Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Cboe EDGX Exchange, Inc., 55883-55888 [2017-25352]

Download as PDF 55883 Federal Register / Vol. 82, No. 225 / Friday, November 24, 2017 / Notices point of contact, and (3) extend the expiration dates of these two licenses. The current import license—IW009 Amendment No. 2 (ML103010568)— authorizes the import of Class A radioactive waste contaminants on combustible materials from Advanced Nuclear Fuels GmbH in Germany to Richland, Washington. In Washington, the materials will be incinerated and processed to recover uranium. The associated export license—XW015 (ML101760056)—authorizes the export of Class A radioactive waste contaminants on non-combustible material to the Advanced Nuclear Fuels GmbH facility in Germany. The NRC is opening the opportunity for public comment and opening the opportunity to file a request for a hearing or petition for leave to intervene with respect to these proposed amendments for 30 days after publication of this notice in the Federal Register. Any request for hearing or petition for leave to intervene shall be served by the requestor or petitioner upon the applicant; the Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555; the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555; and the Executive Secretary, U.S. Department of State, Washington, DC 20520. Hearing requests and intervention petitions must include the information specified in 10 CFR 110.82(b). A request for a hearing or petition for leave to intervene may be filed with the NRC electronically in accordance with NRC’s E-Filing rule promulgated in August 2007 (72 FR 49139; August 28, 2007). Information about filing electronically is available on the NRC’s public Web site at http://www.nrc.gov/ site-help/e-submittals.html. To ensure timely electronic filing, at least 5 days prior to the filing deadline, the petitioner/requestor should contact the Office of the Secretary by email at hearingdocket@nrc.gov, or by calling 301–415–1677, to request a digital ID certificate and allow for the creation of an electronic docket. The information concerning these applications for import and export license amendment follows. NRC IMPORT AND EXPORT LICENSE AMENDMENT APPLICATIONS [Description of material] Name of applicant, date of application(s), date(s) received, application no(s)., docket no(s)., ADAMS accession no(s). AREVA Inc., August 9, 2017, August 24, 2017, August 21, 2017, September 11, 2017, IW009/03, XW015/01, 11005149, 11005789, ML17234A650, ML17256A016, ML17285A013, (Supporting e-mail). Material type Total quantity End use No change in material (Class A Radioactive Waste). No change in quantity (up to a maximum total of 36 kilograms of uranium-235 contained in 1,200 kilograms uranium enriched to 5.0 WGT% maximum). Amend to change the licensee name and point of contact, and extend validity of the license. No other changes to the existing import and export licenses (IW009 and XW015, and subsequent amendments) are requested. IW009, and subsequent amendments, currently authorize the import of Class A Radioactive Waste contaminants on combustible materials for incineration and recovery of the contained uranium. XW015, and subsequent amendments, currently authorize the export (return) of any contaminated non-combustibles recovered to Germany. Dated at Rockville, Maryland, this 20th day of November, 2017. For The Nuclear Regulatory Commission. David L. Skeen, Deputy Director, Office of International Programs. [FR Doc. 2017–25391 Filed 11–22–17; 8:45 am] domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. Date of notice required under 39 U.S.C. 3642(d)(1): November 24, 2017. DATES: Elizabeth A. Reed, 202–268–3179. The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on November 17, 2017, it filed with the Postal Regulatory Commission a USPS Request to Add Priority Mail Express, Priority Mail, & First-Class Package Service Contract 27 to Competitive Product List. Documents SUPPLEMENTARY INFORMATION: sradovich on DSK3GMQ082PROD with NOTICES POSTAL SERVICE Product Change—Priority Mail Express, Priority Mail, & First-Class Package Service Negotiated Service Agreement Postal ServiceTM. ACTION: Notice. AGENCY: are available at www.prc.gov, Docket Nos. MC2018–29, CP2018–58. Elizabeth A. Reed, Attorney, Corporate and Postal Business Law. [FR Doc. 2017–25342 Filed 11–22–17; 8:45 am] BILLING CODE 7710–12–P Jkt 244001 PO 00000 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82107; File No. SR– BatsEDGX–2017–50] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Cboe EDGX Exchange, Inc. November 17, 2017. The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a SUMMARY: 18:19 Nov 22, 2017 from/to Germany. FOR FURTHER INFORMATION CONTACT: BILLING CODE 7590–01–P VerDate Sep<11>2014 Country(ies) Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\24NON1.SGM 24NON1 55884 Federal Register / Vol. 82, No. 225 / Friday, November 24, 2017 / Notices ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 8, 2017, Cboe EDGX Exchange, Inc. (formerly known as Bats EDGX Exchange, Inc.) (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members 5 and non-Members of the Exchange pursuant to EDGX Rules 15.1(a) and (c). The text of the proposed rule change is available at the Exchange’s Web site at www.markets.cboe.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 sradovich on DSK3GMQ082PROD with NOTICES 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 parts of such statements. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 2 17 VerDate Sep<11>2014 18:19 Nov 22, 2017 Jkt 244001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to modify the Fee Schedule applicable to the Exchange’s equity options platform (‘‘EDGX Options’’) to modify the existing tiered pricing structure on EDGX Options and adopt new tiers consistent with such tiered pricing, to adopt tiered pricing applicable to complex orders on EDGX Options, and to modify the Marketing Fees section of the Fee Schedule.6 Existing Tiered Pricing Structure Customer Volume Tiers The Exchange charges various reduced fees or enhanced rebates using a tiered pricing structure pursuant to footnotes set forth on the Fee Schedule. Under the tiers, Members that achieve certain volume criteria may qualify for reduced fees or enhanced rebates for their orders. As set forth in footnote 1, the Exchange offers enhanced rebates to qualifying Members for Customer 7 orders pursuant to certain Customer Volume Tiers. The Exchange proposes to modify rebate provided and the criteria necessary to achieve Customer Volume Tier 4 and to adopt a new Customer Volume Tier 5. Fee codes PC and NC are currently appended to all Customer orders in Penny Pilot Securities 8 and Non-Penny Pilot Securities,9 respectively, and result in a standard rebate of $0.05 per contract. The Customer Volume Tiers in footnote 1 consist of four separate tiers, each providing an enhanced rebate to a Member’s Customer order that yields fee codes PC or NC upon satisfying monthly volume criteria required by the respective tier. For instance, pursuant to Customer Volume Tier 1, the lowest volume tier, a Member will currently receive a rebate of $0.10 per contract 6 The Exchange initially filed the proposed rule changes on November 1, 2017 (SR–BatsEDGX– 2017–49). On November 8, 2017 the Exchange withdrew SR–BatsEDGX–2017–49 and then subsequently submitted this filing (SR–BatsEDGX– 2017–50). 7 ‘‘Customer’’ applies to any transaction identified by a Member for clearing in the Customer range at the OCC, excluding any transaction for a Broker Dealer or a ‘‘Professional’’ as defined in Exchange Rule 16.1. See the Exchange’s Fee Schedule available at: https://markets.cboe.com/us/options/ membership/fee_schedule/edgx/. 