[Federal Register Volume 87, Number 98 (Friday, May 20, 2022)]
[Notices]
[Pages 31026-31039]
[FR Doc No: 2022-10807]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94924; File No. SR-MEMX-2022-13]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Adopt Connectivity
Fees

May 16, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 6, 2022, MEMX LLC (``MEMX'' or the ``Exchange'') filed with
the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I, II and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposed rule change
to amend the Exchange's fee schedule applicable to Members \3\ and non-
Members (the ``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and
(c). The Exchange proposes to implement the changes to the Fee Schedule
pursuant to this proposal immediately. The text of the proposed rule
change is provided in Exhibit 5.
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    \3\ See Exchange Rule 1.5(p).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
Background
    The Exchange is re-filing its proposal to amend the Fee Schedule
regarding fees the Exchange charges to Members and non-Members for
physical connectivity to the Exchange and for application sessions
(otherwise known as ``logical ports'') that a Member utilizes in
connection with their participation on the Exchange (together with
physical connectivity, collectively referred to in this proposal as
``connectivity services,'' as described in greater detail below and in
Exhibit 5). The Exchange is proposing to implement the proposed fees
immediately.
    The Exchange filed its Initial Proposal on December 30, 2021,\4\
and began charging fees for connectivity services for the first time in
January of 2022. On February 28, 2022, the Commission suspended the
Initial Proposal and asked for comments on several

questions.\5\ The Exchange then filed the Second Proposal, which has
recently been withdrawn. The Exchange has collected fees for
connectivity services for four months now and is thus able to
supplement its filing with additional details that were not available
at the time of filing of the Initial Proposal or the Second Proposal
and is also able to respond to certain questions raised in the OIP. As
set forth below, the Exchange believes that both the Initial Proposal
and the Second Proposal provided a great deal of transparency regarding
the cost of providing connectivity services and anticipated revenue and
that both the Initial Proposal and the Second Proposal were consistent
with the Act and associated guidance. The Exchange is re-filing this
proposal promptly following the withdrawal of the Second Proposal (and
SR-MEMX-2022-12, which was substantively identical to the current
proposal but was withdrawn due to a technical error) with the intention
of maintaining the existing fees for connectivity services while at the
same time providing additional details not contained in prior
proposals. The Exchange believes that this approach is appropriate and
fair for competitive reasons as several other exchanges currently
charge for similar services, as described below, and because others
have followed a similar approach when adopting fees.\6\
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    \4\ The Exchange received one comment letter on the Initial
Proposal, which asserted that the Exchange did not address the
Exchange's ownership structure and that revenues from connectivity
services could have a ``disparate impact'' on certain Members. See
Letter from Tyler Gellasch, Healthy Markets Association, dated
January 26, 2022. The Exchange notes that the ownership of an
exchange by members is not unprecedented and that the ownership
structure of the Exchange and related issues were addressed during
the process of the Exchange's registration as a national securities
exchange. See Securities Exchange Act Release No. 88806 (May 4,
2020), 85 FR 27451 (May 8, 2020) (approval order related to the
application of MEMX LLC to register as a national securities
exchange). The Exchange does not believe that the Initial Proposal
or this proposal raises any new issues that have not been previously
addressed.
    \5\ See Securities Exchange Act Release No. 94332 (February 28,
2022) (SR-MEMX-2021-22) (Suspension of and Order Instituting
Proceedings to Determine Whether to Approve or Disapprove Proposed
Rule Change to Amend the Exchange's Fee Schedule to Adopt
Connectivity Fees) (the ``OIP'').
    \6\ See, e.g., Securities Exchange Act Release No. 87875
(December 31, 2019), 85 FR 770 (January 7, 2020) (SR-MIAX-2019-51)
(notice of filing and immediate effectiveness of changes to the
Miami International Securities Exchange LLC, or ``MIAX'', fee
schedule). The Exchange notes that the MIAX filing was the eighth
filing by MIAX to adopt the fees proposed for certain connectivity
services following multiple times of withdrawing and re-filing the
proposal. The Exchange notes that MIAX charged the applicable fees
throughout this period while working to develop a filing that met
the new standards being applied to fee filings. See also Fee
Guidance, infra note 14.
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    As set forth in the Initial Proposal, the Second Proposal and this
filing, the Exchange does incur significant costs related to the
provision of connectivity services and believes it should be permitted
to continue charging for such services while also providing additional
time for public comment on the level of detail contained in this
proposal and other questions posed in the OIP. Finally, the Exchange
does not believe that the ability to charge fees for connectivity
services or the level of the Exchange's proposed fees are at issue, but
rather, that the level of detail required to be included by the
Exchange when adopting such fees is at issue. The Exchange notes that
despite two public comment periods related to the proposed fees, other
than a comment that the Exchange does not believe to be relevant to the
proposal,\7\ no commenters have raised issues about the level of fees
proposed by the Exchange or the level of detail provided by the
Exchange in justifying the proposed fees. For these reasons, the
Exchange believes it is appropriate to re-file this proposal and to
continue charging for connectivity services.
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    \7\ See supra, note 4.
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    In general, 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 Exchange Act
requirements that fees be reasonable, equitably allocated, not unfairly
discriminatory, and not create an undue burden on competition among
members and markets. In particular, the Exchange believes that each
exchange should take extra care to be able to demonstrate that these
fees are based on its costs and reasonable business needs.
    In proposing to charge fees for connectivity services, the Exchange
has sought to be especially diligent in assessing those fees in a
transparent way against its own aggregate costs of providing the
related service, and also carefully and transparently assessing the
impact on Members--both generally and in relation to other Members,
i.e., to assure the fee will not create a financial burden on any
participant and will not have an undue impact in particular on smaller
Members and competition among Members in general. The Exchange believes
that this level of diligence and transparency is called for by the
requirements of Section 19(b)(1) under the Act,\8\ and Rule 19b-4
thereunder,\9\ with respect to the types of information self-regulatory
organizations (``SROs'') should provide when filing fee changes, and
Section 6(b) of the Act,\10\ which requires, among other things, that
exchange fees be reasonable and equitably allocated,\11\ not designed
to permit unfair discrimination,\12\ and that they not impose a burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act.\13\ This rule change proposal addresses those
requirements, and the analysis and data in each of the sections that
follow are designed to clearly and comprehensively show how they are
met.\14\
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    \8\ 15 U.S.C. 78s(b)(1).
    \9\ 17 CFR 240.19b-4.
    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78f(b)(8).
    \14\ In 2019, Commission staff published guidance suggesting the
types of information that SROs may use to demonstrate that their fee
filings comply with the standards of the Exchange Act (``Fee
Guidance''). While MEMX understands that the Fee Guidance does not
create new legal obligations on SROs, the Fee Guidance is consistent
with MEMX's view about the type and level of transparency that
exchanges should meet to demonstrate compliance with their existing
obligations when they seek to charge new fees. See Staff Guidance on
SRO Rule Filings Relating to Fees (May 21, 2019) available at
https://www.sec.gov/tm/staff-guidancesro-rule-filings-fees.
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    Prior to January 3, 2022, MEMX did not charge fees for connectivity
to the Exchange, including fees for physical connections or application
sessions for order entry purposes or receipt of drop copies. The
objective of this approach was to eliminate any fee-based barriers to
connectivity for Members when MEMX launched as a national securities
exchange in 2020, and it was successful in achieving this objective in
that a significant number of Members are directly or indirectly
connected to the Exchange.
    As detailed below, MEMX recently calculated its aggregate monthly
costs for providing physical connectivity to the Exchange at $795,789
and its aggregate monthly costs for providing application sessions at
$347,936. Because MEMX offered all connectivity free of charge until
January of this year, MEMX has borne 100% of all connectivity costs. In
order to cover the aggregate costs of providing connectivity to its
Users (both Members and non-Members \15\) going forward and to make a
modest profit, as described below, the Exchange is proposing to modify
its Fee Schedule, pursuant to MEMX Rules 15.1(a) and (c), to charge a
fee of $6,000 per month for each physical connection in the data center
where the Exchange primarily operates under normal market conditions
(``Primary Data Center'') and a fee of $3,000 per month for each
physical connection in the Exchange's geographically diverse data
center, which is operated for backup and disaster recovery purposes
(``Secondary Data Center''), each as further described below. The
Exchange also proposes to modify its Fee Schedule, pursuant to

