[Federal Register Volume 86, Number 190 (Tuesday, October 5, 2021)]
[Notices]
[Pages 55052-55061]
[FR Doc No: 2021-21619]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93188; File No. SR-EMERALD-2021-31]

Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule To Adopt a Tiered-Pricing Structure for Additional
Limited Service MIAX Emerald Express Interface Ports

September 29, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 28, 2021, MIAX Emerald, LLC (``MIAX Emerald'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'') a 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 a proposal to amend the Exchange's Fee
Schedule (the ``Fee Schedule'') to amend certain port fees.
    The text of the proposed rule change is available on the Exchange's
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX's
principal office, and at the Commission's Public Reference Room.

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
    The Exchange proposes to amend the Fee Schedule to adopt a tiered-
pricing structure for additional Limited Service MIAX Emerald Express
Interface (``MEI'') Ports \3\ available to Market Makers.\4\ The
Exchange believes a tiered-pricing structure will encourage Market
Makers to be more efficient and economical when determining how to
connect to the Exchange. This should also enable the Exchange to better
monitor and provide access to the Exchange's network to ensure
sufficient capacity and headroom in the System.\5\
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    \3\ The MIAX Emerald Express Interface (``MEI'') is a connection
to the MIAX Emerald System that enables Market Makers to submit
simple and complex electronic quotes to MIAX Emerald. See the
Definitions Section of the Fee Schedule.
    \4\ The term ``Market Makers'' refers to Lead Market Makers
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered
Market Makers (``RMMs'') collectively. See the Definitions Section
of the Fee Schedule and Exchange Rule 100.
    \5\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See the Definitions
Section of the Fee Schedule and Exchange Rule 100.
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    The Exchange initially filed the proposed fee changes on August 2,
2021, with the changes being immediately effective.\6\ The First
Proposed Rule Change was published for comment in the Federal Register
on August 19, 2021.\7\ The Commission received one comment letter on
the First Proposed Rule Change.\8\ The Exchange withdrew the First
Proposed Rule Change on September 27, 2021 and resubmitted its
proposal.\9\ The Exchange withdrew the Second Proposed Rule Change and
now submits this proposal, which is immediately effective.
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    \6\ See Securities Exchange Act Release No. 92662 (August 13,
2021), 86 FR 46726 (August 19, 2021) (SR-EMERALD-2021-25) (the
``First Proposed Rule Change'').
    \7\ Id.
    \8\ See Letter from Richard J. McDonald, Susquehanna
International Group, LLC (``SIG''), to Vanessa Countryman,
Secretary, Commission, dated September 7, 2021 (``SIG Comment
Letter'').
    \9\ See SR-EMERALD-2021-30 (the ``Second Proposed Rule
Change'').
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Additional Limited Service MEI Port Tiered-Pricing Structure
    The Exchange proposes to amend the fees for additional Limited
Service MEI Ports. Currently, the Exchange allocates two (2) Full
Service MEI Ports \10\ and two (2) Limited Service MEI Ports \11\ per
matching engine \12\ to which each Market Maker connects. Market Makers
may also request additional Limited Service MEI Ports for each matching
engine to which they connect. The Full Service MEI Ports, Limited
Service MEI Ports and the additional Limited Service MEI Ports all
include access to the Exchange's primary and secondary data centers and
its disaster recovery center. Market Makers may request additional
Limited Service MEI Ports for which they are assessed a $100 monthly
fee for each additional Limited Service MEI Port for each matching
engine.
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    \10\ ``Full Service MEI Ports'' means a port which provides
Market Makers with the ability to send Market Maker simple and
complex quotes, eQuotes, and quote purge messages to the MIAX
Emerald System. Full Service MEI Ports are also capable of receiving
administrative information. Market Makers are limited to two Full
Service MEI Ports per Matching Engine. See the Definitions Section
of the Fee Schedule.
    \11\ ``Limited Service MEI Ports'' means a port which provides
Market Makers with the ability to send simple and complex eQuotes
and quote purge messages only, but not Market Maker Quotes, to the
MIAX Emerald System. Limited Service MEI Ports are also capable of
receiving administrative information. Market Makers initially
receive two Limited Service MEI Ports per Matching Engine. See the
Definitions Section of the Fee Schedule.
    \12\ ``Matching Engine'' means a part of the MIAX Emerald
electronic system that processes options orders and trades on a
symbol-by-symbol basis. Some Matching Engines will process option
classes with multiple root symbols, and other Matching Engines may
be dedicated to one single option root symbol (for example, options
on SPY may be processed by one single Matching Engine that is
dedicated only to SPY). A particular root symbol may only be
assigned to a single designated Matching Engine. A particular root
symbol may not be assigned to multiple Matching Engines. See the
Definitions Section of the Fee Schedule.
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    The Exchange now proposes to move from a flat monthly fee per
additional Limited Service MEI Port for each matching engine to a
tiered-pricing structure for additional Limited Service MEI Ports for
each matching engine under which the monthly fee would vary depending
on the number of additional Limited Service MEI Ports the Market Maker
elects to purchase. Specifically, the Exchange will continue to provide
the first and second additional Limited Service MEI Ports for each
matching engine free of charge, as described above, per the initial
allocation of Limited Service MEI Ports that Market Makers receive. The
Exchange now proposes the following tiered-pricing structure: (i) The
third and fourth additional Limited Service MEI Ports for each matching
engine will increase from the current flat monthly fee of $100 to $200
per port; (ii) the fifth and sixth additional Limited Service MEI Ports
for each matching engine will increase from the current flat monthly
fee of $100 to $300 per port; and (iii) the seventh to the twelfth
additional Limited Service MEI Ports will increase from the current
monthly flat fee of $100 to $400 per port (collectively, the ``Proposed
Access Fees'').
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \13\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \14\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Exchange Members and
issuers and other persons using any facility or system which the
Exchange operates or controls. The Exchange also believes the proposal
furthers the objectives of Section 6(b)(5) of the Act \15\ in that it
is designed to promote just and equitable principles of trade, remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general protect investors and the
public interest and is not designed to permit unfair discrimination
between customers, issuers, brokers and dealers.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its fees for services
and products, in addition to order flow, to remain competitive with
other exchanges. The Exchange believes that the proposed changes
reflect this competitive environment.
    The Exchange believes the proposal to move from a flat fee per
month to a tiered-pricing structure is reasonable, equitably allocated
and not unfairly discriminatory because the Exchange believes the
proposed structure would encourage firms to be more economical and
efficient in the number of additional Limited Service MEI Ports

