[Federal Register Volume 90, Number 137 (Monday, July 21, 2025)]
[Notices]
[Pages 34308-34314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-13575]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103475; File No. SR-LTSE-2025-15]
Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Fee Schedule To Adopt Certain Market Data Fees
July 16, 2025.
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 July 3, 2025, Long-Term Stock Exchange, Inc. (``LTSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to establish a new section (D.
Market Data Fees) in the LTSE Fee Schedule for its proprietary market
data feeds, Depth of Book, Top of Book and Last Sale (each an
``Exchange Data Feed'' and collectively, the ``Exchange Data Feeds'')
and adopt fees for the Depth of Book and Top of Book Feeds effective
July 3, 2025.\3\
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\3\ See Securities Exchange Act Release No. 34-101226 (October
1, 2024), 89 FR 81587 (October 08, 2024) (SR-LTSE-2024-06). See also
Securities Exchange Act Release No. 100783 (August 20, 2024), 89 FR
68481 (August 26, 2024) (SR-LTSE-2024-03) (Order Approving a
Proposed Rule Change to Transition to a New Trading Platform and
Amend its Trading Rules).
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The text of the proposed rule change is available at the Exchange's
website at https://longtermstockexchange.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The self-regulatory organization has prepared summaries,
set forth in Sections A, B, and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to establish a new section (D. Market
Data Fees) in the Long-Term Stock Exchange Fee Schedule for its
proprietary market data feeds, Depth of Book, Top of Book and Last Sale
(each an ``Exchange Data Feed'' and collectively, the ``Exchange Data
Feeds'') and adopt fees for the Depth of Book and Top of Book Feeds.
The Exchange is proposing to implement the proposed fees effective July
3, 2025.\4\
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\4\ See Securities Exchange Act Release No. 34-103076 (May 20,
2025) 90 FR 22339 (May 27, 2025) (SR-LTSE-2025-08), which was filed
on May 12, 2025, and replaced SR-LTSE-2025-05. See Securities
Exchange Act Release No. 34-102735 (March 27, 2025) 90 FR 14507
(April 2, 2025) (SR-LTSE-2025-05), which was filed on March 14,
2025, and replaced SR-LTSE-2025-02. See Securities Exchange Act
Release No. 34-102498 (February 27, 2025), 90 FR 11335 (March 5,
2025) (SR-LTSE-2025-02) which was filed on February 14, 2025, and
replaced SR-LTSE-2024-12. See Securities Exchange Act Release No.
34-102097 (January 3, 2025) 90 FR 2054 (January 10, 2025) (SR-LTSE-
2024-12), which was filed on December 20, 2024. The fees were
initially adopted in SR-LTSE-2024-08, see Securities Exchange Act
Release No. 34-101584 (November 12, 2024), 89 FR 90782 (November 18,
2024) (SR-LTSE-2024-08). The Exchange is now withdrawing and
replacing this filing with SR-LTSE-2025-15.
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Proposed Market Data Pricing
The Exchange offers three separate data feeds to subscribers--Depth
of
[[Page 34309]]
Book, Top of Book and Last Sale.\5\ The Exchange notes that there is no
requirement that any market participant subscribe to a particular
Exchange Data Feed or any Exchange Data Feed whatsoever, but instead, a
market participant may choose to maintain subscriptions to those
Exchange Data Feeds it deems appropriate based on the firm's business
model. The proposed Exchange Data Feed fees will be the same for each
subscriber regardless of size or type of market participant. The
proposed pricing for each of the Exchange Data Feeds is set forth
below.
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\5\ See LTSE Rule 11.330. Data Products. The Exchange notes that
in the Rulebook these feeds are defined as the LTSE MEMOIR Depth,
LTSE MEMOIR Top and LTSE MEMOIR Last Sale. However, the Exchange is
simplifying these names for purposes of simplicity within the LTSE
Fee Schedule.
