Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Applicable to Its Equity Options Platform, 58470-58473 [2017-26689]
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58470
Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
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terms and conditions stated in the
application.
2. Each Fund will hold investment
positions selected to correspond
generally to the performance of an
Underlying Index. Certain of the Funds
will track an Underlying Index that is
compiled, created, sponsored, or
maintained by an affiliated person, as
defined in section 2(a)(3) of the Act
(‘‘Affiliated Person’’), or an affiliated
person of an Affiliated Person (‘‘SecondTier Affiliate’’), of the Trust or a Fund,
of the Adviser, of any sub-adviser to or
promoter of a Fund, or of the Distributor
(each a ‘‘Self-Indexing Fund’’).2
3. Shares will be purchased and
redeemed in Creation Units and
generally on an in-kind basis. Except
where the purchase or redemption will
include cash under the limited
circumstances specified in the
application, purchasers will be required
to purchase Creation Units by
depositing specified instruments
(‘‘Deposit Instruments’’), and
shareholders redeeming their shares
will receive specified instruments
(‘‘Redemption Instruments’’). The
Deposit Instruments and the
Redemption Instruments will each
correspond pro rata to the positions in
the Fund’s portfolio (including cash
positions) except as specified in the
application.
4. Because shares will not be
individually redeemable, applicants
request an exemption from section
5(a)(1) and section 2(a)(32) of the Act
that would permit the Funds to register
as open-end management investment
companies and issue shares that are
redeemable in Creation Units only.
5. Applicants also request an
exemption from section 22(d) of the Act
and rule 22c–1 under the Act as
secondary market trading in shares will
take place at negotiated prices, not at a
current offering price described in a
Fund’s prospectus, and not at a price
based on NAV. Applicants state that (a)
secondary market trading in shares does
not involve a Fund as a party and will
not result in dilution of an investment
in shares, and (b) to the extent different
prices exist during a given trading day,
or from day to day, such variances occur
as a result of third-party market forces,
such as supply and demand. Therefore,
applicants assert that secondary market
transactions in shares will not lead to
2 Each Self-Indexing Fund will post on its website
the identities and quantities of the investment
positions that will form the basis for the Fund’s
calculation of its NAV at the end of the day.
Applicants believe that requiring Self-Indexing
Funds to maintain full portfolio transparency will
help address, together with other protections,
conflicts of interest with respect to such Funds.
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discrimination or preferential treatment
among purchasers. Finally, applicants
represent that share market prices will
be disciplined by arbitrage
opportunities, which should prevent
shares from trading at a material
discount or premium from NAV.
6. With respect to Funds that effect
creations and redemptions of Creation
Units in kind and that are based on
certain Underlying Indexes that include
foreign securities, applicants request
relief from the requirement imposed by
section 22(e) in order to allow such
Funds to pay redemption proceeds
within fifteen calendar days following
the tender of Creation Units for
redemption. Applicants assert that the
requested relief would not be
inconsistent with the spirit and intent of
section 22(e) to prevent unreasonable,
undisclosed or unforeseen delays in the
actual payment of redemption proceeds.
7. Applicants request an exemption to
permit Funds of Funds to acquire Fund
shares beyond the limits of section
12(d)(1)(A) of the Act; and the Funds,
and any principal underwriter for the
Funds, and/or any broker or dealer
registered under the Exchange Act, to
sell shares to Funds of Funds beyond
the limits of section 12(d)(1)(B) of the
Act. The application’s terms and
conditions are designed to, among other
things, help prevent any potential (i)
undue influence over a Fund through
control or voting power, or in
connection with certain services,
transactions, and underwritings, (ii)
excessive layering of fees, and (iii)
overly complex fund structures, which
are the concerns underlying the limits
in sections 12(d)(1)(A) and (B) of the
Act.
8. Applicants request an exemption
from sections 17(a)(1) and 17(a)(2) of the
Act to permit persons that are Affiliated
Persons, or Second Tier Affiliates, of the
Funds, solely by virtue of certain
ownership interests, to effectuate
purchases and redemptions in-kind. The
deposit procedures for in-kind
purchases of Creation Units and the
redemption procedures for in-kind
redemptions of Creation Units will be
the same for all purchases and
redemptions and Deposit Instruments
and Redemption Instruments will be
valued in the same manner as those
investment positions currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
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transactions with the Fund of Funds.3
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–26700 Filed 12–11–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82227; File No. SR–
CboeBZX–2017–007]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Applicable to
Its Equity Options Platform
December 6, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
3 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Funds and redemptions of those shares. Applicants
are not seeking relief from section 17(a) for, and the
requested relief will not apply to, transactions
where a Fund could be deemed an Affiliated
Person, or a Second-Tier Affiliate, of a Fund of
Funds because an Adviser or an entity controlling,
controlled by or under common control with an
Adviser provides investment advisory services to
that Fund of Funds.
