Self-Regulatory Organizations; Miami International Securities Exchange, LLC, MIAX Emerald, LLC; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Changes To Amend Fee Schedules To Adopt Tiered-Pricing Structures for Additional Limited Service MIAX and MIAX Emerald Express Interface Ports, 67745-67750 [2021-25879]
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Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
Dated: November 23, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
Dated: November 24, 2021.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021–25914 Filed 11–26–21; 8:45 am]
[FR Doc. 2021–26047 Filed 11–24–21; 4:15 pm]
BILLING CODE 8011–01–P
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings
[Release No. 34–93640; File Nos. SR–MIAX–
2021–43, SR–EMERALD–2021–31]
2:00 p.m. on Thursday,
December 2, 2021.
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC, MIAX Emerald, LLC; Suspension
of and Order Instituting Proceedings
To Determine Whether To Approve or
Disapprove Proposed Rule Changes
To Amend Fee Schedules To Adopt
Tiered-Pricing Structures for
Additional Limited Service MIAX and
MIAX Emerald Express Interface Ports
TIME AND DATE:
The meeting will be held via
remote means and/or at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
PLACE:
This meeting will be closed to
the public.
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STATUS:
MATTERS TO BE CONSIDERED:
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
staff members who have an interest in
the matters also may be present.
In the event that the time, date, or
location of this meeting changes, an
announcement of the change, along with
the new time, date, and/or place of the
meeting will be posted on the
Commission’s website at https://
www.sec.gov.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
and (10) and 17 CFR 200.402(a)(3),
(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and
(a)(10), permit consideration of the
scheduled matters at the closed meeting.
The subject matter of the closed
meeting will consist of the following
topics:
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings;
Resolution of litigation claims; and
Other matters relating to examinations
and enforcement proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting agenda items that
may consist of adjudicatory,
examination, litigation, or regulatory
matters.
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Authority: 5 U.S.C. 552b.
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I. Introduction
On September 28, 2021, Miami
International Securities Exchange, LLC
(‘‘MIAX’’) and MIAX Emerald, LLC
(‘‘MIAX Emerald’’) (each an
‘‘Exchange’’; collectively, the
‘‘Exchanges’’) each filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt a tiered-pricing structure for
additional limited service express
interface ports. Each proposed rule
change was immediately effective upon
filing with the Commission pursuant to
Section 19(b)(3)(A) of the Act.3 The
proposed rule changes were published
for comment in the Federal Register on
October 5, 2021.4 Pursuant to Section
19(b)(3)(C) of the Act,5 the Commission
is hereby: (1) Temporarily suspending
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
4 See Securities Exchange Act Release Nos. 93185
(September 29, 2021), 86 FR 55093 (October 5,
2021) (SR–MIAX–2021–43) (‘‘MIAX Notice’’); 93188
(September 29, 2021), 86 FR 55052 (October 5,
2021) (SR–EMERALD–2021–31) (‘‘MIAX Emerald
Notice’’). For ease of reference, citations to
statements generally applicable to both notices are
to the MIAX Notice. Comments received on the
proposed rule changes are available on the
Commission’s website at: https://www.sec.gov/
comments/sr-miax-2021-43/srmiax202143.htm
(SR–MIAX–2021–43); https://www.sec.gov/
comments/sr-emerald-2021-31/
sremerald202131.htm (SR–EMERALD–2021–31).
5 15 U.S.C. 78s(b)(3)(C).
67745
File Nos. SR–MIAX–2021–43 and SR–
EMERALD–2021–31; and (2) instituting
proceedings to determine whether to
approve or disapprove File Nos. SR–
MIAX–2021–43 and SR–EMERALD–
2021–31.
II. Description of the Proposed Rule
Changes
Limited Service MIAX Express
Interface Ports and Limited Service
MIAX Emerald Express Interface Ports
(collectively, ‘‘Limited Service MEI
Ports’’) provide Market Makers 6 with
the ability to send eQuotes and quote
purge messages, and are also capable of
receiving administrative information.7
Currently, each Exchange allocates two
Limited Service MEI Ports, free of
charge, per matching engine to which a
Market Maker connects. Market Makers
may request additional Limited Service
MEI Ports for each matching engine to
which they connect for an additional
monthly fee for each such additional
port. Prior to the proposed rule changes,
each Exchange charged a flat $100
monthly fee for each such additional
port. Each Exchange has proposed to
adopt a tiered-pricing structure.8 For
both MIAX and MIAX Emerald, the first
and second Limited Service MEI Ports
for each matching engine would remain
free of charge. For MIAX, the additional
Limited Service MEI Port fees for each
matching engine would increase from
$100 to: (i) $150 for the third and fourth
Limited Service MEI Ports; (ii) $200 for
the fifth and sixth Limited Service MEI
Ports; and (iii) $250 for the seventh or
more Limited Service MEI Ports.9 For
MIAX Emerald, the additional Limited
Service MEI Port fees for each matching
engine would increase from $100 to: (i)
$200 for the third and fourth Limited
Service MEI Ports; (ii) $300 for the fifth
and sixth Limited Service MEI Ports;
and (iii) $400 for the seventh to
fourteenth Limited Service MEI Ports.10
1 15
2 17
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Fmt 4703
Sfmt 4703
6 Defined at MIAX Rule 100 and MIAX Emerald
Rule 100.
7 See, e.g., MIAX Notice, supra note 4, at 55093
n.10.
8 The Exchanges initially filed the proposed fee
changes on August 2, 2021. See Securities Exchange
Act Release Nos. 92661 (August 13, 2021), 86 FR
46737 (August 19, 2021) (SR–MIAX–2021–37),
92662 (August 13, 2021), 86 FR 46726 (August 19,
2021) (SR–EMERALD–2021–25). These filings were
withdrawn and replaced with the instant filings,
with additional information. See also Securities
Exchange Act Release No. 91857 (May 12, 2021), 86
FR 26973 (May 18, 2021) (MIAX–2021–19)
(allowing purchase of any number of additional
Limited Service MEI Ports and stating that, at a
continued monthly fee of $100 for each additional
port, the Exchange anticipates generating an annual
loss from the provision).
9 See MIAX Notice, supra note 4, at 55094.
10 See MIAX Emerald Notice, supra note 4, at
55053. The MIAX Emerald Fee Schedule states that
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III. Suspension of the Proposed Rule
Changes
Pursuant to Section 19(b)(3)(C) of the
Act,11 at any time within 60 days of the
date of filing of an immediately effective
proposed rule change pursuant to
Section 19(b)(1) of the Act,12 the
Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization
(‘‘SRO’’) if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act. As described below, the
Commission believes a temporary
suspension of the proposed rule changes
is necessary and appropriate to allow for
additional analysis of the proposed rule
changes’ consistency with the Act and
the rules thereunder.
In support of the proposed tieredpricing structure and associated fee
increases, the Exchanges argue that they
operate in a highly competitive
market 13 and their ability to price
access and ports is constrained by
competition among exchanges and third
parties.14 MIAX states that it has a
market share of only 5.8%, and MIAX
Emerald states that it has a market share
of only 4.99%, of the U.S. equity
options industry as of September
2021.15 The Exchanges also state that
there are 15 other U.S options
exchanges which they must consider in
their pricing discipline in order to
compete for market participants.16 As
evidence for their arguments, the
Exchanges provide port fees for
competing exchanges which, according
to the Exchanges, demonstrate that the
proposed tiered-pricing structure and
proposed fees for additional Limited
Service MEI Ports are less than or
similar to fees charged by competing
options exchanges for similar access on
those exchanges.17
In further support of their arguments
that competitive forces constrain the
proposed tiered-pricing structure and
the associated fee increases, the
Exchanges state that the use of such
additional Limited Service MEI Ports is
entirely voluntary; 18 and that there is
Market Makers are limited to twelve additional
Limited Service MEI Ports per matching engine, for
a total of fourteen per matching engine. See MIAX
Emerald Fee Schedule 5.d.ii.
11 15 U.S.C. 78s(b)(3)(C).
12 15 U.S.C. 78s(b)(1).
13 See, e.g., MIAX Notice, supra note 4, at 55094.
14 See, e.g., id. at 55101.
15 See MIAX Notice, supra note 4, at 55095; MIAX
Emerald Notice, supra note 4, at 55054–55.
