Notice2021-17537
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX Pearl Options Fee Schedule To Adopt a Tiered-Pricing Structure for Certain Connectivity Fees
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 17, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 156 (Tuesday, August 17, 2021)</title>
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[Federal Register Volume 86, Number 156 (Tuesday, August 17, 2021)]
[Notices]
[Pages 46055-46064]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-17537]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92644; File No. SR-PEARL-2021-36]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
Pearl Options Fee Schedule To Adopt a Tiered-Pricing Structure for
Certain Connectivity Fees
August 11, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 30, 2021, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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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 a proposal to amend the MIAX Pearl Options
Fee Schedule (the ``Fee Schedule'') to amend certain connectivity fees.
The text of the proposed rule change is available on the Exchange's
website at <a href="http://www.miaxoptions.com/rule-filings/pearl">http://www.miaxoptions.com/rule-filings/pearl</a> at MIAX
Pearl's principal office, and at the Commission's Public Reference
Room.
[[Page 46056]]
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
The Exchange proposes to amend the MIAX Pearl Options Fee Schedule
to adopt a tiered-pricing structure for the 10 gigabit (``Gb'') ultra-
low latency (``ULL'') fiber connection available to Members \3\ and
non-Members. The Exchange believes a tiered-pricing structure will
encourage Members and non-Members to be more efficient and economical
when determining how to connect to the Exchange. This should also
enable the Exchange to better monitor and provide access to the
Exchange's network to ensure sufficient capacity and headroom in the
System.\4\
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\3\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of Exchange
Rules for purposes of trading on the Exchange as an ``Electronic
Exchange Member'' or ``Market Maker.'' Members are deemed
``members'' under the Exchange Act. See the Definitions Section of
the Fee Schedule and Exchange Rule 100.
\4\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
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10Gb ULL Tiered-Pricing Structure
The Exchange proposes to amend Sections 5)a)-b) of the Fee Schedule
to provide for a tiered-pricing structure for 10Gb ULL connections for
Members and non-Members. Currently, the Exchange assesses Members and
non-Members a flat monthly fee of $10,000 per 10Gb ULL connection for
access to the Exchange's primary and secondary facilities.
The Exchange now proposes to move from a flat monthly fee per
connection to a tiered-pricing structure per connection under which the
monthly fee would vary depending on the number of 10Gb ULL connections
each Member or non-Member elects to purchase per exchange.
Specifically, the Exchange proposes to decrease the fee for the first
and second 10Gb ULL connections for each Member and non-Member from the
current flat monthly fee of $10,000 to $9,000 per connection. To
encourage more efficient connectivity usage, the Exchange proposes to
increase the per connection fee for Members and non-Members that
purchase more than two 10Gb ULL connections. Specifically, (i) the
third and fourth 10Gb ULL connections for each Member or non-Member
will increase from the current flat monthly fee of $10,000 to $11,000
per connection; and (ii) for the fifth 10Gb ULL connection, and for
each 10Gb ULL connection for each Member and non-Member purchased
thereafter, the fee will increase from the flat monthly fee of $10,000
to $13,000 per connection. The proposed 10Gb ULL tiered-pricing
structure and fees are collectively referred to herein as the
``Proposed Access Fees.''
The Exchange will continue to assess monthly Member and non-Member
network connectivity fees for connectivity to the primary and secondary
facilities in any month the Member or non-Member is credentialed to use
any of the MIAX Pearl APIs or market data feeds in the production
environment. The Exchange proposes to pro-rate the fees when a Member
or non-Member makes a change to the connectivity (by adding or deleting
connections) with such pro-rated fees based on the number of trading
days that the Member or non-Member has been credentialed to utilize any
of the MIAX Pearl APIs or market data feeds in the production
environment through such connection, divided by the total number of
trading days in such month multiplied by the applicable monthly rate.
The Exchange will continue to assess monthly Member and non-Member
network connectivity fees for connectivity to the disaster recovery
facility in each month during which the Member or non-Member has
established connectivity with the disaster recovery facility.
The Exchange's MIAX Express Network Interconnect (``MENI'') can be
configured to provide Members and non-Members of the Exchange network
connectivity to the trading platforms, market data systems, test
systems, and disaster recovery facilities of both the Exchange and its
affiliate, Miami International Securities Exchange, LLC (``MIAX''), via
a single, shared connection. Members and non-Members utilizing the MENI
to connect to the trading platforms, market data systems, test systems,
and disaster recovery facilities of the Exchange and MIAX via a single,
shared connection will continue to only be assessed one monthly
connectivity fee per connection, regardless of the trading platforms,
market data systems, test systems, and disaster recovery facilities
accessed via such connection.
Further, utilizing the proposed tiered-pricing structure, any firm
that is a Member of both MIAX Pearl Options and MIAX and purchases
three or four total 10Gb ULL connections, can effectively allocate one
or two 10Gb ULL connections to the Exchange at the lowest rate and the
other one or two 10Gb ULL connections to MIAX at the lowest rate,
providing additional cost saving benefits to those Members and non-
Members, due to the shared MENI infrastructure of MIAX Pearl and MIAX.
Implementation Date
The proposed fee changes will become effective on August 1, 2021.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \5\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that
it provides for the equitable allocation of reasonable dues, fees and
other charges among Exchange Members and issuers and other persons
using any facility or system which the Exchange operates or controls.
The Exchange also believes the proposal furthers the objectives of
Section 6(b)(5) of the Act \7\ in that it is designed to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general to protect investors and the public interest and is not
designed to permit unfair discrimination between customers, issuers,
brokers and dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its fees for services
and products, in addition to order flow, to remain competitive with
other exchanges. The Exchange believes that the proposed changes
reflect this competitive environment.
The Exchange believes the proposal to move from a flat fee per
month for the 10Gb ULL connection to a tiered-pricing structure is
reasonable, equitably allocated and not unfairly
[[Page 46057]]
discriminatory because the Exchange believes the proposed structure
would encourage firms to be more economical and efficient in the number
of connections they purchase. The Exchange believes this will enable
the Exchange to better monitor and provide access to the Exchange's
network to ensure sufficient capacity and headroom in the System.