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Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
(‘‘Act’’),1 and Rule 19b 4 thereunder,2
notice is hereby given that on November
28, 2017, Cboe BZX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BZX’’) 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 Market Data section of its fee
schedule applicable to its equity options
platform (‘‘BZX Options’’) to adopt fees
for receipt of historical market data.
The text of the proposed rule change
is available at the Exchange’s website 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.
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(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Market Data section of its BZX Options
fee schedule to adopt fees for historical
market data. The Exchange proposes to
begin providing historical data to data
recipients upon request for a fee. The
Exchange currently provides historical
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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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,6
in general, and furthers the objectives of
Section 6(b)(4),7 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its members and
other recipients of Exchange data. The
Exchange believes that the proposed
rates are equitable and nondiscriminatory in that they apply
uniformly to all recipients of Exchange
data. The Exchange believes the
proposed fees are competitive with
those charged by other venues and,
5 See Cboe BZX U.S. Equities Exchange Fee
Schedule available at https://markets.cboe.com/us/
equities/membership/fee_schedule/bzx/.
6 15 U.S.C. 78f.
7 15 U.S.C. 78f(b)(4).
1 15
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data upon request on an ad hoc basis,
but proposes to begin charging a fee due
to the infrastructure costs of storing and
providing such data. Similar to what it
does today, the Exchange proposes to
provide a data recipient with the
requested historical data on an external
hard drive provided by the Exchange.
As an alternative means to obtain
historical data, the Exchange provides
market participants with access to a
database from which they can download
data that is up to 3 months old. As
proposed, the Exchange will offer
historical data from the Exchange’s
PITCH data feed for a fee of $500 per
month of data accessed by any
individual user. The Exchange’s
databases will contain up to 90 days of
data at any point in time. For data that
the Exchange provides on an external
hard drive to a market participant the
proposed cost is $2,500 per 1 terabyte
(TB) drive generated by the Exchange.
Historical data would be provided to
data recipients for internal use only, and
thus, no redistribution will be
permitted. The proposed rates are
identical to the rates it charges for
historical data on its equity trading
platform (‘‘BZX Equities’’).5
Historical data provided by the
Exchange can be used for a variety of
purposes. For instance, data recipients
may use historical data to back-test
certain trading strategies. As another
example, data recipients that provide
market information through public
websites or develop dynamic stock
tickers, portfolio trackers, price/time
graphs and other visual systems can use
historical data for such purposes.
The Exchange proposes to implement
the proposed change to its fee schedule
on January 2, 2018.
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58471
therefore, reasonable and equitably
allocated to recipients. The Exchange
also believes that the proposed fees are
reasonable and non-discriminatory
because they will apply uniformly to all
recipients of Exchange data.
Furthermore, the proposed rates are
identical to the rates the Exchange
charges for historical data on BZX
Equities,8 which have been previously
filed with the Commission and subject
to notice and comment.9
The Exchange also believes that the
proposed rule change is consistent with
Section 11(A) of the Act 10 in that it
supports (i) fair competition among
brokers and dealers, among exchange
markets, and between exchange markets
and markets other than exchange
markets and (ii) the availability to
brokers, dealers, and investors of
information with respect to quotations
for and transactions in securities.
Furthermore, the proposed rule change
is consistent with Rule 603 of
Regulation NMS,11 which provides that
any national securities exchange that
distributes information with respect to
quotations for or transactions in an NMS
stock do so on terms that are not
unreasonably discriminatory. In
adopting Regulation NMS, the
Commission granted self-regulatory
organizations and broker-dealers
increased authority and flexibility to
offer new and unique market data to the
public. It was believed that this
authority would expand the amount of
data available to consumers, and also
spur innovation and competition for the
provision of market data.
In addition, the proposed fees would
not permit unfair discrimination
because all of the Exchange’s customers
and market data vendors will be subject
to the proposed fees on an equivalent
basis. Historical data is distributed and
purchased on a voluntary basis, in that
neither the Exchange nor market data
distributors are required by any rule or
regulation to make this data available.
