Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule in Connection With Migration, 63701-63709 [2019-24862]
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Federal Register / Vol. 84, No. 222 / Monday, November 18, 2019 / Notices
determination. The proposed rule
change was published for notice and
comment in the Federal Register on
May 16, 2019.8 November 12, 2019 is
180 days from that date, and January 11,
2020 is 240 days from that date.
The Commission finds it appropriate
to designate a longer period within
which to issue an order approving or
disapproving the proposed rule change
so that it has sufficient time to consider
the proposed rule change, the issues
raised in the comment letters that have
been submitted in connection therewith,
and the Exchange’s response to
comments.9 Accordingly, the
Commission, pursuant to Section
19(b)(2) of the Act,10 designates January
11, 2020 as the date by which the
Commission should either approve or
disapprove the proposed rule change
(File No. SR–CboeBZX–2019–041).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–24859 Filed 11–15–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87495; File No. SR–CBOE–
2019–106]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule in Connection With Migration
November 8, 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
8 See
Notice, supra note 4.
Commission notes that the Exchange
subsequently filed a proposed rule change to
institute an identical trading rights fee which
contained additional information and analysis with
regard to the proposed fee. See Securities Exchange
Act Release No. 86686 (August 15, 2019), 84 FR
43633 (August 21, 2019) (SR–CboeBZX–2019–072).
The Commission suspended and instituted
proceedings for that filing to allow for additional
analysis of the proposed rule change. See Securities
Exchange Act Release No. 87142 (September 27,
2019), 84 FR 52902 (October 03, 2019) (SR–
CboeBZX–2019–072).
10 15 U.S.C. 78s(b)(2).
11 17 CFR 200.30–3(a)(57).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
9 The
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1, 2019, Cboe Exchange, Inc.
(‘‘Exchange’’ or ‘‘Cboe Options’’) 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 Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its Fees Schedule in connection with
migration. 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://www.cboe.com/
AboutCBOE/CBOELegalRegulatory
Home.aspx), 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
In 2016, the Exchange’s parent
company, Cboe Global Markets, Inc.
(formerly named CBOE Holdings, Inc.)
(‘‘Cboe Global’’), which is also the
parent company of Cboe C2 Exchange,
Inc. (‘‘C2’’), acquired Cboe EDGA
Exchange, Inc. (‘‘EDGA’’), Cboe EDGX
Exchange, Inc. (‘‘EDGX’’ or ‘‘EDGX
Options’’), Cboe BZX Exchange, Inc.
(‘‘BZX’’ or ‘‘BZX Options’’), and Cboe
BYX Exchange, Inc. (‘‘BYX’’ and,
together with Cboe Options, C2, EDGX,
EDGA, and BZX, the ‘‘Cboe Affiliated
Exchanges’’). Cboe Options intends to
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migrate its trading platform to the same
system used by the Cboe Affiliated
Exchanges, and also migrate its current
billing system to a new billing system,
on October 7, 2019 (the ‘‘migration’’).
Accordingly, the Exchange proposes to
amend certain fees in the Fees Schedule
in connection with the migration.3
Consolidated Rate Tables
First, the Exchange proposes to
reorganize and rename its standard
transaction fee tables. Particularly, the
Exchange proposes to consolidate its
current rate tables for equity, ETF and
ETN, and Index Products excluding
Underlying Symbol List A into a single
table and relocate its transaction fees
relating to Sector Indexes into that table.
As proposed, the Fees Schedule will
consist of two transaction fee tables
renamed as: (1) ‘‘Rate Table—All
Products Excluding Underlying Symbol
List A’’ and (2) ‘‘Rate Table—
Underlying Symbol List A’’. The
Exchange also proposes to make other
clarifying, non-substantive changes such
as: (i) Separating out Clearing Trading
Permit Holder Proprietary fees for
Underlying Symbol List A into two line
items: (1) Underlying Symbol List A
excluding VIX and (2) VIX and (ii)
consolidating and relocating fees for
Broker-Dealer, Non-Trading Permit
Holder Market Maker, Professional and
Joint Back Office orders in RUT, RLG,
RLV, RUI and UKXM into the section
immediately above it (i.e., for fees for
Broker-Dealer, Non-Trading Permit
Holder Market Maker, Professional and
Joint Back Office orders in OEX, XEO,
SPX (incl SPXW) and VIX). The
Exchange also proposes to indicate in
the rate table that fees for RLG, RLV,
RUI and UKXM are $0.00, as such fees
are currently waived.4 The Exchange
notes the proposed consolidation and
non-substantive changes are intended to
make the Fees Schedule easier to read
and not intended to change any fees
other than what is discussed below.
3 The Exchange initially filed the proposed fee
changes on October 4, 2019 (SR–CBOE–2019–097).
On October 18, 2019, (but business date October 21,
2019) the Exchange withdrew that filing and
replaced it with SR–CBOE–2019–101. On
November 1, 2019, the Exchange withdrew that
filing and submitted this filing.
4 The Exchange notes such waiver is in place
through December 31, 2019. See Cboe Options
Footnote 40, which footnote is appended to
corresponding rates in the rate table as applicable.
The proposed addition of Fee Code WR in the rate
table is not intended to make such waiver
permanent and Footnote 40 continues to apply.
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Fee Codes
The Exchange first proposes to adopt
and codify in its Fees Schedule fee
codes for its standard transaction fees.
The Exchange notes that on the
Affiliated Exchanges, rather than
returning a monetary value indicating
the rebate or charge for an execution, a
fee code is utilized as an indication of
a fee classification corresponding to an
item on the venue’s fee schedule. Upon
migration, the Exchange’s new billing
system will also utilize various fee
codes. The Exchange believes
incorporating these fee codes directly
into the fees schedule will provide
clarity in the Fees Schedule and allow
Trading Permit Holders (‘‘TPHs’’) to
more easily validate their bills on a
monthly basis.5 The Exchange notes that
none of these changes substantively
amend any fee or rebate, nor do they
alter the manner in which the Exchange
assesses fees or calculates rebates.
Linkage
In addition to adopting fee codes for
standard transaction fees, the Exchange
proposes to adopt fee codes for Linkage
Capacity
Routing Fees. Currently, the Exchange’s
Fees Schedule provides generally that
for Customer orders, in addition to the
customary Cboe Options execution
charges for each Customer order that is
routed, the Exchange passes through the
actual transaction fee assessed by the
exchange(s) to which the order was
routed plus an additional $0.15 per
contract.6 The Exchange also does not
pass through or otherwise charge
customer orders (of any size) routed to
other exchanges that were originally
transmitted to the Exchange from the
trading floor through an Exchangesponsored terminal (e.g., PULSe
Workstation). For Non-Customer Orders,
the Exchange assesses a $0.70 per
contract routing fee in addition to the
customary Cboe Options execution
charges. Effective, October 7, 2019, the
Exchange proposes to specifically
specify the exact charge for linkage for
each type of transaction and adopt a
corresponding fee code. Particularly, the
Exchange will list the fee code and
transaction fee for routed (i) Customer
orders routed to NYSE American, LLC
(‘‘AMEX’’), BOX Exchange LLC
Fee
(‘‘BOX’’), NASDAQ BX, Inc. (‘‘BX’’),
Cboe EDGX Exchange, Inc. (‘‘EDGX’’),
Nasdaq MRX, LLC (‘‘MRX’’), Miami
International Securities Exchange, LLC
(‘‘MIAX’’), or Nasdaq PHLX LLC
(‘‘PHLX’’) for ETF orders equal to or
greater than 100 contracts, (ii) Customer
orders routed to AMEX, BOX, BX,
EDGX, MRX, MIAX, or PHLX for ETF
orders less than 100 contracts and
equity options, (iii) Customer orders
routed to NYSE Arca, Inc. (‘‘ARCA’’),
Cboe BZX Exchange, Inc., (‘‘BZX’’),
Cboe C2 Exchange, Inc. (‘‘C2’’), Nasdaq
ISE, LLC (‘‘ISE’’), Nasdaq GEMX, LLC
(‘‘GEMX’’), MIAX Emerald, LLC
(‘‘Emerald’’), MIAX PEARL, LLC
(‘‘Pearl’’), or Nasdaq Stock Market LLC
(‘‘NOMX’’) for ETF orders equal to or
greater than 100 contracts in Penny and
Non-Penny classes, (iv) Customer orders
routed to ARCA, BZX, C2, ISE, GEMX,
Emerald, Pearl or NOMX for ETF orders
less than 100 contracts and equity
options in Penny and Non-Penny
classes, (v) and Non-Customer Orders in
Penny and Non-Penny classes. The
proposed fees are as follows:
Description
Customer ........................
$0.33
0.15
0.83
1.18
0.65
1.00
Non-Customer ................
1.17
1.45
Routed to AMEX, BOX, BX, EDGX, MRX, MIAX, PHLX, ≥ 100 contracts, ETF.
Routed to AMEX, BOX, BX, EDGX, MRX, MIAX, PHLX, < 100 contracts ETF, Equity.
Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX, ≥ 100 contracts ETF, Penny.
Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX, ≥ 100 contracts ETF, Non-Penny.
Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX, <100 contracts ETF, Equity, Penny.
Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX, <100 contracts ETF, Equity, NonPenny.
Routed, Penny.
Routed, Non-Penny.
The Exchange notes that the linkage
routing rates for (i) Non-Customer
Orders and (ii) Customer Orders routed
to AMEX, BOX, BX, EDGX, MRX,
MIAX, and PHLX are not changing.
Rather the Exchange is merely
expressing the fee as single rate for (1)
Non-Customer orders by combining the
$0.70 per contract fee and the customary
Cboe Options execution charges (i.e.,
$0.47 per contract for Penny Classes and
$0.75 per contract for Non-Penny
Classes) and (2) for Customer Orders by
combining the $0.15 per contract fee
plus the customary Cboe Options
execution charges (i.e., $0.00 for equity
options and ETF orders less than 100
contracts and $0.18 per contract for ETF
orders equal to or greater than 100
contracts) and the actual transaction fee
assessed by the Exchange to which the
order was routed (i.e., $0.00 for AMEX,
BOX, BX, EDGX, MRX, MIAX, and
PHLX .The Exchange notes that it is
amending the linkage fee with respect to
any order routed to ARCA, BZX, C2,
ISE, GEMX, Emerald, Pearl and NOMX.
Particularly, unlike orders routed to
AMEX, BOX, BX, EDGX, MRX, MIAX,
and PHLX, which do not assess fees for
Customer orders, ARCA, BZX, C2, ISE,
GEMX, Emerald, Pearl and NOMX each
assess slightly different fees for
Customer orders. Instead of assessing
different and distinct fees for orders
routed to each of ARCA, BZX, C2, ISE
GEMX, Emerald, Pearl and NOMX, the
Exchange proposes to simplify billing
for these orders and instead assess the
same fee.7 Particularly, the Exchange
proposes to assess the $0.15 per routing
contract fee plus the customary Cboe
Options execution charges (i.e., $0.00
for equity options and ETF orders less
than 100 contracts and $0.18 per
contract for ETF orders equal to or
greater than 100 contracts) and the $0.50
per contract for Penny Classes and $0.85
per contract for Non-Penny Classes. The
Exchange notes that other exchanges,
including two of its Affiliated
Exchanges, assess linkage fees expressed
as a single fee for orders routed to these
exchanges and that the proposed fees
are in line with, and in some instances
5 The Exchange also proposes to publish a list of
its fee codes on its website. The list will include
the fee or rebate, fee code, and a description for
each possible execution that could occur on the
Exchange. The Exchange notes that this table is
merely a consolidated table which lists each of the
proposed fee codes that will be incorporated
directly into the Fees Schedule.
6 Multiple orders from the same executing firm
for itself or for a CMTA or correspondent firm in
the same series on the same side of the market that
are received within 500 milliseconds are currently
aggregated for purposes of determining the order
quantity and will continue to be aggregated postmigration.
7 The Exchange notes that the range of standard
fees assessed by ARCA, BZX, C2, ISE, GEMX,
Emerald, Pearl and NOMX for Customer Orders in
Penny Classes is between $0.41 per contract to
$0.50 per contract and in Non-Penny Classes is
either $0.84 per contract or $0.85 per contract.
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Federal Register / Vol. 84, No. 222 / Monday, November 18, 2019 / Notices
lower than, those fees.8 The Exchange
lastly proposes to eliminate the
exception that the Exchange will not
pass through or otherwise charge
customer orders (of any size) routed to
other exchanges that were originally
transmitted to the Exchange from the
trading floor through an Exchangesponsored terminal (e.g., PULSe
Workstation). The Exchange notes that it
is not required to maintain such an
exception and that it expects the impact
of the proposed change to be relatively
small.