16 See, e.g., MIAX Notice, supra note 4, at 55101.
17 See, e.g., id. at 55095.
18 See, e.g., id. at 55101.
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no regulatory requirement that any
market participant access any one
options exchange, use more than the
two free Limited Service MEI Ports that
the Exchanges provide per matching
engine, access the Exchanges in a
particular capacity, or trade any
particular product offered on the
Exchanges.19 Each Exchange further
states that no options market participant
is required by rule, regulation, or
competitive forces to be a Member of its
Exchange; 20 and that it is not aware of
any reason why market participants
could not simply drop their access (or
not initially access an exchange) if an
exchange were to establish nontransaction fees that did not make
business or economic sense for such
market participants.21 The Exchanges
believe this is illustrated by the fact that
market participants can and do drop
their access to exchanges based on nontransaction fee pricing 22 and that they
are unaware of any one options
exchange whose membership includes
every registered broker-dealer.23
The Exchanges also state that the
proposed fee increases for additional
Limited Service MEI Ports (which they
reference as ‘‘Proposed Access Fees’’)
are intended to recover the Exchanges’
costs of providing access to their
systems 24 and are a reasonable attempt
to offset a portion of the costs associated
with providing access to their network
infrastructure.25 The Exchanges provide
an analysis of their revenues, costs, and
profitability associated with the
Proposed Access Fees. The Exchanges
state that this analysis reflects an
extensive cost review in which the
Exchanges analyzed nearly every
expense item in the Exchanges’ general
expense ledgers to determine whether
each such expense relates to the
Proposed Access Fees, and, if such
expense did so relate, what portion (or
percentage) of such expense actually
supports the access services associated
with the Proposed Access Fees.26
For 2021, the total annual expense for
providing the access services associated
with the Proposed Access Fees is
projected by the Exchanges to be
approximately $1.32 million for MIAX
19 See,
e.g., id. at 55100.
e.g., id. at 55096.
21 See, e.g., id.
22 See, e.g., id.
23 See, e.g., id. at 55100–101.
24 See, e.g., id. at 55099.
25 See, e.g., id. at 55096.
26 See, e.g., id. Each Exchange also states that no
expense amount is allocated twice; and the
expenses in each Exchange’s analysis only cover its
own options market, not those of any affiliate. See,
e.g., id. at 55097.
20 See,
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and $0.88 million for MIAX Emerald.27
As described in more detail in the MIAX
Notice and MIAX Emerald Notice, the
total annual expense for each Exchange
is comprised of the following, all of
which the Exchanges state are directly
related to the access services associated
with the Proposed Access Fees: 28
• Third-party expense, relating to fees
paid by the Exchanges to third-parties
for certain products and services. This
included allocating a portion of fees
paid to: (1) Equinix for data center
services; (2) Zayo Group Holdings, Inc.
for network services; (3) Secure
Financial Transaction Infrastructure,
which supports connectivity and feeds;
(4) various other service providers for
content, connectivity, and infrastructure
services; and (5) various other hardware
and software providers; and
• internal expense, relating to the
internal costs of the Exchanges to
provide the access services associated
with the Proposed Access Fees. This
included allocating a portion of the
Exchanges’: (1) Employee compensation
and benefits expenses for full-time
employees that support the access
services associated with the Proposed
Access Fees; (2) depreciation and
amortization of hardware and software
used to provide the access services
associated with the Proposed Access
Fees; and (3) occupancy expenses for
leased office space for staff that provide
the access services associated with the
Proposed Access Fees.
The Exchanges state that their cost
and revenue analyses show that the
Proposed Access Fees will not result in
excessive pricing or supra-competitive
profits.29 According to the Exchanges,
on a fully-annualized basis, the revenue
the Exchanges project to collect from the
Proposed Access Fees 30 would be
approximately $3.21 million per year for
MIAX and $2.07 million per year for
MIAX Emerald.31 This results in a
projected profit margin of
approximately 59% for MIAX ($3.21
million in projected revenue minus
$1.32 million in projected expense =
$1.89 million profit per year) and
27 See MIAX Notice, supra note 4, at 55096; MIAX
Emerald Notice, supra note 4, at 55056.
28 See, e.g., MIAX Notice, supra note 4, at 55096–
99. The Exchanges clarify that the projected total
annual expense includes costs related to all Limited
Service MEI Ports, including the two Limited
Service MEI Ports that Market Makers receive for
free. See, e.g., id. at 55099.
29 See, e.g., id. at 55099.
30 The revenue numbers include the revenues the
Exchanges project to collect only from the fees the
Exchanges will charge for additional Limited
Service MEI Ports after the first two Limited Service
MEI Ports that Market Makers receive for free. See,
e.g., id.
31 See MIAX Notice, supra note 4, at 55099; MIAX
Emerald Notice, supra note 4, at 55058.
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approximately 58% for MIAX Emerald
($2.07 million in projected revenue
minus $0.88 million in projected
expense = $1.19 million profit per
year).32 The Exchanges state that, based
on the 2020 financial statements filed by
competing options exchanges in Form 1
amendments, the Exchanges’ revenues
that are derived from access fees are in
line with the revenue that is derived
from access fees of competing
exchanges, and the Exchanges’ overall
operating margins are in line with or
less than the operating margins of
competing exchanges.33 MIAX further
states that its anticipated operating
margin, inclusive of its proposed fee
change, would remain lower than or
comparable to that of competing
exchanges.34
The Exchanges further state that the
Proposed Access Fees are reasonable,
equitably allocated, and not unfairly
discriminatory because it benefits
overall competition in the marketplace
to allow relatively new entrants like the
Exchanges and their affiliate, MIAX
Pearl, LLC (‘‘MIAX Pearl’’), to propose
fees that may help them recoup their
substantial investment in building out
costly infrastructure. The Exchanges
state that they and MIAX Pearl have
historically set their fees purposefully
low in order to attract business and
market share. The Exchanges also state
that the concept of a tiered-pricing
structure for ports is not new or novel.35
In addition, the Exchanges state that
the move from a flat fee per month to
a tiered-pricing structure is reasonable,
equitably allocated, and not unfairly
discriminatory because the proposed
structure would encourage firms to be
more efficient and economical in the
number of Limited Service MEI Ports
they purchase, which the Exchanges
believe will enable them to better
monitor and provide access to the
Exchanges’ networks to ensure that the
Exchanges meet their obligations under
the Act to offer access to the Exchanges
on terms that are not unfairly
discriminatory, as well as to ensure
sufficient capacity and headroom in
their systems.36
The Exchanges further state that firms
that are primarily order routers seeking
best-execution do not utilize Limited
Service MEI Ports; and that, therefore,
the fees described in the proposed
tiered-pricing structure will only be
allocated to market-making firms that
32 See MIAX Notice, supra note 4, at 55099; MIAX
Emerald Notice, supra note 4, at 55058.
33 See, e.g., MIAX Notice, supra note 4, at 55100.
34 See MIAX Notice, supra note 4, at 55100.
35 See, e.g., MIAX Notice, supra note 4, at 55100.
36 See, e.g., id.
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engage in advanced trading strategies
and typically request multiple
additional Limited Service MEI Ports.37
The Exchanges further state that such
market-making firms generate higher
costs by utilizing more of the
Exchanges’ resources.38 The Exchanges
state that they must build out and
continue to maintain networks that have
the capacity the handle the message rate
requirements of not only firms that
consume minimal port resources, but
also those firms that most heavily
consume port resources, network
consumers, and purchasers of numerous
Limited Service MEI Ports, which
handle billions of messages per day
across the Exchanges’ networks.39 The
Exchanges believe that, given that
purchasers of the greatest amount of
Limited Service MEI Ports utilize the
most resources across their networks, it
is reasonable to operate at profit margins
of approximately 59% (for MIAX) and
58% (for MIAX Emerald) for these
ports.40 The Exchanges state that such
profit margins should enable the
Exchanges to continue to invest in their
networks and systems, maintain their
current infrastructure, support future
enhancements to ports and network
connectivity, and continue to offer
enhanced customer reporting and
monitoring services.41
The Commission received two
comment letters from one commenter
that opposes the proposed rule
changes.42 This commenter states that
the Exchanges have not sufficiently
demonstrated their proposed fees’
consistency with the Act or addressed
previous concerns with the proposed
fees raised by the same commenter.43
37 See,
e.g., id. at 55094.
e.g., id.
39 See, e.g., id. at 55099.
40 See MIAX Notice, supra note 4, at 55099; MIAX
Emerald Notice, supra note 4, at 55059.
41 See MIAX Notice, supra note 4, at 55099; MIAX
Emerald Notice, supra note 4, at 55059.
42 See letters from Richard J. McDonald,
Susquehanna International Group, LLP, to Vanessa
Countryman, Secretary, Commission, dated October
1, 2021 (‘‘First SIG Letter’’) and October 26, 2021
(‘‘Second SIG Letter’’).
