Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend the Fee Schedule Applicable to Members and Non-Members 1, 32789-32792 [2019-14491]
Download as PDF
<![CDATA[
Federal Register / Vol. 84, No. 131 / Tuesday, July 9, 2019 / Notices
following the requirements of the
Record Access Procedure above.
NOTIFICATION PROCEDURES
Individuals, or third parties with
written authorization from the
individual, wishing to learn whether
this system of records contains
information about them should submit a
written request to the Disclosure Officer,
PBGC, 1200 K Street NW, Washington,
DC 20005, providing their name,
address, date of birth, and verification of
their identity in accordance with 29
CFR 4902.3(c).
EXEMPTIONS PROMULGATED FOR THE SYSTEM
Pursuant to 5 U.S.C. 552a(k)(2), PBGC
has established regulations at 29 CFR
4902.12 that exempt records in this
system depending on their purpose.
HISTORY
None.
[FR Doc. 2019–14605 Filed 7–8–19; 8:45 am]
BILLING CODE 7709–02–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2019–159 and CP2019–179]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
negotiated service agreements. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: July 11,
2019.
SUMMARY:
Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
khammond on DSKBBV9HB2PROD with NOTICES
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
VerDate Sep<11>2014
17:47 Jul 08, 2019
Jkt 247001
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
32789
This Notice will be published in the
Federal Register.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2019–14531 Filed 7–8–19; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
Product Change—Priority Mail and
First-Class Package Service
Negotiated Service Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: July 9,
2019.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Elizabeth Reed, 202–268–3179.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 2, 2019, it
filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & First-Class Package
Service Contract 105 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2019–159,
CP2019–179.
SUPPLEMENTARY INFORMATION:
Elizabeth Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2019–14495 Filed 7–8–19; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86283; File No. SR–
CboeBZX–2019–059]
1. Docket No(s).: MC2019–159 and
CP2019–179; Filing Title: USPS Request
to Add Priority Mail & First-Class
Package Service Contract 105 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: July 2, 2019; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3020.30 et seq., and 39 CFR 3015.5;
Public Representative: Curtis E. Kidd;
Comments Due: July 11, 2019.
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Amend the Fee Schedule Applicable to
Members and Non-Members 1 of the
Exchange Pursuant to BZX Rules
15.1(a) and (c)
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
1 A Member is defined as ‘‘any registered broker
or dealer that has been admitted to membership in
the Exchange.’’ See Exchange Rule 1.5(n).
2 15 U.S.C. 78s(b)(1).
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
July 2, 2019.
Pursuant to Section 19(b)(1) 2 of the
Securities Exchange Act of 1934 (the
E:\FR\FM\09JYN1.SGM
09JYN1
32790
Federal Register / Vol. 84, No. 131 / Tuesday, July 9, 2019 / Notices
‘‘Act’’) 3 and Rule 19b–4 thereunder,4
notice is hereby given that, on June 19,
2019, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) 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 BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend the fee schedule applicable to
Members and non-Members 5 of the
Exchange pursuant to BZX Rules 15.1(a)
and (c). Changes to the fee schedule
pursuant to this proposal are effective
upon filing. The text of the proposed
rule change is attached 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/bzx/), 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
khammond on DSKBBV9HB2PROD with NOTICES
1. Purpose
The Exchange proposes to amend its
fee schedule applicable to its equities
trading platform (‘‘BZX Equities’’) to
adopt a new Step-Up Tier, effective July
1, 2019.
3 15
U.S.C. 78a.
CFR 240.19b–4.
5 A Member is defined as ‘‘any registered broker
or dealer that has been admitted to membership in
the Exchange.’’ See Exchange Rule 1.5(n).
4 17
VerDate Sep<11>2014
17:47 Jul 08, 2019
Jkt 247001
The Exchange first notes that it
operates in a highly-competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. More
specifically, the Exchange is only one of
several equity venues to which market
participants may direct their order flow,
and it represents a small percentage of
the overall market. The Exchange in
particular operates a ‘‘Maker-Taker’’
model whereby it pays credits to
members that provide liquidity and
assesses fees to those that remove
liquidity. The Exchange’s Fees Schedule
sets forth the standard rebates and rates
applied per share for orders that provide
and remove liquidity, respectively.
