Notice2024-29923
Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Fees for Dedicated Cross Connection Access to the Testing Systems Environment
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
December 18, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 243 (Wednesday, December 18, 2024)</title>
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[Federal Register Volume 89, Number 243 (Wednesday, December 18, 2024)]
[Notices]
[Pages 102989-102994]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-29923]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101894; File No. SR-MIAX-2024-45]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Adopt Fees for Dedicated Cross Connection
Access to the Testing Systems Environment
December 12, 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 November 29, 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 is filing a proposal to establish a fee for market
participants that choose to utilize the Exchange's testing systems
environment via a dedicated cross connection.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/all-options-exchanges/rule-filings">https://www.miaxglobal.com/markets/us-options/all-options-exchanges/rule-filings</a>, at MIAX's principal office, and at the
Commission's Public Reference Room.
[[Page 102990]]
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 establish a fee for market participants
that choose to utilize the Exchange's testing systems environment via a
dedicated cross connection. The testing systems environment is a
virtual trading system environment for Members \3\ and non-Members to
test (i) upcoming Exchange software and code releases, (ii) product
enhancements, and (iii) firm-developed software, prior to
implementation in the Exchange's production (e.g., live trading)
environment. Further, the testing systems environment allows unlimited
testing of existing functionality, such as order types, order entry,
order management, order throughput, acknowledgements, risk settings,
mass cancelations, and purge requests. The testing systems environment
is built to closely approximate the production environment to enable
Members and non-Members the ability to test their systems and mimics
the live trading environment.\4\
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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\ Business continuity and disaster recovery testing is
performed separately and not within the testing systems environment
that is the subject of this filing.
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There are currently three methods by which Members and non-Members
may access the Exchange's testing systems environment. One, Members and
non-Members may access the Exchange's testing systems environment via a
virtual private network (``VPN'') that operates over the internet and
provides site-to-site access. VPN access is provided for free to all
Members and non-Members.
A second method is via a dedicated cross connection that allows
Members and non-Members to access the testing systems environment and
is available as either a 1 gigabit (``Gb'') or 10Gb connection. Members
and non-Members that utilize a VPN or a dedicated cross connection to
access the testing systems environment of the Exchange are also able to
access the testing systems environments of each of the Exchange's
affiliated options markets--MIAX Sapphire, LLC (``MIAX Sapphire''),
MIAX PEARL, LLC \5\ (``MIAX Pearl Options''), and MIAX Emerald, LLC
(``MIAX Emerald''). This dedicated cross connection would provide
subscribers access to the testing systems environment of the Exchange,
as well as each of its affiliate options exchanges, via a single
connection.
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\5\ All references to ``MIAX PEARL'' in this filing are to the
options trading facility of MIAX PEARL, LLC, referred to herein as
``MIAX Pearl Options.'' Members and non-Members that choose to
utilize the testing systems environment of MIAX Pearl Equities, the
equities trading facility of MIAX PEARL, LLC, must utilize a
separate dedicated cross connection as MIAX Pearl Equities' testing
systems environment operates on a separate network from the
affiliated options markets.
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Third, access is also provided through the production connections
for each 1Gb or 10Gb ULL connection for the applicable fee \6\ for such
connection and no additional charge. These 1Gb and 10Gb ULL connections
provide access to the Exchange's production environment (i.e., live
trading) and allow the receipt of proprietary real-time market data.
However, the Exchange previously announced that it will phase out the
ability to connect to the testing systems environment via the existing
1Gb and 10Gb ULL production connections by February 28, 2025.\7\
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\6\ See MIAX Fee Schedule, Sections 5)a)-b) for the fees for 1Gb
and 10Gb ULL production connectivity.
\7\ See MIAX Options, MIAX Pearl Options and MIAX Emerald
Options Exchanges--Announcing New Extranet Access to Firm Test Beds
(FTB1 and FTB2) and Decommissioning of Access via Production
Connections Beginning in October 2024, dated September 12, 2024,
available at <a href="https://www.miaxglobal.com/alert/2024/09/12/miax-options-miax-pearl-options-and-miax-emerald-options-exchanges-2?nav=all">https://www.miaxglobal.com/alert/2024/09/12/miax-options-miax-pearl-options-and-miax-emerald-options-exchanges-2?nav=all</a>; and Securities Exchange Act Release No. 100854 (August
28, 2024), 89 FR 71953 (September 4, 2024) (SR-MIAX-2024-35).