Capacity
Recently, the Exchange filed to codify
capacity codes in its Rules.9 By way of
background, the Exchange currently
refers to capacity as ‘‘origin code’’,
which codes are used to specify which
type of market participant the order
belongs to. Cboe Options origin codes
had previously been codified in
Regulatory Circular RG13–038. The
recently codified Capacities (effective
October 7, 2019), are the same as the
Exchange’s current origin codes (prior to
October 7, 2019), except the proposed
rule change replaces ‘‘W’’ with ‘‘U’’ and
deletes ‘‘Y’’ (orders for the account of a
specialist registered in the underlying
stock at the primary exchange for
trading the stock), which will not be
available following migration. The
Exchange’s Fees Schedule currently
identifies market participant types by
‘‘origin code’’. In light of the codified
capacity codes in the Exchange Rules,
the Exchange proposes to update
references to ‘‘origin’’ to ‘‘capacity’’ and
also update the proposed corresponding
codes. The codes are as follows: B
(account of a broker or dealer, including
a Foreign Broker-Dealer), C (Public
Customer account), F (OCC clearing firm
proprietary account), J (joint back office
account), L (non-Trading Permit Holder
affiliate account), M (Market-Maker
account), N (market-maker or specialist
on another options exchange), U
(Professional account). Additionally, the
Exchange proposes to eliminate all
references to the term ‘‘Voluntary
Professional’’ as the Exchange is
8 See Cboe BZX Options Exchange Fee Schedule
and Cboe EDGX Options Exchange Fee Schedule,
which both assess for Routed Customer Orders to
ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and
NOMX $0.85 per contract for penny classes and
$1.25 per contract for non-penny classes (yielding
fee codes RQ and RR, respectively). See also MIAX
Options Fees Schedule which assess for Routed
Customer Orders to ARCA, BZX, C2, ISE, GEMX,
Emerald, Pearl and NOMX $0.65 per contract for
penny classes and $1.00 per contract for non-penny
classes.
9 See Securities Exchange Act Release No 86173
(June 20, 2019) 84 FR 30267 (June 26, 2019) (SR–
CBOE–2019–027).
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eliminating Voluntary Professionals,
effective October 7, 2019.10
Execution Surcharge
The Exchange currently assesses an
Execution Surcharge of $0.21 per
contract for SPX Customer and NonCustomer, Non-Market Maker orders
during the Regular Trading Hours
(‘‘RTH’’) session only (i.e., the surcharge
does not apply during the Global
Trading Hours (‘‘GTH’’) session.
Additionally, pursuant to Footnote 21 of
the Fees Schedule, the Surcharge does
not apply to (i) orders in SPX or SPXW
options in the SPX electronic book for
those SPX or SPXW options that are
executed during opening rotation on the
final settlement date of VIX options and
futures which have the expiration that
contribute to the VIX settlement and (ii)
orders executed by a floor broker using
a PAR terminal. The Exchange proposes
to amend the Execution Surcharge in
two ways.
First, the Exchange notes that upon
migration, the Exchange will use the
same Book for GTH and RTH (whereas
today, each session has a separate
Book). As such, the Exchange proposes
to apply the SPX Execution Surcharge
in both sessions. The Exchange notes
that other executions surcharges, such
as the SPXW Execution Surcharge, are
also assessed in both RTH and GTH.
Next, the Exchange proposes to
amend one of the exceptions to the SPX
and SPXW Execution Surcharge. As
noted above, the execution surcharge is
currently waived for all SPX and SPXW
option series that are (i) executed in the
electronic book during opening rotation
on the final settlement date of VIX
options and futures and (ii) which have
the expiration that is used to calculate
the exercise or final settlement value
(‘‘constituent options series’’). While the
Exchange knows which expiration will
be used to calculate the exercise or final
settlement value prior to the opening,
the actual SPX and SPXW series that the
Exchange will use to calculate the
exercise or settlement value
(‘‘settlement strip’’) are not known until
after the opening. As such, the current
exception applies to all constituent
options series, as TPHs do not know
which series in the constituent options
series will ultimately contribute to the
VIX settlement. Upon migration
however, the Exchange will determine
the settlement strip (i.e., series actually
used) pursuant to an algorithm prior to
the opening and announce such series.11
10 Id.
11 See Exchange Rule 5.31(j)(1). The Exchange
will disseminate the highest call strike and the
lowest put strike that establish the strike range to
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As such, the Exchange believes it’s
appropriate to limit the current
exception and apply it only to SPX/
SPXW options that (i) are executed in
the electronic book during opening
rotation on the final settlement date of
VIX options and futures and (ii) which
have the expiration that are used in the
VIX settlement calculation (as opposed
to the constituent options series which
encompasses series that may not have
ultimately contributed to the VIX
settlement calculation).
CFLEX AIM Response
The Exchange currently assesses a fee
for CFLEX AIM Responses. More
specifically, the CFLEX AIM Response
fee applies to all broker-dealer and nonTPH Holder market-maker responses in
all FLEX products, except Sector
Indexes and Underlying Symbol List
A,12 executed in the FLEX AIM or FLEX
SAM auctions. This fee applies to such
executions instead of the applicable
standard transaction fee. The Exchange
notes that currently FLEX Options trade
on the Exchange’s FLEX Hybrid Trading
System (‘‘CFLEX’’), which is the
Exchange’s trading platform that allows
FLEX Traders to submit electronic and
open outcry request for quotes
(‘‘RFQs’’), FLEX quotes in response to
those RFQs, and FLEX Orders into the
electronic book. Upon the Exchange’s
trading platform migration, FLEX
trading will occur on the same Exchange
System 13 as all other options trading
occurs on the Exchange.14 The
Exchange notes it intends to continue to
offer a FLEX AIM and FLEX SAM
process to provide FLEX Orders with
price improvement and electronic
crossing opportunities. As FLEX trading
all subscribers to the Exchange’s data feeds that
deliver opening auction update messages, no later
than 8:45 a.m. Eastern Time on exercise settlement
value determination days. The Exchange may
update this strike range until 9:15 a.m. Eastern
Time, and will disseminate any updates during that
time period as soon as reasonably possible.
Therefore, the final strike range of the settlement
strip that the Exchange disseminates at 9:15 a.m.
Eastern Time to market participants will be
identical to that which the Exchange will use to
calculate the VIX settlement value itself.
12 As of October 7, 2019, Underlying Symbol List
A includes: OEX, XEO, RUT, RLG, RLV, RUI,
UKXM, SPX (includes SPXw) and VIX. See Cboe
Options Fees Schedule, Footnote 34.
13 The term ‘‘System’’ means the Exchange’s
hybrid trading platform that integrates electronic
and open outcry trading of option contracts on the
Exchange, and includes any connectivity to the
foregoing trading platform that is administered by
or on behalf of the Exchange, such as a
communications hub.
14 In connection with the transition of FLEX
trading from the CFLEX system to the same system
all other trading will occur, the Exchange proposes
to eliminate references to ‘‘CFLEX’’ (and ‘‘FLEX
Hybrid Trading System’’) and replace it with
references to ‘‘FLEX’’.
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(including FLEX AIM and SAM) will
occur on the same trading platform as
all other options trading (including AIM
and SAM), the Exchange no longer
wishes to maintain a distinct fee for
FLEX AIM responses and proposes to
eliminate the separate fee for FLEX AIM
responses. The proposed change will
result in FLEX AIM and FLEX SAM
trades being treated the same as all AIM
and SAM executions (i.e., no fees
assessed for responses). In connection
with the proposed change, the Exchange
also proposes to eliminate Footnote 20
which applies to the CFLEX AIM
Response Fee.
Facilitation Waiver
Pursuant to Footnote 11 of the Fees
Schedule, the Exchange currently
waives Clearing Trading Permit Holder
Proprietary (capacity codes ‘‘F’’ and
‘‘L’’) transaction fees for (1) facilitation
orders executed in open outcry or as a
CFLEX transaction for products other
than Sector Indexes and Underlying
Symbol List A and (2) facilitation orders
executed in open outcry, or
electronically via AIM or as a QCC or
CFLEX transactions orders in Sector
Indexes.15 Footnote 11 also currently
defines ‘‘Facilitation orders’’ for this
purpose as any order in which a
Clearing Trading Permit Holder (‘‘F’’
capacity code) or Non-Trading Permit
Holder Affiliate (‘‘L’’ capacity code) is
contra to any other capacity code,
provided the same executing broker and
clearing firm are on both sides of the
transaction (for open outcry) or both
sides of a paired. The Exchange
proposes to update Footnote 11 to
provide that the current waivers for
facilitation orders will apply only to
volume executed in open outcry. The
Exchange believes the proposed change
would have a de minimis impact as
historically there have been very few
facilitation orders executed
electronically. Lastly, in light of the
proposed change, the Exchange
proposes to eliminate Footnote 12 in its
entirety. Particularly, Footnote 12
currently provides the Clearing Trading
Permit Holder Proprietary Transaction
Fee shall be waived for Clearing Trading
Permit Holders executing facilitation
orders in FLEX Options in all
underlying symbols excluding
Underlying Symbol List A and Sector
Indexes. In light of the proposal to only
waive fees for open outcry facilitation,
this footnote would no longer be true
with respect to facilitation orders
15 Facilitation for Sector Indexes are currently
only waived through December 31, 2019. See Cboe
Options Fees Schedule, Footnote 11. Open-outcry
facilitation for Sector Indexes will continue to be
waived through December 31, 2019.
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executed electronically. The Exchange
proposes to eliminate the footnote in its
entirety in lieu of updating the footnote
as it believes the language is redundant
to Footnote 11, and is therefore not
necessary to maintain. FLEX open
outcry facilitations will continue to be
waived and covered under Footnote 11.
Stock-Option Orders
By way of background, stock-option
orders are complex instruments that
constitute the purchase or sale of a
stated number of units of an underlying
stock or a security convertible into the
underlying stock coupled with the
purchase or sale of an option contract(s)
on the opposite side of the market and
execute in the same manner as complex
orders. Currently, the stock portions of
stock-option strategy orders are
electronically communicated by the
Exchange to a designated broker-dealer,
who then manage the execution of such
stock portions. In connection with this
functionality, the Exchange assesses a
stock handling fee of $0.0010 per share
for the processing and routing by the
Exchange of the stock portion of stockoption strategy orders executed through
those mechanisms. A maximum of
$50.00 per order is currently assessed
under this fee. The Exchange notes that
it largely passes through to TPHs the
fees assessed to the Exchange by the
designated broker-dealer that manages
the execution of the stock portions of
stock-option strategy orders. The
Exchange also notes that the designated
broker-dealer that manages the
execution of the stock portions of stockoption strategy orders apply the $50 cap
on a per execution basis, instead of a per
order basis (meaning the Exchange may
end up subsidizing certain orders
depending on how they were filled).16
Now that the Exchange is migrating to
a new billing system, the Exchange
wishes to modify how the cap is applied
in the billing system. Particularly, the
Exchange proposes to similarly cap the
stock option fee on a per execution basis
instead of a per order basis, which will
more closely align to how the
Exchange’s designated broker-dealer
applies the cap. The Exchange notes
another Exchange similarly caps its
16 For example, take an order that involves 60,000
shares of a stock and is filled via two executions
of 30,000 shares each. Under the current per order
cap, the Exchange can only assess $50.00 as the fees
for the original order is $60 which exceeds the cap
(i.e., $0.0010 × 60,000 shares). The Exchange’s
designated broker-dealer meanwhile bills the
exchange for each execution, resulting in $60 to the
exchange (i.e., $0.0010 × 30,000 × 2). Under the
proposed cap, the Exchange would be able to pass
through the full $60 charge as neither execution of
30,000 contracts hit the $50 per execution cap.
PO 00000
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stock option handling fee at $50 per
trade (instead of order).17
Inactive Nominee Stats Change
(‘‘Swap’’) Fee
Next the Exchange proposes to amend
the Inactive Nominee Status Change
fees. Particularly, under the Fees
Schedule, a fee is assessed each time an
inactive nominee swaps places with a
nominee on a Trading Permit. The
amount of such fee varies depending on
what time the request for the swap
occurs. Specifically, the Exchange
assesses a fee of $55 if the request is
submitted prior to 4:00 p.m. CT on the
day prior to the effective date of the
change; $110 if the request is submitted
after 4:00 p.m. CT on the day prior to
the effective date of the change and
$220 if the request is submitted after
8:00 a.m. CT on the effective date of
change. The Exchange recently
proposed to waive these fees for the
period of October 1–October 4, 2019 as
the Exchange’s Trading Permit structure
was being modified in connection with
migration.18 In order to simplify the fee
structure and billing process for these
permit changes going forward, the
Exchange proposes to eliminate both the
current waiver and fee structure and in
its place assess a flat fee of $100,
regardless of when the request for such
change was submitted. The proposed
change would therefore apply to all
TPHs uniformly.
