[Federal Register Volume 84, Number 136 (Tuesday, July 16, 2019)]
[Notices]
[Pages 34012-34020]
[FR Doc No: 2019-15024]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86342; File No. SR-MIAX-2019-31]

Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule

July 10, 2019.
    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 June 26, 2019, Miami International Securities Exchange LLC (``MIAX
Options'' 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 MIAX Options Fee
Schedule (the ``Fee Schedule'') to modify certain of the Exchange's
system connectivity fees.
    The Exchange previously filed the proposal on April 30, 2019 (SR-
MIAX-2019-23). That filing has been withdrawn and replaced with the
current filing (SR-MIAX-2019-31).
    The text of the proposed rule change is available on the Exchange's
website at http://www.miaxoptions.com/rule-filings, 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 regarding
connectivity to the Exchange. Specifically, the Exchange proposes to
amend Sections (5a) and (b) of the Fee Schedule to increase the network
connectivity fees for the 1 Gigabit (``Gb'') fiber connection, the 10Gb
fiber connection, and the 10Gb ultra-low latency (``ULL'') fiber
connection, which are charged to both Members \3\ and non-Members of
the Exchange for connectivity to the Exchange's primary/secondary
facility. The Exchange also proposes to increase the network
connectivity fees for the 1Gb and 10Gb fiber connections for
connectivity to the Exchange's disaster recovery facility. Each of
these connections are shared connections, and thus can be utilized to
access both the Exchange and the Exchange's affiliate, MIAX PEARL, LLC
(``MIAX PEARL''). These proposed fee increases are collectively
referred to herein as the ``Proposed Fee Increases.''
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    \3\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
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    The Exchange initially filed the Proposed Fee Increases on July 31,
2018, designating the Proposed Fee Increases effective August 1,
2018.\4\ The First Proposed Rule Change was published for comment in
the Federal Register on August 13, 2018.\5\ The Commission received one
comment letter on the proposal.\6\ The Proposed Fee Increases remained
in effect until they were temporarily suspended pursuant to a
suspension order (the ``Suspension Order'') issued by the Commission on
September 17, 2018.\7\ The Suspension Order also instituted proceedings
to determine whether to approve or disapprove the First Proposed Rule
Change.\8\
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    \4\ See Securities Exchange Act Release No. 83786 (August 7,
2018), 83 FR 40106 (August 13, 2018)(SR-MIAX-2018-19) (the ``First
Proposed Rule Change'').
    \5\ Id.
    \6\ See Letter from Tyler Gellasch, Executive Director, The
Healthy Markets Association (``Healthy Markets''), to Brent J.
Fields, Secretary, Commission, dated September 4, 2018 (``Healthy
Markets Letter'').
    \7\ See Securities Exchange Act Release No. 34-84175 (September
17, 2018), 83 FR 47955 (September 21, 2018) (SR-MIAX-2018-19)
(Suspension of and Order Instituting Proceedings To Determine
Whether To Approve or Disapprove a Proposed Rule Change To Amend the
Fee Schedule Regarding Connectivity Fees for Members and Non-
Members).
    \8\ Id.
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    The Healthy Markets Letter argued that the Exchange did not provide
sufficient information in its filing to support a finding that the
proposal is consistent with the Act. Specifically, the Healthy Markets
Letter objected to the Exchange's reliance on the fees of other
exchanges to demonstrate that its fee increases are consistent with the
Act. In addition, the Healthy Markets Letter argued that the Exchange
did not offer any details to support its basis for asserting that the
proposed fee increases are consistent with the Act.
    On October 5, 2018, the Exchange withdrew the First Proposed Rule
Change.\9\ The Exchange refiled the Proposed Fee Increases on September
18, 2018, designating the Proposed Fee Increases immediately
effective.\10\ The Second Proposed Rule Change was published for
comment in the Federal Register on October 10, 2018.\11\ The Commission
received one comment letter on the proposal.\12\ The Proposed Fee
Increases remained in effect until they were temporarily suspended
pursuant to a suspension order (the ``Second Suspension Order'') issued
by the Commission on October 3, 2018.\13\ The Second Suspension Order
also instituted proceedings to determine whether to approve or
disapprove the Second Proposed Rule Change.\14\
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    \9\ See Securities Exchange Act Release No. 84398 (October 10,
2018), 83 FR 52264 (October 16, 2018) (SR-MIAX-2018-19 (Notice of
Withdrawal of a Proposed Rule Change To Amend the Fee Schedule
Regarding Connectivity Fees for Members and Non-Members).
    \10\ See Securities Exchange Act Release No. 84357 (October 3,
2018), 83 FR 50976 (October 10, 2018) (SR-MIAX-2018-25) (the
``Second Proposed Rule Change'') (Notice of Filing of a Proposed
Rule Change To Amend the Fee Schedule Regarding Connectivity Fees
for Members and Non-Members; Suspension of and Order Instituting
Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change).
    \11\ Id.
    \12\ See Letter from Theodore R. Lazo, Managing Director and
Associate General Counsel, and Ellen Greene, Managing Director
Financial Services Operations, The Securities Industry and Financial
Markets Association (``SIFMA''), to Brent J. Fields, Secretary,
Commission, dated October 15, 2018 (``SIFMA Letter'').
    \13\ See supra note 10.
    \14\ Id.

