Notice2022-08381
Self-Regulatory Organizations; MIAX Emerald LLC; Notice of Filing of a Proposed Rule Change To Amend the MIAX Emerald Fee Schedule To Increase Certain Connectivity Fees; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Change
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
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 23648-23660]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-08381]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94717; File No. SR-EMERALD-2022-13]
Self-Regulatory Organizations; MIAX Emerald LLC; Notice of Filing
of a Proposed Rule Change To Amend the MIAX Emerald Fee Schedule To
Increase Certain Connectivity Fees; 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 Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons and is, pursuant to Section 19(b)(3)(C) of the Act, hereby: (i)
Temporarily suspending the rule change; and (ii) instituting
proceedings to determine whether to approve or disapprove the proposed
rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the MIAX Emerald Options
Fee Schedule (the ``Fee Schedule'') to amend certain connectivity fees.
The text of the proposed rule change is available on the Exchange's
website at <a href="http://www.miaxoptions.com/rule-filings/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 Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV [sic] below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule to increase the
fees for Members \3\ and non-Members to access the Exchange's System
Networks \4\ via a 10 gigabit (``Gb'') ultra-low latency (``ULL'')
fiber connection.\5\ Specifically, the Exchange proposes to amend
Sections 5(a)-(b) of the Fee Schedule to increase the 10Gb ULL fee for
Members
[[Page 23649]]
and non-Members from $10,000 per month to $12,000 per month (``10Gb ULL
Fee''). Prior to the proposed fee change, the Exchange assessed Members
and non-Members a flat monthly fee of $10,000 per 10Gb ULL connection
for access to the Exchange's primary and secondary facilities.
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\3\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\4\ The Exchange's System Networks consist of the Exchange's
extranet, internal network, and external network.
\5\ The Exchange initially filed a proposal on July 30, 2021 to
adopt a tiered-pricing structure for the 10Gb ULL fiber connections.
The proposal to adopt a tiered pricing structure was withdrawn and
refiled several times, each time providing more detail and
additional justification in response to questions raised by the
Commission in its Suspension Orders and in response to comments
received. Ultimately, in response to questions raised by the
Commission in its Suspension Orders and comment letters submitted by
SIG on the proposed tiered pricing structure, the Exchange
reluctantly withdrew that proposal on March 30, 2022, despite the
fact that the proposed a tiered-pricing structure reduced the
monthly 10Gb ULL connectivity fees for approximately 60% of the
Exchange's subscribers. See Securities Exchange Act Release Nos.
92645 (August 11, 2021), 86 FR 46048 (August 17, 2021) (SR-EMERALD-
2021-23); 93166 (September 28, 2021), 86 FR 54760 (October 4, 2021)
(SR-EMERALD-2021-29); 93644 (November 22, 2021), 86 FR 67750
(November 29, 2021); 93776 (December 14, 2021), 86 FR 71983
(December 20, 2021) (SR-EMERALD-2021-42); 94089 (January 27, 2022);
94257 (February 15, 2022), 87 FR 9678 (February 22, 2022) (SR-
EMERALD-2022-04). See also letters from Richard J. McDonald,
Susquehanna International Group, LLC (``SIG''), to Vanessa
Countryman, Secretary, Commission, dated September 7, 2021, October
1, 2021, October 26, 2021, and March 15, 2022. See letters from
Richard J. McDonald, SIG, to Vanessa Countryman, Secretary,
Commission, dated October 1, 2021 (``SIG Letter 2'') and October 26,
2021 (``SIG Letter 3''). See also letter from Tyler Gellasch,
Executive Director, Healthy Markets Association (``HMA''), to Hon.
Gary Gensler, Chair, Commission, dated October 29, 2021 (commenting
on SR-CboeEDGA-2021-017, SR-CboeBYX-2021-020, SR-Cboe-BZX-2021-047,
SR-CboeEDGX-2021-030, SR-MIAX-2021-41, SR-PEARL-2021-45, and SR-
EMERALD-2021-29 and stating that ``MIAX has repeatedly filed to
change its connectivity fees in a way that will materially lower
costs for many users, while increasing the costs for some of its
heaviest of users. These filings have been withdrawn and repeatedly
refiled. Each time, however, the filings contain significantly
greater information about who is impacted and how than other filings
that have been permitted to take effect without suspension'')
(emphasis added) (``HMA Letter''); and Ellen Green, Managing
Director, Equity and Options Market Structure, Securities Industry
and Financial Markets Association (``SIFMA''), to Vanessa
Countryman, Secretary, Commission, dated November 26, 2021 (``SIFMA
Letter'').
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The Exchange believes that other exchanges' connectivity fees offer
useful examples of alternative approaches to providing and charging for
connectivity and includes the below table for comparison purposes only
to show how its proposed fees compare to fees currently charged by
other options exchanges for similar connectivity. As shown by the below
table, the Exchange's proposed fees are less than fees charged for
similar connectivity provided by other options exchanges with
comparable market share.
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Monthly fee (per
Exchange Type of connection connection)
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MIAX Emerald (as proposed) (equity options 10Gb ULL.................................... $12,000.00
market share of 3.95% as of March 29, 2022
for the month of March) \6\.
The NASDAQ Stock Market LLC (``NASDAQ'') \7\ 10Gb Ultra fiber............................ 15,000.00
(equity options market share of 8.62% as of
March 29, 2022 for the month of March) \8\.
Nasdaq ISE LLC (``ISE'') \9\ (equity options 10Gb Ultra fiber............................ 15,000.00
market share of 5.83% as of March 29, 2022
for the month of March) \10\.
NYSE American LLC (``Amex'') \11\ (equity 10Gb LX LCN................................. 22,000.00
options market share of 7.15% as of March 29,
2022 for the month of March) \12\.
Nasdaq GEMX, LLC (``GEMX'') \13\ (equity 10Gb Ultra.................................. 15,000.00
options market share of 2.48% as of March 29,
2022 for the month of March) \14\.
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The Exchange will continue to assess monthly Member and non-Member
network connectivity fees for connectivity to the primary and secondary
facilities in any month the Member or non-Member is credentialed to use
any of the Exchange APIs or market data feeds in the production
environment. The Exchange proposes to pro-rate the fees when a Member
or non-Member makes a change to the connectivity (by adding or deleting
connections) with such pro-rated fees based on the number of trading
days that the Member or non-Member has been credentialed to utilize any
of the Exchange APIs or market data feeds in the production environment
through such connection, divided by the total number of trading days in
such month multiplied by the applicable monthly rate. The Exchange will
continue to assess monthly Member and non-Member network connectivity
fees for connectivity to the disaster recovery facility in each month
during which the Member or non-Member has established connectivity with
the disaster recovery facility.