8 ‘‘Penny Pilot Securities’’ are those issues quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. Id. 9 The term ‘‘Non-Penny Pilot Security’’ applies to those issues that are not Penny Pilot Securities quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 where the Member has an ADV 10 in Customer orders equal to or greater than 0.20% of average OCV.11 Pursuant to Customer Volume Tier 4, a Member currently will receive a rebate of $0.21 per contract where: (i) The Member has an ADV in Customer orders equal to or greater than 0.05% of average OCV; and (ii) the Member has an ADV in Customer or Market Maker orders equal to or greater than 0.35% of average OCV. To encourage the entry of additional orders, the Exchange proposes to modify the first prong of the criteria necessary to achieve Customer Volume Tier 4 to require that the Member has an ADV in Customer orders equal to or greater than 0.15% of average OCV. The Exchange does not propose to modify the second prong, requiring the Member to have an ADV in Customer or Market Maker orders equal to or greater than 0.35% of average OCV. The Exchange also proposes to reduce the enhanced rebate provided under Customer Volume Tier 4 from a rebate of $0.21 per contract to a rebate of $0.16 per contract. The Exchange also proposes to offer an additional Customer Volume Tier, Customer Volume Tier 5, to provide Members with another way to achieve the highest rebate for Customer orders, a rebate of $0.21 per contract.12 The Exchange proposes to adopt criteria for Tier 5 such that the enhanced rebate of $0.21 per contract is provided to Members that have: (i) An ADV in Customer orders equal to or greater than 0.30% of average OCV; and (ii) an ADV in Customer or Market Maker orders equal to or greater than 0.50% of average OCV. Market Maker Volume Tiers As set forth in footnote 2, the Exchange offers enhanced rebates to qualifying Members for Market Maker 13 10 ‘‘ADV’’ means average daily volume calculated as the number of contracts added or removed, combined, per day. Additional details regarding the calculation of ADV are contained on the Exchange’s Fee Schedule. See the Exchange’s Fee Schedule available at: https://markets.cboe.com/us/options/ membership/fee_schedule/edgx/. 11 ‘‘OCV’’ stands for ‘‘OCC Customer Volume’’ and means the total equity and ETF options volume that clears in the Customer range at the OCC for the month for which the fees apply, excluding volume on any day that the Exchange experiences an Exchange System Disruption and on any day with a scheduled early market close. See id. 12 A rebate of $0.21 per contract will continue to be available to Members that achieve the criteria for Customer Volume Tier 3, which the Exchange has not proposed to modify, but will no longer be available through Customer Volume Tier 4. 13 ‘‘Market Maker’’ applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is registered with the Exchange as a Market Maker as defined in Rule 16.1(a)(37). See the Exchange’s Fee E:\FR\FM\24NON1.SGM 24NON1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 82, No. 225 / Friday, November 24, 2017 / Notices orders pursuant to certain Market Maker Volume Tiers. The Exchange proposes to modify the criteria necessary to achieve Market Maker Volume Tiers 7 and 8. Fee codes PM and NM are currently appended to all Market Maker orders in Penny Pilot Securities and Non-Penny Pilot Securities, respectively, and result in a standard fee of $0.19 per contract. The Market Maker Volume Tiers in footnote 2 consist of eight separate tiers, each providing a reduced fee or rebate to a Member’s Market Maker order that yields fee codes PM or NM upon satisfying the monthly volume criteria required by the respective tier. For instance, pursuant to Market Maker Volume Tier 1, the lowest volume tier, a Member will currently be charged a reduced fee of $0.16 per contract where the Member has an ADV in Market Maker orders equal to or greater than 0.05% of average OCV. Pursuant to Market Maker Volume Tier 7, a Member will currently be charged a reduced fee of $0.03 per contract where the Member has an ADV in: (i) Customer orders equal to or greater than 0.05% of average OCV; and (ii) Customer or Market Maker orders equal to or greater than 0.35% of average OCV. To encourage the entry of additional orders to the Exchange, the Exchange proposes to modify the first prong of the criteria necessary to achieve Market Maker Volume Tier 7 to require that the Member has an ADV in Customer orders equal to or greater than 0.15% of average OCV. The Exchange does not propose to modify the second prong, requiring the Member to have an ADV in Customer or Market Maker orders equal to or greater than 0.35% of average OCV. Pursuant to Market Maker Volume Tier 8, a Member will currently be charged a reduced fee of $0.02 per contract where the Member has an ADV in: (i) Customer orders equal to or greater than 0.05% of average OCV; (ii) Customer or Market Maker orders equal to or greater than 0.35% of average OCV; and (iii) BAM Agency Orders 14 equal to or greater than 10,000 contracts. The Exchange proposes to modify each of these criteria as follows: increase the ADV requirement of the first prong to 0.30% of average OCV, increase the ADV requirement of the second prong to 0.50% of average OCV, and increase the Schedule available at: https://markets.cboe.com/us/ options/membership/fee_schedule/edgx/. 14 BAM Agency Orders are orders represented as agent by a Member on behalf of another party and submitted to BAM for potential price improvement pursuant to Rule 21.19. See the Exchange’s Fee Schedule available at: https://markets.cboe.com/us/ options/membership/fee_schedule/edgx/. VerDate Sep<11>2014 18:19 Nov 22, 2017 Jkt 244001 ADV requirement of the third prong to 25,000 contracts. In addition, the Exchange proposes to adopt a new prong also necessary to qualify for Market Maker Volume Tier 8, which is intended to incentivize the entry of complex orders to the Exchange. Specifically, in order to qualify for Market Maker Volume Tier 8, the Exchange also proposes to require a Member to have an ADV in complex Customer orders (yielding fee codes ZA, ZB, ZC, or ZD) equal to or greater than 5,000 contracts. Thus, as proposed, pursuant to Market Maker Volume Tier 8, a Member will be charged a reduced fee of $0.02 per contract where the Member has an ADV in: (i) Customer orders equal to or greater than 0.30% of average OCV; (ii) Customer or Market Maker orders equal to or greater than 0.50% of average OCV; (iii) BAM Agency Orders equal to or greater than 25,000 contracts; and (iv) complex Customer orders (yielding fee codes ZA, ZB, ZC, or ZD) equal to or greater than 5,000 contracts. Tiered Pricing—Complex Orders The Exchange recently began accepting complex orders in connection with the launch of the EDGX Options complex order book (‘‘COB’’).15 In turn, the Exchange adopted base fees and rebates applicable to complex orders to accommodate the acceptance of complex orders.16 The Exchange now proposes to adopt various tiers to incentivize the entry of complex orders to the Exchange. As noted above, the Exchange also proposes to add criteria to existing Market Maker Volume Tier 8 to incentivize the entry of complex orders to the Exchange. Customer Volume Tiers—Complex Orders Under the recently adopted fees, the Exchange applies fee code ZA to Customer complex orders that are executed on the COB with a nonCustomer 17 as the contra-party in Penny Pilot Securities and provides such orders a standard rebate of $0.47 per contract. Similarly, the Exchange applies fee code ZB to Customer complex orders that are executed on the COB with a non-Customer as the contraparty in Non-Penny Pilot Securities and 15 See Securities Exchange Act Release No. 81891 (October 17, 2017) (SR–BatsEDGX–2017–29) (order approving rules for EDGX complex order book). 16 The Exchange initially filed to adopt complex order pricing on October 23, 2017 (SR–BatsEDGX– 2017–42). On October 31, 2017 the Exchange withdrew SR–BatsEDGX–2017–42 and submitted a filing to replace such filing (SR–BatsEDGX–2017– 48). 17 ‘‘Non-Customer’’ applies to any transaction that is not a Customer order. Id. PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 55885 provides such orders a standard rebate of $0.97 per contract. The Exchange proposes to adopt two sets of tiers applicable to the Customer Volume Tiers under footnote 1 that would provide enhanced rebates for orders yielding fee codes ZA and ZB. The Exchange proposes to provide enhanced rebates for orders yielding fee code ZA (i.e., Customer complex orders executed on the COB/non-Customer contra-party/Penny Pilot Securities) under Tiers 1 through 3. As proposed, pursuant to Tier 1 the Exchange would provide an enhanced rebate of $0.48 per contract for Members with an ADV in Customer orders equal to or greater than 0.30% of average OCV. Pursuant to Tier 2 the Exchange would provide an enhanced rebate of $0.49 per contract for Members with an ADV in Customer orders equal to or greater than 0.40% of average OCV. Pursuant to Tier 3 the Exchange would provide an enhanced rebate of $0.50 per contract for Members with an ADV in Customer orders equal to or greater than 0.65% of average OCV. The Exchange proposes to provide enhanced rebates for orders yielding fee code ZB (i.e., Customer complex orders executed on the COB/non-Customer contra-party/Non-Penny Pilot Securities) under Tiers 1 through 3 with criteria identical to that described above with respect to tiers applicable to fee code ZA (but rebates that are