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Federal Register / Vol. 86, No. 158 / Thursday, August 19, 2021 / Notices A. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule to adopt a tiered-pricing structure for additional Limited Service MIAX Emerald Express Interface MEI Ports 3 available to Market Makers.4 The Exchange believes a tiered-pricing structure will encourage Market Makers to be more efficient and economical when determining how to connect to the Exchange. This should also enable the Exchange to better monitor and provide access to the Exchanges network to ensure sufficient capacity and headroom in the System.5

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Additional Limited Service MEI Port Tiered-Pricing Structure The Exchange proposes to amend the fees for additional Limited Service MEI
Ports. Currently, the Exchange allocates two 2 Full Service MEI Ports 6 and two 2 Limited Service MEI Ports 7 per matching engine 8 to which each Market Maker connects. Market Makers may also request additional Limited Service 3 The MIAX Emerald Express Interface MEI is a connection to the MIAX Emerald System that enables Market Makers to submit simple and complex electronic quotes to MIAX Emerald. See the Definitions Section of the Fee Schedule.
4 The term Market Makers refers to Lead Market Makers LMMs, Primary Lead Market Makers PLMMs, and Registered Market Makers RMMs collectively. See the Definitions Section of the Fee Schedule and Exchange Rule 100.
5 The term System means the automated trading system used by the Exchange for the trading of securities. See the Definitions Section of the Fee Schedule and Exchange Rule 100.
6 Full Service MEI Ports means a port which provides Market Makers with the ability to send Market Maker simple and complex quotes, eQuotes, and quote purge messages to the MIAX Emerald System. Full Service MEI Ports are also capable of receiving administrative information. Market Makers are limited to two Full Service MEI Ports per Matching Engine. See the Definitions Section of the Fee Schedule.
7 Limited Service MEI Ports means a port which provides Market Makers with the ability to send simple and complex eQuotes and quote purge messages only, but not Market Maker Quotes, to the MIAX Emerald System. Limited Service MEI Ports are also capable of receiving administrative information. Market Makers initially receive two Limited Service MEI Ports per Matching Engine.
See the Definitions Section of the Fee Schedule.
8 Matching Engine means a part of the MIAX
Emerald electronic system that processes options orders and trades on a symbol-by-symbol basis.
Some Matching Engines will process option classes with multiple root symbols, and other Matching Engines may be dedicated to one single option root symbol for example, options on SPY may be processed by one single Matching Engine that is dedicated only to SPY. A particular root symbol may only be assigned to a single designated Matching Engine. A particular root symbol may not be assigned to multiple Matching Engines. See the Definitions Section of the Fee Schedule.

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MEI Ports for each matching engine to which they connect. The Full Service MEI Ports, Limited Service MEI Ports and the additional Limited Service MEI
Ports all include access to the Exchanges primary and secondary data centers and its disaster recovery center.
Market Makers may request additional Limited Service MEI Ports for which they are assessed a $100 monthly fee for each additional Limited Service MEI
Port for each matching engine.
The Exchange now proposes to move from a flat monthly fee per additional Limited Service MEI Port for each matching engine to a tiered-pricing structure per additional Limited Service MEI Ports for each matching engine under which the monthly fee would vary depending on the number of additional Limited Service MEI Ports the Market Maker elects to purchase.
Specifically, the Exchange will continue to provide the first and second additional Limited Service MEI Ports for each matching engine free of charge, as described above, per the initial allocation of Limited Service MEI Ports that Market Makers receive.
Specifically, i the third and fourth additional Limited Service MEI Ports for each matching engine will increase from the current flat monthly fee of $100 to $200 per port; ii the fifth and sixth additional Limited Service MEI Ports for engine matching engine will increase from the current flat monthly fee of $100 to $300 per port; and iii the seventh to the twelfth additional Limited Service MEI Ports will increase from the current monthly flat fee of $100 to $400 per port collectively, the Proposed Access Fees.
2. Statutory Basis The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6b of the Act 9
in general, and furthers the objectives of Section 6b4 of the Act 10 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 11 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 9 15

U.S.C. 78fb.
U.S.C. 78fb4.
11 15 U.S.C. 78fb5.
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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 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 additional Limited Service MEI Ports 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 notes that the firms that are primarily order routers seeking bestexecution do not utilize Limited Service MEI Ports on MIAX Emerald. Therefore, the fees described in the proposed tiered-pricing structure will only be allocated to market making firms that engage in advanced trading strategies and typically request multiple Limited Service MEI Ports. Accordingly, the firms engaged in market making business generate higher costs by utilizing more of the Exchanges resources. The market making firms that purchase higher amounts of Limited Service MEI Ports tend to have specific business oriented market making and taking strategies, as opposed to firms simply engaging in best-execution order routing business. The use of such additional Limited Service MEI Ports is entirely voluntary.
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 port fees to be access fees. It records these fees as part of its Access Fees revenue
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