Accordingly, Distributors and Users can
discontinue use at any time and for any
reason, including due to an assessment
of the reasonableness of fees charged.
Firms have a wide variety of alternative
market data products from which to
choose, such as similar proprietary data
products offered by other exchanges and
consolidated data. Moreover, the
Exchange is not required to make any
8 See Cboe BZX U.S. Equities Exchange Fee
Schedule available at https://markets.cboe.com/us/
equities/membership/fee_schedule/bzx/.
9 See Securities Exchange Act Release Nos. 61885
(April 9, 2010), 75 FR 20018 (April 16, 2010) (SR–
BATS–2010–002).
10 15 U.S.C. 78k–1.
11 See 17 CFR 242.603.
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Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
proprietary data products available or to
offer any specific pricing alternatives to
any customers.
In addition, the fees that are the
subject of this rule filing are constrained
by competition. As explained below in
the Exchange’s Statement on Burden on
Competition, the existence of
alternatives to historical data further
ensures that the Exchange cannot set
unreasonable fees, or fees that are
unreasonably discriminatory, when
vendors and subscribers can elect such
alternatives. That is, the Exchange
competes with other exchanges (and
their affiliates) that provide similar
market data products. If another
exchange (or its affiliate) were to charge
less to distribute its similar product
than the Exchange charges to distribute
historical data, prospective Users likely
would not subscribe to, or would cease
subscribing to, the Exchange’s historical
data.
The Exchange notes that the
Commission is not required to
undertake a cost-of-service or ratemaking approach. The Exchange
believes that, even if it were possible as
a matter of economic theory, cost-based
pricing for non-core market data would
be so complicated that it could not be
done practically.12
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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 result in
12 The Exchange believes that cost-based pricing
would be impractical because it would create
enormous administrative burdens for all parties,
including the Commission, to cost-regulate a large
number of participants and standardize and analyze
extraordinary amounts of information, accounts,
and reports. In addition, it is impossible to regulate
market data prices in isolation from prices charged
by markets for other services that are joint products.
Cost-based rate regulation would also lead to
litigation and may distort incentives, including
those to minimize costs and to innovate, leading to
further waste. Under cost-based pricing, the
Commission would be burdened with determining
a fair rate of return, and the industry could
experience frequent rate increases based on
escalating expense levels. Even in industries
historically subject to utility regulation, cost-based
ratemaking has been discredited. As such, the
Exchange believes that cost-based ratemaking
would be inappropriate for proprietary market data
and inconsistent with Congress’s direction that the
Commission use its authority to foster the
development of the national market system, and
that market forces will continue to provide
appropriate pricing discipline. See Appendix C to
NYSE’s comments to the Commission’s 2000
Concept Release on the Regulation of Market
Information Fees and Revenues, which can be
found on the Commission’s website at https://
www.sec.gov/rules/concept/s72899/buck1.htm. See
also Securities Exchange Act Release No. 73816
(December 11, 2014), 79 FR 75200 (December 17,
2014) (SR–NYSE–2014–64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
to Establish an Access Fee for the NYSE Best Quote
and Trades Data Feed, Operative December 1,
2014).
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any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
The Exchange’s ability to price
historical data is constrained by: (i)
Competition among exchanges, other
trading platforms, and Trade Reporting
Facilities (‘‘TRF’’) that compete with
each other in a variety of dimensions;
(ii) the existence of inexpensive realtime consolidated data and marketspecific data and free delayed data; and
(iii) the inherent contestability of the
market for proprietary data.
The Exchange and its market data
products are subject to significant
competitive forces and the proposed
fees represent responses to that
competition. To start, the Exchange
competes intensely for order flow. It
competes with the other national
securities exchanges that currently trade
equities, with electronic communication
networks, with quotes posted in
FINRA’s Alternative Display Facility,
with alternative trading systems, and
with securities firms that primarily
trade as principal with their customer
order flow.
The availability of a variety of
alternative sources of information
imposes significant competitive
pressures on Exchange data products
and the Exchange’s compelling need to
attract order flow imposes significant
competitive pressure on the Exchange to
act equitably, fairly, and reasonably in
setting the proposed data product fees.
The proposed data product fees are, in
part, responses to that pressure. The
Exchange believes that the proposed
fees would reflect an equitable
allocation of its overall costs to users of
its facilities.
