Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Add Certain Fees Related to the Listing and Trading of Options Contracts on the Dow Jones Industrial Average Index (“DJX”), 22916-22919 [2019-10352]
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Federal Register / Vol. 84, No. 97 / Monday, May 20, 2019 / Notices
FERS–FRAE must pay an increase of
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under FERS–FRAE.
The normal cost percentages for each
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NORMAL COST PERCENTAGES FOR FERS, FERS-REVISED ANNUITY EMPLOYEE (RAE), AND FERS-FURTHER REVISED
ANNUITY (FRAE) GROUPS
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certain employees (when serving abroad) ...............................................................................
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Under section 841.408 of title 5, Code
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The time limit and address for filing
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through 841.412 of title 5, Code of
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DATES and ADDRESSES sections of this
notice.
Office of Personnel Management.
Alexys Stanley,
Regulatory Affairs Analyst.
BILLING CODE 6325–38–P
POSTAL SERVICE
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ACTION: Notice of a modified system of
records; response to comments.
AGENCY:
The United States Postal
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originally scheduled to be effective on
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After review and evaluation of
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FOR FURTHER INFORMATION CONTACT:
Janine Castorina, Chief Privacy and
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and Records Office, United States Postal
Service, 475 L’Enfant Plaza SW, Room
1P830, Washington, DC 20260–1101,
telephone 202–268–3069, or privacy@
usps.gov.
On
February 7, 2019, the Postal Service
published notice of its intent to modify
an existing system of records, USPS
820.300 Informed Delivery to support
the Targeted Offers application.
Targeted Offers Powered by Informed
Address (‘‘Targeted Offers’’) is an
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Targeted Offers will be incorporated
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The Postal Service provides the
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service:
(1) Comment: The comments received
question the Postal Service’s perceived
SUPPLEMENTARY INFORMATION:
[FR Doc. 2019–10292 Filed 5–17–19; 8:45 am]
SUMMARY:
has found that no substantive changes to
the system of records are required, and
that the effective date for the
implementation of the proposed
revisions should proceed as scheduled.
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FERS-RAE
normal cost
(percent)
FERS–FRAE
normal cost
(percent)
23.5
25.2
17.3
19.4
17.5
19.6
34.7
34.5
19.5
35.2
35.0
19.9
35.4
35.1
20.2
23.8
15.5
16.8
24.4
15.9
17.3
24.6
16.1
17.5
expansion of its collection of personally
identifiable information.
Answer: This system of records
update does not expand any current
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directed at its Informed Delivery System
as a whole, and not the particular
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As such, no response is required to said
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(2) Comment: Is it the intent of the
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letters only?
Answer: The Postal Service intends to
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physical mail delivered via Informed
Delivery.
Brittany M. Johnson,
Attorney, Federal Compliance.
[FR Doc. 2019–10457 Filed 5–17–19; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85855; File No. SR–C2–
2019–010]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Add Certain Fees
Related to the Listing and Trading of
Options Contracts on the Dow Jones
Industrial Average Index (‘‘DJX’’)
May 14, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
E:\FR\FM\20MYN1.SGM
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Federal Register / Vol. 84, No. 97 / Monday, May 20, 2019 / Notices
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 7,
2019, Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to add
certain fees related to the listing and
trading of options contracts on the Dow
Jones Industrial Average Index (‘‘DJX’’).
The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/ctwo/),
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.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On May 8, 2019, the Exchange will
begin listing DJX options for trading.3
Accordingly, the Exchange proposes to
amend its Fee Schedule to codify
standard transaction fees for DJX
transactions. The proposed changes will
be effective May 8, 2019.
Specifically, the Exchange proposes to
add various fee codes for executions and
linkage routing in DJX options. The
proposed rates applicable to each
proposed fee code for executions and for
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Interpretation and Policy .01 to Rule 24.
linkage routing correspond to the rates
that currently apply to the same
execution and linkage routing types in
the Russell 2000 Index options (‘‘RUT’’).
The Exchange also proposes to amend
the Index License Surcharge fees that
apply to all non-Public Customer
transactions to include a fee for DJX.