Subcabinet Trades
Currently, Footnote 32 of the Fees
Schedule provides that the Exchange
will assess no transaction fees or
surcharges for subcabinet trades (i.e.,
limit orders with a price of at least $0
but less than $1 per options contract,
per current Exchange Rule 6.54,
Interpretation and Policy .03.) 19
Additionally, the footnote provides that
subcabinet trades will not count
towards any volume thresholds or
volume threshold calculations. To
harmonize and simplify the Exchange’s
billing, the Exchange proposes to treat
subcabinet trades (now called ‘‘subpenny cabinet orders’’) 20 the same as
cabinet trades (now called penny
17 See NASDAQ ISE Options Pricing Schedule,
Section 4.12.
18 See SR–CBOE–2019–080.
19 The Exchange notes it inadvertently failed to
update the Fees Schedule when Rule 6.54.03 was
renumbered to 6.54.02. The Exchange also notes
that it recently submitted a rule filing to relocate
rules relating to both cabinet and subcabinet orders,
effective October 7, 2019. See SR–CBOE–2019–58.
20 See Cboe Options Rule 5.85(h)(2). A sub-penny
cabinet is a limit order with a price less than $0.01
per contact. Bids and offers for opening transactions
for sub-penny cabinet orders are only permitted to
accommodate closing transactions.
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cabinet orders).21 That is, the Exchange
proposes to eliminate Footnote 32 in its
entirety, which would result in normal
transaction fees and surcharges applying
to sub-penny cabinet trades and for such
trades to be counted towards any
volume thresholds or volume threshold
calculations, as cabinet trades are today.
The Exchange would also clarify in the
Marketing Fee notes section that the
Marketing Fee would not apply to subpenny cabinet trades (which is the case
today), as such exception also currently
applies to cabinet trades.22 The [sic]
believes it’s appropriate to treat
subcabinet trades the same as cabinet
trades for billing purposes as both
orders are similar in that they are trades
in listed options on the Exchange that
are either worthless or inactive or not
actively traded. Additionally, the
Exchange believes the proposed change
would have a de minimis impact as
historically there have been very few
sub-penny cabinet trades.
Exchange System Disruption
Footnote 36 of the Fees Schedule
currently provides that under the
Volume Incentive Program (‘‘VIP’’),23
the Exchange provides that in the event
of a Cboe Options System outage or
other interruption of electronic trading
on Cboe Options, the Exchange will
adjust the national customer volume in
all underlying symbols excluding
Underlying Symbol List A, Sector
Indexes, MXEA, MXEF, MNX, NDX,
21 See Cboe Options Rule 5.12(h)(1). [sic] A penny
cabinet is a limit order with a price of $0.01 per
contract.
22 See Cboe Options Fees Schedule, Footnote 6.
The Exchange notes that it is relocating the
language in current Footnote 6 which governs the
Marketing Fee program to the notes section of the
Marketing Fee table in an effort to consolidate the
Fees Schedule and make it easier to follow. The
proposed clarification relating to the exclusion of
sub-penny cabinet trades from the Marketing Fee
program is therefore reflected in the new notes
section and is not marked in Footnote 6. The
Exchange also proposes to reference ‘‘penny cabinet
trades’’ in the notes section instead of referencing
‘‘accommodation liquidations (cabinet trades)’’ as it
does currently in Footnote 6. The Exchange notes
the proposed reference is not a substantive change,
but rather conforms terminology to the Exchange’s
rules.
23 Under VIP, the Exchange credits each TPH the
per contract amount set forth in the VIP table for
Public Customer (origin code ‘‘C’’) orders
transmitted by TPHs (with certain exceptions) and
executed electronically on the Exchange, provided
the TPH meets certain volume thresholds, in which
volume for Professional Customers and Voluntary
Professionals (‘‘Professional Customers’’) (origin
code ‘‘W’’), Broker-Dealers (origin code ‘‘B’’), and
Joint Back-Offices (‘‘JBO’’) (origin code ‘‘J’’) orders
are counted toward reaching such thresholds.
Specifically, the percentage thresholds are
calculated per month based on the percentage of
national customer volume in all underlying
symbols entered and executed, excluding those in
Underlying Symbol List A, Sector Indexes, MXEA,
MXEF, MNX, NDX, DJX and XSP.
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DJX and XSP (‘‘National Customer
Volume’’) for the duration of the outage.
In connection with the migration, the
Exchange wishes to conform how it
handles system disruptions to the way
they are handled on its affiliate
exchanges, Cboe BZX and Cboe EDGX.24
Particularly, the Exchange proposes to
provide that in the event of a Cboe
Options System outage or other
interruption of electronic trading on
Cboe Options that lasts longer than 60
minutes, the Exchange will adjust the
national volume in all underlying
symbols excluding Underlying Symbol
List A (34), Sector Indexes (47), MXEA,
MXEF, DJX and XSP for the entire
trading day (instead of the duration of
the outage). The Exchange also notes
that currently, the Fees Schedule only
explicitly addresses how it handles
exchange outages and interruptions for
VIP and is silent as to if and how it
would adjust national volume in other
incentive programs.25 In order to clarify
that the Exchange will apply the same
approach to any affected incentive
program, the Exchange proposes to
eliminate the reference to exchange
outages/interruptions in Footnote 36
and adopt in its place new Footnote 6.26
Particularly, Footnote 6 will address
how the Exchange handles outages/
interruptions for all incentive programs
that utilize national volume in
determining certain tiers and
thresholds, including VIP, as described
above.
Large Trade Discount
Next the Exchange proposes to amend
the Customer Large Trade Discount
Program and a non-customer Large
Trade Discount Program. By way of
background, the Customer Large Trade
Discount Program caps fees for customer
orders of a certain size in VIX, SPX/
SPXW, XSP, other index options and
ETF and ETN options. The Large Trade
Discount Program similarly caps fess for
non-customer orders of a certain size in
VIX options. Both programs provide that
for an order to be eligible to qualify for
the discount, the order in its entirety
24 See Cboe EDGX Options Fees Schedule and
Cboe BZX Options Fees Schedule. which provide
volume is excluded from certain calculations on
any day that the Exchange’s system experiences a
disruption that lasts more than 60 minutes during
regular trading hours.
25 The Exchange notes that since the Fees
Schedule never explicitly specified how the
Exchange would adjust national volume in the
event of an outage, no adjustments would have been
made to any calculations for any program other
than VIP.
26 The language under current Footnote 6 is
relocating to the Marketing Fee Program table as
discussed above. The Exchange proposes to
therefore reuse Footnote 6 and adopt new language
relating to system outages.
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63705
must be executed in either Global
Trading Hours GTH or RTH, but not
both. The Exchange notes that upon
migration, the Book used during RTH
will be the same Book used during GTH
(as compared to today where the
Exchange maintains separate Books for
each session). As such it is possible for
an order to now be executed over both
sessions and still otherwise qualify for
the caps under the programs. The
Exchange therefore proposes to
eliminate the language in the notes
section of both tables providing that
orders must be entirely executed in one
session or another, but not both.
AIM Contra Fee
Currently, Footnote 18 of the Fees
Schedule provides that the AIM Contra
Execution Fee applies to all orders
(excluding facilitation orders, per
footnote 11) in all products, except
Sector Indexes and Underlying Symbol
List A, executed in AIM, SAM FLEX
AIM and FLEX SAM auctions, that were
initially entered as the contra party to
an Agency/Primary Order. Footnote 18
also provides that instead of the
applicable standard transaction fee, the
AIM Contra Fee will apply to AIM
Contra executions except if the
applicable standard transaction fee is
lower than $.07 per contract,27 in which
case the applicable standard transaction
fee will apply. To simplify the billing
process, the Exchange proposes to
eliminate this exception (i.e., the $0.07
per contract AIM Contra Execution Fee
will always apply to all orders
(excluding facilitation orders) in all
products, except Sector Indexes and
Underlying Symbol List A, executed in
AIM, SAM FLEX AIM and FLEX SAM
auctions, that were initially entered as
the contra party to an Agency/Primary
Order).
HAL to SUM
As part of the migration, the Exchange
is harmonizing its rules in connection
with routing services, including the
Hybrid Agency Liaison (‘‘HAL’’) and
HAL on the Open (‘‘HALO’’) system, to
that of the Cboe Affiliated Exchanges.
As part of the harmonization, the
Exchange has proposed to rename HAL
and HALO to ‘‘Step-Up Mechanism’’ (or
‘‘SUM’’). As such, the Exchange
proposes to replace all references to the
Hal Agency Liaison, HAL, HAL on the
Open or HALO, to ‘‘Step-Up
Mechanism’’ or ‘‘SUM’’, as appropriate.
The Exchange believes the proposed
27 The Exchange notes that when the Exchange
increased the AIM Contra fee from $0.05 per
contract to $0.07 per contract, it inadvertently failed
to update the increased amount in Footnote 18.
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change will provide consistency
between the Exchange Rule Book and
Fees Schedule and alleviate potential
confusion.
MNX and NDX
The Exchange next proposes to amend
the Fees Schedule to remove references
to MNX and NDX. The Exchange notes
that it no longer lists MNX and NDX
options and as such proposes to
eliminate such references from the Fees
Schedule, which will avoid potential
confusion and provide clarity in the
rules. The Exchange also proposes to
modify how the percentage thresholds
of National Customer Volume under VIP
are calculate with respect to MNX and
NDX. Currently, MNX and NDX are
excluded from the National Customer
Volume percentage thresholds, along
with the Exchange’s other proprietary
products. As the Exchange no longer
lists MNX and NDX, it believes it’s
appropriate to start including MNX and
NDX volume in the percentage
thresholds of National Customer
Volume, as it does with volume from all
other non-proprietary products.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.28 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 29 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,30 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Trading Permit Holders and other
persons using its facilities.
First, the Exchange believes that a
number of its proposed changes
alleviate potential confusion and result
28 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
30 15 U.S.C. 78f(b)(4).
29 15
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in a Fees Schedule that is clearer and
easier to follow, thereby removing
impediments to and perfecting the
mechanism of a free and open market
and a national market system, and, in
general, protecting investors and the
public interest. Particularly, the
Exchange believes its proposal to
reorganize and consolidate its rate
tables, along with its proposed nonsubstantive, clarifying changes to the
rate tables described above, will result
in a more transparent, simplified and
easier to read Fees Schedule. The
Exchange also believes the proposal to
adopt fee codes is reasonable and
equitable because the Exchange believes
such fee codes provides further clarity
in the Fees Schedule and the fee codes
do not amend any fees or rebates that
apply to trading activity on the
Exchange. Rather, the proposed fee
codes allow TPHs to more easily
validate the bills that they receive from
the Exchange, thus alleviating potential
confusion.
The Exchange believes its proposal to
(i) replace references to origin codes
with capacity and capacity codes and
(ii) replace references to ‘‘Hybrid
Agency Liaison’’, ‘‘HAL’’ ‘‘HAL on the
Open’’ and ‘‘HALO’’ with ‘‘Step-Up
Mechanism’’ and ‘‘SUM’’ also provides
clarity in the Fees Schedule.
Particularly, as noted above, the
Exchange is codifying in its rules the
available capacity codes and replacing
references to ‘‘Hybrid Agency Liaison’’,
‘‘HAL’’ ‘‘HAL on the Open’’ and
‘‘HALO’’ with ‘‘Step-Up Mechanism’’
and ‘‘SUM’’. The proposed changes
therefore maintains consistency
between its Rulebook and its Fees
Schedule. Similarly, the Exchange
believes it reduces potential confusion
to eliminate references to ‘‘CFLEX’’ as
the Exchange is transitioning its FLEX
trading from the CFLEX platform to the
same system all other trading will occur
on. Removing references to MNX and
NDX from the Fees Schedule also
eliminates confusion as the Exchange no
longer lists these products. The proposal
to include MNX and NDX volume in the
percentage thresholds under VIP is also
reasonable, equitable and not unfairly
discriminatory as the proposed change
applies to all TPHs and because MNX
and NDX are no longer proprietary
products traded on the Exchange and
should therefore be treated the same as
other non-proprietary products.
The Exchange believes its proposed
fees relating to linkage are reasonable as
the proposed fees continue to take into
account routing costs and are in line
with amounts assessed by other
exchanges, including its Affiliated
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Exchanges.31 Moreover, the Exchange
notes that all linkage costs are staying
the same with the exception of orders
routed to ARCA, BZX, C2, ISE GEMX,
Emerald, Pearl and NOMX. The
Exchange believes the proposed fees for
orders routed to ARCA, BZX, C2, ISE
GEMX, Emerald, Pearl and NOMX are
reasonable as the fees are either the
same as, or in some instances even
lower than, fees assessed by other
Exchanges when routed to these
exchanges.32 Moreover, the Exchange
highlights that routing through the
Exchange is voluntary and also notes
that it operates in a highly competitive
market in which market participants can
readily direct order flow to competing
venues or providers of routing services
if they deem fee levels to be excessive.
