[Federal Register Volume 87, Number 111 (Thursday, June 9, 2022)]
[Notices]
[Pages 35252-35269]
[FR Doc No: 2022-12401]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95036; File No. SR-MEMX-2022-14]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule To Adopt Market Data Fees

June 3, 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 March 24, 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 purpose of the proposed rule change is to amend the Fee
Schedule to adopt fees the Exchange will charge to Members and non-
Members for each of its three proprietary market data feeds, namely
MEMOIR Depth, MEMOIR Top, and MEMOIR Last Sale (collectively, the
``Exchange Data Feeds''). As set forth below, the Exchange believes
that the proposed fees are fair and reasonable and has based its
proposal on the fact that competitive forces exist with respect to the
Exchange Data Feeds, a comparison to competitor pricing, as well as a
cost analysis intended to provide transparency to the Commission and to
the industry at large. The Exchange is proposing to implement the
proposed fees immediately.
    Before setting forth the additional details regarding the existence
of competitive forces, the comparison to competitor pricing and the
Exchange's cost analysis for transparency purposes, immediately below
is a description of the proposed fees.
Proposed Market Data Pricing
    The Exchange offers three separate data feeds to subscribers--
MEMOIR Depth, MEMOIR Top and MEMOIR Last Sale. The Exchange notes that
there is no requirement that any Firm subscribe to a particular
Exchange Data Feed or any Exchange Data Feed whatsoever, but instead, a
Firm may choose to maintain subscriptions to those Exchange Data Feeds
they deem appropriate based on their business model. The proposed fee
will not apply differently based upon the size or type of Firm, but
rather based upon the subscriptions a Firm has to Exchange Data Feeds
and their use thereof, which are in turn based upon factors deemed
relevant by each Firm. The proposed pricing for each of the Exchange
Data Feeds is set forth below.
MEMOIR Depth
    The MEMOIR Depth feed is a MEMX-only market data feed that contains
all displayed orders for securities trading on the Exchange (i.e., top
and depth-of-book order data), order executions (i.e., last sale data),
order cancellations, order modifications, order identification numbers,
and administrative messages.\4\ The Exchange proposes to charge each of
the fees set forth below for MEMOIR Depth.
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    \4\ See MEMX Rule 13.8(a).
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    1. Internal Distribution Fee. For the receipt of access to the
MEMOIR Depth feed, the Exchange proposes to charge $1,500 per month.
This proposed access fee would be charged to any data recipient that
receives a data feed of the MEMOIR Depth feed for purposes of internal
distribution (i.e., an ``Internal Distributor''). The Exchange proposes
to define an Internal Distributor as ``a Distributor that receives an
Exchange Data product and then distributes that data to one or more
data recipients within the Distributor's own organization.'' \5\ The
proposed access fee for internal distribution will be charged only once
per month per subscribing entity (``Firm''). The Exchange notes that it
has proposed to use the phrase ``own organization'' in the definition
of Internal Distributor and External Distributor because a Firm will be
permitted to share data received from an Exchange Data product to other
legal entities affiliated with the Firm that have been disclosed to the
Exchange without such distribution being considered external to a third
party. For instance, if a company has multiple affiliated broker-
dealers under the same holding company, that company could have one of
the broker-dealers or a non-broker-dealer affiliate subscribe to an
Exchange Data product and then share the data with other affiliates
that have a need for the data. This sharing with affiliates would not
be considered external distribution to a third party but instead would
be considered internal distribution to data recipients within the
Distributor's own organization.
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    \5\ See Market Data Definitions under the proposed MEMX Fee
Schedule. The Exchange also proposes to adopt a definition for
``Distributor'', which would mean any entity that receives an
Exchange Data product directly from the Exchange or indirectly
through another entity and then distributes internally or externally
to a third party.
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    2. External Distribution Fee. For redistribution of the MEMOIR
Depth feed, the Exchange proposes to establish an access fee of $2,500
per month. The proposed redistribution fee would be charged to any
External Distributor of the MEMOIR Depth feed, which would be defined
to mean ``a Distributor that receives an Exchange Data product and then
distributes that data to a third party or one or more data recipients
outside the Distributor's own organization.'' \6\ The proposed access
fee for external distribution will be charged only once per month per
Firm. As noted above, while a Firm will be permitted to share data
received from an Exchange Data product to other legal entities
affiliated with the Firm that have been disclosed to the Exchange
without such distribution being considered external to a third party,
if a Firm distributes data received from an Exchange Data product to an
unaffiliated third party that would be considered distribution to data
recipients outside the Distributor's own organization and the access
fee for external distribution would apply.
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    \6\ See Market Data Definitions under the proposed MEMX Fee
Schedule.
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    3. Non-Display Use Fees. The Exchange proposes to establish
separate non-display fees for usage by Trading Platforms and other
Users (i.e., not by Trading Platforms).\7\ Non-Display Usage would be
defined to mean ``any method of accessing an Exchange Data product that
involves access or use by a machine or automated device without access
or use of a display by a natural person or

persons.'' \8\ For Non-Display Usage of the MEMOIR Depth feed not by
Trading Platforms, the Exchange proposes to establish a fee of $1,500
per month.\9\ For Non-Display Usage of the MEMOIR Depth feed by Trading
Platforms, the Exchange proposes to establish a fee of $4,000 per
month. The proposed fees for Non-Display Usage will be charged only
once per category per Firm.\10\ In other words, with respect to Non-
Display Usage Fees, a Firm that uses MEMOIR Depth for non-display
purposes but does not operate a Trading Platform would pay $1,500 per
month, a Firm that uses MEMOIR Depth in connection with the operation
of one or more Trading Platforms (but not for other purposes) would pay
$4,000 per month, and a Firm that uses MEMOIR Depth for non-display
purposes other than operating a Trading Platform and for the operation
of one or more Trading Platforms would pay $5,500 per month.
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    \7\ The Exchange proposes to define a Trading Platform as ``any
execution platform operated as or by a registered National
Securities Exchange (as defined in Section 3(a)(1) of the Exchange
Act), an Alternative Trading System (as defined in Rule 300(a) of
Regulation ATS), or an Electronic Communications Network (as defined
in Rule 600(b)(23) of Regulation NMS).'' See Market Data Definitions
under the proposed MEMX Fee Schedule.
    \8\ See Market Data Definitions under the proposed MEMX Fee
Schedule.
    \9\ Non-Display Usage not by Trading Platforms would include
trading uses such as high frequency or algorithmic trading as well
as any trading in any asset class, automated order or quote
generation and/or order pegging, price referencing for smart order
routing, operations control programs, investment analysis, order
verification, surveillance programs, risk management, compliance,
and portfolio management.
    \10\ The Exchange proposes to adopt note 1 to the proposed
Market Data fees table, which would make clear to subscribers that
use of the data for multiple non-display purposes or operate more
than one Trading Platform would only be charged once per category
per month. Thus, the footnote makes clear that each fee applicable
to Non-Display Usage is charged per subscriber (e.g., a Firm) and
that each of the fees represents the maximum charge per month per
subscriber regardless of the number of non-display uses and/or
Trading Platforms operated by the subscriber, as applicable.
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    4. User Fees. The Exchange proposes to charge a Professional User
Fee (per User) of $30 per month and a Non-Professional User Fee (per
User) of $3 per month. The proposed User fees would apply to each
person that has access to the MEMOIR Depth feed for displayed usage.
Thus, each Distributor's count will include every individual that
accesses the data regardless of the purpose for which the individual
uses the data. Internal Distributors and External Distributors of the
MEMX Depth feed must report all Professional and Non-Professional Users
in accordance with the following:
     In connection with a Distributor's distribution of the
MEMOIR Depth feed, the Distributor must count as one User each unique
User that the Distributor has entitled to have access to the MEMOIR
Depth feed.
     Distributors must report each unique individual person who
receives access through multiple devices or multiple methods (e.g., a
single User has multiple passwords and user identifications) as one
User.
     If a Distributor entitles one or more individuals to use
the same device, the Distributor must include only the individuals, and
not the device, in the count. Thus, Distributors would not be required
to report User device counts associated with a User's display use of
the data feed.
    5. Enterprise Fee. Other than the Digital Media Enterprise Fee
described below, the Exchange is not proposing to adopt an Enterprise
Fee for the MEMOIR Depth feed at this time.
    6. Digital Media Enterprise Fee. As an alternative to User fees, a
recipient Firm may purchase a monthly Digital Media Enterprise license
to receive MEMOIR Depth for distribution to an unlimited number of
Users for viewing via television, websites, and mobile devices for
informational and non-trading purposes only. The Exchange proposes to
establish a fee of $5,000 per month for a Digital Media Enterprise
license to the MEMOIR Depth feed.
MEMOIR Top
    The MEMOIR Top feed is a MEMX-only market data feed that contains
top of book quotations based on equity orders entered into the System
as well as administrative messages.\11\ The Exchange proposes to charge
each of the fees set forth below for MEMOIR Top.
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    \11\ See MEMX Rule 13.8(b).
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    1. Internal Distribution Fee. For the receipt of access to the
MEMOIR Top feed, the Exchange proposes to charge $750 per month. This
proposed access fee would be charged to any data recipient that
receives a data feed of the MEMOIR Top feed for purposes of internal
distribution (i.e., an Internal Distributor). The proposed access fee
for internal distribution will be charged only once per month per Firm.
    2. External Distribution Fee. For redistribution of the MEMOIR Top
feed, the Exchange proposes to establish an access fee of $2,000 per
month. The proposed redistribution fee would be charged to any External
Distributor of the MEMOIR Top feed. The proposed access fee for
external distribution will be charged only once per month per Firm.
    3. Non-Display Use Fees. The Exchange does not propose to establish
non-display fees for usage by Trading Platforms or other Users with
respect to MEMOIR Top.
    4. User Fees. The Exchange proposes to charge a Professional User
Fee (per User) of $0.01 per month and a Non-Professional User Fee (per
User) of $0.01 per month. The proposed User fees would apply to each
person that has access to the MEMOIR Top feed that is provided by an
External Distributor for displayed usage. The Exchange does not propose
any per User fees for internal distribution of the MEMOIR Top feed.
Each External Distributor's count will include every individual that
accesses the data regardless of the purpose for which the individual
uses the data. External Distributors of the MEMOIR Top feed must report
all Professional and Non-Professional Users \12\ in accordance with the
following:
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    \12\ The Exchange notes that while it is not differentiating
Professional and Non-Professional Users based on fees (in that it is
proposing the same fee for such Users) for this data feed, and thus
will not audit Firms based on this distinction, it will request
reporting of each distinct category for informational purposes.
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     In connection with an External Distributor's distribution
of the MEMOIR Top feed, the Distributor must count as one User each
unique User that the Distributor has entitled to have access to the
MEMOIR Top feed.
     External Distributors must report each unique individual
person who receives access through multiple devices or multiple methods
(e.g., a single User has multiple passwords and user identifications)
as one User.
     If an External Distributor entitles one or more
individuals to use the same device, the Distributor must include only
the individuals, and not the device, in the count. Thus, Distributors
would not be required to report User device counts associated with a
User's display use of the data feed.
    5. Enterprise Fee. As an alternative to User fees, a recipient Firm
may purchase a monthly Enterprise license to receive MEMOIR Top for
distribution to an unlimited number of Professional and Non-
Professional Users. The Exchange proposes to establish a fee of $10,000
per month for an Enterprise license to the MEMOIR Top feed.
    6. Digital Media Enterprise Fee. As an alternative to User fees, a
recipient Firm may purchase a monthly Digital Media Enterprise license
to receive MEMOIR Top for distribution to an unlimited number of Users
for viewing via television, websites, and mobile devices for
informational and non-trading purposes only. The Exchange proposes to
establish a fee of $2,000 per month for a Digital Media Enterprise
license to the MEMOIR Top feed.
MEMOIR Last Sale
    The MEMOIR Last Sale feed is a MEMX-only market data feed that
contains only execution information based on equity orders entered into
the

