Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the BYX Fee Schedule as It Relates to Pricing for the Use of Certain Routing Strategies, 5134-5136 [2019-02734]

Download as PDF 5134 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Notices will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. Commissioner Jackson, as duty officer, voted to consider the items listed for the closed meeting in closed session. The subject matters of the closed meeting will be: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting items. CONTACT PERSON FOR MORE INFORMATION: For further information and to ascertain what, if any, matters have been added, deleted or postponed; please contact Brent J. Fields from the Office of the Secretary at (202) 551–5400. Dated: February 14, 2019. Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–02905 Filed 2–15–19; 11:15 am] BILLING CODE 8011–01–P [Release No. 34–85122; File No. SR– CboeBYX–2019–002] Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the BYX Fee Schedule as It Relates to Pricing for the Use of Certain Routing Strategies February 13, 2019. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 1, 2019, Cboe BYX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) 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 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 17:16 Feb 19, 2019 Jkt 247001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BYX Exchange, Inc. (‘‘BYX’’ or the ‘‘Exchange’’) is filing with the Securities and Exchange Commission (the ‘‘Commission’’) a proposed rule change to amend the BYX fee schedule as it relates to pricing for the use of certain routing strategies. The text of the proposed rule change is attached [sic] as Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/byx/), 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 SECURITIES AND EXCHANGE COMMISSION 1 15 prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1. Purpose The purpose of the proposed rule change is to amend the BYX fee schedule to change the pricing applicable to orders routed using the SLIM routing strategy in connection with planned changes to the System routing table.3 SLIM is a routing strategy offered by the Exchange that is used to target certain low cost protected market centers by routing to those venues after accessing available liquidity on the BYX Book, and prior to routing to other trading centers included in the System routing table. The Exchange periodically 3 The term ‘‘System routing table’’ refers to the proprietary process for determining the specific trading venues to which the System routes orders and the order in which it routes them. See Rule 11.13(b)(3). The Exchange reserves the right to maintain a different System routing table for different routing options and to modify the System routing table at any time without notice. Id. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 changes the low cost venues targeted by the SLIM routing strategy to ensure that the venues prioritized for routing can be accessed at a low cost. Currently, three exchanges are included in the System routing table as low cost protected market centers: Cboe EDGA Exchange, Inc. (‘‘EDGA’’), Nasdaq BX, Inc. (‘‘BX’’), and New York Stock Exchange LLC (‘‘NYSE’’). Pursuant to Rule 11.13(b)(3), the Exchange has determined to modify the System routing table such that NYSE would no longer be listed as a low cost protected market center where orders are first routed after seeking available liquidity on the BYX Book. In addition, the Exchange has decided to add NYSE American LLC (‘‘NYSE American’’) and NYSE National, Inc. (‘‘NYSE National’’) as low cost protected market centers. These changes to the System routing table are scheduled to be introduced on February 1, 2019. Currently, orders routed using the SLIM routing strategy are charged a fee of $0.00270 per share, except when routed to BZX or NYSE.4 Orders routed to BZX using the SLIM routing strategy are charged a fee of $0.0030 per share,5 and orders routed to NYSE using this routing strategy are charged a fee of $0.00280 per share.6 The Exchange proposes a number of changes to these fees in connection with the changes to the routing table for SLIM. First, in recognition of the fact that EDGA and BX can be accessed at a low cost today, the Exchange proposes to provide a rebate to orders routed to these exchanges using the SLIM routing strategy. As proposed, the rebate would be $0.00240 per share for orders routed to EDGA, and $0.00100 for orders routed to BX. The rebates are consistent with rebates currently offered for orders routed to EDGA and BX using the Destination Specific, TRIM, or TRIM2 routing strategies, which yield fee codes ‘‘BJ’’ and ‘‘C,’’ respectively. To effect the proposed change, the Exchange would therefore add SLIM to the list of routing strategies that yield fee code BJ and C when routed to EDGA or BX. In addition, the fee schedule currently provides that the rebates offered pursuant to fee codes BJ and C are applicable to eligible orders in all securities. EDGA and BX, however, do not provide rebates to orders that remove liquidity in securities priced below $1.00.7 As such, the Exchange 4 See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code ‘‘SX.’’ 5 See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code ‘‘SZ.’’ 6 See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code ‘‘D.’’ 7 Orders that remove liquidity on EDGA for Tapes A, B, and C are neither charged a fee nor provided E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Notices proposes to amend the pricing for orders routed to these exchanges pursuant to fee codes BJ and C, such that no charge or rebate would