29914 Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 

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 Exchange Rule 518(a)(5) for the definition of 

Complex Orders. 

6The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

7See Securities Exchange Act Release No. 79072 

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

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

Rule Change to Adopt New Rules to Govern the 

Trading of Complex Orders). 

8See Securities Exchange Act Release No. 79146 

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

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

description of the cToM data feed). 

9The ‘‘Strategy Book’’ is the Exchange’s 

electronic book of complex orders and complex 

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

10See supra note 8. 

11A ‘‘Distributor’’ of MIAX Emerald data is any 

entity that receives a feed or file of data either 

directly from MIAX Emerald or indirectly through 

another entity and then distributes it either 

internally (within that entity) or externally (outside 

that entity). All Distributors are required to execute 

a MIAX Emerald Distributor Agreement. See 

Section 6)a) of the Fee Schedule. 

12The Exchange also proposes to make a minor 

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

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

change fees for both the ToM and cToM data feeds. 

13See Securities Exchange Act Release Nos. 

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

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

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

(SR–MIAX–2014–66). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94893; File No. SR–MIAX– 

2022–19] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing of a Proposed 

Rule Change To Establish Fees for the 

Exchange’s cToM Market Data 

Product; Suspension of and Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove the 

Proposed Rule Change 

May 11, 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 29, 

2022, Miami International Securities 

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

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Item II below, which Item has been 

prepared by the Exchange. The 

Exchange filed the proposed rule change 

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

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

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons and is, pursuant to Section 

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

Temporarily suspending the proposed 

rule change; and (ii) instituting 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Options Fee Schedule 

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

for the market data product known as 

MIAX Complex Top of Market 

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

April 29, 2022. The text of the proposed 

rule change is available on the 

Exchange’s website at http://

www.miaxoptions.com/rule-filings, at 

MIAX’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Description of the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV [sic] below. 

The Exchange has prepared summaries, 

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

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange previously adopted 

rules governing the trading of Complex 

Orders 5 on the MIAX System 6 in 2016.7

At that time, the Exchange also adopted 

the market data product cToM and 

expressly waived fees for cToM to 

incentivize market participants to 

subscribe.8 The Exchange provided 

cToM free of charge for nearly five years 

and absorbed all costs associated with 

producing the cToM data product. As 

discussed more fully below, the 

Exchange recently calculated its annual 

aggregate costs for providing cToM to 

subscribers to be $299,228, or $24,936 

per month. Because the Exchange has 

offered cToM free of charge, the 

Exchange has borne 100% of the costs 

for the compilation and dissemination 

of cToM to subscribers. The Exchange 

now proposes to amend Section 6)a) of 

the Fee Schedule to establish fees for 

the cToM data product in order to 

recoup a portion, but not all, of these 

ongoing costs. 

Background 

In summary, cToM provides 

subscribers with the same information 

as the MIAX Top of Market (‘‘ToM’’) 

data product as it relates to the Strategy 

Book,9 i.e., the Exchange’s best bid and 

offer for a complex strategy, with 

aggregate size, based on displayable 

order and quoting interest in the 

complex strategy on the Exchange. 

However, cToM provides subscribers 

with the following additional 

information that is not included in ToM: 

(i) The identification of the complex 

strategies currently trading on the 

Exchange; (ii) complex strategy last sale 

information; and (iii) the status of 

securities underlying the complex 

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

cToM is therefore a distinct market data 

product from ToM in that it includes 

additional information that is not 

available to subscribers that receive only 

the ToM data feed. ToM subscribers are 

not required to subscribe to cToM, and 

cToM subscribers are not required to 

subscribe to ToM.10

Proposal 

The Exchange now proposes to amend 

Section 6)a) of the Fee Schedule to 

charge monthly fees to Distributors 11 of 

cToM. Specifically, the Exchange 

proposes to assess Internal Distributors 

$1,250 per month and External 

Distributors $1,750 per month for the 

cToM data feed.12 The proposed fees are 

identical to the fees that the Exchange, 

and its affiliate, MIAX Emerald, LLC 

(‘‘MIAX Emerald’’), currently charge for 

their ToM data products, both of which 

were previously published by the 

Commission and remain in effect 

today.13 The Exchange does not propose 

to adopt redistribution fees for the cToM 

data feed. However, the recipient of the 

cToM data feed would be required to 

become a data subscriber and would be 

subject to the applicable fees. The 

Exchange also does not propose to 

charge any additional fees based on a 

subscriber’s use of the cToM data feed, 

e.g., displayed versus non-displayed 

use, and does not propose to impose any 

individual per user fees. 

As it does today for ToM, the 

Exchange proposes to assess cToM fees 

on Internal and External Distributors in 

each month the Distributor is 

credentialed to use cToM in the 

production environment. Also, as the 

Exchange does today for ToM, market 

data fees for cToM will be reduced for 

new Distributors for the first month 

during which they subscribe to cToM, 

based on the number of trading days 


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14See NYSE American Options Proprietary 

Market Data Fees, American Options Complex Fees, 

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

NYSE_American_Options_Market_Data_Fee_

Schedule.pdf. 15See NYSE Arca Options Proprietary Market 

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

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

Options_Proprietary_Data_Fee_Schedule.pdf. 16See PHLX Price List—U.S. Derivatives Data, 

PHLX Orders Fees, at http://

www.nasdaqtrader.com/Trader.aspx?id=DPPrice

ListOptions#PHLX. 

17See MIAX website, Market Data & Offerings, at 

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

MOR provides real-time ulta-low latency updates 

on the following information: New Simple Orders 

added to the MIAX Order Book; updates to Simple 

Orders resting on the MIAX Order Book; new 

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

the book of Complex Orders); updates to Complex 

Orders resting on the Strategy Book; MIAX listed 

series updates; MIAX Complex Strategy definitions; 

the state of the MIAX System; and MIAX’s 

underlying trading state. 

18See Securities Exchange Act Release No. 92359 

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

MIAX–2021–28). 

19See Securities Exchange Act Release Nos. 

92789 (August 27, 2021), 86 FR 49364 (September 

2, 2021) (SR–MIAX–2021–28, SR–EMERALD–2021– 

21) (‘‘Suspension Order 1’’); 93426 (October 26, 

2021), 86 FR 60314 (November 1, 2021) (SR–MIAX– 

2021–50); 93808 (December 17, 2021), 86 FR 73011 

(December 23, 2021) (SR–MIAX–2021–62). 

20See Securities Exchange Act Release No. 94262 

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

(SR–MIAX–2022–10) (‘‘Suspension Order 2’’). 

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

that have been held during the month 

prior to the date on which that 

subscriber has been credentialed to use 

cToM in the production environment. 

Such new Distributors will be assessed 

a pro-rata percentage of the fees listed 

in the table in Section 6)a) of the Fee 

Schedule, which is the percentage of the 

number of trading days remaining in the 

affected calendar month as of the date 

on which they have been credentialed to 

use cToM in the production 

environment, divided by the total 

number of trading days in the affected 

calendar month. 

The Exchange believes that other 

exchanges’ fees for complex market data 

are useful examples and provides the 

below table for comparison purposes 

only to show how the Exchange’s 

proposed fees compare to fees currently 

charged by other options exchanges for 

similar complex market data. As shown 

by the below table, the Exchange’s 

proposed fees for cToM are similar to or 

less than fees charged for similar data 

products provided by other options 

exchanges. 

Exchange Monthly fee 

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

NYSE American, LLC (‘‘Amex’’) 14 .. $1,500—Access Fee, $1,000—Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

NYSE Arca, Inc. (‘‘Arca’’) 15 ............ $1,500—Access Fee, $1,000—Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

NASDAQ PHLX LLC (‘‘PHLX’’) 16 ... $3,000—Internal Distributor, $3,500—External Distributor. 

TheExchange also proposes to amend 

the paragraph below the table of fees for 

ToM and cToM in Section 6)a) of the 

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

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

sentence following the table of fees for 

ToM and cToM. The purpose of this 

proposed change is to remove 

unnecessary text from the Fee Schedule. 

cToM Content Is Available From 

Alternative Sources 

cToM is also not the exclusive source 

for Complex Order information from the 

Exchange and market participants may 

choose to subscribe to the Exchange’s 

other data products to receive such 

information. It is a business decision of 

market participants whether to 

subscribe to the cToM data product or 

not. Market participants that choose not 

to subscribe to cToM can derive much, 

if not all, of the same information 

provided in the cToM feed from other 

Exchange sources, including, for 

example, the MIAX Order Feed 

(‘‘MOR’’).17 The following cToM 

information is provided to subscribers 

of MOR: The Exchange’s best bid and 

offer for a complex strategy, with 

aggregate size, based on displayable 

order and quoting interest in the 

complex strategy on the Exchange; the 

identification of the complex strategies 

currently trading on the Exchange; and 

the status of securities underlying the 

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

resumed). In addition to the cToM 

information contained in MOR, complex 

strategy last sale information can be 

derived from the Exchange’s ToM data 

feed. Specifically, market participants 

may deduce that last sale information 

for multiple trades in related options 

series that are disseminated via the ToM 

data feed with the same timestamp are 

likely part of a Complex Order 

transaction and last sale. 

