[Federal Register: August 10, 2006 (Volume 71, Number 154)]
[Notices]
[Page 45876-45878]
[DOCID:fr10au06-131]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54271; File No. SR-NASDAQ-2006-027]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify the Date for Compliance With Regulation NMS

August 3, 2006.
    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 August 2, 2006, The NASDAQ Stock Market LLC (``Nasdaq'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by Nasdaq. Nasdaq has filed the proposal pursuant to Section
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which
renders the proposal effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Nasdaq proposes to modify the date upon which its execution systems
would be in compliance with Regulation NMS under the Act (``Regulation
NMS''). The text of the proposed rule change is available on Nasdaq's
Web site at http://www.nasdaq.com, at the principal office of Nasdaq,

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, Nasdaq 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. Nasdaq 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
    Nasdaq proposes to modify certain of its rules that become
effective upon the compliance date for Regulation NMS. In a previous
proposal, Nasdaq had listed the compliance date as May 21, 2007,\5\ the
date established by the Commission for full industry compliance.\6\ The
Commission has established February 5, 2007, as the date of compliance
for all automated trading centers such as Nasdaq. Accordingly, Nasdaq
is proposing to modify its approved rules to demonstrate compliance
with Regulation NMS by February 5, 2007, to conform with the
Commission's scheduled compliance date.
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    \5\ See Securities Exchange Act Release No. 54155 (July 14,
2006), 71 FR 41291 (July 20, 2006).
    \6\ See Securities Exchange Act Release No. 53829 (May 18,
2006), 71 FR 30038 (May 24, 2006).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\7\ in general, and with
Sections 6(b)(5) of the Act,\8\ in particular, in that the proposal is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to 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. Nasdaq
believes that the proposed rule change clarifies certain terms in
Nasdaq's rules.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result
in 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

    Written comments were neither solicited nor received.

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

    The foregoing proposed rule change is subject to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder \10\
because the proposal: (i) Does not significantly affect the protection
of investors or the public interest; (ii) does not impose any
significant burden on competition; and (iii) does not become operative
prior to 30 days after the date of filing or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest; provided that Nasdaq has given the Commission
notice of its intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule change,
or such shorter time as designated by the Commission.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission waive the five-day pre-
filing requirement and the 30-day pre-operative delay. Nasdaq believes
that the filing may appropriately be designated as ``non-
controversial'' because the filing would conform certain of Nasdaq's
rules to changes made in Regulation NMS. Accordingly, Nasdaq believes
that its proposal should become immediately effective and the
Commission should grant Nasdaq's request to waive the 5-day pre-filing
requirement and the 30-day pre-operative waiting period. The Commission
believes that waiving the five-day pre-filing requirement and the 30-
day pre-operative delay is consistent with the protection of investors
and the public interest because such waiver would permit Nasdaq to
clarify the proposed rule change prior to the launch of Nasdaq's new
integrated system, Single Book. For this reason, the Commission
designates the proposed rule change to be effective and operative upon
filing with the Commission.\11\
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    \11\ For the purposes only of waiving the 30-day pre-operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of such proposed rule
change the Commission may summarily abrogate 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.

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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASDAQ-2006-027 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2006-027. This
file number should be included on the subject line if e-mail 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 Web site (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 inspection
and copying in the Commission's Public Reference Room. Copies of the
filing also will be available for inspection and copying at the
principal office of Nasdaq. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NASDAQ-2006-027 and should be submitted on or before
August 31, 2006.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-13004 Filed 8-9-06; 8:45 am]

BILLING CODE 8010-01-P


incurs to provide physical connectivity in the third-party data centers
where it maintains its equipment as well as related costs (the Exchange
does not own the Primary Data Center or the Secondary Data Center, but
instead, leases space in data centers operated by third parties).
External Market Data
    External Market Data includes fees paid to third parties, including
other exchanges, to receive and consume market data from other markets.
The Exchange included External Market Data fees to the provision of
Limited Service MEI Ports as such market data is also necessary here
(in addition to physical connectivity) to offer certain services
related to such ports, such as validating orders on entry against the
national best bid and national best offer and checking for other
conditions (e.g., whether a symbol is halted). This allocation was
included as part of the internet Services cost described above.\127\
Thus, as market data from other Exchanges is consumed at the Limited
Service MEI Port level in order to validate orders before additional
processing occurs with respect to such orders, the Exchange believes it
is reasonable to allocate a small amount of such costs to Limited
Service MEI Ports.
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    \127\ The Exchange notes that MEMX separately allocated 7.5% of
its external market data costs to providing physical connectivity.
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Hardware and Software Maintenance and Licenses
    Hardware and Software Licenses includes hardware and software
licenses used to monitor the health of the order entry services
provided by the Exchange, as described above.
    The Exchange notes that this allocation is greater than its
affiliate, MIAX Pearl Options, by more than a de minimis amount, as
MIAX allocated 7.2% of its Hardware and Software Maintenance and
License expense towards Limited Service MEI Ports, while MIAX Pearl
Options allocated 1.4% to its Full Service MEO Ports (Bulk and Single)
for the same category of expense. The allocation percentages set forth
above differ because they correspond with the number of applicable
ports utilized on each exchange. For March 2023, MIAX Market Makers
utilized 1,782 Limited Service MEI ports and MIAX Emerald Market Makers
utilized 1,028 Limited Service MEI Ports. When compared to Full Service
Port (Bulk and Single) usage, for March 2023, MIAX Pearl Options
Members utilized only 432 Full Service MEO Ports (Bulk and Single), far
fewer than number of Limited Service MEI Ports utilized by Market
Makers on MIAX, thus resulting in a smaller cost allocation. There is
increased cost associated with supporting a higher number of ports
(requiring more hardware and other technical infrastructure), thus the
Exchange allocates a higher percentage of expense than MIAX Pearl
Options, which has a lower port count.
Monthly Depreciation
    All physical assets and software, which also includes assets used
for testing and monitoring of order entry infrastructure, were valued
at cost, depreciated or leased over periods ranging from three to five
years. Thus, the depreciation cost primarily relates to servers
necessary to operate the Exchange, some of which is owned by the
Exchange and some of which is leased by the Exchange in order to allow
efficient periodic technology refreshes. The Exchange allocated 6.3% of
all depreciation costs to providing Limited Service MEI Ports. In
contrast to physical connectivity, described above, the Exchange did
allocate depreciation costs for depreciated software necessary to
operate the Exchange to Limited Service MEI Ports because such software
is related to the provision of such connectivity. The Exchange also
notes that this allocation differs from its affiliated markets due to a
number of factors, such as the age of physical assets and software
(e.g., older physical assets and software were previously depreciated
and removed from the allocation), or certain system enhancements that
required new physical assets and software, thus providing a higher
contribution to the depreciated cost.
Allocated Shared Expenses
    Finally, a limited portion of general shared expenses was allocated
to overall Limited Service MEI Ports costs as without these general
shared costs the Exchange would not be able to operate in the manner
that it does and provide