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\6\ See ``The market at a glance,'' available at <a href="https://www.miaxoptions.com/">https://www.miaxoptions.com/</a> (last visited March 29, 2022).
\7\ See NASDAQ Rules, General 8: Connectivity, Section 1. Co-
Location Services.
\8\ See supra note 6.
\9\ See ISE Rules, General 8: Connectivity.
\10\ See supra note 6.
\11\ See NYSE American Options Fee Schedule, Section IV.
\12\ See supra note 6.
\13\ See GEMX Rules, General 8: Connectivity.
\14\ See supra note 6.
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2. Statutory Basis
The Exchange believes that the proposed increase to the 10Gb ULL
Fee is consistent with Section 6(b) of the Act \15\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \16\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Members and other persons
using any facility or system that the Exchange operates or controls.
The Exchange also believes the proposed increase to the 10Gb ULL Fee
furthers the objectives of Section 6(b)(5) of the Act \17\ in that it
is designed to promote just and equitable principles of trade, remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, protect investors and the
public interest and are not designed to permit unfair discrimination
between customers, issuers, brokers and dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4).
\17\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the information provided to justify the
proposed increase to the 10Gb ULL Fee 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'').\18\ 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.'' \19\ Based on both the BOX Order and the
Guidance, the Exchange believes that the proposed increase to the 10Gb
ULL Fee is consistent with the Act because it (i) is reasonable,
equitably allocated, not unfairly discriminatory, and not an undue
burden on competition; (ii) complies with the BOX Order and the
Guidance; and (iii) is supported by evidence (including comprehensive
revenue and cost data and analysis) that the proposed increase to the
10Gb ULL Fee is fair and reasonable and will not result in excessive
pricing or supra-competitive profit.
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\18\ 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).
\19\ 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'').
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The Proposed Increase to the 10Gb ULL Fee 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.
[[Page 23650]]
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.''
\20\ 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.'' \21\ 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.'' \22\ The Exchange does not assert
that the 10Gb ULL Fee is constrained by competitive forces. Rather, the
Exchange asserts that the proposed increase to the 10Gb ULL Fee is
reasonable because it will permit recovery of the Exchange's costs in
providing access services to supply 10Gb ULL connectivity and will not
result in the Exchange generating a supra-competitive profit.
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\20\ Id.
\21\ Id.
\22\ 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.'' \23\
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.'' \24\ The Exchange provides
this analysis below.
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\23\ Id.
\24\ Id.
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The proposed 10Gb ULL Fee is based on a cost-plus model. A 10Gb ULL
connection provides access to each of the three Exchange networks,
extranet, internal network, and external network, all of which are
necessary for Exchange operations. The Exchange's extranet provides the
means by which the Exchange communicates with market participants and
includes access to the Member portal and the ability to send and
receive daily communications and reports. The internal network connects
the extranet to the rest of the Exchange's systems and includes trading
systems, market data systems, and network monitoring. The external
network includes connectivity between the Exchange and other national
securities exchanges, market data providers, and between the Exchange's
locations in Princeton, New Jersey, Secaucus, New Jersey (NY4), Miami,
Florida, and Chicago, Illinois (CH4). In determining the appropriate
fees to charge Members and non-Members to access the Exchange's System
Networks via a 10Gb ULL fiber connection, the Exchange considered its
costs to provide and maintain its System Networks and connectivity to
those System Networks, using costs that are related to providing and
maintaining access the Exchange's System Networks via a 10Gb ULL fiber
connection to estimate such costs, and set fees that are designed to
cover its costs with a limited return in excess of such costs. The
Exchange believes that it is important to demonstrate that the 10Gb ULL
Fee is based on its costs and reasonable business needs and believes
the proposed increase to the 10Gb ULL Fee will allow the Exchange to
continue to offset expenses. However, as discussed more fully below,
such fees may also result in the Exchange recouping less than all of
its costs of providing and maintaining access to the Exchange's System
Networks via a 10Gb ULL fiber connection because of the uncertainty of
forecasting subscriber decision making with respect to firms'
connectivity needs. The Exchange believes that the proposed increase to
the 10Gb ULL Fee 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
10Gb ULL Fee, and, if such expense did so relate, what portion (or
percentage) of such expense actually supports access to the Exchange's
System Networks via a 10Gb ULL fiber connection associated with the
10Gb ULL Fee. 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 10Gb ULL Fee. 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 10Gb ULL Fee. The Exchange reviewed each
individual expense to determine if such expense was related to the 10Gb
ULL Fee. 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 10Gb ULL Fee. For the avoidance of doubt, no expense amount is
allocated twice.
The analysis conducted by the Exchange is a proprietary process
that is designed to make a fair and reasonable assessment of costs and
resources allocated to support the provision of access services
associated with the 10Gb ULL Fee. The Exchange acknowledges that this
assessment can only capture a moment in time and that costs and
resource allocations may change. That is why the Exchange historically,
and on an ongoing annual basis, reviews its costs and resource
allocations to ensure it appropriately allocates resources to properly
provide services to the Exchange's constituents.
The Exchange believes exchanges, like all businesses, should be
provided flexibility when developing and applying a methodology to
allocate costs and resources they deem necessary to operate their
business, including providing market data and access services. The
Exchange notes that costs and resource allocations may vary from
business to business and, likewise, costs and resource allocations may
differ from exchange to exchange when it comes to providing market data
and access services. It is a business decision that must be evaluated
by each exchange as to how to allocate internal resources and what
costs to incur internally or via third parties that it may deem
necessary to support its business and its provision of market data and
access services to market participants.
The Exchange notes that there are material costs associated with
providing
[[Page 23651]]
the infrastructure and headcount to fully support access to the
Exchange and its System Networks via a 10Gb ULL fiber connection. The
Exchange incurs technology expense related to establishing and
maintaining Information Security services, enhanced network monitoring
and customer reporting, as well as Regulation SCI-mandated processes
associated with its network technology. Both fixed and variable
expenses have significant impact on the Exchange's overall costs to
provide and maintain access to the Exchange's System Networks via a
10Gb ULL fiber connection. For example, to accommodate new Members, the
Exchange may need to purchase additional hardware to support those
Members as well as provide enhanced monitoring and reporting of
customer performance that the Exchange and its affiliates currently
provide. Further, as the total number of Members increases, the
Exchange and its affiliates may need to increase their data center
footprint and consume more power, resulting in increased costs charged
by their 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 10Gb ULL Fee is a reasonable attempt
to offset a portion of those costs associated with providing access to
and maintaining its System Networks' infrastructure and related 10Gb
ULL fiber connection.