Implementation 

The proposed rule change will be 

effective May 2, 2022. The Exchange 

initially filed this proposal on June 30, 

2021 with the proposed fees effective 

beginning July 1, 2021.18 Between 

August 2021 and February 2022, the 

Exchange withdrew and refiled the 

proposed rule change, each time to 

meaningfully attempt to provide 

additional justification for the proposed 

fee changes, provide enhanced details 

regarding the Exchange’s cost 

methodology, and address questions 

contained in the Commission’s 

suspension order.19 No comment letters 

were submitted on any filings made to 

date regarding the proposed cToM fees. 

The Commission again suspended the 

proposed fees on February 15, 2022.20

The Exchange then provided the cToM 

data feed free of charge for the month 

of March 2022 and absorbed all 

associated costs. 

On March 30, 2022, the Exchange 

withdrew the proposed rule change that 

was previously suspended by the 

Commission on February 15, 2022. After 

providing the cToM data product free of 

charge for the month of March 2022, on 

April 1, 2022, the Exchange submitted 

a revised proposal for immediate 

effectiveness. This revised proposal 

provided additional details regarding 

the Exchange’s cost methodology, 

revenue projections, and responded to 

various questions and requests for 

information contained in the 

Commission’s suspension orders. The 

Exchange withdrew that revised 

proposal and submitted a further 

revised filing on April 29, 2022. The 

newest revised filing builds upon the 

additional details regarding the 

Exchange’s cost methodology and 

revenue projections, as well as the 

Exchange’s responses to various 

questions and requests for information 

contained in the Commission’s 

suspension orders. 

2. Statutory Basis 

The Exchange believes that the 

proposed fees are consistent with 

Section 6(b) of the Act 21 in general, and 

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


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22 15 U.S.C. 78f(b)(4). 

23 15 U.S.C. 78f(b)(5). 

24See 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). 

25See 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’’). 

26See supra note 13. 

27See supra notes 14 through 16. 

28See Guidance, supra note 25. 

29 Id. 

30 Id. 

31 Id. 

32 Id. 

of the Act 22 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among Members and other persons 

using any facility or system which the 

Exchange operates or controls. The 

Exchange also believes the proposed 

fees further the objectives of Section 

6(b)(5) of the Act 23 in that they are 

designed to promote just and equitable 

principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general protect investors and the public 

interest and are not designed to permit 

unfair discrimination between 

customers, issuers, brokers and dealers. 

The Exchange believes that the 

information provided to justify the 

proposed fees meets or exceeds the 

amount of detail required in respect of 

proposed fee changes as set forth in 

recent Commission and Commission 

Staff guidance. On March 29, 2019, the 

Commission issued an Order 

disapproving a proposed fee change by 

the BOX Market LLC Options Facility to 

establish connectivity fees for its BOX 

Network (the ‘‘BOX Order’’).24 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.’’ 25 Based on both the BOX Order 

and the Guidance, the Exchange 

believes that the proposed fees are 

consistent with the Act because they 

are: (i) Reasonable, equitably allocated, 

not unfairly discriminatory, and not an 

undue burden on competition; (ii) 

comply with the BOX Order and the 

Guidance; (iii) supported by evidence 

(including comprehensive revenue and 

cost data and analysis) that they are fair 

and reasonable and will not result in 

excessive pricing or supra-competitive 

profit; and (iv) identical to the prices the 

Exchange currently charges for its ToM 

data product and the prices the 

Exchange’s affiliate, MIAX Emerald, 

charges for its ToM product, both of 

which were previously published by the 

Commission and remain in effect 

today.26

In adopting Regulation NMS, the 

Commission granted self-regulatory 

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

flexibility to offer new and unique 

market data to the public. It was 

believed that this authority would 

expand the amount of data available to 

consumers, and also spur innovation 

and competition for the provision of 

market data. Particularly, cToM further 

broadens the availability of U.S. option 

market data to investors consistent with 

the principles of Regulation NMS. The 

data product also promotes increased 

transparency through the dissemination 

of cToM. Particularly, cToM provides 

subscribers with the same information 

as ToM, but includes the following 

additional information: (i) The 

identification of the complex strategies 

currently trading on the Exchange; (ii) 

complex strategy last sale information; 

and (iii) the status of securities 

underlying the complex strategy (e.g., 

halted, open, or resumed). The 

Exchange believes cToM provides a 

valuable tool that subscribers can use to 

gain substantial insight into the trading 

activity in Complex Orders, but also 

emphasizes such data is not necessary 

for trading. Moreover, other exchanges 

offer similar data products.27

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. 

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.’’ 28 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.’’ 29 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.’’ 30 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 producing and 

disseminating cToM data and will not 

result in the Exchange generating a 

supra-competitive profit. 

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

exceed the profits that can be obtained 

in a competitive market.’’ 31 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.’’ 32 The Exchange provides 

this analysis below. 

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

it is important to demonstrate that the 

proposed fees are based on its costs and 

reasonable business needs and believes 

the proposed fees will allow the 

Exchange to begin to offset expenses. 

However, as discussed more fully 

below, such fees may also result in the 

Exchange recouping less than, or more 

than, all of its costs of providing the 

cToM data feed because of the 

uncertainty of forecasting subscriber 

decision making with respect to firms’ 

market data needs. The Exchange 

believes that the proposed fees will not 

result in excessive pricing or supracompetitive 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 suspension orders sought 

additional information and comments 

on various aspects of the prior proposed 

fee changes. In many respects, the 

Commission’s questions about the prior 

proposed fee changes raise broader 

questions around the factors the 

Commission should consider and the 

type of data and analysis an exchange 

should provide in considering whether 


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33Both fixed and variable expenses have 

significant impact on the Exchange’s overall costs 

to provide the cToM data feed. For example, to 

accommodate new Members, the Exchange may 

need to purchase additional hardware to support 

those Members and provide the cToM data feed. 

Further, as the total number of Members increases, 

the Exchange and its affiliates may need to increase 

their data center footprint and consume more 

power, resulting in increased costs charged by their 

third-party data center provider. Accordingly, the 

cost to the Exchange and its affiliates to provide 

access to its Members is not fixed. 

market data, port fees, or connectivity 

fees are fair and reasonable under a costbased methodology. The suspension 

orders also sought 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 third-party expenses 

and percentage allocation or statements 

regarding the Exchange’s overall 

estimated costs for the internal expense 

categories and general shared expenses 

figure. The Exchange added this 

additional information below. 

In this filing, the Exchange offers a 

conceptual framework for further 

considering the Commission’s questions 

that draws on the Exchange’s own 

experience over several years of 

analyzing its own costs. The elements of 

that framework are as follows: 

First, the Exchange created a flat, 

simple fee structure that imposes a 

single monthly fee for Internal 

Distributors and External Distributors, 

without added fees based on the way 

the data is used or individual per user 

fees. The Exchange believes this 

relatively simple, flat fee structure is 

transparent and easy for users to apply, 

and this difference also helps show that 

it meets the objectives of the Act. 

The Exchange then conducted an 

extensive cost review in which the 

Exchange analyzed nearly every 

expense item in the Exchange’s general 

expense ledger to determine whether 

each such expense relates to the cToM 

data feed. That methodology does not 

allow for ‘‘double-counting’’ of the same 

costs for different classes of exchange 

products—for example transaction 

services, other market data products, 

physical connectivity, ‘‘logical’’ port 

connections or regulatory resources. 

The Exchange then sought to 

narrowly allocate specific costs to the 

market data products to which the 

proposed fees would apply. In this 

filing, the Exchange provided more 

detail about how that allocation was 

determined and included information 

about tangential cost items that were not 

included. In determining what portion 

(or percentage) to allocate to producing 

and disseminating the cToM data feed, 

each Exchange department head, in 

coordination with other Exchange 

personnel, determined the expenses that 

support producing and distributing the 

cToM data feed. This included 

numerous meetings between the 

Exchange’s Chief Information Officer, 

Chief Financial Officer, Head of 

Strategic Planning and Operations, 

Chief Technology Officer, various 

members of the Legal Department, and 

other group leaders. The analysis also 

included each department head meeting 

with the divisions of teams within each 

department to determine the amount of 

time and resources allocated by 

employees within each division towards 

producing and distributing the cToM 

data feed. The Exchange reviewed each 

individual expense to determine if such 

expense was related to producing and 

disseminating the cToM data feed. Once 

the expenses were identified, the 

Exchange department heads, with the 

assistance of the Exchange’s internal 

finance department, reviewed such 

expenses holistically on an Exchangewide level to determine what portion of 

that expense supports producing and 

disseminating the cToM data feed. The 

sum of all such portions of expenses 

represents the total cost to the Exchange 

to produce and disseminate the cToM 

data feed. For the avoidance of doubt, 

no expense amount is allocated twice. 

