[Federal Register Volume 87, Number 248 (Wednesday, December 28, 2022)]
[Notices]
[Pages 79915-79918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28201]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96561; File No. SR-MRX-2022-30]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend MRX's 
Pricing Schedule at Options 7, Section 7

December 21, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 79916]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 19, 2022, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the 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 proposes to amend MRX's Pricing Schedule at Options 7, 
Section 7.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, 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 Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On May 2, 2022, MRX initially filed this proposal to amend its 
Pricing Schedule at Options 7, Section 7, to assess market data fees, 
which had not been assessed since MRX's inception in 2016.\3\ The 
proposed changes are designed to update data fees to reflect their 
current value, rather than their value when it was a new exchange six 
years ago. Newly-opened exchanges often charge no fees for market data 
to attract order flow to an exchange, and later amend their fees to 
reflect the true value of those services.\4\ Allowing newly-opened 
exchanges time to build and sustain market share before charging for 
their market data encourages market entry and promotes competition.
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    \3\ The Exchange initially filed the proposed pricing changes on 
May 2, 2022 (SR-MRX-2022-04), instituting fees for membership, ports 
and market data. See Securities Exchange Act Release No. 94901 (May 
12, 2022), 87 FR 30305 (May 18, 2022) (SR-MRX-2022-04). On June 29, 
2022, the Exchange withdrew that filing, and submitted separate 
filings for membership (SR-MRX-2022-07), market data (SR-MRX-2022-
08) and ports (SR-MRX-2022-09). On August 25, 2022, the Exchange 
withdrew the market data filing (SR-MRX-2022-08) and replaced it 
with SR-MRX-2022-14. See Securities Exchange Act Release No. 95708 
(September 8, 2022), 87 FR 56457 (September 14, 2022) (SR-MRX-2022-
14). On October 14, 2022, the Exchange withdrew SR-MRX-2022-14 and 
replaced it with SR-MRX-2022-22 to reflect changes to the 
information contained within each of the five MRX market data feeds 
proposed in SR-MRX-2022-18. See Securities Exchange Act Release No. 
96144 (October 24, 2022), 87 FR 65273 (October 28, 2022) (SR-MRX-
2022-22) (MRX market data fee filing); Securities Exchange Act 
Release No. 95982 (October 4, 2022), 87 FR 61391 (October 11, 2022) 
(SR-MRX-2022-18) (modifying the definitions of MRX feeds). On 
December 8, 2022, the Exchange withdrew SR-MRX-2022-22 and replaced 
it with SR-MRX-2022-27. On December 19, 2022, the Exchange withdrew 
SR-MRX-2022-27 and replaced it with the instant filing.
    \4\ See, e.g., Securities Exchange Act Release No 88211 
(February 14, 2020), 85 FR 9847 (February 20, 2020) (SR-NYSENAT-
2020-05), also available at https://www.nyse.com/publicdocs/nyse/markets/nyse-national/rule-filings/filings/2020/SR-NYSENat-2020-05.pdf (initiating market data fees for the NYSE National exchange 
after initially setting such fees at zero).
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    This Proposal reflects MRX's assessment that it is ready to 
distribute its market data on the same basis as the other 15 options 
exchanges. When these fees were initially proposed in May 2022, MRX was 
the only options exchange out of the 16 current options exchanges not 
to assess market data fees.
    The Exchange proposes to amend fees for the following market data 
feeds within Options 7, Section 7: (1) Nasdaq MRX Depth of Market Data 
Feed (``Depth of Market Feed''); \5\ (2) Nasdaq MRX Order Feed (``Order 
Feed''); \6\ (3) Nasdaq MRX Top of Market Feed (``Top Feed''); \7\ (4) 
Nasdaq MRX Trades Feed (``Trades Feed''); \8\ and (5) Nasdaq MRX Spread 
Feed (``Spread Feed'').\9\ Prior to the initial filing of these 
proposed price changes on May 2, 2022, no fees had been assessed for 
these feeds.
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    \5\ Nasdaq MRX Depth of Market Data Feed is a data feed that 
provides full order and quote depth information for individual 
orders and quotes on the Exchange book and last sale information for 
trades executed on the Exchange. The data provided for each option 
series includes the symbols (series and underlying security), put or 
call indicator, expiration date, the strike price of the series, and 
whether the option series is available for trading on the Exchange 
and identifies if the series is available for closing transactions 
only. The feed also provides order imbalances on opening/reopening 
(size of matched contracts and size of the imbalance). See Options 
3, Section 23(a)(1).
