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Notice2022-08379

Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of Filing of a Proposed Rule Change To Establish Fees for the Exchange's cToM Market Data Product; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Change

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Published

April 20, 2022

Issuing agencies

Securities and Exchange Commission

Full Text

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<title>Federal Register, Volume 87 Issue 76 (Wednesday, April 20, 2022)</title>
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[Federal Register Volume 87, Number 76 (Wednesday, April 20, 2022)]
[Notices]
[Pages 23674-23687]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-08379]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94715; File No. SR-EMERALD-2022-14]

Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing of a Proposed Rule Change To Establish Fees for the Exchange's
cToM Market Data Product; Suspension of and Order Instituting
Proceedings To Determine Whether To Approve or Disapprove the Proposed
Rule Change

April 14, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 1, 2022, MIAX Emerald, LLC (``MIAX Emerald'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
proposed rule change as described in Item II below, which Item has been
prepared by the Exchange. The Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2)
thereunder.\4\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons and is,
pursuant to Section 19(b)(3)(C) of the Act, hereby: (i) Temporarily
suspending the proposed rule change; and (ii) instituting proceedings
to determine whether to approve or disapprove the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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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 Exchange's Fee
Schedule (``Fee Schedule'') to establish fees for the market data
product known as MIAX Emerald Complex Top of Market (``cToM''). The
fees became operative on April 1, 2022. The text of the proposed rule
change is available on the Exchange's website at <a href="http://www.miaxoptions.com/rule-filings/emerald">http://www.miaxoptions.com/rule-filings/emerald</a>, at MIAX's principal office,
and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Description of the Proposed Rule
Change

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

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

1. Purpose
The Exchange proposes to amend Section 6)(a) of the Fee Schedule to
establish fees for the cToM data product. The Exchange initially filed
this proposal on June 30, 2021 with the proposed fees to be effective
beginning July 1, 2021 (``First Proposed Rule Change'').\5\ The First
Proposed Rule Change was published for comment in the Federal Register
on July 15, 2021.\6\ Although no comment letters were submitted, the
Commission suspended the First Proposed Rule Change on August 27,
2021.\7\ The Exchange withdrew the First Proposed Rule Change on
September 30, 2021 \8\ and re-

[[Page 23675]]

submitted the proposal, with the proposed fee changes being immediately
effective (``Second Proposed Rule Change'').\9\ The Second Proposed
Rule Change provided additional justification for the proposed fee
changes and addressed comments provided by the Commission Staff. On
October 14, 2021, the Exchange withdrew the Second Proposed Rule Change
and submitted a revised proposal to again provide additional
justification for the proposed fee changes and address additional
comments provided by the Commission Staff (``Third Proposed Rule
Change'').\10\ The Third Proposed Rule Change was published for comment
in the Federal Register on November 1, 2021.\11\ Although the
Commission did not again receive any comment letters on the Third
Proposed Rule Change, the Exchange withdrew the Third Proposed Rule
Change on December 10, 2021 and submitted a revised proposal for
immediate effectiveness (``Fourth Proposed Rule Change'').\12\ The
Fourth Proposed Rule Change was published for comment in the Federal
Register on December 23, 2021.\13\ Although the Commission did not
again receive any comment letters on the Fourth Proposed Rule Change,
the Exchange withdrew the Fourth Proposed Rule Change on February 7,
2022 and submitted a revised proposal for immediate effectiveness,
which was noticed and immediately suspended by the Commission on
February 15, 2022 (``Fifth Proposed Rule Change'').\14\ Although the
Commission did not again receive any comment letters on the Fifth
Proposed Rule Change, the Exchange withdrew the Fifth Proposed Rule
Change on March 30, 2022 and submits this revised proposal to be
effective April 1, 2022 (``Sixth Proposed Rule Change'').
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\5\ See Securities Exchange Act Release No. 92358 (July 9,
2021), 86 FR 37361 (July 15, 2021) (SR-EMERALD-2021-21).
\6\ Id.
\7\ See Securities Exchange Act Release No. 92789 (August 27,
2021), 86 FR 49364 (September 2, 2021) (SR-MIAX-2021-28, SR-EMERALD-
2021-21) (the ``Suspension Order'').
\8\ See Securities Exchange Act Release No. 93471 (October 29,
2021), 86 FR 60947 (November 4, 2021).
\9\ See SR-EMERALD-2021-32.
\10\ See Securities Exchange Act Release No. 93427 (October 26,
2021), 86 FR 60310 (November 1, 2021) (SR-EMERALD-2021-34).
\11\ Id.
\12\ See Securities Exchange Act Release No. 93811 (December 17,
2021), 86 FR 73051 (December 23, 2021) (SR-EMERALD-2021-44).
\13\ Id.
\14\ See Securities Exchange Act Release No. 94263 (February 15,
2022), 87 FR 9766 (February 22, 2022) (SR-EMERALD-2022-06) (Notice
of Filing of a Proposed Rule Change To Establish Fees for the
Exchange's cToM Market Data Product; Suspension of and Order
Instituting Proceedings To Determine Whether To Approve or
Disapprove the Proposed Rule Change).
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Background
The Exchange previously adopted rules governing the trading of
Complex Orders \15\ on the MIAX Emerald System \16\ in 2018,\17\ ahead
of the Exchange's planned launch, which took place on March 1, 2019.
Shortly thereafter, the Exchange adopted the market data product, cToM,
and provided cToM free of charge to incentivize market participants to
subscribe.\18\ The Exchange provided cToM free of charge for nearly
three years and absorbed all costs associated with producing the cToM
data product.
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\15\ See Exchange Rule 518(a)(5) for the definition of Complex
Orders.
\16\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
\17\ See Securities Exchange Act Release Nos. 84891 (December
20, 2018), 83 FR 67421 (December 28, 2018) (In the Matter of the
Application of MIAX EMERALD, LLC for Registration as a National
Securities Exchange; Findings, Opinion, and Order of the
Commission); and 85345(March 18, 2019), 84 FR 10848 (March 22, 2019)
(SR-EMERALD-2019-13) (Notice of Filing and Immediate Effectiveness
of a Proposed Rule Change To Amend Exchange Rule 518, Complex
Orders).
\18\ See Securities Exchange Act Release No. 85207 (February 27,
2019), 84 FR 7963 (March 5, 2019) (SR-EMERALD-2019-09) (providing a
complete description of the cToM data feed).
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In summary, cToM provides subscribers with the same information as
the MIAX Emerald Top of Market (``ToM'') data product as it relates to
the Strategy Book,\19\ i.e., the Exchange's best bid and offer for a
complex strategy, with aggregate size, based on displayable order and
quoting interest in the complex strategy on the Exchange. However, cToM
provides subscribers with the following additional information that is
not included in ToM: (i) The identification of the complex strategies
currently trading on the Exchange; (ii) complex strategy last sale
information; and (iii) the status of securities underlying the complex
strategy (e.g., halted, open, or resumed). cToM is therefore a distinct
market data product from ToM in that it includes additional information
that is not available to subscribers that receive only the ToM data
feed. ToM subscribers are not required to subscribe to cToM, and cToM
subscribers are not required to subscribe to ToM.\20\
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\19\ The ``Strategy Book'' is the Exchange's electronic book of
complex orders and complex quotes. See Exchange Rule 518(a)(17).
\20\ See supra note 18.
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Proposal
The Exchange now proposes to amend Section 6)a) of the Fee Schedule
to charge monthly fees to Distributors \21\ of cToM. Specifically, the
Exchange proposes to assess Internal Distributors $1,250 per month and
External Distributors $1,750 per month for the cToM data feed.\22\ The
Exchange notes that the proposed monthly cToM fees for Internal and
External Distributors are identical to the prices the Exchange
currently charges for its ToM data product and the prices the
Exchange's affiliate, MIAX, charges for its ToM product, both of which
were previously published by the Commission and remain in effect
today.\23\
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\21\ A ``Distributor'' of MIAX Emerald data is any entity that
receives a feed or file of data either directly from MIAX Emerald or
indirectly through another entity and then distributes it either
internally (within that entity) or externally (outside that entity).
All Distributors are required to execute a MIAX Emerald Distributor
Agreement. See Section 6)a) of the Fee Schedule.
\22\ The Exchange also proposes to make a minor related change
to remove ``(as applicable)'' from the explanatory paragraph in
Section 6)a) as it will not change fees for both the ToM and cToM
data feeds.
\23\ See Securities Exchange Act Release Nos. 91145 (February
17, 2021), 86 FR 11033 (February 23, 2021) (SR-EMERALD-2021-05);
73942 (December 24, 2014), 80 FR 71 (January 2, 2015) (SR-MIAX-2014-
66).
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As it does today for ToM, the Exchange proposes to assess cToM fees
on Internal and External Distributors in each month the Distributor is
credentialed to use cToM in the production environment. Also, as the
Exchange does today for ToM, market data fees for cToM will be reduced
for new Distributors for the first month during which they subscribe to
cToM, based on the number of trading days that have been held during
the month prior to the date on which that subscriber has been
credentialed to use cToM in the production environment. Such new
Distributors will be assessed a pro-rata percentage of the fees in the
table in Section 6)a) of the Fee Schedule, which is the percentage of
the number of trading days remaining in the affected calendar month as
of the date on which they have been credentialed to use cToM in the
production environment, divided by the total number of trading days in
the affected calendar month.
The Exchange believes that other exchanges' fees for complex market
data are useful examples and provides the below table for comparison
purposes only to show how the Exchange's proposed fees compare to fees
currently charged by other options exchanges for similar complex market
data. As shown by the below table, the Exchange's proposed fees for
cToM are similar to or less than fees charged for similar data products
provided by other options exchanges.
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\24\ See NYSE American Options Proprietary Market Data Fees,
American Options Complex Fees, at <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Options_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Options_Market_Data_Fee_Schedule.pdf</a>.
\25\ See NYSE Arca Options Proprietary Market Data Fees, Arca
Options Complex Fees, at <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Options_Proprietary_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Options_Proprietary_Data_Fee_Schedule.pdf</a>.
\26\ See PHLX Price List--U.S. Derivatives Data, PHLX Orders
Fees, at <a href="http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#PHLX">http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#PHLX</a>.