Specifically, no expense amount is 

allocated to more than one expense 

category within this filing and no 

expense amount that is allocated as a 

cost to produce and disseminate the 

cToM data feed in this filing has been 

or will be allocated as a cost to provide 

any other exchange product or service 

in any other fee filing. In the suspension 

orders, the Commission questioned 

whether further explanation of the 

Exchange’s cost analysis was necessary. 

The Exchange provides further details 

concerning its cost analysis in response 

to this question. 

The 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. 

Finally, the Exchange acknowledges 

that it is difficult to predict how much 

revenue the Exchange will receive from 

the proposed fees with precision. The 

analysis conducted by the Exchange is 

designed to make a fair and reasonable 

assessment of costs and resources 

allocated to support the production and 

dissemination of the cToM data feed 

associated with the proposed fees. The 

Exchange further 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 basis, reviews its costs and 

resource allocations to ensure it 

appropriately allocates resources to 

properly provide services to the 

Exchange’s constituents. As part of this 

proposed rule change, and as described 

further below, the Exchange is 

committing to conduct an annual cost 

review with respect to fees that are cost 

justified in this proposed rule change 

beginning one year from the date of this 

proposal, and annually thereafter. The 

Exchange expects that it may propose to 

adjust fees at that time, either to 

increase fees in the event that revenues 

fail to reasonably cover costs at the 

estimated margin set forth below, or to 

decrease fees in the event that revenue 

materially exceeds the Exchange’s 

current projections. In the event that the 

Exchange determines to propose a fee 

change, updated cost estimates will be 

included in a rule filing proposing the 

fee change. 

The Exchange believes applying this 

framework to the proposed fees shows 

that they are consistent with the 

requirements of the Act, leaving aside 

that the proposed fees are relatively 

similar to, or less than, fees charged by 

other exchanges for similar market data 

products. 

Exchange Costs and Cost Methodology 

The Exchange notes that there are 

material costs associated with providing 

the infrastructure and headcount to 

fully support the production and 

dissemination of the cToM data feed. As 

described below, the Exchange incurs 

technology expense related to 

establishing and maintaining 

Information Security services, enhanced 

network monitoring and customer 

reporting, as well as Regulation SCImandated processes associated with its 

network technology.33 The Exchange 

believes the proposed fees are a 

reasonable attempt to offset a portion of 

those costs associated with producing 

and disseminating the cToM data feed. 


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34The percentage allocations used in this 

proposed rule change may differ from past filings 

from the Exchange or its affiliates due to 

adjustments to internal resource allocations and 

different system architecture of the Exchange as 

compared to its affiliates. 

35For 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. 87875 (December 31, 

2019), 85 FR 770 (January 7, 2020) (SR–MIAX– 

2019–51). Accordingly, the third-party expense 

described in this filing is attributed to the same line 

item for the Exchange’s 2022 Form 1 Amendment, 

which will be filed in 2023. In its suspension 

orders, the Commission also asked should the 

Exchange use cost projections or actual costs 

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

cost projections for 2022. The Exchange utilized 

expenses from its most recent audited financial 

statement as those numbers are more reliable than 

more recent unaudited numbers, which may be 

subject to change. 

36The 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 

amount. 

The Exchange estimated its total 

annual expense to provide the cToM 

data feed based on the following general 

expense categories: (1) External 

expenses, which include fees paid to 

third parties for certain products and 

services; (2) internal expenses relating 

to the internal costs to produce and 

disseminate the cToM data feed; and (3) 

general shared expenses.34 The below 

table details each of these individual 

external and internal annual costs 

considered by the Exchange to be 

directly related to offering cToM to 

subscribers, and not any other product 

or service offered by the Exchange. The 

below table also details the general 

shared expense allocated to this 

proposal. Each of these expenses are 

discussed in more detail further below. 

For 2022, the total annual expense for 

producing and disseminating the cToM 

data feed is estimated to be $299,228, or 

$24,936 per month. The Exchange 

utilized its estimated 2022 revenue and 

costs, which utilize the same 

methodology set forth in the Exchange’s 

previously-issued Audited 

Unconsolidated Financial Statements.35

External expenses 

Category Percentage of total expense amount allocated 

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

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

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

Total of External Expenses ............................................................... $5,380.36

Internal expenses 

Category Expense amount allocated 

Employee Compensation ......................................................................... $270,825 (representing 1.8% of total $14,957,861 expense). 

Depreciation and Amortization ................................................................. $3,830 (representing 0.09% of total $4,135,294 expense). 

Occupancy ................................................................................................ $13,925 (representing 1.8% of total $769,108 expense). 

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

Total Allocated Shared Expenses ............................................................ $5,268 (representing 0.13% of total $4,042,629 expense). 

Total External + Internal + Allocated Shared Expenses ........... $299,228. 

In its suspension orders, the 

Commission solicited commenters’ 

views on whether the Exchange has 

provided sufficient detail on the 

identity and nature of services provided 

by third parties. The Commission 

further solicited commenters’ views on 

whether the Exchange has provided 

sufficient detail on the elements that go 

into producing and distributing the 

cToM data feed, including how shared 

costs are allocated and attributed to the 

cToM data feed, to permit an 

independent review and assessment of 

the reasonableness of purported costbased fees and the corresponding profit 

margin thereon. In response, the 

Exchange provides additional detail 

regarding the identity and nature of 

services provided by third parties, the 

elements that go into producing and 

distributing the cToM data feed, and 

how expenses are allocated. The 

Exchange believes this additional detail 

is sufficient to support a finding that the 

proposed fees are consistent with the 

Exchange Act. 

The Exchange notes that it only has a 

single source of revenue, distribution 

fees, to recover those costs associated 

with providing and disseminating the 

cToM data feed. For clarity, the 

Exchange took a conservative approach 

in determining the expense and the 

percentage of that expense to be 

allocated to providing the cToM data 

feed. The Exchange describes below the 

analysis conducted for each expense 

and the resources or determinations that 

were considered when determining the 

amount necessary to allocate to each 

expense. The Exchange notes that, 

without the specific third party and 

internal expense items, the Exchange 

would not be able to provide and 

distribute cToM data feed. Each of these 

expense items, including physical 

hardware, software, employee 

compensation and benefits, occupancy 

costs, and the depreciation and 

amortization of equipment, were 

identified through a line-by-line cost 

analysis and determined to be integral 

to providing and distributing the cToM 

data feed for the reasons discussed 

below. Only a portion of all fees paid to 

such third parties are included in the 

third party expenses described herein, 

and, again, no expense amount is 

allocated twice. For example, the 

Exchange does not allocate its entire 

information technology and 

communication costs to providing and 

distributing the cToM data feed because 

it determined that a portion of those 

costs are attributable to other areas of 

the Exchange’s operations, such as ports 

and transaction services, as well as 

other market data products provided by 

the Exchange. This may result in the 

Exchange under allocating an expense 

to provide the cToM data feed, and such 


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37The Exchange notes that expenses associated 

with its affiliates, MIAX Emerald and MIAX Pearl 

(the options and equities markets), are accounted 

for separately and are not included within the scope 

of this filing. 

38See supra note 36. 

39 Id. The Exchange did not allocate any expense 

associated with the proposed fees towards the 

Securities Financial Transaction Infrastructure 

(‘‘SFTI’’) and various other service providers’ 

because the Exchange’s architecture takes advantage 

of an advance in design to eliminate the need for 

a market data distribution gateway layer. The 

computation and dissemination via an API is done 

solely within the match engine environment and is 

then delivered via the Member and non-Member 

connectivity infrastructure. This architecture 

delivers a market data system that is more efficient 

both in cost and performance. Accordingly, the 

Exchange determined not to allocate any expense 

associated with SFTI and various other service 

providers. 

40The Investors Exchange, Inc. (‘‘IEX’’) also 

allocated data center costs to produce market data 

based on space utilized. See Securities Exchange 

Act Release No. 94630 (April 7, 2022), 87 FR 21945, 

at page 21949 (April 13, 2022) (SR–IEX–2022–02) 

(‘‘IEX Market Data Fee Proposal’’) (noting that 

‘‘[d]ata Center costs consist of the fees charged by 

the third-party data centers used by IEX and 

represent less than 10% the Exchange’s total data 

center costs based on space utilized’’ (emphasis 

added)). 

expenses may actually be higher than 

what the Exchange allocated as part of 

this proposal.37

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 as compared to prior versions of 

this proposed fee change that were 

previously withdrawn by the Exchange. 