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Depth of Book
The Depth of Book feed is an LTSE-only market data feed that
contains all displayed orders for securities trading on the Exchange
(i.e., top and depth-of-book order data), order executions (i.e., last
sale data), order cancellations, order modifications, order
identification numbers, and administrative messages.\6\ For the receipt
of access to the Depth of Book feed the Exchange proposes to charge
$2,500 per data recipient per month. The proposed fee would be charged
to any data recipient that receives the Depth of Book feed for the
purpose of either nternal use within the firm and/or external
distribution to Affiliates \7\ or for External Use.\8\ The proposed fee
for Depth of Book will be charged only once per data recipient per
month per subscribing entity.
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\6\ See LTSE Rule 11.330(a)(1).
\7\ ``Affiliates'' is defined as any Data Recipient meaning any
entity that directly or indirectly Controls, is Controlled by, or is
under common Control with Data Recipient. An Affiliate of Data
Recipient is entitled to the same rights granted to Data Recipient
hereunder including the right to use and distribute the Market Data
to other Persons subject to the terms of the Exchange Data
Agreement. See Long-Term Stock Exchange, Inc. Exchange Data
Agreement. Internal distribution includes the sharing of any
Exchange data product to other legal entities affiliated with the
firm that have been disclosed to the Exchange.
\8\ ``External Use'' is defined as the distribution of Market
Data to Persons who are not officers, employees or Affiliates of the
Distributor. See Long-Term Stock Exchange, Inc. Exchange Data
Agreement. External distribution includes a firm that receives an
Exchange data product and then distributes that data to a third-
party or one or more data recipients outside the firm.
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Top of Book
The Top of Book feed is a LTSE-only market data feed that contains
top of book quotations based on equity orders entered into the trading
system as well as administrative messages and last sale data.\9\ For
the receipt of access to the Top of Book feed the Exchange proposes to
charge $500 per data recipient per month. The proposed fee would be
charged to any data recipient that receives the Top of Book feed for
the purpose of either internal distribution within the Company and/or
with Affiliates or external distribution for External Use. The proposed
fee for Top of Book will be charged only once per month per subscribing
entity.
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\9\ See LTSE Rule 11.330(a)(2).
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Last Sale
The Last Sale feed is a LTSE-only market data feed that contains
only execution information based on equity orders entered into the
System as well as administrative messages.\10\ For the receipt of
access to the Last Sale feed the Exchange proposes to charge $0 per
month.
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\10\ See LTSE Rule 11.330(a)(3).
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In proposing to charge fees for Exchange Data Feeds, the Exchange
has sought to be especially diligent in assessing those fees in a
transparent way against its own aggregate costs of providing the
related services. It has also sought to carefully and transparently
assess the impact on market participants--both generally and in
relation to other market participants, i.e., to assure the fees will
not create a financial burden on any participant and will not have an
undue impact in particular on smaller market participants and
competition among market participants in general. The Exchange believes
that this level of diligence and transparency is called for by the
requirements of Section 19(b)(1) under the Act,\11\ and Rule 19b-4
thereunder,\12\ with respect to the types of information self-
regulatory organizations (``SROs'') should provide when filing fee
changes, and Section 6(b) of the Act,\13\ which requires, among other
things, that exchange fees be reasonable and equitably allocated,\14\
not designed to permit unfair discrimination,\15\ and that they not
impose a burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.\16\ This rule change proposal
addresses those requirements, and the analysis and data in each of the
sections that follow are designed to clearly and comprehensively show
how they are met.\17\
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\11\ 15 U.S.C. 78s(b)(1).
\12\ 17 CFR 240.19b-4.
\13\ 15 U.S.C.78f(b).
\14\ 15 U.S.C. 78f(b)(4).
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78f(b)(8).
\17\ In 2019, Commission staff published guidance suggesting the
types of information that SROs may use to demonstrate that their fee
filings comply with the standards of the Act (``Fee Guidance'').
While LTSE understands that the Fee Guidance does not create new
legal obligations on SROs, the Fee Guidance is consistent with
LTSE's view about the type and level of transparency that exchanges
should meet to demonstrate compliance with their existing
obligations when they seek to charge new fees. See Staff Guidance on
SRO Rule Filings Relating to Fees (May 21, 2019), available at
https://www.sec.gov/about/staff-guidance-sro-rule-filings-fees.
