Document ID: SEC-2023-0126-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2023-02-03T05:00Z

[Federal Register Volume 88, Number 23 (Friday, February 3, 2023)]
[Notices]
[Pages 7487-7500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-02238]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96775; File No. SR-MEMX-2023-02]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule To Adopt Market Data Fees

January 30, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on January 17, 2023, MEMX LLC (``MEMX'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposed rule change 
to amend the Exchange's fee schedule applicable to Members \3\ and non-
Members (the ``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and 
(c). The Exchange proposes to implement the changes to the Fee Schedule 
pursuant to this proposal immediately.
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    \3\ See Exchange Rule 1.5(p).
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    The text of the proposed rule change is provided in Exhibit 5.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Background
    The purpose of the proposed rule change is to amend the Fee 
Schedule to adopt fees the Exchange will charge to Members and non-
Members for each of its three proprietary market data feeds, namely 
MEMOIR Depth, MEMOIR Top, and MEMOIR Last Sale (collectively, the 
``Exchange Data Feeds''). The Exchange is proposing to implement the 
proposed fees immediately.
    The Exchange previously filed the proposal on March 24, 2022 (SR-
MEMX-2022-03) (the ``Initial Proposal''). The Exchange withdrew the 
Initial Proposal and replaced the proposal with SR-MEMX-2022-14 (the 
``Second Proposal''). The Exchange withdrew the Second Proposal and 
replaced the proposal with SR-MEMX-2022-19 (the ``Third Proposal''). 
The Exchange withdrew the Third Proposal and replaced the proposal with 
SR-MEMX-2022-28 (the ``Fourth Proposal''). The Exchange withdrew the 
Fourth Proposal and replaced the proposal with SR-MEMX-2022-32 (the 
``Fifth Proposal''). The Exchange recently withdrew the Fifth Proposal 
and is replacing it with the current proposal (SR-MEMX-2023-02).
    The Exchange notes that it has previously included a cost analysis 
in connection with the proposed fees for the Exchange Data Feeds, 
however, the prior cost analysis coupled costs related to operating its 
trading system, or transaction services, with costs of producing market 
data. As described more fully below, in the Fifth Proposal and this 
filing, the Exchange provides an updated cost analysis that focuses 
solely on costs related to the provision of the Exchange Data Feeds 
(the ``Cost Analysis''). Although the baseline Cost Analysis used to 
justify the fees was made with the Fifth Proposal, the fees themselves 
have not changed since the Initial Proposal and the Exchange still 
proposes fees that are intended to cover the Exchange's cost of 
producing the Exchange Data Feeds with a reasonable mark-up over those 
costs. Before setting forth the additional details regarding the 
proposal as well as the updated Cost Analysis conducted by the 
Exchange, immediately below is a description of the proposed fees.
Proposed Market Data Pricing
    The Exchange offers three separate data feeds to subscribers--
MEMOIR

[[Page 7488]]

Depth, MEMOIR Top and MEMOIR Last Sale. The Exchange notes that there 
is no requirement that any Firm subscribe to a particular Exchange Data 
Feed or any Exchange Data Feed whatsoever, but instead, a Firm may 
choose to maintain subscriptions to those Exchange Data Feeds they deem 
appropriate based on their business model. The proposed fee will not 
apply differently based upon the size or type of Firm, but rather based 
upon the subscriptions a Firm has to Exchange Data Feeds and their use 
thereof, which are in turn based upon factors deemed relevant by each 
Firm. The proposed pricing for each of the Exchange Data Feeds is set 
forth below.
MEMOIR Depth
    The MEMOIR Depth feed is a MEMX-only market data feed that contains 
all displayed orders for securities trading on the Exchange (i.e., top 
and depth-of-book order data), order executions (i.e., last sale data), 
order cancellations, order modifications, order identification numbers, 
and administrative messages.\4\ The Exchange proposes to charge each of 
the fees set forth below for MEMOIR Depth.
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    \4\ See MEMX Rule 13.8(a).
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    1. Internal Distribution Fee. For the receipt of access to the 
MEMOIR Depth feed, the Exchange proposes to charge $1,500 per month. 
This proposed access fee would be charged to any data recipient that 
receives a data feed of the MEMOIR Depth feed for purposes of internal 
distribution (i.e., an ``Internal Distributor''). The Exchange proposes 
to define an Internal Distributor as ``a Distributor that receives an 
Exchange Data product and then distributes that data to one or more 
data recipients within the Distributor's own organization.'' \5\ The 
proposed access fee for internal distribution will be charged only once 
per month per subscribing entity (``Firm''). The Exchange notes that it 
has proposed to use the phrase ``own organization'' in the definition 
of Internal Distributor and External Distributor because a Firm will be 
permitted to share data received from an Exchange Data product to other 
legal entities affiliated with the Firm that have been disclosed to the 
Exchange without such distribution being considered external to a third 
party. For instance, if a company has multiple affiliated broker-
dealers under the same holding company, that company could have one of 
the broker-dealers or a non-broker-dealer affiliate subscribe to an 
Exchange Data product and then share the data with other affiliates 
that have a need for the data. This sharing with affiliates would not 
be considered external distribution to a third party but instead would 
be considered internal distribution to data recipients within the 
Distributor's own organization.
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    \5\ See Market Data Definitions under the proposed MEMX Fee 
Schedule. The Exchange also proposes to adopt a definition for 
``Distributor'', which would mean any entity that receives an 
Exchange Data product directly from the Exchange or indirectly 
through another entity and then distributes internally or externally 
to a third party.
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    2. External Distribution Fee. For redistribution of the MEMOIR 
Depth feed, the Exchange proposes to establish an access fee of $2,500 
per month. The proposed redistribution fee would be charged to any 
External Distributor of the MEMOIR Depth feed, which would be defined 
to mean ``a Distributor that receives an Exchange Data product and then 
distributes that data to a third party or one or more data recipients 
outside the Distributor's own organization.'' \6\ The proposed access 
fee for external distribution will be charged only once per month per 
Firm. As noted above, while a Firm will be permitted to share data 
received from an Exchange Data product to other legal entities 
affiliated with the Firm that have been disclosed to the Exchange 
without such distribution being considered external to a third party, 
if a Firm distributes data received from an Exchange Data product to an 
unaffiliated third party that would be considered distribution to data 
recipients outside the Distributor's own organization and the access 
fee for external distribution would apply.
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    \6\ See Market Data Definitions under the proposed MEMX Fee 
Schedule.
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    3. Non-Display Use Fees. The Exchange proposes to establish 
separate non-display fees for usage by Trading Platforms and other 
Users (i.e., not by Trading Platforms).\7\ Non-Display Usage would be 
defined to mean ``any method of accessing an Exchange Data product that 
involves access or use by a machine or automated device without access 
or use of a display by a natural person or persons.'' \8\ For Non-
Display Usage of the MEMOIR Depth feed not by Trading Platforms, the 
Exchange proposes to establish a fee of $1,500 per month.\9\ For Non-
Display Usage of the MEMOIR Depth feed by Trading Platforms, the 
Exchange proposes to establish a fee of $4,000 per month. The proposed 
fees for Non-Display Usage will be charged only once per category per 
Firm.\10\ In other words, with respect to Non-Display Usage Fees, a 
Firm that uses MEMOIR Depth for non-display purposes but does not 
operate a Trading Platform would pay $1,500 per month, a Firm that uses 
MEMOIR Depth in connection with the operation of one or more Trading 
Platforms (but not for other purposes) would pay $4,000 per month, and 
a Firm that uses MEMOIR Depth for non-display purposes other than 
operating a Trading Platform and for the operation of one or more 
Trading Platforms would pay $5,500 per month.
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    \7\ The Exchange proposes to define a Trading Platform as ``any 
execution platform operated as or by a registered National 
Securities Exchange (as defined in Section 3(a)(1) of the Exchange 
Act), an Alternative Trading System (as defined in Rule 300(a) of 
Regulation ATS), or an Electronic Communications Network (as defined 
in Rule 600(b)(23) of Regulation NMS).'' See Market Data Definitions 
under the proposed MEMX Fee Schedule.
    \8\ See Market Data Definitions under the proposed MEMX Fee 
Schedule.
    \9\ Non-Display Usage not by Trading Platforms would include 
trading uses such as high frequency or algorithmic trading as well 
as any trading in any asset class, automated order or quote 
generation and/or order pegging, price referencing for smart order 
routing, operations control programs, investment analysis, order 
verification, surveillance programs, risk management, compliance, 
and portfolio management.
    \10\ The Exchange proposes to adopt note 1 to the proposed 
Market Data fees table, which would make clear to subscribers that 
use of the data for multiple non-display purposes or operate more 
than one Trading Platform would only be charged once per category 
per month. Thus, the footnote makes clear that each fee applicable 
to Non-Display Usage is charged per subscriber (e.g., a Firm) and 
that each of the fees represents the maximum charge per month per 
subscriber regardless of the number of non-display uses and/or 
Trading Platforms operated by the subscriber, as applicable.
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    4. User Fees. The Exchange proposes to charge a Professional User 
\11\ Fee (per User) of $30 per month and a Non-Professional User \12\ 
Fee (per User) of $3 per month. The proposed User fees would apply to 
each person that has access to the MEMOIR Depth feed for displayed 
usage. Thus, each Distributor's count will include every individual 
that accesses the data regardless of the purpose for which the 
individual uses the data. Internal

[[Page 7489]]