The revised percentages are, among 

other things, the result of the shifting of 

internal resources in response to 

business objectives. 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, annual expenses relating to 

fees paid by the Exchange to third 

parties for products and services 

necessary to provide the cToM data feed 

are estimated to be $5,380.38 This 

includes 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; and (3) hardware and 

software providers, which support the 

production environment in which 

Members and non-Members connect to 

the network to receive market data.39

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 

and distribute market data in the third 

party data centers where it maintains its 

equipment as well as related costs 

described below. 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, provide a trading platform 

for market participants, and produce 

and distribute market data. The 

Exchange does not employ a separate 

fee to cover its data center expense and 

recoups that expense, in part, by 

charging for the cToM data feed. 

The Exchange reviewed its data center 

footprint and space utilized, 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 space utilized by each area.40

Based on this review, the Exchange 

determined that 0.20% of the total 

applicable data center provider expense 

is applicable to providing the cToM data 

feed. The Exchange reviewed space 

utilized to house rack space, cage usage, 

servers, switches, cabling, storage space, 

heating and cooling of physical space, 

and monitoring, and identified that a 

small portion of that footprint is 

dedicated to equipment used to produce 

and distribute the cToM data feed. 

The Exchange believes this allocation 

is reasonable because it represents the 

costs associated with housing the 

Exchange’s equipment dedicated to 

processing and disseminating the cToM 

data feed. The Exchange excluded from 

this allocation portion of the Exchange’s 

data center expense that is due to space 

utilized to provide and maintain 

connectivity to the Exchange’s System 

Networks, including providing cabling 

within the data center between market 

participants and the Exchange. The 

Exchange also did not allocate the 

remainder of the data center expense 

because it pertains to space utilized by 

other areas of the Exchange’s operations, 

such as connectivity, ports and 

transaction services, as well as other 

market data products provided by the 

Exchange. 

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. Fiber connectivity is also 

necessary for personnel responsible for 

overseeing and providing customer 

service related to producing and 

distributing the cToM data feed, 

receiving relevant data and being able to 

communicate between the Exchange’s 

various locations and data centers. 

Without the retention of a third party 

fiber connectivity provider, they 

Exchange would not be able to 

communicate between its data centers 

and office locations in a manner 

necessary to maintain and support the 

cToM data feed. Fiber connectivity is a 

necessary integral means to disseminate 

information, including data related to 

producing and distributing the cToM 

data feed, from the Exchange’s primary 

data center to other Exchange locations. 

It is necessary for Exchange employees 

located in various locations to be able to 

communicate and receive the necessary 

data to maintain and provide customer 

support related to the cToM data feed. 

The Exchange would not be able to 

operate and support the network and 

produce and distribute the cToM data 

feed without third party fiber 

connectivity. The Exchange does not 

employ a separate fee to cover its fiber 

connectivity expense and recoups that 

expense, in part, by charging for cToM 

data feed. 


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41The Exchange notes that IEX used a similar 

methodology to allocate hardware costs to market 

data. See IEX Market Data Fee Proposal, id. at page 

21950 (noting that ‘‘IEX only included hardware 

specifically dedicated to the market data feeds in 

calculating the costs of providing market data’’). 

The Exchange reviewed it costs to 

retain fiber connectivity from a third 

party, including the ongoing costs to 

support fiber connectivity, ensuring 

adequate bandwidth and infrastructure 

maintenance to support exchange 

operations, and ongoing network 

monitoring and maintenance and 

determined that 0.20% of the total fiber 

connectivity expense was applicable to 

producing and distributing the cToM 

data feed. The Exchange reviewed its 

total fiber connectivity expense and 

allocated it among transaction services, 

connectivity, ports, other market data 

products, and administrative operations 

based on usage. The Exchange then 

further divided up its fiber connectivity 

costs related to market data and 

identified the portion that is attributable 

to producing and maintaining the cToM 

data feed, also based on usage. This 

allocation is, therefore, based on the 

amount of bandwidth and fiber 

connectivity the Exchange calculated is 

utilized to support exchange operations, 

and ongoing network monitoring and 

maintenance that are necessary to 

produce and maintain the cToM data 

feed. The Exchange believes this 

allocation is reasonable because it 

reflects the portion of the fiber 

connectivity expense that relates to 

producing and distributing the cToM 

data feed. The Exchange excluded a 

large portion of the Exchange’s fiber 

connectivity expense that is due to 

providing and maintaining connectivity 

between the Exchange’s System 

Networks, data centers, and office 

locations and is core to the daily 

operation of the Exchange. The 

Exchange also excluded from this 

allocation fiber connectivity usage 

related to system connectivity or other 

business lines, such as transaction 

services and other market data products 

offered by the Exchange, 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 and 

does not directly relate to providing the 

cToM data feed. The Exchange believes 

this allocation is reasonable because it 

represents the Exchange’s cost to 

produce and distribute the cToM data 

feed. 

Hardware and Software Providers 

The Exchange relies on dozens of 

third party hardware and software 

providers for equipment necessary to 

produce and disseminate the cToM data 

feed. This includes either the purchase 

or licensing of physical equipment, such 

as servers, switches, cabling, and 

devices needed by Exchange personnel 

to monitor servers and the health of 

market data products, including the 

cToM data feed. This consists of realtime monitoring of system performance, 

integrity, and latency of market data 

products. It also includes the Exchange 

purchasing or licensing software 

necessary for security monitoring, data 

analysis and Exchange operations. 

Hardware and software providers are 

necessary to produce and distribute the 

cToM data feed. Hardware and software 

equipment and licenses for that 

equipment are also necessary to operate 

and monitor physical assets necessary to 

produce and distribute the cToM data 

feed. Hardware and software equipment 

and licenses are key to the operation of 

the Exchange and without them the 

Exchange would not be able to produce 

and distribute the cToM data feed. The 

Exchange does not employ a separate 

fee to cover its hardware and software 

expense and recoups that expense, in 

part, by charging for cToM data feed 

dissemination. 

The Exchange reviewed its hardware 

and software related costs, including 

software patch management, 

vulnerability management, 

administrative activities related to 

equipment and software management, 

professional services for selection, 

installation and configuration of 

equipment and software supporting 

exchange operations. The Exchange 

then divided those costs among 

transaction services, ports, connectivity, 

other market data products, and other 

Exchange operations based on whether 

all of that hardware or software is based 

on usage. The Exchange then reviewed 

the amount allocated to producing and 

distributing market data generally and 

what portion of that hardware and 

software equipment or license is used to 

support the cToM data feed specifically. 

Based on this review, the Exchange 

determined that 0.20% of the total 

applicable hardware and software 

expense is allocated to producing and 

distributing the cToM data feed. This 

percentage reflects the amount of 

hardware and software equipment and 

licenses dedicated to produce and 

maintain the cToM data feed.41

Hardware and software equipment and 

licenses are key to the operation of the 

Exchange and production and 

distribution of market data. Without 

them, the Exchange would not be able 

to develop, and market participants 

would not be able to purchase, the 

cToM data feed. The Exchange only 

allocated the portion of this expense to 

the hardware and software that is 

related to the cToM data feed, such as 

operating servers and equipment 

necessary to produce and distribute the 

cToM data feed. The Exchange, 

therefore, did not allocate portions of its 

hardware and software expense that 

related to other areas of the Exchange’s 

business, such as hardware and software 

used for connectivity or unrelated 

administrative services. The Exchange 

also did not allocate the remainder of 

this expense because it pertains to other 

areas of the Exchange’s operations, such 

as ports or transaction services, as well 

as other market data products provided 

by the Exchange, and is not directly 

related to producing and disseminating 

the cToM data feed. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

cost to produce and disseminate the 

cToM data feed, and not any other 

service, as supported by its cost review. 

Internal Expense Allocations 

For 2022, total internal annual 

expense relating to the Exchange 

producing and distributing the cToM 

data feed is estimated to be $288,580. 

This includes costs associated with: (1) 

Employee compensation and benefits 

for full-time employees that support 

market data, 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 produce 

and distribute the cToM data feed, 

including equipment, servers, cabling, 

purchased software and internally 

developed software used in the 

production environment to support the 

network for trading; and (3) occupancy 

costs for leased office space for staff that 

support the cToM data feed. 

Employee Compensation and Benefits 

Human personnel are key to exchange 

operations and supporting the 

Exchange’s ongoing provision of the 

cToM data feed. The Exchange reviewed 

its employee compensation and benefits 

expense and the portion of that expense 

allocated to providing the cToM data 

feed. As part of this review, the 

Exchange considered employees whose 

functions include providing and 

maintaining the cToM data feed and 

used a blended rate of compensation 

reflecting salary, stock and bonus 

compensation, bonuses, benefits, 


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42For purposes of this allocation, the Exchange 

did not consider expenses related to office space, 

supplies, or equipment use by employees who 

support cToM data feed. 

