Notice2024-06348
Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule for Purge Ports
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
March 26, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 59 (Tuesday, March 26, 2024)</title>
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[Federal Register Volume 89, Number 59 (Tuesday, March 26, 2024)]
[Notices]
[Pages 21140-21148]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-06348]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99813; File No. SR-MIAX-2024-14]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule for Purge Ports
March 20, 2024.
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 March 8, 2024, Miami International Securities Exchange, LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the MIAX Options Exchange Fee
Schedule (the ``Fee Schedule'') to amend fees for Purge Ports.\3\
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\3\ The proposed fee change is based on a recent proposal by
Nasdaq Phlx LLC (``Phlx'') to adopt fees for purge ports. See
Securities Exchange Act Release No. 97825 (June 30, 2023), 88 FR
43405 (July 7, 2023) (SR-Phlx-2023-28).
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The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings">https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings</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 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 fees for Purge Ports, which is a
function enabling Market Makers \4\ to cancel all open quotes or a
subset of open quotes through a single cancel message. The Exchange
currently provides Market Makers the option to purchase Purge Ports to
assist in their quoting activity. Purge Ports provide Market Makers
with the ability to send purge messages to the Exchange System.\5\
Purge Ports are not capable of sending or receiving any other type of
messages or information. The use of Purge Ports is completely optional
and no rule or regulation requires that a Market Maker utilize them.
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\4\ The term ``Market Makers'' refers to Lead Market Makers
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered
Market Makers (``RMMs'') collectively. See Exchange Rule 100.
\5\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
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The Exchange initially filed the proposal on September 29, 2023
(the ``Initial Proposal'').\6\ On November 22, 2023, the Exchange
withdrew the Initial Proposal and replaced with a revised filing (the
``Second Proposal'').\7\ On January 17, 2024, the Exchange withdrew the
Second Proposal and, on January 31, 2024, replaced it with a further
revised filing (the ``Third Proposal'').\8\ On March 8, 2024, the
Exchange withdrew the Third Proposal and replaced it with this further
revised filing (the ``Fourth Proposal'').
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\6\ See Securities Exchange Act Release No. 98732 (October 12,
2023), 88 FR 71913 (October 18, 2023) (SR-MIAX-2023-37).
\7\ See Securities Exchange Act Release No. 99088 (December 5,
2023), 88 FR 85958 (December 11, 2023) (SR-MIAX-2023-43).
\8\ See Securities Exchange Act Release No. 99526 (February 13,
2024), 89 FR 12898 (February 20, 2024) (SR-MIAX-2024-07).
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The Exchange is including a cost analysis in this filing to justify
the proposed fees. As described more fully below, the cost analysis
includes, among other things, descriptions of how the Exchange
allocated costs among it and its affiliated exchanges for similar
proposed fee changes (separately between MIAX Pearl Options \9\ and
MIAX Emerald,\10\ collectively referred to herein as the ``affiliated
markets''), to ensure no cost was allocated more than once, as well as
detail supporting its cost allocation processes and explanations as to
why a cost allocation in this proposal may differ from the same cost
allocation in similar proposals submitted by the affiliated markets.
The proposed fees are intended to cover the Exchange's cost of
providing Purge Ports with a reasonable mark-up over those costs.
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\9\ MIAX Pearl Options is the options market of MIAX PEARL, LLC
(``MIAX Pearl''), which also operates an equities trading facility
called MIAX Pearl Equities. See Exchange Rule 100 and MIAX Pearl
Rule 1901.
\10\ The term ``MIAX Emerald'' means MIAX Emerald, LLC. See
Exchange Rule 100.
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Purge Port Fee Change
Unlike other options exchanges that charge fees for Purge Ports on
a per port basis,\11\ the Exchange assesses a flat fee
[[Page 21141]]
of $1,500 per month, regardless of the number of Purge Ports utilized
by a Market Maker. Prior to the Initial Proposal, a Market Maker could
request and be allocated two (2) Purge Ports per Matching Engine \12\
to which it connects and not all Market Makers connected to all of the
Exchange's Matching Engines.
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\11\ See Cboe BXZ Exchange, Inc. (``BZX'') Options Fee Schedule,
Options Logical Port Fees, Purge Ports ($750 per purge port per
month); Cboe EDGX Exchange, Inc. (``EDGX'') Options Fee Schedule,
Options Logical Port Fees, Purge Ports ($750 per purge port per
month); Cboe Exchange, Inc. (``Cboe'') Fee Schedule ($850 per purge
port per month). See also Nasdaq GEMX, Options 7, Pricing Schedule,
Section 6.C.(3). Nasdaq GEMX, LLC (``Nasdaq GEMX'') assesses its
members $1,250 per SQF Purge Port per month, subject to a monthly
cap of $17,500 for SQF Purge Ports and SQF Ports, applicable to
market makers. See also Securities Exchange Act Release No. 97825
(June 30, 2023), 88 FR 43405 (July 7, 2023) (SR-Phlx-2023-28).
\12\ A Matching Engine is a part of the MIAX electronic system
that processes options quotes and trades on a symbol-by-symbol
basis. Some matching engines will process option classes with
multiple root symbols, and other matching engines will be dedicated
to one single option root symbol (for example, options on SPY will
be processed by one single matching engine that is dedicated only to
SPY). A particular root symbol may only be assigned to a single
designated matching engine. A particular root symbol may not be
assigned to multiple matching engines. See Fee Schedule, Section
5)d), note 29.
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The Exchange now proposes to amend the fee for Purge Ports to align
more closely with other exchanges who charge on a per port basis by
providing two (2) Purge Ports per Matching Engine for a monthly flat
fee of $300 per month per Matching Engine. The only difference with a
per port structure is that Market Makers receive two (2) Purge Ports
per Matching Engine for the same proposed monthly fee, rather than
being charged a separate fee for each Purge Port. The Exchange proposes
to charge the proposed fee for Purge Ports per Matching Engine, instead
on a per Purge Port basis, due to its System architecture which
provides two (2) Purge Ports per Matching Engine for redundancy
purposes. In addition, the proposed fee is lower than the comparable
fee charged by competing exchanges that also charge on a per port
basis, notwithstanding that the Exchange is providing up to two (2)
Purge Ports for that same lower fee.\13\
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\13\ See supra note 11.
