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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices III. Suspension of the Proposed Rule Changes Pursuant to Section 19b3C of the Act,13 at any time within 60 days of the date of filing of an immediately effective proposed rule change pursuant to Section 19b1 of the Act,14 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. 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.
The Exchanges generally argue that the proposed fees are consistent with the Act because the Exchanges operate in a highly competitive environment that constrains their pricing of the cToM
feeds.15 In particular, the Exchanges maintain that subscribing to the cToM
feeds is optional, as is the use of complex orders themselves.16 The Exchanges argue that because complex orders are not protected or subject to trade-through requirements, and because market makers are not subject to continuous quoting requirements for complex orders as they are for simple orders, it is therefore a business decision whether market participants use complex order strategies on the Exchanges and whether they purchase cToM data to help effect those strategies.17 Accordingly, the Exchanges assert that if they priced their complex data products too highly, and market participants wanted to use those data products to trade complex orders, then those market participants would move their complex order flow to a more competitively-priced exchange offering complex order functionality and a comparable data product.18 The Exchanges argue that this potential to lose both order flow and data subscribers on each of MIAX and/or MIAX Emerald constrains their pricing of the cToM feeds.19 The Exchanges also 13 15

U.S.C. 78sb3C.
U.S.C. 78sb1.
15 See Notice, supra note 4, at 3739596. In support, the Exchanges state that MIAX and MIAX
Emerald currently represent approximately 6.75%
and 3.24% of options market share, respectively.
See id. at 37395; Emerald Notice, supra note 4, at 37362.
16 See Notice, supra note 4, at 37395.
17 See id.
18 See id. at 3739596.
19 See id.

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argue that the proposed fees are reasonable because they are similar to and generally lower than the fees assessed by other exchanges that provide similar data products, and that proposing fees excessively higher would ultimately reduce demand for the Exchanges own cToM products.20
The Exchanges further argue that the proposals are equitable and not unfairly discriminatory because the proposed cToM fees will apply to all market participants of the Exchanges on a uniform basis.21 Moreover, the Exchanges assert that it is reasonable, equitable, and not unfairly discriminatory to assess Internal Distributors fees that are lower than the fees assessed for External Distributors for subscriptions to the cToM data feeds, since Internal Distributors have limited, restricted usage rights to the market data, as compared to External Distributors, which have more expansive usage rights, including rights to commercialize such market data.22
Finally, the Exchanges assert that the proposed fees would not cause any unnecessary or inappropriate burden on inter-market competition, as other exchanges are free to introduce their own comparable data products and lower their prices to better compete with the Exchanges offerings.23 In this regard, the Exchanges assert that the proposals will promote competition by permitting the Exchanges to sell data products similar to those offered by other competitor options exchanges.24
The Exchanges also assert that the proposed rule changes would not cause any unnecessary or inappropriate burden on intra-market competition, as 20 See id. In addition, the Exchanges state that the proposed monthly cToM fees for Internal and External Distributors are the same prices that the Exchanges charge for their ToM data products. See id. at 37396. The Exchanges also argue that the proposed fees are reasonable because members have had the ability to receive cToM data free of charge from MIAX for the past five years and from MIAX
Emerald for the past two years, since each respective cToM market data product was established on each Exchange. See id. at 37395;
Emerald Notice, supra note 4, at 37361, 37363. The Exchanges now assert that it is no longer necessary to provide cToM data for free to attract market participants, as the Exchanges Strategy Books are now established and the Exchanges no longer need to rely on such fee waivers to attract market participants. See Notice, supra note 4, at 37394, 37396.
21 See Notice, supra note 4, at 37396.
22 See id. at 3739596. In addition, the Exchanges argue that they use more resources to support External Distributors as compared to Internal Distributors, as External Distributors have reporting and monitoring obligations that Internal Distributors do not have, thus requiring additional time and effort of the Exchanges staff. See id. at 37396.
23 See id.
24 See id.

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the proposed fees apply uniformly to any purchaser by not differentiating between subscribers that purchase cToM other than between Internal and External Distributors, as described above, and are set at a modest level allowing any interested member or nonmember to purchase such data based on their business needs.25
When exchanges file their proposed rule changes with the Commission, including fee filings like the Exchanges present proposals, they are required to provide a statement supporting the proposals basis under the Act and the rules and regulations thereunder applicable to the exchange.26 The instructions to Form 19b4, 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. 27
Section 6 of the Act, including Sections 6b4, 5, and 8, require the rules of an exchange to: 1 Provide for the equitable allocation of reasonable fees among members, issuers, and other persons using the exchanges facilities; 28 2 perfect the mechanism of a free and open market and a national market system, protect investors and the public interest, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers; 29 and 3 not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.30
In temporarily suspending the Exchanges proposed rule changes, the Commission intends to further consider whether the proposals to establish fees for the cToM market data feeds 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 exchanges rules provide for the equitable allocation of reasonable fees among members, issuers, and other persons using its facilities; not permit unfair discrimination between customers, issuers, brokers or dealers; and do not impose any burden on competition not 25 See
id.
17 CFR 240.19b4 Item 3 entitled SelfRegulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change.
27 See id.
28 15 U.S.C. 78fb4.
29 15 U.S.C. 78fb5.
30 15 U.S.C. 78fb8.
26 See
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