43 See Second SIG Letter, supra note 42, at 2. In
the First SIG Letter the commenter requested that
the Commission suspend the proposals and
institute proceedings to determine whether to
approve or disapprove the proposals on the basis
that the proposals represent the same fee changes
previously proposed by the Exchanges for which
the commenter expressed concerns. See also letter
from Richard J. McDonald, Susquehanna
International Group, LLP, to Vanessa Countryman,
Secretary, Commission, dated September 7, 2021,
available at https://www.sec.gov/comments/srmiax-2021-35/srmiax202135-9208444-249989.pdf
(comment letter submitted to File Nos. SR–MIAX–
2021–35, SR–MIAX–2021–37, SR–PEARL–2021–33,
SR–PEARL–2021–36, SR–EMERALD–2021–23, and
SR–EMERALD–2021–25, and expressing similar
concerns to those described herein).
38 See,
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67747
Specifically, this commenter argues that
the Exchanges’ filings make the same
general claims in support of their
assertion that the port fee changes are
fair and reasonable, equitably allocated,
and not unfairly discriminatory as other
filings relating to ‘‘10Gb ULL’’
connections,44 and that the Exchanges’
justifications for the Limited Service
MEI Ports fail for the same reasons as
those offered in the 10Gb ULL filings.45
The commenter asserts that there are no
reasonable substitutes for the
Exchanges’ 10Gb ULL connectivity
lines, particularly for market makers
whose business models require them to
subscribe to direct connectivity to the
Exchanges in the highest proposed
pricing tier.46 The commenter further
argues that the fact that no member or
non-member has altered its use of 10Gb
ULL connectivity since the fee changes
went into effect serves as further
support of its claim that there are no
reasonable alternatives to the service.47
This commenter also argues that the
ability for a member to withdraw from
an exchange should not support the
reasonableness of any individual
proposed fee, as a member would incur
significant costs in withdrawing from an
exchange in the form of lost
infrastructure investments, the cost of
withdrawal itself, and other opportunity
costs.48 This commenter further objects
that the Exchanges have not provided
sufficient quantitative support for their
revenues, costs, and profitability under
the current and proposed fees to support
an analysis that the proposed fees and
the Exchanges’ profitability are
reasonable.49 Moreover, the commenter
argues that the Exchanges’ comparison
of their projected access fee profit
margins to the overall profit margins of
competing exchanges is insufficient as it
does not appropriately compare the
individual components of these other
exchange fees to those of the
Exchanges.50 The commenter also
suggests that any comparisons made by
the Exchanges to the revenues and
margins of other exchanges are inapt
44 See Securities Exchange Act Release Nos.
93165 (September 28, 2021), 86 FR 54750 (October
4, 2021) (SR–MIAX–2021–41); 93162 (September
28, 2021), 86 FR 54739 (October 4, 2021) (SR–
PEARL–45); and 93166 (September 28, 2021), 86 FR
54760 (October 4, 2021) (SR–EMERALD–29).
45 See Second SIG Letter, supra note 42, at 7.
46 See id. at 2–3.
47 See id. at 3.
48 See id.
49 See id. at 4. The commenter further argues that
the Exchanges have not sufficiently justified the
profit margins they would be accruing with the
proposed fees by, for example, explaining specific
technological undertakings the Exchanges expect to
fund with the revenue from the new fees. See id.
50 See id. at 4–5.
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because they do not account for the
circumstances under which other
exchanges established their fees,
including, for example, whether the
services are equivalent or the costs to
provide them are similar.51 Finally, this
commenter claims that the proposed
tiers in the new fee structure are
unfairly discriminatory because the
Exchanges have not provided any cost
breakdown to support the claim that the
use of multiple connections creates
higher costs for the Exchanges.52
Instead, the commenter argues that
market participants who purchase more
units of 10Gb ULL connections use
more exchange bandwidth simply due
to the fact that they have purchased
more units, and that this does not justify
the proposal to charge a higher rate per
unit, which the commenter claims is
unfairly discriminatory towards market
maker subscribers.53
Another commenter asks the
Commission to disapprove the proposed
fee changes because the Exchanges have
not met their burden of demonstrating
that they are consistent with the
standards under the Exchange Act.54
This commenter states that the
Exchanges’ argument that competition
for order flow constrains pricing for
products and services exclusively
offered by the Exchange does not
demonstrate that the fees are
reasonable.55 This commenter also
disagrees with the Exchanges’ statement
that they must continually adjust the
fees for these services as a result of
competition from other markets because
it does not reflect marketplace reality.56
This commenter also states that the
Exchanges have failed to demonstrate
that the proposed fees are equitably
allocated and not unfairly
discriminatory, with the proposed fee
changes ‘‘clearly and directly’’
impacting market makers and burden of
the fee increases falling predominantly
on market makers operating on the
Exchanges.57 The commenter states that
the Exchanges offer no concrete support
for their arguments that the tieredpricing structure would encourage firms
to be more economical and efficient in
the number of connections they
purchase, allowing the Exchanges to
better monitor and provide access to
their networks to ensure that they have
sufficient capacity and headroom in
their systems.58 The commenter also
states that the Exchanges have provided
no public information on how they
derived the cost amounts they
determined to allocate to the products
and services subject to the proposed fee
changes nor any meaningful baseline
information regarding the Exchanges’
overall costs.59 This commenter believes
that the Exchanges have withdrawn and
refiled essentially identical proposals,60
subverting proper consideration of the
proposed fee changes under the process
set forth in the Exchange Act.61
When an exchange files a proposed
rule change with the Commission,
including fee filings, it is required to
provide a statement supporting the
proposal’s basis under the Act and the
rules and regulations thereunder
applicable to the exchange.62 The
instructions to Form 19b–4, on which
exchanges file their proposed rule
changes, specify that such statement
‘‘should be sufficiently detailed and
specific to support a finding that the
proposed rule change is consistent with
[those] requirements.’’ 63
Section 6 of the Act, including
Sections 6(b)(4), (5), and (8), requires,
among other things, that the rules of an
exchange: (1) Provide for the equitable
allocation of reasonable fees among
members, issuers, and other persons
using the exchange’s facilities; 64 (2) be
designed to perfect the mechanism of a
free and open market and a national
market system and to protect investors
and the public interest, and not be
57 See
id. at 4–5.
id. at 4. The commenter also states that the
Exchanges fail to provide any discussion of why
their current capacity needs are constrained under
the current pricing structure.
59 See id. at 5. The commenter believes that such
information is needed to allow commenters to judge
whether the allocations are supportable. Id. This
commenter also believes that the Exchanges’
discussion of profit margins are ‘‘high-level and
conclusory,’’ and fail to provide sufficient detail to
understand whether or not the fees are reasonable.
Id.
60 See supra note 8.
61 See SIFMA Letter, supra note 54, at 5–6.
62 See 17 CFR 240.19b–4 (General Instructions for
Form 19b–4—Information to be Included in the
Complete Form—Item 3 entitled ‘‘Self-Regulatory
Organization’s Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change’’).
63 See id.
64 15 U.S.C. 78f(b)(4).
58 See
51 See
id.
id. at 5.
53 See id. at 6.
54 See letter from Ellen Green, Managing Director,
Equity and Options Market Structure, Securities
Industry and Financial Markets Association, to
Vanessa Countryman, Secretary, Commission, dated
November 16, 2021 (‘‘SIFMA Letter’’).
55 See id. at 3. This commenter asserts that the
proposals are similar to proprietary market data
products offered by the Exchanges, which are
unique to the Exchanges and market participants
cannot obtain anywhere else. Id. The commenter
also states that for market makers, additional MEI
ports are critical for market makers to provide
liquidity on the Exchanges and the argument that
the additional MEI ports are options ‘‘does not
reflect marketplace reality, nor does it demonstrate
that the proposed fees are reasonable.’’ Id. at 4.
56 See id. at 4.
khammond on DSKJM1Z7X2PROD with NOTICES
52 See
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designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers; 65 and (3)
not impose any burden on competition
not necessary or appropriate in
furtherance of the purposes of the Act.66
In temporarily suspending the
Exchanges’ proposed rule changes, the
Commission intends to further consider
whether the proposed additional
Limited Service MEI Port fees are
consistent with the statutory
requirements applicable to a national
securities exchange under the Act. In
particular, the Commission will
consider whether the proposed rule
changes satisfy the standards under the
Act and the rules thereunder requiring,
among other things, that an exchange’s
rules provide for the equitable
allocation of reasonable fees among
members, issuers, and other persons
using its facilities; are designed to
perfect the mechanism of a free and
open market and a national market
system and to protect investors and the
public interest, and are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers;
and do not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.67
Therefore, the Commission finds that
it is appropriate in the public interest,
for the protection of investors, and
otherwise in furtherance of the purposes
of the Act, to temporarily suspend the
proposed rule changes.68
IV. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Changes
In addition to temporarily suspending
the proposal, the Commission also
hereby institutes proceedings pursuant
to Sections 19(b)(3)(C) 69 and 19(b)(2)(B)
of the Act 70 to determine whether the
Exchanges’ proposed rule changes
should be approved or disapproved.