Regarding executions in DJX options,
fee code DC will be appended to all
Public Customer orders executed in DJX
options, and will result in a rate of $0.15
per contract. Fee code DM will be
appended to all C2 Market-Maker orders
executed in DJX options, and will result
in a rate of $0.35 per contract. Fee code
DN will be appended to Non-Customer
and Non-Market-Maker orders executed
in DJX options, and will result in a rate
of $0.55 per contract. Fee code DO will
be appended to trades executed on the
open in DJX options, and will be free.
The proposed fees assessed are the same
for corresponding execution types in
RUT.
Regarding linkage routing fees for
orders routed away to another exchange
in DJX, fee code FC will be appended to
all routed Customer orders in DJX
options, and will result in a fee of $0.85.
Fee code FM will be appended to all
routed Market-Marker orders in DJX
options, and will result in a fee of $1.05.
Fee code FN will be appended to all
routed Non-Customer and Non-MarketMaker orders in DJX options, and will
result in a fee of $1.25. Fee code FO will
be appended to all order routed at the
open in DJX, and will be free. The
proposed fees assessed are the same for
corresponding linkage routing types in
RUT.
As stated, the Exchange also proposes
to amend the Index License Surcharge
fee, which is applicable to all nonPublic Customer transactions, to include
a fee of $0.10 per contract assessed for
transactions in DJX options. The
Exchange proposes to assess a Surcharge
of $0.10 per contract in order to recoup
the costs associated with the DJX
license.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the Section 6 of the Act,4 in general, and
Section 6(b)(4),5 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Trading Permit
Holders (‘‘TPHs’’) and other persons
using its facilities.
Specifically, the Exchange believes it
is reasonable to charge different fee
amounts to different user types for
1 15
2 17
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U.S.C. 78f(b)(4).
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22917
executions and linkage routing in DJX
options in the manner proposed because
the proposed fees are consistent with
the price differentiation and type of
TPH transactions that exists today on
the Exchange for another index option
product, RUT, as well as on its affiliated
exchange, Cboe Exchange, Inc. (‘‘Cboe
Options’’) for index option products,
which includes DJX options.6
Additionally, the Exchange believes the
proposed fee amounts for DJX
executions and linkage routing are
reasonable because the proposed fee
amounts correspond to the fee amounts
charged for executions and linkage
routing in RUT on the Exchange today.
In addition to this, the Exchange
believes that the proposed surcharge for
DJX options is reasonable because a
similar surcharge exists on the Exchange
today for RUT options (which is higher
than the proposed surcharge for DJX).
The Exchange also notes that Cboe
Options currently assesses a $0.10
surcharge fee for DJX options.7
Furthermore, the Exchange believes that
the proposed fees for the newly listed
DJX options on C2 are reasonable as the
Exchange’s affiliated exchange, Cboe
BZX Exchange, Inc. (‘‘BZX Options’’)
recently added comparable execution,
linkage routing and surcharge fees for a
newly listed index option product,
RUT.8 The Exchange believes these
types of fee codes for newly or recently
listed index options are reasonable
because they promote and encourage
trading in such products.
The Exchange also believes that it is
equitable and not unfairly
discriminatory to assess lower fees for
executions and linkage routing to
Customers (including Public Customers)
as compared to other market
participants because Customer order
flow enhances liquidity on the
Exchange for the benefit of all market
participants. Specifically, Customer
liquidity benefits all market participants
by providing more trading
opportunities, which attracts MarketMakers. An increase in the activity of
these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants. Moreover, the options
industry has a long history of providing
preferential pricing to Customers, and
the Exchange’s current Fee Schedule
6 See Cboe Options Fees Schedule, Index Options
Rate Table.
7 Id.
8 See Securities Exchange Act Release No. 84401
(October, 11, 2018), 83 FR 52591 (October 17, 2018)
(Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Related to Fees on Cboe BZX
Exchange, Inc.) (SR–CboeBZX–2018–075).
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Federal Register / Vol. 84, No. 97 / Monday, May 20, 2019 / Notices
currently does so in many places, as do
the fees structures of multiple other
exchanges.9 The Exchange notes that all
fee amounts applicable to Customers
will be applied equally to all Customers,
i.e. all Customers will be assessed the
same amount.