System as well as administrative messages.\13\ The Exchange proposes to
charge each of the fees set forth below for MEMOIR Last Sale.
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    \13\ See MEMX Rule 13.8(c).
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    1. Internal Distribution Fee. For the receipt of access to the
MEMOIR Last Sale feed, the Exchange proposes to charge $500 per month.
This proposed access fee would be charged to any data recipient that
receives a data feed of the MEMOIR Last Sale feed for purposes of
internal distribution (i.e., an Internal Distributor). The proposed
access fee for internal distribution will be charged only once per
month per Firm.
    2. External Distribution Fee. For redistribution of the MEMOIR Last
Sale feed, the Exchange proposes to establish an access fee of $2,000
per month. The proposed redistribution fee would be charged to any
External Distributor of the MEMOIR Last Sale feed. The proposed access
fee for external distribution will be charged only once per month per
Firm.
    3. Non-Display Use Fees. The Exchange does not propose to establish
separate non-display fees for usage by Trading Platforms or other Users
with respect to MEMOIR Last Sale.
    4. User Fees. The Exchange proposes to charge a Professional User
Fee (per User) of $0.01 per month and a Non-Professional User Fee (per
User) of $0.01 per month. The proposed User fees would apply to each
person that has access to the MEMOIR Last Sale feed that is provided by
an External Distributor for displayed usage. The Exchange does not
propose any per User fees for internal distribution of the MEMOIR Last
Sale feed. Each External Distributor's count will include every
individual that accesses the data regardless of the purpose for which
the individual uses the data. External Distributors of the MEMOIR Last
Sale feed must report all Professional and Non-Professional Users \14\
in accordance with the following:
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    \14\ See supra note 12.
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     In connection with an External Distributor's distribution
of the MEMOIR Last Sale feed, the Distributor must count as one User
each unique User that the Distributor has entitled to have access to
the MEMOIR Last Sale feed.
     External Distributors must report each unique individual
person who receives access through multiple devices or multiple methods
(e.g., a single User has multiple passwords and user identifications)
as one User.
     If an External Distributor entitles one or more
individuals to use the same device, the Distributor must include only
the individuals, and not the device, in the count. Thus, Distributors
would not be required to report User device counts associated with a
User's display use of the data feed.
    5. Enterprise Fee. As an alternative to User fees, a recipient Firm
may purchase a monthly Enterprise license to receive MEMOIR Last Sale
for distribution to an unlimited number of Professional and Non-
Professional Users. The Exchange proposes to establish a fee of $10,000
per month per Firm for an Enterprise license to the MEMOIR Last Sale
feed.
    6. Digital Media Enterprise Fee. As an alternative to User fees, a
recipient Firm may purchase a monthly Digital Media Enterprise license
to receive MEMOIR Last Sale for distribution to an unlimited number of
Users for viewing via television, websites, and mobile devices for
informational and non-trading purposes only. The Exchange proposes to
establish a fee of $2,000 per month per Firm for a Digital Media
Enterprise license to the MEMOIR Last Sale feed.
Additional Discussion--Competitive Forces
    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.'' \15\ As the Commission
itself recognized, the market for trading services in NMS stocks has
become ``more fragmented and competitive.'' \16\ Indeed, equity trading
is currently dispersed across 16 exchanges,\17\ 31 alternative trading
systems,\18\ and numerous broker-dealer internalizers and wholesalers,
all competing for order flow. While the competitive environment
described above and the Commission's statements related thereto are
primarily regarding market share and trading volumes, and not market
data specifically, the Exchange believes that competition does
constrain the Exchange's ability to set market data prices, as
described below.
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    \15\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS Adopting Release'').
    \16\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
    \17\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at: http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \18\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsData. A list of
alternative trading systems registered with the Commission is
available at: https://www.sec.gov/foia/docs/atslist.htm.
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    The recent growth of MEMX's market share demonstrates the
competitive marketplace in which the Exchange operates. The Exchange
launched in September 2020 and slowly grew over the next several months
as it completed its staged rollout intended to ensure market stability.
In January 2021, the Exchange averaged approximately 0.6% of
consolidated trading volume.\19\ The Exchange experienced significant
growth every month from February 2021 to December 2021 and ended 2021
with market share of approximately 4.2% of consolidated volume; MEMX
has maintained a similar market share percentage in 2022, with
approximately 4.05% market share to date.\20\
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    \19\ Market share percentage calculated as of February 1, 2022.
The Exchange receives and processes data made available through
consolidated data feeds (i.e., CTS and UTDF).
    \20\ See id.
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    As the Exchange's transaction market share has increased, so has
the value of its market data. In addition to achieving over 4% of
consolidated volume, the Exchange's NBBO Quote Market Share (i.e., the
notional value displayed at the inside national best bid or offer, or
``NBBO'', as a percentage of overall notional value at the NBBO) is
comparable to that of Cboe BZX Exchange, Inc. (``BZX'') and the New
York Stock Exchange (``NYSE''), and higher than that of Cboe EDGX
Exchange. Inc.\21\ The Exchange determined the level of the fees to
charge for the Exchange Data Feeds based on the value of the Exchange's
market data as well as the cost analysis described later in this
filing. In particular, as noted elsewhere in this proposal, the
proposed fee structure is comparable to that of BZX and the proposed
fees themselves are equal to or in many cases lower than BZX. Thus, as
the Exchange has similar market quality to BZX and other larger maker/
taker exchanges and has priced its data at a significant discount to
those markets,