Particularly, the Exchange provides a
standard rebate of $0.0020 per share for
orders that add liquidity 6 and assesses
a fee of $0.0025 per share for orders that
remove liquidity. In response to the
competitive environment, the Exchange
also offers tiered pricing which provides
Members opportunities to qualify for
higher rebates or reduced fees where
certain volume criteria and thresholds
are met. Tiered pricing provides an
incremental incentive for Members to
strive for higher tier levels, which
provides increasingly higher benefits or
discounts for satisfying increasingly
more stringent criteria.
For example, pursuant to footnote 2 of
the Fees Schedule, the Exchange offers
four Step-Up Tiers that provide
Members an opportunity to qualify for
an enhanced rebate on their orders that
add liquidity where they increase their
relative liquidity each month over a
predetermined baseline. Under the
current Step-Up Tiers, a Member
receives a rebate of $0.0030 (Tier 1),
$0.0031 (Tier 2 and Tier 3), or $0.0032
(Tier 4) per share for qualifying orders
which yield fee codes B,7 V,8 or Y 9 if
the corresponding required criteria per
tier is met.10 More specifically, Step-Up
Tiers 1–4 require that Members reach
certain Step-Up Add TCV thresholds.
As currently defined in the BZX
Equities fee schedule, Step-Up Add TCV
6 Displayed Orders which add liquidity in Tape
B securities receive a standard rebate of $0.0025 per
share.
7 Fee code B is appended to displayed orders
which add liquidity to Tape B and is provided a
rebate of $0.0025 per share.
8 Fee code V is appended to displayed orders
which add liquidity to Tape A and is provided a
rebate of $0.0020 per share.
9 Fee code Y is appended to displayed orders
which add liquidity to Tape C and is provided a
rebate of $0.0020 per share.
10 See Cboe BZX U.S. Equities Fees Schedule,
Footnote 2, Step-Up Tiers.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
means ADAV 11 as a percentage of
TCV 12 in the relevant baseline month
subtracted from current ADAV as a
percentage of TCV.13 The Exchange
notes that step-up tiers are designed to
encourage Members that provide
displayed liquidity on the Exchange to
increase their order flow, which would
benefit all Members by providing greater
execution opportunities on the
Exchange.
The Exchange now proposes to amend
footnote 2 to adopt a fifth Step-Up Tier,
which would become ‘‘Step-Up Tier 1’’.
Under the proposed Step-Up Tier 1, a
Member would receive a rebate of
$0.0030 per share for their qualifying
orders which yield fee codes B, V, or Y
where the Member has a Step-Up Add
TCV from April 2019 greater or equal to
0.05%. Members that achieve the
proposed Step-Up Tier 1 must therefore
increase the amount of liquidity that
they provide on BZX by 0.05% relative
to their ADAV as a percentage of TCV
in April 2019, thereby contributing to a
deeper and more liquid market, which
benefits all market participants. The
proposed tier provides Members an
additional opportunity to receive a
rebate and is designed to provide
Members that provide displayed
liquidity on the Exchange a further
incentive to increase that order flow,
which would benefit all Members by
providing greater execution
opportunities on the Exchange. The
Exchange notes the proposed tier is
available to all Members.
Lastly, in connection with the
proposed change described above, the
Exchange also proposes to renumber the
existing Step-Up Tiers accordingly.
2. Statutory Basis
The Exchange believes that the
proposed rule changes are consistent
with the objectives of Section 6 of the
Act,14 in general, and furthers the
11 ‘‘ADAV’’ means average daily volume
calculated as the number of shares added per day.
ADAV is calculated on a monthly basis.
12 ‘‘TCV’’ means total consolidated volume
calculated as the volume reported by all exchanges
and trade reporting facilities to a consolidated
transaction reporting plan for the month for which
the fees apply.
13 The following demonstrates how Step-Up Add
TCV is calculated: In April [sic] 2018, Member A
had an ADAV of 12,947,242 shares and average
daily TCV was 9,248,029,751, resulting in an ADAV
as a percentage of TCV of 0.14%; In February 2019,
Member A had an ADAV of 46,826,572 and average
daily TCV was 7,093,306,325, resulting in an ADAV
as a percentage of TCV of 0.66%. Member A’s StepUp Add TCV from December 2018 was therefore
0.52% which makes Member A eligible for the
existing Step-Up Tier 4 rebate. (i.e., 0.66% (Feb
2019)–0.14% (Dec 2018), which is greater than
0.50% as required by current Tier 4).