Additionally, the Exchange believes
that it is equitable and not unfairly
discriminatory to assess lower fees for
executions and linkage routing to
Market-Makers as compared to other
market participants, other than
Customers, because Market-Makers,
unlike other market participants, take
on a number of obligations, including
quoting obligations, which other market
participants do not have. Further, these
lower fees offered to Market-Makers are
intended to incent Market-Makers to
quote and trade more on C2 Options,
thereby providing more trading
opportunities for all market
participants. The Exchange notes that
all fee amounts applicable to MarketMakers will be applied equally to all
Market-Makers, i.e. all Market-Makers
will be assessed the same amount.
Similarly, the Exchange notes that the
DJX fee amounts for each separate type
of other market participant will be
assessed equally to all such market
participants, i.e. all Non-Customer and
Non-Market-Maker orders will be
assessed the same amount.
The Exchange believes its proposed
fees for DJX orders that are routed away
from the Exchange are reasonable taking
into account routing costs and also
notes that the proposed fees are in line
with amounts assessed by other
exchanges.10 For the reasons described
above, the Exchange also believes that it
is equitable and not unfairly
discriminatory to assess lower routing
fees to Customers as compared to other
market participants. The Exchange notes
that routing through the Exchange is
voluntary and market participants can
readily direct order flow to another
exchange if they deem Exchange fee
levels to be excessive.
Finally, the Exchange believes that it
is reasonable to asses an Index License
Surcharge fee to all non-Public
Customer transactions because the
surcharge helps recoup some of the
costs associated with the license for
DJX. As previously stated, the Exchange
notes that the surcharge amount is the
same as the amount assessed on other
exchanges and lower than the amount
assessed for RUT options on the
Exchange. The proposed Surcharge is
also equitable and not unfairly
9 See e.g. supra note 6. See also BZX Options Fee
Schedule, Fee Codes and Associated Fees.
10 See supra note 9.
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16:41 May 17, 2019
Jkt 247001
discriminatory because the amount will
be assessed to all market participants to
whom the Surcharge applies. Not
applying the DJX License Surcharge fee
to Public Customer orders is equitable
and not unfairly discriminatory because
this is designed to attract Customer DJX
option orders, which increases liquidity
and provides greater trading
opportunities to all market participants.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes the proposed
amendments to its Fee Schedule will
not impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because the DJX fee amounts for each
separate type of market participant will
be assessed equally to all such market
participants. While different fees are
assessed to different market participants
in some circumstances, the obligations
and circumstances between these
market participants differ, as discussed
above. For example, Market-Makers
have quoting obligations that are not
applicable to other market participants.
Further, the proposed fees structure for
DJX is intended to encourage more
trading of DJX, which brings liquidity to
the Exchange and benefits all market
participants.
The Exchange also does not believe
that the proposed rule changes will
impose any burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because the
proposed DJX fees are in line with
amounts assessed for index option
products by other exchanges. The
Exchange notes that to the extent that
the proposed fee rates and rebates for
certain orders in DJX options make the
Exchange a more attractive venue for
market participants than other
exchanges, market participants are
welcome to become TPHs and execute
such orders on the Exchange. Also, as
stated, market participants are free to
direct order flow to other competing
venues if they deem the Exchange’s fees
excessive.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
PO 00000
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Fmt 4703
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comments from TPHs or other interested
parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and paragraph (f) of Rule
19b–4 12 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. 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–
C2–2019–010 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–C2–2019–010. 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
11 15
12 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
20MYN1
Federal Register / Vol. 84, No. 97 / Monday, May 20, 2019 / Notices
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–C2–2019–010 and should
be submitted on or before June 10, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–10352 Filed 5–17–19; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–85852; File No. SR–
CboeEDGX–2019–030]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule
May 14, 2019.
khammond on DSKBBV9HB2PROD with NOTICES
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 May 1,
2019, Cboe EDGX Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
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
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) is filing with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to amend the fee
schedule applicable to Members and
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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16:41 May 17, 2019
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
13 17
non-Members 3 of the Exchange
pursuant to EDGX Rules 15.1(a) and (c).