the Exchange believes it is starting from a place of general
acceptability to industry participants. Indeed, while silence cannot
necessarily be interpreted as support, the Exchange notes that no
comment letters on the Initial Proposal have been filed.
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    \21\ See Cboe Global Markets NBBO Quote Market Share Statistics,
available at: https://www.cboe.com/us/equities/market_statistics/.
In April 2022, NBBO Quote Market Share of the largest six equities
exchanges was as follows: NYSE Arca 18.88%, Nasdaq 17.67%, BZX
11.66%, NYSE 10.43%, MEMX 9.85%, EDGX 8.91%. The remaining ten
equities exchanges have NBBO Quote Market Share below 5%.
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    As noted above, over a 16-month period, MEMX has grown from 0% to
over 4% market share of consolidated trading volume. During that same
period, the Exchange has had a steady increase in the number of
subscribers to Exchange Data Feeds. As a new entrant into the exchange
industry, the Exchange is particularly subject to competitive forces as
it works to attract new Members and trading volume and maintain
participation from existing participants. While the Exchange has been
able to rapidly grow its market share since its launch in September
2020, MEMX operates only a single U.S. equities exchange with market
share that remains significantly lower than the market share of the
largest exchange groups. As noted above, until April of this year, MEMX
did not charge fees for market data provided by the Exchange. The
objective of this approach was to eliminate any fee-based barriers for
Members when MEMX launched as a national securities exchange in 2020,
which the Exchange believes has been helpful in its ability to attract
order flow as a new exchange. The Exchange also did not initially
charge for market data because MEMX believes that any exchange should
first deliver meaningful value to Members and other market participants
before charging fees for its products and services. The Exchange
believes that its proposed approach to market data fees is reasonable
based on the existence of competition, a comparison to competitors and
the cost analysis presented below.
    The Exchange is not required to make the Exchange Data Feeds
available or to offer any specific pricing alternatives to any
customers, nor is any firm required to purchase the Exchange Data
Feeds. Firms that choose to subscribe to the Exchange Data Feeds do so
for the primary goals of using it to increase their revenues, reduce
their expenses, and in some instances to compete directly with the
Exchange (including for order flow). Those firms are able to determine
for themselves whether or not the Exchange Data Feeds or any other
similar products are attractively priced.
    Because the Exchange Data Feeds have not been previously subject to
fees, the Exchange did not know the impact of the proposed fees on data
recipients at the time of the Initial Proposal but expected that
subscribers may choose to reduce or eliminate their use of MEMX data.
The Exchange now has additional data regarding the impact of fees for
Exchange Data Feeds. Specifically, current subscribers to the Exchange
Data Feeds have indeed changed their behavior in response to the
imposition of fees as predicted in the Initial Proposal. Following the
date that fees for the Exchange Data Feeds were officially announced,
fifteen (15) out of seventy-nine (79) subscribers, representing 19% of
the subscribers to such data feeds, modified or canceled their
subscriptions before the fees went into effect. In each instance, the
subscriber told the Exchange that the reason for modifying or
cancelling its subscription was the imminent imposition of fees. These
modifications and cancellations are evidence that subscribing to the
Exchange Data Feeds is discretionary, that each customer makes the
decision whether to subscribe based on its own analysis of the benefits
and costs to itself, and that customers can and do make those decisions
quickly based on reactions to fee changes. Prior to the imposition of
fees, four (4) customers (or 5% of market data subscribers) informed
the Exchange that if the Exchange imposes the fees as proposed, such
customers will limit their subscription the MEMOIR Top feed and/or the
MEMOIR Last Sale feed, rather than the MEMOIR Depth feed, which is more
expensive under the proposed fees. Notably, three (3) of these
customers are active trading participants on the Exchange and have
continued to participate on the Exchange without use of the Exchange's
MEMOIR Depth feed. In addition, eleven (11) customers of the Exchange
that were subscribed to receive Exchange Data Feeds have cancelled
their subscriptions to such data feeds entirely (representing
approximately 14% of market data subscribers). Five (5) of the eleven
(11) customers that have cancelled all subscriptions to Exchange Data
Feeds actively trade on the Exchange and have informed the Exchange
that they will rely instead on consolidated data distributed pursuant
to NMS Plans (i.e., ``SIP data'') to participate on the Exchange. This
is clear evidence that the availability of these substitute products
constrains the Exchange's ability to charge supra-competitive prices
for the Exchange Data Feeds.\22\
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    \22\ The Exchange notes that the remaining customers that
modified or cancelled their subscriptions to the Exchange Data Feeds
(seven customers total) are not trading participants on the Exchange
and likely subscribed to the Exchange Data Feeds initially because
they were free but determined to cancel such subscriptions now that
the Exchange is charging market data fees.
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    The Exchange intentionally adopted fees that it believed were
reasonable and would not result in the Exchange losing market share. In
fact, despite the modifications and cancellations described above, the
Exchange has not lost market share from such market participants.
Rather, their participation has remained similar to that on the
Exchange prior to the imposition of fees and resulting changes to their
market data subscriptions. However, the Exchange continues to believe
that a data recipient that chose to discontinue subscribing to the
Exchange's Data Feeds could also choose to shift order flow away from
the Exchange and, given the current competitive environment, if data
recipients had both discontinued the product and shifted order flow
away from the Exchange, the Exchange would have had to reevaluate the
fees and file a separate proposed rule change to amend its fees. The
Exchange believes that the majority of data subscribers have maintained
both their subscriptions to Exchange Data Feeds and their market share
on the Exchange due to the overall reasonability of the proposed fees.
    Had the proposed fees for the Exchange Data Feeds instead been
unreasonable, the Exchange believes it would have seen additional
modifications or cancellations to subscriptions to the Exchange Data
Feeds and this may have further resulted in a loss of market share. As
the Exchange has intentionally avoided imposing unreasonable fees,
consistent with its obligations as a registered national securities
exchange, the Exchange cannot present statistical evidence to support
its understanding of how market participants would have reacted to the
imposition of such fees. Indeed, adopting fees that are unreasonable in
order to prove that the Exchange's market data is subject to
competitive forces, would contradict the Exchange's responsibilities
under Section 6(b)(4) of the Exchange Act, and would have the
paradoxical effect of weakening competition in the market by harming
the competitive standing of a new exchange entrant that has actively
sought to increase competition among U.S. equities exchanges.
Additional Discussion--Comparison With Other Exchanges
    The proposed fee structure is not novel but is instead comparable
to the fee structure currently in place for the equities exchanges
operated by Cboe Global Markets, Inc., in particular

BZX.\23\ As noted above, in January 2022, MEMX had 4.2% market share;
for that same month, BZX had 5.5% market share.\24\ The Exchange is
proposing fees for its Exchange Data Feeds that are similar in
structure to BZX and rates that are equal to, or in most cases lower,
than the rates data recipients pay for comparable data feeds from
BZX.\25\ The Exchange notes that other competitors maintain fees
applicable to market data that are considerably higher than those
proposed by the Exchange, including NYSE Arca \26\ and Nasdaq.\27\
However, the Exchange has focused its comparison on BZX because it is
the closest market in terms of market share and offers market data at
prices lower than several other incumbent exchanges.\28\
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    \23\ See BZX Fee Schedule, available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \24\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
    \25\ The Exchange notes that although no fee proposed by the
Exchange is higher than the fee charged for BZX for a comparable
data product, under certain fact patterns a BZX data recipient could
pay a lower rate than that charged by the Exchange. For instance,
while the Exchange has proposed to adopt identical fees to those
charged for internal distribution of MEMOIR Top as compared to BZX
Top ($750 per month) and for internal distribution of MEMOIR Last
Sale as compared to BZX Last Sale ($500 per month), BZX permits a
data recipient who takes both feeds to pay only one fee and, upon
request, to receive the other data feed free of charge. See BZX Fee
Schedule, Market Data Fees, BZX Depth, available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/. Because the
Exchange has not proposed such a discount, a data recipient taking
both MEMOIR TOP and MEMOIR Last Sale would pay more ($1,250 per
month) than they would to take comparable data feeds from BZX ($750
per month).
    \26\ Fees for the NYSE Arca Integrated Feed, which is the
comparable product to MEMOIR Depth, are $3,000 for access (internal
use) and $3,750 for redistribution (external distribution), compared
to the Exchange's proposed fees of $1,500 and $2,500, respectively.
In addition, for its Integrated Feed, NYSE Arca charges for three
different categories of non-display usage, each of which is $10,500
and each of which can be charged to the same firm more than one time
(e.g., a customer operating a Trading Platform would pay $10,500
compared to the Exchange's proposed fee of $4,000 but would also pay
for each Trading Platform, up to three, if they operate more than
one, instead of the single fee proposed by the Exchange; if that
customer also uses the data for the other categories of non-display
usage they would also pay $10,500 for each other category of usage,
whereas the Exchange would only charge $1,500 for any non-display
usage other than operating a Trading Platform). Finally, the NYSE
Arca Integrated Feed user fee for pro devices is $60 compared to the
proposed Professional User fee of $30 for MEMOIR Depth and the NYSE
Arca Integrated user fee for non-pro devices is $20 compared to the
proposed Non-Professional User fee of $3 for MEMOIR Depth. See NYSE
Proprietary Market Data Pricing list, available at: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Pricing.pdf.
    \27\ Fees for the Nasdaq TotalView data feed, which is the
comparable product to MEMOIR Depth, are $1,500 for access (internal
use) and $3,750 for redistribution (external distribution), compared
to the Exchange's proposed fees of $1,500 and $2,500, respectively.
In addition, for TotalView, Nasdaq charges Trading Platforms $5,000
compared to the Exchange's proposal of $4,000, and, like NYSE Arca,
charges customers per Trading Platform, up to three, if they operate
more than one, instead of the single fee proposed by the Exchange.
Nasdaq also requires users to report and pay usage fees for non-
display access at levels of from $375 per subscriber for smaller
firms with 39 or fewer subscribers to $75,000 per firm for a larger
firm with over 250 subscribers. The Exchange does not require
counting of devices or users for non-display purposes and instead
has proposed flat fee of $1,500 for non-display usage not by Trading
Platforms. Finally, the Nasdaq TotalView user fee for professional
subscribers is $76 compared to the proposed Professional User fee of
$30 for MEMOIR Depth and the Nasdaq TotalView user fee for non-
professional subscribers is $15 compared to the proposed Non-
Professional User fee of $3 for MEMOIR Depth. See Nasdaq Global Data
Products pricing list, available at: http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
    \28\ See supra notes 26 and 27.
---------------------------------------------------------------------------

    The fees for the BZX Depth feed--which like the MEMOIR Depth feed,
includes top of book, depth of book, trades, and security status
messages--consist of an internal distributor access fee of $1,500 per
month (the same as the Exchange's proposed rate), an external
distributor access fee of $5,000 per month (two times the Exchange's
proposed rate), a non-display usage fee for non-Trading Platforms of
$2,000 per month ($500 more than the Exchange's proposed rate), a non-
display usage fee for Trading Platforms of $5,000 per month ($1,000
more than the Exchange's proposed rate), a Professional User fee (per
User) of $40 per month ($10 more than the Exchange's proposed rate),
and a Non-Professional User fee (per User) of $5 per month ($2 more
than the Exchange's proposed rate).\29\
---------------------------------------------------------------------------

    \29\ See BZX Fee Schedule, Market Data Fees, BZX Depth,
available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/. The Exchange notes that there are differences
between the structure of BZX Depth fees and the proposed fees for
MEMOIR Depth, including that the Exchange has proposed a Digital
Media Enterprise License for MEMOIR Depth but a comparable license
is not available from BZX. Additionally, BZX maintains a general
enterprise license for User fees, similar to that proposed by the
Exchange for MEMOIR Top and MEMOIR Last Sale, but the Exchange has
not proposed adding a general Enterprise license at this time.
---------------------------------------------------------------------------