MEMX Rules 15.1(a) and (c), to charge a fee of $450 per month for each
application session used for order entry (``Order Entry Port'') and
application session for receipt of drop copies (``Drop Copy Port'') in
the Exchange's Primary Data Center, as further described below.\16\
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    \15\ Types of market participants that obtain connectivity
services from the Exchange but are not Members include service
bureaus and extranets. Service bureaus offer technology-based
services to other companies for a fee, including order entry
services to Members, and thus, may access application sessions on
behalf of one or more Members. Extranets offer physical connectivity
services to Members and non-Members.
    \16\ As proposed, fees for connectivity services would be
assessed based on each active connectivity service product at the
close of business on the first day of each month. If a product is
cancelled by a Member's submission of a written request or via the
MEMX User Portal prior to such fee being assessed then the Member
will not be obligated to pay the applicable product fee. MEMX will
not return pro-rated fees even if a product is not used for an
entire month.
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Cost Analysis
Background on Cost Analysis
    In October 2021, MEMX completed a study of its aggregate costs to
produce market data and connectivity (the ``Cost Analysis''). The Cost
Analysis required a detailed analysis of MEMX's aggregate baseline
costs, including a determination and allocation of costs for core
services provided by the Exchange--transaction execution, market data,
membership services, physical connectivity, and application sessions
(which provide order entry, cancellation and modification
functionality, risk functionality, ability to receive drop copies, and
other functionality). MEMX separately divided its costs between those
costs necessary to deliver each of these core services, including
infrastructure, software, human resources (i.e., personnel), and
certain general and administrative expenses (``cost drivers''). Next,
MEMX adopted an allocation methodology with various principles to guide
how much of a particular cost should be allocated to each core service.
For instance, fixed costs that are not driven by client activity (e.g.,
message rates), such as data center costs, were allocated more heavily
to the provision of physical connectivity (75%), with smaller
allocations to logical ports (2.6%), and the remainder to the provision
of transaction execution and market data services (22.4%). In contrast,
costs that are driven largely by client activity (e.g., message rates),
were not allocated to physical connectivity at all but were allocated
primarily to the provision of transaction execution and market data
services (90%) with a smaller allocation to application sessions (10%).
The allocation methodology was decided through conversations with
senior management familiar with each area of the Exchange's operations.
After adopting this allocation methodology, the Exchange then applied
an estimated allocation of each cost driver to each core service,
resulting in the cost allocations described below.
    By allocating segmented costs to each core service, MEMX was able
to estimate by core service the potential margin it might earn based on
different fee models. The Exchange notes that as a non-listing venue it
has four primary sources of revenue that it can potentially use to fund
its operations: Transaction fees, fees for connectivity services,
membership and regulatory fees, and market data fees. Accordingly, the
Exchange must cover its expenses from these four primary sources of
revenue.
    Through the Exchange's extensive Cost Analysis, the Exchange
analyzed every expense item in the Exchange's general expense ledger to
determine whether each such expense relates to the provision of
connectivity services, and, if such expense did so relate, what portion
(or percentage) of such expense actually supports the provision of
connectivity services, and thus bears a relationship that is, ``in
nature and closeness,'' directly related to network connectivity
services. In turn, the Exchange allocated certain costs more to
physical connectivity and others to applications, while certain costs
were only allocated to such services at a very low percentage or not at
all, using consistent allocation methodologies as described above.
Based on this analysis, MEMX estimates that the cost drivers to provide
connectivity services, including both physical connections and
application sessions, result in an aggregate monthly cost of
$1,143,715, as further detailed below.
Costs Related to Offering Physical Connectivity
    The following chart details the individual line-item costs
considered by MEMX to be related to offering physical connectivity as
well as the percentage of the Exchange's overall costs such costs
represent for such area (e.g., as set forth below, the Exchange
allocated approximately 13.8% of its overall Human Resources cost to
offering physical connectivity).

------------------------------------------------------------------------
              Costs drivers                    Costs         % of all
------------------------------------------------------------------------
Human Resources.........................        $262,129            13.8
Connectivity (external fees, cabling,            162,000            75.0
 switches, etc.)........................
Data Center.............................         219,000            75.0
External Market Data....................             n/a             n/a
Hardware and Software Licenses..........           4,507             1.2
Monthly Depreciation....................          99,328            18.5
Allocated Shared Expenses...............          48,826            18.9
                                         -------------------------------
    Total...............................         795,789            20.1
------------------------------------------------------------------------

    Below are additional details regarding each of the line-item costs
considered by MEMX to be related to offering physical connectivity.
Human Resources
    For personnel costs (Human Resources), MEMX calculated an
allocation of employee time for employees whose functions include
providing and maintaining physical connectivity and performance thereof
(primarily the MEMX network infrastructure team, which spends most of
their time performing functions necessary to provide physical
connectivity) and for which the Exchange allocated 75% of each
employee's time. The Exchange also allocated Human Resources costs to
provide physical connectivity to a limited subset of personnel with
ancillary functions related to establishing and maintaining such
connectivity (such as information security and finance personnel), for
which the Exchange allocated cost on an employee-by-employee basis
(i.e., only including those personnel who do support functions related
to providing physical connectivity) and then applied a smaller
allocation to such employees (less than 20%). The Exchange notes that
it has fewer than seventy (70)

employees and each department leader has direct knowledge of the time
spent by those spent by each employee with respect to the various tasks
necessary to operate the Exchange. The estimates of Human Resources
cost were therefore determined by consulting with such department
leaders, determining which employees are involved in tasks related to
providing physical connectivity, and confirming that the proposed
allocations were reasonable based on an understanding of the percentage
of their time such employees devote to tasks related to providing
physical connectivity. The Exchange notes that senior level executives
were only allocated Human Resources costs to the extent the Exchange
believed they are involved in overseeing tasks related to providing
physical connectivity. The Human Resources cost was calculated using a
blended rate of compensation reflecting salary, equity and bonus
compensation, benefits, payroll taxes, and 401(k) matching
contributions.
Connectivity
    The Connectivity cost includes external fees paid to connect to
other exchanges, cabling and switches required to operate the Exchange.
The Exchange notes that it previously labeled this line item as
``Infrastructure and Connectivity'' but has eliminated the reference to
Infrastructure because several other line-item costs could be
considered infrastructure given the generality of that term. The
Connectivity line-item is more narrowly focused on technology used to
complete connections to the Exchange and to connect to external
markets.
Data Center
    Data Center costs includes an allocation of the costs the Exchange
incurs to provide physical connectivity in the third-party data centers
where it maintains its equipment as well as related costs (the Exchange
does not own the Primary Data Center or the Secondary Data Center, but
instead, leases space in data centers operated by third parties).
External Market Data
    External Market Data includes fees paid to third parties, including
other exchanges, to receive and consume market data from other markets.
The Exchange notes that it did not allocate any External Market Data
fees to the provision of physical connectivity as market data is not
related to such services.
Hardware and Software Licenses
    Hardware and Software Licenses includes hardware and software
licenses used to operate and monitor physical assets necessary to offer
physical connectivity to the Exchange.
Monthly Depreciation
    All physical assets and software, which also includes assets used
for testing and monitoring of Exchange infrastructure, were valued at
cost, depreciated or leased over periods ranging from three to five
years. Thus, the depreciation cost primarily relates to servers
necessary to operate the Exchange, some of which are owned by the
Exchange and some of which are leased by the Exchange in order to allow
efficient periodic technology refreshes. As noted above, the Exchange
allocated 18.5% of all depreciation costs to providing physical
connectivity. The Exchange notes, however, that it did not allocate
depreciation costs for any depreciated software necessary to operate
the Exchange to physical connectivity, as such software does not impact
the provision of physical connectivity.
Allocated Shared Expenses
    Finally, a limited portion of general shared expenses was allocated
to overall physical connectivity costs as without these general shared
costs the Exchange would not be able to operate in the manner that it
does and provide physical connectivity. The costs included in general
shared expenses include general expenses of the Exchange, including
office space and office expenses (e.g., occupancy and overhead
expenses), utilities, recruiting and training, marketing and
advertising costs, professional fees for legal, tax and accounting
services (including external and internal audit expenses), and
telecommunications costs. The Exchange notes that the cost of paying
directors to serve on its Board of Directors is also included in the
Exchange's general shared expenses, and thus a portion of such overall
cost amounting to less than 20% of the overall cost for directors was
allocated to providing physical connectivity. The total monthly cost of
$795,789 was divided by the number of physical connections the Exchange
maintained at the time that proposed pricing was determined (143), to
arrive at a cost of approximately $5,565 per month, per physical
connection.
Costs Related to Offering Application Sessions
    The following chart details the individual line-item costs
considered by MEMX to be related to offering application sessions as
well as the percentage of the Exchange's overall costs such costs
represent for such area (e.g., as set forth below, the Exchange
allocated approximately 7.7% of its overall Human Resources cost to
offering application sessions).