Distributors and External Distributors of the MEMX Depth feed must 
report all Professional and Non-Professional Users in accordance with 
the following:
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    \11\ As proposed, a Professional User is any User other than a 
Non-Professional User. See infra note 12.
    \12\ As proposed, a Non-Professional User is a natural person or 
qualifying trust that uses Exchange Data only for personal purposes 
and not for any commercial purpose and, for a natural person who 
works in the United States, is not: (i) registered or qualified in 
any capacity with the Securities and Exchange Commission, the 
Commodities Futures Trading Commission, any state securities agency, 
any securities exchange or association, or any commodities or 
futures contract market or association; (ii) engaged as an 
``investment adviser'' as that term is defined in Section 202(a)(11) 
of the Investment Advisors Act of 1940 (whether or not registered or 
qualified under that Act); or (iii) employed by a bank or other 
organization exempt from registration under federal or state 
securities laws to perform functions that would require registration 
or qualification if such functions were performed for an 
organization not so exempt; or, for a natural person who works 
outside of the United States, does not perform the same functions as 
would disqualify such person as a Non-Professional User if he or she 
worked in the United States.
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     In connection with a Distributor's distribution of the 
MEMOIR Depth feed, the Distributor must count as one User each unique 
User that the Distributor has entitled to have access to the MEMOIR 
Depth feed.
     Distributors must report each unique individual person who 
receives access through multiple devices or multiple methods (e.g., a 
single User has multiple passwords and user identifications) as one 
User.
     If a Distributor entitles one or more individuals to use 
the same device, the Distributor must include only the individuals, and 
not the device, in the count. Thus, Distributors would not be required 
to report User device counts associated with a User's display use of 
the data feed.
    5. Enterprise Fee. Other than the Digital Media Enterprise Fee 
described below, the Exchange is not proposing to adopt an Enterprise 
Fee for the MEMOIR Depth feed at this time.
    6. Digital Media Enterprise Fee. As an alternative to User fees, a 
recipient Firm may purchase a monthly Digital Media Enterprise license 
to receive MEMOIR Depth for distribution to an unlimited number of 
Users for viewing via television, websites, and mobile devices for 
informational and non-trading purposes only. The Exchange proposes to 
establish a fee of $5,000 per month for a Digital Media Enterprise 
license to the MEMOIR Depth feed.
MEMOIR Top
    The MEMOIR Top feed is a MEMX-only market data feed that contains 
top of book quotations based on equity orders entered into the System 
as well as administrative messages.\13\ The Exchange proposes to charge 
each of the fees set forth below for MEMOIR Top.
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    \13\ See MEMX Rule 13.8(b).
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    1. Internal Distribution Fee. For the receipt of access to the 
MEMOIR Top feed, the Exchange proposes to charge $750 per month. This 
proposed access fee would be charged to any data recipient that 
receives a data feed of the MEMOIR Top feed for purposes of internal 
distribution (i.e., an Internal Distributor). The proposed access fee 
for internal distribution will be charged only once per month per Firm.
    2. External Distribution Fee. For redistribution of the MEMOIR Top 
feed, the Exchange proposes to establish an access fee of $2,000 per 
month. The proposed redistribution fee would be charged to any External 
Distributor of the MEMOIR Top feed. The proposed access fee for 
external distribution will be charged only once per month per Firm.
    3. Non-Display Use Fees. The Exchange does not propose to establish 
non-display fees for usage by Trading Platforms or other Users with 
respect to MEMOIR Top.
    4. User Fees. The Exchange proposes to charge a Professional User 
Fee (per User) of $0.01 per month and a Non-Professional User Fee (per 
User) of $0.01 per month. The proposed User fees would apply to each 
person that has access to the MEMOIR Top feed that is provided by an 
External Distributor for displayed usage. The Exchange does not propose 
any per User fees for internal distribution of the MEMOIR Top feed. 
Each External Distributor's count will include every individual that 
accesses the data regardless of the purpose for which the individual 
uses the data. External Distributors of the MEMOIR Top feed must report 
all Professional and Non-Professional Users \14\ in accordance with the 
following:
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    \14\ The Exchange notes that while it is not differentiating 
Professional and Non-Professional Users based on fees (in that it is 
proposing the same fee for such Users) for this data feed, and thus 
will not audit Firms based on this distinction, it will request 
reporting of each distinct category for informational purposes.
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     In connection with an External Distributor's distribution 
of the MEMOIR Top feed, the Distributor must count as one User each 
unique User that the Distributor has entitled to have access to the 
MEMOIR Top feed.
     External Distributors must report each unique individual 
person who receives access through multiple devices or multiple methods 
(e.g., a single User has multiple passwords and user identifications) 
as one User.
     If an External Distributor entitles one or more 
individuals to use the same device, the Distributor must include only 
the individuals, and not the device, in the count. Thus, Distributors 
would not be required to report User device counts associated with a 
User's display use of the data feed.
    5. Enterprise Fee. As an alternative to User fees, a recipient Firm 
may purchase a monthly Enterprise license to receive MEMOIR Top for 
distribution to an unlimited number of Professional and Non-
Professional Users. The Exchange proposes to establish a fee of $10,000 
per month for an Enterprise license to the MEMOIR Top feed.
    6. Digital Media Enterprise Fee. As an alternative to User fees, a 
recipient Firm may purchase a monthly Digital Media Enterprise license 
to receive MEMOIR Top for distribution to an unlimited number of Users 
for viewing via television, websites, and mobile devices for 
informational and non-trading purposes only. The Exchange proposes to 
establish a fee of $2,000 per month for a Digital Media Enterprise 
license to the MEMOIR Top feed.
MEMOIR Last Sale
    The MEMOIR Last Sale feed is a MEMX-only market data feed that 
contains only execution information based on equity orders entered into 
the System as well as administrative messages.\15\ The Exchange 
proposes to charge each of the fees set forth below for MEMOIR Last 
Sale.
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    \15\ See MEMX Rule 13.8(c).
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    1. Internal Distribution Fee. For the receipt of access to the 
MEMOIR Last Sale feed, the Exchange proposes to charge $500 per month. 
This proposed access fee would be charged to any data recipient that 
receives a data feed of the MEMOIR Last Sale feed for purposes of 
internal distribution (i.e., an Internal Distributor). The proposed 
access fee for internal distribution will be charged only once per 
month per Firm.
    2. External Distribution Fee. For redistribution of the MEMOIR Last 
Sale feed, the Exchange proposes to establish an access fee of $2,000 
per month. The proposed redistribution fee would be charged to any 
External Distributor of the MEMOIR Last Sale feed. The proposed access 
fee for external distribution will be charged only once per month per 
Firm.
    3. Non-Display Use Fees. The Exchange does not propose to establish 
separate non-display fees for usage by Trading Platforms or other Users 
with respect to MEMOIR Last Sale.
    4. User Fees. The Exchange proposes to charge a Professional User 
Fee (per User) of $0.01 per month and a Non-Professional User Fee (per 
User) of $0.01 per month. The proposed User fees would apply to each 
person that has access to the MEMOIR Last Sale feed that is provided by 
an External Distributor for displayed usage. The Exchange does not 
propose any per User fees for internal distribution of the MEMOIR Last 
Sale feed. Each External Distributor's count will include every 
individual that accesses the data regardless of the purpose for which 
the individual uses the data. External Distributors of the MEMOIR Last 
Sale feed must report all Professional and Non-Professional Users \16\ 
in accordance with the following:
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    \16\ See supra note 14.
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     In connection with an External Distributor's distribution 
of the MEMOIR Last Sale feed, the Distributor

[[Page 7490]]