    The comparisons of the MEMOIR Last Sale feed and MEMOIR Top feed to
the BZX Last Sale feed and BZX Top feed, respectively, are similar in
that BZX generally maintains the same fee structure proposed by the
Exchange and BZX charges fees that are comparable to, but in most cases
higher than, the Exchange's proposed fees. Notably, the User fees
proposed by the Exchange for External Distributors of MEMOIR Last Sale
and MEMOIR Top ($0.01 for both Professional Users and Non-Professional
Users) are considerably lower than those charged by BZX for BZX Top and
BZX Last Sale ($4 for Professional Users and $0.10 for Non-Professional
Users).
    By charging the same low rate for all Users of MEMOIR Top and
MEMOIR Last Sale the Exchange believes it is proposing a structure that
is not only lower cost but that will also simplify reporting for
subscribers who externally distribute these data feeds to Users, as the
Exchange believes that categorization of Users as Professional and Non-
Professional is not meaningful for these products and requiring such
categorization would expose Firms to unnecessary audit risk of paying
more for mis-categorization. However, the Exchange does not believe
this is equally true for MEMOIR Depth, as most individual Users of
MEMOIR Depth are likely to be Professional Users and the Exchange has
proposed pricing for such Users that the Exchange believes is
reasonable given the value to Professional Users (i.e., since
Professional Users use data to participate in the markets as part of
their full-time profession and earn compensation based on their
employment). While the Exchange would prefer the simplicity of a single
fee, similar to that imposed for Professional Users and Non-
Professional Users, as that would reduce audit risk and simplify
reporting, the proposed fee for Professional Users if also applied to
Non-Professional Users would be significantly higher than other
exchanges charge. The Exchange reiterates that it does not anticipate
many Non-Professional Users to subscribe to MEMOIR Depth. In fact,
though data recipient reporting is still being completed and validated
for the first billing cycle, the Exchange is only aware of a single
Non-Professional User (i.e., one User) that is reported to receive
MEMOIR Depth.
Additional Discussion--Cost Analysis
    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. Accordingly,
in proposing to charge fees for market data, 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,\30\ and Rule 19b-4
thereunder,\31\ with respect to the types of information self-
regulatory organizations (``SROs'') should provide when filing fee
changes, and Section 6(b) of the Act,\32\ which requires, among other
things, that exchange fees be reasonable and equitably allocated,\33\
not designed to permit unfair discrimination,\34\ and that they not
impose a burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.\35\ This rule change proposal
addresses those requirements, and the analysis and data in this section
are designed to clearly and comprehensively show how they are met.\36\
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(1).
    \31\ 17 CFR 240.19b-4.
    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(4).
    \34\ 15 U.S.C. 78f(b)(5).
    \35\ 15 U.S.C. 78f(b)(8).
    \36\ 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.
---------------------------------------------------------------------------

    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--transactions, 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.
    The Exchange recently filed to adopt fees for connectivity
services, to which the Exchange allocated a monthly aggregate monthly
cost of $1,143,715.\37\ Based on the pricing adopted by the Exchange,
the Exchange estimated it would generate monthly revenue of $1,233,750
from connectivity services (i.e., physical connections and application
sessions), providing cost recovery to the Exchange for the aggregate
costs of offering connectivity services plus approximately 8% margin.
Thus far, fees for connectivity services have generated revenues
consistent with the Exchange's estimates.
---------------------------------------------------------------------------

    \37\ See Securities Exchange Act Release Nos. 93937 (January 10,
2022), 87 FR 2466 (January 14, 2022) (SR-MEMX-2021-22); 94419 (March
15, 2022), 87 FR 16046 (March 21, 2022) (SR-MEMX-2022-02); 94924
(May 16, 2022) (SR-MEMX-2022-13) (as the fees adopted have remained
the same and the Exchange has filed since January of 2022, these
filings are referred to generally hereafter as the ``Connectivity
Filing'').
---------------------------------------------------------------------------

    The Exchange notes that it is difficult, if not impossible, to
purely split the costs of generating and producing market data and the
costs associated with operation of the system that processes (and
displays through market data) orders, cancellations, and transactions
and performs related functions (collectively, together with market
data, ``Transaction Services''). Instead, as described below, the
Exchange believes its costs for providing Transaction Services,
including market data, are inextricably linked, and thus the cost
analysis below and corollary margin discussion includes all Transaction
Services.
    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
Transaction Services, and, if such expense did so relate, what portion
(or percentage) of such expense actually supports the provision of
Transaction Services, and thus bears a relationship that is, ``in
nature and closeness,'' directly related to Transaction Services. In
turn, the Exchange allocated certain costs more to Transaction Services
than other services, while certain costs were only allocated to such
services at a very low percentage, using consistent allocation
methodologies as described above. Based on its analysis, MEMX
calculated its aggregate monthly costs for providing Transaction
Services, at $2,797,265. The Exchange expects to recoup the majority of
this cost from transaction fees and revenues from the public data feeds
in which the Exchange participates and receives revenues (i.e., the
SIPs). As such, the Exchange has not determined it necessary to charge
higher fees for the Exchange Data Feeds than proposed, but instead has
proposed what it believes are relatively low-cost options to receive
and use Exchange Data Feeds. However, in order to cover operating costs
and earn a reasonable profit on its market data the Exchange has
determined it necessary to charge some fees for proprietary data, and,
as such, the Exchange is proposing to modify its Fee Schedule, pursuant
to MEMX Rules 15.1(a) and (c), as set forth above.
Costs Related To Offering Transaction Services
    The following chart details the individual line-item (monthly)
costs considered by MEMX to be related to offering Transaction Services
(transactions and market data) to its

Members and other customers 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 77.8% of its overall Human
Resources cost to offering Transaction Services).

------------------------------------------------------------------------
           Costs drivers \38\                  Costs         % of all
------------------------------------------------------------------------
Human Resources.........................      $1,480,822            77.8
Connectivity (external fees, cabling,             48,480            22.4
 switches, etc.)........................
Data Center.............................          65,538            22.4
External Market Data....................         133,266            92.5
Hardware and Software Licenses and               331,722            88.7
 Consulting.............................
Monthly Depreciation....................         393,830            73.2
Allocated Shared Expenses...............         343,607            70.6
                                         -------------------------------
    Total...............................       2,797,265            70.7
------------------------------------------------------------------------

Human Resources
---------------------------------------------------------------------------

    \38\ The Exchange notes that the total monthly cost set forth
for Transaction Services ($2,797,265) is the same as that used for
the Initial Proposal; however, the Exchange has modified the
categorization of such fees in the table above as such
categorization was inconsistent when compared to the categorization
used in the Connectivity Filing. In order to ensure a consistent
presentation and description of the Cost Analysis and allocation
methodology, the revised chart above corrects these inconsistencies
to align with the categorization used in the Connectivity Filing.
---------------------------------------------------------------------------

    For personnel costs (Human Resources), MEMX calculated an
allocation of employee time for employees whose functions include
directly providing services necessary to offer Transaction Services,
including performance thereof, as well as personnel with ancillary
functions related to establishing and providing such services (such as
information security and finance personnel). 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 Transaction Services, 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 Transaction Services. The Exchange notes
that senior level executives were allocated Human Resources costs to
the extent the Exchange believed they are involved in overseeing tasks
related to providing Transaction Services. 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. The majority of the Exchange's Connectivity cost was allocated
to physical connectivity (75%), as set forth in the Connectivity
Filing. The remainder of the Exchange's Connectivity cost was allocated
between Transaction Services (22.4%) and application sessions (2.6%).
Data Center
    Data Center costs includes an allocation of the costs the Exchange
incurs to provide Transaction Services in the third-party data centers
where the Exchange 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). Similar to the Connectivity cost described above, the
majority of the Exchange's Data Center cost was allocated to physical
connectivity (75%), as set forth in the Connectivity Filing. The
remainder of the Exchange's Data Center cost was allocated between
Transaction Services (22.4%) and application sessions (2.6%).
External Market Data
    External Market Data Costs includes fees paid to third parties,
including other exchanges and the SIPs under the consolidated plans, to
receive and consume market data necessary to provide Transaction
Services.
Hardware and Software Licenses and Consulting
    Hardware and Software Licenses and Consulting includes hardware and
software licenses used to operate and monitor physical assets necessary
to offer Transaction Services. This line-item also includes the cost of
certain third-party consultants used by the Exchange to help test and
review systems necessary to offering Transaction Services.\39\
---------------------------------------------------------------------------

    \39\ The Exchange notes that in the Initial Proposal it included
technology Consulting costs as a separate line-item but has included
such costs along with Hardware and Software Licenses in this
proposal for consistency with the Connectivity Filing.
---------------------------------------------------------------------------

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. The depreciation cost also
includes depreciated software that is necessary to run the Exchange. As
noted above, the Exchange allocated 73.2% of all depreciation costs,
including both hardware and software depreciation, to providing
Transaction Services.
Allocated Shared Expenses
    Finally, a limited portion of general shared expenses was allocated
to overall

Transaction Services costs as without these general shared costs the
Exchange would not be able to operate in the manner that it does and
provide Transaction Services. 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,
regulatory costs,\40\ 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 included in the
calculation of Allocated Shared Expenses, and thus a portion of such
overall cost was allocated to providing Transaction Services.
---------------------------------------------------------------------------

    \40\ The Exchange notes that in the Initial Proposal it included
Regulatory Costs as a separate line-item but has included such costs
in Allocated Shared Expenses in this proposal for consistency with
the Connectivity Filing.
---------------------------------------------------------------------------

Cost Analysis--Additional Discussion
    In conducting its Cost Analysis, the Exchange did not allocate any
of its expenses in full to any core service and did not double-count
any expenses. Instead, as described above, the Exchange identified and
allocated applicable cost drivers across its core services and used the
same Cost Analysis to form the basis of the Connectivity Filing and
this filing proposing fees for Exchange Data Feeds. For instance, as
described in the Connectivity Filing, 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.
    In total, again as explained in the Connectivity Filing, 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 the majority to Transaction Services (77.8%). 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 Transaction Services, 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
Exchange. Without this equipment, the Exchange would not be able to
operate the Exchange and provide Transaction Services to its Members
and non-Members and their customers. The Exchange did not allocate all
of the depreciation and amortization expense toward the cost of
providing Transaction Services, but instead allocated approximately 73%
of the Exchange's overall depreciation and amortization expense to
Transaction Services.
    The Exchange anticipates that the proposed fees for Exchange Data
Feeds will generate approximately $280,000 based on initial reporting
that has taken place since the Exchange commenced billing for such data
feeds. The proposed fees for Exchange Data Feeds are designed to permit
the Exchange to cover the costs allocated to providing Transaction
Services with a markup that the Exchange believes is modest
(approximately 10.1%), which the Exchange believes is fair and
reasonable after taking into account the costs related to Transaction
Services that the Exchange has previously borne completely on its own
and help fund future expenditures (increased costs, improvements,
etc.). The Exchange also reiterates that prior to April of this year
the Exchange has not previously charged any fees for Exchange Data
Feeds and its allocation of costs to Exchange Data Feeds was part of a
holistic allocation that also allocated costs to other core services
without double-counting any expenses.
    Looking at the Exchange's operations holistically, the total
monthly costs to the Exchange for offering core services is $3,954,537.
The Exchange again notes that it anticipates that the proposed fees for
Exchange Data Feeds will generate approximately $280,000 based on
initial reporting that has taken place since the Exchange commenced
billing for such data feeds. Incorporating this amount into the
Exchange's overall projected revenue, the Exchange anticipates monthly
revenue of $4,326,950 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 proposed herein 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 9.4% margin on its
operations as a whole. As noted above, the Exchange believes its profit
margin for Transaction Services will be approximately 10.1%. The
Exchange believes that both of these amounts are reasonable.
    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 the
Exchange Data Feeds, the Exchange will have to be successful in
retaining existing subscribers and obtaining new subscribers to the
Exchange Data Feeds. 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
subscribers to subscribe to the Exchange Data Feeds, 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 revenues 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 current
year. As a general matter, 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 Exchange Data Feeds it will receive additional
revenue to offset future cost increases. However, if use of Exchange
Data Feeds 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 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 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, the Exchange believes 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.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \41\ of the Act in general, and
furthers the objectives of Section 6(b)(4) \42\ 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) \43\ 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.
---------------------------------------------------------------------------

