Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule To Adopt a New Type of Tier Related to Automated Improvement Mechanism Customer Volume, 61084-61088 [2019-24496]
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
issued) licenses (e.g., operating licenses
and combined licenses) and regulatory
approvals. Hence, the issuance of this
SRP guidance—even if considered
guidance subject to the Backfit Rule or
the issue finality provisions in 10 CFR
part 52—would not need to be evaluated
as if it were a backfit or as being
inconsistent with issue finality
provisions. If, in the future, the NRC
staff seeks to impose a position in the
SRP on holders of already issued
licenses in a manner that would
constitute backfitting or does not
provide issue finality as described in the
applicable issue finality provision, then
the staff must make a showing as set
forth in the Backfit Rule or address the
criteria set forth in the applicable issue
finality provision, as applicable, that
would allow the staff to impose the
position.
Dated at Rockville, Maryland, this 6th day
of November, 2019.
For the Nuclear Regulatory Commission.
Dennis C. Morey,
Chief, Licensing Projects Branch, Division of
Operating Reactor Licensing, Office of
Nuclear Reactor Regulation.
[FR Doc. 2019–24551 Filed 11–8–19; 8:45 am]
BILLING CODE 7590–01–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2020–20 and CP2020–19]
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: November
14, 2019.
ADDRESSES: 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.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
17:47 Nov 08, 2019
II. Docketed Proceeding(s)
1. Docket No(s).: MC2020–20 and
CP2020–19; Filing Title: USPS Request
to Add Priority Mail Contract 558 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: November 5, 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: November 14, 2019.
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).
I. Introduction
II. Docketed Proceeding(s)
VerDate Sep<11>2014
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
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.
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This Notice will be published in the
Federal Register.
Darcie S. Tokioka,
Acting Secretary.
[FR Doc. 2019–24520 Filed 11–8–19; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
Product Change—Priority Mail
Negotiated Service Agreement
Postal ServiceTM.
Notice.
AGENCY:
ACTION:
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:
November 12, 2019.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on November 5,
2019, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Contract 558 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2020–20, CP2020–19.
SUMMARY:
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2019–24464 Filed 11–8–19; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87469; File No. SR–
CboeEDGX–2019–068]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule To Adopt a New Type of
Tier Related to Automated
Improvement Mechanism Customer
Volume
November 5, 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 November
1, 2019, Cboe EDGX Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGX’’) filed with the
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
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 its Fee
Schedule. 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/edgx/),
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 for its equity options
platform (‘‘EDGX Options’’), effective
November 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
16 options venues to which market
participants may direct their order flow.
Based on publicly available information,
no single options exchange has more
than 21% of the market share and
currently the Exchange represents only
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17:47 Nov 08, 2019
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3% of the market share.3 Thus, in such
a low-concentrated and highly
competitive market, no single options
exchange, including the Exchange,
possesses significant pricing power in
the execution of option order flow. The
Exchange believes that the ever-shifting
market share among the exchanges from
month to month demonstrates that
market participants can shift order flow,
or discontinue to reduce use of certain
categories of products, in response to fee
changes. Accordingly, competitive
forces constrain the Exchange’s
transaction fees, and market participants
can readily trade on competing venues
if they deem pricing levels at those
other venues to be more favorable. The
Exchange’s Fees Schedule sets forth
standard rebates and rates applied per
contract. For example, the Exchange
provides a standard rebate of $0.01 per
contract for Customer orders that add
liquidity in both Penny and Non-Penny
Securities. Additionally, 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, the Exchange currently
offers four non-complex Customer
Volume Tiers under Footnote 1 of the
fee schedule which provide enhanced
rebates between $0.10 and $0.21 per
contract for qualifying Customer orders
which meet certain total volume
thresholds and yield fee codes ‘‘PC’’ 4
and ‘‘NM’’.5 Under the current noncomplex Customer Volume Tiers, a
Member receives a reduced fee between
$0.10 and $0.21 per contract, where the
Member has an ADV 6 in Customer
orders greater or equal to a specified
percentage of OCV 7 (Tiers 1–3).
