Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Increase the Spread-Crossing Eligible Remove Fee to $0.0009 Per Share for Executions at or Above $1.00 That Remove Non-Displayed Liquidity, 40800-40803 [2018-17628]
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40800
Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices
All submissions should refer to File
Number SR–Phlx–2018–55. 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–Phlx–2018–55 and should
be submitted on or before September 6,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018–17633 Filed 8–15–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
sradovich on DSK3GMQ082PROD with NOTICES
[Release No. 34–83829; File No. SR–
NYSEAMER–2018–22]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Withdrawal of
a Proposed Rule Change To Amend
Exchange Rule 7.35E Relating to the
Auction Reference Price for a Trading
Halt Auction Following a Regulatory
Halt
August 10, 2018.
On May 15, 2018, NYSE American
LLC (‘‘Exchange’’ or ‘‘NYSE American’’)
12 17
CFR 200.30–3(a)(12).
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17:15 Aug 15, 2018
Jkt 244001
filed with the Securities and Exchange
Commission (‘‘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 amend Exchange Rule 7.35E
relating to the Auction Reference Price
for a Trading Halt Auction following a
regulatory halt. The proposed rule
change was published for comment in
the Federal Register on June 5, 2018.3
On July 18, 2018, pursuant to Section
19(b)(2) of the Act,4 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 to disapprove the proposed
rule change.5 The Commission has
received one comment letter in response
to the proposed rule change.6
On August 10, 2018, the Exchange
withdrew the proposed rule change
(SR–NYSEAmer–2018–22).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Brent J. Fields,
Secretary.
[FR Doc. 2018–17632 Filed 8–15–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83818; File No. SR–ISE–
2018–56]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Designation of
Longer Period for Commission Action
on Proposed Rule Change To Amend
Its Rules Related to Complex Orders
August 10, 2018.
On June 22, 2018, Nasdaq ISE, LLC
(the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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
add greater detail to its rules governing
the trading of complex orders. The
proposed rule change was published for
comment in the Federal Register on July
15 U.S.C. 78s(b)(1).
17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 83341
(May 30, 2018), 83 FR 26121 (Jun. 5, 2018) (Notice).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 83668
(Jul. 18, 2018), 83 FR 35040 (Jul. 24, 2018).
6 See Letter from Duane Fiedler, to Secretary,
Securities and Exchange Commission (Jun. 23,
2018).
7 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1
2
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9, 2018.3 The Commission has received
no comments regarding the proposal.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is August 23, 2018.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, pursuant to Section
19(b)(2) of the Act,5 the Commission
designates October 5, 2018, as the date
by which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–ISE–2018–56).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Brent J. Fields,
Secretary.
[FR Doc. 2018–17626 Filed 8–15–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83820; File No. SR–IEX–
2018–17]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Increase the SpreadCrossing Eligible Remove Fee to
$0.0009 Per Share for Executions at or
Above $1.00 That Remove NonDisplayed Liquidity
August 10, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
3 See Securities Exchange Act Release No. 83576
(July 2, 2018), 83 FR 31783.
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2).
6 17 CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
E:\FR\FM\16AUN1.SGM
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Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices
notice is hereby given that, on (date),
the Investors Exchange LLC (‘‘IEX’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the self-regulatory organization. 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
Pursuant to the provisions of Section
19(b)(1) under the Securities Exchange
Act of 1934 (‘‘Act’’),4 and Rule 19b–4
thereunder,5 Investors Exchange LLC
(‘‘IEX’’ or ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to modify its Fee Schedule, pursuant to
IEX Rule 15.110(a) and (c), to increase
the Spread-Crossing Eligible Remove
Fee to $0.0009 per share for executions
at or above $1.00 that remove nondisplayed liquidity. Changes to the Fee
Schedule pursuant to this proposal are
effective upon filing and will be
operative on August 1, 2018.
