Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Market Data Fees, 553-557 [2017-28495]

Download as PDF Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices Procedures applicable to the exercise of options to align the Procedures with recent changes to the Exchange rules, and to make certain other clarifications and updates. ICE Clear Europe does not believe the amendments would affect competition among clearing members or adversely affect the cost of clearing, the market for clearing services generally or access to clearing in these products by clearing members or other market participants. (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed amendments have not been solicited or received by ICE Clear Europe. ICE Clear Europe will notify the Commission of any comments received with respect to the proposed amendments. III. Date of Effectiveness of the Proposed Rule Change, Security-Based Swap Submission and Advance Notice and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b–4(f)(4)(ii) 12 thereunder. 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, security-based swap submission or advance notice 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– ICEEU–2017–015 on the subject line. All submissions should refer to File Number SR–ICEEU–2017–015. 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, security-based swap submission or advance notice that are filed with the Commission, and all written communications relating to the proposed rule change, security-based swap submission or advance notice 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 Section, 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 filings will also be available for inspection and copying at the principal office of ICE Clear Europe and on ICE Clear Europe’s website at https:// www.theice.com/notices/ Notices.shtml?regulatoryFilings. 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–ICEEU–2017–015 and should be submitted on or before January 25, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–28437 Filed 1–3–18; 8:45 am] ethrower on DSK3G9T082PROD with NOTICES U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(4)(ii). VerDate Sep<11>2014 16:16 Jan 03, 2018 Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Market Data Fees December 29, 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 15, 2017, Cboe 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 a mend [sic] the Market Data section of its fee schedule to lower the Internal Distribution 5 fees and to adopt per User fees for the Cboe One Summary Feed. 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 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 A ‘‘Distributor’’ is defined as ‘‘any entity that receives the Exchange Market Data product directly from the Exchange or indirectly through another entity and then distributes it internally or externally to a third party.’’ See the Exchange’s fee schedule available at https://markets.cboe.com/us/equities/ membership/fee_schedule/edgx/. An ‘‘Internal Distributor’’ is defined as ‘‘a Distributor that receives the Exchange Market Data product and then distributes that data to one or more Users within the Distributor’s own entity.’’ Id. 2 17 13 17 Jkt 244001 [Release No. 34–82424; File No. SR– CboeEDGX–2017–008] 1 15 • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. 12 17 SECURITIES AND EXCHANGE COMMISSION BILLING CODE 8011–01–P Paper Comments 11 15 553 PO 00000 CFR 200.30–3(a)(12). Frm 00055 Fmt 4703 Sfmt 4703 E:\FR\FM\04JAN1.SGM 04JAN1 554 Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices 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 ethrower on DSK3G9T082PROD with NOTICES 1. Purpose The Exchange proposes to amend the Market Data section of its fee schedule to lower the fee for Internal Distribution and to adopt separate fees for Professional 6 and Non-Professional Users 7 for the Cboe One Summary Feed. The Cboe One Feed is an optional data feed that disseminates, on a realtime basis, the aggregate best bid and offer (‘‘BBO’’) of all displayed orders for securities traded on EDGX and its affiliated exchanges 8 and for which they report quotes under the Consolidated Tape Association (‘‘CTA’’) Plan or the Nasdaq/UTP Plan.9 The Cboe One Feed also contains the individual last sale information for the Cboe Equity Exchanges (collectively with the aggregate BBO, the ‘‘Cboe One 6 A ‘‘Professional User’’ is defined as ‘‘any User other than a Non-Professional User.’’ See the Exchange’s fee schedule available at https:// markets.cboe.com/us/equities/membership/fee_ schedule/edgx/. 7 A ‘‘Non-Professional User’’ is currently defined as ‘‘a natural person who is not: (i) Registered or qualified in any capacity with the Commission, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association; (ii) engaged as an ‘‘investment adviser’’ as that term is defined in Section 202(a)(11) of the Investment Advisers Act of 1940 (whether or not registered or qualified under that Act); or (iii) employed by a bank or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt.’’ Id. See SR–CboeEDGX–2017–006 (filed December 15, 2017) (amending the definition of Non-Professional User to harmonize it with that of its affiliate exchanges, Cboe Exchange, Inc. and C2 Exchange, Inc. as of January 2, 2018). 8 EDGX’s affiliated exchanges are Cboe BYX Exchange, Inc. (‘‘BYX’’), Cboe EDGA Exchange, Inc. (‘‘EDGA’’), and Cboe BZX Exchange, Inc. (‘‘BZX’’, together with EDGX, EDGA, and BYX, the ‘‘Cboe Equity Exchanges’’). 