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Federal Register / Vol. 86, No. 208 / Monday, November 1, 2021 / Notices
lotter on DSK11XQN23PROD with NOTICES1

MOR.19 The following cToM
information is provided to subscribers of MOR: The Exchanges best bid and offer for a complex strategy, with aggregate size, based on displayable order and quoting interest in the complex strategy on the Exchange; the identification of the complex strategies currently trading on the Exchange; and the status of securities underlying the complex strategy e.g., halted, open, or resumed. In addition to the cToM
information contained in MOR, complex strategy last sale information can be derived from the Exchanges ToM feed based sic. Specifically, market participants may deduce that last sale information for multiple trades in related options series that are disseminated via the ToM feed with the same timestamp are likely part of a Complex Order transaction and last sale.
The Exchange also notes that no market participant is required by any rule or regulation to utilize the Exchanges Complex Order functionality or subscribe to the cToM data feed.
Further, unlike orders on the Exchanges Simple Order Book, Complex Orders are not protected and will never trade through Priority Customer 20 orders, thus protecting the priority that is established in the Simple Order Book.21
Additionally, unlike the continuous quoting requirements of Market Makers in the simple order market, there are no continuous quoting requirements respecting Complex Orders. It is a business decision whether market participants utilize Complex Order strategies on the Exchange and whether to purchase cToM data to help effect those strategies.
The Exchange believes the proposed fees are reasonable as the proposed fees are both modest and similar to, or even lower than, the fees assessed by other exchanges that provide similar data 19 See MIAX website, Market Data & Offerings, at https www.miaxoptions.com/market-dataofferings last visited October 13, 2021. In general, MOR provides real-time ulta-low sic latency updates on the following information: New Simple Orders added to the MIAX Order Book; updates to Simple Orders resting on the MIAX Order Book;
new Complex Orders added to the Strategy Book i.e., the book of Complex Orders; updates to Complex Orders resting on the Strategy Book; MIAX
listed series updates; MIAX Complex Strategy definitions; the state of the MIAX System; and MIAXs underlying trading state.
20 The term Priority Customer means a person or entity that i is not a broker or dealer in securities and ii does not place more than 390
orders in listed options per day on average during a calendar month for its own beneficial accountss.
The term Priority Customer Order means an order for the account of a Priority Customer. See Exchange Rule 100.
21 The Simple Order Book is the Exchanges regular electronic book of orders and quotes. See Exchange Rule 518a15. See supra note 5.

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products.22 Indeed, proposing fees that are excessively higher than established fees for similar data products would simply serve to reduce demand for the Exchanges data product, which as noted, is entirely optional. Like the Exchanges cToM data product, other exchanges offer similar data products and complex order functionality. As such, if a market participant views another exchanges complex order functionality and related data feeds as more attractive than what is offered by the Exchange, then such market participant can merely choose not to utilize the Exchanges Complex Order functionality or purchase cToM.
Instead, that market participant can utilize similar complex functionality elsewhere and purchase another exchanges complex data product, which likely offers similar data points, albeit based on that other markets complex order trading activity.
Selling market data, such as cToM, is also a means by which exchanges compete to attract business. If the market deems the proposed fees to be unfair or inequitable, firms can diminish or discontinue their use of the data and/or avail themselves of similar products offered by other exchanges.23
The Exchange therefore believes that the proposed fees for cToM reflect the competitive environment 24 and would be properly assessed on Member or nonMember users. The Exchange also believes the proposed fees are equitable and not unfairly discriminatory as the fees would apply equally to all users who choose to purchase such data. The Exchanges proposed fees would not differentiate between subscribers that purchase cToM and are set at a modest level that would allow any interested Member or non-Member to purchase such data based on their business needs.
The Exchange also believes the proposed cToM fees are reasonable and not unfairly discriminatory because since the Exchange initially established the cToM data product in 2016, all Exchange Members have had the ability to receive the Exchanges cToM data free of charge for the past five years.25
Since 2016, when the Exchange adopted Complex Order functionality, the Exchange has spent time and resources See supra note 11.
See id.
24 Currently, 11 of 16 registered options exchanges compete for complex market share. The Exchange had a complex market share of approximately 12.13% for the month of July 2021
and 10.78% for the month of August 2021. For the months of July and August 2021, no single exchange had a complex market share of more than approximately 20%.
25 See supra note 6.
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building out various Complex Order functionality in its System to provide better trading strategies and risk functionality for market participants in order to better compete with other exchanges complex functionality and similar data products focused on complex orders.26 The cToM data product allows market participants to better utilize the Exchanges Complex Order functionality by providing insights into the Exchanges Complex Order flow. The Exchange currently has 15 subscribers 14 Members and 1 nonMember for its cToM data product.
Each one of these subscribers have not paid any cToM data fees other than the 2 months in which the First Proposed Rule Change was in effect but have received the benefit of the Exchange building out its Complex Order functionality to better compete with other exchanges complex functionality.
The Exchange notes that no market participant ceased subscribing to the cToM feed since July 1, 2021, the date on which the fees became effective when proposed in the First Proposed Rule Change.
The Exchange believes that it is reasonable, equitable and not unfairly discriminatory to assess Internal Distributors fees that are less than the fees assessed for External Distributors for subscriptions to the cToM data feed because Internal Distributors have limited, restricted usage rights to the market data, as compared to External Distributors, which have more expansive usage rights. All Members and non-Members that determine to receive any market data feed of the Exchange or its affiliates, MIAX
PEARL, LLC and MIAX Emerald, must first execute, among other things, the MIAX Exchange Group Exchange Data Agreement the Exchange Data Agreement.27 Pursuant to the Exchange Data Agreement, Internal Distributors are restricted to the internal use of any market data they receive. This means that Internal 26 See Securities Exchange Act Release Nos.
79405 November 28, 2016, 81 FR 87086
December 2, 2016 SRMIAX201644
amendment to clarify the manner in which the System allocates contracts at the end of a Complex Auction; 80089 February 22, 2017, 82 FR 12153
February 28, 2017 SRMIAX201706 adopting the Complex MIAX Options Price Collar, an additional price protection feature; 81229 July 27, 2017, 82 FR 36023 August 2, 2017 SRMIAX
201734 amendment to ensure price and trade protections apply to Complex Orders; 89085 June 17, 2020, 85 FR 37719 June 23, 2020 SRMIAX
202016 adopting new order type, Complex Attributable Order.
27 See Exchange Data Agreement, available at https miaxweb2.pairsite.com/sites/default/files/
page-files/MIAX_Exchange_Group_Data_
Agreement_09032020.pdf.

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