Limited Service MEI Ports. The costs included in general shared
expenses include general expenses of the Exchange, including office
space and office expenses (e.g., occupancy and overhead expenses),
utilities, recruiting and training, marketing and advertising costs,
professional fees for legal, tax and accounting services (including
external and internal audit expenses), and telecommunications costs.
The Exchange again notes that the cost of paying directors to serve on
its Board of Directors is included in the calculation of Allocated
Shared Expenses, and thus a portion of such overall cost amounting to
less than 10% of the overall cost for directors was allocated to
providing Limited Service MEI Ports. The Exchange notes that the 9.8%
allocation of general shared expenses for Limited Service MEI Ports is
lower than that allocated to general shared expenses for physical
connectivity based on its allocation methodology that weighted costs
attributable to each Core Service based on an understanding of each
area. While Limited Service MEI Ports have several areas where certain
tangible costs are heavily weighted towards providing such service
(e.g., Data Centers, as described above), 10Gb ULL connectivity
requires a broader level of support from Exchange personnel in
different areas, which in turn leads to a broader general level of cost
to the Exchange. The total monthly cost of $179,765 was divided by the
number of chargeable Limited Service MEI Ports (excluding the two free
Limited Service MEI Ports per matching engine that each Member
receives) the Exchange maintained at the time that proposed pricing was
determined (1303), to arrive at a cost of approximately $138 per month,
per charged Limited Service MEI Port.
    Lastly, the Exchange notes that this allocation is greater than its
affiliate, MIAX Pearl Options, by more than a de minimis amount as MIAX
allocated 9.8% of its Allocated Shared Expense towards Limited Service
MEI Ports, while MIAX Pearl Options allocated 3.6% to its Full Service
MEO Ports (Bulk and Single) for the same category of expense. The
allocation percentages set forth above differ because they correspond
with the number of applicable ports utilized on each exchange. For
March 2023, MIAX Market Makers utilized 1,782 Limited Service MEI Ports
and MIAX Emerald Market Makers utilized 1,028 Limited Service MEI
ports. When compared to Full Service Port (Bulk and Single) usage, for
March 2023, MIAX Pearl Options Members utilized only 432 Full Service
MEO Ports (Bulk and Single), far fewer than number of Limited Service
MEI Ports utilized by Market Makers on MIAX, thus resulting in a
smaller cost allocation. There is increased cost associated with
supporting a higher number of ports (requiring more hardware and other
technical infrastructure), thus the Exchange allocates a higher
percentage of expense than MIAX Pearl Options which has a lower port
count.
Cost Analysis--Additional Discussion
    In conducting its Cost Analysis, the Exchange did not allocate any
of its expenses in full to any core services (including physical
connectivity or Limited Service MEI Ports) and did not double-count any
expenses. Instead, as described above, the Exchange allocated
applicable cost drivers across its core services and used the same Cost
Analysis to form the basis of this proposal and the filings the
Exchange submitted proposing fees for proprietary data feeds offered by
the Exchange. For instance, in calculating the Human Resources expenses
to be allocated to physical connections based upon the above described
methodology, the Exchange has a team of employees dedicated to network
infrastructure and with respect to such employees the Exchange
allocated network infrastructure personnel with a high percentage of
the cost of such personnel (42%) given their focus on functions
necessary to provide physical connections. The salaries of those same
personnel were allocated only 8.4% to Limited Service MEI Ports and the
remaining 49.6% was allocated to 1Gb connectivity, other port services,
transaction services, membership services and market data. The Exchange
did not allocate any other Human Resources expense for providing
physical connections to any other employee group, outside of a smaller
allocation of 17.8% for 10Gb ULL connectivity or 18.2% for the entire
network, of the cost associated with certain specified personnel who
work closely with and support network infrastructure personnel. In
contrast, the Exchange allocated much smaller percentages of costs (5%
or less) across a wider range of personnel groups in order to allocate
Human Resources costs to providing Limited Service MEI Ports. This is
because a much wider range of personnel are involved in functions
necessary to offer, monitor and maintain Limited Service MEI Ports but
the tasks necessary to do so are not a primary or full-time function.
    In total, the Exchange allocated 25.6% of its personnel costs to
providing physical connections and 5.8% of its personnel costs to
providing Limited Service MEI Ports, for a total allocation of 31.4%
Human Resources expense to provide these specific connectivity
services. In turn, the Exchange allocated the remaining 68.6% of its
Human Resources expense to membership services, transaction services,
other port services and market data. Thus, again, the Exchange's
allocations of cost across core services were based on real costs of
operating the Exchange and were not double-counted across the core
services or their associated revenue streams.
    As another example, the Exchange allocated depreciation expense to
all core services, including physical connections and Limited Service
MEI Ports, but in different amounts. The Exchange believes it is
reasonable to allocate the identified portion of such expense because
such expense includes the actual cost of the computer equipment, such
as dedicated servers, computers, laptops, monitors, information
security appliances and storage, and network switching infrastructure
equipment, including switches and taps that were purchased to operate
and support the network. Without this equipment, the Exchange would not
be able to operate the network and provide connectivity services to its
Members and non-Members and their customers. However, the Exchange did
not allocate all of the depreciation and amortization expense toward
the cost of providing connectivity services, but instead allocated
approximately 67.9% of the Exchange's overall depreciation and
amortization expense to connectivity services (61.6% attributed to 10Gb
ULL physical connections and 6.3% to Limited Service MEI Ports). The
Exchange allocated the remaining depreciation and amortization expense
(approximately 32.1%) toward the cost of providing transaction
services, membership services, other port services and market data.
    The Exchange notes that its revenue estimates are based on
projections across all potential revenue streams and will only be
realized to the extent such revenue streams actually produce the
revenue estimated. The Exchange does not yet know whether such
expectations will be realized. For instance, in order to generate the
revenue expected from connectivity, the Exchange will have to be
successful in retaining existing clients that wish to maintain physical
connectivity and/or Limited Service MEI Ports or in obtaining new
clients that will purchase such services. Similarly, the Exchange will
have to be successful in retaining a positive net