The Exchange also believes the
proposed change is reasonable as it
simplifies billing for these orders.
Furthermore, two of the Exchange’s
affiliated exchanges similarly assess
linkage fees expressed as a single fee for
orders routed to these exchanges and
that the proposed fees are lower than
those fees.33 The Exchange believes its
proposal to eliminate the exception that
the Exchange will not pass through or
otherwise charge customer orders (of
any size) routed to other exchanges that
were originally transmitted to the
Exchange from the trading floor through
an Exchange-sponsored terminal (e.g.,
PULSe Workstation) is reasonable as the
Exchange is not required to maintain
such an exception. Indeed, the
Exchange is not aware of other
Exchanges with a trading floor that
maintain a similar exception to routing
fees. The Exchange also expects the
impact of the proposed change to be
relatively small. The Exchange believes
the proposed changes to linkage fees are
equitable and not unfairly
discriminatory because the proposed
changes apply equally to all TPHs who
chose to use the Exchange to route
orders to other exchanges. TPHs that do
not favor the proposed pricing can
readily direct order flow directly to
31 See e.g., See Cboe BZX Options Exchange Fee
Schedule and Cboe EDGX Options Exchange Fee
Schedule. See also NYSE Arca Options Fees and
Charges, Routing Fees.
32 See Cboe BZX Options Exchange Fee Schedule
and Cboe EDGX Options Exchange Fee Schedule,
which both assess for Routed Customer Orders to
ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and
NOMX $0.85 per contract for penny classes and
$1.25 per contract for non-penny classes (yielding
fee codes RQ and RR, respectively). See also MIAX
Options Fees Schedule which assess for Routed
Customer Orders to ARCA, BZX, C2, ISE, GEMX,
Emerald, Pearl and NOMX $0.65 per contract for
penny classes and $1.00 per contract for non-penny
classes.
33 See Cboe BZX Options Exchange Fee Schedule
and Cboe EDGX Options Exchange Fee Schedule.
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those other exchanges or through
competing venues or providers of
routing services.
The Exchange believes the proposal to
apply the Execution Surcharge to orders
in both the RTH and GTH session is
reasonable because the amount of the
surcharge will be the same for both the
RTH and GTH session. Additionally,
post-migration, the Exchange will use
the same Book for GTH and RTH, as
compared to today where each session
has a separate Book, and the Exchange
therefore believes it’s reasonable to
assess the fee to both sessions.
Moreover, the Exchange believes the
proposed change is reasonable,
equitable and not unfairly
discriminatory as other execution
surcharges, such as the execution
surcharge for SPXW, also applies to
orders in both RTH and GTH. The
Exchange believes the proposed change
is equitable and not unfairly
discriminatory as it applies uniformly to
all TPHs.
The Exchange believes the
amendment to Footnote 21 regarding the
exception to the SPX and SPXW
Execution Surcharges is reasonable as it
will result in market participants at
times not being required to pay these
surcharges for SPX and/or SPXW
transactions in the circumstances
described. Particularly, the Exchange
notes that it had adopted the exception
in recognition that while liquidity is
important to open all series on the
Exchange, given the potential impact on
the exercise settlement value
determined for expiring volatility index
derivatives, it was important to
encourage a fair and orderly opening of
the series that expire in the month used
to calculate the final settlement value of
expiring VIX derivatives. As discussed,
the Exchange currently only applies
such exception to constituent options
series as only the expiration month used
to calculate the final settlement is
known prior to opening. Upon
migration however, the Exchange (and
TPHs) will know which series will
actually be used to calculate the
exercise or final settlement value prior
to the opening. Accordingly, the
Exchange does not believe the exception
should continue to be broadly applied
to all constituent options series, since
only a subset of such series are used in
the settlement value calculation and
since such subset will now be known
prior to opening. As such, the Exchange
believes the proposed rule change is
reasonable, equitable and not unfairly
discriminatory and also notes it applies
uniformly to all TPHs.
The Exchange believes it’s reasonable
to eliminate the CFLEX AIM Response
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fee as TPHs will no longer be subject to
a fee for FLEX AIM responses.
Moreover, as discussed, CFLEX AIM
will no longer operate on a separate
trading system upon migration. AIM
(and SAM) for FLEX orders will operate
on the same system as AIM (and SAM)
for all other orders and the Exchange
therefore believes it’s reasonable to
assess the same fees for FLEX and nonFLEX AIM and SAM orders. The
Exchange believes the proposed change
is equitable and not unfairly
discriminatory because it applies
uniformly to all TPHs.
The Exchange believes it’s reasonable
to limit its waiver of facilitation fees for
orders executed in open-outcry only
because the Exchange is not required to
maintain a facilitation fee waiver for any
transactions and notes that TPHs will
still be eligible to receive the waiver for
open-outcry transactions. Additionally,
as noted above there have historically
been very few electronic facilitation
orders which were eligible for the
current waiver, as compared to openoutcry facilitations which tend to be
much more common. The Exchange
therefore also believes the impact of the
proposed change is de minimis. The
Exchange believes the proposed change
is equitable and not unfairly
discriminatory because the proposed
change applies uniformly to all TPHs
and treats all electronic facilitation
orders equally.
The Exchange believes its proposed
change relating to how it caps the stockoption order fee is reasonable because
the Exchange is capping the transactions
the same way the Exchange’s designated
broker-dealer that manages the
execution of the stock portions of stockoption strategy orders caps (and bills the
Exchange) for these orders. Specifically,
the Exchange will merely no longer be
subsidizing certain stock-option order
transactions and the modified cap
which will more closely align to how
the Exchange’s designated broker-dealer
applies the cap. The Exchange believes
the proposed change is also reasonable
as it will not result in the Exchange
collecting fees beyond what the
Exchange itself is billed for by its
designated broker-dealer. The Exchange
notes another Exchange similarly caps
its stock option handling fee at $50 per
trade (instead of order).34 The Exchange
believes the proposed change is
equitable and not unfairly
discriminatory as it will be applied to
all TPHs uniformly.
The Exchange believes the proposed
change to the inactive nominee swap fee
34 See NASDAQ ISE Options Pricing Schedule,
Section 4.12.
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63707
is reasonable because the fee is similar
to the fees that were previously assessed
for certain swaps. As discussed above,
TPHs were previously subject to an
inactive nominee swap fee of $55, $110
or $220, depending on the time they
submitted their request for a swap. The
Exchange believes the proposed change
provides for a simplified fee and billing
structure (i.e., maintaining a single fee
vs multiple fees based on time
submissions). The proposed change is
equitable and not unfairly
discriminatory as it would apply to any
TPH that is swapping inactive nominees
on a Trading Permit uniformly.
The Exchange believes its proposed
change relating to subcabinet trades
(now referred to as ‘‘sub-penny cabinet
trades’’) is reasonable as the proposed
change results in sub-penny cabinet
trades being treated the same as cabinet
trades (now called ‘‘penny-cabinet
trades’’). The believes it’s appropriate to
treat sub-penny and penny cabinet
trades the same as cabinet trades for
billing purposes as both orders are
similar in that they are trades in listed
options on the Exchange that are either
worthless or inactive or not actively
traded and are both reported and
processed like all other open outcry
trades. The Exchange also believes the
proposed change is reasonable,
equitable and not unfairly
discriminatory because it applies
equally to all TPHs and because the
Exchange believes the proposed change
would have a de minimis impact as
historically there have been very few
sub-penny cabinet trades.
The Exchange believes its proposal to
amend how it calculates national
volume in the event of a system outage
or trading interruption is reasonable as
it conforms to the way the [sic] handles
such outages on its affiliate exchanges,
Cboe BZX and Cboe EDGX.35 The
Exchange also notes that it may not be
possible in all instances to adjust
national volume numbers for the period
of the outage only. The Exchange
believes the proposed change also adds
clarity to the Fees Schedule, as the Fees
Schedule is currently silent as to how it
calculates certain thresholds based on
national volume for programs other than
VIP. The proposed change therefore
makes clear how different incentive
programs are impacted in the event of
a system outage or electronic trading
35 See Cboe EDGX Options Fees Schedule and
Cboe BZX Options Fees Schedule. [sic] which
provide volume is excluded from certain
calculations on any day that the Exchange’s system
experiences a disruption that lasts more than 60
minutes during regular trading hours.
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interruption. The proposed rule change
also applies uniformly to all TPHs.
The Exchange also believes its
amendment to the Customer Large
Trade Discount Large Trade Discount
Programs are reasonable, equitable and
not unfairly discriminatory. As
discussed, the Book used during RTH
will be the same Book used during GTH
upon migration (as compared to today
where each session has a separate
Book). As such it will be possible for an
order to be executed over both sessions
upon migration and the Exchange
therefore believes it’s reasonable to
eliminate requirement that orders must
be entirely executed in one session or
another, but not both. The Exchange
believes the proposed change is also
reasonable as orders that may not have
otherwise been eligible for the discounts
in the past because to [sic] this
requirement may now be eligible. The
proposed rule change also applies
uniformly to all TPHs.
The Exchange believes its proposal to
eliminate the exception to the AIM
Contra Fee is reasonable, equitable and
not unfairly discriminatory because
TPHs will still not be paying more than
the current AIM Contra Fee ($0.07) for
AIM Contra orders that are subject to the
AIM Contra Fee pursuant to Footnote
18. The proposed change also results in
a simplified billing process and the
Exchange notes that it is not
requirement to maintain the current
exception to the AIM Contra Fee. The
Exchange believes the proposed change
is equitable and not unfairly
discriminatory as it will be applied to
all TPHs uniformly.
In sum, the Exchange believes the
proposed changes described above
incorporate updates to the Fees
Schedule in connection with the
migration of the Exchange’s trading
system and new billing system, conform
certain billing practices to practices on
the Exchange’s affiliated exchanges,
simplify billing practices and add
clarity to the Fees Schedule. For the
reasons discussed above, the Exchange
believes the proposed changes are
reasonable, equitable and unfairly
discriminatory will apply uniformly to
similarly situated TPHs. Finally, the
Exchange believes that the proposed fee
schedule will be easier to read for
investors and will eliminate potential
investor confusion, thereby removing
impediments to and perfecting the
mechanism of a free and open market
and a national market system, and, in
general, protecting investors and the
public interest.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Specifically,
the Exchange does not believe that the
proposed change will impose any
burden on intramarket competitions that
is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed changes will be
applied equally to all similarly situated
TPHs. The Exchange also 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
continues to reflect a competitive
pricing structure designed to incentivize
market participants to direct their order
flow to the Exchange, which the
Exchange believes enhances market
quality to the benefit of all TPHs.
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange also notes that the
proposed rule changes are precipitated
by its upcoming migration of the
Exchange’s migration of its trading
platform and billing system and not
intended to address competitive issues.
Rather, the proposed changes are
generally being made in connection
with changes resulting from migration
and/or are designed to simplify the
Exchange’s billing processes postmigration.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
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 36 and paragraph (f) of Rule
19b–4 37 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
36 15
37 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00104
Fmt 4703
Sfmt 4703
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–
CBOE–2019–106 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–CBOE–2019–106. 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–CBOE–2019–106 and
E:\FR\FM\18NON1.SGM
18NON1
Federal Register / Vol. 84, No. 222 / Monday, November 18, 2019 / Notices
should be submitted on or before
December 9, 2019.
DEPARTMENT OF STATE
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.38
Jill M. Peterson,
Assistant Secretary.
[Public Notice 10938]
30-Day Notice of Proposed Information
Collection: Evaluation of the Mandela
Washington Fellowship for Young
African Leaders
[FR Doc. 2019–24862 Filed 11–15–19; 8:45 am]
Notice of request for public
comment and submission to OMB of
proposed collection of information.
ACTION:
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[License No. 05/05–0337]
GMB Mezzanine Capital IV, L.P.; Notice
Seeking Exemption Under Section 312
of the Small Business Investment Act,
Conflicts of Interest
Notice is hereby given that GMB
Mezzanine Capital IV, L.P., 50 South
Sixth Street, Suite 1460, Minneapolis,
MN 55402, a Federal Licensee under the
Small Business Investment Act of 1958,
as amended (‘‘the Act’’), in connection
with the financing of a small concern,
has sought an exemption under Section
312 of the Act and Section 107.730,
Financings which Constitute Conflicts
of Interest of the Small Business
Administration (‘‘SBA’’) Rules and
Regulations (13 CFR 107.730). GMB
Mezzanine Capital IV, L.P. proposes to
provide debt and equity security
financing to Motion and Flow Control,
Inc., 14402 East 33rd Place, Aurora,
Colorado 80011.