3 See Cboe Global Markets U.S. Options Market
Volume Summary (October 29, 2019), available at
https://markets.cboe.com/us/options/market_
statistics/.
4 Appended to Customer Penny Pilot orders and
provided a rebate of $0.01.
5 Appended to Customer non-Penny Pilot orders
and provided a rebate of $0.01.
6 ‘‘ADV’’ means average daily volume calculated
as the number of contracts added or removed,
combined, per day. ADV is calculated on a monthly
basis. See Cboe EDGX Options Exchange Fee
Schedule.
7 ‘‘OCV’’ means the total equity and ETF options
volume that clears in the Customer range at the
Options Clearing Corporation (‘‘OCC’’) for the
month for which the fees apply, excluding volume
on any day that the Exchange experiences an
Exchange System Disruption and on any day with
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61085
Members also have an opportunity to
receive a reduced fee of $0.21 per
contract under Tier 4 where the Member
satisfies an additional criteria by also
reaching another specified ADV
threshold in Customer or Market Maker
orders. The Exchange now proposes to
adopt a new type of tier related to
Customer volume under proposed
footnote 9 (Automated Improvement
Mechanism (‘‘AIM’’) Tier) applicable to
orders yielding fee code ‘‘BC’’, which
are appended to Customer AIM Agency
orders. The Exchange notes that orders
yielding fee code BC are currently
provided a rebate of $0.14, and it now
proposes to reduce this rebate to $0.11
and, instead, offer a rebate of $0.14 for
such orders where a Member reaches
the proposed AIM Tier.
Specifically, the proposed AIM Tier
provides Members an additional
opportunity and alternative means to
receive a rebate for meeting the
corresponding proposed criteria.
Pursuant to the proposed changes, all
orders yielding the fee code BC would
receive a base rebate of $0.11 and a
Member would receive an enhanced
rebate of $0.14 on such orders where
they have an ADV in Customer orders
greater than or equal to .35% of the
OCV. Members that achieve the
proposed AIM Tier must therefore
increase their overall Customer order
flow, both adding and/or removing
liquidity, as a percentage greater than or
equal to 0.35% of the TCV. The
Exchange believes the proposed
enhanced rebates for both liquidity
adding and removing Customer orders
incentivizes increased overall order
flow to the Book. The proposed tier
provides both liquidity providing
Members and liquidity executing
Members on the Exchange an additional
opportunity to receive a rebate. It is
designed to provide Members that add
liquidity by means of Customer orders
on the Exchange a further incentive to
contribute to a deeper, more liquid
market, and Members executing
Customer orders on the Exchange an
incentive to increase transactions and
take the execution opportunities
provided by such increased liquidity.
Increased overall Customer order flow
benefits all market participants because
it continues to attract liquidity to the
Exchange by providing more trading
opportunities, which attracts Market
Makers. An increase in Market Maker
activity, in turn, facilitates tighter
spreads, signaling additional
corresponding increase in order flow
from other market participants, which
a scheduled early market close. See Cboe EDGX
Options Exchange Fee Schedule.
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
contributes towards a robust, wellbalanced market ecosystem. In addition
to this, although the proposed based
rebate for orders yielding fee code BC is
lower than the current base rebate for
such orders, Members still have an
opportunity to receive a base rebate for
such orders, which is in line with
similar fees for Customer orders in place
on other options exchanges.8 Members
will now be able to achieve the higher
rebate for orders yield fee code BC
pursuant to the proposed AIM Tier
described above, which is tied to the
levels of a Member’s Customer order
flow. Therefore, the reduced base rebate
for orders yielding fee code BC is
balanced by the rebate opportunity
pursuant to the proposed AIM Tier and
helps support the Exchange’s objective
in implementing the proposed tier to
encourage an overall increase in
Customer order flow and facilitate
improved market quality on the
Exchange.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6 of the Act,9 in general, and
furthers the requirements of Section
6(b)(4),10 in particular, as it is designed
to provide for the equitable allocation of
reasonable dues, fees and other charges
among its 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 a rebate by
providing a different set of criteria they
for which they can compete. The
Exchange notes that volume-based
incentives and discounts have been
widely adopted by exchanges,11
8 See MIAX Options Section 1(a)(iii), Priority
Customer Rebate Program, which provides a base
rebate of $0.10 for Customer Price Improvement
Mechanism (‘‘PRIME’’) Agency orders, which are
comparable to orders yielding fee code BC on the
Exchange (i.e., Customer AIM Agency orders).