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Similar to a per port charge, Market Makers are able to select the
Matching Engines that they want to connect to,\14\ based on the
business needs of each Market Maker, and pay the applicable fee based
on the number of Matching Engines and ports utilized. The Exchange
believes that the proposed fee provides Market Makers with flexibility
to control their Purge Port costs based on the number of Matching
Engines each Marker Maker elects to connect to based on each Market
Maker's business needs.
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\14\ The Exchange notes that each Matching Engine corresponds to
a specified group of symbols. Certain Market Makers choose to only
quote in certain symbols while other Market Makers choose to quote
the entire market.
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* * * * *
A logical port represents a port established by the Exchange within
the Exchange's System for trading and billing purposes. Each logical
port grants a Member \15\ the ability to accomplish a specific
function, such as order entry, order cancellation, access to execution
reports, and other administrative information.
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\15\ 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.
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Purge Ports are designed to assist Market Makers \16\ in the
management of, and risk control over, their quotes, particularly if the
firm is dealing with a large number of securities. For example, if a
Market Maker detects market indications that may influence the
execution potential of their quotes, the Market Maker may use Purge
Ports to reduce uncertainty and to manage risk by purging all quotes in
a number of securities. This allows Market Makers to seamlessly avoid
unintended executions, while continuing to evaluate the market, their
positions, and their risk levels. Purge Ports are used by Market Makers
that conduct business activity that exposes them to a large amount of
risk across a number of securities. Purge Ports enable Market Makers to
cancel all open quotes, or a subset of open quotes through a single
cancel message. The Exchange notes that Purge Ports increase efficiency
of already existing functionality enabling the cancellation of quotes.
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\16\ Members seeking to become registered as a Market Maker must
comply with the applicable requirements of Chapter VI of the
Exchange's Rules.
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The Exchange operates highly performant systems with significant
throughput and determinism which allows participants to enter, update
and cancel quotes at high rates. Market Makers may currently cancel
individual quotes through the existing functionality, such as through
the use of a mass cancel message by which a Market Maker may request
that the Exchange remove all or a subset of its quotations and block
all or a subset of its new inbound quotations.\17\ Other than Purge
Ports being a dedicated line for cancelling quotations, Purge Ports
operate in the same manner as a mass cancel message being sent over a
different type of port. For example, like Purge Ports, mass
cancellations sent over a logical port may be done at either the firm
or MPID level. As a result, Market Makers can currently cancel quotes
in rapid succession across their existing logical ports \18\ or through
a single cancel message, all open quotes or a subset of open quotes.
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\17\ See Exchange Rule 519C(a) and (b).
\18\ Current Exchange port functionality supports cancelation
rates that exceed one thousand messages per second and the
Exchange's research indicates that certain market participants rely
on such functionality and at times utilize such cancelation rates.
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Similarly, Market Makers may also use cancel-on-disconnect control
when they experience a disruption in connection to the Exchange to
automatically cancel all quotes, as configured or instructed by the
Member or Market Maker.\19\ In addition, the Exchange already provides
similar ability to mass cancel quotes through the Exchange's risk
controls, which are offered at no charge and enables Market Makers to
establish pre-determined levels of risk exposure, and can be used to
cancel all open quotes.\20\ Accordingly, the Exchange believes that the
Purge Ports provide an efficient option as an alternative to already
available services and enhance the Market Maker's ability to manage
their risk.
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\19\ See Exchange Rule 519C(c).
\20\ See Exchange Rule 532.
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The Exchange believes that market participants benefit from a
dedicated purge mechanism for specific Market Makers and to the market
as a whole. Market Makers will have the benefit of efficient risk
management and purge tools. The market will benefit from potential
increased quoting and liquidity as Market Makers may use Purge Ports to
manage their risk more robustly. Only Market Makers that request Purge
Ports would be subject to the proposed fees, and other Market Makers
can continue to operate in exactly the same manner as they do today
without dedicated Purge Ports, but with the additional purging
capabilities described above.
Implementation Date
The proposed fee change is immediately effective.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\21\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\22\ in particular, in that it
is not designed to permit unfair discrimination among customers,
brokers, or dealers. The Exchange also believes that its proposed fee
is consistent with Section 6(b)(4) of the
[[Page 21142]]
Act \23\ because it represents an equitable allocation of reasonable
dues, fees and other charges among market participants.
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\21\ 15 U.S.C. 78f(b).
\22\ 15 U.S.C. 78f(b)(5).
\23\ 15 U.S.C. 78f(b)(4).
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Cost Analysis
In general, the Exchange believes that exchanges, in setting fees
of all types, should meet very high standards of transparency to
demonstrate why each new fee or fee increase meets the Exchange Act
requirements that fees be reasonable, equitably allocated, not unfairly
discriminatory, and not create an undue burden on competition among
members and markets. In particular, the Exchange believes that each
exchange should take extra care to be able to demonstrate that these
fees are based on its costs and reasonable business needs.
In proposing to charge fees for port services, the Exchange is
especially diligent in assessing those fees in a transparent way
against its own aggregate costs of providing the related service, and
in carefully and transparently assessing the impact on Members--both
generally and in relation to other Members, i.e., to assure the fee
will not create a financial burden on any participant and will not have
an undue impact in particular on smaller Members and competition among
Members in general. The Exchange believes that this level of diligence
and transparency is called for by the requirements of Section 19(b)(1)
under the Act,\24\ and Rule 19b-4 thereunder,\25\ with respect to the
types of information exchanges should provide when filing fee changes,
and Section 6(b) of the Act,\26\ which requires, among other things,
that exchange fees be reasonable and equitably allocated,\27\ not
designed to permit unfair discrimination,\28\ and that they not impose
a burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.\29\ This rule change proposal addresses those
requirements, and the analysis and data in each of the sections that
follow are designed to clearly and comprehensively show how they are
met. The Exchange notes that the legacy exchanges with whom the
Exchange vigorously competes for order flow and market share, were not
subject to any such diligence or transparency in setting their baseline
non-transaction fees, most of which were put in place before the Staff
Guidance.\30\
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\24\ 15 U.S.C. 78s(b)(1).
