Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on the Cboe BZX Exchange, Inc. Equity Options Platform, 184-186 [2017-28228]

Download as PDF 184 Federal Register / Vol. 83, No. 1 / Tuesday, January 2, 2018 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Brent J. Fields, Secretary. [FR Doc. 2017–28309 Filed 12–29–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82401; File No. SR– CboeBZX–2017–014] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on the Cboe BZX Exchange, Inc. Equity Options Platform December 26, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 12, 2017, Cboe BZX Exchange, Inc. (‘‘BZX’’ or the ‘‘Exchange’’) 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 daltland on DSKBBV9HB2PROD with NOTICES The Exchange filed a proposal to amend its fees and rebates applicable to Members 5 and non-Members of the Exchange pursuant to BZX Rule 15.1(a) and (c). 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. 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 19:54 Dec 29, 2017 Jkt 244001 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its fee schedule for its equity options platform (‘‘BZX Options’’) to adopt a new Firm,6 Broker Dealer 7 and Joint Back Office 8 Penny Pilot 9 Add Volume Tier under footnote 2, effective immediately.10 The Exchange currently offers one Firm, Broker Dealer and Joint Back Office Penny Add Volume Tier under footnote 2, which provides an enhanced rebate of $0.46 per contract for qualifying orders that add liquidity in Penny Pilot Securities and yield fee code PF.11 The Exchange now proposes to add a new Tier 1 and to re-number current Tier 1 as Tier 2. Currently under Tier 1, to be renumbered as Tier 2, a Member’s orders 6 ‘‘Firm’’ applies to any transaction identified by a Member for clearing in the Firm range at the OCC, excluding any Joint Back Office transaction. See the Exchange’s fee schedule available at https:// markets.cboe.com/us/options/membership/fee_ schedule/bzx/. 7 ‘‘Broker Dealer’’ applies to any order for the account of a broker dealer, including a foreign broker dealer, that clears in the Customer range at the Options Clearing Corporation (‘‘OCC’’). See id. 8 ‘‘Joint Back Office’’ applies to any transaction identified by a Member for clearing in the Firm range at the OCC that is identified with an origin code as Joint Back Office. A Joint Back Office participant is a Member that maintains a Joint Back Office arrangement with a clearing broker-dealer. See id. 9 ‘‘Penny Pilot Securities’’ are those issues quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. 10 The Exchange initially filed the proposed rule changes on December 1, 2017 (SR–CboeBZX–2017– 10). On December 12, 2017 the Exchange withdrew SR–CboeBZX–2017–10 and then subsequently submitted this filing (SR–CboeBZX–2017–14). 11 Fee code PF is appended to Firm, Broker Dealer and Joint Back Office orders in Penny Pilot Securities that add liquidity. Orders that yield fee code PF are provided a standard rebate of $0.25 per contract. See the Exchange’s fee schedule available at https://markets.cboe.com/us/options/ membership/fee_schedule/bzx/. PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 that yield fee code PF receive an enhanced rebate of $0.46 per contract where the Member has an: (i) ADAV 12 in Away Market Maker 13, Firm, Broker Dealer and Joint Back Office orders greater than or equal to 1.05% of average OCV 14; and (ii) ADV 15 equal to or greater than 1.95% of average OCV. The Exchange proposes to adopt new Tier 1, which would be similar to renumbered Tier 2 but would have lower criteria (but with different qualifying volume, as described below) and a lower rebate. In order to provide an incentive to encourage additional participation by Members that do not participate on the Exchange as Market Makers or Away Market Makers, new Tier 1 would not take Away Market Maker volume into account for purposes of the Tier calculation. Specifically, pursuant to new Tier 1 a Member’s orders that yield fee code PF would receive an enhanced rebate of $0.38 per contract where the Member has an ADAV in Firm, Broker Dealer and Joint Back Office orders greater than or equal to 0.20% of average OCV. Implementation Date The Exchange proposes to implement the above changes to its fee schedule immediately. 2. Statutory Basis The Exchange believes that the proposed rule changes are consistent with the objectives of Section 6 of the Act,16 in general, and furthers the objectives of Section 6(b)(4),17 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and other persons using its facilities. The Exchange believes that the proposed modification to the Exchange’s tiered pricing structure is reasonable, fair and equitable, and nondiscriminatory. The Exchange operates in a highly competitive market in which 12 ‘‘ADAV’’ means average daily added volume calculated as the number of contracts added per day. See id. 13 ‘‘Away Market Maker’’ applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is not registered with the Exchange as a Market Maker, but is registered as a market maker on another options exchange. See id. 14 ‘‘OCV’’ means the total equity and ETF options volume that clears in the Customer range at the Options Clearing Corporation (‘‘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. 