23660 Federal Register / Vol. 87, No. 76 / Wednesday, April 20, 2022 / Notices 

66See Susquehanna Int’l Group, LLP v. Securities 

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

(D.C. Cir. 2017) (rejecting the Commission’s reliance 

on an SRO’s own determinations without sufficient 

evidence of the basis for such determinations). 

67 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). 

68 15 U.S.C. 78s(b)(3)(C). 

69 17 CFR 200.30–3(a)(12), (57) and (58). 

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

2 17 CFR 240.19b–4. 

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

order interface for certain order types as set forth 

in Rule 516 into the MIAX Pearl System. See the 

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 

Commission approval of a proposed rule 

change.66

The Commission believes it is 

appropriate to institute proceedings to 

allow for additional consideration and 

comment on the issues raised herein, 

including as to whether the proposal is 

consistent with the Act, any potential 

comments or supplemental information 

provided by the Exchange, and any 

additional independent analysis by the 

Commission. 

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. In 

particular, the Commission invites the 

written views of interested persons 

concerning whether the proposal is 

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

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

Act, or the rules and regulations 

thereunder. The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.67

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by May 11, 2022. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by May 25, 2022. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR– 

EMERALD–2022–13 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–EMERALD–2022–13. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–EMERALD–2022–13 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,68 that File 

Number SR–EMERALD–2022–13 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.69

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–08381 Filed 4–19–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94722; File No. SR– 

PEARL–2022–12] 

Self-Regulatory Organizations; MIAX 

PEARL LLC; Notice of Filing of a 

Proposed Rule Change To Amend the 

MIAX PEARL Options Fee Schedule To 

Increase the Monthly Fees for MIAX 

Express Network Full Service Port; 

Suspension of and Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove the Proposed 

Rule Change 

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, MIAX PEARL, LLC (‘‘MIAX Pearl’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I and II below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons and is, pursuant 

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

(i) Temporarily suspending the rule 

change; and (ii) instituting proceedings 

to determine whether to approve or 

disapprove the proposed rule change. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Pearl Options Fee 

Schedule (the ‘‘Fee Schedule’’) to 

amend the fees for the Exchange’s MIAX 

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

Ports. 

The text of the proposed rule change 

is available on the Exchange’s website at 

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

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 


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4 ‘‘Member’’ means an individual or organization 

that is registered with the Exchange pursuant to 

Chapter II of Exchange Rules for purposes of trading 

on the Exchange as an ‘‘Electronic Exchange 

Member’’ or ‘‘Market Maker.’’ Members are deemed 

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

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 

5See Securities Exchange Act Release No. 92365 

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

PEARL–2021–33). 

6See id. 

7See Letter from Richard J. McDonald, 

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

Vanessa Countryman, Secretary, Commission, dated 

September 7, 2021 (‘‘SIG Letter 1’’). 

8See Securities Exchange Act Release No. 92798 

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

2021). 

9See Securities Exchange Act Release No. 93556 

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

2021) (SR–PEARL–2021–53). 

10See id. 

11Securities Exchange Act Release No. 93894 

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

(SR–PEARL–2021–58). 

12 Id. 

13See Securities Exchange Act Release No. 94286 

(February 18, 2022), 87 FR 10860 (February 25, 

2022) (SR–PEARL–2022–04) (Notice of Filing of a 

Proposed Rule Change to Amend the MIAX PEARL 

Options Fee Schedule to Increase the Monthly Fees 

for MIAX Express Network Full Service Port; 

Suspension of and Order Instituting Proceedings to 

Determine Whether to Approve or Disapprove the 

Proposed Rule Change). 

14See Letter from Richard J. McDonald, SIG, to 

Vanessa Countryman, Secretary, Commission, dated 

March 15, 2022 (‘‘SIG Letter 2’’). 

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

port that supports all MEO input message types and 

binary bulk order entry. See the Definitions Section 

of the Fee Schedule. 

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

MEO port that supports all MEO input message 

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

Section of the Fee Schedule. 

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

port that supports all MEO input message types, but 

does not support bulk order entry and only 

supports limited order types, as specified by the 

Exchange via Regulatory Circular. See the 

Definitions Section of the Fee Schedule. 

18A ‘‘Matching Engine’’ is a part of the MIAX 

Pearl electronic system that processes options 

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

Some Matching Engines will process option classes 

with multiple root symbols, and other Matching 

Engines may be dedicated to one single option root 

symbol. A particular root symbol may only be 

assigned to a single designated Matching Engine. A 

particular root symbol may not be assigned to 

multiple Matching Engines. See the Definitions 

Section of the Fee Schedule. 

19See NYSE American Options Fee Schedule, 

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

matching engine basis, with NYSE American having 

17 match engines). See NYSE Technology FAQ and 

Best Practices: Options, Section 5.1 (How many 

matching engines are used by each exchange?) 

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

detailing the number of matching engines per 

options exchange); NYSE Arca Options Fee 

Schedule, Port Fees (each port charged on a per 

matching engine basis, NYSE Arca having 19 match 

engines); and NYSE Technology FAQ and Best 

Practices: Options, Section 5.1 (How many 

matching engines are used by each exchange?) 

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

detailing the number of matching engines per 

options exchange). See NASDAQ Fee Schedule, 

Nasdaq Options 7 Pricing Schedule, Section 3, 

Nasdaq Options Market—Ports and Other Services 

(each port charged on a per matching engine basis, 

with Nasdaq having multiple matching engines). 

See Nasdaq Specialized Quote Interface (SQF) 

Specification, Version 6.5b (updated February 13, 

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

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

Interface Specification’’). The NASDAQ SQF 

Interface Specification also provides that 

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

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

trading infrastructures that may consist of multiple 

matching engines with each matching engine 

trading only a range of option underlyings. Further, 

the NASDAQ SQF Interface Specification provides 

that the SQF infrastructure is such that the firms 

connect to one or more servers residing directly on 

the matching engine infrastructure. Since there may 

be multiple matching engines, firms will need to 

connect to each engine’s infrastructure in order to 

establish the ability to quote the symbols handled 

by that engine. 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV [sic] below. 

The Exchange has prepared summaries, 

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

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Fee Schedule to increase the fees for its 

Full Service MEO Ports, Bulk and 

Single, which allow Members 4 to 

submit electronic orders in all products 

to the Exchange. The Exchange initially 

filed this proposal on July 1, 2021, with 

the proposed fee changes being 

immediately effective (‘‘First Proposed 

Rule Change’’).5 The First Proposed 

Rule Change was published for 

comment in the Federal Register on July 

15, 2021.6 The Commission received 

one comment letter on the First 

Proposed Rule Change 7 and 

subsequently suspended the Frist [sic] 

Proposed Rule Change on August 27, 

2021.8 The Exchange withdrew First 

Proposed Rule Change on October 12, 

2021 and re-submitted the proposal on 

November 1, 2021, with the proposed 

fee changes being immediately effective 

(‘‘Second Proposed Rule Change’’).9 The 

Second Proposed Rule Change provided 

additional justification for the proposed 

fee changes and addressed certain 

points raised in the single comment 

letter that was submitted on the First 

Proposed Rule Change. The Second 

Proposed Rule Change was published 

for comment in the Federal Register on 

November 17, 2021.10 The Commission 

received no comment letters on the 

Second Proposed Rule Change. 