they purchase. The Exchange believes this will enable the Exchange to
better monitor and provide access to the Exchange's network to ensure
sufficient capacity and headroom in the System.
    The Exchange notes that firms that are primarily order routers
seeking best-execution do not utilize Limited Service MEI Ports on MIAX
Emerald. Therefore, the fees described in the proposed tiered-pricing
structure will only be allocated to market making firms that engage in
advanced trading strategies and typically request multiple Limited
Service MEI Ports, beyond the two per matching engine that are free.
Accordingly, the firms engaged in market making business generate
higher costs by utilizing more of the Exchange's resources. The market
making firms that purchase higher amounts of Limited Service MEI Ports
tend to have specific business oriented market making and trading
strategies, as opposed to firms engaging solely in order routing as
part of their best-execution obligations. The use of such additional
Limited Service MEI Ports is a voluntary business decision of each
market maker.
    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 requirements of the Act that fees be
reasonable, equitably allocated, not unfairly discriminatory, and not
create an undue burden on competition among market participants. The
Exchange believes this high standard is especially important when an
exchange imposes various access fees for market participants to access
an exchange's marketplace. The Exchange deems port fees to be access
fees. It records these fees as part of its ``Access Fees'' revenue in
its financial statements. The Exchange believes that it is important to
demonstrate that these fees are based on its costs and reasonable
business needs. The Exchange believes the Proposed Access Fees will
allow the Exchange to offset expense the Exchange has and will incur,
and that the Exchange is providing sufficient transparency (as
described below) into how the Exchange determined to charge such fees.
Accordingly, the Exchange is providing an analysis of its revenues,
costs, and profitability associated with the Proposed Access Fees. This
analysis includes information regarding its methodology for determining
the costs and revenues associated with the Proposed Access Fees.
    In order to determine the Exchange's costs to provide the access
services associated with the Proposed Access Fees, the Exchange
conducted an extensive cost review in which the Exchange analyzed
nearly every expense item in the Exchange's general expense ledger to
determine whether each such expense relates to the Proposed Access
Fees, and, if such expense did so relate, what portion (or percentage)
of such expense actually supports the access services. The sum of all
such portions of expenses represents the total cost to the Exchange to
provide the access services associated with the Proposed Access Fees.
For the avoidance of doubt, no expense amount was allocated twice. The
Exchange is also providing detailed information regarding the
Exchange's cost allocation methodology--namely, information that
explains the Exchange's rationale for determining that it was
reasonable to allocate certain expenses described in this filing
towards the cost to the Exchange to provide the access services
associated with the Proposed Access Fees.
    In order to determine the Exchange's projected revenues associated
with the Proposed Access Fees, the Exchange analyzed the number of
Market Makers currently utilizing Limited Service MEI Ports, and,
utilizing a recent monthly billing cycle representative of 2021 monthly
revenue, extrapolated annualized revenue on a going-forward basis. The
Exchange does not believe it is appropriate to factor into its analysis
future revenue growth or decline into its projections for purposes of
these calculations, given the uncertainty of such projections due to
the continually changing access needs of market participants, discounts
that can be achieved due to lower trading volume and vice versa, market
participant consolidation, etc. Additionally, the Exchange similarly
does not factor into its analysis future cost growth or decline. The
Exchange is presenting its revenue and expense associated with the
Proposed Access Fees in this filing in a manner that is consistent with
how the Exchange presents its revenue and expense in its Audited
Unconsolidated Financial Statements. The Exchange's most recent Audited
Unconsolidated Financial Statement is for 2020. However, since the
revenue and expense associated with the Proposed Access Fees were not
in place in 2020 or for the first seven months of 2021, the Exchange
believes its 2020 Audited Unconsolidated Financial Statement is not
representative of its current total annualized revenue and costs
associated with the Proposed Access Fees. Accordingly, the Exchange
believes it is more appropriate to analyze the Proposed Access Fees
utilizing its 2021 revenue and costs, as described herein, which
utilize the same presentation methodology as set forth in the
Exchange's previously-issued Audited Unconsolidated Financial
Statements. Based on this analysis, the Exchange believes that the
Proposed Access Fees are fair and reasonable because they will not
result in excessive pricing or supra-competitive profit when comparing
the Exchange's total annual expense associated with providing the
services associated with the Proposed Access Fees versus the total
projected annual revenue the Exchange will collect for providing those
services.
* * * * *
    On March 29, 2019, the Commission issued its Order Disapproving
Proposed Rule Changes to Amend the Fee Schedule on the BOX Market LLC
Options Facility to Establish BOX Connectivity Fees for Participants
and Non-Participants Who Connect to the BOX Network (the ``BOX
Order'').\16\ On May 21, 2019, the Commission issued the Staff Guidance
on SRO Rule Filings Relating to Fees.\17\ Accordingly, the Exchange
believes that the Proposed Access Fees are consistent with the Act
because they (i) are reasonable, equitably allocated, not unfairly
discriminatory, and not an undue burden on competition; (ii) comply
with the BOX Order and the Guidance; (iii) are supported by evidence
(including comprehensive revenue and cost data and analysis) that they
are fair and reasonable because they will not result in excessive
pricing or supra-competitive profit; and (iv) utilize a cost-based
justification framework that is substantially similar to a framework
previously used by the Exchange, and its affiliates MIAX PEARL, LLC
(``MIAX Pearl'') and Miami International Securities Exchange, LLC
(``MIAX''), to establish or increase other non-transaction fees.\18\
Accordingly, the Exchange believes that the Commission should find that
the Proposed Access Fees are consistent with the Act.
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    \16\ See Securities Exchange Act Release No. 85459 (March 29,
2019), 84 FR 13363 (April 4, 2019) (SR-BOX-2018-24, SR-BOX-2018-37,
and SR-BOX-2019-04).
    \17\ See Staff Guidance on SRO Rule Filings Relating to Fees
(May 21, 2019), at https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees (the ``Guidance'').
    \18\ See Securities Exchange Act Release Nos. 90981 (January 25,
2021), 86 FR 7582 (January 29, 2021) (SR-PEARL-2021-01) (proposal to
increase connectivity fees); 90980 (January 25, 2021), 86 FR 7602
(January 29, 2021) (SR-MIAX-2021-02) (proposal to increase
connectivity fees).
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* * * * *
    As of September 27, 2021, the Exchange had a market share of only

4.99% of the U.S. equity options industry for the month of September
2021.\19\ The Exchange is not aware of any evidence that a market share
of approximately 4-5% provides the Exchange with anti-competitive
pricing power. If the Exchange were to attempt to establish
unreasonable pricing, then no market participant would join or access
the Exchange, and existing market participants would discontinue all or
some of their access services. If the Exchange were to attempt to
establish unreasonable pricing for any of its means provided to access
the Exchange, market participants may look to access the Exchange via
other means such as through a third party service provider, or look to
connect to the Exchange via a competing exchange with cheaper access
alternatives that also provides routing services to the Exchange. In
addition, existing market participants that are connected to the
Exchange may choose to disconnect from the Exchange or reduce their
number of connections to the Exchange as a means to reduce their
overall costs.
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    \19\ See ``The market at a glance,'' available at https://www.miaxoptions.com/ (last visited September 27, 2021).
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    The proposed tiered-pricing structure and proposed fees for
additional Limited Service MEI Ports are less than or similar to fees
charged by competing options exchanges for similar access on those
exchanges. The Exchange believes that it provides a better value
through its enhanced network monitoring, customer reporting, and
superior network infrastructure than markets with higher market shares
and more expensive access alternatives. For example, NYSE American, LLC
(``Amex'') (equity options market share of 7.86% as of September 23,
2021 for the month of September) \20\ and NYSE Arca, Inc. (``Arca'')
(equity options market share of 12.58% as of September 23, 2021 for the
month of September) \21\ both charge $450 per port for order/quote
entry ports 1-40 and $150 per port for ports 41 and greater,\22\ all on
a per matching engine basis, with Amex and Arca having 17 match engines
and 19 match engines, respectively.\23\ Similarly, The Nasdaq Stock
Market LLC (``NASDAQ'') (equity options market share of 7.81% as of
September 23, 2021 for the month of September) \24\ charges $1,500 per
port for SQF ports 1-5, $1,000 per SQF port for ports 6-20, and $500
per SQF port for ports 21 and greater,\25\ all on a per matching engine
basis, with NASDAQ having multiple matching engines.\26\ The NASDAQ SQF
Interface Specification provides that PHLX/NOM/BX Options trading
infrastructures may consist of multiple matching engines with each
matching engine trading only a range of option underlyings. Further,
the SQF infrastructure is such that the firms connect to one or more
servers residing directly on the matching engine infrastructure. Since
there may be multiple matching engines, firms will need to connect to
each engine's infrastructure in order to establish the ability to quote
the symbols handled by that engine.\27\
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    \20\ See ``The market at a glance,'' available at https://www.miaxoptions.com/ (last visited September 23, 2021).
    \21\ See id.
    \22\ See NYSE American Options Fee Schedule, Section V.A., Port
Fees; NYSE Arca Options Fee Schedule, Port Fees.
    \23\ See NYSE Technology FAQ and Best Practices: Options,
Section 5.1 (How many matching engines are used by each exchange?)
(September 2020) (providing a link to an Excel file detailing the
number of matching engines per options exchange).
    \24\ See supra note 20.
    \25\ See Nasdaq Stock Market, Nasdaq Options 7 Pricing Schedule,
Section 3, Nasdaq Options Market--Ports and Other Services.
    \26\ See Nasdaq Specialized Quote Interface (SQF) Specification,
Version 6.4 (October 2017), Section 2, Architecture (the ``NASDAQ
SQF Interface Specification'').
    \27\ See id.
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    In the each of the above cases, the Exchange's highest tier in the
proposed tiered-pricing structure is lower than that of competing
options exchanges. Further, as described in more detail below, those
exchanges generate higher operating profit margins and higher ``access
fees'' than the Exchange, even with the proposed fee change. Despite
proposing lower or similar fees to that of competing options exchanges
with similar market share, the Exchange believes that it provides a
better overall value to its Members and non-Members via a highly
deterministic System, enhanced network monitoring and customer
reporting, and a superior network infrastructure than markets with
higher market shares and more expensive access alternatives. Each of
the port rates in place at competing options exchanges were filed with
the Commission for immediate effectiveness and remain in place today.
    Separately, the Exchange is not aware of any reason why market
participants could not simply drop their access (or not initially
access an exchange) if an exchange were to establish prices for its
non-transaction fees that, in the determination of such market
participant, did not make business or economic sense for such market
participant to access such exchange. No options market participant is
required by rule, regulation, or competitive forces to be a Member of
the Exchange. As evidence of the fact that market participants can and
do drop their access to exchanges based on non-transaction fee pricing,
R2G Services LLC (``R2G'') filed a comment letter after BOX's proposed
rule changes to increase its connectivity fees (SR-BOX-2018-24, SR-BOX-
2018-37, and SR-BOX-2019-04). The R2G Letter stated, ``[w]hen BOX
instituted a $10,000/month price increase for connectivity; we had no
choice but to terminate connectivity into them as well as terminate our
market data relationship. The cost benefit analysis just didn't make
any sense for us at those new levels.'' Similarly, the Exchange noted
in a recent filing that once MIAX Emerald issued a notice that it was
instituting MEI Port fees, among other non-transaction fees, one MIAX
Emerald Member dropped its access to MIAX Emerald as a result of those
fees.\28\ Accordingly, these examples show that if a market participant
believes, based on its business model, that an exchange charges too
high of a fee for ports and/or other non-transaction fees, including
other access fees for its relevant marketplace, market participants can
choose to drop their access to such exchange.
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    \28\ See Securities Exchange Act Release No. 91460 (April 2,
2021), 86 FR 18349 (April 8, 2021) (SR-EMERALD-2021-11) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule To Adopt Port Fees, Increase Certain Network
Connectivity Fees, and Increase the Number of Additional Limited
Service MIAX Emerald Express Interface Ports Available to Market
Makers) (adopting tiered MEI Port fee structure ranging from $5,000
to $20,500 per month).
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    In order to provide more detail and to quantify the Exchange's
costs associated with providing access to the Exchange in general, the
Exchange notes that there are material costs associated with providing
the infrastructure and headcount to fully-support access to the
Exchange. The Exchange incurs technology expense related to
establishing and maintaining Information Security services, enhanced
network monitoring and customer reporting, as well as Regulation SCI
mandated processes, associated with its network technology. While some
of the expense is fixed, much of the expense is not fixed, and thus
increases as the services associated with the Proposed Access Fees
increase. For example, new Members to the Exchange may require the
purchase of additional hardware to support those Members as well as
enhanced monitoring and reporting of customer performance that the
Exchange and its affiliates provide. Further, as the total number
Members increases, the Exchange and its affiliates