an enhancement to the standard rebate for orders yielding fee code ZB). Thus, pursuant to Tier 1 the Exchange would provide an enhanced rebate of $0.98 per contract for Members with an ADV in Customer orders equal to or greater than 0.30% of average OCV. Pursuant to Tier 2 the Exchange would provide an enhanced rebate of $0.99 per contract for Members with an ADV in Customer orders equal to or greater than 0.40% of average OCV. Pursuant to Tier 3 the Exchange would provide an enhanced rebate of $1.00 per contract for Members with an ADV in Customer orders equal to or greater than 0.65% of average OCV. In connection with these changes, the Exchange proposes to append footnote 1 to fee codes ZA and ZB on the Fee Codes and Associated Fees table of the Fee Schedule. Market Maker Volume Tiers—Complex Orders Under the recently adopted fees, the Exchange applies fee code ZM to Market Maker complex orders that are executed on the COB with a Customer as the contra-party in Penny Pilot Securities and charges such orders a standard fee of $0.50 per contract. The Exchange applies fee code ZN to Market Maker complex orders that are executed on the E:\FR\FM\24NON1.SGM 24NON1 55886 Federal Register / Vol. 82, No. 225 / Friday, November 24, 2017 / Notices COB with a Customer as the contraparty in Non-Penny Pilot Securities and charges such orders a standard fee of $1.10 per contract. Similar to the new tiers proposed for footnote 1 as described above, the Exchange proposes to adopt new tiers under footnote 2 applicable to fee codes ZM and ZN, respectively. The Exchange proposes to adopt a single tier applicable to fee code ZM, Tier 1, under which the Exchange would charge a reduced fee of $0.48 per contract for Members with an ADV in complex Customer orders (yielding fee codes ZA, ZB, ZC, or ZD) equal to or greater than 10,000 contracts. The Exchange proposes a similar tier applicable to fee code ZN, again Tier 1, under which the Exchange would charge a reduced fee of $1.05 per contract for Members with an ADV in complex Customer orders (yielding fee codes ZA, ZB, ZC, or ZD) equal to or greater than 10,000 contracts. In connection with these changes, the Exchange proposes to append footnote 2 to fee codes ZM and ZN on the Fee Codes and Associated Fees table of the Fee Schedule. sradovich on DSK3GMQ082PROD with NOTICES Marketing Fees The Fee Schedule currently contains a section entitled ‘‘Marketing Fees’’ that specifies that marketing fees are charged to all Market Makers who are counterparties to a trade with a Customer. In connection with the recent adoption of fees applicable to complex orders, the Exchange specified that marketing fees shall not apply to executions of complex orders on the COB.18 The Exchange proposes to extend this exclusion to orders subject to BAM Pricing set forth in footnote 6 and Qualified Contingent Cross Orders. The Exchange notes with respect to the proposed language regarding BAM Pricing that certain orders executed through BAM are assessed standard fee rates as set forth in footnote 6 and that marketing fees will continue to be assessed for such transactions. Accordingly, the Exchange has proposed to limit the exclusion from marketing fees being assessed to those orders that are subject to BAM Pricing and not all orders executed through BAM. Implementation Date The Exchange proposes to implement the proposed changes immediately. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.19 Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,20 in that it provides for the equitable allocation of reasonable dues, fees and other charges among Members and other persons using any facility or system which the Exchange operates or controls. In sum, the Exchange believes that the proposed fee and rebate structure is designed to promote the growth of EDGX Options, including the EDGX Options COB, which benefits all market participants by providing additional trading opportunities. The goal is to attract both Customers and liquidity providers and an increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow originating from other market participants. Volume-based rebates such as those currently maintained on the Exchange have been widely adopted by options exchanges and are equitable because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to the value of an exchange’s market quality associated with higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns, and introduction of higher volumes of orders into the price and volume discovery processes. The proposed modifications to the existing Customer Volume Tiers and Market Maker Volume tiers that make such tiers more difficult to attain are each intended to incentivize Members to send additional Customer and/or Market Maker orders to the Exchange, and in the case of Market Maker Volume Tier 8, also to encourage the submission of complex orders to the Exchange in an effort to qualify or continue to qualify for the enhanced rebate or lower fee made available by the tiers. With respect to the reduction of the rebate provided for Customer Volume Tier 4, this change is reasonable, fair and equitable because the Exchange is adopting an additional Tier, Tier 5, as another means to achieve the rebate previously provided by Tier 4 (in addition to Tier 3, which also provides such rebate and remains unchanged). With respect to Tier 5, the Exchange believes this Tier is reasonable, equitably allocated and nondiscriminatory for the reasons set forth 19 15 18 See supra, note 16. VerDate Sep<11>2014 18:19 Nov 22, 2017 20 15 Jkt 244001 PO 00000 U.S.C. 78f. U.S.C. 78f(b)(4). Frm 00088 Fmt 4703 Sfmt 4703 regarding tiered pricing generally, and also because the proposed tier is consistent with existing Tier 4 (which the Exchange has proposed to modify), only with higher criteria and a higher rebate as an incentive to achieve such criteria. The Exchange’s recent launch of a complex order book is a competitive offering, and the Exchange believes it is necessary to adopt certain incentives to encourage Members to enter complex orders to the Exchange. In particular, the Exchange believes that incentivizing the submission of Customer orders to the Exchange, including the Exchange’s COB, will help to grow participation in the COB generally, and that providing enhanced rebates and reduced fees for such participation will help to grow liquidity on the COB to the benefit of all participants on the Exchange. The proposed criteria for each tier applicable to complex orders is in-line with existing criteria on the Exchange as well as criteria proposed herein, and does not represent a significant departure in pricing applied by the Exchange. Similarly, the enhanced rebates and reduced fees provide modest incentives to Members to increase their participation on the Exchange generally, including the submission of complex orders. The Exchange believes that the proposed tiers are reasonable, fair and equitable, and non-discriminatory, for the reasons set forth above with respect to volume-based pricing generally and because such changes will incentivize participants to further contribute to market quality. The proposed tiers will provide an additional way for market participants to qualify for enhanced rebates or reduced fees. Further, the COB is fully available to all Members, and the proposed thresholds are intended to encourage Members to do the development work necessary to participate on the COB and send complex orders to the Exchange. Continuing to provide Customer orders a rebate for complex orders, including a potentially enhanced rebate, while assessing Non-Customers a fee for complex orders, is reasonable because of the desirability of Customer activity. The proposed fees and rebates for complex orders continue to be intended to encourage greater Customer volume on the Exchange. As set forth above, Customer activity enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more trading opportunities, which attracts market makers and other liquidity providers. The fee and rebate schedule as proposed continues to reflect E:\FR\FM\24NON1.SGM 24NON1 Federal Register / Vol. 82, No. 225 / Friday, November 24, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES differentiation among different market participants typically found in options fee and rebate schedules.21 The Exchange believes that the differentiation is reasonable and notes that unlike others (e.g., Customers) some market participants like EDGX Options Market Makers commit to various obligations. For example, transactions of an EDGX Options Market Maker must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings.22 Further, all Market Makers are designated