9 15 U.S.C. 78f.
10 15 U.S.C. 78f(b)(4).
11 See e.g., Cboe BZX U.S. Options Exchange Fee
Schedule, Footnotes 1 and 12, Customer Penny
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17:47 Nov 08, 2019
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including the Exchange,12 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
market activity, such as higher levels of
liquidity provision and/or growth
patterns. Additionally, as noted above,
the Exchange operates in highly
competitive market. The Exchange is
only one of several options venues to
which market participants may direct
their order flow, and it represents a
small percentage of the overall market.
Competing options 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 pricing
incentives tied to comparable tiers.13
Moreover, the Exchange believes the
proposed AIM Tier is a reasonable
means to encourage Members to
increase Customer volume on the
Exchange. Particularly, the Exchange
believes the proposed tier is reasonable
because it will encourage increased
Customer volume, thus a deeper, more
liquid market, and an increase in
transaction opportunities for all market
participants provided by the increased
Customer liquidity. As stated, increased
Customer order flow provides continued
liquidity to the Exchange, in that it
provides additional transaction
opportunities which attract Market
Makers. Increased Market Maker activity
facilitates tighter spreads and signals an
increase in additional order flow from
other market participants. In turn, these
increases benefit all Members by
contributing towards a robust and wellbalanced market ecosystem. Also,
increased overall order flow benefits all
investors by deepening the Exchange’s
liquidity pool, providing greater
Pilot and Non-Penny Pilot Add Volume Tiers which
provide enhanced rebates for Customer orders
where Members meet certain volume thresholds;
see also supra note 8.
12 See e.g., Cboe EDGX U.S. Options Exchange
Fee Schedule, Footnote 1, Customer Volume Tiers,
which provide enhanced rebates between $0.10 and
$0.21 per contract for non-complex Customer Penny
and Non-Penny orders where Members meet certain
volume thresholds.
13 See e.g., Cboe BZX U.S. Options Exchange Fee
Schedule, Footnotes 1 and 12, Customer Penny
Pilot and Non-Penny Pilot Add Volume Tiers,
which provide enhanced rebates between $0.35–
$1.05 per contract where Members, among other
things including a cross-asset threshold, meet a
specified level of ADAV in Customer orders as a
percentage of OCV.
PO 00000
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execution incentives and opportunities,
offering additional flexibility for all
investors to enjoy cost savings,
supporting the quality of price
discovery, promoting market
transparency, and improving investor
protection. Additionally, the Exchange
believes the proposed reduction in the
base rebate for orders yielding fee code
BC is reasonable because Members still
have an opportunity to receive a rebate
for such orders, albeit at a lesser
amount. Moreover, the reduced base
rebate is still higher than offered at
other exchanges for similar
transactions.14 As described above, the
Exchange will continue to offer an
opportunity to receive the $0.14 rebate,
but will now tie it to a requirement to
increase Members’ Customer order flow.
Accordingly, balancing the reduced base
rebate for orders yielding fee code BC
with the higher rebate opportunity for
such orders helps support Exchange’s
objective in implementing an incentive
to encourage an increase in Customer
order flow and contribution to enhanced
market quality on the Exchange.