[[Page 23676]]

------------------------------------------------------------------------
Exchange Monthly fee
------------------------------------------------------------------------
MIAX Emerald (as proposed)........ $1,250--Internal Distributor;
$1,750--External Distributor.
NYSE American, LLC (``Amex'') \24\ $1,500 Access Fee; $1,000
Redistribution Fee (this fee is in
addition to the Access Fee
resulting in a $2,500 monthly fee
for external distribution).
NYSE Arca, Inc. (``Arca'') \25\... $1,500 Access Fee; $1,000
Redistribution Fee (this fee is in
addition to the Access Fee
resulting in a $2,500 monthly fee
for external distribution)
NASDAQ PHLX LLC (``PHLX'') \26\... $3,000--Internal Distributor;
$3,500--External Distributor.
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The Exchange also proposes to amend the paragraph below the table
of fees for ToM and cToM in Section 6)a) of the Fee Schedule to make a
minor, non-substantive correction by deleting the phrase ``(as
applicable)'' in the first sentence following the table of fees for ToM
and cToM. The purpose of this proposed change is to remove unnecessary
text from the Fee Schedule.
cToM Content Is Available From Alternative Sources
cToM is also not the exclusive source for Complex Order information
from the Exchange and market participants may choose to subscribe to
the Exchange's other data products to receive such information. It is a
business decision of market participants whether to subscribe to the
cToM data product or not. Market participants that choose not to
subscribe to cToM can derive much, if not all, of the same information
provided in the cToM feed from other Exchange sources, including, for
example, the MIAX Emerald Order Feed (``MOR'').\27\ The following cToM
information is provided to subscribers of MOR: The Exchange's best bid
and offer for a complex strategy, with aggregate size, based on
displayable order and quoting interest in the complex strategy on the
Exchange; the identification of the complex strategies currently
trading on the Exchange; and the status of securities underlying the
complex strategy (e.g., halted, open, or resumed). In addition to the
cToM information contained in MOR, complex strategy last sale
information can be derived from the Exchange's ToM data feed.
Specifically, market participants may deduce that last sale information
for multiple trades in related options series that are disseminated via
the ToM data feed with the same timestamp are likely part of a Complex
Order transaction and last sale.
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\27\ See MIAX website, Market Data & Offerings, at <a href="https://www.miaxoptions.com/market-data-offerings">https://www.miaxoptions.com/market-data-offerings</a> (last visited April 1,
2022). In general, MOR provides real-time ulta-low latency updates
on the following information: New Simple Orders added to the MIAX
Emerald Order Book; updates to Simple Orders resting on the MIAX
Emerald Order Book; new Complex Orders added to the Strategy Book
(i.e., the book of Complex Orders); updates to Complex Orders
resting on the Strategy Book; MIAX Emerald listed series updates;
MIAX Emerald Complex Strategy definitions; the state of the MIAX
Emerald System; and MIAX Emerald's underlying trading state.
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Implementation
The proposed rule change will be effective April 1, 2022.
2. Statutory Basis
The Exchange believes that the proposed fees are consistent with
Section 6(b) of the Act \28\ in general, and furthers the objectives of
Section 6(b)(4) of the Act \29\ in particular, in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among Members and other persons using any facility or system which the
Exchange operates or controls. The Exchange also believes the proposed
fees further the objectives of Section 6(b)(5) of the Act \30\ in that
they are designed to promote just and equitable principles of trade,
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general protect investors
and the public interest and are not designed to permit unfair
discrimination between customers, issuers, brokers and dealers.
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\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(4).
\30\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the information provided to justify the
proposed fees meets or exceeds the amount of detail required in respect
of proposed fee changes as set forth in recent Commission and
Commission Staff guidance. On March 29, 2019, the Commission issued an
Order disapproving a proposed fee change by the BOX Market LLC Options
Facility to establish connectivity fees for its BOX Network (the ``BOX
Order'').\31\ On May 21, 2019, the Commission Staff issued guidance
``to assist the national securities exchanges and FINRA . . . in
preparing Fee Filings that meet their burden to demonstrate that
proposed fees are consistent with the requirements of the Securities
Exchange Act.'' \32\ Based on both the BOX Order and the Guidance, the
Exchange believes that the proposed fees are consistent with the Act
because they are: (i) Reasonable, equitably allocated, not unfairly
discriminatory, and not an undue burden on competition; (ii) comply
with the BOX Order and the Guidance; (iii) supported by evidence
(including comprehensive revenue and cost data and analysis) that they
are fair and reasonable and will not result in excessive pricing or
supra-competitive profit; and (iv) identical to the prices the Exchange
currently charges for its ToM data product and the prices the
Exchange's affiliate, MIAX, charges for its ToM product, both of which
were previously published by the Commission and remain in effect
today.\33\
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\31\ 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) (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).
\32\ 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'').
\33\ See supra note 23.
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. Particularly, cToM further broadens the
availability of U.S. option market data to investors consistent with
the principles of Regulation NMS. The data product also promotes
increased transparency through the dissemination of cToM. Particularly,
cToM provides subscribers with the same information as ToM, but
includes the following additional information: (i) The identification
of the complex strategies currently trading on the Exchange; (ii)
complex strategy last sale information; and (iii) the status of
securities underlying the complex strategy (e.g., halted, open, or
resumed). The

[[Page 23677]]