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Cost Analysis
The Exchange notes it operates a unique model where the LTSE
trading system and certain associated services are provided on an
outsourced basis by MEMX Technologies LLC (``MEMX Technologies'').\18\
As such, a large portion of the Exchange's technology costs, including
those related to Exchange Data Feeds, are incorporated into the overall
fees that the Exchange pays MEMX Technologies as part of its multi-year
arrangement to provide a trading system and associated services.\19\
Because of this arrangement, the Exchange does not possess the same
level of specificity for cost drivers related to market data as other
exchanges have detailed within their own similar filings. However, the
Exchange recognizes that the fees it pays MEMX Technologies are for the
services MEMX Technologies provides to the Exchange and the associated
costs incurred by MEMX Technologies. These services and costs include
maintaining a team of highly skilled network engineers, fees charged to
MEMX Technologies by the third-party data center operator for the
servers and equipment LTSE utilizes, costs associated with projects and
initiatives designed to improve overall network performance and
stability, and costs associated with fully supporting advances in
infrastructure and expansion of network level services, including
customer monitoring, alerting and reporting. There are also significant
technology expenses related to establishing and maintaining information
security services, enhanced network monitoring and customer reporting,
as well as Regulation SCI
[[Page 34310]]
mandated processes, associated with the MEMX Technologies network
technology that are borne by the Exchange. Most of the specific
expenses for market data fees and the Exchange's DSLA with MEMX
Technologies are combined, and therefore the Exchange discusses these
expenses, and the portion allocated to market data as part of the
``Third-Party Expenses'' Cost Driver below.
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\18\ The Exchange and MEMX Technologies executed a Development,
License and Services Agreement on January 23, 2024, with
accompanying Schedules (collectively, the ``DLSA''). MEMX
Technologies, an affiliate of the MEMX Exchange, is in the business
of developing technology systems for use in the financial industry.
See SR-LTSE-2024-03.
\19\ The DSLA with MEMX Technologies entails both fixed and
variable costs. The Exchange used both types of costs when
determining aggregated monthly costs detailed below.
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Further, while the Exchange has been operating since September
2020, it only entered the DLSA with MEMX Technologies in January of
2024 and launched the new trading system in September 2024. Therefore,
the Exchange's most recent publicly available financial statement (2023
Audited Unconsolidated Financial Statement) does not reflect the
current costs associated with development and operation of market data
on LTSE. Accordingly, the Exchange believes it is more appropriate to
justify its fees utilizing a recent monthly billing cycle and
extrapolated annualized costs on a going-forward basis.
LTSE recently calculated its aggregate monthly costs for providing
Exchange Data Feeds at $223,336 for 2025.\20\ Before the launch of the
new trading system in September 2024 the Exchange did not offer any
market data products. Now, in order to cover some of the aggregate
costs of providing the Exchange Data Feeds to market participants (both
Members and non-Members) the Exchange is proposing to modify its Fee
Schedule and charge the Exchange Market Data Fees detailed herein.
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\20\ The aggregate monthly costs were determined by taking the
individual cost drivers detailed below and their yearly costs and
dividing by twelve months.
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In order to determine the Exchange's costs for providing the
services associated with the Exchange Data Feeds, the Exchange
conducted an extensive review in which the Exchange analyzed every
expense item in the Exchange's general expense ledger to determine
whether each such expense relates to the services associated with the
Market Data Fees, and, if such expense did so relate, what portion (or
percentage) of such expense actually supports those services. The sum
of all such portions of expenses represents the total cost of the
Exchange to provide the services associated with the Exchange Data
Feeds. For the avoidance of doubt, no expense amount was allocated
twice. The Exchange is also providing detailed information regarding
the Exchange's cost allocation methodology--namely, information that
explains the Exchange's rationale for determining that it was
reasonable to allocate certain expenses described in this filing
towards the total cost to provide Exchange Data Feeds.
The Exchange believes that the Market Data Fees are fair and
reasonable because they will only cover a portion of the total annual
expense that the Exchange projects to incur in connection with
providing the services associated with the proposed Market Data Fees
versus the total annual revenue of the Exchange projects to collect in
connection with providing those services. Based on market data usage as
of May 1st, 2025, as well as projected use through the remainder of the
year, the Exchange would generate monthly revenues for 2025 of
approximately $52,000, which will result in a loss for the Exchange.