may need to increase their data center footprint and consume more
power, resulting in increased costs charged by their third-party data
center provider. Accordingly, the cost to the Exchange and its
affiliates to provide access to its System for market participants is
not fixed. The Exchange believes the Proposed Access Fees are a
reasonable attempt to offset a portion of the costs to the Exchange
associated with providing access to its network infrastructure.
    The Exchange only has four primary sources of revenue: Transaction
fees, access fees (which includes the Proposed Access Fees), regulatory
fees, and market data fees. Accordingly, the Exchange must cover all of
its expenses from these four primary sources of revenue.
    The Exchange believes that the Proposed Access Fees are fair and
reasonable because they will not result in excessive pricing or supra-
competitive profit, when comparing the total annual expense that the
Exchange projects to incur in connection with providing these access
services versus the total annual revenue that the Exchange projects to
collect in connection with services associated with the Proposed Access
Fees. For 2021, \29\ the total annual expense for providing the access
services associated with the Proposed Access Fees is projected to be
approximately $0.88 million. The approximately $0.88 million in
projected total annual expense is comprised of the following, all of
which are directly related to the access services associated with the
Proposed Access Fees: (1) Third-party expense, relating to fees paid by
the Exchange to third-parties for certain products and services; and
(2) internal expense, relating to the internal costs of the Exchange to
provide the services associated with the Proposed Access Fees.\30\ As
noted above, the Exchange believes it is more appropriate to analyze
the Proposed Access Fees utilizing its 2021 revenue and costs, which
utilize the same presentation methodology as set forth in the
Exchange's previously-issued Audited Unconsolidated Financial
Statements.\31\ The $0.88 million in projected total annual expense is
directly related to the access services associated with the Proposed
Access Fees, and not any other product or service offered by the
Exchange. It does not include general costs of operating matching
systems and other trading technology, and no expense amount was
allocated twice.
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    \29\ The Exchange has not yet finalized its 2021 year end
results.
    \30\ The percentage allocations used in this proposed rule
change may differ from past filings from the Exchange or its
affiliates due to, among other things, changes in expenses charged
by third-parties, adjustments to internal resource allocations, and
different system architecture of the Exchange as compared to its
affiliates.
    \31\ For example, the Exchange previously noted that all third-
party expense described in its prior fee filing was contained in the
information technology and communication costs line item under the
section titled ``Operating Expenses Incurred Directly or Allocated
From Parent,'' in the Exchange's 2019 Form 1 Amendment containing
its financial statements for 2018. See Securities Exchange Act
Release No. 87877 (December 31, 2019), 85 FR 738 (January 7, 2020)
(SR-EMERALD-2019-39). Accordingly, the third-party expense described
in this filing is attributed to the same line item for the
Exchange's 2021 Form 1 Amendment, which will be filed in 2022.
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    As discussed, the Exchange conducted an extensive cost review in
which the Exchange analyzed nearly every expense item in the Exchange's
general expense ledger (this includes over 150 separate and distinct
expense items) to determine whether each such expense relates to the
access services associated with the Proposed Access Fees, and, if such
expense did so relate, what portion (or percentage) of such expense
actually supports those services, and thus bears a relationship that
is, ``in nature and closeness,'' directly related to those services.
The sum of all such portions of expenses represents the total cost of
the Exchange to provide access services associated with the Proposed
Access Fees.
    For 2021, total third-party expense, relating to fees paid by the
Exchange to third-parties for certain products and services for the
Exchange to be able to provide the access services associated with the
Proposed Access Fees, is projected to be $0.05 million. This includes,
but is not limited to, a portion of the fees paid to: (1) Equinix, for
data center services, for the primary, secondary, and disaster recovery
locations of the Exchange's trading system infrastructure; (2) Zayo
Group Holdings, Inc. (``Zayo'') for network services (fiber and
bandwidth products and services) linking the Exchange's office
locations in Princeton, New Jersey and Miami, Florida, to all data
center locations; (3) Secure Financial Transaction Infrastructure
(``SFTI''),\32\ which supports connectivity and feeds for the entire
U.S. options industry; (4) various other services providers (including
Thompson Reuters, NYSE, Nasdaq, and Internap), which provide content,
connectivity services, and infrastructure services for critical
components of options connectivity and network services; and (5)
various other hardware and software providers (including Dell and
Cisco, which support the production environment in which Members
connect to the network to trade, receive market data, etc.). For
clarity, only a portion of all fees paid to such third-parties is
included in the third-party expense herein, and no expense amount is
allocated twice. Accordingly, the Exchange does not allocate its entire
information technology and communication costs to the access services
associated with the Proposed Access Fees.
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    \32\ In fact, on October 22, 2019, the Exchange was notified by
SFTI that it is again raising its fees charged to the Exchange by
approximately 11%, without having to show that such fee change
complies with the Act by being reasonable, equitably allocated, and
not unfairly discriminatory. It is unfathomable to the Exchange
that, given the critical nature of the infrastructure services
provided by SFTI, that its fees are not required to be rule-filed
with the Commission pursuant to Section 19(b)(1) of the Act and Rule
19b-4 thereunder. See 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b-4,
respectively.
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    For clarity, only a portion of all fees paid to such third-parties
is included in the third-party expense herein, and no expense amount is
allocated twice. Accordingly, the Exchange does not allocate its entire
information technology and communication costs to the access services
associated with the Proposed Access Fees. Further, the Exchange notes
that, with respect to the expenses included herein, those expenses only
cover the MIAX Emerald market; expenses associated with MIAX Pearl for
its options and equities markets and MIAX, are accounted for separately
and are not included within the scope of this filing. As noted above,
the percentage allocations used in this proposed rule change may differ
from past filings from the Exchange or its affiliates due to, among
other things, changes in expenses charged by third-parties, adjustments
to internal resource allocations, and different system architecture of
the Exchange as compared to its affiliates. Further, as part its
ongoing assessment of costs and expenses, the Exchange recently
conducted a periodic thorough review of its expenses and resource
allocations which, in turn, resulted in a revised percentage
allocations in this filing.
    The Exchange believes it is reasonable to allocate such third-party
expense described above towards the total cost to the Exchange to
provide the access services associated with the Proposed Access Fees.
In particular, the Exchange believes it is reasonable to allocate the
identified portion of the Equinix expense because Equinix operates the
data centers (primary, secondary, and disaster recovery) that host the
Exchange's network infrastructure. This includes, among other things,
the necessary storage space, which continues to expand and increase in

cost, power to operate the network infrastructure, and cooling
apparatuses to ensure the Exchange's network infrastructure maintains
stability. Without these services from Equinix, the Exchange would not
be able to operate and support the network and provide the access
services associated with the Proposed Access Fees to its Members and
their customers. The Exchange did not allocate all of the Equinix
expense toward the cost of providing the access services associated
with the Proposed Access Fees, only that portion which the Exchange
identified as being specifically mapped to providing the access
services associated with the Proposed Access Fees, approximately 2.05%
of the total applicable Equinix expense. The Exchange believes this
allocation is reasonable because it represents the Exchange's actual
cost to provide the access services associated with the Proposed Access
Fees, and not any other service, as supported by its cost review.\33\
---------------------------------------------------------------------------