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* * * * *
The Exchange now proposes to amend the Fee Schedule to establish a
monthly fee for Members and non-Members that choose to access the
testing systems environment via a dedicated cross connect. In
particular, the Exchange proposes to establish a monthly fee of $1,000
per dedicated cross connection to the testing systems environment for
Members and non-Members. The proposed fee is the same whether a Member
or non-Member chooses to connect to the testing systems environment via
a 1Gb or 10Gb cross connect. The proposed fees would be set forth under
new Sections 4)e) and 4)f) of the Fee Schedule. Proposed Sections 4)e)
and 4)f) would also codify that VPN access to the test environment is
provided for free for all Members and non-Members.
* * * * *
Members and non-Members that access the testing systems environment
through any one of the available access methods, including a dedicated
cross connection, receive functionally the same testing experience.
Each Member or non-Member is free to decide how to access the testing
systems environment based on their own needs and trading architecture
or not utilize the testing systems environment at all. Again, accessing
the testing systems environment via a dedicated direct connection is
entirely optional and no Member or non-Member is required by rule or
regulation to make use of the testing systems environment via a
dedicated direct connection. Regardless of access method, all Members
and non-Members are provided the same testing systems environment
experience and are able to perform all of the same functions.
Implementation
The proposed fee change will be effective December 1, 2024.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\9\ in particular, in that it
is not designed to permit unfair discrimination among customers,
brokers, or dealers. The Exchange also believes that its proposal is
consistent with Section 6(b)(4) of the Act \10\ because it represents
an equitable allocation of reasonable dues, fees and other charges
among market participants using any facility or system which the
Exchange operates or controls.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ 15 U.S.C. 78f(b)(4).
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Free VPN Access to the Firm Test Bed Is a Reasonable Substitute
In 2019, Commission staff published guidance suggesting the types
of information that self-regulatory organizations (``SROs'') may use to
demonstrate that their fee filings comply with the standards of the
Exchange Act
[[Page 102991]]
(the ``Staff Guidance'').\11\ The Staff Guidance provides that in
assessing the reasonableness of a fee, the Staff would consider whether
the fee is constrained by significant competitive forces. To determine
whether a proposed fee is constrained by significant competitive
forces, the Staff Guidance further provides that the Staff would
consider whether the evidence provided by an SRO in a Fee Filing
proposal demonstrates (i) that there are reasonable substitutes for the
product or service that is the subject of a proposed fee; (ii) that
``platform'' competition constrains the fee; and/or (iii) that the
revenue and cost analysis provided by the SRO otherwise demonstrates
that the proposed fee would not result in the SRO taking supra-
competitive profits.\12\ The proposed fee is reasonable because there
is a reasonable substitute for the service that is the subject of this
proposed fee as set forth below.
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\11\ 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>.
\12\ Id.
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This filing includes the following evidence that demonstrates that
there is a reasonable substitute to purchasing a dedicated cross
connection to access the Exchange's testing systems environment. That
reasonable substitute is VPN access, which is provided for free and
will continue to be free for all Members and non-Members. Members and
non-Members may access the testing systems environment through either a
VPN or a dedicated cross connection and will receive functionally the
same testing environment and are able to perform all of the same
functions. The testing systems environment, whether accessed via a
dedicated cross connection or VPN, provides Members and non-Members the
same scope of abilities to test their systems and software in the
Exchange's testing systems environment, which replicates the Exchange's
production trading environment. Like a dedicated cross connection, a
VPN provides access to the testing systems environment of not only the
Exchange, but also each of its affiliate options exchanges over the
same single access point. Accessing the testing systems environment via
a dedicated cross connection provides no advantage to Members and non-
Members compared to those market participants that elect to access the
testing systems environment via a VPN for free.