The text of the proposed rule change
is available at the Exchange’s website at
www.iextrading.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
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to modify its
Fee Schedule, pursuant to IEX Rule
15.110(a) and (c), to increase the
Spread-Crossing Eligible Remove Fee to
$0.0009 per share for executions at or
above $1.00. The proposed change
eliminates the pricing incentive for
removing non-displayed liquidity at or
above $1.00 with a spread-crossing
eligible order, as such execution will be
subject to a fee of $0.0009. On May 1,
2018, the Exchange filed an
immediately effective rule filing to
introduce a more deterministic fee of
$0.0003 per share for executions at or
above $1.00 that result from removing
liquidity with an order that is
executable at the far side of the NBBO
after accounting for the order’s limit (if
any), peg instruction (if any), market
conditions, and all applicable rules and
regulations (the ‘‘Spread-Crossing
Eligible Remove Fee’’ incentive).6
As discussed in the rule filing to
adopt the Spread-Crossing Eligible
Remove Fee,7 the intended purpose of
the fee was to incentivize Members to
route more orders to the Exchange that
are executable at the far side of the
NBBO by reducing the variability in fees
to access liquidity on the Exchange.
However, the Exchange has observed
over time that the Spread-Crossing
Eligible Remove Fee incentive has not
served its intended purposes.
Specifically, the Exchange has not seen
any notable increase in spread-crossing
orders 8 entered on the Exchange since
the operative date of the SpreadCrossing Eligible Remove Fee incentive
on May 1, 2018. In fact, the average
monthly percentage of the Exchange’s
volume represented by executions
resulting from spread-crossing orders
decreased from 22.8% in May, to 21.6%
in June of 2018. Accordingly, the
Exchange is proposing to eliminate the
Spread-Crossing Eligible Remove Fee
incentive for interacting with resting
non-displayed interest by increasing the
fee to $0.0009.9
As a result of the proposed change,
the following fees will be increasing to
$0.0009 from $0.0003 for executions at
or above $1.00 that result from removing
non-displayed liquidity with a spreadcrossing eligible order. All other fees
shall remain unchanged.
Fee codes
Description
IN ......................
IQN ...................
Removes non-displayed liquidity with a spread-crossing eligible order ..............................................................
Removes non-displayed liquidity during periods of quote instability with a spread-crossing eligible order ........
2. Statutory Basis
sradovich on DSK3GMQ082PROD with NOTICES
IEX believes that the proposed rule
change is consistent with the provisions
of Section 6(b) 11 of the Act in general,
and furthers the objectives of Sections
6(b)(4) 12 of the Act, in particular, in that
it is designed to provide for the
equitable allocation of reasonable dues,
fees and other charges among its
Members and other persons using its
facilities. The Exchange believes that
the proposed fee change is reasonable,
fair and equitable, and nondiscriminatory. The Exchange believes
the proposal to eliminate the SpreadCrossing Eligible Remove Fee incentive
4 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
6 See Securities Exchange Act Release No. 83147
(May 1, 2018), 83 FR 20118 (May 7, 2018) (SR–IEX–
2018–9) [sic].
7 Id.
8 The Exchange defines ‘‘spread-crossing eligible
order’’ as a buy order that is executable at the NBO
or a sell order that is executable at the NBB after
5 17
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40801
Fee
$0.0009
10 0.0009
is reasonable because, as discussed
above, the fee incentive has not been
successful in achieving its intended
purpose of incentivizing Members to
route more orders to the Exchange that
are executable at the far side of the
NBBO. The Exchange has limited
resources available to it to devote to the
operation of pricing incentives and as
such, it is reasonable and equitable for
the Exchange to reallocate those
resources away from programs that are
ineffective. The proposed change is also
equitable and not unfairly
discriminatory because the SpreadCrossing Eligible Remove Fee incentive
for executions against resting nondisplayed interest will be eliminated for
all Members, as the increased fee will be
charged to all Members that remove
non-displayed liquidity with a spreadcrossing eligible order.