must count as one User each unique User that the Distributor has 
entitled to have access to the MEMOIR Last Sale feed.
     External Distributors must report each unique individual 
person who receives access through multiple devices or multiple methods 
(e.g., a single User has multiple passwords and user identifications) 
as one User.
     If an External Distributor entitles one or more 
individuals to use the same device, the Distributor must include only 
the individuals, and not the device, in the count. Thus, Distributors 
would not be required to report User device counts associated with a 
User's display use of the data feed.
    5. Enterprise Fee. As an alternative to User fees, a recipient Firm 
may purchase a monthly Enterprise license to receive MEMOIR Last Sale 
for distribution to an unlimited number of Professional and Non-
Professional Users. The Exchange proposes to establish a fee of $10,000 
per month per Firm for an Enterprise license to the MEMOIR Last Sale 
feed.
    6. Digital Media Enterprise Fee. As an alternative to User fees, a 
recipient Firm may purchase a monthly Digital Media Enterprise license 
to receive MEMOIR Last Sale for distribution to an unlimited number of 
Users for viewing via television, websites, and mobile devices for 
informational and non-trading purposes only. The Exchange proposes to 
establish a fee of $2,000 per month per Firm for a Digital Media 
Enterprise license to the MEMOIR Last Sale feed.
Additional Discussion--Background
    In two years, MEMX has grown from 0% to monthly market share 
ranging between 3-4% of consolidated trading volume. During that same 
period, the Exchange has had a steady increase in the number of 
subscribers to Exchange Data Feeds. Until April of 2022, MEMX did not 
charge fees for market data provided by the Exchange. The objective of 
this approach was to eliminate any fee-based barriers for Members when 
MEMX launched as a national securities exchange in 2020, which the 
Exchange believes has been helpful in its ability to attract order flow 
as a new exchange. The Exchange also did not initially charge for 
market data because MEMX believes that any exchange should first 
deliver meaningful value to Members and other market participants 
before charging fees for its products and services. As discussed more 
fully below, the Exchange recently calculated its annual aggregate 
costs for providing the Exchange Data Feeds at approximately $3 
million. In order to establish fees that are designed to recover the 
aggregate costs of providing the Exchange Data Feeds plus a reasonable 
mark-up, the Exchange is proposing to modify its Fee Schedule, as 
described above. In addition to the Cost Analysis, described below, the 
Exchange believes that its proposed approach to market data fees is 
reasonable based on a comparison to competitors.
Additional Discussion--Comparison With Other Exchanges
    The proposed fee structure is not novel but is instead comparable 
to the fee structure currently in place for the equities exchanges 
operated by Cboe Global Markets, Inc., in particular BZX.\17\ As noted 
above, in January 2022, MEMX had 4.2% market share; for that same 
month, BZX had 5.5% market share.\18\ The Exchange is proposing fees 
for its Exchange Data Feeds that are similar in structure to BZX and 
rates that are equal to, or in most cases lower, than the rates data 
recipients pay for comparable data feeds from BZX.\19\ The Exchange 
notes that other competitors maintain fees applicable to market data 
that are considerably higher than those proposed by the Exchange, 
including NYSE Arca \20\ and Nasdaq.\21\ However, the Exchange has 
focused its comparison on BZX because it is the closest market in terms 
of market share and offers market data at prices lower than several 
other incumbent exchanges.\22\
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    \17\ See BZX Fee Schedule, available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/ (the ``BZX Fee Schedule'').
    \18\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
    \19\ The Exchange notes that although no fee proposed by the 
Exchange is higher than the fee charged for BZX for a comparable 
data product, under certain fact patterns a BZX data recipient could 
pay a lower rate than that charged by the Exchange. For instance, 
while the Exchange has proposed to adopt identical fees to those 
charged for internal distribution of MEMOIR Top as compared to BZX 
Top ($750 per month) and for internal distribution of MEMOIR Last 
Sale as compared to BZX Last Sale ($500 per month), BZX permits a 
data recipient who takes both feeds to pay only one fee and, upon 
request, to receive the other data feed free of charge. See BZX Fee 
Schedule, supra note 17. Because the Exchange has not proposed such 
a discount, a data recipient taking both MEMOIR TOP and MEMOIR Last 
Sale would pay more ($1,250 per month) than they would to take 
comparable data feeds from BZX ($750 per month).
    \20\ Fees for the NYSE Arca Integrated Feed, which is the 
comparable product to MEMOIR Depth, are $3,000 for access (internal 
use) and $3,750 for redistribution (external distribution), compared 
to the Exchange's proposed fees of $1,500 and $2,500, respectively. 
In addition, for its Integrated Feed, NYSE Arca charges for three 
different categories of non-display usage, each of which is $10,500 
and each of which can be charged to the same firm more than one time 
(e.g., a customer operating a Trading Platform would pay $10,500 
compared to the Exchange's proposed fee of $4,000 but would also pay 
for each Trading Platform, up to three, if they operate more than 
one, instead of the single fee proposed by the Exchange; if that 
customer also uses the data for the other categories of non-display 
usage they would also pay $10,500 for each other category of usage, 
whereas the Exchange would only charge $1,500 for any non-display 
usage other than operating a Trading Platform). Finally, the NYSE 
Arca Integrated Feed user fee for pro devices is $60 compared to the 
proposed Professional User fee of $30 for MEMOIR Depth and the NYSE 
Arca Integrated user fee for non-pro devices is $20 compared to the 
proposed Non-Professional User fee of $3 for MEMOIR Depth. See NYSE 
Proprietary Market Data Pricing list, available at: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Pricing.pdf.
    \21\ Fees for the Nasdaq TotalView data feed, which is the 
comparable product to MEMOIR Depth, are $1,500 for access (internal 
use) and $3,750 for redistribution (external distribution), compared 
to the Exchange's proposed fees of $1,500 and $2,500, respectively. 
In addition, for TotalView, Nasdaq charges Trading Platforms $5,000 
compared to the Exchange's proposal of $4,000, and, like NYSE Arca, 
charges customers per Trading Platform, up to three, if they operate 
more than one, instead of the single fee proposed by the Exchange. 
Nasdaq also requires users to report and pay usage fees for non-
display access at levels of from $375 per subscriber for smaller 
firms with 39 or fewer subscribers to $75,000 per firm for a larger 
firm with over 250 subscribers. The Exchange does not require 
counting of devices or users for non-display purposes and instead 
has proposed flat fee of $1,500 for non-display usage not by Trading 
Platforms. Finally, the Nasdaq TotalView user fee for professional 
subscribers is $76 compared to the proposed Professional User fee of 
$30 for MEMOIR Depth and the Nasdaq TotalView user fee for non-
professional subscribers is $15 compared to the proposed Non-
Professional User fee of $3 for MEMOIR Depth. See Nasdaq Global Data 
Products pricing list, available at: http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
    \22\ See supra notes 20-21.
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    The fees for the BZX Depth feed--which like the MEMOIR Depth feed, 
includes top of book, depth of book, trades, and security status 
messages--consist of an internal distributor access fee of $1,500 per 
month (the same as the Exchange's proposed rate), an external 
distributor access fee of $5,000 per month (two times the Exchange's 
proposed rate), a non-display usage fee for non-Trading Platforms of 
$2,000 per month ($500 more than the Exchange's proposed rate), a non-
display usage fee

[[Page 7491]]

for Trading Platforms of $5,000 per month ($1,000 more than the 
Exchange's proposed rate), a Professional User fee (per User) of $40 
per month ($10 more than the Exchange's proposed rate), and a Non-
Professional User fee (per User) of $5 per month ($2 more than the 
Exchange's proposed rate).\23\
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    \23\ See BZX Fee Schedule, supra note 17. The Exchange notes 
that there are differences between the structure of BZX Depth fees 
and the proposed fees for MEMOIR Depth, including that the Exchange 
has proposed a Digital Media Enterprise License for MEMOIR Depth but 
a comparable license is not available from BZX. Additionally, BZX 
maintains a general enterprise license for User fees, similar to 
that proposed by the Exchange for MEMOIR Top and MEMOIR Last Sale, 
but the Exchange has not proposed adding a general Enterprise 
license at this time.
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    The comparisons of the MEMOIR Last Sale feed and MEMOIR Top feed to 
the BZX Last Sale feed and BZX Top feed, respectively, are similar in 
that BZX generally maintains the same fee structure proposed by the 
Exchange and BZX charges fees that are comparable to, but in most cases 
higher than, the Exchange's proposed fees. Notably, the User fees 
proposed by the Exchange for External Distributors of MEMOIR Last Sale 
and MEMOIR Top ($0.01 for both Professional Users and Non-Professional 
Users) are considerably lower than those charged by BZX for BZX Top and 
BZX Last Sale ($4 for Professional Users and $0.10 for Non-Professional 
Users).
    By charging the same low rate for all Users of MEMOIR Top and 
MEMOIR Last Sale the Exchange believes it is proposing a structure that 
is not only lower cost but that will also simplify reporting for 
subscribers who externally distribute these data feeds to Users, as the 
Exchange believes that categorization of Users as Professional and Non-
Professional is not meaningful for these products and requiring such 
categorization would expose Firms to unnecessary audit risk of paying 
more for mis-categorization. However, the Exchange does not believe 
this is equally true for MEMOIR Depth, as most individual Users of 
MEMOIR Depth are likely to be Professional Users and the Exchange has 
proposed pricing for such Users that the Exchange believes is 
reasonable given the value to Professional Users (i.e., since 
Professional Users use data to participate in the markets as part of 
their full-time profession and earn compensation based on their 
employment). While the Exchange would prefer the simplicity of a single 
fee, similar to that imposed for Professional Users and Non-
Professional Users of the MEMOIR Top and MEMOIR Last Sale feeds, as 
that would reduce audit risk and simplify reporting, the proposed fee 
for Professional Users of the MEMOIR Depth feed if also applied to Non-
Professional Users of such feed would be significantly higher than 
other exchanges charge. The Exchange reiterates that it does not 
anticipate many Non-Professional Users to subscribe to MEMOIR Depth. In 
fact, the Exchange is only aware of a single Non-Professional User 
(i.e., one User) that is reported to receive MEMOIR Depth.
Additional Discussion--Cost Analysis
    In general, the Exchange believes that exchanges, in setting fees 
of all types, should meet very high standards of transparency to 
demonstrate why each new fee or fee increase meets the Exchange Act 
requirements that fees be reasonable, equitably allocated, not unfairly 
discriminatory, and not create an undue burden on competition among 
members and markets. In particular, the Exchange believes that each 
exchange should take extra care to be able to demonstrate that these 
fees are based on its costs and reasonable business needs. Accordingly, 
in proposing to charge fees for market data, the Exchange has sought to 
be especially diligent in assessing those fees in a transparent way 
against its own aggregate costs of providing the related service, and 
also carefully and transparently assessing the impact on Members--both 
generally and in relation to other Members, i.e., to assure the fee 
will not create a financial burden on any participant and will not have 
an undue impact in particular on smaller Members and competition among 
Members in general. The Exchange does not believe it needs to otherwise 
address questions about market competition in the context of this 
filing because the proposed fees are so clearly consistent with the Act 
based on its Cost Analysis. The Exchange also believes that this level 
of diligence and transparency is called for by the requirements of 
Section 19(b)(1) under the Act,\24\ and Rule 19b-4 thereunder,\25\ with 
respect to the types of information self-regulatory organizations 
(``SROs'') should provide when filing fee changes, and Section 6(b) of 
the Act,\26\ which requires, among other things, that exchange fees be 
reasonable and equitably allocated,\27\ not designed to permit unfair 
discrimination,\28\ and that they not impose a burden on competition 
not necessary or appropriate in furtherance of the purposes of the 
Act.\29\ This rule change proposal addresses those requirements, and 
the analysis and data in this section are designed to clearly and 
comprehensively show how they are met.\30\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(1).
    \25\ 17 CFR 240.19b-4.
    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(4).
    \28\ 15 U.S.C. 78f(b)(5).
    \29\ 15 U.S.C. 78f(b)(8).
    \30\ In 2019, Commission staff published guidance suggesting the 
types of information that SROs may use to demonstrate that their fee 
filings comply with the standards of the Exchange Act (``Fee 
Guidance''). While MEMX understands that the Fee Guidance does not 
create new legal obligations on SROs, the Fee Guidance is consistent 
with MEMX's view about the type and level of transparency that 
exchanges should meet to demonstrate compliance with their existing 
obligations when they seek to charge new fees. See Staff Guidance on 
SRO Rule Filings Relating to Fees (May 21, 2019) available at 
https://www.sec.gov/tm/staff-guidancesro-rule-filings-fees.
---------------------------------------------------------------------------