The Exchange believes that the proposal to move to a tiered-pricing
structure for its 10Gb ULL connections is reasonable, equitably
allocated and not unfairly discriminatory because the majority of
Members and non-Members that purchase 10Gb ULL connections will either
save money or pay the same amount after the tiered-pricing structure is
implemented. Based on a recently completed billing cycle, of the firms
that purchased at least one 10Gb ULL connection, approximately 80% will
see a proposed decrease in their monthly fees and approximately 20%
will see a proposed increase in their monthly fees as a result of the
proposed tiered-pricing structure versus the current flat monthly fee
structure. To illustrate, firms that purchase only one 10Gb ULL
connection per month currently pay the flat rate of $10,000 per month
for that one 10Gb ULL connection. Pursuant to the proposed tiered-
pricing structure, these firms will now pay $9,000 per month for that
one 10Gb ULL connection, saving $1,000 per month or $12,000 annually.
Further, firms that purchase two 10Gb ULL connections per month
currently pay the flat rate of $20,000 per month ($10,000 x 2) for
those two 10Gb ULL connections. Pursuant to the proposed tiered-pricing
structure, these firms will now pay $18,000 per month ($9,000 x 2) for
those two 10Gb ULL connections, saving $2,000 per month or $24,000
annually. Additionally, any firm that is a Member of both MIAX Pearl
Options and MIAX and purchases four total 10Gb ULL connections, can
effectively allocate two 10Gb ULL connections to MIAX Pearl Options at
the $9,000 rate (saving $2,000 per month as compared to the flat fee)
and two 10Gb ULL connections to MIAX at the $9,000 rate (saving an
additional $2,000 per month as compared to the flat fee), for a total
savings of $4,000 per month, or $48,000 annually over the current flat
monthly fee structure, due to the shared MENI infrastructure of MIAX
Pearl Options and MIAX.
The Exchange also notes that, for firms that primarily route orders
seeking best-execution, a limited number of connections are needed.
Therefore, the connectivity costs will likely be lower for these firms
based on the proposed tiered-pricing structure. The firms that engage
in advanced trading strategies typically require multiple connections
and, therefore, generate higher costs by utilizing more of the
Exchange's resources. These firms will absorb the increased
connectivity cost based on the proposed tiered-pricing structure, as
shown by the 20% of firms that will likely see an increase in their
monthly fees. Additionally, the firms that purchase a higher amount of
10Gb ULL connections tend to have specific business oriented market
making and taking strategies, as opposed to firms simply engaging in
best-execution order routing business.
The Exchange also notes that, for firms that are primarily order
routers seeking best-execution, a limited number of connections are
needed. Therefore, the connectivity costs will likely be lower for
these firms based on the proposed tiered-pricing structure. The firms
that engage in advanced trading strategies typically require multiple
connections and, therefore, generate higher costs by utilizing more of
the Exchange's resources. These firms will absorb the increased
connectivity cost based on the proposed tiered-pricing structure, as
shown by the 20% of firms that will likely see an increase in their
monthly fees. Additionally, the firms that purchase a higher amount of
10Gb ULL connections tend to have specific business oriented market
making and taking strategies, as opposed to firms simply engaging in
best-execution order routing business.
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 requirements of the Act that fees be
reasonable, equitably allocated, not unfairly discriminatory, and not
create an undue burden on competition among market participants. The
Exchange believes this high standard is especially important when an
exchange imposes various access fees for market participants to access
an exchange's marketplace. The Exchange deems connectivity to be access
fees. It records these fees as part of its ``Access Fees'' revenue in
its financial statements. The Exchange believes that it is important to
demonstrate that these fees are based on its costs and reasonable
business needs. The Exchange believes the Proposed Access Fees will
allow the Exchange to offset expense the Exchange has and will incur,
and that the Exchange is providing sufficient transparency (as
described below) into how the Exchange determined to charge such fees.
Accordingly, the Exchange is providing an analysis of its revenues,
costs, and profitability associated with the Proposed Access Fees. This
analysis includes information regarding its methodology for determining
the costs and revenues associated with the Proposed Access Fees.
In order to determine the Exchange's costs to provide the access
services associated with the Proposed Access Fees, the Exchange
conducted an extensive cost review in which the Exchange analyzed every
expense item in the Exchange's general expense ledger to determine
whether each such expense relates to the Proposed Access Fees, and, if
such expense did so relate, what portion (or percentage) of such
expense actually supports the access services. The sum of all such
portions of expenses represents the total cost of the Exchange to
provide the access services associated with the Proposed Access Fees.
For the avoidance of doubt, no expense amount was allocated twice. The
Exchange is also providing detailed information regarding the
Exchange's cost allocation methodology--namely, information that
explains the Exchange's rationale for determining that it was
reasonable to allocate certain expenses described in this filing
towards the cost to the Exchange to provide the access services
associated with the Proposed Access Fees.