\25\ 17 CFR 240.19b-4.
\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(4).
\28\ 15 U.S.C. 78f(b)(5).
\29\ 15 U.S.C. 78f(b)(8).
\30\ See Staff Guidance on SRO Rule Filings Relating to Fees
(May 21, 2019), available 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 ``Staff Guidance'').
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As detailed below, the Exchange recently calculated its aggregate
annual costs for providing Purge Ports to be $910,413 (or approximately
$75,868 per month, rounded to the nearest dollar when dividing the
annual cost by 12 months). In order to cover the aggregate costs of
providing Purge Ports to its Market Makers going forward and to make a
modest profit, as described below, the Exchange proposes to modify its
Fee Schedule to charge a fee of $300 per Matching Engine for Purge
Ports.
In 2019, the Exchange completed a study of its aggregate costs to
produce market data and connectivity (the ``Cost Analysis'').\31\ The
Cost Analysis required a detailed analysis of the Exchange's aggregate
baseline costs, including a determination and allocation of costs for
core services provided by the Exchange--transaction execution, market
data, membership services, physical connectivity, and port access
(which provide order entry, cancellation and modification
functionality, risk and purge functionality, the ability to receive
drop copies, and other functionality). The Exchange separately divided
its costs between those costs necessary to deliver each of these core
services, including infrastructure, software, human resources (i.e.,
personnel), and certain general and administrative expenses (``cost
drivers''). The Exchange recently update its Cost Analysis using its
2024 estimated budget as described below.
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\31\ The Exchange frequently updates it Cost Analysis as
strategic initiatives change, costs increase or decrease, and market
participant needs and trading activity changes. The Exchange's most
recent Cost Analysis was conducted ahead of this filing.
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As an initial step, the Exchange determined the total cost for the
Exchange and the affiliated markets for each cost driver as part of its
2024 budget review process. The 2024 budget review is a company-wide
process that occurs over the course of many months, includes meetings
among senior management, department heads, and the Finance Team. Each
department head is required to send a ``bottom up'' budget to the
Finance Team allocating costs at the profit and loss account and vendor
levels for the Exchange and its affiliated markets based on a number of
factors, including server counts, additional hardware and software
utilization, current or anticipated functional or non-functional
development projects, capacity needs, end-of-life or end-of-service
intervals, number of members, market model (e.g., price time or pro-
rata, simple only or simple and complex markets, auction functionality,
etc.), which may impact message traffic, individual system
architectures that impact platform size,\32\ storage needs, dedicated
infrastructure versus shared infrastructure allocated per platform
based on the resources required to support each platform, number of
available connections, and employees allocated time. All of these
factors result in different allocation percentages among the Exchange
and its affiliated markets, i.e., the different percentages of the
overall cost driver allocated to the Exchange and its affiliated
markets will cause the dollar amount of the overall cost allocated
among the Exchange and its affiliated markets to also differ. Because
the Exchange's parent company currently owns and operates four separate
and distinct marketplaces, the Exchange must determine the costs
associated with each actual market--as opposed to the Exchange's parent
company simply concluding that all costs drivers are the same at each
individual marketplace and dividing total cost by four (4) (evenly for
each marketplace). Rather, the Exchange's parent company determines an
accurate cost for each marketplace, which results in different
allocations and amounts across exchanges for the same cost drivers, due
to the unique factors of each marketplace as described above. This
allocation methodology also ensures that no cost would be allocated
twice or double-counted between the Exchange and its affiliated
markets. The Finance Team then consolidates the budget and sends it to
senior management, including the Chief Financial Officer and Chief
Executive Officer, for review and approval. Next, the budget is
presented to the Board of Directors and the Finance and Audit
Committees for each exchange for their approval. The above steps
encompass the first step of the cost allocation process.
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\32\ For example, MIAX maintains 24 matching engines, MIAX Pearl
Options maintains 12 matching engines, MIAX Pearl Equities maintains
24 matching engines, and MIAX Emerald maintains 12 matching engines.
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The next step involves determining what portion of the cost
allocated to the Exchange pursuant to the above methodology is to be
allocated to each core service, e.g., connectivity and ports, market
data, and transaction services. The Exchange and its affiliated markets
adopted an allocation methodology with thoughtful and
[[Page 21143]]
consistently applied principles to guide how much of a particular cost
amount allocated to the Exchange should be allocated within the
Exchange to each core service. This is the final step in the cost
allocation process and is applied to each of the cost drivers set forth
below.
This next level of the allocation methodology at the individual
exchange level also took into account factors similar to those set
forth under the first step of the allocation methodology process
described above, to determine the appropriate allocation to
connectivity or market data versus allocations for other services. This
allocation methodology was developed through an assessment of costs
with senior management intimately familiar with each area of the
Exchange's operations. After adopting this allocation methodology, the
Exchange then applied an allocation of each cost driver to each core
service, resulting in the cost allocations described below. Each of the
below cost allocations is unique to the Exchange and represents a
percentage of overall cost that was allocated to the Exchange pursuant
to the initial allocation described above.
By allocating segmented costs to each core service, the Exchange
was able to estimate by core service the potential margin it might earn
based on different fee models. The Exchange notes that as a non-listing
venue it has five primary sources of revenue that it can potentially
use to fund its operations: transaction fees, fees for connectivity and
port services, membership fees, regulatory fees, and market data fees.