Costs Related to Offering Market Data
The following chart details the individual line-item costs
considered by LTSE to be related to offering market data as well as the
percentage of the Exchange's overall costs per year in that area (e.g.,
as set forth below, the Exchange allocated approximately 18% of its
overall Human Resources cost to offering market data for a total of
$591,228 per year).
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Allocated Allocated
Cost drivers monthly costs yearly costs % of All
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Third-Party Expenses............................................ $154,349 $1,852,188 17
Human Resources................................................. 49,274 591,228 9
Data Center..................................................... 19,713 236,552 39
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Total....................................................... 223,336 2,680,027 ..............
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Below are additional details regarding each of the line-item costs
considered by LTSE to be related to offering the Exchange Data Feeds.
Third-Party Expenses
As discussed above, LTSE has undertaken a unique model where it has
outsourced its trading system and related technology to a third-party
technology provider, MEMX Technologies. With this arrangement LTSE
receives, among other things, (1) a state-of-the-art trading engine
used to generate and disseminate the Exchange Data Feeds; (2) servers
used at the Exchange's primary and back-up data centers specifically
for the Exchange Data Feeds; and (3) hardware and software to operate
and monitor physical assets necessary to offer the Exchange Data Feeds.
MEMX Technologies provides personnel to support the use and operation
of the LTSE trading platform including but not limited to, monitoring
the network, managing system development and testing, facilitating
connection changes and access changes, as well as performing normal
maintenance operations. The Exchange has an additional third-party
vendor which assists the Exchange with services related to monitoring
the trading system. Together these two third-parties account for all
the Third-Party expenses. The Exchange's Third-Party expenses include
both fixed and variable costs, but only fixed costs relate to providing
market data.
The Exchange took the annual costs for each of these two third-
party providers to determine what portion (or percentage) of these
costs related to providing market data and thus bears a relationship
that is, ``in nature and closeness,'' directly related to market data.
There are four major core technology cost buckets associated with
operating the Exchange: (1) the Member Gateways which include physical
and logical connectivity, (2) connectivity to the Securities
Information Processor (``SIP''), (3) the Trading Engine, and (4) any
downstream services which include system reporting, etc. The Exchange
then reviewed each of these technology cost buckets in great detail and
determined the percentage each of these buckets should be allocated to
the total cost of the third-party expense, with Member Gateways, the
SIP and the Trading Engine each accounting for 30% of the costs related
to a third-party provider, and downstream services being allocated the
remaining 10%.
[[Page 34311]]
Using this breakdown for both third-party providers, the Exchange
determined the portion of each of these costs that was associated with
providing market data, connectivity services or neither. Here, the
Exchange determined that the 20% (of the overall 30%) allocated to the
cost of the Trading Engine should be associated with the cost of
providing market data. Additionally, the Exchange determined an
allocation of 5% (of the overall 30%) for the cost of the Member
Gateway was appropriate to associate with the cost of providing market
data, as well as 5% (of the overall 10%) for the costs to provide
downstream services. Blended together that is 17% of the overall third-
party expenses.
Human Resources
In addition to the cost of personnel of outsourced third-party
providers that are allocated in the Third-Party Expense section above,
LTSE then calculated an allocation of LTSE employee time for employees
whose functions include providing services necessary to offer the
Exchange Data Feeds, including performance thereof, as well as
personnel with ancillary functions related to establishing and
providing such services (such as information security and finance
personnel). The Exchange notes that while MEMX Technologies maintains
its own network support services, due to the Exchange's independent
regulatory oversight obligations, the Exchange and its staff provide
certain direct network support services to Members and non-Members,
including network monitoring, reporting and support services.