In order to determine the Exchange's projected revenue associated
with the Proposed Access Fees, the Exchange analyzed the number of
Members and non-Members currently utilizing the 10Gb ULL fiber
connection, and, utilizing a recent monthly billing cycle
representative of 2021 monthly revenue, extrapolated annualized revenue
on a going-forward basis. The Exchange does not believe it is
appropriate to factor into its analysis future revenue growth or
decline into its projections for purposes of these calculations, given
the uncertainty of such projections due to the continually changing
access needs of market participants, discounts that can be achieved due
to lower trading volume and vice versa, market participant
consolidation, etc. Additionally, the Exchange similarly does not
factor into its analysis future cost growth or decline. The Exchange is
presenting its revenue and expense associated with the Proposed Access
Fees in this filing in a manner that is consistent with how the
Exchange presents its revenue and expense in its Audited Unconsolidated
Financial Statements. The Exchange's most recent Audited Unconsolidated
Financial Statement is for 2020. However, since the revenue and expense
associated with the Proposed Access Fees were not
[[Page 46058]]
in place in 2020 or for the first seven months of 2021, the Exchange
believes its 2020 Audited Unconsolidated Financial Statement is not
useful for analyzing the reasonableness of the total annual revenue and
costs associated with the Proposed Access Fees. Accordingly, the
Exchange believes it is more appropriate to analyze the Proposed Access
Fees utilizing its 2021 revenue and costs, as described herein, which
utilize the same presentation methodology as set forth in the
Exchange's previously-issued Audited Unconsolidated Financial
Statements. Based on this analysis, the Exchange believes that the
Proposed Access Fees are fair and reasonable because they will not
result in excessive pricing or supra-competitive profit when comparing
the Exchange's total annual expense associated with providing the
services associated with the Proposed Access Fees versus the total
projected annual revenue the Exchange will collect for providing those
services.
* * * * *
On March 29, 2019, the Commission issued its Order Disapproving
Proposed Rule Changes to Amend the Fee Schedule on the BOX Market LLC
Options Facility to Establish BOX Connectivity Fees for Participants
and Non-Participants Who Connect to the BOX Network (the ``BOX
Order'').\8\ On May 21, 2019, the Commission issued the Staff Guidance
on SRO Rule Filings Relating to Fees.\9\ Accordingly, the Exchange
believes that the Proposed Access Fees are consistent with the Act
because they (i) are reasonable, equitably allocated, not unfairly
discriminatory, and not an undue burden on competition; (ii) comply
with the BOX Order and the Guidance; (iii) are supported by evidence
(including comprehensive revenue and cost data and analysis) that they
are fair and reasonable because they will not result in excessive
pricing or supra-competitive profit; and (iv) utilize a cost-based
justification framework that is substantially similar to a framework
previously used by the Exchange, and its affiliates MIAX and MIAX
Emerald, LLC (``MIAX Emerald''), to establish or increase other non-
transaction fees.\10\ Accordingly, the Exchange believes that the
Proposed Access Fees are consistent with the Act.
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\8\ See Securities Exchange Act Release No. 85459 (March 29,
2019), 84 FR 13363 (April 4, 2019) (SR-BOX-2018-24, SR-BOX-2018-37,
and SR-BOX-2019-04).
\9\ See Staff Guidance on SRO Rule Filings Relating to Fees (May
21, 2019), at <a href="https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees">https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees</a> (the ``Guidance'').
\10\ See Securities Exchange Act Release Nos. 91460 (April 2,
2021), 86 FR 18349 (SR-EMERALD-2021-11) (proposal to adopt port
fees, increase connectivity fees, and increase additional limited
service ports); 91033 (February 1, 2021), 86 FR 8455 (February 5,
2021) (SR-EMERALD-2021-03) (proposal to adopt trading permit fees);
90980 (January 25, 2021), 86 FR 7602 (January 29, 2021) (SR-MIAX-
2021-02) (proposal to increase connectivity fees).
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* * * * *
As of July 29, 2021, the Exchange had a market share of only 4.52%
of the U.S. equity options industry for the month of July 2021.\11\ The
Exchange is not aware of any evidence that a market share of
approximately 4-5% provides the Exchange with anti-competitive pricing
power. If the Exchange were to attempt to establish unreasonable
pricing, then no market participant would join or connect, and existing
market participants would disconnect.
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\11\ See ``The market at a glance,'' available at <a href="https://www.miaxoptions.com/">https://www.miaxoptions.com/</a> (last visited July 29, 2021).
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Separately, the Exchange is not aware of any reason why market
participants could not simply drop their access (or not initially
access an exchange) if an exchange were to establish prices for its
non-transaction fees that, in the determination of such market
participant, did not make business or economic sense for such market
participant to access such exchange. No options market participant is
required by rule, regulation, or competitive forces to be a Member of
the Exchange. As evidence of the fact that market participants can and
do drop their access to exchanges based on non-transaction fee pricing,
R2G Services LLC (``R2G'') filed a comment letter after BOX's proposed
rule changes to increase its connectivity fees (SR-BOX-2018-24, SR-BOX-
2018-37, and SR-BOX-2019-04). The R2G Letter stated, ``[w]hen BOX
instituted a $10,000/month price increase for connectivity; we had no
choice but to terminate connectivity into them as well as terminate our
market data relationship. The cost benefit analysis just didn't make
any sense for us at those new levels.'' Similarly, the Exchange's
affiliate, MIAX Emerald, noted in a recent filing that once MIAX
Emerald issued a notice that it was instituting MEI Port fees, among
other non-transaction fees, one MIAX Emerald Member dropped its access
to MIAX Emerald as a result of those fees.\12\ Accordingly, these
examples show that if an exchange sets too high of a fee for
connectivity and/or other non-transaction fees for its relevant
marketplace, market participants can choose to drop their access to
such exchange.
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\12\ See Securities Exchange Act Release No. 91460 (April 2,
2021), 86 FR 18349 (April 8, 2021) (SR-EMERALD-2021-11) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule To Adopt Port Fees, Increase Certain Network
Connectivity Fees, and Increase the Number of Additional Limited
Service MIAX Emerald Express Interface Ports Available to Market
Makers) (adopting tiered MEI Port fee structure ranging from $5,000
to $20,500 per month).
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In order to provide more detail and to quantify the Exchange's
costs associated with providing access to the Exchange in general, the
Exchange notes that there are material costs associated with providing
the infrastructure and headcount to fully-support access to the
Exchange. The Exchange incurs technology expense related to
establishing and maintaining Information Security services, enhanced
network monitoring and customer reporting, as well as Regulation SCI
mandated processes, associated with its network technology. While some
of the expense is fixed, much of the expense is not fixed, and thus
increases as the services associated with the Proposed Access Fees
increase. For example, new Members to the Exchange may require the
purchase of additional hardware to support those Members as well as
enhanced monitoring and reporting of customer performance that the
Exchange and its affiliates provide. Further, as the total number
Members increases, the Exchange and its affiliates may need to increase
their data center footprint and consume more power, resulting in
increased costs charged by their third-party data center provider.