In addition, when establishing the
proposed fees, the Exchange considered
the competitiveness of the market for
proprietary data and all of the
implications of that competition. The
Exchange believes that it has considered
all relevant factors and has not
considered irrelevant factors in order to
establish fair, reasonable, and not
unreasonably discriminatory fees and an
equitable allocation of fees among all
Users. The existence of alternatives to
historical data, including existing
similar feeds by other exchanges,
consolidated data, and proprietary data
from other sources, ensures that the
Exchange cannot set unreasonable fees,
or fees that are unreasonably
discriminatory, when vendors and
subscribers can elect these alternatives
or choose not to purchase a specific
proprietary data product if its cost to
purchase is not justified by the returns
any particular vendor or subscriber
would achieve through the purchase.
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(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
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 13 and paragraph (f) of Rule
19b–4 thereunder.14 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:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2017–007 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2017–007. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
13 15
14 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
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–CboeBZX–2017–007 and
should be submitted on or before
January 2, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–26689 Filed 12–11–17; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–82225; File No. SR–NYSE–
2017–42]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change
Amending the NYSE Listed Company
Manual To Modify Its Requirements
With Respect to Delivery of Proxy
Materials to the Exchange
ethrower on DSK3G9T082PROD with NOTICES
December 6, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
November 22, 2017, New York Stock
Exchange LLC (‘‘NYSE’’ 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 selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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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 those 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 the
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
15 17
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Listed Company Manual (the
‘‘Manual’’) to modify its requirements
with respect to delivery of proxy
materials to the Exchange. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
1. Purpose
The Exchange proposes to amend the
Manual to modify its requirements with
respect to delivery of proxy materials to
the Exchange.
The Manual currently includes two
provisions requiring listed companies to
provide physical copies of proxy
materials to the Exchange. Section
204.00(B) requires listed companies to
provide six hard copies of proxy
materials not later than the date on
which the material is physically or
electronically delivered to shareholders.
Section 402.01 requires listed
companies to provide three definitive
copies of the proxy material (together
with proxy card) not later than the date
on which such material is sent, or given,
to any security holders.
The Exchange proposes to delete from
Section 204.00(B) a provision stating
that listed companies are required to file
hard copies of certain SEC reports and
other material (such as proxies) with the
Exchange, as this provision is
inconsistent with the Exchange’s
proposed revised approach to the
review of SEC filings. To that end, the
Exchange proposes to modify Section
204.00(B) so as to require companies to
send hard copy proxy materials to the
Exchange only (i) in the circumstances
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58473
specified by Section 402.01 in its
proposed amended form and (ii) one
hard copy of any filing that is not
required to be filed through EDGAR,
including pursuant to a hardship
exemption granted by the SEC.
In addition, the Exchange proposes to
amend Section 402.01 to provide that
listed companies will not be required to
provide proxy materials to the Exchange
in physical form, provided such proxy
materials are included in an SEC filing
available on the SEC’s EDGAR filing
system. Any listed company whose
proxy materials are available on EDGAR
but not filed pursuant to Schedule 14A
under the Act will be required to
provide to the Exchange information
sufficient to identify such filing (by one
of the means specified in Section
204.00(A)) not later than the date on
which such material is sent, or given, to
any security holders. Notwithstanding
the foregoing, any listed company
whose proxy materials are not included
in their entirety (together with proxy
card) in an SEC filing available on
EDGAR will continue to be required to
provide three physical copies of any
proxy material not available on EDGAR
to the Exchange not later than the date
on which such material is sent, or given,
to any security holders, consistent with
the requirements of Rule 14a–6(b) under
the Act.4 The Exchange also proposes to
correct an erroneous reference to Rule
14–a(6)(c) [sic] in Section 402.01 to refer
instead to part (c) of that rule.
The Exchange notes that almost all
U.S. domestic listed companies are
subject to the SEC’s proxy rules. Those
companies are required to file their
proxy materials on the SEC’s EDGAR
system and the relevant filings are
readily identifiable as being filed under
Schedule 14A under the U.S. proxy
rules. Exchange staff receives alerts
when filings are submitted to the SEC
and generally reviews proxy materials
on EDGAR shortly after filing. This
review has generally been completed
long before the Exchange receives hard
copies of proxy materials and the
Exchange therefore has no real need to
receive hard copies.
Listed foreign private issuers are not
required to comply with the U.S. proxy
rules, although the NYSE does require
these companies to solicit proxies.