9 See Exchange Rule 11.22(j). See also Securities Exchange Act Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31, 2014) (File Nos. SR–EDGX–2014–25; SR–EDGA–2014–25; SR– BATS–2014–055; SR–BYX–2014–030) (Notice of Amendment No. 2 and Order Granting Accelerated Approval to Proposed Rule Changes, as Modified by Amendments Nos. 1 and 2, to Establish a New Market Data Product called the Cboe One Feed) (‘‘Cboe One Approval Order’’). VerDate Sep<11>2014 16:16 Jan 03, 2018 Jkt 244001 Summary Feed’’). In addition, the Cboe One Feed contains optional functionality which enables recipients to receive aggregated two-sided quotations from the Cboe Equity Exchanges for up to five (5) price levels (‘‘Cboe One Premium Feed’’). The Exchange proposes to amend its fee schedule to lower the fee for Internal Distribution for the Cboe One Summary Feed and to adopt separate fees for Professional and Non-Professional Users.10 The Exchange does not propose to amend the fees for the Cboe One Premium Feed. Distribution Fees. Currently, each Internal Distributor that receives the Cboe One Summary Feed is charged a fee of $10,000 per month. The Exchange now proposes to lower the fee for Internal Distribution to $1,500 per month. User Fees. Like it does today for External Distributors, the Exchange proposes to adopt per User fees for Internal Distributors that receive the Cboe One Summary Feed. The Exchange currently charges External Distributors that redistribute the Cboe One Summary Feed different fees for their Professional Users and Non-Professional Users. Those fees are $10.00 per month for each Professional Users and $0.25 per month for each Non-Professional Users. To date, the Exchange has not charged per User fees to Internal Distributors for the Cboe One Summary Feed. To offset the proposed reduction to the monthly Internal Distribution fee, the Exchange proposes to adopt per User fees for Internal Distribution, the amounts of each fee would be the same as the per User fees currently charged to External Distributors described above. The Exchange also proposes to extend the current $50,000 per month Enterprise Fee available to External Distributors of the Cboe One Summary Feed to Internal Distributors. In lieu of per User fees, the Enterprise fee will permit Internal Distributors who redistribute the Cboe One Summary Feed to an unlimited number of internal Professional and Non-Professional Users for a set fee of $50,000 per month. For example, if an Internal Distributor had 15,000 Professional Users who each receive the Cboe One Summary Feed at $10.00 per month, then that Internal Distributor will pay $150,000 per month in Professional Users fees. Under the 10 The Exchange also proposes a non-substantive, immaterial change to the fee table headings to conform to other heading within the Market Data Section of the fee schedule. In particular, the Exchange proposes to change the term ‘‘Distributor’’ to ‘‘Distribution’’ in both the Internal Distributor and External Distributor headings under the Cboe One Feed. PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 proposed Enterprise Fee, the Internal Distributor will pay a flat fee of $50,000 for an unlimited number of internal Professional and Non-Professional Users of the Cboe One Summary Feed. An Internal Distributor that pays the Enterprise Fee will not have to report its number of such Users (as set forth below) on a monthly basis. However, every six months, an Internal Distributor must provide the Exchange with a count of the total number of natural person users of each product, including both Professional and Non-Professional Users. Like for External Distributors, the Enterprise Fee for Internal Distributors would be in addition to the applicable Distribution Fee. Like External Distributors of the Cboe One Summary Feed, Internal Distributors that receive the Cboe One Summary Feed will be required to count every Professional User and NonProfessional User to which they provide the Cboe One Summary Feed, the requirements for which are identical to that currently in place for External Distributors of the Cboe One Summary Feed and other market data products offered by the Exchange.11 Thus, the Internal Distributor’s count will include every person and device that accesses the data regardless of the purpose for which the individual or device uses the data. Internal Distributors must report all Professional and Non-Professional Users in accordance with the following: • In connection with an Internal Distributor’s distribution of the Cboe One Summary Feed, the Internal Distributor must count as one User each unique User that the Internal Distributor has entitled to have access to the Cboe One Summary Feed. However, where a device is dedicated specifically to a single individual, the Internal Distributor must count only the individual and need not count the device. • The Internal Distributor must identify and report each unique User. If a User uses the same unique method to gain access to the Cboe One Summary Feed, the Internal Distributor must count that as one User. However, if a unique User uses multiple methods to gain access to the Cboe One Summary Feed (e.g., a single User has multiple passwords and user identifications), the 11 See Securities Exchange Act Release Nos. 74282 (February 18, 2015); 80 FR 9487 (February 23, 2015) (SR–EDGX–2015–09) (proposing fees for the Bats One Feed); 75397 (July 8, 2015), 80 FR 41104 (July 14, 2015) (SR–EDGX–2015–28) (proposing user fees for the EDGX Top and Last Sale data feeds); and 75788 (August 28, 2015), 80 FR 53364 (September 3, 2015) (SR–EDGX–2015–38) (proposing fees for EDGX Book Viewer). E:\FR\FM\04JAN1.SGM 04JAN1 Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices Internal Distributor must report each of those methods as an individual User. • Internal Distributors must report each unique individual person who receives access through multiple devices as one User so long as each device is dedicated specifically to that individual. • If an Internal Distributor entitles one or more individuals to use the same device, the Distributor must include only the individuals, and not the device, in the count. ethrower on DSK3G9T082PROD with NOTICES Implementation Date The Exchange intends to implement the proposed fees 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,12 in general, and furthers the objectives of Section 6(b)(4),13 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, therefore, reasonable and equitably allocated to recipients. The Exchange believes that the proposed rule change is consistent with Section 11(A) of the Act 14 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,15 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 12 15 U.S.C. 78f. U.S.C. 78f(b)(4). 14 15 U.S.C. 78k–1. 15 17 CFR 242.603. 13 15 VerDate Sep<11>2014 16:16 Jan 03, 2018 Jkt 244001 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 who subscribe to the Cboe One Summary Feed will be subject to the proposed fees. The Cboe One Summary Feed is distributed and purchased on a voluntary basis, in that neither the Exchange nor market data distributors are required by any rule or regulation purchase this data or 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 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 the Cboe One Summary Feed further ensure 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. For example, the Cboe One Summary Feed provides investors with alternative market data and competes with similar market data product currently offered by other exchanges. If another exchange (or its affiliate) were to charge less to distribute its similar product than the Exchange charges to create the Cboe One Summary Feed, prospective Users likely would not subscribe to, or would cease subscribing to either market data product. 