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    The SIFMA Letter argued that the Exchange did not provide
sufficient information in its filing to support a finding that the
proposal should be approved by the Commission after further review of
the proposed fee increases. Specifically, the SIFMA Letter objected to
the Exchange's reliance on the fees of other exchanges to justify its
own fee increases. In addition, the SIFMA Letter argued that the
Exchange did not offer any details to support its basis for asserting
that the proposed fee increases are reasonable. On November 23, 2018,
the Exchange withdrew the Second Proposed Rule Change.\15\
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    \15\ See Securities Exchange Act Release No. 84650 (November 26,
2018), 83 FR 61705 (November 30, 2018) (SR-MIAX-2018-25) (Notice of
Withdrawal of a Proposed Rule Change To Amend the Fee Schedule
Regarding Connectivity Fees for Members and Non-Members.).
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    The Exchange refiled the Proposed Fee Increases on March 1, 2019,
designating the Proposed Fee Increases immediately effective.\16\ The
Third Proposed Rule Change was published for comment in the Federal
Register on March 20, 2019.\17\ The Third Proposed Rule Change provided
new information, including additional detail about the market
participants impacted by the Proposed Fee Increases, as well as the
additional costs incurred by the Exchange associated with providing the
connectivity alternatives, in order to provide more transparency and
support relating to the Exchange's belief that the Proposed Fee
Increases are reasonable, equitable, and non-discriminatory, and to
provide sufficient information for the Commission to determine that the
Proposed Fee Increases are consistent with the Act.
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    \16\ See Securities Exchange Act Release No. 85318 (March 14,
2019), 84 FR 10363 (March 20, 2019) (SR-MIAX-2019-10) (the ``Third
Proposed Rule Change'') (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule).
    \17\ Id.
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    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'').\18\ In the BOX Order, the Commission highlighted a number of
deficiencies it found in three separate rule filings by BOX Exchange
LLC (``BOX'') to increase BOX's connectivity fees that prevented the
Commission from finding that BOX's proposed connectivity fees were
consistent with the Act. These deficiencies relate to topics that the
Commission believes should be discussed in a connectivity fee filing.
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    \18\ 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).
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    After the BOX Order was issued, the Commission received four
comment letters on the Third Proposed Rule Change.\19\
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    \19\ See Letter from Joseph W. Ferraro III, SVP & Deputy General
Counsel, MIAX, to Vanessa Countryman, Acting Secretary, Commission,
dated April 5, 2019 (``MIAX Letter''); Letter from Theodore R. Lazo,
Managing Director and Associate General Counsel, SIFMA, to Vanessa
Countryman, Acting Secretary, Commission, dated April 10, 2019
(``Second SIFMA Letter''); Letter from John Ramsay, Chief Market
Policy Officer, Investors Exchange LLC, to Vanessa Countryman,
Acting Secretary, Commission, dated April 10, 2019 (``IEX Letter'');
and Letter from Tyler Gellasch, Executive Director, Healthy Markets,
to Brent J. Fields, Secretary, Commission, dated April 18, 2019
(``Second Healthy Markets Letter'').
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    The Second SIFMA Letter argued that the Exchange did not provide
sufficient information in its Third Proposed Rule Change to support a
finding that the proposal should be approved by the Commission after
further review of the proposed fee increases. Specifically, the Second
SIFMA Letter argued that the Exchange's market data fees and
connectivity fees were not constrained by competitive forces, the
Exchange's filing lacked sufficient information regarding cost and
competition, and that the Commission should establish a framework for
determining whether fees for exchange products and services are
reasonable when those products and services are not constrained by
significant competitive forces.
    The IEX Letter argued that the Exchange did not provide sufficient
information in its Third Proposed Rule Change to support a finding that
the proposal should be approved by the Commission and that the
Commission should extend the time for public comment on the Third
Proposed Rule Change. Despite the objection to the Proposed Fee
Increases, the IEX Letter did find that ``MIAX has provided more
transparency and analysis in these filings than other exchanges have
sought to do for their own fee increases.'' \20\ The IEX Letter
specifically argued that the Proposed Fee Increases were not
constrained by competition, the Exchange should provide data on the
Exchange's actual costs and how those costs relate to the product or
service in question, and whether and how MIAX considered changes to
transaction fees as an alternative to offsetting exchange costs.
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    \20\ See IEX Letter, pg. 1.
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    The Second Healthy Markets Letter did not object to the Third
Proposed Rule Change and the information provided by the Exchange in
support of the Proposed Fee Increases. Specifically, the Second Healthy
Markets Letter stated that the Third Proposed Rule Change was
``remarkably different,'' and went on to further state as follows:

    The instant MIAX filings--along with their April 5th
supplement--provide much greater detail regarding users of
connectivity, the market for connectivity, and costs than the
Initial MIAX Filings. They also appear to address many of the issues
raised by the Commission staff's BOX disapproval order. This third
round of MIAX filings suggests that MIAX is operating in good faith
to provide what the Commission and staff seek.\21\
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    \21\ See Second Healthy Markets Letter, pg. 2.

    On April 29, 2019, the Exchange withdrew the Third Proposed Rule
Change.\22\
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    \22\ See SR-MIAX-2019-10.
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    The Exchange refiled the Proposed Fee Increases on April 30, 2019,
designating the Proposed Fee Increases immediately effective.\23\ The
Fourth Proposed Rule Change was published for comment in the Federal
Register on May 16, 2019.\24\ The Fourth Proposed Rule Change provided
further cost analysis information to squarely and comprehensively
address each and every topic raised for discussion in the BOX Order,
the IEX Letter and the Second SIFMA Letter to ensure that the Proposed
Fee Increases are reasonable, equitable, and non-discriminatory, and
that the Commission should find that the Proposed Fee Increases are
consistent with the Act.
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    \23\ See Securities Exchange Act Release No. 85836 (May 10,
2019), 84 FR 22205 (May 16, 2019) (SR-MIAX-2019-23) (the ``Fourth
Proposed Rule Change'') (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule).
    \24\ Id.
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    On May 21, 2019, the Commission issued the Staff Guidance on SRO
Rule Filings Relating to Fees (the ``Guidance'').\25\
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    \25\ 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.
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    The Commission received two comment letters on the Fourth Proposed
Rule Change, after the Guidance was released.\26\ The Second IEX Letter
and the Third SIFMA Letter argued that the Exchange did not provide
sufficient information in its Fourth Proposed Rule Change to justify
the Proposed Fee Increases based on the Guidance and the BOX Order. Of
note, however, is that