The financing is brought within the
purview of § 107.730(a)(1) of the
Regulations because GMB Mezzanine
Capital II, L.P. is an Associate of GMB
Mezzanine Capital IV, L.P., and will
receive proceeds from the refinancing of
Motion and Flow Control, Inc.;
therefore, this transaction is considered
Financing an Associate requiring prior
SBA approval.
Notice is hereby given that any
interested person may submit written
comments on this transaction within
fifteen days of the date of this
publication to the Associate
Administrator, Office of Investment and
Innovation, U.S. Small Business
Administration, 409 Third Street SW,
Washington, DC 20416.
Dated: October 17, 2019.
A. Joseph Shepard,
Associate Administrator for Office of
Investment and Innovation.
[FR Doc. 2019–24914 Filed 11–15–19; 8:45 am]
BILLING CODE P
38 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:41 Nov 15, 2019
Jkt 250001
The Department of State has
submitted the information collection
described below to the Office of
Management and Budget (OMB) for
approval. In accordance with the
Paperwork Reduction Act of 1995 we
are requesting comments on this
collection from all interested
individuals and organizations. The
purpose of this Notice is to allow 30
days for public comment.
DATES: Submit comments directly to the
Office of Management and Budget
(OMB) up to December 18, 2019.
ADDRESSES: Direct comments to the
Department of State Desk Officer in the
Office of Information and Regulatory
Affairs at the Office of Management and
Budget (OMB). You may submit
comments by the following methods:
• Email: oira_submission@
omb.eop.gov. You must include the DS
form number, information collection
title, and the OMB control number in
the subject line of your message.
• Fax: 202–395–5806. Attention: Desk
Officer for Department of State.
FOR FURTHER INFORMATION CONTACT:
Direct requests for additional
information regarding the collection
listed in this notice, including requests
for copies of the proposed collection
instrument and supporting documents,
to Natalie Donahue, Chief of Evaluation,
Bureau of Educational and Cultural
Affairs, who may be reached on at
DonahueNR@state.gov or at (202) 632–
6193.
SUPPLEMENTARY INFORMATION:
• Title of Information Collection:
Evaluation of the Mandela Washington
Fellowship for Young African Leaders.
• OMB Control Number: None.
• Type of Request: New collection.
• Originating Office: Educational and
Cultural Affairs (ECA/P/V).
• Form Number: No form.
• Respondents: Mandela Washington
Fellowship program implementers and
participating private individuals and
organizations who interacted with the
Fellows (including University staff,
internship host organizations, peer
collaborators, home stay hosts, and site
visit/community service organizations).
SUMMARY:
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
63709
• Estimated Number of Academic
and Leadership Institute Survey
Respondents: 100.
• Estimated Number of Academic
and Leadership Institute Survey
Responses: 40.
• Average Time per Academic and
Leadership Institute Survey: 30 minutes.
• Total Estimated Academic and
Leadership Institute Survey Burden
Time: 20 hours.
• Estimated Number of Professional
Development Experience Host Survey
Respondents: 407.
• Estimated Number of Professional
Development Experience Host
Responses: 122.
• Average Time per Professional
Development Experience Host Survey:
30 minutes.
• Total Estimated Professional
Development Experience Host Survey
Burden Time: 61 hours.
• Estimated Number of Reciprocal
Exchange Alumni Survey Respondents:
172.
• Estimated Number of Reciprocal
Exchange Alumni Responses: 52.
• Average Time per Reciprocal
Exchange Alumni Survey: 30 minutes.
• Total Estimated Reciprocal
Exchange Alumni Survey Burden Time:
26 hours.
• Estimated Number of U.S.
Community Members Survey
Respondents: 50.
• Estimated Number of U.S.
Community Members Responses: 15.
• Average Time per U.S. Community
Members Survey: 25 minutes.
• Total Estimated U.S. Community
Members Survey Burden Time: 6.25
hours.
• Estimated Number of Academic
and Leadership Institute Staff Key
Informant Interview Participants: 15.
• Average Time per Academic and
Leadership Institute Staff Key Informant
Interviews: 60 minutes.
• Total Estimated Academic and
Leadership Institute Staff Key Informant
Interviews Burden Time: 15 hours.
• Estimated Number of Professional
Development Experience Host
Organization Staff Key Informant
Interview Participants: 15.
• Average Time per Professional
Development Experience Host
Organization Staff Key Informant
Interviews: 60 minutes.
• Total Estimated Professional
Development Experience Host
Organization Staff Key Informant
Interviews Burden Time: 15 hours.
• Estimated Number of Reciprocal
Exchange Alumni Key Informant
Interview Participants: 15.
• Average Time per Reciprocal
Exchange Alumni Key Informant
Interviews: 60 minutes.
E:\FR\FM\18NON1.SGM
18NON1
]]>Agencies
[Federal Register Volume 84, Number 222 (Monday, November 18, 2019)]
[Notices]
[Pages 63701-63709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24862]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87495; File No. SR-CBOE-2019-106]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule in Connection With Migration
November 8, 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 Exchange, Inc. (``Exchange'' or ``Cboe
Options'') 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\ 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend its Fees Schedule in connection with migration. 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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
In 2016, the Exchange's parent company, Cboe Global Markets, Inc.
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated
Exchanges''). Cboe Options intends to migrate its trading platform to
the same system used by the Cboe Affiliated Exchanges, and also migrate
its current billing system to a new billing system, on October 7, 2019
(the ``migration''). Accordingly, the Exchange proposes to amend
certain fees in the Fees Schedule in connection with the migration.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed fee changes on
October 4, 2019 (SR-CBOE-2019-097). On October 18, 2019, (but
business date October 21, 2019) the Exchange withdrew that filing
and replaced it with SR-CBOE-2019-101. On November 1, 2019, the
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------
Consolidated Rate Tables
First, the Exchange proposes to reorganize and rename its standard
transaction fee tables. Particularly, the Exchange proposes to
consolidate its current rate tables for equity, ETF and ETN, and Index
Products excluding Underlying Symbol List A into a single table and
relocate its transaction fees relating to Sector Indexes into that
table. As proposed, the Fees Schedule will consist of two transaction
fee tables renamed as: (1) ``Rate Table--All Products Excluding
Underlying Symbol List A'' and (2) ``Rate Table--Underlying Symbol List
A''. The Exchange also proposes to make other clarifying, non-
substantive changes such as: (i) Separating out Clearing Trading Permit
Holder Proprietary fees for Underlying Symbol List A into two line
items: (1) Underlying Symbol List A excluding VIX and (2) VIX and (ii)
consolidating and relocating fees for Broker-Dealer, Non-Trading Permit
Holder Market Maker, Professional and Joint Back Office orders in RUT,
RLG, RLV, RUI and UKXM into the section immediately above it (i.e., for
fees for Broker-Dealer, Non-Trading Permit Holder Market Maker,
Professional and Joint Back Office orders in OEX, XEO, SPX (incl SPXW)
and VIX). The Exchange also proposes to indicate in the rate table that
fees for RLG, RLV, RUI and UKXM are $0.00, as such fees are currently
waived.\4\ The Exchange notes the proposed consolidation and non-
substantive changes are intended to make the Fees Schedule easier to
read and not intended to change any fees other than what is discussed
below.
---------------------------------------------------------------------------
\4\ The Exchange notes such waiver is in place through December
31, 2019. See Cboe Options Footnote 40, which footnote is appended
to corresponding rates in the rate table as applicable. The proposed
addition of Fee Code WR in the rate table is not intended to make
such waiver permanent and Footnote 40 continues to apply.
---------------------------------------------------------------------------
[[Page 63702]]
Fee Codes
The Exchange first proposes to adopt and codify in its Fees
Schedule fee codes for its standard transaction fees. The Exchange
notes that on the Affiliated Exchanges, rather than returning a
monetary value indicating the rebate or charge for an execution, a fee
code is utilized as an indication of a fee classification corresponding
to an item on the venue's fee schedule. Upon migration, the Exchange's
new billing system will also utilize various fee codes. The Exchange
believes incorporating these fee codes directly into the fees schedule
will provide clarity in the Fees Schedule and allow Trading Permit
Holders (``TPHs'') to more easily validate their bills on a monthly
basis.\5\ The Exchange notes that none of these changes substantively
amend any fee or rebate, nor do they alter the manner in which the
Exchange assesses fees or calculates rebates.
---------------------------------------------------------------------------
\5\ The Exchange also proposes to publish a list of its fee
codes on its website. The list will include the fee or rebate, fee
code, and a description for each possible execution that could occur
on the Exchange. The Exchange notes that this table is merely a
consolidated table which lists each of the proposed fee codes that
will be incorporated directly into the Fees Schedule.
---------------------------------------------------------------------------
Linkage
In addition to adopting fee codes for standard transaction fees,
the Exchange proposes to adopt fee codes for Linkage Routing Fees.
Currently, the Exchange's Fees Schedule provides generally that for
Customer orders, in addition to the customary Cboe Options execution
charges for each Customer order that is routed, the Exchange passes
through the actual transaction fee assessed by the exchange(s) to which
the order was routed plus an additional $0.15 per contract.\6\ The
Exchange also does not pass through or otherwise charge customer orders
(of any size) routed to other exchanges that were originally
transmitted to the Exchange from the trading floor through an Exchange-
sponsored terminal (e.g., PULSe Workstation). For Non-Customer Orders,
the Exchange assesses a $0.70 per contract routing fee in addition to
the customary Cboe Options execution charges. Effective, October 7,
2019, the Exchange proposes to specifically specify the exact charge
for linkage for each type of transaction and adopt a corresponding fee
code. Particularly, the Exchange will list the fee code and transaction
fee for routed (i) Customer orders routed to NYSE American, LLC
(``AMEX''), BOX Exchange LLC (``BOX''), NASDAQ BX, Inc. (``BX''), Cboe
EDGX Exchange, Inc. (``EDGX''), Nasdaq MRX, LLC (``MRX''), Miami
International Securities Exchange, LLC (``MIAX''), or Nasdaq PHLX LLC
(``PHLX'') for ETF orders equal to or greater than 100 contracts, (ii)
Customer orders routed to AMEX, BOX, BX, EDGX, MRX, MIAX, or PHLX for
ETF orders less than 100 contracts and equity options, (iii) Customer
orders routed to NYSE Arca, Inc. (``ARCA''), Cboe BZX Exchange, Inc.,
(``BZX''), Cboe C2 Exchange, Inc. (``C2''), Nasdaq ISE, LLC (``ISE''),
Nasdaq GEMX, LLC (``GEMX''), MIAX Emerald, LLC (``Emerald''), MIAX
PEARL, LLC (``Pearl''), or Nasdaq Stock Market LLC (``NOMX'') for ETF
orders equal to or greater than 100 contracts in Penny and Non-Penny
classes, (iv) Customer orders routed to ARCA, BZX, C2, ISE, GEMX,
Emerald, Pearl or NOMX for ETF orders less than 100 contracts and
equity options in Penny and Non-Penny classes, (v) and Non-Customer
Orders in Penny and Non-Penny classes. The proposed fees are as
follows:
---------------------------------------------------------------------------
\6\ Multiple orders from the same executing firm for itself or
for a CMTA or correspondent firm in the same series on the same side
of the market that are received within 500 milliseconds are
currently aggregated for purposes of determining the order quantity
and will continue to be aggregated post-migration.
----------------------------------------------------------------------------------------------------------------
Capacity Fee Description
----------------------------------------------------------------------------------------------------------------
Customer................................. $0.33 Routed to AMEX, BOX, BX, EDGX, MRX, MIAX, PHLX, >=
100 contracts, ETF.
0.15 Routed to AMEX, BOX, BX, EDGX, MRX, MIAX, PHLX, < 100
contracts ETF, Equity.
0.83 Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
>= 100 contracts ETF, Penny.
1.18 Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
>= 100 contracts ETF, Non-Penny.
0.65 Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
<100 contracts ETF, Equity, Penny.
1.00 Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
<100 contracts ETF, Equity, Non-Penny.
Non-Customer............................. 1.17 Routed, Penny.
