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Federal Register / Vol. 86, No. 189 / Monday, October 4, 2021 / Notices Unconsolidated Financial Statements.
Based on this analysis, the Exchange believes that the Proposed Access Fees are fair and reasonable because they will not result in excessive pricing or supracompetitive profit when comparing the Exchanges total annual expense associated with providing the services associated with the Proposed Access Fees versus the total projected annual revenue the Exchange will collect for providing those services.

On March 29, 2019, the Commission issued its Order Disapproving Proposed Rule Changes to Amend the Fee Schedule on the BOX Market LLC
Options Facility to Establish BOX
Connectivity Fees for Participants and Non-Participants Who Connect to the BOX Network the BOX Order.11 On May 21, 2019, the Commission issued the Staff Guidance on SRO Rule Filings Relating to Fees.12 Accordingly, the Exchange believes that the Proposed Access Fees are consistent with the Act because they i are reasonable, equitably allocated, not unfairly discriminatory, and not an undue burden on competition; ii comply with the BOX Order and the Guidance; iii are supported by evidence including comprehensive revenue and cost data and analysis that they are fair and reasonable because they will not result in excessive pricing or supracompetitive profit; and iv utilize a cost-based justification framework that is substantially similar to a framework previously used by the Exchange, and its affiliates, MIAX Pearl and MIAX
Emerald, LLC MIAX Emerald, to establish or increase other nontransaction fees.13 Accordingly, the Exchange believes that the Proposed Access Fees are consistent with the Act.

As of September 20, 2021, the Exchange had a market share of only 5.47% of the U.S. equity options industry for the month of September 11 See Securities Exchange Act Release No. 85459
March 29, 2019, 84 FR 13363 April 4, 2019 SR
BOX201824, SRBOX201837, and SRBOX
201904.
12 See Staff Guidance on SRO Rule Filings Relating to Fees May 21, 2019, at https
www.sec.gov/tm/staff-guidance-sro-rule-filings-fees the Guidance.
13 See Securities Exchange Act Release Nos.
90981 January 25, 2021, 86 FR 7582 January 29, 2021 SRPEARL202101 proposal to increase connectivity fees; 91460 April 2, 2021, 86 FR
18349 SREMERALD202111 proposal to adopt port fees, increase connectivity fees, and increase additional limited service ports; 91033 February 1, 2021, 86 FR 8455 February 5, 2021 SR
EMERALD202103 proposal to adopt trading permit fees.

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2021.14 The Exchange is not aware of any evidence that a market share of approximately 56% provides the Exchange with anti-competitive pricing power. If the Exchange were to attempt to establish unreasonable pricing for any of its means provided to access the Exchange, market participants may look to access the Exchange via other means such as through a third party service provider, or look to connect to the Exchange via a competing exchange with cheaper access alternatives that also provides routing services to the Exchange. In addition, existing market participants that are connected to the Exchange may choose to disconnect from the Exchange or reduce their number of connections to the Exchange as a means to reduce their overall costs.
The Exchange believes the proposed tiered-pricing structure for 10Gb ULL
connections is equitable and reasonable because the proposed highest tier is still less than fees charged for similar connectivity provided by other options exchanges with comparable market shares. For example, The Nasdaq Stock Market LLC NASDAQ equity options market share of 7.79% as of September 22, 2021 for the month of September 15 charges a monthly fee of $10,000 per 10Gb fiber connection and $15,000 per 10Gb Ultra fiber connection.16 The highest tier of the Exchanges proposed fee structure for a 10Gb ULL connection is $2,000 per month less than NASDAQ and, unlike NASDAQ, the Exchange does not charge installation fees. The Exchange notes that the same connectivity fees described above for NASDAQ also apply to its affiliates, Nasdaq ISE, LLC ISE
equity options market share of 6.47%
as of September 22, 2021 for the month of September 17 and NASDAQ PHLX
LLC PHLX equity options market share of 11.25% as of September 22, 2021 for the month of September.18
NYSE American LLC Amex equity options market share of 7.89% as of September 22, 2021 for the month of September 19 charges $15,000 per connection initially plus $22,000
monthly per 10Gb LX LCN circuit 14 See The market at a glance, available at https www.miaxoptions.com/ last visited September 20, 2021.
15 See The market at a glance, available at https www.miaxoptions.com/ last visited September 22, 2021.
16 See Nasdaq Stock Market LLC Rules, General 8: Connectivity, Section 1. Co-Location Services;
Nasdaq ISE Rules, General 8: Connectivity.
17 See id.
18 See id. See also PHLX Rules, General 8:
Connectivity.
19 See supra note 15.

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connection.20 Again, the highest tier of the Exchanges proposed fee structure for a 10Gb ULL connection is $9,000 per month lower than the Amex connectivity fee after the first month.
In the each of the above cases, the Exchanges highest tier in the proposed tiered-pricing structure is significantly lower than that of competing options exchanges with similar market share.
Further, as described in more detail below, those exchanges generate higher overall operating profit margins and higher access fees than the Exchange, even with this proposed fee change.
Despite proposing lower or similar fees to that of competing options exchanges with similar market share, the Exchange believes that it provides a premium network experiencer to its Members and non-Members via a highly deterministic system, enhanced network monitoring and customer reporting, and a superior network infrastructure than markets with higher market shares and more expensive connectivity alternatives.
Each of the connectivity rates in place at competing options exchanges were filed with the Commission for immediate effectiveness and remain in place today.
The Exchange also notes that the higher connectivity fees described above for competing exchanges have been in place for years over 8 years in some cases, allowing those exchanges to derive significantly more revenue from their access fees. For example, in 2013, Amex adopted the pricing for its 10Gb LX LCN connection of $15,000 as an initial charge per connection and then a monthly fee of $20,000 per connection.
The initial fee per connection is higher than the Exchanges highest proposed tier of $13,000 per connection, notwithstanding the fact that the monthly fee is $7,000 more than the Exchanges highest proposed tier and Amexs fees have been in place for nearly 8 years.21 NYSE Arca, Inc.
Arca also adopted the exact same fees as Amex in 2013 and has been collecting higher fees than the Exchanges current proposal for nearly 8
years as well initial charge of $15,000
per connection and then a monthly fee of $20,000 per connection.22 Not only were the fees that Amex and Arca adopted in 2013 significantly higher than the fees the Exchange currently proposes, in 2016, Amex and Arca 20 See NYSE American Options Fee Schedule, Section IV.
21 See Securities Exchange Act Release No. 70982
December 4, 2013, 78 FR 74197 December 10, 2013 SRNYSEMKT201397.
22 See Securities Exchange Act Release No. 70981
December 4, 2013, 78 FR 74203 December 10, 2013 SRNYSEARCA2013131.

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