be provided in securities priced below $1.00. Second, the Exchange proposes to add two new fee codes, MX and NX, that relate to orders routed to NYSE American and NYSE National, respectively, using the SLIM routing strategy. Orders routed using the SLIM routing strategy would be charged a fee of $0.00020 per share if executed on NYSE American. If executed on NYSE National, those orders would be provided a rebate of $0.00200 per share in securities priced at or above $1.00, and no charge or rebate would be applied for securities priced below $1.00. The proposed fees and rebates chosen for routing to these venues generally reflect the current transaction fees and rebates available for accessing liquidity on those markets.8 Third, since the Exchange would now charge a low fee or pay a rebate for routing to all low cost protected market centers using the SLIM routing strategy, the Exchange proposes to increase the default fee charged to orders routed using the SLIM routing strategy to $0.00290 per share. This routing fee, designated under fee code SX, would apply to all orders routed using the SLIM routing strategy, except when routed to BX, BZX, EDGA, NYSE American, or NYSE National. Since NYSE would no longer be included as a low cost protected market center, the Exchange proposes to eliminate special pricing for orders routed to NYSE using the SLIM routing strategy under fee code D. Such orders would now pay the default routing fee for orders routed using this routing strategy, as described above. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with a rebate in securities priced below $1.00. See Cboe EDGA U.S. Equities Exchange Fee Schedule, fee codes ‘‘BB,’’ ‘‘N,’’ ‘‘W.’’ Orders that remove liquidity on Nasdaq BX in such securities are charged a fee equal to 0.10% of the total transaction cost. See Nasdaq BX Rulebook, Equity 7, Section 118(b). 8 NYSE American currently charges a fee for removing liquidity that is $0.00020 per share in securities priced at or above $1.00, and 0.25% of the total dollar value of the transaction in securities priced below $1.00. See NYSE American Equities Price List, I. Transaction Fees. NYSE National currently provides a rebate of $0.00200 per share in securities priced at or above $1.00 for members that achieve their taking tier. See NYSE National Schedule of Fees and Rebates, I. Transaction Fees, B. Tiered Rates. Orders that remove liquidity in securities below $1.00 are executed without charge or rebate. See NYSE National, Schedule of Fees and Rebates, I. Transaction Fees, A. General Rates. VerDate Sep<11>2014 17:16 Feb 19, 2019 Jkt 247001 Section 6 of the Act,9 in general, and furthers the requirements of Section 6(b)(4),10 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. The Exchange believes the proposed routing fee changes are appropriate as they reflect changes to the System routing table used to determine the order in which venues are accessed using the SLIM routing strategy. SLIM specifically targets certain equities exchanges that provide cheap executions or rebates to liquidity removing orders, and routes to those venues after trading with the BYX Book, and prior to accessing liquidity that may be available on other venues on the System routing table. The Exchange believes that the proposed changes reflect the intent of members when they submit routable order flow to the Exchange using the SLIM routing strategy. The Exchange believes that it is reasonable and equitable to begin rebating orders routed to EDGA and BX using the SLIM routing strategy. Although the Exchange does not offer special pricing when routing to those markets using the SLIM routing strategy today, the Exchange does offer such incentives when routing to those markets using certain other routing strategies, including Destination Specific, TRIM, or TRIM2. As is the case for orders routed to EDGA and BX using those routing strategies, the proposed rebates applicable to the SLIM routing strategy are designed to reflect incentives offered to liquidity taking orders on these two venues, which operating using taker/maker pricing models that offer rebates to remove liquidity. The Exchange also believes that it is reasonable and equitable to provide free executions, rather than rebates, for orders routed to EDGA and BX using the Destination Specific, TRIM, TRIM2, or SLIM routing strategies in securities priced below $1.00. Although EDGA and BX both generally provide rebates to orders that remove liquidity, as described above, those rebates are limited to securities priced at or above $1.00.11 For orders that remove liquidity in securities priced below $1.00, EDGA charges no fee and provides no rebate, while BX instead charges a fee.12 With the proposed changes to the routing fees, the Exchange would recoup some, but not all, of the cost associated with 9 15 U.S.C. 78f. U.S.C. 78f(b)(4). 11 See supra note 7. 