Accordingly, the cost to the Exchange and its affiliates to provide
access to its Members is not fixed. The Exchange believes the Proposed
Access Fees are reasonable in order to offset a portion of the costs to
the Exchange associated with providing access to its network
infrastructure.
The Exchange only has four primary sources of revenue: Transaction
fees, access fees (which includes the Proposed Access Fees), regulatory
fees, and market data fees. Accordingly, the Exchange must cover all of
its expenses from these four primary sources of revenue.
The Exchange believes that the Proposed Access Fees are fair and
reasonable because they will not result in excessive pricing or supra-
competitive profit, when comparing the total annual expense that the
Exchange and MIAX project to incur in connection with providing these
access services versus the total annual revenue that the Exchange
projects to collect in connection with services associated with the
Proposed Access Fees. For
[[Page 46059]]
2021,\13\ the total annual expense for providing the access services
associated with the Proposed Access Fees (that is, the shared network
connectivity of the Exchange and MIAX, but excluding MIAX Emerald) is
projected to be approximately $15.9 million. The approximately $15.9
million in projected total annual expense is comprised of the
following, all of which are directly related to the access services
associated with the Proposed Access Fees: (1) Third-party expense,
relating to fees paid by the Exchange to third-parties for certain
products and services; and (2) internal expense, relating to the
internal costs of the Exchange and MIAX to provide the services
associated with the Proposed Access Fees.\14\ As noted above, the
Exchange believes it is more appropriate to analyze the Proposed Access
Fees utilizing its 2021 revenue and costs, which utilize the same
presentation methodology as set forth in the Exchange's previously-
issued Audited Unconsolidated Financial Statements.\15\ The $15.9
million in projected total annual expense is directly related to the
access services associated with the Proposed Access Fees, and not any
other product or service offered by the Exchange. It does not include
general costs of operating matching systems and other trading
technology, and no expense amount was allocated twice.
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\13\ The Exchange has not yet finalized its 2021 year end
results.
\14\ The percentage allocations used in this proposed rule
change may differ from past filings from the Exchange or its
affiliates due to, among other things, changes in expenses charged
by third-parties, adjustments to internal resource allocations, and
different system architecture of the Exchange as compared to its
affiliates.
\15\ For example, the Exchange previously noted that all third-
party expense described in its prior fee filing was contained in the
information technology and communication costs line item under the
section titled ``Operating Expenses Incurred Directly or Allocated
From Parent,'' in the Exchange's 2019 Form 1 Amendment containing
its financial statements for 2018. See 87876 (December 31, 2019), 85
FR 757 (January 7, 2020) (SR-PEARL-2019-36). Accordingly, the third-
party expense described in this filing is attributed to the same
line item for the Exchange's 2021 Form 1 Amendment, which will be
filed in 2022.
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As discussed, the Exchange conducted an extensive cost review in
which the Exchange analyzed every expense item in the Exchange's
general expense ledger (this includes over 150 separate and distinct
expense items) to determine whether each such expense relates to the
access services associated with the Proposed Access Fees, and, if such
expense did so relate, what portion (or percentage) of such expense
actually supports those services, and thus bears a relationship that
is, ``in nature and closeness,'' directly related to those services.
The sum of all such portions of expenses represents the total cost of
the Exchange to provide access services associated with the Proposed
Access Fees.
For 2021, total third-party expense, relating to fees paid by the
Exchange and MIAX to third-parties for certain products and services
for the Exchange to be able to provide the access services associated
with the Proposed Access Fees, is projected to be $3.9 million. This
includes, but is not limited to, a portion of the fees paid to: (1)
Equinix, for data center services, for the primary, secondary, and
disaster recovery locations of the Exchange's trading system
infrastructure; (2) Zayo Group Holdings, Inc. (``Zayo'') for network
services (fiber and bandwidth products and services) linking the
Exchange's and MIAX's office locations in Princeton, New Jersey and
Miami, Florida, to all data center locations; (3) Secure Financial
Transaction Infrastructure (``SFTI''),\16\ which supports connectivity
and feeds for the entire U.S. options industry; (4) various other
services providers (including Thompson Reuters, NYSE, Nasdaq, and
Internap), which provide content, connectivity services, and
infrastructure services for critical components of options connectivity
and network services; and (5) various other hardware and software
providers (including Dell and Cisco, which support the production
environment in which Members connect to the network to trade, receive
market data, etc.).
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\16\ In fact, on October 22, 2019, the Exchange was notified by
SFTI that it is again raising its fees charged to the Exchange by
approximately 11%, without having to show that such fee change
complies with the Act by being reasonable, equitably allocated, and
not unfairly discriminatory. It is unfathomable to the Exchange
that, given the critical nature of the infrastructure services
provided by SFTI, that its fees are not required to be rule-filed
with the Commission pursuant to Section 19(b)(1) of the Act and Rule
19b-4 thereunder. See 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b-4,
respectively.
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For clarity, only a portion of all fees paid to such third-parties
is included in the third-party expense herein, and no expense amount is
allocated twice. Accordingly, the Exchange and MIAX do not allocate
their entire information technology and communication costs to the
access services associated with the Proposed Access Fees. Further, the
Exchange notes that, with respect to the MIAX Pearl expenses included
herein, those expenses only cover the MIAX Pearl options market;
expenses associated with MIAX Pearl Equities are accounted for
separately and are not included within the scope of this filing.