Nonetheless, the Exchange withdrew 

the Second Proposed Rule Change on 

December 20, 2021 and submitted a 

revised proposal for immediate 

effectiveness (‘‘Third Proposed Rule 

Change’’).11 The Third Proposed Rule 

Change was published for comment in 

the Federal Register on January 10, 

2022.12 Although the Commission again 

did not receive any comment letters on 

the Third Proposed Rule Change, the 

Exchange withdrew the Third Proposed 

Rule Change on February 15, 2022 and 

submitted a revised proposal for 

immediate effectiveness, which was 

noticed and immediately suspended by 

the Commission on February 18, 2022 

(‘‘Fourth Proposed Rule Change’’).13

The Commission received one comment 

letter on the Fourth Proposed Rule 

Change.14 The Exchange withdrew the 

Fourth Proposed Rule Change on March 

30, 2022 and submits this revised 

proposal to be effective April 1, 2022 

(‘‘Fifth Proposed Rule Change’’). 

Full Service MEO Port Fee Changes 

The Exchange currently offers 

different types of MEO Ports depending 

on the services required by the Member, 

including a Full Service MEO PortBulk,15 a Full Service MEO PortSingle,16 and a Limited Service MEO 

Port.17 For one monthly price, a Member 

may be allocated two (2) Full-Service 

MEO Ports of either type per matching 

engine 18 and may request Limited 

Service MEO Ports for which MIAX 

Pearl will assess Members Limited 

Service MEO Port fees per matching 

engine based on a sliding scale for the 

number of Limited Service MEO Ports 

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

per matching engine to a Member may 

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

Ports—Bulk; (b) two (2) Full Service 

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

Service MEO Port—Bulk and one (1) 

Full Service MEO Port—Single. 

Unlike other options exchanges that 

provide similar port functionality and 

charge fees on a per port basis,19 the 

Exchange offers Full Service MEO Ports 

as a package and provides Members 

with the option to receive up to two Full 

Service MEO Ports (described above) 

per matching engine to which that 

Member connects. The Exchange 

currently has twelve (12) matching 

engines, which means Members may 

receive up to twenty-four (24) Full 

Service MEO Ports for a single monthly 

fee, that can vary based on certain 

volume percentages, as described below. 

For illustrative purposes and as 

described in more detail below, the 

Exchange currently assesses a fee of 

$5,000 per month for Members that 


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20See Securities Exchange Act Release No. 82867 

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

(SR–PEARL–2018–07). 

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

of at least 75% common ownership between the 

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

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

Appointed EEM (or, conversely, the Appointed 

EEM of an Appointed Market Maker). An 

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

Maker (who does not otherwise have a corporate 

affiliation based upon common ownership with an 

EEM) that has been appointed by an EEM and an 

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

otherwise have a corporate affiliation based upon 

common ownership with a MIAX Pearl Market 

Maker) that has been appointed by a MIAX Pearl 

Market Maker, pursuant to the following process. A 

MIAX Pearl Market Maker appoints an EEM and an 

EEM appoints a MIAX Pearl Market Maker, for the 

purposes of the Fee Schedule, by each completing 

and sending an executed Volume Aggregation 

Request Form by email to membership@

miaxoptions.com no later than 2 business days 

prior to the first business day of the month in which 

the designation is to become effective. Transmittal 

of a validly completed and executed form to the 

Exchange along with the Exchange’s 

acknowledgement of the effective designation to 

each of the Market Maker and EEM will be viewed 

as acceptance of the appointment. The Exchange 

will only recognize one designation per Member. A 

Member may make a designation not more than 

once every 12 months (from the date of its most 

recent designation), which designation shall remain 

in effect unless or until the Exchange receives 

written notice submitted 2 business days prior to 

the first business day of the month from either 

Member indicating that the appointment has been 

terminated. Designations will become operative on 

the first business day of the effective month and 

may not be terminated prior to the end of the 

month. Execution data and reports will be provided 

to both parties. See the Definitions Section of the 

Fee Schedule. 

22 ‘‘Excluded Contracts’’ means any contracts 

routed to an away market for execution. See the 

Definitions Section of the Fee Schedule. 

23 ‘‘TCV’’ means total consolidated volume 

calculated as the total national volume in those 

classes listed on MIAX Pearl for the month for 

which the fees apply, excluding consolidated 

volume executed during the period of time in 

which the Exchange experiences an Exchange 

System Disruption (solely in the option classes of 

the affected Matching Engine). See the Definitions 

Section of the Fee Schedule. 

24The term ‘‘Market Maker’’ means a Member 

registered with the Exchange for the purpose of 

making markets in options contracts traded on the 

Exchange and that is vested with the rights and 

responsibilities specified in Chapter VI of Exchange 

Rules. See the Definitions Section of the Fee 

Schedule and Exchange Rule 100. 

reach the highest Full Service MEO 

Port—Bulk Tier, regardless of the 

number of Full Service MEO Ports 

allocated to the Member. For example, 

assuming a Member connects to all 

twelve (12) matching engines during a 

month, with two Full Service MEO 

Ports per matching engine, this results 

in a cost of $208.33 per Full Service 

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

month. This fee had been unchanged 

since the Exchange adopted Full Service 

MEO Port fees in 2018.20 The Exchange 

proposes to increase Full Service MEO 

Port fees as further described below, 

with the highest monthly fee of $10,000 

for the Full Service MEO Port—Bulk. 

Members will continue to receive two 

(2) Full Service MEO Ports to each 

matching engine to which they connect 

for the single flat monthly fee. 

Assuming a Member connects to all 

twelve (12) matching engines during the 

month, with two Full Service MEO 

Ports per matching engine, this would 

result in a cost of $416.67 per Full 

Service MEO Port ($10,000 divided by 

24). 

The Exchange assesses Members Full 

Service MEO Port Fees, either for a Full 

Service MEO Port—Bulk and/or for a 

Full Service MEO Port—Single, based 

upon the monthly total volume 

executed by a Member and its 

Affiliates 21 on the Exchange across all 

origin types, not including Excluded 

Contracts,22 as compared to the Total 

Consolidated Volume (‘‘TCV’’),23 in all 

MIAX Pearl-listed options. The 

Exchange adopted a tier-based fee 

structure based upon the volume-based 

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

described in the Definitions section of 

the Fee Schedule. The Exchange 

assesses these and other monthly Port 

fees to Members in each month the 

market participant is credentialed to use 

a Port in the production environment. 

Current Full Service MEO Port—Bulk 

Fees. The Exchange currently assesses 

Members monthly Full Service MEO 

Port—Bulk fees as follows: 

(i) If its volume falls within the 

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

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

(ii) if its volume falls within the 

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

or volume above 0.30% up to 0.60%, 

$4,500; and 

(iii) if its volume falls with the 

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

or volume above 0.60%, $5,000. 

Proposed Full Service MEO Port— 

Bulk Fees. The Exchange proposes to 

assess Members monthly Full Service 

MEO Port—Bulk fees as follows: 

(i) If its volume falls within the 

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

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

(ii) if its volume falls within the 

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

or volume above 0.30% up to 0.60%, 

$7,500; and 

(iii) if its volume falls with the 

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

or volume above 0.60%, $10,000. 

Current Full Service MEO Port— 

Single Fees. The Exchange currently 

assesses Members monthly Full Service 

MEO Port—Single fees as follows: 

(i) If its volume falls within the 

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

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

(ii) if its volume falls within the 

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

or volume above 0.30% up to 0.60%, 

$3,375; and 

(iii) if its volume falls with the 

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

or volume above 0.60%, $3,750. 

Proposed Full Service MEO Port— 

Single Fees. The Exchange proposes to 

assess Members monthly Full Service 

MEO Port—Single fees as follows: 

(i) If its volume falls within the 

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

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

(ii) if its volume falls within the 

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

or volume above 0.30% up to 0.60%, 

$3,500; and 

(iii) if its volume falls with the 

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

or volume above 0.60%, $4,500. 

