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

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 518a5 sic. See supra note 5.
22 See supra note 11.

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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 when it launched trading operations on March 1, 2019, all Exchange Members have had the ability to receive the Exchanges cToM data free of charge for the past two and a half years.25 Since 2019, when the Exchange launched operations with Complex Order functionality, the Exchange has spent time and resources 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 23 See
id.

24 Currently,
11 of 16 registered options exchanges compete for complex market share. The Exchange had a complex market share of approximately 5.70% for the month of July 2021
and 5.80% 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.
26 See Securities Exchange Act Release Nos.
85345 March 18, 2019, 84 FR 10848 March 22, 2019 SREMERALD201913 adopting complex stock-option order functionality; 85346 March 18, 2019, 84 FR 10854 March 22, 2019 SR

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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 13 subscribers 12 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, 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 Distributors may only distribute the Exchanges market data to the recipients officers and employees and its affiliates.28 External Distributors may distribute the Exchanges market data to persons who are not officers, employees or affiliates of the External Distributor,29
and may charge their own fees for the distribution of such market data.
Accordingly, the Exchange believes it is fair, reasonable and not unfairly discriminatory to assess External Distributors a higher fee for the Exchanges market data products as External Distributors have greater usage EMERALD201914 adopting additional price protection during a Complex Auction and the Complex Liquidity Exposure Process to provide additional price discovery.
27 See Exchange Data Agreement, available at https miaxweb2.pairsite.com/sites/default/files/
page-files/MIAX_Exchange_Group_Data_
Agreement_09032020.pdf.
28 See id.
29 See id.

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