The Exchange estimated its total annual expense to provide and
maintain access to the Exchange's System Networks via a 10Gb ULL fiber
connection 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 10Gb ULL Fee; and (3)
general shared expenses.\25\ The Guidance does not include any
information regarding the methodology that an exchange should use to
determine its cost associated with a proposed fee change. The Exchange
utilized a methodology in this proposed fee change that it believes is
reasonable because the Exchange analyzed its entire cost structure,
allocated a percentage of each cost attributable to maintaining its
System Networks, then divided those costs according to the cost
methodology outlined below.
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\25\ 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 the 10Gb ULL Fee is estimated to be
$9,088,382, or $757,365 per month. The Exchange believes it is more
appropriate to analyze the 10Gb ULL Fee 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.\26\ The $9,088,382 estimated total annual expense
is directly related to the access to the Exchange's System Networks via
a 10Gb ULL fiber connection, 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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\26\ 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.
\27\ 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.
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External expenses
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Percentage of
Category total expense
amount allocated
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Data Center Provider................................ 62%
Fiber Connectivity Provider......................... 62%
Security Financial Transaction Infrastructure 89%
(``SFTI''), and Other Connectivity and Content
Service Providers..................................
Hardware and Software Providers..................... 51%
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Total of External Expenses.......................... \27\ $1,946,869
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Internal Expenses
------------------------------------------------------------------------
Category Expense amount
allocated
------------------------------------------------------------------------
Employee Compensation............................... $3,259,251
Depreciation and Amortization....................... 2,164,610
Occupancy........................................... 284,947
-------------------
Total of Internal Expenses...................... 5,708,808
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Allocated Shared Expenses........................... 1,432,705
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The Exchange notes that it only has two primary sources of revenue,
connectivity and port fees, to recover those costs associated with
providing and maintaining access to the Exchange's System Networks. The
Exchange notes that, without the specific third-party and internal
expense items, the Exchange would not be able to provide and maintain
the System Networks and access to the System Networks via a 10Gb ULL
fiber connection to Members and non-Members. Each of these expense
items, including physical hardware, software, employee compensation and
benefits, occupancy costs, and the depreciation and amortization of
equipment, has
[[Page 23652]]
been identified through a line-by-line item analysis to be integral to
providing and maintaining the System Networks and access to System
Networks via a 10Gb ULL fiber connection.
For clarity, the Exchange took a conservative approach in
determining the expense and the percentage of that expense to be
allocated to providing and maintaining the System Networks and access
to System Networks in connection with 10Gb ULL fiber connectivity. The
Exchange describes the analysis conducted for each expense and the
resources or determinations that were considered when determining the
amount necessary to allocate to each expense. Only a portion of all
fees paid to such third-parties is included in the third-party expenses
described herein, and no expense amount is allocated twice.
Accordingly, the Exchange does not allocate its entire information
technology and communication costs to providing and maintaining the
System Networks and access to Exchange's System Networks via a 10Gb ULL
fiber connection. This may result in the Exchange under allocating an
expense to provide and maintain its System Networks and access to the
System Networks via a 10Gb ULL fiber connection, 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.\28\
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\28\ 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.
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External Expense Allocations
For 2022, expenses relating to fees paid by the Exchange to third
parties for products and services necessary to provide and maintain the
System Networks and access to the System Networks via a 10Gb ULL fiber
connection are estimated to be $1,946,869. This includes, but is not
limited to, a portion of the fees paid to: (1) A third-party data
center provider, including for the primary, secondary, and disaster
recovery locations of the Exchange's trading system infrastructure; (2)
a fiber connectivity provider for network services (fiber and bandwidth
products and services) linking the Exchange's and its affiliates'
office locations in Princeton, New Jersey and Miami, Florida, to all
data center locations; (3) SFTI, which supports connectivity feeds for
the entire U.S. options industry; (4) various other content and
connectivity service providers, which provide content, connectivity
services, and infrastructure services for critical components of
options connectivity and network services; and (5) various other
hardware and software providers that support the production environment
in which Members and non-Members connect to the network to trade and
receive market data.
Data Center Space and Operations Provider
The Exchange does not own the primary data center or the secondary
data center, but instead leases space in data centers operated by third
parties where the Exchange houses servers, switches and related
equipment. Data center costs include an allocation of the costs the
Exchange incurs to provide physical connectivity in the third-party
data centers where it maintains its equipment as well as related costs.
The data center provider operates the data centers (primary, secondary,
and disaster recovery) that host the Exchange's network infrastructure.
Without the retention of a third-party data center, the Exchange would
not be able to operate its systems and provide a trading platform for
market participants. The Exchange does not employ a separate fee to
cover its data center expense and recoups that expense, in part, by
charging for 10Gb ULL connectivity.
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 62% of the total applicable
data center provider expense is applicable to providing and maintaining
access services and System Networks associated with the 10Gb ULL Fee.
The Exchange believes this allocation is reasonable because 10Gb ULL
connectivity is a core means of access to the Exchange's network,
providing one method for market participants to send and receive order
and trade messages, as well as receive market data. A large portion of
the Exchange's data center expense is due to providing and maintaining
connectivity to the Exchange's System Networks, including providing
cabling within the data center between market participants and the
Exchange. The Exchange excluded from this allocation servers that are
dedicated to market data. The Exchange also did not allocate the
remainder of the data center expense because it pertains to other areas
of the Exchange's operations, such as ports, market data, and
transaction services.
Fiber Connectivity Provider
The Exchange engages a third-party service provider that provides
the internet, fiber and bandwidth connections between the Exchange's
networks, primary and secondary data center, and office locations in
Princeton and Miami. Fiber connectivity is necessary for the Exchange
to switch to its secondary data center in the case of an outage in its
primary data center. Fiber connectivity also allows the Exchange's
National Operations & Control Center (``NOCC'') and Security Operations
Center (``SOC'') in Princeton to communicate with the Exchange's
primary and secondary data centers. As such, all trade data, including
the billions of messages each day, flow through this third-party
provider's infrastructure over the Exchange's network. Without these
services, the Exchange would not be able to operate and support the
network and provide and maintain access services and System Networks
associated with the 10Gb ULL Fee to its Members and their customers.
Without the retention of a third-party fiber connectivity provider, the
Exchange would not be able to communicate between its data centers and
office locations. The Exchange does not employ a separate fee to cover
its
[[Page 23653]]
fiber connectivity expense and recoups that expense, in part, by
charging for 10Gb ULL connectivity.
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 62% of the total fiber connectivity expense was
applicable to providing and maintaining access services and System
Networks associated with the 10Gb ULL Fee. The Exchange believes this
allocation is reasonable because 10Gb ULL connectivity is a core means
of access to the Exchange's network, providing one method for market
participants to send and receive order and trade messages, as well as
receive market data. A large portion of the Exchange's fiber
connectivity expense is due to providing and maintaining connectivity
between the Exchange's System Networks, data centers, and office
locations and is core to the daily operation of the Exchange. Fiber
connectivity is a necessary integral means to disseminate information
from the Exchange's primary data center to other Exchange locations.