Accordingly, the Exchange must cover its expenses from these five
primary sources of revenue. The Exchange also notes that as a general
matter each of these sources of revenue is based on services that are
interdependent. For instance, the Exchange's system for executing
transactions is dependent on physical hardware and connectivity; only
Members and parties that they sponsor to participate directly on the
Exchange may submit orders to the Exchange; many Members (but not all)
consume market data from the Exchange in order to trade on the
Exchange; and, the Exchange consumes market data from external sources
in order to comply with regulatory obligations. Accordingly, given this
interdependence, the allocation of costs to each service or revenue
source required judgment of the Exchange and was weighted based on
estimates of the Exchange that the Exchange believes are reasonable, as
set forth below. While there is no standardized and generally accepted
methodology for the allocation of an exchange's costs, the Exchange's
methodology is the result of an extensive review and analysis and will
be consistently applied going forward for any other potential fee
proposals. In the absence of the Commission attempting to specify a
methodology for the allocation of exchanges' interdependent costs, the
Exchange will continue to be left with its best efforts to attempt to
conduct such an allocation in a thoughtful and reasonable manner.
Through the Exchange's extensive updated Cost Analysis, which was
again recently further refined, the Exchange analyzed every expense
item in the Exchange's general expense ledger to determine whether each
such expense relates to the provision of connectivity and port
services, and, if such expense did so relate, what portion (or
percentage) of such expense actually supports the provision of Purge
Port services, and thus bears a relationship that is, ``in nature and
closeness,'' directly related to Purge Port services. In turn, the
Exchange allocated certain costs more to physical connectivity and
others to ports, while certain costs were only allocated to such
services at a very low percentage or not at all, using consistent
allocation methodologies as described above. Based on this analysis,
the Exchange estimates that the aggregate monthly cost to provide Purge
Port services is $75,868, as further detailed below.
Costs Related to Offering Purge Ports
The following chart details the individual line-item costs
considered by the Exchange to be related to offering Purge Ports as
well as the percentage of the Exchange's overall costs that such costs
represent for each cost driver (e.g., as set forth below, the Exchange
allocated approximately 2.2% of its overall Human Resources cost to
offering Purge Ports).
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Allocated Allocated
Cost drivers annual cost monthly cost % of all
\a\ \b\
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Human Resources................................................. $492,357 $41,030 2.2
Connectivity (external fees, cabling, switches, etc.)........... 1,036 86 1.1
Internet Services and External Market Data...................... 16,081 1,340 2.1
Data Center..................................................... 31,102 2,592 2.1
Hardware and Software Maintenance and Licenses.................. 42,539 3,545 2.1
Depreciation.................................................... 82,610 6,884 1.9
Allocated Shared Expenses....................................... 244,688 20,391 2.8
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Total....................................................... 910,413 75,868 2.3
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\a\ The Annual Cost includes figures rounded to the nearest dollar.
\b\ The Monthly Cost was determined by dividing the Annual Cost for each line item by twelve (12) months and
rounding up or down to the nearest dollar.
Below are additional details regarding each of the line-item costs
considered by the Exchange to be related to offering Purge Ports. While
some costs were attempted to be allocated as equally as possible among
the Exchange and its affiliated markets, the Exchange notes that some
of its cost allocation percentages for certain cost drivers differ when
compared to the same cost drivers for the Exchange's affiliated markets
in their similar proposed fee changes for Purge Ports. This is because
the Exchange's cost allocation methodology utilizes the actual
projected costs of the Exchange (which are specific to the Exchange and
are independent of the costs projected and utilized by the Exchange's
affiliated markets) to determine its actual costs, which may vary
across the Exchange and its affiliated markets based on factors that
are unique to each marketplace. The Exchange provides additional
explanation below (including the reason for the deviation) for the
significant differences.
Human Resources
The Exchange notes that it and its affiliated markets anticipate
that by year-end 2024, there will be 289 employees (excluding employees
at non-options/equities exchange subsidiaries of Miami International
Holdings, Inc. (``MIH''), the holding company of the Exchange and its
[[Page 21144]]
affiliated markets), and each department leader has direct knowledge of
the time spent by each employee with respect to the various tasks
necessary to operate the Exchange. Specifically, twice a year, and as
needed with additional new hires and new project initiatives, in
consultation with employees as needed, managers and department heads
assign a percentage of time to every employee and then allocate that
time amongst the Exchange and its affiliated markets to determine each
market's individual Human Resources expense. Then, managers and
department heads assign a percentage of each employee's time allocated
to the Exchange into buckets including network connectivity, ports,
market data, and other exchange services. This process ensures that
every employee is 100% allocated, ensuring there is no double counting
between the Exchange and its affiliated markets.
For personnel costs (Human Resources), the Exchange calculated an
allocation of employee time for employees whose functions include
providing and maintaining Purge Ports and performance thereof
(primarily the Exchange's network infrastructure team, which spends
most of their time performing functions necessary to provide port and
connectivity services). As described more fully above, the Exchange's
parent company allocates costs to the Exchange and its affiliated
markets and then a portion of the Human Resources costs allocated to
the Exchange is then allocated to port services. From that portion
allocated to the Exchange that applied to ports, the Exchange then
allocated a weighted average of 2.7% of each employee's time from the
above group to Purge Ports.
The Exchange also allocated Human Resources costs to provide Purge
Ports to a limited subset of personnel with ancillary functions related
to establishing and maintaining such ports (such as information
security, sales, membership, and finance personnel). The Exchange
allocated cost on an employee-by-employee basis (i.e., only including
those personnel who support functions related to providing Purge Ports)
and then applied a smaller allocation to such employees' time to Purge
Ports (1.2%). This other group of personnel with a smaller allocation
of Human Resources costs also have a direct nexus to Purge Ports,
whether it is a sales person selling port services, finance personnel
billing for port services or providing budget analysis, or information
security ensuring that such ports are secure and adequately defended
from an outside intrusion.