------------------------------------------------------------------------
           Costs Drivers \17\                  Costs         % of all
------------------------------------------------------------------------
Human Resources.........................        $147,029             7.7
Connectivity (external fees, cabling,              5,520             2.6
 switches, etc.)........................
Data Center.............................           7,462             2.6
External Market Data....................          10,734             7.5
Hardware and Software Licenses..........          37,771            10.1
Monthly Depreciation....................          44,843             8.3
Allocated Shared Expenses...............          94,567             8.3
                                         -------------------------------
    Total...............................         347,926             8.8
------------------------------------------------------------------------

Human Resources
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    \17\ The Exchange notes that the total monthly cost set forth
for application sessions ($347,926) is the same as that used for the
Initial Proposal and the Second Proposal, however the Exchange has
modified the categorization of such fees in the table above as such
categorization was inconsistent in the prior proposals between
physical connectivity and application sessions. For instance, the
Exchange included applicable depreciation expenses in the Hardware
and Software Licenses category with respect to application sessions
instead of the Monthly Depreciation category. As another example,
the Exchange included applicable Data Center costs in the
Connectivity category with respect to application sessions. The
revised chart above corrects these inconsistencies.
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    With respect to application sessions, MEMX calculated Human
Resources cost by taking an allocation of employee time for employees
whose functions

include providing application sessions and maintaining performance
thereof (including a broader range of employees such as technical
operations personnel, market operations personnel, and software
engineering personnel) as well as a limited subset of personnel with
ancillary functions related to maintaining such connectivity (such as
sales, membership, and finance personnel). The estimates of Human
Resources cost were again determined by consulting with department
leaders, determining which employees are involved in tasks related to
providing application sessions and maintaining performance thereof, and
confirming that the proposed allocations were reasonable based on an
understanding of the percentage of their time such employees devote to
tasks related to providing application sessions and maintaining
performance thereof. The Exchange notes that senior level executives
were only allocated Human Resources costs to the extent the Exchange
believed they are involved in overseeing tasks related to providing
application sessions and maintaining performance thereof. The Human
Resources cost was again calculated using a blended rate of
compensation reflecting salary, equity and bonus compensation,
benefits, payroll taxes, and 401(k) matching contributions.
Connectivity
    The Connectivity cost includes external fees paid to connect to
other exchanges, cabling and switches, as described above.
Data Center
    Data Center costs includes an allocation of the costs the Exchange
incurs to provide physical connectivity in the third-party data centers
where it maintains its equipment as well as related costs (the Exchange
does not own the Primary Data Center or the Secondary Data Center, but
instead, leases space in data centers operated by third parties).
External Market Data
    External Market Data includes fees paid to third parties, including
other exchanges, to receive and consume market data from other markets.
The Exchange allocated a small portion of External Market Data fees
(7.5%) to the provision of application sessions as such market data is
necessary to offer certain services related to such sessions, such as
validating orders on entry against the national best bid and national
best offer and checking for other conditions (e.g., whether a symbol is
halted or subject to a short sale circuit breaker).
Hardware and Software Licenses
    Hardware and Software Licenses includes hardware and software
licenses used to monitor the health of the order entry services
provided by the Exchange.
Monthly Depreciation
    All physical assets and software, which also includes assets used
for testing and monitoring of order entry infrastructure, were valued
at cost, depreciated or leased over periods ranging from three to five
years. Thus, the depreciation cost primarily relates to servers
necessary to operate the Exchange, some of which is owned by the
Exchange and some of which is leased by the Exchange in order to allow
efficient periodic technology refreshes. The Exchange allocated 8.3% of
all depreciation costs to providing application sessions. In contrast
to physical connectivity, described above, the Exchange did allocate
depreciation costs for depreciated software necessary to operate the
Exchange to application sessions because such software is related to
the provision of such connectivity.
Allocated Shared Expenses
    Finally, a limited portion of general shared expenses was allocated
to overall application session costs as without these general shared
costs the Exchange would not be able to operate in the manner that it
does and provide application sessions. The costs included in general
shared expenses include general expenses of the Exchange, including
office space and office expenses (e.g., occupancy and overhead
expenses), utilities, recruiting and training, marketing and
advertising costs, professional fees for legal, tax and accounting
services (including external and internal audit expenses), and
telecommunications costs. The Exchange again notes that the cost of
paying directors to serve on its Board of Directors is included in the
calculation of Allocated Shared Expenses, and thus a portion of such
overall cost amounting to less than 10% of the overall cost for
directors was allocated to providing application sessions. The total
monthly cost of $347,926 was divided by the number of application
sessions the Exchange maintained at the time that proposed pricing was
determined (835), to arrive at a cost of approximately $417 per month,
per application session.
Cost Analysis--Additional Discussion
    In conducting its Cost Analysis, the Exchange did not allocate any
of its expenses in full to any core services (including physical
connectivity or application sessions) and did not double-count any
expenses. Instead, as described above, the Exchange allocated
applicable cost drivers across its core services and used the same Cost
Analysis to form the basis of this proposal and the filing it recently
submitted proposing fees for proprietary data feeds offered by the
Exchange. For instance, in calculating the Human Resources expenses to
be allocated to physical connections, the Exchange has a team of
employees dedicated to network infrastructure and with respect to such
employees the Exchange allocated network infrastructure personnel with
a high percentage of the cost of such personnel (75%) given their focus
on functions necessary to provide physical connections. The salaries of
those same personnel were allocated only 2.5% to application sessions
and the remaining 22.5% was allocated to transactions and market data.
The Exchange did not allocate any other Human Resources expense for
providing physical connections to any other employee group outside of a
smaller allocation (19%) of the cost associated with certain specified
personnel who work closely with and support network infrastructure
personnel. In contrast, the Exchange allocated much smaller percentages
of costs (11% or less) across a wider range of personnel groups in
order to allocate Human Resources costs to providing application
sessions. This is because a much wider range of personnel are involved
in functions necessary to offer, monitor and maintain application
sessions but the tasks necessary to do so are not a primary or full-
time function.
    In total, the Exchange allocated 13.8% of its personnel costs to
providing physical connections and 7.7% of its personnel costs to
providing application sessions, for a total allocation of 21.5% Human
Resources expense to provide connectivity services. In turn, the
Exchange allocated the remaining 78.5% of its Human Resources expense
to membership (less than 1%) and transactions and market data (77.5%).
Thus, again, the Exchange's allocations of cost across core services
were based on real costs of operating the Exchange and were not double-
counted across the core services or their associated revenue streams.
    As another example, the Exchange allocated depreciation expense to
all core services, including physical

connections and application sessions, but in different amounts. 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. Without this
equipment, the Exchange would not be able to operate the network and
provide connectivity services to its Members and non-Members and their
customers. However, the Exchange did not allocate all of the
depreciation and amortization expense toward the cost of providing
connectivity services, but instead allocated approximately 27% of the
Exchange's overall depreciation and amortization expense to
connectivity services (18.5% attributed to physical connections and
8.3% to application sessions). The Exchange allocated the remaining
depreciation and amortization expense (approximately 73%) toward the
cost of providing transaction services and market data.
    Looking at the Exchange's operations holistically, the total
monthly costs to the Exchange for offering core services is $3,954,537.
Based on the initial four months of billing for connectivity services,
the Exchange expects to collect its original estimate of $1,233,750 on
a monthly basis for such services.\18\ Incorporating this amount into
the Exchange's overall projected revenue, including projections related
to recently adopted market data fees, the Exchange anticipates monthly
revenue ranging from $4,296,950 to $4,546,950 from all sources (i.e.,
connectivity fees and membership fees that were introduced in January
2022, transaction fees, and revenue from market data, both through the
fees adopted in April 2022 and through the revenue received from the
SIPs). As such, applying the Exchange's holistic Cost Analysis to a
holistic view of anticipated revenues, the Exchange would earn
approximately 8.5% to 15% margin on its operations as a whole. The
Exchange believes that this amount is reasonable.
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    \18\ The Exchange notes that it has charged connectivity
services for four months and so far the average amount expected is
very close to the estimated revenue provided in the Initial
Proposal. Specifically, the Exchange has earned an estimated
$1,246,700 ($12,950 more than projected) for connectivity services
on an average basis over January through April. The Exchange
believes this difference is immaterial for purposes of this proposal
and thus, will continue to use the original estimated revenue of
$1,233,750 for purposes of this proposal.
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    The Exchange notes that its revenue estimates are based on
projections across all potential revenue streams and will only be
realized to the extent such revenue streams actually produce the
revenue estimated. As a new entrant to the hyper-competitive exchange
environment, and an exchange focused on driving competition, the
Exchange does not yet know whether such expectations will be realized.
For instance, in order to generate the revenue expected from
connectivity, the Exchange will have to be successful in retaining
existing clients that wish to maintain physical connectivity and/or
application sessions or in obtaining new clients that will purchase
such services. Similarly, the Exchange will have to be successful in
retaining a positive net capture on transaction fees in order to
realize the anticipated revenue from transaction pricing.
    To the extent the Exchange is successful in gaining market share,
improving its net capture on transaction fees, encouraging new clients
to connect directly to the Exchange, and other developments that would
help to increase Exchange revenues, the Exchange does not believe it
should be penalized for such success. The Exchange, like other
exchanges, is, after all, a for-profit business. Accordingly, while the
Exchange believes in transparency around costs and potential margins as
well as periodic review of costs and applicable costs (as discussed
below), the Exchange does not believe that these estimates should form
the sole basis of whether or not a proposed fee is reasonable or can be
adopted. Instead, the Exchange believes that the information should be
used solely to confirm that an Exchange is not earning supra-
competitive profits, and the Exchange believes its Cost Analysis and
related projections demonstrate this fact.
    The Exchange notes that the Cost Analysis was based on the
Exchange's first year of operations and projections for the next year
(which is currently underway). As such, the Exchange believes that its
costs will remain relatively similar in future years. It is possible
however that such costs will either decrease or increase. To the extent
the Exchange sees growth in use of connectivity services it will
receive additional revenue to offset future cost increases. However, if
use of connectivity services is static or decreases, the Exchange might
not realize the revenue that it anticipates or needs in order to cover
applicable costs. Accordingly, the Exchange is committing to conduct a
one-year review after implementation of these fees. The Exchange
expects that it may propose to adjust fees at that time, to increase
fees in the event that revenues fail to cover costs and a reasonable
mark-up of such costs. Similarly, the Exchange would propose to
decrease fees in the event that revenue materially exceeds our current
projections. In addition, the Exchange will periodically conduct a
review to inform its decision making on whether a fee change is
appropriate (e.g., to monitor for costs increasing/decreasing or
subscribers increasing/decreasing, etc. in ways that suggest the then-
current fees are becoming dislocated from the prior cost-based
analysis) and would propose to increase fees in the event that revenues
fail to cover its costs and a reasonable mark-up, or decrease fees in
the event that revenue or the mark-up materially exceeds our current
projections. In the event that the Exchange determines to propose a fee
change, the results of a timely review, including an updated cost
estimate, will be included in the rule filing proposing the fee change.
More generally, we believe that it is appropriate for an exchange to
refresh and update information about its relevant costs and revenues in
seeking any future changes to fees, and the Exchange commits to do so.
Proposed Fees
Physical Connectivity Fees
    MEMX offers its Members the ability to connect to the Exchange in
order to transmit orders to and receive information from the Exchange.
Members can also choose to connect to MEMX indirectly through physical
connectivity maintained by a third-party extranet. Extranet physical
connections may provide access to one or multiple Members on a single
connection. Users of MEMX physical connectivity services (both Members
and non-Members \19\) seeking to establish one or more connections with
the Exchange submit a request to the Exchange via the MEMX User Portal
or directly to Exchange personnel. Upon receipt of the completed
instructions, MEMX establishes the physical connections requested by
the User. The number of physical connections assigned to each User as
of April 29, 2022, ranges from one to ten, depending on the scope and
scale of the Member's trading activity on the Exchange as determined by
the Member, including the Member's determination of the need for
redundant connectivity. The Exchange notes that