43The Exchange notes that IEX used a similar 

methodology to allocate employee compensation 

related costs to market data. See IEX Market Data 

Fee Proposal, supra note 41 at page 29150 (noting 

that ‘‘[f]or personnel costs, IEX calculated an 

allocation of employee time for employees whose 

functions include providing and maintaining IEX 

Data and/or the proprietary market data feeds used 

to transmit IEX Data, and used a blended rate of 

compensation reflecting salary, stock and bonus 

compensation, benefits, payroll taxes, and 401(k) 

matching contributions’’). 

44The Exchange notes that IEX used a similar 

methodology to allocate hardware costs to market 

data. See IEX Market Data Fee Proposal at note 54, 

supra note 41 at page 21950 (noting that 

‘‘[h]ardware is depreciated on a straight-line threeyear period, which in IEX’s experience, is equal to 

the typical life expectancy of those assets. As noted 

above, one-third of the cost of each hardware asset 

is included in the annual costs allocated to market 

data. IEX only included hardware specifically 

dedicated to the market data feeds in calculating the 

costs of providing market data. This means that 

physical assets used for both order entry and market 

data were excluded from the calculation’’). 

payroll taxes, and 401K matching 

contributions.42

In its suspension orders, the 

Commission asked the Exchange 

provide more detail about the 

methodology the Exchange used to 

determine how much of an employee’s 

time is devoted to market data related 

activities. In considering the cost of 

personnel, the Exchange generally 

considered the time spent on various 

market data projects and initiatives 

through project management tracking 

tools and analysis of employee resource 

allocations, among its Technology Team 

in the following areas: Technical 

Operations, Software Engineering, 

Quality Assurance, and Infrastructure. 

The Exchange did not consider nonTechnology Teams such as Market 

Operations, Project Management, 

Regulatory, Legal, and Accounting/ 

Finance.43

Based on this review, the Exchange 

determined to allocate $270,825 in 

employee compensation and benefits 

expense to producing and distributing 

the cToM data feed. This represents 

approximately 1.8% of the $14,957,861 

total projected expense for employee 

compensation and benefits. The 

Exchange determined the cost allocation 

for employees who perform work in 

support of producing and distributing 

the cToM data feed to arrive at a full 

time equivalent (‘‘FTE’’) of 0.8 FTEs 

across all the identified personnel. The 

Exchange then multiplied the FTE times 

a blended compensation rate for all 

relevant Exchange personnel to 

determine the personnel costs 

associated with producing and 

distributing the cToM data feed. 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 producing and distributing the cToM 

data feed. The Exchange determined the 

above allocation based on the personnel 

whose work focused on functions 

necessary to producing and distributing 

the cToM data feed. The Exchange does 

not charge a separate fee for employees 

who support the cToM data feed and the 

Exchange seeks to recoup that expense, 

in part, by charging for the cToM data 

feed. 

The Exchange believes it is 

appropriate to include incentive 

compensation in the blended personnel 

compensation rate on the same basis as 

other personnel costs for in-scope 

employees because incentive 

compensation is a part of the total 

personnel costs associated with the 

Exchange’s costs to provide the cToM 

data feed. Moreover, the Exchange notes 

that it has taken a conservative 

approach in determining which 

employees to include in its cost 

analysis, in terms of function and 

percent allocation, so that the included 

personnel costs are directly and closely 

tied to the costs of providing the cToM 

data feed. The FTE allocation represents 

just 1.8% of the Exchange’s overall 

personnel costs. Consistent with the 

Exchange’s conservative methodology to 

limit costs allocated to producing and 

disseminating the cToM data feed, this 

approach includes only a de minimis 

personnel cost allocation for senior level 

executives and no allocation for 

members of the Exchange’s board of 

directors. Accordingly, the Exchange 

believes that the allocated personnel 

expenses included are appropriately 

attributable to producing and 

disseminating the cToM data feed. 

Depreciation and Amortization 

A key expense incurred by the 

Exchange relates to the depreciation and 

amortization of equipment that the 

Exchange procured to produce and 

distribute the cToM data feed. The 

Exchange reviewed all of its physical 

assets and software, owned and leased, 

and determined whether each asset is 

related to providing and maintaining the 

cToM data feeds, and added up the 

depreciation of those assets. All 

physical assets and software, which 

includes assets used for testing and 

monitoring of Exchange infrastructure, 

were valued at cost and depreciated or 

leased over periods ranging from three 

to five years. Based on the Exchange’s 

experience, this depreciation period 

equals the typical life expectancy of 

those assets. In determining the amount 

of depreciation and amortization to 

apply to providing the cToM data feeds, 

the Exchange considered the 

depreciation of hardware and software 

that are key to its provision of the cToM 

data feeds. This includes servers, 

computers, laptops, monitors, 

information security appliances and 

storage, and network switching 

infrastructure equipment, including 

switches and taps that were previously 

purchased to produce and distribute the 

cToM data feed. Without them, market 

participants would not be able to 

receive the cToM data feed. The 

Exchange seeks to recoup a portion of 

its depreciation expense by charging for 

the cToM data feed. 

Based on this review, the Exchange 

determined to allocate $3,830 in 

depreciation and amortization expense 

to producing and distributing the cToM 

data feed. This is only 0.09% of the 

$4,135,294 total projected expense for 

depreciation and amortization. For 

purposes of the allocation of these costs 

to the cToM data feed, the Exchange 

allocates the annual depreciation (i.e., 

one-third or one-fifth of the initial asset 

value based on the typical life 

expectancy of those assets). One-third or 

one-fifth of the cost of each asset is 

included in the annual costs allocated to 

the cToM data feed. The Exchange only 

included assets specifically dedicated to 

the cToM data feed in calculating the 

costs of providing the cToM data feed. 

This means that physical assets used for 

transaction services, other market data 

products, or other Exchange operations 

were excluded from the calculation.44

The Exchange, therefore, did not 

allocate portions of depreciation 

expense that relates to other areas of the 

Exchange’s business, such as the 

depreciation of hardware and software 

used for connectivity, unrelated 

administrative services, or other market 

data products provided by the 

Exchange. All of the expenses outlined 

in this proposed fee change refer to the 

operating expenses of the Exchange. In 

the suspension orders, the Commission 

asked for additional detail or 

explanation to ensure that no expense 

amount is allocated twice. The 

Exchange did not included any future 

capital expenditures within these costs 

ensuring that no cost is counted twice. 

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 


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45For the avoidance of doubt, the Exchange did 

not include within this cost any portion of its costs 

related to third party fiber connectivity used by 

Exchange staff in different office locations to 

communicate as part of their role in supporting the 

cToM data feed. 

46The Exchange notes that the number of cToM 

subscribers may change over time. Beginning with 

June 2021, the month prior to the original fee 

change to adopt cToM data fees, the Exchange had 

the following number of subscribers each month: 

June (15 subscribers); July (13 subscribers); August 

(14 subscribers); September (17 subscribers); 

October (13 subscribers); November (13 

subscribers); December (13 subscribers); January (13 

subscribers); February (13 subscribers); March (13 

subscribers); and April (13 subscribers). 

47See Guidance, supra note 25. 

48The Exchange has incurred a cumulative loss 

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

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

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

for Registration or Exemption from Registration as 

a National Securities Exchange, filed July 28, 2021, 

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

vprr/2100/21000460.pdf. 

is no double counting of expenses in the 

Exchange’s cost estimates. 

Occupancy 

The Exchange rents and maintains 

multiple physical locations to house 

staff and equipment necessary to 

support the production and 

dissemination of the cToM data feed. 

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 producing and 

distributing the cToM data feed. 

Similarly, the Exchange also considered 

the actual physical space used to house 

hardware and other equipment 

necessary to provide and maintain the 

cToM data feed. The Exchange 

maintains staff that support producing 

and distributing the cToM data feed in 

various locations and needs to provide 

workplaces for that staff as well as space 

to house hardware and equipment 

necessary for those employees to 

perform those functions.45 This 

equipment includes computers, servers, 

and accessories necessary to support 

producing and distributing cToM data 

feed. Based on this review, the 

Exchange determined to allocate 

$13,925 of its occupancy expense to 

producing and distributing the cToM 

data feed. According to the Exchange’s 

calculations, it allocated approximately 

1.8% of the total applicable occupancy 

expense to producing and distributing 

the cToM data feeds. This is only a 

portion of the $769,108 total projected 

expense for occupancy. The Exchange 

believes this allocation is reasonable 

because it represents the Exchange’s 

cost to rent and maintain a physical 

location for the Exchange’s staff who 

operate and support the cToM data feed. 

The Exchange considered the rent paid 

for the Exchange’s Princeton and Miami 

offices, as well as various related costs, 

such as physical security, property 

management fees, property taxes, and 

utilities at each of those locations. The 

Exchange did not include occupancy 

expenses related to housing employees 

and equipment related to other 

Exchange operations, such as 

transaction and administrative services. 