as specialists on EDGX Options for all purposes under the Act or rules thereunder.23 Continuing to provide a rebate for Customer orders and a fee for NonCustomer Orders is also equitable and not unfairly discriminatory. This is because the Exchange’s proposal to provide rebates and assess fees will apply the same to all similarly situated participants. Moreover, all similarly situated complex orders are subject to the same proposed Fee Schedule, and access to the Exchange is offered on terms that are not unfairly discriminatory. Similarly, the Exchange believes that providing different rates for Penny Pilot Securities and NonPenny Pilot Securities is wellestablished in the options industry, including on the Exchange’s current fee schedule.24 The Exchange believes it is reasonable, equitably allocated and nondiscriminatory to impose higher fees and provide higher rebates in NonPenny Pilot Securities than Penny Pilot Securities because Penny Pilot Securities and Non-Penny Pilot Securities have different liquidity, spread and trading characteristics. In particular, spreads in Penny Pilot Securities are tighter than those in NonPenny Pilot Securities (which trade in increments of $0.05 or greater). The wider spreads in Non-Penny Pilot 21 See the Exchange’s Fee Schedule, available at:https://markets.cboe.com/us/options/ membership/fee_schedule/edgx/; see also, e.g., MIAX Fee Schedule, NYSE Amex Options Fee Schedule, BX Options Fee Schedule and Nasdaq Options Market Fee Schedule. 22 See Exchange Rule 22.5, entitled ‘‘Obligations of Market Makers’’. 23 See Exchange Rule 22.2, entitled ‘‘Options Market Maker Registration and Appointment’’. 24 See the Exchange’s Fee Schedule, available at:https://markets.cboe.com/us/options/ membership/fee_schedule/edgx/; see also, e.g., MIAX Fee Schedule, NYSE Amex Options Fee Schedule. VerDate Sep<11>2014 18:19 Nov 22, 2017 Jkt 244001 Securities allow for greater profit potential. In connection with the adoption of fees applicable to complex orders, the Exchange modified the description of Marketing Fees applicable on the Exchange to make clear that such fees do not apply to complex orders.25 The Exchange proposes to expand the exclusions listed in this section to also exclude orders subject to BAM Pricing set forth in footnote 6 and Qualified Contingent Cross Orders. The Exchange believes this proposal is a reasonable and equitable allocation of fees and dues and is not unreasonably discriminatory because the rates for Market Makers for orders subject to BAM Pricing and Qualified Contingent Cross Orders are more reasonable and equitably allocated as an all-inclusive rate but would increase such rates to a level higher than that paid by other nonCustomers if Marketing Fees were also assessed on such transactions. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe the proposed fee changes would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed tiered pricing structure, including the tiered pricing structure for complex orders, represents a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange’s competitors. Rather, the Exchange believes the proposal will enhance competition as it is a competitive proposal that seeks to further the growth of the Exchange by encouraging Members to enter orders to the Exchange, including Customer orders generally and complex orders. The Exchange’s proposal to adopt complex order functionality was a competitive response to complex order books operated by other options exchanges. The Exchange believes this proposed rule change is necessary to permit fair competition among the options exchanges. While the proposed fees and rebates are intended to attract participation on the Exchange, particularly complex orders, the Exchange does not believe that its proposed pricing significantly departs from pricing in place on other options exchanges that accept complex orders. Accordingly, the Exchange does not believe that the proposal creates an undue burden on inter-market competition. 25 See PO 00000 supra, note 16. Frm 00089 Fmt 4703 Sfmt 4703 55887 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. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed charges assessed and credits available to Members under the proposed tiered pricing structure do not impose a burden on competition because the Exchange’s execution services are completely voluntary and subject to extensive competition. If the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result and/or will be unable to attract participants to the Exchange or the COB. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. Additionally, the changes proposed herein are procompetitive to the extent that they allow the Exchange to promote and maintain the COB, which has the potential to result in efficient executions to the benefit of market participants. The Exchange believes that the proposed change would increase both inter-market and intra-market competition by incentivizing members to direct their orders, and particularly Customer orders, to the Exchange, which benefits all market participants by providing more trading opportunities, which attracts Market Makers. To the extent that there is a differentiation between proposed fees assessed and rebates offered to Customers as opposed to other market participants, the Exchange believes that this is appropriate because the fees and rebates should incentivize Members to direct additional order flow to the Exchange and thus provide additional liquidity that enhances the quality of its markets and increases the volume of E:\FR\FM\24NON1.SGM 24NON1 55888 Federal Register / Vol. 82, No. 225 / Friday, November 24, 2017 / Notices contracts traded on the Exchange. To the extent that this purpose is achieved, all the Exchange’s market participants should benefit from the improved market liquidity. Enhanced market quality and increased transaction volume that results from the anticipated increase in order flow directed to the Exchange will benefit all market participants and improve competition on the Exchange. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. 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) of the Act 26 and paragraph (f) of Rule 19b–4 thereunder.27 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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: sradovich on DSK3GMQ082PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BatsEDGX–2017–50 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–BatsEDGX–2017–50. 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 Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site 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 such 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–BatsEDGX–2017–50, and should be submitted on or before December 15, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–25352 Filed 11–22–17; 8:45 am] BILLING CODE 8011–01–P 27 17 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82114; File No. SR–BOX– 2017–34] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 7050 (Minimum Trading Increments) November 17, 2017. 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 November 8, 2017, BOX Options Exchange LLC (the ‘‘Exchange’’) filed with the Securities and Exchange Commission CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). VerDate Sep<11>2014 18:19 Nov 22, 2017 Jkt 244001 PO 00000 Frm 00090 Fmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7050 (Minimum Trading Increments). The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s Internet Web site at http://boxoptions.com. 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 self-regulatory organization 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 28 17 26 15 (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. Sfmt 4703 Currently, BOX Rule 7050(a) establishes minimum trading increments for single leg options contracts traded on BOX. Rule 7050(a) states that with regard to minimum trading increments for single leg options contracts, ‘‘the following principles shall apply: (1) If the options contract is trading at less than $3.00 per option, five (5) cents; (2) if the options contract is trading at $3.00 per option or higher, ten (10) cents; and (3) if the options contract is traded pursuant to the procedures of the Improvement Period in Rules 7150 then one (1) cent.’’ Further, BOX Rule 7050(b) establishes an exception 3 to 7050(a) while Rule 7050(c) and (d) establish cross references to existing rules with 3 Rule 7050(b) states that ‘‘the Exchange will operate a pilot program to permit options classes to be quoted and traded in increments as low as one (1) cent.’’ E:\FR\FM\24NON1.SGM 24NON1