44% of its Members do not maintain a physical connection directly with
the Exchange in the Primary Data Center (though many such Members have
connectivity through a third-party provider) and another 44% have
either one or two physical ports to connect to the Exchange in the
Primary Data Center. Thus, only a limited number of Members, 12%,
maintain three or more physical ports to connect to the Exchange in the
Primary Data Center.
---------------------------------------------------------------------------

    \19\ See supra note 15.
---------------------------------------------------------------------------

    As described above, in order to cover the aggregate costs of
providing physical connectivity to Users and make a modest profit, as
described below, the Exchange is proposing to charge a fee of $6,000
per month for each physical connection in the Primary Data Center and a
fee of $3,000 per month for each physical connection in the Secondary
Data Center. There is no requirement that any Member maintain a
specific number of physical connections and a Member may choose to
maintain as many or as few of such connections as each Member deems
appropriate. The Exchange notes, however, that pursuant to Rule 2.4
(Mandatory Participation in Testing of Backup Systems), the Exchange
does require a small number of Members to connect and participate in
functional and performance testing as announced by the Exchange, which
occurs at least once every 12 months. Specifically, Members that have
been determined by the Exchange to contribute a meaningful percentage
of the Exchange's overall volume must participate in mandatory testing
of the Exchange's backup systems (i.e., such Members must connect to
the Secondary Data Center). The Exchange notes that Members that have
been designated are still able to use third-party providers of
connectivity to access the Exchange at its Secondary Data Center, and
that one such designated Member does use a third-party provider instead
of connecting directly to the Secondary Data Center through
connectivity provided by the Exchange.\20\ Nonetheless, because some
Members are required to connect to the Secondary Data Center pursuant
to Rule 2.4 and to encourage Exchange Members to connect to the
Secondary Data Center generally, the Exchange has proposed to charge
one-half of the fee for a physical connection in the Primary Data
Center. The Exchange notes that its costs related to operating the
Secondary Data Center were not separately calculated for purposes of
this proposal, but instead, all costs related to providing physical
connections were considered in aggregate. The Exchange believes this is
appropriate because had the Exchange calculated such costs separately
and then determined the fee per physical connection that would be
necessary for the Exchange to cover its costs for operating the
Secondary Data Center, the costs would likely be much higher than those
proposed for connectivity at the Primary Data Center because Members
maintain significantly fewer connections at the Secondary Data Center.
The Exchange believes that charging a higher fee for physical
connections at the Secondary Data Center would be inconsistent with its
objective of encouraging Members to connect at such data center and is
inconsistent with the fees charged by other exchanges, which also
provide connectivity for disaster recovery purposes at a discounted
rate.\21\
---------------------------------------------------------------------------

    \20\ The Exchange also notes that a second designated Member
that is required to participate in mandatory testing with the
Exchange for the first time this year has not yet connected to the
Exchange in the Secondary Data Center and has indicated that it is
likely to use a third-party provider.
    \21\ See, e.g., the BZX equities fee schedule, available at:
https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    The proposed fee will not apply differently based upon the size or
type of the market participant, but rather based upon the number of
physical connections a User requests, based upon factors deemed
relevant by each User (either a Member, service bureau or extranet).
The Exchange believes these factors include the costs to maintain
connectivity, business model and choices Members make in how to
participate on the Exchange, as further described below.
    The proposed fee of $6,000 per month for physical connections at
the Primary Data Center is designed to permit the Exchange to cover the
costs allocated to providing connectivity services with a modest markup
(approximately 8%), which would also help fund future expenditures
(increased costs, improvements, etc.). The Exchange believes it is
appropriate to charge fees that represent a reasonable markup over cost
given the other factors discussed above and the need for the Exchange
to maintain a highly performant and stable platform to allow Members to
transact with determinism. The Exchange also reiterates that the
Exchange did not charge any fees for connectivity services prior to
January 2022, and its allocation of costs to physical connections was
part of a holistic allocation that also allocated costs to other core
services without double-counting any expenses. As such, the proposal
only truly constitutes a ``markup'' to the extent the Exchange recovers
the initial costs of building the network and infrastructure necessary
to offer physical connectivity and operating the Exchange for over a
year without connectivity fees.
    As noted above, the Exchange proposes a discounted rate of $3,000
per month for physical connections at its Secondary Data Center. The
Exchange has proposed this discounted rate for Secondary Data Center
connectivity in order to encourage Members to establish and maintain
such connections. Also, as noted above, a small number of Members are
required pursuant to Rule 2.4 to connect and participate in testing of
the Exchange's backup systems, and the Exchange believes it is
appropriate to provide a discounted rate for physical connections at
the Secondary Data Center given this requirement. The Exchange notes
that this rate is well below the cost of providing such services and
the Exchange will operate its network and systems at the Secondary Data
Center without recouping the full amount of such cost through
connectivity services.
    The proposed fee for physical connections is effective on filing
and will become operative immediately.
Application Session Fees
    Similar to other exchanges, MEMX offers its Members application
sessions, also known as logical ports, for order entry and receipt of
trade execution reports and order messages. Members can also choose to
connect to MEMX indirectly through a session maintained by a third-
party service bureau. Service bureau sessions may provide access to one
or multiple Members on a single session. Users of MEMX connectivity
services (both Members and non-Members \22\) seeking to establish one
or more application sessions with the Exchange submit a request to the
Exchange via the MEMX User Portal or directly to Exchange personnel.
Upon receipt of the completed instructions, MEMX assigns the User the
number of sessions requested by the User. The number of sessions
assigned to each User as of April 29, 2022, ranges from one to more
than 100, depending on the scope and scale of the Member's trading
activity on the Exchange (either through a direct connection or through
a service bureau) as determined by the Member. For example, by using
multiple sessions, Members can segregate order flow from different
internal desks, business lines, or customers. The Exchange does not
impose any minimum or maximum requirements for how many application
sessions a Member or service bureau can maintain,

and it is not proposing to impose any minimum or maximum session
requirements for its Members or their service bureaus.
---------------------------------------------------------------------------

    \22\ See supra note 15.
---------------------------------------------------------------------------