    \6\ Nasdaq MRX Order Feed provides information on new orders 
resting on the book (e.g. price, quantity, market participant 
capacity and Attributable Order tags when provided by a Member). The 
data provided for each option series includes the symbols (series 
and underlying security), displayed order types, order attributes 
(e.g., OCC account number, give-up information, CMTA information), 
put or call indicator, expiration date, the strike price of the 
series, and whether the option series is available for trading on 
MRX and identifies if the series is available for closing 
transactions only. The feed also provides order imbalances on 
opening/reopening (size of matched contracts and size of the 
imbalance), auction and exposure notifications. See Options 3, 
Section 23(a)(2).
    \7\ Nasdaq MRX Top of Market Feed calculates and disseminates 
MRX's best bid and offer position, with aggregated size (including 
total size in aggregate, for Professional Order size in the 
aggregate and Priority Customer Order size in the aggregate), based 
on displayable order and quote interest in the System. The feed also 
provides last trade information and for each option series includes 
the symbols (series and underlying security), put or call indicator, 
expiration date, the strike price of the series, and whether the 
option series is available for trading on MRX and identifies if the 
series is available for closing transactions only. The feed also 
provides order imbalances on opening/reopening. See Options 3, 
Section 23(a)(3).
    \8\ Nasdaq MRX Trades Feed displays last trade information. The 
data provided for each option series includes the symbols (series 
and underlying security), put or call indicator, expiration date, 
the strike price of the series, and whether the option series is 
available for trading on MRX and identifies if the series is 
available for closing transactions only. See Options 3, Section 
23(a)(4).
    \9\ Nasdaq MRX Spread Feed is a feed that consists of: (1) 
options orders for all Complex Orders (i.e., spreads, buy-writes, 
delta neutral strategies, etc.); (2)full Complex Order depth 
information, including prices, side, size, capacity, Attributable 
Complex Order tags when provided by a Member, and order attributes 
(e.g., OCC account number, give-up information, CMTA information), 
for individual Complex Orders on the Exchange book; (3) last trades 
information; and (4) calculating and disseminating MRX's complex 
best bid and offer position, with aggregated size (including total 
size in aggregate, for Professional Order size in the aggregate and 
Priority Customer Order size in the aggregate), based on displayable 
Complex Order interest in the System. The feed also provides Complex 
Order auction notifications. See Options 3, Section 23(a)(5).
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    In addition to the proposed fees for each data feed, the Exchange 
proposes an Internal Distributor Fee \10\ of $1,500 per month for the 
Depth of Market Feed, Order Feed, and Top Feed, an Internal Distributor 
Fee of $750 per month for the Trades Feed, and an Internal Distributor 
Fee of $1,000 per month for the Spread Feed. If a Member subscribes to 
both the Trades Feed and the Spread Feed, both Internal Distributor 
Fees would be assessed.
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    \10\ A ``distributor'' of Nasdaq MRX data is any entity that 
receives a feed or data file of data directly from Nasdaq MRX or 
indirectly through another entity and then distributes it either 
internally (within that entity) or externally (outside that entity). 
All distributors shall execute a Nasdaq Global Data Agreement.
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    The Exchange also proposes to assess an External Distributor Fee of 
$2,000 per month for the Depth of Market Feed, Order Feed, and Top 
Feed, an External

[[Page 79917]]

Distributor Fee of $1,000 per month for the Trades Feed, and an 
External Distributor Fee of $1,500 per month for the Spread Feed.
    MRX will also assess Professional \11\ and Non-Professional \12\ 
subscriber fees. The Professional Subscriber fee will be $25 per month, 
and the Non-Professional Subscriber fee will be $1 per month. These 
subscriber fees (both Professional and Non-Professional) cover the 
usage of all five MRX data products identified above and would not be 
assessed separately for each product.\13\
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    \11\ A Professional Subscriber is any Subscriber that is not a 
Non-Professional Subscriber.
    \12\ A Non-Professional Subscriber is a natural person who is 
neither: (i) registered or qualified in any capacity with the 
Commission, the Commodities Futures Trading Commission, any state 
securities agency, any securities exchange or association, or any 
commodities or futures contract market or association; (ii) engaged 
as an ``investment adviser'' as that term is defined in Section 
201(11) of the Investment Advisors Act of 1940 (whether or not 
registered or qualified under that Act); nor (iii) employed by a 
bank or other organization exempt from registration under federal or 
state securities laws to perform functions that would require 
registration or qualification if such functions were performed for 
an organization not so exempt.