capture on transaction fees in order to realize the anticipated revenue
from transaction pricing.
    The Exchange notes that the Cost Analysis is based on the
Exchange's 2023 fiscal year of operations and projections. It is
possible however that such costs will either decrease or increase. To
the extent the Exchange sees growth in use of connectivity services it
will receive additional revenue to offset future cost increases.
    However, if use of connectivity services is static or decreases,
the Exchange might not realize the revenue that it anticipates or needs
in order to cover applicable costs. Accordingly, the Exchange is
committing to conduct a one-year review after implementation of these
fees. The Exchange expects that it may propose to adjust fees at that
time, to increase fees in the event that revenues fail to cover costs
and a reasonable mark-up of such costs. Similarly, the Exchange would
propose to decrease fees in the event that revenue materially exceeds
our current projections. In addition, the Exchange will periodically
conduct a review to inform its decision making on whether a fee change
is appropriate (e.g., to monitor for costs increasing/decreasing or
subscribers increasing/decreasing, etc. in ways that suggest the then-
current fees are becoming dislocated from the prior cost-based
analysis) and would propose to increase fees in the event that revenues
fail to cover its costs and a reasonable mark-up, or decrease fees in
the event that revenue or the mark-up materially exceeds our current
projections. In the event that the Exchange determines to propose a fee
change, the results of a timely review, including an updated cost
estimate, will be included in the rule filing proposing the fee change.
More generally, the Exchange believes that it is appropriate for an
exchange to refresh and update information about its relevant costs and
revenues in seeking any future changes to fees, and the Exchange
commits to do so.
Projected Revenue \128\
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    \128\ For purposes of calculating revenue for 10Gb ULL
connectivity, the Exchange used revenues for February 2023, the
first full month for which it provided dedicated 10Gb ULL
connectivity to the Exchange and ceased operating a shared 10Gb ULL
network with MIAX Pearl Options.
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    The proposed fees will allow the Exchange to cover certain costs
incurred by the Exchange associated with providing and maintaining
necessary hardware and other network infrastructure as well as network
monitoring and support services; without such hardware, infrastructure,
monitoring and support the Exchange would be unable to provide the
connectivity services. Much of the cost relates to monitoring and
analysis of data and performance of the network via the subscriber's
connection(s). The above cost, namely those associated with hardware,
software, and human capital, enable the Exchange to measure network
performance with nanosecond granularity. These same costs are also
associated with time and money spent seeking to continuously improve
the network performance, improving the subscriber's experience, based
on monitoring and analysis activity. The Exchange routinely works to
improve the performance of the network's hardware and software. The
costs associated with maintaining and enhancing a state-of-the-art
exchange network is a significant expense for the Exchange, and thus
the Exchange believes that it is reasonable and appropriate to help
offset those costs by amending fees for connectivity services.
Subscribers, particularly those of 10Gb ULL connectivity, expect the
Exchange to provide this level of support to connectivity so they
continue to receive the performance they expect. This differentiates
the Exchange from its competitors. As detailed above, the Exchange has
five primary sources of revenue that it can potentially use to fund its
operations: transaction fees, fees for connectivity services,
membership and regulatory fees, and market data fees. Accordingly, the
Exchange must cover its expenses from these five primary sources of
revenue.
    The Exchange's Cost Analysis estimates the annual cost to provide
10Gb ULL connectivity services at $12,034,554. Based on current 10Gb
ULL connectivity services usage, the Exchange would generate annual
revenue of approximately $15,066,000. This represents a modest profit
of 20% when compared to the cost of providing 10Gb ULL connectivity
services, which will decrease over time.\129\
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    \129\ Assuming the U.S. inflation rate continues at its current
rate, the Exchange believes that the projected profit margins in
this proposal will decrease; however, the Exchange cannot predict
with any certainty whether the U.S. inflation rate will continue at
its current rate or its impact on the Exchange's future profits or
losses. See, e.g., https://www.usinflationcalculator.com/inflation/current-inflation-rates/ (last visited April 18, 2023).
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    The Exchange's Cost Analysis estimates the annual cost to provide
Limited Service MEI Port services at $2,157,178. Based on current
Limited Service MEI Port services usage, the Exchange would generate
annual revenue of approximately $3,300,600. This represents an
estimated profit margin of 35% when compared to the cost of providing
Limited Service MEI Port services, which will decrease over time.\130\
The Exchange notes that the cost to provide Limited Service MEI Ports
may be substantially higher than the cost for the Exchange's affiliate,
MIAX Pearl Options, to provide Full Service MEO Ports due to the
substantially larger number of Limited Service MEI Ports used by
Exchange Members. For example, the Exchange's Members are currently
allocated 1,645 Limited Service MEI Ports compared to only 19 Full
Service MEO Ports (Bulk and Single combined) allocated to MIAX Pearl
Options members.
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    \130\ Id.
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    Even if the Exchange earns those amounts or incrementally more or
less, the Exchange believes the proposed fees are fair and reasonable
because they will not result in pricing that deviates from that of
other exchanges or supra-competitive profit, when comparing the total
expense of the Exchange associated with providing 10Gb ULL connectivity
and Limited Service MEI Port services versus the total projected
revenue of the Exchange associated with network 10Gb ULL connectivity
and Limited Service MEI Port services.
* * * * *
    The Exchange has operated at a cumulative net annual loss since it
launched operations in 2012.\131\ The Exchange has operated at a net
loss due to a number of factors, one of which is choosing to forgo
revenue by offering certain products, such as connectivity, at lower
rates than other options exchanges to attract order flow and encourage
market participants to experience the high determinism, low latency,
and resiliency of the Exchange's trading systems. The Exchange should
not now be penalized for seeking to raise its fees in light of
necessary technology changes and its increased costs after offering
such products as discounted prices. Therefore, the Exchange believes
the proposed fees are reasonable because they are based on both
relative costs to the Exchange to provide dedicated 10Gb ULL
connectivity and Limited Service MEI Ports, the extent to which the
product drives the Exchange's overall costs and the relative value of
the product, as well as the Exchange's objective to make access to its
Systems broadly available to market participants. The Exchange