14 15 U.S.C. 78f.
E:\FR\FM\09JYN1.SGM
09JYN1
Federal Register / Vol. 84, No. 131 / Tuesday, July 9, 2019 / Notices
objectives of Section 6(b)(4),15 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 and does not unfairly
discriminate between customers,
issuers, brokers or dealers. The
Exchange operates in a highlycompetitive market in which market
participants can readily direct order
flow to competing venues if they deem
fee levels at a particular venue to be
excessive or incentives to be
insufficient. The proposed rule change
reflects a competitive pricing structure
designed to incentivize market
participants to direct their order flow to
the Exchange, which the Exchange
believes would enhance market quality
to the benefit of all Members.
In particular, the Exchange believes
the proposed tier is reasonable because
it provides an additional opportunity for
Members to receive an enhanced rebate.
The Exchange notes that relative
volume-based incentives and discounts
have been widely adopted by
exchanges,16 including the Exchange,17
and are reasonable, equitable and nondiscriminatory because they are open to
all members on an equal basis and
provide additional benefits or discounts
that are reasonably related to (i) the
value to an exchange’s market quality
and (ii) associated higher levels of
growth patterns. Additionally, as noted
above, the Exchange operates in a highly
competitive market. The Exchange is
only one of several equity venues to
which market participants may direct
their order flow, and it represents a
small percentage of the overall market.
It is also only one of several maker-taker
exchanges. Competing equity exchanges
offer similar tiered pricing structures to
that of the Exchange, including
schedules of rebates and fees that apply
based upon members achieving certain
volume and/or growth thresholds. These
competing pricing schedules, moreover,
are presently comparable to those that
the Exchange provides, including the
pricing of comparable tiers.18
Moreover, the Exchange believes the
proposed Step-Up Tier 1 is a reasonable
means to encourage Members to
increase their liquidity on the Exchange
khammond on DSKBBV9HB2PROD with NOTICES
15 15
U.S.C. 78f(b)(4).
e.g., NYSE Arca Equities, Fees and Charges,
Step-Up Tiers.
17 See e.g., Cboe BZX U.S. Equities Exchange Fee
Schedule, Footnote 2, Step-Up Tiers 1–4.
18 See e.g., NYSE Arca Equities, Fees and Charges,
Step-Up Tiers which offers rebates between
$0.0022–$0.0034 per share if the corresponding
required criteria per tier is met. NYSE Arca
Equities’ Step-Up Tiers similarly require Members
to increase their relative liquidity each month over
a predetermined baseline.
16 See
VerDate Sep<11>2014
20:08 Jul 08, 2019
Jkt 247001
based on increasing their relative
volume above a predetermined baseline.
Particularly, the Exchange believes that
adopting a tier with less stringent
criteria compared to existing Step-Up
Tiers 2–4 (now Step-Up Tiers 3–5), and
an alternative criteria to Step-Up Tier 1
(now Step-Up Tier 2), will encourage
those Members who could not achieve
the existing tiers previously to increase
their order flow as compared to April
2019 as a means to receive the new tier’s
enhanced rebate. Increased liquidity
benefits all investors by deepening the
Exchange’s liquidity pool, offering
additional flexibility for all investors to
enjoy cost savings, supporting the
quality of price discovery, promoting
market transparency and improving
investor protection. The Exchange also
believes that proposed rebate is
reasonable based on the difficulty of
satisfying the tier’s criteria, using April
2019 as the predetermined baseline and
ensures the proposed rebate and
threshold appropriately reflects the
incremental difficulty to achieve the
existing Step-Up Tiers. The proposed
rebate amount also does not represent a
significant departure from the rebates
currently offered under the Exchange’s
existing Step-Up Tiers. Indeed, the
rebate amount is the same offered as
existing Step-Up Tier 1 (now Step-Up
Tier 2) (i.e., $0.0030 per share) and
slightly less than the rebates offered
under Step-Up Tiers 2–4 (now Step-Up
Tiers 3–5) (i.e., $0.0031–$0.0032 per
share).
The Exchange believes that the
proposal represents an equitable
allocation of rebates and is not unfairly
discriminatory because all Members are
eligible for the proposed tier and have
a reasonable opportunity to meet the
tier’s criteria, which as noted above is
less stringent than other existing step-up
tiers. Without having a view of
Member’s activity on other markets and
off-exchange venues, the Exchange has
no way of knowing whether this
proposed rule change would result in
any Members qualifying for this tier.