1.45 Routed, Non-Penny.
----------------------------------------------------------------------------------------------------------------
The Exchange notes that the linkage routing rates for (i) Non-
Customer Orders and (ii) Customer Orders routed to AMEX, BOX, BX, EDGX,
MRX, MIAX, and PHLX are not changing. Rather the Exchange is merely
expressing the fee as single rate for (1) Non-Customer orders by
combining the $0.70 per contract fee and the customary Cboe Options
execution charges (i.e., $0.47 per contract for Penny Classes and $0.75
per contract for Non-Penny Classes) and (2) for Customer Orders by
combining the $0.15 per contract fee plus the customary Cboe Options
execution charges (i.e., $0.00 for equity options and ETF orders less
than 100 contracts and $0.18 per contract for ETF orders equal to or
greater than 100 contracts) and the actual transaction fee assessed by
the Exchange to which the order was routed (i.e., $0.00 for AMEX, BOX,
BX, EDGX, MRX, MIAX, and PHLX .The Exchange notes that it is amending
the linkage fee with respect to any order routed to ARCA, BZX, C2, ISE,
GEMX, Emerald, Pearl and NOMX. Particularly, unlike orders routed to
AMEX, BOX, BX, EDGX, MRX, MIAX, and PHLX, which do not assess fees for
Customer orders, ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX each
assess slightly different fees for Customer orders. Instead of
assessing different and distinct fees for orders routed to each of
ARCA, BZX, C2, ISE GEMX, Emerald, Pearl and NOMX, the Exchange proposes
to simplify billing for these orders and instead assess the same
fee.\7\ Particularly, the Exchange proposes to assess the $0.15 per
routing contract fee plus the customary Cboe Options execution charges
(i.e., $0.00 for equity options and ETF orders less than 100 contracts
and $0.18 per contract for ETF orders equal to or greater than 100
contracts) and the $0.50 per contract for Penny Classes and $0.85 per
contract for Non-Penny Classes. The Exchange notes that other
exchanges, including two of its Affiliated Exchanges, assess linkage
fees expressed as a single fee for orders routed to these exchanges and
that the proposed fees are in line with, and in some instances
[[Page 63703]]
lower than, those fees.\8\ The Exchange lastly proposes to eliminate
the exception that the Exchange will not pass through or otherwise
charge customer orders (of any size) routed to other exchanges that
were originally transmitted to the Exchange from the trading floor
through an Exchange-sponsored terminal (e.g., PULSe Workstation). The
Exchange notes that it is not required to maintain such an exception
and that it expects the impact of the proposed change to be relatively
small.
---------------------------------------------------------------------------
\7\ The Exchange notes that the range of standard fees assessed
by ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX for Customer
Orders in Penny Classes is between $0.41 per contract to $0.50 per
contract and in Non-Penny Classes is either $0.84 per contract or
$0.85 per contract.
\8\ See Cboe BZX Options Exchange Fee Schedule and Cboe EDGX
Options Exchange Fee Schedule, which both assess for Routed Customer
Orders to ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.85
per contract for penny classes and $1.25 per contract for non-penny
classes (yielding fee codes RQ and RR, respectively). See also MIAX
Options Fees Schedule which assess for Routed Customer Orders to
ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.65 per contract
for penny classes and $1.00 per contract for non-penny classes.
---------------------------------------------------------------------------
Capacity
Recently, the Exchange filed to codify capacity codes in its
Rules.\9\ By way of background, the Exchange currently refers to
capacity as ``origin code'', which codes are used to specify which type
of market participant the order belongs to. Cboe Options origin codes
had previously been codified in Regulatory Circular RG13-038. The
recently codified Capacities (effective October 7, 2019), are the same
as the Exchange's current origin codes (prior to October 7, 2019),
except the proposed rule change replaces ``W'' with ``U'' and deletes
``Y'' (orders for the account of a specialist registered in the
underlying stock at the primary exchange for trading the stock), which
will not be available following migration. The Exchange's Fees Schedule
currently identifies market participant types by ``origin code''. In
light of the codified capacity codes in the Exchange Rules, the
Exchange proposes to update references to ``origin'' to ``capacity''
and also update the proposed corresponding codes. The codes are as
follows: B (account of a broker or dealer, including a Foreign Broker-
Dealer), C (Public Customer account), F (OCC clearing firm proprietary
account), J (joint back office account), L (non-Trading Permit Holder
affiliate account), M (Market-Maker account), N (market-maker or
specialist on another options exchange), U (Professional account).
Additionally, the Exchange proposes to eliminate all references to the
term ``Voluntary Professional'' as the Exchange is eliminating
Voluntary Professionals, effective October 7, 2019.\10\
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No 86173 (June 20, 2019)
84 FR 30267 (June 26, 2019) (SR-CBOE-2019-027).
\10\ Id.
---------------------------------------------------------------------------
Execution Surcharge
The Exchange currently assesses an Execution Surcharge of $0.21 per
contract for SPX Customer and Non-Customer, Non-Market Maker orders
during the Regular Trading Hours (``RTH'') session only (i.e., the
surcharge does not apply during the Global Trading Hours (``GTH'')
session. Additionally, pursuant to Footnote 21 of the Fees Schedule,
the Surcharge does not apply to (i) orders in SPX or SPXW options in
the SPX electronic book for those SPX or SPXW options that are executed
during opening rotation on the final settlement date of VIX options and
futures which have the expiration that contribute to the VIX settlement
and (ii) orders executed by a floor broker using a PAR terminal. The
Exchange proposes to amend the Execution Surcharge in two ways.
First, the Exchange notes that upon migration, the Exchange will
use the same Book for GTH and RTH (whereas today, each session has a
separate Book). As such, the Exchange proposes to apply the SPX
Execution Surcharge in both sessions. The Exchange notes that other
executions surcharges, such as the SPXW Execution Surcharge, are also
assessed in both RTH and GTH.
Next, the Exchange proposes to amend one of the exceptions to the
SPX and SPXW Execution Surcharge. As noted above, the execution
surcharge is currently waived for all SPX and SPXW option series that
are (i) executed in the electronic book during opening rotation on the
final settlement date of VIX options and futures and (ii) which have
the expiration that is used to calculate the exercise or final
settlement value (``constituent options series''). While the Exchange
knows which expiration will be used to calculate the exercise or final
settlement value prior to the opening, the actual SPX and SPXW series
that the Exchange will use to calculate the exercise or settlement
value (``settlement strip'') are not known until after the opening. As
such, the current exception applies to all constituent options series,
as TPHs do not know which series in the constituent options series will
ultimately contribute to the VIX settlement. Upon migration however,
the Exchange will determine the settlement strip (i.e., series actually
used) pursuant to an algorithm prior to the opening and announce such
series.\11\ As such, the Exchange believes it's appropriate to limit
the current exception and apply it only to SPX/SPXW options that (i)
are executed in the electronic book during opening rotation on the
final settlement date of VIX options and futures and (ii) which have
the expiration that are used in the VIX settlement calculation (as
opposed to the constituent options series which encompasses series that
may not have ultimately contributed to the VIX settlement calculation).
---------------------------------------------------------------------------
\11\ See Exchange Rule 5.31(j)(1). The Exchange will disseminate
the highest call strike and the lowest put strike that establish the
strike range to all subscribers to the Exchange's data feeds that
deliver opening auction update messages, no later than 8:45 a.m.
Eastern Time on exercise settlement value determination days. The
Exchange may update this strike range until 9:15 a.m. Eastern Time,
and will disseminate any updates during that time period as soon as
reasonably possible. Therefore, the final strike range of the
settlement strip that the Exchange disseminates at 9:15 a.m. Eastern
Time to market participants will be identical to that which the
Exchange will use to calculate the VIX settlement value itself.
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CFLEX AIM Response
The Exchange currently assesses a fee for CFLEX AIM Responses. More
specifically, the CFLEX AIM Response fee applies to all broker-dealer
and non-TPH Holder market-maker responses in all FLEX products, except
Sector Indexes and Underlying Symbol List A,\12\ executed in the FLEX
AIM or FLEX SAM auctions. This fee applies to such executions instead
of the applicable standard transaction fee. The Exchange notes that
currently FLEX Options trade on the Exchange's FLEX Hybrid Trading
System (``CFLEX''), which is the Exchange's trading platform that
allows FLEX Traders to submit electronic and open outcry request for
quotes (``RFQs''), FLEX quotes in response to those RFQs, and FLEX
Orders into the electronic book. Upon the Exchange's trading platform
migration, FLEX trading will occur on the same Exchange System \13\ as
all other options trading occurs on the Exchange.\14\ The Exchange
notes it intends to continue to offer a FLEX AIM and FLEX SAM process
to provide FLEX Orders with price improvement and electronic crossing
opportunities. As FLEX trading
[[Page 63704]]
(including FLEX AIM and SAM) will occur on the same trading platform as
all other options trading (including AIM and SAM), the Exchange no
longer wishes to maintain a distinct fee for FLEX AIM responses and
proposes to eliminate the separate fee for FLEX AIM responses. The
proposed change will result in FLEX AIM and FLEX SAM trades being
treated the same as all AIM and SAM executions (i.e., no fees assessed
for responses). In connection with the proposed change, the Exchange
also proposes to eliminate Footnote 20 which applies to the CFLEX AIM
Response Fee.
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\12\ As of October 7, 2019, Underlying Symbol List A includes:
OEX, XEO, RUT, RLG, RLV, RUI, UKXM, SPX (includes SPXw) and VIX. See
Cboe Options Fees Schedule, Footnote 34.
\13\ The term ``System'' means the Exchange's hybrid trading
platform that integrates electronic and open outcry trading of
option contracts on the Exchange, and includes any connectivity to
the foregoing trading platform that is administered by or on behalf
of the Exchange, such as a communications hub.
\14\ In connection with the transition of FLEX trading from the
CFLEX system to the same system all other trading will occur, the
Exchange proposes to eliminate references to ``CFLEX'' (and ``FLEX
Hybrid Trading System'') and replace it with references to ``FLEX''.
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Facilitation Waiver
Pursuant to Footnote 11 of the Fees Schedule, the Exchange
currently waives Clearing Trading Permit Holder Proprietary (capacity
codes ``F'' and ``L'') transaction fees for (1) facilitation orders
executed in open outcry or as a CFLEX transaction for products other
than Sector Indexes and Underlying Symbol List A and (2) facilitation
orders executed in open outcry, or electronically via AIM or as a QCC
or CFLEX transactions orders in Sector Indexes.\15\ Footnote 11 also
currently defines ``Facilitation orders'' for this purpose as any order
in which a Clearing Trading Permit Holder (``F'' capacity code) or Non-
Trading Permit Holder Affiliate (``L'' capacity code) is contra to any
other capacity code, provided the same executing broker and clearing
firm are on both sides of the transaction (for open outcry) or both
sides of a paired. The Exchange proposes to update Footnote 11 to
provide that the current waivers for facilitation orders will apply
only to volume executed in open outcry. The Exchange believes the
proposed change would have a de minimis impact as historically there
have been very few facilitation orders executed electronically. Lastly,
in light of the proposed change, the Exchange proposes to eliminate
Footnote 12 in its entirety. Particularly, Footnote 12 currently
provides the Clearing Trading Permit Holder Proprietary Transaction Fee
shall be waived for Clearing Trading Permit Holders executing
facilitation orders in FLEX Options in all underlying symbols excluding
Underlying Symbol List A and Sector Indexes. In light of the proposal
to only waive fees for open outcry facilitation, this footnote would no
longer be true with respect to facilitation orders executed
electronically. The Exchange proposes to eliminate the footnote in its
entirety in lieu of updating the footnote as it believes the language
is redundant to Footnote 11, and is therefore not necessary to
maintain. FLEX open outcry facilitations will continue to be waived and
covered under Footnote 11.
---------------------------------------------------------------------------
\15\ Facilitation for Sector Indexes are currently only waived
through December 31, 2019. See Cboe Options Fees Schedule, Footnote
11. Open-outcry facilitation for Sector Indexes will continue to be
waived through December 31, 2019.
---------------------------------------------------------------------------
Stock-Option Orders
By way of background, stock-option orders are complex instruments
that constitute the purchase or sale of a stated number of units of an
underlying stock or a security convertible into the underlying stock
coupled with the purchase or sale of an option contract(s) on the
opposite side of the market and execute in the same manner as complex
orders. Currently, the stock portions of stock-option strategy orders
are electronically communicated by the Exchange to a designated broker-
dealer, who then manage the execution of such stock portions. In
connection with this functionality, the Exchange assesses a stock
handling fee of $0.0010 per share for the processing and routing by the
Exchange of the stock portion of stock-option strategy orders executed
through those mechanisms. A maximum of $50.00 per order is currently
assessed under this fee. The Exchange notes that it largely passes
through to TPHs the fees assessed to the Exchange by the designated
broker-dealer that manages the execution of the stock portions of
stock-option strategy orders. The Exchange also notes that the
designated broker-dealer that manages the execution of the stock
portions of stock-option strategy orders apply the $50 cap on a per
execution basis, instead of a per order basis (meaning the Exchange may
end up subsidizing certain orders depending on how they were
filled).\16\ Now that the Exchange is migrating to a new billing
system, the Exchange wishes to modify how the cap is applied in the
billing system. Particularly, the Exchange proposes to similarly cap
the stock option fee on a per execution basis instead of a per order
basis, which will more closely align to how the Exchange's designated
broker-dealer applies the cap. The Exchange notes another Exchange
similarly caps its stock option handling fee at $50 per trade (instead
of order).\17\
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\16\ For example, take an order that involves 60,000 shares of a
stock and is filled via two executions of 30,000 shares each. Under
the current per order cap, the Exchange can only assess $50.00 as
the fees for the original order is $60 which exceeds the cap (i.e.,
$0.0010 x 60,000 shares). The Exchange's designated broker-dealer
meanwhile bills the exchange for each execution, resulting in $60 to
the exchange (i.e., $0.0010 x 30,000 x 2). Under the proposed cap,
the Exchange would be able to pass through the full $60 charge as
neither execution of 30,000 contracts hit the $50 per execution cap.