also believes the proposed fees are reasonable because they are
designed to generate annual revenue to recoup the Exchange's costs of
providing dedicated 10Gb ULL connectivity and Limited Service MEI
Ports.
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    \131\ The Exchange has incurred a cumulative loss of $121
million since its inception in 2012 through full year 2021. See
Exchange's Form 1/A, Application for Registration or Exemption from
Registration as a National Securities Exchange, filed June 29, 2022,
available at https://www.sec.gov/Archives/edgar/vprr/2200/22001163.pdf.
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    The Exchange notes that its revenue estimate is based on
projections and will only be realized to the extent customer activity
actually produces the revenue estimated. As a competitor in the hyper-
competitive exchange environment, and an exchange focused on driving
competition, the Exchange does not yet know whether such projections
will be realized. For instance, in order to generate the revenue
expected from 10Gb ULL connectivity and Limited Service MEI Ports, the
Exchange will have to be successful in retaining existing clients that
wish to utilize 10Gb ULL connectivity and Limited Service MEI Ports
and/or obtaining new clients that will purchase such access. To the
extent the Exchange is successful in encouraging new clients to utilize
10Gb ULL connectivity and Limited Service MEI Ports, the Exchange does
not believe it should be penalized for such success. To the extent the
Exchange has mispriced and experiences a net loss in clients, the
Exchange could experience a net reduction in revenue. While the
Exchange believes in transparency around costs and potential revenue,
the Exchange does not believe that these estimates should form the sole
basis of whether or not a proposed fee is reasonable or can be adopted.
    The Exchange is owned by a holding company that is the parent
company of four exchange markets and, therefore, the Exchange and its
affiliated markets must allocate shared costs across all of those
markets accordingly, pursuant to the above-described allocation
methodology. In contrast, the Investors Exchange LLC (``IEX'') and
MEMX, which are currently each operating only one exchange, in their
recent non-transaction fee filings can allocate the entire amount of
that same cost to a single exchange. This can result in lower profit
margins for the non-transaction fees proposed by IEX and MEMX because
the single allocated cost does not experience the efficiencies and
synergies associated with shared costs across multiple platforms. The
Exchange and its affiliated markets must share a single cost, which
results in cost efficiencies that cause a broader gap between the
allocated cost amount and projected revenue, even though the fee levels
being proposed are lower or similar to competing markets (as described
above). To the extent that the application of a cost-based standard
results in Commission Staff making determinations as to the
appropriateness of certain profit margins, the Commission Staff must
consider whether the proposed fee level is comparable to, or on parity
with, the same fee charged by competing exchanges and how different
cost allocation methodologies (such as across multiple markets) may
result in different profit margins for comparable fee levels. If it is
the case that the Commission Staff is making determinations as to
appropriate profit margins, the Exchange believes that Staff should be
clear to all market participants as to what they determine is an
appropriate profit margin and should apply such determinations
consistently and, in the case of certain legacy exchanges,
retroactively, if such standards are to avoid having a discriminatory
effect.
    Further, the proposal reflects the Exchange's efforts to control
its costs, which the Exchange does on an ongoing basis as a matter of
good business practice. A potential profit margin should not be judged
alone based on its size, but is also indicative of costs management and
whether the ultimate fee reflects the value of the services provided.
For example, a profit margin on one exchange should not be deemed
excessive where that exchange has been successful in controlling its
costs, but not excessive where on another exchange where that exchange
is charging comparable fees but has a lower profit margin due to higher
costs. Doing so could have the perverse effect of not incentivizing
cost control where higher costs alone could be used to justify fees
increases.
The Proposed Pricing Is Not Unfairly Discriminatory and Provides for
the Equitable Allocation of Fees, Dues, and Other Charges
    The Exchange believes that the proposed fees are reasonable, fair,
equitable, and not unfairly discriminatory because they are designed to
align fees with services provided and will apply equally to all
subscribers.
10Gb ULL Connectivity
    The Exchange believes that the proposed fees are equitably
allocated among users of the network connectivity and port
alternatives, as the users of 10Gb ULL connections consume
substantially more bandwidth and network resources than users of 1Gb
ULL connection. Specifically, the Exchange notes that 10Gb ULL
connection users account for more than 99% of message traffic over the
network, driving other costs that are linked to capacity utilization,
as described above, while the users of the 1Gb ULL connections account
for less than 1% of message traffic over the network. In the Exchange's
experience, users of the 1Gb connections do not have the same business
needs for the high-performance network as 10Gb ULL users.
    The Exchange's high-performance network and supporting
infrastructure (including employee support), provides unparalleled
system throughput with the network ability to support access to several
distinct options markets. To achieve a consistent, premium network
performance, the Exchange must build out and maintain a network that
has the capacity to handle the message rate requirements of its most
heavy network consumers. These billions of messages per day consume the
Exchange's resources and significantly contribute to the overall
network connectivity expense for storage and network transport
capabilities. The Exchange must also purchase additional storage
capacity on an ongoing basis to ensure it has sufficient capacity to
store these messages to satisfy its record keeping requirements under
the Exchange Act.\132\ Thus, as the number of messages an entity
increases, certain other costs incurred by the Exchange that are
correlated to, though not directly affected by, connection costs (e.g.,
storage costs, surveillance costs, service expenses) also increase.
Given this difference in network utilization rate, the Exchange
believes that it is reasonable, equitable, and not unfairly
discriminatory that the 10Gb ULL users pay for the vast majority of the
shared network resources from which all market participants' benefit.
---------------------------------------------------------------------------

    \132\ 17 CFR 240.17a-1 (recordkeeping rule for national
securities exchanges, national securities associations, registered
clearing agencies and the Municipal Securities Rulemaking Board).
---------------------------------------------------------------------------

Limited Service MEI Ports
    The Exchange believes that the proposed fees are equitably
allocated among users of the network connectivity alternatives, as the
users of the Limited Service MEI Ports consume the most bandwidth and
resources of the network. Specifically, like above for the 10Gb ULL
connectivity, the Exchange notes that the Market Makers who take the
maximum amount of Limited Service MEI Ports account for approximately
greater than 99% of message traffic over the network, while Market
Makers with fewer Limited Service MEI Ports account for approximately
less than 1% of message traffic over the network. In the

Exchange's experience, Market Makers who only utilize the two free
Limited Service MEI Ports do not have a business need for the high-
performance network solutions required by Market Makers who take the
maximum amount of Limited Service MEI Ports. The Exchange's high-
performance network solutions and supporting infrastructure (including
employee support), provides unparalleled system throughput and the
capacity to handle approximately 18 million quote messages per second.
Based on November 2022 trading results, on an average day, the Exchange
handles over approximately 8.8 billion quotes, and more than 185
billion quotes over the entire month. Of that total, Market Makers with
the maximum amount of Limited Service MEI Ports generate approximately
5 billion quotes, and Market Makers who utilize the two free Limited
Service MEI Ports generate approximately 1.5 billion quotes. Also for
November 2022, Market Makers who utilized 3 to 4 Limited Service MEI
ports submitted an average of 1,152,654,133 quotes per day and Market
Makers who utilized 5 to 9 Limited Service MEI ports submitted an
average of 1,172,105,181 quotes per day. To achieve a consistent,
premium network performance, the Exchange must build out and maintain a
network that has the capacity to handle the message rate requirements
of its most heavy network consumers. These billions of messages per day
consume the Exchange's resources and significantly contribute to the
overall network connectivity expense for storage and network transport
capabilities. The Exchange must also purchase additional storage
capacity on an ongoing basis to ensure it has sufficient capacity to
store these messages as part of it surveillance program and to satisfy
its record keeping requirements under the Exchange Act.\133\ Thus, as
the number of connections a Market Maker has increases, certain other
costs incurred by the Exchange that are correlated to, though not
directly affected by, connection costs (e.g., storage costs,
surveillance costs, service expenses) also increase. The Exchange
sought to design the proposed tiered-pricing structure to set the
amount of the fees to relate to the number of connections a firm
purchases. The more connections purchased by a Market Maker likely
results in greater expenditure of Exchange resources and increased cost
to the Exchange. With this in mind, the Exchange proposes no fee or
lower fees for those Market Makers who receive fewer Limited Service
MEI Ports since those Market Makers generally tend to send the least
amount of orders and messages over those connections. Given this
difference in network utilization rate, the Exchange believes that it
is reasonable, equitable, and not unfairly discriminatory that Market
Makers who take the most Limited Service MEI Ports pay for the vast
majority of the shared network resources from which all Member and non-
Member users benefit, but is designed and maintained from a capacity
standpoint to specifically handle the message rate and performance
requirements of those Market Makers.
---------------------------------------------------------------------------

    \133\ 17 CFR 240.17a-1 (recordkeeping rule for national
securities exchanges, national securities associations, registered
clearing agencies and the Municipal Securities Rulemaking Board).
---------------------------------------------------------------------------

    To achieve a consistent, premium network performance, the Exchange
must build out and maintain a network that has the capacity to handle
the message rate requirements of its most heavy network consumers.
Billions of messages per day consume the Exchange's resources and
significantly contribute to the overall network connectivity expense
for storage and network transport capabilities. The Exchange must also
purchase additional storage capacity on an ongoing basis to ensure it
has sufficient capacity to store these messages as part of it
surveillance program and to satisfy its record keeping requirements
under the Exchange Act.\134\ Thus, as the number of connections a
Market Maker has increases, the related pull on Exchange resources also
increases. The Exchange sought to design the proposed tiered-pricing
structure to set the amount of the fees to relate to the number of
connections a firm purchases. The more connections purchased by a
Market Maker likely results in greater expenditure of Exchange
resources and increased cost to the Exchange.
---------------------------------------------------------------------------