However, the Exchange believes the
proposed tier would provide an
incentive for Members to submit
additional adding liquidity to qualify for
the proposed rebate. The Exchange also
notes that the proposal will not
adversely impact any Member’s pricing
or their ability to qualify for other rebate
tiers. Rather, should a Member not meet
the proposed criteria, the Member will
merely not receive an enhanced rebate.
Furthermore, the proposed rebate would
apply to all Members that meet the
required criteria under proposed StepUp Tier 1.
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
32791
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 intramarket or
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, as
discussed above, the Exchange believes
that the proposed change would
encourage the submission of additional
liquidity to a public exchange, thereby
promoting market depth, price
discovery and transparency and
enhancing order execution
opportunities for all Members. As a
result, the Exchange believes that the
proposed change furthers the
Commission’s goal in adopting
Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 19
The Exchange believes the proposed
rule change does [sic] impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Particularly, the proposed change
applies to all Members equally in that
all Members are eligible for the
proposed tier, have a reasonable
opportunity to meet the tier’s criteria
and will all receive the proposed rebate
if such criteria is met. Additionally the
proposed change is designed to attract
additional order flow to the Exchange.
The Exchange believes that the
proposed tier would incentivize market
participants to direct providing
displayed order flow to the Exchange.
Greater liquidity benefits all market
participants on the Exchange by
providing more trading opportunities
and encourages Members to send orders,
thereby contributing to robust levels of
liquidity, which benefits all market
participants.
Next, the Exchange believes the
proposed rule change does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, the Exchange
operates in a highly competitive market.
Members have numerous alternative
venues that they may participate on and
director their order flow, including 12
other equities exchanges and offexchange venues, including 32
alternative trading systems.
Additionally, the Exchange represents a
small percentage of the overall market.
Based on publicly available information,
19 Securities Exchange Act Release No. 51808, 70
FR 37495, 37498–99 (June 29, 2005) (S7–10–04)
(Final Rule).
E:\FR\FM\09JYN1.SGM
09JYN1
32792
Federal Register / Vol. 84, No. 131 / Tuesday, July 9, 2019 / Notices
no single equities exchange has more
than 18% of the market share.20
Therefore, no exchange possesses
significant pricing power in the
execution of option [sic] order flow.
Indeed, participants can readily choose
to send their orders to other exchange
and off-exchange venues if they deem
fee levels at those other venues to be
more favorable. Moreover, the
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. Specifically, in
Regulation NMS, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 21 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.22 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
khammond on DSKBBV9HB2PROD with NOTICES
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
Members or other interested parties.
20 See Cboe Global Markets U.S. Equities Market
Volume Summary (June 14, 2019), available at
https://markets.cboe.com/us/equities/market_share/.
21 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
22 NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir.
2010) (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782–83
(December 9, 2008) (SR–NYSEArca–2006–21)).
VerDate Sep<11>2014
17:47 Jul 08, 2019
Jkt 247001
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 23 and paragraph (f) of Rule
19b–4 24 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–
CboeBZX–2019–059 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–CboeBZX–2019–059. 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
PO 00000
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–CboeBZX–2019–059 and
should be submitted on or before July
30, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–14491 Filed 7–8–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86278; File No. SR–
NASDAQ–2019–052]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change Regarding
the Listing and Trading the Shares of
the AlphaMark Actively Managed Small
Cap ETF
July 2, 2019.
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 June 19,
2019, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II, 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 change the
rule for listing and trading the shares of
the AlphaMark Actively Managed Small
Cap ETF (the ‘‘Fund’’) of ETF Series
Solutions (the ‘‘Trust’’). Currently, the
shares are listed pursuant to an SEC
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
23 15
U.S.C. 78s(b)(3)(A).
24 17 CFR 240.19b–4(f).
Frm 00094
Fmt 4703
1 15
Sfmt 4703
E:\FR\FM\09JYN1.SGM
09JYN1
]]>Agencies
[Federal Register Volume 84, Number 131 (Tuesday, July 9, 2019)]
[Notices]
[Pages 32789-32792]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14491]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86283; File No. SR-CboeBZX-2019-059]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend the Fee Schedule Applicable to Members and Non-Members \1\ of
the Exchange Pursuant to BZX Rules 15.1(a) and (c)
July 2, 2019.