The Exchange offers various types of 

ports with differing prices because each 

port accomplishes different tasks, are 

suited to different types of Members, 

and consume varying capacity amounts 

of the network. For instance, MEO ports 

allow for a higher throughput and can 

handle much higher quote/order rates 

than FIX ports. Members that are Market 

Makers 24 or high frequency trading 

firms utilize these ports (typically 

coupled with 10Gb ULL connectivity) 

because they transact in significantly 

higher amounts of messages being sent 

to and from the Exchange, versus FIX 

port users, who are traditionally 

customers sending only orders to the 

Exchange (typically coupled with 1Gb 

connectivity). The different types of 

ports cater to the different types of 

Exchange Memberships and different 

capabilities of the various Exchange 

Members. Certain Members need ports 

and connections that can handle using 

far more of the network’s capacity for 

message throughput, risk protections, 

and the amount of information that the 

System has to assess. Those Members 

may account for the vast majority of 

network capacity utilization and volume 

executed on the Exchange, as discussed 

throughout. 

The Exchange proposes to increase its 

monthly Full Service MEO Port fees 


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25See supra note 20. 

26See MIAX Fee Schedule, Section 5)d)ii); MIAX 

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

27See NYSE American Options Fee Schedule, 

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

Schedule, Port Fees; Nasdaq Stock Market LLC 

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

3. 

28See ‘‘The market at a glance,’’ available at 

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

29, 2022). 

29See NASDAQ Rules, General 8: Connectivity, 

Section 1. Co-Location Services. 

30See supra note 28. 

31See ISE Rules, General 8: Connectivity. 

32See supra note 28. 

33See NYSE American Options Fee Schedule, 

Section IV. 

34See supra note 28. 

35 15 U.S.C. 78f(b). 

36 15 U.S.C. 78f(b)(4). 

37 15 U.S.C. 78f(b)(5). 

38See 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). 

39See 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’’). 

since it has not done so since the fees 

were adopted in 2018,25 which are 

designed to recover a portion of the 

costs associated with directly accessing 

the Exchange. The Exchange notes that 

its affiliates, Miami International 

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

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

charge fees for their high throughput, 

low latency MIAX Express Interface 

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

Exchange charges for its MEO Ports— 

generally, the more active user the 

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

national ADV of classes assigned to 

quote on MIAX and MIAX Emerald), the 

higher the MEI Port fee.26 This concept 

is not new or novel. The Exchange also 

notes that the proposed increased fees 

for the Exchange’s Full Service MEO 

Ports are in line with, or cheaper than, 

the similar port fees for similar 

membership fees charged by other 

options exchanges.27

The Exchange has historically 

undercharged for Full Service MEO 

Ports as compared to other options 

exchanges because the Exchange 

provides Full Service MEO Ports as a 

package for a single monthly fee. As 

described above, this package includes 

two Full Service MEO Ports for each of 

the Exchange’s twelve (12) matching 

engines. The Exchange understands 

other options exchanges charge fees on 

a per port basis. The Exchange believes 

other exchanges’ port fees are useful 

examples of alternative approaches to 

providing and charging for port access 

and provides the below table for 

comparison purposes only to show how 

its proposed fees compare to fees 

currently charged by other options 

exchanges for similar port access. 

Exchange Type of port Monthly fee 

MIAX Pearl (as proposed) (equity options market share of 

4.32% as of March 29, 2022 for the month of March).28

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

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

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

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

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

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

The NASDAQ Stock Market LLC (‘‘NASDAQ’’) 29 (equity options market share of 8.62% as of March 29, 2022 for the 

month of March).30

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

Ports 41 or more: $150 each. 

Nasdaq ISE LLC (‘‘ISE’’) 31 (equity options market share of 

5.83% as of March 29, 2022 for the month of March).32

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

Ports 41 or more: $150 each. 

NYSE American LLC (‘‘Amex’’) 33 (equity options market 

share of 7.15% as of March 29, 2022 for the month of 

March).34

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

Ports 6–20: $1,000 each. 

Ports 21 or more: $500. 

Implementation 

The proposed fees are effective 

beginning April 1, 2022. 

2. Statutory Basis 

The Exchange believes that the 

proposed increase to the MEO Port fees 

is consistent with Section 6(b) of the 

Act 35 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 36

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 that the Exchange operates or 

controls. The Exchange also believes the 

proposed MEO Port fees furthers the 

objectives of Section 6(b)(5) of the Act 37

in that it is designed to promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest and 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’’).38 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.’’ 39 Based on both the BOX Order 

and the Guidance, the Exchange 

believes that the proposed MEO Port 

fees is consistent with the Act because 

it (i) is reasonable, equitably allocated, 

not unfairly discriminatory, and not an 

undue burden on competition; (ii) 

complies with the BOX Order and the 

Guidance; and (iii) is supported by 

evidence (including comprehensive 

revenue and cost data and analysis) that 

the proposed fees are fair and 

reasonable and will not result in 

excessive pricing or supra-competitive 

profit. 

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 


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40 Id. 

41 Id. 

42 Id. 

43 Id. 

44 Id. 

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.’’ 40 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.’’ 41 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.’’ 42 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 access 

services to supply MEO Ports and will 

not result in the Exchange generating a 

supra-competitive profit. 

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

exceed the profits that can be obtained 

in a competitive market.’’ 43 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.’’ 44 The Exchange provides 

this analysis below. 

The proposed fees are based on a costplus model. An MEO Port provides 

access to each of the three Exchange 

networks, extranet, internal network, 

and external network, all of which are 

necessary for Exchange operations. The 

Exchange’s extranet provides the means 

by which the Exchange communicates 

with market participants and includes 

access to the Member portal and the 

ability to send and receive daily 

communications and reports. The 

internal network connects the extranet 

to the rest of the Exchange’s systems 

and includes trading systems, market 

data systems, and network monitoring. 

The external network includes 

connectivity between the Exchange and 

other national securities exchanges, 

market data providers, and between the 

Exchange’s locations in Princeton, New 

Jersey, Secaucus, New Jersey (NY4), 

Miami, Florida, and Chicago, Illinois 

(CH4). In determining the appropriate 

fees to charge Members and nonMembers to access the Exchange’s 

System Networks via MEO Ports, the 

Exchange considered its costs to provide 

and maintain its System Networks and 

connectivity to those System Networks, 

using costs that are related to providing 

and maintaining access the Exchange’s 

System Networks via MEO Ports to 

estimate such costs, and set fees that are 

designed to cover its costs with a 

limited return in excess of such costs. 

The Exchange believes that it is 

important to demonstrate that the 

proposed fees are based on the 

Exchange’s costs and reasonable 

business needs and believes the 

proposed fees will allow the Exchange 

to continue 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 and maintaining access to the 

Exchange’s System Networks via MEO 

Ports because of the uncertainty of 

forecasting subscriber decision making 

with respect to firms’ port and access 

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 MEO Ports, and, if 

such expense did so relate, what portion 

(or percentage) of such expense actually 

supports access to the Exchange’s 

System Networks via MEO Ports. 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 

MEO Ports. 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 MEO Ports. 

The Exchange reviewed each individual 

expense to determine if such expense 

was related to MEO Ports. 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 MEO Ports. For 

the avoidance of doubt, no expense 

amount is allocated twice. 

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 MEO 

Ports. 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, reviews 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 


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45The 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. 46For example, the Exchange previously noted 

that all third-party expense described in its prior fee 

filing was contained in the information technology 

and communication costs line item under the 

section titled ‘‘Operating Expenses Incurred 

Directly or Allocated From Parent,’’ in the 

Exchange’s 2019 Form 1 Amendment containing its 

financial statements for 2018. See Securities 

Exchange Act Release No. 87876 (December 31, 

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

2019–36). Accordingly, the third party expense 

described in this filing is attributed to the same line 

item for the Exchange’s 2022 Form 1 Amendment, 

which will be filed in 2023. 47The 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. 

fully support access to the Exchange 

and its System Networks via MEO Ports. 