However, many foreign private issuers
furnish and submit their proxy materials
to the SEC as part of a Form 6–K (or, in
the case of foreign private issuers that
voluntarily submit periodic reports
applicable to domestic companies,
proxy materials may instead be
included in a Form 8–K). As foreign
4 17
E:\FR\FM\12DEN1.SGM
CFR 14a–6(b).
12DEN1
]]>Agencies
[Federal Register Volume 82, Number 237 (Tuesday, December 12, 2017)]
[Notices]
[Pages 58470-58473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26689]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82227; File No. SR-CboeBZX-2017-007]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Applicable
to Its Equity Options Platform
December 6, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 58471]]
(``Act''),\1\ and Rule 19b 4 thereunder,\2\ notice is hereby given that
on November 28, 2017, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(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 Market Data section of
its fee schedule applicable to its equity options platform (``BZX
Options'') to adopt fees for receipt of historical market data.
The text of the proposed rule change is available at the Exchange's
website 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 amend the Market Data section of its BZX
Options fee schedule to adopt fees for historical market data. The
Exchange proposes to begin providing historical data to data recipients
upon request for a fee. The Exchange currently provides historical data
upon request on an ad hoc basis, but proposes to begin charging a fee
due to the infrastructure costs of storing and providing such data.
Similar to what it does today, the Exchange proposes to provide a data
recipient with the requested historical data on an external hard drive
provided by the Exchange. As an alternative means to obtain historical
data, the Exchange provides market participants with access to a
database from which they can download data that is up to 3 months old.
As proposed, the Exchange will offer historical data from the
Exchange's PITCH data feed for a fee of $500 per month of data accessed
by any individual user. The Exchange's databases will contain up to 90
days of data at any point in time. For data that the Exchange provides
on an external hard drive to a market participant the proposed cost is
$2,500 per 1 terabyte (TB) drive generated by the Exchange. Historical
data would be provided to data recipients for internal use only, and
thus, no redistribution will be permitted. The proposed rates are
identical to the rates it charges for historical data on its equity
trading platform (``BZX Equities'').\5\
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\5\ See Cboe BZX U.S. Equities Exchange Fee Schedule available
at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
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Historical data provided by the Exchange can be used for a variety
of purposes. For instance, data recipients may use historical data to
back-test certain trading strategies. As another example, data
recipients that provide market information through public websites or
develop dynamic stock tickers, portfolio trackers, price/time graphs
and other visual systems can use historical data for such purposes.
The Exchange proposes to implement the proposed change to its fee
schedule on January 2, 2018.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\6\ in general, and
furthers the objectives of Section 6(b)(4),\7\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its members and other recipients of
Exchange data. The Exchange believes that the proposed rates are
equitable and non-discriminatory in that they apply uniformly to all
recipients of Exchange data. The Exchange believes the proposed fees
are competitive with those charged by other venues and, therefore,
reasonable and equitably allocated to recipients. The Exchange also
believes that the proposed fees are reasonable and non-discriminatory
because they will apply uniformly to all recipients of Exchange data.
Furthermore, the proposed rates are identical to the rates the Exchange
charges for historical data on BZX Equities,\8\ which have been
previously filed with the Commission and subject to notice and
comment.\9\
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(4).
\8\ See Cboe BZX U.S. Equities Exchange Fee Schedule available
at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
\9\ See Securities Exchange Act Release Nos. 61885 (April 9,
2010), 75 FR 20018 (April 16, 2010) (SR-BATS-2010-002).
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The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act \10\ in that it supports (i)
fair competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.
Furthermore, the proposed rule change is consistent with Rule 603 of
Regulation NMS,\11\ which provides that any national securities
exchange that distributes information with respect to quotations for or
transactions in an NMS stock do so on terms that are not unreasonably
discriminatory. In adopting Regulation NMS, the Commission granted
self-regulatory organizations and broker-dealers increased authority
and flexibility to offer new and unique market data to the public. It
was believed that this authority would expand the amount of data
available to consumers, and also spur innovation and competition for
the provision of market data.
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\10\ 15 U.S.C. 78k-1.
\11\ See 17 CFR 242.603.
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In addition, the proposed fees would not permit unfair
discrimination because all of the Exchange's customers and market data
vendors will be subject to the proposed fees on an equivalent basis.