    As noted above, MEMX has conducted and recently updated a study of 
its aggregate costs to produce the Exchange Data Feeds--the Cost 
Analysis. The Cost Analysis required a detailed analysis of MEMX's 
aggregate baseline costs, including a determination and allocation of 
costs for core services provided by the Exchange--transactions, market 
data, membership services, physical connectivity, and application 
sessions (which provide order entry, cancellation and modification 
functionality, risk functionality, ability to receive drop copies, and 
other functionality). MEMX separately divided its costs between those 
costs necessary to deliver each of these core services, including 
infrastructure, software, human resources (i.e., personnel), and 
certain general and administrative expenses (``cost drivers''). Next, 
MEMX adopted an allocation methodology with various principles to guide 
how much of a particular cost should be allocated to each core service. 
For instance, fixed costs that are not driven by client activity (e.g., 
message rates), such as data center costs, were allocated more heavily 
to the provision of physical connectivity (75%), with smaller 
allocations to logical ports (2.6%), and the remainder to the provision 
of transaction execution and market data services (22.4%). The 
allocation methodology was decided through conversations with senior 
management familiar with each area of the Exchange's operations. After 
adopting this allocation methodology, the Exchange then applied an 
estimated allocation of each cost driver to each core service, 
resulting in the cost allocations described below.
    By allocating segmented costs to each core service, MEMX was able 
to estimate by core service the potential margin it might earn based on 
different

[[Page 7492]]

fee models. The Exchange notes that as a non-listing venue it has four 
primary sources of revenue that it can potentially use to fund its 
operations: transaction fees, fees for connectivity services, 
membership and regulatory fees, and market data fees. Accordingly, the 
Exchange generally must cover its expenses from these four primary 
sources of revenue.
    Through the Exchange's extensive Cost Analysis, which was again 
recently updated to focus solely on the provision of the Exchange Data 
Feeds, the Exchange analyzed every expense item in the Exchange's 
general expense ledger to determine whether each such expense relates 
to the provision of the Exchange Data Feeds, and, if such expense did 
so relate, what portion (or percentage) of such expense actually 
supports the provision of the Exchange Data Feeds, and thus bears a 
relationship that is, ``in nature and closeness,'' directly related to 
the Exchange Data Feeds. Based on its analysis, MEMX calculated its 
aggregate annual costs for providing the Exchange Data Feeds, at 
$3,014,348. This results in an estimated monthly cost for providing 
Exchange Data Feeds of $251,196. In order to cover operating costs and 
earn a reasonable profit on its market data, the Exchange has 
determined it necessary to charge fees for its proprietary data 
products, and, as such, the Exchange is proposing to modify its Fee 
Schedule, pursuant to MEMX Rules 15.1(a) and (c), as set forth above.
Costs Related to Offering Exchange Data Feeds
    The following chart details the individual line-item (annual) costs 
considered by MEMX to be related to offering the Exchange Data Feeds to 
its Members and other customers as well as the percentage of the 
Exchange's overall costs that such costs represent for such area (e.g., 
as set forth below, the Exchange allocated approximately 6.9% of its 
overall Human Resources cost to offering Exchange Data Feeds).

------------------------------------------------------------------------
              Costs drivers                    Costs         % of all
------------------------------------------------------------------------
Human Resources.........................      $1,729,856             6.9
Network Infrastructure (e.g., servers,           232,452             8.8
 switches)..............................
Data Center.............................         318,456             9.8
Hardware and Software Licenses..........         246,864             9.8
Depreciation............................         399,911            18.0
Allocated Shared Expenses...............          86,809             1.8
                                         -------------------------------
    Total...............................      $3,014,348             6.5
------------------------------------------------------------------------

Human Resources
    For personnel costs (Human Resources), MEMX calculated an 
allocation of employee time for employees whose functions include 
directly providing services necessary to offer the Exchange Data Feeds, 
including performance thereof, as well as personnel with ancillary 
functions related to establishing and providing such services (such as 
information security and finance personnel). The Exchange notes that it 
has fewer than eighty (80) employees and each department leader has 
direct knowledge of the time spent by each employee with respect to the 
various tasks necessary to operate the Exchange. The estimates of Human 
Resources cost were therefore determined by consulting with such 
department leaders, determining which employees are involved in tasks 
related to providing the Exchange Data Feeds, and confirming that the 
proposed allocations were reasonable based on an understanding of the 
percentage of their time such employees devote to tasks related to 
providing the Exchange Data Feeds. The Exchange notes that senior level 
executives were allocated Human Resources costs to the extent the 
Exchange believed they are involved in overseeing tasks related to 
providing the Exchange Data Feeds. The Exchange's cost allocation for 
employees who perform work in support of generating and disseminating 
the Exchange Data Feeds arrive at a full time equivalent (``FTE'') of 
5.2 FTEs. The Human Resources cost was calculated using a blended rate 
of compensation reflecting salary, equity and bonus compensation, 
benefits, payroll taxes, and 401(k) matching contributions.
Network Infrastructure
    The Network Infrastructure cost includes cabling and switches 
required to generate and disseminate the Exchange Data Feeds. The 
Network Infrastructure cost was narrowly estimated by focusing on the 
servers used at the Exchange's primary and back-up data centers 
specifically for the Exchange Data Feeds. Further, as certain servers 
are only partially utilized to generate and disseminate the Exchange 
Data Feeds, only the percentage of such servers devoted to generating 
and disseminating the Exchange Data Feeds was included (i.e., the 
capacity of such servers allocated to the Exchange Data Feeds). From 
this analysis, the Exchange determined that 9.8% of its servers are 
used to generate and disseminate the Exchange Data Feeds. When combined 
with the applicable switches used for Exchange Data Feeds, the Exchange 
has determined that approximately 8.8% of its overall Network 
Infrastructure costs are attributable to the Exchange Data Feeds.
Data Center
    Data Center costs includes an allocation of the costs the Exchange 
incurs to provide the Exchange Data Feeds in the third-party data 
centers where the Exchange maintains its equipment as well as related 
costs (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). As the Data Center costs are primarily for 
space, power, and cooling of servers, the Exchange applied the same 
percentage calculated above with respect to servers, i.e., 9.8%, to 
allocate the applicable Data Center costs for the Exchange Data Feeds. 
The Exchange believes it is reasonable to apply the same proportionate 
percentage of Data Center costs to that of Network Infrastructure.
Hardware and Software Licenses
    Hardware and Software Licenses includes hardware and software 
licenses used to operate and monitor physical assets necessary to offer 
the Exchange Data Feeds. Because the hardware and software license fees 
are correlated to the servers used by the Exchange, the Exchange again 
applied an allocation of 9.8% of its costs for Hardware and Software 
Licenses to the Exchange Data Feeds.
Depreciation
    The vast majority of the software the Exchange uses with respect to 
its operations, including the software used to generate and disseminate 
the Exchange Data Feeds has been

[[Page 7493]]

developed in-house and the cost of such development is depreciated over 
time. Accordingly, the Exchange included Depreciation cost related to 
depreciated software used to generate and disseminate the Exchange Data 
Feeds. The Exchange also included in the Depreciation costs certain 
budgeted improvements that the Exchange intends to capitalize and 
depreciate with respect to the Exchange Data Feeds in the near-term. As 
with the other allocated costs in the Exchange's updated Cost Analysis, 
the Depreciation cost was therefore narrowly tailored to depreciation 
related to the Exchange Data Feeds.
Allocated Shared Expenses
    Finally, certain general shared expenses were allocated to the 
Exchange Data Feeds. However, contrary to its prior cost analysis, 
rather than taking the whole amount of general shared expenses and 
applying an allocated percentage, the Exchange has narrowly selected 
specific general shared expenses relevant to the Exchange Data Feeds. 
The costs included in general shared expenses allocated to the Exchange 
Data Feeds include office space and office expenses (e.g., occupancy 
and overhead expenses), utilities, recruiting and training, marketing 
and advertising costs, professional fees for legal, tax and accounting 
services (including external and internal audit expenses), and 
telecommunications costs. The cost of paying individuals to serve on 
the Exchange's Board of Directors or any committee was not allocated to 
providing Exchange Data Feeds.
Cost Analysis--Additional Discussion
    In conducting its Cost Analysis, the Exchange did not allocate any 
of its expenses in full to any core service and did not double-count 
any expenses. Instead, as described above, the Exchange identified and 
allocated applicable cost drivers across its core services and used the 
same approach to analyzing costs to form the basis of a separate 
proposal to adopt fees for connectivity services (the ``Connectivity 
Filing'') \31\ and this filing proposing fees for Exchange Data Feeds. 
Thus, the Exchange's allocations of cost across core services were 
based on real costs of operating the Exchange and were not double-
counted across the core services or their associated revenue streams.
---------------------------------------------------------------------------

    \31\ See SR-MEMX-2022-26, filed September 15, 2022, available 
at: https://info.memxtrading.com/rules-and-filings/.
---------------------------------------------------------------------------

    The Exchange anticipates that the proposed fees for Exchange Data 
Feeds will generate approximately $262,500 monthly ($3,150,000 
annually) based on billing and reporting that has taken place since the 
Exchange commenced billing for such data feeds. The proposed fees for 
Exchange Data Feeds are designed to permit the Exchange to cover the 
costs allocated to providing Exchange Data Feeds with a mark-up that 
the Exchange believes is modest (approximately 4%), which the Exchange 
believes is fair and reasonable after taking into account the costs 
related to creating, generating, and disseminating the Exchange Data 
Feeds and the fact that the Exchange will need to fund future 
expenditures (increased costs, improvements, etc.). The Exchange also 
reiterates that prior to April of 2022 the Exchange has not previously 
charged any fees for Exchange Data Feeds and its allocation of costs to 
Exchange Data Feeds was part of a holistic allocation that also 
allocated costs to other core services without double-counting any 
expenses.
    The Exchange like other exchanges is, after all, a for-profit 
business. Accordingly, while the Exchange believes in transparency 
around costs and potential margins, as well as periodic review of 
revenues and applicable costs (as discussed below), the Exchange does 
not believe that these estimates should form the sole basis of whether 
or not a proposed fee is reasonable or can be adopted. Instead, the 
Exchange believes that the information should be used solely to confirm 
that an Exchange is not earning supra-competitive profits, and the 
Exchange believes its Cost Analysis and related projections demonstrate 
this fact.
    As a general matter, the Exchange believes that its costs will 
remain relatively similar in future years. It is possible however that 
such costs will either decrease or increase. To the extent the Exchange 
sees growth in use of Exchange Data Feeds it will receive additional 
revenue to offset future cost increases. However, if use of Exchange 
Data Feeds is static or decreases, the Exchange might not realize the 
revenue that it anticipates or needs in order to cover applicable 
costs. Accordingly, the Exchange is committing to conduct a one-year 
review after implementation of these fees. The Exchange expects that it 
may propose to adjust fees at that time, to increase fees in the event 
that revenues fail to cover costs and a reasonable mark-up of such 
costs.\32\ Similarly, the Exchange expects that it would propose to 
decrease fees in the event that revenue materially exceeds current 
projections. In addition, the Exchange will periodically conduct a 
review to inform its decision making on whether a fee change is 
appropriate (e.g., to monitor for costs increasing/decreasing or 
subscribers increasing/decreasing, etc. in ways that suggest the then-
current fees are becoming dislocated from the prior cost-based 
analysis) and expects that it would propose to increase fees in the 
event that revenues fail to cover its costs and a reasonable mark-up, 
or decrease fees in the event that revenue or the mark-up materially 
exceeds current projections. In the event that the Exchange determines 
to propose a fee change, the results of a timely review, including an 
updated cost estimate, will be included in the rule filing proposing 
the fee change. More generally, the Exchange believes that it is 
appropriate for an exchange to refresh and update information about its 
relevant costs and revenues in seeking any future changes to fees, and 
the Exchange commits to do so.
---------------------------------------------------------------------------