    \33\ As noted above, the percentage allocations used in this
proposed rule change may differ from past filings from the Exchange
or its affiliates due to, among other things, changes in expenses
charged by third-parties, adjustments to internal resource
allocations, and different system architecture of the Exchange as
compared to its affiliates. Again, as part its ongoing assessment of
costs and expenses, the Exchange recently conducted a periodic
thorough review of its expenses and resource allocations which, in
turn, resulted in a revised percentage allocations in this filing.
---------------------------------------------------------------------------

    The Exchange believes it is reasonable to allocate the identified
portion of the Zayo expense because Zayo provides the internet, fiber
and bandwidth connections with respect to the network, linking the
Exchange with its affiliates, MIAX Pearl and MIAX, as well as the data
center and disaster recovery locations. As such, all of the trade data,
including the billions of messages each day per exchange, flow through
Zayo's infrastructure over the Exchange's network. Without these
services from Zayo, the Exchange would not be able to operate and
support the network and provide the access services associated with the
Proposed Access Fees. The Exchange did not allocate all of the Zayo
expense toward the cost of providing the access services associated
with the Proposed Access Fees, only the portion which the Exchange
identified as being specifically mapped to providing the Proposed
Access Fees, approximately 1.64% of the total applicable Zayo expense.
The Exchange believes this allocation is reasonable because it
represents the Exchange's actual cost to provide the access services
associated with the Proposed Access Fees, and not any other service, as
supported by its cost review.\34\
---------------------------------------------------------------------------

    \34\ Id.
---------------------------------------------------------------------------

    The Exchange believes it is reasonable to allocate the identified
portions of the SFTI expense and various other service providers'
(including Thompson Reuters, NYSE, Nasdaq, and Internap) expense
because those entities provide connectivity and feeds for the entire
U.S. options industry, as well as the content, connectivity services,
and infrastructure services for critical components of the network.
Without these services from SFTI and various other service providers,
the Exchange would not be able to operate and support the network and
provide access to its Members and their customers. The Exchange did not
allocate all of the SFTI and other service providers' expense toward
the cost of providing the access services associated with the Proposed
Access Fees, only the portions which the Exchange identified as being
specifically mapped to providing the access services associated with
the Proposed Access Fees, approximately 2.05% of the total applicable
SFTI and other service providers' expense. The Exchange believes this
allocation is reasonable because it represents the Exchange's actual
cost to provide the access services associated with the Proposed Access
Fees.\35\
---------------------------------------------------------------------------

    \35\ Id.
---------------------------------------------------------------------------

    The Exchange believes it is reasonable to allocate the identified
portion of the other hardware and software provider expense because
this includes costs for dedicated hardware licenses for switches and
servers, as well as dedicated software licenses for security monitoring
and reporting across the network. Without this hardware and software,
the Exchange would not be able to operate and support the network and
provide access to its Members and their customers. The Exchange did not
allocate all of the hardware and software provider expense toward the
cost of providing the access services associated with the Proposed
Access Fees, only the portions which the Exchange identified as being
specifically mapped to providing the access services associated with
the Proposed Access Fees, approximately 1.23% of the total applicable
hardware and software provider expense. The Exchange believes this
allocation is reasonable because it represents the Exchange's actual
cost to provide the access services associated with the Proposed Access
Fees.\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    For 2021, total projected internal expense, relating to the
internal costs of the Exchange to provide the access services
associated with the Proposed Access Fees, is projected to be $0.83
million. This includes, but is not limited to, costs associated with:
(1) Employee compensation and benefits for full-time employees that
support the access services associated with the Proposed Access Fees,
including staff in network operations, trading operations, development,
system operations, and business that support those employees and
functions (including an increase as a result of the higher determinism
project); (2) depreciation and amortization of hardware and software
used to provide the access services associated with the Proposed Access
Fees, including equipment, servers, cabling, purchased software and
internally developed software used in the production environment to
support the network for trading; and (3) occupancy costs for leased
office space for staff that provide the access services associated with
the Proposed Access Fees. The breakdown of these costs is more fully-
described below. For clarity, only a portion of all such internal
expenses are included in the internal expense herein, and no expense
amount is allocated twice. Accordingly, the Exchange does not allocate
its entire costs contained in those items to the access services
associated with the Proposed Access Fees.
    The Exchange believes it is reasonable to allocate such internal
expense described above towards the total cost to the Exchange to
provide the access services associated with the Proposed Access Fees.
In particular, the Exchange's employee compensation and benefits
expense relating to providing the access services associated with the
Proposed Access Fees is projected to be approximately $0.76 million,
which is only a portion of the $9.74 million total projected expense
for employee compensation and benefits. The Exchange believes it is
reasonable to allocate the identified portion of such expense because
this includes the time spent by employees of several departments,
including Technology, Back Office, Systems Operations, Networking,
Business Strategy Development (who create the business requirement
documents that the Technology staff use to develop network features and
enhancements), and Trade Operations. As part of the extensive cost
review conducted by the Exchange, the Exchange reviewed the amount of
time spent by each employee on matters relating to the provision of
access services associated with the Proposed Access Fees. Without these
employees,

the Exchange would not be able to provide the access services
associated with the Proposed Access Fees to its Members and their
customers. The Exchange did not allocate all of the employee
compensation and benefits expense toward the cost of the access
services associated with the Proposed Access Fees, only the portions
which the Exchange identified as being specifically mapped to providing
the access services associated with the Proposed Access Fees,
approximately 7.81% of the total applicable employee compensation and
benefits expense. The Exchange believes this allocation is reasonable
because it represents the Exchange's actual cost to provide the access
services associated with the Proposed Access Fees, and not any other
service, as supported by its cost review.\37\
---------------------------------------------------------------------------

    \37\ Id.
---------------------------------------------------------------------------

    The Exchange's depreciation and amortization expense relating to
providing the services associated with the Proposed Access Fees is
projected to be $0.06 million, which is only a portion of the $3.13
million total projected expense for depreciation and amortization. The
Exchange believes it is reasonable to allocate the identified portion
of such expense because such expense includes the actual cost of the
computer equipment, such as dedicated servers, computers, laptops,
monitors, information security appliances and storage, and network
switching infrastructure equipment, including switches and taps that
were purchased to operate and support the network and provide the
access services associated with the Proposed Access Fees. Without this
equipment, the Exchange would not be able to operate the network and
provide the access services associated with the Proposed Access Fees to
its Members and their customers. The Exchange did not allocate all of
the depreciation and amortization expense toward the cost of providing
the access services associated with the Proposed Access Fees, only the
portion which the Exchange identified as being specifically mapped to
providing the access services associated with the Proposed Access Fees,
approximately 1.92% of the total applicable depreciation and
amortization expense, as these access services would not be possible
without relying on such. The Exchange believes this allocation is
reasonable because it represents the Exchange's actual cost to provide
the access services associated with the Proposed Access Fees, and not
any other service, as supported by its cost review.\38\
---------------------------------------------------------------------------

    \38\ Id.
---------------------------------------------------------------------------

    The Exchange's occupancy expense relating to providing the services
associated with the Proposed Access Fees is projected to be $0.01
million, which is only a portion of the $0.52 million total projected
expense for occupancy. The Exchange believes it is reasonable to
allocate the identified portion of such expense because such expense
represents the portion of the Exchange's cost to rent and maintain a
physical location for the Exchange's staff who operate and support the
network, including providing the access services associated with the
Proposed Access Fees. This amount consists primarily of rent for the
Exchange's Princeton, NJ office, as well as various related costs, such
as physical security, property management fees, property taxes, and
utilities. The Exchange operates its Network Operations Center
(``NOC'') and Security Operations Center (``SOC'') from its Princeton,
New Jersey office location. A centralized office space is required to
house the staff that operates and supports the network. The Exchange
currently has approximately 150 employees. Approximately two-thirds of
the Exchange's staff are in the Technology department, and the majority
of those staff have some role in the operation and performance of the
access services associated with the Proposed Access Fees. Without this
office space, the Exchange would not be able to operate and support the
network and provide the access services associated with the Proposed
Access Fees to its Members and their customers. Accordingly, the
Exchange believes it is reasonable to allocate the identified portion
of its occupancy expense because such amount represents the Exchange's
actual cost to house the equipment and personnel who operate and
support the Exchange's network infrastructure and the access services
associated with the Proposed Access Fees. The Exchange did not allocate
all of the occupancy expense toward the cost of providing the access
services associated with the Proposed Access Fees, only the portion
which the Exchange identified as being specifically mapped to operating
and supporting the network, approximately 1.93% of the total applicable
occupancy expense. The Exchange believes this allocation is reasonable
because it represents the Exchange's cost to provide the access
services associated with the Proposed Access Fees, and not any other
service, as supported by its cost review.\39\
---------------------------------------------------------------------------

    \39\ Id.
---------------------------------------------------------------------------