    \134\ 17 CFR 240.17a-1 (recordkeeping rule for national
securities exchanges, national securities associations, registered
clearing agencies and the Municipal Securities Rulemaking Board).
---------------------------------------------------------------------------

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.
Intra-Market Competition
    The Exchange believes the proposed fees will not result in any
burden on intra-market competition that is not necessary or appropriate
in furtherance of the purposes of the Act because the proposed fees
will allow the Exchange to recoup some of its costs in providing 10Gb
ULL connectivity and Limited Service MEI Ports at below market rates to
market participants since the Exchange launched operations. As
described above, the Exchange has operated at a cumulative net annual
loss since it launched operations in 2012 \135\ due to providing a low-
cost alternative to attract order flow and encourage market
participants to experience the high determinism and resiliency of the
Exchange's trading Systems. To do so, the Exchange chose to waive the
fees for some non-transaction related services and Exchange products or
provide them at a very lower fee, which was not profitable to the
Exchange. This resulted in the Exchange forgoing revenue it could have
generated from assessing any fees or higher fees. The Exchange could
have sought to charge higher fees at the outset, but that could have
served to discourage participation on the Exchange. Instead, the
Exchange chose to provide a low-cost exchange alternative to the
options industry, which resulted in lower initial revenues. Examples of
this are 10Gb ULL connectivity and Limited Service MEI Ports, for which
the Exchange only now seeks to adopt fees at a level similar to or
lower than those of other options exchanges.
---------------------------------------------------------------------------

    \135\ See supra note 131.
---------------------------------------------------------------------------

    Further, the Exchange does not believe that the proposed fee
increase for the 10Gb ULL connection 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 is the case with the current proposed flat
fee, the proposed fee would apply uniformly to all market participants
regardless of the number of connections they choose to purchase. The
proposed fee does not favor certain categories of market participants
in a manner that would impose an undue burden on 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, Exchange
personnel has been informally discussing potential fees for
connectivity services with a diverse group of market participants that
are connected to the Exchange (including large and small firms, firms
with large connectivity service footprints and small connectivity
service footprints, as well as extranets and service bureaus)

for several months leading up to that time. The Exchange does not
believe the proposed fees for connectivity services would negatively
impact the ability of Members, non-Members (extranets or service
bureaus), third-parties that purchase the Exchange's connectivity and
resell it, and customers of those resellers to compete with other
market participants or that they are placed at a disadvantage.
    The Exchange does anticipate, however, that some market
participants may reduce or discontinue use of connectivity services
provided directly by the Exchange in response to the proposed fees. In
fact, as mentioned above, one MIAX Pearl Options Market Maker
terminated their MIAX Pearl Options membership on January 1, 2023 as a
direct result of the similar proposed fee changes by MIAX Pearl
Options.\136\ The Exchange does not believe that the proposed fees for
connectivity services place certain market participants at a relative
disadvantage to other market participants because the proposed
connectivity pricing is associated with relative usage of the Exchange
by each market participant and does not impose a barrier to entry to
smaller participants. The Exchange believes its proposed pricing is
reasonable and, when coupled with the availability of third-party
providers that also offer connectivity solutions, that participation on
the Exchange is affordable for all market participants, including
smaller trading firms. As described above, the connectivity services
purchased by market participants typically increase based on their
additional message traffic and/or the complexity of their operations.
The market participants that utilize more connectivity services
typically utilize the most bandwidth, and those are the participants
that consume the most resources from the network. Accordingly, the
proposed fees for connectivity services do not favor certain categories
of market participants in a manner that would impose a burden on
competition; rather, the allocation of the proposed connectivity fees
reflects the network resources consumed by the various size of market
participants and the costs to the Exchange of providing such
connectivity services.
---------------------------------------------------------------------------

    \136\ The Exchange acknowledges that IEX included in its
proposal to adopt market data fees after offering market data for
free an analysis of what its projected revenue would be if all of
its existing customers continued to subscribe versus what its
projected revenue would be if a limited number of customers
subscribed due to the new fees. See Securities Exchange Act Release
No. 94630 (April 7, 2022), 87 FR 21945 (April 13, 2022) (SR-IEX-
2022-02). MEMX did not include a similar analysis in either of its
recent non-transaction fee proposals. See, e.g., supra note 54. The
Exchange does not believe a similar analysis would be useful here
because it is amending existing fees, not proposing to charge a new
fee where existing subscribers may terminate connections because
they are no longer enjoying the service at no cost.
---------------------------------------------------------------------------

Inter-Market Competition
    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 connect
to all options exchanges. There is no reason to believe that our
proposed price increase will harm another exchange's ability to
compete. There are other options markets of which market participants
may connect to trade options at higher rates than the Exchange's. There
is also a range of alternative strategies, including routing to the
exchange through another participant or market center or accessing the
Exchange indirectly. Market participants are free to choose which
exchange or reseller to use to satisfy their business needs.
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.
    The Exchange also believes that the proposed fees for 10Gb
connectivity are appropriate and warranted in light of it bifurcating
10Gb connectivity between the Exchange and MIAX Pearl and would not
impose any burden on competition because this is a technology driven
change that would assist the Exchange in recovering costs related to
providing dedicating 10Gb connectivity to the Exchange while enabling
it to continue to meet current and anticipated demands for connectivity
by its Members and other market participants. Separating its 10Gb
network from MIAX Pearl Options would enable the Exchange to better
compete with other exchanges by ensuring it can continue to provide
adequate connectivity to existing and new Members, which may increase
in ability to compete for order flow and deepen its liquidity pool,
improving the overall quality of its market.
    The proposed rates for 10Gb ULL connectivity are also driven by the
Exchange's need to bifurcate its 10Gb ULL network shared with MIAX
Pearl Options so that it can continue to meet current and anticipated
connectivity demands of all market participants. Similarly, and also in
connection with a technology change, Cboe Exchange, Inc. (``Cboe'')
amended access and connectivity fees, including port fees.\137\
Specifically, Cboe adopted certain logical ports to allow for the
delivery and/or receipt of trading messages--i.e., orders, accepts,
cancels, transactions, etc. Cboe established tiered pricing for BOE and
FIX logical ports, tiered pricing for BOE Bulk ports, and flat prices
for DROP, Purge Ports, GRP Ports and Multicast PITCH/Top Spin Server
Ports. Cboe argued in its fee proposal that the proposed pricing more
closely aligned its access fees to those of its affiliated exchanges,
and reasonably so, as the affiliated exchanges offer substantially
similar connectivity and functionality and are on the same platform
that Cboe migrated to.\138\ Cboe also justified its proposal by stating
that, ``. . . the Exchange believes substitutable products and services
are in fact available to market participants, including, among other
things, other options exchanges a market participant may connect to in
lieu of the Exchange, indirect connectivity to the Exchange via a
third-party reseller of connectivity and/or trading of any options
product, including proprietary products, in the Over- the-Counter (OTC)
markets.'' \139\ Cboe stated in its proposal that,
---------------------------------------------------------------------------

    \137\ See Securities Exchange Act Release No. 90333 (November 4,
2020), 85 FR 71666 (November 10, 2020) (SR-CBOE-2020-105). The
Exchange notes that Cboe submitted this filing after the Staff
Guidance and contained no cost-based justification.
    \138\ Id. at 71676.
    \139\ Id.