Each Member or non-Member is free to decide how to access the
testing systems environment based on their own needs and trading
architecture. Again, accessing the testing systems environment via a
dedicated direct connection is entirely optional and no Member or non-
Member is required by rule or regulation to make use of the testing
systems environment via a dedicated direct connection. Accessing the
testing systems environment via the proposed dedicated cross connection
may not provide utility to all Members and non-Members based on their
business models and needs, and such users may choose to access the
testing systems environment for free through the VPN and perform the
same testing functions. As such, the Exchange believes that the
proposed fee for access to the testing systems environment is
reasonable and Members and non-Members have the choice, but are not
obligated to access the testing systems environment via a dedicated
cross connection. Otherwise, a user may choose to access the test
environment via a VPN for free to test system functionality. For
example, of the Exchange's forty-six Members \13\ and nine non-Members
that provide connectivity to the Exchange, sixteen Members and non-
Members currently use a VPN to access the Exchange's testing systems
environment instead of the other two currently available options, i.e.,
a dedicated cross connection or their existing 1Gb or 10Gb ULL
connection to the production environment. Some Members and non-Members
also choose not to access the testing systems environment at all.
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\13\ See the Exchange's Membership Directory available at
<a href="https://www.miaxglobal.com/miax_options_exchange_members.pdf">https://www.miaxglobal.com/miax_options_exchange_members.pdf</a>.
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Lastly, supporting a proposed non-transaction fee change by arguing
the availability of reasonable substitutes is not novel. Commission
Staff has published for immediate effectiveness filings regarding non-
transaction fees by exchanges who argued that the fees were consistent
with the Exchange Act because of reasonable substitutes were available
as provided for in the Commission Staff Guidance.\14\
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\14\ See, e.g., Securities Exchange Act Release Nos. 101096
(September 18, 2024), 89 FR 77913 (September 24, 2024) (SR-ISE-2024-
46); 98974 (November 16, 2023), 88 FR 81468 (November 22, 2023) (SR-
NYSEARCA-2023-78); 87795 (December 18, 2019), 84 FR 71043 (December
26, 2019) (SR-NYSEArca-2019-88); and 90409 (November 12, 2020), 85
FR 73522 (November 18, 2020) (SR-NYSEArca-2020-95).
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Fee Is Constrained by Competition and the Availability of Free VPN
Access
If the Exchange prices the fee for dedicated cross connection
access to the testing systems environment too high, Members and non-
Members may choose not to subscribe and contiue to perform the same
testing functions via VPN internet access for no fee if they do not
find the fee for accessing the testing systems environment via a
dedicated cross connection to be of value. Again, the Exchange notes
that accessing the testing systems environment via a dedicated cross
connection would be completely voluntary and is simply an additional
optional means to access the test environment. The Exchange also has
Members and non-Members that do not utilize the testing systems
environment at all.
The Exchange operates in a highly competitive environment in which
18 U.S. registered equity options exchanges compete for market share.
Based on publicly available information for the month of October 2024,
no single options exchange had more than approximately 12-13% of the
equity options market share and the Exchange represented only
approximately 6.17% of the market share of equity options for that
month.\15\ The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Particularly, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and recognized that
current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \16\ The
proposed fee for optional access via a dedicated cross connection to
the test environment is the result of the competitive environment of
the U.S. options industry.
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\15\ See the ``Market Share'' section of the Exchange's website,
available at <a href="https://www.miaxglobal.com/">https://www.miaxglobal.com/</a> (last visited November 5,
2024).
\16\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Exchanges compete for order flow by providing testing opportunities
and robust testing environments. Services like a testing environment
provide Members and non-Members with the opportunity to test Exchange
functionality prior to sending real order flow to be executed in the
Exchange's production environment. As mentioned above, numerous
exchanges provide testing environments to market participants to test
functionality and gain comfort with their exchange offering.\17\ This
is intended to attract
[[Page 102992]]
market share by offering a risk free way to gain comfort that their
orders would be handled within the Exchange's production environment as
expected. Exchanges seek to further encourage market participants to
utilize their testing environments by providing multiple methods to
connect. Some are provided for free while others and require a fee.
