reg e dispute flowchart

69. 181292 (D.C. Cir. Only if this were a substantial fee decrease could this be considered a form of predatory pricing. Reg E and Tier Three Timely Notification. Certification Logical Ports). This added gateway contributes to the difference in allocations between the Exchange and MIAX Pearl. Despite approving hundreds of access fee filings in the years prior to the BOX Order (described further below) utilizing a market-based test, the Commission changed course and disapproved BOX's proposal to begin charging connectivity at one-fourth the rate of competing exchanges' pricing. See 80. In the Staff Guidance, the Commission Staff further states that, [i]f an SRO seeks to support its claims that a proposed fee is fair and reasonable because it will permit recovery of the SRO's costs, . See supra June 5, 2020). the Exchange will route an order to any away market that is at the NBBO to ensure that the order was executed at a superior price and prevent a trade-through.[102]. This includes personnel from the following Exchange departments that are predominately involved in providing Limited Service fees based on the number of firms that connect to the Exchange indirectly via the third-party). In that same statement, Chair Gary Gensler cited the five objectives laid out by Congress in 11A of the Exchange Act (15 U.S.C. the D.C. Without these services providers, the Exchange would not be able to connect to other national securities exchanges, market data providers or OPRA and, therefore, would not be able to operate and support its System Networks. See June 5, 2020). For instance, 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. ., specific information, including quantitative information, should be provided to support that argument.[75]. Upon debiting a provisionally credited amount, the financial institution must. 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. on NARA's archives.gov. [9] 129. 47. 13. This change is an operational necessity due to ever-increasing capacity constraints and to accommodate anticipated access needs for Members and other market participants. 06/30/2023 at 8:45 am. Co-Location Services. However, we occasionally find the following violations during our testing of the EFT error resolution process: 1005.11(c) and 1005.11(d) require communicating this information to the consumer. Again, there is no legal or regulatory requirement that a market participant become a Member of the Exchange. The need to support 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 believes the Cost Analysis and related projections in this filing demonstrate this fact. healthcare and insurance). 135. case noted above, the Commission never followed through with its intention to subject the over 400 fee filings to develop a record, and to explain their conclusions, based on that record, in a written decision that is sufficient to enable us to perform our review.[34] and The Exchange does not yet know whether such expectations will be realized. From 2011 until the issuance of the Staff Guidance in 2019, national securities exchanges filed, and the Commission Staff did not abrogate or suspend (allowing such fees to become effective), at least 92 filings[36] Start Printed Page 42856 0000017593 00000 n See See Web1. 31. v. 88. [137] . 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. [118] 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. As described above, the Exchange has operated at a cumulative net annual loss since it launched operations in 2012[141] 92. In the Revised Review Process and Staff Guidance, Commission Staff indicated that they would look at factors beyond the competitive environment, such as cost, only if a proposal lacks persuasive evidence that the proposed fee is constrained by significant competitive forces.[86]. There are a few time rules in Regulation E. The first concerns the time within which a customer must make an error claim in order for the claim to qualify for error resolution protections afforded by Section 205.11. Document page views are updated periodically throughout the day and are cumulative counts for this document. The Exchange also notes that this the resultant profit margin differs slightly from the profit margins set forth in similar fee filings by its affiliated markets. The Exchange and its affiliates, MIAX Pearl and MIAX Emerald, have a total of 47 members. A particular root symbol may only be assigned to a single designated matching engine. Therefore, the Exchange did not propose to alter 1Gb connectivity and continues to provide 1Gb connectivity over a shared network. 