    As described above, in order to cover the aggregate costs of
providing application sessions to Users and to make a modest profit, as
described below, the Exchange is proposing to charge a fee of $450 per
month for each Order Entry Port and Drop Copy Port in the Primary Data
Center. The Exchange notes that it does not propose to charge for: (1)
Order Entry Ports or Drop Copy Ports in the Secondary Data Center, or
(2) any Test Facility Ports or MEMOIR Gap Fill Ports. The Exchange has
proposed to provide Order Entry Ports and Drop Copy Ports in the
Secondary Data Center free of charge in order to encourage Members to
connect to the Exchange's backup trading systems. Similarly, because
the Exchange wishes to encourage Members to conduct appropriate testing
of their use of the Exchange, the Exchange has not proposed to charge
for Test Facility Ports. With respect to MEMOIR Gap Fill ports, such
ports are exclusively used in order to receive information when a
market data recipient has temporarily lost its view of MEMX market
data. The Exchange has not proposed charging for such ports because the
costs of providing and maintaining such ports is more directly related
to producing market data.
    The proposed fee of $450 per month for each Order Entry Port and
Drop Copy Port in the Primary Data Center is designed to permit the
Exchange to cover the costs allocated to providing application sessions
with a modest markup (approximately 8%), which would also help fund
future expenditures (increased costs, improvements, etc.). The Exchange
also reiterates that the Exchange did not charge any fees for
connectivity services prior to January 2022, and its allocation of
costs to application sessions was part of a holistic allocation that
also allocated costs to other core services without double-counting any
expenses. As such, the proposal only truly constitutes a ``markup'' to
the extent the Exchange recovers the initial costs of building the
network and infrastructure necessary to offer application sessions and
operating the Exchange for over a year without connectivity fees.
    The proposed fee is also designed to encourage Users to be
efficient with their application session usage, thereby resulting in a
corresponding increase in the efficiency that the Exchange would be
able to realize in managing its aggregate costs for providing
connectivity services. There is no requirement that any Member maintain
a specific number of application sessions and a Member may choose to
maintain as many or as few of such ports as each Member deems
appropriate. The Exchange has designed its platform such that Order
Entry Ports can handle a significant amount of message traffic (i.e.,
over 50,000 orders per second), and has no application flow control or
order throttling. In contrast, other exchanges maintain certain
thresholds that limit the amount of message traffic that a single
logical port can handle.\23\ As such, while several Members maintain a
relatively high number of ports because that is consistent with their
usage on other exchanges and is preferable for their own reasons, the
Exchange believes that it has designed a system capable of allowing
such Members to significantly reduce the number of application sessions
maintained.
---------------------------------------------------------------------------

    \23\ See, e.g., Cboe US Equities BOE Specification, available
at: https://cdn.cboe.com/resources/membership/Cboe_US_Equities_BOE_Specification.pdf (describing a 5,000 message
per second Port Order Rate Threshold on Cboe BOE ports).
---------------------------------------------------------------------------

    The proposed fee will not apply differently based upon the size or
type of the market participant, but rather based upon the number of
application sessions a User requests, based upon factors deemed
relevant by each User (either a Member or service bureau on behalf of a
Member). The Exchange believes these factors include the costs to
maintain connectivity and choices Members make in how to segment or
allocate their order flow.\24\
---------------------------------------------------------------------------

    \24\ The Exchange understands that some Members (or service
bureaus) may also request more Order Entry Ports to enable the
ability to send a greater number of simultaneous order messages to
the Exchange by spreading orders over more Order Entry Ports,
thereby increasing throughput (i.e., the potential for more orders
to be processed in the same amount of time). The degree to which
this usage of Order Entry Ports provides any throughput advantage is
based on how a particular Member sends order messages to MEMX,
however the Exchange notes that its architecture reduces the impact
or necessity of such a strategy. All Order Entry Ports on MEMX
provide the same throughput, and as noted above, the throughput is
likely adequate even for a Member sending a significant amount of
volume at a fast pace, and is not artificially throttled or limited
in any way by the Exchange.
---------------------------------------------------------------------------

    The proposed fee for application sessions is effective on filing
and will become operative immediately.
Proposed Fees--Additional Discussion
    As discussed above, the proposed fees for connectivity services do
not by design apply differently to different types or sizes of Members.
As discussed in more detail in the Statutory Basis section, the
Exchange believes that the likelihood of higher fees for certain
Members subscribing to connectivity services usage than others is not
unfairly discriminatory because it is based on objective differences in
usage of connectivity services among different Members. The Exchange's
incremental aggregate costs for all connectivity services are
disproportionately related to Members with higher message traffic and/
or Members with more complicated connections established with the
Exchange, as such Members: (1) Consume the most bandwidth and resources
of the network; (2) transact the vast majority of the volume on the
Exchange; and (3) require the high-touch network support services
provided by the Exchange and its staff, including network monitoring,
reporting and support services, resulting in a much higher cost to the
Exchange to provide such connectivity services. For these reasons, MEMX
believes it is not unfairly discriminatory for the Members with higher
message traffic and/or Members with more complicated connections to pay
a higher share of the total connectivity services fees. While Members
with a business model that results in higher relative inbound message
activity or more complicated connections are projected to pay higher
fees, the level of such fees is based solely on the number of physical
connections and/or application sessions deemed necessary by the Member
and not on the Member's business model or type of Member. The Exchange
notes that the correlation between message traffic and usage of
connectivity services is not completely aligned because Members
individually determine how many physical connections and application
sessions to request, and Members may make different decisions on the
appropriate ways based on facts unique to their individual businesses.
Based on the Exchange's architecture, as described above, the Exchange
believes that a Member even with high message traffic would be able to
conduct business on the Exchange with a relatively small connectivity
services footprint.

    Because the Exchange has already adopted fees for connectivity
services, the Exchange has initial results of the impact such fees have
had on Member and non-Member usage of connectivity services. Since the
fees went into effect as set forth in the Initial Proposal, nine (9)
customers with physical connectivity to the Exchange have canceled one
or more of their physical connections. These cancellations resulted in
an approximate 6% drop in the physical connectivity offered by the
Exchange prior to the Exchange charging for such connectivity.\25\ In
each instance, the customer told the Exchange that its reason for
cancelling its connectivity was the imposition of fees. Of these
customers, two (2) customers canceled services entirely, three (3)
maintained at least one physical connection provided directly by the
Exchange, and the remaining four (4) customers migrated to alternative
sources of connectivity through a third-party provider. As such, some
market participants (one market data provider and one extranet)
determined that they no longer wanted to connect to the Exchange
directly or through a third party as it was not necessary for their
business and their initial connection was only worthwhile so long as
services were provided free of charge. Other market participants (one
market data provider, one extranet and one Member) determined that they
still wished to be directly connected to the Exchange but did not need
as many connections. Finally, some market participants (one market data
provider, one service bureau and two trading participants) determined
that there was a more affordable alternative through a third-party
provider of connectivity services. As a general matter, the customers
that discontinued use of physical connectivity or transitioned to a
third-party provider of connectivity services were either connected
purely to consume market data for their own purposes or distribution to
others, were themselves extranets or service bureaus providing
alternatives to the Exchange's connectivity services, or were smaller
trading firms that elected not to participate on the Exchange directly
and likely connected initially due to the fact that there were no fees
to connect.
---------------------------------------------------------------------------

    \25\ The Exchange notes that despite these cancellations, the
Exchange has since had existing customers and new customers order
physical connectivity that has resulted in the Exchange maintaining
nearly the same amount of physical connections for customers as it
did prior to the imposition of fees.
---------------------------------------------------------------------------

    Additionally, since the Exchange began charging for application
sessions, five (5) customers have canceled a total of thirty (30)
application sessions (approximately 3.5% of all customer application
sessions) due to the fees adopted by the Exchange.\26\ As a general
matter, these customers determined that the number of application
sessions that they maintained was not necessary in order to participate
on the Exchange.
---------------------------------------------------------------------------

    \26\ The Exchange notes that, as was the case with respect to
physical connectivity, the Exchange has since had existing customers
and new customers order additional application sessions that has
resulted in the Exchange maintaining nearly the same amount of
application sessions for customers as it did prior to the imposition
of fees.
---------------------------------------------------------------------------