The Exchange incurs technology 

expense related to establishing and 

maintaining Information Security 

services, enhanced network monitoring 

and customer reporting, as well as 

Regulation SCI-mandated processes 

associated with its network technology. 

Both fixed and variable expenses have 

significant impact on the Exchange’s 

overall costs to provide and maintain 

access to the Exchange’s System 

Networks via MEO Ports. For example, 

to accommodate new Members, the 

Exchange may need to purchase 

additional hardware to support those 

Members as well as provide enhanced 

monitoring and reporting of customer 

performance that the Exchange and its 

affiliates currently provide. Further, as 

the total number of Members increases, 

the Exchange and its affiliates may need 

to increase their data center footprint 

and consume more power, resulting in 

increased costs charged by their 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 proposed fees are a 

reasonable attempt to offset a portion of 

those costs associated with providing 

access to and maintaining its System 

Networks’ infrastructure and related 

MEO Ports. 

The Exchange estimated its total 

annual expense to provide and maintain 

access to the Exchange’s System 

Networks via MEO Ports 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 MEO Ports; 

and (3) general shared expenses.45 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 

maintaining its System Networks, then 

divided those costs according to the cost 

methodology outlined below. 

For 2022, the total annual expense for 

providing the access services associated 

with the MEO Ports is estimated to be 

$2,923,534, or $243,627 per month. The 

Exchange believes it is more appropriate 

to analyze the proposed fees utilizing its 

estimated 2022 revenue and costs, 

which utilize the same presentation 

methodology as set forth in the 

Exchange’s previously-issued Audited 

Unconsolidated Financial Statements.46

The $2,923,534 estimated total annual 

expense is directly related to the access 

to the Exchange’s System Networks via 

MEO Ports 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 line-item costs considered by 

the Exchange for each category are 

described further below. 

External expenses 

Category 

Percentage of 

total expense 

amount allocated 

Data Center Provider ..................................................................................................................................................................... 1.80% 

Fiber Connectivity Provider ........................................................................................................................................................... 0.90% 

Security Financial Transaction Infrastructure (‘‘SFTI’’), and Other Connectivity and Content Service Providers ........................ 0.90% 

Hardware and Software Providers ................................................................................................................................................ 0.90% 

Total of External Expenses ........................................................................................................................................................... 47 $295,184 

Internal expenses 

Category Expense amount 

allocated 

Employee Compensation ............................................................................................................................................................... $2,066,488 

Depreciation and Amortization ...................................................................................................................................................... 161,578 

Occupancy ..................................................................................................................................................................................... 62,531 

Total of Internal expenses ...................................................................................................................................................... 2,290,597 

Allocated Shared Expenses .......................................................................................................................................................... 337,753 

The Exchange notes that it only has 

two primary sources of revenue, 

connectivity and port fees, to recover 

those costs associated with providing 

and maintaining access to the 

Exchange’s System Networks. 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 via MEO Ports to Members. 

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 and 

maintaining the System Networks and 


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access to System Networks via MEO 

Ports. 

For clarity, the Exchange took a 

conservative approach in determining 

the expense and the percentage of that 

expense to be allocated to providing and 

maintaining the System Networks and 

access to System Networks in 

connection with MEO Ports. 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 and maintaining the System 

Networks and access to Exchange’s 

System Networks via MEO Ports. This 

may result in the Exchange under 

allocating an expense to provide and 

maintain its System Networks and 

access to the System Networks via MEO 

Ports, 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 and MIAX 

Emerald, as well as the Exchange’s 

equities market, 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 and maintain the System 

Networks and access to the System 

Networks via a MEO Port are estimated 

to be $295,184. 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) SFTI, which supports 

connectivity feeds for the entire U.S. 

options industry; (4) 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 (5) various other hardware 

and software providers that 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 MEO 

Ports. 

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 1.80% of the 

total applicable data center provider 

expense is applicable to providing and 

maintaining access services and System 

Networks associated with MEO Ports. 

The Exchange believes this allocation is 

reasonable because MEO Ports are a core 

means of access to the Exchange’s 

network, providing one method for 

market participants to send and receive 

order and trade messages, as well as 

receive market data. A large portion of 

the Exchange’s data center expense is 

due to providing and maintaining port 

access and connectivity to the 

Exchange’s System Networks, including 

providing cabling within the data center 

between market participants and the 

Exchange. The Exchange excluded from 

this allocation servers that are dedicated 

to market data. 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 other ports, market data, 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 

and maintain access services and 

System Networks associated with the 

MEO Ports to its Members and their 

customers. Without the retention of a 

third-party fiber connectivity provider, 

the 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 

MEO Ports. 

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 0.90% of the total fiber 

connectivity expense was applicable to 

providing and maintaining access 

services and System Networks 

associated with MEO Ports. The 

Exchange believes this allocation is 

reasonable because MEO Ports are a core 

means of access to the Exchange’s 


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network, providing one method for 

market participants to send and receive 

order and trade messages, as well as 

receive market data. A large portion of 

the Exchange’s fiber connectivity 

expense 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 market data 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 and 

maintaining access services and System 

Networks associated with MEO Ports. 

The Exchange believes this allocation is 

reasonable because it represents the 

Exchange’s actual cost to retain fiber 

connectivity and maintain and provide 

access to its System Networks via MEO 

Ports. 

Connectivity and Content Services 

Provided by SFTI and Other Providers 

The Exchange relies on SFTI and 

various other connectivity and content 

service providers for connectivity and 

data feeds for the entire U.S. options 

industry, as well as content, 

connectivity, and infrastructure services 

for critical components of the network 

that are necessary to provide and 

maintain its System Networks and 

access to its System Networks via MEO 

Ports. Specifically, the Exchange utilizes 

SFTI and other content service provider 

to connect to other national securities 

exchanges, the Options Price Reporting 

Authority (‘‘OPRA’’), and to receive 

market data from other exchanges and 

market data providers. SFTI is operated 

by the Intercontinental Exchange, the 

parent company of five registered 

exchanges, and has become integral to 

the U.S. markets. The Exchange 

understands SFTI provides services to 

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

exchanges and other market 

participants. Without services from 

SFTI and various other service 

providers, the Exchange would not be 

able to connect to other national 

securities exchanges, market data 

providers, or OPRA and, therefore, 

would not be able to operate and 

support its System Networks. The 

Exchange does not employ a separate 

fee to cover its SFTI and content service 

provider expense and recoups that 

expense, in part, by charging for MEO 

Ports. 

The Exchange reviewed it costs to 

retain SFTI and other content service 

providers, including network 

monitoring and maintenance, 

remediation of connectivity related 

issues, and ongoing administrative 

activities related to connectivity 

management and determined that 0.90% 

of the total applicable SFTI and other 

service provider expense is allocated to 

providing the access services associated 

with MEO Ports. SFTI and other content 

service providers are key vendors and 

necessary components in providing 

connectivity to the Exchange. The 

primary service SFTI provides for the 

Exchange is connectivity to other 

national securities exchanges and their 

disaster recovery facilities and, 

therefore, a vast portion of this expense 

is allocated to providing access to the 

System Networks via MEO Ports. 

Connectivity via SFTI is necessary for 

purposes of order routing and accessing 

disaster recovery facilities in the case of 

a system outage. Engaging SFTI and 

other like vendors provides purchasers 

of MEO Ports connectivity to other 

national securities exchanges for 

purposes of order routing and disaster 

recovery. The Exchange did not allocate 

a portion of this expense that relates to 

the receipt of market data from other 

national securities exchange and OPRA. 