Providing multiple methods to connect to a test environment provides
market participants a choice on how to engage with the testing
environment and a choice regarding the access method that best meets
their business and operational needs.
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\17\ The Exchange notes that other exchange families offer a
similar dedicated connection to their testing environment for their
members and non-members. See, e.g., Nasdaq Options Test Facility
(NTF) Abstract, Version 1.4.4 (March 2024), available at <a href="https://www.nasdaq.com/Nasdaq_Test_Facility_NTF_Guide">https://www.nasdaq.com/Nasdaq_Test_Facility_NTF_Guide</a> (last visited July 16,
2024) (``. . . the Nasdaq Test Facility . . . where market
participants can test their trading applications with the INET
trading system. The NTF environment allows members to test sending
and executing quotes and orders offered by our six options exchanges
. . .''); see also Securities Exchange Act Release No. 100442 (June
27, 2024), 89 FR 55296 (July 3, 2024) (SR-CboeBZX-2024-058) (``. . .
the Exchange also offers corresponding ports which provide Members
and non-Members access to the Exchange's certification environment
to test proprietary systems and applications . . . The certification
environment facilitates testing using replicas of the Exchange's
production environment process configurations which provide for a
robust and realistic testing experience . . .'').
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If the Exchange proposed a fee that Members and non-Members viewed
as excessively high, then the proposed fee would simply serve to reduce
demand for access via a dedicated cross connection to the test
environment, which as noted, is entirely optional as the Exchange will
continue to provide free access to the test environment through VPN
through the internet for site-to-site access. This could, in turn,
reduce the attractiveness of the Exchange's live trading production
environment because Members and non-Members may be unwilling to test
functionality prior to entering live orders. Again, other options
exchanges currently offer, or are able to introduce at their own cost,
their own comparable testing environments with lower prices to better
compete with the Exchange's offering and several competing exchanges
already provide a similar service.
Selling different products and services, such as proposed herein,
is a means by which exchanges compete to attract business. To the
extent that the Exchange is successful in attracting market
participants to purchase the dedicated cross connection to the test
environment proposed herein, the Exchange may earn revenue and further
enhance market participants' interactions on the Exchange, which would
increase value of its other products and services to all market
participants. If the market deems the proposed fee to be too high,
Members and non-Members can choose not to use or discontinue their use
of dedicated cross connection to the test environment and perform the
same testing functions via the VPN internet access for free. The
Exchange, therefore, believes that the proposed fee for dedicated cross
connection to the test environment reflects the competitive environment
of U.S. options exchanges and would be properly assessed to Members and
non-Members that subscribe.
The Proposed Fee Is Reasonable Because it Is Similar to or Lower Than
Like Fees Charged by Other Exchanges
The Exchange believes the proposed fees are reasonable as the
proposed fees are similar to or lower than fees charged by competing
exchanges for similar services. For example, The Nasdaq Stock Market,
LLC assesses a fee of $1,000 per hand-off, per month for subscribers to
the testing facility via either a 1Gb or 10Gb switch port plus a one-
time installation fee of $1,000 per hand-off.\18\ The Exchange's
proposed fee is, therefore, lower because it does not charge a separate
installation fee. Cboe BZX Exchange, Inc. (``Cboe BZX'') Options
assesses a lower fee of $250 per month for each certification logical
port, which only provides access to the Cboe BZX testing environment,
and not to the testing environment of any of Cboe BZX's affiliates.\19\
The fee to access the Cboe BZX testing environment and the testing
environment of each of its three affiliated options exchange becomes
incrementally higher with each Cboe BZX affiliate charging a $250
monthly fee to access each testing environment, totaling as much as
$1,000.00 per month.\20\ Accordingly, the Exchange believes that
comparable and competitive pricing are key factors in determining
whether a proposed fee meets the requirements of the Act.
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\18\ See, e.g., Nasdaq, Options 7: Pricing Schedule, Section 13
Testing Facilities, available at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Options%207">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Options%207</a>. Nasdaq's affiliates,
like Nasdaq PHLX LLC (``PHLX''), also charge the same fee. See e.g.,
PHLX Options 7: Pricing Schedule, Section 9. Other Member Fees, E.