The Exchange excluded from this allocation fiber connectivity usage
related to market data or other business lines. The Exchange also did
not allocate the remainder of this expense because it pertains to other
areas of the Exchange's operations and does not directly relate to
providing and maintaining access services and System Networks
associated with the 10Gb ULL Fee. The Exchange believes this allocation
is reasonable because it represents the Exchange's actual cost to
retain fiber connectivity and maintain and provide access to its System
Networks via a 10Gb ULL fiber connectivity.
Connectivity and Content Services Provided by SFTI and Other Providers
The Exchange relies on SFTI and various other connectivity and
content service providers for connectivity and data feeds for the
entire U.S. options industry, as well as content, connectivity, and
infrastructure services for critical components of the network that are
necessary to provide and maintain its System Networks and access to its
System Networks via a 10Gb ULL fiber connection. Specifically, the
Exchange utilizes SFTI and other content service provider to connect to
other national securities exchanges, the Options Price Reporting
Authority (``OPRA''), and to receive market data from other exchanges
and market data providers. SFTI is operated by the Intercontinental
Exchange, the parent company of five registered exchanges, and has
become integral to the U.S. markets. The Exchange understands SFTI
provides services to most, if not all, of the other U.S. exchanges and
other market participants. Without services from SFTI and various other
service providers, the Exchange would not be able to connect to other
national securities exchanges, market data providers, or OPRA and,
therefore, would not be able to operate and support its System
Networks. The Exchange does not employ a separate fee to cover its SFTI
and content service provider expense and recoups that expense, in part,
by charging for 10Gb ULL connectivity.
The Exchange reviewed it costs to retain SFTI and other content
service providers, including network monitoring and maintenance,
remediation of connectivity related issues, and ongoing administrative
activities related to connectivity management and determined that 89%
of the total applicable SFTI and other service provider expense is
allocated to providing the access services associated with the 10Gb ULL
Fee. SFTI and other content service providers are key vendors and
necessary components in providing connectivity to the Exchange. The
primary service SFTI provides for the Exchange is connectivity to other
national securities exchanges and their disaster recovery facilities
and, therefore, a vast portion of this expense is allocated to
providing access to the System Networks via a 10Gb ULL connection.
Connectivity via SFTI is necessary for purposes of order routing and
accessing disaster recovery facilities in the case of a system outage.
Engaging SFTI and other like vendors provides purchasers of 10Gb ULL
connectivity to other national securities exchanges for purposes of
order routing and disaster recovery. The Exchange did not allocate a
portion of this expense that relates to the receipt of market data from
other national securities exchange and OPRA. The Exchange also did not
allocate the remainder of this expense because it pertains to other
areas of the Exchange's operations and does not directly relate to
providing and maintaining the System Networks or access to its System
Networks via 10Gb ULL fiber connection. The Exchange believes this
allocation is reasonable because it represents the Exchange's actual
cost to provide and maintain its System Networks and access to its
System Networks via a 10Gb ULL fiber connection, and not any other
service, as supported by its cost review.
Hardware and Software Providers
The Exchange relies on dozens of third-party hardware and software
providers for equipment necessary to operate its System Networks. This
includes either the purchase or licensing of physical equipment, such
as servers, switches, cabling, and monitoring devices. It also includes
the purchase or license of software necessary for security monitoring,
data analysis and Exchange operations. Hardware and software providers
are necessary to maintain its System Networks and provide access to its
System Networks via a 10Gb ULL fiber connection. Hardware and software
equipment and licenses for that equipment are also necessary to operate
and monitor physical assets necessary to offer physical connectivity to
the Exchange. Hardware and software equipment and licenses are key to
the operation of the Exchange and, without them, the Exchange would not
be able to operate and support its System Networks and provide access
to its Members and their customers. The Exchange does not employ a
separate fee to cover its hardware and software expense and recoups
that expense, in part, by charging for 10Gb ULL connectivity.
The Exchange reviewed it hardware and software related costs,
including software patch management, vulnerability management,
administrative activities related to equipment and software management,
professional services for selection, installation and configuration of
equipment and software supporting exchange operations and determined
that 51% of the total applicable hardware and software expense is
allocated to providing and maintaining access services and System
Networks associated with the 10Gb ULL Fee. Hardware and software
equipment and licenses are key to the operation of the Exchange and its
System Networks. Without them, market participants would not be able to
access the System Networks via a 10Gb ULL connection. The Exchange only
allocated the portion of this expense to the hardware and software that
is related to a market participant's use of a 10Gb ULL connection, such
as operating its matching engines. The Exchange, therefore, did not
allocate portions of its hardware and software expense that related to
other areas of the Exchange's business, such as hardware and software
used for market data or unrelated
[[Page 23654]]
administrative services. The Exchange also did not allocate the
remainder of this expense because it pertains to other areas of the
Exchange's operations, such as ports or transaction services, and does
not directly relate to providing and maintaining its System Networks
and access to its System Networks via a 10Gb ULL fiber connection. The
Exchange believes this allocation is reasonable because it represents
the Exchange's cost to provide and maintain its System Networks and
access to its System Networks via a 10Gb ULL fiber connection, and not
any other service, as supported by its cost review.
Internal Expense Allocations
For 2022, total internal expenses relating to the Exchange
providing and maintaining its System Networks and access to its System
Networks via a 10Gb ULL fiber connection are estimated to be
$5,708,808. 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 via a
10Gb ULL fiber connection, 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 10Gb ULL Fee, including equipment,
servers, cabling, purchased software and internally developed software
used in the production environment to support the network for trading;
and (3) occupancy costs for leased office space for staff that provide
and maintain the System Networks and access to System Networks via 10G
ULL fiber connections. The breakdown of these costs is more fully
described below.
Employee Compensation and Benefits
Human personnel are key to exchange operations and supporting the
Exchange's ongoing provision and maintenance of the System Networks and
access to System Networks via 10Gb ULL fiber connections. The Exchange
reviewed its employee compensation and benefits expense and the portion
of that expense allocated to providing and maintaining the System
Networks and access to System Networks via 10Gb ULL fiber connections.
As part of this review, the Exchange considered employees whose
functions include providing and maintaining the System Networks and
10Gb ULL connectivity and used a blended rate of compensation
reflecting salary, stock and bonus compensation, bonuses, benefits,
payroll taxes, and 401K matching contributions.\29\
---------------------------------------------------------------------------
\29\ For purposes of this allocation, the Exchange did not
consider expenses related to supporting employees who support 10Gb
ULL connectivity, 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 9.9 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 10Gb ULL Fee.