    \41\ 15 U.S.C. 78f.
    \42\ 15 U.S.C. 78f(b)(4).
    \43\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The Proposed Rule Change Is Reasonable
    In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique
market data to the public. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
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.'' \44\
---------------------------------------------------------------------------

    \44\ See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
---------------------------------------------------------------------------

    With respect to market data, the decision of the United States
Court of Appeals for the District of Columbia Circuit in NetCoalition
v. SEC upheld the Commission's reliance on the existence of competitive
market mechanisms to evaluate the reasonableness and fairness of fees
for proprietary market data:
    In fact, the legislative history indicates that the Congress
intended that the market system ``evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are removed''
and that the SEC wield its regulatory power ``in those situations where
competition may not be sufficient,'' such as in the creation of a
``consolidated transactional reporting system.'' \45\
---------------------------------------------------------------------------

    \45\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010)
(``NetCoalition I'') (quoting H.R. Rep. No. 94-229 at 92 (1975), as
reprinted in 1975 U.S.C.C.A.N. 323).
---------------------------------------------------------------------------

    The court agreed with the Commission's conclusion that ``Congress
intended that `competitive forces should dictate the services and
practices that constitute the U.S. national market system for trading
equity securities.' '' \46\
---------------------------------------------------------------------------

    \46\ Id. at 535.
---------------------------------------------------------------------------

    In this competitive marketplace, the Exchange's executed trading
volume has grown from 0% market share to over 4% market share in less
than one and a half years and the Exchange believes that it is
reasonable to begin charging fees for the Exchange Data Feeds. 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 market data, with fees that are discounted when compared to
products and services offered by competitors.\47\
---------------------------------------------------------------------------

    \47\ See supra notes 26-27; see supra note 29 and accompanying
text.
---------------------------------------------------------------------------

    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 elsewhere, market participants (even those that
trade on the Exchange) are not required to subscribe to the Exchange
Data Feeds, and if they do so, have a choice with respect to the
Exchange Data Feed(s) to which they will subscribe. As noted above,
when the Exchange announced that it would charge for the Exchange Data
Feeds, 19% of its subscribers either modified or cancelled their
subscriptions to Exchange Data Feeds. While some of these subscribers
do not actively participate by trading on the Exchange and likely
subscribed to the Exchange Data Feeds because they were offered free of
charge, several of the subscribers that modified or cancelled their
subscriptions are in fact Members that trade on the Exchange.
Specifically, five (5) subscribers that actively participate on the
Exchange have cancelled all subscriptions to the Exchange Data Feeds
and have informed the Exchange that they will instead utilize SIP data
to trade on the Exchange. In addition, three (3) subscribers that
actively participate on the Exchange have discontinued their
subscription to receive the MEMOIR Depth feed and have informed the
Exchange that they will instead use the less expensive MEMOIR Top feed
to trade on the Exchange (the Exchange notes that two of these
subscribers have also maintained their subscriptions to the MEMOIR Last
Sale feed).

    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, consistent with the decisions in Susquehanna Int'l Grp.,
LLC v. SEC \48\ and In the Matter of the Application of Securities
Industry and Financial Markets Ass'n for Review of Action taken by NYSE
Arca, Inc. and Nasdaq Stock Market, LLC,\49\ the Commission considers
whether the SRO has provided evidence 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.
---------------------------------------------------------------------------

    \48\ 866 F.3d 442 (D.C. Cir. 2017).
    \49\ Securities Exchange Act Release No. 84432 (October 16,
2018).
---------------------------------------------------------------------------

    The Exchange has not previously charged fees for market data but
commenced charging in April of this year. As discussed in the purpose
section of this proposed rule change, while the Exchange intentionally
adopted fees that it believes are reasonable and would not result in a
loss of market share, consistent with its obligations as a national
securities exchange under Section 6(b)(4) of the Act, the Exchange
continues to believe that competitive forces are in effect and that if
the proposed fees for the Exchange Data Feeds were unreasonable that
the Exchange would lose current or prospective Members and market
share. Further, the Exchange has conducted a comprehensive Cost
Analysis to determine the reasonability of its proposed fees, including
that the Exchange will not take supra-competitive profits.
1. The Proposed Fees Are Constrained by Significant Competitive Forces
a. Exchange Market Data Fees Are Constrained by Competition
    The Commission itself has recognized that the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\50\ The Commission's Division of Trading and Markets has also
recognized that with so many ``operating equities exchanges and dozens
of ATSs, there is vigorous price competition among the U.S. equity
markets and, as a result, [transaction] fees are tailored and
frequently modified to attract particular types of order flow, some of
which is highly fluid and price sensitive.'' \51\ Indeed, as noted
above, equity trading is currently dispersed across 16 exchanges, 31
alternative trading systems, and numerous broker-dealer internalizers
and wholesalers, all competing for order flow. While the competitive
environment described above and the Commission's statements related
thereto are primarily regarding market share and trading volumes, and
not market data specifically, the Exchange believes that competition
does constrain the Exchange's ability to set market data prices, as
described in this proposal.
---------------------------------------------------------------------------

    \50\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18).
    \51\ Commission Division of Trading and Markets, Memorandum to
EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-feeson-equities-exchanges.pdf.
---------------------------------------------------------------------------

    Further, low barriers to entry mean that new exchanges like the
Exchange may rapidly enter the market and offer competition with the
Exchange. Due to the ready availability of substitutes and the low cost
to move order flow to those substitute trading venues, an exchange
setting market data fees that are not at competitive levels would
expect to quickly lose business to competitors with more attractive
pricing. Indeed, as described above, at least eight Members trade on
the Exchange either by using the lower cost MEMOIR Top feed (some in
combination with MEMOIR Last Sale) or without use of any Exchange Data
Feed (i.e., using SIP data). Although the various exchanges may differ
in their strategies for pricing their market data products and their
transaction fees for trades--with some offering low-cost market data
with higher trading costs, and others charging more for market data and
comparatively less for trading--all exchanges compete for the same pool
of customers and must work to demonstrate to such customers that
pricing is reasonable. The Exchange believes that the best way to do
this is to provide transparency into the costs of producing and
maintaining its services.
    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. As noted elsewhere in
this proposal, there is no regulatory requirement that any market
participant subscribe to any Exchange Data Feeds or a particular
Exchange Data Feed. To demonstrate substitutability with tangible
evidence, as noted above, five (5) Members that actively trade on the
Exchange have determined to the SIPs as a substitute for the Exchange's
Data Feeds but have continued trading on the Exchange while three (3)
Members that actively trade on the Exchange have determined to use
lower cost Exchange Data Feeds (i.e., MEMOIR Top or MEMOIR Top in
conjunction with MEMOIR Last Sale) instead of the MEMOIR Depth feed.
    The Exchange believes the proposed fees are reasonable because in
setting them, the Exchange is constrained by the availability of
numerous competitors offering market data products and trading
services. Such substitutes need not be identical, but only
substantially similar to the product at hand. More specifically, in
setting fees for the Exchange Data Feeds, the Exchange is constrained
by the fact that, if its pricing is unattractive to customers,
customers have their pick of a large number of alternative execution
venues to use instead of the Exchange. The Exchange believes that it
has considered all relevant factors and has not considered irrelevant
factors in order to establish reasonable fees. The existence of
competition ensures that the Exchange cannot set unreasonable market
data fees without suffering the negative effects of that decision in
the fiercely competitive market in which it operates.
b. Exchange Data Feeds Are Optional Market Data Products
    Subscribing to the Exchange Data Feeds is entirely optional. The
Exchange is not required to make the Exchange Data Feeds available to
any customers, nor is any customer required to purchase any Exchange
Data Feed. Unlike some other data products (e.g., the consolidated
quotation and last-sale information feeds) that firms are required to
purchase in order to fulfill

regulatory obligations,\52\ a customer's decision whether to purchase
any Exchange Data Feed is entirely discretionary. Most Firms that
choose to subscribe to an Exchange Data Feed do so for the primary
goals of using it to increase their revenues, reduce their expenses,
and in some instances to compete directly with the Exchange for order
flow. Such firms are able to determine for themselves whether a
particular Exchange Data Feed is necessary for their business needs,
and if so, whether or not it is attractively priced. If an Exchange
Data Feed does not provide sufficient value to a Firm based on the uses
such Firm may have for it, such Firm may simply choose to conduct their
business operations in ways that do not use the applicable Exchange
Data Feed. Again, the Exchange has demonstrated above that several
Members have in fact made this determination and trade on the Exchange
without use of Exchange Data Feeds or with use of one or more of the
lower cost Exchange Data Feeds and not MEMOIR Depth.
---------------------------------------------------------------------------

    \52\ The Exchange notes that broker-dealers are not required to
purchase proprietary market data to comply with their best execution
obligations. See In the Matter of the Application of Securities
Industry and Financial Markets Association for Review of Actions
Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-
15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement
in Regulation NMS or any other rule that proprietary data be
utilized for order routing decisions, and some competing exchanges,
broker-dealers and ATSs have chosen not to do so.
---------------------------------------------------------------------------

