Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule, Including Connectivity Fees, in Connection with its Technology Migration, 22546-22550 [2018-10261]

Download as PDF 22546 Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices Act 19 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 20 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative upon filing. The Exchange states that waiver of the operative delay would allow the Exchange to update its rules to immediately reflect the correct operation of zero-bid series on Phlx. Therefore, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.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. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved. 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: daltland on DSKBBV9HB2PROD with 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– Phlx–2018–35 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–Phlx–2018–35. This file 19 17 CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 21 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 20 17 VerDate Sep<11>2014 20:27 May 14, 2018 Jkt 244001 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–Phlx–2018–35, and should be submitted on or before June 5, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–10255 Filed 5–14–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83201; File No. SR–C2– 2018–006] Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule, Including Connectivity Fees, in Connection with its Technology Migration May 9, 2018. 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 April 27, 22 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 2018, Cboe C2 Exchange, Inc. (‘‘Exchange’’ or ‘‘C2’’) 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 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 proposes to amend its Fees Schedule in connection with the technology migration of C2 onto the options platform of the Exchange’s affiliated options exchanges, Cboe EDGX Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX Options’’) and Cboe BZX Exchange, Inc. (‘‘BZX’’ or ‘‘BZX Options’’). The text of the proposed rule change is also available on the Exchange’s website (https://www.c2exchange.com/ Legal/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In 2016, the Exchange’s parent company, Cboe Global Markets, Inc., which is also the parent company of Cboe Exchange, Inc. (‘‘Cboe Options’’), acquired EDGX and BZX and its affiliated exchanges, Cboe EDGA Exchange, Inc. (‘‘EDGA’’) and Cboe BYX Exchange, Inc. (‘‘BYX’’). C2 intends to migrate its technology onto the same trading platform as BZX, BYX, EDGA and BZX (‘‘Affiliated Exchanges’’) on May 14, 2018 (the ‘‘migration’’). The Exchange proposes to amend certain fees in the Fees Schedule and adopt new connectivity fees, effective May 1, 2018. E:\FR\FM\15MYN1.SGM 15MYN1 Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices Physical Connectivity daltland on DSKBBV9HB2PROD with NOTICES A physical port is utilized by a Trading Permit Holder (‘‘TPH’’) or nonTPH to connect to the Exchange at the data centers where the Exchange’s servers are located. The Exchange currently assesses fees for Network Access Ports for these physical connections to the Exchange. Specifically, TPHs and non-TPHs can elect to connect to C2’s trading system via either a 1 gigabit per second (‘‘Gbps’’) Network Access Port or a 10 Gbps Network Access Port. The Exchange currently assesses a monthly fee of $500 per port for 1 Gbps Network Access Ports and a monthly fee of $1,000 per port for 10 Gbps Network Access Ports. Through June 30, 2018, C2 market participants will continue to have the ability to connect to C2’s trading system via the current Network Access Ports. For the month of May 2018, the Exchange will continue to assess the current fee for any Network Access Port a TPH or non-TPH uses during the month of May. Effective May 14, 2018, in connection with the migration, TPHs and non-TPHs may alternatively elect to connect to C2 via new Physical Ports.3 The new Physical Ports will similarly allow TPHs and non-TPHs the ability to connect to the Exchange at the data centers where the Exchange’s servers are located and TPHs and non-TPHs will have the option to connect via 1 Gbps or 10 Gbps Physical Ports. The Exchange proposes to assess a monthly fee of $2,000 per port for 1 Gbps Physical Ports and a monthly fee of $7,000 per port for 10 Gbps Physical Ports. The new Physical Port fees will be prorated based on the remaining trading days in the calendar month. The Exchange notes that the new Physical Ports may also be used to connect to BZX, BYX, EDGX, and EDGA. The Exchange proposes to provide that market participants will only be assessed a single fee for any Physical Port that also accesses these exchanges.4 The Exchange will passthrough in full any fees or costs in excess of $1,000 incurred by the Exchange to complete a cross-connect between exchanges. The Exchange notes that the proposed physical connectivity ports and corresponding fees are 3 As previously noted, market participants will continue to have the option of connecting to C2 via a 1 Gbps or 10 Gbps Network Access Port and would be assessed current rates of $500 and $1,000 per port, respectively. 4 For example, if a market participant uses only one 10 Gbps port to connect to both EDGX and C2, the market participant would only be assessed one monthly fee of $7,000. VerDate Sep<11>2014 20:27 May 14, 2018 Jkt 244001 identical to the ports and fees assessed by its Affiliated Exchanges.5 Logical Connectivity Next, the Exchange proposes to amend its login fees. Currently, C2 market participants may access Cboe Command via either a CMI or a FIX Port, depending on how their systems are configured. The Exchange currently assesses monthly fees for each CMI and FIX Login ID a market participant has. Specifically, the Exchange assesses $550 per Login ID, per month for CMI Login IDs and FIX Login IDs. Effective May 14, 2018, market participants will no longer be able to use CMI and FIX Login IDs. Rather, the Exchange will utilize a variety of logical connectivity ports as further described below. Similar to the legacy CMI and FIX Login IDs, a logical port provides users with the ability within the Exchange’s system to accomplish a specific function through a connection, such as order entry, data receipt, or access to information. In light of the upcoming discontinuation of CMI and FIX Login IDs, the Exchange proposes to eliminate the fees associated with the login IDs effective May 1, 2018 and adopt the below pricing for logical connectivity in it [sic] place. Service Cost per month Logical Ports (BOE, FIX, Drop). Bulk BOE Ports 1–5 .............. Bulk BOE Ports >5 ................ Purge ports ............................ GRP Ports ............................. $650 per port Multicast PITCH/Top Spin Server Ports. 