---------------------------------------------------------------------------
Based on this review, the Exchange determined to allocate
$3,259,251 in employee compensation and benefits expense to providing
access to the System Networks. To determine the appropriate allocation
the Exchange reviewed the time employees allocated to supporting its
System Networks and access to its System Networks via 10Gb ULL fiber
connections. Senior staff also reviewed these time allocations with
department heads and team leaders to determine whether those
allocations were appropriate. These employees are critical to the
Exchange to provide and maintain access to its System Networks via 10Gb
ULL fiber connections for its Members, non-Members and their customers.
The Exchange determined the above allocation based on the personnel
whose work focused on functions necessary to provide and maintain the
System Networks and access to System Networks via 10Gb ULL fiber
connections. The Exchange does not charge a separate fee regarding
employees who support 10Gb ULL connectivity and the Exchange seeks to
recoup that expense, in part, by charging for 10Gb ULL connections.
Depreciation and Amortization
A key expense incurred by the Exchange relates to the depreciation
and amortization of equipment that the Exchange procured to provide and
maintain the System Networks and access to System Networks via 10Gb ULL
fiber connections. The Exchange reviewed all of its physical assets and
software, owned and leased, and determined whether each asset is
related to providing and maintaining its System Networks and access to
its System Networks via 10Gb ULL fiber connections, 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 10Gb ULL
connectivity and the System Networks, the Exchange considered the
depreciation of hardware and software that are key to the operation of
the Exchange and its System Networks. This includes servers, computers,
laptops, monitors, information security appliances and storage, and
network switching infrastructure equipment, including switches and
taps, that were previously purchased to maintain and provide access to
its System Networks via 10Gb ULL fiber connections. Without them,
market participants would not be able to access the System Networks.
The Exchange seeks to recoup a portion of its depreciation expense by
charging for 10Gb ULL connectivity.
Based on this review, the Exchange determined to allocate
$2,164,610 in depreciation and amortization expense to providing access
to the System Networks via a 10Gb ULL connection. The Exchange only
allocated the portion of this depreciation expense to the hardware and
software related to a market participant's use of a 10GB ULL
connection. The Exchange, therefore, did not allocate portions of
depreciation expense that relates to other areas of the Exchange's
business, such as the depreciation of hardware and software used for
market data or unrelated administrative services.\30\
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\30\ 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 System Networks and 10Gb ULL
connectivity. Similarly, the
[[Page 23655]]
Exchange also considered the actual physical space used to house
hardware and other equipment necessary to provide and maintain the
System Networks and 10Gb ULL connectivity. This equipment includes
computers, servers, and accessories necessary to support the System
Networks and 10Gb ULL connectivity. Based on this review, the Exchange
determined to allocate $284,947 of its occupancy expense to provide and
maintain the System Networks and 10Gb ULL connectivity. The Exchange
believes this allocation is reasonable because it represents the
Exchange's cost to rent and maintain a physical location for the
Exchange's staff who operate and support the System Networks, including
providing and maintaining access to its System Networks via 10Gb ULL
fiber connections. The Exchange considered the rent paid for the
Exchange's Princeton and Miami offices, as well as various related
costs, such as physical security, property management fees, property
taxes, and utilities at each of those locations. The Exchange did not
include occupancy expenses related to housing employees and equipment
related to other Exchange operations, such as market data and
administrative services.
* * * * *
The Exchange notes that a material portion of its total overall
expense is allocated to the provision and maintenance of access
services (including connectivity and ports). The Exchange believes this
is reasonable as the Exchange operates a technology-based business that
differentiates itself from its competitors based on its more
deterministic and resilient trading systems that rely on access to a
high performance network, resulting in significant technology expense.
Over two-thirds of Exchange staff are technology-related employees. The
majority of the Exchange's expense is technology-based. Thus, the
Exchange believes it is reasonable to allocate a material portion of
its total overall expense towards providing and maintaining its System
Networks and access to its System Networks via 10Gb ULL fiber
connections.
Allocated Shared Expense
Finally, a limited portion of general shared expenses was allocated
to overall 10Gb ULL connectivity costs as without these general shared
costs, the Exchange would not be able to operate in the manner that it
does and provide 10Gb ULL connectivity. 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 10Gb ULL connectivity and the
System Networks that support those connections is estimated to be
$1,432,705. 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 (which includes the 10Gb ULL Fee), 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
10Gb ULL Fee, the Exchange analyzed the number of Members and non-
Members currently utilizing the 10Gb ULL fiber connection 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 10Gb ULL 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 10Gb ULL Fee, Members and
non-Members purchased a total of 98 10Gb ULL connections for which the
Exchange anticipates charging $980,000 (depending on whether Members
and non-Members drop or add connections mid-month, resulting in pro-
rated charges). This will result in a profit of $222,635 for that month
(a profit margin of 33%). For April 2022, the Exchange anticipates
Members and non-Members purchasing a total of 98 10Gb ULL connections.
Assuming the Exchange charges its proposed monthly rate of $12,000 per
connection, the Exchange would generate revenue of $1,176,000 for that
month (not including potential pro-rated connection charges for mid-
month connections). This would result in a profit of $418,6335
($1,176,000 minus $757,365) for that month (a modest 3% profit margin
increase from March 2022 to April 2022 from 33% to 36%).
The Exchange believes that conducting the above analysis on a per
month basis is reasonable as the revenue generated from access services
subject to the proposed fee generally remains static from month to
month. The Exchange also conducted the above analysis on a per month
basis to comply with the Commission Staff's Guidance, which requires a
baseline analysis to assist in determining whether the proposal
generates a supra-competitive profit. The Exchange cautions that this
profit margin may also fluctuate from month to month based on the
uncertainty of predicting how many 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 profit 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.'' \31\ Until recently, the
Exchange has operated at a cumulative net annual loss since it launched
operations in 2019.\32\ 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 connectivity, 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 should not
now be penalized for now seeking to raise it fees to near market rates
after offering such products as discounted prices.
---------------------------------------------------------------------------
\31\ See supra note 19.
\32\ 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
[[Page 23656]]
revenue expected from 10 GB ULL connectivity, the Exchange will have to
be successful in retaining existing clients that wish to maintain
physical connectivity or obtaining new clients that will purchase such
services. To the extent the Exchange is successful in encouraging new
clients to connect directly to the Exchange, the Exchange does not
believe it should be penalized for such success. The Exchange, like
other exchanges, is, after all, a for-profit business. While the
Exchange believes in transparency around costs and potential margins,
the Exchange does not believe that these estimates should form the sole
basis of whether or not a proposed fee is reasonable or can be adopted.