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/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
1. Purpose
The Exchange proposes to amend its
fee schedule applicable to its equities
trading platform (‘‘EDGX Equities’’),
effective May 1, 2019.
Transaction Fee Changes
Orders That Remove Liquidity
In securities priced at or above $1.00,
the Exchange currently assesses a fee of
$0.0030 per share for Displayed and
Non-Displayed orders that remove
liquidity (i.e., yields fee codes N, W, 6,
BB, PR and ZR). All Displayed and NonDisplayed orders in securities priced
below $1.00 that remove liquidity (i.e.,
yield fee codes N, W, 6, BB, PR and ZR)
result in a fee of 0.30% of dollar value.
The Exchange first proposes to reduce
the current standard rate of $0.0030 per
share to $0.00265 per share for
Displayed and Non-Displayed orders
that remove liquidity for securities
priced at or above $1.00. All Displayed
and Non-Displayed orders that remove
liquidity in securities priced below
$1.00 would continue to result in a fee
of 0.30% of dollar value.
Orders That Add Liquidity
In securities priced at or above $1.00,
the Exchange currently provides a
3A
Member is defined as ‘‘any registered broker
or dealer that has been admitted to membership in
the Exchange.’’ See Exchange Rule 1.5(n).
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22919
standard rebate of $0.0020 per share for
Displayed orders that add liquidity (i.e.,
yield fee code B, V, Y, 3 and 4) and a
rebate of $0.0015 for Non-Displayed
orders that add liquidity (i.e., yield fee
code DM, HA, MM, and RP).4 All
Displayed and Non-Displayed orders in
securities priced below $1.00 that add
liquidity receive a rebate of $0.00003
per share.
The Exchange now proposes to reduce
rebates for Displayed and NonDisplayed orders that add liquidity to
balance the revenue received for orders
that remove liquidity (and as described
above, the Exchange is reducing the
rates assessed for orders that remove
liquidity). With respect to Displayed
orders priced at or above $1.00 that add
liquidity (i.e., yields fee codes B, V, Y,
3 and 4), the Exchange proposes to
reduce the per share rebate from
$0.0020 to $0.0017. With respect to
Non-Displayed orders priced at or above
$1.00 that add liquidity (i.e., yields fee
codes DM, HA, MM, and RP), the
Exchange proposes to reduce the
standard rebate from $0.0015 per share
to $0.0010 per share.
The Exchange also proposes to
eliminate the current rebate pf $0.00003
per share for Non-Displayed orders in
securities priced below $1.00 that add
liquidity and provide that such
executions shall be free. All Displayed
orders that add liquidity in securities
priced below $1.00 would continue to
receive a rebate of $0.00003 per share.
Add Volume Tiers—Amendments
The Exchange next proposes to amend
and restructure its Add Volume Tiers
under footnote 1 of the fees schedule.
Currently, the Exchange offers eight
Add Volume Tiers under footnote 1,
which provide an enhanced rebate of
$0.0025 to $0.0033 per share for
qualifying Displayed orders which yield
fee codes B, V, Y, 3 and 4. The Exchange
proposes to (i) eliminate the Super Tier,
Ultra Tier and Mega Tiers 1 and 2, and
adopt in their place new Tiers 1–4, (ii)
amend the current Growth Tier and
adopt an additional Growth Tier, (iii)
amend the Cross-Asset Volume Tier, (iv)
adopt a Market Quality Tier, and (v)
eliminate the Investor Tier and Step-Up
Tier. The Exchange believes the
proposed changes result in an easier to
follow tier structure and continues to
provide Members a variety of
opportunities to receive enhanced
rebates for adding certain levels of
4 Does not include fee code HI, which is
appended to Non-Displayed orders that receive
price improvement and add liquidity. Such
executions are free.
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]]>Agencies
[Federal Register Volume 84, Number 97 (Monday, May 20, 2019)]
[Notices]
[Pages 22916-22919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10352]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85855; File No. SR-C2-2019-010]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Add
Certain Fees Related to the Listing and Trading of Options Contracts on
the Dow Jones Industrial Average Index (``DJX'')
May 14, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the
[[Page 22917]]
``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 7, 2019, Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'')
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to add
certain fees related to the listing and trading of options contracts on
the Dow Jones Industrial Average Index (``DJX''). The text of the
proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/ctwo/), 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
On May 8, 2019, the Exchange will begin listing DJX options for
trading.\3\ Accordingly, the Exchange proposes to amend its Fee
Schedule to codify standard transaction fees for DJX transactions. The
proposed changes will be effective May 8, 2019.