Exchange believes cToM provides a valuable tool that subscribers can
use to gain substantial insight into the trading activity in Complex
Orders, but also emphasizes such data is not necessary for trading.
Moreover, other exchanges offer similar data products.\34\
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\34\ See supra notes 24 through 26.
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The Proposed Fees Will Not Result in a Supra-Competitive Profit
The Exchange believes that exchanges, in setting fees of all types,
should meet very high standards of transparency to demonstrate why each
new fee or fee amendment meets the requirements of the Act that fees be
reasonable, equitably allocated, not unfairly discriminatory, and not
create an undue burden on competition among market participants. The
Exchange believes this high standard is especially important when an
exchange imposes various fees for market participants to access an
exchange's marketplace.
In the Guidance, the Commission Staff states that, ``[a]s an
initial step in assessing the reasonableness of a fee, staff considers
whether the fee is constrained by significant competitive forces.''
\35\ The Guidance further states that, ``. . . even where an SRO cannot
demonstrate, or does not assert, that significant competitive forces
constrain the fee at issue, a cost-based discussion may be an
alternative basis upon which to show consistency with the Exchange
Act.'' \36\ In the Guidance, the Commission Staff further states that,
``[i]f an SRO seeks to support its claims that a proposed fee is fair
and reasonable because it will permit recovery of the SRO's costs, or
will not result in excessive pricing or supra-competitive profit,
specific information, including quantitative information, should be
provided to support that argument.'' \37\ The Exchange does not assert
that the proposed fees are constrained by competitive forces. Rather,
the Exchange asserts that the proposed fees are reasonable because they
will permit recovery of the Exchange's costs in providing cToM data and
will not result in the Exchange generating a supra-competitive profit.
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\35\ See Guidance, supra note 32.
\36\ Id.
\37\ Id.
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The Guidance defines ``supra-competitive profit'' as ``profits that
exceed the profits that can be obtained in a competitive market.'' \38\
The Commission Staff further states in the Guidance that ``the SRO
should provide an analysis of the SRO's baseline revenues, costs, and
profitability (before the proposed fee change) and the SRO's expected
revenues, costs, and profitability (following the proposed fee change)
for the product or service in question.'' \39\ The Exchange provides
this analysis below.
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\38\ Id.
\39\ Id.
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The proposed fees are based on a cost-plus model. The Exchange
believes that it is important to demonstrate that the proposed fees are
based on its costs and reasonable business needs and believes the
proposed fees will allow the Exchange to begin to offset expenses.
However, as discussed more fully below, such fees may also result in
the Exchange recouping less than all of its costs of providing the cToM
data feed because of the uncertainty of forecasting subscriber decision
making with respect to firms' market data needs. The Exchange believes
that the proposed fees will not result in excessive pricing or supra-
competitive profit based on the total expenses the Exchange incurs
versus the total revenue the Exchange projects to collect, and
therefore meets the standards in the Act as interpreted by the
Commission and the Commission Staff in the BOX Order and the Guidance.
The Exchange conducted an extensive cost review in which the
Exchange analyzed nearly every expense item in the Exchange's general
expense ledger to determine whether each such expense relates to the
cToM data feed, and, if such expense did so relate, what portion (or
percentage) of such expense actually supports t [sic] providing the
cToM data feed. In determining what portion (or percentage) to allocate
to access services, each Exchange department head, in coordination with
other Exchange personnel, determined the expenses that support access
services and System Networks associated with the cToM data feed. This
included numerous meetings between the Exchange's Chief Information
Officer, Chief Financial Officer, Head of Strategic Planning and
Operations, Chief Technology Officer, various members of the Legal
Department, and other group leaders. The analysis also included each
department head meeting with the divisions of teams within each
department to determine the amount of time and resources allocated by
employees within each division towards the access services and System
Networks associated with the cToM data feed. The Exchange reviewed each
individual expense to determine if such expense was related to the cToM
data feed. Once the expenses were identified, the Exchange department
heads, with the assistance of our internal finance department, reviewed
such expenses holistically on an Exchange-wide level to determine what
portion of that expense supports providing access services and the
System Networks. The sum of all such portions of expenses represents
the total cost to the Exchange to provide access services associated
with the cToM market data feed. For the avoidance of doubt, no expense
amount is allocated twice. In the Suspension Order, the Commission
questioned whether further explanation of the Exchange's cost analysis
was necessary. The Exchange provides further details concerning its
cost analysis in response to this question.
The analysis conducted by the Exchange is a proprietary process
that is designed to make a fair and reasonable assessment of costs and
resources allocated to support the provision of access services
associated with the cToM data feed. The Exchange acknowledges that this
assessment can only capture a moment in time and that costs and
resource allocations may change. That is why the Exchange historically,
and on an ongoing annual basis, will continue to review its costs and
resource allocations to ensure it appropriately allocates resources to
properly provide services to the Exchange's constituents.
The Exchange believes exchanges, like all businesses, should be
provided flexibility when developing and applying a methodology to
allocate costs and resources they deem necessary to operate their
business, including providing market data and access services. The
Exchange notes that costs and resource allocations may vary from
business to business and, likewise, costs and resource allocations may
differ from exchange to exchange when it comes to providing market data
and access services. It is a business decision that must be evaluated
by each exchange as to how to allocate internal resources and what
costs to incur internally or via third parties that it may deem
necessary to support its business and its provision of market data and
access services to market participants.
The Exchange notes that there are material costs associated with
providing the infrastructure and headcount to fully support access to
the cToM data feed. The Exchange incurs technology expense related to
establishing and maintaining Information Security services, enhanced
network monitoring and customer reporting, as well as Regulation SCI-
mandated processes associated with its network technology. Both fixed
and variable expenses have significant impact on the Exchange's

[[Page 23678]]

overall costs to provide the cToM data feed. For example, to
accommodate new Members, the Exchange may need to purchase additional
hardware to support those Members and provide the cToM data feed.
Further, as the total number of Members increases, the Exchange and its
affiliates may need to increase their data center footprint and consume
more power, resulting in increased costs charged by their third-party
data center provider. Accordingly, the cost to the Exchange and its
affiliates to provide access to its Members is not fixed. The Exchange
believes the cToM market data feed is a reasonable attempt to offset a
portion of those costs associated with providing access to and
maintaining its System Networks' infrastructure.
The Exchange estimated its total annual expense to provide the cToM
data feed based on the following general expense categories: (1)
External expenses, which include fees paid to third parties for certain
products and services; (2) internal expenses relating to the internal
costs to provide the services associated with the cToM data feed; and
(3) general shared expenses.\40\ The Guidance does not include any
information regarding the methodology that an exchange should use to
determine its cost associated with a proposed fee change. The Exchange
utilized a methodology in this proposed fee change that it believes is
reasonable because the Exchange analyzed its entire cost structure,
allocated a percentage of each cost attributable to providing the cToM
data feed, then divided those costs according to the cost methodology
outlined below.
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\40\ 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.
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For 2022, the total annual expense for providing the access
services associated with providing the cToM data feed is estimated to
be $236,284, or $19,690 per month. The Exchange believes it is more
appropriate to analyze the cToM market data feed utilizing its
estimated 2022 revenue and costs, which utilize the same presentation
methodology as set forth in the Exchange's previously-issued Audited
Unconsolidated Financial Statements.\41\ The $236,284 estimated total
annual expense is directly related to the access to the cToM data feed,
and not any other product or service offered by the Exchange. For
example, it does not include general costs of operating matching
engines and other trading technology. No expense amount was allocated
twice. Each of the categories of expenses are set forth in the
following table and details of the individual line-item costs
considered by the Exchange for each category are described further
below.
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\41\ 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 Securities Exchange Act
Release No. 87877 (December 31, 2019), 85 FR 738 (January 7, 2020)
(SR-EMERALD-2019-39). Accordingly, the third-party expense described
in this filing is attributed to the same line item for the
Exchange's 2022 Form 1 Amendment, which will be filed in 2023. In
its Suspension Order, the Commission also asked should the Exchange
to use cost projections or actual costs estimated for 2021 in a
filing made in 2022, or make cost projections for 2022. The Exchange
utilized expenses from its most recent audited financial statement
as those numbers are more reliable than more recent unaudited
numbers, which may be subject to change.

------------------------------------------------------------------------
External expenses
-------------------------------------------------------------------------
Percentage of
Category total expense
amount allocated
------------------------------------------------------------------------
Data Center Provider................................ 0.20%
Fiber Connectivity Provider......................... 0.20%
Security Financial Transaction Infrastructure 0%
(``SFTI''), and Other Connectivity and Content
Service Providers..................................
Hardware and Software Providers..................... 0.20%
-------------------
Total of External Expenses...................... \42\ $5,434
------------------------------------------------------------------------
Internal expenses
------------------------------------------------------------------------
Category Expense amount
allocated
------------------------------------------------------------------------
Employee Compensation............................... $209,610
Depreciation and Amortization....................... 4,055
Occupancy........................................... 11,410
-------------------
Total of Internal Expenses...................... 225,075
------------------------------------------------------------------------
Allocated Shared Expenses........................... 5,775
------------------------------------------------------------------------

In its Suspension Order, the Commission solicited commenters' views
on whether the Exchange has provided sufficient detail on the identity
and nature of services provided by third parties. The Commission
further solicited commenters' views on whether the Exchange has
provided sufficient detail on the elements that go into connectivity
costs, including how shared costs are allocated and attributed to
connectivity expenses, to permit an independent review and assessment
of the reasonableness of purported cost-based fees and the
corresponding profit margin thereon. Based on the below analysis, the
Exchange believes that the cToM market data fees are fair and
reasonable and that the Exchange has provided sufficient detail
surrounding the Commission's questions. In accordance with the
Guidance, the Exchange has provided sufficient detail to support a
finding that the proposed fees are consistent with the Exchange Act.
The proposal includes a detailed description of the Exchange's costs
and

[[Page 23679]]

how the Exchange determined to allocate those costs related to the
proposed fees. The Exchange notes that its only has a single source of
revenue, distribution fees, to recover those costs associated with
providing the cToM data feed. The Exchange notes that, without the
specific third party and internal expense items, the Exchange would not
be able to provide and maintain the System Networks and access to the
System Networks. Each of these expense items, including physical
hardware, software, employee compensation and benefits, occupancy
costs, and the depreciation and amortization of equipment, has been
identified through a line-by-line item analysis to be integral to
providing the cToM data feed.
---------------------------------------------------------------------------

\42\ The Exchange does not believe it is appropriate to disclose
the actual amount it pays to each individual third party provider as
those fee arrangements are competitive or the Exchange is
contractually prohibited from disclosing that number.
---------------------------------------------------------------------------