1,500 per port 2,500 per port 750 per port 650/primary (A or C Feed) 650/set of primary (A or C feed) Logical Ports (BOE, FIX, Drop): The new Logical Ports represents ports established by the Exchange within the Exchange’s system for trading purposes. Each Logical Port established is specific to a TPH or non-TPH and grants that TPH or non-TPH the ability to operate a specific application, such as order entry (FIX and BOE Ports) or drop copies (Drop Ports). Logical Port fees are limited to Logical Ports in the Exchange’s primary data center and no 5 See Cboe EDGA U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe EDGX U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe BZX U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe BYX U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe EDGX Options Exchange Fee Schedule, Physical Connectivity Fees; and Cboe BZX Options Exchange Fee Schedule, Physical Connectivity Fees (collectively, ‘‘Affiliated Exchange Fee Schedules’’). PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 22547 Logical Port fees are assessed for redundant secondary data center ports. The Exchange proposes to set the monthly port fee at $650 per port. Each BOE or FIX Logical Port will incur the logical port fee indicated in the table above when used to enter up to 20,000 orders per trading day per logical port as measured on average in a single month. Each incremental usage of up to 20,000 per day per logical port will incur an additional logical port fee of $650 per month. Incremental usage will be determined on a monthly basis based on the average orders per day entered in a single month across all of a market participant’s subscribed BOE and FIX Logical Ports.6 The Exchange believes that the pricing implications of going beyond 20,000 orders per trading day per Logical Port encourage users to mitigate message traffic as necessary. The Exchange notes that the proposed fee of $650 per port is in line with the fee assessed for similar ports on BZX Options.7 BOE Bulk Logical Ports: Postmigration, the Exchange will also offer BOE Bulk Logical Ports, which provide users with the ability to submit single and bulk order messages to enter, modify, or cancel orders designated as Post Only Orders with a Time-in-Force of Day or GTD with an expiration time on that trading day. As indicated above, BOE Bulk Logical Ports are assessed $1,500 per port, per month for the first 5 BOE Bulk Logical Ports and thereafter assessed $2,500 per port, per month for each additional BOE Bulk Logical Port. Each Bulk BOE Logical Port will incur the logical port fee indicated in the table above when used to enter up to 30,000,000 orders per trading day per logical port as measured on average in a single month. Each incremental usage of up to 30,000,000 orders per day per BOE Bulk Logical Port will incur an additional logical port fee of $2,500 per month. Incremental usage will be determined on a monthly basis based on the average orders per day entered in a single month across all of a market participant’s subscribed BOE Bulk Logical Ports.8 The Exchange believes that the pricing implications of going beyond 30,000,000 orders per trading day per BOE Bulk Logical Port encourage users to mitigate message 6 For May 2018, average daily order quantities used to determine incremental usage will be determined based on the number of trading days between May 14th and May 31st. 7 See Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. 8 For May 2018, average daily order quantities used to determine incremental usage will be determined based on the number of trading days between May 14th and May 31st. E:\FR\FM\15MYN1.SGM 15MYN1 22548 Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES traffic as necessary. The Exchange notes that the proposed BOE Bulk Logical Port fees are similar to the fees assessed for these ports by BZX Options.9 Purge Ports: As part of the migration, C2 will be introducing Purge Ports to provide TPHs additional risk management and open order control functionality. The proposed ports are designed to assist TPHs, in the management of, and risk control over, their quotes, particularly if the TPH is dealing with a large number of options. Particularly, Purge Ports will allow TPHs to submit a cancelation for all open orders, or a subset thereof, across multiple sessions under the same Executing Firm ID (‘‘EFID’’). As indicated in the table above, the Exchange proposes to assess a monthly charge of $750 per Purge Port. The Exchange notes that the proposed fee is identical to the fee assessed by BZX Options and EDGX Options for Purge Ports.10 Multicast PITCH/Top Spin Server and GRP Ports: In connection with the migration, the Exchange will also offer Multicast PITCH/Top Spin Server and GRP ports and proposes to assess $750 per month, per port. Multicast PITCH/ Top Spin Server Ports and GRP Ports are used to request and receive a retransmission of data from the Exchange’s Multicast PITCH/Top data feed. The Exchange’s Multicast PITCH/ Top data feed is available from two primary feeds, identified as the ‘‘A feed’’ and the ‘‘C feed’’, which contain the same information but differ only in the way such feeds are received. The Exchange also offers two redundant feeds, identified as the ‘‘B feed’’ and the ‘‘D feed.’’ All secondary feed Multicast PITCH/Top Spin Server and GRP Ports will be provided for redundancy at no additional cost. The Exchange notes that the proposed fee is in line with the fee assessed for the same ports on BZX Options.11 The Exchange proposes to provide for each of the logical connectivity fees that new requests will be prorated for the first month of service. Cancellation requests are billed in full month increments as firms are required to pay for the service for the remainder of the month, unless the session is terminated within the first month of service. The Exchange notes that the proration policy is the same on its Affiliated Exchanges.12 The Exchange also proposes to make clear in the Fees Schedule that port fees for BOE, FIX, BOE Bulk and Drop ports will be assessed the full month rates for May for ports available for use on the new trading platform beginning May 14, 2018. The port fees for BOE, FIX, BOE BULK and Drop ports added on or after May 15, 2018, will be pro-rated. The Exchange notes that BOE, FIX, Drop and BOE Bulk ports offer similar functionality as current CMI and FIX Login Ids. As such, in lieu of assessing the current CMI and FIX Login Id fees for the month of May, the Exchange proposes to assess the proposed Logical Ports and BOE Bulk Port fees at the full rate for the month of May for any of these ports subscribed to on the date of the migration (May 14, 2018). Access Fees Currently, the Exchange assesses $5,000 per month for a Market-Maker Permit and $1,000 per month for an Electronic Access Permit. Market-Maker Permits entitle the holder to act as a Market-Maker and also provides an appointment credit, quote and order bandwidth allowance and a login allowance. Electronic Access Permits entitle the holder to access the Exchange and also provides an order entry bandwidth allowance and a login allowance. The Exchange notes that post-Migration, bandwidth allocation and logins will not be tied to a Permit, and as such, TPHs will no longer need to have multiple Permits for each type of Permit (i.e., multiple Market-Maker Permits and/or and Electronic Access Permits).13 The Exchange therefore proposes to provide that TPHs will only be assessed the monthly fee for each type of Permit once (e.g., a TPH that holds only two