unlike their previous comment letter, the Third SIFMA Letter did not
call for the Commission to suspend the Fourth Proposed Rule Change.
Also, Healthy Markets did not comment on the Fourth Proposed Rule
Change.
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    \26\ See Letter from John Ramsay, Chief Market Policy Officer,
Investors Exchange LLC, to Vanessa Countryman, Acting Secretary,
Commission, dated June 5, 2019 (the ``Second IEX Letter'') and
Letter from Theodore R. Lazo, Managing Director and Associate
General Counsel, and Ellen Greene, Managing Director, SIFMA, to
Vanessa Countryman, Acting Secretary, Commission, dated June 6, 2019
(the ``Third SIFMA Letter'').
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    The Exchange is now re-filing the Proposed Fee Increases (the
``Fifth Proposed Rule Change'') to bolster its cost-based discussion to
support its claim that the Proposed Fee Increases are fair and
reasonable because they will permit recovery of the Exchange's costs
and will not result in excessive pricing or supracompetitive profit, in
light of the Guidance issued by Commission staff subsequent to the
Fourth Proposed Rule Change. The Exchange believes that the Proposed
Fee Increases 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, as demonstrated in the Fifth Proposed Rule Change
and supported by evidence (including data and analysis), constrained by
significant competitive forces; and (iv) are, as demonstrated in the
Fifth Proposed Rule Change and supported by specific information
(including quantitative information), fair and reasonable because they
will permit recovery of the Exchange's costs and will not result in
excessive pricing or supracompetitive profit. Accordingly, the Exchange
believes that the Commission should find that the Proposed Fee
Increases are consistent with the Act. The proposed rule change is
immediately effective upon filing with the Commission pursuant to
Section 19(b)(3)(A) of the Act.
    The Exchange currently offers various bandwidth alternatives for
connectivity to the Exchange, to its primary and secondary facilities,
consisting of a 1Gb fiber connection, a 10Gb fiber connection, and a
10Gb ULL fiber connection. The 10Gb ULL offering uses an ultra-low
latency switch, which provides faster processing of messages sent to it
in comparison to the switch used for the other types of connectivity.
The Exchange currently assesses the following monthly network
connectivity fees to both Members and non-Members for connectivity to
the Exchange's primary/secondary facility: (a) $1,100 for the 1Gb
connection; (b) $5,500 for the 10Gb connection; and (c) $8,500 for the
10Gb ULL connection. The Exchange also assesses to both Members and
non-Members a monthly per connection network connectivity fee of $500
for each 1Gb connection to the disaster recovery facility and a monthly
per connection network connectivity fee of $2,500 for each 10Gb
connection to the disaster recovery facility.
    The Exchange's MIAX Express Network Interconnect (``MENI'') can be
configured to provide Members and non-Members of the Exchange network
connectivity to the trading platforms, market data systems, test
systems, and disaster recovery facilities of both the Exchange and its
affiliate, MIAX PEARL, via a single, shared connection. Members and
non-Members utilizing the MENI to connect to the trading platforms,
market data systems, test systems and disaster recovery facilities of
the Exchange and MIAX PEARL via a single, shared connection are
assessed only one monthly network connectivity fee per connection,
regardless of the trading platforms, market data systems, test systems,
and disaster recovery facilities accessed via such connection.
    The Exchange proposes to increase the monthly network connectivity
fees for such connections for both Members and non-Members. The network
connectivity fees for connectivity to the Exchange's primary/secondary
facility will be increased as follows: (a) From $1,100 to $1,400 for
the 1Gb connection; (b) from $5,500 to $6,100 for the 10Gb connection;
and (c) from $8,500 to $9,300 for the 10Gb ULL connection. The network
connectivity fees for connectivity to the Exchange's disaster recovery
facility will be increased as follows: (a) From $500 to $550 for the
1Gb connection; and (b) from $2,500 to $2,750 for the 10Gb connection.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \27\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \28\ 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 \29\ in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general to protect
investors and the public interest and is not designed to permit unfair
discrimination between customer, issuers, brokers and dealers.
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    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(4).
    \29\ 15 U.S.C. 78f(b)(5).
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    The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \30\
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    \30\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
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    First, the Exchange believes that its proposal is consistent with
Section 6(b)(4) of the Act, in that the Proposed Fee Increases are
fair, equitable and not unreasonably discriminatory, because the fees
for the connectivity alternatives available on the Exchange, as
proposed to be increased, are constrained by significant competitive
forces. The U.S. options markets are highly competitive (there are
currently 16 options markets) and a reliance on competitive markets is
an appropriate means to ensure equitable and reasonable prices.
    The Exchange acknowledges that there is no regulatory requirement
that any market participant connect to the Exchange, or that any
participant connect at any specific connection speed. The rule
structure for options exchanges are, in fact, fundamentally different
from those of equities exchanges. In particular, options market
participants are not forced to connect to (and purchase market data
from) all options exchanges, as shown by the number of Members of MIAX
as compared to the much greater number of members at other options
exchanges (as further detailed below). Not only does MIAX have less
than half the number of members as certain other options exchanges, but
there are also a number of the Exchange's Members that do not connect
directly to MIAX. Further, of the number of Members that connect
directly to MIAX, many such Members do not purchase market data from
MIAX. There are a number of large market makers and broker-dealers that
are members of other options exchange but not Members of MIAX. For
example, the following are not Members of MIAX: The D. E. Shaw Group,
CTC, XR Trading LLC, Hardcastle Trading AG, Ronin Capital LLC,
Belvedere Trading, LLC, Bluefin Trading, and HAP Capital LLC. In
addition, of the market makers that are connected to MIAX, it is the
individual needs of the market maker that require whether they need one
connection or multiple connections to

the Exchange. The Exchange has market maker Members that only purchase
one connection (10Gb or 10Gb ULL) and the Exchange has market maker
Members that purchase multiple connections. It is all driven by the
business needs of the market maker. Market makers that are
consolidators that target resting order flow tend to purchase more
connectivity that market makers that simply quote all symbols on the
Exchange. Even though non-Members purchase and resell 10Gb and 10Gb ULL
connections to both Members and non-Members, no market makers currently
connect to the Exchange indirectly through such resellers.
    SIFMA's argument that all broker-dealers are required to connect to
all exchanges is not true in the options markets. The options markets
have evolved differently than the equities markets both in terms of
market structure and functionality. For example, there are many order
types that are available in the equities markets that are not utilized
in the options markets, which relate to mid-point pricing and pegged
pricing which require connection to the SIPs and each of the equities
exchanges in order to properly execute those orders in compliance with
best execution obligations. In addition, in the options markets there
is a single SIP (OPRA) versus two SIPs in the equities markets,
resulting in fewer hops and thus alleviating the need to connect
directly to all the options exchanges. Additionally, in the options
markets, the linkage routing and trade through protection are handled
by the exchanges, not by the individual members. Thus not connecting to
an options exchange or disconnecting from an options exchange does not
potentially subject a broker-dealer to violate order protection
requirements as suggested by SIFMA. Gone are the days when the retail
brokerage firms (the Fidelity's, the Schwab's, the eTrade's) were
members of the options exchanges--they are not members of MIAX or its
affiliates, MIAX PEARL and MIAX Emerald, they do not purchase
connectivity to MIAX, and they do not purchase market data from MIAX.
The Exchange recognizes that the decision of whether to connect to the
Exchange is separate and distinct from the decision of whether and how
to trade on the Exchange. The Exchange acknowledges that many firms may
choose to connect to the Exchange, but ultimately not trade on it,
based on their particular business needs.
    To assist prospective Members or firms considering connecting to
MIAX, the Exchange provides information about the Exchange's available
connectivity alternatives in a Connectivity Guide, which contains
detailed specifications regarding, among other things, throughput and
latency for each available connection.\31\ The decision of which type
of connectivity to purchase, or whether to purchase connectivity at all
for a particular exchange, is based on the business needs of the firm.
For example, if the firm wants to receive the top-of-market data feed
product or depth data feed product, due to the amount/size of data
contained in those feeds, such firm would need to purchase either the
10Gb or 10Gb ULL connection. The 1Gb connection is too small to support
those data feed products. MIAX notes that there are twelve (12) Members
that only purchase the 1Gb connectivity alternative. Thus, while there
is a meaningful percentage of purchasers of only 1Gb connections (12 of
33), by definition, those twelve (12) members purchase connectivity
that cannot support the top-of-market data feed product or depth data
feed product and thus they do not purchase such data feed products.
Accordingly, purchasing market data is a business decision/choice, and
thus the pricing for it is constrained by competition.
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    \31\ See the MIAX Connectivity Guide at https://www.miaxoptions.com/sites/default/files/page-files/MIAX_Connectivity_Guide_v3.6_01142019.pdf.
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    Contrary to SIFMA's argument, there is competition for connectivity
to MIAX and its affiliates. MIAX competes with nine (9) non-Members who
resell MIAX connectivity. These are resellers of MIAX connectivity--
they are not arrangements between broker-dealers to share connectivity
costs, as SIFMA suggests. Those non-Members resell that connectivity to
multiple market participants over that same connection, including both
Members and non-Members of MIAX (typically extranets and service
bureaus). When connectivity is re-sold by a third-party, MIAX does not
receive any connectivity revenue from that sale. It is entirely between
the third-party and the purchaser, thus constraining the ability of
MIAX to set its connectivity pricing as indirect connectivity is a
substitute for direct connectivity. There are currently nine (9) non-
Members that purchase connectivity to MIAX and/or MIAX PEARL. Those
non-Members resell that connectivity to eleven (11) customers, some of
whom are agency broker-dealers that have tens of customers of their
own. Some of those eleven (11) customers also purchase connectivity
directly from MIAX and/or MIAX PEARL. Accordingly, indirect
connectivity is a viable alternative that is already being used by non-
Members of MIAX, constraining the price that MIAX is able to charge for
connectivity to its Exchange.
    The Exchange \32\ and MIAX PEARL \33\ are comprised of 41 distinct
Members between the two exchanges, excluding any additional affiliates
of such Members that are also Members of MIAX, MIAX PEARL, or both. Of
those 41 distinct Members, 33 Members have purchased the 1Gb, 10Gb,
10Gb ULL connections or some combination of multiple various
connections. Furthermore, every Member who has purchased at least one
connection also trades on the Exchange, MIAX PEARL, or both, with the
exception of one new Member who is currently in the on-boarding
process. The 8 remaining Members who have not purchased any
connectivity to the Exchange are still able to trade on the Exchange
indirectly through other Members or non-Member service bureaus that are
connected. These 8 Members who have not purchased connectivity are not
forced or compelled to purchase connectivity, and they retain all of
the other benefits of Membership with the Exchange. Accordingly,
Members have the choice to purchase connectivity and are not compelled
to do so in any way.
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    \32\ The Exchange has 38 distinct Members, excluding affiliated
entities. See MIAX Exchange Member Directory, available at https://www.miaxoptions.com/exchange-members.
    \33\ MIAX PEARL has 36 distinct Members, excluding affiliated
entities. See MIAX PEARL Exchange Member Directory, available at
https://www.miaxoptions.com/exchange-members/pearl.
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    The Exchange believes that the Proposed Fee Increases are fair,
equitable and not unreasonably discriminatory because the connectivity
pricing is associated with relative usage of the various market
participants and does not impose a barrier to entry to smaller
participants. Accordingly, the Exchange offers three direct
connectivity alternatives and various indirect connectivity (via third-
party) alternatives, as described above. MIAX recognizes that there are
various business models and varying sizes of market participants
conducting business on the Exchange. The 1Gb direct connectivity
alternative is \1/10\th the size of the 10Gb direct connectivity
alternative. Because it is \1/10\th of the size, it does not offer
access to many of the products and services offered by the Exchange,
such as the ability to quote or receive certain market data products.
Thus, the value of the 1Gb alternative is much lower than value of a
10Gb alternative, when measured based on