The Exchange believes it is reasonable to allocate such third-party
expense described above towards the total cost to the Exchange and MIAX
to provide the access services associated with the Proposed Access
Fees. In particular, the Exchange believes it is reasonable to allocate
the identified portion of the Equinix expense because Equinix operates
the data centers (primary, secondary, and disaster recovery) that host
the Exchange's network infrastructure. This includes, among other
things, the necessary storage space, which continues to expand and
increase in cost, power to operate the network infrastructure, and
cooling apparatuses to ensure the Exchange's network infrastructure
maintains stability. Without these services from Equinix, the Exchange
would not be able to operate and support the network and provide the
access services associated with the Proposed Access Fees to its Members
and their customers. The Exchange did not allocate all of the Equinix
expense toward the cost of providing the access services associated
with the Proposed Access Fees, only that portion which the Exchange
identified as being specifically mapped to providing the access
services associated with the Proposed Access Fees, approximately 62% of
the total applicable Equinix expense. The Exchange believes this
allocation is reasonable because it represents the Exchange's actual
cost to provide the access services associated with the Proposed Access
Fees, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified
portion of the Zayo expense because Zayo provides the internet, fiber
and bandwidth connections with respect to the network, linking the
Exchange with its affiliates, MIAX and MIAX Emerald, as well as the
data center and disaster recovery locations. As such, all of the trade
data, including the billions of messages each day per exchange, flow
through Zayo's infrastructure over the Exchange's network. Without
these services from Zayo, the Exchange would not be able to operate and
support the network and provide the access services associated with the
Proposed Access Fees. The Exchange did not allocate all of the Zayo
expense toward the cost of providing the access services associated
with the Proposed Access Fees, only the portion which the Exchange
identified as being specifically mapped to providing the Proposed
Access Fees, approximately 62% of the total applicable Zayo expense.
The Exchange believes this allocation is reasonable because it
represents the Exchange's
[[Page 46060]]
actual cost to provide the access services associated with the Proposed
Access Fees, and not any other service, as supported by its cost
review.
The Exchange believes it is reasonable to allocate the identified
portions of the SFTI expense and various other service providers'
(including Thompson Reuters, NYSE, Nasdaq, and Internap) expense
because those entities provide connectivity and feeds for the entire
U.S. options industry, as well as the content, connectivity services,
and infrastructure services for critical components of the network.
Without these services from SFTI and various other service providers,
the Exchange would not be able to operate and support the network and
provide access to its Members and their customers. The Exchange did not
allocate all of the SFTI and other service providers' expense toward
the cost of providing the access services associated with the Proposed
Access Fees, only the portions which the Exchange identified as being
specifically mapped to providing the access services associated with
the Proposed Access Fees, approximately 75% of the total applicable
SFTI and other service providers' expense. The Exchange believes this
allocation is reasonable because it represents the Exchange's actual
cost to provide the access services associated with the Proposed Access
Fees.
The Exchange believes it is reasonable to allocate the identified
portion of the other hardware and software provider expense because
this includes costs for dedicated hardware licenses for switches and
servers, as well as dedicated software licenses for security monitoring
and reporting across the network. Without this hardware and software,
the Exchange would not be able to operate and support the network and
provide access to its Members and their customers. The Exchange did not
allocate all of the hardware and software provider expense toward the
cost of providing the access services associated with the Proposed
Access Fees, only the portions which the Exchange identified as being
specifically mapped to providing the access services associated with
the Proposed Access Fees, approximately 51% of the total applicable
hardware and software provider expense. The Exchange believes this
allocation is reasonable because it represents the Exchange's actual
cost to provide the access services associated with the Proposed Access
Fees.
For 2021, total projected internal expense, relating to the
internal costs of the Exchange and MIAX to provide the access services
associated with the Proposed Access Fees, is projected to be
approximately $12 million. This includes, but is not limited to, costs
associated with: (1) Employee compensation and benefits for full-time
employees that support the access services associated with the Proposed
Access Fees, including staff in network operations, trading operations,
development, system operations, business, as well as staff in general
corporate departments (such as legal, regulatory, and finance) that
support those employees and functions (including an increase as a
result of the higher determinism project); (2) depreciation and
amortization of hardware and software used to provide the access
services associated with the Proposed Access Fees, including equipment,
servers, cabling, purchased software and internally developed software
used in the production environment to support the network for trading;
and (3) occupancy costs for leased office space for staff that provide
the access services associated with the Proposed Access Fees. The
breakdown of these costs is more fully-described below. For clarity,
only a portion of all such internal expenses are included in the
internal expense herein, and no expense amount is allocated twice.
Accordingly, the Exchange and MIAX do not allocate their entire costs
contained in those items to the access services associated with the
Proposed Access Fees.
The Exchange believes it is reasonable to allocate such internal
expense described above towards the total cost to the Exchange to
provide the access services associated with the Proposed Access Fees.
In particular, the Exchange's and MIAX's combined employee compensation
and benefits expense relating to providing the access services
associated with the Proposed Access Fees is projected to be
approximately $6.1 million, which is only a portion of the
approximately $12.6 million (for MIAX) and $9.2 million (for MIAX
Pearl) total projected expense for employee compensation and benefits.
The Exchange believes it is reasonable to allocate the identified
portion of such expense because this includes the time spent by
employees of several departments, including Technology, Back Office,
Systems Operations, Networking, Business Strategy Development (who
create the business requirement documents that the Technology staff use
to develop network features and enhancements), Trade Operations,
Finance (who provide billing and accounting services relating to the
network), and Legal (who provide legal services relating to the
network, such as rule filings and various license agreements and other
contracts). As part of the extensive cost review conducted by the
Exchange, the Exchange reviewed the amount of time spent by each
employee on matters relating to the provision of access services
associated with the Proposed Access Fees. Without these employees, the
Exchange would not be able to provide the access services associated
with the Proposed Access Fees to its Members and their customers. The
Exchange did not allocate all of the employee compensation and benefits
expense toward the cost of the access services associated with the
Proposed Access Fees, only the portions which the Exchange identified
as being specifically mapped to providing the access services
associated with the Proposed Access Fees, approximately 28% of the
total applicable employee compensation and benefits expense. The
Exchange believes this allocation is reasonable because it represents
the Exchange's actual cost to provide the access services associated
with the Proposed Access Fees, and not any other service, as supported
by its cost review.