15 ‘‘ADV’’ means average daily volume calculated as the number of contracts added or removed, combined, per day. See id. 16 15 U.S.C. 78f. 17 15 U.S.C. 78f(b)(4). E:\FR\FM\02JAN1.SGM 02JAN1 daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 1 / Tuesday, January 2, 2018 / Notices market participants may readily send order flow to many competing venues if they deem fees at the Exchange to be excessive or incentives provided to be insufficient. The proposed structure remains intended to attract order flow to the Exchange by offering market participants a competitive pricing structure. The Exchange believes it is reasonable to offer and incrementally modify incentives intended to help to contribute to the growth of the Exchange. Volume-based pricing structures such as that maintained by the Exchange have been widely adopted by exchanges, including the Exchange, 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: (i) The value to an exchange’s market quality; (ii) associated higher levels of market activity, such as higher levels of liquidity provisions and/or growth patterns; and (iii) introduction of higher volumes of orders into the price and volume discovery processes. In particular, the proposed change to footnote 2 is a minor change intended to provide an incentive similar to an existing incentive. The proposed incentive, in turn, is intended to incentivize Members to send increased order flow to the Exchange in an effort to qualify for the enhanced rebates made available by the tier. This increased order flow, in turn, contributes to the growth of the Exchange. The Exchange also believes the rebate associated with the tier is reasonable as it reflects the difficulty in achieving the tier, requiring less participation than existing Tier 1 but also providing a lower rebate. The Exchange again notes that the proposed tier also does not include the same volume as is included when determining whether a Member has qualified for existing Tier 1, specifically, the new tier would not take Away Market Maker volume into account, whereas existing Tier 1 does. The Exchange believes that the proposal to only count Firm, Broker Dealer and Joint Back Office volume for purposes of Tier 1 is reasonable, fair and equitable and not unreasonably discriminatory because it is intended to encourage participants that do not participate as Market Makers or Away Market Makers on the Exchange to increase their participation on the Exchange. The Exchange also believes the proposal is reasonable, equitably allocated and not unreasonably discriminatory because there are other existing incentives offered by the Exchange that are provided to Market Makers and Away VerDate Sep<11>2014 19:54 Dec 29, 2017 Jkt 244001 Market Makers, and because a participant with Away Market Maker volume could still qualify for the new tier to the extent they also have Firm, Broker Dealer and Joint Back Office volume that reaches the required level, it is just that their Away Market Maker Volume will not be included in the calculation. The Exchange believes that the incentives it provides remain reasonably related to the value to the Exchange’s market quality associated with higher levels of market activity, including liquidity provision and the introduction of higher volumes of orders into the price and volume discovery processes. The proposed change to the tiered pricing structure is not unfairly discriminatory because it will apply equally to all Members. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes the proposed amendment to its fee schedule would not 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 change represents a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange’s competitors. Additionally, Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange does not believe that the proposed change to the Exchange’s tiered pricing structure burdens competition, but instead, enhances competition, as it is intended to increase the competitiveness of 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 18 and paragraph (f) of Rule 18 15 PO 00000 U.S.C. 78s(b)(3)(A). Frm 00088 Fmt 4703 19b–4 thereunder.19 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–2017–014 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-CboeBZX–2017–014. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of this filing will also 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 19 17 Sfmt 4703 185 E:\FR\FM\02JAN1.SGM CFR 240.19b–4(f). 