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 and maintaining the 

System Networks or access to its System 

Networks via MEO Ports. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

actual cost to provide and maintain its 

System Networks and access to its 

System Networks via MEO Ports, and 

not any other service, as supported by 

its cost review. 

Hardware and Software Providers 

The Exchange relies on dozens of 

third-party hardware and software 

providers for equipment necessary to 

operate its 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 access to its 

System Networks via MEO Ports. 

Hardware and software equipment and 

licenses for that equipment are also 

necessary to operate and monitor 

physical assets necessary to offer 

physical connectivity to the Exchange. 

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 its System Networks and 

provide access to its Members and their 

customers. The Exchange does not 

employ a separate fee to cover its 

hardware and software expense and 

recoups that expense, in part, by 

charging for MEO Ports. 

The Exchange reviewed it 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 0.90% of the total applicable 

hardware and software expense is 

allocated to providing and maintaining 

access services and System Networks 

associated with MEO Ports. Hardware 

and software equipment and licenses 

are key to the operation of the Exchange 

and its System Networks. Without them, 

market participants would not be able to 

access the System Networks via MEO 

Ports. The Exchange only allocated the 

portion of this expense to the hardware 

and software that is related to a market 

participant’s use of MEO Ports, such as 

operating its matching engines. 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 market data 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 and maintaining its System 

Networks and access to its System 

Networks via MEO Ports. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

cost to provide and maintain its System 

Networks and access to its System 

Networks via MEO Ports, 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 via a 

MEO Port connection are estimated to 

be $2,290,597. This includes, but is not 

limited to, costs associated with: (1) 


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48For purposes of this allocation, the Exchange 

did not consider expenses related to supporting 

employees who support MEO Ports, 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 6.3 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 MEO Ports. 

49All 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. 

Employee compensation and benefits 

for full-time employees that support the 

System Networks and access to System 

Networks via MEO Ports, 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 MEO 

Ports, 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 and maintain the 

System Networks and access to System 

Networks via MEO Ports. 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 and 

maintenance of the System Networks 

and access to System Networks via MEO 

Ports. The Exchange reviewed its 

employee compensation and benefits 

expense and the portion of that expense 

allocated to providing and maintaining 

the System Networks and access to 

System Networks via MEO Ports. As 

part of this review, the Exchange 

considered employees whose functions 

include providing and maintaining the 

System Networks and MEO Ports and 

used a blended rate of compensation 

reflecting salary, stock and bonus 

compensation, bonuses, benefits, 

payroll taxes, and 401K matching 

contributions.48

Based on this review, the Exchange 

determined to allocate $2,066,488 in 

employee compensation and benefits 

expense to providing access to the 

System Networks. To determine the 

appropriate allocation the Exchange 

reviewed the time employees allocated 

to supporting its System Networks and 

access to its System Networks via MEO 

Ports. 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 and maintain 

access to its System Networks via MEO 

Ports for its Members, non-Members and 

their customers. The Exchange 

determined the above allocation based 

on the personnel whose work focused 

on functions necessary to provide and 

maintain the System Networks and 

access to System Networks via MEO 

Ports. The Exchange does not charge a 

separate fee regarding employees who 

support MEO Ports and the Exchange 

seeks to recoup that expense, in part, by 

charging for MEO Ports. 

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 System Networks and 

access to System Networks via MEO 

Ports. The Exchange reviewed all of its 

physical assets and software, owned and 

leased, and determined whether each 

asset is related to providing and 

maintaining its System Networks and 

access to its System Networks via MEO 

Ports, 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 

MEO Ports and the System Networks, 

the Exchange considered the 

depreciation of hardware and software 

that are key to the operation of the 

Exchange and its System Networks. 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 access to its System Networks 

via MEO Ports. Without them, market 

participants would not be able to access 

the System Networks. The Exchange 

seeks to recoup a portion of its 

depreciation expense by charging for 

MEO Ports. 

Based on this review, the Exchange 

determined to allocate $161,578 in 

depreciation and amortization expense 

to providing access to the System 

Networks via a MEO Port fees. The 

Exchange only allocated the portion of 

this depreciation expense to the 

hardware and software related to a 

market participant’s use of MEO Ports. 

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 market data or unrelated 

administrative services.49

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 System Networks and 

MEO Ports. Similarly, the Exchange also 

considered the actual physical space 

used to house hardware and other 

equipment necessary to provide and 

maintain the System Networks and 

MEO Ports. This equipment includes 

computers, servers, and accessories 

necessary to support the System 

Networks and MEO Ports. Based on this 

review, the Exchange determined to 

allocate $62,531 of its occupancy 

expense to provide and maintain the 

System Networks and MEO Ports. 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 

System Networks, including providing 

and maintaining access to its System 

Networks via MEO Ports. 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 market data and administrative 

services. 

* * * * * 

The Exchange notes that a material 

portion of its total overall expense is 


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50See supra note 35. 

51The Exchange has incurred a cumulative loss 

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

See Exchange’s Form 1/A, Application for 

Registration or Exemption from Registration as a 

National Securities Exchange, filed July 28, 2021, 

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

vprr/2100/21000461.pdf. 

allocated to the provision and 

maintenance of access services 

(including connectivity and ports). The 

Exchange believes this is reasonable as 

the Exchange operates a technologybased business that differentiates itself 

from its competitors based on its more 

deterministic and resilient trading 

systems that rely on access to a high 

performance network, resulting in 

significant technology expense. Over 

two-thirds of Exchange staff are 

technology-related employees. The 

majority of the Exchange’s expense is 

technology-based. Thus, the Exchange 

believes it is reasonable to allocate a 

material portion of its total overall 

expense towards providing and 

maintaining its System Networks and 

access to its System Networks via MEO 

Ports. 

Allocated Shared Expense 

Finally, a limited portion of general 

shared expenses was allocated to overall 

MEO Port costs as without these general 

shared costs, the Exchange would not be 

able to operate in the manner that it 

does and provide MEO Ports. 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 MEO Ports and the System 

Networks that support those 

connections is estimated to be $337,753. 

The Exchange used the average of the 

above allocations to determine the 

amount of general shared expenses to 

allocate to this proposal. The Exchange 

believes this ensures that the allocation 

correlates to the percentage of the above 

internal and external expense applied to 

the proposed fee change. 

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 

(which includes MEO Ports), 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 MEO 

Ports, the Exchange analyzed the 

number of Members currently utilizing 

MEO Ports 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 fees 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 

fees, Members purchased 15 Full 

Service MEO Port—Bulk, for which the 

Exchange anticipates charging $60,500, 

and 4 Full Service MEO Port—Single, 

for which the Exchange anticipates 

charging $11,125, for a total of $71,625 

for that month. This will result in a loss 

of $171,999 ($71,625 in MEO Port 

revenue, minus $243,627 in monthly 

MEO Port expenses). For April 2022, 

assuming the Exchange charges the 

proposed fees described herein, the 

Exchange anticipates Members 

purchasing 15 Full Service MEO Port— 

Bulk, for which the Exchange 

anticipates charging $112,500, and 4 

Full Service MEO Port—Single, for 

which the Exchange anticipates 

charging $13,000, for a total of $125,500 

for that month. This will result in a loss 

of $118,127 ($125,500 in MEO Port 

revenue, minus $243,627 in monthly 

MEO Port expenses). 