\17\ See NASDAQ ISE Options Pricing Schedule, Section 4.12.
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Inactive Nominee Stats Change (``Swap'') Fee
Next the Exchange proposes to amend the Inactive Nominee Status
Change fees. Particularly, under the Fees Schedule, a fee is assessed
each time an inactive nominee swaps places with a nominee on a Trading
Permit. The amount of such fee varies depending on what time the
request for the swap occurs. Specifically, the Exchange assesses a fee
of $55 if the request is submitted prior to 4:00 p.m. CT on the day
prior to the effective date of the change; $110 if the request is
submitted after 4:00 p.m. CT on the day prior to the effective date of
the change and $220 if the request is submitted after 8:00 a.m. CT on
the effective date of change. The Exchange recently proposed to waive
these fees for the period of October 1-October 4, 2019 as the
Exchange's Trading Permit structure was being modified in connection
with migration.\18\ In order to simplify the fee structure and billing
process for these permit changes going forward, the Exchange proposes
to eliminate both the current waiver and fee structure and in its place
assess a flat fee of $100, regardless of when the request for such
change was submitted. The proposed change would therefore apply to all
TPHs uniformly.
---------------------------------------------------------------------------
\18\ See SR-CBOE-2019-080.
---------------------------------------------------------------------------
Subcabinet Trades
Currently, Footnote 32 of the Fees Schedule provides that the
Exchange will assess no transaction fees or surcharges for subcabinet
trades (i.e., limit orders with a price of at least $0 but less than $1
per options contract, per current Exchange Rule 6.54, Interpretation
and Policy .03.) \19\ Additionally, the footnote provides that
subcabinet trades will not count towards any volume thresholds or
volume threshold calculations. To harmonize and simplify the Exchange's
billing, the Exchange proposes to treat subcabinet trades (now called
``sub-penny cabinet orders'') \20\ the same as cabinet trades (now
called penny
[[Page 63705]]
cabinet orders).\21\ That is, the Exchange proposes to eliminate
Footnote 32 in its entirety, which would result in normal transaction
fees and surcharges applying to sub-penny cabinet trades and for such
trades to be counted towards any volume thresholds or volume threshold
calculations, as cabinet trades are today. The Exchange would also
clarify in the Marketing Fee notes section that the Marketing Fee would
not apply to sub-penny cabinet trades (which is the case today), as
such exception also currently applies to cabinet trades.\22\ The [sic]
believes it's appropriate to treat subcabinet trades the same as
cabinet trades for billing purposes as both orders are similar in that
they are trades in listed options on the Exchange that are either
worthless or inactive or not actively traded. Additionally, the
Exchange believes the proposed change would have a de minimis impact as
historically there have been very few sub-penny cabinet trades.
---------------------------------------------------------------------------
\19\ The Exchange notes it inadvertently failed to update the
Fees Schedule when Rule 6.54.03 was renumbered to 6.54.02. The
Exchange also notes that it recently submitted a rule filing to
relocate rules relating to both cabinet and subcabinet orders,
effective October 7, 2019. See SR-CBOE-2019-58.
\20\ See Cboe Options Rule 5.85(h)(2). A sub-penny cabinet is a
limit order with a price less than $0.01 per contact. Bids and
offers for opening transactions for sub-penny cabinet orders are
only permitted to accommodate closing transactions.
\21\ See Cboe Options Rule 5.12(h)(1). [sic] A penny cabinet is
a limit order with a price of $0.01 per contract.
\22\ See Cboe Options Fees Schedule, Footnote 6. The Exchange
notes that it is relocating the language in current Footnote 6 which
governs the Marketing Fee program to the notes section of the
Marketing Fee table in an effort to consolidate the Fees Schedule
and make it easier to follow. The proposed clarification relating to
the exclusion of sub-penny cabinet trades from the Marketing Fee
program is therefore reflected in the new notes section and is not
marked in Footnote 6. The Exchange also proposes to reference
``penny cabinet trades'' in the notes section instead of referencing
``accommodation liquidations (cabinet trades)'' as it does currently
in Footnote 6. The Exchange notes the proposed reference is not a
substantive change, but rather conforms terminology to the
Exchange's rules.
---------------------------------------------------------------------------
Exchange System Disruption
Footnote 36 of the Fees Schedule currently provides that under the
Volume Incentive Program (``VIP''),\23\ the Exchange provides that in
the event of a Cboe Options System outage or other interruption of
electronic trading on Cboe Options, the Exchange will adjust the
national customer volume in all underlying symbols excluding Underlying
Symbol List A, Sector Indexes, MXEA, MXEF, MNX, NDX, DJX and XSP
(``National Customer Volume'') for the duration of the outage. In
connection with the migration, the Exchange wishes to conform how it
handles system disruptions to the way they are handled on its affiliate
exchanges, Cboe BZX and Cboe EDGX.\24\ Particularly, the Exchange
proposes to provide that in the event of a Cboe Options System outage
or other interruption of electronic trading on Cboe Options that lasts
longer than 60 minutes, the Exchange will adjust the national volume in
all underlying symbols excluding Underlying Symbol List A (34), Sector
Indexes (47), MXEA, MXEF, DJX and XSP for the entire trading day
(instead of the duration of the outage). The Exchange also notes that
currently, the Fees Schedule only explicitly addresses how it handles
exchange outages and interruptions for VIP and is silent as to if and
how it would adjust national volume in other incentive programs.\25\ In
order to clarify that the Exchange will apply the same approach to any
affected incentive program, the Exchange proposes to eliminate the
reference to exchange outages/interruptions in Footnote 36 and adopt in
its place new Footnote 6.\26\ Particularly, Footnote 6 will address how
the Exchange handles outages/interruptions for all incentive programs
that utilize national volume in determining certain tiers and
thresholds, including VIP, as described above.
---------------------------------------------------------------------------
\23\ Under VIP, the Exchange credits each TPH the per contract
amount set forth in the VIP table for Public Customer (origin code
``C'') orders transmitted by TPHs (with certain exceptions) and
executed electronically on the Exchange, provided the TPH meets
certain volume thresholds, in which volume for Professional
Customers and Voluntary Professionals (``Professional Customers'')
(origin code ``W''), Broker-Dealers (origin code ``B''), and Joint
Back-Offices (``JBO'') (origin code ``J'') orders are counted toward
reaching such thresholds. Specifically, the percentage thresholds
are calculated per month based on the percentage of national
customer volume in all underlying symbols entered and executed,
excluding those in Underlying Symbol List A, Sector Indexes, MXEA,
MXEF, MNX, NDX, DJX and XSP.
\24\ See Cboe EDGX Options Fees Schedule and Cboe BZX Options
Fees Schedule. which provide volume is excluded from certain
calculations on any day that the Exchange's system experiences a
disruption that lasts more than 60 minutes during regular trading
hours.
\25\ The Exchange notes that since the Fees Schedule never
explicitly specified how the Exchange would adjust national volume
in the event of an outage, no adjustments would have been made to
any calculations for any program other than VIP.
\26\ The language under current Footnote 6 is relocating to the
Marketing Fee Program table as discussed above. The Exchange
proposes to therefore reuse Footnote 6 and adopt new language
relating to system outages.
---------------------------------------------------------------------------
Large Trade Discount
Next the Exchange proposes to amend the Customer Large Trade
Discount Program and a non-customer Large Trade Discount Program. By
way of background, the Customer Large Trade Discount Program caps fees
for customer orders of a certain size in VIX, SPX/SPXW, XSP, other
index options and ETF and ETN options. The Large Trade Discount Program
similarly caps fess for non-customer orders of a certain size in VIX
options. Both programs provide that for an order to be eligible to
qualify for the discount, the order in its entirety must be executed in
either Global Trading Hours GTH or RTH, but not both. The Exchange
notes that upon migration, the Book used during RTH will be the same
Book used during GTH (as compared to today where the Exchange maintains
separate Books for each session). As such it is possible for an order
to now be executed over both sessions and still otherwise qualify for
the caps under the programs. The Exchange therefore proposes to
eliminate the language in the notes section of both tables providing
that orders must be entirely executed in one session or another, but
not both.
AIM Contra Fee
Currently, Footnote 18 of the Fees Schedule provides that the AIM
Contra Execution Fee applies to all orders (excluding facilitation
orders, per footnote 11) in all products, except Sector Indexes and
Underlying Symbol List A, executed in AIM, SAM FLEX AIM and FLEX SAM
auctions, that were initially entered as the contra party to an Agency/
Primary Order. Footnote 18 also provides that instead of the applicable
standard transaction fee, the AIM Contra Fee will apply to AIM Contra
executions except if the applicable standard transaction fee is lower
than $.07 per contract,\27\ in which case the applicable standard
transaction fee will apply. To simplify the billing process, the
Exchange proposes to eliminate this exception (i.e., the $0.07 per
contract AIM Contra Execution Fee will always apply to all orders
(excluding facilitation orders) in all products, except Sector Indexes
and Underlying Symbol List A, executed in AIM, SAM FLEX AIM and FLEX
SAM auctions, that were initially entered as the contra party to an
Agency/Primary Order).
---------------------------------------------------------------------------
\27\ The Exchange notes that when the Exchange increased the AIM
Contra fee from $0.05 per contract to $0.07 per contract, it
inadvertently failed to update the increased amount in Footnote 18.
---------------------------------------------------------------------------
HAL to SUM
As part of the migration, the Exchange is harmonizing its rules in
connection with routing services, including the Hybrid Agency Liaison
(``HAL'') and HAL on the Open (``HALO'') system, to that of the Cboe
Affiliated Exchanges. As part of the harmonization, the Exchange has
proposed to rename HAL and HALO to ``Step-Up Mechanism'' (or ``SUM'').
As such, the Exchange proposes to replace all references to the Hal
Agency Liaison, HAL, HAL on the Open or HALO, to ``Step-Up Mechanism''
or ``SUM'', as appropriate. The Exchange believes the proposed
[[Page 63706]]
change will provide consistency between the Exchange Rule Book and Fees
Schedule and alleviate potential confusion.
MNX and NDX
The Exchange next proposes to amend the Fees Schedule to remove
references to MNX and NDX. The Exchange notes that it no longer lists
MNX and NDX options and as such proposes to eliminate such references
from the Fees Schedule, which will avoid potential confusion and
provide clarity in the rules. The Exchange also proposes to modify how
the percentage thresholds of National Customer Volume under VIP are
calculate with respect to MNX and NDX. Currently, MNX and NDX are
excluded from the National Customer Volume percentage thresholds, along
with the Exchange's other proprietary products. As the Exchange no
longer lists MNX and NDX, it believes it's appropriate to start
including MNX and NDX volume in the percentage thresholds of National
Customer Volume, as it does with volume from all other non-proprietary
products.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\28\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \29\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with
Section 6(b)(4) of the Act,\30\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Trading Permit Holders and other persons using
its facilities.
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
\30\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
First, the Exchange believes that a number of its proposed changes
alleviate potential confusion and result in a Fees Schedule that is
clearer and easier to follow, thereby removing impediments to and
perfecting the mechanism of a free and open market and a national
market system, and, in general, protecting investors and the public
interest. Particularly, the Exchange believes its proposal to
reorganize and consolidate its rate tables, along with its proposed
non-substantive, clarifying changes to the rate tables described above,
will result in a more transparent, simplified and easier to read Fees
Schedule. The Exchange also believes the proposal to adopt fee codes is
reasonable and equitable because the Exchange believes such fee codes
provides further clarity in the Fees Schedule and the fee codes do not
amend any fees or rebates that apply to trading activity on the
Exchange. Rather, the proposed fee codes allow TPHs to more easily
validate the bills that they receive from the Exchange, thus
alleviating potential confusion.