For clarity, the Exchange took a conservative approach in
determining the expense and the percentage of that expense to be
allocated to providing the cToM data feed. The Exchange describes the
analysis conducted for each expense and the resources or determinations
that were considered when determining the amount necessary to allocate
to each expense. Only a portion of all fees paid to such third parties
is included in the third-party expenses described herein, and no
expense amount is allocated twice. Accordingly, the Exchange does not
allocate its entire information technology and communication costs to
providing the cToM data feed. This may result in the Exchange under
allocating an expense to provide the cToM data feed, and such expenses
may actually be higher than what the Exchange allocated as part of this
proposal. The Exchange notes that expenses associated with its
affiliates, MIAX and MIAX Pearl (the options and equities markets), are
accounted for separately and are not included within the scope of this
filing.
Further, as part its ongoing assessment of costs and expenses, the
Exchange recently conducted a periodic thorough review of its expenses
and resource allocations, which resulted in revised percentage
allocations in this filing. The revised percentages are, among other
things, the result of the shuffling of internal resources in response
to business objectives and changes to fees charged and services
provided by third parties. Therefore, the percentage allocations used
in this proposed rule change may differ from past filings from the
Exchange or its affiliates due to, among other things, changes in
expenses charged by third parties, adjustments to internal resource
allocations, and different system architecture of the Exchange as
compared to its affiliates.\43\
---------------------------------------------------------------------------

\43\ The Exchange notes that the expense allocations differ from
the Exchange's filing earlier in 2021, SR-EMERALD-2021-11, because
that prior filing pertained to several different access fees, which
the Exchange had not been charging for since the Exchange launched
operations in March 2019. See Securities Exchange Act Release No.
91460 (April 2, 2021), 86 FR 18349 (April 8, 2021) (SR-EMERALD-2021-
11). In SR-EMERALD-2021-11, the Exchange sought to adopt fees for
FIX Ports, MEI Ports, Purge Ports, Clearing Trade Drop Ports, and
FIX Drop Copy Ports, all of which had been free for market
participants for over two years since inception.
---------------------------------------------------------------------------

External Expense Allocations
For 2022, expenses relating to fees paid by the Exchange to third
parties for products and services necessary to provide the cToM market
data feed are estimated to be $5,434.\44\ This includes, but is not
limited to, a portion of the fees paid to: (1) A third party data
center provider, including for the primary, secondary, and disaster
recovery locations of the Exchange's trading system infrastructure; (2)
a fiber connectivity provider for network services (fiber and bandwidth
products and services) linking the Exchange's and its affiliates'
office locations in Princeton, New Jersey and Miami, Florida, to all
data center locations; (3) various other content and connectivity
service providers, which provide content, connectivity services, and
infrastructure services for critical components of options connectivity
and network services; and (4) various other hardware and software
providers which support the production environment in which Members and
non-Members connect to the network to trade and receive market
data.\45\
---------------------------------------------------------------------------

\44\ See supra note 42.
\45\ Id.
---------------------------------------------------------------------------

Data Center Space and Operations Provider
The Exchange does not own the primary data center or the secondary
data center, but instead leases space in data centers operated by third
parties where the Exchange houses servers, switches and related
equipment. Data center costs include an allocation of the costs the
Exchange incurs to provide physical connectivity in the third party
data centers where it maintains its equipment as well as related costs.
The data center provider operates the data centers (primary, secondary,
and disaster recovery) that host the Exchange's network infrastructure.
Without the retention of a third party data center, the Exchange would
not be able to operate its systems and provide a trading platform for
market participants. The Exchange does not employ a separate fee to
cover its data center expense and recoups that expense, in part, by
charging for the cToM data feed.
The Exchange reviewed its data center footprint, including its
total rack space, cage usage, number of servers, switches, cabling
within the data center, heating and cooling of physical space, storage
space, and monitoring and divided its data center expenses among
providing transaction services, market data, and connectivity. Based on
this review, the Exchange determined that 0.20% of the total applicable
data center provider expense is applicable to providing the cToM data
feed. The Exchange believes this allocation is reasonable because it
represents the costs associated with the Exchange's servers and
internal cabling dedicated to processing and disseminating market data.
The Exchange excluded from this allocation portion of the Exchange's
data center expense that is due to providing and maintaining
connectivity to the Exchange's System Networks, including providing
cabling within the data center between market participants and the
Exchange. The Exchange also did not allocate the remainder of the data
center expense because it pertains to other areas of the Exchange's
operations, such as ports and transaction services.
Fiber Connectivity Provider
The Exchange engages a third-party service provider that provides
the internet, fiber and bandwidth connections between the Exchange's
networks, primary and secondary data center, and office locations in
Princeton and Miami. Fiber connectivity is necessary for the Exchange
to switch to its secondary data center in the case of an outage in its
primary data center. Fiber connectivity also allows the Exchange's
National Operations & Control Center (``NOCC'') and Security Operations
Center (``SOC'') in Princeton to communicate with the Exchange's
primary and secondary data centers. As such, all trade data, including
the billions of messages each day, flow through this third-party
provider's infrastructure over the Exchange's network. Without these
services, the Exchange would not be able to operate and support the
network and provide the cToM data feed. Without the retention of a
third party fiber connectivity provider, they Exchange would not be
able to communicate between its data centers and office locations. The
Exchange does not employ a separate fee to cover its fiber connectivity
expense and recoups that expense, in part, by charging for cToM data
feeds.

[[Page 23680]]

The Exchange reviewed it costs to retain fiber connectivity from a
third party, including the ongoing costs to support fiber connectivity,
ensuring adequate bandwidth and infrastructure maintenance to support
exchange operations, and ongoing network monitoring and maintenance and
determined that 0.20% of the total fiber connectivity expense was
applicable to providing the cToM data feed. The Exchange believes this
allocation is reasonable because it reflects the portion of the fiber
connectivity expense that relates to maintaining and providing the cToM
data feed. The Exchange excluded a large portion of the Exchange's
fiber connectivity expense that is due to providing and maintaining
connectivity between the Exchange's System Networks, data centers, and
office locations and is core to the daily operation of the Exchange.
Fiber connectivity is a necessary integral means to disseminate
information from the Exchange's primary data center to other Exchange
locations. The Exchange excluded from this allocation fiber
connectivity usage related to system connectivity or other business
lines. The Exchange also did not allocate the remainder of this expense
because it pertains to other areas of the Exchange's operations and
does not directly relate to providing the cToM data feed. The Exchange
believes this allocation is reasonable because it represents the
Exchange's actual cost to provide the cToM data feed.
Connectivity and Content Services Provided by SFTI and Other Providers
The Exchange did not allocate any expense associated with the
proposed fees towards SFTI and various other service providers' because
the Exchange's architecture takes advantage of an advance in design to
eliminate the need for a market data distribution gateway layer. The
computation and dissemination via an API is done solely within the
match engine environment and is then delivered via the Member and non-
Member connectivity infrastructure. This architecture delivers a market
data system that is more efficient both in cost and performance.
Accordingly, the Exchange determined not to allocate any expense
associated with SFTI and various other service providers.
Hardware and Software Providers
The Exchange relies on dozens of third-party hardware and software
providers for equipment necessary to operate is System Networks. This
includes either the purchase or licensing of physical equipment, such
as servers, switches, cabling, and monitoring devices. It also includes
the purchase or license of software necessary for security monitoring,
data analysis and Exchange operations. Hardware and software providers
are necessary to maintain its System Networks and provide the cToM data
feed. Hardware and software equipment and licenses for that equipment
are also necessary to operate and monitor physical assets necessary to
offer the cToM data feed. Hardware and software equipment and licenses
are key to the operation of the Exchange and without them the Exchange
would not be able to operate and support the cToM data feed. The
Exchange does not employ a separate fee to cover its hardware and
software expense and recoups that expense, in part, by charging for
cToM data feed dissemination.
The Exchange reviewed its hardware and software related costs,
including software patch management, vulnerability management,
administrative activities related to equipment and software management,
professional services for selection, installation and configuration of
equipment and software supporting exchange operations and determined
that 0.20% of the total applicable hardware and software expense is
allocated to providing the cToM data feed. Hardware and software
equipment and licenses are key to the operation of the Exchange and its
System Networks. Without them, the Exchange would not be able to
develop and market participants would not be able to purchase the cToM
data feed. The Exchange only allocated the portion of this expense to
the hardware and software that is related to the cToM data feed, such
as operating servers and equipment necessary to produce the cToM data
feed. The Exchange, therefore, did not allocate portions of its
hardware and software expense that related to other areas of the
Exchange's business, such as hardware and software used for
connectivity or unrelated administrative services. The Exchange also
did not allocate the remainder of this expense because it pertains to
other areas of the Exchange's operations, such as ports or transaction
services, and does not directly relate to providing the cToM data feed.
The Exchange believes this allocation is reasonable because it
represents the Exchange's cost to the cToM data feed, and not any other
service, as supported by its cost review.
Internal Expense Allocations
For 2022, total internal expenses relating to the Exchange
providing and maintaining its System Networks and access to its System
Networks for cToM data feeds are estimated to be $225,075. This
includes, but is not limited to, costs associated with: (1) Employee
compensation and benefits for full-time employees that support the
System Networks and access to System Networks, including staff in
network operations, trading operations, development, system operations,
business, as well as staff in general corporate departments (such as
legal, regulatory, and finance) that support those employees and
functions as well as important system upgrades; (2) depreciation and
amortization of hardware and software used to provide and maintain
access services and System Networks associated with the cToM data feed,
including equipment, servers, cabling, purchased software and
internally developed software used in the production environment to
support the network for trading; and (3) occupancy costs for leased
office space for staff that provide the cToM data feed. The breakdown
of these costs is more fully described below.
Employee Compensation and Benefits
Human personnel are key to exchange operations and supporting the
Exchange's ongoing provision the cToM data feed. The Exchange's
reviewed its employee compensation and benefits expense and the portion
of that expense allocated to providing the cToM data feed. As part of
this review, the Exchange considered employees whose functions include
providing and maintaining the cToM data feed and used a blended rate of
compensation reflecting salary, stock and bonus compensation, bonuses,
benefits, payroll taxes, and 401K matching contributions.\46\
---------------------------------------------------------------------------