Market-Maker Permits during the month of May would be assessed a total of $5,000 as and for Permit fees in May). Bandwidth Packets As described above, post-migration, the Exchange will utilize a variety of logical ports. Part of this functionality is similar to bandwidth packets currently available on C2. Bandwidth packets restrict the maximum number of orders and quotes per second. Post-migration, market participants may similarly have multiple Logical Ports and/or BOE Bulk Ports as they may have bandwidth packets to accommodate their order and quote entry needs. As such, the Exchange proposes to eliminate its current Supplemental Bandwidth Packet fees, effective May 1, 2018. The Exchange believes that the proposed pricing implications of going beyond specified bandwidth described above in the logical connectivity fees section will be able to otherwise mitigate message traffic as necessary. CAS Servers By way of background, in order to connect to Cboe Command, which allows a TPH to trade on the C2 System, a TPH must connect via either a CMI or FIX interface (depending on the configuration of the TPH’s own systems). For TPHs that connect via a CMI interface, they must use CMI CAS Servers. In order to ensure that a CAS Server is not overburdened by quoting activity for Market-Makers, the Exchange currently allots each MarketMaker a certain number of CASs (in addition to the shared backups) based on the amount of quoting bandwidth that they have. Post-migration, the Exchange will no longer use CAS Servers. In light of the upcoming elimination of CAS Servers, the Exchange proposes to eliminate the CAS Server allotment table and extra CAS Server fee, effective May 1, 2018. Exchange Data Reports The Exchange proposes to eliminate Exchange Data Reports Fees as it no longer wishes to assess such fees. The Exchange notes that requests for reports and data from TPHs and non-TPHs will continue to be treated in a fair and efficient manner. Miscellaneous Changes The Exchange proposes to renumber the sections in the Fees Schedule in light of the elimination of certain sections (e.g., Bandwidth Packet Fees and Exchange Data Reports). The Exchange also proposes to eliminate the Firm Designated Examining Authority Fee. The Exchange notes that C2 is not a Designated Examining Authority and as such the fee could not be assessed to firms. The Exchange proposes to eliminate the fee from the Fees Schedule to avoid potential confusion. 2. Statutory Basis 9 See Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. 10 See Cboe EDGX Options Exchange Fee Schedule, Options Logical Port Fees; and Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. 11 See Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. VerDate Sep<11>2014 20:27 May 14, 2018 Jkt 244001 12 See Affiliated Exchange Fee Schedules, Logical Port Fees. 13 The Exchange notes that TPHs do not need more than one Market-Maker Permit to accommodate all of the available appointments (i.e., a Market-Maker may have appointments in each class offered on C2 and still be below the appointment cost of one Trading Permit). PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of E:\FR\FM\15MYN1.SGM 15MYN1 Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices Section 6(b) of the Act.14 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(4) of the Act,15 which provides that Exchange rules may provide for the equitable allocation of reasonable dues, fees, and other charges among its Permit Holders and other persons using its facilities. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 16 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Physical Connectivity The Exchange believes it’s reasonable, equitable and not unfairly discriminatory to assess Network Access Port fees through May as market participants will still be able to utilize these ports throughout the month of May and the fee will apply to all TPHs and non-TPHs who use a Network Access Port. The Exchange believes the proposed post-migration Physical Port fees are reasonable because the Exchange is expending significant resources setting up physical connectivity in connection with the migration and will have ongoing costs associated with maintaining connectivity. The Exchange also notes that the proposed amounts are in line with the costs of physical connectivity at its Affiliated Exchanges.17 Indeed, the Exchange also believes that it is reasonable and in the interest of the public and investors to harmonize the Exchange’s connectivity options and connectivity fees once the Exchange is on a common platform of its Affiliated Exchanges. The Exchange believes it’s reasonable, equitable and not unfairly discriminatory to assess a Physical Port fee only once if it connects with another affiliate exchange because only one port is being used and the Exchange does not wish to charge multiple fees for the same port. The Exchange also believes it’s reasonable to pass-through in full any fees or costs in excess of $1,000.00 incurred by the Exchange to complete a cross-connect, because the Exchange is still subsidizing costs to enable crossconnects, just not amounts in excess of $1,000. daltland on DSKBBV9HB2PROD with NOTICES Logical Connectivity The Exchange believes it’s reasonable to eliminate certain fees associated with legacy options for connecting to the 14 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). 16 15 U.S.C. 78f(b)(5). 17 See Affiliated Exchange Fee Schedules, Physical Connectivity Fees. 15 15 VerDate Sep<11>2014 20:27 May 14, 2018 Jkt 244001 Exchange and to replace them with fees associated with new options for connecting to the Exchange that are similar to those offered at its Affiliated Exchanges. In particular, the Exchange believes it’s reasonable to no longer assess fees for CMI and FIX Login IDs because the Login IDs will be retired and obsolete upon migration and because the Exchange is proposing to replace them with fees associated with the new logical connectivity options. The Exchange believes the proposed change is equitable and not unfairly discriminatory because it applies uniformly to market participants. The Exchange believes it’s reasonable to assess the proposed fees for each of the new logical connectivity ports described above as the proposed fees help recoup costs setting up logical connectivity and also enables the Exchange to continue to maintain and improve its market technology and services. Additionally, the Exchange notes the proposed fees are the same as, or in line with, the fees assessed on its Affiliated Exchanges for similar connectivity.18 As noted above, the Exchange also believes that it is reasonable and in the interest of the public and investors to harmonize the Exchange’s logical connectivity options and corresponding connectivity fees once the Exchange is on a common platform as its Affiliated Exchanges. The proposed logical connectivity fees are also equitable and not unfairly discriminatory because the Exchange will apply the same fees to all market participants that use the same respective connectivity options. Access Fees The Exchange believes it’s reasonable, equitable and not unfairly discriminatory to assess an access fee only once for each kind of Permit, notwithstanding the number of Permits a TPH currently holds, because TPHs will be paying lower fees for access and the proposed change will apply uniformly to all TPHs. Additionally, the Exchange notes that currently, TPHs request additional Permits because of bandwidth and/or login needs. As described above, upon migration on May 14, 2018, bandwidth and logins will no longer be tied to Permits and as such, the need to hold multiple permits will be obsolete. Through May 14, 2018 however, TPHs may still need additional Permits and the Exchange does not wish to charge for those additional Permits. 