    Specifically related to the Exchange Data Feed with the highest
rates, the MEMOIR Depth Feed, even if a Firm determines that the fees
for such feed are too high, customers can access much of the same data
at lower rates by subscribing to the MEMOIR Top feed (which includes
best-bid-and-offer information for the Exchange on a real-time basis)
and MEMOIR Last Sale (which includes last-sale information for the
Exchange on a real-time basis). MEMX top-of-book quotation information
and last-sale information is also available on the consolidated SIP
feeds.\53\ In this way, MEMOIR Top, MEMOIR Last Sale, and SIP data
products are all substitutes for a significant portion of the data
available on the MEMOIR Depth Feed, and SIP data products are also a
substitute for a significant portion of data available on the MEMOIR
Top and MEMOIR Last Sale feeds. As shown above, several Members that
trade on the Exchange discontinued subscriptions to MEMOIR Depth and
instead use MEMOIR Top (or MEMOIR Top combined with MEMOIR Last Sale)
as a substitute while others discontinued their subscription to
Exchange Data Feeds altogether, using SIP data as a substitute.
Furthermore, several exchange competitors of the Exchange have not
subscribed to any Exchange Data Feeds for purposes of executing orders
on their exchanges, order routing, and regulatory purposes,\54\ even
though the Exchange subscribes to and pays for their comparable market
data products.\55\ As such competitors are required by Regulation NMS
to honor (i.e., not trade through, lock or cross) protected quotations
\56\ displayed by the Exchange and by rule they offer routing services
including routing to the Exchange,\57\ these competitors must have
determined it possible to meet these obligations through use of SIP
data in lieu of subscribing to any Exchange Data Feed.
---------------------------------------------------------------------------

    \53\ Broadly speaking, the self-regulatory organizations
(``SROs'') administer the SIPs and set pricing. Each SIP charges its
own fees, which are determined by the operating committees of each
SIP subject to the SEC rule filing process. While MEMX is a member
of the operating committee of each SIP, it has only one vote and
does not exercise control over SIP pricing. MEMX also notes that the
SIPs charge pursuant to a different pricing structure than the
pricing structure proposed by the Exchange in this filing.
    \54\ See, e.g., NYSE Arca Rule 7.37-E.(d), Order Execution and
Routing, and BZX Rule 11.21, each of which discloses the data feeds
used by each respective exchange and state that SIP products are
used with respect to MEMX.
    \55\ See MEMX Rule 13.4, Usage of Data Feeds, which discloses
that the Exchange uses proprietary data feeds for all exchanges that
offer them.
    \56\ See Rule 600(b)(71) of Regulation NMS, 17 CFR
242.600(b)(17).
    \57\ See NYSE Arca Rule 7.37-E.(b), describing routing services
offered by NYSE Arca; BZX Rule 11.13(b), describing routing services
offered by BZX.
---------------------------------------------------------------------------

    The only content available on the MEMOIR Depth Feed that is not
available on these other products is the order-by-order look at the
MEMX order book, which provides information about depth-of-book on the
Exchange. The Exchange has been a vocal advocate in support of the
Commission's Market Data Infrastructure Rule, which mandates the
creation of a ``SIP Premium'' product that would include depth-of-book
information on the consolidated market data feeds.\58\ The Exchange has
also been a vocal advocate in support of pricing new content for the
consolidated market data feeds in a reasonable and competitive manner
that would encourage the use of a SIP Premium product and other content
to be provided via the SIPs.\59\ Future products such as SIP Premium
would include not only integrated depth-of-book information from MEMX,
but all other exchanges as well, and would further constrain the
Exchange's ability to price any Exchange Data Feed, including MEMOIR
Depth, at a supra-competitive price. However, even in the absence of
such products, the Exchange believes that use of the Exchange Data
Feeds is entirely optional, as described above.
---------------------------------------------------------------------------

    \58\ See, e.g., Letter from Anders Franzon, General Counsel,
MEMX LLC, dated May 26, 2020, regarding proposed Market Data
Infrastructure rule, available at: https://www.sec.gov/comments/s7-03-20/s70320-7235183-217090.pdf.
    \59\ See, e.g., Letter from Adrian Griffiths, Head of Market
Structure, MEMX LLC, dated November 8, 2021, regarding proposed fees
for consolidated data provided pursuant to CTA/CQ/UTP Plans,
available at: https://www.sec.gov/comments/sr-ctacq-2021-03/srctacq202103-9403088-262830.pdf.
---------------------------------------------------------------------------

    Further, in the case of products that are also redistributed
through market data vendors such as Bloomberg and Refinitiv, the
vendors themselves provide additional price discipline for proprietary
data products because they control the primary means of access to
certain end users. These vendors impose price discipline based upon
their business models. For example, vendors that assess a surcharge on
data they sell are able to refuse to offer proprietary products that
their end users do not or will not purchase in sufficient numbers. Even
in the absence of fees for the Exchange Data Feeds, many major market
data vendors have not elected to make available the Exchange Data Feeds
and likely will not unless their customers request it, and customers
will not elect to pay the proposed fees unless the applicable Exchange
Data Feed can provide value by sufficiently increasing revenues or
reducing costs to the customer's business in a manner that will offset
the fees. All of these factors operate as constraints on pricing
proprietary data products.
    In setting the proposed fees for the Exchange Data Feeds, the
Exchange considered the competitiveness of the market for proprietary
data and all of the implications of that competition. As described
elsewhere in this proposal, the Exchange also considered the Cost
Analysis conducted by the Exchange and believes it has demonstrated
that the fees will not result in any supra-competitive profit. The
Exchange believes that it has considered all relevant factors and has
not considered irrelevant factors in order to establish reasonable
fees. The existence of alternatives to the Exchange and the continued
availability of choice between different Exchange Data Feeds, other
exchanges' proprietary data products, and the SIPs ensure that the
Exchange cannot set unreasonable fees when vendors and subscribers can
elect these alternatives or choose not to purchase a specific
proprietary data product if the attendant fees are not justified by the

returns that any particular vendor or data recipient would achieve
through the purchase.
c. The Proposed Fees for Exchange Data Feeds Will Not Result in Supra-
Competitive Profits
    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.\60\ 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 Transaction Services with a
modest markup (approximately 10.1%), which the Exchange believes is
fair and reasonable after taking into account the costs related to
Transaction Services that the Exchange has previously borne completely
on its own and to 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) \61\ 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.
---------------------------------------------------------------------------

    \60\ See Fee Guidance, supra note 36.
    \61\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The proposed fees for Exchange Data Feeds 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 Transaction Services, including
market data. 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 the Exchange Data Feeds. 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 expects to recoup the majority of its estimated
aggregate monthly costs for providing Transaction Services from
transaction fees and revenues from the public data feeds in which the
Exchange participates and receives revenues (i.e., the SIPs). As such,
the Exchange has not determined it necessary to charge higher fees for
the Exchange Data Feeds than proposed, but instead has proposed what it
believes are relatively low-cost options to receive and use Exchange
Data Feeds. However, in order to cover operating costs and earn a
reasonable profit on its market data the Exchange has determined it
necessary to charge some fees for proprietary data, and, as such, the
Exchange is proposing to charge the fees described herein for the
Exchange Data Feeds. 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, including the relatively low
cost to participate on the Exchange \62\ and the need for the Exchange
to maintain a highly performant and stable platform to allow Members to
transact with determinism.
---------------------------------------------------------------------------

    \62\ The Exchange notes that while it does impose a $200 per
month Membership Fee, the Exchange does not charge several other
types of fees charged by competitors to the Exchange, including fees
for market participant identifiers (``MPIDs''), fees for risk
management tools, application fees, or fees to access the Exchange
User portal.
---------------------------------------------------------------------------

    The Exchange's Cost Analysis estimates the costs to provide
Transaction Services at $2,797,265. Based on current subscriptions to
Exchange Data Feeds (but without definitive data regarding User counts)
and projections related to transaction activity and volumes, the
Exchange estimates it will generate monthly revenues of approximately
$280,000 from the Exchange Data Feeds and $3,080,000 from providing
Transaction Services overall (on a monthly basis). This represents a
modest profit when compared to the cost of providing Transaction
Services (approximately 10.1%). Further, as noted above, applying the
Exchange's holistic Cost Analysis to a holistic view of anticipated
revenues from all sources, the Exchange would earn approximately 9.4%
margin on its operations as a whole. The Exchange believes that this
amount is reasonable and cannot be considered to be supra-competitive
profit.
2. The Proposed Fees Are Reasonable
    The specific fees that the Exchange proposes for the Exchange Data
Feeds are reasonable for the following additional reasons.
    Overall. The Exchange believes the proposed fees for the Exchange
Data Feeds are reasonable when compared to fees for comparable
products, such as the BZX Depth feed, BZX Top feed, and BZX Last Sale
feed, compared to which the Exchange's proposed fees are generally
lower, as well as other comparable data feeds priced significantly
higher than the Exchange's proposed fees for the Exchange Data
Feeds.\63\ Specifically with respect to the MEMOIR Depth feed, the
Exchange believes that the proposed fees for such feed are reasonable
because they represent not only the value of the data available from
the MEMOIR Top and MEMOIR Last Sale data feeds, which have lower
proposed fees, but also the value of receiving the depth-of-book data
on an order-by-order basis. The Exchange believes it is reasonable to
have pricing based, in part, upon the amount of information contained
in each data feed and the value of that information to market
participants. The MEMOIR Top and Last Sale data feeds, as described
above, can be utilized to trade on the Exchange but contain less
information than that is available on the MEMOIR Depth feed (i.e., even
for a subscriber who takes both feeds, such feeds do not contain depth-
of-book information). Thus, the Exchange believes it reasonable for the
products to be priced as proposed, with MEMOIR Last Sale having the
lowest price, MEMOIR Top the next lowest price, and MEMOIR Depth the
highest price (and more than MEMOIR Last Sale and MEMOIR Top combined).
Finally, the Exchange believes that its Cost Analysis and holistic
approach thereto demonstrates that the proposed fees for the Exchange
Data Feeds would not result in supra-competitive profits.
---------------------------------------------------------------------------

    \63\ See supra notes 26-27; see supra note 29 and accompanying
text.
---------------------------------------------------------------------------