Institution of proceedings does not
indicate that the Commission has
reached any conclusions with respect to
any of the issues involved. Rather, the
65 15
U.S.C. 78f(b)(5).
U.S.C. 78f(b)(8).
67 See 15 U.S.C. 78f(b)(4), (5), and (8),
respectively.
68 For purposes of temporarily suspending the
proposed rule changes, the Commission has
considered the proposed rules’ impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
69 15 U.S.C. 78s(b)(3)(C). Once the Commission
temporarily suspends a proposed rule change,
Section 19(b)(3)(C) of the Act requires that the
Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule
change should be approved or disapproved.
70 15 U.S.C. 78s(b)(2)(B).
66 15
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Commission seeks and encourages
interested persons to provide additional
comment on the proposed rule changes
to inform the Commission’s analysis of
whether to approve or disapprove the
proposed rule changes.
Pursuant to Section 19(b)(2)(B) of the
Act,71 the Commission is providing
notice of the grounds for possible
disapproval under consideration:
• Whether the Exchanges have
demonstrated how the proposed fees are
consistent with Section 6(b)(4) of the
Act, which requires that the rules of a
national securities exchange ‘‘provide
for the equitable allocation of reasonable
dues, fees, and other charges among its
members and issuers and other persons
using its facilities’’; 72
• Whether the Exchanges have
demonstrated how the proposed fees are
consistent with Section 6(b)(5) of the
Act, which requires, among other
things, that the rules of a national
securities exchange be designed to
‘‘perfect the mechanism of a free and
open market and a national market
system’’ and ‘‘protect investors and the
public interest,’’ and not be ‘‘designed
to permit unfair discrimination between
customers, issuers, brokers, or
dealers’’; 73 and
• Whether the Exchanges have
demonstrated how the proposed fees are
consistent with Section 6(b)(8) of the
Act, which requires that the rules of a
national securities exchange ‘‘not
impose any burden on competition not
necessary or appropriate in furtherance
of the purposes of [the Act].’’ 74
As discussed in Section III above, the
Exchanges made various arguments in
support of the proposals, and the
Commission received comment letters
disputing the Exchanges’ arguments and
expressing concerns regarding the
proposals.75 In particular, the
commenters argue that the Exchanges
did not provide sufficient information to
establish that the proposed fees are
consistent with the Act and the rules
thereunder.76 The Commission believes
that there are questions as to whether
71 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the
Act also provides that proceedings to determine
whether to disapprove a proposed rule change must
be concluded within 180 days of the date of
publication of notice of the filing of the proposed
rule change. See id. The time for conclusion of the
proceedings may be extended for up to 60 days if
the Commission finds good cause for such
extension and publishes its reasons for so finding,
or if the exchange consents to the longer period. See
id.
72 15 U.S.C. 78f(b)(4).
73 15 U.S.C. 78f(b)(5).
74 15 U.S.C. 78f(b)(8).
75 See First SIG Letter and Second SIG Letter,
supra note 42; SIFMA Letter, supra note 54.
76 See id.
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the Exchanges have provided sufficient
information to demonstrate that the
proposals are consistent with the Act
and the rules thereunder.
Under the Commission’s Rules of
Practice, the ‘‘burden to demonstrate
that a proposed rule change is
consistent with the [Act] and the rules
and regulations issued thereunder . . .
is on the [SRO] that proposed the rule
change.’’ 77 The description of a
proposed rule change, its purpose and
operation, its effect, and a legal analysis
of its consistency with applicable
requirements must all be sufficiently
detailed and specific to support an
affirmative Commission finding,78 and
any failure of an SRO to provide this
information may result in the
Commission not having a sufficient
basis to make an affirmative finding that
a proposed rule change is consistent
with the Act and the applicable rules
and regulations.79
The Commission is instituting
proceedings to allow for additional
consideration and comment on the
issues raised herein, including as to
whether the proposals are consistent
with the Act, and specifically, with its
requirements that the rules of a national
securities exchange provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers, and other persons
using its facilities; are designed to
perfect the mechanism of a free and
open market and a national market
system, and to protect investors and the
public interest; are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers;
and do not impose a burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act; 80 as well as any
other provision of the Act, or the rules
and regulations thereunder.
V. Commission’s Solicitation of
Comments
The Commission requests written
views, data, and arguments with respect
to the concerns identified above as well
as any other relevant concerns. Such
comments should be submitted by
December 20, 2021. Rebuttal comments
should be submitted by January 3, 2022.
Although there do not appear to be any
issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
77 17
CFR 201.700(b)(3).
id.
79 See id.
80 See 15 U.S.C. 78f(b)(4), (5), and (8).
78 See
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Fmt 4703
Sfmt 4703
67749
request for an opportunity to make an
oral presentation.81
The Commission asks that
commenters address the sufficiency and
merit of the Exchanges’ statements in
support of the proposals, in addition to
any other comments they may wish to
submit about the proposed rule changes.
Interested persons are invited to
submit written data, views, and
arguments concerning the proposed rule
changes, including whether the
proposed rule changes are consistent
with the Act. Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Nos. SR–
MIAX–2021–43 and SR–EMERALD–
2021–31 on the subject line.
Paper Comments
• 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
Nos. SR–MIAX–2021–43 and SR–
EMERALD–2021–31. These file
numbers 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
changes that are filed with the
Commission, and all written
communications relating to the
proposed rule changes between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
81 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by an
SRO. See Securities Acts Amendments of 1975,
Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
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Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
inspection and copying at the principal
office of the Exchanges. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File Nos.
SR–MIAX–2021–43 and SR–EMERALD–
2021–31 and should be submitted on or
before December 20, 2021. Rebuttal
comments should be submitted by
January 3, 2022.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,82 that File
Nos. SR–MIAX–2021–43 and SR–
EMERALD–2021–31 be, and hereby are,
temporarily suspended. In addition, the
Commission is instituting proceedings
to determine whether the proposed rule
changes should be approved or
disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.83
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25879 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93644; File No. SR–
EMERALD–2021–29]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Suspension of and
Order Instituting Proceedings To
Determine Whether To Approve or
Disapprove Proposed Rule Change To
Amend the Exchange’s Fee Schedule
To Adopt a Tiered-Pricing Structure for
Certain Connectivity Fees
khammond on DSKJM1Z7X2PROD with NOTICES
November 22, 2021.
I. Introduction
On September 24, 2021, MIAX
Emerald, LLC (‘‘MIAX Emerald’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Exchange Act’’ or ‘‘Act’’),1 and
Rule 19b–4 thereunder,2 a proposed rule
change (File Number SR–EMERALD–
2021–29) to amend the Exchange’s Fee
Schedule (‘‘Fee Schedule’’) to adopt a
tiered pricing structure for certain
82 15
U.S.C. 78s(b)(3)(C).
CFR 200.30–3(a)(57) and (58).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
83 17
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16:55 Nov 26, 2021
Jkt 256001
connectivity fees. The proposed rule
change was immediately effective upon
filing with the Commission pursuant to
Section 19(b)(3)(A) of the Act.3 The
proposed rule change was published for
comment in the Federal Register on
October 4, 2021.4 Under Section
19(b)(3)(C) of the Act,5 the Commission
is hereby: (i) Temporarily suspending
File Number SR–EMERALD–2021–29;
and (ii) instituting proceedings to
determine whether to approve or
disapprove File Number SR–
EMERALD–2021–29.
II. Description of the Proposed Rule
Change
MIAX Emerald proposes to modify
the Exchange’s Fee Schedule to adopt a
tiered-pricing structure for 10 gigabit
(‘‘Gb’’) ultra-low latency (‘‘ULL’’) fiber
connections to the Exchange’s primary
and secondary facilities available to
both Members 6 and non-Members.
Specifically, the Exchange proposes to
modify the pricing structure for 10Gb
ULL connections from a flat monthly fee
of $10,000 per 10Gb ULL connection to
the following fees (collectively, the
‘‘Proposed Access Fees’’): 7
• $9,000 each for the 1st and 2nd
connections;
• $11,000 each for the 3rd and 4th
connections; and
• $13,000 for each additional
connection after the 4th connection.
These fees are assessed in any month
the Member or non-Member is
credentialed to use any of the
Exchange’s APIs or market data feeds in
the Exchange’s production environment,
pro-rated when a Member or nonMember makes a change to connectivity
by adding or deleting connections, and
3 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
4 See Securities Exchange Act Release No. 93166
(September 28, 2021), 86 FR 54760 (‘‘Notice’’).