Pursuant to Section 19(b)(1) \2\ of the Securities Exchange Act of
1934 (the
[[Page 32790]]
``Act'') \3\ and Rule 19b-4 thereunder,\4\ notice is hereby given that,
on June 19, 2019, Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'')
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.
---------------------------------------------------------------------------
\1\ A Member is defined as ``any registered broker or dealer
that has been admitted to membership in the Exchange.'' See Exchange
Rule 1.5(n).
\2\ 15 U.S.C. 78s(b)(1).
\3\ 15 U.S.C. 78a.
\4\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to amend the fee schedule applicable to Members and non-
Members \5\ of the Exchange pursuant to BZX Rules 15.1(a) and (c).
Changes to the fee schedule pursuant to this proposal are effective
upon filing. The text of the proposed rule change is attached as
Exhibit 5.
---------------------------------------------------------------------------
\5\ A Member is defined as ``any registered broker or dealer
that has been admitted to membership in the Exchange.'' See Exchange
Rule 1.5(n).
---------------------------------------------------------------------------
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), 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 Exchange proposes to amend its fee schedule applicable to its
equities trading platform (``BZX Equities'') to adopt a new Step-Up
Tier, effective July 1, 2019.
The Exchange first notes that it operates in a highly-competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of several equity venues to which market
participants may direct their order flow, and it represents a small
percentage of the overall market. The Exchange in particular operates a
``Maker-Taker'' model whereby it pays credits to members that provide
liquidity and assesses fees to those that remove liquidity. The
Exchange's Fees Schedule sets forth the standard rebates and rates
applied per share for orders that provide and remove liquidity,
respectively. Particularly, the Exchange provides a standard rebate of
$0.0020 per share for orders that add liquidity \6\ and assesses a fee
of $0.0025 per share for orders that remove liquidity. In response to
the competitive environment, the Exchange also offers tiered pricing
which provides Members opportunities to qualify for higher rebates or
reduced fees where certain volume criteria and thresholds are met.
Tiered pricing provides an incremental incentive for Members to strive
for higher tier levels, which provides increasingly higher benefits or
discounts for satisfying increasingly more stringent criteria.
---------------------------------------------------------------------------
\6\ Displayed Orders which add liquidity in Tape B securities
receive a standard rebate of $0.0025 per share.
---------------------------------------------------------------------------
For example, pursuant to footnote 2 of the Fees Schedule, the
Exchange offers four Step-Up Tiers that provide Members an opportunity
to qualify for an enhanced rebate on their orders that add liquidity
where they increase their relative liquidity each month over a
predetermined baseline. Under the current Step-Up Tiers, a Member
receives a rebate of $0.0030 (Tier 1), $0.0031 (Tier 2 and Tier 3), or
$0.0032 (Tier 4) per share for qualifying orders which yield fee codes
B,\7\ V,\8\ or Y \9\ if the corresponding required criteria per tier is
met.\10\ More specifically, Step-Up Tiers 1-4 require that Members
reach certain Step-Up Add TCV thresholds. As currently defined in the
BZX Equities fee schedule, Step-Up Add TCV means ADAV \11\ as a
percentage of TCV \12\ in the relevant baseline month subtracted from
current ADAV as a percentage of TCV.\13\ The Exchange notes that step-
up tiers are designed to encourage Members that provide displayed
liquidity on the Exchange to increase their order flow, which would
benefit all Members by providing greater execution opportunities on the
Exchange.
---------------------------------------------------------------------------
\7\ Fee code B is appended to displayed orders which add
liquidity to Tape B and is provided a rebate of $0.0025 per share.
\8\ Fee code V is appended to displayed orders which add
liquidity to Tape A and is provided a rebate of $0.0020 per share.
\9\ Fee code Y is appended to displayed orders which add
liquidity to Tape C and is provided a rebate of $0.0020 per share.
\10\ See Cboe BZX U.S. Equities Fees Schedule, Footnote 2, Step-
Up Tiers.
\11\ ``ADAV'' means average daily volume calculated as the
number of shares added per day. ADAV is calculated on a monthly
basis.
\12\ ``TCV'' means total consolidated volume calculated as the
volume reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply.