Testing Facilities, available at <a href="https://listingcenter.nasdaq.com/rulebook/phlx/rules/Phlx%20Options%207">https://listingcenter.nasdaq.com/rulebook/phlx/rules/Phlx%20Options%207</a> (assessing a fee of $1,000
per hand-off, per month for subscribers to the testing facility via
either a 1Gb or 10Gb switch port and a one-time installation fee of
$1,000 per hand-off). See also Securities Exchange Act Release No.
76259 (October 26, 2015), 80 FR 66947 (October 30, 2015) (SR-NASDAQ-
2015-117) (Notice of Filing and Immediate Effectiveness of Proposed
Rule Change to Options Testing Facility). Like the Exchange's
testing environment, a single connection to Nasdaq's test
environment provides access to the other test environments of its
affiliate options markets, PHLX and Nasdaq BX, Inc.
\19\ See also Cboe BZX Options Fee Schedule, Options Logical
Port Fees, Certification Logical Ports, available at <a href="https://www.cboe.com/us/options/membership/fee_schedule/bzx/">https://www.cboe.com/us/options/membership/fee_schedule/bzx/</a>. See, e.g.,
Cboe EDGX Exchange, Inc. Options Fee Schedule, Options Logical Port
Fees, Certification Logical Ports, available at <a href="https://www.cboe.com/us/options/membership/fee_schedule/edgx/">https://www.cboe.com/us/options/membership/fee_schedule/edgx/</a>.
\20\ See also Cboe EDGX Exchange, Inc. Options Fee Schedule,
Options Logical Port Fees, Certification Logical Ports, available at
<a href="https://www.cboe.com/us/options/membership/fee_schedule/edgx/">https://www.cboe.com/us/options/membership/fee_schedule/edgx/</a>; Cboe
Exchange, Inc. Fee Schedule, Logical Connectivity Fees,
Certification Logical Ports, available at Cboe_FeeSchedule.pdf; and
Cboe C2 Exchange, Inc. Options Fee Schedule, Options Logical Port
Fees, Certification Logical Ports, available at <a href="https://www.cboe.com/us/options/membership/fee_schedule/c2/">https://www.cboe.com/us/options/membership/fee_schedule/c2/</a>.
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The Proposed Fee Is Not Unfairly Discriminatory
The Exchange also believes the proposed fee is equitable and not
unfairly discriminatory as the fee would apply equally to all Members
and non-Members who choose to subscribe. It is a business and
operational decision of each Member or non-Member that chooses to
subscribe. The Exchange's proposed fee would not differentiate between
Members and non-Members or connectivity types and is set at a modest
level that would allow any interested Member and non-Member to
subscribe based on their business and operational needs.
The Exchange also believes the proposal furthers the objectives of
Section 6(b)(5) of the Act \21\ 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 is not
designed to permit unfair discrimination between customer, issuers,
brokers and dealers. The Exchange does not believe that the proposed
fee is unfairly discriminatory to subscribers to the test environment
via a dedicated cross connection because, unlike the live trading
environment where the capacity of connectivity to the Exchange may
confer a competitive advantage to a market participant and therefore
price differentiation is appropriate for the benefit conferred, there
is no such benefit conferred in the testing systems environment.
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\21\ 15 U.S.C. 78f(b)(5).
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The Exchange does not believe that the proposed fee is unfairly
discriminatory among subscribers to the test environment because all
Members and non-Members that subscribe to the service will be assessed
the same fee.
[[Page 102993]]
Because the proposed fee does not discriminate between 1Gb and 10Gb
cross connection options, Members and non-Members are able to subscribe
to the test environment without regard to the cost of their capacity
election. The Exchange believes that not discriminating on this basis
will encourage participants to connect to the test environment in the
same manner as they do to the live trading environment, and thereby
help the test environment more closely mirror the live trading
environment. Providing a more useful and accurate test environment will
serve to improve live trading on the Exchange and the national market
system by permitting Members and non-Members the ability to accurately
test changes prior to implementing them in the live trading
environment, thereby reducing the likelihood of a potentially
disruptive system failure in the live trading environment, which has
the potential to affect all market participants.