Comments received on the proposed rule change
are available on the Commission’s website at:
https://www.sec.gov/comments/sr-emerald-202129/sremerald202129.htm.
5 15 U.S.C. 78s(b)(3)(C).
6 The term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of Exchange Rules for
purposes of trading on the Exchange as an
‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’
Members are deemed ‘‘members’’ under the
Exchange Act. See the Definitions Section of the
Fee Schedule and Exchange Rule 100.
7 The Exchange initially filed the proposed fee
change on July 30, 2021. See Securities Exchange
Act Release No. 92645 (August 11, 2021), 86 FR
46048 (August 17, 2021) (SR–EMERALD–2021–23).
That filing was withdrawn by the Exchange and
replaced with the instant filing, with additional
information.
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Frm 00077
Fmt 4703
Sfmt 4703
assessed in any month during which the
Member or non-Member has established
connectivity with the Exchange’s
disaster recovery facility.8
III. Suspension of the Proposed Rule
Change
Pursuant to Section 19(b)(3)(C) of the
Act,9 at any time within 60 days of the
date of filing of an immediately effective
proposed rule change pursuant to
Section 19(b)(1) of the Act,10 the
Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization
(‘‘SRO’’) if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act. As discussed below, the
Commission believes a temporary
suspension of the proposed rule change
is necessary and appropriate to allow for
additional analysis of the proposed rule
change’s consistency with the Act and
the rules thereunder.
The Exchange states that the tieredpricing structure is reasonable,
equitably allocated, and not unfairly
discriminatory because it will encourage
Members and non-Members to be more
efficient and economical when
determining how to connect to the
Exchange, and also enable the Exchange
to better monitor and provide access to
the Exchange’s network to ensure
sufficient capacity and headroom in the
System.11 The Exchange also states that
the majority of Members and nonMembers that purchase 10Gb ULL
connections will either save money or
pay the same amount after the tieredpricing structure is implemented.12 The
Exchange further states that firms that
primarily route orders for best
executions generally only need a limited
number of connections to fulfill that
obligation and connectivity costs will
8 See
Notice, supra note 4, at 54761.
U.S.C. 78s(b)(3)(C).
10 15 U.S.C. 78s(b)(1).
11 See Notice, supra note 4, at 54761. The term
‘‘System’’ means the automated trading system used
by the Exchange for the trading of securities. See
Exchange Rule 100.
12 See Notice, supra note 4, at 54761, 54769. The
Exchange states that it initially filed this proposed
fee change on July 30, 2021 (SR–EMERALD–2021–
23) and, after the effective date of SR–EMERALD–
2021–23 on August 1, 2021, approximately 60% of
the firms that purchased at least one 10Gb ULL
connection experienced a decrease in their monthly
connectivity fees, while approximately 40% of
firms experienced an increase in their monthly
connectivity fees as a result of the proposed tieredpricing structure when compared to the flat
monthly fee structure. See id. at 54761. The
Exchange also states that no Member or nonMember has altered its use of 10Gb ULL
connectivity since the proposed fees went into
effect on August 1, 2021. See id. at 54768.
9 15
E:\FR\FM\29NON1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 226 (Monday, November 29, 2021)]
[Notices]
[Pages 67745-67750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25879]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93640; File Nos. SR-MIAX-2021-43, SR-EMERALD-2021-31]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC, MIAX Emerald, LLC; Suspension of and Order Instituting
Proceedings To Determine Whether To Approve or Disapprove Proposed Rule
Changes To Amend Fee Schedules To Adopt Tiered-Pricing Structures for
Additional Limited Service MIAX and MIAX Emerald Express Interface
Ports
November 22, 2021.
I. Introduction
On September 28, 2021, Miami International Securities Exchange, LLC
(``MIAX'') and MIAX Emerald, LLC (``MIAX Emerald'') (each an
``Exchange''; collectively, the ``Exchanges'') each filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\
and Rule 19b-4 thereunder,\2\ a proposed rule change to adopt a tiered-
pricing structure for additional limited service express interface
ports. Each proposed rule change was immediately effective upon filing
with the Commission pursuant to Section 19(b)(3)(A) of the Act.\3\ The
proposed rule changes were published for comment in the Federal
Register on October 5, 2021.\4\ Pursuant to Section 19(b)(3)(C) of the
Act,\5\ the Commission is hereby: (1) Temporarily suspending File Nos.
SR-MIAX-2021-43 and SR-EMERALD-2021-31; and (2) instituting proceedings
to determine whether to approve or disapprove File Nos. SR-MIAX-2021-43
and SR-EMERALD-2021-31.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A). A proposed rule change may take
effect upon filing with the Commission if it is designated by the
exchange as ``establishing or changing a due, fee, or other charge
imposed by the self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory organization.''
15 U.S.C. 78s(b)(3)(A)(ii).
\4\ See Securities Exchange Act Release Nos. 93185 (September
29, 2021), 86 FR 55093 (October 5, 2021) (SR-MIAX-2021-43) (``MIAX
Notice''); 93188 (September 29, 2021), 86 FR 55052 (October 5, 2021)
(SR-EMERALD-2021-31) (``MIAX Emerald Notice''). For ease of
reference, citations to statements generally applicable to both
notices are to the MIAX Notice. Comments received on the proposed
rule changes are available on the Commission's website at: https://www.sec.gov/comments/sr-miax-2021-43/srmiax202143.htm (SR-MIAX-2021-
43); https://www.sec.gov/comments/sr-emerald-2021-31/sremerald202131.htm (SR-EMERALD-2021-31).
\5\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
II. Description of the Proposed Rule Changes
Limited Service MIAX Express Interface Ports and Limited Service
MIAX Emerald Express Interface Ports (collectively, ``Limited Service
MEI Ports'') provide Market Makers \6\ with the ability to send eQuotes
and quote purge messages, and are also capable of receiving
administrative information.\7\ Currently, each Exchange allocates two
Limited Service MEI Ports, free of charge, per matching engine to which
a Market Maker connects. Market Makers may request additional Limited
Service MEI Ports for each matching engine to which they connect for an
additional monthly fee for each such additional port. Prior to the
proposed rule changes, each Exchange charged a flat $100 monthly fee
for each such additional port. Each Exchange has proposed to adopt a
tiered-pricing structure.\8\ For both MIAX and MIAX Emerald, the first
and second Limited Service MEI Ports for each matching engine would
remain free of charge. For MIAX, the additional Limited Service MEI
Port fees for each matching engine would increase from $100 to: (i)
$150 for the third and fourth Limited Service MEI Ports; (ii) $200 for
the fifth and sixth Limited Service MEI Ports; and (iii) $250 for the
seventh or more Limited Service MEI Ports.\9\ For MIAX Emerald, the
additional Limited Service MEI Port fees for each matching engine would
increase from $100 to: (i) $200 for the third and fourth Limited
Service MEI Ports; (ii) $300 for the fifth and sixth Limited Service
MEI Ports; and (iii) $400 for the seventh to fourteenth Limited Service
MEI Ports.\10\
---------------------------------------------------------------------------
\6\ Defined at MIAX Rule 100 and MIAX Emerald Rule 100.
\7\ See, e.g., MIAX Notice, supra note 4, at 55093 n.10.
\8\ The Exchanges initially filed the proposed fee changes on
August 2, 2021. See Securities Exchange Act Release Nos. 92661
(August 13, 2021), 86 FR 46737 (August 19, 2021) (SR-MIAX-2021-37),
92662 (August 13, 2021), 86 FR 46726 (August 19, 2021) (SR-EMERALD-
2021-25). These filings were withdrawn and replaced with the instant
filings, with additional information. See also Securities Exchange
Act Release No. 91857 (May 12, 2021), 86 FR 26973 (May 18, 2021)
(MIAX-2021-19) (allowing purchase of any number of additional
Limited Service MEI Ports and stating that, at a continued monthly
fee of $100 for each additional port, the Exchange anticipates
generating an annual loss from the provision).
\9\ See MIAX Notice, supra note 4, at 55094.
\10\ See MIAX Emerald Notice, supra note 4, at 55053. The MIAX
Emerald Fee Schedule states that Market Makers are limited to twelve
additional Limited Service MEI Ports per matching engine, for a
total of fourteen per matching engine. See MIAX Emerald Fee Schedule
5.d.ii.