    \32\ The Exchange notes that it does not believe that a 4% mark-
up is necessarily competitive, and instead that this is likely 
significantly below the mark-up many businesses place on their 
products and services.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \33\ of the Act in general, and 
furthers the objectives of Section 6(b)(4) \34\ of the Act, in 
particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees and other charges among its Members 
and other persons using its facilities. Additionally, the Exchange 
believes that the proposed fees are consistent with the objectives of 
Section 6(b)(5) \35\ of the Act in that they are designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to a free and open market and 
national market system, and, in general, to protect investors and the 
public interest, and, particularly, are not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f.
    \34\ 15 U.S.C. 78f(b)(4).
    \35\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange notes prior to addressing the specific reasons the 
Exchange believes the proposed fees and fee structure are reasonable, 
equitably allocated and not unreasonably discriminatory, that the 
proposed definitions and fee structure

[[Page 7494]]

described above are consistent with the definitions and fee structure 
used by most U.S. securities exchanges, and Cboe BZX in particular. As 
such, the Exchange believes it is adopting a model that is easily 
understood by Members and non-Members, most of which also subscribe to 
market data products from other exchanges. For this reason, the 
Exchange believes that the proposed definitions and fee structure 
described above are consistent with the Act generally, and Section 
6(b)(5) \36\ of the Act in particular.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As noted above, the Exchange's executed trading volume has grown 
from 0% market share to approximately 3-4% market share in two years 
and the Exchange believes that it is reasonable to begin charging fees 
for the Exchange Data Feeds. One of the primary objectives of MEMX is 
to provide competition and to reduce fixed costs imposed upon the 
industry. Consistent with this objective, the Exchange believes that 
this proposal reflects a simple, competitive, reasonable, and equitable 
pricing structure, with fees that are discounted when compared to 
comparable data products and services offered by competitors.\37\
---------------------------------------------------------------------------

    \37\ See supra notes 20-21; see supra note 23 and accompanying 
text.
---------------------------------------------------------------------------

Reasonableness
    Overall. With regard to reasonableness, the Exchange understands 
that the Commission has traditionally taken a market-based approach to 
examine whether the SRO making the fee proposal was subject to 
significant competitive forces in setting the terms of the proposal. 
The Exchange understands that in general the analysis considers whether 
the SRO has demonstrated in its filing that (i) there are reasonable 
substitutes for the product or service; (ii) ``platform'' competition 
constrains the ability to set the fee; and/or (iii) revenue and cost 
analysis shows the fee would not result in the SRO taking 
supracompetitive profits. If the SRO demonstrates that the fee is 
subject to significant competitive forces, the Exchange understands 
that in general the analysis will next consider whether there is any 
substantial countervailing basis to suggest the fee's terms fail to 
meet one or more standards under the Exchange Act. The Exchange further 
understands that if the filing fails to demonstrate that the fee is 
constrained by competitive forces, the SRO must provide a substantial 
basis, other than competition, to show that it is consistent with the 
Exchange Act, which may include production of relevant revenue and cost 
data pertaining to the product or service.
    The Exchange has not determined its proposed overall market data 
fees based on assumptions about market competition, instead relying 
upon a cost-plus model to determine a reasonable fee structure that is 
informed by the Exchange's understanding of different uses of the 
products by different types of participants. In this context, the 
Exchange believes the proposed fees overall are fair and reasonable as 
a form of cost recovery plus the possibility of a reasonable return for 
Exchange's aggregate costs of offering the Exchange Data Feeds. The 
Exchange believes the proposed fees are reasonable because they are 
designed to generate annual revenue to recoup some or all of Exchange's 
annual costs of providing market data with a reasonable mark-up. As 
discussed in the Purpose section, the Exchange estimates this fee 
filing will result in annual revenue of approximately $3.15 million, 
representing a potential mark-up of just 4% over the cost of providing 
market data. Accordingly, the Exchange believes that this fee 
methodology is reasonable because it allows the Exchange to recoup some 
or all of its expenses for providing market data products (with any 
additional revenue representing no more than what the Exchange believes 
to be a reasonable rate of return). The Exchange also believes that the 
proposed fees are reasonable because they are generally less than the 
fees charged by competing equities exchanges for comparable market data 
products, notwithstanding that the competing exchanges may have 
different system architectures that may result in different cost 
structures for the provision of market data.
    The Exchange believes the proposed fees for the Exchange Data Feeds 
are reasonable when compared to fees for comparable products, such as 
the BZX Depth feed, BZX Top feed, and BZX Last Sale feed, compared to 
which the Exchange's proposed fees are generally lower, as well as 
other comparable data feeds priced significantly higher than the 
Exchange's proposed fees for the Exchange Data Feeds.\38\ Specifically 
with respect to the MEMOIR Depth feed, the Exchange believes that the 
proposed fees for such feed are reasonable because they represent not 
only the value of the data available from the MEMOIR Top and MEMOIR 
Last Sale data feeds, which have lower proposed fees, but also the 
value of receiving the depth-of-book data on an order-by-order basis. 
The Exchange believes it is reasonable to have pricing based, in part, 
upon the amount of information contained in each data feed and the 
value of that information to market participants. The MEMOIR Top and 
Last Sale data feeds, as described above, can be utilized to trade on 
the Exchange but contain less information than that is available on the 
MEMOIR Depth feed (i.e., even for a subscriber who takes both feeds, 
such feeds do not contain depth-of-book information). Thus, the 
Exchange believes it reasonable for the products to be priced as 
proposed, with MEMOIR Last Sale having the lowest price, MEMOIR Top the 
next lowest price, and MEMOIR Depth the highest price (and more than 
MEMOIR Last Sale and MEMOIR Top combined).
---------------------------------------------------------------------------

    \38\ See supra notes 20-21; see supra note 23 and accompanying 
text.
---------------------------------------------------------------------------

    Internal Distribution Fees. The Exchange believes that it is 
reasonable to charge Fees to access the Exchange Data Feeds for 
Internal Distribution because of the value of such data to subscribers 
in their profit-generating activities. The Exchange also believes that 
the proposed monthly Internal Distribution fees for MEMOIR Depth, 
MEMOIR Top, and MEMOIR Last Sale are reasonable as they are the same 
amounts charged by at least one other exchange of comparable size for 
comparable data products,\39\ and are lower than the fees charged by 
several other exchanges for comparable data products.\40\
---------------------------------------------------------------------------

    \39\ See BZX Fee Schedule, supra note 17.
    \40\ See, e.g., NYSE Proprietary Market Data Pricing list, 
available at: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Pricing.pdf (``NYSE Fee Schedule''); Nasdaq Global 
Data Products pricing list, available at: http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN (``Nasdaq Fee 
Schedule'').
---------------------------------------------------------------------------

    External Distribution Fees. The Exchange believes that it is 
reasonable to charge External Distribution fees for the Exchange Data 
Feeds because vendors receive value from redistributing the data in 
their business products provided to their customers. The Exchange 
believes that charging External Distribution fees is reasonable because 
the vendors that would be charged such fees profit by re-transmitting 
the Exchange's market data to their customers. These fees would be 
charged only once per month to each vendor account that redistributes 
any Exchange Data Feed, regardless of the number of customers to which 
that vendor redistributes the data. The Exchange also believes the 
proposed monthly External Distribution fee for the MEMOIR Depth Feed is 
reasonable because it is half the amount of the fee charged by at least 
one other exchange of comparable size for a comparable

[[Page 7495]]

data product,\41\ and significantly less than the amount charged by 
several other exchanges for comparable data products.\42\ Similarly, 
the Exchange believes the proposed monthly External Distribution fees 
for the MEMOIR TOP and MEMOIR Last Sale feeds are reasonable because 
they are discounted compared to same amounts charged by at least one 
other exchange of comparable size for comparable data products,\43\ and 
significantly less than the amount charged by several other exchanges 
for comparable data products.\44\
---------------------------------------------------------------------------

    \41\ See BZX Fee Schedule, supra note 17.
    \42\ See, e.g., NYSE Fee Schedule, supra note 40; Nasdaq Fee 
Schedule, supra note 40.
    \43\ See BZX Fee Schedule, supra note 17.
    \44\ See, e.g., NYSE Fee Schedule, supra note 40; Nasdaq Fee 
Schedule, supra note 40.
---------------------------------------------------------------------------

    User Fees. The Exchange believes that having separate Professional 
and Non-Professional User fees for the MEMOIR Depth feed is reasonable 
because it will make the product more affordable and result in greater 
availability to Professional and Non-Professional Users. Setting a 
modest Non-Professional User fee is reasonable because it provides an 
additional method for Non-Professional Users to access the Exchange 
Data Feeds by providing the same data that is available to Professional 
Users. The proposed monthly Professional User fee and monthly Non-
Professional User fee are reasonable because they are lower than the 
fees charged by at least one other exchange of comparable size for 
comparable data products,\45\ and significantly less than the amounts 
charged by several other exchanges for comparable data products.\46\
---------------------------------------------------------------------------