    Internal Distribution Fees. The Exchange believes that it is
reasonable to charge fees to access the Exchange Data Feeds for
Internal Distribution because of the value of such data to subscribers
in their profit-generating activities. The Exchange also believes that
the proposed monthly Internal Distribution fees for MEMOIR Depth,
MEMOIR Top, and MEMOIR Last Sale are reasonable as they are the same

amounts charged by at least one other exchange of comparable size for
comparable data products,\64\ and are lower than the fees charged by
several other exchanges for comparable data products.\65\
---------------------------------------------------------------------------

    \64\ See BZX Fee Schedule available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \65\ See NYSE Proprietary Market Data Pricing list, available
at: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Pricing.pdf; Nasdaq Global Data Products pricing
list, available at: http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
---------------------------------------------------------------------------

    External Distribution Fees. The Exchange believes that it is
reasonable to charge External Distribution fees for the Exchange Data
Feeds because vendors receive value from redistributing the data in
their business products provided to their customers. The Exchange
believes that charging External Distribution fees is reasonable because
the vendors that would be charged such fees profit by re-transmitting
the Exchange's market data to their customers. These fee would be
charged only once per month to each vendor account that redistributes
any Exchange Data Feed, regardless of the number of customers to which
that vendor redistributes the data. The Exchange also believes the
proposed monthly External Distribution fee for the MEMOIR Depth Feed is
reasonable because it is half the amount of the fee charged by at least
one other exchange of comparable size for a comparable data
product,\66\ and significantly less than the amount charged by several
other exchanges for comparable data products.\67\ Similarly, the
Exchange believes the proposed monthly External Distribution fees for
the MEMOIR TOP and MEMOIR Last Sale feeds are reasonable because they
are discounted compared to same amounts charged by at least one other
exchange of comparable size for comparable data products, and
significantly less than the amount charged by several other exchanges
for comparable data products.\68\
---------------------------------------------------------------------------

    \66\ See BZX Fee Schedule available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \67\ See id.
    \68\ See NYSE Proprietary Market Data Pricing list, available
at: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Pricing.pdf; Nasdaq Global Data Products pricing
list, available at: http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
---------------------------------------------------------------------------

    User Fees. The Exchange believes that having separate Professional
and Non-Professional User fees for the MEMOIR Depth feed is reasonable
because it will make the product more affordable and result in greater
availability to Professional and Non-Professional Users. Setting a
modest Non-Professional User fee is reasonable because it provides an
additional method for Non-Professional Users to access the Exchange
Data Feeds by providing the same data that is available to Professional
Users. The proposed monthly Professional User fee and monthly Non-
Professional User fee are reasonable because they are lower than the
fees charged by at least one other exchange of comparable size for
comparable data products,\69\ and significantly less than the amounts
charged by several other exchanges for comparable data products.\70\
The Exchange also believes it is reasonable to charge the same low per
User fee of $0.01 for both Professional Users and Non-Professional
Users receiving the MEMOIR Top and MEMOIR Last Sale feeds, as this is
not only pricing such data at a much lower cost than other exchanges
charge for comparable data feeds \71\ but doing so will also simplify
reporting for subscribers who externally distribute these data feeds to
Users, as the Exchange believes that categorization of Users as
Professional and Non-Professional is not meaningful for these products
and that requiring such categorization would expose Firms to
unnecessary audit risk of paying more for mis-categorization. The
Exchange also believes that the proposal to require reporting of
individual Users, but not devices, is reasonable as this too will
eliminate unnecessary audit risk that can arise when recipients are
required to apply complex counting rules such as whether or not to
count devices or whether an individual accessing the same data through
multiple devices should be counted once or multiple times.
---------------------------------------------------------------------------

    \69\ See BZX Fee Schedule, available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \70\ See NYSE Proprietary Market Data Pricing list, available
at: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Pricing.pdf; Nasdaq Global Data Products pricing
list, available at: http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
    \71\ See id.
---------------------------------------------------------------------------

    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Usage fees for the MEMOIR Depth feed are reasonable, because
they reflect the value of the data to the data recipients in their
profit-generating activities and do not impose the burden of counting
non-display devices.
    The Exchange believes that the proposed Non-Display Usage fees
reflect the significant value of the non-display data use to data
recipients, which purchase such data on an entirely voluntary basis.
Non-display data can be used by data recipients for a wide variety of
profit-generating purposes, including proprietary and agency trading
and smart order routing, as well as by data recipients that operate
Trading Platforms that compete directly with the Exchange for order
flow. The data also can be used for a variety of non-trading purposes
that indirectly support trading, such as risk management and
compliance. Although some of these non-trading uses do not directly
generate revenues, they can nonetheless substantially reduce a
recipient's costs by automating such functions so that they can be
carried out in a more efficient and accurate manner and reduce errors
and labor costs, thereby benefiting recipients. The Exchange believes
that charging for non-trading uses is reasonable because data
recipients can derive substantial value from such uses, for example, by
automating tasks so that can be performed more quickly and accurately
and less expensively than if they were performed manually.
    Previously, the non-display use data pricing policies of many
exchanges required customers to count, and the exchanges to audit the
count of, the number of non-display devices used by a customer. As non-
display use grew more prevalent and varied, however, exchanges received
an increasing number of complaints about the impracticality and
administrative burden associated with that approach. In response,
several exchanges developed a non-display use pricing structure that
does not require non-display devices to be counted or those counts to
be audited, and instead categorizes different types of use. The
Exchange proposes to distinguish between non-display use for the
operation of a Trading Platform and other non-display use, which is
similar to exchanges such as BZX and EDGX,\72\ while other exchanges
maintain additional categories and in many cases charge multiple times
for different types of non-display use or the operation of multiple
Trading Platforms.\73\
---------------------------------------------------------------------------

    \72\ See BZX Fee Schedule, available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/; EDGX Fee Schedule,
available at: https://www.cboe.com/us/equities/membership/fee_schedule/edgx/.
    \73\ See supra notes 26-27.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to segment the fee for
non-display use into these two categories. As noted above, the uses to
which customers can put the MEMOIR Depth feed are numerous and varied,
and the Exchange believes that charging separate fees for these
separate categories of use is reasonable because

it reflects the actual value the customer derives from the data, based
upon how the customer makes use of the data.
    The Exchange believes that the proposed fees for non-display use
other than operation of a Trading Platform is reasonable. These fees
are comparable to, and lower than, the fees charged by at least one
other exchange of comparable size for a comparable data product,\74\
and significantly less than the amounts charged by several other
exchanges for comparable data products.\75\ The Exchange believes that
the proposed fees directly and appropriately reflect the significant
value of using data on a non-display basis in a wide range of computer-
automated functions relating to both trading and non-trading activities
and that the number and range of these functions continue to grow
through innovation and technology developments. Further, in contrast to
non-display use for operation of a Trading Platform, discussed below,
the Exchange benefits from and wants to encourage other non-display use
by market participants (including the fact that the Exchange receives
orders resulting from algorithms and routers as well as more broadly
beneficial uses such as risk management and compliance).
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    \74\ See BZX Fee Schedule, available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \75\ See NYSE Proprietary Market Data Pricing list, available
at: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Pricing.pdf; Nasdaq Global Data Products pricing
list, available at: http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
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    The Exchange also believes, regarding non-display use for operation
of a Trading Platform, it is reasonable to charge a higher monthly fee
than for other non-display use because such use of the Exchange's data
is directly in competition with the Exchange and the Exchange should be
permitted to recoup some of its lost trading revenue by charging for
the data that makes such competition possible. The Exchange also
believes that it is reasonable to charge the proposed fees for non-
display use for operation of a Trading Platform because the proposed
fees are comparable to, and lower than, the fees charged at least one
other exchange of comparable size for a comparable data product,\76\
and significantly less than the amounts charged by several other
exchanges for comparable data products, which also charge per Trading
Platform operated by a data subscriber subject to a cap in most cases,
rather than charging per Firm, as proposed by the Exchange.\77\
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    \76\ See BZX Fee Schedule, available at: https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \77\ See supra notes 26-27.
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    The proposed Non-Display Usage fees for the Exchange Data Feeds are
also reasonable because they take into account the extra value of
receiving the data for Non-Display Usage that includes a rich set of
information including top of book quotations, depth-of-book quotations,
executions and other information. The Exchange believes that the
proposed fees directly and appropriately reflect the significant value
of using the MEMOIR Depth feed on a non-display basis in a wide range
of computer-automated functions relating to both trading and non-
trading activities and that the number and range of these functions
continue to grow through innovation and technology developments.\78\
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    \78\ See also Exchange Act Release No. 69157, March 18, 2013, 78
FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (``[D]ata feeds
have become more valuable, as recipients now use them to perform a
far larger array of non-display functions. Some firms even base
their business models on the incorporation of data feeds into black
boxes and application programming interfaces that apply trading
algorithms to the data, but that do not require widespread data
access by the firm's employees. As a result, these firms pay little
for data usage beyond access fees, yet their data access and usage
is critical to their businesses.''
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    For all of the foregoing reasons, the Exchange believes that the
proposed fees for the Exchange Data Feeds are reasonable.
The Proposed Fees Are Equitably Allocated
    The Exchange believes the proposed fees for the Exchange Data Feeds
are allocated fairly and equitably among the various categories of
users of the feeds, and any differences among categories of users are
justified and appropriate.
    Overall. The Exchange believes that the proposed fees are equitably
allocated because they will apply uniformly to all data recipients that
choose to subscribe to the Exchange Data Feeds. Any subscriber or
vendor that chooses to subscribe to one or more Exchange Data Feeds is
subject to the same Fee Schedule, regardless of what type of business
they operate, and the decision to subscribe to one or more Exchange
Data Feeds is based on objective differences in usage of Exchange Data
Feeds among different Firms, which are still ultimately in the control
of any particular Firm. The Exchange believes the proposed pricing
between Exchange Data Feeds is equitably allocated because it is based,
in part, upon the amount of information contained in each data feed and
the value of that information to market participants. The MEMOIR Top
and Last Sale data feeds, as described above, can be utilized to trade
on the Exchange but contain less information than that is available on
the MEMOIR Depth feed (i.e., even for a subscriber who takes both
feeds, such feeds do not contain depth-of-book information). Thus, the
Exchange believes it is an equitable allocation of fees for the
products to be priced as proposed, with MEMOIR Last Sale having the
lowest price, MEMOIR Top the next lowest price, and MEMOIR Depth the
highest price (and more than MEMOIR Last Sale and MEMOIR Top combined).
    Internal Distribution Fee. The Exchange believes the proposed
monthly fees for Internal Distribution of the Exchange Data Feeds are
equitably allocated because they would be charged on an equal basis to
all data recipients that receive the Exchange Data Feeds for internal
distribution, regardless of what type of business they operate.
    External Distribution Fees. The Exchange believes the proposed
monthly fees for External Distribution of the Exchange Data Feeds are
equitably allocated because they would be charged on an equal basis to
all data recipients that receive the Exchange Data Feeds that choose to
redistribute the feeds externally. The Exchange also believes that the
proposed monthly fees for External Distribution are equitably allocated
when compared to lower proposed fees for Internal Distribution because
data recipients that are externally distributing Exchange Data Feeds
are able to monetize such distribution and spread such costs amongst
multiple third party data recipients, whereas the Internal Distribution
fee is applicable to use by a single data recipient (and its
affiliates).
    User Fees. The Exchange believes that the fee structure
differentiating Professional User fees from Non-Professional User fees
for display use of the MEMOIR Depth feed is equitable. This structure
has long been used by other exchanges and the SIPs to reduce the price
of data to Non-Professional Users and make it more broadly
available.\79\ Offering the MEMOIR Depth feed to Non-Professional Users
at a lower cost than Professional Users results in greater equity among
data