Instead, the Exchange believes that the information should be used
solely to confirm that an Exchange is not earning supra-competitive
profits, and the Exchange believes its cost analysis and related
estimates demonstrate this fact.
Further, the proposed profit margin reflects the Exchange's efforts
to control its costs. A profit margin should not be judged alone based
on its size, but whether the ultimate fee reflects the value of the
services provided and is in line with other exchanges. A profit margin
on one exchange should not be deemed excessive where that exchange has
been successful in controlling costs, but not excessive where an
exchange is charging the same fee but has a lower profit margin due to
higher costs.
The expected profit margin is reasonable because the Exchange
offers a premium System Network, System Networks connectivity, and a
highly deterministic trading environment. The Exchange is recognized as
a leader in network monitoring, determinism, risk protections, and
network stability. For example, the Exchange experiences approximately
a 95% determinism rate, system throughput of approximately 18 million
quotes and average round trip latency rate of approximately 18
microseconds for a single quote. The Exchange provides extreme
performance and radical scalability designed to match the unique needs
of trading differing asset class/market model combinations. Exchange
systems offer two customer interfaces, FIX gateway for orders, and ULL
interfaces and data feeds with best-in-class wire order determinism.
The Exchange also offers automated continuous testing to ensure high
reliability, advanced monitoring and systems security, and employs a
software architecture that results in minimizing the demands on power,
space, and cooling while allowing for rapid scalability, resiliency and
fault isolation. The Exchange also provides latency equalized cross-
connects in the primary data center ensures fair and cost efficient
access to the MIAX systems. The Exchange, therefore, believes the
anticipated profit margin is reasonable because it reflects the
Exchange's cost controls and the quality of the Exchanges systems.
The Exchange also believes its proposed profit margin does not
exceed what can be obtained in a competitive market. The Exchange is
one of sixteen registered U.S. options exchanges and maintains an
average market share of approximately 3.50%.\33\ The anticipated rate
of return is reasonable because it is based on a rate that likely
remains lower than what other exchanges with comparable market share
charge for similar connectivity. For example the below table is
provided for comparison purposes only to show how the Exchange's
proposed fees compare to fees currently charged by other options
exchanges for similar connectivity. As shown by the below table, the
Exchange's proposed fee remains less than fees charged for similar
connectivity provided by other options exchanges with similar market
share, notwithstanding that the competing exchanges may have different
system architectures that may result in different cost structures for
the provision of connectivity.
---------------------------------------------------------------------------
\33\ See supra note 6.
----------------------------------------------------------------------------------------------------------------
Monthly fee (per
Exchange Type of connection connection)
----------------------------------------------------------------------------------------------------------------
MIAX Emerald (as proposed) (equity options 10Gb ULL.................................... $12,000.00
market share of 3.95% as of March 29, 2022
for the month of March) \34\.
NASDAQ \35\ (equity options market share of 10Gb Ultra fiber............................ 15,000.00
8.62% as of March 29, 2022 for the month of
March) \36\.
ISE \37\ (equity options market share of 5.83% 10Gb Ultra fiber............................ 15,000.00
as of March 29, 2022 for the month of March)
\38\.
Amex \39\ (equity options market share of 10Gb LX LCN................................. 22,000.00
7.15% as of March 29, 2022 for the month of
March) \40\.
GEMX \41\ (equity options market share of 10Gb Ultra.................................. 15,000.00
2.48% as of March 29, 2022 for the month of
March) \42\.
----------------------------------------------------------------------------------------------------------------
Lastly, the Exchange notes that this is a singular potential profit
margin from a single revenue source and is not reflective of the
Exchange's overall profit margin. This profit margin may be offset by
lower or negative profit margins generated by other areas of the
Exchange's operations that are not subject to this proposed fee change.
The Exchange only has four primary sources of revenue and cost recovery
mechanisms to fund all of its operations: transaction fees, access fees
(which includes the 10Gb ULL Fee), regulatory fees, and market data
fees. A potential profit margin in one area may be used to offset a
potential loss in another area, and, therefore, a potential profit
margin from a single product is not representative of the Exchange's
overall profitability and whether that singular profit exceeds the
profits that can be obtained in a competitive market.
---------------------------------------------------------------------------
\34\ See supra note 6.
\35\ See supra note 7.
\36\ See supra note 6.
\37\ See supra note 9.
\38\ See supra note 6.
\39\ See supra note 11.
\40\ See supra note 6.
\41\ See supra note 13.
\42\ See supra note 6.
---------------------------------------------------------------------------
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 connectivity or their fee markup over those
costs, and therefore cannot use other exchange's connectivity fees as a
benchmark to determine a reasonable markup over the costs of providing
connectivity. Nevertheless, the Exchange believes the other exchanges'
connectivity 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 connectivity.
To that end, the Exchange believes the proposed 10Gb ULL Fee is
reasonable because the proposed fee is still less than fees charged for
similar connectivity provided by other options
[[Page 23657]]
exchanges with comparable market shares.
As described in the above table, the Exchange's proposed fee
remains less than fees charged for similar connectivity provided by
other options exchanges with similar market share. In each of the above
cases, the Exchange's proposed fee is still significantly lower than
that of competing options exchanges with similar market share. Despite
proposing lower or similar fees to that of competing options exchanges
with similar market share, the Exchange believes that it provides a
premium network experience to its Members and non-Members via a highly
deterministic System, enhanced network monitoring and customer
reporting, and a superior network infrastructure than markets with
higher market shares and more expensive connectivity alternatives. Each
of the connectivity rates in place at competing options exchanges were
filed with the Commission for immediate effectiveness and remain in
place today.
The Proposed Fees Are Equitably Allocated
The Exchange believes that the proposed 10Gb ULL fees are equitably
allocated among users of the network connectivity alternatives, as the
users of the 10Gb ULL connections consume the most bandwidth and
resources of the network. Specifically, the Exchange notes that these
users account for approximately greater than 99% of message traffic
over the network, while the users of the 1Gb connections account for
approximately less than 1% of message traffic over the network. In the
Exchange's experience, users of the 1Gb connections do not have a
business need for the high performance network solutions required by
10Gb ULL users. The Exchange's high performance network solutions and
supporting infrastructure (including employee support), provides
unparalleled system throughput and the capacity to handle approximately
18 million quote messages per second. On an average day, the Exchange
handles over approximately 3 billion total messages. Of those, users of
the 10Gb ULL connections generate approximately 3 billion messages, and
users of the 1Gb connections generate 500,000 messages. However, in
order to achieve a consistent, premium network performance, the
Exchange must build out and maintain a network that has the capacity to
handle the message rate requirements of its most heavy network
consumers. These billions of messages per day consume the Exchange's
resources and significantly contribute to the overall network
connectivity expense for storage and network transport capabilities.