Agencies

[Federal Register Volume 82, Number 225 (Friday, November 24, 2017)]
[Notices]
[Pages 55883-55888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25352]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82107; File No. SR-BatsEDGX-2017-50]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change Related 
to Fees for Use on Cboe EDGX Exchange, Inc.

November 17, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 55884]]

``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 8, 2017, Cboe EDGX Exchange, Inc. (formerly known as Bats 
EDGX Exchange, Inc.) (the ``Exchange'' or ``EDGX'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the Exchange. The Exchange has designated the proposed 
rule change as one establishing or changing a member due, fee, or other 
charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 
\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposed rule 
change effective upon filing with the Commission. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-Members of the Exchange pursuant to EDGX Rules 
15.1(a) and (c).
---------------------------------------------------------------------------

    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at www.markets.cboe.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 Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

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

1. Purpose
    The Exchange proposes to modify the Fee Schedule applicable to the 
Exchange's equity options platform (``EDGX Options'') to modify the 
existing tiered pricing structure on EDGX Options and adopt new tiers 
consistent with such tiered pricing, to adopt tiered pricing applicable 
to complex orders on EDGX Options, and to modify the Marketing Fees 
section of the Fee Schedule.\6\
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    \6\ The Exchange initially filed the proposed rule changes on 
November 1, 2017 (SR-BatsEDGX-2017-49). On November 8, 2017 the 
Exchange withdrew SR-BatsEDGX-2017-49 and then subsequently 
submitted this filing (SR-BatsEDGX-2017-50).
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Existing Tiered Pricing Structure
Customer Volume Tiers
    The Exchange charges various reduced fees or enhanced rebates using 
a tiered pricing structure pursuant to footnotes set forth on the Fee 
Schedule. Under the tiers, Members that achieve certain volume criteria 
may qualify for reduced fees or enhanced rebates for their orders. As 
set forth in footnote 1, the Exchange offers enhanced rebates to 
qualifying Members for Customer \7\ orders pursuant to certain Customer 
Volume Tiers. The Exchange proposes to modify rebate provided and the 
criteria necessary to achieve Customer Volume Tier 4 and to adopt a new 
Customer Volume Tier 5.
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    \7\ ``Customer'' applies to any transaction identified by a 
Member for clearing in the Customer range at the OCC, excluding any 
transaction for a Broker Dealer or a ``Professional'' as defined in 
Exchange Rule 16.1. See the Exchange's Fee Schedule available at: 
https://markets.cboe.com/us/options/membership/fee_schedule/edgx/.
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    Fee codes PC and NC are currently appended to all Customer orders 
in Penny Pilot Securities \8\ and Non-Penny Pilot Securities,\9\ 
respectively, and result in a standard rebate of $0.05 per contract. 
The Customer Volume Tiers in footnote 1 consist of four separate tiers, 
each providing an enhanced rebate to a Member's Customer order that 
yields fee codes PC or NC upon satisfying monthly volume criteria 
required by the respective tier. For instance, pursuant to Customer 
Volume Tier 1, the lowest volume tier, a Member will currently receive 
a rebate of $0.10 per contract where the Member has an ADV \10\ in 
Customer orders equal to or greater than 0.20% of average OCV.\11\
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    \8\ ``Penny Pilot Securities'' are those issues quoted pursuant 
to Exchange Rule 21.5, Interpretation and Policy .01. Id.
    \9\ The term ``Non-Penny Pilot Security'' applies to those 
issues that are not Penny Pilot Securities quoted pursuant to 
Exchange Rule 21.5, Interpretation and Policy .01.
    \10\ ``ADV'' means average daily volume calculated as the number 
of contracts added or removed, combined, per day. Additional details 
regarding the calculation of ADV are contained on the Exchange's Fee 
Schedule. See the Exchange's Fee Schedule available at: https://markets.cboe.com/us/options/membership/fee_schedule/edgx/.
    \11\ ``OCV'' stands for ``OCC Customer Volume'' and means the 
total equity and ETF options volume that clears in the Customer 
range at the OCC for the month for which the fees apply, excluding 
volume on any day that the Exchange experiences an Exchange System 
Disruption and on any day with a scheduled early market close. See 
id.
---------------------------------------------------------------------------

    Pursuant to Customer Volume Tier 4, a Member currently will receive 
a rebate of $0.21 per contract where: (i) The Member has an ADV in 
Customer orders equal to or greater than 0.05% of average OCV; and (ii) 
the Member has an ADV in Customer or Market Maker orders equal to or 
greater than 0.35% of average OCV. To encourage the entry of additional 
orders, the Exchange proposes to modify the first prong of the criteria 
necessary to achieve Customer Volume Tier 4 to require that the Member 
has an ADV in Customer orders equal to or greater than 0.15% of average 
OCV. The Exchange does not propose to modify the second prong, 
requiring the Member to have an ADV in Customer or Market Maker orders 
equal to or greater than 0.35% of average OCV. The Exchange also 
proposes to reduce the enhanced rebate provided under Customer Volume 
Tier 4 from a rebate of $0.21 per contract to a rebate of $0.16 per 
contract.
    The Exchange also proposes to offer an additional Customer Volume 
Tier, Customer Volume Tier 5, to provide Members with another way to 
achieve the highest rebate for Customer orders, a rebate of $0.21 per 
contract.\12\ The Exchange proposes to adopt criteria for Tier 5 such 
that the enhanced rebate of $0.21 per contract is provided to Members 
that have: (i) An ADV in Customer orders equal to or greater than 0.30% 
of average OCV; and (ii) an ADV in Customer or Market Maker orders 
equal to or greater than 0.50% of average OCV.
---------------------------------------------------------------------------