the type of Exchange access it offers, which is the basis for
difference in price between a 1Gb connection and a 10Gb connection.
Approximately just less than half of MIAX and MIAX PEARL Members that
connect (14 out of 33) purchase 1Gb connections. The 1Gb direct
connection can support the sending of orders and the consumption of all
market data feed products, other than the top-of-market data feed
product or depth data feed product (which require a 10Gb connection).
The 1Gb direct connection is generally purchased by market participants
that utilize less bandwidth. The market participants that purchase 10Gb
ULL direct connections utilize the most bandwidth, and those are the
participants that consume the most resources from the network.
Accordingly, the Exchange believes the allocation of the Proposed Fee
Increases ($9,300 for a 10Gb ULL connection versus $1,400 for a 1Gb
connection) are reasonable based on the network resources consumed by
the market participants--lowest bandwidth consuming members pay the
least, and highest bandwidth consuming members pays the most,
particularly since higher bandwidth consumption translates to higher
costs to the Exchange. The 10Gb ULL connection offers optimized
connectivity for latency sensitive participants and is approximately
single digit microseconds faster in round trip time for connection
oriented traffic to the Exchange than the 10Gb connection. This lower
latency is achieved through more advanced network equipment, such as
advanced hardware and switching components, which translates to
increased costs to the Exchange. Market participants that are less
latency sensitive can purchase 10Gb direct connections and quote in all
products on the Exchange and consume all market data feeds, and such
10Gb direct connections are priced lower than the 10Gb ULL direct
connections, offering smaller sized market makers a lower cost
alternative.
    With respect to options trading, the Exchange had only 3.75% market
share of the U.S. options industry in May 2019 in Equity/ETF classes
according to the OCC.\34\ For May 2019, the Exchange's affiliate, MIAX
PEARL, had only 4.84% market share of the U.S. options industry in
Equity/ETF classes according to the OCC.\35\ For May 2019, the
Exchange's affiliate, MIAX Emerald, had only 0.77% market share of the
U.S. options industry in Equity/ETF classes according to the OCC.\36\
The Exchange is not aware of any evidence that a combined market share
of less than 10% provides the Exchange with anti-competitive pricing
power. This, in addition to the fact that not all broker-dealers are
required to connect to all options exchanges, supports the Exchange's
conclusion that its pricing is constrained by competition.
---------------------------------------------------------------------------

    \34\ See Exchange Market Share of Equity Products--2019, The
Options Clearing Corporation, available at https://www.theocc.com/webapps/exchange-volume.
    \35\ Id.
    \36\ Id.
---------------------------------------------------------------------------

    Separately, the Exchange is not aware of any reason why market
participants could not simply drop their connections and cease being
Members of the Exchange if the Exchange were to establish unreasonable
and uncompetitive price increases for its connectivity alternatives.
Market participants choose to connect to a particular exchange and
because it is a choice, MIAX must set reasonable connectivity pricing,
otherwise prospective members would not connect and existing members
would disconnect or connect through a third-party reseller of
connectivity. No options market participant is required by rule,
regulation, or competitive forces to be a Member of the Exchange.
Several market participants choose not to be Members of the Exchange
and choose not to access the Exchange, and several market participants
also access the Exchange indirectly through another market participant.
To illustrate, the Exchange has only 45 Members (including all such
Members' affiliate Members). However, Cboe Exchange, Inc. (``Cboe'')
has over 200 members,\37\ Nasdaq ISE, LLC has approximately 100
members,\38\ and NYSE American LLC has over 80 members.\39\ If all
market participants were required to be Members of the Exchange and
connect directly to the Exchange, the Exchange would have over 200
Members, in line with Cboe's total membership. But it does not. The
Exchange only has 45 Members (inclusive of Members' affiliates).
---------------------------------------------------------------------------

    \37\ See Form 1/A, filed August 30, 2018 (https://www.sec.gov/Archives/edgar/vprr/1800/18002831.pdf); Form 1/A, filed August 30,
2018 (https://www.sec.gov/Archives/edgar/vprr/1800/18002833.pdf);
Form 1/A, filed July 24, 2018 (https://www.sec.gov/Archives/edgar/vprr/1800/18002781.pdf); Form 1/A, filed August 30, 2018 (https://www.sec.gov/Archives/edgar/data/1473845/999999999718007832/9999999997-18-007832-index.htm).
    \38\ See Form 1/A, filed July 1, 2016 (https://www.sec.gov/Archives/edgar/vprr/1601/16019243.pdf).
    \39\ See https://www.nyse.com/markets/american-options/membership#directory.
---------------------------------------------------------------------------