Allocated Shared Expense 

Finally, a limited portion of general 

shared expenses was allocated to the 

cToM data feed costs, as without these 

general shared costs, the Exchange 

would not be able to operate in the 

manner that it does and produce and 

distribute the cToM data feed. The costs 

included in general shared expenses 

include recruiting and training, 

marketing and advertising costs, 

professional fees for legal, tax and 

accounting services, and 

telecommunications costs. For 2022, the 

Exchange’s general shared expense 

allocated to the cToM data feed is 

estimated to be $5,268. This represents 

approximately 0.13% of the $4,042,629 

total projected general shared combined 

expense. The Exchange used the 

weighted average of the above 

allocations to determine the amount of 

general shared expenses to allocate to 

the Exchange. Next, based on additional 

management and expense analysis, 

these fees are allocated to the proposal. 

Revenue and Estimated Profit Margin 

The Exchange only has four primary 

sources of revenue and cost recovery 

mechanisms to fund all of its 

operations: Transaction fees, access fees, 

regulatory fees, and market data fees. 

Accordingly, the Exchange must cover 

all of its expenses from these four 

primary sources of revenue and cost 

recovery mechanisms. 

To determine the Exchange’s 

estimated revenue associated with the 

cToM data feed, the Exchange analyzed 

the number of Members and nonMembers currently receiving the cToM 

data feed and used a recent monthly 

billing cycle representative of current 

monthly revenue. The Exchange also 

provided its baseline by analyzing 

March 2022, the monthly billing cycle 

prior to the proposed cToM data fee, 

and compared this to its expenses for 

that month. As discussed below, the 

Exchange does not believe it is 

appropriate to factor into its analysis 

future revenue growth or decline into its 

estimates for purposes of these 

calculations, given the uncertainty of 

such estimates due to the continually 

changing access needs of market 

participants and potential changes in 

internal and third party expenses. 

For the month of March 2022, prior to 

the effectiveness of the proposed cToM 

fees, the Exchange had 13 cToM data 

feed subscribers, for which the 

Exchange charged $0. This resulted in a 

loss of $24,936 for that month. For April 

2022, the Exchange anticipates that it 

will have 13 cToM data feed 

subscribers.46 Assuming the Exchange 

charges the proposed fees for 

Distributors, the Exchange would 

generate revenue of $16,250 for April 

2022. This would result in a loss of 

$8,686 ($16,250 minus $24,936) for the 

month of April (a negative 53% margin 

from March 2022 to April 2022). 

The Exchange believes that 

conducting the above analysis on a per 

month basis is reasonable as the revenue 

generated from the cToM data feed 

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 supracompetitive profit. The Exchange 

cautions that this margin may also 

fluctuate from month to month based on 

the uncertainty of predicting how many 

subscribers may purchase cToM data 

feed subscriptions from month to month 

as Members and non-Members are free 

to add and drop subscriptions 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.’’ 47 Until recently, the Exchange 

has operated at a cumulative net annual 

loss since it launched operations in 

2008.48 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 the 

cToM data feed, for free, as well as other 

products at lower rates, than other 

options exchanges to attract order flow 

and encourage market participants to 

experience the high determinism, low 

latency, and resiliency of the Exchange’s 

trading systems. The Exchange 

previously provided the cToM data feed 

free of charge and absorbed all costs 


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associated with providing the cToM 

data feed to market participants. In this 

proposal, the Exchange would continue 

to offer the cToM data feed for a fee that 

still falls short of covering the 

Exchange’s expenses. The Exchange is 

not generating a profit, and therefore, 

cannot be deemed to be generating a 

‘‘supra-competitive’’ profit by now 

charging for the cToM data feed. The 

Exchange should not now be penalized 

for seeking to adopt fees to at least cover 

a portion of its costs after offering the 

cToM data feed free of charge. 

Therefore, the Exchange believes the 

proposed fees are reasonable because 

they are based on both relative costs to 

the Exchange to generate and 

disseminate cToM, the extent to which 

the product drives the Exchange’s 

overall costs and the relative value of 

the product, as well as the Exchange’s 

objective to make cToM broadly 

available to market participants. The 

Exchange also believes the proposed 

fees are reasonable because they are 

designed to generate annual revenue to 

recoup some of the Exchange’s annual 

costs of providing the cToM data feed. 

The Exchange notes that its revenue 

estimate is based on projections and 

will only be realized to the extent such 

revenue actually produces the revenue 

estimated. As an innovator in the hypercompetitive exchange environment, and 

an exchange focused on driving 

competition, the Exchange does not yet 

know whether such expectations will be 

realized. For instance, in order to 

generate the revenue expected from the 

cToM data feed, the Exchange will have 

to be successful in retaining existing 

clients that wish to receive the cToM 

data feed or obtaining new clients that 

will purchase such data. To the extent 

the Exchange is successful in 

encouraging new clients to receive the 

cToM data feed, the Exchange does not 

believe it should be penalized for such 

success. The Exchange, like other 

exchanges, is, after all, a for-profit 

business. While the Exchange believes 

in transparency around costs and 

potential margins, the Exchange does 

not believe that these estimates should 

form the sole basis of whether or not a 

proposed fee is reasonable or can be 

adopted. Instead, the Exchange believes 

that the information should be used 

solely to confirm that an Exchange is 

not earning supra-competitive profits, 

and the Exchange believes this proposal 

demonstrates this fact. 

Finally, the Exchange believes that 

the proposed fees are reasonable 

because they will not impose onerous 

audit requirements on subscribers, 

because there will be no need to 

substantiate the number of users of 

cToM or the manner in which it is being 

used, but rather only whether it is being 

redistributed internally or to external 

third parties. 

Annual Review of Fees 

In its suspension orders, the 

Commission asks whether exchanges 

should periodically reevaluate fees on 

an ongoing and periodic basis in order 

to assure that actual revenue aligns with 

a reasonable cost-plus model. As 

described above and as part of this 

proposed rule change, the Exchange is 

committing to conduct a one year 

review of the fees that are cost justified 

as part of this proposed rule change 

after the date of this proposal, and 

annually thereafter. The Exchange 

expects that it may propose to adjust 

fees at that time, either to increase fees 

in the event that revenues fail to 

reasonably cover costs at the estimated 

margin set forth above, or to decrease 

fees in the event that revenue materially 

exceeds the Exchange’s current 

projections. In the event that the 

Exchange determines to propose a fee 

change, updated cost estimates will be 

included in a rule filing proposing the 

fee change. The Exchange believes this 

approach will further increase 

transparency around market data costs 

and help to ensure that Exchange fees 

continue to be reasonably related to 

costs. 

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 options exchanges’ costs to 

provide market data or their fee markup 

over those costs, and therefore cannot 

use other exchange’s market data fees as 

a benchmark to determine a reasonable 

markup over the costs of providing 

market data. Nevertheless, the Exchange 

believes the other exchanges’ complex 

market data fees are useful examples of 

alternative approaches to providing and 

charging for complex market data 

notwithstanding that the competing 

exchanges may have different system 

architectures that may result in different 

cost structures for the provision of 

complex market data. To that end, the 

Exchange believes the proposed cToM 

data fees are reasonable because the 

proposed fees are similar to, or less than 

fees charged for complex market data 

provided by other options exchanges 

with comparable market shares. 

As described in the below table, the 

Exchange’s proposed fees remain less 

than fees charged for similar market 

data products provided by other options 

exchanges with similar market share. 

Each of the market data rates in place at 

competing options exchanges were filed 

with the Commission for immediate 

effectiveness and remain in place today. 

Exchange Monthly fee 

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

Amex 49 ........................................... $1,500—Access Fee, $1,000—Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

Arca 50 ............................................. $1,500—Access Fee, $1,000—Redistribution Fee (this fee is in addition to the Access Fee resulting in a 

$2,500 monthly fee for external distribution). 

PHLX51 ........................................... $3,000—Internal Distributor, $3,500—External Distributor. 

49See NYSE American Options Proprietary Market Data Fees, American Options Complex Fees, at https://www.nyse.com/publicdocs/nyse/ 

data/NYSE_American_Options_Market_Data_Fee_Schedule.pdf. 50See NYSE Arca Options Proprietary Market Data Fees, Arca Options Complex Fees, at https://www.nyse.com/publicdocs/nyse/data/NYSE_

Arca_Options_Proprietary_Data_Fee_Schedule.pdf. 51See PHLX Price List—U.S. Derivatives Data, PHLX Orders Fees, at http://www.nasdaqtrader.com/Trader.aspx?id=DPPrice

ListOptions#PHLX. 


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52See Exchange Data Agreement, available at 

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

page-files/MIAX_Exchange_Group_Data_

Agreement_09032020.pdf. 

53See id. 

54See id. 

55Section 6 of the Exchange’s Market Data 

Policies, available at https://

www.miaxoptions.com/sites/default/files/pagefiles/MIAX_Exchange_Group_Market_Data_

Policies_07202021.pdf. 56See supra note 48. 