The Proposed Fee Is Equitable
The Exchange believes that the proposed fee is equitably allocated
because all Members and non-Members that choose to connect to the test
environment will be assessed a uniform fee for those services. The
Exchange believes that offering subscribers the option to subscribe to
either a 1Gb or 10Gb dedicated cross connection for the same fee is an
equitable allocation of fees because, unlike the live trading
environment, there is no competitive advantage to possessing a higher
capacity connection in the test environment. The test environment is
designed to closely mirror the live trading environment for Members and
non-Members, including matching the capacity of the live trading
environment connection of each Member and non-Member. In the absence of
any competitive advantage, charging a uniform fee for both a 1Gb or
10Gb dedicated cross connection is an equitable allocation of fees. The
Exchange believes that charging a uniform fee rather than mirroring the
fees for the live trading environment will encourage Members and non-
Members to subscribe to the test environment and further encourage
those that subscribe to use the same hardware as is used by them for
connectivity to the live trading environment.
* * * * *
Finally, and as noted above, the Exchange's test environment
provides a robust and realistic testing experience using a replica of
the Exchange's production environment process configurations. This
environment enables market participants to test upcoming Exchange
software and code releases, product enhancements, as well as test firm
software prior to implementation in the production environment.
Further, the test environment allows unlimited firm-level testing of
order types, order entry, order management, order throughput,
acknowledgements, risk settings, mass cancelations, and purge requests.
By providing firms the ability to test all of these features in the
test environment prior to implementing them in the live trading
environment, the Exchange believes this will reduce the likelihood of a
potentially disruptive system failure in the live trading environment,
which has the potential to affect all market participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
made connectivity access to the test environment available to keep pace
with technological changes in the industry and evolving customer needs
and demands, and believes the product will contribute to robust
competition among national securities exchanges. As a result, the
Exchange believes this proposed rule change permits fair competition
among national securities exchanges.
The Exchange believes the proposed fee would not cause any
unnecessary or inappropriate burden on intermarket competition as other
exchanges are free to introduce their own comparable testing
environments for free or lower prices, which several competing
exchanges already provide.\22\ The Exchange operates in a highly
competitive environment, and its ability to price access to the test
environment is constrained by the optional nature of accessing the test
environment via a dedicated cross connect. Providing access to the test
environment via dedicated cross connection is provided purely for
convenience, in response to Member demand, and, again, would be
entirely optional. The Exchange notes that use of accessing the test
environment via a dedicated cross connection would be completely
voluntary and is simply an additional optional means to access the test
environment. Members who do not prefer the to access the test
environment via a dedicated cross connection and pay the applicable fee
will be able to continue to perform the same testing functions when
accessing the test environment via the existing VPN internet access for
free. The Exchange must consider this in its pricing discipline in
order to attract subscribers. The Exchange believes that if it were to
propose a fee that is excessively high, it would simply serve to reduce
demand for the Exchange's product, which as discussed, Members and non-
Members are under no obligation to utilize.
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\22\ See supra note 18.
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The Exchange does not believe the proposed rule change would cause
any unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed fee applies uniformly to any purchaser in
that the Exchange does not differentiate between subscribers that wish
to access the testing systems environment via a dedicated cross connect
via either a 1Gb or 10Gb connection. The proposed fee is set at a
modest level that would allow any interested market participant to
purchase access to the test environment based on their business needs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\23\ and Rule 19b-4(f)(2) \24\ 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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\23\ 15 U.S.C. 78s(b)(3)(A)(ii).
\24\ 17 CFR 240.19b-4(f)(2).
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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:
[[Page 102994]]
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#2153544d440c424e4c4c444f5552615244420f464e57"><span class="__cf_email__" data-cfemail="3c4e495059115f5351515952484f7c4f595f125b534a">[email protected]</span></a>. Please include
file number SR-MIAX-2024-45 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-2024-45. 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-2024-45 and should be
submitted on or before January 8, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29923 Filed 12-17-24; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 18, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.