    The Exchange finds it compelling that all of the Exchange's
existing Members continued to purchase the Exchange's connectivity
services during the period for which the Proposed Fee Increases took
effect in August 2018. In particular, the Exchange believes that the
Proposed Fee Increases are reasonable because the Exchange did not lose
any Members (or the number of connections each Member purchased) or
non-Member connections due to the Exchange increasing its connectivity
fees through the First Proposed Rule Change, which fee increase became
effective August 1, 2018. For example, in July 2018, fourteen (14)
Members purchased 1Gb connections, ten (10) Members purchased 10Gb
connections, and fifteen (15) Members purchased 10Gb ULL connections.
(The Exchange notes that 1Gb connections are purchased primarily by EEM
Members; 10Gb ULL connections are purchased primarily by higher volume
Market Makers quoting all products across both MIAX and MIAX PEARL and
targeting mid-market resting orders; and 10Gb connections are purchased
by higher volume EEMs and lower volume Market Makers.) The vast
majority of those Members purchased multiple such connections with the
actual number of connections depending on the Member's throughput
requirements based on the volume of their quote/order traffic and
market data needs associated with their business model. After the fee
increase, beginning August 1, 2018, the same number of Members
purchased the same number of connections.\40\ Furthermore, the total
number of connections did not decrease from July to August 2018, and in
fact one Member even purchased two (2) additional 10Gb ULL connections
in August 2018, after the fee increase.
---------------------------------------------------------------------------

    \40\ The Exchange notes that one Member downgraded one
connection in July of 2018, however such downgrade was done well
ahead of notice of the Proposed Fee Increase and was the result of a
change to the Member's business operation that was completely
independent of, and unrelated to, the Proposed Fee Increases.
---------------------------------------------------------------------------

    Also, in July 2018, four (4) non-Members purchased 1Gb connections,
two (2) non-Members purchased 10Gb connections, and one (1) non-Member
purchased 10Gb ULL connections. After the fee increase, beginning
August 1, 2018, the same non-Members purchased the same number of
connections across all available alternatives and two (2) additional
non-Members purchased three (3) more connections after the fee
increase. These non-Members freely purchased their connectivity with
the Exchange in order to offer trading services to other firms and
customers, as well as access to the market data services that their
connections to the Exchange provide them, but they are not required or
compelled to purchase any

of the Exchange's connectivity options. MIAX did not experience any
noticeable change (increase or decrease) in order flow sent by its
market participants as a result of the fee increase.
    Of those Members and non-Members that bought multiple connections,
no firm dropped any connections beginning August 1, 2018, when the
Exchange increased its fees. Nor did the Exchange lose any Members.
Furthermore, the Exchange did not receive any comment letters or
official complaints from any Member or non-Member purchaser of
connectivity regarding the increased fees regarding how the fee
increase was unreasonable, unduly burdensome, or would negatively
impact their competitiveness amongst other market participants. These
facts, coupled with the discussion above, showing that it is not
necessary to join and/or connect to all options exchanges, demonstrate
that the Exchange's fees are constrained by competition and are
reasonable and not contrary to the Law of Demand as SIFMA suggests.
Therefore, the Exchange believes that the Proposed Fee Increases are
fair, equitable, and non-discriminatory, as the fees are competitive.
    The Exchange believes that the Proposed Fee Increases are equitably
allocated among Members and non-Members, as evidenced by the fact that
the fee increases are allocated across all connectivity alternatives,
and there is not a disproportionate number of Members purchasing any
alternative--fourteen (14) Members purchased 1Gb connections, ten (10)
Members purchased 10Gb connections, fifteen (15) Members purchased 10Gb
ULL connections, four (4) non-Members purchased 1Gb connections, two
(2) non-Members purchased 10Gb connections, and one (1) non-Member
purchased 10Gb ULL connections. The Exchange recognizes that the
relative fee increases are 27% for the 1Gb connection, 10.9% for the
10Gb connection, and 9.4% for the 10Gb ULL connection, but the Exchange
believes that percentage increase differentiation is appropriate, given
the different levels of service provided and the largest percentage
increase being associated with the lowest cost connection. Further, the
Exchange believes that the fees are reasonably allocated as the users
of the higher bandwidth connections consume the most resources of the
Exchange's network. It is these firms that account that also account
for the vast majority of the Exchange's trading volume. The purchasers
of the 10Gb ULL connectivity account for approximately 75% of the
volume on the Exchange. For example, in June of 2019, to date,
approximately 7.8 million contracts of the 10.3 million contracts
executed were done by the top market making firms on the Exchange in
simple (non-complex) volume. The Exchange considered whether to
increase transaction fees and other fees in order to offset its costs
as an alternative to increasing connectivity fees, however, the
Exchange determined that increasing its connectivity fees was the only
viable alternative. This is because the increased costs are more
closely associated with connectivity, as well as the intense level of
competition among the options exchanges for order flow through
transaction fees.
    Second, the Exchange believes that its proposal is consistent with
Section 6(b)(4) of the Act because the Proposed Fee Increases will
permit recovery of the Exchange's costs and will not result in
excessive pricing or supracompetitive profit. The Proposed Fee
Increases will allow the Exchange to recover a portion (less than all)
of the increased costs incurred by the Exchange associated with
providing and maintaining the necessary hardware and other network
infrastructure to support this technology since it last filed to
increase its connectivity fees in December 2016, which became effective
on January 1, 2017.\41\ Put simply, the costs of the Exchange to
provide these services have increased considerably over this time, as
more fully-detailed and quantified below. The Exchange believes that it
is reasonable and appropriate to increase its fees charged for use of
its connectivity to partially offset the increased costs the Exchange
incurred during this time associated with maintaining and enhancing a
state-of-the-art exchange network infrastructure in the U.S. options
industry.
---------------------------------------------------------------------------

    \41\ See Securities Exchange Act Release No. 79666 (December 22,
2016), 81 FR 96133 (December 29, 2016) (SR-MIAX-2016-47) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule To Modify the Exchange's Connectivity Fees).
---------------------------------------------------------------------------