94229 at 92 (1975) ([I]t is the intent of the conferees that the national market system evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed.). Id. 15. Similarly, the cost of paying directors to serve on the Exchange's Board of Directors is also included in the Exchange's general shared expense cost driver. The Exchange must also purchase and maintain 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. See15 U.S.C. issued August 12, 2022, Mkts. v. [120] . Becoming a member of the exchange does not lock a potential member into a market or diminish the overall competition for exchange services. (together with MIAX Pearl Options and MIAX Pearl Equities, the affiliated markets)) to ensure no cost was allocated more than once, as well as additional detail supporting its cost allocation processes and explanations as to why a cost allocation in this proposal may differ from the same cost allocation in a similar proposal submitted by one of its affiliated exchanges. Those items marked with * are required entries. Securities Exchange Act Release No. ), which may impact message traffic, individual system architectures that impact platform size,[121] Specifically, the Exchange utilizes content service providers to receive market data from OPRA, other exchanges and market data providers. For complete information about, and access to, our official publications %%EOF e.g., 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. Counts are subject to sampling, reprocessing and revision (up or down) throughout the day. 10Gb ULL connection SEC, See supra The Exchange will continue to assess monthly Member and non-Member network connectivity fees for connectivity to the primary and secondary facilities in any month the Member or non-Member is credentialed to use any of the Exchange APIs or market data feeds in the production environment. Securities Exchange Act Release No. 77. Start Printed Page 42864 10. Non-Member third-parties, such as service bureaus and extranets, resell the Exchange's connectivity. [111] As this is a fee increase, arguably if set too high, this fee would make it easier for other exchanges to compete with the Exchange. note 25. Use this form to file an informal complaint against a utility within the State of Utah. Ports, but in different amounts. Front line staff can quickly find customers and transactions and complete the intake process in under 2 minutes. at note 1. better and aid in comparing the online edition to the print edition. Start Printed Page 42848 and Rule 19b4 thereunder,[2] note 9. 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. The term Market Makers refers to Lead Market Makers (LMMs), Primary Lead Market Makers (PLMMs), and Registered Market Makers (RMMs) collectively. 1005.11(d) requires if no error or a different error is found: The financial institution must report the results of its investigation, including a written explanation of the institution's findings and the. Start Printed Page 42850 866 F.3d 442 (D.C. The allocation percentages set forth above differ because they correspond with the number of applicable ports utilized on each exchange. In addition, the Exchange will periodically conduct a review to inform its decision making on whether a fee change is appropriate ( Disapproval could also have the adverse effect of discouraging an exchange from optimizing its operations and deploying innovative technology to the benefit of market participants if it believes the Commission would later prevent that exchange from covering its costs and monetizing operational enhancements, thus adversely impacting competition. The Exchange notes that senior level executives were allocated Human Resources costs to the extent they are involved in overseeing tasks specifically related to providing Limited Service MEI Ports. is making determinations as to appropriate profit margins in their approval of exchange fees, the Exchange believes that the Commission should be clear to all market participants as to what they have determined 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. The Staff Guidance further states that, . 123. 0 A market participant may either pay the costs associated with becoming a member of an exchange or, in the alternative, a market participant may elect to pay commissions to a broker-dealer, pay fees to a service bureau to submit trades, or pay a member to sponsor the market participant in order to submit trades directly to an exchange. 35. 85459 (March 29, 2019), 84 FR 13363 (April 4, 2019) (SRBOX201824, SRBOX201837, and SRBOX201904) (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). In light of the arguments above regarding disparate standards of review for historical legacy non-transaction fees and current non-transaction fees for non-legacy exchanges, a fee parity alternative would be one possible way to avoid the current unfair and discriminatory effect of the Staff Guidance and Revised Review Process. and various other developments, the Commission began to undertake a heightened review of exchange filings, including non-transaction fee filings that was substantially and materially different from it prior review process (hereinafter referred to as the Revised Review Process). Because the Exchange's parent company currently owns and operates four separate and distinct marketplaces, the Exchange must determine the costs associated with each actual marketas opposed to the Exchange's parent company simply concluding that all costs drivers are the same at each individual marketplace and dividing total cost by four (4) (evenly for each marketplace). PLEASE NOTE: Complaints elevated to FORMAL COMPLAINTS and filed with the Commission are public documents and will be published on the Commission's website. Allowing new exchange entrants time to build and sustain market share through various pricing