Given this difference in network utilization rate, the Exchange
believes that it is reasonable, equitable, and not unfairly
discriminatory that the 10Gb ULL users pay for the vast majority of the
shared network resources from which all Member and non-Member users
benefit, but is designed and maintained from a capacity standpoint to
specifically handle the message rate and performance requirements of
10Gb ULL users.
The Exchange also believes that the connectivity fees are equitably
allocated amongst users of the network connectivity alternatives, when
these fees are viewed in the context of the overall trading volume on
the Exchange. To illustrate, the purchasers of the 10Gb ULL
connectivity account for approximately 98% of the volume on the
Exchange. This overall volume percentage (98% of total Exchange volume)
is in line with the amount of network connectivity revenue collected
from 10Gb ULL purchasers (99% of total Exchange connectivity revenue).
For example, utilizing a recent billing cycle, Exchange Members and
non-Members that purchased 10Gb ULL connections accounted for
approximately 99% of the total network connectivity revenue collected
by the Exchange from all connectivity alternatives; and (ii) Members
and non-Members that purchased 1Gb connections accounted for
approximately 1% of the revenue collected by the Exchange from all
connectivity alternatives.
Lastly, the Exchange further believes that the 10Gb ULL Fee are
reasonable, equitably allocated and not unfairly discriminatory
because, for one 10Gb ULL connection, the Exchange provides each Member
or non-Member access to all twelve (12) matching engines on MIAX
Emerald and a vast majority choose to connect to all twelve (12)
matching engines. The Exchange believes that other exchanges require
firms to connect to multiple matching engines.\43\
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\43\ See Specialized Quote Interface Specification, Nasdaq PHLX,
Nasdaq Options Market, Nasdaq BX Options, Version 6.5a, Section 2,
Architecture (revised August 16, 2019), available at <a href="http://www.nasdaqtrader.com/content/technicalsupport/specifications/TradingProducts/SQF6.5a-2019-Aug.pdf">http://www.nasdaqtrader.com/content/technicalsupport/specifications/TradingProducts/SQF6.5a-2019-Aug.pdf</a>. The Exchange notes that it is
unclear whether the NASDAQ exchanges include connectivity to each
matching engine for the single fee or charge per connection, per
matching engine. See also NYSE Technology FAQ and Best Practices:
Options, Section 5.1 (How many matching engines are used by each
exchange?) (September 2020). The Exchange notes that NYSE provides a
link to an Excel file detailing the number of matching engines per
options exchange, with Arca and Amex having 19 and 17 matching
engines, respectively.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
With respect to intra-market competition, the Exchange does not
believe that the proposed rule change would place certain market
participants at the Exchange at a relative disadvantage compared to
other market participants or affect the ability of such market
participants to compete. As is the case with the current proposed flat
fee, the proposed fee would apply uniformly to all market participants
regardless of the number of connections they choose to purchase. The
proposed fee does not favor certain categories of market participants
in a manner that would impose an undue burden on competition.
The Exchange also does not believe that the proposed rule change
will result in any burden on inter-market competition that is not
necessary or appropriate in furtherance of the purposes of the Act. As
discussed above, options market participants are not forced to connect
to all options exchanges. There is no reason to believe that our
proposed price increase will harm another exchange's ability to
compete. There are other options markets of which market participants
may connect to trade options. There is also a possible range of
alternative strategies, including routing to the exchange through
another participant or market center or accessing the Exchange
indirectly. Market participants are free to choose which exchange or
reseller to use to satisfy their business needs. Accordingly, the
Exchange does not believe its proposed fee changes impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Suspension of the Proposed Rule Change
Pursuant to Section 19(b)(3)(C) of the Act,\44\ at any time within
60 days of the date of filing of a proposed rule change pursuant to
Section 19(b)(1) of the
[[Page 23658]]
Act,\45\ 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.
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\44\ 15 U.S.C. 78s(b)(3)(C).
\45\ 15 U.S.C. 78s(b)(1).
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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.\46\ 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.'' \47\
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\46\ 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'').
\47\ Id.
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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; \48\ (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; \49\
and (3) not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\50\
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\48\ 15 U.S.C. 78f(b)(4).
\49\ 15 U.S.C. 78f(b)(5).
\50\ 15 U.S.C. 78f(b)(8).
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In temporarily suspending the Exchange's fee change, the Commission
intends to further consider whether the proposal to modify fees for
certain connectivity options is consistent with the statutory
requirements applicable to a national securities exchange under the
Act. In particular, the Commission will consider whether the proposed
rule change satisfies the standards under the Act and the rules
thereunder requiring, among other things, that an exchange's rules
provide for the equitable allocation of reasonable fees among members,
issuers, and other persons using its facilities; not 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.\51\
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\51\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
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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.\52\
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\52\ 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).
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IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change
The Commission is instituting proceedings pursuant to Sections
19(b)(3)(C) \53\ and 19(b)(2)(B) \54\ of the Act to determine whether
the Exchange's proposed rule change should be approved or disapproved.
Institution of such proceedings is appropriate at this time in view of
the legal and policy issues raised by the proposed rule change.
Institution of proceedings does not indicate that the Commission has
reached any conclusions with respect to any of the issues involved.
Rather, as described below, the Commission seeks and encourages
interested persons to provide comments on the proposed rule change to
inform the Commission's analysis of whether to approve or disapprove
the proposed rule change.
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\53\ 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.
\54\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\55\ 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),\56\ 6(b)(5),\57\ and 6(b)(8) \58\ of the Act. Section 6(b)(4)
of the Act requires that the rules of a national securities exchange
provide for the equitable allocation of reasonable dues, fees, and
other charges among its members and issuers and other persons using its
facilities. Section 6(b)(5) of the Act requires that the rules of a
national securities exchange be designed, among other things, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system and, in general, to protect investors and the public
interest, and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. Section 6(b)(8) of the Act
requires that the rules of a national securities exchange not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
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\55\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also
provides that proceedings to determine whether to disapprove a
proposed rule change must be concluded within 180 days of the date
of publication of notice of the filing of the proposed rule change.
See id. The time for conclusion of the proceedings may be extended
for up to 60 days if the Commission finds good cause for such
extension and publishes its reasons for so finding, or if the
exchange consents to the longer period. See id.
\56\ 15 U.S.C. 78f(b)(4).
\57\ 15 U.S.C. 78f(b)(5).
\58\ 15 U.S.C. 78f(b)(8).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, in addition to any
other comments they may wish to submit about the proposed rule change.