The estimates of Human Resources cost were therefore determined by
consulting with such department leaders, determining which employees
are involved in tasks related to providing Purge Ports, and confirming
that the proposed allocations were reasonable based on an understanding
of the percentage of time such employees devote to those tasks. This
includes personnel from the Exchange departments that are predominately
involved in providing Purge Ports: Business Systems Development,
Trading Systems Development, Systems Operations and Network Monitoring,
Network and Data Center Operations, Listings, Trading Operations, and
Project Management. Again, the Exchange allocated 2.7% of each of their
employee's time assigned to the Exchange for Purge Ports, as stated
above. Employees from these departments perform numerous functions to
support Purge Ports, such as the installation, re-location,
configuration, and maintenance of Purge Ports and the hardware they
access. This hardware includes servers, routers, switches, firewalls,
and monitoring devices. These employees also perform software upgrades,
vulnerability assessments, remediation and patch installs, equipment
configuration and hardening, as well as performance and capacity
management. These employees also engage in research and development
analysis for equipment and software supporting Purge Ports and design,
and support the development and on-going maintenance of internally-
developed applications as well as data capture and analysis, and Member
and internal Exchange reports related to network and system
performance. The above list of employee functions is not exhaustive of
all the functions performed by Exchange employees to support Purge
Ports, but illustrates the breath of functions those employees perform
in support of the above cost and time allocations.
Lastly, the Exchange notes that senior level executives' time was
only allocated to the Purge Ports related Human Resources costs to the
extent that they are involved in overseeing tasks related to providing
Purge Ports. The Human Resources cost was calculated using a blended
rate of compensation reflecting salary, equity and bonus compensation,
benefits, payroll taxes, and 401(k) matching contributions.
Connectivity (External Fees, Cabling, Switches, Etc.)
The Connectivity cost driver includes external fees paid to connect
to other exchanges and third parties, cabling and switches required to
operate the Exchange. The Connectivity cost driver is more narrowly
focused on technology used to complete connections to the Exchange and
to connect to external markets. The Exchange notes that its
connectivity to external markets vendors is required in order to
receive market data to run the Exchange's matching engine and basic
operations compliant with existing regulations, primarily Regulation
NMS.
The Exchange relies on various connectivity providers for
connectivity to the entire U.S. options industry, 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 10Gb ULL connectivity. Specifically, the Exchange utilizes
connectivity providers to connect to other national securities
exchanges and the Options Price Reporting Authority (``OPRA''). The
Exchange understands that these service providers provide services to
most, if not all, of the other U.S. exchanges and other market
participants. Connectivity provided by these service providers is
critical to the Exchanges daily operations and performance of its
System Networks which includes Purge Ports. Without these services
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, including
Purge Ports. In addition, the connectivity is necessary for the
Exchange to notify OPRA and other market participants that an order has
been cancelled, and that quotes may have been cancelled as a result of
a Member purging quotes via their Purge Port. Also, like other types of
ports offered by the Exchange, Purge Ports leverage the Exchange's
existing 10Gb ULL connectivity, which also relies on connectivity to
other national securities exchanges and OPRA. The Exchange does not
employ a separate fee to cover its connectivity provider expense and
recoups that expense, in part, by charging for Purge Ports.
Internet Services and External Market Data
The next cost driver consists of internet services and external
market data. Internet services includes third-party service providers
that provide the internet, fiber and bandwidth connections between the
Exchange's networks, primary and secondary data centers, and office
locations in Princeton and Miami. For purposes of Purge Ports, the
Exchange also includes a portion of its costs related to external
[[Page 21145]]
market data. External market data includes fees paid to third parties,
including OPRA, to receive and consume market data from other markets.
The Exchange includes external market data costs towards Purge Ports
because such market data is necessary to offer certain services related
to such ports, such as checking for market conditions (e.g., halted
securities). External market data is also consumed at the Matching
Engine level for, among other things, as validating quotes on entry
against the national best bid or offer (``NBBO'').\33\ Purge Ports are
a component of the Matching Engine, and used by market participants to
cancel multiple resting quotes within the Matching Engine. While
resting, the Exchange uses external market data to manage those quotes,
such as preventing trade-throughs, and those quotes are also reported
to OPRA for inclusion in this consolidated data stream. The Exchange
also must notify OPRA and other market participants that an order has
been cancelled, and that quotes may have been cancelled as a result of
a Member purging quotes via their Purge Port. Thus, since market data
from other exchanges is consumed by the Matching Engine to validate
quotes and check market conditions, the Exchange believes it is
reasonable to allocate a small amount of such costs to Purge Ports.
---------------------------------------------------------------------------
\33\ The term ``NBBO'' means the national best bid or offer as
calculated by the Exchange based on market information received by
the Exchange from OPRA. See Exchange Rule 100.
---------------------------------------------------------------------------
For the reasons set forth above, the Exchange believes it is
reasonable to allocate a small amount of such costs to Purge Ports
since market data from other exchanges is consumed at the Exchange's
Purge Port level to validate purge messages and the necessity to cancel
a resting quote via a purge message or via some other means.
Data Center
Data Center costs includes an allocation of the costs the Exchange
incurs to provide Purge Ports in the third-party data centers where it
maintains its equipment as well as related costs for market data to
then enter the Exchange's System. 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. The Exchange has allocated a
percentage of its Data Center cost (2.1%) to Purge Ports because the
third-party data centers and the Exchange's physical equipment
contained therein are necessary for providing Purge Ports. In other
words, for the Exchange to operate in a dedicated physical space with
direct connectivity by market participants to its trading platform, the
data centers are a critical component to the provision of Purge Ports.
If the Exchange did not maintain such a presence, then Purge Ports
would be of little value to market participants.