    \13\ For example, if a firm has one Professional (Non-
Professional) Subscriber accessing Top Quote Feed, Order, and Depth 
of Market Feed the firm would only report the Subscriber once and 
pay $25 ($1 for Non-Professional).
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    MRX also proposes a Non-Display Enterprise License for $7,500 per 
month. This license would lower costs for internal professional 
subscribers and lower administrative costs overall by permitting the 
distribution of all MRX proprietary direct data feed products to an 
unlimited number of internal non-display Subscribers without incurring 
additional fees for each internal Subscriber, or requiring the customer 
to count internal subscribers.\14\ The Non-Display Enterprise License 
is in addition to any other associated distributor fees for MRX 
proprietary direct data feed products.
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    \14\ The Non-Display Enterprise License of $7,500 per month is 
optional. A firm that does not have a sufficient number of 
subscribers to benefit from purchase of the license need not do so.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\15\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\16\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \15\ See 15 U.S.C. 78f(b).
    \16\ See 15 U.S.C. 78f(b)(4) and (5).
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    The Proposal is reasonable and unlikely to burden the market in 
light of MRX's small size, the nature of the fees, and the demonstrated 
ability of MRX customers to cancel their subscriptions for market 
data.\17\ MRX has had a consistently low percentage of market share, 
starting at approximately 0.2 percent when it opened as an Exchange and 
ending in approximately 1.37% in November 2022. The proposed fees are 
comparable to those of other exchanges; in particular, the proposed MRX 
fees are lower than those charged by ISE today, as well as those of the 
MIAX Emerald Options Exchange, C2 Options, and NYSE American Options, 
to cite a few examples. A sizeable portion of subscribers--
approximately 15 percent--have terminated their subscriptions following 
the implementation of the proposed fees, demonstrating that customers 
can and do exercise choice in deciding whether to purchase the 
Exchange's market data feeds.
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    \17\ Nasdaq announced that, beginning in 2022, it would migrate 
its North American markets to Amazon Web Services in a phased 
approach, starting with MRX. The MRX migration took place in 
November 2022. The proposed fee changes are unrelated to that 
effort.
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    MRX has had a consistently low percentage of market share, starting 
at approximately 0.2 percent when it opened as an Exchange and ending 
at approximately 1.37% in November 2022. This is the smallest market 
share of the 16 operating options exchanges.
    The proposed fees are comparable to those of other exchanges. For 
example, the MIAX Emerald Options Exchange charges $3,000 for internal 
distribution and $3,500 for external distribution of the MIAX Order 
Feed (``MOR'').\18\ The proposed MRX Order Feed is $1,500 for internal 
distribution and $2,000 for external distribution.
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    \18\ See MIAX Emerald Options Exchange, Fee Schedule (December 
8, 2022), available at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_12082022c.pdf.
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    C2 Options charges $2,500 per month for internal and external 
distribution of its Book Depth Data Feed, plus $50 per Device or user 
ID for Display Only Service Users (external users).\19\ MRX proposes to 
charge $1,500 for internal distribution, and $2,000 for external 
distribution, of its Depth of Market Feed.
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    \19\ See Cboe U.S. Options Fee Schedule, C2 Options, BBO Data 
Feed (Effective September 1, 2022), available at https://www.cboe.com/us/options/membership/fee_schedule/ctwo/.
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    NYSE American Options charges an access fee of $3,000 per month for 
its American Options Top, American Options Deep and American Options 
Complex products, plus a multiple datafeed fee of $200, a 
redistribution fee of $2,000 per month, and a Professional per user fee 
of $50 per month and a Non-Professional user fee of $1 per month.\20\ 
MRX proposes to charge no access or multiple datafeed fees, but rather 
a monthly external distributor fee of $2,000 for Top Feed, and a 
monthly external distributor fee of $2,000 for its Depth of Market 
Feed.
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    \20\ See NYSE American Options Fee Schedule (March 1, 2022), 
available at https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Options_Market_Data_Fee_Schedule.pdf.
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    Internal distribution fees for the Nasdaq ISE Order Feed is $3,000 
per month per distributor for internal use, and $3,000 per month for 
external redistribution, with additional fees for external controlled 
devices.\21\ Proposed Distributor fees for the MRX Order Feed is $1,500 
per month for internal distribution, and $2,000 per month for external 
distribution.
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    \21\ See Nasdaq ISE Rules, Options 7 (Pricing Schedule), Section 
10(G) (Nasdaq ISE Order Feed).