---------------------------------------------------------------------------
[[Page 67746]]
III. Suspension of the Proposed Rule Changes
Pursuant to Section 19(b)(3)(C) of the Act,\11\ at any time within
60 days of the date of filing of an immediately effective proposed rule
change pursuant to Section 19(b)(1) of the Act,\12\ the Commission
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') if it appears to the Commission that
such action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. As described below, the Commission believes a temporary
suspension of the proposed rule changes is necessary and appropriate to
allow for additional analysis of the proposed rule changes' consistency
with the Act and the rules thereunder.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(C).
\12\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
In support of the proposed tiered-pricing structure and associated
fee increases, the Exchanges argue that they operate in a highly
competitive market \13\ and their ability to price access and ports is
constrained by competition among exchanges and third parties.\14\ MIAX
states that it has a market share of only 5.8%, and MIAX Emerald states
that it has a market share of only 4.99%, of the U.S. equity options
industry as of September 2021.\15\ The Exchanges also state that there
are 15 other U.S options exchanges which they must consider in their
pricing discipline in order to compete for market participants.\16\ As
evidence for their arguments, the Exchanges provide port fees for
competing exchanges which, according to the Exchanges, demonstrate that
the proposed tiered-pricing structure and proposed fees for additional
Limited Service MEI Ports are less than or similar to fees charged by
competing options exchanges for similar access on those exchanges.\17\
---------------------------------------------------------------------------
\13\ See, e.g., MIAX Notice, supra note 4, at 55094.
\14\ See, e.g., id. at 55101.
\15\ See MIAX Notice, supra note 4, at 55095; MIAX Emerald
Notice, supra note 4, at 55054-55.
\16\ See, e.g., MIAX Notice, supra note 4, at 55101.
\17\ See, e.g., id. at 55095.
---------------------------------------------------------------------------
In further support of their arguments that competitive forces
constrain the proposed tiered-pricing structure and the associated fee
increases, the Exchanges state that the use of such additional Limited
Service MEI Ports is entirely voluntary; \18\ and that there is no
regulatory requirement that any market participant access any one
options exchange, use more than the two free Limited Service MEI Ports
that the Exchanges provide per matching engine, access the Exchanges in
a particular capacity, or trade any particular product offered on the
Exchanges.\19\ Each Exchange further states that no options market
participant is required by rule, regulation, or competitive forces to
be a Member of its Exchange; \20\ and that it is not aware of any
reason why market participants could not simply drop their access (or
not initially access an exchange) if an exchange were to establish non-
transaction fees that did not make business or economic sense for such
market participants.\21\ The Exchanges believe this is illustrated by
the fact that market participants can and do drop their access to
exchanges based on non-transaction fee pricing \22\ and that they are
unaware of any one options exchange whose membership includes every
registered broker-dealer.\23\
---------------------------------------------------------------------------
\18\ See, e.g., id. at 55101.
\19\ See, e.g., id. at 55100.
\20\ See, e.g., id. at 55096.
\21\ See, e.g., id.
\22\ See, e.g., id.
\23\ See, e.g., id. at 55100-101.
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The Exchanges also state that the proposed fee increases for
additional Limited Service MEI Ports (which they reference as
``Proposed Access Fees'') are intended to recover the Exchanges' costs
of providing access to their systems \24\ and are a reasonable attempt
to offset a portion of the costs associated with providing access to
their network infrastructure.\25\ The Exchanges provide an analysis of
their revenues, costs, and profitability associated with the Proposed
Access Fees. The Exchanges state that this analysis reflects an
extensive cost review in which the Exchanges analyzed nearly every
expense item in the Exchanges' general expense ledgers to determine
whether each such expense relates to the Proposed Access Fees, and, if
such expense did so relate, what portion (or percentage) of such
expense actually supports the access services associated with the
Proposed Access Fees.\26\
---------------------------------------------------------------------------
\24\ See, e.g., id. at 55099.
\25\ See, e.g., id. at 55096.
\26\ See, e.g., id. Each Exchange also states that no expense
amount is allocated twice; and the expenses in each Exchange's
analysis only cover its own options market, not those of any
affiliate. See, e.g., id. at 55097.
---------------------------------------------------------------------------
For 2021, the total annual expense for providing the access
services associated with the Proposed Access Fees is projected by the
Exchanges to be approximately $1.32 million for MIAX and $0.88 million
for MIAX Emerald.\27\ As described in more detail in the MIAX Notice
and MIAX Emerald Notice, the total annual expense for each Exchange is
comprised of the following, all of which the Exchanges state are
directly related to the access services associated with the Proposed
Access Fees: \28\
---------------------------------------------------------------------------
\27\ See MIAX Notice, supra note 4, at 55096; MIAX Emerald
Notice, supra note 4, at 55056.
\28\ See, e.g., MIAX Notice, supra note 4, at 55096-99. The
Exchanges clarify that the projected total annual expense includes
costs related to all Limited Service MEI Ports, including the two
Limited Service MEI Ports that Market Makers receive for free. See,
e.g., id. at 55099.
---------------------------------------------------------------------------
Third-party expense, relating to fees paid by the
Exchanges to third-parties for certain products and services. This
included allocating a portion of fees paid to: (1) Equinix for data
center services; (2) Zayo Group Holdings, Inc. for network services;
(3) Secure Financial Transaction Infrastructure, which supports
connectivity and feeds; (4) various other service providers for
content, connectivity, and infrastructure services; and (5) various
other hardware and software providers; and
internal expense, relating to the internal costs of the
Exchanges to provide the access services associated with the Proposed
Access Fees. This included allocating a portion of the Exchanges': (1)
Employee compensation and benefits expenses for full-time employees
that support the access services associated with the Proposed Access
Fees; (2) depreciation and amortization of hardware and software used
to provide the access services associated with the Proposed Access
Fees; and (3) occupancy expenses for leased office space for staff that
provide the access services associated with the Proposed Access Fees.
The Exchanges state that their cost and revenue analyses show that
the Proposed Access Fees will not result in excessive pricing or supra-
competitive profits.\29\ According to the Exchanges, on a fully-
annualized basis, the revenue the Exchanges project to collect from the
Proposed Access Fees \30\ would be approximately $3.21 million per year
for MIAX and $2.07 million per year for MIAX Emerald.\31\ This results
in a projected profit margin of approximately 59% for MIAX ($3.21
million in projected revenue minus $1.32 million in projected expense =
$1.89 million profit per year) and
[[Page 67747]]
approximately 58% for MIAX Emerald ($2.07 million in projected revenue
minus $0.88 million in projected expense = $1.19 million profit per
year).\32\ The Exchanges state that, based on the 2020 financial
statements filed by competing options exchanges in Form 1 amendments,
the Exchanges' revenues that are derived from access fees are in line
with the revenue that is derived from access fees of competing
exchanges, and the Exchanges' overall operating margins are in line
with or less than the operating margins of competing exchanges.\33\
MIAX further states that its anticipated operating margin, inclusive of
its proposed fee change, would remain lower than or comparable to that
of competing exchanges.\34\
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\29\ See, e.g., id. at 55099.
\30\ The revenue numbers include the revenues the Exchanges
project to collect only from the fees the Exchanges will charge for
additional Limited Service MEI Ports after the first two Limited
Service MEI Ports that Market Makers receive for free. See, e.g.,
id.
\31\ See MIAX Notice, supra note 4, at 55099; MIAX Emerald
Notice, supra note 4, at 55058.
\32\ See MIAX Notice, supra note 4, at 55099; MIAX Emerald
Notice, supra note 4, at 55058.
\33\ See, e.g., MIAX Notice, supra note 4, at 55100.
\34\ See MIAX Notice, supra note 4, at 55100.
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The Exchanges further state that the Proposed Access Fees are
reasonable, equitably allocated, and not unfairly discriminatory
because it benefits overall competition in the marketplace to allow
relatively new entrants like the Exchanges and their affiliate, MIAX
Pearl, LLC (``MIAX Pearl''), to propose fees that may help them recoup
their substantial investment in building out costly infrastructure. The
Exchanges state that they and MIAX Pearl have historically set their
fees purposefully low in order to attract business and market share.
The Exchanges also state that the concept of a tiered-pricing structure
for ports is not new or novel.\35\
---------------------------------------------------------------------------
\35\ See, e.g., MIAX Notice, supra note 4, at 55100.
---------------------------------------------------------------------------
In addition, the Exchanges state that the move from a flat fee per
month to a tiered-pricing structure is reasonable, equitably allocated,
and not unfairly discriminatory because the proposed structure would
encourage firms to be more efficient and economical in the number of
Limited Service MEI Ports they purchase, which the Exchanges believe
will enable them to better monitor and provide access to the Exchanges'
networks to ensure that the Exchanges meet their obligations under the
Act to offer access to the Exchanges on terms that are not unfairly
discriminatory, as well as to ensure sufficient capacity and headroom
in their systems.\36\
---------------------------------------------------------------------------
\36\ See, e.g., id.