The Exchange notes that as proposed,
spread-crossing orders that remove
displayed liquidity will be charged a
lower fee than if such orders had
removed non-displayed liquidity.
However, the Exchange believes the
proposal remains reasonable, equitable,
and not unfairly discriminatory because
spread-crossing orders may interact
with non-displayed interest resting
accounting for the order’s limit (if any), peg
instruction (if any), market conditions, and all
applicable rules and regulations. See the Investors
Exchange Fee Schedule, available on the Exchange
public website.
9 Consistent with the Exchange’s existing Fee
Schedule, the fee for executions below $1.00 will
be 0.30% of the total dollar value of the transaction.
10 The Exchange notes that, consistent with the
existing Fee Schedule, executions with Fee Code Q
that exceed the CQRF Threshold are subject to the
Crumbling Quote Remove Fee identified in the Fee
Code Modifiers table. Executions with Fee Code Q
that do not exceed the CQRF Threshold are subject
to the fees identified in the Fee Codes and
Associated Fees table. See the Investors Exchange
Fee Schedule, available on the Exchange public
website.
11 15 U.S.C. 78f.
12 15 U.S.C. 78f(b)(4).
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Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices
within the spread, thereby receiving
price improvement equal to the delta
between the execution price and the far
side quotation (i.e., the difference
between the trade price and the NBO
(NBB) for buy (sell) orders).
Accordingly, the Exchange believes that
spread-crossing orders removing nondisplayed liquidity receive a significant
benefit in the form of potential price
improvement, and are thus not subject
to unfairly discriminatory fees.
Moreover, the Exchange notes that the
proposed fee for spread-crossing eligible
orders that remove liquidity is identical
to the fee assessed by the Exchange
prior to the introduction of the SpreadCrossing Eligible Remove Fee, pursuant
to the IEX Fee Schedule that was filed
with the Commission pursuant to the
Act.13 Thus, the Exchange believe the
proposed change does not present any
unique or novel issues under the Act
that have not already been considered
by the Commission.
The Exchange further believes the
proposed increase in the SpreadCrossing Remove Fee to $0.0009 from
$0.0003 is reasonable in that is within
the range of transaction fees currently
charged by the Exchange,14 and
continues to be substantially lower than
the fee for removing liquidity on
competing exchanges with a ‘‘makertaker’’ fee structure (i.e., that provide a
rebate to liquidity adders and charge
liquidity removers).15
spread-crossing eligible order, and thus
there will be no competitive burdens
placed on Members as a result of the
proposed change. With regard to intermarket competition, the Exchange notes
that it operates in a highly competitive
market in which market participants can
readily favor competing venues if they
deem fee levels at a particular venue to
be excessive. In such an environment,
the Exchange must continually adjust its
fees to remain competitive with other
exchanges and alternative trading
systems. Because competitors are free to
modify their own fees in response, and
because market participants may readily
adjust their order routing practices, the
Exchange believes that the degree to
which fee changes in this market may
impose any burden on competition is
extremely limited.
Moreover, trading venues are free to
adjust their fees and credits in response
to any changes that the Exchange makes
to its fees and credits. If any of the
changes proposed herein are
unattractive to market participants, it is
likely that the Exchange will lose
market share as a result. Accordingly,
the Exchange does not believe that the
proposed changes will impair the ability
of members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
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 not
necessary or appropriate in furtherance
of the purposes of the Act. With regard
to intra-market competition, the
Exchange notes that the increased fee
will be charged to all Members that
remove non-displayed liquidity with a
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
sradovich on DSK3GMQ082PROD with NOTICES
13 See
Securities Exchange Act Release No. 80453
(April 13, 2017), 82 FR 18503 (April 19, 2017) (SR–
IEX–2016–09).
14 For example, the proposed Spread-Crossing
Remove Fee is equal to the Non-Displayed Match
Fee. See the Investors Exchange Fee Schedule,
available on the Exchange public website.
