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Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Notices
business, as well as staff in general corporate departments such as legal, regulatory, and finance that support those employees and functions including an increase as a result of the higher determinism project; 2
depreciation and amortization of hardware and software used to provide the market data products associated with the proposed 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 market data products associated with the proposed 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, MIAX Emerald does not allocate its entire costs contained in those items to the market data products associated with the proposed fees.
The Exchange believes it is reasonable to allocate such internal expense described above towards the total cost to the Exchange to provide the market data products associated with the proposed fees. In particular, MIAX Emeralds employee compensation and benefits expense relating to providing the market data products associated with the proposed fees is projected to be $935,400, which is only a portion of the $9,354,009 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 market data products and enhancements, Trade Operations, Finance who provide billing and accounting services relating to the market data products, and Legal who provide legal services relating to the market data products, 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 the market data products associated with the proposed fees. Without these employees, the Exchange would not be able to provide the market data products associated with the proposed fees to its Members and their customers. The
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Exchange did not allocate all of the employee compensation and benefits expense toward the cost of the market data products associated with the proposed fees, only the portions which the Exchange identified as being specifically mapped to providing the market data products associated with the proposed fees, approximately 10%
of the total employee compensation and benefits expense. The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the market data products associated with the proposed fees, and not any other service, as supported by its cost review.
MIAX Emeralds depreciation and amortization expense relating to providing the market data products associated with the proposed fees is projected to be $38,125, which is only a portion of the $3,812,590 total projected expense for depreciation and amortization. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense includes the actual cost of the computer equipment, such as dedicated servers, computers, laptops, monitors, information security appliances and storage, and network switching infrastructure equipment, including switches and taps that were purchased to operate and support the network and provide the market data products associated with the proposed fees.
Without this equipment, the Exchange would not be able to operate the network and provide the market data products associated with the proposed fees to its Members and their customers.
The Exchange did not allocate all of the depreciation and amortization expense toward the cost of providing the market data products associated with the proposed fees, only the portion which the Exchange identified as being specifically mapped to providing the market data products associated with the proposed fees, approximately 1% of the total depreciation and amortization expense, as these access services would not be possible without relying on such.
The Exchange believes this allocation is reasonable because it represents the Exchanges actual cost to provide the market data products associated with the proposed fees, and not any other product or service, as supported by its cost review.
MIAX Emeralds occupancy expense relating to providing the market data products associated with the proposed fees is projected to be $47,432, which is only a portion of the $474,323 total projected expense for occupancy. The Exchange believes it is reasonable to allocate the identified portion of such
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expense because such expense represents the portion of the Exchanges cost to rent and maintain a physical location for the Exchanges staff who operate and support the market data products, including providing the services associated with the proposed fees. This amount consists primarily of rent for the Exchanges Princeton, NJ
office, as well as various related costs, such as physical security, property management fees, property taxes, and utilities. The Exchange operates its Network Operations Center NOC
and Security Operations Center SOC
from its Princeton, New Jersey office location. A centralized office space is required to house the staff that operate and support the market data products.
The Exchange currently has approximately 150 employees.
Approximately two-thirds of the Exchanges staff are in the Technology department, and the majority of those staff have some role in the operation and performance of the network that supports the provision of the market data products associated with the proposed fees. Without this office space, the Exchange would not be able to operate and support the network and provide the market data products associated with the proposed fees to its Members and their customers.
Accordingly, the Exchange believes it is reasonable to allocate the identified portion of its occupancy expense because such amount represents the Exchanges actual cost to house the equipment and personnel who operate and support the Exchanges network infrastructure and the market data products associated with the proposed fees. The Exchange did not allocate all of the occupancy expense toward the cost of providing the market data products associated with the proposed fees, only the portion which the Exchange identified as being specifically mapped to operating and supporting the market data products, approximately 10% of the total occupancy expense. The Exchange believes this allocation is reasonable because it represents the Exchanges cost to provide the services associated with the proposed fees, and not any other service, as supported by its cost review.
Accordingly, based on the facts and circumstances presented, the Exchange believes that its provision of the market data products associated with the proposed fees will not result in excessive pricing or supra-competitive profit. To illustrate, on a going-forward, fully-annualized basis, the Exchange projects that its annualized revenue for
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