). Once the Commission 

temporarily suspends a proposed rule change, 

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

Commission institute proceedings under Section 

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

change should be approved or disapproved. 

72 15 U.S.C. 78s(b)(2)(B). 

73 Id. 

74 15 U.S.C. 78f(b)(4). 

75 15 U.S.C. 78f(b)(5). 

76 15 U.S.C. 78f(b)(8). 

Act,57 the Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

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

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. As discussed below, the 

Commission believes a temporary 

suspension of the proposed rule change 

is necessary and appropriate to allow for 

additional analysis of the proposed rule 

change’s consistency with the Act and 

the rules thereunder. 

As the Exchange further details above, 

the Exchange first filed a proposed rule 

change proposing fee changes as 

proposed herein on June 30, 2021, with 

the proposed fee changes effective 

beginning July 1, 2021. That proposal, 

MIAX–2021–28, was published for 

comment in the Federal Register on July 

15, 2021.58 On August 27, 2021, 

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

Act, the Commission: (1) Temporarily 

suspended the proposed rule change; 

and (2) instituted proceedings to 

determine whether to approve or 

disapprove the proposal.59 On 

September 30, 2021, the Exchange 

withdrew the proposed rule change,60

and filed two other proposed rule 

changes proposing fee changes as 

proposed herein,61 which were each 

also subsequently withdrawn. On 

February 7, 2022, the Exchange filed a 

proposed rule change proposing fee 

changes as proposed herein and, on 

February 15, 2022, the Commission 

issued a notice of the proposed rule 

change and, pursuant to Section 

19(b)(3)(C) of the Act, simultaneously: 

(1) Temporarily suspended the 

proposed rule change; and (2) instituted 

proceedings to determine whether to 

approve or disapprove the proposal.62

The instant filing is substantially 

similar.63

When exchanges file their proposed 

rule changes with the Commission, 

including fee filings like the Exchange’s 

present proposal, they are required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.64 The 

instructions to Form 19b–4, on which 

exchanges file their proposed rule 

changes, specify that such statement 

‘‘should be sufficiently detailed and 

specific to support a finding that the 

proposed rule change is consistent with 

[those] requirements.’’ 65

Among other things, exchange 

proposed rule changes are subject to 

Section 6 of the Act, including Sections 

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

rules of an exchange to (1) provide for 

the equitable allocation of reasonable 

fees among members, issuers, and other 

persons using the exchange’s 

facilities; 66 (2) perfect the mechanism of 

a free and open market and a national 

market system, protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers; 67 and (3) not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.68

In temporarily suspending the 

Exchange’s fee change, the Commission 

intends to further consider whether the 

proposed fees for the cToM market data 

feed are consistent with the statutory 

requirements applicable to a national 

securities exchange under the Act. In 

particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; not permit unfair 

discrimination between customers, 

issuers, brokers or dealers; and do not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act.69

Therefore, the Commission finds that 

it is appropriate in the public interest, 

for the protection of investors, and 

otherwise in furtherance of the purposes 

of the Act, to temporarily suspend the 

proposed rule change.70

IV. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Rule Change 

In addition to temporarily suspending 

the proposal, the Commission also 

hereby institutes proceedings pursuant 

to Sections 19(b)(3)(C) 71 and 19(b)(2)(B) 

of the Act 72 to determine whether the 

proposed rule change should be 

approved or disapproved. Institution of 

such proceedings is appropriate at this 

time in view of the legal and policy 

issues raised by the proposed rule 

change. Institution of proceedings does 

not indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, the 

Commission seeks and encourages 

interested persons to provide additional 

comment on the proposed rule change 

to inform the Commission’s analysis of 

whether to disapprove the proposed 

rule change. 

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

Act,73 the Commission is providing 

notice of the grounds for possible 

disapproval under consideration. The 

Commission is instituting proceedings 

to allow for additional analysis of 

whether the Exchange has sufficiently 

demonstrated how the proposed rule 

change is consistent with Sections 

6(b)(4),74 6(b)(5),75 and 6(b)(8) 76 of the 

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

that the rules of a national securities 

exchange provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

issuers and other persons using its 

facilities. Section 6(b)(5) of the Act 

requires that the rules of a national 

securities exchange be designed, among 

other things, to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

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

the rules of a national securities 

exchange not impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 


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77See supra Section II.A.2. 

78See id. 

79See id. 80See id. 