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\3\ See Interpretation and Policy .01 to Rule 24.
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Specifically, the Exchange proposes to add various fee codes for
executions and linkage routing in DJX options. The proposed rates
applicable to each proposed fee code for executions and for linkage
routing correspond to the rates that currently apply to the same
execution and linkage routing types in the Russell 2000 Index options
(``RUT''). The Exchange also proposes to amend the Index License
Surcharge fees that apply to all non-Public Customer transactions to
include a fee for DJX.
Regarding executions in DJX options, fee code DC will be appended
to all Public Customer orders executed in DJX options, and will result
in a rate of $0.15 per contract. Fee code DM will be appended to all C2
Market-Maker orders executed in DJX options, and will result in a rate
of $0.35 per contract. Fee code DN will be appended to Non-Customer and
Non-Market-Maker orders executed in DJX options, and will result in a
rate of $0.55 per contract. Fee code DO will be appended to trades
executed on the open in DJX options, and will be free. The proposed
fees assessed are the same for corresponding execution types in RUT.
Regarding linkage routing fees for orders routed away to another
exchange in DJX, fee code FC will be appended to all routed Customer
orders in DJX options, and will result in a fee of $0.85. Fee code FM
will be appended to all routed Market-Marker orders in DJX options, and
will result in a fee of $1.05. Fee code FN will be appended to all
routed Non-Customer and Non-Market-Maker orders in DJX options, and
will result in a fee of $1.25. Fee code FO will be appended to all
order routed at the open in DJX, and will be free. The proposed fees
assessed are the same for corresponding linkage routing types in RUT.
As stated, the Exchange also proposes to amend the Index License
Surcharge fee, which is applicable to all non-Public Customer
transactions, to include a fee of $0.10 per contract assessed for
transactions in DJX options. The Exchange proposes to assess a
Surcharge of $0.10 per contract in order to recoup the costs associated
with the DJX license.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the Section 6 of the Act,\4\ in general, and Section 6(b)(4),\5\
in particular, as it is designed to provide for the equitable
allocation of reasonable dues, fees and other charges among its Trading
Permit Holders (``TPHs'') and other persons using its facilities.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
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Specifically, the Exchange believes it is reasonable to charge
different fee amounts to different user types for executions and
linkage routing in DJX options in the manner proposed because the
proposed fees are consistent with the price differentiation and type of
TPH transactions that exists today on the Exchange for another index
option product, RUT, as well as on its affiliated exchange, Cboe
Exchange, Inc. (``Cboe Options'') for index option products, which
includes DJX options.\6\ Additionally, the Exchange believes the
proposed fee amounts for DJX executions and linkage routing are
reasonable because the proposed fee amounts correspond to the fee
amounts charged for executions and linkage routing in RUT on the
Exchange today. In addition to this, the Exchange believes that the
proposed surcharge for DJX options is reasonable because a similar
surcharge exists on the Exchange today for RUT options (which is higher
than the proposed surcharge for DJX). The Exchange also notes that Cboe
Options currently assesses a $0.10 surcharge fee for DJX options.\7\
Furthermore, the Exchange believes that the proposed fees for the newly
listed DJX options on C2 are reasonable as the Exchange's affiliated
exchange, Cboe BZX Exchange, Inc. (``BZX Options'') recently added
comparable execution, linkage routing and surcharge fees for a newly
listed index option product, RUT.\8\ The Exchange believes these types
of fee codes for newly or recently listed index options are reasonable
because they promote and encourage trading in such products.
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\6\ See Cboe Options Fees Schedule, Index Options Rate Table.
\7\ Id.
\8\ See Securities Exchange Act Release No. 84401 (October, 11,
2018), 83 FR 52591 (October 17, 2018) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change Related to Fees on
Cboe BZX Exchange, Inc.) (SR-CboeBZX-2018-075).