    \12\ A rebate of $0.21 per contract will continue to be 
available to Members that achieve the criteria for Customer Volume 
Tier 3, which the Exchange has not proposed to modify, but will no 
longer be available through Customer Volume Tier 4.
---------------------------------------------------------------------------

Market Maker Volume Tiers
    As set forth in footnote 2, the Exchange offers enhanced rebates to 
qualifying Members for Market Maker \13\

[[Page 55885]]

orders pursuant to certain Market Maker Volume Tiers. The Exchange 
proposes to modify the criteria necessary to achieve Market Maker 
Volume Tiers 7 and 8.
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    \13\ ``Market Maker'' applies to any transaction identified by a 
Member for clearing in the Market Maker range at the OCC, where such 
Member is registered with the Exchange as a Market Maker as defined 
in Rule 16.1(a)(37). See the Exchange's Fee Schedule available at: 
https://markets.cboe.com/us/options/membership/fee_schedule/edgx/.
---------------------------------------------------------------------------

    Fee codes PM and NM are currently appended to all Market Maker 
orders in Penny Pilot Securities and Non-Penny Pilot Securities, 
respectively, and result in a standard fee of $0.19 per contract. The 
Market Maker Volume Tiers in footnote 2 consist of eight separate 
tiers, each providing a reduced fee or rebate to a Member's Market 
Maker order that yields fee codes PM or NM upon satisfying the monthly 
volume criteria required by the respective tier. For instance, pursuant 
to Market Maker Volume Tier 1, the lowest volume tier, a Member will 
currently be charged a reduced fee of $0.16 per contract where the 
Member has an ADV in Market Maker orders equal to or greater than 0.05% 
of average OCV.
    Pursuant to Market Maker Volume Tier 7, a Member will currently be 
charged a reduced fee of $0.03 per contract where the Member has an ADV 
in: (i) Customer orders equal to or greater than 0.05% of average OCV; 
and (ii) Customer or Market Maker orders equal to or greater than 0.35% 
of average OCV. To encourage the entry of additional orders to the 
Exchange, the Exchange proposes to modify the first prong of the 
criteria necessary to achieve Market Maker Volume Tier 7 to require 
that the Member has an ADV in Customer orders equal to or greater than 
0.15% of average OCV. The Exchange does not propose to modify the 
second prong, requiring the Member to have an ADV in Customer or Market 
Maker orders equal to or greater than 0.35% of average OCV.
    Pursuant to Market Maker Volume Tier 8, a Member will currently be 
charged a reduced fee of $0.02 per contract where the Member has an ADV 
in: (i) Customer orders equal to or greater than 0.05% of average OCV; 
(ii) Customer or Market Maker orders equal to or greater than 0.35% of 
average OCV; and (iii) BAM Agency Orders \14\ equal to or greater than 
10,000 contracts. The Exchange proposes to modify each of these 
criteria as follows: increase the ADV requirement of the first prong to 
0.30% of average OCV, increase the ADV requirement of the second prong 
to 0.50% of average OCV, and increase the ADV requirement of the third 
prong to 25,000 contracts. In addition, the Exchange proposes to adopt 
a new prong also necessary to qualify for Market Maker Volume Tier 8, 
which is intended to incentivize the entry of complex orders to the 
Exchange. Specifically, in order to qualify for Market Maker Volume 
Tier 8, the Exchange also proposes to require a Member to have an ADV 
in complex Customer orders (yielding fee codes ZA, ZB, ZC, or ZD) equal 
to or greater than 5,000 contracts.
---------------------------------------------------------------------------

    \14\ BAM Agency Orders are orders represented as agent by a 
Member on behalf of another party and submitted to BAM for potential 
price improvement pursuant to Rule 21.19. See the Exchange's Fee 
Schedule available at: https://markets.cboe.com/us/options/membership/fee_schedule/edgx/.
---------------------------------------------------------------------------

    Thus, as proposed, pursuant to Market Maker Volume Tier 8, a Member 
will be charged a reduced fee of $0.02 per contract where the Member 
has an ADV in: (i) Customer orders equal to or greater than 0.30% of 
average OCV; (ii) Customer or Market Maker orders equal to or greater 
than 0.50% of average OCV; (iii) BAM Agency Orders equal to or greater 
than 25,000 contracts; and (iv) complex Customer orders (yielding fee 
codes ZA, ZB, ZC, or ZD) equal to or greater than 5,000 contracts.
Tiered Pricing--Complex Orders
    The Exchange recently began accepting complex orders in connection 
with the launch of the EDGX Options complex order book (``COB'').\15\ 
In turn, the Exchange adopted base fees and rebates applicable to 
complex orders to accommodate the acceptance of complex orders.\16\ The 
Exchange now proposes to adopt various tiers to incentivize the entry 
of complex orders to the Exchange. As noted above, the Exchange also 
proposes to add criteria to existing Market Maker Volume Tier 8 to 
incentivize the entry of complex orders to the Exchange.
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 81891 (October 17, 
2017) (SR-BatsEDGX-2017-29) (order approving rules for EDGX complex 
order book).
    \16\ The Exchange initially filed to adopt complex order pricing 
on October 23, 2017 (SR-BatsEDGX-2017-42). On October 31, 2017 the 
Exchange withdrew SR-BatsEDGX-2017-42 and submitted a filing to 
replace such filing (SR-BatsEDGX-2017-48).
---------------------------------------------------------------------------

Customer Volume Tiers--Complex Orders
    Under the recently adopted fees, the Exchange applies fee code ZA 
to Customer complex orders that are executed on the COB with a non-
Customer \17\ as the contra-party in Penny Pilot Securities and 
provides such orders a standard rebate of $0.47 per contract. 
Similarly, the Exchange applies fee code ZB to Customer complex orders 
that are executed on the COB with a non-Customer as the contra-party in 
Non-Penny Pilot Securities and provides such orders a standard rebate 
of $0.97 per contract.
---------------------------------------------------------------------------

    \17\ ``Non-Customer'' applies to any transaction that is not a 
Customer order. Id.
---------------------------------------------------------------------------