    The Exchange notes that a material portion of its total overall
expense is allocated to the provision of access services (including
connectivity, ports, and trading permits). The Exchange believes this
is reasonable and in line, as the Exchange operates a technology-based
business that differentiates itself from its competitors based on its
trading systems that rely on access to a high performance network,
resulting in significant technology expense. Over two-thirds of
Exchange staff are technology-related employees. The majority of the
Exchange's expense is technology-based. As described above, the
Exchange has only four primary sources of fees to recover their costs;
thus, the Exchange believes it is reasonable to allocate a material
portion of their total overall expense towards access fees.
    Accordingly, based on the facts and circumstances presented, the
Exchange believes that its provision of the access services associated
with the Proposed Access Fees will not result in excessive pricing or
supra-competitive profit. To illustrate, on a going-forward, fully-
annualized basis, the Exchange projects that annualized revenue for
providing the access services associated with the Proposed Access Fees
would be approximately $2.07 million per annum, based on a recent
billing cycle. This revenue number includes the revenue the Exchange
projects to collect only from the fees the Exchange will charge for
additional Limited Service MEI Ports after the first two Limited
Service MEI Ports that Market Makers receive for free. The Exchange
projects that its annualized expense for providing the services
associated with the Proposed Access Fees will be approximately $0.88
million per annum. This expense includes the costs related to all
Limited Service MEI Ports, including the two Limited Service MEI Ports
that Market Makers receive for free. Accordingly, on a fully-annualized
basis, the Exchange believes its total projected revenue for providing
the access services associated with the Proposed Access Fees will not
result in excessive pricing or supra-competitive profit, as the
Exchange will make a profit margin of approximately 58% ($2.07 million
in total revenue minus $.088 [sic] million in expense = $1.19 million
in profit per annum). Additionally, this profit margin does not take
into account the cost of capital expenditures (``CapEx'') the Exchange
projects to spend each year on CapEx going forward.

    For the avoidance of doubt, none of the expenses included herein
relating to the access services associated with the Proposed Access
Fees relate to the provision of any other services offered by the
Exchange or its affiliates. Stated differently, no expense amount of
the Exchange is allocated twice. The Exchange notes that, with respect
to expenses associated with the Exchange's affiliates, MIAX Pearl and
MIAX, those expenses are accounted for separately and are not included
within the scope of this filing. Stated differently, no expense amount
of the Exchange is also allocated to MIAX Pearl or MIAX.
    The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to allocate the respective percentages of each expense
category described above towards the total cost to the Exchange of
operating and supporting the network, including providing the access
services associated with the Proposed Access Fees because the Exchange
performed a line-by-line item analysis of nearly every expense of the
Exchange, and has determined the expenses that directly relate to
providing access to the Exchange. Further, the Exchange notes that,
without the specific third-party and internal items listed above, the
Exchange would not be able to provide the access services associated
with the Proposed Access Fees to its Members and their customers. Each
of these expense items, including physical hardware, software, employee
compensation and benefits, occupancy costs, and the depreciation and
amortization of equipment, have been identified through a line-by-line
item analysis to be integral to providing access services. The Proposed
Access Fees are intended to recover the Exchange's costs of providing
access to its System. Accordingly, the Exchange believes that the
Proposed Access Fees are fair and reasonable because they do not result
in excessive pricing or supra-competitive profit, when comparing the
actual costs to the Exchange versus the projected annual revenue from
the Proposed Access Fees.
    The Exchange believes the proposed changes are reasonable,
equitably allocated and not unfairly discriminatory, and do not result
in a ``supra-competitive'' \40\ profit. Of note, the Guidance defines
``supra-competitive profit'' as profits that exceed the profits that
can be obtained in a competitive market.\41\ With the proposed changes,
the Exchange anticipates that its profit margin will be approximately
58%, inclusive of the Proposed Access Fees. In order to achieve a
consistent, premium network performance, the Exchange must build out
and continue to maintain a network that has the capacity to handle the
message rate requirements of not only firms that consume minimal ports
resources of the Exchange, but also those firms that most heavily
consume port resources of the Exchange, network consumers, and
purchasers of numerous Limited Service MEI Ports, which handle billions
of messages per day across the Exchange's network. These billions of
messages per day consume the Exchange's resources and significantly
contribute to the overall network port expense for storage and network
transport capabilities. Given that purchasers of the greatest amount of
Limited Service MEI Ports utilize the most resources across the
network, the Exchange believes that it is reasonable to operate at a
profit margin of approximately 58% for these ports, inclusive of the
Proposed Access Fees. Such profit margin should enable the Exchange to
continue to invest in its network and systems, maintain its current
infrastructure, support future enhancements to ports and network
connectivity, and continue to offer enhanced customer reporting and
monitoring services.
---------------------------------------------------------------------------

    \40\ See supra note 17.
    \41\ See id.
---------------------------------------------------------------------------

    While the proposed fees are similar or less than that of other
options exchanges,\42\ as discussed above, the incremental increase in
revenue generated from the 58% profit margin for Limited Service MEI
Ports will allow the Exchange to further invest in its System
architecture and matching engine functionality to the benefit of all
market participants. The ability to continue to invest in technology
and systems will also enable the Exchange to improve the determinism
and overall performance of not only its logical ports, but overall
performance including the resiliency and efficiency of its matching
engines. The revenue generated under the proposed rule change would
also provide the Exchange with the resources necessary to further
innovate and enhance its systems and seek additional improvements or
functionality to offer market participants generally. The Exchange
believes that these investments, in turn, will benefit all investors by
encouraging other exchanges to further invest, innovate, and improve
their own systems in response.
---------------------------------------------------------------------------

    \42\ See supra notes 22 and 25.
---------------------------------------------------------------------------

    Based on the 2020 Audited Financial Statements of competing options
exchanges (since the 2021 Audited Financial Statements will likely not
become publicly available until early July 2022, after the Exchange has
submitted this filing), the Exchange's revenue that is derived from its
access fees is in line with the revenue that is derived from access
fees of competing exchanges. For example, the total revenue from
``access fees'' \43\ for 2020 for MIAX Emerald was $7,244,000. MIAX
Emerald projects that the total revenue from ``access fees'' for 2021
for MIAX Emerald will be $20,910,179, inclusive of the Proposed Access
Fees described herein. The Exchanges notes that the projected 2021
``access fee'' revenue also includes projected revenue due to the
Exchange's recent proposal to move to a tiered-pricing structure for
its 10Gb ULL connectivity (SR-EMERALD-2021-29).
---------------------------------------------------------------------------

    \43\ As described in the Exchange's Audited Financial
Statements, fees for ``access services'' are assessed to exchange
members for the opportunity to trade and use other related functions
of the exchanges. See https://www.sec.gov/Archives/edgar/vprr/2100/21000461.pdf.
---------------------------------------------------------------------------

    The Exchange's 2021 projected revenue from access fees is still
less than, or similar to, the access fee revenues generated by access
fees charged by other U.S. options exchanges. For example, the Cboe
Exchange, Inc. (``Cboe'') reported $70,893,000 in ``access and capacity
fee'' \44\ revenue for 2020. Cboe C2 Exchange, Inc. (``C2'') reported
$19,016,000 in ``access and capacity fee'' revenue for 2020.\45\ Cboe
BZX Exchange, Inc. (``BZX'') reported $38,387,000 in ``access and
capacity fee'' revenue for 2020.\46\ Cboe EDGX Exchange, Inc.
(``EDGX'') reported $26,126,000 in ``access and capacity fee'' revenue
for 2020.\47\ PHLX reported $20,817,000 in ``Trade Management
Services'' revenue for 2019.\48\ The Exchange notes it is unable to
compare ``access fee'' revenues with PHLX (or other affiliated NASDAQ
exchanges) because after 2019, the ``Trade Management Services'' line
item was bundled into a much larger line item in

PHLX's Form 1, simply titled ``Market services.'' \49\
---------------------------------------------------------------------------

    \44\ According to Cboe, access and capacity fees represent fees
assessed for the opportunity to trade, including fees for trading-
related functionality. See Form 1 Amendment, at https://www.sec.gov/Archives/edgar/vprr/2100/21000465.pdf.
    \45\ See id.
    \46\ See id.
    \47\ See id.
    \48\ According to PHLX, ``Trade Management Services'' includes
``a wide variety of alternatives for connectivity to and accessing
[the PHLX] markets for a fee. These participants are charged monthly
fees for connectivity and support in accordance with [PHLX's]
published fee schedules.'' See Form 1 Amendment, at https://www.sec.gov/Archives/edgar/vprr/2001/20012246.pdf.
    \49\ See Form 1 Amendment, at https://www.sec.gov/Archives/edgar/vprr/2100/21000475.pdf.
---------------------------------------------------------------------------

    The Exchange also believes that, based on the 2020 Audited
Financial Statements of competing options exchanges, the Exchange's
overall operating margin is in line with or less than the operating
margins of competing options exchanges, including the revenue and
expense associated with the Proposed Access Fees. For example, the 2020
operating margin for MIAX Emerald was -12%.\50\ Based on competing
exchanges' Form 1 Amendments, ISE's operating profit margin for 2020
was approximately 85%; PHLX's operating profit margin for 2020 was
approximately 49%; NASDAQ's operating profit margin for 2020 was
approximately 62%; Arca's operating profit margin for 2020 was
approximately 55%; Amex's operating profit margin for 2020 was
approximately 59%; Cboe Exchange, Inc.'s (``Cboe'') operating profit
margin for 2020 was approximately 74%; and Cboe BZX Exchange, Inc.'s
(``BZX'') operating profit margin for 2020 was approximately 52%.
---------------------------------------------------------------------------