---------------------------------------------------------------------------
The Exchanges further state that firms that are primarily order
routers seeking best-execution do not utilize Limited Service MEI
Ports; and that, therefore, the fees described in the proposed tiered-
pricing structure will only be allocated to market-making firms that
engage in advanced trading strategies and typically request multiple
additional Limited Service MEI Ports.\37\ The Exchanges further state
that such market-making firms generate higher costs by utilizing more
of the Exchanges' resources.\38\ The Exchanges state that they must
build out and continue to maintain networks that have the capacity the
handle the message rate requirements of not only firms that consume
minimal port resources, but also those firms that most heavily consume
port resources, network consumers, and purchasers of numerous Limited
Service MEI Ports, which handle billions of messages per day across the
Exchanges' networks.\39\ The Exchanges believe that, given that
purchasers of the greatest amount of Limited Service MEI Ports utilize
the most resources across their networks, it is reasonable to operate
at profit margins of approximately 59% (for MIAX) and 58% (for MIAX
Emerald) for these ports.\40\ The Exchanges state that such profit
margins should enable the Exchanges to continue to invest in their
networks and systems, maintain their current infrastructure, support
future enhancements to ports and network connectivity, and continue to
offer enhanced customer reporting and monitoring services.\41\
---------------------------------------------------------------------------
\37\ See, e.g., id. at 55094.
\38\ See, e.g., id.
\39\ See, e.g., id. at 55099.
\40\ See MIAX Notice, supra note 4, at 55099; MIAX Emerald
Notice, supra note 4, at 55059.
\41\ See MIAX Notice, supra note 4, at 55099; MIAX Emerald
Notice, supra note 4, at 55059.
---------------------------------------------------------------------------
The Commission received two comment letters from one commenter that
opposes the proposed rule changes.\42\ This commenter states that the
Exchanges have not sufficiently demonstrated their proposed fees'
consistency with the Act or addressed previous concerns with the
proposed fees raised by the same commenter.\43\ Specifically, this
commenter argues that the Exchanges' filings make the same general
claims in support of their assertion that the port fee changes are fair
and reasonable, equitably allocated, and not unfairly discriminatory as
other filings relating to ``10Gb ULL'' connections,\44\ and that the
Exchanges' justifications for the Limited Service MEI Ports fail for
the same reasons as those offered in the 10Gb ULL filings.\45\ The
commenter asserts that there are no reasonable substitutes for the
Exchanges' 10Gb ULL connectivity lines, particularly for market makers
whose business models require them to subscribe to direct connectivity
to the Exchanges in the highest proposed pricing tier.\46\ The
commenter further argues that the fact that no member or non-member has
altered its use of 10Gb ULL connectivity since the fee changes went
into effect serves as further support of its claim that there are no
reasonable alternatives to the service.\47\ This commenter also argues
that the ability for a member to withdraw from an exchange should not
support the reasonableness of any individual proposed fee, as a member
would incur significant costs in withdrawing from an exchange in the
form of lost infrastructure investments, the cost of withdrawal itself,
and other opportunity costs.\48\ This commenter further objects that
the Exchanges have not provided sufficient quantitative support for
their revenues, costs, and profitability under the current and proposed
fees to support an analysis that the proposed fees and the Exchanges'
profitability are reasonable.\49\ Moreover, the commenter argues that
the Exchanges' comparison of their projected access fee profit margins
to the overall profit margins of competing exchanges is insufficient as
it does not appropriately compare the individual components of these
other exchange fees to those of the Exchanges.\50\ The commenter also
suggests that any comparisons made by the Exchanges to the revenues and
margins of other exchanges are inapt
[[Page 67748]]
because they do not account for the circumstances under which other
exchanges established their fees, including, for example, whether the
services are equivalent or the costs to provide them are similar.\51\
Finally, this commenter claims that the proposed tiers in the new fee
structure are unfairly discriminatory because the Exchanges have not
provided any cost breakdown to support the claim that the use of
multiple connections creates higher costs for the Exchanges.\52\
Instead, the commenter argues that market participants who purchase
more units of 10Gb ULL connections use more exchange bandwidth simply
due to the fact that they have purchased more units, and that this does
not justify the proposal to charge a higher rate per unit, which the
commenter claims is unfairly discriminatory towards market maker
subscribers.\53\
---------------------------------------------------------------------------
\42\ See letters from Richard J. McDonald, Susquehanna
International Group, LLP, to Vanessa Countryman, Secretary,
Commission, dated October 1, 2021 (``First SIG Letter'') and October
26, 2021 (``Second SIG Letter'').
\43\ See Second SIG Letter, supra note 42, at 2. In the First
SIG Letter the commenter requested that the Commission suspend the
proposals and institute proceedings to determine whether to approve
or disapprove the proposals on the basis that the proposals
represent the same fee changes previously proposed by the Exchanges
for which the commenter expressed concerns. See also letter from
Richard J. McDonald, Susquehanna International Group, LLP, to
Vanessa Countryman, Secretary, Commission, dated September 7, 2021,
available at https://www.sec.gov/comments/sr-miax-2021-35/srmiax202135-9208444-249989.pdf (comment letter submitted to File
Nos. SR-MIAX-2021-35, SR-MIAX-2021-37, SR-PEARL-2021-33, SR-PEARL-
2021-36, SR-EMERALD-2021-23, and SR-EMERALD-2021-25, and expressing
similar concerns to those described herein).
\44\ See Securities Exchange Act Release Nos. 93165 (September
28, 2021), 86 FR 54750 (October 4, 2021) (SR-MIAX-2021-41); 93162
(September 28, 2021), 86 FR 54739 (October 4, 2021) (SR-PEARL-45);
and 93166 (September 28, 2021), 86 FR 54760 (October 4, 2021) (SR-
EMERALD-29).
\45\ See Second SIG Letter, supra note 42, at 7.
\46\ See id. at 2-3.
\47\ See id. at 3.
\48\ See id.
\49\ See id. at 4. The commenter further argues that the
Exchanges have not sufficiently justified the profit margins they
would be accruing with the proposed fees by, for example, explaining
specific technological undertakings the Exchanges expect to fund
with the revenue from the new fees. See id.
\50\ See id. at 4-5.
\51\ See id.
\52\ See id. at 5.
\53\ See id. at 6.
---------------------------------------------------------------------------
Another commenter asks the Commission to disapprove the proposed
fee changes because the Exchanges have not met their burden of
demonstrating that they are consistent with the standards under the
Exchange Act.\54\ This commenter states that the Exchanges' argument
that competition for order flow constrains pricing for products and
services exclusively offered by the Exchange does not demonstrate that
the fees are reasonable.\55\ This commenter also disagrees with the
Exchanges' statement that they must continually adjust the fees for
these services as a result of competition from other markets because it
does not reflect marketplace reality.\56\ This commenter also states
that the Exchanges have failed to demonstrate that the proposed fees
are equitably allocated and not unfairly discriminatory, with the
proposed fee changes ``clearly and directly'' impacting market makers
and burden of the fee increases falling predominantly on market makers
operating on the Exchanges.\57\ The commenter states that the Exchanges
offer no concrete support for their arguments that the tiered-pricing
structure would encourage firms to be more economical and efficient in
the number of connections they purchase, allowing the Exchanges to
better monitor and provide access to their networks to ensure that they
have sufficient capacity and headroom in their systems.\58\ The
commenter also states that the Exchanges have provided no public
information on how they derived the cost amounts they determined to
allocate to the products and services subject to the proposed fee
changes nor any meaningful baseline information regarding the
Exchanges' overall costs.\59\ This commenter believes that the
Exchanges have withdrawn and refiled essentially identical
proposals,\60\ subverting proper consideration of the proposed fee
changes under the process set forth in the Exchange Act.\61\
---------------------------------------------------------------------------
\54\ See letter from Ellen Green, Managing Director, Equity and
Options Market Structure, Securities Industry and Financial Markets
Association, to Vanessa Countryman, Secretary, Commission, dated
November 16, 2021 (``SIFMA Letter'').
\55\ See id. at 3. This commenter asserts that the proposals are
similar to proprietary market data products offered by the
Exchanges, which are unique to the Exchanges and market participants
cannot obtain anywhere else. Id. The commenter also states that for
market makers, additional MEI ports are critical for market makers
to provide liquidity on the Exchanges and the argument that the
additional MEI ports are options ``does not reflect marketplace
reality, nor does it demonstrate that the proposed fees are
reasonable.'' Id. at 4.
\56\ See id. at 4.
\57\ See id. at 4-5.
