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Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices connection, divided by the total number of trading days in such month multiplied by the applicable monthly rate. The Exchange will continue to assess monthly Member and nonMember network connectivity fees for connectivity to the disaster recovery facility in each month during which the Member or non-Member has established connectivity with the disaster recovery facility.
The Exchanges MIAX Express Network Interconnect MENI can be configured to provide Members and non-Members of the Exchange network connectivity to the trading platforms, market data systems, test systems, and disaster recovery facilities of both the Exchange and its affiliate, MIAX
PEARL, LLC MIAX Pearl, via a single, shared connection. Members and non-Members utilizing the MENI to connect to the trading platforms, market data systems, test systems, and disaster recovery facilities of the Exchange and MIAX Pearl via a single, shared connection will continue to only be assessed one monthly connectivity fee per connection, regardless of the trading platforms, market data systems, test systems, and disaster recovery facilities accessed via such connection.
Further, utilizing the proposed tieredpricing structure, any firm that is a Member of both MIAX and MIAX Pearl Options and purchases three or four total 10Gb ULL connections, can effectively allocate one or two 10Gb ULL connections to MIAX at the lowest rate and the other one or two 10Gb ULL
connections to MIAX Pearl Options at the lowest rate, providing additional cost saving benefits to those Members and non-Members, due to the shared MENI infrastructure of MIAX and MIAX
Pearl.

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Implementation Date The proposed fee changes will become effective on August 1, 2021.
2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6b of the Act 5
in general, and furthers the objectives of Section 6b4 of the Act 6 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among Exchange Members and issuers and other persons using any facility or system which the Exchange operates or controls. The Exchange also believes the proposal furthers the objectives of Section 6b5 of the Act 7
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in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest and is not designed to permit unfair discrimination between customers, issuers, brokers and dealers.
The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, the Exchange must continually adjust its fees for services and products, in addition to order flow, to remain competitive with other exchanges. The Exchange believes that the proposed changes reflect this competitive environment.
The Exchange believes the proposal to move from a flat fee per month for the 10Gb ULL connection to a tiered-pricing structure is reasonable, equitably allocated and not unfairly discriminatory because the Exchange believes the proposed structure would encourage firms to be more economical and efficient in the number of connections they purchase. The Exchange believes this will enable the Exchange to better monitor and provide access to the Exchanges network to ensure sufficient capacity and headroom in the System.
The Exchange believes that the proposal to move to a tiered-pricing structure for its 10Gb ULL connections is reasonable, equitably allocated and not unfairly discriminatory because the majority of Members and non-Members that purchase 10Gb ULL connections will either save money or pay the same amount after the tiered-pricing structure is implemented. Based on a recently completed billing cycle, of the firms that purchased at least one 10Gb ULL
connection, approximately 80% will see a proposed decrease in their monthly fees and approximately 20% will see a proposed increase in their monthly fees as a result of the proposed tiered-pricing structure versus the current flat monthly fee structure. To illustrate, firms that purchase only one 10Gb ULL
connection per month currently pay the flat rate of $10,000 per month for that one 10Gb ULL connection. Pursuant to the proposed tiered-pricing structure, these firms will now pay $9,000 per month for that one 10Gb ULL
connection, saving $1,000 per month or $12,000 annually. Further, firms that purchase two 10Gb ULL connections per month currently pay the flat rate of $20,000 per month $10,000 x 2 for those two 10Gb ULL connections.

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Pursuant to the proposed tiered-pricing structure, these firms will now pay $18,000 per month $9,000 x 2 for those two 10Gb ULL connections, saving $2,000 per month or $24,000 annually.
Additionally, any firm that is a Member of both MIAX and MIAX Pearl Options and purchases four total 10Gb ULL
connections, can effectively allocate two 10Gb ULL connections to MIAX at the $9,000 rate saving $2,000 per month as compared to the flat fee and two 10Gb ULL connections to MIAX Pearl Options at the $9,000 rate saving an additional $2,000 per month as compared to the flat fee, for a total savings of $4,000 per month, or $48,000 annually over the current flat monthly fee structure, due to the shared MENI infrastructure of MIAX and MIAX Pearl.
The Exchange also notes that, for firms that primarily route orders seeking best-execution, a limited number of connections are needed. Therefore, the connectivity costs will likely be lower for these firms based on the proposed tiered-pricing structure. The firms that engage in advanced trading strategies typically require multiple connections and, therefore, generate higher costs by utilizing more of the Exchanges resources. These firms will absorb the increased connectivity cost based on the proposed tiered-pricing structure, as shown by the 20% of firms that will likely see an increase in their monthly fees. Additionally, the firms that purchase a higher amount of 10Gb ULL
connections tend to have specific business oriented market making and taking strategies, as opposed to firms simply engaging in best-execution order routing business.
The Exchange believes that exchanges, in setting fees of all types, should meet very high standards of transparency to demonstrate why each new fee or fee increase meets the requirements of the Act that fees be reasonable, equitably allocated, not unfairly discriminatory, and not create an undue burden on competition among market participants. The Exchange believes this high standard is especially important when an exchange imposes various access fees for market participants to access an exchanges marketplace. The Exchange deems connectivity to be access fees. It records these fees as part of its Access Fees revenue in its financial statements. The Exchange believes that it is important to demonstrate that these fees are based on its costs and reasonable business needs.
The Exchange believes the Proposed Access Fees will allow the Exchange to offset expense the Exchange has and will incur, and that the Exchange is providing sufficient transparency as
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