    \45\ See BZX Fee Schedule, supra note 17.
    \46\ See, e.g., NYSE Fee Schedule, supra note 40; Nasdaq Fee 
Schedule, supra note 40.
---------------------------------------------------------------------------

    The Exchange also believes it is reasonable to charge the same low 
per User fee of $0.01 for both Professional Users and Non-Professional 
Users receiving the MEMOIR Top and MEMOIR Last Sale feeds, as this is 
not only pricing such data at a much lower cost than other exchanges 
charge for comparable data feeds \47\ but doing so will also simplify 
reporting for subscribers who externally distribute these data feeds to 
Users, as the Exchange believes that categorization of Users as 
Professional and Non-Professional is not meaningful for these products 
and that requiring such categorization would expose Firms to 
unnecessary audit risk of paying more for mis-categorization. The 
Exchange also believes that the proposal to require reporting of 
individual Users, but not devices, is reasonable as this too will 
eliminate unnecessary audit risk that can arise when recipients are 
required to apply complex counting rules such as whether or not to 
count devices or whether an individual accessing the same data through 
multiple devices should be counted once or multiple times. In addition, 
the Exchange believes it is reasonable to charge User fees only for 
External Distribution of the MEMOIR Top and MEMOIR Last Sale feeds, and 
not charge User fees for Internal Distribution of such market data 
feeds, because vendors receive additional value from being able to 
redistribute such data to their customers and can recoup associated 
expenses by passing on such fees either directly to those customers or 
indirectly by using the data to facilitate other revenue-generating 
activity.
---------------------------------------------------------------------------

    \47\ See id.
---------------------------------------------------------------------------

    The Exchange further believes that its proposal to adopt a Digital 
Media Enterprise Fee for each of the Exchange Data Feeds is reasonable 
because it would allow a market participant that wishes to disseminate 
information from the Exchange Data Feeds through a digital media 
platform such as a public website without determining the number of 
Users, which would be practically impossible. The Exchange further 
believes it is reasonable for the Digital Media Enterprise Fee to be 
higher for MEMOIR Depth than MEMOIR Top or MEMOIR Last Sale because of 
the additional information that is contained in MEMOIR Depth, and in 
turn, the potential additional value to data recipients.
    The Exchange also believes it is reasonable to adopt an Enterprise 
Fee for MEMOIR Top and MEMOIR Last Sale because this would allow a 
market participant to disseminate such data feeds to an unlimited 
number of Users without the necessity of counting such Users. As this 
is an optional subscription, a data recipient is able to determine 
whether it prefers to count Users and report such Users to the Exchange 
or not, and also whether it is more economically advantageous to count 
and pay for specific Users or to subscribe to the Enterprise Fee. The 
Exchange also notes that given the low cost proposed per User, only a 
market participant with a substantial number of Users would likely 
choose to subscribe for and pay the Enterprise Fee. The Exchange also 
believes it is reasonable not to adopt an Enterprise Fee for MEMOIR 
Depth at this time as the Exchange does not believe there is sufficient 
demand for an Enterprise Fee given relatively low User counts for 
subscribers of MEMOIR Depth. While MEMOIR Top and MEMOIR Last Sale also 
currently have relatively low User counts, the Exchange does believe 
that there is potential demand for a market data recipient that wishes 
to disseminate top of book and last sale information to a large 
subscriber base, and thus again believes it is reasonable to offer an 
Enterprise Fee option for such a market data recipient.
    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Usage fees for the MEMOIR Depth feed are reasonable, because 
they reflect the value of the data to the data recipients in their 
profit-generating activities and do not impose the burden of counting 
non-display devices.
    The Exchange believes that the proposed Non-Display Usage fees for 
the MEMOIR Depth feed reflect the significant value of the non-display 
data use to data recipients, most of whom purchase such data on a 
voluntary basis. Non-display data can be used by data recipients for a 
wide variety of profit-generating purposes, including proprietary and 
agency trading and smart order routing, as well as by data recipients 
that operate Trading Platforms that compete directly with the Exchange 
for order flow. The data also can be used for a variety of non-trading 
purposes that indirectly support trading, such as risk management and 
compliance. Although some of these non-trading uses do not directly 
generate revenues, they can nonetheless substantially reduce a 
recipient's costs by automating such functions so that they can be 
carried out in a more efficient and accurate manner and reduce errors 
and labor costs, thereby benefiting recipients. The Exchange believes 
that charging for non-trading uses is reasonable because data 
recipients can derive substantial value from such uses, for example, by 
automating tasks so that can be performed more quickly and accurately 
and less expensively than if they were performed manually.
    Previously, the non-display use data pricing policies of many 
exchanges required customers to count, and the exchanges to audit the 
count of, the number of non-display devices used by a customer. As non-
display use grew more prevalent and varied, however, exchanges received 
an increasing number of complaints about the impracticality and 
administrative burden associated with that approach. In response, 
several exchanges developed a non-display use pricing structure that 
does not require non-display devices to be counted or those counts to 
be audited, and instead categorizes different types of use. The 
Exchange proposes to distinguish

[[Page 7496]]

between non-display use for the operation of a Trading Platform and 
other non-display use, which is similar to exchanges such as BZX and 
EDGX,\48\ while other exchanges maintain additional categories and in 
many cases charge multiple times for different types of non-display use 
or the operation of multiple Trading Platforms.\49\
---------------------------------------------------------------------------

    \48\ See BZX Fee Schedule, supra note 17; EDGX Fee Schedule, 
available at: https://www.cboe.com/us/equities/membership/fee_schedule/edgx/.
    \49\ See supra notes 20-21.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to segment the fee for 
non-display use into these two categories. As noted above, the uses to 
which customers can put the MEMOIR Depth feed are numerous and varied, 
and the Exchange believes that charging separate fees for these 
separate categories of use is reasonable because it reflects the actual 
value the customer derives from the data, based upon how the customer 
makes use of the data.
    The Exchange believes that the proposed fees for non-display use 
other than operation of a Trading Platform is reasonable. These fees 
are comparable to, and lower than, the fees charged by at least one 
other exchange of comparable size for a comparable data product,\50\ 
and significantly less than the amounts charged by several other 
exchanges for comparable data products.\51\ The Exchange believes that 
the proposed fees directly and appropriately reflect the significant 
value of using data on a non-display basis in a wide range of computer-
automated functions relating to both trading and non-trading activities 
and that the number and range of these functions continue to grow 
through innovation and technology developments. Further, the Exchange 
benefits from other non-display use by market participants (including 
the fact that the Exchange receives orders resulting from algorithms 
and routers) and both the Exchange and other participants benefit from 
other non-display use by market participants when such use is to 
support more broadly beneficial functions such as risk management and 
compliance. Based on the Exchange's desire to encourage other non-
display use by market participants, the Exchange believes it is 
reasonable to provide data for non-display use other than operation of 
a Trading Platform at a price that is discounted when compared to that 
for non-display use for operation of a Trading Platform.
---------------------------------------------------------------------------

    \50\ See BZX Fee Schedule, supra note 17.
    \51\ See, e.g., NYSE Fee Schedule, supra note 40; Nasdaq Fee 
Schedule, supra note 40.
---------------------------------------------------------------------------

    The Exchange also believes, regarding non-display use for operation 
of a Trading Platform, it is reasonable to charge a higher monthly fee 
than for other non-display use because such use is optional for Trading 
Platforms and because a similar fee structure is in place on other 
exchanges. With respect to alternative trading systems, or ATSs, such 
platforms can utilize the Exchange Data Feeds to form prices for 
trading on such platforms but are not required to do so and can instead 
utilize SIP data. Approximately two-thirds of the ATSs approved to 
trade NMS stocks do not currently subscribe to the Exchange Data 
Feeds.\52\ With respect to other exchanges, which may choose to use the 
Exchange Data Feeds for Regulation NMS compliance and order routing, 
the Exchange notes that several exchange competitors of the Exchange 
have not subscribed to any Exchange Data Feeds and instead utilize SIP 
data for such purposes.\53\ Accordingly, both ATSs and other exchanges 
clearly have a choice whether to subscribe to the Exchange Data Feeds. 
The Exchange also believes that it is reasonable to charge the proposed 
fees for non-display use for operation of a Trading Platform because 
the proposed fees are comparable to, and lower than, the fees charged 
at least one other exchange of comparable size for a comparable data 
product,\54\ and significantly less than the amounts charged by several 
other exchanges for comparable data products, which also charge per 
Trading Platform operated by a data subscriber subject to a cap in most 
cases, rather than charging per Firm, as proposed by the Exchange.\55\
---------------------------------------------------------------------------

    \52\ MEMX internal data regarding non-display use by Trading 
Platforms; as of December 31, 2022, there were 33 ATSs that had 
filed an effective Form ATS-N with the Commission to trade NMS 
stocks.
    \53\ See, e.g., NYSE Arca Rule 7.37-E.(d), Order Execution and 
Routing, and BZX Rule 11.21, each of which discloses the data feeds 
used by each respective exchange and state that SIP products are 
used with respect to MEMX.
    \54\ See BZX Fee Schedule, supra note 17.
    \55\ See supra notes 20-21.
---------------------------------------------------------------------------

    The proposed Non-Display Usage fees for the MEMOIR Depth feed are 
also reasonable because they take into account the extra value of 
receiving the data for Non-Display Usage that includes a rich set of 
information including top of book quotations, depth-of-book quotations, 
executions and other information. The Exchange believes that the 
proposed fees directly and appropriately reflect the significant value 
of using the MEMOIR Depth feed on a non-display basis in a wide range 
of computer-automated functions relating to both trading and non-
trading activities and that the number and range of these functions 
continue to grow through innovation and technology developments.\56\ 
For the same reasons, the Exchange believes it is reasonable to provide 
other data feeds, namely MEMOIR Top and MEMOIR Last Sale, free of 
charge for Non-Display Usage. The Exchange does not believe that either 
MEMOIR Top or MEMOIR Last Sale has the same value to market 
participants with respect to non-display usage as MEMOIR Depth, as 
neither of MEMOIR Top or MEMOIR Last Sale contains the amount of 
information that the Exchange expects market participants need for 
typical trading and non-trading non-display applications.
---------------------------------------------------------------------------