\13\ The following demonstrates how Step-Up Add TCV is
calculated: In April [sic] 2018, Member A had an ADAV of 12,947,242
shares and average daily TCV was 9,248,029,751, resulting in an ADAV
as a percentage of TCV of 0.14%; In February 2019, Member A had an
ADAV of 46,826,572 and average daily TCV was 7,093,306,325,
resulting in an ADAV as a percentage of TCV of 0.66%. Member A's
Step-Up Add TCV from December 2018 was therefore 0.52% which makes
Member A eligible for the existing Step-Up Tier 4 rebate. (i.e.,
0.66% (Feb 2019)-0.14% (Dec 2018), which is greater than 0.50% as
required by current Tier 4).
---------------------------------------------------------------------------
The Exchange now proposes to amend footnote 2 to adopt a fifth
Step-Up Tier, which would become ``Step-Up Tier 1''. Under the proposed
Step-Up Tier 1, a Member would receive a rebate of $0.0030 per share
for their qualifying orders which yield fee codes B, V, or Y where the
Member has a Step-Up Add TCV from April 2019 greater or equal to 0.05%.
Members that achieve the proposed Step-Up Tier 1 must therefore
increase the amount of liquidity that they provide on BZX by 0.05%
relative to their ADAV as a percentage of TCV in April 2019, thereby
contributing to a deeper and more liquid market, which benefits all
market participants. The proposed tier provides Members an additional
opportunity to receive a rebate and is designed to provide Members that
provide displayed liquidity on the Exchange a further incentive to
increase that order flow, which would benefit all Members by providing
greater execution opportunities on the Exchange. The Exchange notes the
proposed tier is available to all Members.
Lastly, in connection with the proposed change described above, the
Exchange also proposes to renumber the existing Step-Up Tiers
accordingly.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with the objectives of Section 6 of the Act,\14\ in general, and
furthers the
[[Page 32791]]
objectives of Section 6(b)(4),\15\ 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 and
does not unfairly discriminate between customers, issuers, brokers or
dealers. The Exchange operates in a highly-competitive market in which
market participants can readily direct order flow to competing venues
if they deem fee levels at a particular venue to be excessive or
incentives to be insufficient. The proposed rule change reflects a
competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes would enhance market quality to the benefit of all
Members.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f.
\15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In particular, the Exchange believes the proposed tier is
reasonable because it provides an additional opportunity for Members to
receive an enhanced rebate. The Exchange notes that relative volume-
based incentives and discounts have been widely adopted by
exchanges,\16\ including the Exchange,\17\ and are reasonable,
equitable and non-discriminatory because they are open to all members
on an equal basis and provide additional benefits or discounts that are
reasonably related to (i) the value to an exchange's market quality and
(ii) associated higher levels of growth patterns. Additionally, as
noted above, the Exchange operates in a highly competitive market. The
Exchange is only one of several equity venues to which market
participants may direct their order flow, and it represents a small
percentage of the overall market. It is also only one of several maker-
taker exchanges. Competing equity exchanges offer similar tiered
pricing structures to that of the Exchange, including schedules of
rebates and fees that apply based upon members achieving certain volume
and/or growth thresholds. These competing pricing schedules, moreover,
are presently comparable to those that the Exchange provides, including
the pricing of comparable tiers.\18\
---------------------------------------------------------------------------
\16\ See e.g., NYSE Arca Equities, Fees and Charges, Step-Up
Tiers.
\17\ See e.g., Cboe BZX U.S. Equities Exchange Fee Schedule,
Footnote 2, Step-Up Tiers 1-4.
\18\ See e.g., NYSE Arca Equities, Fees and Charges, Step-Up
Tiers which offers rebates between $0.0022-$0.0034 per share if the
corresponding required criteria per tier is met. NYSE Arca Equities'
Step-Up Tiers similarly require Members to increase their relative
liquidity each month over a predetermined baseline.