The Exchange also believes that the
proposed rebate amount and criteria
under the AIM Tier does not represent
a significant departure from the rebates
currently offered, or required criteria,
under the Exchange’s existing Customer
Volume Tiers. For example, under
existing non-complex Customer Volume
Tier 1 (applicable to orders yielding fee
code PC or NC which are provided a
standard rebate of $0.01), if a Member
has a daily average volume (ADV) of
0.35% or greater than the OCV the
Member receives a rebate of $0.10 per
share. The Exchange believes the
proposed tier criteria and rebate of $0.14
is comparable to this existing tier,
especially given that orders yielding
fees code PC or NC receive a standard
rebate of $0.01 as compared to the $0.11
base rebate (as proposed) for orders
yielding fee code BC.
The Exchange believes that the
proposed tier represents an equitable
allocation of fees and is not unfairly
discriminatory because it applies
uniformly to all Members. All Members
are eligible for the proposed AIM tier,
would have the opportunity to meet the
tier’s criteria (which the Exchange
believes is less stringent that other
existing Customer Volume tiers),15 and
would receive the proposed rebate if
such criteria is met. While the Exchange
has no way of knowing whether this
14 See
supra note 8.
e.g., Cboe EDGX U.S. Options Exchange
Fee Schedule, Footnote 1, Customer Volume Tiers
2–4, which require a Member to have an ADV of
over 0.35% (as proposed in the AIM Tier) of the
OCV.
15 See
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Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
proposed rule change would
definitively result in any particular
Member qualifying for the proposed tier
or if it would otherwise impact Member
activity, the Exchange anticipates at
least three Members meeting, or being
reasonably able to meet, the proposed
criteria. Accordingly, the Exchange
believes the proposed tier is reasonably
designed to provide an incentive for
Members interested in meeting the tier
criteria to submit additional Customer
volume to achieve the proposed rebate.
The Exchange lastly notes that the
proposed tier will not adversely impact
any Member’s pricing or their ability to
qualify for other tiers. Rather, should a
Member not meet the proposed criteria,
the Member will merely not receive the
proposed reduced fee. Furthermore, the
proposed rebate would uniformly apply
to all Members that meet the required
criteria under proposed AIM Tier.
Likewise, the Exchange believes that the
proposed reduction in the base rebate
for orders yielding fee code BC
represents an equitable allocation of
rebates and is not unfairly
discriminatory because it is balanced by
the higher rebate for such orders
provided under the proposed AIM Tier
and Members will continue to have the
opportunity to receive a base rebate on
such orders which will also continue to
uniformly apply to all such orders.
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.’’ 16
The Exchange believes the proposed
rule change does impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
16 Securities Exchange Act Release No. 51808, 70
FR 37495, 37498–99 (June 29, 2005) (S7–10–04)
(Final Rule).
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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 both
liquidity providing and executable order
flow to the Exchange. Greater overall
order flow benefits all market
participants on the Exchange by
providing more trading opportunities
and continuing to encourage Members
to send orders, thereby contributing
towards a robust and well-balanced
market ecosystem, 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 15
other options exchanges and offexchange venues. Additionally, the
Exchange represents a small percentage
of the overall market. Based on publicly
available information, no single options
exchange has more than 21% of the
market share.17 Therefore, no exchange
possesses significant pricing power in
the execution of option 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.’’ 18 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
17 See
supra note 3.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
18 See
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61087
‘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’. . . .’’.19 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
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 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 20 and paragraph (f) of Rule
19b–4 21 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
19 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
20 15 U.S.C. 78s(b)(3)(A).
21 17 CFR 240.19b–4(f).