    Based on its experience since adopting the proposed fees in
January, the Exchange believes that there is ample evidence showing
that it is subject to competitive forces when setting fees for physical
connectivity and application sessions. Indeed, the evidence shows that
firms can choose not to purchase those services, reduce consumption, or
rely on external third-party providers in response to proposed fees.
These competitive forces ensure that the Exchange cannot charge supra-
competitive fees for connectivity services. In fact, as a new entrant
to the exchange industry, the Exchange is particularly subject to
competitive forces and has carefully crafted its current and proposed
fees with the goal of growing its business. In this environment, the
Exchange has no ability to set fees at levels that would be deemed
supra-competitive as doing so would limit the Exchange's ability to
compete with its larger, established competitors.
    Finally, the fees for connectivity services will help to encourage
connectivity services usage in a way that aligns with the Exchange's
regulatory obligations. As a national securities exchange, the Exchange
is subject to Regulation Systems Compliance and Integrity (``Reg
SCI'').\27\ Reg SCI Rule 1001(a) requires that the Exchange establish,
maintain, and enforce written policies and procedures reasonably
designed to ensure (among other things) that its Reg SCI systems have
levels of capacity adequate to maintain the Exchange's operational
capability and promote the maintenance of fair and orderly markets.\28\
By encouraging Users to be efficient with their usage of connectivity
services, the proposed fee will support the Exchange's Reg SCI
obligations in this regard by ensuring that unused application sessions
are available to be allocated based on individual User needs and as the
Exchange's overall order and trade volumes increase. As noted above,
based on early results, the adoption of fees has led to certain firms
reducing the number of application sessions maintained now that such
sessions are no longer provided free of charge. Additionally, because
the Exchange will charge a lower rate for a physical connection to the
Secondary Data Center and will not charge any fees for application
sessions at the Secondary Data Center or its Test Facility, the
proposed fee structure will further support the Exchange's Reg SCI
compliance by reducing the potential impact of a disruption should the
Exchange be required to switch to its Disaster Recovery Facility and
encouraging Members to engage in any necessary system testing with low
or no cost imposed by the Exchange.\29\
---------------------------------------------------------------------------

    \27\ 17 CFR 242.1000-1007.
    \28\ 17 CFR 242.1001(a).
    \29\ While some Members might directly connect to the Secondary
Data Center and incur the proposed $3,000 per month fee, there are
other ways to connect to the Exchange, such as through a service
bureau or extranet, and because the Exchange is not imposing fees
for application sessions in the Secondary Data Center, a Member
connecting through another method would not incur any fees charged
directly by the Exchange. However, the Exchange notes that a third-
party service provider providing connectivity to the Exchange likely
would charge a fee for providing such connectivity; such fees are
not set by or shared in by the Exchange.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \30\ of the Act in general, and
furthers the objectives of Section 6(b)(4) \31\ of the Act, in
particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees and other charges among its Members
and other persons using its facilities. Additionally, the Exchange
believes that the proposed fees are consistent with the objectives of
Section 6(b)(5) \32\ of the Act in that they are designed to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to a free and open market and
national market system, and, in general, to protect investors and the
public interest, and, particularly, are not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78f.
    \31\ 15 U.S.C. 78f(b)(4).
    \32\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission

highlighted the importance of market forces in determining prices and
SRO revenues and also recognized that current regulation of the market
system ``has been remarkably successful in promoting market competition
in its broader forms that are most important to investors and listed
companies.'' \33\ One of the primary objectives of MEMX is to provide
competition and to reduce fixed costs imposed upon the industry.
Consistent with this objective, the Exchange believes that this
proposal reflects a simple, competitive, reasonable, and equitable
pricing structure designed to permit the Exchange to cover certain
fixed costs that it incurs for providing connectivity services, which
are discounted when compared to products and services offered by
competitors.\34\
---------------------------------------------------------------------------

    \33\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
    \34\ See infra notes 40-45 and accompanying text.
---------------------------------------------------------------------------

    Commission staff noted in its Fee Guidance that, as an initial step
in assessing the reasonableness of a fee, staff considers whether the
fee is constrained by significant competitive forces. To determine
whether a proposed fee is constrained by significant competitive
forces, staff has said that it considers whether the evidence
demonstrates that there are reasonable substitutes for the product or
service that is the subject of a proposed fee. There is no regulatory
requirement that any market participant connect to the Exchange, that
any participant connect in a particular manner, or that any participant
maintain a certain number of connections to the Exchange. The Exchange
reiterates that a small number of Members are required to connect to
the Exchange for participation in mandatory testing of backup systems
but such connectivity does not have to be obtained directly from the
Exchange but instead can be through a third-party provider that
provides connectivity to the Exchange. The Exchange again notes that at
least one designated Member does, in fact, connect to the Exchange at
the Secondary Data Center through a third-party provider.
    The Exchange also acknowledges that certain market participants
operate businesses that do, in fact, require them to be connected to
all U.S. equity exchanges. For instance, certain Members operate as
routing brokers for other market participants. As an equities exchange
with approximately 4% volume, these routing brokers likely need to
maintain a connection to the Exchange on behalf of their clients.
However, it is connectivity services provided by the Exchange that
allow such participants to offer their clients a service for which they
can be compensated (and allowing their clients not to directly connect
but still to access the Exchange), and, as such, the Exchange believes
it is reasonable, equitably allocated and not unfairly discriminatory
to charge such Members for connectivity services.
    As a new entrant to the equities market, the Exchange does not have
as Members many market participants that actively trade equities on
other exchanges nor are such market participants directly connected to
the Exchange. There are also a number of the Exchange's Members that do
not connect directly to MEMX. For instance, of the number of Members
that maintain application sessions to participate directly on the
Exchange, many such Members do not maintain physical connectivity but
instead access the Exchange through a service bureau or extranet. In
addition, of the Members that are directly connected to MEMX, it is
generally the individual needs of the Member that dictate whether they
need one or multiple physical connections to the Exchange as well as
the number of application sessions that they will maintain. It is all
driven by the business needs of the Member, and as described above, the
Exchange believes it offers technology that will enable Members to
maintain a smaller connectivity services footprint than they do on
other markets.
    The Exchange's experience as a new entrant to the market over the
past year shows that all broker-dealers are not required to connect to
all exchanges, including the Exchange. Instead, many market
participants awaited the Exchange growing to a certain percentage of
market share before they would join as a Member or connect to the
Exchange. In addition, many market participants still have not
connected despite the Exchange's growth in one year to more than 4% of
the overall equities market share. Thus, the Exchange recognizes that
the decision of whether to connect to the Exchange is separate and
distinct from the decision of whether and how to trade on the Exchange.
This is because there are multiple alternatives to directly
participating on the Exchange (such as use of a third-party routing
broker to access the Exchange) or directly connecting to the Exchange
(such as use of an extranet or service bureau). The Exchange
acknowledges that many firms may choose to connect to the Exchange, but
ultimately not trade on it, based on their particular business needs.
The decision of which type of connectivity to purchase, or whether to
purchase connectivity at all, is based on the business needs of each
individual firm.
    There is also competition for connectivity to the Exchange. For
instance, the Exchange competes with certain non-Members who provide
connectivity and access to the Exchange, namely extranets and service
bureaus. These are resellers of MEMX connectivity--they are not
arrangements between broker-dealers to share connectivity costs. Those
non-Members resell that connectivity to multiple market participants
over the same connection. When physical connectivity is re-sold by a
third-party, the Exchange will not receive any connectivity revenue
from that sale, and without connectivity fees for the past year, such
third parties have been able to re-sell something they receive for
free. Such arrangements are entirely between the third-party and the
purchaser, thus constraining the ability of MEMX to set its
connectivity pricing as indirect connectivity is a substitute for
direct connectivity.
    Indirect connectivity is a viable alternative that is already being
used by Members and non-Members of MEMX, constraining the price that
the Exchange is able to charge for connectivity to its Exchange. As set
forth above, nearly half of the Exchange's Members do not have a
physical connection provided by the Exchange and instead must use a
third-party provider. Members who have not established any connectivity
to the Exchange are still able to trade on the Exchange indirectly
through other Members or non-Member extranets or service bureaus that
are connected. These Members will not be forced or compelled to
purchase physical connectivity services, and they retain all of the
other benefits of membership with the Exchange. Accordingly, Members
have the choice to purchase physical connectivity and are not compelled
to do so. The Exchange notes that without an application session,
specifically an Order Entry Port, a Member could not submit orders to
the Exchange. As such, while application sessions too can be obtained
from a third-party reseller (i.e., a service bureau) the Exchange will
receive revenue either from the Member or the third-party service
bureau for each application session. However, as noted elsewhere, the
Exchange has designed its platform such that Order Entry Ports can
handle a significant amount of message traffic (i.e., over 50,000
orders per second), and has no application flow control or order
throttling. As such, the Exchange believes that it has designed a
system capable of allowing such Members to significantly reduce