incentives before increasing non-transaction fees encourages market entry and fee parity, which promotes competition among exchanges. The Exchange has provided this information to Commission Staff under separate cover with a request for confidentiality. It is the responsibility of a claimant to be punctual and remain at work within the Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change, The Proposed Fees Ensure Parity Among Exchange Access Fees, Which Promotes Competition, Bifurcation of 10Gb ULL Connectivity and Related Fees, Costs Related to Offering Physical 10Gb ULL Connectivity, Connectivity (External Fees, Cabling, Switches, etc. Extranets offer physical connectivity services to Members and non-Members. Securities Exchange Act Release No. and the D.C. and The merchant can either accept that they lost the dispute or decline the pre-arbitration, in which case the issuer has the option to either reverse the chargeback or go to arbitration. Mobile App Fraud and Regulation E. Over the past several months, more and more consumers have turned to mobile payments. Start Printed Page 42861 In the absence of the Commission attempting to specify a methodology for the allocation of exchanges' interdependent costs, the Exchange will continue to be left with its best efforts to attempt to conduct such an allocation in a thoughtful and reasonable manner. Section 179D Energy Efficient Tax Deduction, Internal Audit Outsourcing & Consulting Services, Outsourced CFO, controller and accounting department, Wealth management and investment advisory services, Complete Solution for Job Shops and Contract Manufacturers, Microsoft Dynamics 365 Project Service Automation, Integrate invoice processing & AP automation with Concur Connectors, Connectors for Dynamics 365 Business Central, Regulation E: Common Mistakes and How to Avoid Them, Overview of OMB's Uniform Guidance (Preconference to the Iowa Community Action Association Annual Conference, New research shows state of credit unions as 2023 starts, Wipfli releases new research on the state of banking. 79. If a market participant chooses to become a Member, they may then choose to purchase connectivity beyond the one connection that is necessary to quote or submit orders on the Exchange. The Exchange notes that this allocation is greater than its affiliate, MIAX Pearl Options, 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. 0000001090 00000 n New Fee - Disclosure Rules. SQF Port. 134. WebEFTA Reg E - ERROR RESOLUTION QUICK REFERENCE GUIDE Regulation E Section 205.11 defines 7 types of EFT Errors that qualify for the resolution process noted on the the Exchange believes that the proposed fees are consistent with the Act because they are: (i) reasonable, equitably allocated, not unfairly discriminatory, and not an undue burden on competition; (ii) comply with the BOX Order and the Staff Guidance; and (iii) supported by evidence (including comprehensive revenue and cost data and analysis) that they are fair and reasonable and will not result in excessive pricing or supra-competitive profit. 85802, 2019 WL 2022819 (May 7, 2019) (the Order Denying Reconsideration). which requires, among other things, that exchange fees be reasonable and equitably allocated,[115] Securities Exchange Act Release No. WebOptimize quality, first-contact resolution, and the customer experience. Each of the below cost allocations is unique to the Exchange and represents a percentage of overall cost that was allocated to the Exchange pursuant to the initial allocation described above. the number of matching engines per exchange, New exchanges often do not charge fees or charge lower fees for certain services such as memberships/trading permits to attract order flow to an exchange, and later amend their fees to reflect the true value of those services, absorbing all costs to provide those services in the meantime. [151] storage costs, surveillance costs, service expenses) also increase. See Consider the following example: a Member has just sent numerous messages and/or orders over one of their Limited Service MEI Ports that are now in queue to be processed. . 66. 53. startxref Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. in preparing Fee Filings that meet their burden to demonstrate that proposed fees are consistent with the requirements of the Securities Exchange Act.[25] Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change, A. For example, a third-party broker-dealer Member of the Exchange may be utilized by a retail investor to submit orders into an exchange. The D.C. [FR Doc. Start Printed Page 42859. The allocation percentages set forth above differ because they directly correspond with the number of applicable ports utilized on each exchange. 74417 (March 3, 2015), 80 FR 12534 (March 9, 2015) (SRISE201506); 83016 (April 9, 2018), 83 FR 16157 (April 13, 2018) (SRPHLX201826); 70285 (August 29, 2013), 78 FR 54697 (September 5, 2013) (SRNYSEMKT201371); 76373 (November 5, 2015), 80 FR 70024 (November 12, 2015) (SRNYSEMKT201590); 79729 (January 4, 2017), 82 FR 3061 (January 10, 2017) (SRNYSEARCA2016172). The Exchange and its affiliated markets often share a single cost, which results in cost efficiencies that can cause a broader gap between the allocated cost amount and projected revenue, even though the fee levels being proposed are lower or competitive with competing markets (as described above). As with the other allocated costs in the Exchange's updated Cost Analysis, the Depreciation cost driver was therefore narrowly tailored to depreciation related to Limited Service MEI Ports. 