E:\FR\FM\12NON1.SGM
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61088
Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Notices
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2019–068 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–CboeEDGX–2019–068. 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–CboeEDGX–2019–068 and
should be submitted on or before
December 3, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–24496 Filed 11–8–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87461; File No. SR–
CboeBZX–2019–093]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Adopt Fees for a New Data Product on
Its Equity Options Platform (‘‘BZX
Options’’) To Be Known as Open-Close
Data
November 5, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
29, 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 Options’’) is filing
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to adopt fees for
a new data product on its equity options
platform (‘‘BZX Options’’) to be known
as Open-Close Data. 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/
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
1 15
22 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:47 Nov 08, 2019
2 17
Jkt 250001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00084
Fmt 4703
Sfmt 4703
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 adopt fees
for a new data product on BZX Options
known as Open-Close Data, which is
available for purchase to BZX Options
Members and Non-Members.3 Cboe
LiveVol, LLC (‘‘LiveVol’’), a wholly
owned subsidiary of the Exchange’s
parent company, Cboe Global Markets,
Inc., will make the Open-Close Data
available for purchase to Members and
Non-Members on the LiveVol DataShop
website (datashop.cboe.com). The
Exchange proposes to amend its Fee
Schedule to adopt fees for the product.4
The Exchange recently introduced the
Open-Close Data product. Open-Close
Data is a volume summary file for
trading activity on BZX Options. The
Exchange notes it is proprietary BZX
Options trade data and does not include
trade data from any other exchanges. It
is also a historical data product and not
a real time data feed. The Open-Close
Data summarizes and buckets the
volume by origin (customer,
professional customer, broker-dealer,
and market maker), buying/selling, and
opening/closing criteria. The customer
and professional customer volume is
further broken down into trade size
buckets (less than 100 contracts, 100–
199 contracts, greater than 199
contracts). The data currently goes back
to January 2018 and contains all series
in an underlying security if it has
volume.5 The Exchange anticipates a
wide variety of market participants to
purchase Open-Close Data, including,
but not limited to, individual customers,
buy-side investors, investment banks
and academic institutions. For example,
the Exchange notes that academic
institutions may utilize Open-Close Data
and as a result promote research and
studies of the options industry to the
benefit of all market participants. The
Exchange believes the Open-Close Data
product may also provide helpful
trading information regarding investor
sentiment and may be used to create
3 See Securities Exchange Act Release No. 86811
(August 29, 2019), 84 FR 46765 (September 5, 2019)
(SR–CboeBZX–2019–079).
4 The Exchange initially filed the proposed fees
on business date August 30, 2019 (SR–CboeBZX–
2019–080). On business date October 29, 2019, the
Exchange withdrew that filing and submitted this
filing.
5 The Open-Close data file format specifications
can be found at https://datashop.cboe.com/Themes/
Livevol/Content/static/OpenCloseSpecification.pdf.
E:\FR\FM\12NON1.SGM
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]]>Agencies
[Federal Register Volume 84, Number 218 (Tuesday, November 12, 2019)]
[Notices]
[Pages 61084-61088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24496]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87469; File No. SR-CboeEDGX-2019-068]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule To Adopt a New Type of Tier Related to Automated
Improvement Mechanism Customer Volume
November 5, 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 November 1, 2019, Cboe EDGX Exchange, Inc. (``Exchange'' or
``EDGX'') filed with the
[[Page 61085]]
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to amend its Fee Schedule. 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/edgx/), 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 for its equity
options platform (``EDGX Options''), effective November 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 16 options venues to which market participants
may direct their order flow. Based on publicly available information,
no single options exchange has more than 21% of the market share and
currently the Exchange represents only 3% of the market share.\3\ Thus,
in such a low-concentrated and highly competitive market, no single
options exchange, including the Exchange, possesses significant pricing
power in the execution of option order flow. The Exchange believes that
the ever-shifting market share among the exchanges from month to month
demonstrates that market participants can shift order flow, or
discontinue to reduce use of certain categories of products, in
response to fee changes. Accordingly, competitive forces constrain the
Exchange's transaction fees, and market participants can readily trade
on competing venues if they deem pricing levels at those other venues
to be more favorable. The Exchange's Fees Schedule sets forth standard
rebates and rates applied per contract. For example, the Exchange
provides a standard rebate of $0.01 per contract for Customer orders
that add liquidity in both Penny and Non-Penny Securities.