    The rule structure for options exchanges are also 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. 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. 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. Gone are the days when the
retail brokerage firms (such as Fidelity, Schwab, and eTrade) were
members of the options exchanges--they are not members of the
Exchange or its affiliates, they do not purchase connectivity to the
Exchange, and they do not purchase market data from the Exchange.
Accordingly, not only is there not an actual regulatory requirement
to connect to every options exchange, the Exchange believes there is
also no ``de facto'' or practical requirement as well, as further
evidenced by the recent significant reduction in the number of

broker-dealers that are members of all options exchanges.\140\
---------------------------------------------------------------------------

    \140\ Id. at 71676.

    The proposal also referenced the National Market System Plan
Governing the Consolidated Audit Trail (``CAT NMS Plan''),\141\ wherein
the Commission discussed the existence of competition in the
marketplace generally, and particularly for exchanges with unique
business models. The Commission acknowledged that, even if an exchange
were to exit the marketplace due to its proposed fee-related change, it
would not significantly impact competition in the market for exchange
trading services because these markets are served by multiple
competitors.\142\ Further, the Commission explicitly stated that
``[c]onsequently, demand for these services in the event of the exit of
a competitor is likely to be swiftly met by existing competitors.''
\143\ Finally, the Commission recognized that while some exchanges may
have a unique business model that is not currently offered by
competitors, a competitor could create similar business models if
demand were adequate, and if a competitor did not do so, the Commission
believes it would be likely that new entrants would do so if the
exchange with that unique business model was otherwise profitable.\144\
---------------------------------------------------------------------------

    \141\ See Securities Exchange Act Release No. 86901 (September
9, 2019), 84 FR 48458 (September 13, 2019) (File No. S7-13-19).
    \142\ Id.
    \143\ Id.
    \144\ Id.
---------------------------------------------------------------------------

    Cboe also filed to establish a monthly fee for Certification
Logical Ports of $250 per Certification Logical Port.\145\ Cboe
reasoned that purchasing additional Certification Logical Ports, beyond
the one Certification Logical Port per logical port type offered in the
production environment free of charge, is voluntary and not required in
order to participate in the production environment, including live
production trading on the Exchange.\146\
---------------------------------------------------------------------------

    \145\ See Securities Exchange Act Release No. 94512 (March 24,
2002), 87 FR 18425 (March 30, 2022) (SR-Cboe-2022-011). Cboe offers
BOE and FIX Logical Ports, BOE Bulk Logical Ports, DROP Logical
Ports, Purge Ports, GRP Ports and Multicast PITCH/Top Spin Server
Ports. For each type of the aforementioned logical ports that are
used in the production environment, the Exchange also offers
corresponding ports which provide Trading Permit Holders and non-
TPHs access to the Exchange's certification environment to test
proprietary systems and applications (i.e., ``Certification Logical
Ports'').
    \146\ See Securities Exchange Act Release No. 94512 (March 24,
2002), 87 FR 18425 (March 30, 2022) (SR-Cboe-2022-011).
---------------------------------------------------------------------------

    In its statutory basis, Cboe justified the new port fee by stating
that it believed the Certification Logical Port fee were reasonable
because while such ports were no longer completely free, TPHs and non-
TPHs would continue to be entitled to receive free of charge one
Certification Logical Port for each type of logical port that is
currently offered in the production environment.\147\ Cboe noted that
other exchanges assess similar fees and cited to NASDAQ LLC and
MIAX.\148\ Cboe also noted that the decision to purchase additional
ports is optional and no market participant is required or under any
regulatory obligation to purchase excess Certification Logical Ports in
order to access the Exchange's certification environment.\149\ Finally,
similar proposals to adopt a Certification Logical Port monthly fee
were filed by Cboe BYX Exchange, Inc.,\150\ BZX,\151\ and Cboe EDGA
Exchange, Inc.\152\
---------------------------------------------------------------------------

    \147\ Id. at 18426.
    \148\ Id.
    \149\ Id.
    \150\ See Securities Exchange Act Release No. 94507 (March 24,
2002), 87 FR 18439 (March 30, 2022) (SR-CboeBYX-2022-004).
    \151\ See Securities Exchange Act Release No. 94511 (March 24,
2002), 87 FR 18411 (March 30, 2022) (SR-CboeBZX-2022-021).
    \152\ See Securities Exchange Act Release No. 94517 (March 25,
2002), 87 FR 18848 (March 31, 2022) (SR-CboeEDGA-2022-004).
---------------------------------------------------------------------------

    The Cboe fee proposals described herein were filed subsequent to
the D.C. Circuit decision in Susquehanna Int'l Grp., LLC v. SEC, 866
F.3d 442 (D.C. Cir. 2017), meaning that such fee filings were subject
to the same (and current) standard for SEC review and approval as this
proposal. In summary, the Exchange requests the Commission apply the
same standard of review to this proposal which was applied to the
various Cboe and Cboe affiliated markets' filings with respect to non-
transaction fees. If the Commission were to apply a different standard
of review to this proposal than it applied to other exchange fee
filings it would create a burden on competition such that it would
impair the Exchange's ability to make necessary technology driven
changes, such as bifurcating its 10Gb ULL network, because it would be
unable to monetize or recoup costs related to that change and compete
with larger, non-legacy exchanges.
* * * * *
    In conclusion, as discussed thoroughly above, the Exchange
regrettably believes that the application of the Revised Review Process
and Staff Guidance has adversely affected inter-market competition
among legacy and non-legacy exchanges by impeding the ability of non-
legacy exchanges to adopt or increase fees for their market data and
access services (including connectivity and port products and services)
that are on parity or commensurate with fee levels previously
established by legacy exchanges. Since the adoption of the Revised
Review Process and Staff Guidance, and even more so recently, it has
become extraordinarily difficult to adopt or increase fees to generate
revenue necessary to invest in systems, provide innovative trading
products and solutions, and improve competitive standing to the benefit
of non-legacy exchanges' market participants. Although the Staff
Guidance served an important policy goal of improving disclosures and
requiring exchanges to justify that their market data and access fee
proposals are fair and reasonable, it has also negatively impacted non-
legacy exchanges in particular in their efforts to adopt or increase
fees that would enable them to more fairly compete with legacy
exchanges, despite providing enhanced disclosures and rationale under
both competitive and cost basis approaches provided for by the Revised
Review Process and Staff Guidance to support their proposed fee
changes.

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

    The Exchange received one comment letter on the Initial Proposal
and one comment letter on the Second Proposal from the same
commenter.\153\ In their letters, the sole commenter seeks to
incorporate comments submitted on previous Exchange proposals to which
the Exchange has previously responded. To the extent the sole commenter
has attempted to raise new issues in its letters, the Exchange believes
those issues are not germane to this proposal in particular, but rather
raise larger issues with the current environment surrounding exchange
non-transaction fee proposals that should be addressed by the
Commission through rule making, or Congress, more holistically and not
through an individual exchange fee filing. Among other things, the
commenter is requesting additional data and information that is both
opaque and a moving target and would constitute a level of disclosure
materially over and above that provided by any competitor exchanges.
---------------------------------------------------------------------------

    \153\ See letter from Brian Sopinsky, General Counsel,
Susquehanna International Group, LLP (``SIG''), to Vanessa
Countryman, Secretary, Commission, dated February 7, 2023 and letter
from Gerald D. O'Connell, SIG, to Vanessa Countryman, Secretary,
Commission, dated March 21, 2023.