15 U.S.C. . 110. Also, weve identified some financial institutions that have required the consumer to work with the merchant prior to investigating an EFT error. The costs included in general shared expenses include general expenses of the Exchange, including office space and office expenses ( The Exchange notes that the cost to provide Limited Service MEI Ports is higher than the cost for the Exchange's affiliate, MIAX Pearl Options, to provide Full Service MEO Ports due to the substantially higher number of Limited Service MEI Ports used by Exchange Members. For example, the Exchange notes that the percentages it and its affiliate, MIAX Emerald, allocated to the depreciation cost driver for Limited Service MEI Ports differ by only 2.6%. Member Network Connectivity Testing and Certification Fees will not be assessed for testing and certification of connectivity to the Exchange's Disaster Recovery Facility.). 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. 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. 75. The Exchange notes it is unable to compare access fee revenues with NASDAQ Phlx (or other affiliated NASDAQ exchanges) because after 2019, the Trade Management Services line item was bundled into a much larger line item in PHLX's Form 1, simply titled Market services.[48]. Prior to bifurcating the 10Gb ULL network, the Exchange and MIAX Pearl Options continued to add switches to meet ongoing demand for 10Gb ULL connectivity. wherein the Commission discussed the existence of competition in the marketplace generally, and particularly for exchanges with unique business models. Securities Exchange Act Release No. not at the national best bid or offer (NBBO),[101] Circuit stated, [n]o one disputes that competition for order flow is `fierce.' The Visa Online Merchant Dispute Guide is your one-stop resource for handling cardholder disputes from start-to-finish. 78f(b). 17. See With respect to Limited Service MEI Ports, the Exchange calculated Human Resources cost by taking an allocation of employee time for employees whose functions include providing Limited Service MEI Ports and maintaining performance thereof (including a broader range of employees such as technical operations personnel, market operations personnel, and software engineering personnel) as well as a limited subset of personnel with ancillary functions related to maintaining such connectivity (such as sales, membership, and finance personnel). A potential profit margin should not be evaluated solely on its size; that assessment should also consider cost management and whether the ultimate fee reflects the value of the services provided. 88211 (February 14, 2020), 85 FR 9847 (February 20, 2020) (SRNYSENAT202005), The Exchange notes that it does not own the Primary Data Center or the Secondary Data Center, but instead, leases space in data centers operated by third parties. 85. Instead, those Members maintain dedicated separate 10Gb ULL connections for the Exchange and separate dedicated 10Gb ULL connections for MIAX Pearl Options. It was viewed 3 times while on Public Inspection. See Presented by: PAR/WACHA-The Premier Payments Resource Michele Barlow, AAP, NCP Vice President 262-345-1245 or 800-453-1843 www.wacha.org mbarlow@wacha.org 2017 84432, 2018 WL 5023228 (October 16, 2018) (the SIFMA Decision). the different percentages of the overall cost driver allocated to the Exchange and its affiliated markets will cause the dollar amount of the overall cost allocated among the Exchange and its affiliated markets to also differ. 0000007894 00000 n 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. Since the time of the 2021 increase discussed above, the Exchange experienced ongoing increases in expenses, particularly internal expenses. [40] This includes personnel from the Exchange departments that are predominately involved in providing 1Gb and 10Gb ULL connectivity: Business Systems Development, Trading Systems Development, Systems Operations and Network Monitoring, Network and Data Center Operations, Listings, Trading Operations, and Project Management, of which the Exchange allocated 42% of each of their employee's time assigned to the Exchange, as stated above. Whether to send money to a family member out of work or to pay for groceries at the local market, contactless payments are on the rise. Should the Commission Staff disapprove such fees, it would effectively dictate how an exchange manages its technology and would hamper the Exchange's ability to continue to invest in and fund access services in a manner that allows it to meet existing and anticipated access demands of market participants. 144. 0000003267 00000 n Id. The costs included in general shared expenses include general expenses of the Exchange, including office space and office expenses (

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