    \56\ See also Exchange Act Release No. 69157, March 18, 2013, 78 
FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (``[D]ata feeds 
have become more valuable, as recipients now use them to perform a 
far larger array of non-display functions. Some firms even base 
their business models on the incorporation of data feeds into black 
boxes and application programming interfaces that apply trading 
algorithms to the data, but that do not require widespread data 
access by the firm's employees. As a result, these firms pay little 
for data usage beyond access fees, yet their data access and usage 
is critical to their businesses.''
---------------------------------------------------------------------------

    For all of the foregoing reasons, the Exchange believes that the 
proposed fees for the Exchange Data Feeds are reasonable.
Equitable Allocation
    Overall. The Exchange believes that its proposed fees are 
reasonable, fair, and equitable, and not unfairly discriminatory 
because they are designed to align fees with services provided. The 
Exchange believes the proposed fees for the Exchange Data Feeds are 
allocated fairly and equitably among the various categories of users of 
the feeds, and any differences among categories of users are justified 
and appropriate.
    The Exchange believes that the proposed fees are equitably 
allocated because they will apply uniformly to all data recipients that 
choose to subscribe to the Exchange Data Feeds. Any subscriber or 
vendor that chooses to subscribe to one or more Exchange Data Feeds is 
subject to the same Fee Schedule, regardless of what type of business 
they operate, and the decision to subscribe to one or more Exchange 
Data Feeds is based on objective differences in usage of Exchange Data 
Feeds among different Firms, which are still ultimately in the control 
of any particular Firm. The Exchange believes the proposed pricing 
between Exchange Data Feeds is equitably allocated because it is based, 
in part, upon the amount of information contained in each data feed and 
the value of that information to market participants. The MEMOIR Top 
and Last Sale data feeds, as described above, can be utilized to

[[Page 7497]]

trade on the Exchange but contain less information than that is 
available on the MEMOIR Depth feed (i.e., even for a subscriber who 
takes both feeds, such feeds do not contain depth-of-book information). 
Thus, the Exchange believes it is an equitable allocation of fees for 
the products to be priced as proposed, with MEMOIR Last Sale having the 
lowest price, MEMOIR Top the next lowest price, and MEMOIR Depth the 
highest price (and more than MEMOIR Last Sale and MEMOIR Top combined).
    Internal Distribution Fee. The Exchange believes the proposed 
monthly fees for Internal Distribution of the Exchange Data Feeds are 
equitably allocated because they would be charged on an equal basis to 
all data recipients that receive the Exchange Data Feeds for internal 
distribution, regardless of what type of business they operate.
    External Distribution Fees. The Exchange believes the proposed 
monthly fees for External Distribution of the Exchange Data Feeds are 
equitably allocated because they would be charged on an equal basis to 
all data recipients that receive the Exchange Data Feeds that choose to 
redistribute the feeds externally. The Exchange also believes that the 
proposed monthly fees for External Distribution are equitably allocated 
when compared to lower proposed fees for Internal Distribution because 
data recipients that are externally distributing Exchange Data Feeds 
are able to monetize such distribution and spread such costs amongst 
multiple third party data recipients, whereas the Internal Distribution 
fee is applicable to use by a single data recipient (and its 
affiliates).
    User Fees. The Exchange believes that the fee structure 
differentiating Professional User fees from Non-Professional User fees 
for display use of the MEMOIR Depth feed is equitable. This structure 
has long been used by other exchanges and the SIPs to reduce the price 
of data to Non-Professional Users and make it more broadly 
available.\57\ Offering the MEMOIR Depth feed to Non-Professional Users 
at a lower cost than Professional Users results in greater equity among 
data recipients, as Professional Users are categorized as such based on 
their employment and participation in financial markets, and thus, are 
compensated to participate in the markets. While Non-Professional Users 
too can receive significant financial benefits through their 
participation in the markets, the Exchange believes it is reasonable to 
charge more to those Users who are more directly engaged in the 
markets. The Exchange also believes it may be unreasonable to charge a 
Non-Professional User the same fee that it has proposed for 
Professional Users, as this fee would be higher than any other U.S. 
equities exchange charges to Non-Professional Users for receipt of a 
comparable data product. These User fees would be charged uniformly to 
all individuals that have access to the MEMOIR Depth feed based on the 
category of User.
---------------------------------------------------------------------------

    \57\ See, e.g., Securities Exchange Act Release No. 59544 (March 
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) 
(establishing the $15 Non-Professional User Fee (Per User) for NYSE 
OpenBook); Securities Exchange Act Release No. 20002, File No. S7-
433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing Non-
Professional fees for CTA data); NASDAQ BX Equity 7 Pricing 
Schedule, Section 123.
---------------------------------------------------------------------------

    The Exchange also believes the proposed User fees for MEMOIR Top 
and MEMOIR Last Sale are equitable because the Exchange has proposed to 
charge Professional Users and Non-Professional Users the same low rate 
of $0.01 per month. In addition, the Exchange believes it is equitable 
to charge User fees only for External Distribution of the MEMOIR Top 
and MEMOIR Last Sale feeds, and not charge User fees for Internal 
Distribution of such market data feeds, because vendors receive 
additional value from being able to redistribute such data to their 
customers and can recoup associated expenses by passing on such fees 
either directly to those customers or indirectly by using the data to 
facilitate other revenue-generating activity.
    Finally, the Exchange believes it is equitable to adopt User fees 
for the Memoir Depth feed that are significantly higher than the User 
fees for the MEMOIR Top and MEMOIR Last Sale feeds because, as 
described above, MEMOIR Depth contains significantly more data than 
such data feeds. The Exchange believes it is equitable to have pricing 
based, in part, upon the amount of information contained in each data 
feed and the value of that information to market participants.
    The Exchange further believes that its proposal to adopt a Digital 
Media Enterprise Fee for each of the Exchange Data Feeds is equitable 
because it would allow a market participant that wishes to disseminate 
information from the Exchange Data Feeds through a digital media 
platform such as a public website without determining the number of 
Users, which would be practically impossible. The Exchange further 
believes it is equitable for the Digital Media Enterprise Fee to be 
higher for MEMOIR Depth than MEMOIR Top or MEMOIR Last Sale because of 
the additional information that is contained in MEMOIR Depth, and in 
turn, the potential additional value to data recipients.
    The Exchange also believes it is equitable to adopt an Enterprise 
Fee for MEMOIR Top and MEMOIR Last Sale because this would allow a 
market participant to disseminate such data feeds to an unlimited 
number of Users without the necessity of counting such Users. As this 
is an optional subscription, a data recipient is able to determine 
whether it prefers to count Users and report such Users to the Exchange 
or not, and also whether it is more economically advantageous to count 
and pay for specific Users or to subscribe to the Enterprise Fee. The 
Exchange also believes it is equitable not to adopt an Enterprise Fee 
for MEMOIR Depth at this time as the Exchange does not believe there is 
sufficient demand for an Enterprise Fee given relatively low User 
counts for subscribers of MEMOIR Depth, as described above.
    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Usage fees are equitably allocated because they would require 
subscribers to pay fees only for the uses they actually make of the 
data. As noted above, non-display data can be used by data recipients 
for a wide variety of profit-generating purposes (including trading and 
order routing) as well as purposes that do not directly generate 
revenues (such as risk management and compliance) but nonetheless 
substantially reduce the recipient's costs by automating certain 
functions. The Exchange believes that it is equitable to charge non-
display data subscribers that use MEMOIR Depth data for purposes other 
than operation of a Trading Platform as proposed because all such 
subscribers would have the ability to use such data for as many non-
display uses as they wish for one low fee. As noted above, this 
structure is comparable to that in place for the BZX Depth feed but 
several other exchanges charge multiple non-display fees to the same 
client to the extent they use a data feed in several different trading 
platforms or for several types of non-display use.\58\
---------------------------------------------------------------------------

    \58\ See supra notes 20-21.
---------------------------------------------------------------------------

    In contrast to non-display use for operation of a Trading Platform, 
the Exchange benefits from other non-display use by market participants 
(including the fact that the Exchange receives orders resulting from 
algorithms and routers) and both the Exchange and other participants 
benefit from other non-display use by market

[[Page 7498]]

participants when such use is to support more broadly beneficial 
functions such as risk management and compliance. Based on the 
Exchange's desire to encourage other non-display use by market 
participants, the Exchange believes it is equitable to charge a lower 
rate for non-display not by Trading Platforms than it does for non-
display by Trading Platforms. With respect to ATSs and other exchanges, 
the Exchange reiterates that approximately two-thirds of ATSs and 
several exchange competitors of the Exchange have not subscribed to any 
Exchange Data Feeds.\59\ Accordingly, ATSs and other exchanges clearly 
have a choice whether to subscribe to the Exchange Data Feeds. The 
Exchange also notes that, as described above, other exchanges have 
similar fee structures in place that charge a higher rate for non-
display use by a Trading Platform than for a non-Trading Platform.\60\ 
As such, with respect to other exchanges, the Exchange also believes it 
is equitable to adopt a similar fee structure because it is the same 
fee structure that the Exchange is subject to when subscribing to data 
feeds from such other exchanges (i.e., paying a higher rate than that 
paid by non-Trading Platforms).
---------------------------------------------------------------------------

    \59\ See supra note 52 and accompanying text; see also, supra 
note 53.
    \60\ See, e.g., supra note 48.
---------------------------------------------------------------------------