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.16 16 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 PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 555 The Exchange believes that lowering the Internal Distribution fee for the Cboe One Summary Feed is equitable and reasonable because the lower fee coupled with the adoption of per User fees is designed to provide a price structure for Internal Distributors that is competitive and attracts additional subscribers to each market data feed. The Exchange also believes that it is reasonable to charge a lower fee to Internal Distributors than External Distributors because External Distributors redistribute the data to their subscribers for a fee while Internal Distributors do not. The Exchange believes that implementing the Professional and NonProfessional User fees for the Cboe One Summary Feed are equitable and reasonable because they will result in greater availability to Professional and Non-Professional Users. The addition of per User fees also enables the fee for Internal Distribution, thereby lowering their overall costs where the number of Users they account for is low. Moreover, introducing a modest Non-Professional User fee is reasonable because it provides an additional method for NonProfessional investors to access the data by providing the same data that is available to Professional Users. The Exchange believes that the proposed fees are equitable and not unfairly discriminatory because they will be charged uniformly to Internal Distributors and Users. The Exchange notes that the amount of the per User fees for Internal Distribution equal those charged for External Distribution for the Cboe One Summary Feed. 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). E:\FR\FM\04JAN1.SGM 04JAN1 556 Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices The fee structure of differentiated Professional and Non-Professional fees is utilized by the Exchange for the Cboe One Feed and has long been used by other exchanges for their proprietary data products, and by the Nasdaq UTP and the CTA and CQ Plans in order to reduce the price of data to retail investors and make it more broadly available.17 Offering the Cboe One Summary Feed to Non-Professional Users with the same data available to Professional Users results in greater equity among data recipients. The proposed expansion of the Enterprise Fee to Internal Distributors of the Cboe One Summary Feed is reasonable because it could result in a fee reduction for Internal Distributors with a large number of Professional and Non-Professional Users. If an Internal Distributor has a smaller number of Professional Users of the Cboe One Summary Feed, then it may continue using the per User structure. By reducing prices for Internal Distributors with a large number of Professional and Non-Professional Users, the Exchange believes that more Internal Distributors may choose to receive and to distribute the Cboe One Summary Feed, thereby expanding the distribution of this market data for the benefit of investors. The Exchange further believes that the proposed Enterprise Fee is reasonable because it will simplify reporting for certain Internal Distributors that have large numbers of Professional and NonProfessional Users. Internal Distributors that pay the proposed Enterprise Fee will not have to report the number of Users on a monthly basis as they currently do, but rather will only have to count natural person users every six months, which is a significant reduction in administrative burden. Finally, the Exchange believes that it is equitable and not unfairly discriminatory to establish an Enterprise Fee because it reduces the Exchange’s costs and the Distributor’s administrative burdens in tracking and auditing large numbers of Users. (B) Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in ethrower on DSK3G9T082PROD with NOTICES 17 See Securities Exchange Act Release Nos. 74285 (February 18, 2015), 80 FR 9828 (February 24, 2015) (SR–BATS–2015–11); 74283 (February 18, 2015), 80 FR 9809 (February 24, 2015) (SR–EDGA– 2015–09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR–EDGX–2015–09); and 74284 (February 18, 2015), 80 FR 9792 (February 24, 2015) (SR–BYX–2015–09) (‘‘Initial Cboe One Feed Fee Filings’’). See also, e.g., Securities Exchange Act Release No. 20002, File No. S7–433 (July 22, 1983) (establishing nonprofessional fees for CTA data); and Nasdaq Rules 7023(b) and 7047. VerDate Sep<11>2014 16:16 Jan 03, 2018 Jkt 244001 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 the Cboe One Summary Feed 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 Cboe One Summary Feed will enhance competition because it not only provides content that is competitive with the similar products offered by other exchanges, but will provide pricing that is competitive as well. The Cboe One Summary Feed provides investors with an alternative option for receiving market data and competes directly with similar market data products currently offered by the NYSE and Nasdaq.18 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 18 See Nasdaq Basic, https:// www.nasdaqtrader.com/ Trader.aspx?id=nasdaqbasic (data feed offering the BBO and Last Sale information for all U.S. exchange-listed securities based on liquidity within the Nasdaq market center, as well as trades reported to the FINRA/Nasdaq Trade Reporting Facility (‘‘TRF’’)); Nasdaq NLS Plus, https:// www.nasdaqtrader.com/Trader.aspx?id=NLSplus (data feed providing last sale data as well as consolidated volume from the following Nasdaq OMX markets for U.S. exchange-listed securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and Nasdaq OMX PSX); Securities Exchange Act Release No. 73553 (November 6, 2014), 79 FR 67491 (November 13, 2014) (SR–NYSE–2014–40) (Notice of Amendment No. 1 and Order Granting Accelerated Approval to a Proposed Rule Change, as Modified by Amendment No.1, To Establish the NYSE Best Quote & Trades (‘‘BQT’’) Data