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 

ports may be purchased from month to 

month as Members are free to add and 

drop ports 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 

market.’’ 50 Until recently, the Exchange 

has operated at a cumulative net annual 

loss since it launched operations in 

2017.51 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 MEO 

Ports, 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 is not 

generating a profit, and therefore, 

cannot be deemed to be generating a 

‘‘supra-competitive’’ profit by now 

increasing the fees for MEO Ports while 

still sustaining a loss. The Exchange 

should not now be penalized for now 

seeking to raise it fees to near market 

rates after offering such products as 

discounted prices. 

The Exchange notes that its revenue 

estimate is based on estimates 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 MEO Ports, the 

Exchange will have to be successful in 

retaining existing clients that wish to 

maintain physical connectivity or 

obtaining new clients that will purchase 

such services. To the extent the 

Exchange is successful in encouraging 

new clients to connect directly to the 

Exchange, 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 exchanges’ costs to provide 

ports or their fee markup over those 

costs, and therefore cannot use other 

exchange’s port fees as a benchmark to 


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52See supra note 19. 53See supra note 20. 54See supra note 14. 

determine a reasonable markup over the 

costs of providing ports. Nevertheless, 

the Exchange believes the other 

exchanges’ port fees are useful examples 

of alternative approaches to providing 

and charging for ports notwithstanding 

that the competing exchanges may have 

different system architectures that may 

result in different cost structures for the 

provision of connectivity. To that end, 

the Exchange believes the proposed fees 

are reasonable because the proposed 

fees are still less than fees charged for 

similar ports provided by other options 

exchanges with comparable market 

shares. 

As described in the above table, the 

Exchange’s proposed fees remain less 

than fees charged for similar ports 

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. 

Despite proposing lower or similar fees 

to that of competing options exchanges 

with similar market share, the Exchange 

believes that it provides a premium 

network experience to its Members and 

non-Members via a highly deterministic 

System, enhanced network monitoring 

and customer reporting, and a superior 

network infrastructure than markets 

with higher market shares and more 

expensive connectivity alternatives. 

Each of the rates in place at competing 

options exchanges were filed with the 

Commission for immediate effectiveness 

and remain in place today. 

The Proposed Fees Are Equitably 

Allocated 

The Exchange further believes that the 

proposed fees are reasonable, equitably 

allocated and not unfairly 

discriminatory because, for the flat fee, 

the Exchange provides each Member 

two (2) Full Service MEO Ports for each 

matching engine to which that Member 

is connected. Unlike other options 

exchanges that provide similar port 

functionality and charge fees on a per 

port basis,52 the Exchange offers Full 

Service MEO Ports as a package and 

provides Members with the option to 

receive up to two Full Service MEO 

Ports per matching engine to which it 

connects. The Exchange currently has 

twelve (12) matching engines, which 

means Members may receive up to 

twenty-four (24) Full Service MEO Ports 

for a single monthly fee, that can vary 

based on certain volume percentages. 

The Exchange currently assesses 

Members a fee of $5,000 per month in 

the highest Full Service MEO Port— 

Bulk Tier, regardless of the number of 

Full Service MEO Ports allocated to the 

Member. Assuming a Member connects 

to all twelve (12) matching engines 

during a month, with two Full Service 

MEO Ports per matching engine, this 

results in a cost of $208.33 per Full 

Service MEO Port—Bulk ($5,000 

divided by 24) for the month. This fee 

has been unchanged since the Exchange 

adopted Full Service MEO Port fees in 

2018.53 The Exchange now proposes to 

increase the Full Service MEO Port fees, 

with the highest Tier fee for a Full 

Service MEO Port—Bulk of $10,000 per 

month. Members will continue to 

receive two (2) Full Service MEO Ports 

to each matching engine to which they 

are connected for the single flat monthly 

fee. Assuming a Member connects to all 

twelve (12) matching engines during the 

month, and achieves the highest Tier for 

that month, with two Full Service MEO 

Ports—Bulk per matching engine, this 

would result in a cost of $416.67 per 

Full Service MEO Port ($10,000 divided 

by 24). 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would place 

certain market participants at the 

Exchange at a relative disadvantage 

compared to other market participants 

or affect the ability of such market 

participants to compete. 

Intra-Market Competition 

The Exchange believes that the 

proposed fees do not place certain 

market participants at a relative 

disadvantage to other market 

participants because the proposed fees 

do not favor certain categories of market 

participants in a manner that would 

impose a burden on competition; rather, 

the allocation of the proposed fees 

reflects the network resources 

consumed by the various size of market 

participants—lowest bandwidth 

consuming members pay the least, and 

highest bandwidth consuming members 

pays the most, particularly since higher 

bandwidth consumption translates to 

higher costs to the Exchange. 

Inter-Market Competition 

The Exchange believes the proposed 

fees do not place an undue burden on 

competition on other options exchanges 

that is not necessary or appropriate. In 

particular, options market participants 

are not forced to connect to (and 

purchase MEO Ports from) all options 

exchanges. The Exchange also notes that 

it has far less Members as compared to 

the much greater number of members at 

other options exchanges. Not only does 

MIAX Pearl have less than half the 

number of members as certain other 

options exchanges, but there are also a 

number of the Exchange’s Members that 

do not connect directly to MIAX Pearl. 

There are a number of large users of the 

MEO Interface and broker-dealers that 

are members of other options exchange 

but not Members of MIAX Pearl. The 

Exchange is also unaware of any 

assertion that its existing fee levels or 

the proposed fees would somehow 

unduly impair its competition with 

other options exchanges. To the 

contrary, if the fees charged are deemed 

too high by market participants, they 

can simply disconnect. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

One comment letter was submitted on 

the Fourth Proposed Rule Change 54 and 

the Exchange responds to issues raised 

in that comment letter here. 

First, SIG Letter 2 asserts that the 

Exchange’s motivation for the proposed 

fees is not a proper justification and 

refers to statements included in 

withdrawn filings about the Exchange’s 

need to recoup initial capital 

expenditures. SIG Letter 2 does not 

provided a reason why recoupment of 

initial capital expenditures is not a 

proper justification for a proposed rule 

change. SIG Letter 2 also asserts that 

enhancing profitability is not an 

appropriate justification for the 

proposed fee change. The Exchange 

never asserted in any of the preceding 

versions of this proposed fee change 

that enhancing profitability was a 

motivation for the proposed fee change. 

Rather, the Exchange provided 

numerous reasons for the proposed fee 

change, including the need to cover 

ongoing internal and external expenses 

and anticipated increases in those costs 

due to ongoing inflationary pressures. 

Second, SIG Letter 2 claims that the 

Exchange omitted the data necessary to 

assess the proposed fee change under 

the Exchange Act. SIG Letter 2 also 

asserts that the Exchange’s disclosed 

cost data is not reliable. With each 

iteration of this proposed fee change, 

the Exchange provided more detail 

about its cost based analysis and 

rationale. In accordance with the 

Guidance, the Exchange has provided 

sufficient detail to support a finding that 

the proposed fees are consistent with 

the Exchange Act. The proposal 

includes a detailed description of the 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 76 / Wednesday, April 20, 2022 / Notices 23671 

55See letter from Tyler Gellasch, Executive 

Director, Healthy Markets Association (‘‘HMA’’), to 

Hon. Gary Gensler, Chair, Commission, dated 

October 29, 2021 (commenting on SR–CboeEDGA– 

2021–017, SR–CboeBYX–2021–020, SR–Cboe– 

BZX–2021–047, SR–CboeEDGX–2021–030, SR– 

MIAX–2021–41, SR–PEARL–2021–45, and SR– 

EMERALD–2021–29) (‘‘HMA Letter’’). 

56 15 U.S.C. 78f(b)(4). 

57 15 U.S.C. 78s(b)(3)(C). 