18 See Affiliated Exchange Fee Schedules, Logical Port Fees. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 22549 Bandwidth Packets and CMI CAS Server Fees The Exchange believes it’s reasonable to eliminate Supplemental Bandwidth Packet fees and the CMI CAS Server fee because TPHs will not pay fees for these connectivity options and because bandwidth packets and CAS Servers will be retired and obsolete upon the upcoming migration. The Exchange believes that even though it will be discontinuing Supplemental Bandwidth Packets, the proposed incremental pricing for Logical Ports and BOE Bulk Ports will continue to encourage users to mitigate message traffic. The proposed change is equitable and not unfairly discriminatory because it will apply uniformly to all TPHs. Exchange Data Reports The Exchange believes eliminating fees for Exchange Data Reports is reasonable, equitable and not unfairly discriminatory because TPHs and nonTPHs no longer have to pay fees for these reports and it applies to TPHs and non-TPHs uniformly. As noted above, requests for reports and data from TPHs and non-TPHs will continue to be treated in a fair and efficient manner. Miscellaneous Changes The Exchange believes the proposed rule change to renumber the sections in light of the elimination of certain sections (e.g., Bandwidth Packet Fees and Exchange Data Reports) alleviates potential confusion. Similarly, the Exchange believes deleting the Firm Designated Examining Authority Fee from the Fees Schedule alleviates confusion as it eliminates a fee that is moot because it cannot be charged (as discussed, C2 is not a Designated Examining Authority). The alleviation of confusion removes impediments to and perfects the mechanism of a free and open market and a national market system. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition 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 pricing offered by the Exchange’s affiliates. Additionally, TPHs 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 TPHs or competing venues to maintain their competitive E:\FR\FM\15MYN1.SGM 15MYN1 22550 Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices standing in the financial markets. The Exchange believes that fees for connectivity are constrained by the robust competition for order flow among exchanges and non-exchange markets. Further, excessive fees for connectivity, would serve to impair an exchange’s ability to compete for order flow rather than burdening competition. The Exchange also does not believe the proposed rule change would impact intramarket competition as it would apply to all TPHs and non-TPHs equally. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received 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 19 and paragraph (f) of Rule 19b–4 20 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. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. 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 daltland on DSKBBV9HB2PROD with NOTICES • 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– C2–2018–006 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. 19 15 20 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). VerDate Sep<11>2014 20:27 May 14, 2018 All submissions should refer to File Number SR–C2–2018–006. 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–C2–2018–006 and should be submitted on or before June 5, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–10261 Filed 5–14–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83205; File No. SR–CBOE– 2018–008] Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Approving a Proposed Rule Change Relating to Flexibly Structured Options May 9, 2018. I. Introduction On January 18, 2018, Cboe Exchange, Inc. (‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities 21 17 Jkt 244001 PO 00000 CFR 200.30–3(a)(12). Frm 00110 Fmt 4703 Sfmt 4703 Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change amending Cboe Options’s rules relating to the fungibility of Flexible Exchange Options (‘‘FLEX Options’’). The proposed rule change was published for comment in the Federal Register on February 8, 2018.3 On March 23, 2018, the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved.4 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change. II. Description of the Proposed Rule Change In its filing, the Exchange proposed to amend Interpretation and Policy .02 to Rule 24A.4, which sets forth requirements relating to a FLEX Option that has the same terms as a Non-FLEX Option.5 First, Cboe Options has proposed to amend the rule to make all FLEX Options fungible with Non-FLEX Options that have identical terms.6 Currently, FLEX Options that have quarterly expirations,7 short term expirations,8 weekly expirations,9 and End of Month (‘‘EOM’’) expirations 10 are not fungible with Non-FLEX Options with identical terms.11 The OCC 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 82622 (Feb. 2, 2018), 83 FR 5668 (Feb. 8, 2018) (‘‘Notice’’). 4 See Securities Exchange Act Release No. 82936 (Mar. 23, 2018), 83 FR 13552 (Mar. 29, 2018). 5 See Cboe Options Rule 24A.1(q). 6 See proposed Cboe Options Rule 24A.4.02(a) (‘[t]his Interpretation and Policy shall apply to all FLEX Options’’). 7 See Cboe Options Rules 5.5(e), 24.9(a)(2)(B), and 24.9(c). 8 See Cboe Options Rules 5.5(d) and 24.9(a)(2)(A). 9 See Cboe Options Rule 24.9(e). These are currently traded pursuant to the Nonstandard Expirations Pilot Program. 10 Id. These are also traded pursuant to the Nonstandard Expiration Pilot Program. 11 Cboe Options states in its proposal that FLEX Options with these expirations were not originally intended to be fungible. See Securities Exchange Release Act Nos. 62658 (August 5, 2010), 75 FR 49010, 49011 n.8 (August 12, 2010) (SR–CBOE– 2009–075) (notice). The notice states that FLEX Options do not become fungible with subsequently introduced Non-FLEX structured quarterly and short term options, and that they will not be with End of Week (‘‘EOW’’) and EOM expirations because of their similarities to the quarterly and short term options. EOW expirations are now called weekly expirations as Cboe Options Rule 24.9(e) was amended to include Monday and Wednesday expirations. See also Securities Exchange Release Act No. 62911 (September 14, 2010), 75 FR 57539 (September 21, 2010) (SR–CBOE–2009–075) (approval order). 2 17 E:\FR\FM\15MYN1.SGM 15MYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 83, Number 94 (Tuesday, May 15, 2018)]
[Notices]
[Pages 22546-22550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10261]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83201; File No. SR-C2-2018-006]


Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
its Fees Schedule, Including Connectivity Fees, in Connection with its 
Technology Migration

May 9, 2018.
    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 April 27, 2018, Cboe C2 Exchange, Inc. (``Exchange'' or ``C2'') 
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 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule in connection with 
the technology migration of C2 onto the options platform of the 
Exchange's affiliated options exchanges, Cboe EDGX Exchange, Inc. 
(``EDGX'' or ``EDGX Options'') and Cboe BZX Exchange, Inc. (``BZX'' or 
``BZX Options'').
    The text of the proposed rule change is also available on the 
Exchange's website (https://www.c2exchange.com/Legal/), at the 
Exchange's Office of the Secretary, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc., 
which is also the parent company of Cboe Exchange, Inc. (``Cboe 
Options''), acquired EDGX and BZX and its affiliated exchanges, Cboe 
EDGA Exchange, Inc. (``EDGA'') and Cboe BYX Exchange, Inc. (``BYX''). 
C2 intends to migrate its technology onto the same trading platform as 
BZX, BYX, EDGA and BZX (``Affiliated Exchanges'') on May 14, 2018 (the 
``migration''). The Exchange proposes to amend certain fees in the Fees 
Schedule and adopt new connectivity fees, effective May 1, 2018.

[[Page 22547]]

Physical Connectivity
    A physical port is utilized by a Trading Permit Holder (``TPH'') or 
non-TPH to connect to the Exchange at the data centers where the 
Exchange's servers are located. The Exchange currently assesses fees 
for Network Access Ports for these physical connections to the 
Exchange. Specifically, TPHs and non-TPHs can elect to connect to C2's 
trading system via either a 1 gigabit per second (``Gbps'') Network 
Access Port or a 10 Gbps Network Access Port. The Exchange currently 
assesses a monthly fee of $500 per port for 1 Gbps Network Access Ports 
and a monthly fee of $1,000 per port for 10 Gbps Network Access Ports. 
Through June 30, 2018, C2 market participants will continue to have the 
ability to connect to C2's trading system via the current Network 
Access Ports. For the month of May 2018, the Exchange will continue to 
assess the current fee for any Network Access Port a TPH or non-TPH 
uses during the month of May.
    Effective May 14, 2018, in connection with the migration, TPHs and 
non-TPHs may alternatively elect to connect to C2 via new Physical 
Ports.\3\ The new Physical Ports will similarly allow TPHs and non-TPHs 
the ability to connect to the Exchange at the data centers where the 
Exchange's servers are located and TPHs and non-TPHs will have the 
option to connect via 1 Gbps or 10 Gbps Physical Ports. The Exchange 
proposes to assess a monthly fee of $2,000 per port for 1 Gbps Physical 
Ports and a monthly fee of $7,000 per port for 10 Gbps Physical Ports. 
The new Physical Port fees will be prorated based on the remaining 
trading days in the calendar month. The Exchange notes that the new 
Physical Ports may also be used to connect to BZX, BYX, EDGX, and EDGA. 
The Exchange proposes to provide that market participants will only be 
assessed a single fee for any Physical Port that also accesses these 
exchanges.\4\ The Exchange will pass-through in full any fees or costs 
in excess of $1,000 incurred by the Exchange to complete a cross-
connect between exchanges. The Exchange notes that the proposed 
physical connectivity ports and corresponding fees are identical to the 
ports and fees assessed by its Affiliated Exchanges.\5\
---------------------------------------------------------------------------

    \3\ As previously noted, market participants will continue to 
have the option of connecting to C2 via a 1 Gbps or 10 Gbps Network 
Access Port and would be assessed current rates of $500 and $1,000 
per port, respectively.
    \4\ For example, if a market participant uses only one 10 Gbps 
port to connect to both EDGX and C2, the market participant would 
only be assessed one monthly fee of $7,000.
    \5\ See Cboe EDGA U.S. Equities Exchange Fee Schedule, Physical 
Connectivity Fees; Cboe EDGX U.S. Equities Exchange Fee Schedule, 
Physical Connectivity Fees; Cboe BZX U.S. Equities Exchange Fee 
Schedule, Physical Connectivity Fees; Cboe BYX U.S. Equities 
Exchange Fee Schedule, Physical Connectivity Fees; Cboe EDGX Options 
Exchange Fee Schedule, Physical Connectivity Fees; and Cboe BZX 
Options Exchange Fee Schedule, Physical Connectivity Fees 
(collectively, ``Affiliated Exchange Fee Schedules'').
---------------------------------------------------------------------------

Logical Connectivity
    Next, the Exchange proposes to amend its login fees. Currently, C2 
market participants may access Cboe Command via either a CMI or a FIX 
Port, depending on how their systems are configured. The Exchange 
currently assesses monthly fees for each CMI and FIX Login ID a market 
participant has. Specifically, the Exchange assesses $550 per Login ID, 
per month for CMI Login IDs and FIX Login IDs. Effective May 14, 2018, 
market participants will no longer be able to use CMI and FIX Login 
IDs. Rather, the Exchange will utilize a variety of logical 
connectivity ports as further described below. Similar to the legacy 
CMI and FIX Login IDs, a logical port provides users with the ability 
within the Exchange's system to accomplish a specific function through 
a connection, such as order entry, data receipt, or access to 
information. In light of the upcoming discontinuation of CMI and FIX 
Login IDs, the Exchange proposes to eliminate the fees associated with 
the login IDs effective May 1, 2018 and adopt the below pricing for 
logical connectivity in it [sic] place.