Feed); https://www.nyse.com/market-data/real-time/nysebqt (data feed providing unified view of BBO and last sale information for the NYSE, NYSE Arca, and NYSE MKT). PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all Users. The existence of alternatives to the Cboe One Summary Feed 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. Lastly, the Exchange represents that the proposed pricing of the Cboe One Summary Feed provides investors with alternative market data and competes with similar market data product currently offered by other exchanges.19 In addition, the Exchange notes the concerns regarding whether a competing vendor could create a similar product on the same price basis as the Exchange are not present here. The proposed changes are limited to fees for Internal Distributers who use the data for internal use only and not for the redistribution and sale to external parties. (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 20 and paragraph (f) of Rule 19b–4 thereunder.21 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: 19 Id. 20 15 21 17 E:\FR\FM\04JAN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 04JAN1 Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices 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– CboeEDGX–2017–008 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. ethrower on DSK3G9T082PROD with NOTICES All submissions should refer to File Number SR–CboeEDGX–2017–008. 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 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–CboeEDGX–2017–008 and should be submitted on or before January 25, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–28495 Filed 1–3–18; 8:45 am] BILLING CODE 8011–01–P 22 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:16 Jan 03, 2018 Jkt 244001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82421; File No. SR–LCH SA–2017–010] Self-Regulatory Organizations; LCH SA; Order Granting Accelerated Approval of a Proposed Rule Change Relating to the Implementation of the Markets in Financial Instruments Regulation December 29, 2017. I. Introduction On November 21, 2017, Banque Centrale de Compensation, which conducts business under the name LCH SA (‘‘LCH SA’’), filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change to make conforming and clarifying changes necessary to implement certain provisions of the European Union’s Markets in Financial Instruments Regulation (‘‘MiFIR’’).3 The proposed rule change was published for comment in the Federal Register on December 7, 2017.4 The Commission received no comment letters regarding the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change on an accelerated basis. II. Description of the Proposed Rule Change a. Overview The principal purpose of this proposed rule change is to amend LCH SA’s CDS Clearing Rulebook (the ‘‘Rulebook’’) and CDS Clearing Procedures (the ‘‘Procedures’’) to implement provisions of MiFIR that are applicable to central counterparties (‘‘CCPs’’) authorized under the European Markets Infrastructure Regulation (‘‘EMIR’’) 5 (each such CCP, an ‘‘authorized CCP’’).6 In particular, the proposed rule changes are intended to implement Article 29 of MiFIR, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012. 4 Securities Exchange Act Release No. 34–82194 (December 1, 2017), 82 FR 57803 (December 7, 2017) (SR–LCH–2017–010) (‘‘Notice’’). 5 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade reporting. 6 Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Rulebook. 2 17 PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 557 which the Commission understands requires authorized CCPs to establish effective systems, procedures and arrangements to ensure that cleared derivatives transactions are submitted and accepted for clearing on a straightthrough processing (‘‘STP’’) basis,7 and Article 30 of MiFIR, which the Commission understands requires authorized CCPs to establish indirect clearing arrangements with respect to exchange-traded derivatives (‘‘ETDs’’) that are of ‘‘equivalent effect’’ to the corresponding requirements under EMIR.8 In addition, the Commission understands that the European Commission has adopted regulatory technical standards to set more specific requirements that authorized CCPs must meet in order to comply with MiFIR. The regulatory technical standards for straight-through processing (‘‘RTS 26’’) were adopted in 2016.9 More recently, the European Commission adopted regulatory technical standards, which align the indirect clearing requirements under EMIR and MiFIR (‘‘Indirect Clearing RTS’’).10 MiFIR takes effect January 3, 2018 and it is expected that the Indirect Clearing RTS will also take effect on the same date. b. Straight-Through Processing The Commission understands that RTS 26 establishes the specific requirements with which authorized CCPs, trading venues,11 and clearing 7 In this context, the Commission understands STP to mean that an authorized CCP must have systems, procedures, and arrangements in place to ensure derivatives are cleared as quickly as technologically practicable using automated systems. Notice, 82 FR at 57804. The Commission understands that RTS 26 provides detailed additional requirements regarding the transfer of information and related authorized CCP rulebook requirements, as well as timelines for the transfer of information, among other things. See id. at 57803 & n.5 (citing RTS 26). 8 Notice, 82 FR at 57803. 9 Commission Delegated Regulation (EU) 2017/ 582 of 29.6.2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards specifying the obligation to clear derivatives traded on regulated markets and timing of acceptance for clearing. 10 Commission Delegated Regulation (EU) of 22.9.2017 amending Commission Delegated Regulation (EU) No 149/2013 with regard to regulatory technical standards on indirect clearing arrangements. A separate, but identical, set of RTS apply to indirect clearing of exchange-traded derivatives. See, Commission Delegated Regulation (EU) of 22.9.2017 supplementing Regulation (EU) No 600/2014 with regard to regulatory technical standards on indirect clearing arrangements. 11 The Commission understands that the term ‘‘trading venue,’’ as used in RTS 26, refers to EUbased venues only (i.e., regulated markets, multilateral trading facilities and organized trading facilities). LCH SA therefore represents that third- E:\FR\FM\04JAN1.SGM Continued 04JAN1