    In particular, the Exchange's increased costs associated with
supporting its network are due to several factors, including increased
costs associated with maintaining and expanding a team of highly-
skilled network engineers (the Exchange also hired additional network
engineering staff in 2017 and 2018), increasing fees charged by the
Exchange's third-party data center operator, and costs associated with
projects and initiatives designed to improve overall network
performance and stability, through the Exchange's research and
development (``R&D'') efforts.
    In order to provide more detail and to quantify the Exchange's
increased costs, the Exchange notes that increased costs are associated
with the infrastructure and increased headcount to fully-support the
advances in infrastructure and expansion of network level services,
including customer monitoring, alerting and reporting. Additional
technology expenses were incurred related to the expanding its
Information Security services, enhanced network monitoring and customer
reporting, as well as Regulation SCI mandated processes associated with
network technology. All of these additional expenses have been incurred
by the Exchange since it last increased its connectivity fees on
January 1, 2017.
    Additionally, while some of the expense is fixed, much of the
expense is not fixed, and thus increases as the number of connections
increase. For example, new 1Gb, 10Gb, and 10Gb ULL connections require
the purchase of additional hardware to support those connections as
well as enhanced monitoring and reporting of customer performance that
MIAX and its affiliates provide. And 10Gb ULL connections require the
purchase of specialized, more costly hardware. Further, as the total
number of all connections increase, MIAX and its affiliates need to
increase their data center footprint and consume more power, resulting
in increased costs charged by their third-party data center provider.
Accordingly, cost to MIAX and its affiliates is not entirely fixed.
Just the initial fixed cost buildout of the network infrastructure of
MIAX and its affiliates, including both primary/secondary sites and
disaster recovery, was over $30 million. These costs have increased
over 10% since the last time the Exchange increased its connectivity
fees on January 1, 2017. As these network connectivity-related expenses
increase, MIAX and its affiliates look to offset those costs through
increased connectivity fees.
    A more detailed breakdown of the expense increases since January 1,
2017 include an approximate 70% increase in technology-related
personnel costs in infrastructure, due to expansion of services/support
(increase of approximately $800,000); an approximate 10% increase in
datacenter costs due to price increases and footprint expansion
(increase of approximately $500,000); an approximate 5% increase in
vendor-supplied dark fiber due to price increases and expanded
capabilities (increase of approximately $25,000); and a 30% increase in
market data connectivity fees (increase of approximately $200,000). Of
note,

regarding market data connectivity fee increased cost, this is the cost
associated with MIAX consuming connectivity/content from the equities
markets in order to operate the Exchange, causing MIAX to effectively
pay its competitors for this connectivity. While the Exchange and MIAX
PEARL have incurred a total increase in connectivity expenses since
January 2017 (the last time connectivity fees were raised) of
approximately $1.5 million per year (as described above), the total
increase in connectivity revenue amount as a result of the Proposed Fee
Increases is projected to be approximately $1.2 million per year for
MIAX and MIAX PEARL. Accordingly, the total projected MIAX and MIAX
PEARL connectivity revenue as a result of the proposed increase, on an
annualized basis, is less than total annual actual MIAX and MIAX PEARL
connectivity expense. Accordingly, the Proposed Fee Increases are fair
and reasonable because they will not result in excessive pricing or
supracompetitive profit, when comparing the increase in actual costs to
the Exchange (since January 2017) versus the projected increase in
annual revenue.
    The Exchange also incurred additional significant capital
expenditures over this same period to upgrade and enhance the
underlying technology components, as more fully-detailed below.
    Further, because the costs of operating a data center are
significant and not economically feasible for the Exchange, the
Exchange does not operate its own data centers, and instead contracts
with a third-party data center provider. The Exchange notes that
larger, dominant exchange operators own/operate their data centers,
which offers them greater control over their data center costs. Because
those exchanges own and operate their data centers as profit centers,
the Exchange is subject to additional costs. As a result, the Exchange
is subject to fee increases from its data center provider, which the
Exchange experienced in 2017 and 2018 of approximately 10%, as cited
above. Connectivity fees, which are charged for accessing the
Exchange's data center network infrastructure, are directly related to
the network and offset such costs.
    Further, the Exchange invests significant resources in network R&D,
which are not included in direct expenses to improve the overall
performance and stability of its network. For example, the Exchange has
a number of network monitoring tools (some of which were developed in-
house, and some of which are licensed from third-parties), that
continually monitor, detect, and report network performance, many of
which serve as significant value-adds to the Exchange's Members and
enable the Exchange to provide a high level of customer service. These
tools detect and report performance issues, and thus enable the
Exchange to proactively notify a Member (and the SIPs) when the
Exchange detects a problem with a Member's connectivity. The costs
associated with the maintenance and improvement of existing tools and
the development of new tools resulted in significant increased cost to
the Exchange since January 1, 2017.
    Certain recently developed network aggregation and monitoring tools
provide the Exchange with the ability to measure network traffic with a
much more granular level of variability. This is important as Exchange
Members demand a higher level of network determinism and the ability to
measure variability in terms of single digit nanoseconds. Also, the
Exchange routinely conducts R&D projects to improve the performance of
the network's hardware infrastructure. As an example, in the last year,
the Exchange's R&D efforts resulted in a performance improvement,
requiring the purchase of new equipment to support that improvement,
and thus resulting in increased costs in the hundreds of thousands of
dollars range. In sum, the costs associated with maintaining and
enhancing a state-of-the-art exchange network infrastructure in the
U.S. options industry is a significant expense for the Exchange that
continues to increase, and thus the Exchange believes that it is
reasonable to offset a portion of those increased costs by increasing
its network connectivity fees, as proposed herein. The Exchange invests
in and offers a superior network infrastructure as part of its overall
options exchange services offering, resulting in significant costs
associated with maintaining this network infrastructure, which are
directly tied to the amount of the connectivity fees that must be
charged to access it, in order to recover those costs. As detailed in
the Exchange's 2018 audited financial statements which will be publicly
available as part of the Exchange's Form 1 Amendment, the Exchange only
has four primary sources of revenue: Transaction fees, access fees (of
which network connectivity constitute the majority), regulatory fees,
and market data fees. Accordingly, the Exchange must cover all of its
expenses from these four primary sources of revenue.
    The Proposed Fee Increases are fair and reasonable because they
will not result in excessive pricing or supracompetitive profit, when
comparing the total annual expense of the Exchange associated with
providing the network connectivity services versus the total projected
annual revenue of the Exchange associated with providing the network
connectivity services. For 2018, the annual expense associated with
providing the network connectivity services (that is, the shared
network connectivity of MIAX and MIAX PEARL, but excluding MIAX
Emerald) was approximately $20.8 million. This amount is comprised of
both direct and indirect expense. The direct expense (which relates
100% to the network infrastructure, associated data center processing
equipment required to support various connections, network monitoring
systems and associated software required to support the various forms
of connectivity) was approximately $8.5 million (constituting primarily
Information Technology expense in the Exchange's 2018 financial
statements). The indirect expense (which includes expense from such
areas as trading operations, software development, business
development, information technology, marketing, human resources, legal
and regulatory, finance and accounting) that the Exchange allocates to
the maintenance and support of network connectivity services was
approximately $12.3 million. This indirect expense amount of $12.3
million represents approximately 20% of the total annual expense of
MIAX and MIAX PEARL for 2018 of approximately $70 million, less direct
expense of $8.5 million ($70 million less $8.5 million equals $61.5
million multiplied by 20% equals $12.3 million). Total projected
annualized revenue of the Exchange associated with selling the network
connectivity services (reflecting the Proposed Fee Increases on a
fully-annualized basis, using May 2019 data) for MIAX and MIAX PEARL is
projected to be approximately $14.5 million. This projected revenue
amount of $14.5 million represents approximately 20% of total net
revenue of MIAX and MIAX PEARL for 2018 of approximately $72 million.
The Exchange believes that an indirect expense allocation of 20% of
total expense (less direct expense) to network connectivity services is
fair and reasonable, as total projected network connectivity revenue
represents approximately 20% of total net revenue for 2018. That is,
direct expense of $8.5 million plus indirect expense of $12.3 million
fairly reflects the total annual