12 Id. 10 15 PO 00000 Frm 00090 Fmt 4703 routing orders in lower priced securities to these markets on behalf of members that use the Destination Specific, TRIM, TRIM2, or SLIM routing strategies. Similarly, the Exchange believes that it is reasonable and equitable to provide special pricing for orders routed to NYSE American and NYSE National using the SLIM routing strategy. As mentioned previously, the Exchange is adding these two exchanges to its list of low cost protected market centers, and wishes to provide the benefit of the rebate or lower fee provided by those markets to BYX members using the SLIM routing strategy. The Exchange believes that these changes may increase interest in the Exchange’s SLIM routing strategy, in particular, by passing on better pricing to BYX members that choose to enter such orders on the Exchange, thereby encouraging additional order flow to be entered to the BYX Book. The rebates provided to orders routed to NYSE National using the SLIM routing strategy would be limited to order price at or above $1.00 in light of the fact that NYSE National does not provide rebates to liquidity removing orders in securities priced below $1.00. For securities priced below $1.00, the Exchange would charge no fee and provide no rebate, which is equivalent to pricing on NYSE National.13 Without limiting the proposed rebate for NYSE National to securities priced at or above $1.00, the Exchange would pay a significant rebate that would not be recouped via a rebate provided by the execution venue. The Exchange believes that is reasonable and equitable to limit routing rebates to circumstances where the Exchange would actually earn a rebate from the away venue in order to properly recoup the costs of accessing liquidity on such markets. Given the proposed changes to the fees charged or rebates provided when routing low cost protected market centers, the Exchange also believes that it is reasonable and equitable to increase the fee charged when routing to other equities markets. Specifically, the Exchange charges a default routing fee for orders routed using the SLIM routing strategy that is, in effect, a blended fee designed to compensate the Exchange for routing to one of the venues not otherwise subject to special pricing. Since the Exchange is introducing special pricing for orders routed to low cost protected market centers, the venues subject to this pricing, would, on average, charge a higher execution fee for liquidity removing orders. Indeed, a number of the trading centers that are 13 See Sfmt 4703 5135 E:\FR\FM\20FEN1.SGM supra note 8. 20FEN1 5136 Federal Register / Vol. 84, No. 34 / Wednesday, February 20, 2019 / Notices accessible using the SLIM routing strategy, including, for example, The Nasdaq Stock Market LLC (‘‘Nasdaq’’) and Cboe EDGX Exchange, Inc. (‘‘EDGX’’), charge a taker fee of $0.00300 per share.14 The Exchange believes that the proposed increased routing fee for these orders reflects an appropriate blended rate for accessing liquidity on those markets, and would appropriately compensate the Exchange for the costs associated with routing to such venues. Furthermore, the Exchange believes that the changes to the System routing table would reduce the chance that an order is routed to a high cost venue since routing to low cost protected market centers is prioritized. Finally, the Exchange believes that the proposed changes are equitable and not unfairly discriminatory as the proposed fees and rebates would apply equally to all members that use the Exchange to route orders using the associated routing strategy. The proposed fees are designed to reflect the fees charged and rebates offered by certain away trading centers that are accessed by Exchange routing strategies, and are being made in conjunction with changes to the System routing table designed to provide members with low cost executions for their routable order flow. Furthermore, if members do not favor the proposed pricing, they can send their routable orders directly to away markets instead of using routing functionality provided by the Exchange. Routing through the Exchange is voluntary, and the Exchange operates in a competitive environment where market participants can readily direct order flow to competing venues or providers of routing services if they deem fee levels to be excessive. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The proposed routing fee changes are designed to reflect changes being made to the System routing table used to determine where to send certain routable orders, and generally provide better pricing to members for orders routed to low cost protected market centers using the Exchange’s routing strategies. The Exchange operates in a highly competitive market in which market participants can readily direct their order flow to competing venues. In 14 See Nasdaq, Equity Rules, Pricing Schedule; EDGX U.S. Equities Exchange Fee Schedule, Fee Codes and Associated Fees. VerDate Sep<11>2014 17:16 Feb 19, 2019 Jkt 247001 such an environment, the Exchange must continually review, and consider adjusting, its fees and rebates to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed fee changes reflect this competitive environment. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or 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 15 and paragraph (f) of Rule 19b–4 16 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 • 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– CboeBYX–2019–002 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–CboeBYX–2019–002. 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 15 15 16 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). Frm 00091 Fmt 4703 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–CboeBYX–2019–002 and should be submitted on or before March 13, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–02734 Filed 2–19–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon Written Request Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Extension: Form T–4, SEC File No. 270–124, OMB Control No. 3235–0107 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection 17 17 Sfmt 4703 E:\FR\FM\20FEN1.SGM CFR 200.30–3(a)(12). 20FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 84, Number 34 (Wednesday, February 20, 2019)]
[Notices]
[Pages 5134-5136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02734]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85122; File No. SR-CboeBYX-2019-002]

Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the BYX Fee Schedule as It Relates to Pricing for the Use of Certain
Routing Strategies

February 13, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 1, 2019, Cboe BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') 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 Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

Cboe BYX Exchange, Inc. (``BYX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to amend the BYX fee schedule as it relates to
pricing for the use of certain routing strategies. The text of the
proposed rule change is attached [sic] as Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/byx/), 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
The purpose of the proposed rule change is to amend the BYX fee
schedule to change the pricing applicable to orders routed using the
SLIM routing strategy in connection with planned changes to the System
routing table.\3\ SLIM is a routing strategy offered by the Exchange
that is used to target certain low cost protected market centers by
routing to those venues after accessing available liquidity on the BYX
Book, and prior to routing to other trading centers included in the
System routing table. The Exchange periodically changes the low cost
venues targeted by the SLIM routing strategy to ensure that the venues
prioritized for routing can be accessed at a low cost. Currently, three
exchanges are included in the System routing table as low cost
protected market centers: Cboe EDGA Exchange, Inc. (``EDGA''), Nasdaq
BX, Inc. (``BX''), and New York Stock Exchange LLC (``NYSE''). Pursuant
to Rule 11.13(b)(3), the Exchange has determined to modify the System
routing table such that NYSE would no longer be listed as a low cost
protected market center where orders are first routed after seeking
available liquidity on the BYX Book. In addition, the Exchange has
decided to add NYSE American LLC (``NYSE American'') and NYSE National,
Inc. (``NYSE National'') as low cost protected market centers. These
changes to the System routing table are scheduled to be introduced on
February 1, 2019.
---------------------------------------------------------------------------

\3\ The term ``System routing table'' refers to the proprietary
process for determining the specific trading venues to which the
System routes orders and the order in which it routes them. See Rule
11.13(b)(3). The Exchange reserves the right to maintain a different
System routing table for different routing options and to modify the
System routing table at any time without notice. Id.
---------------------------------------------------------------------------

Currently, orders routed using the SLIM routing strategy are
charged a fee of $0.00270 per share, except when routed to BZX or
NYSE.\4\ Orders routed to BZX using the SLIM routing strategy are
charged a fee of $0.0030 per share,\5\ and orders routed to NYSE using
this routing strategy are charged a fee of $0.00280 per share.\6\ The
Exchange proposes a number of changes to these fees in connection with
the changes to the routing table for SLIM.
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\4\ See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code
``SX.''
\5\ See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code
``SZ.''
\6\ See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code
``D.''
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First, in recognition of the fact that EDGA and BX can be accessed
at a low cost today, the Exchange proposes to provide a rebate to
orders routed to these exchanges using the SLIM routing strategy. As
proposed, the rebate would be $0.00240 per share for orders routed to
EDGA, and $0.00100 for orders routed to BX. The rebates are consistent
with rebates currently offered for orders routed to EDGA and BX using
the Destination Specific, TRIM, or TRIM2 routing strategies, which
yield fee codes ``BJ'' and ``C,'' respectively. To effect the proposed
change, the Exchange would therefore add SLIM to the list of routing
strategies that yield fee code BJ and C when routed to EDGA or BX. In
addition, the fee schedule currently provides that the rebates offered
pursuant to fee codes BJ and C are applicable to eligible orders in all
securities. EDGA and BX, however, do not provide rebates to orders that
remove liquidity in securities priced below $1.00.\7\ As such, the
Exchange

[[Page 5135]]

proposes to amend the pricing for orders routed to these exchanges
pursuant to fee codes BJ and C, such that no charge or rebate would be
provided in securities priced below $1.00.
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\7\ Orders that remove liquidity on EDGA for Tapes A, B, and C
are neither charged a fee nor provided a rebate in securities priced
below $1.00. See Cboe EDGA U.S. Equities Exchange Fee Schedule, fee
codes ``BB,'' ``N,'' ``W.'' Orders that remove liquidity on Nasdaq
BX in such securities are charged a fee equal to 0.10% of the total
transaction cost. See Nasdaq BX Rulebook, Equity 7, Section 118(b).
---------------------------------------------------------------------------