Agencies

[Federal Register Volume 83, Number 3 (Thursday, January 4, 2018)]
[Notices]
[Pages 553-557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-28495]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82424; File No. SR-CboeEDGX-2017-008]


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

December 29, 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 15, 2017, Cboe 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 a mend [sic] the Market Data 
section of its fee schedule to lower the Internal Distribution \5\ fees 
and to adopt per User fees for the Cboe One Summary Feed.
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    \5\ A ``Distributor'' is defined as ``any entity that receives 
the Exchange Market Data product directly from the Exchange or 
indirectly through another entity and then distributes it internally 
or externally to a third party.'' See the Exchange's fee schedule 
available at https://markets.cboe.com/us/equities/membership/fee_schedule/edgx/. An ``Internal Distributor'' is defined as ``a 
Distributor that receives the Exchange Market Data product and then 
distributes that data to one or more Users within the Distributor's 
own entity.'' Id.
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    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

[[Page 554]]

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 fee 
schedule to lower the fee for Internal Distribution and to adopt 
separate fees for Professional \6\ and Non-Professional Users \7\ for 
the Cboe One Summary Feed.
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    \6\ A ``Professional User'' is defined as ``any User other than 
a Non-Professional User.'' See the Exchange's fee schedule available 
at https://markets.cboe.com/us/equities/membership/fee_schedule/edgx/.
    \7\ A ``Non-Professional User'' is currently defined as ``a 
natural person who is not: (i) Registered or qualified in any 
capacity with the Commission, the Commodity Futures Trading 
Commission, any state securities agency, any securities exchange or 
association, or any commodities or futures contract market or 
association; (ii) engaged as an ``investment adviser'' as that term 
is defined in Section 202(a)(11) of the Investment Advisers Act of 
1940 (whether or not registered or qualified under that Act); or 
(iii) employed by a bank or other organization exempt from 
registration under federal or state securities laws to perform 
functions that would require registration or qualification if such 
functions were performed for an organization not so exempt.'' Id. 
See SR-CboeEDGX-2017-006 (filed December 15, 2017) (amending the 
definition of Non-Professional User to harmonize it with that of its 
affiliate exchanges, Cboe Exchange, Inc. and C2 Exchange, Inc. as of 
January 2, 2018).
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    The Cboe One Feed is an optional data feed that disseminates, on a 
real-time basis, the aggregate best bid and offer (``BBO'') of all 
displayed orders for securities traded on EDGX and its affiliated 
exchanges \8\ and for which they report quotes under the Consolidated 
Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan.\9\ The Cboe One 
Feed also contains the individual last sale information for the Cboe 
Equity Exchanges (collectively with the aggregate BBO, the ``Cboe One 
Summary Feed''). In addition, the Cboe One Feed contains optional 
functionality which enables recipients to receive aggregated two-sided 
quotations from the Cboe Equity Exchanges for up to five (5) price 
levels (``Cboe One Premium Feed'').
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    \8\ EDGX's affiliated exchanges are Cboe BYX Exchange, Inc. 
(``BYX''), Cboe EDGA Exchange, Inc. (``EDGA''), and Cboe BZX 
Exchange, Inc. (``BZX'', together with EDGX, EDGA, and BYX, the 
``Cboe Equity Exchanges'').
    \9\ See Exchange Rule 11.22(j). See also Securities Exchange Act 
Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31, 
2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-25; SR-BATS-2014-055; 
SR-BYX-2014-030) (Notice of Amendment No. 2 and Order Granting 
Accelerated Approval to Proposed Rule Changes, as Modified by 
Amendments Nos. 1 and 2, to Establish a New Market Data Product 
called the Cboe One Feed) (``Cboe One Approval Order'').
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    The Exchange proposes to amend its fee schedule to lower the fee 