The Proposed Pricing Is Not Unfairly 

Discriminatory and Provides for the 

Equitable Allocation of Fees, Dues, and 

Other Charges 

The Exchange believes that the 

proposed fees are reasonable, fair, and 

equitable, and not unfairly 

discriminatory because they are 

designed to align fees with services 

provided and will apply equally to all 

subscribers. The Exchange believes that 

it is reasonable, equitable and not 

unfairly discriminatory to assess 

Internal Distributors fees that are less 

than the fees assessed for External 

Distributors for subscriptions to the 

cToM data feed because Internal 

Distributors have limited, restricted 

usage rights to the market data, as 

compared to External Distributors, 

which have more expansive usage 

rights. All Members and non-Members 

that determine to receive any market 

data feed of the Exchange (or its 

affiliates, MIAX Pearl and MIAX 

Emerald), must first execute, among 

other things, the MIAX Exchange Group 

Exchange Data Agreement (the 

‘‘Exchange Data Agreement’’).52

Pursuant to the Exchange Data 

Agreement, Internal Distributors are 

restricted to the ‘‘internal use’’ of any 

market data they receive. This means 

that Internal Distributors may only 

distribute the Exchange’s market data to 

the recipient’s officers and employees 

and its affiliates.53 External Distributors 

may distribute the Exchange’s market 

data to persons who are not officers, 

employees or affiliates of the External 

Distributor,54 and may charge their own 

fees for the redistribution of such 

market data. External Distributors may 

monetize their receipt of the cToM data 

feed by charging their customers fees for 

receipt of the Exchange’s cToM data. 

Internal Distributors do not have the 

same ability to monetize the Exchange’s 

cToM data feed. Accordingly, the 

Exchange believes it is fair, reasonable 

and not unfairly discriminatory to 

assess External Distributors a higher fee 

for the Exchange’s cToM data feed as 

External Distributors have greater usage 

rights to commercialize such market 

data and can adjust their own fee 

structures if necessary. 

The Exchange also utilizes more 

resources to support External 

Distributors versus Internal Distributors, 

as External Distributors have reporting 

and monitoring obligations that Internal 

Distributors do not have, thus requiring 

additional time and effort of Exchange 

staff. For example, External Distributors 

have monthly reporting requirements 

under the Exchange’s Market Data 

Policies.55 Exchange staff must then, in 

turn, process and review information 

reported by External Distributors to 

ensure the External Distributors are 

redistributing cToM data in compliance 

with the Exchange’s Market Data 

Agreement and Policies. 

The Exchange believes the proposed 

cToM fees are equitable and not unfairly 

discriminatory because the fee level 

results in a reasonable and equitable 

allocation of fees amongst subscribers 

for similar services, depending on 

whether the subscriber is an Internal or 

External Distributor. Moreover, the 

decision as to whether or not to 

purchase market data is entirely 

optional to all market participants. 

Potential purchasers are not required to 

purchase the market data, and the 

Exchange is not required to make the 

market data available. Purchasers may 

request the data at any time or may 

decline to purchase such data. The 

allocation of fees among users is fair and 

reasonable because, if market 

participants determine not to subscribe 

to the data feed, firms can discontinue 

their use of the cToM data. 

The Exchange further believes that the 

proposed fees are reasonable, fair, and 

equitable, and non-discriminatory 

because they will apply to all 

subscribers in the same manner based 

on whether the data is used for internal 

purposes or distributed to third parties. 

All similarly situated market 

participants are subject to the same fees. 

The fees also do not depend on any 

distinctions between or among 

Members, customers, broker-dealers, or 

any other entity, because they are solely 

determined by the individual market 

participant based on its business needs. 

The Exchange also notes that the 

proposed monthly cToM fees for 

Internal and External Distributors are 

the same prices that the Exchange 

charges for its ToM data product. 

Finally, the Exchange believes that 

the proposed fees are consistent with 

Section 11A of the Exchange Act in that 

it is designed to facilitate the 

economically efficient execution of 

securities transactions, fair competition 

among brokers and dealers, exchange 

markets and markets other than 

exchange markets, and the practicability 

of brokers executing investors’ orders in 

the best market. Specifically, the 

proposed low cost-based fee will enable 

a broad range of market participants to 

receive the cToM data feed, thereby 

facilitating the economically efficient 

execution of securities transactions on 

the Exchange, fair competition between 

and among such Members, and the 

practicability of Members that are 

brokers executing investors’ orders on 

the Exchange when it is the best market. 

For the foregoing reasons, the 

Exchange believes that the proposed fee 

is reasonable, equitably allocated, and 

not unfairly discriminatory. 

* * * * * 

The Exchange believes the proposed 

change to delete certain text from 

Section 6)a) of the Fee Schedule 

promotes just and equitable principles 

of trade and removes impediments to 

and perfects the mechanism of a free 

and open market and a national market 

system because the proposed change is 

a non-substantive edit to the Fee 

Schedule to remove unnecessary text. 

The Exchange believes that this 

proposed change will provide greater 

clarity to Members and the public 

regarding the Exchange’s Fee Schedule 

and that it is in the public interest for 

the Fee Schedule to be accurate and 

concise so as to eliminate the potential 

for confusion. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intra-Market Competition 

The Exchange believes the proposed 

fees will not result in any burden on 

intra-market competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because the 

proposed fees will allow the Exchange 

to recoup some of its costs in providing 

cToM to market participants. As 

described above, the Exchange has 

operated at a cumulative net annual loss 

since it launched operations in 2008 56

due to providing a low cost alternative 

to attract order flow and encourage 

market participants to experience the 

high determinism and resiliency of the 

Exchange’s trading Systems. To do so, 

the Exchange chose to waive the fees for 

some non-transaction related services 

and Exchange products or provide them 

at a very marginal cost, which was not 

profitable to the Exchange. This resulted 

in the Exchange forgoing revenue it 

could have generated from assessing any 


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57See supra notes 14 through 16. 

58 15 U.S.C. 78s(b)(3)(C). 

59 15 U.S.C. 78s(b)(1). 

60See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose 

of, and Statutory Basis for, the Proposed Rule 

Change’’). 

61 Id. 

62 15 U.S.C. 78f(b)(4). 

63 15 U.S.C. 78f(b)(5). 

64 15 U.S.C. 78f(b)(8). 

65See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 

66For 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). 

67 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. 

68 15 U.S.C. 78s(b)(2)(B). 

fees or higher fees. The Exchange could 

have sought to charge higher fees at the 

outset, but that could have served to 

discourage participation on the 

Exchange. Instead, the Exchange chose 

to provide a low cost exchange 

alternative to the options industry 

which resulted in lower initial 

revenues. An example of this is cToM, 

for which the Exchange only now seeks 

to adopt fees at a level similar to or 

lower than those of other options 

exchanges. 

Since the Exchange initially adopted 

the cToM data product in 2016, all 

Exchange Members and non-Members 

have had the ability to receive the 

Exchange’s cToM data free of charge for 

the past six years. Since then, the 

Exchange has spent time and resources 

building out additional features for 

Complex Order functionality in its 

System to provide better trading 

strategies and risk protections for 

market participants in order to better 

compete with other exchanges’ complex 

functionality and similar data products 

focused on complex orders.57 The 

Exchange now seeks to recoup its costs 

for providing cToM to market 

participants and believes the proposed 

fees will not result in excessive pricing 

or supra-competitive profit. 

Inter-Market Competition 

The Exchange also does not believe 

the proposed fees would cause any 

unnecessary or in appropriate burden 

on intermarket competition as other 

exchanges are free to introduce their 

own comparable data product and lower 

their prices to better compete with the 

Exchange’s offering. There is no reason 

to believe that the newly proposed fees 

to receive the cToM data feed would 

impair other exchange’s ability to 

compete or cause any unnecessary or 

inappropriate burden on inter-market 

competition. Particularly, the proposed 

product and fees apply uniformly to any 

purchaser, in that it does not 

differentiate between subscribers that 

purchase cToM. The proposed fees are 

set at a modest level that would allow 

any interested Member or non-Member 

to purchase such data based on their 

business needs. 

The Exchange does not believe that 

the proposed rule change to make a 

minor, non-substantive edit to Section 

6)a) of the Fee Schedule by deleting 

unnecessary text will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. This 

proposed rule change is not being made 

for competitive reasons, but rather is 

designed to remedy a minor nonsubstantive issue and will provide 

added clarity to the Fee Schedule. The 

Exchange believes that it is in the public 

interest for the Fee Schedule to be 

accurate and concise so as to eliminate 

the potential for confusion on the part 

of market participants. In addition, the 

Exchange does not believe the proposal 

will impose any burden on inter-market 

competition as the proposal does not 

address any competitive issues and is 

intended to protect investors by 

providing further transparency 

regarding the Exchange’s Fee Schedule. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Suspension of the Proposed Rule 

Change 

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

Act,58 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,59 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. 