The Exchange also allocated Human Resources costs to provide market
data to a limited subset of LTSE personnel with ancillary functions
related to monitoring and enabling market data (such as information
security and finance personnel), for which the Exchange allocated cost
on an employee-by-employee basis (i.e., only including those personnel
who do support functions related to providing market data) and then
applied a smaller allocation to such employees. Blended together, Human
Resources costs to provide market data accounted for 9% of all Human
Resource costs. The Exchange notes that it has fewer than fifty (50)
employees, and each department leader has direct knowledge of the time
spent by each employee with respect to the various tasks necessary to
operate the Exchange. The estimates of Human Resources cost were
therefore determined by consulting with such department leaders,
determining which employees are involved in tasks related to providing
market data, and confirming that the proposed allocations were
reasonable based on an understanding of the percentage of their time
such employees devote to tasks related to providing market data. The
Exchange notes that senior level executives were only allocated Human
Resources costs to the extent the Exchange believed they are involved
in overseeing tasks related to providing market data. The Human
Resources cost was calculated using a blended rate of compensation
reflecting salary, equity and bonus compensation, benefits, payroll
taxes, and 401(k) matching contributions.
Data Center
In addition to the data center costs included by the Exchange per
its DSLA with MEMX Technologies which are allocated in the Third-Party
Expenses above, the Exchange also maintains its own footprint in a
third-party data center.\21\ Data center costs include an allocation of
the costs the Exchange incurs to monitor its trading platform, as well
as the costs to maintain its equipment in the data center. The Exchange
does not own the data center facilities, but instead, leases space in a
data center operated by a third-party.
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\21\ LTSE has a presence in the Secaucus NY4 data center that is
operated by Equinix.
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The Exchange has two third-party vendors that account for the Data
Center expenses. Consistent with the exercise above, the Exchange took
the annual costs for each of these two Data Center vendors to determine
what portion (or percentage) of these costs related to providing market
data and thus bears a relationship that is, ``in nature and
closeness,'' directly related to market data. The Exchange then
reviewed each of the technology cost buckets detailed above and
determined the percentage each of these buckets should be allocated to
the total cost of the Data Center expenses, with Member Gateways, the
SIP and the Trading Engine each accounting for 30% of the costs related
to a third-party provider, and downstream services being allocated the
remaining 10%. Using this breakdown for all Data Center vendors the
Exchange determined the portion of each of these costs was associated
with providing market data, connectivity services or neither. Here, the
Exchange determined that the 15% allocation for the cost of the Member
Gateway (of the overall 30%) should be associated with the cost of
providing market data. Additionally, the Exchange determined an
allocation of 18% (of the overall 30%) for the cost of the Trading
Engine was appropriate to associate with the cost of providing market
data, as well as 6% (of the overall 10%) should be associated with the
cost to provide downstream services. Blended together that is 39% of
the overall data center expenses.
Proposed Fees--Additional Discussion
In conducting its cost analysis, the Exchange did not allocate any
of its expenses in full to any core service and did not double-count
any expenses. Instead, as described above, the Exchange identified and
allocated applicable cost drivers across its core services and used the
same approach to analyzing costs to form the basis of a separate
proposal to adopt fees for connectivity services (the ``Connectivity
Filing'') \22\ and this filing proposing fees for Exchange Data Feeds.
Thus, 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.
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\22\ See Securities Exchange Act Release No. 34-102322 (February
3, 2025), 90 FR 9175 (February 7, 2025) (SR-LTSE-2025-01) which was
filed on January 23, 2025, and replaced SR-LTSE-2024-09. See
Securities Exchange Act Release No. 34-101851 (December 9, 2024), 89
FR 101057 (December 13, 2024) (SR-LTSE-2024-09) which was filed on
November 27, 2024, and replaced SR-LTSE-2024-07. See also Securities
Exchange Act Release No. 34-101320 (October 11, 2024), 89 FR 83731
(October 17, 2024) (SR-LTSE-2024-07). The fees were initially
adopted in SR-LTSE-2024-06, see Securities Exchange Act Release No.
34-101226 (October 1, 2024), 89 FR 81587 (October 8, 2024) (SR-LTSE-
2024-06).