    The Exchange believes that it is equitable to charge a single fee 
per Firm rather than multiple fees for a Firm that operates more than 
one Trading Platform because operators of Trading Platforms are many 
times viewed as a single competing venue or group, even if there are 
multiple liquidity pools operated by the same competitor.
    For all of the foregoing reasons, the Exchange believes that the 
proposed fees for the Exchange Data Feeds are equitably allocated.
The Proposed Fees Are Not Unfairly Discriminatory
    The Exchange believes the proposed fees for the Exchange Data Feeds 
are not unfairly discriminatory because any differences in the 
application of the fees are based on meaningful distinctions between 
customers, and those meaningful distinctions are not unfairly 
discriminatory between customers.
    Overall. The Exchange believes that the proposed fees are not 
unfairly discriminatory because they would apply to all data recipients 
that choose to subscribe to the same Exchange Data Feed(s). Any vendor 
or subscriber that chooses to subscribe to the Exchange Data Feeds is 
subject to the same Fee Schedule, regardless of what type of business 
they operate. Because the proposed fees for MEMOIR Depth are higher, 
vendors and subscribers seeking lower cost options may instead choose 
to receive data from the SIPs or through the MEMOIR Top and/or MEMOIR 
Last Sale feed for a lower cost. Alternatively, vendors and subscribers 
can choose to pay for the MEMOIR Depth feed in order to receive data in 
a single feed with depth-of-book information if such information is 
valuable to such vendors or subscribers. The Exchange notes that 
vendors or subscribers can also choose to subscribe to a combination of 
data feeds for redundancy purposes or to use different feeds for 
different purposes. In sum, each vendor or subscriber has the ability 
to choose the best business solution for itself. The Exchange does not 
believe it is unfairly discriminatory to base pricing upon the amount 
of information contained in each data feed and the value of that 
information to market participants. As described above, the MEMOIR Top 
and Last Sale data feeds, can be utilized to trade on the Exchange but 
contain less information than that is available on the MEMOIR Depth 
feed (i.e., even for a subscriber who takes both feeds, such feeds do 
not contain depth-of-book information). Thus, the Exchange believes it 
is not unfairly discriminatory for the products to be priced as 
proposed, with MEMOIR Last Sale having the lowest price, MEMOIR Top the 
next lowest price, and MEMOIR Depth the highest price (and more than 
MEMOIR Last Sale and MEMOIR Top combined).
    Internal Distribution Fees. The Exchange believes the proposed 
monthly fees for Internal Distribution of the Exchange Data Feeds are 
not unfairly discriminatory because they would be charged on an equal 
basis to all data recipients that receive the same Exchange Data 
Feed(s) for internal distribution, regardless of what type of business 
they operate.
    External Distribution Fees. The Exchange believes the proposed 
monthly fees for redistributing the Exchange Data Feeds are not 
unfairly discriminatory because they would be charged on an equal basis 
to all data recipients that receive the same Exchange Data Feed(s) that 
choose to redistribute the feed(s) externally. The Exchange also 
believes that having higher monthly fees for External Distribution than 
Internal Distribution is not unfairly discriminatory because data 
recipients that are externally distributing Exchange Data Feeds are 
able to monetize such distribution and spread such costs amongst 
multiple third party data recipients, whereas the Internal Distribution 
fee is applicable to use by a single data recipient (and its 
affiliates).
    User Fees. The Exchange believes that the fee structure 
differentiating Professional User fees from Non-Professional User fees 
for display use of the MEMOIR Depth feed is not unfairly 
discriminatory. This structure has long been used by other exchanges 
and the SIPs to reduce the price of data to Non-Professional Users and 
make it more broadly available.\61\ Offering the Exchange Data Feeds to 
Non-Professional Users with the same data as is available to 
Professional Users, albeit at a lower cost, results in greater equity 
among data recipients. These User fees would be charged uniformly to 
all individuals that have access to the Exchange Data Feeds based on 
the category of User. The Exchange also believes the proposed User fees 
for MEMOIR Depth are not unfairly discriminatory, with higher fees for 
Professional Users than Non-Professional Users, because Non-
Professional Users may have less ability to pay for such data than 
Professional Users as well as less opportunity to profit from their 
usage of such data. The Exchange also believes the proposed User fees 
for MEMOIR Depth are not unfairly discriminatory, even though 
substantially higher than the proposed User fees for MEMOIR Top and 
MEMOIR Last Sale, because, as described above, MEMOIR Depth has 
significantly more information than the other Exchange Data Feeds and 
is thus potentially more valuable to such Users. The Exchange also 
believes the proposed User fees for MEMOIR Top and MEMOIR Last Sale are 
not unfairly discriminatory because the Exchange has proposed to charge 
Professional Users and Non-Professional Users the same low rate of 
$0.01 per month.
---------------------------------------------------------------------------

    \61\ See supra note 56.
---------------------------------------------------------------------------

    The Exchange further believes that its proposal to adopt a Digital 
Media Enterprise Fee for each of the Exchange Data Feeds and an 
Enterprise Fee for MEMOIR Top and MEMOIR Last Sale is not unfairly 
discriminatory because these optional alternatives to counting and 
paying for specific Users will provide market participants the ability 
to provide information from the Exchange Data Feeds to large numbers of 
Users without counting and paying for such Users. The Exchange also 
believes it is not unfairly discriminatory not to adopt an Enterprise 
Fee for MEMOIR Depth at this time as the Exchange does not believe 
there is sufficient demand for an Enterprise Fee given relatively low 
User counts for

[[Page 7499]]

subscribers of MEMOIR Depth, as described above.
    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Usage fees for the MEMOIR Depth feed are not unfairly 
discriminatory because they would require subscribers for non-display 
use to pay fees depending on their use of the data, either for 
operation of a Trading Platform or not, but would not impose multiple 
fees to the extent a Firm operates multiple Trading Platforms or has 
multiple different types of non-display use. As noted above, non-
display data can be used by data recipients for a wide variety of 
profit-generating purposes as well as purposes that do not directly 
generate revenues but nonetheless substantially reduce the recipient's 
costs by automating certain functions. This segmented fee structure is 
not unfairly discriminatory because no subscriber of non-display data 
would be charged a fee for a category of use in which it did not 
actually engage.
    In contrast to non-display use for operation of a Trading Platform, 
the Exchange benefits from other non-display use by market participants 
(including the fact that the Exchange receives orders resulting from 
algorithms and routers) and both the Exchange and other participants 
benefit from other non-display use by market participants when such use 
is to support more broadly beneficial functions such as risk management 
and compliance. The Exchange believes that, regarding non-display use 
other than for operation of a Trading Platform, it is not unreasonably 
discriminatory to charge a lower rate than that which is charged to a 
Firm operating a Trading Platform based on the Exchange's desire to 
encourage other non-display use by market participants. With respect to 
other ATSs and other exchanges, the Exchange reiterates that 
approximately two-thirds of registered ATSs and several exchange 
competitors of the Exchange have not subscribed to any Exchange Data 
Feeds.\62\ Accordingly, ATSs and other exchanges clearly have a choice 
whether to subscribe to the Exchange Data Feeds.
---------------------------------------------------------------------------

    \62\ See supra note 52 and accompanying text; see also supra 
note 53.
---------------------------------------------------------------------------

    The Exchange believes that it is not unreasonably discriminatory to 
charge a single fee for an operator of Trading Platforms that operates 
more than one Trading Platform because operators of Trading Platforms 
are many times viewed as a single competing venue or group, even if 
there a multiple liquidity pools operated by the same competitor. The 
Exchange again notes that certain competitors to the Exchange charge 
for non-display usage per Trading Platform,\63\ in contrast to the 
Exchange's proposal. In turn, to the extent they subscribe to Exchange 
Data Feeds, these same competitors will benefit from the Exchange's 
pricing model to the extent they operate multiple Trading Platforms (as 
most do) by paying a single fee rather than paying for each Trading 
Platform that they operate that consumes Exchange Data Feeds.
---------------------------------------------------------------------------

    \63\ See supra notes 20-21.
---------------------------------------------------------------------------

    For all of the foregoing reasons, the Exchange believes that the 
proposed fees for the Exchange Data Feeds are not unfairly 
discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\64\ the Exchange 
does not believe that the proposed rule change would impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of the Act.
---------------------------------------------------------------------------

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

Intra-Market Competition
    The Exchange does not believe that the proposed fees for Exchange 
Data Feeds place certain market participants at a relative disadvantage 
to other market participants because, as noted above, the proposed fees 
are associated with usage of Exchange Data Feeds by each market 
participant based on the type of business they operate, and the 
decision to subscribe to one or more Exchange Data Feeds is based on 
objective differences in usage of Exchange Data Feeds among different 
Firms, which are still ultimately in the control of any particular 
Firm, and such fees do not impose a barrier to entry to smaller 
participants. Accordingly, the proposed fees for Exchange Data Feeds do 
not favor certain categories of market participants in a manner that 
would impose a burden on competition; rather, the allocation of the 
proposed fees reflects the types of Exchange Data Feeds consumed by 
various market participants and their usage thereof.
Inter-Market Competition
    The Exchange does not believe the proposed fees place an undue 
burden on competition on other SROs that is not necessary or 
appropriate. In particular, market participants are not forced to 
subscribe to any of the Exchange Data Feeds, as described above. 
Additionally, other exchanges have similar market data fees in place 
for their participants, but with comparable and in many cases higher 
rates for market data feeds.\65\ The proposed fees are based on actual 
costs and are designed to enable the Exchange to recoup its applicable 
costs with the possibility of a reasonable profit on its investment as 
described in the Purpose and Statutory Basis sections. Competing 
equities exchanges are free to adopt comparable fee structures subject 
to the SEC rule filing process.
---------------------------------------------------------------------------

    \65\ See supra notes 20-21; see supra note 23 and accompanying 
text.
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \66\ and Rule 19b-4(f)(2) \67\ thereunder.
---------------------------------------------------------------------------

    \66\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \67\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MEMX-2023-02 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-MEMX-2023-02. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your

[[Page 7500]]

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 submissions. 
You should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-MEMX-2023-02 
and should be submitted on or before February 24, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\68\
---------------------------------------------------------------------------

    \68\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-02238 Filed 2-2-23; 8:45 am]
BILLING CODE 8011-01-P