58 15 U.S.C. 78s(b)(1). 

59See Securities Exchange Act Release No. 92365 

(July 9, 2021), 86 FR 37347. The Commission 

received one comment letter on that proposal. 

Comment for SR–PEARL–2021–33 can be found at: 

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

srpearl202133-9208443-250011.pdf. 

60See Securities Exchange Act Release No. 93556, 

86 FR 49360 (September 2, 2021). 

61See Securities Exchange Act Release No. 93556 

(November 19, 2021), 86 FR 64235. 

62See Securities Exchange Act Release No. 93894 

(January 4, 2022), 87 FR 1203. 

63See Securities Exchange Act Release No. 94286, 

87 FR 10860 (February 25, 2022). 

64Comment on SR–PEARL–2022–04 can be found 

at: https://www.sec.gov/comments/sr-emerald-2022- 

05/sremerald202205-20119633-272460.pdf. 

65See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

66 Id. 

67 15 U.S.C. 78f(b)(4). 

Exchange’s costs and how the Exchange 

determined to allocate those costs 

related to the proposed fees. The 

Exchange was commended by an 

industry group regarding the level of 

transparency and disclosure included in 

the proposed fee changes and that group 

was supportive of the efforts made by 

the Exchange and its affiliates to 

provide increased transparency and 

justification for their proposed fees. The 

commenter specifically noted that: 

MIAX has repeatedly filed to change its 

connectivity fees in a way that will 

materially lower costs for many users, while 

increasing the costs for some of its heaviest 

of users. These filings have been withdrawn 

and repeatedly refiled. Each time, however, 

the filings contain significantly greater 

information about who is impacted and how 

than other filings that have been permitted to 

take effect without suspension. For example, 

MIAX detailed the associated projected 

revenues generated from the connectivity 

fees by user class, again in a clear attempt to 

comply with the SRO Fee Filing Guidance. 55

Despite the Exchange refiling its fee 

proposals to include significantly 

greater information about the impact of 

the proposed fees on Members and nonMembers, primarily at the request of the 

Commission Staff and in response to 

comments from SIG, SIG argues that the 

data the Exchange provided is 

insufficient or unreliable. Section 

6(b)(4) of the Act 56 requires an 

exchange to ‘‘provide for the equitable 

allocation of reasonable dues, fees and 

other charges.’’ The standard set by 

Congress for the Exchange to establish 

or amend a certain fee is 

‘‘reasonableness,’’ and the Exchange 

provided significant detail in this filing 

and past filings to support a finding that 

the proposed fees are reasonable under 

the Exchange Act. 

SIG Letter 2 also claims that the 

Exchange has not shown that the 

estimated profit margin is reasonable. In 

this filing, the Exchange enhanced its 

justification and support to find that the 

projected margin is reasonable and 

would not result in a supra-competitive 

profit. SIG Letter 2 states that SIG 

believes exchanges are utilities and 

utilities should only generate single to 

low double digit profit margins. This 

statement assumes that the projected 

profit margin is reflective of the 

Exchange’s overall profit margin and 

ignores that this is a single profit margin 

from a single offering that is offset by 

lower or negative profit margins for 

other products and services offered by 

the Exchange. SIG’s statement that 

utilities should only generate single to 

low double digit profit margins ignores 

SIG’s own reference to a 14.4%, low 

double digit profit margin from one of 

the Exchange’s recent proposed fee 

changes, as well as single digit to 

negative profit margins in other 

Exchange filings currently pending 

before the Commission. 

III. Suspension of the Proposed Rule 

Change 

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

Act,57 at any time within 60 days of the 

date of filing of a proposed rule change 

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

Act,58 the Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

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

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. As discussed below, the 

Commission believes a temporary 

suspension of the proposed rule change 

is necessary and appropriate to allow for 

additional analysis of the proposed rule 

change’s consistency with the Act and 

the rules thereunder. 

As the Exchange further details above, 

the Exchange first filed a proposed rule 

change proposing fee changes as 

proposed herein on July 1, 2021, with 

the proposed fee changes being 

immediately effective. That proposal, 

SR–PEARL–2021–33, was published for 

comment in the Federal Register on July 

15, 2021.59 On August 27, 2021, 

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

Act, the Commission: (1) Temporarily 

suspended the proposed rule change 

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

proceedings to determine whether to 

approve or disapprove the proposed 

rule change.60 On October 12, 2021, the 

Exchange withdrew SR–PEARL–2021– 

33. On November 1, 2021, the Exchange 

filed a proposed rule change proposing 

fee changes as proposed herein (SR– 

PEARL–2021–53). That proposal, SR– 

PEARL–2021–53, was published for 

comment in the Federal Register on 

November 17, 2021.61 On December 20, 

2021, the Exchange withdrew SR– 

PEARL–2021–53 and filed a proposed 

rule change proposing fee changes as 

proposed herein on December 20, 2021 

(PEARL–2022–58). That filing, SR– 

PEARL–2021–58, was published for 

comment in the Federal Register on 

January 10, 2022.62 On February 15, 

2022, the Exchange withdrew SR– 

PEARL–2021–58 and filed a proposed 

rule change proposing fee changes as 

proposed herein (SR–PEARL–2022–04). 

On February 18, 2022, pursuant to 

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

Commission: (1) Temporarily 

suspended the proposed rule change 

(SR–PEARL–2022–04); and (2) 

instituted proceedings to determine 

whether to approve or disapprove the 

proposal.63 The Commission received 

one comment letter on SR–PEARL– 

2022–04.64 On April 1, 2022, the 

Exchange withdrew SR–PEARL–2022– 

04 and filed the instant filing, which is 

substantially similar. 

When exchanges file their proposed 

rule changes with the Commission, 

including fee filings like the Exchange’s 

present proposal, they are required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.65 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.’’ 66

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; 67 (2) perfect the mechanism of 

a free and open market and a national 

market system, protect investors and the 

public interest, and not permit unfair 

discrimination between customers, 


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68 15 U.S.C. 78f(b)(5). 

69 15 U.S.C. 78f(b)(8). 

70See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 

71For 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). 

72 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. 

73 15 U.S.C. 78s(b)(2)(B). 

74 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the 

Act also provides that proceedings to determine 

whether to disapprove a proposed rule change must 

be concluded within 180 days of the date of 

publication of notice of the filing of the proposed 

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

proceedings may be extended for up to 60 days if 

the Commission finds good cause for such 

extension and publishes its reasons for so finding, 

or if the exchange consents to the longer period. See 

id. 

75 15 U.S.C. 78f(b)(4). 

76 15 U.S.C. 78f(b)(5). 

77 15 U.S.C. 78f(b)(8). 78See supra Section II.A.2. 

issuers, brokers, or dealers; 68 and (3) 

not impose any burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the Act.69

In temporarily suspending the 

Exchange’s fee change, the Commission 

intends to further consider whether the 

proposal to increase the monthly fees 

for MIAX Express Network Full Service 

Ports is consistent with the statutory 

requirements applicable to a national 

securities exchange under the Act. In 

particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; not be designed to 

permit unfair discrimination between 

customers, issuers, brokers or dealers; 

and not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.70

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.71

IV. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Rule Change 

The Commission is instituting 

proceedings pursuant to Sections 

19(b)(3)(C) 72 and 19(b)(2)(B) 73 of the 

Act to determine whether the 

Exchange’s proposed rule change 

should be approved or disapproved. 

Institution of such proceedings is 

appropriate at this time in view of the 

legal and policy issues raised by the 

proposed rule change. Institution of 

proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. Rather, as described 

below, the Commission seeks and 

encourages interested persons to 

provide comments on the proposed rule 

change to inform the Commission’s 

analysis of whether to approve or 

disapprove the proposed rule change. 