Additionally, 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.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets U.S. Options Market Volume Summary
(October 29, 2019), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------
For example, the Exchange currently offers four non-complex
Customer Volume Tiers under Footnote 1 of the fee schedule which
provide enhanced rebates between $0.10 and $0.21 per contract for
qualifying Customer orders which meet certain total volume thresholds
and yield fee codes ``PC'' \4\ and ``NM''.\5\ Under the current non-
complex Customer Volume Tiers, a Member receives a reduced fee between
$0.10 and $0.21 per contract, where the Member has an ADV \6\ in
Customer orders greater or equal to a specified percentage of OCV \7\
(Tiers 1-3). Members also have an opportunity to receive a reduced fee
of $0.21 per contract under Tier 4 where the Member satisfies an
additional criteria by also reaching another specified ADV threshold in
Customer or Market Maker orders. The Exchange now proposes to adopt a
new type of tier related to Customer volume under proposed footnote 9
(Automated Improvement Mechanism (``AIM'') Tier) applicable to orders
yielding fee code ``BC'', which are appended to Customer AIM Agency
orders. The Exchange notes that orders yielding fee code BC are
currently provided a rebate of $0.14, and it now proposes to reduce
this rebate to $0.11 and, instead, offer a rebate of $0.14 for such
orders where a Member reaches the proposed AIM Tier.
---------------------------------------------------------------------------
\4\ Appended to Customer Penny Pilot orders and provided a
rebate of $0.01.
\5\ Appended to Customer non-Penny Pilot orders and provided a
rebate of $0.01.
\6\ ``ADV'' means average daily volume calculated as the number
of contracts added or removed, combined, per day. ADV is calculated
on a monthly basis. See Cboe EDGX Options Exchange Fee Schedule.
\7\ ``OCV'' means the total equity and ETF options volume that
clears in the Customer range at the Options Clearing Corporation
(``OCC'') for the month for which the fees apply, excluding volume
on any day that the Exchange experiences an Exchange System
Disruption and on any day with a scheduled early market close. See
Cboe EDGX Options Exchange Fee Schedule.
---------------------------------------------------------------------------
Specifically, the proposed AIM Tier provides Members an additional
opportunity and alternative means to receive a rebate for meeting the
corresponding proposed criteria. Pursuant to the proposed changes, all
orders yielding the fee code BC would receive a base rebate of $0.11
and a Member would receive an enhanced rebate of $0.14 on such orders
where they have an ADV in Customer orders greater than or equal to .35%
of the OCV. Members that achieve the proposed AIM Tier must therefore
increase their overall Customer order flow, both adding and/or removing
liquidity, as a percentage greater than or equal to 0.35% of the TCV.
The Exchange believes the proposed enhanced rebates for both liquidity
adding and removing Customer orders incentivizes increased overall
order flow to the Book. The proposed tier provides both liquidity
providing Members and liquidity executing Members on the Exchange an
additional opportunity to receive a rebate. It is designed to provide
Members that add liquidity by means of Customer orders on the Exchange
a further incentive to contribute to a deeper, more liquid market, and
Members executing Customer orders on the Exchange an incentive to
increase transactions and take the execution opportunities provided by
such increased liquidity. Increased overall Customer order flow
benefits all market participants because it continues to attract
liquidity to the Exchange by providing more trading opportunities,
which attracts Market Makers. An increase in Market Maker activity, in
turn, facilitates tighter spreads, signaling additional corresponding
increase in order flow from other market participants, which
[[Page 61086]]
contributes towards a robust, well-balanced market ecosystem. In
addition to this, although the proposed based rebate for orders
yielding fee code BC is lower than the current base rebate for such
orders, Members still have an opportunity to receive a base rebate for
such orders, which is in line with similar fees for Customer orders in
place on other options exchanges.\8\ Members will now be able to
achieve the higher rebate for orders yield fee code BC pursuant to the
proposed AIM Tier described above, which is tied to the levels of a
Member's Customer order flow. Therefore, the reduced base rebate for
orders yielding fee code BC is balanced by the rebate opportunity
pursuant to the proposed AIM Tier and helps support the Exchange's
objective in implementing the proposed tier to encourage an overall
increase in Customer order flow and facilitate improved market quality
on the Exchange.