\58\ See id. at 4. The commenter also states that the Exchanges
fail to provide any discussion of why their current capacity needs
are constrained under the current pricing structure.
\59\ See id. at 5. The commenter believes that such information
is needed to allow commenters to judge whether the allocations are
supportable. Id. This commenter also believes that the Exchanges'
discussion of profit margins are ``high-level and conclusory,'' and
fail to provide sufficient detail to understand whether or not the
fees are reasonable. Id.
\60\ See supra note 8.
\61\ See SIFMA Letter, supra note 54, at 5-6.
---------------------------------------------------------------------------
When an exchange files a proposed rule change with the Commission,
including fee filings, it is required to provide a statement supporting
the proposal's basis under the Act and the rules and regulations
thereunder applicable to the exchange.\62\ The instructions to Form
19b-4, on which exchanges file their proposed rule changes, specify
that such statement ``should be sufficiently detailed and specific to
support a finding that the proposed rule change is consistent with
[those] requirements.'' \63\
---------------------------------------------------------------------------
\62\ See 17 CFR 240.19b-4 (General Instructions for Form 19b-4--
Information to be Included in the Complete Form--Item 3 entitled
``Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change'').
\63\ See id.
---------------------------------------------------------------------------
Section 6 of the Act, including Sections 6(b)(4), (5), and (8),
requires, among other things, that the rules of an exchange: (1)
Provide for the equitable allocation of reasonable fees among members,
issuers, and other persons using the exchange's facilities; \64\ (2) be
designed to perfect the mechanism of a free and open market and a
national market system and to protect investors and the public
interest, and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers; \65\ and (3) not impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.\66\
---------------------------------------------------------------------------
\64\ 15 U.S.C. 78f(b)(4).
\65\ 15 U.S.C. 78f(b)(5).
\66\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
In temporarily suspending the Exchanges' proposed rule changes, the
Commission intends to further consider whether the proposed additional
Limited Service MEI Port fees are consistent with the statutory
requirements applicable to a national securities exchange under the
Act. In particular, the Commission will consider whether the proposed
rule changes satisfy the standards under the Act and the rules
thereunder requiring, among other things, that an exchange's rules
provide for the equitable allocation of reasonable fees among members,
issuers, and other persons using its facilities; are designed to
perfect the mechanism of a free and open market and a national market
system and to protect investors and the public interest, and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers; and do not impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act.\67\
---------------------------------------------------------------------------
\67\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
---------------------------------------------------------------------------
Therefore, the Commission finds that it is appropriate in the
public interest, for the protection of investors, and otherwise in
furtherance of the purposes of the Act, to temporarily suspend the
proposed rule changes.\68\
---------------------------------------------------------------------------
\68\ For purposes of temporarily suspending the proposed rule
changes, the Commission has considered the proposed rules' impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Changes
In addition to temporarily suspending the proposal, the Commission
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C)
\69\ and 19(b)(2)(B) of the Act \70\ to determine whether the
Exchanges' proposed rule changes should be approved or disapproved.
Institution of proceedings does not indicate that the Commission has
reached any conclusions with respect to any of the issues involved.
Rather, the
[[Page 67749]]
Commission seeks and encourages interested persons to provide
additional comment on the proposed rule changes to inform the
Commission's analysis of whether to approve or disapprove the proposed
rule changes.
---------------------------------------------------------------------------
\69\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily
suspends a proposed rule change, Section 19(b)(3)(C) of the Act
requires that the Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule change should be
approved or disapproved.
\70\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Act,\71\ the Commission is
providing notice of the grounds for possible disapproval under
consideration:
---------------------------------------------------------------------------
\71\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also
provides that proceedings to determine whether to disapprove a
proposed rule change must be concluded within 180 days of the date
of publication of notice of the filing of the proposed rule change.
See id. The time for conclusion of the proceedings may be extended
for up to 60 days if the Commission finds good cause for such
extension and publishes its reasons for so finding, or if the
exchange consents to the longer period. See id.
---------------------------------------------------------------------------
Whether the Exchanges have demonstrated how the proposed
fees are consistent with Section 6(b)(4) of the Act, which requires
that the rules of a national securities exchange ``provide for the
equitable allocation of reasonable dues, fees, and other charges among
its members and issuers and other persons using its facilities''; \72\
---------------------------------------------------------------------------
\72\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Whether the Exchanges have demonstrated how the proposed
fees are consistent with Section 6(b)(5) of the Act, which requires,
among other things, that the rules of a national securities exchange be
designed to ``perfect the mechanism of a free and open market and a
national market system'' and ``protect investors and the public
interest,'' and not be ``designed to permit unfair discrimination
between customers, issuers, brokers, or dealers''; \73\ and
---------------------------------------------------------------------------
\73\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Whether the Exchanges have demonstrated how the proposed
fees are consistent with Section 6(b)(8) of the Act, which requires
that the rules of a national securities exchange ``not impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of [the Act].'' \74\
---------------------------------------------------------------------------
\74\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
As discussed in Section III above, the Exchanges made various
arguments in support of the proposals, and the Commission received
comment letters disputing the Exchanges' arguments and expressing
concerns regarding the proposals.\75\ In particular, the commenters
argue that the Exchanges did not provide sufficient information to
establish that the proposed fees are consistent with the Act and the
rules thereunder.\76\ The Commission believes that there are questions
as to whether the Exchanges have provided sufficient information to
demonstrate that the proposals are consistent with the Act and the
rules thereunder.
---------------------------------------------------------------------------
\75\ See First SIG Letter and Second SIG Letter, supra note 42;
SIFMA Letter, supra note 54.
\76\ See id.
---------------------------------------------------------------------------
Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the [Act]
and the rules and regulations issued thereunder . . . is on the [SRO]
that proposed the rule change.'' \77\ The description of a proposed
rule change, its purpose and operation, its effect, and a legal
analysis of its consistency with applicable requirements must all be
sufficiently detailed and specific to support an affirmative Commission
finding,\78\ and any failure of an SRO to provide this information may
result in the Commission not having a sufficient basis to make an
affirmative finding that a proposed rule change is consistent with the
Act and the applicable rules and regulations.\79\
---------------------------------------------------------------------------
\77\ 17 CFR 201.700(b)(3).
\78\ See id.
\79\ See id.
---------------------------------------------------------------------------
The Commission is instituting proceedings to allow for additional
consideration and comment on the issues raised herein, including as to
whether the proposals are consistent with the Act, and specifically,
with its requirements that the rules of a national securities exchange
provide for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers, and other persons using its
facilities; are designed to perfect the mechanism of a free and open
market and a national market system, and to protect investors and the
public interest; are not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers; and do not impose a
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act; \80\ as well as any other provision of the
Act, or the rules and regulations thereunder.
---------------------------------------------------------------------------
\80\ See 15 U.S.C. 78f(b)(4), (5), and (8).
---------------------------------------------------------------------------
V. Commission's Solicitation of Comments
The Commission requests written views, data, and arguments with
respect to the concerns identified above as well as any other relevant
concerns. Such comments should be submitted by December 20, 2021.
Rebuttal comments should be submitted by January 3, 2022. Although
there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral presentation.\81\
---------------------------------------------------------------------------
\81\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by an SRO. See Securities
Acts Amendments of 1975, Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------
The Commission asks that commenters address the sufficiency and
merit of the Exchanges' statements in support of the proposals, in
addition to any other comments they may wish to submit about the
proposed rule changes.
Interested persons are invited to submit written data, views, and
arguments concerning the proposed rule changes, including whether the
proposed rule changes are consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Nos. SR-MIAX-2021-43 and SR-EMERALD-2021-31 on the subject line.
Paper Comments
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 Nos. SR-MIAX-2021-43 and SR-
EMERALD-2021-31. These file numbers 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent
amendments, all written statements with respect to the proposed rule
changes that are filed with the Commission, and all written
communications relating to the proposed rule changes between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for
[[Page 67750]]
inspection and copying at the principal office of the Exchanges. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Nos. SR-MIAX-2021-43 and SR-EMERALD-
2021-31 and should be submitted on or before December 20, 2021.
Rebuttal comments should be submitted by January 3, 2022.
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\82\ that File Nos. SR-MIAX-2021-43 and SR-EMERALD-2021-31 be, and
hereby are, temporarily suspended. In addition, the Commission is
instituting proceedings to determine whether the proposed rule changes
should be approved or disapproved.
---------------------------------------------------------------------------
\82\ 15 U.S.C. 78s(b)(3)(C).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\83\
---------------------------------------------------------------------------
\83\ 17 CFR 200.30-3(a)(57) and (58).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25879 Filed 11-26-21; 8:45 am]
BILLING CODE 8011-01-P