The Exchange's and MIAX's combined depreciation and amortization
expense relating to providing the services associated with the Proposed
Access Fees is projected to be $5.3 million, which is only a portion of
the $4.8 million (for MIAX) and $2.9 million (for MIAX Pearl) total
projected expense for depreciation and amortization. The Exchange
believes it is reasonable to allocate the identified portion of such
expense because such expense includes the actual cost of the computer
equipment, such as dedicated servers, computers, laptops, monitors,
information security appliances and storage, and network switching
infrastructure equipment, including switches and taps that were
purchased to operate and support the network and provide the access
services associated with the Proposed Access Fees. Without this
equipment, the Exchange would not be able to operate the network and
provide the access services associated with the Proposed Access Fees to
its Members and their customers. The Exchange did not allocate all of
the depreciation and amortization expense toward the cost of providing
the access services associated with the Proposed Access Fees, only the
portion which the Exchange identified as being specifically mapped to
providing the access services associated with the Proposed Access Fees,
approximately
[[Page 46061]]
70% of the total applicable depreciation and amortization expense, as
these access services would not be possible without relying on such.
The Exchange believes this allocation is reasonable because it
represents the Exchange's actual cost to provide the access services
associated with the Proposed Access Fees, and not any other service, as
supported by its cost review.
The Exchange's and MIAX's combined occupancy expense relating to
providing the services associated with the Proposed Access Fees is
projected to be approximately $0.6 million, which is only a portion of
the $0.6 million (for MIAX) and $0.5 million (for MIAX Pearl) total
projected expense for occupancy. The Exchange believes it is reasonable
to allocate the identified portion of such expense because such expense
represents the portion of the Exchange's cost to rent and maintain a
physical location for the Exchange's staff who operate and support the
network, including providing the access services associated with the
Proposed Access Fees. This amount consists primarily of rent for the
Exchange's Princeton, NJ office, as well as various related costs, such
as physical security, property management fees, property taxes, and
utilities. The Exchange operates its Network Operations Center
(``NOC'') and Security Operations Center (``SOC'') from its Princeton,
New Jersey office location. A centralized office space is required to
house the staff that operates and supports the network. The Exchange
currently has approximately 150 employees. Approximately two-thirds of
the Exchange's staff are in the Technology department, and the majority
of those staff have some role in the operation and performance of the
access services associated with the Proposed Access Fees. Without this
office space, the Exchange would not be able to operate and support the
network and provide the access services associated with the Proposed
Access Fees to its Members and their customers. Accordingly, the
Exchange believes it is reasonable to allocate the identified portion
of its occupancy expense because such amount represents the Exchange's
actual cost to house the equipment and personnel who operate and
support the Exchange's network infrastructure and the access services
associated with the Proposed Access Fees. The Exchange did not allocate
all of the occupancy expense toward the cost of providing the access
services associated with the Proposed Access Fees, only the portion
which the Exchange identified as being specifically mapped to operating
and supporting the network, approximately 53% of the total applicable
occupancy expense. The Exchange believes this allocation is reasonable
because it represents the Exchange's cost to provide the access
services associated with the Proposed Access Fees, and not any other
service, as supported by its cost review.
The Exchange notes that a material portion of its total overall
expense is allocated to the provision of access services (including
connectivity, ports, and trading permits). The Exchange believes this
is reasonable and in line, as the Exchange operates a technology-based
business that differentiates itself from its competitors based on its
trading systems that rely on access to a high performance network,
resulting in significant technology expense. Over two-thirds of
Exchange staff are technology-related employees. The majority of the
Exchange's expense is technology-based. As described above, the
Exchange and MIAX have only four primary sources of fees to recover
their costs; thus, the Exchange and MIAX believe it is reasonable to
allocate a material portion of their total overall expense towards
access fees.
Accordingly, based on the facts and circumstances presented, the
Exchange believes that its provision of the access services associated
with the Proposed Access Fees will not result in excessive pricing or
supra-competitive profit. To illustrate, on a going-forward, fully-
annualized basis, the Exchange and MIAX project that annualized revenue
for providing the access services associated with the Proposed Access
Fees would be approximately $22 million per annum, based on a recent
billing cycle.\17\ The Exchange and MIAX project that their annualized
revenue for providing network connectivity services (all connectivity
alternatives) to be approximately $22.8 million per annum. The Exchange
and MIAX project that their annualized expense for providing network
connectivity services (all connectivity alternatives) to be
approximately 15.9 million per annum. Accordingly, on a fully-
annualized basis, the Exchange and MIAX believe their total projected
revenue for the providing the access services associated with the
Proposed Access Fees will not result in excessive pricing or supra-
competitive profit, as the Exchange and MIAX will make a profit margin
of only approximately 30% inclusive of the Proposed Access Fees and all
other connectivity alternatives ($22.8 million in total connectivity
revenue minus $15.9 million in expense = $6.9 million in profit per
annum). Additionally, this profit margin does not take into account the
cost of capital expenditures (``CapEx'') the Exchange and MIAX
historically spent or are projected to spend each year on CapEx going
forward.
---------------------------------------------------------------------------
\17\ The Exchange and MIAX also project approximately $69,550 in
monthly revenue through 1Gb connections; however, the Exchange and
MIAX do not propose to adjust the fees for those connections at this
time.
---------------------------------------------------------------------------
For the avoidance of doubt, none of the expenses included herein
relating to the access services associated with the Proposed Access
Fees relate to the provision of any other services offered by the
Exchange or MIAX. Stated differently, no expense amount of the Exchange
is allocated twice. The Exchange notes that, with respect to the MIAX
Pearl expenses included herein, those expenses only cover the MIAX
Pearl options market; expenses associated with the MIAX Pearl equities
market and the Exchange's affiliate, MIAX Emerald, are accounted for
separately and are not included within the scope of this filing. Stated
differently, no expense amount of the Exchange is also allocated to
MIAX Pearl Equites or MIAX Emerald.