    \50\ This information is provided in response to the SIG Comment
Letter. See supra note 8.
---------------------------------------------------------------------------

    The Exchange further believes its proposed fees are reasonable,
equitably allocated and not unfairly discriminatory because the
Exchange believes that it benefits overall competition in the
marketplace to allow relatively new entrants like the Exchange and its
affiliates, MIAX Pearl and MIAX, to propose fees that may help these
new entrants recoup their substantial investment in building out costly
infrastructure. The Exchange and its affiliates have historically set
their fees purposefully low in order to attract business and market
share. The Exchange notes that the concept of a tiered-pricing
structure for ports is not new or novel.\51\
---------------------------------------------------------------------------

    \51\ See Cboe BZX Exchange, Inc. (``BZX'') Options Fee Schedule,
Options Logical Port Fees, Ports with Bulk Quoting Capabilities
(charging $1,500/month for the 1st and 2nd port, $2,500/month for
the 3rd port or more); Cboe Exchange, Inc. (``Cboe'') Fee Schedule,
Logical Connectivity Fees (charging $750/month per port for BOE/FIX
Logical Ports 1 to 5 and $800/month per port for BOE/FIX Logical
Ports greater than 5; charging $1,500/month per port for BOE Bulk
Logical Ports 1 to 5, $2,500/month per port for BOE Bulk Logical
Ports 6 to 30, and $3,000/month per port for BOE Bulk Logical Ports
greater than 30); The Nasdaq Stock Market LLC (``Nasdaq''), Options
7, Pricing Schedule, Section 3 Nasdaq Options Market--Ports and
Other Services (charging $1,500/month per port for first 5 ports,
$1,000/month per port for the next 15 ports, and $500/month per port
for all ports over 20).
---------------------------------------------------------------------------

    The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive. In such an
environment, the Exchange must continually adjust its fees for services
and products, in addition to order flow, to remain competitive with
other exchanges. The Exchange believes that the proposed changes
reflect this competitive environment.
    The Exchange believes the proposal to move from a flat fee per
month to a tiered-pricing structure is reasonable, equitably allocated
and not unfairly discriminatory because the Exchange believes the
proposed structure would encourage firms to be more economical and
efficient in the number of Limited Service MEI Ports they purchase. The
Exchange believes this will enable the Exchange to better monitor and
provide access to the Exchange's network in order to ensure that the
Exchange meets its obligations under the Act such that access to the
Exchange is offered on terms that are not unfairly discriminatory, as
well as to ensure sufficient capacity and headroom in the System.
    There is also no regulatory requirement that any market participant
access any one options exchange, that each Market Maker access the
Exchange utilizing more than the two free Limited Service MEI Ports
that the Exchange provides, access the Exchange in a particular
capacity, or trade any particular product offered on the Exchange.
Moreover, membership is not a requirement to participate on the
Exchange. A market participant may submit orders to the Exchange via a
Sponsored User.\52\ Indeed, the Exchange is unaware of any one options
exchange whose membership includes every registered broker-dealer.
Based on a recent analysis conducted by Cboe, as of October 21, 2020,
only three (3) of the broker-dealers, out of approximately 250 broker-
dealers, were members of at least one exchange that lists options for
trading and were members of all 16 options exchanges.\53\ Additionally,
the Cboe Fee Filing found that several broker-dealers were members of
only a single exchange that lists options for trading and that the
number of members at each exchange that trades options varies
greatly.\54\
---------------------------------------------------------------------------

    \52\ See Exchange Rule 210. The Sponsored User is subject to the
fees, if any, of the Sponsoring Member. The Exchange notes that the
Sponsoring Member is not required to publicize, let alone justify or
file with the Commission its fees, and as such could charge the
Sponsored User any fees it deems appropriate, even if such fees
would otherwise be considered supra-competitive, or otherwise
potentially unreasonable or uncompetitive.
    \53\ See Securities Exchange Act Release No. 90333 (November 4,
2020), 85 FR 71666 (November 10, 2020) (SR-CBOE-2020-105) (the
``Cboe Fee Filing''). The Cboe Fee Filing cited to the October 2020
Active Broker Dealer Report, provided by the Commission's Office of
Managing Executive, on October 8, 2020.
    \54\ Id.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
    With respect to intra-market competition, the Exchange does not
believe that the proposed rule change would place certain market
participants at the Exchange at a relative disadvantage compared to
other market participants or affect the ability of such market
participants to compete. As stated above, the Exchange does not believe
its proposed pricing will impose a barrier to entry to smaller
participants and notes that the proposed pricing structure for is
associated with relative usage of the various market participants.
Firms that are primarily order routers seeking best-execution do not
utilize Limited Service MEI Ports on MIAX Emerald and therefore will
not pay the fees associated with the tiered-pricing structure. Rather,
the fees described in the proposed tiered-pricing structure will only
be allocated to market making firms that engage in advanced trading
strategies and typically request multiple Limited Service MEI Ports,
beyond the two that are free. Accordingly, the firms engaged in market
making business generate higher costs by utilizing more of the
Exchange's resources. The market making firms that purchase higher
amounts of Limited Service MEI Ports tend to have specific business
oriented market making and trading strategies, as opposed to firms
engaging solely in best-execution order routing business. Additionally,
the use of such additional Limited Service MEI Ports is entirely
voluntary.
    The Exchange also does not believe that the proposed rule change
will result in any burden on inter-market competition that is not
necessary or appropriate in furtherance of the purposes of the Act. As
discussed above, options market participants are not forced to access
all options exchanges. The Exchange operates in a highly competitive
environment, and as discussed above, its ability to price access and
ports is constrained by competition among exchanges and third parties.
There are other options markets of which market participants may access

in order to trade options. There is also a possible range of
alternative strategies, including routing to the exchange through
another participant or market center or accessing the Exchange
indirectly. For example, there are 15 other U.S. options exchanges,
which the Exchange must consider in its pricing discipline in order to
compete for market participants. In this competitive environment,
market participants are free to choose which competing exchange to use
to satisfy their business needs. As a result, the Exchange believes
this proposed rule change permits fair competition among national
securities exchanges. Accordingly, the Exchange does not believe its
proposed fee changes impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange received one comment on the proposed rule change.\55\
The Exchange notes that the Exchange, and its affiliates, MIAX Pearl
and MIAX, justified similar fee changes in the past with similar, if
not identical, justifications in previous filings that have been
noticed by the Commission for public comment and are currently in
effect.\56\ Nonetheless, the Exchange has sought to address the
commenters concerns via the enhanced justification and additional
information included in this proposal.
---------------------------------------------------------------------------

    \55\ See the SIG Comment Letter, supra note 8.
    \56\ See Securities Exchange Act Release Nos. 90980 (January 25,
2021), 86 FR 7602 (January 29, 2021) (SR-MIAX-2021-02); 90981
(January 25, 2021), 86 FR 7582 (January 29, 2021) (SR-PEARL-2021-
01); 91033 (February 1, 2021), 86 FR 8455 (February 5, 2021) (SR-
EMERALD-2021-03); 91460 (April 2, 2021), 86 FR 18349 (April 8, 2021)
(SR-EMERALD-2021-11).
---------------------------------------------------------------------------

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\57\ and Rule 19b-4(f)(2) \58\ thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \57\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \58\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-EMERALD-2021-31 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-EMERALD-2021-31. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-EMERALD-2021-31 and should be submitted
on or before October 26, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\59\
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    \59\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21619 Filed 10-4-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 132 (Wednesday, July 14, 2021)]
[Rules and Regulations]
[Pages 37037-37038]
[FR Doc No: 2021-15070]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 573

[Docket No. FDA-2019-F-5401]

Food Additives Permitted in Feed and Drinking Water of Animals;
Guanidinoacetic Acid

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA, we, or the Agency) is
amending the regulations for food additives permitted in feed and
drinking water of animals to provide for the safe use of
guanidinoacetic acid as a precursor of creatine in poultry feeds. This
action is in response to a food additive petition filed by Alzchem
Trostberg GmbH.

DATES: This rule is effective July 14, 2021. See section V of this
document for further information on the filing of objections. Submit
either electronic or written objections and requests for a hearing on
the final rule by August 13, 2021.

ADDRESSES: You may submit objections and requests for a hearing as
follows. Please note that late, untimely filed objections will not be
considered. Electronic objections must be submitted on or before August
13, 2021. The https://www.regulations.gov electronic filing system will
accept comments until 11:59 p.m. Eastern Time at the end of August 13,
2021. Objections received by mail/hand delivery/courier (for written/
paper submissions) will be considered timely if they are postmarked or
the delivery service acceptance receipt is on or before that date.