------------------------------------------------------------------------
                  Service                          Cost per month
------------------------------------------------------------------------
Logical Ports (BOE, FIX, Drop)............  $650 per port
Bulk BOE Ports 1-5........................  1,500 per port
Bulk BOE Ports >5.........................  2,500 per port
Purge ports...............................  750 per port
GRP Ports.................................  650/primary (A or C Feed)
Multicast PITCH/Top Spin Server Ports.....  650/set of primary (A or C
                                             feed)
------------------------------------------------------------------------

    Logical Ports (BOE, FIX, Drop): The new Logical Ports represents 
ports established by the Exchange within the Exchange's system for 
trading purposes. Each Logical Port established is specific to a TPH or 
non-TPH and grants that TPH or non-TPH the ability to operate a 
specific application, such as order entry (FIX and BOE Ports) or drop 
copies (Drop Ports). Logical Port fees are limited to Logical Ports in 
the Exchange's primary data center and no Logical Port fees are 
assessed for redundant secondary data center ports. The Exchange 
proposes to set the monthly port fee at $650 per port. Each BOE or FIX 
Logical Port will incur the logical port fee indicated in the table 
above when used to enter up to 20,000 orders per trading day per 
logical port as measured on average in a single month. Each incremental 
usage of up to 20,000 per day per logical port will incur an additional 
logical port fee of $650 per month. Incremental usage will be 
determined on a monthly basis based on the average orders per day 
entered in a single month across all of a market participant's 
subscribed BOE and FIX Logical Ports.\6\ The Exchange believes that the 
pricing implications of going beyond 20,000 orders per trading day per 
Logical Port encourage users to mitigate message traffic as necessary. 
The Exchange notes that the proposed fee of $650 per port is in line 
with the fee assessed for similar ports on BZX Options.\7\
---------------------------------------------------------------------------

    \6\ For May 2018, average daily order quantities used to 
determine incremental usage will be determined based on the number 
of trading days between May 14th and May 31st.
    \7\ See Cboe BZX Options Exchange Fee Schedule, Options Logical 
Port Fees.
---------------------------------------------------------------------------

    BOE Bulk Logical Ports: Post-migration, the Exchange will also 
offer BOE Bulk Logical Ports, which provide users with the ability to 
submit single and bulk order messages to enter, modify, or cancel 
orders designated as Post Only Orders with a Time-in-Force of Day or 
GTD with an expiration time on that trading day. As indicated above, 
BOE Bulk Logical Ports are assessed $1,500 per port, per month for the 
first 5 BOE Bulk Logical Ports and thereafter assessed $2,500 per port, 
per month for each additional BOE Bulk Logical Port. Each Bulk BOE 
Logical Port will incur the logical port fee indicated in the table 
above when used to enter up to 30,000,000 orders per trading day per 
logical port as measured on average in a single month. Each incremental 
usage of up to 30,000,000 orders per day per BOE Bulk Logical Port will 
incur an additional logical port fee of $2,500 per month. Incremental 
usage will be determined on a monthly basis based on the average orders 
per day entered in a single month across all of a market participant's 
subscribed BOE Bulk Logical Ports.\8\ The Exchange believes that the 
pricing implications of going beyond 30,000,000 orders per trading day 
per BOE Bulk Logical Port encourage users to mitigate message

[[Page 22548]]

traffic as necessary. The Exchange notes that the proposed BOE Bulk 
Logical Port fees are similar to the fees assessed for these ports by 
BZX Options.\9\
---------------------------------------------------------------------------

    \8\ For May 2018, average daily order quantities used to 
determine incremental usage will be determined based on the number 
of trading days between May 14th and May 31st.
    \9\ See Cboe BZX Options Exchange Fee Schedule, Options Logical 
Port Fees.
---------------------------------------------------------------------------

    Purge Ports: As part of the migration, C2 will be introducing Purge 
Ports to provide TPHs additional risk management and open order control 
functionality. The proposed ports are designed to assist TPHs, in the 
management of, and risk control over, their quotes, particularly if the 
TPH is dealing with a large number of options. Particularly, Purge 
Ports will allow TPHs to submit a cancelation for all open orders, or a 
subset thereof, across multiple sessions under the same Executing Firm 
ID (``EFID''). As indicated in the table above, the Exchange proposes 
to assess a monthly charge of $750 per Purge Port. The Exchange notes 
that the proposed fee is identical to the fee assessed by BZX Options 
and EDGX Options for Purge Ports.\10\
---------------------------------------------------------------------------

    \10\ See Cboe EDGX Options Exchange Fee Schedule, Options 
Logical Port Fees; and Cboe BZX Options Exchange Fee Schedule, 
Options Logical Port Fees.
---------------------------------------------------------------------------

    Multicast PITCH/Top Spin Server and GRP Ports: In connection with 
the migration, the Exchange will also offer Multicast PITCH/Top Spin 
Server and GRP ports and proposes to assess $750 per month, per port. 
Multicast PITCH/Top Spin Server Ports and GRP Ports are used to request 
and receive a retransmission of data from the Exchange's Multicast 
PITCH/Top data feed. The Exchange's Multicast PITCH/Top data feed is 
available from two primary feeds, identified as the ``A feed'' and the 
``C feed'', which contain the same information but differ only in the 
way such feeds are received. The Exchange also offers two redundant 
feeds, identified as the ``B feed'' and the ``D feed.'' All secondary 
feed Multicast PITCH/Top Spin Server and GRP Ports will be provided for 
redundancy at no additional cost. The Exchange notes that the proposed 
fee is in line with the fee assessed for the same ports on BZX 
Options.\11\
---------------------------------------------------------------------------