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LTSE believes the proposed fees for Exchange Data Feeds are fair
and reasonable as a form of cost recovery for the Exchange's aggregate
costs of offering market data. The proposed fees are expected to
generate monthly revenue of approximately $52,000 \23\ providing
partial cost recovery to the Exchange for the aggregate costs of
offering Exchange Data Feeds, based on a methodology that narrowly
limits the cost drivers that are allocated to those closely and
directly related to the particular service. The proposed fees for
Exchange Data Feeds are designed to permit the Exchange to cover a
portion of costs for providing Exchange Data Feeds, which the Exchange
believes is fair and reasonable after taking into account the costs
related to creating, generating, and disseminating the Exchange Data
Feeds. LTSE notes that like other exchanges, it is after all, a for-
profit business. Accordingly, while the Exchange believes in
transparency
[[Page 34312]]
around costs and potential margins, as well as periodic review of
revenues and applicable costs (as discussed below), the Exchange does
not believe that these estimates should form the sole basis of whether
or not a proposed fee is reasonable or can be adopted. Instead, the
Exchange believes that the information should be used solely to confirm
that an Exchange is not earning supra-competitive profits, and the
Exchange believes its Cost Analysis and related projections demonstrate
this fact. As a general matter, the Exchange believes that its costs
will remain relatively similar in future years. It is possible however
that such costs will either decrease or increase. To the extent the
Exchange sees growth in use of Exchange Data Feeds it will receive
additional revenue to offset future cost increases. However, if use of
Exchange Data Feeds is static or decreases, the Exchange might not
realize the revenue that it anticipates or needs in order to cover
applicable costs. Accordingly, the Exchange is committing to conduct a
one-year review after implementation of these fees. The Exchange
expects that it may propose to adjust fees at that time, to increase
fees in the event that revenues fail to cover costs and a reasonable
mark-up of such costs.
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\23\ As stated above, the Exchange launched its new trading
platform on September 23, 2024. This expected revenue is based on
market data usage as of May 1st, 2025, as well as projected use
through the remainder of the year.
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Similarly, the Exchange expects that it would propose to decrease
fees in the event that revenue materially exceeds current projections.
In addition, the Exchange will periodically conduct a review to inform
its decision making on whether a fee change is appropriate (e.g., to
monitor for costs increasing/decreasing or subscribers increasing/
decreasing, etc. in ways that suggest the then-current fees are
becoming dislocated from the prior cost-based analysis) and expects
that it would propose to increase fees in the event that revenues fail
to cover its costs and a reasonable mark-up, or decrease fees in the
event that revenue or the mark-up materially exceeds current
projections. In the event that the Exchange determines to propose a fee
change, the results of a timely review, including an updated cost
estimate, will be included in the rule filing proposing the fee change.
More generally, the Exchange believes that it is appropriate for an
exchange to refresh and update information about its relevant costs and
revenues in seeking any future changes to fees, and the Exchange
commits to do so.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \24\ of the Act in general and
furthers the objectives of Section 6(b)(4) \25\ of the Act, in
particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees and other charges among its Members
and other persons using its facilities. Additionally, the Exchange
believes that the proposed fees are consistent with the objectives of
Section 6(b)(5) \26\ of the Act in that they are designed to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to a free and open market and
national market system, and, in general, to protect investors and the
public interest, and, particularly, are not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
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\24\ 15 U.S.C. 78f.
\25\ 15 U.S.C. 78f(b)(4).
\26\ 15 U.S.C. 78f(b)(5).
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The Exchange notes prior to addressing the specific reasons the
Exchange believes the proposed fees and fee structure are reasonable,
equitably allocated and not unreasonably discriminatory, that the
proposed fee structure described above is consistent with the fee
structure used by the Investors Exchange LLC (``IEX'').\27\ As such,
the Exchange believes it is adopting a model that is easily understood
by Members and non-Members, most of which also subscribe to market data
products from other exchanges, including IEX. For this reason, the
Exchange believes that the proposed fees described above are consistent
with the Act generally, and Section 6(b)(5) \28\ of the Act in
particular.
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\27\ Similar to LTSE, IEX did not initially charge for market
data but now charges $2,500 per month for its Depth of Book Feed
(DEEP Feed) and $500 per month for its Top of Book Feed (TOPS Feed).
All other market data products on IEX are free.
\28\ 15 U.S.C. 78f(b)(5).