---------------------------------------------------------------------------

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,\154\ and Rule 19b-4(f)(2) \155\ 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.
---------------------------------------------------------------------------

    \154\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \155\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-MIAX-2023-18 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-2023-18. 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 (https://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. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-MIAX-2023-18 and should
be submitted on or before May 30, 2023.
---------------------------------------------------------------------------

    \156\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\156\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09681 Filed 5-5-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 87, Number 162 (Tuesday, August 23, 2022)]
[Notices]
[Pages 51690-51691]
[FR Doc No: 2022-18126]

=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Docket ID FEMA-2022-0002; Internal Agency Docket No. FEMA-B-2267]

Proposed Flood Hazard Determinations

AGENCY: Federal Emergency Management Agency, Department of Homeland
Security.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: Comments are requested on proposed flood hazard
determinations, which may include additions or modifications of any
Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area
(SFHA) boundary or zone designation, or regulatory floodway on the
Flood Insurance Rate Maps (FIRMs), and where applicable, in the
supporting Flood Insurance Study (FIS) reports for the communities
listed in the table below. The purpose of this notice is to seek
general information and comment regarding the preliminary FIRM, and
where applicable, the FIS report that the Federal Emergency Management
Agency (FEMA) has provided to the affected communities. The FIRM and
FIS report are the basis of the floodplain management measures that the
community is required either to adopt or to show evidence of having in
effect in order to qualify or remain qualified for participation in the
National Flood Insurance Program (NFIP).

DATES: Comments are to be submitted on or before November 21, 2022.

ADDRESSES: The Preliminary FIRM, and where applicable, the FIS report
for each community are available for inspection at both the online
location https://hazards.fema.gov/femaportal/prelimdownload and the
respective Community Map Repository address listed in the tables below.
Additionally, the current effective FIRM and FIS report for each
community are accessible online through the FEMA Map Service Center at
https://msc.fema.gov for comparison.
    You may submit comments, identified by Docket No. FEMA-B-2267, to
Rick Sacbibit, Chief, Engineering Services Branch, Federal Insurance
and Mitigation Administration, FEMA, 400 C Street SW, Washington, DC
20472,<PHONE_NUMBER>, or (email) [email protected].

FOR FURTHER INFORMATION CONTACT: Rick Sacbibit, Chief, Engineering
Services Branch, Federal Insurance and Mitigation Administration, FEMA,
400 C Street SW, Washington, DC 20472,<PHONE_NUMBER>, or (email)
[email protected]; or visit the FEMA Mapping and Insurance
eXchange (FMIX) online at https://www.floodmaps.fema.gov/fhm/fmx_main.html.

SUPPLEMENTARY INFORMATION: FEMA proposes to make flood hazard
determinations for each community listed below, in accordance with
section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C.
4104, and 44 CFR 67.4(a).
    These proposed flood hazard determinations, together with the
floodplain management criteria required by 44 CFR 60.3, are the minimum
that are required. They should not be construed to mean that the
community must change any existing ordinances that are more stringent
in their floodplain management requirements. The community may at any
time enact stricter requirements of its own or pursuant to policies
established by other Federal, State, or regional entities. These flood
hazard determinations are used to meet the floodplain management
requirements of the NFIP.
    The communities affected by the flood hazard determinations are
provided in the tables below. Any request for reconsideration of the
revised flood hazard information shown on the Preliminary FIRM and FIS
report that satisfies the data requirements outlined in 44 CFR 67.6(b)
is considered an appeal. Comments unrelated to the flood hazard
determinations also will be considered before the FIRM and FIS report
become effective.
    Use of a Scientific Resolution Panel (SRP) is available to
communities in support of the appeal resolution process. SRPs are
independent panels of experts in hydrology, hydraulics, and other
pertinent sciences established to review conflicting scientific and
technical data and provide recommendations for resolution. Use of the
SRP only may be exercised after FEMA and local communities have been
engaged in a collaborative consultation process for at least 60 days
without a mutually acceptable resolution of an appeal. Additional
information regarding the SRP process can be found online at https://www.floodsrp.org/pdfs/srp_overview.pdf.
    The watersheds and/or communities affected are listed in the tables
below. The Preliminary FIRM, and where applicable, FIS report for each
community are available for inspection at both the online location
https://hazards.fema.gov/femaportal/prelimdownload and the respective
Community Map Repository address listed in the tables. For communities
with multiple ongoing Preliminary studies, the studies can be
identified by the unique project number and Preliminary FIRM date
listed in the tables. Additionally, the current effective FIRM and FIS
report for each community are accessible online through the FEMA Map
Service Center at https://msc.fema.gov for comparison.

(Catalog of Federal Domestic Assistance No. 97.022, ``Flood
Insurance.'')

Michael M. Grimm,
Assistant Administrator for Risk Management, Department of Homeland
Security, Federal Emergency Management Agency.

------------------------------------------------------------------------
                                             Community map repository
               Community                             address
------------------------------------------------------------------------
             Racine County, Wisconsin and Incorporated Areas
        Project: 12-05-2816S Preliminary Date: December 23, 2021
------------------------------------------------------------------------
City of Burlington.....................  City Hall, 300 North Pine
                                          Street, Burlington, WI 53105.
City of Racine.........................  City Hall, 730 Washington
                                          Avenue, Racine, WI 53403.
Unincorporated Areas of Racine County..  Ives Grove Office Complex,
                                          14200 Washington Avenue,
                                          Sturtevant, WI 53177.
Village of Caledonia...................  Caledonia Village Hall, 5043
                                          Chester Lane, Racine, WI
                                          53402.
Village of Mount Pleasant..............  Village Hall, 8811 Campus
                                          Drive, Mount Pleasant, WI
                                          53406.
Village of North Bay...................  North Bay Village Hall, 3615
                                          Hennepin Place, Racine, WI
                                          53402.
Village of Rochester...................  Village Hall, 300 West Spring
                                          Street, Rochester, WI 53167.
Village of Waterford...................  Village Hall, 123 North River
                                          Street, Waterford, WI 53185.
Village of Wind Point..................  Wind Point Village Office, 215
                                          East Four Mile Road, Racine,
                                          WI 53402.
------------------------------------------------------------------------

[FR Doc. 2022-18126 Filed 8-22-22; 8:45 am]
BILLING CODE 9110-12-P


[Federal Register Volume 77, Number 146 (Monday, July 30, 2012)]
[Notices]
[Page 44610]
[FR Doc No: 2012-18438]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 2662-012-CT; Project No. 12968-001-CT]

Notice of Availability of Draft Environmental Assessment

FirstLight Hydro Generating Company,
 Project No. 2662-012-CT.
City of Norwich Dept. of Public Utilities,
 Project No. 12968-001-CT.