---------------------------------------------------------------------------
\8\ See MIAX Options Section 1(a)(iii), Priority Customer Rebate
Program, which provides a base rebate of $0.10 for Customer Price
Improvement Mechanism (``PRIME'') Agency orders, which are
comparable to orders yielding fee code BC on the Exchange (i.e.,
Customer AIM Agency orders).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act,\9\ in general, and furthers the requirements
of Section 6(b)(4),\10\ in particular, as it is designed to provide for
the equitable allocation of reasonable dues, fees and other charges
among its 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.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f.
\10\ 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 a rebate by providing a different set of criteria they for
which they can compete. The Exchange notes that volume-based incentives
and discounts have been widely adopted by exchanges,\11\ including the
Exchange,\12\ 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 market activity, such as higher levels of liquidity provision and/or
growth patterns. Additionally, as noted above, the Exchange operates in
highly competitive market. The Exchange is only one of several options
venues to which market participants may direct their order flow, and it
represents a small percentage of the overall market. Competing options
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 pricing incentives tied to
comparable tiers.\13\
---------------------------------------------------------------------------
\11\ See e.g., Cboe BZX U.S. Options Exchange Fee Schedule,
Footnotes 1 and 12, Customer Penny Pilot and Non-Penny Pilot Add
Volume Tiers which provide enhanced rebates for Customer orders
where Members meet certain volume thresholds; see also supra note 8.
\12\ See e.g., Cboe EDGX U.S. Options Exchange Fee Schedule,
Footnote 1, Customer Volume Tiers, which provide enhanced rebates
between $0.10 and $0.21 per contract for non-complex Customer Penny
and Non-Penny orders where Members meet certain volume thresholds.
\13\ See e.g., Cboe BZX U.S. Options Exchange Fee Schedule,
Footnotes 1 and 12, Customer Penny Pilot and Non-Penny Pilot Add
Volume Tiers, which provide enhanced rebates between $0.35-$1.05 per
contract where Members, among other things including a cross-asset
threshold, meet a specified level of ADAV in Customer orders as a
percentage of OCV.
---------------------------------------------------------------------------
Moreover, the Exchange believes the proposed AIM Tier is a
reasonable means to encourage Members to increase Customer volume on
the Exchange. Particularly, the Exchange believes the proposed tier is
reasonable because it will encourage increased Customer volume, thus a
deeper, more liquid market, and an increase in transaction
opportunities for all market participants provided by the increased
Customer liquidity. As stated, increased Customer order flow provides
continued liquidity to the Exchange, in that it provides additional
transaction opportunities which attract Market Makers. Increased Market
Maker activity facilitates tighter spreads and signals an increase in
additional order flow from other market participants. In turn, these
increases benefit all Members by contributing towards a robust and
well-balanced market ecosystem. Also, increased overall order flow
benefits all investors by deepening the Exchange's liquidity pool,
providing greater execution incentives and opportunities, offering
additional flexibility for all investors to enjoy cost savings,
supporting the quality of price discovery, promoting market
transparency, and improving investor protection. Additionally, the
Exchange believes the proposed reduction in the base rebate for orders
yielding fee code BC is reasonable because Members still have an
opportunity to receive a rebate for such orders, albeit at a lesser
amount. Moreover, the reduced base rebate is still higher than offered
at other exchanges for similar transactions.\14\ As described above,
the Exchange will continue to offer an opportunity to receive the $0.14
rebate, but will now tie it to a requirement to increase Members'
Customer order flow. Accordingly, balancing the reduced base rebate for
orders yielding fee code BC with the higher rebate opportunity for such
orders helps support Exchange's objective in implementing an incentive
to encourage an increase in Customer order flow and contribution to
enhanced market quality on the Exchange.