    The Exchange proposes to adopt two sets of tiers applicable to the 
Customer Volume Tiers under footnote 1 that would provide enhanced 
rebates for orders yielding fee codes ZA and ZB.
    The Exchange proposes to provide enhanced rebates for orders 
yielding fee code ZA (i.e., Customer complex orders executed on the 
COB/non-Customer contra-party/Penny Pilot Securities) under Tiers 1 
through 3. As proposed, pursuant to Tier 1 the Exchange would provide 
an enhanced rebate of $0.48 per contract for Members with an ADV in 
Customer orders equal to or greater than 0.30% of average OCV. Pursuant 
to Tier 2 the Exchange would provide an enhanced rebate of $0.49 per 
contract for Members with an ADV in Customer orders equal to or greater 
than 0.40% of average OCV. Pursuant to Tier 3 the Exchange would 
provide an enhanced rebate of $0.50 per contract for Members with an 
ADV in Customer orders equal to or greater than 0.65% of average OCV.
    The Exchange proposes to provide enhanced rebates for orders 
yielding fee code ZB (i.e., Customer complex orders executed on the 
COB/non-Customer contra-party/Non-Penny Pilot Securities) under Tiers 1 
through 3 with criteria identical to that described above with respect 
to tiers applicable to fee code ZA (but rebates that are an enhancement 
to the standard rebate for orders yielding fee code ZB). Thus, pursuant 
to Tier 1 the Exchange would provide an enhanced rebate of $0.98 per 
contract for Members with an ADV in Customer orders equal to or greater 
than 0.30% of average OCV. Pursuant to Tier 2 the Exchange would 
provide an enhanced rebate of $0.99 per contract for Members with an 
ADV in Customer orders equal to or greater than 0.40% of average OCV. 
Pursuant to Tier 3 the Exchange would provide an enhanced rebate of 
$1.00 per contract for Members with an ADV in Customer orders equal to 
or greater than 0.65% of average OCV.
    In connection with these changes, the Exchange proposes to append 
footnote 1 to fee codes ZA and ZB on the Fee Codes and Associated Fees 
table of the Fee Schedule.
Market Maker Volume Tiers--Complex Orders
    Under the recently adopted fees, the Exchange applies fee code ZM 
to Market Maker complex orders that are executed on the COB with a 
Customer as the contra-party in Penny Pilot Securities and charges such 
orders a standard fee of $0.50 per contract. The Exchange applies fee 
code ZN to Market Maker complex orders that are executed on the

[[Page 55886]]

COB with a Customer as the contra-party in Non-Penny Pilot Securities 
and charges such orders a standard fee of $1.10 per contract.
    Similar to the new tiers proposed for footnote 1 as described 
above, the Exchange proposes to adopt new tiers under footnote 2 
applicable to fee codes ZM and ZN, respectively. The Exchange proposes 
to adopt a single tier applicable to fee code ZM, Tier 1, under which 
the Exchange would charge a reduced fee of $0.48 per contract for 
Members with an ADV in complex Customer orders (yielding fee codes ZA, 
ZB, ZC, or ZD) equal to or greater than 10,000 contracts. The Exchange 
proposes a similar tier applicable to fee code ZN, again Tier 1, under 
which the Exchange would charge a reduced fee of $1.05 per contract for 
Members with an ADV in complex Customer orders (yielding fee codes ZA, 
ZB, ZC, or ZD) equal to or greater than 10,000 contracts.
    In connection with these changes, the Exchange proposes to append 
footnote 2 to fee codes ZM and ZN on the Fee Codes and Associated Fees 
table of the Fee Schedule.
Marketing Fees
    The Fee Schedule currently contains a section entitled ``Marketing 
Fees'' that specifies that marketing fees are charged to all Market 
Makers who are counterparties to a trade with a Customer. In connection 
with the recent adoption of fees applicable to complex orders, the 
Exchange specified that marketing fees shall not apply to executions of 
complex orders on the COB.\18\ The Exchange proposes to extend this 
exclusion to orders subject to BAM Pricing set forth in footnote 6 and 
Qualified Contingent Cross Orders. The Exchange notes with respect to 
the proposed language regarding BAM Pricing that certain orders 
executed through BAM are assessed standard fee rates as set forth in 
footnote 6 and that marketing fees will continue to be assessed for 
such transactions. Accordingly, the Exchange has proposed to limit the 
exclusion from marketing fees being assessed to those orders that are 
subject to BAM Pricing and not all orders executed through BAM.
---------------------------------------------------------------------------

    \18\ See supra, note 16.
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement the proposed changes 
immediately.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\19\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\20\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among Members and other persons using any facility or system which the 
Exchange operates or controls.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    In sum, the Exchange believes that the proposed fee and rebate 
structure is designed to promote the growth of EDGX Options, including 
the EDGX Options COB, which benefits all market participants by 
providing additional trading opportunities. The goal is to attract both 
Customers and liquidity providers and an increase in the activity of 
these market participants in turn facilitates tighter spreads, which 
may cause an additional corresponding increase in order flow 
originating from other market participants.
    Volume-based rebates such as those currently maintained on the 
Exchange have been widely adopted by options exchanges and are 
equitable because they are open to all Members on an equal basis and 
provide additional benefits or discounts that are reasonably related to 
the value of an exchange's market quality associated with higher levels 
of market activity, such as higher levels of liquidity provision and/or 
growth patterns, and introduction of higher volumes of orders into the 
price and volume discovery processes. The proposed modifications to the 
existing Customer Volume Tiers and Market Maker Volume tiers that make 
such tiers more difficult to attain are each intended to incentivize 
Members to send additional Customer and/or Market Maker orders to the 
Exchange, and in the case of Market Maker Volume Tier 8, also to 
encourage the submission of complex orders to the Exchange in an effort 
to qualify or continue to qualify for the enhanced rebate or lower fee 
made available by the tiers. With respect to the reduction of the 
rebate provided for Customer Volume Tier 4, this change is reasonable, 
fair and equitable because the Exchange is adopting an additional Tier, 
Tier 5, as another means to achieve the rebate previously provided by 
Tier 4 (in addition to Tier 3, which also provides such rebate and 
remains unchanged). With respect to Tier 5, the Exchange believes this 
Tier is reasonable, equitably allocated and non-discriminatory for the 
reasons set forth regarding tiered pricing generally, and also because 
the proposed tier is consistent with existing Tier 4 (which the 
Exchange has proposed to modify), only with higher criteria and a 
higher rebate as an incentive to achieve such criteria.
    The Exchange's recent launch of a complex order book is a 
competitive offering, and the Exchange believes it is necessary to 
adopt certain incentives to encourage Members to enter complex orders 
to the Exchange. In particular, the Exchange believes that 
incentivizing the submission of Customer orders to the Exchange, 
including the Exchange's COB, will help to grow participation in the 
COB generally, and that providing enhanced rebates and reduced fees for 
such participation will help to grow liquidity on the COB to the 
benefit of all participants on the Exchange. The proposed criteria for 
each tier applicable to complex orders is in-line with existing 
criteria on the Exchange as well as criteria proposed herein, and does 
not represent a significant departure in pricing applied by the 
Exchange. Similarly, the enhanced rebates and reduced fees provide 
modest incentives to Members to increase their participation on the 
Exchange generally, including the submission of complex orders.
    The Exchange believes that the proposed tiers are reasonable, fair 
and equitable, and non-discriminatory, for the reasons set forth above 
with respect to volume-based pricing generally and because such changes 
will incentivize participants to further contribute to market quality. 
The proposed tiers will provide an additional way for market 
participants to qualify for enhanced rebates or reduced fees. Further, 
the COB is fully available to all Members, and the proposed thresholds 
are intended to encourage Members to do the development work necessary 
to participate on the COB and send complex orders to the Exchange.
    Continuing to provide Customer orders a rebate for complex orders, 
including a potentially enhanced rebate, while assessing Non-Customers 
a fee for complex orders, is reasonable because of the desirability of 
Customer activity. The proposed fees and rebates for complex orders 
continue to be intended to encourage greater Customer volume on the 
Exchange. As set forth above, Customer activity enhances liquidity on 
the Exchange for the benefit of all market participants and benefits 
all market participants by providing more trading opportunities, which 
attracts market makers and other liquidity providers. The fee and 
rebate schedule as proposed continues to reflect