the number of application sessions maintained.
    As described above, the Exchange has seen certain Members and non-
Members discontinue or change their usage of connectivity services
provided by the Exchange in response to the fees adopted by the
Exchange. Specifically, nine (9) participants reduced or discontinued
use of connectivity services provided directly by the Exchange and five
(5) participants reduced the number of application sessions used to
participate on the Exchange. The Exchange believes that this
demonstrates that not all market participants are required to use
connectivity services provided by the Exchange but can instead choose
to participate on the Exchange through a third-party provider of
connectivity services, indirectly through another Member of the
Exchange, or not at all. The Exchange also notes that of the
participants that reduced or discontinued their use of connectivity
services, several were in fact third-party providers of connectivity
services, which demonstrates that such providers will connect to the
Exchange to the extent they have sufficient clients to whom they can
provide connectivity services and make a profit but they will not
connect if this is not the case.
    The Exchange believes that the proposed fees for connectivity
services are reasonable, equitable and not unfairly discriminatory
because, as described above, the proposed pricing for connectivity
services is directly related to the relative costs to the Exchange to
provide those respective services and does not impose a barrier to
entry to smaller participants. Accordingly, the Exchange offers direct
connectivity alternatives and various indirect connectivity (via third-
party) alternatives, as described above.
    The Exchange recognizes that there are various business models and
varying sizes of market participants conducting business on the
Exchange. The Exchange's incremental aggregate costs for all
connectivity services are disproportionately related to Members with
higher message traffic and/or Members with more complicated connections
established with the Exchange, as such Members: (1) Consume the most
bandwidth and resources of the network; (2) transact the vast majority
of the volume on the Exchange; and (3) require the high-touch network
support services provided by the Exchange and its staff, including
network monitoring, reporting and support services, resulting in a much
higher cost to the Exchange to provide such connectivity services.
Accordingly, the Exchange believes the allocation of the proposed fees
that increase based on the number of physical connections or
application sessions is reasonable based on the resources consumed by
the respective type of market participant (i.e., lowest resource
consuming Members will pay the least, and highest resource consuming
Members will pay the most), particularly since higher resource
consumption translates directly to higher costs to the Exchange.
    With respect to equities trading, the Exchange had approximately
4.3% market share of the U.S. equities industry in February 2022.\35\
The Exchange is not aware of any evidence that a market share of
approximately 4% provides the Exchange with supra-competitive pricing
power because, as shown above, market participants that choose to
connect to the Exchange have various choices in determining how to do
so, including third party alternatives. This, in addition to the fact
that not all broker-dealers are required to connect to the Exchange,
supports the Exchange's conclusion that its pricing is constrained by
competition.
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    \35\ Market share percentage calculated as of February 28, 2022.
The Exchange receives and processes data made available through
consolidated data feeds (i.e., CTS and UTDF).
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    Several market participants choose not to be Members of the
Exchange and choose not to access the Exchange, and several market
participants also access the Exchange indirectly through another market
participant. To illustrate, the Exchange currently has 65 Members.
However, based on publicly available information regarding a sample of
the Exchange's competitors, the New York Stock Exchange LLC (``NYSE'')
has 142 members, Cboe BZX Exchange, Inc. (``BZX'') has 140 members, and
Investors Exchange LLC (``IEX'') has 133 members.\36\ If all market
participants were required to be Members of the Exchange and connect
directly to the Exchange, the Exchange would have over 130 Members, in
line with these other exchanges. But it does not. The Exchange
currently has approximately half of the number of members as compared
to these other exchanges.
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    \36\ See NYSE Membership Directory, available at: https://www.nyse.com/markets/nyse/membership; BZX Form 1 filed November 19,
2021, available at: https://www.sec.gov/Archives/edgar/vprr/2100/21009368.pdf; IEX Current Members list, available at: https://exchange.iex.io/resources/trading/current-membership/.
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    Separately, the Exchange is not aware of any reason why market
participants could not simply drop their connections and cease being
Members of the Exchange if the Exchange were to establish unreasonable
and uncompetitive prices for its connectivity services. Market
participants choose to connect to a particular exchange and because it
is a choice, MEMX must set reasonable pricing for connectivity
services, otherwise prospective Members would not connect and existing
Members would disconnect, connect through a third-party reseller of
connectivity, or otherwise access the Exchange indirectly. The Exchange
reiterates that several Members and non-Members did in fact reduce or
discontinue use of connectivity services provided directly by the
Exchange in response to the fees adopted by the Exchange. No market
participant is required by rule or regulation to be a Member of or
connect directly to the Exchange, though again, the Exchange
acknowledges that certain types of broker-dealers might be compelled by
their business model to connect and also notes that pursuant to Rule
2.4, certain Members with significant volume on the Exchange are
required to connect to the Exchange's backup systems for testing on at
least an annual basis.
    With regard to reasonableness, the Exchange understands that the
Commission has traditionally taken a market-based approach to examine
whether the SRO making the proposal was subject to significant
competitive forces in setting the terms of the proposal. In looking at
this question, the Commission considers whether the SRO has
demonstrated in its filing that: (i) There are reasonable substitutes
for the product or service; (ii) ``platform'' competition constrains
the ability to set the fee; and/or (iii) revenue and cost analysis
shows the fee would not result in the SRO taking supra-competitive
profits. If the SRO demonstrates that the fee is subject to significant
competitive forces, the Commission will next consider whether there is
any substantial countervailing basis to suggest the fee's terms fail to
meet one or more standards under the Exchange Act. If the filing fails
to demonstrate that the fee is constrained by competitive forces, the
SRO must provide a substantial basis, other than competition, to show
that it is consistent with the Exchange Act, which may include
production of relevant revenue and cost data pertaining to the product
or service.
    As described above, the Exchange believes that competitive forces
are in effect and that if the proposed fees for connectivity services
were unreasonable that the Exchange would lose current or prospective
Members and market share. The Exchange reiterates that several market
participants have in fact

modified the way that they connect to the Exchange in response to the
Exchange's pricing proposal. Further, the Exchange has conducted a
comprehensive Cost Analysis in order to determine the reasonability of
its proposed fees, including that the Exchange will not take supra-
competitive profits.
    MEMX believes the proposed fees for connectivity services are fair
and reasonable as a form of cost recovery for the Exchange's aggregate
costs of offering connectivity services to Members and non-Members. The
proposed fees are expected to generate monthly revenue of $1,233,750
providing cost recovery to the Exchange for the aggregate costs of
offering connectivity services, based on a methodology that narrowly
limits the cost drivers that are allocated cost to those closely and
directly related to the particular service. In addition, this revenue
will allow the Exchange to continue to offer, to enhance, and to
continually refresh its infrastructure as necessary to offer a state-
of-the-art trading platform. The Exchange believes that, consistent
with the Act, it is appropriate to charge fees that represent a
reasonable markup over cost given the other factors discussed above.
The Exchange also believes the proposed fee is a reasonable means of
encouraging Users to be efficient in the connectivity services they
reserve for use, with the benefits to overall system efficiency to the
extent Members and non-Members consolidate their usage of connectivity
services or discontinue subscriptions to unused physical connectivity.
    The Exchange further believes that the proposed fees, as they
pertain to purchasers of each type of connectivity alternative,
constitute an equitable allocation of reasonable fees charged to the
Exchange's Members and non-Members and are allocated fairly amongst the
types of market participants using the facilities of the Exchange.
    As described above, the Exchange believes the proposed fees are
equitably allocated because the Exchange's incremental aggregate costs
for all connectivity services are disproportionately related to Members
with higher message traffic and/or Members with more complicated
connections established with the Exchange, as such Members: (1) Consume
the most bandwidth and resources of the network; (2) transact the vast
majority of the volume on the Exchange; and (3) require the high-touch
network support services provided by the Exchange and its staff,
including network monitoring, reporting and support services, resulting
in a much higher cost to the Exchange to provide such connectivity
services.
    Commission staff previously noted that the generation of supra-
competitive profits is one of several potential factors in considering
whether an exchange's proposed fees are consistent with the Act.\37\ As
described in the Fee Guidance, the term ``supra-competitive profits''
refers to profits that exceed the profits that can be obtained in a
competitive market. The proposed fee structure would not result in
excessive pricing or supra-competitive profits for the Exchange. The
proposed fee structure is merely designed to permit the Exchange to
cover the costs allocated to providing connectivity services with a
modest markup (approximately 8%), which would also help fund future
expenditures (increased costs, improvements, etc.). The Exchange
believes that this is fair, reasonable, and equitable. Accordingly, the
Exchange believes that its proposal is consistent with Section 6(b)(4)
\38\ of the Act because the proposed fees will permit recovery of the
Exchange's costs and will not result in excessive pricing or supra-
competitive profit.
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    \37\ See Fee Guidance, supra note 14.
    \38\ 15 U.S.C. 78f(b)(4).
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    The proposed fees for connectivity services will allow the Exchange
to cover certain costs incurred by the Exchange associated with
providing and maintaining necessary hardware and other network
infrastructure as well as network monitoring and support services;
without such hardware, infrastructure, monitoring and support the
Exchange would be unable to provide the connectivity services. The
Exchange routinely works to improve the performance of the network's
hardware and software. The costs associated with maintaining and
enhancing a state-of-the-art exchange network is a significant expense
for the Exchange, and thus the Exchange believes that it is reasonable
and appropriate to help offset those costs by adopting fees for
connectivity services. As detailed above, the Exchange has four primary
sources of revenue that it can potentially use to fund its operations:
transaction fees, fees for connectivity services, membership and
regulatory fees, and market data fees. Accordingly, the Exchange must
cover its expenses from these four primary sources of revenue. The
Exchange's Cost Analysis estimates the costs to provide connectivity
services at $1,143,715. Based on current connectivity services usage,
the Exchange would generate monthly revenues of approximately
$1,233,750.\39\ This represents a modest profit when compared to the
cost of providing connectivity services. Even if the Exchange earns
that amount or incrementally more, the Exchange believes the proposed
fees for connectivity services are fair and reasonable because they
will not result in excessive pricing or supra-competitive profit, when
comparing the total expense of MEMX associated with providing
connectivity services versus the total projected revenue of the
Exchange associated with network connectivity services. As noted above,
when incorporating the projected revenue from connectivity services
into the Exchange's overall projected revenue, including projections
related to recently adopted market data fees, the Exchange anticipates
monthly revenue ranging from $4,296,950 to $4,546,950 from all sources.
As such, applying the Exchange's holistic Cost Analysis to a holistic
view of anticipated revenues, the Exchange would earn approximately
8.5% to 15% margin on its operations as a whole. The Exchange believes
that this amount is reasonable and is again evidence that the Exchange
will not earn a supra-competitive profit.
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    \39\ See supra note 18.