02JAN1 186 Federal Register / Vol. 83, No. 1 / Tuesday, January 2, 2018 / Notices submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CboeBZX–2017–014 and should be submitted on or before January 23, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Brent J. Fields, Secretary. [FR Doc. 2017–28228 Filed 12–29–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82408; File No. SR– NASDAQ–2017–131] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade the Shares of the Reinhart Intermediate Bond NextShares Fund December 27, 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 December 20, 2017, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. daltland on DSKBBV9HB2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade under Nasdaq Rule 5745 (Exchange-Traded Managed Fund Shares (‘‘NextShares’’)) the common shares (‘‘Shares’’) of the Reinhart Intermediate Bond NextShares (the ‘‘Fund’’). 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 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 19:54 Dec 29, 2017 Jkt 244001 places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade the Shares of the Fund under Nasdaq Rule 5745, which governs the listing and trading of exchange-traded managed fund shares, as defined in Nasdaq Rule 5745(c)(1), on the Exchange.3 Managed Portfolio Series, which is discussed below, is registered with the Commission as an open-end investment company and has filed a registration statement on Form N–1A (‘‘Registration Statement’’) with the Commission. The Fund is a series of Managed Portfolio Series and will be advised by an investment adviser registered under the Investment Advisers Act of 1940 (‘‘Advisers Act’’), as described below. The Fund will be actively managed and will pursue the principal investment strategy noted below.4 I. Managed Portfolio Series Managed Portfolio Series is registered with the Commission as an open-end investment company and has filed a Registration Statement with the Commission.5 The following Fund is a series of Managed Portfolio Series.6 Reinhart Partners, Inc. (the ‘‘Adviser’’) will be the adviser to the Fund. The Adviser is not a registered broker-dealer, and is not affiliated with a brokerdealer. Personnel who make decisions on the Fund’s portfolio composition must be subject to procedures designed to prevent the use and dissemination of material, non-public information 3 The Commission approved Nasdaq Rule 5745 in Securities Exchange Act Release No. 34–73562 (Nov. 7, 2014), 79 FR 68309 (Nov. 14, 2014) (SR– NASDAQ–2014–020). 4 Additional information regarding the Fund will be available on the free public website for the Fund at www.reinhartfunds.com and in the Registration Statement for the Fund. 5 See Post-Effective Amendment number 316 to the Registration Statement on Form N–1A for Managed Portfolio Series dated Oct. 26, 2017 (File Nos. 333–172080 and 811–22525). The descriptions of the Fund and the Shares contained herein conform to the initial Registration Statement. 6 The Commission has issued an order granting Managed Portfolio Series and certain affiliates exemptive relief under the Investment Company Act of 1940, as amended (the ‘‘Investment Company Act’’). See Investment Company Act Release No. 32893 (Nov. 28, 2017) (File No. 812–14830). PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 regarding the open-end fund’s portfolio.7 In the event that (a) the Adviser registers as a broker-dealer or becomes newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser to the Fund is a registered broker-dealer or is affiliated with a broker-dealer, such adviser or sub-adviser will implement and will maintain a fire wall with respect to its relevant personnel and/or such broker-dealer affiliate, as applicable, regarding access to information concerning the composition and/or changes to the Fund’s portfolio and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. Quasar Distributors, LLC will be the principal underwriter and distributor of the Fund’s Shares. U.S. Bancorp Fund Services, LLC will act as the administrator and accounting agent to the Fund; U.S. Bancorp Fund Services, LLC will act as transfer agent to the Fund; and U.S. Bank, NA will act as custodian to the Fund. The Fund will be actively managed and will pursue the principal investment strategies described below.8 Reinhart Intermediate Bond NextShares The investment objective of the Reinhart Intermediate Bond NextShares is that the Fund will seek to outperform its benchmark, the Barclays Capital Intermediate Government/Credit Index, measured over an entire market cycle, while maintaining key risks (interest 7 An investment adviser to an open-end fund is required to be registered under the Advisers Act. As a result, the Adviser and its related personnel are subject to the provisions of Rule 204A–1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. 8 Additional information regarding the Fund will be available on a free public website for the Fund (www.reinhartfunds.com which may contain links for certain information to www.nextshares.com) and in the Registration Statement for the Fund. E:\FR\FM\02JAN1.SGM 02JAN1