In particular, the Commission seeks comment on the following aspects of
the proposal and asks commenters to submit data where appropriate to
support their views:
1. Cost Estimates and Allocation. The Exchange states that it is
not asserting that the proposed 10Gb ULL Fee is constrained by
competitive forces, but rather set forth a ``cost-plus model,''
employing a ``conservative approach'' in determining the expense and
the percentage of that expense to be allocated to providing and
maintaining the System Networks and access to System Networks in
connection with 10Gb ULL fiber connectivity.\59\ Setting forth its
costs in providing 10Gb ULL connectivity, and as summarized in greater
detail above, the Exchange projects that the total combined annual
expense for providing the access services associated with the 10Gb ULL
Fee in 2022 will be $9,088,382, the sum of: (1) $1,946,869 in third-
party expenses paid in total to their Data Center Provider (62% of the
total applicable expense) for data center services; Fiber Connectivity
Provider, for network services (62% of the total applicable expense);
SFTI and other connectivity and content service
[[Page 23659]]
providers for connectivity support (89% of the total applicable
expense); and various other hardware and software providers (51% of the
total applicable expense), (2) $5,708,808 in internal expenses,
allocated to (a) employee compensation and benefit costs ($3,259,251);
(b) depreciation and amortization ($2,164,610); and (c) occupancy costs
($284,947) and (3) $1,432,705 of allocated general shared expenses that
include recruiting and training, marketing and advertising costs,
professional fees for legal, tax and accounting services, and
telecommunications costs. Do commenters believe that these allocations
are reasonable? Should the Exchange be required to provide more
specific information regarding the allocation of third-party expenses,
such as the overall estimated cost for each category of external
expenses or at minimum the total applicable 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 10Gb ULL connectivity and why? Do commenters believe that
the Exchange has provided sufficient detail about how it determined
``general shared expenses'' and how it determined what portion should
be associated with providing and maintaining 10Gb ULL connectivity? Do
commenters believe that the Exchange provided sufficient detail or
explanation to support its claim that ``no expense amount is allocated
twice,'' \60\ whether among the sub-categories of expenses in this
filing, across the Exchange's fee filings for other products or
services, or over time? 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 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?
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\59\ See supra Section II.A.2.
\60\ See id.
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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 36%. Do commenters believe this is
reasonable? If not, why not? The Exchange states that their proposed
fee structure is ``designed to cover its costs with a limited return in
excess of such costs,'' and believes that a 36% margin is a limited
return over such costs.\61\ The profit margin is also dependent on the
accuracy of the cost projections which, if inflated (intentionally or
unintentionally), may render the projected profit margin meaningless.
The Exchange acknowledges that this margin may fluctuate from month to
month due to changes in the number of connections purchased, and that
costs may increase, but that the number of connections has not
materially changed over the prior months and so the months that the
Exchange has used as a baseline to perform its assessment are
representative of reasonably anticipated costs and expenses.\62\ 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 they believe are reasonably possible, and the reasons
therefor?
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\61\ See supra Section II.A.2.
\62\ See id.
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3. Reasonable Rate of Return. Do commenters agree with the Exchange
that its expected 36% profit margin would constitute a reasonable rate
of return over cost for 10GB ULL connectivity, and is not a ``supra-
competitive'' profit that exceeds the profits that can be obtained in a
competitive market? If not, what would commenters consider to be a
reasonable rate of return and/or what methodology would they consider
to be appropriate for determining a reasonable rate of return? What are
commenters' views regarding what factors should be considered in
determining what constitutes a reasonable rate of return for 10Gb ULL
connectivity fees? Do commenters believe it relevant to an assessment
of reasonableness that the Exchange's proposed fees for 10Gb ULL
connections are lower than those of other options exchanges to which
the Exchange has compared the 10Gb ULL connectivity fees? Should an
assessment of reasonable rate of return include consideration of
factors other than costs; and if so, what factors should be considered,
and why?
4. Periodic Reevaluation. The Exchange has not stated that it would
re-evaluate the appropriate level of 10Gb ULL fees if there is a
material deviation from the anticipated profit margin. In light of the
impact that the number of subscribers has on connectivity 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
connectivity fees to ensure that they stay in line with their stated
profitability target and do not become unreasonable over time, for
example, by failing to adjust for efficiency gains, cost increases or
decreases, and changes in subscribers? How formal should that process
be, how often should that reevaluation occur, and what metrics and
thresholds should be considered? How soon after a new connectivity fee
change is implemented should an exchange assess whether its subscriber
estimates were accurate and at what threshold should an exchange commit
to file a fee change if its estimates were inaccurate? Should an
initial review take place within the first 30 days after a connectivity
fee is implemented? 60 days? 90 days? Some other period?
Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
[SRO] that proposed the rule change.'' \63\ 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,\64\ 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.\65\
Moreover, ``unquestioning reliance'' on an SRO's representations in a
proposed rule change would not be sufficient to justify
[[Page 23660]]
Commission approval of a proposed rule change.\66\
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\63\ 17 CFR 201.700(b)(3).
\64\ See id.
\65\ See id.
\66\ 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).
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The Commission believes it is appropriate to institute proceedings
to allow for additional consideration and comment on the issues raised
herein, including as to whether the proposal is consistent with the
Act, any potential comments or supplemental information provided by the
Exchange, and any additional independent analysis by the Commission.
V. Commission's Solicitation of Comments
The Commission requests written views, data, and arguments with
respect to the concerns identified above as well as any other relevant
concerns. In particular, the Commission invites the written views of
interested persons concerning whether the proposal is consistent with
Sections 6(b)(4), 6(b)(5), and 6(b)(8), or any other provision of the
Act, or the rules and regulations thereunder. The Commission asks that
commenters address the sufficiency and merit of the Exchange's
statements in support of the proposal, in addition to any other
comments they may wish to submit about the proposed rule change.
Although there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral presentation.\67\
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\67\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by an SRO. See Securities
Acts Amendments of 1975, Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by May 11, 2022. Any person who wishes to file a rebuttal
to any other person's submission must file that rebuttal by May 25,
2022.
Comments may be submitted by any of the following methods:
Electronic Comments
<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#344641585119575b5959515a4047744751571a535b42"><span class="__cf_email__" data-cfemail="5d2f283138703e3230303833292e1d2e383e733a322b">[email protected]</span></a>. Please include
File No. SR-EMERALD-2022-13 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-2022-13. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<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-2022-13 and should be submitted
on or before May 11, 2022. Rebuttal comments should be submitted by May
25, 2022.
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\68\ that File Number SR-EMERALD-2022-13 be, and hereby is,
temporarily suspended. In addition, the Commission is instituting
proceedings to determine whether the proposed rule change should be
approved or disapproved.
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\68\ 15 U.S.C. 78s(b)(3)(C).
\69\ 17 CFR 200.30-3(a)(12), (57) and (58).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\69\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-08381 Filed 4-19-22; 8:45 am]
BILLING CODE 8011-01-P
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