Hardware and Software Maintenance and Licenses
Hardware and Software Licenses includes hardware and software
licenses used to operate and monitor physical assets necessary to offer
Purge Ports for each Matching Engine of the Exchange. This hardware
includes servers, network switches, cables, optics, protocol data
units, and cabinets, to maintain a state-of-the-art technology
platform. Without hardware and software licenses, Purge Ports would not
be able to be offered to market participants because hardware and
software are necessary to operate the Exchange's Matching Engines,
which are necessary to enable the purging of quotes. The Exchange also
routinely works to improve the performance of the hardware and software
used to operate the Exchange's network and System. The costs associated
with maintaining and enhancing a state-of-the-art exchange network is a
significant expense for the Exchange, and thus the Exchange believes
that it is reasonable and appropriate to allocate a certain percentage
of its hardware and software expense to help offset those costs of
providing Purge Port connectivity to its Matching Engines.
Depreciation
The vast majority of the software the Exchange uses to provide
Ports has been developed in-house and the cost of such development,
which takes place over an extended period of time and includes not just
development work, but also quality assurance and testing to ensure the
software works as intended, is depreciated over time once the software
is activated in the production environment. Hardware used to provide
Purge Ports includes equipment used for testing and monitoring of order
entry infrastructure and other physical equipment the Exchange
purchased and is also depreciated over time.
All hardware and software, which also includes assets used for
testing and monitoring of order entry infrastructure, were valued at
cost, depreciated or leased over periods ranging from three to five
years. Thus, the depreciation cost primarily relates to servers
necessary to operate the Exchange, some of which is owned by the
Exchange and some of which is leased by the Exchange in order to allow
efficient periodic technology refreshes. The Exchange allocated 1.9% of
all depreciation costs to providing Purge Ports. The Exchange allocated
depreciation costs for depreciated software necessary to operate the
Exchange because such software is related to the provision of Purge
Ports. As with the other allocated costs in the Exchange's updated Cost
Analysis, the Depreciation cost driver was therefore narrowly tailored
to depreciation related to Purge Ports.
Allocated Shared Expenses
Finally, a portion of general shared expenses was allocated to
overall Purge Port costs as without these general shared costs the
Exchange would not be able to operate in the manner that it does and
provide Purge Ports. The costs included in general shared expenses
include general expenses of the Exchange, including office space and
office expenses (e.g., occupancy and overhead expenses), utilities,
recruiting and training, marketing and advertising costs, professional
fees for legal, tax and accounting services (including external and
internal audit expenses), and telecommunications costs. The Exchange
again notes that the cost of paying directors to serve on its Board of
Directors is included in the calculation of Allocated Shared Expenses,
and thus a portion of such overall cost amounting to less than 3% of
the overall cost for directors was allocated to providing Purge Ports.
Approximate Cost for Purge Ports per Month
Based on projected 2024 data, the total monthly cost allocated to
Purge Ports of $75,868 was divided by the total number of Matching
Engines in which Market Makers used Purge Ports for the month of
December 2023, which was 291, resulting in an approximate cost of $261
per Matching Engine per month for Purge Port usage (when rounding to
the nearest dollar). The Exchange notes that the flat fee of $300 per
month per Matching Engine entitles each Market Maker to two Purge Ports
per Matching Engine. The majority of Market Makers are connected to all
twenty-four of the Exchange's Matching Engines and utilize Purge Ports
on each Matching Engine, except one Market Maker, which only utilizes
Purge Ports on three Matching Engines.
Cost Analysis--Additional Discussion
In conducting its Cost Analysis, the Exchange did not allocate any
of its expenses in full to any core services (including Purge Ports)
and did not
[[Page 21146]]
double-count any expenses. Instead, as described above, the Exchange
allocated applicable cost drivers across its core services and used the
same Cost Analysis to form the basis of this proposal. For instance, in
calculating the Human Resources expenses to be allocated to Purge Ports
based upon the above described methodology, the Exchange has a team of
employees dedicated to network infrastructure and with respect to such
employees the Exchange allocated network infrastructure personnel with
a higher percentage of the cost of such personnel (19.6%) given their
focus on functions necessary to provide Ports. The salaries of those
same personnel were allocated only 2.7 to Purge Ports and the remaining
97.3% was allocated to connectivity, other port services, transaction
services, membership services and market data. The Exchange did not
allocate any other Human Resources expense for providing Purge Ports to
any other employee group, outside of a smaller allocation of 1.2% for
Purge Ports, of the cost associated with certain specified personnel
who work closely with and support network infrastructure personnel.
This is because a much wider range of personnel are involved in
functions necessary to offer, monitor and maintain Purge Ports but the
tasks necessary to do so are not a primary or full-time function.
In total, the Exchange allocated 2.2% of its personnel costs to
providing Purge Ports. In turn, the Exchange allocated the remaining
97.8% of its Human Resources expense to membership services,
transaction services, connectivity services, other port services and
market data. Thus, again, the Exchange's allocations of cost across
core services were based on real costs of operating the Exchange and
were not double-counted across the core services or their associated
revenue streams.
As another example, the Exchange allocated depreciation expense to
all core services, including Purge Ports, but in different amounts. The
Exchange believes it is reasonable to allocate the identified portion
of such expense because such expense includes the actual cost of the
computer equipment, such as dedicated servers, computers, laptops,
monitors, information security appliances and storage, and network
switching infrastructure equipment, including switches and taps that
were purchased to operate and support the network. Without this
equipment, the Exchange would not be able to operate the network and
provide Purge Port services to its Market Makers. However, the Exchange
did not allocate all of the depreciation and amortization expense
toward the cost of providing Purge Port services, but instead allocated
approximately 1.9% of the Exchange's overall depreciation and
amortization expense to Purge Ports. The Exchange allocated the
remaining depreciation and amortization expense (approximately 98.1%)
toward the cost of providing transaction services, membership services,
connectivity services, other port services, and market data.
The Exchange notes that its revenue estimates are based on
projections across all potential revenue streams and will only be
realized to the extent such revenue streams actually produce the
revenue estimated. The Exchange does not yet know whether such
expectations will be realized. For instance, in order to generate the
revenue expected from Purge Ports, the Exchange will have to be
successful in retaining existing Market Makers that wish to maintain
Purge Ports or in obtaining new Market Makers that will purchase such
services. Similarly, the Exchange will have to be successful in
retaining a positive net capture on transaction fees in order to
realize the anticipated revenue from transaction pricing.