---------------------------------------------------------------------------
\14\ See supra note 8.
---------------------------------------------------------------------------
The Exchange also believes that the proposed rebate amount and
criteria under the AIM Tier does not represent a significant departure
from the rebates currently offered, or required criteria, under the
Exchange's existing Customer Volume Tiers. For example, under existing
non-complex Customer Volume Tier 1 (applicable to orders yielding fee
code PC or NC which are provided a standard rebate of $0.01), if a
Member has a daily average volume (ADV) of 0.35% or greater than the
OCV the Member receives a rebate of $0.10 per share. The Exchange
believes the proposed tier criteria and rebate of $0.14 is comparable
to this existing tier, especially given that orders yielding fees code
PC or NC receive a standard rebate of $0.01 as compared to the $0.11
base rebate (as proposed) for orders yielding fee code BC.
The Exchange believes that the proposed tier represents an
equitable allocation of fees and is not unfairly discriminatory because
it applies uniformly to all Members. All Members are eligible for the
proposed AIM tier, would have the opportunity to meet the tier's
criteria (which the Exchange believes is less stringent that other
existing Customer Volume tiers),\15\ and would receive the proposed
rebate if such criteria is met. While the Exchange has no way of
knowing whether this
[[Page 61087]]
proposed rule change would definitively result in any particular Member
qualifying for the proposed tier or if it would otherwise impact Member
activity, the Exchange anticipates at least three Members meeting, or
being reasonably able to meet, the proposed criteria. Accordingly, the
Exchange believes the proposed tier is reasonably designed to provide
an incentive for Members interested in meeting the tier criteria to
submit additional Customer volume to achieve the proposed rebate. The
Exchange lastly notes that the proposed tier will not adversely impact
any Member's pricing or their ability to qualify for other tiers.
Rather, should a Member not meet the proposed criteria, the Member will
merely not receive the proposed reduced fee. Furthermore, the proposed
rebate would uniformly apply to all Members that meet the required
criteria under proposed AIM Tier. Likewise, the Exchange believes that
the proposed reduction in the base rebate for orders yielding fee code
BC represents an equitable allocation of rebates and is not unfairly
discriminatory because it is balanced by the higher rebate for such
orders provided under the proposed AIM Tier and Members will continue
to have the opportunity to receive a base rebate on such orders which
will also continue to uniformly apply to all such orders.
---------------------------------------------------------------------------
\15\ See e.g., Cboe EDGX U.S. Options Exchange Fee Schedule,
Footnote 1, Customer Volume Tiers 2-4, which require a Member to
have an ADV of over 0.35% (as proposed in the AIM Tier) of the OCV.
---------------------------------------------------------------------------
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.'' \16\
---------------------------------------------------------------------------
\16\ 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 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 both
liquidity providing and executable order flow to the Exchange. Greater
overall order flow benefits all market participants on the Exchange by
providing more trading opportunities and continuing to encourage
Members to send orders, thereby contributing towards a robust and well-
balanced market ecosystem, 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 15 other options exchanges and
off-exchange venues. Additionally, the Exchange represents a small
percentage of the overall market. Based on publicly available
information, no single options exchange has more than 21% of the market
share.\17\ Therefore, no exchange possesses significant pricing power
in the execution of option 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.'' \18\ 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'. . . .''.\19\
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.
---------------------------------------------------------------------------
\17\ See supra note 3.
\18\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\19\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 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 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 \20\ and paragraph (f) of Rule 19b-4 \21\
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.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 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
[[Page 61088]]
Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2019-068 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-CboeEDGX-2019-068. 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-CboeEDGX-2019-068 and should be
submitted on or before December 3, 2019.
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\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24496 Filed 11-8-19; 8:45 am]
BILLING CODE 8011-01-P