for Internal Distribution for the Cboe One Summary Feed and to adopt 
separate fees for Professional and Non-Professional Users.\10\ The 
Exchange does not propose to amend the fees for the Cboe One Premium 
Feed.
---------------------------------------------------------------------------

    \10\ The Exchange also proposes a non-substantive, immaterial 
change to the fee table headings to conform to other heading within 
the Market Data Section of the fee schedule. In particular, the 
Exchange proposes to change the term ``Distributor'' to 
``Distribution'' in both the Internal Distributor and External 
Distributor headings under the Cboe One Feed.
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    Distribution Fees. Currently, each Internal Distributor that 
receives the Cboe One Summary Feed is charged a fee of $10,000 per 
month. The Exchange now proposes to lower the fee for Internal 
Distribution to $1,500 per month.
    User Fees. Like it does today for External Distributors, the 
Exchange proposes to adopt per User fees for Internal Distributors that 
receive the Cboe One Summary Feed. The Exchange currently charges 
External Distributors that redistribute the Cboe One Summary Feed 
different fees for their Professional Users and Non-Professional Users. 
Those fees are $10.00 per month for each Professional Users and $0.25 
per month for each Non-Professional Users. To date, the Exchange has 
not charged per User fees to Internal Distributors for the Cboe One 
Summary Feed. To offset the proposed reduction to the monthly Internal 
Distribution fee, the Exchange proposes to adopt per User fees for 
Internal Distribution, the amounts of each fee would be the same as the 
per User fees currently charged to External Distributors described 
above.
    The Exchange also proposes to extend the current $50,000 per month 
Enterprise Fee available to External Distributors of the Cboe One 
Summary Feed to Internal Distributors. In lieu of per User fees, the 
Enterprise fee will permit Internal Distributors who redistribute the 
Cboe One Summary Feed to an unlimited number of internal Professional 
and Non-Professional Users for a set fee of $50,000 per month. For 
example, if an Internal Distributor had 15,000 Professional Users who 
each receive the Cboe One Summary Feed at $10.00 per month, then that 
Internal Distributor will pay $150,000 per month in Professional Users 
fees. Under the proposed Enterprise Fee, the Internal Distributor will 
pay a flat fee of $50,000 for an unlimited number of internal 
Professional and Non-Professional Users of the Cboe One Summary Feed. 
An Internal Distributor that pays the Enterprise Fee will not have to 
report its number of such Users (as set forth below) on a monthly 
basis. However, every six months, an Internal Distributor must provide 
the Exchange with a count of the total number of natural person users 
of each product, including both Professional and Non-Professional 
Users. Like for External Distributors, the Enterprise Fee for Internal 
Distributors would be in addition to the applicable Distribution Fee.
    Like External Distributors of the Cboe One Summary Feed, Internal 
Distributors that receive the Cboe One Summary Feed will be required to 
count every Professional User and Non-Professional User to which they 
provide the Cboe One Summary Feed, the requirements for which are 
identical to that currently in place for External Distributors of the 
Cboe One Summary Feed and other market data products offered by the 
Exchange.\11\ Thus, the Internal Distributor's count will include every 
person and device that accesses the data regardless of the purpose for 
which the individual or device uses the data. Internal Distributors 
must report all Professional and Non-Professional Users in accordance 
with the following:
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release Nos. 74282 (February 
18, 2015); 80 FR 9487 (February 23, 2015) (SR-EDGX-2015-09) 
(proposing fees for the Bats One Feed); 75397 (July 8, 2015), 80 FR 
41104 (July 14, 2015) (SR-EDGX-2015-28) (proposing user fees for the 
EDGX Top and Last Sale data feeds); and 75788 (August 28, 2015), 80 
FR 53364 (September 3, 2015) (SR-EDGX-2015-38) (proposing fees for 
EDGX Book Viewer).
---------------------------------------------------------------------------