The Exchange notes that the Cost Analysis is based on the
Exchange's 2024 fiscal year of operations and projections. It is
possible, however, that actual costs may be higher or lower. To the
extent the Exchange sees growth in use of connectivity services it will
receive additional revenue to offset future cost increases. However, if
use of port services is static or decreases, the Exchange might not
realize the revenue that it anticipates or needs in order to cover
applicable costs. Accordingly, the Exchange is committing to conduct a
one-year review after implementation of these fees. The Exchange
expects that it may propose to adjust fees at that time, to increase
fees in the event that revenues fail to cover costs and a reasonable
mark-up of such costs. Similarly, the Exchange may propose to decrease
fees in the event that revenue materially exceeds our current
projections. In addition, the Exchange will periodically conduct a
review to inform its decision making on whether a fee change is
appropriate (e.g., to monitor for costs increasing/decreasing or
subscribers increasing/decreasing, etc. in ways that suggest the then-
current fees are becoming dislocated from the prior cost-based
analysis) and would propose to increase fees in the event that revenues
fail to cover its costs and a reasonable mark-up, or decrease fees in
the event that revenue or the mark-up materially exceeds our current
projections. In the event that the Exchange determines to propose a fee
change, the results of a timely review, including an updated cost
estimate, will be included in the rule filing proposing the fee change.
More generally, the Exchange believes that it is appropriate for an
exchange to refresh and update information about its relevant costs and
revenues in seeking any future changes to fees, and the Exchange
commits to do so.
Projected Revenue \34\
---------------------------------------------------------------------------
\34\ For purposes of calculating projected 2024 revenue for
Purge Ports, the Exchange used revenues for the most recently
completed full month.
---------------------------------------------------------------------------
The proposed fees will allow the Exchange to cover certain costs
incurred by the Exchange associated with providing and maintaining
necessary hardware and other network infrastructure as well as network
monitoring and support services; without such hardware, infrastructure,
monitoring and support the Exchange would be unable to provide port
services. Much of the cost relates to monitoring and analysis of data
and performance of the network via the subscriber's connection(s). The
above cost, namely those associated with hardware, software, and human
capital, enable the Exchange to measure network performance with
nanosecond granularity. These same costs are also associated with time
and money spent seeking to continuously improve the network
performance, improving the subscriber's experience, based on monitoring
and analysis activity. The Exchange routinely works to improve the
performance of the network's hardware and software. The costs
associated with maintaining and enhancing a state-of-the-art exchange
network is a significant expense for the Exchange, and thus the
Exchange believes that it is reasonable and appropriate to help offset
those costs by amending fees for Purge Port services. Subscribers,
particularly those of Purge Ports, expect the Exchange to provide this
level of support so they continue to receive the performance they
expect. This differentiates the Exchange from its competitors. As
detailed above, the Exchange has five primary sources of revenue that
it can potentially use to fund its operations: transaction fees, fees
for connectivity services (connections and ports), membership and
regulatory fees, and market data fees. Accordingly, the Exchange must
cover its expenses from these five primary sources of revenue.
The Exchange's Cost Analysis estimates the annual cost to provide
[[Page 21147]]
Purge Port services will equal $910,413. Based on current Purge Port
services usage, the Exchange would generate annual revenue of
approximately $1,047,600. The Exchange believes this represents a
modest profit of 13.1% when compared to the cost of providing Purge
Port services, which could decrease over time.\35\
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\35\ Assuming the U.S. inflation rate continues at its current
rate, the Exchange believes that the projected profit margins in
this proposal will decrease; however, the Exchange cannot predict
with any certainty whether the U.S. inflation rate will continue at
its current rate or its impact on the Exchange's future profits or
losses. See, e.g., <a href="https://www.usinflationcalculator.com/inflation/current-inflation-rates/">https://www.usinflationcalculator.com/inflation/current-inflation-rates/</a> (last visited January 18, 2024).
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Based on the above discussion, the Exchange believes that even if
the Exchange earns the above revenue or incrementally more or less, the
proposed fees are fair and reasonable because they will not result in
pricing that deviates from that of other exchanges or a supra-
competitive profit, when comparing the total expense of the Exchange
associated with providing Purge Port services versus the total
projected revenue of the Exchange associated with network Purge Port
services.
The Proposed Fees Are Also Equitable, Reasonable, and Not Unfairly
Discriminatory
The Exchange believes that the proposed rule change would promote
just and equitable principles of trade and remove impediments to and
perfect the mechanism of a free and open market because offering Market
Makers optional Purge Port services with a flexible fee structure
promotes choice, flexibility, and efficiency. The Exchange believes
Purge Ports enhance Market Makers' ability to manage quotes, which
would, in turn, improve their risk controls to the benefit of all
market participants. The Exchange believes that Purge Ports foster
cooperation and coordination with persons engaged in facilitating
transactions in securities because designating Purge Ports for purge
messages may encourage better use of such ports. This may, concurrent
with the ports that carry quotes and other information necessary for
market making activities, enable more efficient, as well as fair and
reasonable, use of Market Makers' resources. The Exchange believes that
proper risk management, including the ability to efficiently cancel
multiple quotes quickly when necessary is valuable to all firms,
including Market Makers that have heightened quoting obligations that
are not applicable to other market participants.
Purge Ports do not relieve Market Makers of their quoting
obligations or firm quote obligations under Regulation NMS Rule
602.\36\ Specifically, any interest that is executable against a
Member's or Market Maker's quotes that is received by the Exchange
prior to the time of the removal of quotes request will automatically
execute. Market Makers that purge their quotes will not be relieved of
the obligation to provide continuous two-sided quotes on a daily basis,
nor will it prohibit the Exchange from taking disciplinary action
against a Market Maker for failing to meet their continuous quoting
obligation each trading day.\37\
---------------------------------------------------------------------------
\36\ See Exchange Rule 604. See also generally Chapter VI of the
Exchange's Rules.