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth above, 

in addition to any other comments they 

may wish to submit about the proposed 

rule change. In particular, the 

Commission seeks comment on the 

following aspects of the proposal and 

asks commenters to submit data where 

appropriate to support their views: 

1. Cost Estimates and Allocation. The 

Exchange states that it is not asserting 

that the proposed fees are constrained 

by competitive forces, but rather sets 

forth a ‘‘cost-plus model,’’ and states 

that the proposed fees are ‘‘reasonable 

because they will permit recovery of the 

Exchange’s costs in providing cToM 

data and will not result in the Exchange 

generating a supra-competitive 

profit.’’ 77 Setting forth its costs in 

providing the cToM data product, and 

as summarized in greater detail above, 

MIAX projects $299,228 in aggregate 

annual estimated costs for 2022 as the 

sum of: (1) $5,379 in external expenses 

paid in total to its data center provider 

(0.20% of the total applicable expense) 

for data center services; its fiber 

connectivity provider for network 

services (0.20% of the total applicable 

expense); and various other hardware 

and software providers (0.20% of the 

total applicable expense) supporting the 

production environment; (2) $288,580 

in internal expenses, allocated to (a) 

employee compensation costs 

($270,825); (b) depreciation and 

amortization ($3,830); and (c) 

occupancy costs ($13,925); and (3) 

$5,268 in allocated shared expenses, 

including recruiting and training, 

marketing and advertising costs, 

professional fees for legal, tax and 

accounting services, and 

telecommunications costs. Do 

commenters believe that these 

allocations are reasonable? Should the 

Exchange be required to provide more 

specific information regarding the 

allocation of third-party expenses, such 

as the overall estimated cost for each 

category of external expenses or at 

minimum the total applicable thirdparty expenses? Should the Exchange 

have provided either a percentage 

allocation or statements regarding the 

Exchange’s overall estimated costs for 

the internal expense categories and 

general shared expenses figure? Do 

commenters believe that the Exchange 

has provided sufficient detail about how 

it determined which costs are associated 

with providing and maintaining the 

cToM data product and why? Do 

commenters believe that the Exchange 

provided sufficient detail or explanation 

to support its claim that ‘‘no expense 

amount is allocated twice,’’ 78 whether 

among the sub-categories of expenses in 

this filing, across the Exchange’s fee 

filings for other products or services, or 

over time? Do commenters believe that 

the Exchange has provided sufficient 

detail about how it determined ‘‘general 

shared expenses’’ and how it 

determined what portion should be 

associated with providing and 

maintaining the cToM data product? 

The Exchange describes a ‘‘proprietary’’ 

process that was applied in making 

these determinations or arriving at 

particular allocations. Do commenters 

believe further explanation is necessary? 

What are commenters’ views on 

whether the Exchange has provided 

sufficient detail on the identity and 

nature of services provided by third 

parties? Across all of the Exchange’s 

projected costs, what are commenters’ 

views on whether the Exchange has 

provided sufficient detail on the 

elements that go into market data costs, 

including how shared costs are 

allocated and attributed to market data 

expenses, to permit an independent 

review and assessment of the 

reasonableness of purported cost-based 

fees and the corresponding profit 

margin thereon? 

2. Revenue Estimates and Profit 

Margin Range. The Exchange provides a 

single monthly revenue figure from 

March 2022 as the basis for calculating 

the profit margin of –53%. Do 

commenters believe this is reasonable? 

If not, why not? The profit margin is 

also dependent on the accuracy of the 

cost projections which, if inflated 

(intentionally or unintentionally), may 

render the projected profit margin 

meaningless. The Exchange 

acknowledges that this margin may 

fluctuate from month to month as 

Members and non-Members add and 

drop subscriptions,79 and that costs may 

increase. The Exchange does not 

account for the possibility of cost 

decreases, however. What are 

commenters’ views on the extent to 

which actual costs (or revenues) deviate 

from projected costs (or revenues)? Do 

commenters believe that the Exchange’s 

methodology for estimating the profit 

margin is reasonable? Should the 

Exchange provide a range of profit 

margins that it believes are reasonably 

possible, and the reasons therefor? 

3. Reasonable Rate of Return. The 

Exchange states that its expected profit 

margin is –53% and that the proposed 

fees are reasonable because the 

Exchange is operating at a negative 

margin for this product. Further, the 

Exchange states that it chose to initially 

provide the cToM data product for free 

and to forego revenue that they 

otherwise could have generated from 

assessing any fees.80 What are 

commenters’ views regarding what 

factors should be considered in 

determining what constitutes a 

reasonable rate of return for the cToM 

market data product? Do commenters 

believe it relevant to an assessment of 

reasonableness that, according to the 

Exchange, the Exchange’s proposed fees 

are similar to or lower than fees charged 

by competing options exchanges with 

similar market share? Should an 

assessment of reasonable rate of return 

include consideration of factors other 

than costs; and if so, what factors 

should be considered, and why? 

4. Periodic Reevaluation. The 

Exchange has not stated that it would 

reevaluate the appropriate level of cToM 

data product fees if there is a material 

deviation from the anticipated profit 

margin. In light of the impact that the 

number of subscriptions has on profit 

margins, and the potential for costs to 

decrease (or increase) over time, what 

are commenters’ views on the need for 

exchanges to commit to reevaluate, on 

an ongoing and periodic basis, their 

cost-based data fees to ensure that the 

fees stay in line with their stated 

profitability projections and do not 

become unreasonable over time, for 

example, by failing to adjust for 

efficiency gains, cost increases or 

decreases, and changes in subscribers? 