Electronic Submissions

    Submit electronic objections in the following way:
     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting objections. Objections submitted
electronically, including attachments, to https://www.regulations.gov
will be posted to the docket unchanged. Because your objection will be
made public, you are solely responsible for ensuring that your
objection does not include any confidential information that you or a
third party may not wish to be posted, such as medical information,
your or anyone else's Social Security number, or confidential business
information, such as a manufacturing process. Please note that if you
include your name, contact information, or other information that
identifies you in the body of your objection, that information will be
posted on https://www.regulations.gov.
     If you want to submit an objection with confidential
information that you do not wish to be made available to the public,
submit the objection as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper objections submitted to the Dockets
Management Staff, FDA will post your objection, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2019-F-5401 for ``Food Additives Permitted in Feed and Drinking
Water of Animals; Guanidinoacetic Acid.'' Received objections, those
filed in a timely manner (see ADDRESSES), will be placed in the docket
and, except for those submitted as ``Confidential Submissions,''
publicly viewable at https://www.regulations.gov or at the Dockets
Management Staff between 9 a.m. and 4 p.m., Monday through Friday, 240-
402-7500.
     Confidential Submissions--To submit an objection with
confidential information that you do not wish to be made publicly
available, submit your objections only as a written/paper submission.
You should submit two copies in total. One copy will include the
information you claim to be confidential with a heading or cover note
that states ``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The
Agency will review this copy, including the claimed confidential
information, in its consideration of objections. The second copy, which
will have the claimed confidential information redacted/blacked out,
will be available for public viewing and posted on https://www.regulations.gov. Submit both copies to the Dockets Management
Staff. If you do not wish your name and contact information to be made
publicly available, you can provide this information on the cover sheet
and not in the body of your objections and you must identify this
information as ``confidential.'' Any information marked as
``confidential'' will not be disclosed except in accordance with 21 CFR
10.20 and other applicable disclosure law. For more information about
FDA's posting of comments to public dockets, see 80 FR 56469, September
18, 2015, or access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper objections received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852,<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Carissa Adams, Center for Veterinary
Medicine, Food and Drug Administration, 7519 Standish Pl. (HFV-221),
Rockville, MD 20855,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    In a document published in the Federal Register of November 29,
2019 (84 FR 65717), FDA announced that we had filed a food additive
petition (animal use) (FAP 2309) submitted by Alzchem Trostberg GmbH,
Dr.-Albert-Frank-Str. 32, 83308 Trostberg, Germany. The petition
proposed that the regulations for food additives permitted in feed and
drinking water of animals be amended to provide for the safe use of
guanidinoacetic acid as a precursor of creatine in poultry feeds.

II. Conclusion

    FDA concludes that the data establish the safety and utility of
guanidinoacetic acid as a precursor of creatine in poultry feeds and
that the food additive regulations should be amended as set forth in
this document.

III. Public Disclosure

    In accordance with Sec.  571.1(h) (21 CFR 571.1(h)), the petition
and documents we considered and relied upon in reaching our decision to
approve the petition will be made available for public disclosure (see
FOR FURTHER INFORMATION CONTACT). As provided in Sec.  571.1(h), we
will delete from the documents any materials that are not available for
public disclosure.

IV. Analysis of Environmental Impact

    We have determined under 21 CFR 25.32(r) that this action is of a
type that does not individually or cumulatively have a significant
effect on the human

environment. Therefore, neither an environmental assessment nor an
environmental impact statement is required.

V. Objections and Hearing Requests

    Any person who will be adversely affected by this regulation may
file with the Dockets Management Staff (see ADDRESSES) either
electronic or written objections. Each objection shall be separately
numbered, and each numbered objection shall specify with particularity
the provision of the regulation to which objection is made and the
grounds for the objection. Each numbered objection on which a hearing
is requested shall specifically so state. Failure to request a hearing
for any particular objection shall constitute a waiver of the right to
a hearing on that objection. Each numbered objection for which a
hearing is requested shall include a detailed description and analysis
of the specific factual information intended to be presented in support
of the objection in the event that a hearing is held. Failure to
include such a description and analysis for any particular objection
shall constitute a waiver of the right to a hearing on the objection.

List of Subjects in 21 CFR Part 573

    Animal feeds, Food additives.

    Therefore, 21 CFR part 573 is amended as follows:

PART 573--FOOD ADDITIVES PERMITTED IN FEED AND DRINKING WATER OF
ANIMALS

0
1. The authority citation for part 573 continues to read as follows:

    Authority:  21 U.S.C. 321, 342, 348.

0
2. In Sec.  573.496, revise the introductory text and paragraphs (b)
and (e)(2)(i) to read as follows:

Sec.  573.496  Guanidinoacetic acid.

    The food additive, guanidinoacetic acid, may be safely used in
poultry feeds in accordance with the following prescribed conditions:
* * * * *
    (b) The additive is used or intended for use at levels not to
exceed 0.12 percent of the complete feed:
    (1) To spare arginine in broiler chicken and turkey feeds; or
    (2) As a precursor of creatine in poultry feeds.
* * * * *
    (e) * * *
    (2) * * *
    (i) A statement to indicate the maximum use level of
guanidinoacetic acid must not exceed 0.12 percent of the complete feed
for poultry; and
* * * * *

    Dated: July 7, 2021.
Janet Woodcock,
Acting Commissioner of Food and Drugs.
    Dated: July 12, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-15070 Filed 7-13-21; 8:45 am]
BILLING CODE 4164-01-P


[Federal Register: May 12, 2008 (Volume 73, Number 92)]
[Notices]
[Page 27000-27001]
[DOCID:fr12my08-47]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2007-E-0047] (formerly Docket No. 2007E-0139)

Determination of Regulatory Review Period for Purposes of Patent
Extension; VECTIBIX

AGENCY:  Food and Drug Administration, HHS.

ACTION:  Notice.

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SUMMARY:  The Food and Drug Administration (FDA) has determined the
regulatory review period for VECTIBIX and is publishing this notice of
that determination as required by law. FDA has made the determination
because of the submission of an application to the Director of Patents
and Trademarks, Department of Commerce, for the extension of a patent
which claims that human biological product.

ADDRESSES:  Submit written or electronic comments and petitions to the
Division of Dockets Management (HFA-305), Food and Drug Administration,
5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic
comments to http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Beverly Friedman, Office of Regulatory
Policy, Food and Drug Administration, 10903 New Hampshire Ave., Bldg.
51, rm. 6222, Silver Spring, MD 20993-0002,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The Drug Price Competition and Patent Term
Restoration Act of 1984 (Public Law 98-417) and the Generic Animal Drug
and Patent Term Restoration Act (Public Law 100-670) generally provide
that a patent may be extended for a period of up to 5 years so long as
the patented item (human drug product, animal drug product, medical
device, food additive, or color additive) was subject to regulatory
review by FDA before the item was marketed. Under these acts, a
product's regulatory review period forms the basis for determining the
amount of extension an applicant may receive.
    A regulatory review period consists of two periods of time: A
testing phase and an approval phase. For human biological products, the
testing phase begins when the exemption to permit the clinical
investigations of the biological becomes effective and runs until the
approval phase begins. The approval phase starts with the initial
submission of an application to market the human biological product and
continues until FDA grants permission to market the biological product.
Although only a portion of a regulatory review period may count toward
the actual amount of extension that the Director of Patents and
Trademarks may award (for example, half the testing phase must be
subtracted as well as any time that may have occurred before the patent
was issued), FDA's determination of the length of a regulatory review
period for a human biological product will include all of the testing
phase and approval phase as specified in 35 U.S.C. 156(g)(1)(B).
    FDA recently approved for marketing the human biologic product
VECTIBIX (panitumumab). VECTIBIX is indicated for the treatment of
EGFR-expressing, metastatic colorectal carcinoma with disease
progression on or following fluoropyrimidine-, oxaliplatin-, and
irinotecan-containing chemotherapy regimens. Subsequent to this
approval, the Patent and
    Trademark Office received a patent term restoration application for
VECTIBIX (U.S. Patent No. 6,235,883) from Amgen Fremont Inc., and the
Patent and Trademark Office requested FDA's assistance in determining
this patent's eligibility for patent term restoration. In a letter
dated May 16, 2007, FDA advised the Patent and Trademark Office that
this human biological product had undergone a regulatory review period
and that the approval of VECTIBIX represented the first permitted
commercial marketing or use of the product. Shortly thereafter, the
Patent and Trademark Office requested that FDA determine the product's
regulatory review period.
    FDA has determined that the applicable regulatory review period for
VECTIBIX is 2,662 days. Of this time, 2,479 days occurred during the
testing phase of the regulatory review period, while 183 days occurred
during the approval phase. These periods of time were derived from the
following dates:
    1. The date an exemption under section 505(i) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(i)) became effective: June 16,
1999. The applicant claims June 19, 1999, as the date the
investigational new drug application (IND) became effective. However,
FDA records indicate that the IND effective date was June 16, 1999,
which was 30 days after FDA receipt of the IND.
    2. The date the application was initially submitted with respect to
the human biological product under section 351 of the Public Health
Service Act (42 U.S.C. 262): March 29, 2006. The applicant claims
December 15, 2005, as the date the original biologics license
application (BLA) for VECTIBIX (BLA 125147/0) was initially submitted.
However, FDA records indicate that BLA 125147/0 was submitted in
several modules under the continuous marketing application pilot
program. It is FDA's position that the approval phase begins when the
marketing application is complete for review. The final module of the
BLA making it complete for review was submitted on March 29, 2006.
    3. The date the application was approved: September 27, 2006. FDA
has verified the applicant's claim that BLA 125147/0 was approved on
September 27, 2006.
    This determination of the regulatory review period establishes the
maximum potential length of a patent extension. However, the U.S.
Patent and Trademark Office applies several statutory limitations in
its calculations