[[Page 55887]]

differentiation among different market participants typically found in 
options fee and rebate schedules.\21\ The Exchange believes that the 
differentiation is reasonable and notes that unlike others (e.g., 
Customers) some market participants like EDGX Options Market Makers 
commit to various obligations. For example, transactions of an EDGX 
Options Market Maker must constitute a course of dealings reasonably 
calculated to contribute to the maintenance of a fair and orderly 
market, and Market Makers should not make bids or offers or enter into 
transactions that are inconsistent with such course of dealings.\22\ 
Further, all Market Makers are designated as specialists on EDGX 
Options for all purposes under the Act or rules thereunder.\23\
---------------------------------------------------------------------------

    \21\ See the Exchange's Fee Schedule, available at:https://markets.cboe.com/us/options/membership/fee_schedule/edgx/; see also, 
e.g., MIAX Fee Schedule, NYSE Amex Options Fee Schedule, BX Options 
Fee Schedule and Nasdaq Options Market Fee Schedule.
    \22\ See Exchange Rule 22.5, entitled ``Obligations of Market 
Makers''.
    \23\ See Exchange Rule 22.2, entitled ``Options Market Maker 
Registration and Appointment''.
---------------------------------------------------------------------------

    Continuing to provide a rebate for Customer orders and a fee for 
Non-Customer Orders is also equitable and not unfairly discriminatory. 
This is because the Exchange's proposal to provide rebates and assess 
fees will apply the same to all similarly situated participants. 
Moreover, all similarly situated complex orders are subject to the same 
proposed Fee Schedule, and access to the Exchange is offered on terms 
that are not unfairly discriminatory. Similarly, the Exchange believes 
that providing different rates for Penny Pilot Securities and Non-Penny 
Pilot Securities is well-established in the options industry, including 
on the Exchange's current fee schedule.\24\ The Exchange believes it is 
reasonable, equitably allocated and non-discriminatory to impose higher 
fees and provide higher rebates in Non-Penny Pilot Securities than 
Penny Pilot Securities because Penny Pilot Securities and Non-Penny 
Pilot Securities have different liquidity, spread and trading 
characteristics. In particular, spreads in Penny Pilot Securities are 
tighter than those in Non-Penny Pilot Securities (which trade in 
increments of $0.05 or greater). The wider spreads in Non-Penny Pilot 
Securities allow for greater profit potential.
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    \24\ See the Exchange's Fee Schedule, available at:https://markets.cboe.com/us/options/membership/fee_schedule/edgx/; see also, 
e.g., MIAX Fee Schedule, NYSE Amex Options Fee Schedule.
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    In connection with the adoption of fees applicable to complex 
orders, the Exchange modified the description of Marketing Fees 
applicable on the Exchange to make clear that such fees do not apply to 
complex orders.\25\ The Exchange proposes to expand the exclusions 
listed in this section to also exclude orders subject to BAM Pricing 
set forth in footnote 6 and Qualified Contingent Cross Orders. The 
Exchange believes this proposal is a reasonable and equitable 
allocation of fees and dues and is not unreasonably discriminatory 
because the rates for Market Makers for orders subject to BAM Pricing 
and Qualified Contingent Cross Orders are more reasonable and equitably 
allocated as an all-inclusive rate but would increase such rates to a 
level higher than that paid by other non-Customers if Marketing Fees 
were also assessed on such transactions.
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    \25\ See supra, note 16.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe the proposed fee changes would impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed tiered pricing structure, including the tiered 
pricing structure for complex orders, represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Rather, the Exchange believes 
the proposal will enhance competition as it is a competitive proposal 
that seeks to further the growth of the Exchange by encouraging Members 
to enter orders to the Exchange, including Customer orders generally 
and complex orders.
    The Exchange's proposal to adopt complex order functionality was a 
competitive response to complex order books operated by other options 
exchanges. The Exchange believes this proposed rule change is necessary 
to permit fair competition among the options exchanges. While the 
proposed fees and rebates are intended to attract participation on the 
Exchange, particularly complex orders, the Exchange does not believe 
that its proposed pricing significantly departs from pricing in place 
on other options exchanges that accept complex orders. Accordingly, the 
Exchange does not believe that the proposal creates an undue burden on 
inter-market 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. In terms of inter-market 
competition, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other exchanges. Because 
competitors are free to modify their own fees in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.
    In this instance, the proposed charges assessed and credits 
available to Members under the proposed tiered pricing structure do not 
impose a burden on competition because the Exchange's execution 
services are completely voluntary and subject to extensive competition. 
If the changes proposed herein are unattractive to market participants, 
it is likely that the Exchange will lose market share as a result and/
or will be unable to attract participants to the Exchange or the COB. 
Accordingly, the Exchange does not believe that the proposed changes 
will impair the ability of members or competing order execution venues 
to maintain their competitive standing in the financial markets. 
Additionally, the changes proposed herein are pro-competitive to the 
extent that they allow the Exchange to promote and maintain the COB, 
which has the potential to result in efficient executions to the 
benefit of market participants.
    The Exchange believes that the proposed change would increase both 
inter-market and intra-market competition by incentivizing members to 
direct their orders, and particularly Customer orders, to the Exchange, 
which benefits all market participants by providing more trading 
opportunities, which attracts Market Makers. To the extent that there 
is a differentiation between proposed fees assessed and rebates offered 
to Customers as opposed to other market participants, the Exchange 
believes that this is appropriate because the fees and rebates should 
incentivize Members to direct additional order flow to the Exchange and 
thus provide additional liquidity that enhances the quality of its 
markets and increases the volume of

[[Page 55888]]

contracts traded on the Exchange. To the extent that this purpose is 
achieved, all the Exchange's market participants should benefit from 
the improved market liquidity. Enhanced market quality and increased 
transaction volume that results from the anticipated increase in order 
flow directed to the Exchange will benefit all market participants and 
improve competition on the Exchange.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

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) of the Act \26\ and paragraph (f) of Rule 19b-4 
thereunder.\27\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4(f).
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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 rule-comments@sec.gov. Please include 
File Number SR-BatsEDGX-2017-50 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-BatsEDGX-2017-50. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site 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 such 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-BatsEDGX-2017-50, and should 
be submitted on or before December 15, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25352 Filed 11-22-17; 8:45 am]
BILLING CODE 8011-01-P