    \11\ See Cboe BZX Options Exchange Fee Schedule, Options Logical 
Port Fees.
---------------------------------------------------------------------------

    The Exchange proposes to provide for each of the logical 
connectivity fees that new requests will be prorated for the first 
month of service. Cancellation requests are billed in full month 
increments as firms are required to pay for the service for the 
remainder of the month, unless the session is terminated within the 
first month of service. The Exchange notes that the proration policy is 
the same on its Affiliated Exchanges.\12\ The Exchange also proposes to 
make clear in the Fees Schedule that port fees for BOE, FIX, BOE Bulk 
and Drop ports will be assessed the full month rates for May for ports 
available for use on the new trading platform beginning May 14, 2018. 
The port fees for BOE, FIX, BOE BULK and Drop ports added on or after 
May 15, 2018, will be pro-rated. The Exchange notes that BOE, FIX, Drop 
and BOE Bulk ports offer similar functionality as current CMI and FIX 
Login Ids. As such, in lieu of assessing the current CMI and FIX Login 
Id fees for the month of May, the Exchange proposes to assess the 
proposed Logical Ports and BOE Bulk Port fees at the full rate for the 
month of May for any of these ports subscribed to on the date of the 
migration (May 14, 2018).
---------------------------------------------------------------------------

    \12\ See Affiliated Exchange Fee Schedules, Logical Port Fees.
---------------------------------------------------------------------------

Access Fees
    Currently, the Exchange assesses $5,000 per month for a Market-
Maker Permit and $1,000 per month for an Electronic Access Permit. 
Market-Maker Permits entitle the holder to act as a Market-Maker and 
also provides an appointment credit, quote and order bandwidth 
allowance and a login allowance. Electronic Access Permits entitle the 
holder to access the Exchange and also provides an order entry 
bandwidth allowance and a login allowance. The Exchange notes that 
post-Migration, bandwidth allocation and logins will not be tied to a 
Permit, and as such, TPHs will no longer need to have multiple Permits 
for each type of Permit (i.e., multiple Market-Maker Permits and/or and 
Electronic Access Permits).\13\ The Exchange therefore proposes to 
provide that TPHs will only be assessed the monthly fee for each type 
of Permit once (e.g., a TPH that holds only two Market-Maker Permits 
during the month of May would be assessed a total of $5,000 as and for 
Permit fees in May).
---------------------------------------------------------------------------

    \13\ The Exchange notes that TPHs do not need more than one 
Market-Maker Permit to accommodate all of the available appointments 
(i.e., a Market-Maker may have appointments in each class offered on 
C2 and still be below the appointment cost of one Trading Permit).
---------------------------------------------------------------------------

Bandwidth Packets
    As described above, post-migration, the Exchange will utilize a 
variety of logical ports. Part of this functionality is similar to 
bandwidth packets currently available on C2. Bandwidth packets restrict 
the maximum number of orders and quotes per second. Post-migration, 
market participants may similarly have multiple Logical Ports and/or 
BOE Bulk Ports as they may have bandwidth packets to accommodate their 
order and quote entry needs. As such, the Exchange proposes to 
eliminate its current Supplemental Bandwidth Packet fees, effective May 
1, 2018. The Exchange believes that the proposed pricing implications 
of going beyond specified bandwidth described above in the logical 
connectivity fees section will be able to otherwise mitigate message 
traffic as necessary.
CAS Servers
    By way of background, in order to connect to Cboe Command, which 
allows a TPH to trade on the C2 System, a TPH must connect via either a 
CMI or FIX interface (depending on the configuration of the TPH's own 
systems). For TPHs that connect via a CMI interface, they must use CMI 
CAS Servers. In order to ensure that a CAS Server is not overburdened 
by quoting activity for Market-Makers, the Exchange currently allots 
each Market-Maker a certain number of CASs (in addition to the shared 
backups) based on the amount of quoting bandwidth that they have. Post-
migration, the Exchange will no longer use CAS Servers. In light of the 
upcoming elimination of CAS Servers, the Exchange proposes to eliminate 
the CAS Server allotment table and extra CAS Server fee, effective May 
1, 2018.
Exchange Data Reports
    The Exchange proposes to eliminate Exchange Data Reports Fees as it 
no longer wishes to assess such fees. The Exchange notes that requests 
for reports and data from TPHs and non-TPHs will continue to be treated 
in a fair and efficient manner.
Miscellaneous Changes
    The Exchange proposes to renumber the sections in the Fees Schedule 
in light of the elimination of certain sections (e.g., Bandwidth Packet 
Fees and Exchange Data Reports). The Exchange also proposes to 
eliminate the Firm Designated Examining Authority Fee. The Exchange 
notes that C2 is not a Designated Examining Authority and as such the 
fee could not be assessed to firms. The Exchange proposes to eliminate 
the fee from the Fees Schedule to avoid potential confusion.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of

[[Page 22549]]