of the actual period for patent extension. In its application for
patent extension, this applicant seeks 1,122 days of patent term
extension.
    Anyone with knowledge that any of the dates as published are
incorrect may submit to the Division of Dockets Management (see
ADDRESSES) written or electronic comments and ask for a redetermination
by July 11, 2008. Furthermore, any interested person may petition FDA
for a determination regarding whether the applicant for extension acted
with due diligence during the regulatory review period by November 10,
2008. To meet its burden, the petition must contain sufficient facts to
merit an FDA investigation. (See H. Rept. 857, part 1, 98th Cong., 2d
sess., pp. 41-42, 1984.) Petitions should be in the format specified in
21 CFR 10.30. Comments and petitions should be submitted to the
Division of Dockets Management. Three copies of any mailed information
are to be submitted, except that individuals may submit one copy.
Comments are to be identified with the docket number found in brackets
in the heading of this document. Comments and petitions may be seen in
the Division of Dockets Management between 9 a.m. and 4 p.m., Monday
through Friday.
    Please note that on January 15, 2008, the FDA Web site transitioned
to the Federal Dockets Management System (FDMS). FDMS is a Government-
wide, electronic docket management system. Electronic submissions will
be accepted by FDA through FDMS only.

    Dated: April 28, 2008.
Jane A. Axelrad,
Associate Director for Policy, Center for Drug Evaluation and Research.
[FR Doc. E8-10512 Filed 5-9-08; 8:45 am]

BILLING CODE 4160-01-S


[Federal Register Volume 84, Number 98 (Tuesday, May 21, 2019)]
[Notices]
[Page 23154]
[FR Doc No: 2019-10591]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

June 6, 2019 Drone Advisory Committee (DAC) Meeting

AGENCY: Federal Aviation Administration (FAA), U.S. Department of
Transportation (DOT).

ACTION: Announcement of meeting.

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SUMMARY: The FAA is issuing this notice to announce the June 6, 2019
DAC Meeting to the public.

DATES: The meeting will be held on June 6, 2019, 9:00 a.m.-4:00 p.m.
Eastern Time.

ADDRESSES: The meeting will be held at the Hyatt Regency Crystal City
(Regency E, Ballroom Level), 2799 Jefferson Davis Highway, Arlington,
Virginia 22202.

FOR FURTHER INFORMATION CONTACT: For questions about the DAC, please
visit https://www.faa.gov/uas/programs_partnerships/dac/ or contact
Erik Amend, Manager, Executive Office, UAS Integration Office, at
<EMAIL_ADDRESS>or<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Pursuant to section 10(a) (2) of the Federal
Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is
hereby given of the June 6, 2019 DAC Meeting. The DAC is a Federal
Advisory Committee managed by the FAA. The agenda will likely include,
but may not be limited to, the following:

 Official Statement of the Designated Federal Officer
 Approval of the Agenda and Minutes
 Opening Remarks
 FAA Update
 Update on Counter-UAS Technology Trends
 The FAA's Plan to Address the FAA Reauthorization Act of 2018
 Discussion on Knowledge Test for Recreational Drone Operators
 Industry-Led Technical Topics
 New Business/Agenda Topics
 Closing Remarks
 Adjourn

    The agenda will be available through the Federal Register, the
FAA's Notices of Public Meetings web page (https://www.faa.gov/regulations_policies/rulemaking/npm/), and the FAA's DAC web page
(https://www.faa.gov/uas/programs_partnerships/dac/).
    Attendance is open to the interested public but limited to space
available. Registration is required for this meeting; members of the
public may register at<EMAIL_ADDRESS>until May 31, 2019.
    Members of the public may present a written statement to the
committee at any time. The FAA is not accepting oral presentations at
this meeting due to time constraints.
    If you are in need of assistance or require a reasonable
accommodation for this meeting, please contact the person listed under
the heading FOR FURTHER INFORMATION CONTACT. Sign and oral
interpretation, as well as a listening device, can be made available if
requested 10 calendar days before the meeting.

    Issued in Washington, DC, on May 15, 2019.
Erik W. Amend,
Manager, Executive Office, AUS-10, FAA UAS Integration Office.
[FR Doc. 2019-10591 Filed 5-20-19; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 78, Number 95 (Thursday, May 16, 2013)]
[Notices]
[Page 28899]
[FR Doc No: 2013-11620]

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SECURITIES AND EXCHANGE COMMISSION

Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.

Extension:
    Rule 20a-1; OMB Control No. 3235-0158, SEC File No. 270-132.

    Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (the ``Commission'') is soliciting comments on the
collection of information summarized below. The Commission plans to
submit this existing collection of information to the Office of
Management and Budget for extension and approval.
    Rule 20a-1 (17 CFR 270.20a-1) was adopted under Section 20(a) of
the Investment Company Act of 1940 (``1940 Act'') (15 U.S.C. 80a-20(a))
and concerns the solicitation of proxies, consents, and authorizations
with respect to securities issued by registered investment companies
(``Funds''). More specifically, rule 20a-1 under the 1940 Act (15
U.S.C. 80a-1 et seq.) requires that the solicitation of a proxy,
consent, or authorization with respect to a security issued by a Fund
be in compliance with Regulation 14A (17 CFR 240.14a-1 et seq.),
Schedule 14A (17 CFR 240.14a-101), and all other rules and regulations
adopted pursuant to section 14(a) of the Securities Exchange Act of
1934 (``1934 Act'') (15 U.S.C. 78n(a)). It also requires, in certain
circumstances, a Fund's investment adviser or a prospective adviser,
and certain affiliates of the adviser or prospective adviser, to
transmit to the person making the solicitation the information
necessary to enable that person to comply with the rules and
regulations applicable to the solicitation. In addition, rule 20a-1
instructs Funds that have made a public offering of securities and that
hold security holder votes for which proxies, consents, or
authorizations are not being solicited, to refer to section 14(c) of
the 1934 Act (15 U.S.C. 78n(c)) and the information statement
requirements set forth in the rules thereunder.
    The types of proposals voted upon by Fund shareholders include not
only the typical matters considered in proxy solicitations made by
operating companies, such as the election of directors, but also
include issues that are unique to Funds, such as the approval of an
investment advisory contract and the approval of changes in fundamental
investment policies of the Fund. Through rule 20a-1, any person making
a solicitation with respect to a security issued by a Fund must,
similar to operating company solicitations, comply with the rules and
regulations adopted pursuant to Section 14(a) of the 1934 Act. Some of
those Section 14(a) rules and regulations, however, include provisions
specifically related to Funds, including certain particularized
disclosure requirements set forth in Item 22 of Schedule 14A under the
1934 Act.
    Rule 20a-1 is intended to ensure that investors in Fund securities
are provided with appropriate information upon which to base informed
decisions regarding the actions for which Funds solicit proxies.
Without rule 20a-1, Fund issuers would not be required to comply with
the rules and regulations adopted under Section 14(a) of the 1934 Act,
which are applicable to non-Fund issuers, including the provisions
relating to the form of proxy and disclosure in proxy statements.
    The staff currently estimates that approximately 1,108 proxy
statements are filed by Funds annually. Based on staff estimations and
information from the industry, the staff estimates that the average
annual burden associated with the preparation and submission of proxy
statements is 85 hours per response, for a total annual burden of
94,180 hours (1,108 responses x 85 hours per response = 94,180). In
addition, the staff estimates the costs for purchased services, such as
outside legal counsel, proxy statement mailing, and proxy tabulation
services, to be $30,000 per proxy solicitation.
    Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information collected; and (d)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology. Consideration will
be given to comments and suggestions submitted in writing within 60
days of this publication.
    Please direct your written comments to Thomas Bayer, Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312; or send an
email to<EMAIL_ADDRESS>
    Dated: May 10, 2013.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11620 Filed 5-15-13; 8:45 am]
BILLING CODE 8011-01-P