\46\ For purposes of this allocation, the Exchange did not
consider expenses related to supporting employees who support cToM
data feeds, such as office space and supplies. The Exchange
determined cost allocation for employees who perform work in support
of offering access services and System Networks to arrive at a full
time equivalent (``FTE'') of 0.6 FTEs across all the identified
personnel. The Exchange then multiplied the FTE times a blended
compensation rate for all relevant Exchange personnel to determine
the personnel costs associated with providing the access services
and System Networks associated with the cToM data feeds.
---------------------------------------------------------------------------

Based on this review, the Exchange determined to allocate $209,610
in employee compensation and benefits expense to providing the cToM
data feeds. To determine the appropriate allocation the Exchange
reviewed the time employees allocated to supporting the cToM data
feeds. Senior staff also reviewed these time allocations with
department heads and team leaders to

[[Page 23681]]

determine whether those allocations were appropriate. These employees
are critical to the Exchange to provide the cToM data feeds. The
Exchange determined the above allocation based on the personnel whose
work focused on functions necessary to provide and maintain the cToM
data feeds. The Exchange does not charge a separate fee regarding
employees who support the cToM data feeds and the Exchange seeks to
recoup that expense, in part, by charging for the cToM data feeds.
Depreciation and Amortization
A key expense incurred by the Exchange relates to the depreciation
and amortization of equipment that the Exchange procured to provide and
maintain the cToM data feeds. The Exchange reviewed all of its physical
assets and software, owned and leased, and determined whether each
asset is related to providing and maintaining the cToM data feeds, and
added up the depreciation of those assets. All physical assets and
software, which includes assets used for testing and monitoring of
Exchange infrastructure, were valued at cost, depreciated or leased
over periods ranging from three to five years. In determining the
amount of depreciation and amortization to apply to providing the cToM
data feeds, the Exchange considered the depreciation of hardware and
software that are key to the operation of the Exchange and its
provision of the cToM data feeds. This includes servers, computers,
laptops, monitors, information security appliances and storage, and
network switching infrastructure equipment, including switches and taps
that were previously purchased to maintain and provide the cToM data
feeds. Without them, market participants would not be able to receive
the cToM data feeds. The Exchange seeks to recoup a portion of its
depreciation expense by charging for the cToM data feeds.
Based on this review, the Exchange determined to allocate $4,055 in
depreciation and amortization expense to providing the cToM data feeds.
The Exchange only allocated the portion of this depreciation expense to
the hardware and software related to providing the cToM data feeds. The
Exchange, therefore, did not allocate portions of depreciation expense
that relates to other areas of the Exchange's business, such as the
depreciation of hardware and software used for connectivity or
unrelated administrative services.\47\
---------------------------------------------------------------------------

\47\ All of the expenses outlined in this proposed fee change
refer to the operating expenses of the Exchange. The Exchange did
not included any future capital expenditures within these costs.
Depreciation and amortization represent the expense of previously
purchased hardware and internally developed software spread over the
useful life of the assets. Due to the fact that the Exchange has
only included operating expense and historical purchases, there is
no double counting of expenses in the Exchange's cost estimates.
---------------------------------------------------------------------------

Occupancy
The Exchange rents and maintains multiple physical locations to
house staff and equipment necessary to support access services, System
Networks, and exchange operations. The Exchange's occupancy expense is
not limited to the housing of personnel and includes locations used to
store equipment necessary for Exchange operations. In determining the
amount of its occupancy related expense, the Exchange considered actual
physical space used to house employees whose functions include
providing and maintaining the cToM data feeds. Similarly, the Exchange
also considered the actual physical space used to house hardware and
other equipment necessary to provide and maintain the cToM data feeds.
This equipment includes computers, servers, and accessories necessary
to support the System Networks and cToM data feeds. Based on this
review, the Exchange determined to allocate $11,410 of its occupancy
expense to provide and maintain the cToM data feeds. The Exchange
believes this allocation is reasonable because it represents the
Exchange's cost to rent and maintain a physical location for the
Exchange's staff who operate and support the cToM data feeds. The
Exchange considered the rent paid for the Exchange's Princeton and
Miami offices, as well as various related costs, such as physical
security, property management fees, property taxes, and utilities at
each of those locations. The Exchange did not include occupancy
expenses related to housing employees and equipment related to other
Exchange operations, such as transaction and administrative services.
Allocated Shared Expense
Finally, a limited portion of general shared expenses was allocated
to overall the cToM data feed costs as without these general shared
costs, the Exchange would not be able to operate in the manner that it
does and provide the cToM data feeds. The costs included in general
shared expenses include recruiting and training, marketing and
advertising costs, professional fees for legal, tax and accounting
services, and telecommunications costs. For 2022, the Exchange's
general shared expense allocated to the cToM data feeds is estimated to
be $5,755. The Exchange used the weighted average of the above
allocations to determine the amount of general shared expenses to
allocate to the Exchange. Next, based on additional management and
expense analysis, these fees are allocated to the proposal.
Revenue and Estimated Profit Margin
The Exchange only has four primary sources of revenue and cost
recovery mechanisms to fund all of its operations: Transaction fees,
access fees, regulatory fees, and market data fees. Accordingly, the
Exchange must cover all of its expenses from these four primary sources
of revenue and cost recovery mechanisms.
To determine the Exchange's estimated revenue associated with the
cToM data feed, the Exchange analyzed the number of Members and non-
Members currently receiving the cToM data feed and used a recent
monthly billing cycle representative of current monthly revenue. The
Exchange also provided its baseline by analyzing March 2022, the
monthly billing cycle prior to the proposed cToM data fee, and compared
this to its expenses for that month. As discussed below, the Exchange
does not believe it is appropriate to factor into its analysis future
revenue growth or decline into its estimates for purposes of these
calculations, given the uncertainty of such estimates due to the
continually changing access needs of market participants and potential
changes in internal and third party expenses.
For March 2022, prior to the proposed the cToM data fee, Members
and non-Members purchased a total of 13 cToM data feeds, for which the
Exchange anticipates charging $0. This will result in a loss of $19,690
for that month. For April 2022, the Exchange anticipates Members and
non-Members purchasing a total of 13 cToM data feeds. Assuming the
Exchange charges its proposed fees for Distributors, the Exchange would
generate revenue of $16,250 for that month. This would result in a loss
of $3,440 ($16,250 minus $19,690) for that month (a negative 21% margin
from March 2022 to April 2022).
The Exchange believes that conducting the above analysis on a per
month basis is reasonable as the revenue generated from access services
subject to the proposed fee generally remains static from month to
month. The Exchange also conducted the above analysis on a per month
basis to comply with the Commission Staff's Guidance, which requires a
baseline analysis to assist in determining whether the proposal
generates a supra-competitive profit. The Exchange cautions that this

[[Page 23682]]

profit margin may also fluctuate from month to month based on the
uncertainty of predicting how many connections may be purchased from
month to month as Members and non-Members are free to add and drop
connections at any time based on their own business decisions.
The Exchange believes the proposed margin is reasonable and will
not result in a ``supra-competitive'' profit. The Guidance defines
``supra-competitive profit'' as ``profits that exceed the profits that
can be obtained in a competitive market.'' \48\ Until recently, the
Exchange has operated at a cumulative net annual loss since it launched
operations in 2019.\49\ The Exchange has operated at a net loss due to
a number of factors, one of which is choosing to forgo revenue by
offering certain products, such as market data, at lower rates than
other options exchanges to attract order flow and encourage market
participants to experience the high determinism, low latency, and
resiliency of the Exchange's trading systems. The Exchange previously
provided the cToM data feed free of charge and absorbed all costs
associated with providing the cToM data feed to market participants. In
this proposal, the Exchange would continue to offer the cToM data feed
for a fee that that still falls short of covering the Exchange's
expenses. The Exchange is not generating a profit, and therefore,
cannot be deemed to be generating a ``supra-competitive'' profit by now
charging for the cToM data feed. The Exchange should not now be
penalized for now seeking to raise it fees to at least cover a portion
of its costs after offering the cToM data feed free of charge.
---------------------------------------------------------------------------