     In connection with an Internal Distributor's distribution 
of the Cboe One Summary Feed, the Internal Distributor must count as 
one User each unique User that the Internal Distributor has entitled to 
have access to the Cboe One Summary Feed. However, where a device is 
dedicated specifically to a single individual, the Internal Distributor 
must count only the individual and need not count the device.
     The Internal Distributor must identify and report each 
unique User. If a User uses the same unique method to gain access to 
the Cboe One Summary Feed, the Internal Distributor must count that as 
one User. However, if a unique User uses multiple methods to gain 
access to the Cboe One Summary Feed (e.g., a single User has multiple 
passwords and user identifications), the

[[Page 555]]

Internal Distributor must report each of those methods as an individual 
User.
     Internal Distributors must report each unique individual 
person who receives access through multiple devices as one User so long 
as each device is dedicated specifically to that individual.
     If an Internal Distributor entitles one or more 
individuals to use the same device, the Distributor must include only 
the individuals, and not the device, in the count.
Implementation Date
    The Exchange intends to implement the proposed fees 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,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is consistent 
with Section 11(A) of the Act \14\ 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,\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78k-1.
    \15\ 17 CFR 242.603.
---------------------------------------------------------------------------

    In addition, the proposed fees would not permit unfair 
discrimination because all of the Exchange's customers and market data 
vendors who subscribe to the Cboe One Summary Feed will be subject to 
the proposed fees. The Cboe One Summary Feed is distributed and 
purchased on a voluntary basis, in that neither the Exchange nor market 
data distributors are required by any rule or regulation purchase this 
data or 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 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 
the Cboe One Summary Feed further ensure 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. For example, the Cboe One Summary 
Feed provides investors with alternative market data and competes with 
similar market data product currently offered by other exchanges. If 
another exchange (or its affiliate) were to charge less to distribute 
its similar product than the Exchange charges to create the Cboe One 
Summary Feed, prospective Users likely would not subscribe to, or would 
cease subscribing to either market data product.
    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.\16\
---------------------------------------------------------------------------

    \16\ 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).
---------------------------------------------------------------------------

    The Exchange believes that lowering the Internal Distribution fee 
for the Cboe One Summary Feed is equitable and reasonable because the 
lower fee coupled with the adoption of per User fees is designed to 
provide a price structure for Internal Distributors that is competitive 
and attracts additional subscribers to each market data feed. The 
Exchange also believes that it is reasonable to charge a lower fee to 
Internal Distributors than External Distributors because External 
Distributors redistribute the data to their subscribers for a fee while 
Internal Distributors do not.
    The Exchange believes that implementing the Professional and Non-
Professional User fees for the Cboe One Summary Feed are equitable and 
reasonable because they will result in greater availability to 
Professional and Non-Professional Users. The addition of per User fees 
also enables the fee for Internal Distribution, thereby lowering their 
overall costs where the number of Users they account for is low. 
Moreover, introducing a modest Non-Professional User fee is reasonable 
because it provides an additional method for Non-Professional investors 
to access the data by providing the same data that is available to 
Professional Users. The Exchange believes that the proposed fees are 
equitable and not unfairly discriminatory because they will be charged 
uniformly to Internal Distributors and Users. The Exchange notes that 
the amount of the per User fees for Internal Distribution equal those 
charged for External Distribution for the Cboe One Summary Feed.