Agencies

[Federal Register Volume 83, Number 1 (Tuesday, January 2, 2018)]
[Notices]
[Pages 184-186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-28228]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82401; File No. SR-CboeBZX-2017-014]


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

December 26, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 12, 2017, Cboe BZX Exchange, Inc. (``BZX'' or the 
``Exchange'') 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 its fees and rebates 
applicable to Members \5\ and non-Members of the Exchange pursuant to 
BZX Rule 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 
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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule for its equity 
options platform (``BZX Options'') to adopt a new Firm,\6\ Broker 
Dealer \7\ and Joint Back Office \8\ Penny Pilot \9\ Add Volume Tier 
under footnote 2, effective immediately.\10\
---------------------------------------------------------------------------

    \6\ ``Firm'' applies to any transaction identified by a Member 
for clearing in the Firm range at the OCC, excluding any Joint Back 
Office transaction. See the Exchange's fee schedule available at 
https://markets.cboe.com/us/options/membership/fee_schedule/bzx/.
    \7\ ``Broker Dealer'' applies to any order for the account of a 
broker dealer, including a foreign broker dealer, that clears in the 
Customer range at the Options Clearing Corporation (``OCC''). See 
id.
    \8\ ``Joint Back Office'' applies to any transaction identified 
by a Member for clearing in the Firm range at the OCC that is 
identified with an origin code as Joint Back Office. A Joint Back 
Office participant is a Member that maintains a Joint Back Office 
arrangement with a clearing broker-dealer. See id.
    \9\ ``Penny Pilot Securities'' are those issues quoted pursuant 
to Exchange Rule 21.5, Interpretation and Policy .01.
    \10\ The Exchange initially filed the proposed rule changes on 
December 1, 2017 (SR-CboeBZX-2017-10). On December 12, 2017 the 
Exchange withdrew SR-CboeBZX-2017-10 and then subsequently submitted 
this filing (SR-CboeBZX-2017-14).
---------------------------------------------------------------------------

    The Exchange currently offers one Firm, Broker Dealer and Joint 
Back Office Penny Add Volume Tier under footnote 2, which provides an 
enhanced rebate of $0.46 per contract for qualifying orders that add 
liquidity in Penny Pilot Securities and yield fee code PF.\11\ The 
Exchange now proposes to add a new Tier 1 and to re-number current Tier 
1 as Tier 2.
---------------------------------------------------------------------------

    \11\ Fee code PF is appended to Firm, Broker Dealer and Joint 
Back Office orders in Penny Pilot Securities that add liquidity. 
Orders that yield fee code PF are provided a standard rebate of 
$0.25 per contract. See the Exchange's fee schedule available at 
https://markets.cboe.com/us/options/membership/fee_schedule/bzx/.
---------------------------------------------------------------------------

    Currently under Tier 1, to be re-numbered as Tier 2, a Member's 
orders that yield fee code PF receive an enhanced rebate of $0.46 per 
contract where the Member has an: (i) ADAV \12\ in Away Market Maker 
\13\, Firm, Broker Dealer and Joint Back Office orders greater than or 
equal to 1.05% of average OCV \14\; and (ii) ADV \15\ equal to or 
greater than 1.95% of average OCV. The Exchange proposes to adopt new 
Tier 1, which would be similar to re-numbered Tier 2 but would have 
lower criteria (but with different qualifying volume, as described 
below) and a lower rebate. In order to provide an incentive to 
encourage additional participation by Members that do not participate 
on the Exchange as Market Makers or Away Market Makers, new Tier 1 
would not take Away Market Maker volume into account for purposes of 
the Tier calculation. Specifically, pursuant to new Tier 1 a Member's 
orders that yield fee code PF would receive an enhanced rebate of $0.38 
per contract where the Member has an ADAV in Firm, Broker Dealer and 
Joint Back Office orders greater than or equal to 0.20% of average OCV.
---------------------------------------------------------------------------