\48\ See Guidance, supra note 32.
\49\ The Exchange has incurred a cumulative loss of $22 million
since its inception in 2019 to 2020, the last year for which the
Exchange's Form 1 data is available. See Exchange's Form 1/A,
Application for Registration or Exemption from Registration as a
National Securities Exchange, filed July 28, 2021, available at
<a href="https://sec.report/Document/9999999997-21-004557/">https://sec.report/Document/9999999997-21-004557/</a>.
---------------------------------------------------------------------------

The Exchange notes that its revenue estimate is based on
projections and will only be realized to the extent such revenue
actually produces the revenue estimated. As a generally new entrant to
the hyper-competitive exchange environment, and an exchange focused on
driving competition, the Exchange does not yet know whether such
expectations will be realized. For instance, in order to generate the
revenue expected from the cToM data feed, the Exchange will have to be
successful in retaining existing clients that wish to receive the cToM
data feed or obtaining new clients that will purchase such data. To the
extent the Exchange is successful in encouraging new clients to receive
the cToM data feed, the Exchange does not believe it should be
penalized for such success. The Exchange, like other exchanges, is,
after all, a for-profit business. While the Exchange believes in
transparency around costs and potential margins, the Exchange does not
believe that these estimates should form the sole basis of whether or
not a proposed fee is reasonable or can be adopted. Instead, the
Exchange believes that the information should be used solely to confirm
that an Exchange is not earning supra-competitive profits, and the
Exchange believes its cost analysis and related estimates demonstrate
this fact.
The Proposed Fees Are Reasonable When Compared to the Fees of Other
Options Exchanges With Similar Market Share
The Exchange does not have visibility into other equities
exchanges' costs to provide market data or their fee markup over those
costs, and therefore cannot use other exchange's market data fees as a
benchmark to determine a reasonable markup over the costs of providing
market data. Nevertheless, the Exchange believes the other exchanges'
market data fees are a useful example of alternative approaches to
providing and charging for connectivity notwithstanding that the
competing exchanges may have different system architectures that may
result in different cost structures for the provision of market data.
To that end, the Exchange believes the proposed cToM market data fees
are reasonable because the proposed fees are still less than fees
charged for similar connectivity provided by other options exchanges
with comparable market shares.
As described in the below table, the Exchange's proposed fee
remains less than fees charged for similar market data products
provided by other options exchanges with similar market share. In the
each of the above cases, the Exchange's proposed fees are still
significantly lower than that of competing options exchanges with
similar market share. Each of the market data rates in place at
competing options exchanges were filed with the Commission for
immediate effectiveness and remain in place today.
---------------------------------------------------------------------------

\50\ See NYSE American Options Proprietary Market Data Fees,
American Options Complex Fees, at <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Options_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Options_Market_Data_Fee_Schedule.pdf</a>.
\51\ See NYSE Arca Options Proprietary Market Data Fees, Arca
Options Complex Fees, at <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Options_Proprietary_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Options_Proprietary_Data_Fee_Schedule.pdf</a>.
\52\ See PHLX Price List--U.S. Derivatives Data, PHLX Orders
Fees, at <a href="http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#PHLX">http://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#PHLX</a>.

------------------------------------------------------------------------
Exchange Monthly fee
------------------------------------------------------------------------
MIAX Emerald (as proposed)........ $1,250--Internal Distributor;
$1,750--External Distributor.
Amex \50\......................... $1,500 Access Fee; $1,000
Redistribution Fee (this fee is in
addition to the Access Fee
resulting in a $2,500 monthly fee
for external distribution).
Arca \51\......................... $1,500 Access Fee; $1,000
Redistribution Fee (this fee is in
addition to the Access Fee
resulting in a $2,500 monthly fee
for external distribution).
PHLX \52\......................... $3,000--Internal Distributor;
$3,500--External Distributor.
------------------------------------------------------------------------

The Proposed Pricing Is Not Unfairly Discriminatory and Provides for
the Equitable Allocation of Fees, Dues, and Other Charges
The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to assess Internal Distributors fees that are
less than the fees assessed for External Distributors for subscriptions
to the cToM data feed because Internal Distributors have limited,
restricted usage rights to the market data, as compared to External
Distributors, which have more expansive usage rights. All Members and
non-Members that determine to receive any market data feed of the
Exchange (or its affiliates, MIAX Pearl and MIAX), must first execute,
among other things, the MIAX Exchange Group Exchange Data Agreement
(the ``Exchange Data Agreement'').\53\ Pursuant to the Exchange Data

[[Page 23683]]

Agreement, Internal Distributors are restricted to the ``internal use''
of any market data they receive. This means that Internal Distributors
may only distribute the Exchange's market data to the recipient's
officers and employees and its affiliates.\54\ External Distributors
may distribute the Exchange's market data to persons who are not
officers, employees or affiliates of the External Distributor,\55\ and
may charge their own fees for the redistribution of such market data.
Accordingly, the Exchange believes it is fair, reasonable and not
unfairly discriminatory to assess External Distributors a higher fee
for the Exchange's market data products as External Distributors have
greater usage rights to commercialize such market data and can adjust
their own fee structures if necessary. The Exchange also utilizes more
resources to support External Distributors versus Internal
Distributors, as External Distributors have reporting and monitoring
obligations that Internal Distributors do not have, thus requiring
additional time and effort of Exchange staff. The Exchange believes the
proposed cToM fees are equitable and not unfairly discriminatory
because the fee level results in a reasonable and equitable allocation
of fees amongst subscribers for similar services, depending on whether
the subscriber is an Internal or External Distributor. Moreover, the
decision as to whether or not to purchase market data is entirely
optional to all market participants. Potential purchasers are not
required to purchase the market data, and the Exchange is not required
to make the market data available. Purchasers may request the data at
any time or may decline to purchase such data. The allocation of fees
among users is fair and reasonable because, if market participants
determine not to subscribe to the data feed, firms can discontinue
their use of the cToM data.
---------------------------------------------------------------------------

\53\ See Exchange Data Agreement, available at <a href="https://miaxweb2.pairsite.com/sites/default/files/page-files/MIAX_Exchange_Group_Data_Agreement_09032020.pdf">https://miaxweb2.pairsite.com/sites/default/files/page-files/MIAX_Exchange_Group_Data_Agreement_09032020.pdf</a>.
\54\ See id.
\55\ See id.
---------------------------------------------------------------------------

Further, the Exchange believes that the proposal is equitable and
not unfairly discriminatory because the proposed cToM fees will apply
to all market participants of the Exchange on a uniform basis. The
Exchange also notes that the proposed monthly cToM fees for Internal
and External Distributors are the same prices that the Exchange charges
for its ToM data product.
The Exchange believes the proposed change to delete certain text
from Section 6)a) of the Fee Schedule promotes just and equitable
principles of trade and removes impediments to and perfects the
mechanism of a free and open market and a national market system
because the proposed change is a non-substantive edit to the Fee
Schedule to remove unnecessary text. The Exchange believes that this
proposed change will provide greater clarity to Members and the public
regarding the Exchange's Fee Schedule and that it is in the public
interest for the Fee Schedule to be accurate and concise so as to
eliminate the potential for confusion.

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

The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Intra-Market Competition
The Exchange believes the proposed fees will not result in any
burden on intra-market competition that is not necessary or appropriate
in furtherance of the purposes of the Act because the proposed fees
will allow the Exchange to recoup some of its costs in providing cToM
to market participants. As described above, the Exchange has operated
at a cumulative net annual loss since it launched operations in 2019
\56\ due to providing a low cost alternative to attract order flow and
encourage market participants to experience the high determinism and
resiliency of the Exchange's trading Systems. To do so, the Exchange
chose to waive the fees for some non-transaction related services and
Exchange products or provide them at a very marginal cost, which was
not profitable to the Exchange. This resulted in the Exchange forgoing
revenue it could have generated from assessing any fees or higher fees.
The Exchange could have sought to charge higher fees at the outset, but
that could have served to discourage participation on the Exchange.
Instead, the Exchange chose to provide a low cost exchange alternative
to the options industry which resulted in lower initial revenues. An
example of this is cToM, for which the Exchange only now seeks to adopt
fees at a level similar to or lower than those of other options
exchanges.
---------------------------------------------------------------------------

\56\ See supra note 49.
---------------------------------------------------------------------------

Since the Exchange initially launched operations with the cToM data
product in 2019, all Exchange Members and non-Members have had the
ability to receive the Exchange's cToM data free of charge for the past
three years.\57\ Since 2019, when the Exchange adopted Complex Order
functionality, the Exchange has spent time and resources building out
various Complex Order functionality in its System to provide better
trading strategies and risk functionality for market participants in
order to better compete with other exchanges' complex functionality and
similar data products focused on complex orders.\58\ The Exchange now
seeks to recoup its costs for providing cToM to market participants and
believes the proposed fees will not result in excessive pricing or
supra-competitive profit.
---------------------------------------------------------------------------