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    The Top Quote Feed for ISE is $3,000 per month per distributor for 
internal use, plus additional fees; $3,000 per month per distributor 
for professional external distribution, plus other charges; and $3,000 
per distributor per month for external Non-Professional distribution 
through a controlled device.\22\ Proposed distributor fees for the MRX 
Top Feed are $1,500 per month for internal distribution, and $2,000 for 
external distribution.
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    \22\ See Nasdaq ISE Rules, Options 7 (Pricing Schedule), Section 
10(H) (Nasdaq ISE Top Quote Feed).
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    MRX views the proposed fees as comparable to those of other options 
exchanges and fairly representative of the value of its data.
    A sizeable portion of subscribers--approximately 15 percent--have 
terminated their subscriptions following the implementation of the 
proposed fees, demonstrating that customers can and do exercise choice 
in deciding whether to purchase the Exchange's market data feeds. As of 
May 2, 2022, the date that MRX initially proposed these market data 
fees, MRX reported that two customers had terminated their market data 
subscriptions.\23\ As of now, a total of five firms have cancelled, 
amounting to approximately 15 percent of the 34 customers that had been 
taking MRX feeds in the first quarter of 2022.\24\

[[Page 79918]]

Two of the five customers had access to all five feeds: the Depth of 
Market Data, the Order Feed, the Top Feed, the Trades Feed, and the 
Spread Feed. The three remaining customers had access to only two 
feeds: the Order Feed and the Top Feed. All five customers cancelled 
all feeds that they had access to.
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    \23\ See Securities Exchange Act Release No. 94901 (May 12, 
2022), 87 FR 30305 (May 18, 2022) (SR-MRX-2022-04).
    \24\ These terminations were limited to market data; none of 
these customers were members of MRX and therefore purchased neither 
memberships nor ports from the Exchange.
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    Three of the five customers were either data vendors or technology 
suppliers. Data vendors purchase exchange data and redistribute it to 
downstream customers, while technology suppliers incorporate exchange 
data into software solutions, which are sold to downstream customers. 
The remaining two firms engage in options trading, either on their own 
behalf or that of a customer. The three data vendors/technology 
suppliers do not trade on their own behalf or on the behalf of any 
downstream customs, although their customers may do so. The Exchange 
understands that these three firms cancelled due to insufficient demand 
from their downstream customers for MRX data. The two remaining firms, 
which do engage in options trading, have not traded on MRX, but are 
active traders on other Nasdaq options exchanges.
    The Proposal is not unfairly discriminatory. The five market data 
feeds at issue here--the Depth of Market Feed, Order Feed, Top Feed, 
Trades Feed, and Spread Feed--are used by a variety of market 
participants for a variety of purposes. Users include regulators, 
market makers, competing exchanges, media, retail, academics, portfolio 
managers. Market data feeds will be available to members of all of 
these groups on a non-discriminatory basis.
    The Proposal is consistent with the typical growth pattern of 
exchanges. New exchanges commonly waive data fees to attract market 
participants, facilitating their entry into the market and, once there 
is sufficient depth and breadth of liquidity, ``graduate'' to compete 
against established exchanges and charge fees that reflect the value of 
their services. Other options exchanges have charged market data fees 
while MRX developed, and now, after 6 years, MRX proposes to do so as 
well.\25\
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    \25\ Prior to submission of the proposed pricing changes on May 
2, 2022, MRX was the only options exchange not assessing market data 
fees.
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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 not necessary or appropriate in 
furtherance of the purposes of the Act.
    Nothing in the Proposal burdens inter-market competition (the 
competition among self-regulatory organizations) because approval of 
the Proposal does not impose any burden on the ability of other options 
exchanges to compete. MRX market data is available to any customer 
under the same fee schedule as any other customer, and any market 
participant that wishes to purchase MRX market data can do so.
    Nothing in the Proposal burdens intra-market competition (the 
competition among consumers of exchange data) because each customer 
will be able to decide whether or not to purchase the Exchange's market 
data, as demonstrated by the fact that a significant number of the 
Exchange's customers have already elected to terminate their access to 
such feeds.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\26\ 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: (i) necessary or appropriate in the public 
interest; (ii) for the protection of investors; or (iii) 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.
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    \26\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MRX-2022-30 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-MRX-2022-30. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-MRX-2022-30 and should be submitted on 
or before January 18, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-28201 Filed 12-27-22; 8:45 am]
BILLING CODE 8011-01-P