How formal should that process be, how 

often should that reevaluation occur, 

and what metrics and thresholds should 

be considered? How soon after a new 

data fee change is implemented should 

an exchange assess whether its revenue 

and/or cost estimates were accurate and 

at what threshold should an exchange 

commit to file a fee change if its 

estimates were inaccurate? Should an 

initial review take place within the first 

30 days after a data fee is implemented? 

60 days? 90 days? Some other period? 

5. Fees for Internal Distributors versus 

External Distributors. The Exchange 

argues that it is reasonable, equitable, 

and not unfairly discriminatory to 

assess Internal Distributors fees that are 

lower than the fees assessed for External 

Distributors for subscriptions to the 

cToM data feed ($1,250 per month for 

Internal Distributors versus $1,750 per 

month for External Distributors), since 

Internal Distributors have limited, 

restricted usage rights to the market 

data, as compared to External 


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81See text accompanying supra notes 50–52. 

82See id. 

83See id. 

84Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

85See id. 

86See id. 

87See Susquehanna Int’l Group, LLP v. Securities 

and Exchange Commission, 866 F.3d 442, 446–47 

(DC Cir. 2017) (rejecting the Commission’s reliance 

on an SRO’s own determinations without sufficient 

evidence of the basis for such determinations). 

88 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act 

grants the Commission flexibility to determine what 

type of proceeding—either oral or notice and 

opportunity for written comments—is appropriate 

for consideration of a particular proposal by an 

SRO. See Securities Acts Amendments of 1975, 

Report of the Senate Committee on Banking, 

Housing and Urban Affairs to Accompany S. 249, 

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

89 15 U.S.C. 78s(b)(3)(C). 

90 17 CFR 200.30–3(a)(12), (57), and (58). 

Distributors, which have more 

expansive usage rights, including rights 

to commercialize such market data.81 In 

addition, the Exchange states that it 

‘‘utilizes more resources’’ to support 

External Distributors as compared to 

Internal Distributors, as External 

Distributors have reporting and 

monitoring obligations that Internal 

Distributors do not have, thus requiring 

‘‘additional time and effort’’ of the 

Exchange’s staff.82 What are 

commenters’ views on the adequacy of 

the information the Exchange provides 

regarding the differential between the 

Internal Distributor and External 

Distributor fees? Do commenters believe 

that the fees for Internal Distributors 

and External Distributors, as well as the 

fee differences between Distributors, are 

supported by the Exchange’s assertions 

that it sets the differentiated pricing 

structure in a manner that is equitable 

and not unfairly discriminatory? Do 

commenters believe that the Exchange 

should demonstrate how the proposed 

Distributor fee levels correlate with 

different costs to better substantiate how 

the Exchange ‘‘utilizes more resources’’ 

to support External Distributors versus 

Internal Distributors and permit an 

assessment of the Exchange’s statement 

that ‘‘External Distributors have 

reporting and monitoring obligations 

that Internal Distributors do not have, 

thus requiring additional time and effort 

of Exchange staff’’? 83

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the [Act] and the rules 

and regulations issued thereunder . . . 

is on the [SRO] that proposed the rule 

change.’’ 84 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,85 and 

any failure of an SRO to provide this 

information may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Act and the applicable rules 

and regulations.86 Moreover, 

‘‘unquestioning reliance’’ on an SRO’s 

representations in a proposed rule 

change would not be sufficient to justify 

Commission approval of a proposed rule 

change.87

The Commission believes it is 

appropriate to institute proceedings to 

allow for additional consideration and 

comment on the issues raised herein, 

including as to whether the proposal is 

consistent with the Act, any potential 

comments or supplemental information 

provided by the Exchange, and any 

additional independent analysis by the 

Commission. 

V. Request for Written Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above, as well 

as any other relevant concerns. In 

particular, the Commission invites the 

written views of interested persons 

concerning whether the proposal is 

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

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

Act, or the rules and regulations 

thereunder. The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.88

Interested persons are invited to 

submit written data, views, and 

arguments concerning the proposed rule 

change, including whether the proposed 

rule change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

MIAX–2022–15 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MIAX–2022–15. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MIAX–2022–15 and should 

be submitted on or before May 11, 2022. 

Rebuttal comments should be submitted 

by May 25, 2022. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,89 that File 

Number SR–MIAX–2022–15 be and 

hereby is, temporarily suspended. In 

addition, the Commission is instituting 

proceedings to determine whether the 

proposed rule change should be 

approved or disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.90

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–08380 Filed 4–19–22; 8:45 am] 

BILLING CODE 8011–01–P 


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