\57\ See supra note 18.
\58\ See supra note 15.
---------------------------------------------------------------------------

Inter-Market Competition
The Exchange also does not believe the proposed fees would cause
any unnecessary or in appropriate burden on intermarket competition as
other exchanges are free to introduce their own comparable data product
and lower their prices to better compete with the Exchange's offering.
There is no reason to believe that the newly proposed fees for receive
the cToM data feed would impair other exchange's ability to compete or
cause any unnecessary or inappropriate burden on inter-market
competition. Particularly, the proposed product and fees apply
uniformly to any purchaser, in that it does not differentiate between
subscribers that purchase cToM. The proposed fees are set at a modest
level that would allow any interested Member or non-Member to purchase
such data based on their business needs.
The Exchange does not believe that the proposed rule change to make
a minor, non-substantive edit to Section 6)a) of the Fee Schedule by
deleting unnecessary text will result in any burden on competition that
is not necessary or appropriate in furtherance of the purposes of the
Act. This proposed rule change is not being made for competitive
reasons, but rather is designed to remedy a minor non-substantive issue
and will provide added clarity to the Fee Schedule. The Exchange
believes that it is in the public interest for the Fee Schedule to be
accurate and concise so as to eliminate the potential for confusion on
the part of market participants. In addition, the Exchange does not
believe the proposal will impose any burden on inter-market competition
as the proposal does not address any competitive issues and is intended
to protect investors by providing further transparency regarding the
Exchange's Fee Schedule.

[[Page 23684]]

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

Written comments were neither solicited nor received.

III. Suspension of the Proposed Rule Change

Pursuant to Section 19(b)(3)(C) of the Act,\59\ at any time within
60 days of the date of filing of a proposed rule change pursuant to
Section 19(b)(1) of the Act,\60\ the Commission summarily may
temporarily suspend the change in the rules of a self-regulatory
organization (``SRO'') if it appears to the Commission that such action
is necessary or appropriate in the public interest, for the protection
of investors, or otherwise in furtherance of the purposes of the Act.
As discussed below, the Commission believes a temporary suspension of
the proposed rule change is necessary and appropriate to allow for
additional analysis of the proposed rule change's consistency with the
Act and the rules thereunder.
---------------------------------------------------------------------------

\59\ 15 U.S.C. 78s(b)(3)(C).
\60\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

As the Exchange further details above, the Exchange first filed a
proposed rule change proposing fee changes as proposed herein on June
30, 2021, with the proposed fee changes effective beginning July 1,
2021. That proposal, EMERALD-2021-21, was published for comment in the
Federal Register on July 15, 2021.\61\ On August 27, 2021, pursuant to
Section 19(b)(3)(C) of the Act, the Commission: (1) Temporarily
suspended the proposed rule change; and (2) instituted proceedings to
determine whether to approve or disapprove the proposal.\62\ On
September 30, 2021, the Exchange withdrew the proposed rule change,\63\
and filed two other proposed rule changes proposing fee changes as
proposed herein,\64\ which were each also subsequently withdrawn. On
February 7, 2022, the Exchange filed a proposed rule change proposing
fee changes as proposed herein and, on February 15, 2022, the
Commission issued a notice of the proposed rule change and, pursuant to
Section 19(b)(3)(C) of the Act, simultaneously: (1) Temporarily
suspended the proposed rule change; and (2) instituted proceedings to
determine whether to approve or disapprove the proposal.\65\ The
instant filing is substantially similar.\66\
---------------------------------------------------------------------------

\61\ See supra note 5, and accompanying text.
\62\ See Securities Exchange Act Release No. 92789, 86 FR 49364
(September 2, 2021).
\63\ See Securities Exchange Act Release No. 93471 (October 29,
2021), 86 FR 60947 (November 4, 2021).
\64\ See Securities Exchange Act Release Nos. 93427 (October 26,
2021), 86 FR 60310 (November 1, 2021); 93811 (December 17, 2021), 86
FR 73051 (December 23, 2021).
\65\ See Securities Exchange Act Release No. 94263 (February 15,
2022), 87 FR 9766 (February 22, 2022).
\66\ See id.
---------------------------------------------------------------------------

When exchanges file their proposed rule changes with the
Commission, including fee filings like the Exchange's present proposal,
they are required to provide a statement supporting the proposal's
basis under the Act and the rules and regulations thereunder applicable
to the exchange.\67\ The instructions to Form 19b-4, on which exchanges
file their proposed rule changes, specify that such statement ``should
be sufficiently detailed and specific to support a finding that the
proposed rule change is consistent with [those] requirements.'' \68\
---------------------------------------------------------------------------

\67\ See 17 CFR 240.19b-4 (Item 3 entitled ``Self-Regulatory
Organization's Statement of the Purpose of, and Statutory Basis for,
the Proposed Rule Change'').
\68\ Id.
---------------------------------------------------------------------------

Among other things, exchange proposed rule changes are subject to
Section 6 of the Act, including Sections 6(b)(4), (5), and (8), which
requires the rules of an exchange to (1) provide for the equitable
allocation of reasonable fees among members, issuers, and other persons
using the exchange's facilities; \69\ (2) perfect the mechanism of a
free and open market and a national market system, protect investors
and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers; \70\
and (3) not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\71\
---------------------------------------------------------------------------

\69\ 15 U.S.C. 78f(b)(4).
\70\ 15 U.S.C. 78f(b)(5).
\71\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

In temporarily suspending the Exchange's fee change, the Commission
intends to further consider whether the proposed fees for the cToM
market data feed are consistent with the statutory requirements
applicable to a national securities exchange under the Act. In
particular, the Commission will consider whether the proposed rule
change satisfies the standards under the Act and the rules thereunder
requiring, among other things, that an exchange's rules provide for the
equitable allocation of reasonable fees among members, issuers, and
other persons using its facilities; not permit unfair discrimination
between customers, issuers, brokers or dealers; and do not impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.\72\
---------------------------------------------------------------------------

\72\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
---------------------------------------------------------------------------

Therefore, the Commission finds that it is appropriate in the
public interest, for the protection of investors, and otherwise in
furtherance of the purposes of the Act, to temporarily suspend the
proposed rule change.\73\
---------------------------------------------------------------------------

\73\ For purposes of temporarily suspending the proposed rule
change, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change

In addition to temporarily suspending the proposal, the Commission
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C)
\74\ and 19(b)(2)(B) of the Act \75\ to determine whether the proposed
rule change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, the Commission seeks and
encourages interested persons to provide additional comment on the
proposed rule change to inform the Commission's analysis of whether to
disapprove the proposed rule change.
---------------------------------------------------------------------------

\74\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily
suspends a proposed rule change, Section 19(b)(3)(C) of the Act
requires that the Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule change should be
approved or disapproved.
\75\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

Pursuant to Section 19(b)(2)(B) of the Act,\76\ the Commission is
providing notice of the grounds for possible disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of whether the Exchange has sufficiently
demonstrated how the proposed rule change is consistent with Sections
6(b)(4),\77\ 6(b)(5),\78\ and 6(b)(8) \79\ of the Act. Section 6(b)(4)
of the Act requires that the rules of a national securities exchange
provide for the equitable allocation of reasonable dues, fees, and
other charges among its members and issuers and other persons using its
facilities. Section 6(b)(5) of the Act requires that the rules of a
national securities exchange be designed, among other things, to
promote just and equitable principles of trade, to remove

[[Page 23685]]

impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest, and not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers. Section 6(b)(8) of the
Act requires that the rules of a national securities exchange not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

