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Federal Register / Vol. 86, No. 18 / Friday, January 29, 2021 / Notices Without these services from Equinix, the Exchange would not be able to operate and support the network and provide the services associated with the Proposed Access Fees to its Members and non-Members and their customers.
The Exchange did not allocate all of the Equinix expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to providing network connectivity services, approximately 68% of the total Equinix expense. The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the services associated with the Proposed Access Fees, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the Zayo expense because Zayo provides the internet, fiber and bandwidth connections with respect to the network, linking MIAX PEARL with its affiliates, MIAX and MIAX Emerald, as well as the data center and disaster recovery locations. As such, all of the trade data, including the billions of messages each day per exchange, flow through Zayos infrastructure over the Exchanges network. Without these services from Zayo, the Exchange would not be able to operate and support the network and provide the services associated with the Proposed Access Fees to its Members and non-Members and their customers. The Exchange did not allocate all of the Zayo expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to providing network connectivity services, approximately 62% of the total Zayo expense. The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the services associated with the Proposed Access Fees, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the SFTI expense and various other service providers including Thompson Reuters, NYSE, Nasdaq, and Internap expense because those entities provide connectivity and feeds for the entire U.S. options industry as well as the content, connectivity services, and infrastructure services for critical components of the network. Without these services from SFTI and various other service providers, the Exchange would not be able to operate and support the network and provide the
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services associated with the Proposed Access Fees to its Members and nonMembers and their customers. The Exchange did not allocate all of the SFTI
and other service providers expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to providing network connectivity services, approximately 89% of the total SFTI
and other service providers expense.
The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the services associated with the Proposed Access Fees, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the other hardware and software provider expense because this includes costs for dedicated hardware licenses for switches and servers, as well as dedicated software licenses for security monitoring and reporting across the network. Without this hardware and software, the Exchange would not be able to operate and support the network and provide the services associated with the Proposed Access Fees to its Members and non-Members and their customers. The Exchange did not allocate all of the hardware and software provider expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to providing network connectivity services, approximately 54% of the total hardware and software provider expense. The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the services associated with the Proposed Access Fees, and not any other service, as supported by its cost review.
For 2020, total projected internal expense, relating to the internal costs of MIAX PEARL and MIAX to provide network connectivity services, is projected to be $13,831,434. This includes, but is not limited to, costs associated with: 1 Employee compensation and benefits for full-time employees that support the services associated with the Proposed Access Fees, including staff in network operations, trading operations, development, system operations, business, as well as staff in general corporate departments such as legal, regulatory, and finance that support those employees and functions; 2
depreciation and amortization of hardware and software used to provide the services associated with the
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Proposed Access Fees, including equipment, servers, cabling, purchased software and internally developed software used in the production environment to support the network for trading; and 3 occupancy costs for leased office space for staff that provide the services associated with the Proposed Access Fees. The breakdown of these costs is more fully-described below. For clarity, only a portion of all such internal expenses are included in the internal expense herein, and no expense amount is allocated twice.
Accordingly, the Exchange and MIAX
do not allocate their entire costs contained in those items to the services associated with the Proposed Access Fees.
The Exchange believes it is reasonable to allocate such internal expense described above towards the total cost to the Exchange to provide the services associated with the Proposed Access Fee. In particular, MIAX PEARLs and MIAXs combined employee compensation and benefits expense relating to providing network connectivity services is projected to be approximately $6,892,689, which is only a portion of the $9,727,857 for MIAX PEARL and $11,811,796 for MIAX total projected expense for employee compensation and benefits.
The Exchange believes it is reasonable to allocate the identified portion of such expense because this includes the time spent by employees of several departments, including Technology, Back Office, Systems Operations, Networking, Business Strategy Development who create the business requirement documents that the Technology staff use to develop network features and enhancements, Trade Operations, Finance who provide billing and accounting services relating to the network, and Legal who provide legal services relating to the network, such as rule filings and various license agreements and other contracts. As part of the extensive cost review conducted by the Exchange, the Exchange reviewed the amount of time spent by each employee on matters relating to the provision of services associated with the Proposed Access Fees. Without these employees, the Exchange would not be able to operate and support the network and provide network and provide the services associated with the Proposed Access Fees to its Members and nonMembers and their customers. The Exchange did not allocate all of the employee compensation and benefits expense toward the cost of providing network connectivity services, only the portions which the Exchange identified
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