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The Exchange also believes that it is equitable and not unfairly
discriminatory to assess lower fees for executions and linkage routing
to Customers (including Public Customers) as compared to other market
participants because Customer order flow enhances liquidity on the
Exchange for the benefit of all market participants. Specifically,
Customer liquidity benefits all market participants by providing more
trading opportunities, which attracts Market-Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. Moreover, the options industry has
a long history of providing preferential pricing to Customers, and the
Exchange's current Fee Schedule
[[Page 22918]]
currently does so in many places, as do the fees structures of multiple
other exchanges.\9\ The Exchange notes that all fee amounts applicable
to Customers will be applied equally to all Customers, i.e. all
Customers will be assessed the same amount.
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\9\ See e.g. supra note 6. See also BZX Options Fee Schedule,
Fee Codes and Associated Fees.
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Additionally, the Exchange believes that it is equitable and not
unfairly discriminatory to assess lower fees for executions and linkage
routing to Market-Makers as compared to other market participants,
other than Customers, because Market-Makers, unlike other market
participants, take on a number of obligations, including quoting
obligations, which other market participants do not have. Further,
these lower fees offered to Market-Makers are intended to incent
Market-Makers to quote and trade more on C2 Options, thereby providing
more trading opportunities for all market participants. The Exchange
notes that all fee amounts applicable to Market-Makers will be applied
equally to all Market-Makers, i.e. all Market-Makers will be assessed
the same amount. Similarly, the Exchange notes that the DJX fee amounts
for each separate type of other market participant will be assessed
equally to all such market participants, i.e. all Non-Customer and Non-
Market-Maker orders will be assessed the same amount.
The Exchange believes its proposed fees for DJX orders that are
routed away from the Exchange are reasonable taking into account
routing costs and also notes that the proposed fees are in line with
amounts assessed by other exchanges.\10\ For the reasons described
above, the Exchange also believes that it is equitable and not unfairly
discriminatory to assess lower routing fees to Customers as compared to
other market participants. The Exchange notes that routing through the
Exchange is voluntary and market participants can readily direct order
flow to another exchange if they deem Exchange fee levels to be
excessive.
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\10\ See supra note 9.
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Finally, the Exchange believes that it is reasonable to asses an
Index License Surcharge fee to all non-Public Customer transactions
because the surcharge helps recoup some of the costs associated with
the license for DJX. As previously stated, the Exchange notes that the
surcharge amount is the same as the amount assessed on other exchanges
and lower than the amount assessed for RUT options on the Exchange. The
proposed Surcharge is also equitable and not unfairly discriminatory
because the amount will be assessed to all market participants to whom
the Surcharge applies. Not applying the DJX License Surcharge fee to
Public Customer orders is equitable and not unfairly discriminatory
because this is designed to attract Customer DJX option orders, which
increases liquidity and provides greater trading opportunities to all
market participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed amendments to its Fee Schedule
will not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
does not believe that the proposed rule change will impose any burden
on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the DJX fee amounts for
each separate type of market participant will be assessed equally to
all such market participants. While different fees are assessed to
different market participants in some circumstances, the obligations
and circumstances between these market participants differ, as
discussed above. For example, Market-Makers have quoting obligations
that are not applicable to other market participants. Further, the
proposed fees structure for DJX is intended to encourage more trading
of DJX, which brings liquidity to the Exchange and benefits all market
participants.
The Exchange also does not believe that the proposed rule changes
will impose any burden on intermarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act because the
proposed DJX fees are in line with amounts assessed for index option
products by other exchanges. The Exchange notes that to the extent that
the proposed fee rates and rebates for certain orders in DJX options
make the Exchange a more attractive venue for market participants than
other exchanges, market participants are welcome to become TPHs and
execute such orders on the Exchange. Also, as stated, market
participants are free to direct order flow to other competing venues if
they deem the Exchange's fees excessive.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from TPHs or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and paragraph (f) of Rule 19b-4 \12\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. 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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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-C2-2019-010 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-C2-2019-010. 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
[[Page 22919]]
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-C2-2019-010 and should be
submitted on or before June 10, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10352 Filed 5-17-19; 8:45 am]
BILLING CODE 8011-01-P