The Exchange believes its proposal to (i) replace references to
origin codes with capacity and capacity codes and (ii) replace
references to ``Hybrid Agency Liaison'', ``HAL'' ``HAL on the Open''
and ``HALO'' with ``Step-Up Mechanism'' and ``SUM'' also provides
clarity in the Fees Schedule. Particularly, as noted above, the
Exchange is codifying in its rules the available capacity codes and
replacing references to ``Hybrid Agency Liaison'', ``HAL'' ``HAL on the
Open'' and ``HALO'' with ``Step-Up Mechanism'' and ``SUM''. The
proposed changes therefore maintains consistency between its Rulebook
and its Fees Schedule. Similarly, the Exchange believes it reduces
potential confusion to eliminate references to ``CFLEX'' as the
Exchange is transitioning its FLEX trading from the CFLEX platform to
the same system all other trading will occur on. Removing references to
MNX and NDX from the Fees Schedule also eliminates confusion as the
Exchange no longer lists these products. The proposal to include MNX
and NDX volume in the percentage thresholds under VIP is also
reasonable, equitable and not unfairly discriminatory as the proposed
change applies to all TPHs and because MNX and NDX are no longer
proprietary products traded on the Exchange and should therefore be
treated the same as other non-proprietary products.
The Exchange believes its proposed fees relating to linkage are
reasonable as the proposed fees continue to take into account routing
costs and are in line with amounts assessed by other exchanges,
including its Affiliated Exchanges.\31\ Moreover, the Exchange notes
that all linkage costs are staying the same with the exception of
orders routed to ARCA, BZX, C2, ISE GEMX, Emerald, Pearl and NOMX. The
Exchange believes the proposed fees for orders routed to ARCA, BZX, C2,
ISE GEMX, Emerald, Pearl and NOMX are reasonable as the fees are either
the same as, or in some instances even lower than, fees assessed by
other Exchanges when routed to these exchanges.\32\ Moreover, the
Exchange highlights that routing through the Exchange is voluntary and
also notes that it operates in a highly competitive market in which
market participants can readily direct order flow to competing venues
or providers of routing services if they deem fee levels to be
excessive. The Exchange also believes the proposed change is reasonable
as it simplifies billing for these orders. Furthermore, two of the
Exchange's affiliated exchanges similarly assess linkage fees expressed
as a single fee for orders routed to these exchanges and that the
proposed fees are lower than those fees.\33\ The Exchange believes its
proposal to eliminate the exception that the Exchange will not pass
through or otherwise charge customer orders (of any size) routed to
other exchanges that were originally transmitted to the Exchange from
the trading floor through an Exchange-sponsored terminal (e.g., PULSe
Workstation) is reasonable as the Exchange is not required to maintain
such an exception. Indeed, the Exchange is not aware of other Exchanges
with a trading floor that maintain a similar exception to routing fees.
The Exchange also expects the impact of the proposed change to be
relatively small. The Exchange believes the proposed changes to linkage
fees are equitable and not unfairly discriminatory because the proposed
changes apply equally to all TPHs who chose to use the Exchange to
route orders to other exchanges. TPHs that do not favor the proposed
pricing can readily direct order flow directly to
[[Page 63707]]
those other exchanges or through competing venues or providers of
routing services.
---------------------------------------------------------------------------
\31\ See e.g., See Cboe BZX Options Exchange Fee Schedule and
Cboe EDGX Options Exchange Fee Schedule. See also NYSE Arca Options
Fees and Charges, Routing Fees.
\32\ See Cboe BZX Options Exchange Fee Schedule and Cboe EDGX
Options Exchange Fee Schedule, which both assess for Routed Customer
Orders to ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.85
per contract for penny classes and $1.25 per contract for non-penny
classes (yielding fee codes RQ and RR, respectively). See also MIAX
Options Fees Schedule which assess for Routed Customer Orders to
ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.65 per contract
for penny classes and $1.00 per contract for non-penny classes.
\33\ See Cboe BZX Options Exchange Fee Schedule and Cboe EDGX
Options Exchange Fee Schedule.
---------------------------------------------------------------------------
The Exchange believes the proposal to apply the Execution Surcharge
to orders in both the RTH and GTH session is reasonable because the
amount of the surcharge will be the same for both the RTH and GTH
session. Additionally, post-migration, the Exchange will use the same
Book for GTH and RTH, as compared to today where each session has a
separate Book, and the Exchange therefore believes it's reasonable to
assess the fee to both sessions. Moreover, the Exchange believes the
proposed change is reasonable, equitable and not unfairly
discriminatory as other execution surcharges, such as the execution
surcharge for SPXW, also applies to orders in both RTH and GTH. The
Exchange believes the proposed change is equitable and not unfairly
discriminatory as it applies uniformly to all TPHs.
The Exchange believes the amendment to Footnote 21 regarding the
exception to the SPX and SPXW Execution Surcharges is reasonable as it
will result in market participants at times not being required to pay
these surcharges for SPX and/or SPXW transactions in the circumstances
described. Particularly, the Exchange notes that it had adopted the
exception in recognition that while liquidity is important to open all
series on the Exchange, given the potential impact on the exercise
settlement value determined for expiring volatility index derivatives,
it was important to encourage a fair and orderly opening of the series
that expire in the month used to calculate the final settlement value
of expiring VIX derivatives. As discussed, the Exchange currently only
applies such exception to constituent options series as only the
expiration month used to calculate the final settlement is known prior
to opening. Upon migration however, the Exchange (and TPHs) will know
which series will actually be used to calculate the exercise or final
settlement value prior to the opening. Accordingly, the Exchange does
not believe the exception should continue to be broadly applied to all
constituent options series, since only a subset of such series are used
in the settlement value calculation and since such subset will now be
known prior to opening. As such, the Exchange believes the proposed
rule change is reasonable, equitable and not unfairly discriminatory
and also notes it applies uniformly to all TPHs.
The Exchange believes it's reasonable to eliminate the CFLEX AIM
Response fee as TPHs will no longer be subject to a fee for FLEX AIM
responses. Moreover, as discussed, CFLEX AIM will no longer operate on
a separate trading system upon migration. AIM (and SAM) for FLEX orders
will operate on the same system as AIM (and SAM) for all other orders
and the Exchange therefore believes it's reasonable to assess the same
fees for FLEX and non-FLEX AIM and SAM orders. The Exchange believes
the proposed change is equitable and not unfairly discriminatory
because it applies uniformly to all TPHs.
The Exchange believes it's reasonable to limit its waiver of
facilitation fees for orders executed in open-outcry only because the
Exchange is not required to maintain a facilitation fee waiver for any
transactions and notes that TPHs will still be eligible to receive the
waiver for open-outcry transactions. Additionally, as noted above there
have historically been very few electronic facilitation orders which
were eligible for the current waiver, as compared to open-outcry
facilitations which tend to be much more common. The Exchange therefore
also believes the impact of the proposed change is de minimis. The
Exchange believes the proposed change is equitable and not unfairly
discriminatory because the proposed change applies uniformly to all
TPHs and treats all electronic facilitation orders equally.
The Exchange believes its proposed change relating to how it caps
the stock-option order fee is reasonable because the Exchange is
capping the transactions the same way the Exchange's designated broker-
dealer that manages the execution of the stock portions of stock-option
strategy orders caps (and bills the Exchange) for these orders.
Specifically, the Exchange will merely no longer be subsidizing certain
stock-option order transactions and the modified cap which will more
closely align to how the Exchange's designated broker-dealer applies
the cap. The Exchange believes the proposed change is also reasonable
as it will not result in the Exchange collecting fees beyond what the
Exchange itself is billed for by its designated broker-dealer. The
Exchange notes another Exchange similarly caps its stock option
handling fee at $50 per trade (instead of order).\34\ The Exchange
believes the proposed change is equitable and not unfairly
discriminatory as it will be applied to all TPHs uniformly.
---------------------------------------------------------------------------
\34\ See NASDAQ ISE Options Pricing Schedule, Section 4.12.
---------------------------------------------------------------------------
The Exchange believes the proposed change to the inactive nominee
swap fee is reasonable because the fee is similar to the fees that were
previously assessed for certain swaps. As discussed above, TPHs were
previously subject to an inactive nominee swap fee of $55, $110 or
$220, depending on the time they submitted their request for a swap.
The Exchange believes the proposed change provides for a simplified fee
and billing structure (i.e., maintaining a single fee vs multiple fees
based on time submissions). The proposed change is equitable and not
unfairly discriminatory as it would apply to any TPH that is swapping
inactive nominees on a Trading Permit uniformly.
The Exchange believes its proposed change relating to subcabinet
trades (now referred to as ``sub-penny cabinet trades'') is reasonable
as the proposed change results in sub-penny cabinet trades being
treated the same as cabinet trades (now called ``penny-cabinet
trades''). The believes it's appropriate to treat sub-penny and penny
cabinet trades the same as cabinet trades for billing purposes as both
orders are similar in that they are trades in listed options on the
Exchange that are either worthless or inactive or not actively traded
and are both reported and processed like all other open outcry trades.
The Exchange also believes the proposed change is reasonable, equitable
and not unfairly discriminatory because it applies equally to all TPHs
and because the Exchange believes the proposed change would have a de
minimis impact as historically there have been very few sub-penny
cabinet trades.
The Exchange believes its proposal to amend how it calculates
national volume in the event of a system outage or trading interruption
is reasonable as it conforms to the way the [sic] handles such outages
on its affiliate exchanges, Cboe BZX and Cboe EDGX.\35\ The Exchange
also notes that it may not be possible in all instances to adjust
national volume numbers for the period of the outage only. The Exchange
believes the proposed change also adds clarity to the Fees Schedule, as
the Fees Schedule is currently silent as to how it calculates certain
thresholds based on national volume for programs other than VIP. The
proposed change therefore makes clear how different incentive programs
are impacted in the event of a system outage or electronic trading
[[Page 63708]]
interruption. The proposed rule change also applies uniformly to all
TPHs.
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\35\ See Cboe EDGX Options Fees Schedule and Cboe BZX Options
Fees Schedule. [sic] which provide volume is excluded from certain
calculations on any day that the Exchange's system experiences a
disruption that lasts more than 60 minutes during regular trading
hours.
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The Exchange also believes its amendment to the Customer Large
Trade Discount Large Trade Discount Programs are reasonable, equitable
and not unfairly discriminatory. As discussed, the Book used during RTH
will be the same Book used during GTH upon migration (as compared to
today where each session has a separate Book). As such it will be
possible for an order to be executed over both sessions upon migration
and the Exchange therefore believes it's reasonable to eliminate
requirement that orders must be entirely executed in one session or
another, but not both. The Exchange believes the proposed change is
also reasonable as orders that may not have otherwise been eligible for
the discounts in the past because to [sic] this requirement may now be
eligible. The proposed rule change also applies uniformly to all TPHs.
The Exchange believes its proposal to eliminate the exception to
the AIM Contra Fee is reasonable, equitable and not unfairly
discriminatory because TPHs will still not be paying more than the
current AIM Contra Fee ($0.07) for AIM Contra orders that are subject
to the AIM Contra Fee pursuant to Footnote 18. The proposed change also
results in a simplified billing process and the Exchange notes that it
is not requirement to maintain the current exception to the AIM Contra
Fee. The Exchange believes the proposed change is equitable and not
unfairly discriminatory as it will be applied to all TPHs uniformly.
In sum, the Exchange believes the proposed changes described above
incorporate updates to the Fees Schedule in connection with the
migration of the Exchange's trading system and new billing system,
conform certain billing practices to practices on the Exchange's
affiliated exchanges, simplify billing practices and add clarity to the
Fees Schedule. For the reasons discussed above, the Exchange believes
the proposed changes are reasonable, equitable and unfairly
discriminatory will apply uniformly to similarly situated TPHs.
Finally, the Exchange believes that the proposed fee schedule will be
easier to read for investors and will eliminate potential investor
confusion, thereby removing impediments to and perfecting the mechanism
of a free and open market and a national market system, and, in
general, protecting investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the Exchange
does not believe that the proposed change will impose any burden on
intramarket competitions that is not necessary or appropriate in
furtherance of the purposes of the Act because the proposed changes
will be applied equally to all similarly situated TPHs. The Exchange
also 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 continues to reflect a
competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes enhances market quality to the benefit of all TPHs.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
also notes that the proposed rule changes are precipitated by its
upcoming migration of the Exchange's migration of its trading platform
and billing system and not intended to address competitive issues.
Rather, the proposed changes are generally being made in connection
with changes resulting from migration and/or are designed to simplify
the Exchange's billing processes post-migration.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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 \36\ and paragraph (f) of Rule 19b-4 \37\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\36\ 15 U.S.C. 78s(b)(3)(A).
\37\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2019-106 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-CBOE-2019-106. 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-CBOE-2019-106 and
[[Page 63709]]
should be submitted on or before December 9, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24862 Filed 11-15-19; 8:45 am]
BILLING CODE 8011-01-P