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to allocate the respective percentages of each expense
category described above towards the total cost to the Exchange of
operating and supporting the network, including providing the access
services associated with the Proposed Access Fees because the Exchange
performed a line-by-line item analysis of all the expenses of the
Exchange, and has determined the expenses that directly relate to
providing access to the Exchange and MIAX. Further, the Exchange notes
that, without the specific third-party and internal items listed above,
the Exchange would not be able to provide the access services
associated with the Proposed Access Fees to its Members and their
customers. Each of these expense items, including physical hardware,
software, employee compensation and benefits, occupancy costs, and the
depreciation and amortization of equipment, have been identified
through a line-by-line item analysis to be integral to providing access
services. The Proposed Access Fees are intended to recover the
Exchange's and MIAX's costs of providing access to their Systems.
Accordingly, the Exchange believes that the Proposed Access Fees are
fair and reasonable because they do not result in excessive pricing or
supra-competitive profit, when comparing the actual costs to the
Exchange versus the projected
[[Page 46062]]
annual revenue from the Proposed Access Fees.
The Exchange believes the proposed changes are reasonable,
equitably allocated and not unfairly discriminatory, and do not result
in a ``supra-competitive'' \18\ profit. Of note, the Guidance defines
``supra-competitive profit'' as profits that exceed the profits that
can be obtained in a competitive market.\19\ With the proposed changes,
the Exchange and MIAX anticipate they will have a profit margin of
approximately 30%, inclusive of the Proposed Access Fees and all other
connectivity alternatives. Based on the 2020 Audited Financial
Statements of competing options exchanges (since the 2021 Audited
Financial Statements will likely not become publicly available until
early July 2022, after the Exchange has submitted this filing), the
Exchange's profit margin is well below the operating profit margins of
other competing exchanges. For example, Nasdaq ISE, LLC's (``ISE'')
operating profit margin for all of 2020 was approximately 85%; Nasdaq
PHLX LLC's (``PHLX'') operating profit margin for all of 2020 was
approximately 49%; the Nasdaq Stock Market LLC's (``Nasdaq'') operating
profit margin for all of 2020 was approximately 62%; NYSE Arca, Inc.'s
(``Arca'') operating profit margin for all of 2020 was approximately
55%; NYSE American LLC's (``Amex'') operating profit margin for all of
2020 was approximately 59%; Cboe Exchange, Inc.'s (``Cboe'') operating
profit margin for all of 2020 was approximately 74%; and Cboe BZX
Exchange, Inc.'s (``BZX'') operating profit margin for all of 2020 was
approximately 52%.
---------------------------------------------------------------------------
\18\ See supra note 9.
\19\ See id.
---------------------------------------------------------------------------
The Exchange believes that the Proposed Access Fees are reasonable,
equitably allocated and not unfairly discriminatory because, for one
10Gb ULL connection, the Exchange provides each Member or non-Member
access to all twelve (12) matching engines on the Exchange. Under the
proposed pricing-structure, the Exchange will assess each Member or
non-Member $9,000 for the first 10Gb ULL connection. For that $9,000
monthly fee, each Member or non-Member has access to all twelve
matching engines each month. This results in a per matching engine
connectivity cost of only $750 ($9,000 divided by 12). The Exchange
believes its connectivity cost to be less than or similar to
connectivity fees charged by competing options exchanges.\20\
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\20\ See The Nasdaq Stock Market LLC (``NASDAQ'') Rules, General
8: Connectivity, Section 1. Co-Location Services (charging a monthly
fee of $10,000 per 10Gb fiber connection, $15,000 per 10Gb Ultra
fiber connection, and $20,000 per 40Gb fiber connection, plus
installation fees ranging from $1,000 to $1,500). The Exchange notes
that the same connectivity fees described above for NASDAQ also
apply to its affiliates, Nasdaq ISE, LLC and NASDAQ PHLX LLC. See
Nasdaq ISE Rules, General 8: Connectivity and NASDAQ PHLX Rules,
General 8: Connectivity (both incorporating by reference the fees in
NASDAQ Rules, General 8: Connectivity). See also NYSE American LLC
Options Fee Schedule, Section IV (charging the following
connectivity fees: $6,000 per connection initial charge plus $5,000
monthly per 1Gb circuit connection; $15,000 per connection initial
charge plus $22,000 monthly per 10Gb LX LCN circuit connection; and
$15,000 per connection initial charge plus $22,000 monthly charge
per 40Gb LCN circuit connection).
---------------------------------------------------------------------------
The Exchange further believes its proposed fees are reasonable,
equitably allocated and not unfairly discriminatory because the
Exchange believes that it benefits overall competition in the
marketplace to allow relatively new entrants like the Exchange and its
affiliates, MIAX and MIAX Emerald, to propose fees that may help these
new entrants recoup their substantial investment in building out costly
infrastructure. The Exchange and its affiliates have historically set
their fees purposefully low in order to attract business and market
share, and the proposed tiered-pricing structure will help make the
rates consistent with other exchanges while not raising costs for a
majority of the Exchange's Members and non-Members.
The Guidance provides that in determining whether a proposed fee is
constrained by significant competitive forces, the Commission will
consider whether there are reasonable substitutes for the product or
service that is the subject of a proposed fee. As described below, the
Exchange believes substitute products and services are available to
market participants, including, among other things, other options
exchanges that market participants may connect to in lieu of the
Exchange, indirect connectivity to the Exchange via a third-party
reseller and/or trading of any options products, including proprietary
products, in the Over-the-Counter (``OTC'') markets.