\76\ Id.
\77\ 15 U.S.C. 78f(b)(4).
\78\ 15 U.S.C. 78f(b)(5).
\79\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
above, in addition to any other comments they may wish to submit about
the proposed rule change. In particular, the Commission seeks comment
on the following aspects of the proposal and asks commenters to submit
data where appropriate to support their views:
1. Cost Estimates and Allocation. The Exchange states that it is
not asserting that the proposed fees are constrained by competitive
forces, but rather sets forth a ``cost-plus model,'' and states that
the proposed fees are ``reasonable because they will permit recovery of
the Exchange's costs in providing cToM data and will not result in the
Exchange generating a supra-competitive profit.'' \80\ Setting forth
its costs in providing the cToM data product, and as summarized in
greater detail above, MIAX Emerald projects $236,284 in aggregate
annual estimated costs for 2022 as the sum of: (1) $5,434 in external
expenses paid in total to its data center provider (0.20% of the total
applicable expense) for data center services; its fiber connectivity
provider for network services (0.20% of the total applicable expense);
and various other hardware and software providers (0.20% of the total
applicable expense) supporting the production environment; (2) $225,075
in internal expenses, allocated to (a) employee compensation costs
($209,610); (b) depreciation and amortization ($4,055); and (c)
occupancy costs ($11,410); and (3) $5,775 in allocated shared expenses,
including recruiting and training, marketing and advertising costs,
professional fees for legal, tax and accounting services, and
telecommunications costs. Do commenters believe that these allocations
are reasonable? Should the Exchange be required to provide more
specific information regarding the allocation of third-party expenses,
such as the overall estimated cost for each category of external
expenses or at minimum the total applicable third-party expenses?
Should the Exchange have provided either a percentage allocation or
statements regarding the Exchange's overall estimated costs for the
internal expense categories and general shared expenses figure? Do
commenters believe that the Exchange has provided sufficient detail
about how it determined which costs are associated with providing and
maintaining the cToM data product and why? Do commenters believe that
the Exchange provided sufficient detail or explanation to support its
claim that ``no expense amount is allocated twice,'' \81\ whether among
the sub-categories of expenses in this filing, across the Exchange's
fee filings for other products or services, or over time? Do commenters
believe that the Exchange has provided sufficient detail about how it
determined ``general shared expenses'' and how it determined what
portion should be associated with providing and maintaining the cToM
data product? The Exchange describes a ``proprietary'' process that was
applied in making these determinations or arriving at particular
allocations. Do commenters believe further explanation is necessary?
What are commenters' views on whether the Exchange has provided
sufficient detail on the identity and nature of services provided by
third parties? Across all of the Exchange's projected costs, what are
commenters' views on whether the Exchange has provided sufficient
detail on the elements that go into market data costs, including how
shared costs are allocated and attributed to market data expenses, to
permit an independent review and assessment of the reasonableness of
purported cost-based fees and the corresponding profit margin thereon?
---------------------------------------------------------------------------

\80\ See supra Section II.A.2.
\81\ See id.
---------------------------------------------------------------------------

2. Revenue Estimates and Profit Margin Range. The Exchange provides
a single monthly revenue figure from March 2022 as the basis for
calculating the profit margin of -21%. Do commenters believe this is
reasonable? If not, why not? The profit margin is also dependent on the
accuracy of the cost projections which, if inflated (intentionally or
unintentionally), may render the projected profit margin meaningless.
The Exchange acknowledges that this margin may fluctuate from month to
month as Members and non-Members add and drop subscriptions,\82\ and
that costs may increase. The Exchange does not account for the
possibility of cost decreases, however. What are commenters' views on
the extent to which actual costs (or revenues) deviate from projected
costs (or revenues)? Do commenters believe that the Exchange's
methodology for estimating the profit margin is reasonable? Should the
Exchange provide a range of profit margins that it believes are
reasonably possible, and the reasons therefor?
---------------------------------------------------------------------------

\82\ See id.
---------------------------------------------------------------------------

3. Reasonable Rate of Return. The Exchange states that its expected
profit margin is -21% and that the proposed fees are reasonable because
the Exchange is operating at a negative margin for this product.
Further, the Exchange states that it chose to initially provide the
cToM data product for free and to forego revenue that they otherwise
could have generated from assessing any fees.\83\ What are commenters'
views regarding what factors should be considered in determining what
constitutes a reasonable rate of return for the cToM market data
product? Do commenters believe it relevant to an assessment of
reasonableness that, according to the Exchange, the Exchange's proposed
fees are similar to or lower than fees charged by competing options
exchanges with similar market share? Should an assessment of reasonable
rate of return include consideration of factors other than costs; and
if so, what factors should be considered, and why?
---------------------------------------------------------------------------

\83\ See id.
---------------------------------------------------------------------------

4. Periodic Reevaluation. The Exchange has not stated that it would
reevaluate the appropriate level of cToM data product fees if there is
a material deviation from the anticipated profit margin. In light of
the impact that the number of subscriptions has on profit margins, and
the potential for costs to decrease (or increase) over time, what are
commenters' views on the need for exchanges to commit to reevaluate, on
an ongoing and periodic basis, their cost-based data fees to ensure
that the fees stay in line with their stated profitability projections
and do not become unreasonable over time, for example, by failing to
adjust for efficiency gains, cost increases or decreases, and changes
in subscribers? How formal should that process be, how often should
that reevaluation occur, and what metrics and thresholds should be
considered? How soon after a new data fee change is implemented should
an exchange assess whether its revenue and/or cost estimates were
accurate and at what threshold should an exchange commit to file a fee
change if its estimates were inaccurate? Should an initial review take
place within the first 30 days after a data fee is implemented? 60
days? 90 days? Some other period?

[[Page 23686]]

5. Fees for Internal Distributors versus External Distributors. The
Exchange argues that it is reasonable, equitable, and not unfairly
discriminatory to assess Internal Distributors fees that are lower than
the fees assessed for External Distributors for subscriptions to the
cToM data feed ($1,250 per month for Internal Distributors versus
$1,750 per month for External Distributors), since Internal
Distributors have limited, restricted usage rights to the market data,
as compared to External Distributors, which have more expansive usage
rights, including rights to commercialize such market data.\84\ In
addition, the Exchange states that it ``utilizes more resources'' to
support External Distributors as compared to Internal Distributors, as
External Distributors have reporting and monitoring obligations that
Internal Distributors do not have, thus requiring ``additional time and
effort'' of the Exchange's staff.\85\ What are commenters' views on the
adequacy of the information the Exchange provides regarding the
differential between the Internal Distributor and External Distributor
fees? Do commenters believe that the fees for Internal Distributors and
External Distributors, as well as the fee differences between
Distributors, are supported by the Exchange's assertions that it sets
the differentiated pricing structure in a manner that is equitable and
not unfairly discriminatory? Do commenters believe that the Exchange
should demonstrate how the proposed Distributor fee levels correlate
with different costs to better substantiate how the Exchange ``utilizes
more resources'' to support External Distributors versus Internal
Distributors and permit an assessment of the Exchange's statement that
``External Distributors have reporting and monitoring obligations that
Internal Distributors do not have, thus requiring additional time and
effort of Exchange staff''? \86\
---------------------------------------------------------------------------

\84\ See text accompanying supra notes 53-55.
\85\ See id.
\86\ See id.
---------------------------------------------------------------------------

Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the [Act]
and the rules and regulations issued thereunder . . . is on the [SRO]
that proposed the rule change.'' \87\ The description of a proposed
rule change, its purpose and operation, its effect, and a legal
analysis of its consistency with applicable requirements must all be
sufficiently detailed and specific to support an affirmative Commission
finding,\88\ and any failure of an SRO to provide this information may
result in the Commission not having a sufficient basis to make an
affirmative finding that a proposed rule change is consistent with the
Act and the applicable rules and regulations.\89\ Moreover,
``unquestioning reliance'' on an SRO's representations in a proposed
rule change would not be sufficient to justify Commission approval of a
proposed rule change.\90\
---------------------------------------------------------------------------

\87\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
\88\ See id.
\89\ See id.
\90\ See Susquehanna Int'l Group, LLP v. Securities and Exchange
Commission, 866 F.3d 442, 446-47 (D.C. Cir. 2017) (rejecting the
Commission's reliance on an SRO's own determinations without
sufficient evidence of the basis for such determinations).
---------------------------------------------------------------------------

The Commission believes it is appropriate to institute proceedings
to allow for additional consideration and comment on the issues raised
herein, including as to whether the proposal is consistent with the
Act, any potential comments or supplemental information provided by the
Exchange, and any additional independent analysis by the Commission.

V. Request for Written Comments

The Commission requests written views, data, and arguments with
respect to the concerns identified above, as well as any other relevant
concerns. In particular, the Commission invites the written views of
interested persons concerning whether the proposal is consistent with
Sections 6(b)(4), 6(b)(5), and 6(b)(8), or any other provision of the
Act, or the rules and regulations thereunder. The Commission asks that
commenters address the sufficiency and merit of the Exchange's
statements in support of the proposal, in addition to any other
comments they may wish to submit about the proposed rule change.
Although there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral presentation.\91\
---------------------------------------------------------------------------

\91\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by an SRO. See Securities
Acts Amendments of 1975, Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

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

Electronic Comments

<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#0173746d642c626e6c6c646f7572417264622f666e77"><span class="__cf_email__" data-cfemail="295b5c454c044a4644444c475d5a695a4c4a074e465f">[email&#160;protected]</span></a>. Please include
File Number SR-EMERALD-2022-14 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-EMERALD-2022-14. 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-EMERALD-2022-14 and should be submitted
on or before May 11, 2022. Rebuttal comments should be submitted by May
25, 2022.

VI. Conclusion

It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\92\ that File Number SR-EMERALD-2022-14 be and hereby is,
temporarily suspended. In addition, the Commission is instituting
proceedings to determine whether the

[[Page 23687]]

proposed rule change should be approved or disapproved.
---------------------------------------------------------------------------

\92\ 15 U.S.C. 78s(b)(3)(C).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\93\
---------------------------------------------------------------------------

\93\ 17 CFR 200.30-3(a)(12), (57), and (58).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-08379 Filed 4-19-22; 8:45 am]
BILLING CODE 8011-01-P

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