Section 6(b) of the Act.\14\ Specifically, the Exchange believes the 
proposed rule change is consistent with Section 6(b)(4) of the Act,\15\ 
which provides that Exchange rules may provide for the equitable 
allocation of reasonable dues, fees, and other charges among its Permit 
Holders and other persons using its facilities. Additionally, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \16\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Physical Connectivity
    The Exchange believes it's reasonable, equitable and not unfairly 
discriminatory to assess Network Access Port fees through May as market 
participants will still be able to utilize these ports throughout the 
month of May and the fee will apply to all TPHs and non-TPHs who use a 
Network Access Port. The Exchange believes the proposed post-migration 
Physical Port fees are reasonable because the Exchange is expending 
significant resources setting up physical connectivity in connection 
with the migration and will have ongoing costs associated with 
maintaining connectivity. The Exchange also notes that the proposed 
amounts are in line with the costs of physical connectivity at its 
Affiliated Exchanges.\17\ Indeed, the Exchange also believes that it is 
reasonable and in the interest of the public and investors to harmonize 
the Exchange's connectivity options and connectivity fees once the 
Exchange is on a common platform of its Affiliated Exchanges. The 
Exchange believes it's reasonable, equitable and not unfairly 
discriminatory to assess a Physical Port fee only once if it connects 
with another affiliate exchange because only one port is being used and 
the Exchange does not wish to charge multiple fees for the same port. 
The Exchange also believes it's reasonable to pass-through in full any 
fees or costs in excess of $1,000.00 incurred by the Exchange to 
complete a cross-connect, because the Exchange is still subsidizing 
costs to enable cross-connects, just not amounts in excess of $1,000.
---------------------------------------------------------------------------

    \17\ See Affiliated Exchange Fee Schedules, Physical 
Connectivity Fees.
---------------------------------------------------------------------------

Logical Connectivity
    The Exchange believes it's reasonable to eliminate certain fees 
associated with legacy options for connecting to the Exchange and to 
replace them with fees associated with new options for connecting to 
the Exchange that are similar to those offered at its Affiliated 
Exchanges. In particular, the Exchange believes it's reasonable to no 
longer assess fees for CMI and FIX Login IDs because the Login IDs will 
be retired and obsolete upon migration and because the Exchange is 
proposing to replace them with fees associated with the new logical 
connectivity options. The Exchange believes the proposed change is 
equitable and not unfairly discriminatory because it applies uniformly 
to market participants. The Exchange believes it's reasonable to assess 
the proposed fees for each of the new logical connectivity ports 
described above as the proposed fees help recoup costs setting up 
logical connectivity and also enables the Exchange to continue to 
maintain and improve its market technology and services. Additionally, 
the Exchange notes the proposed fees are the same as, or in line with, 
the fees assessed on its Affiliated Exchanges for similar 
connectivity.\18\ As noted above, the Exchange also believes that it is 
reasonable and in the interest of the public and investors to harmonize 
the Exchange's logical connectivity options and corresponding 
connectivity fees once the Exchange is on a common platform as its 
Affiliated Exchanges. The proposed logical connectivity fees are also 
equitable and not unfairly discriminatory because the Exchange will 
apply the same fees to all market participants that use the same 
respective connectivity options.
---------------------------------------------------------------------------

    \18\ See Affiliated Exchange Fee Schedules, Logical Port Fees.
---------------------------------------------------------------------------

Access Fees
    The Exchange believes it's reasonable, equitable and not unfairly 
discriminatory to assess an access fee only once for each kind of 
Permit, notwithstanding the number of Permits a TPH currently holds, 
because TPHs will be paying lower fees for access and the proposed 
change will apply uniformly to all TPHs. Additionally, the Exchange 
notes that currently, TPHs request additional Permits because of 
bandwidth and/or login needs. As described above, upon migration on May 
14, 2018, bandwidth and logins will no longer be tied to Permits and as 
such, the need to hold multiple permits will be obsolete. Through May 
14, 2018 however, TPHs may still need additional Permits and the 
Exchange does not wish to charge for those additional Permits.
Bandwidth Packets and CMI CAS Server Fees
    The Exchange believes it's reasonable to eliminate Supplemental 
Bandwidth Packet fees and the CMI CAS Server fee because TPHs will not 
pay fees for these connectivity options and because bandwidth packets 
and CAS Servers will be retired and obsolete upon the upcoming 
migration. The Exchange believes that even though it will be 
discontinuing Supplemental Bandwidth Packets, the proposed incremental 
pricing for Logical Ports and BOE Bulk Ports will continue to encourage 
users to mitigate message traffic. The proposed change is equitable and 
not unfairly discriminatory because it will apply uniformly to all 
TPHs.
Exchange Data Reports
    The Exchange believes eliminating fees for Exchange Data Reports is 
reasonable, equitable and not unfairly discriminatory because TPHs and 
non-TPHs no longer have to pay fees for these reports and it applies to 
TPHs and non-TPHs uniformly. As noted above, requests for reports and 
data from TPHs and non-TPHs will continue to be treated in a fair and 
efficient manner.
Miscellaneous Changes
    The Exchange believes the proposed rule change to renumber the 
sections in light of the elimination of certain sections (e.g., 
Bandwidth Packet Fees and Exchange Data Reports) alleviates potential 
confusion. Similarly, the Exchange believes deleting the Firm 
Designated Examining Authority Fee from the Fees Schedule alleviates 
confusion as it eliminates a fee that is moot because it cannot be 
charged (as discussed, C2 is not a Designated Examining Authority). The 
alleviation of confusion removes impediments to and perfects the 
mechanism of a free and open market and a national market system.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition 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 pricing offered by the Exchange's affiliates. Additionally, TPHs 
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 TPHs or 
competing venues to maintain their competitive

[[Page 22550]]

standing in the financial markets. The Exchange believes that fees for 
connectivity are constrained by the robust competition for order flow 
among exchanges and non-exchange markets. Further, excessive fees for 
connectivity, would serve to impair an exchange's ability to compete 
for order flow rather than burdening competition. The Exchange also 
does not believe the proposed rule change would impact intramarket 
competition as it would apply to all TPHs and non-TPHs equally.

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

    The Exchange neither solicited nor received 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 \19\ and paragraph (f) of Rule 19b-4 \20\ 
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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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-C2-2018-006 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-C2-2018-006. 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-C2-2018-006 and should be submitted on 
or before June 5, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10261 Filed 5-14-18; 8:45 am]
BILLING CODE 8011-01-P

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