15 See e.g., the New York Stock Exchange
(‘‘NYSE’’) trading fee schedule on its public website
reflects fees to ‘‘take’’ liquidity ranging from
$0.0024–$0.0030 depending on the type of market
participant, order and execution; the Nasdaq Stock
Market (‘‘Nasdaq’’) trading fee schedule on its
public website reflects fees to ‘‘remove’’ liquidity
ranging from $0.0025–$0.0030 per share for shares
executed in continuous trading at or above $1.00 or
0.30% of total dollar volume for shares executed
below $1.00; the Cboe BZX Exchange (‘‘Cboe BZX)
trading fee schedule on its public website reflects
fees for ‘‘removing’’ liquidity ranging from $0.0025–
$0.0030, for shares executed in continuous trading
at or above $1.00 or 0.30% of total dollar volume
for shares executed below $1.00.
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17:15 Aug 15, 2018
Jkt 244001
Written comments were neither
solicited nor received.
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 16 and paragraph (f) of Rule
19b–4 17 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.
16 15
17 17
PO 00000
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
IEX–2018–17 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–IEX–2018–17. 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. All submissions
should refer to File Number SR–IEX–
2018–17 and should be submitted on or
before September 6, 2018.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Brent J. Fields,
Secretary.
[FR Doc. 2018–17628 Filed 8–15–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83824; File No. SR–
NASDAQ–2018–063]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Exchange’s Pricing at Chapter XV,
Section 2 Entitled ‘‘Nasdaq Options
Market—Fees and Rebates’’
August 10, 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 July 31,
2018, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, 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 the
Exchange’s pricing at Chapter XV,
Section 2 entitled ‘‘Nasdaq Options
Market—Fees and Rebates,’’ which
governs pricing for Nasdaq Participants
using The Nasdaq Options Market LLC
(‘‘NOM’’), Nasdaq’s facility for
executing and routing standardized
equity and index options. The Exchange
proposes to amend an incentive offered
today related to its subsidy program, the
Market Access and Routing Subsidy or
‘‘MARS.’’
While the changes proposed herein
are effective upon filing, the Exchange
has designated the amendments become
operative on August 1, 2018.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.cchwallstreet.com/, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Generally, under MARS, the Exchange pays
participating NOM Participants to subsidize their
costs of providing routing services to route orders
to NOM. The Exchange believes that the proposed
amendment to MARS will continue to attract higher
volumes of electronic equity and ETF options
volume to the Exchange from non-NOM
Participants as well as NOM Participants. The order
routing functionalities permit NOM Participants to
provide access and connectivity to other
Participants as well as utilize such access for
themselves. The Exchange notes that one NOM
Participant is eligible for payments under MARS,
while another NOM Participant might potentially
be liable for transaction charges associated with the
execution of the order, because those orders were
delivered to the Exchange through a NOM
sradovich on DSK3GMQ082PROD with NOTICES
1 15
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Jkt 244001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NOM proposes to amend the
Exchange’s pricing at Chapter XV,
Section 2 entitled ‘‘Nasdaq Options
Market—Fees and Rebates.’’
Specifically, the Exchange proposes to
amend an incentive in note ‘‘d’’ offered
to NOM Participants that qualify for any
MARS Payment Tier in Chapter XV,
Section 2(6) related to the MARS
subsidy program. MARS pays a subsidy
to NOM Participants that provide
certain order routing functionalities to
other NOM Participants and/or use such
functionalities themselves.3
Background on MARS
Today, to qualify for MARS, a NOM
Participant’s routing system (hereinafter
‘‘System’’) is required to meet certain
criteria.4
MARS Payments are made to NOM
Participants that have System Eligibility
and have routed the requisite number of
Eligible Contracts daily in a month
(‘‘Average Daily Volume’’), which were
executed on NOM.5 Today, NOM
Participants that have System Eligibility
and have executed the requisite number
of Eligible Contracts in a month will be
paid the following rebates: 6
Average Daily
Volume
(‘‘ADV’’)
Tiers
1
2
3
4
5
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
Participant’s connection to the Exchange and that
Participant qualified for the MARS Payment.