Second, the Exchange proposes to add two new fee codes, MX and NX,
that relate to orders routed to NYSE American and NYSE National,
respectively, using the SLIM routing strategy. Orders routed using the
SLIM routing strategy would be charged a fee of $0.00020 per share if
executed on NYSE American. If executed on NYSE National, those orders
would be provided a rebate of $0.00200 per share in securities priced
at or above $1.00, and no charge or rebate would be applied for
securities priced below $1.00. The proposed fees and rebates chosen for
routing to these venues generally reflect the current transaction fees
and rebates available for accessing liquidity on those markets.\8\
---------------------------------------------------------------------------

\8\ NYSE American currently charges a fee for removing liquidity
that is $0.00020 per share in securities priced at or above $1.00,
and 0.25% of the total dollar value of the transaction in securities
priced below $1.00. See NYSE American Equities Price List, I.
Transaction Fees.
NYSE National currently provides a rebate of $0.00200 per share
in securities priced at or above $1.00 for members that achieve
their taking tier. See NYSE National Schedule of Fees and Rebates,
I. Transaction Fees, B. Tiered Rates. Orders that remove liquidity
in securities below $1.00 are executed without charge or rebate. See
NYSE National, Schedule of Fees and Rebates, I. Transaction Fees, A.
General Rates.
---------------------------------------------------------------------------

Third, since the Exchange would now charge a low fee or pay a
rebate for routing to all low cost protected market centers using the
SLIM routing strategy, the Exchange proposes to increase the default
fee charged to orders routed using the SLIM routing strategy to
$0.00290 per share. This routing fee, designated under fee code SX,
would apply to all orders routed using the SLIM routing strategy,
except when routed to BX, BZX, EDGA, NYSE American, or NYSE National.
Since NYSE would no longer be included as a low cost protected market
center, the Exchange proposes to eliminate special pricing for orders
routed to NYSE using the SLIM routing strategy under fee code D. Such
orders would now pay the default routing fee for orders routed using
this routing strategy, as described above.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act,\9\ in general, and furthers the requirements
of Section 6(b)(4),\10\ in particular, as it is designed to provide for
the equitable allocation of reasonable dues, fees and other charges
among its members and other persons using its facilities. The Exchange
believes the proposed routing fee changes are appropriate as they
reflect changes to the System routing table used to determine the order
in which venues are accessed using the SLIM routing strategy. SLIM
specifically targets certain equities exchanges that provide cheap
executions or rebates to liquidity removing orders, and routes to those
venues after trading with the BYX Book, and prior to accessing
liquidity that may be available on other venues on the System routing
table. The Exchange believes that the proposed changes reflect the
intent of members when they submit routable order flow to the Exchange
using the SLIM routing strategy.
---------------------------------------------------------------------------

\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

The Exchange believes that it is reasonable and equitable to begin
rebating orders routed to EDGA and BX using the SLIM routing strategy.
Although the Exchange does not offer special pricing when routing to
those markets using the SLIM routing strategy today, the Exchange does
offer such incentives when routing to those markets using certain other
routing strategies, including Destination Specific, TRIM, or TRIM2. As
is the case for orders routed to EDGA and BX using those routing
strategies, the proposed rebates applicable to the SLIM routing
strategy are designed to reflect incentives offered to liquidity taking
orders on these two venues, which operating using taker/maker pricing
models that offer rebates to remove liquidity.
The Exchange also believes that it is reasonable and equitable to
provide free executions, rather than rebates, for orders routed to EDGA
and BX using the Destination Specific, TRIM, TRIM2, or SLIM routing
strategies in securities priced below $1.00. Although EDGA and BX both
generally provide rebates to orders that remove liquidity, as described
above, those rebates are limited to securities priced at or above
$1.00.\11\ For orders that remove liquidity in securities priced below
$1.00, EDGA charges no fee and provides no rebate, while BX instead
charges a fee.\12\ With the proposed changes to the routing fees, the
Exchange would recoup some, but not all, of the cost associated with
routing orders in lower priced securities to these markets on behalf of
members that use the Destination Specific, TRIM, TRIM2, or SLIM routing
strategies.
---------------------------------------------------------------------------

\11\ See supra note 7.
\12\ Id.
---------------------------------------------------------------------------