[[Page 556]]

    The fee structure of differentiated Professional and Non-
Professional fees is utilized by the Exchange for the Cboe One Feed and 
has long been used by other exchanges for their proprietary data 
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to 
reduce the price of data to retail investors and make it more broadly 
available.\17\ Offering the Cboe One Summary Feed to Non-Professional 
Users with the same data available to Professional Users results in 
greater equity among data recipients.
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release Nos. 74285 (February 
18, 2015), 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11); 74283 
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR-
EDGX-2015-09); and 74284 (February 18, 2015), 80 FR 9792 (February 
24, 2015) (SR-BYX-2015-09) (``Initial Cboe One Feed Fee Filings''). 
See also, e.g., Securities Exchange Act Release No. 20002, File No. 
S7-433 (July 22, 1983) (establishing nonprofessional fees for CTA 
data); and Nasdaq Rules 7023(b) and 7047.
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    The proposed expansion of the Enterprise Fee to Internal 
Distributors of the Cboe One Summary Feed is reasonable because it 
could result in a fee reduction for Internal Distributors with a large 
number of Professional and Non-Professional Users. If an Internal 
Distributor has a smaller number of Professional Users of the Cboe One 
Summary Feed, then it may continue using the per User structure. By 
reducing prices for Internal Distributors with a large number of 
Professional and Non-Professional Users, the Exchange believes that 
more Internal Distributors may choose to receive and to distribute the 
Cboe One Summary Feed, thereby expanding the distribution of this 
market data for the benefit of investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain Internal 
Distributors that have large numbers of Professional and Non-
Professional Users. Internal Distributors that pay the proposed 
Enterprise Fee will not have to report the number of Users on a monthly 
basis as they currently do, but rather will only have to count natural 
person users every six months, which is a significant reduction in 
administrative burden. Finally, the Exchange believes that it is 
equitable and not unfairly discriminatory to establish an Enterprise 
Fee because it reduces the Exchange's costs and the Distributor's 
administrative burdens in tracking and auditing large numbers of Users.

(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 the Cboe One Summary Feed 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 Cboe One Summary Feed will enhance competition because it not only 
provides content that is competitive with the similar products offered 
by other exchanges, but will provide pricing that is competitive as 
well. The Cboe One Summary Feed provides investors with an alternative 
option for receiving market data and competes directly with similar 
market data products currently offered by the NYSE and Nasdaq.\18\
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    \18\ See Nasdaq Basic, https://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (data feed offering the BBO and Last Sale 
information for all U.S. exchange-listed securities based on 
liquidity within the Nasdaq market center, as well as trades 
reported to the FINRA/Nasdaq Trade Reporting Facility (``TRF'')); 
Nasdaq NLS Plus, https://www.nasdaqtrader.com/Trader.aspx?id=NLSplus 
(data feed providing last sale data as well as consolidated volume 
from the following Nasdaq OMX markets for U.S. exchange-listed 
securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and Nasdaq OMX 
PSX); Securities Exchange Act Release No. 73553 (November 6, 2014), 
79 FR 67491 (November 13, 2014) (SR-NYSE-2014-40) (Notice of 
Amendment No. 1 and Order Granting Accelerated Approval to a 
Proposed Rule Change, as Modified by Amendment No.1, To Establish 
the NYSE Best Quote & Trades (``BQT'') Data Feed); https://www.nyse.com/market-data/real-time/nyse-bqt (data feed providing 
unified view of BBO and last sale information for the NYSE, NYSE 
Arca, and NYSE MKT).
---------------------------------------------------------------------------

    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 the Cboe One Summary 
Feed 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.
    Lastly, the Exchange represents that the proposed pricing of the 
Cboe One Summary Feed provides investors with alternative market data 
and competes with similar market data product currently offered by 
other exchanges.\19\ In addition, the Exchange notes the concerns 
regarding whether a competing vendor could create a similar product on 
the same price basis as the Exchange are not present here. The proposed 
changes are limited to fees for Internal Distributers who use the data 
for internal use only and not for the redistribution and sale to 
external parties.
---------------------------------------------------------------------------

    \19\ Id.
---------------------------------------------------------------------------

(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 \20\ and paragraph (f) of Rule 19b-4 
thereunder.\21\ 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.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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:

[[Page 557]]

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-CboeEDGX-2017-008 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-CboeEDGX-2017-008. 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 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-CboeEDGX-2017-008 and should be 
submitted on or before January 25, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-28495 Filed 1-3-18; 8:45 am]
 BILLING CODE 8011-01-P
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