4 Specifically the Participant’s System is required
to: (1) Enable the electronic routing of orders to all
of the U.S. options exchanges, including NOM; (2)
provide current consolidated market data from the
U.S. options exchanges; and (3) be capable of
interfacing with NOM’s API to access current NOM
match engine functionality. The Participant’s
System would also need to cause NOM to be one
of the top three default destination exchanges for
(a) individually executed marketable orders if NOM
is at the national best bid or offer (‘‘NBBO’’),
regardless of size or time, or (b) orders that establish
a new NBBO on NOM’s Order Book, but allow any
user to manually override NOM as a default
destination on an order-by-order basis. Any NOM
Participant is permitted to avail itself of this
arrangement, provided that its order routing
functionality incorporates the features described
herein and the Participant satisfies NOM that it
PO 00000
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Sfmt 4703
2,000
5,000
10,000
20,000
45,000
MARS
payment
(penny)
$0.07
0.09
0.11
0.15
0.17
MARS
payment
(non-penny)
$0.15
0.20
0.30
0.50
0.60
appears to be robust and reliable. Participants
remain solely responsible for implementing and
operating its System.
5 For the purpose of qualifying for the MARS
Payment, Eligible Contracts may include Firm, NonNOM Market Maker, Broker-Dealer, or Joint Back
Office or ‘‘JBO’’ equity option orders that add
liquidity and are electronically delivered and
executed. Eligible Contracts do not include Mini
Option orders.
6 The specified MARS Payments are paid on all
executed Eligible Contracts that add liquidity,
which are routed to NOM through a participating
NOM Participant’s System and meet the requisite
Eligible Contracts ADV. No payments are made
with respect to orders that are routed to NOM, but
not executed. Also, a Participant is not entitled to
receive any other revenue from the Exchange for the
use of its System specifically with respect to orders
routed to NOM.
E:\FR\FM\16AUN1.SGM
16AUN1
]]>Agencies
[Federal Register Volume 83, Number 159 (Thursday, August 16, 2018)]
[Notices]
[Pages 40800-40803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17628]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83820; File No. SR-IEX-2018-17]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Increase the Spread-Crossing Eligible Remove Fee to $0.0009 Per Share
for Executions at or Above $1.00 That Remove Non-Displayed Liquidity
August 10, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\
[[Page 40801]]
notice is hereby given that, on (date), the Investors Exchange LLC
(``IEX'' or the ``Exchange'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II and III below, which Items have been prepared by the
self-regulatory organization. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the
Securities and Exchange Commission (``Commission'') a proposed rule
change to modify its Fee Schedule, pursuant to IEX Rule 15.110(a) and
(c), to increase the Spread-Crossing Eligible Remove Fee to $0.0009 per
share for executions at or above $1.00 that remove non-displayed
liquidity. Changes to the Fee Schedule pursuant to this proposal are
effective upon filing and will be operative on August 1, 2018.
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\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
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The text of the proposed rule change is available at the Exchange's
website at www.iextrading.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
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to modify its Fee Schedule, pursuant to IEX
Rule 15.110(a) and (c), to increase the Spread-Crossing Eligible Remove
Fee to $0.0009 per share for executions at or above $1.00. The proposed
change eliminates the pricing incentive for removing non-displayed
liquidity at or above $1.00 with a spread-crossing eligible order, as
such execution will be subject to a fee of $0.0009. On May 1, 2018, the
Exchange filed an immediately effective rule filing to introduce a more
deterministic fee of $0.0003 per share for executions at or above $1.00
that result from removing liquidity with an order that is executable at
the far side of the NBBO after accounting for the order's limit (if
any), peg instruction (if any), market conditions, and all applicable
rules and regulations (the ``Spread-Crossing Eligible Remove Fee''
incentive).\6\
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\6\ See Securities Exchange Act Release No. 83147 (May 1, 2018),
