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Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices which the Exchange analyzed every expense item in the Exchanges general expense ledger this includes over 150
separate and distinct expense items to determine whether each such expense relates to providing the market data products associated with the proposed fees, and, if such expense did so relate, what portion or percentage of such expense actually supports those products, and thus bears a relationship that is, in nature and closeness, directly related to those products. The sum of all such portions of expenses represents the total cost of the Exchange to provide the market data products associated with the proposed fees.
For 2020, total third-party expense, relating to fees paid by MIAX Emerald to third-parties for certain products and services for the Exchange to be able to provide the market data products associated with the proposed fees, is projected to be $19,105. This includes, but is not limited to, a portion of the fees paid to: 1 Equinix, for data center services, for the primary, secondary, and disaster recovery locations of the MIAX
Emerald trading system infrastructure;
2 Zayo Group Holdings, Inc. Zayo for network services fiber and bandwidth products and services linking MIAX Emeralds office locations in Princeton, NJ and Miami, FL to all data center locations; 3 Secure Financial Transaction Infrastructure SFTI,28 which supports connectivity and feeds for the entire U.S. options industry; 4 various other services providers including Thompson Reuters, NYSE, Nasdaq, and Internap, which provide content, connectivity services, and infrastructure services for critical components of options connectivity and network services; and 5 various other hardware and software providers including Dell and Cisco, which support the production environment in which Members connect to the network to trade, receive market data, etc..
For clarity, only a portion of all fees paid to such third-parties is included in the third-party expense herein, and no expense amount is allocated twice.
Accordingly, MIAX Emerald does not allocate its entire information technology and communication costs to 28 In fact, on October 22, 2019, the Exchange was notified by SFTI that it is again raising its fees charged to the Exchange by approximately 11%, without having to show that such fee change complies with the Act by being reasonable, equitably allocated, and not unfairly discriminatory. It is unfathomable to the Exchange that, given the critical nature of the infrastructure services provided by SFTI, that its fees are not required to be rule-filed with the Commission pursuant to Section 19b1 of the Act and Rule 19b4 thereunder. See 15 U.S.C. 78sb1 and 17
CFR 240.19b4, respectively.

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providing the market data products associated with the proposed fees.
The Exchange believes it is reasonable to allocate such third-party expense described above towards the total cost to the Exchange to provide the market data products associated with the proposed fees. In particular, the Exchange believes it is reasonable to allocate the identified portion of the Equinix expense because Equinix operates the data centers primary, secondary, and disaster recovery that host the Exchanges network infrastructure. This includes, among other things, the necessary storage space, which continues to expand and increase in cost, power to operate the network infrastructure, and cooling apparatuses to ensure the Exchanges network infrastructure maintains stability.
Without these services from Equinix, the Exchange would not be able to operate and support the network and provide the market data products associated with the proposed fees to its Members and their customers. The Exchange did not allocate all of the Equinix expense toward the cost of providing the market data products associated with the proposed fees, only that portion which the Exchange identified as being specifically mapped to providing the market data products associated with the proposed fees, approximately 1% of the total Equinix expense. The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the market data products associated with the proposed fees, and not any other product or service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the Zayo expense because Zayo provides the internet, fiber and bandwidth connections with respect to the network, linking MIAX Emerald with its affiliates, MIAX and MIAX PEARL, as well as the data center and disaster recovery locations. As such, all of the trade data, including the billions of messages each day per exchange, flow through Zayos infrastructure over the Exchanges network. Without these services from Zayo, the Exchange would not be able to operate and support the network and provide the market data products associated with the proposed fees. The Exchange did not allocate all of the Zayo expense toward the cost of providing the market data products associated with the proposed fees, only the portion which the Exchange identified as being specifically mapped to providing the market data products associated with the proposed fees, approximately 1% of the total Zayo
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expense. The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the market data products associated with the proposed fees, and not any other product or service, as supported by its cost review.
The Exchange did not allocate any expense associated with the proposed fees towards SFTI and various other service providers including Thompson Reuters, NYSE, Nasdaq, and Internap because, as described above, the MIAX
Emerald architecture takes advantage of an advance in design to eliminate the need for a market data distribution gateway layer. The computation and dissemination via an API is done solely within the match engine environment and is then delivered via the member and non-member connectivity infrastructure. This architecture delivers a market data system that is more efficient both in cost and performance.
Accordingly, the Exchange determined not to allocate any expense associated with SFTI and various other service providers.
The Exchange believes it is reasonable to allocate the identified portion of the other hardware and software provider expense because this includes costs for dedicated hardware licenses for switches and servers, as well as dedicated software licenses for security monitoring and reporting across the network. Without this hardware and software, the Exchange would not be able to operate and support the network and provide the market data products.
The Exchange did not allocate all of the hardware and software provider expense toward the cost of providing the market data products associated with the proposed fees, only the portions which the Exchange identified as being specifically mapped to providing the market data products associated with the proposed fees, approximately 1% of the total hardware and software provider expense. The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the market data products associated with the proposed fees.
For 2020, total projected internal expense, relating to the internal costs of MIAX Emerald to provide the market data products associated with the proposed fees, is projected to be $1,020,959. This includes, but is not limited to, costs associated with: 1
Employee compensation and benefits for full-time employees that support the market data products associated with the proposed fees, including staff in network operations, trading operations, development, system operations,
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