Historical data is distributed and purchased on a voluntary basis, in
that neither the Exchange nor market data distributors are required by
any rule or regulation to make this data available. Accordingly,
Distributors and Users can discontinue use at any time and for any
reason, including due to an assessment of the reasonableness of fees
charged. Firms have a wide variety of alternative market data products
from which to choose, such as similar proprietary data products offered
by other exchanges and consolidated data. Moreover, the Exchange is not
required to make any
[[Page 58472]]
proprietary data products available or to offer any specific pricing
alternatives to any customers.
In addition, the fees that are the subject of this rule filing are
constrained by competition. As explained below in the Exchange's
Statement on Burden on Competition, the existence of alternatives to
historical data further ensures that the Exchange cannot set
unreasonable fees, or fees that are unreasonably discriminatory, when
vendors and subscribers can elect such alternatives. That is, the
Exchange competes with other exchanges (and their affiliates) that
provide similar market data products. If another exchange (or its
affiliate) were to charge less to distribute its similar product than
the Exchange charges to distribute historical data, prospective Users
likely would not subscribe to, or would cease subscribing to, the
Exchange's historical data.
The Exchange notes that the Commission is not required to undertake
a cost-of-service or rate-making approach. The Exchange believes that,
even if it were possible as a matter of economic theory, cost-based
pricing for non-core market data would be so complicated that it could
not be done practically.\12\
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\12\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties, including the Commission, to cost-regulate a large
number of participants and standardize and analyze extraordinary
amounts of information, accounts, and reports. In addition, it is
impossible to regulate market data prices in isolation from prices
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort
incentives, including those to minimize costs and to innovate,
leading to further waste. Under cost-based pricing, the Commission
would be burdened with determining a fair rate of return, and the
industry could experience frequent rate increases based on
escalating expense levels. Even in industries historically subject
to utility regulation, cost-based ratemaking has been discredited.
As such, the Exchange believes that cost-based ratemaking would be
inappropriate for proprietary market data and inconsistent with
Congress's direction that the Commission use its authority to foster
the development of the national market system, and that market
forces will continue to provide appropriate pricing discipline. See
Appendix C to NYSE's comments to the Commission's 2000 Concept
Release on the Regulation of Market Information Fees and Revenues,
which can be found on the Commission's website at https://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to Establish an
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative
December 1, 2014).
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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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange's ability to price historical data is constrained by: (i)
Competition among exchanges, other trading platforms, and Trade
Reporting Facilities (``TRF'') that compete with each other in a
variety of dimensions; (ii) the existence of inexpensive real-time
consolidated data and market-specific data and free delayed data; and
(iii) the inherent contestability of the market for proprietary data.
The Exchange and its market data products are subject to
significant competitive forces and the proposed fees represent
responses to that competition. To start, the Exchange competes
intensely for order flow. It competes with the other national
securities exchanges that currently trade equities, with electronic
communication networks, with quotes posted in FINRA's Alternative
Display Facility, with alternative trading systems, and with securities
firms that primarily trade as principal with their customer order flow.
The availability of a variety of alternative sources of information
imposes significant competitive pressures on Exchange data products and
the Exchange's compelling need to attract order flow imposes
significant competitive pressure on the Exchange to act equitably,
fairly, and reasonably in setting the proposed data product fees. The
proposed data product fees are, in part, responses to that pressure.
The Exchange believes that the proposed fees would reflect an equitable
allocation of its overall costs to users of its facilities.
In addition, when establishing the proposed fees, the Exchange
considered the competitiveness of the market for proprietary data and
all of the implications of that competition. The Exchange believes that
it has considered all relevant factors and has not considered
irrelevant factors in order to establish fair, reasonable, and not
unreasonably discriminatory fees and an equitable allocation of fees
among all Users. The existence of alternatives to historical data,
including existing similar feeds by other exchanges, consolidated data,
and proprietary data from other sources, ensures that the Exchange
cannot set unreasonable fees, or fees that are unreasonably
discriminatory, when vendors and subscribers can elect these
alternatives or choose not to purchase a specific proprietary data
product if its cost to purchase is not justified by the returns any
particular vendor or subscriber would achieve through the purchase.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
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 \13\ and paragraph (f) of Rule 19b-4
thereunder.\14\ 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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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2017-007 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeBZX-2017-007. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the
[[Page 58473]]
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-CboeBZX-2017-007 and should
be submitted on or before January 2, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26689 Filed 12-11-17; 8:45 am]
BILLING CODE 8011-01-P