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.60 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.’’ 61

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; 62 (2) perfect the mechanism of 

a free and open market and a national 

market system, protect investors and the 

public interest, and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers; 63 and (3) not impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.64

In temporarily suspending the 

Exchange’s fee change, the Commission 

intends to further consider whether the 

proposed fees for the cToM market data 

feed are consistent with the statutory 

requirements applicable to a national 

securities exchange under the Act. In 

particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; not permit unfair 

discrimination between customers, 

issuers, brokers or dealers; and do not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act.65

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.66

IV. Proceedings To Determine Whether 

To Approve or Disapprove the 

Proposed Rule Change 

In addition to temporarily suspending 

the proposal, the Commission also 

hereby institutes proceedings pursuant 

to Sections 19(b)(3)(C) 67 and 19(b)(2)(B) 

of the Act 68 to determine whether the 

proposed rule change should be 

approved or disapproved. Institution of 


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69 Id. 

70 15 U.S.C. 78f(b)(4). 

71 15 U.S.C. 78f(b)(5). 

72 15 U.S.C. 78f(b)(8). 

73See supra Section II.A.2. 

74See id. 

75See id. 

76See id. 

77See id. 

such proceedings is appropriate at this 

time in view of the legal and policy 

issues raised by the proposed rule 

change. Institution of proceedings does 

not indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, the 

Commission seeks and encourages 

interested persons to provide additional 

comment on the proposed rule change 

to inform the Commission’s analysis of 

whether to disapprove the proposed 

rule change. 

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

Act,69 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),70 6(b)(5),71 and 6(b)(8) 72 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, which are set forth above, 

in addition to any other comments they 

may wish to submit about the proposed 

rule change. In particular, the 

Commission seeks comment on the 

following aspects of the proposal and 

asks commenters to submit data where 

appropriate to support their views: 

1. Cost Estimates and Allocation. The 

Exchange states that it is not asserting 

that the proposed fees are constrained 

by competitive forces, but rather sets 

forth a ‘‘cost-plus model,’’ employing a 

‘‘conservative approach,’’ that the 

expenses are ‘‘directly related’’ to cToM 

data, and not any other product or 

service offered by the Exchange, and 

states that the proposed fees are 

‘‘reasonable because they will permit 

recovery of the Exchange’s costs in 

providing cToM data and will not result 

in the Exchange generating a supracompetitive profit.’’ 73 In explaining its 

costs, should the Exchange identify 

more specifically which, if any, of its 

costs are incurred solely to provide 

cToM data? Regarding the allocations 

provided by the Exchange as described 

in greater detail above, do commenters 

believe that the Exchange provided 

sufficient detail about how it 

determined these allocations and why 

they are reasonable? Why or why not? 

Do commenters believe that the 

Exchange provided sufficient context to 

permit an independent review and 

assessment of the reasonableness of the 

cost allocations? Do commenters believe 

that the Exchange provided sufficient 

detail or explanation to support its 

claim that ‘‘no expense amount is 

allocated twice,’’ 74 whether among the 

sub-categories of expenses in this filing, 

across the Exchange’s fee filings for 

other products or services, or over time? 

2. Revenue Estimates and Profit 

Margin Range. The Exchange provides a 

single monthly revenue figure as the 

basis for calculating its anticipated 

profit margin. Do commenters believe 

this is reasonable? If not, why not? The 

profit margin is also dependent on the 

accuracy of the cost projections which, 

if inflated (intentionally or 

unintentionally), may render the 

projected profit margin meaningless. 

The Exchange acknowledges that this 

margin may fluctuate from month to 

month as Members and non-Members 

add and drop subscriptions,75 and that 

costs may increase. The Exchange does 

not account for the possibility of cost 

decreases, however. What are 

commenters’ views on the extent to 

which actual costs (or revenues) deviate 

from projected costs (or revenues)? Do 

commenters believe that the Exchange’s 

methodology for estimating the profit 

margin is reasonable? Should the 

Exchange provide a range of profit 

margins that it believes are reasonably 

possible, and the reasons therefor? 

3. Reasonableness. The Exchange 

states that the proposed fees are 

reasonable because the Exchange is 

operating at a negative margin for this 

product. Further, the Exchange states 

that it chose to initially provide the 

cToM data product for free and to forego 

revenue that they otherwise could have 

generated from assessing any fees.76

What are commenters’ views regarding 

what factors should be considered in 

determining what constitutes a 

reasonable fee for the cToM market data 

product? Do commenters believe it 

relevant to an assessment of 

reasonableness that, according to the 

Exchange, the Exchange’s proposed fees 

are similar to or lower than fees charged 

by competing options exchanges with 

similar market share? Should an 

assessment of reasonableness include 

consideration of factors other than costs; 

and if so, what factors should be 

considered, and why? 

4. Periodic Reevaluation. The 

Exchange has stated that it will conduct 

a one-year review of the cost-based fees 

subject to this proposal after the date of 

the proposal, and annually thereafter. In 

light of the impact that the number of 

subscriptions has on profit margins, and 

the potential for costs to decrease (or 

increase) over time, what are 

commenters’ views on the need for 

exchanges to commit to reevaluate, on 

an ongoing and periodic basis, their 

cost-based data fees to ensure that the 

fees stay in line with their stated 

profitability projections and do not 

become unreasonable over time, for 

example, by failing to adjust for 

efficiency gains, cost increases or 

decreases, and changes in subscribers? 

How formal should that process be, how 

often should that reevaluation occur, 

and what metrics and thresholds should 

be considered? How soon after a new 

data fee change is implemented should 

an exchange assess whether its revenue 

and/or cost estimates were accurate and 

at what threshold should an exchange 

commit to file a fee change if its 

estimates were inaccurate? 

5. Fees for Internal Distributors versus 

External Distributors. The Exchange 

argues that it is reasonable, equitable, 

and not unfairly discriminatory to 

assess Internal Distributors fees that are 

lower than the fees assessed for External 

Distributors for subscriptions to the 

cToM data feed ($1,250 per month for 

Internal Distributors versus $1,750 per 

month for External Distributors), since 

Internal Distributors have limited, 

restricted usage rights to the market 

data, as compared to External 

Distributors, which have more 

expansive usage rights, including rights 

to commercialize such market data.77 In 

addition, the Exchange states that it 

‘‘utilizes more resources’’ to support 

External Distributors as compared to 

Internal Distributors, as External 


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Federal Register / Vol. 87, No. 95 / Tuesday, May 17, 2022 / Notices 29927 

78See id. 

79See id. 

80Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

81See id. 

82See id. 

83See 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). 

84 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). 

85 15 U.S.C. 78s(b)(3)(C). 

86 17 CFR 200.30–3(a)(12), (57), and (58). 

Distributors have reporting and 

monitoring obligations that Internal 

Distributors do not have, thus requiring 

‘‘additional time and effort’’ of the 

Exchange’s staff.78 What are 

commenters’ views on the adequacy of 

the information the Exchange provides 

regarding the differential between the 

Internal Distributor and External 

Distributor fees? Do commenters believe 

that the fees for Internal Distributors 

and External Distributors, as well as the 

fee differences between Distributors, are 

supported by the Exchange’s assertions 

that it sets the differentiated pricing 

structure in a manner that is equitable 

and not unfairly discriminatory? Do 

commenters believe that the Exchange 

should demonstrate how the proposed 

Distributor fee levels correlate with 

different costs to better substantiate how 

the Exchange ‘‘utilizes more resources’’ 

to support External Distributors versus 

Internal Distributors and permit an 

assessment of the Exchange’s statement 

that ‘‘External Distributors have 

reporting and monitoring obligations 

that Internal Distributors do not have, 

thus requiring additional time and effort 

of Exchange staff’’? 79

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the [Act] and the rules 

and regulations issued thereunder . . . 

is on the [SRO] that proposed the rule 

change.’’ 80 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,81 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.82 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.83

The Commission believes it is 

appropriate to institute proceedings to 

allow for additional consideration and 

comment on the issues raised herein, 

including as to whether the proposal is 

consistent with the Act, any potential 

comments or supplemental information 

provided by the Exchange, and any 

additional independent analysis by the 

Commission. 

V. Request for Written Comments 

The Commission requests written 

views, data, and arguments with respect 

to the concerns identified above, as well 

as any other relevant concerns. In 

particular, the Commission invites the 

written views of interested persons 

concerning whether the proposal is 

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

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

Act, or the rules and regulations 

thereunder. The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.84

Interested persons are invited to 

submit written data, views, and 

arguments concerning the proposed rule 

change, including whether the proposed 

rule change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

MIAX–2022–19 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MIAX–2022–19. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MIAX–2022–19 and should 

be submitted on or before June 7, 2022. 

Rebuttal comments should be submitted 

by June 21, 2022. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,85 that File 

Number SR–MIAX–2022–19 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.86

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10512 Filed 5–16–22; 8:45 am] 

BILLING CODE 8011–01–P 


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