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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Notices Vendors and Service Bureaus are redistributing data and reselling services to other Members and market participants the number and types of scenarios that need to be tested are more numerous and complex than those tested and certified for Members.
The Exchange believes the difference in the proposed 1 Gigabit and 10 Gigabit ULL network connectivity testing and certification fees is an equitable allocation of reasonable dues and fees pursuant to Section 6b4 of the Act 40
because of the additional review and resources involved in testing and certifying a 10 Gigabit ULL connection as opposed to a 1 Gigabit connection, as 10 Gigabit ULL connections offer vastly greater products and services which require significantly more time to test, including Market Maker quoting systems. The Exchange believes its proposed API Testing and Certification fees and Network Connectivity Testing and Certification fees are reasonable and well within the range of non-transaction fees assessed among other exchanges, including the Exchanges affiliate options exchanges, MIAX and MIAX
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B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
Intra-Market Competition The Exchange believes that the proposed fees do not put any market participants at a relative disadvantage compared to other market participants.
The proposed fees would apply to all new Exchange Members and those firms looking to establish APIs and network connectivity in the same manner.
Market participants may not only choose whether to become Exchange Members at all, but may choose to become members at competing options exchanges instead.
The Exchange further believes the proposed fees do not place any market participant at a disadvantage compared to other market participants because the proposed API Testing and Certification and Network Connectivity Testing and Certification fees are intended to cover the situations where a Member or nonMember firm makes changes to its own system for its own business purpose i.e., instances where a firm is trying to improve its quoting engine, which requires the Exchange to test those re40 15

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architected systems. This testing requires the time of Exchange personnel in several departments Trading Operations, Business, On-Boarding, Membership, and occurs primarily outside of normal business hours, often over the course of the weekend. The proposed fees are a way for the Exchange to recoup its costs associated with this testing. When the Exchange determines to make upgrades to its own system which requires mandatory testing and certification by Members, the Exchange does not charge any fees.
The Exchange believes that the proposed fees do not dampen innovation because the majority of Exchange Members are members of most, if not all, of the other 15 options exchanges. Those exchanges also require testing and certification any time the Member makes changes to its system at those exchanges, and also charge a fee to recoup the costs associated with testing and certifying members. The Exchange also notes that it has never received a complaint from a Member or non-Member any time a Member or non-Member has made a change to its own system that resulted in the Exchange assessing a testing and certification fee. Without some sort of testing and certification fee, the Exchange believes that Members and non-Members might be less efficient in testing their systems, potentially resulting in excessive time being consumed by the Exchange re-testing and re-certifying Members and nonMembers, to the detriment of all market participants as Exchange resources are diverted away from other trading operations.
The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue burden on competition. To the extent that various market participants are charged different fees for the one-time membership application and perinstance API and network connectivity testing, those distinctions are not unfairly discriminatory and do not unfairly burden one set of market participants over another. The difference in the proposed membership application fee to be charged to EEMs and Market Makers is because of the additional review and resources involved in processing a Market Makers application, as Market Makers have greater and more complex obligations with respect to doing business on the Exchange.42 The proposed higher fee charged to Third Party Vendors, Service 42 See
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Bureaus and non-Members reflects the greater amount of time spent by MIAX
Emerald employees testing and certifying non-Members. It has been MIAX Emeralds experience that Member testing takes less time than non-Member testing because Members have more experience testing these systems with exchanges, resulting in generally fewer questions and issues arising during the testing and certification process. Also, because Third Party Vendors and Service Bureaus are redistributing data and reselling services to other Members and market participants, the number and types of scenarios that need to be tested are more numerous and complex than those tested and certified for a single Member. The higher fee charged to nonMembers reflects the greater amount of time spent by MIAX Emerald employees testing and certifying non-Members. It has been MIAX Emeralds experience that Member network connectivity testing takes less time than non-Member network connectivity testing because Members have more experience testing these systems with exchanges as generally fewer questions and issues arise during the testing and certification process. The proposed higher fee charged for 10 Gigabit ULL connections versus 1 Gigabit ULL connections reflects the greater amount of time spent by MIAX Emerald employees testing and certifying 10 Gigabit ULL
connections. MIAX Emeralds proposed one-time membership application fee and per-instance API Testing and Certification fee levels and Network Connectivity Testing and Certification fee levels, as described herein, are comparable to fee levels charged by other options exchanges for the same or similar services, including those fees assessed by the Exchanges affiliates, MIAX and MIAX PEARL.43
The Exchange believes that the proposed API Testing and Certification fees and Network Connectivity Testing and Certification fees do not place certain market participants at a relative disadvantage to other market participants because the fees do not apply unequally to different size market participants, but instead would allow the Exchange to charge for the time and resource necessary for API testing and certification and network connectivity testing and certification for Members and non-Members to ensure proper functioning of all available order types, new order entry, order management, order throughput and mass order cancellation as well as, for Market Makers, all available quote types, quote 43 See
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