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Reasonableness
With regard to reasonableness, the Exchange understands that the
Commission has traditionally taken a market-based approach to examine
whether the SRO making the fee proposal was subject to significant
competitive forces in setting the terms of the proposal. The Exchange
understands that in general the analysis considers whether the SRO has
demonstrated in its filing that (i) there are reasonable substitutes
for the product or service; (ii) ``platform'' competition constrains
the ability to set the fee; and/or (iii) revenue and cost analysis
shows the fee would not result in the SRO taking supracompetitive
profits. If the SRO demonstrates that the fee is subject to significant
competitive forces, the Exchange understands that in general the
analysis will next consider whether there is any substantial
countervailing basis to suggest the fee's terms fail to meet one or
more standards under the Act. The Exchange further understands that if
the filing fails to demonstrate that the fee is constrained by
competitive forces, the SRO must provide a substantial basis, other
than competition, to show that it is consistent with the Act, which may
include production of relevant revenue and cost data pertaining to the
product or service.
The Exchange has not determined its proposed overall market data
fees based on assumptions about market competition, instead relying
upon a cost-plus model to determine a reasonable fee structure that is
informed by the Exchange's understanding of different uses of the
products. In this context, the Exchange believes the proposed fees
overall are fair and reasonable as a form of partial cost recovery,
plus provide the possibility of a reasonable return for Exchange's
aggregate costs of offering the Exchange Data Feeds. The Exchange
believes the proposed fees are reasonable because they are designed to
generate annual revenue to recoup some of Exchange's annual costs of
providing Exchange Data Feeds. Accordingly, the Exchange believes that
this fee methodology is reasonable because it allows the Exchange to
recoup some or all of its expenses for providing Exchange Data Feeds.
The Exchange also believes that the proposed fees are reasonable
because they are less than the fees charged by another exchange \29\
with comparable market data products, notwithstanding that another
exchange may have different system architectures that may result in
different cost structures for the provision of market data.
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\29\ See the MEMX fee schedule, available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/.
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The Exchange believes the proposed fees for the Exchange Data Feeds
are reasonable when compared to fees for comparable products at MEMX
LLC (``MEMX'').\30\ Specifically, the fees for MEMX's MEMOIR Depth
Feed,\31\
[[Page 34313]]
MEMOIR Top Feed \32\ and MEMOIR Last Sale Feed \33\ in most instances
are priced higher than the proposed Exchange Data Feeds. The Exchange
notes that MEMX also has fees for enterprise-level distribution, which
can result in monthly fees of up to $5,000 for Depth of Book feed and
$10,000 for Top of Book and Last Sale feed. LTSE does not charge for
enterprise-level distribution.
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\30\ Id.
\31\ For its Depth of Book feed, MEMX charges $1,500 for
internal distributors and $2,500 for external distributors.
\32\ For its Top of Book feed, MEMX charges $750 for internal
distributors and $2,000 for external distributors.
\33\ For its Last Sale feed, MEMX charges $500 for internal
distributors and $2,000 for external distributors.
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Specifically with respect to the Depth of Book feed, the Exchange
believes that the proposed fees for such feed are reasonable because
the Depth of Book feed contains more information than the Top of Book
and Last Sale data feeds. The Top of Book and Last Sale data feeds, as
described above, can be utilized to trade on the Exchange but contain
less information than that available on the Depth of Book feed (i.e.,
even for a subscriber who takes both feeds, such feeds do not contain
depth-of-book information). Thus, the Exchange believes it reasonable
for the products to be priced as proposed, with Last Sale having no
fee, Top of Book priced at $500, and Depth of Book priced at $2500.
Equitable Allocation
The Exchange believes that its proposed fees are reasonable, fair,
and equitable, and not unfairly discriminatory because they are
designed to align fees with services provided. The Exchange believes
that the proposed fees are equitably allocated because they will apply
uniformly to all data recipients that choose to subscribe to the
Exchange Data Feeds. Any firm that chooses to subscribe to one or more
Exchange Data Feeds is subject to the same Fee Schedule, regardless of
what type of business they operate, and the decision to subscribe to
one or more Exchange Data Feeds is based on objective differences in
usage of Exchange Data Feeds among different firms, which are still
ultimately in the control of any particular firm. The Exchange believes
the proposed pricing among Exchange Data Feeds is equitably allocated
because it is based upon the amount of information contained in each
data feed. The Top of Book and Last Sale data feeds, as described
above, can be utilized to trade on the Exchange but contain less
information than that is available on the Depth of Book feed (i.e.,
even for a subscriber who takes both feeds, such feeds do not contain
depth-of-book information). Thus, the Exchange believes it is an
equitable allocation of fees for the products to be priced as proposed,
with Last Sale having no fee, Top of Book priced at $500, and Depth of
Book priced at $2500.\34\
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\34\ The Exchange believes it is equitable and appropriate to
provide the Last Sale data for free.
