Voglio sapere a riguardo di…

Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES

participant to conduct its business using the Exchange, which is a business decision to be made by each particular type of market participant. The different types of connectivity and port alternatives allows Members to conduct their different business strategiessome Members put an emphasis on speed, while others emphasize other strategies, such as redundancy and certainty of execution. The Exchange does not require a Member to have a certain framework for accessing the Exchange, but provides various connectivity and port alternatives for each Members distinct business lines.
The Exchange offers various types of ports with differing prices because each port accomplishes different tasks, are suited to different types of Members, and consume varying capacity amounts of the network. For instance, MEI ports allow for a higher throughput and can handle much higher quote/order rates than FIX ports. Members that are Market Makers or high frequency trading firms utilize these ports typically coupled with 10Gb ULL connectivity because they transact in significantly higher amounts of messages being sent to and from the Exchange, versus FIX port users, who are traditionally customers sending only orders to the Exchange typically coupled with 1Gb connectivity. The different types of ports cater to the different types of Exchange Memberships and different capabilities of the various Exchange Members. Market Makers have quoting and other obligations that traditional customers do not. Market Makers, therefore, need ports and connections that can handle using far more of the networks capacity for message throughput, risk protections, and the amount of information that has to be assessed. Market Makers account for the vast majority of network capacity utilization and volume executed on the Exchange, as discussed throughout.40
Accordingly, the Exchange believes that it is reasonable and appropriate to charge market participants more for MEI
ports versus FIX ports and other lower capacity ports.
The Exchange believes that its proposal to increase the number of 40 See supra page 70 discussing how purchasers of the 10Gb ULL connectivity accounted for approximately 98% of the volume on the Exchange for the month of October 2020; 99% of total Exchange connectivity revenue; Members and nonMembers that purchased 10Gb ULL connections accounted for approximately 99% of the total network connectivity revenue collected by the Exchange from all connectivity alternatives; and Members and non-Members that purchased 1Gb connections accounted for approximately 1% of the revenue collected by the Exchange from all connectivity alternatives.

VerDate Sep<11>2014

17:11 Mar 01, 2021

Jkt 253001

Additional Limited Service Ports available to Market Makers is consistent with the objectives of Section 6b5 of the Act 41 because the proposed addition of Limited Service MEI Ports will be available to all Market Makers and the current fees for the Additional Limited Service MEI Ports apply equally to all Market Makers regardless of type, and access to the Exchange is offered on terms that are not unfairly discriminatory. The Exchange proposes to increase the number of available Limited Service MEI Ports because the Exchange is expanding its network. This network expansion is necessary due to increased customer demand and increased volatility in the marketplace, both of which have translated into increased message traffic rates across the network. Consequently, this network expansion, which increases the number of switches supporting customer facing systems, is necessary in order to provide sufficient and equal access to new and existing Members, to maintain a sufficient amount of network capacity head-room, and to continue to provide the same level of service across the Exchanges low-latency, highthroughput technology environment.
Currently, the Exchange has 6
network switches that support the entire customer base of MIAX Emerald. The Exchange plans to increase this to 12
switches, which will increase the number of available customer ports by 100%. This increase in the number of available customer ports will enable the Exchange to continue to provide sufficient and equal access to the MIAX
Emerald System for all Members.
Absent the proposed increase in available MEI Ports, the Exchange projects that its current inventory will be depleted and it will lack sufficient capacity to continue to meet Members access needs. Further, the Exchange notes the decision of whether to purchase any Additional Limited Service MEI Ports is completely optional and it is a business decision for each Market Maker to determine whether Additional Limited Service MEI Ports are necessary to meet their business requirements.
The Exchange further believes that the availability of the Additional Limited Service MEI Ports is equitable and not unfairly discriminatory because it will enable Market Makers to maintain uninterrupted access to the MIAX
Emerald System and consequently enhance the marketplace by helping Market Makers to better manage risk, thus preserving the integrity of the MIAX Emerald markets, all to the 41 15

PO 00000

U.S.C. 78fb5.

Frm 00061

Fmt 4703

Sfmt 4703

12229

benefit of and protection of investors and the public as a whole. The Exchange also believes that its proposal is consistent with Section 6b4 of the Act because only Market Makers that voluntarily purchase Additional Limited Service MEI Ports will be charged the monthly fee per port.
As stated above, the Exchange proposes to expand its network by making available six Additional Limit Service MEI Ports due to increased customer demand and increased volatility in the marketplace, both of which have translated into increased message traffic rates across the network.
The cost to expand the network in this manner is greater than the revenue the Exchange anticipates the Additional Limited Service MEI Ports will generate.
Specifically, the Exchange estimates it has already incurred a one-time cost of approximately $175,000 in capital expenditures CapEx on hardware, software, and other items to expand the network to make available the six Additional Limited Service MEI Ports.
This estimated cost also includes expense associated with providing the necessary engineering and support personnel to transition those Market Makers who wish to acquire any number of Additional Limited Service MEI Ports.
The Exchange cannot be certain how many firms will purchase the Additional Limited Service MEI Ports or in what quantity. However, the Exchange projects that approximately three to four Market Makers will purchase all six of the Additional Limited Service MEI Ports, and approximately three to four firms will purchase two out of six of the Additional Limited Service MEI Ports, which will be subject to the proposed monthly fee of $100 per port.
Accordingly, the Exchange projects that the monthly revenue for the Additional Limited Service MEI Ports will be approximately $33,400 assuming four Market Makers purchase all six of the Additional Limited Service MEI Ports and four Market Makers purchase two out of six of the Additional Limited Service MEI Ports.
The Exchange only has four primary sources of revenue: Transaction fees, access fees of which the Proposed Access Fees constitute the majority, regulatory fees, and market data fees.
Accordingly, the Exchange must cover all of its expenses from these four primary sources of revenue.
The Exchange believes that the Proposed Access Fees are fair and reasonable because they will not result in excessive pricing or supracompetitive profit, when comparing the
E:FRFM02MRN1.SGM

02MRN1