expense associated with providing the network connectivity services,
both from the perspective of similar revenue and expense percentages
(connectivity to total), as well as matching connectivity resources to
connectivity expenses. The Exchange believes that this is a
conservative allocation of indirect expense. Accordingly, the total
projected MIAX and MIAX PEARL connectivity revenue, reflective of the
proposed increase, on an annualized basis, of $14.5 million, is less
than total annual actual MIAX and MIAX PEARL connectivity expense for
2018 of $20.8 million. The Exchange projects comparable network
connectivity revenue and expense for 2019 for MIAX and MIAX PEARL.
Accordingly, the Proposed Fee Increases are fair and reasonable because
they do not result in excessive pricing or supracompetitive profit,
when comparing the actual network connectivity costs to the Exchange
versus the projected network connectivity annual revenue, including the
increase amount. Additional information on overall revenue and expense
of the Exchange can be found in the Exchange's 2018 audited financial
results, which will be publicly available as part of the Exchange's
Form 1 filed with the Commission by June 30, 2019.
    The Exchange notes that other exchanges have similar connectivity
alternatives for their participants, including similar low-latency
connectivity. For example, Nasdaq PHLX LLC (``Phlx''), NYSE Arca, Inc.
(``Arca''), NYSE American LLC (``NYSE American'') and Nasdaq ISE, LLC
(``ISE'') all offer a 1Gb, 10Gb and 10Gb low latency ethernet
connectivity alternatives to each of their participants.\42\ The
Exchange further notes that Phlx, ISE, Arca and NYSE American each
charge higher rates for such similar connectivity to primary and
secondary facilities.\43\ While MIAX's proposed connectivity fees are
substantially lower than the fees charged by Phlx, ISE, Arca and NYSE
American, MIAX believes that it offers significant value to Members
over other exchanges in terms of network monitoring and reporting,
which MIAX believes is a competitive advantage, and differentiates its
connectivity versus connectivity to other exchanges. Additionally, the
Exchange's proposed connectivity fees to its disaster recovery facility
are within the range of the fees charged by other exchanges for similar
connectivity alternatives.\44\
---------------------------------------------------------------------------

    \42\ See Phlx and ISE Rules, General Equity and Options Rules,
General 8, Section 1(b). Phlx and ISE each charge a monthly fee of
$2,500 for each 1Gb connection, $10,000 for each 10Gb connection and
$15,000 for each 10Gb Ultra connection, which the equivalent of the
Exchange's 10Gb ULL connection. See also NYSE American Fee Schedule,
Section V.B, and Arca Fees and Charges, Co-Location Fees. NYSE
American and Arca each charge a monthly fee of $5,000 for each 1Gb
circuit, $14,000 for each 10Gb circuit and $22,000 for each 10Gb LX
circuit, which the equivalent of the Exchange's 10Gb ULL connection.
    \43\ Id.
    \44\ See Nasdaq ISE, Options Rules, Options 7, Pricing Schedule,
Section 11.D. (charging $3,000 for disaster recovery testing &
relocation services); see also Cboe Exchange, Inc. (``Cboe'') Fees
Schedule, p. 14, Cboe Command Connectivity Charges (charging a
monthly fee of $2,000 for a 1Gb disaster recovery network access
port and a monthly fee of $6,000 for a 10Gb disaster recovery
network access port).
---------------------------------------------------------------------------

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

    MIAX does not believe that the proposed rule changes will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.
Intra-Market Competition
    The Exchange does not believe that the proposed rule change would
place certain market participants at the Exchange at a relative
disadvantage compared to other market participants or affect the
ability of such market participants to compete. In particular, the
Exchange has received no official complaints from Members, non-Members
(extranets and service bureaus), third-parties that purchase the
Exchange's connectivity and resell it, and customers of those
resellers, that the Exchange's fees or the Proposed Fee Increases are
negatively impacting or would negatively impact their abilities to
compete with other market participants or that they are placed at a
disadvantage.
    The Exchange believes that the Proposed Fee Increases do not place
certain market participants at a relative disadvantage to other market
participants because the connectivity pricing is associated with
relative usage of the various market participants and does not impose a
barrier to entry to smaller participants. As described above, the less
expensive 1Gb direct connection is generally purchased by market
participants that utilize less bandwidth. The market participants that
purchase 10Gb ULL direct connections utilize the most bandwidth, and
those are the participants that consume the most resources from the
network. Accordingly, the Proposed Fee Increases do not favor certain
categories of market participants in a manner that would impose a
burden on competition; rather, the allocation of the Proposed Fee
Increases reflects the network resources consumed by the various size
of market participants--lowest bandwidth consuming members pay the
least, and highest bandwidth consuming members pays the most,
particularly since higher bandwidth consumption translates to higher
costs to the Exchange.
Inter-Market Competition
    The Exchange believes the Proposed Fee Increases do not place an
undue burden on competition on other SROs that is not necessary or
appropriate. In particular, options market participants are not forced
to connect to (and purchase market data from) all options exchanges, as
shown by the number of Members of MIAX as compared to the much greater
number of members at other options exchanges (as described above). Not
only does MIAX have less than half the number of members as certain
other options exchanges, but there are also a number of the Exchange's
Members that do not connect directly to MIAX. There are a number of
large market makers and broker-dealers that are members of other
options exchange but not Members of MIAX. Additionally, the Exchange
other exchanges have similar connectivity alternatives for their
participants, including similar low-latency connectivity, but with much
higher rates to connect.\45\ The Exchange is also unaware of any
assertion that its existing fee levels or the Proposed Fee Increases
would somehow unduly impair its competition with other options
exchanges. To the contrary, if the fees charged are deemed too high by
market participants, they can simply disconnect.
---------------------------------------------------------------------------

    \45\ See supra note 42.
---------------------------------------------------------------------------

    While the Exchange recognizes the distinction between connecting to
an exchange and trading at the exchange, the Exchange notes that it
operates in a highly competitive options market in which market
participants can readily connect and trade with venues they desire. In
such an environment, the Exchange must continually adjust its fees to
remain competitive with other exchanges. The Exchange believes that the
proposed changes reflect this competitive environment.

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

    Written comments were neither solicited nor received.