---------------------------------------------------------------------------
Moreover, the Exchange believes the proposed Step-Up Tier 1 is a
reasonable means to encourage Members to increase their liquidity on
the Exchange based on increasing their relative volume above a
predetermined baseline. Particularly, the Exchange believes that
adopting a tier with less stringent criteria compared to existing Step-
Up Tiers 2-4 (now Step-Up Tiers 3-5), and an alternative criteria to
Step-Up Tier 1 (now Step-Up Tier 2), will encourage those Members who
could not achieve the existing tiers previously to increase their order
flow as compared to April 2019 as a means to receive the new tier's
enhanced rebate. Increased liquidity benefits all investors by
deepening the Exchange's liquidity pool, offering additional
flexibility for all investors to enjoy cost savings, supporting the
quality of price discovery, promoting market transparency and improving
investor protection. The Exchange also believes that proposed rebate is
reasonable based on the difficulty of satisfying the tier's criteria,
using April 2019 as the predetermined baseline and ensures the proposed
rebate and threshold appropriately reflects the incremental difficulty
to achieve the existing Step-Up Tiers. The proposed rebate amount also
does not represent a significant departure from the rebates currently
offered under the Exchange's existing Step-Up Tiers. Indeed, the rebate
amount is the same offered as existing Step-Up Tier 1 (now Step-Up Tier
2) (i.e., $0.0030 per share) and slightly less than the rebates offered
under Step-Up Tiers 2-4 (now Step-Up Tiers 3-5) (i.e., $0.0031-$0.0032
per share).
The Exchange believes that the proposal represents an equitable
allocation of rebates and is not unfairly discriminatory because all
Members are eligible for the proposed tier and have a reasonable
opportunity to meet the tier's criteria, which as noted above is less
stringent than other existing step-up tiers. Without having a view of
Member's activity on other markets and off-exchange venues, the
Exchange has no way of knowing whether this proposed rule change would
result in any Members qualifying for this tier. However, the Exchange
believes the proposed tier would provide an incentive for Members to
submit additional adding liquidity to qualify for the proposed rebate.
The Exchange also notes that the proposal will not adversely impact any
Member's pricing or their ability to qualify for other rebate tiers.
Rather, should a Member not meet the proposed criteria, the Member will
merely not receive an enhanced rebate. Furthermore, the proposed rebate
would apply to all Members that meet the required criteria under
proposed Step-Up Tier 1.
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 intramarket or intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
Rather, as discussed above, the Exchange believes that the proposed
change would encourage the submission of additional liquidity to a
public exchange, thereby promoting market depth, price discovery and
transparency and enhancing order execution opportunities for all
Members. As a result, the Exchange believes that the proposed change
furthers the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.'' \19\
---------------------------------------------------------------------------
\19\ Securities Exchange Act Release No. 51808, 70 FR 37495,
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------
The Exchange believes the proposed rule change does [sic] impose
any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Particularly,
the proposed change applies to all Members equally in that all Members
are eligible for the proposed tier, have a reasonable opportunity to
meet the tier's criteria and will all receive the proposed rebate if
such criteria is met. Additionally the proposed change is designed to
attract additional order flow to the Exchange. The Exchange believes
that the proposed tier would incentivize market participants to direct
providing displayed order flow to the Exchange. Greater liquidity
benefits all market participants on the Exchange by providing more
trading opportunities and encourages Members to send orders, thereby
contributing to robust levels of liquidity, which benefits all market
participants.
Next, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and director their order flow, including 12 other equities exchanges
and off-exchange venues, including 32 alternative trading systems.
Additionally, the Exchange represents a small percentage of the overall
market. Based on publicly available information,
[[Page 32792]]
no single equities exchange has more than 18% of the market share.\20\
Therefore, no exchange possesses significant pricing power in the
execution of option [sic] order flow. Indeed, participants can readily
choose to send their orders to other exchange and off-exchange venues
if they deem fee levels at those other venues to be more favorable.
Moreover, the Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Specifically, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \21\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission, the D.C.
Circuit stated as follows: ``[n]o one disputes that competition for
order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S.
national market system, buyers and sellers of securities, and the
broker-dealers that act as their order-routing agents, have a wide
range of choices of where to route orders for execution'; [and] `no
exchange can afford to take its market share percentages for granted'
because `no exchange possesses a monopoly, regulatory or otherwise, in
the execution of order flow from broker dealers'. . . .''.\22\
Accordingly, the Exchange does not believe its proposed fee change
imposes any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\20\ See Cboe Global Markets U.S. Equities Market Volume Summary
(June 14, 2019), available at https://markets.cboe.com/us/equities/market_share/.
\21\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\22\ NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------
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 unsolicited written comments from Members 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 \23\ and paragraph (f) of Rule 19b-4 \24\
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.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78s(b)(3)(A).
\24\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2019-059 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-CboeBZX-2019-059. 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-CboeBZX-2019-059 and should be submitted
on or before July 30, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
---------------------------------------------------------------------------
\25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-14491 Filed 7-8-19; 8:45 am]
BILLING CODE 8011-01-P