83 FR 20118 (May 7, 2018) (SR-IEX-2018-9) [sic].
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As discussed in the rule filing to adopt the Spread-Crossing
Eligible Remove Fee,\7\ the intended purpose of the fee was to
incentivize Members to route more orders to the Exchange that are
executable at the far side of the NBBO by reducing the variability in
fees to access liquidity on the Exchange. However, the Exchange has
observed over time that the Spread-Crossing Eligible Remove Fee
incentive has not served its intended purposes. Specifically, the
Exchange has not seen any notable increase in spread-crossing orders
\8\ entered on the Exchange since the operative date of the Spread-
Crossing Eligible Remove Fee incentive on May 1, 2018. In fact, the
average monthly percentage of the Exchange's volume represented by
executions resulting from spread-crossing orders decreased from 22.8%
in May, to 21.6% in June of 2018. Accordingly, the Exchange is
proposing to eliminate the Spread-Crossing Eligible Remove Fee
incentive for interacting with resting non-displayed interest by
increasing the fee to $0.0009.\9\
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\7\ Id.
\8\ The Exchange defines ``spread-crossing eligible order'' as a
buy order that is executable at the NBO or a sell order that is
executable at the NBB after accounting for the order's limit (if
any), peg instruction (if any), market conditions, and all
applicable rules and regulations. See the Investors Exchange Fee
Schedule, available on the Exchange public website.
\9\ Consistent with the Exchange's existing Fee Schedule, the
fee for executions below $1.00 will be 0.30% of the total dollar
value of the transaction.
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As a result of the proposed change, the following fees will be
increasing to $0.0009 from $0.0003 for executions at or above $1.00
that result from removing non-displayed liquidity with a spread-
crossing eligible order. All other fees shall remain unchanged.
------------------------------------------------------------------------
Fee codes Description Fee
------------------------------------------------------------------------
IN......................... Removes non-displayed $0.0009
liquidity with a spread-
crossing eligible order.
IQN........................ Removes non-displayed \10\ 0.0009
liquidity during periods
of quote instability with
a spread-crossing eligible
order.
------------------------------------------------------------------------
2. Statutory Basis
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\10\ The Exchange notes that, consistent with the existing Fee
Schedule, executions with Fee Code Q that exceed the CQRF Threshold
are subject to the Crumbling Quote Remove Fee identified in the Fee
Code Modifiers table. Executions with Fee Code Q that do not exceed
the CQRF Threshold are subject to the fees identified in the Fee
Codes and Associated Fees table. See the Investors Exchange Fee
Schedule, available on the Exchange public website.
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IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \11\ of the Act in general, and furthers the
objectives of Sections 6(b)(4) \12\ of the Act, in particular, in that
it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities. The Exchange believes that the proposed fee change is
reasonable, fair and equitable, and non-discriminatory. The Exchange
believes the proposal to eliminate the Spread-Crossing Eligible Remove
Fee incentive is reasonable because, as discussed above, the fee
incentive has not been successful in achieving its intended purpose of
incentivizing Members to route more orders to the Exchange that are
executable at the far side of the NBBO. The Exchange has limited
resources available to it to devote to the operation of pricing
incentives and as such, it is reasonable and equitable for the Exchange
to reallocate those resources away from programs that are ineffective.
The proposed change is also equitable and not unfairly discriminatory
because the Spread-Crossing Eligible Remove Fee incentive for
executions against resting non-displayed interest will be eliminated
for all Members, as the increased fee will be charged to all Members
that remove non-displayed liquidity with a spread-crossing eligible
order.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(4).