Similarly, the Exchange believes that it is reasonable and
equitable to provide special pricing for orders routed to NYSE American
and NYSE National using the SLIM routing strategy. As mentioned
previously, the Exchange is adding these two exchanges to its list of
low cost protected market centers, and wishes to provide the benefit of
the rebate or lower fee provided by those markets to BYX members using
the SLIM routing strategy. The Exchange believes that these changes may
increase interest in the Exchange's SLIM routing strategy, in
particular, by passing on better pricing to BYX members that choose to
enter such orders on the Exchange, thereby encouraging additional order
flow to be entered to the BYX Book.
The rebates provided to orders routed to NYSE National using the
SLIM routing strategy would be limited to order price at or above $1.00
in light of the fact that NYSE National does not provide rebates to
liquidity removing orders in securities priced below $1.00. For
securities priced below $1.00, the Exchange would charge no fee and
provide no rebate, which is equivalent to pricing on NYSE National.\13\
Without limiting the proposed rebate for NYSE National to securities
priced at or above $1.00, the Exchange would pay a significant rebate
that would not be recouped via a rebate provided by the execution
venue. The Exchange believes that is reasonable and equitable to limit
routing rebates to circumstances where the Exchange would actually earn
a rebate from the away venue in order to properly recoup the costs of
accessing liquidity on such markets.
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\13\ See supra note 8.
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Given the proposed changes to the fees charged or rebates provided
when routing low cost protected market centers, the Exchange also
believes that it is reasonable and equitable to increase the fee
charged when routing to other equities markets. Specifically, the
Exchange charges a default routing fee for orders routed using the SLIM
routing strategy that is, in effect, a blended fee designed to
compensate the Exchange for routing to one of the venues not otherwise
subject to special pricing. Since the Exchange is introducing special
pricing for orders routed to low cost protected market centers, the
venues subject to this pricing, would, on average, charge a higher
execution fee for liquidity removing orders. Indeed, a number of the
trading centers that are

[[Page 5136]]

accessible using the SLIM routing strategy, including, for example, The
Nasdaq Stock Market LLC (``Nasdaq'') and Cboe EDGX Exchange, Inc.
(``EDGX''), charge a taker fee of $0.00300 per share.\14\ The Exchange
believes that the proposed increased routing fee for these orders
reflects an appropriate blended rate for accessing liquidity on those
markets, and would appropriately compensate the Exchange for the costs
associated with routing to such venues. Furthermore, the Exchange
believes that the changes to the System routing table would reduce the
chance that an order is routed to a high cost venue since routing to
low cost protected market centers is prioritized.
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\14\ See Nasdaq, Equity Rules, Pricing Schedule; EDGX U.S.
Equities Exchange Fee Schedule, Fee Codes and Associated Fees.
---------------------------------------------------------------------------

Finally, the Exchange believes that the proposed changes are
equitable and not unfairly discriminatory as the proposed fees and
rebates would apply equally to all members that use the Exchange to
route orders using the associated routing strategy. The proposed fees
are designed to reflect the fees charged and rebates offered by certain
away trading centers that are accessed by Exchange routing strategies,
and are being made in conjunction with changes to the System routing
table designed to provide members with low cost executions for their
routable order flow. Furthermore, if members do not favor the proposed
pricing, they can send their routable orders directly to away markets
instead of using routing functionality provided by the Exchange.
Routing through the Exchange is voluntary, and the Exchange operates in
a competitive environment where market participants can readily direct
order flow to competing venues or providers of routing services if they
deem fee levels to be excessive.

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

The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
proposed routing fee changes are designed to reflect changes being made
to the System routing table used to determine where to send certain
routable orders, and generally provide better pricing to members for
orders routed to low cost protected market centers using the Exchange's
routing strategies. The Exchange operates in a highly competitive
market in which market participants can readily direct their order flow
to competing venues. In such an environment, the Exchange must
continually review, and consider adjusting, its fees and rebates to
remain competitive with other exchanges. For the reasons described
above, the Exchange believes that the proposed fee changes reflect this
competitive environment.

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

No written comments were either solicited or 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 \15\ and paragraph (f) of Rule 19b-4 \16\
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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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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 rule-comments@sec.gov. Please include
File Number SR-CboeBYX-2019-002 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-CboeBYX-2019-002. 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-CboeBYX-2019-002 and should be submitted
on or before March 13, 2019.
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\17\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02734 Filed 2-19-19; 8:45 am]
BILLING CODE 8011-01-P

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