recipients, as Professional Users are categorized as such based on
their employment and participation in financial markets, and thus, are
compensated to participate in the markets. While Non-Professional Users
too can receive significant financial benefits through their
participation in the markets, the Exchange believes it is reasonable to
charge more to those Users who are more directly engaged in the
markets. The Exchange also believes it may be unreasonable to charge a
Non-Professional User the same fee that it has proposed for
Professional Users, as this fee would be higher than any other U.S.
equities exchange charges to Non-Professional Users for receipt of a
comparable data product. These User fees would be charged uniformly to
all individuals that have access to the MEMOIR Depth feed based on the
category of User. The Exchange also believes the proposed User fees for
MEMOIR Top and MEMOIR Last Sale are equitable because the Exchange has
proposed to charge Professional Users and Non-Professional Users the
same low rate of $0.01 per month.
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    \79\ See, e.g., Securities Exchange Act Release No. 59544 (March
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131)
(establishing the $15 Non-Professional User Fee (Per User) for NYSE
OpenBook); Securities Exchange Act Release No. 20002, File No. S7-
433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing Non-
Professional fees for CTA data); NASDAQ BX Equity 7 Pricing
Schedule, Section 123.
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    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Usage fees are equitably allocated because they would require
subscribers to pay fees only for the uses they actually make of the
data. As noted above, non-display data can be used by data recipients
for a wide variety of profit-generating purposes (including trading and
order routing) as well as purposes that do not directly generate
revenues (such as risk management and compliance) but nonetheless
substantially reduce the recipient's costs by automating certain
functions. The Exchange believes that it is equitable to charge non-
display data subscribers that use data for purposes other than
operation of a Trading Platform as proposed because all such
subscribers would have the ability to use such data for as many non-
display uses as they wish for one low fee. As noted above, this
structure is comparable to that in place for the BZX Depth feed but
several other exchanges charge multiple non-display fees to the same
client to the extent they use a data feed in several different trading
platforms or for several types of non-display use.\80\
---------------------------------------------------------------------------

    \80\ See supra, notes 26-27.
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    The Exchange also believes, regarding non-display use for operation
of a Trading Platform, it is equitable to charge a higher rate for each
Firm operating a Trading Platform (as compared to other Non-Display
Usage not by Trading Platforms) because such use of the data is
directly in competition with the Exchange and the Exchange should be
permitted to recoup some of its lost trading revenue by charging for
the data that makes such competition possible. Further, in contrast to
non-display use for operation of a Trading Platform, the Exchange
benefits from and wants to encourage other non-display use by market
participants (including the fact that the Exchange receives orders
resulting from algorithms and routers as well as more broadly
beneficial uses such as risk management and compliance). The Exchange
believes that it is equitable to charge a single fee per Firm rather
than multiple fees for a Firm that operates more than one Trading
Platform because operators of Trading Platforms are many times viewed
as a single competing venue or group, even if there a multiple
liquidity pools operated by the same competitor.
    For all of the foregoing reasons, the Exchange believes that the
proposed fees for the Exchange Data Feeds are equitably allocated.
The Proposed Fees Are Not Unfairly Discriminatory
    The Exchange believes the proposed fees for the Exchange Data Feeds
are not unfairly discriminatory because any differences in the
application of the fees are based on meaningful distinctions between
customers, and those meaningful distinctions are not unfairly
discriminatory between customers.
    Overall. The Exchange believes that the proposed fees are not
unfairly discriminatory because they would apply to all data recipients
that choose to subscribe to the same Exchange Data Feed(s). Any vendor
or subscriber that chooses to subscribe to the Exchange Data Feeds is
subject to the same Fee Schedule, regardless of what type of business
they operate. Because the proposed fees for MEMOIR Depth are higher,
vendors and subscribers seeking lower cost options may instead choose
to receive data from the SIPs or through the MEMOIR Top and/or MEMOIR
Last Sale feed for a lower cost. Alternatively, vendors and subscribers
can choose to pay for the MEMOIR Depth feed in order to receive data in
a single feed with depth-of-book information if such information is
valuable to such vendors or subscribers. The Exchange notes that
vendors or subscribers can also choose to subscribe to a combination of
data feeds for redundancy purposes or to use different feeds for
different purposes. In sum, each vendor or subscriber has the ability
to choose the best business solution for itself. The Exchange does not
believe it is unfairly discriminatory to base pricing upon the amount
of information contained in each data feed and the value of that
information to market participants. As described above, the MEMOIR Top
and Last Sale data feeds, can be utilized to trade on the Exchange but
contain less information than that is available on the MEMOIR Depth
feed (i.e., even for a subscriber who takes both feeds, such feeds do
not contain depth-of-book information). Thus, the Exchange believes it
is not unfairly discriminatory for the products to be priced as
proposed, with MEMOIR Last Sale having the lowest price, MEMOIR Top the
next lowest price, and MEMOIR Depth the highest price (and more than
MEMOIR Last Sale and MEMOIR Top combined).
    Internal Distribution Fees. The Exchange believes the proposed
monthly fees for Internal Distribution of the Exchange Data Feeds are
not unfairly discriminatory because they would be charged on an equal
basis to all data recipients that receive the same Exchange Data
Feed(s) for internal distribution, regardless of what type of business
they operate.
    External Distribution Fees. The Exchange believes the proposed
monthly fees for redistributing the Exchange Data Feeds are not
unfairly discriminatory because they would be charged on an equal basis
to all data recipients that receive the same Exchange Data Feed(s) that
choose to redistribute the feed(s) externally. The Exchange also
believes that having higher monthly fees for External Distribution than
Internal Distribution is not unfairly discriminatory because data
recipients that are externally distributing Exchange Data Feeds are
able to monetize such distribution and spread such costs amongst
multiple third party data recipients, whereas the Internal Distribution
fee is applicable to use by a single data recipient (and its
affiliates).
    User Fees. The Exchange believes that the fee structure
differentiating Professional User fees from Non-Professional User fees
for display use of the MEMOIR Depth feed is not unfairly
discriminatory. This structure has long been used by other exchanges
and the SIPs to reduce the price of data to Non-Professional Users and
make it more broadly available.\81\ Offering the Exchange Data Feeds to
Non-Professional Users with the same data as is available to
Professional Users results in greater equity among data recipients.
These User fees would be charged uniformly to all individuals that have
access to the Exchange Data Feeds based on the category of User. The
Exchange

also believes the proposed User fees for MEMOIR Top and MEMOIR Last
Sale are not unfairly discriminatory because the Exchange has proposed
to charge Professional Users and Non-Professional Users the same low
rate of $0.01 per month.
---------------------------------------------------------------------------

    \81\ See supra note 79.
---------------------------------------------------------------------------

    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Usage fees for the MEMOIR Depth feed are not unfairly
discriminatory because they would require subscribers for non-display
use to pay fees depending on their use of the data, either for
operation of a Trading Platform or not, but would not impose multiple
fees to the extent a Firm operates multiple Trading Platforms or has
multiple different types of non-display use. As noted above, non-
display data can be used by data recipients for a wide variety of
profit-generating purposes as well as purposes that do not directly
generate revenues but nonetheless substantially reduce the recipient's
costs by automating certain functions. This segmented fee structure is
not unfairly discriminatory because no subscriber of non-display data
would be charged a fee for a category of use in which it did not
actually engage.
    The Exchange also believes that, regarding non-display use for
operation of a Trading Platform, it is not unreasonably discriminatory
to charge a higher fee for each Firm operating a Trading Platform (as
compared to other Non-Display Usage not by Trading Platforms) because
such use of the data is directly in competition with the Exchange and
the Exchange should be permitted to recoup some of its lost trading
revenue by charging for the data that makes such competition possible.
The Exchange believes that it is not unreasonably discriminatory to
charge a single fee for an operator of Trading Platforms that operates
more than one Trading Platform because operators of Trading Platforms
are many times viewed as a single competing venue or group, even if
there a multiple liquidity pools operated by the same competitor. The
Exchange again notes that certain competitors to the Exchange charge
for non-display usage per Trading Platform,\82\ in contrast to the
Exchange's proposal. In turn, to the extent they subscribe to Exchange
Data Feeds, these same competitors will benefit from the Exchange's
pricing model to the extent they operate multiple Trading Platforms (as
most do) by paying a single fee rather than paying for each Trading
Platform that they operate that consumes Exchange Data Feeds.
---------------------------------------------------------------------------

    \82\ See supra notes 26-27.
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    For all of the foregoing reasons, the Exchange believes that the
proposed fees for the Exchange Data Feeds are not unfairly
discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\83\ 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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    \83\ 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