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The Exchange notes that as proposed, spread-crossing orders that
remove displayed liquidity will be charged a lower fee than if such
orders had removed non-displayed liquidity. However, the Exchange
believes the proposal remains reasonable, equitable, and not unfairly
discriminatory because spread-crossing orders may interact with non-
displayed interest resting
[[Page 40802]]
within the spread, thereby receiving price improvement equal to the
delta between the execution price and the far side quotation (i.e., the
difference between the trade price and the NBO (NBB) for buy (sell)
orders). Accordingly, the Exchange believes that spread-crossing orders
removing non-displayed liquidity receive a significant benefit in the
form of potential price improvement, and are thus not subject to
unfairly discriminatory fees.
Moreover, the Exchange notes that the proposed fee for spread-
crossing eligible orders that remove liquidity is identical to the fee
assessed by the Exchange prior to the introduction of the Spread-
Crossing Eligible Remove Fee, pursuant to the IEX Fee Schedule that was
filed with the Commission pursuant to the Act.\13\ Thus, the Exchange
believe the proposed change does not present any unique or novel issues
under the Act that have not already been considered by the Commission.
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\13\ See Securities Exchange Act Release No. 80453 (April 13,
2017), 82 FR 18503 (April 19, 2017) (SR-IEX-2016-09).
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The Exchange further believes the proposed increase in the Spread-
Crossing Remove Fee to $0.0009 from $0.0003 is reasonable in that is
within the range of transaction fees currently charged by the
Exchange,\14\ and continues to be substantially lower than the fee for
removing liquidity on competing exchanges with a ``maker-taker'' fee
structure (i.e., that provide a rebate to liquidity adders and charge
liquidity removers).\15\
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\14\ For example, the proposed Spread-Crossing Remove Fee is
equal to the Non-Displayed Match Fee. See the Investors Exchange Fee
Schedule, available on the Exchange public website.
\15\ See e.g., the New York Stock Exchange (``NYSE'') trading
fee schedule on its public website reflects fees to ``take''
liquidity ranging from $0.0024-$0.0030 depending on the type of
market participant, order and execution; the Nasdaq Stock Market
(``Nasdaq'') trading fee schedule on its public website reflects
fees to ``remove'' liquidity ranging from $0.0025-$0.0030 per share
for shares executed in continuous trading at or above $1.00 or 0.30%
of total dollar volume for shares executed below $1.00; the Cboe BZX
Exchange (``Cboe BZX) trading fee schedule on its public website
reflects fees for ``removing'' liquidity ranging from $0.0025-
$0.0030, for shares executed in continuous trading at or above $1.00
or 0.30% of total dollar volume for shares executed below $1.00.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. With regard to intra-market
competition, the Exchange notes that the increased fee will be charged
to all Members that remove non-displayed liquidity with a spread-
crossing eligible order, and thus there will be no competitive burdens
placed on Members as a result of the proposed change. With regard to
inter-market competition, the Exchange notes that it operates in a
highly competitive market in which market participants can readily
favor competing venues if they deem fee levels at a particular venue to
be excessive. In such an environment, the Exchange must continually
adjust its fees to remain competitive with other exchanges and
alternative trading systems. Because competitors are free to modify
their own fees in response, and because market participants may readily
adjust their order routing practices, the Exchange believes that the
degree to which fee changes in this market may impose any burden on
competition is extremely limited.
Moreover, trading venues are free to adjust their fees and credits
in response to any changes that the Exchange makes to its fees and
credits. If any of the changes proposed herein are unattractive to
market participants, it is likely that the Exchange will lose market
share as a result. Accordingly, the Exchange does not believe that the
proposed changes will impair the ability of members or competing order
execution venues to maintain their competitive standing in the
financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
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 \16\ and paragraph (f) of Rule 19b-4 \17\
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.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-IEX-2018-17 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-IEX-2018-17. 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. All submissions should refer to
File Number SR-IEX-2018-17 and should be submitted on or before
September 6, 2018.
[[Page 40803]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-17628 Filed 8-15-18; 8:45 am]
BILLING CODE 8011-01-P