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,\46\ and Rule 19b-4(f)(2) \47\ 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.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \47\ 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-MIAX-2019-31 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-MIAX-2019-31. 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-MIAX-2019-31 and should be submitted on
or before August 6, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\48\
---------------------------------------------------------------------------

    \48\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-15024 Filed 7-15-19; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 148 (Thursday, August 3, 2023)]
[Notices]
[Pages 51373-51374]
[FR Doc No: 2023-16491]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34976]

Deregistration Under Section 8(f) of the Investment Company Act
of 1940

AGENCY: Securities and Exchange Commission (``Commission'' or ``SEC'')

ACTION: Notice of Applications for Deregistration under Section 8(f) of
the Investment Company Act of 1940.

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    The following is a notice of applications for deregistration under
section 8(f) of the Investment Company Act of 1940 for the month of
July 2023. A copy of each application may be obtained via the
Commission's website by searching for the applicable file number listed
below, or for an applicant using the Company name search field, on the
SEC's EDGAR system. The SEC's EDGAR system may be searched at https://www.sec.gov/edgar/searchedgar/legacy/companysearch.html. You may also
call the SEC's Public Reference Room at<PHONE_NUMBER>. An order
granting each application will be issued unless the SEC orders a
hearing. Interested persons may request a hearing on any application by
emailing the SEC's Secretary at [email protected] and serving
the relevant applicant with a copy of the request by email, if an email
address is listed for the relevant applicant below, or personally or by
mail, if a physical address is listed for the relevant applicant below.
Hearing requests should be received by the SEC by 5:30 p.m. on August
22, 2023, and should be accompanied by proof of service on applicants,
in the form of an affidavit or, for lawyers, a certificate of service.
Pursuant to Rule 0-5 under the Act, hearing requests should state the
nature of the writer's interest, any facts bearing upon the
desirability of a hearing on the matter, the reason for the request,
and the issues contested. Persons who wish to be notified of a hearing
may request notification by writing to the Commission's Secretary at
[email protected].

ADDRESSES: The Commission: [email protected].

FOR FURTHER INFORMATION CONTACT: Shawn Davis, Assistant Director, at
(202) 551-6413 or Chief Counsel's Office at<PHONE_NUMBER>; SEC,
Division of Investment Management, Chief Counsel's Office, 100 F Street
NE, Washington, DC 20549-8010.

AlphaCentric Prime Meridian Income Fund [File No. 811-23230]

    Summary: Applicant, a closed-end investment company, seeks an order
declaring that it has ceased to be an investment company. Applicant
currently has fewer than 100 beneficial owners, is not presently making
an offering of securities and does not propose to make any offering of
securities. Applicant will continue to operate as a private investment
fund in reliance on section 3(c)(1) of the Act.
    Filing Dates: The application was filed on June 22, 2023.
    Applicant's Address: 36 North New York Avenue, Huntington, New York
11743.

BNY Mellon Ultra Short Income Fund [File No. 811-04888]

    Summary: Applicant seeks an order declaring that it has ceased to
be an investment company. On December 21, 2021, applicant made a
liquidating distribution to its shareholders based on net asset value.
Expenses of $4,883 incurred in connection with the liquidation were
paid by the applicant's investment adviser.
    Filing Dates: The application was filed on June 12, 2023.
    Applicant's Address: c/o BNY Mellon Investment Adviser, Inc., 240
Greenwich Street, New York, New York 10286.

    For the Commission, by the Division of Investment Management,
pursuant to delegated authority.

    Dated: July 28, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16491 Filed 8-2-23; 8:45 am]
BILLING CODE 8011-01-P


UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                NATIONAL VEHICLE AND FUEL EMISSIONS LABORATORY
                             2000 TRAVERWOOD ROAD
                           ANN ARBOR, MI  48105-2498

									          	OFFICE OF
										AIR AND RADIATION

January 18, 2011

MEMORANDUM

SUBJECT:	Meeting with the Motor & Equipment Manufacturers Association (MEMA)

FROM:	Angela Cullen

TO:		Docket EPA-HQ-OAR-2010-0162

This memorandum documents a teleconference held on Thursday, January 13, 2011 between EPA, NHTSA, and MEMA.  The individuals who participated in the teleconference include:

      EPA: Byron Bunker, Chien Sze, Cle Jackson, and Angela Cullen

      NHTSA: Maurice Hicks

      MEMA: Leigh Merino and representatives from Bergstrom, Bendix, Delphi, Eaton, Essbar Heating Systems, Honeywell, Reemy, Bosch, SRG Global, Webasto, ZF, and Alcoa

In the meeting, EPA provided clarifications to the questions posed by MEMA included below:
Clarification Questions / Issue Areas for EPA Call 1/13/11
1.       Relative to the regulatory flexibilities, as we understand it, the agencies want to encourage faster adoption of advanced technologies and, as such, have proposed including a 1.5 credit for Hybrid Powertrains (designs that include energy storage systems); Rankine Cycle Engines (waste heat recovery); All-Electric Vehicles; and, Fuel Cell Vehicles.
Please consider the following questions:
         a.       Agencies requested comments on the technologies identified and whether additional technologies should be added to the list. We interpret that to mean the agency needs a concrete list of advanced technologies and/or advanced technology categories. Is a "fixed list" what the agencies envisioned for the standards? Or would the agency be open to an approach / system that could add, over time, advanced technologies to an active list / living document to include technologies (deemed / defined as "advanced") evolve within those categories listed in the NPRM?
         b.      Specific question re: Rankine Cycle Engines  -  On Page 74255 the NPRM specifies "Rankine cycle engines" as a proposed advanced credit technology. Is "Rankine" interchangeable with "bottoming cycle" in this context?
         c.       Specific question re: Hybrid Powertrains  -  On Page 74188 the NPRM specifies "the agencies propose to set standards for the chassis manufacturers of vocational vehicles." Can advanced technology credits be generated for hybrid vocational vehicles in the case where the hybrid system integrator is not the chassis manufacturer? If yes, is the chassis manufacturer required to do the testing or is it acceptable for the hybrid system integrator to do the testing for the credits calculation?
2.       For innovative technologies we understand the agencies included them as those technologies "for which the reduction benefits are not captured over the test procedure used to determine compliance with the standards"   -  and are, therefore, "off-cycle." The agencies continue on to say that eligible innovative technology "are newly introduced in one or more vehicle models or engines, but that are not yet widely implemented in the heavy-duty fleet."
We would like clarification on how the agencies interpret "newly introduced" and "widely implemented."
3.       We notice that under the "Definitions" section of the proposed regulatory text (Subpart I -- Definitions and Other Reference Information§ 1036.801 Definitions), there are no proposed definitions for either "advanced technologies" or "innovative technologies." Was that intentional?
4.       Page 74209 (center column) refers to "four separate N2O measurement methods" and that "EPA expects that most manufacturers would use photo-acoustic measurement equipment". What are the other acceptable measurement methods?
5.       Can the agencies share with us what was the volume mix of diesel and gasoline vehicles used to establish the 2010 common baseline for the pickups and vans?
6.       In the pickup and vans category, can credits be applied across fuel types within this category? For example, can credits on diesel vehicles be applied to compensate for deficiencies on gasoline vehicles?
7.      Why are improved accessories for HD pickups and vans only considered for diesel engine vehicles and not gasoline engine vehicles