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The Proposed Fees Are Not Unfairly Discriminatory
The Exchange believes that the proposed fees are not unfairly
discriminatory because they would apply to all data recipients that
choose to subscribe to the same Exchange Data Feed(s). Any subscriber
that chooses to subscribe to the Exchange Data Feeds is subject to the
same Fee Schedule, regardless of what type of business they operate.
Because the proposed fees for Depth of Book are higher, subscribers
seeking lower cost options may instead choose to receive data from the
SIPs or through the Top of Book and/or Last Sale feed for a lower cost.
Alternatively, subscribers can choose to pay for the Depth of Book feed
in order to receive data in a single feed with depth-of-book
information if such information is valuable to subscribers. The
Exchange notes that subscribers can also choose to subscribe to a
combination of data feeds for redundancy purposes or to use different
feeds for different purposes. In sum, each subscriber has the ability
to choose the best business solution for itself. The Exchange does not
believe it is unfairly discriminatory to base pricing upon the amount
of information contained in each data feed. As described above, the Top
of Book and Last Sale data feeds can be utilized to trade on the
Exchange but contain less information than that is available on the
Depth of Book feed (i.e., even for a subscriber who takes both feeds,
such feeds do not contain depth-of-book information). Thus, the
Exchange believes it is not unfairly discriminatory for the products to
be priced as proposed, with Last Sale having no fee, Top of Book priced
at $500, and Depth of Book priced at $2500.\35\
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\35\ The Exchange believes it is not unfairly discriminatory to
provide the Last Sale data for free.
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\36\ the Exchange
does not believe that the proposed rule change would impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act.
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\36\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition
The Exchange does not believe that the proposed fees for Exchange
Data Feeds place certain market participants at a relative disadvantage
to other market participants because, as noted above, the proposed fees
are associated with usage of Exchange Data Feeds by each market
participant based on the type of business they operate, and the
decision to subscribe to one or more Exchange Data Feeds is based on
objective differences in usage of Exchange Data Feeds among different
firms, which are still ultimately in the control of any particular
firm, and such fees do not impose a barrier to entry to smaller
participants. Accordingly, the proposed fees for Exchange Data Feeds do
not favor certain categories of market participants in a manner that
would impose a burden on competition; rather, the allocation of the
proposed fees reflects the types of Exchange Data Feeds consumed by
various market participants and their usage thereof.
Intermarket Competition
The Exchange does not believe the proposed fees place an undue
burden on competition on other SROs that is not necessary or
appropriate. In particular, market participants are not forced to
subscribe to any of the Exchange Data Feeds, as described above.
Additionally, another exchange has similar market data fees in place
for their participants, but with comparable and in many cases higher
rates for market data feeds.\37\ The proposed fees are based on actual
costs and are designed to enable the Exchange to recoup a portion of
its costs related to providing market data. Competing equities
exchanges are free to adopt comparable fee structures subject to the
SEC rule filing process.
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\37\ See supra, footnote 28 [sic] referencing MEMX Exchange.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
This proposed rule change establishes dues, fees or other charges
among its members and, as such, may take effect upon filing with the
Commission pursuant to Section 19(b)(3)(A)(ii) of the Act \38\ and
paragraph (f)(2) of Rule 19b-
[[Page 34314]]
4 thereunder.\39\ Accordingly, the proposed rule change would take
effect upon filing with the Commission.
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\38\ 15 U.S.C. 78s(b)(3)(A)(ii).
\39\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further 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.
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-LTSE-2025-15 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-LTSE-2025-15. 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
a.m. and 3 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-LTSE-2025-15 and should be
submitted on or before August 11, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
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\40\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13575 Filed 7-18-25; 8:45 am]
BILLING CODE 8011-01-P