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

Act,74 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),75 6(b)(5),76 and 6(b)(8) 77 of the 

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

that the rules of a national securities 

exchange provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

issuers and other persons using its 

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

requires that the rules of a national 

securities exchange be designed, among 

other things, to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

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

the rules of a national securities 

exchange not impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following aspects of the 

proposal and asks commenters to 

submit data where appropriate to 

support their views: 

1. Cost Estimates and Allocation. The 

Exchange states that it is not asserting 

that the proposed MEO Port fee is 

constrained by competitive forces, but 

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

employing a ‘‘conservative approach’’ in 

determining the expense and the 

percentage of that expense to be 

allocated to providing and maintaining 

the System Networks and access to 

System Networks in connection with 

MEO Ports.78 Setting forth its costs in 

providing MEO Ports, and as 

summarized in greater detail above, the 

Exchange projects that the total 

combined annual expense for providing 

the access services associated with the 

MEO Ports in 2022 will be $2,923,534, 

the sum of: (1) $295,184 In third-party 

expenses paid in total to their Data 

Center Provider (1.8% of the total 

applicable expense) for data center 

services; Fiber Connectivity Provider, 

for network services (0.90% of the total 

applicable expense); SFTI and other 

connectivity and content service 

providers for connectivity support 

(0.90% of the total applicable expense); 

and various other hardware and 

software providers (0.90% of the total 

applicable expense), (2) $2,290,597 in 

internal expenses, allocated to (a) 

employee compensation and benefit 

costs ($2,066,488); (b) depreciation and 

amortization ($161,578); and (c) 

occupancy costs ($62,531) and (3) 

$337,753 of allocated general shared 

expenses that include 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 MEO 

Ports and why? 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 MEO Ports? 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 


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Federal Register / Vol. 87, No. 76 / Wednesday, April 20, 2022 / Notices 23673 

79See supra Section II.A.2. 

80See id. 81See id. 

82 17 CFR 201.700(b)(3). 

83See id. 

84See id. 

85See Susquehanna Int’l Group, LLP v. Securities 

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

(D.C. Cir. 2017) (rejecting the Commission’s reliance 

on an SRO’s own determinations without sufficient 

evidence of the basis for such determinations). 

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 MEO Port 

costs, including how shared costs are 

allocated and attributed to MEO Port 

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 

a revenue loss of $118,127 for April 

2022. Previously, the Exchange stated 

an estimated profit margin of 38%. 

What are commenters views on the 

significant increases in expenses 

allocated for this product? If not, why 

not? The Exchange states that their 

proposed margin is reasonable and is 

‘‘designed recover a portion of the costs 

associated with directly accessing the 

Exchange.’’ 79 The profit margin is also 

dependent on the accuracy of the cost 

projections which, if inflated 

(intentionally or unintentionally), may 

render the projected profit margin 

meaningless. The Exchange 

acknowledges that this margin may 

fluctuate from month to month due to 

changes in the number of ports 

purchased, and that costs may increase, 

but that the number of ports has not 

materially changed over the prior 

months and so the months that the 

Exchange has used as a baseline to 

perform its assessment are 

representative of reasonably anticipated 

costs and expenses.80 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 or 

loss margin is reasonable? Should the 

Exchange provide a range of profit or 

loss margins that they believe are 

reasonably possible, and the reasons 

therefor? 

3. Reasonable Rate of Return. As 

noted, the Exchange previously stated 

an estimated profit margin of 38% and 

now states a loss. What would 

commenters consider to be a reasonable 

rate of return and/or what methodology 

would they consider to be appropriate 

for determining a reasonable rate of 

return? What are commenters’ views 

regarding what factors should be 

considered in determining what 

constitutes a reasonable rate of return 

for MEO Port fees? Do commenters 

believe it relevant to an assessment of 

reasonableness that the Exchange’s 

proposed fees for MEO Ports are lower 

than those of other options exchanges to 

which the Exchange has compared? 

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 

re-evaluate the appropriate level of MEO 

Ports if there is a material deviation 

from the anticipated profit margin. In 

light of the impact that the number of 

subscribers has on MEO Port profit 

margins, and the potential for costs to 

decrease (or increase) over time, what 

are commenters’ views on the need for 

exchanges to commit to reevaluate, on 

an ongoing and periodic basis, their 

cost-based MEO Port fees to ensure that 

they stay in line with their stated 

profitability target and do not become 

unreasonable over time, for example, by 

failing to adjust for efficiency gains, cost 

increases or decreases, and changes in 

subscribers? How formal should that 

process be, how often should that 

reevaluation occur, and what metrics 

and thresholds should be considered? 

How soon after a new MEO Port fee 

change is implemented should an 

exchange assess whether its subscriber 

estimates were accurate and at what 

threshold should an exchange commit 

to file a fee change if its estimates were 

inaccurate? Should an initial review 

take place within the first 30 days after 

a MEO Port fee is implemented? 60 

days? 90 days? Some other period? 

5. Tiered Structure for Full Service 

MEO Ports Fees. The Exchange states 

that proposed tiered-pricing structure is 

reasonable, equitably allocated, and not 

unfairly discriminatory because for a 

flat fee the Exchange provides each 

Member two Full Service MEO Ports for 

each matching engine to which the 

Member is connected, and further, it is 

the model adopted by the Exchange 

when it launched operations for its Full 

Service MEO Port fees.81 What are 

commenters’ views on the adequacy of 

the information the Exchange provides 

regarding the proposed differentials in 

fees? Do commenters believe that the 

proposed price differences are 

supported by the Exchange’s assertions 

that it set the level of each proposed 

new fee in a manner that it equitable 

and not unfairly discriminatory? 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the Exchange Act and 

the rules and regulations issued 

thereunder . . . is on the [SRO] that 

proposed the rule change.’’ 82 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,83 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.84 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.85

The Commission believes it is 

appropriate to institute proceedings to 

allow for additional consideration and 

comment on the issues raised herein, 

including as to whether the proposal is 

consistent with the Act, any potential 

comments or supplemental information 

provided by the Exchange, and any 

additional independent analysis by the 

Commission. 

V. Commission’s Solicitation of 

Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above as well 

as any other relevant concerns. In 

particular, the Commission invites the 

written views of interested persons 

concerning whether the proposal is 

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

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

Act, or the rules and regulations 

thereunder. The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 


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86 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). 

87 15 U.S.C. 78s(b)(3)(C). 

88 17 CFR 200.30–3(a)(12), (57) and (58). 

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. 92358 

(July 9, 2021), 86 FR 37361 (July 15, 2021) (SR– 

EMERALD–2021–21). 

6 Id. 

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). 

request for an opportunity to make an 

oral presentation.86

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by May 11, 2022. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by May 25, 2022. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR– 

PEARL–2022–12 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2022–12. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–PEARL–2022–12 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,87 that File 

Number SR–PEARL–2022–12 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.88

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–08387 Filed 4–19–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94715; File No. SR– 

EMERALD–2022–14] 

Self-Regulatory Organizations; MIAX 

Emerald, 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, MIAX Emerald, LLC (‘‘MIAX 

Emerald’’ 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 Exchange’s Fee Schedule 

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

the market data product known as 

MIAX Emerald 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/ 

emerald, 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 

August 27, 2021.7 The Exchange 

withdrew the First Proposed Rule 

Change on September 30, 2021 8 and reVerDate Sep<11>2014 19:01 Apr 19, 2022 Jkt 256001 PO 00000 Frm 00182 Fmt 4703 Sfmt 4703 E:\FR\FM\20APN1.SGM 20APN1

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