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    The Exchange notes that other exchanges offer similar connectivity
options to market participants and that the Exchange's fees are a
discount as compared to the majority of such fees.\40\ With respect to
physical connections, each of the Nasdaq Stock Market LLC (``Nasdaq''),
NYSE, NYSE Arca, Inc. (``Arca''), BZX and Cboe EDGX Exchange, Inc.
(``EDGX'') charges between $7,500-$22,000 per month for physical
connectivity at their primary data centers that is comparable to that
offered by the Exchange.\41\ Nasdaq, NYSE and Arca also charge
installation fees, which are not proposed to be charged by the
Exchange. With respect to application sessions, each of Nasdaq, NYSE,
Arca, BZX and EDGX charges between $500-$575 per month for order entry
and drop ports.\42\ The Exchange further notes that several of these
exchanges each charge for other logical ports that the Exchange will
continue to provide for free, such as application sessions for testing
and disaster recovery purposes.\43\ While the Exchange's proposed
connectivity fees are lower than the fees charged by Nasdaq, NYSE,
Arca, BZX and EDGX, MEMX believes that it offers significant value to
Members over these other exchanges in terms of bandwidth available over
such connectivity services, which the Exchanges believes is a
competitive advantage, and differentiates its connectivity versus
connectivity to other exchanges.\44\ Additionally, the Exchange's
proposed connectivity fees to its disaster recovery facility are within
the range of the fees charged by other exchanges for similar
connectivity alternatives.\45\ The Exchange believes that its proposal
to offer certain application sessions free of charge is reasonable,
equitably allocated and not unfairly discriminatory because such
proposal is intended to encourage Member connections and use of backup
and testing facilities of the Exchange, and, with respect to MEMOIR Gap
Fill ports, such ports are used exclusively in connection with the
receipt and processing of market data from the Exchange.
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    \40\ One significant differentiation between the Exchanges is
that while it offers different types of physical connections,
including 10Gb, 25Gb, 40Gb, and 100Gb connections, the Exchange does
not propose to charge different prices for such connections. In
contrast, most of the Exchange's competitors provide scaled pricing
that increases depending on the size of the physical connection. The
Exchange does not believe that its costs increase incrementally
based on the size of a physical connection but instead, that
individual connections and the number of such separate and disparate
connections are the primary drivers of cost for the Exchange.
    \41\ See the Nasdaq equities fee schedule, available at: http://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2; the NYSE fee
schedule, available at: https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf; the NYSE Arca equities fee
schedule, available at: https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf; the BZX equities
fee schedule, available at: https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; the EDGX equities fee schedule,
available at: https://markets.cboe.com/us/equities/membership/fee_schedule/edgx/. This range is based on a review of the fees
charged for 10-40Gb connections at each of these exchanges and
relates solely to the physical port fee or connection charge,
excluding co-location fees and other fees assessed by these
exchanges. The Exchange notes that it does not offer physical
connections with lower bandwidth than 10Gb and that Members and non-
Members with lower bandwidth requirements typically access the
Exchange through third-party extranets or service bureaus.
    \42\ See id.
    \43\ See id.
    \44\ As noted above, all physical connections offered by MEMX
are at least 10Gb capable and physical connections provided with
larger bandwidth capabilities will be provided at the same rate as
such connections. In contrast to other exchanges, MEMX has not
proposed different types of physical connections with higher pricing
for those with greater capacity. See supra note 40. The Exchange
also reiterates that MEMX application sessions are capable of
handling significant amount of message traffic (i.e., over 50,000
orders per second), and have no application flow control or order
throttling, in contrast to competitors that have imposed message
rate thresholds. See supra note 23 and accompanying text.
    \45\ See supra note 41.
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    In conclusion, the Exchange submits that its proposed fee structure
satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of the Act
\46\ for the reasons discussed above in that it provides for the
equitable allocation of reasonable dues, fees and other charges among
its Members and other persons using its facilities, does not permit
unfair discrimination between customers, issuers, brokers, or dealers,
and 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, particularly as the proposal neither targets
nor will it have a disparate impact on any particular category of
market participant. As described more fully below in the Exchange's
statement regarding the burden on competition, the Exchange believes
that it is subject to significant competitive forces, and that the
proposed fee structure is an appropriate effort to address such forces.
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    \46\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\47\ the Exchange
does not believe that the proposed rule change would impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act.
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    \47\ 15 U.S.C. 78f(b)(8).
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Intra-Market Competition
    The Exchange does not believe that the proposed rule change would
place certain market participants at the Exchange at a relative
disadvantage compared to other market participants or affect the
ability of such market participants to compete. In particular, while
the Exchange did not officially proposed fees until late December of
2021 when it filed the Initial Proposal, Exchange personnel had been
informally discussing potential fees for connectivity services with a
diverse group of market participants that are connected to the Exchange
(including large and small firms, firms with large connectivity service
footprints and small connectivity service footprints, as well as
extranets and service bureaus) for several months leading up to that
time. The Exchange received no official complaints from Members, non-
Members (extranets or service bureaus), third-parties that purchase the
Exchange's connectivity and resell it, and customers of those
resellers, that the Exchange's fees or the proposed fees for
connectivity services would negatively impact their abilities to
compete with other market participants or that they are placed at a
disadvantage.
    As expected, the Exchange did, however, have several market
participants reduce or discontinue use of connectivity services
provided directly by the Exchange in response to the fees adopted by
the Exchange. The Exchange does not believe that the proposed fees for
connectivity services place certain market participants at a relative
disadvantage to other market participants because the proposed
connectivity pricing is associated with relative usage of the Exchange
by each market participant and does not impose a barrier to entry to
smaller participants. The Exchange notes that two smaller trading firms
cancelled connectivity services and elected not to participate on the
Exchange directly due to the imposition of fees but these participants
were not actively participating on the Exchange prior to disconnecting
and likely connected initially due to the fact that there were no fees
to connect. The Exchange believes its proposed pricing is reasonable
and, when coupled with the availability of third-party providers that
also offer connectivity solutions, that participation on the Exchange
is affordable for all market participants, including smaller trading
firms. As described above, the connectivity

services purchased by market participants typically increase based on
their additional message traffic and/or the complexity of their
operations. The market participants that utilize more connectivity
services typically utilize the most bandwidth, and those are the
participants that consume the most resources from the network.
Accordingly, the proposed fees for connectivity services do not favor
certain categories of market participants in a manner that would impose
a burden on competition; rather, the allocation of the proposed
connectivity fees reflects the network resources consumed by the
various size of market participants and the costs to the Exchange of
providing such connectivity services.
Inter-Market Competition
    The Exchange does not believes the proposed fees place an undue
burden on competition on other SROs that is not necessary or
appropriate. In particular, market participants are not forced to
connect to all exchanges, as shown by the number of Members of the
Exchange as compared to the much greater number of members at other
exchanges, as described above. Not only does MEMX have less than half
the number of members as certain other exchanges, but there are also a
number of the Exchange's Members that do not connect directly to the
Exchange. Additionally, other exchanges have similar connectivity
alternatives for their participants, but with higher rates to
connect.\48\ The Exchange is also unaware of any assertion that the
proposed fees for connectivity services would somehow unduly impair its
competition with other exchanges. To the contrary, if the fees charged
are deemed too high by market participants, they can simply disconnect.
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    \48\ See supra notes 40-45 and accompanying text.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \49\ and Rule 19b-4(f)(2) \50\ thereunder.
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    \49\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \50\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-MEMX-2022-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-MEMX-2022-13. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MEMX-2022-13 and should be submitted on
or before June 10, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
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    \51\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-10807 Filed 5-19-22; 8:45 am]
BILLING CODE 8011-01-P