There is also no regulatory requirement that any market participant
connect to any one options exchange, that any market participant
connect at a particular connection speed or act in a particular
capacity on the Exchange, or trade any particular product offered on an
exchange. Moreover, membership is not a requirement to participate on
the Exchange. A market participant may submit orders to the Exchange
via a Sponsored User.\21\ Indeed, the Exchange is unaware of any one
options exchange whose membership includes every registered broker-
dealer. Based on a recent analysis conducted by the Cboe Exchange, Inc.
(``Cboe''), as of October 21, 2020, only three (3) of the broker-
dealers, out of approximately 250 broker-dealers, were members of at
least one exchange that lists options for trading and were members of
all 16 options exchanges.\22\ Additionally, the Cboe Fee Filing found
that several broker-dealers were members of only a single exchange that
lists options for trading and that the number of members at each
exchange that trades options varies greatly.\23\
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\21\ See Exchange Rule 210. The Sponsored User is subject to the
fees, if any, of the Sponsoring Member. The Exchange notes that the
Sponsoring Member is not required to publicize, let alone justify or
file with the Commission its fees, and as such could charge the
Sponsored User any fees it deems appropriate, even if such fees
would otherwise be considered supra-competitive, or otherwise
potentially unreasonable or uncompetitive.
\22\ See Securities Exchange Act Release No. 90333 (November 4,
2020), 85 FR 71666 (November 10, 2020) (SR-CBOE-2020-105) (the
``Cboe Fee Filing''). The Cboe Fee Filing cited to the October 2020
Active Broker Dealer Report, provided by the Commission's Office of
Managing Executive, on October 8, 2020.
\23\ Id.
---------------------------------------------------------------------------
The Exchange notes that non-Member third-parties, such as Service
Bureaus and Extranets, resell the Exchange's connectivity. This
indirect connectivity is another viable alternative for market
participants to trade on the Exchange without connecting directly to
the Exchange (and thus not pay the Exchange's connectivity fees), which
alternative is already being used by non-Members and further constrains
the price that the Exchange is able to charge for connectivity and
other access fees to its market. The Exchange notes that it could, but
chooses not to, preclude market participants from reselling its
connectivity. The Exchange also chooses not to adopt fees that would be
assessed to third-party resellers on a per customer basis (i.e., fees
based on the number of firms that connect to the Exchange indirectly
via the third-party). Indeed, the Exchange does not receive any
connectivity revenue when connectivity is resold by a third-party,
which often is resold to multiple customers, some of whom are agency
broker-dealers that have numerous customers of their own.\24\ In sum,
the
[[Page 46063]]
Exchange believes this creates and fosters a competitive environment
and subjects the Exchange to competitive forces in pricing its
connectivity and access fees. Particularly, in the event that a market
participant views the Exchange's direct connectivity and access fees as
more or less attractive than competing markets, that market participant
can choose to connect to the Exchange indirectly or may choose not to
connect to the Exchange and connect instead to one or more of the other
15 options markets. Accordingly, the Exchange believes that the
Proposed Access Fees are fair and reasonable and do not result in
excessive pricing or supra-competitive profit.
---------------------------------------------------------------------------
\24\ The Exchange notes that resellers are not required to
publicize, let alone justify or file with the Commission their fees,
and as such could charge the market participant any fees it deems
appropriate (including connectivity fees higher than the Exchange's
connectivity fees), even if such fees would otherwise be considered
potentially unreasonable or uncompetitive fees.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
With respect to intra-market competition, the Exchange does not
believe that the proposed rule change would place certain market
participants at the Exchange at a relative disadvantage compared to
other market participants or affect the ability of such market
participants to compete. As stated above, the Exchange does not believe
its proposed pricing will impose a barrier to entry to smaller
participants and notes that its proposed connectivity pricing structure
for its 10Gb ULL connections is associated with relative usage of the
various market participants. Further, the majority of firms that
purchase 10Gb ULL connections may either save money or pay the same
amount after the tiered-pricing structure is implemented. While total
cost may be increased for market participants with larger capacity
needs or for business/technical preferences, such options provide far
more capacity and are purchased by those that consume more resources
from the network. Accordingly, the proposed tiered-pricing structure
does not favor certain categories of market participants in a manner
that would impose a burden on competition; rather, the allocation
reflects the network resources consumed by the various usage of market
participants--lowest bandwidth consuming members pay the least, and
highest bandwidth consuming members pays the most, particularly since
higher bandwidth consumption translates to higher costs to the
Exchange.
The Exchange also does not believe that the proposed rule change
will result in any burden on inter-market competition that is not
necessary or appropriate in furtherance of the purposes of the Act. As
discussed above, options market participants are not forced to connect
to all options exchanges. The Exchange operates in a highly competitive
environment, and as discussed above, its ability to price access and
connectivity is constrained by competition among exchanges and third
parties. There are other options markets of which market participants
may connect to trade options. There is also a possible range of
alternative strategies, including routing to the exchange through
another participant or market center or accessing the Exchange
indirectly. For example, there are 15 other U.S. options exchanges,
which the Exchange must consider in its pricing discipline in order to
compete for market participants. In this competitive environment,
market participants are free to choose which competing exchange or
reseller to use to satisfy their business needs. As a result, the
Exchange believes this proposed rule change permits fair competition
among national securities exchanges. Accordingly, the Exchange does not
believe its proposed fee changes impose any burden on competition that
is not necessary or appropriate in furtherance of the purposes of the
Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\25\ and Rule 19b-4(f)(2) \26\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78s(b)(3)(A)(ii).
\26\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#8dfff8e1e8a0eee2e0e0e8e3f9fecdfee8eea3eae2fb"><span class="__cf_email__" data-cfemail="9fedeaf3fab2fcf0f2f2faf1ebecdfecfafcb1f8f0e9">[email protected]</span></a>. Please include
File Number SR-PEARL-2021-36 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-PEARL-2021-36. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-PEARL-2021-36 and should be submitted on
or before September 7, 2021.
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\27\ 17 CFR 200.30-3(a)(12).
[[Page 46064]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-17537 Filed 8-16-21; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on August 17, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.