    \12\ ``ADAV'' means average daily added volume calculated as the 
number of contracts added per day. See id.
    \13\ ``Away Market Maker'' applies to any transaction identified 
by a Member for clearing in the Market Maker range at the OCC, where 
such Member is not registered with the Exchange as a Market Maker, 
but is registered as a market maker on another options exchange. See 
id.
    \14\ ``OCV'' means the total equity and ETF options volume that 
clears in the Customer range at the Options Clearing Corporation 
(``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.
    \15\ ``ADV'' means average daily volume calculated as the number 
of contracts added or removed, combined, per day. See id.
---------------------------------------------------------------------------

Implementation Date
    The Exchange proposes to implement the above changes to its fee 
schedule immediately.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\16\ in general, and 
furthers the objectives of Section 6(b)(4),\17\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities. The Exchange believes that the proposed modification to the 
Exchange's tiered pricing structure is reasonable, fair and equitable, 
and non-discriminatory. The Exchange operates in a highly competitive 
market in which

[[Page 185]]

market participants may readily send order flow to many competing 
venues if they deem fees at the Exchange to be excessive or incentives 
provided to be insufficient. The proposed structure remains intended to 
attract order flow to the Exchange by offering market participants a 
competitive pricing structure. The Exchange believes it is reasonable 
to offer and incrementally modify incentives intended to help to 
contribute to the growth of the Exchange.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f.
    \17\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    Volume-based pricing structures such as that maintained by the 
Exchange have been widely adopted by exchanges, including the Exchange, 
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: (i) The value to an exchange's market quality; (ii) 
associated higher levels of market activity, such as higher levels of 
liquidity provisions and/or growth patterns; and (iii) introduction of 
higher volumes of orders into the price and volume discovery processes. 
In particular, the proposed change to footnote 2 is a minor change 
intended to provide an incentive similar to an existing incentive. The 
proposed incentive, in turn, is intended to incentivize Members to send 
increased order flow to the Exchange in an effort to qualify for the 
enhanced rebates made available by the tier. This increased order flow, 
in turn, contributes to the growth of the Exchange. The Exchange also 
believes the rebate associated with the tier is reasonable as it 
reflects the difficulty in achieving the tier, requiring less 
participation than existing Tier 1 but also providing a lower rebate. 
The Exchange again notes that the proposed tier also does not include 
the same volume as is included when determining whether a Member has 
qualified for existing Tier 1, specifically, the new tier would not 
take Away Market Maker volume into account, whereas existing Tier 1 
does. The Exchange believes that the proposal to only count Firm, 
Broker Dealer and Joint Back Office volume for purposes of Tier 1 is 
reasonable, fair and equitable and not unreasonably discriminatory 
because it is intended to encourage participants that do not 
participate as Market Makers or Away Market Makers on the Exchange to 
increase their participation on the Exchange. The Exchange also 
believes the proposal is reasonable, equitably allocated and not 
unreasonably discriminatory because there are other existing incentives 
offered by the Exchange that are provided to Market Makers and Away 
Market Makers, and because a participant with Away Market Maker volume 
could still qualify for the new tier to the extent they also have Firm, 
Broker Dealer and Joint Back Office volume that reaches the required 
level, it is just that their Away Market Maker Volume will not be 
included in the calculation. The Exchange believes that the incentives 
it provides remain reasonably related to the value to the Exchange's 
market quality associated with higher levels of market activity, 
including liquidity provision and the introduction of higher volumes of 
orders into the price and volume discovery processes. The proposed 
change to the tiered pricing structure is not unfairly discriminatory 
because it will apply equally to all Members.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposed amendment to its fee schedule 
would not 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 change represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Accordingly, the Exchange does not believe that the 
proposed change will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets. The 
Exchange does not believe that the proposed change to the Exchange's 
tiered pricing structure burdens competition, but instead, enhances 
competition, as it is intended to increase the competitiveness of 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 \18\ and paragraph (f) of Rule 19b-4 
thereunder.\19\ 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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-2017-014 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-CboeBZX-2017-014. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of this filing will also 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

[[Page 186]]

submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CboeBZX-2017-014 and should 
be submitted on or before January 23, 2018.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Brent J. Fields,
Secretary.
[FR Doc. 2017-28228 Filed 12-29-17; 8:45 am]
 BILLING CODE 8011-01-P
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