    In accordance with the National Environmental Policy Act of 1969
and the Federal Energy Regulatory Commission (Commission) regulations,
18 CFR part 380 (Order No. 486, 52 FR 47897), the Office of Energy
Projects has reviewed competing applications for a new license for the
Scotland Hydroelectric Project (Commission Project Nos. 2662-012 and
12968-001). The Scotland Hydroelectric Project is located on the
Shetucket River, in Windham County, Connecticut. The existing licensee
for the Scotland Hydroelectric Project No. 2662 is FirstLight Hydro
Generating Company (FirstLight). The competitor applicant for the
Scotland Hydroelectric Project No. 12968 is the City of Norwich
Department of Public Utilities (Norwich Public Utilities).
    Staff prepared a draft environmental assessment (EA), which
analyzes the potential environmental effects of licensing the project
with either FirstLight's or Norwich Public Utilities' proposals, and
concludes that licensing the project with either proposal, with
appropriate environmental protection measures, would not constitute a
major federal action that would significantly affect the quality of the
human environment.
    A copy of the draft EA is available for review at the Commission in
the Public Reference Room or may be viewed on the Commission's Web site
at www.ferc.gov using the ``eLibrary'' link. Enter the docket number
for either project, excluding the last three digits, in the docket
number field to access the document. For assistance, contact Commission
Online Support at<EMAIL_ADDRESS>toll-free at 1-866-
208-3676; or for TTY,<PHONE_NUMBER>.
    You may also register online at www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to these or other pending projects. For assistance, contact
Commission Online Support.
    Any comments should be filed within 30 days from the date of this
notice. Comments may be filed electronically via the Internet. See 18
CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web
site http://www.ferc.gov/doc-filing/efiling.asp. Commenters can submit
brief comments up to 6,000 characters, without prior registration,
using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the
end of your comments. For assistance, please contact Commission Online
Support. Although the Commission strongly encourages electronic filing,
documents may also be paper-filed. To paper-file, mail an original and
seven copies to: Kimberly D. Bose, Secretary, Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426. Please affix
Scotland Hydroelectric Project, P-2662-012 and P-12968-001 to all
comments.
    For further information, contact Janet Hutzel at<PHONE_NUMBER> or
by email at<EMAIL_ADDRESS>
    Dated: July 20, 2012.
Kimberly D. Bose,
Secretary.
[FR Doc. 2012-18438 Filed 7-27-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 81, Number 81 (Wednesday, April 27, 2016)]
[Notices]
[Pages 24820-24822]
[FR Doc No: 2016-09769]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2013-N-0514]

Agency Information Collection Activities; Proposed Collection;
Comment Request; Requests for Clinical Laboratory Improvement
Amendments Categorization

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA) is announcing an
opportunity for public comment on the proposed collection of certain
information by the Agency. Under the Paperwork Reduction Act of 1995
(the PRA), Federal Agencies are required to publish notice in the
Federal Register concerning each proposed collection of information,
including each proposed extension of an existing collection of
information, and to allow 60 days for public comment in response to the
notice. This notice solicits comments on requests for Clinical
Laboratory Improvement Amendments of 1998 (CLIA) categorization of in
vitro diagnostic tests when a premarket review is not needed.

DATES: Submit either electronic or written comments on the collection
of information by June 27, 2016.

ADDRESSES: You may submit comments as follows:

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to http://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
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 comments, that information will be posted on http://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment 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): Division of Dockets Management (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Division of
Dockets Management, FDA will post your comment, 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-2013-N-0514 for ``Agency Information Collection Activities;
Proposed Collection; Comment Request; Requests for Clinical Laboratory
Improvement Amendments Categorization.'' Received comments will be
placed in the docket and, except for those submitted as ``Confidential
Submissions,'' publicly viewable at http://www.regulations.gov or at
the Division of Dockets Management between 9 a.m. and 4 p.m., Monday
through Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies 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 comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on http://www.regulations.gov.
Submit both copies to the Division of Dockets Management. 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 comments 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: http://www.fda.gov/regulatoryinformation/dockets/default.htm.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to http://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 Division of Dockets Management, 5630 Fishers
Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: FDA PRA Staff, Office of Operations,
Food and Drug Administration, 8455 Colesville Rd., COLE-14526, Silver
Spring, MD 20993-0002<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal
Agencies must obtain approval from the Office of Management and Budget
(OMB) for each collection of information they conduct or sponsor.
``Collection of information'' is defined in 44 U.S.C. 3502(3) and 5 CFR
1320.3(c) and includes Agency requests or requirements that members of
the public submit reports, keep records, or provide information to a
third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A))
requires Federal Agencies to provide a 60-day notice in the Federal
Register concerning each proposed collection of information, including
each proposed extension of an existing collection of information,
before submitting the collection to OMB for approval. To comply with
this requirement, FDA is publishing notice of the proposed collection
of information set forth in this document.
    With respect to the following collection of information, FDA
invites comments on these topics: (1) Whether the proposed collection
of information is necessary for the proper performance of FDA's
functions, including whether the information will have practical
utility; (2) the accuracy of FDA's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility, and clarity of the information to be collected; and (4) ways
to minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques, when
appropriate, and other forms of information technology.

Requests for Clinical Laboratory Improvement Amendments of 1988
Categorization--42 CFR 493.17--OMB Control Number 0910-0607--Extension

    A guidance document entitled ``Guidance for Administrative
Procedures for CLIA Categorization'' was released on May 7, 2008. The
document describes procedures FDA uses to assign the complexity
category to a device. Typically, FDA assigns complexity categorizations
to devices at the time of clearance or approval of the device. In this
way, no additional burden is incurred by the manufacturer because the
labeling (including operating instructions) is included in the
premarket notification (510(k)) or premarket approval application
(PMA). In some cases, however, a manufacturer may request CLIA
categorization even if FDA is not simultaneously reviewing a 510(k) or
PMA. One example is when a manufacturer requests that FDA assign CLIA
categorization to a previously cleared device that has changed names
since the original CLIA categorization. Another example is when a
device is exempt from premarket review. In such cases, the guidance
recommends that manufacturers provide FDA with a copy of the package
insert for the device and a cover letter indicating why the
manufacturer is requesting a categorization (e.g. name change, exempt
from 510(k) review). The guidance recommends that in the correspondence
to FDA the manufacturer should identify the product code and
classification as well as reference to the original 510(k) when this is
available.

    FDA estimates the burden of this collection of information as
follows:

                                                     Table 1--Estimated Annual Reporting Burden \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Total operating
                                                       Number of        Number of       Total annual   Average  burden                         and
                     Activity                         respondents     responses per      responses      per  response     Total hours      maintenance
                                                                        respondent                                                            costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Request for CLIA Categorization...................              60               15              900                1              900          $46,800
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs associated with this collection of information.

    The number of respondents is approximately 60. On average, each
respondent will request categorizations (independent of a 510(k) or
PMA) 15 times per year. The cost, not including personnel, is estimated
at $52 per hour (52 x 900), totaling $46,800. This includes the cost of
copying and mailing copies of package inserts and a cover letter, which
includes a statement of the reason for the request and reference to the
original 510(k) numbers, including regulation numbers and product
codes. The burden hours are based on FDA familiarity with the types of
documentation typically included in a sponsor's categorization
requests, and costs for basic office supplies (e.g., paper).

    Dated: April 21, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-09769 Filed 4-26-16; 8:45 am]
BILLING CODE 4164-01-P