\37\ Id.
---------------------------------------------------------------------------
The Exchange also believes that offering Purge Ports at the
Matching Engine level promotes risk management across the industry, and
thereby facilitates investor protection. Some market participants, in
particular the larger firms, could and do build similar risk
functionality in their trading systems that permit the flexible
cancellation of quotes entered on the Exchange at a high rate. Offering
Matching Engine level protections ensures that such functionality is
widely available to all firms, including smaller firms that may
otherwise not be willing to incur the costs and development work
necessary to support their own customized mass cancel functionality.
The Exchange also believes that moving to a per Matching Engine fee for
Purge Ports is reasonable due to the Exchange's architecture that
provides the Exchange the ability to provide two (2) Purge Ports per
Matching Engine.
The Exchange believes that the proposed Purge Port fees are
equitable because the proposed Purge Ports are completely voluntary as
they relate solely to optional risk management functionality.
The Exchange also believes that the proposed amendments to its Fee
Schedule are not unfairly discriminatory because they will apply
uniformly to all Market Makers that choose to use the optional Purge
Ports. Purge Ports are completely voluntary and, as they relate solely
to optional risk management functionality, no Market Maker is required
or under any regulatory obligation to utilize them. All Market Makers
that voluntarily select this service option will be charged the same
amount for the same services. All Market Makers have the option to
select any port or connectivity option, and there is no differentiation
among Market Makers with regard to the fees charged for the services
offered by the Exchange.
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 not necessary or appropriate in
furtherance of the purposes of the Act. Purge Ports are completely
voluntary and are available to all Market Makers on an equal basis at
the same cost. While the Exchange believes that Purge Ports provide a
valuable service, Market Makers can choose to purchase, or not
purchase, these ports based on their own determination of the value and
their business needs. No Market Maker is required or under any
regulatory obligation to utilize Purge Ports. Accordingly, the Exchange
believes that Purge Ports offer appropriate risk management
functionality to firms that trade on the Exchange without imposing an
unnecessary or inappropriate burden on competition.
Furthermore, the Exchange operates in a highly competitive
environment, and its ability to price the Purge Ports is constrained by
competition among exchanges that offer similar functionality. As
discussed, there are currently a number of similar offers available to
market participants for higher fees at other exchanges. Proposing fees
that are excessively higher than established fees for similar
functionality would simply serve to reduce demand for the Purge Ports,
which as discussed, market participants are under no obligation to
utilize. It could also cause firms to shift trading to other exchanges
that offer similar functionality at a lower cost, adversely impacting
the overall trading on the Exchange and reducing market share. In this
competitive environment, potential purchasers are free to choose which,
if any, similar product to purchase to satisfy their need for risk
management. As a result, the Exchange believes this proposed rule
change permits fair competition among national securities exchanges.
The Exchange also does not believe the proposal would cause any
unnecessary or inappropriate burden on intermarket competition as other
exchanges are free to introduce their own purge port functionality and
lower their prices to better compete with the Exchange's offering. The
Exchange does not believe the proposed rule change would cause any
unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposal would apply uniformly to any market
participant, in that it does not
[[Page 21148]]
differentiate between Market Makers. The proposal would allow any
interested Market Makers to purchase Purge Port functionality based on
their business needs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange received one comment letter on the Initial Proposal
and one comment letter on the Second Proposal, both from the same
commenter.\38\ These comment letters were submitted not only on these
proposals, but also the proposals by the Exchange and its affiliates to
amend fees for 10Gb ULL connectivity and certain other ports. The
Exchange received one other comment letter on the Second Proposal and
another on the Third Proposal from a separate commenter.\39\ Overall,
the Exchange believes that the issues raised by the first commenter are
not germane to this proposal because they apply primarily to the other
fee filings. Also, both commenters raised concerns with the current
environment surrounding exchange non-transaction fee proposals that
should be addressed by the Commission through rule making, or Congress,
more holistically and not through an individual exchange fee filings.
However, the commenters do raise one issue that concerns this proposal
whereby it asserts that the Exchange's comparison to fees charged by
other exchanges for similar ports is irrelevant and unpersuasive. The
core of the issue raised is regarding the cost to connect to one
exchange compared to the cost to connect to others. A thorough response
to this comment would require the Exchange to obtain competitively
sensitive information about other exchanges' architecture and how their
members connect. The Exchange is not privy to this information.
Further, the commenters compare the Exchange's proposed rate to other
exchanges that offer purge port functionality across all matching
engines for a single fee, but fails to provide the same comparison to
other exchanges that charge for purge functionality as proposed herein.
The Exchange does not have insight into the technical architecture of
other exchanges so it is difficult to ascertain the number of purge
ports a firm would need to connect to another exchange's entire market.
Therefore, the Exchange is limited to comparing its proposed fee to
other exchanges' purge port fees as listed in their fee schedules.
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\38\ See letters from Thomas M. Merritt, Deputy General Counsel,
Virtu Financial, Inc. (``Virtu''), to Vanessa Countryman, Secretary,
Commission, dated November 8, 2023 and January 2, 2024.
\39\ See letters from John C. Pickford, Counsel, Susquehanna
International Group, LLP (``SIG''), to Vanessa Countryman,
Secretary, Commission, dated January 4, 2024 and March 1, 2024.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\40\ and Rule 19b-4(f)(2) \41\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
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\40\ 15 U.S.C. 78s(b)(3)(A)(ii).
\41\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#2654534a430b45494b4b434852556655434508414950"><span class="__cf_email__" data-cfemail="493b3c252c642a2624242c273d3a093a2c2a672e263f">[email protected]</span></a>. Please include
file number SR-MIAX-2024-14 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MIAX-2024-14. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MIAX-2024-14 and should be
submitted on or before April 16, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
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\42\ 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-06348 Filed 3-25-24; 8:45 am]
BILLING CODE 8011-01-P
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