Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule Applicable to the BYX Equities Trading Platform as it Relates to Pricing for Orders Routed to Cboe EDGA Exchange, Inc. Using the ALLB, TRIM, or SLIM Routing Strategy, 64164-64166 [2019-25106]
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64164
Federal Register / Vol. 84, No. 224 / Wednesday, November 20, 2019 / Notices
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 28
Intramarket Competition
The proposed rule change is designed
to attract order flow to the Exchange,
and thereby, increased liquidity. Greater
liquidity benefits all market participants
on the Exchange by providing more
trading opportunities and encourages
Participants, to send orders, thereby
contributing to robust levels of liquidity,
which benefit all market participants.
The Exchange does not believe that the
proposed rule change will impair the
ability of Participants to compete in the
financial markets. There are 13
exchanges, 31 alternative trading
systems, and numerous broker-dealer
internalizers and wholesalers, all
competing for order flow from which
Participants may choose to send their
quotes and trades. The Exchange also
does not believe the proposed rule
change would impact intramarket
competition as the proposed rule change
would apply to all Participants equally
that transact on the Exchange, and
therefore the proposed change would
not impose a disparate burden on
competition among market participants
on the Exchange.
Intermarket Competition
The Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee and
rebate levels at those other venues to be
more favorable. As noted earlier, the
Exchange’s market share of intraday
trading (i.e., excluding auctions) was
0.47% in September 2019. In such an
environment, the Exchange must
continually adjust its fees and rebates to
remain competitive with other
exchanges and with off-exchange
venues. Because competitors are free to
modify their own fees and credits in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
does not believe the proposed change
can impose any burden on intermarket
competition.
The Exchange believes that the
proposed rule change could promote
competition between the Exchange and
other execution venues, including those
that currently offer similar order types
and comparable transaction pricing, by
encouraging additional orders to be sent
to the Exchange for execution.
28 See Securities Exchange Act Release No. 51808,
70 FR 37495, 37498–99 (June 29, 2005) (S7–10–04)
(Final Rule).
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17:21 Nov 19, 2019
Jkt 250001
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 29 of the Act and
subparagraph (f)(2) of Rule 19b–4 30
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such 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 shall institute proceedings
under Section 19(b)(2)(B) 31 of the Act 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–
NYSECHX–2019–20 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–NYSECHX–2019–20. 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/
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
31 15 U.S.C. 78s(b)(2)(B).
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–NYSECHX–2019–20 and
should be submitted on or before
December 11, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–25107 Filed 11–19–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87543; File No. SR–
CboeBYX–2019–021]
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule Applicable to the BYX
Equities Trading Platform as it Relates
to Pricing for Orders Routed to Cboe
EDGA Exchange, Inc. Using the ALLB,
TRIM, or SLIM Routing Strategy
November 14, 2019.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
13, 2019, Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
29 15
32 17
30 17
1 15
PO 00000
Frm 00127
Fmt 4703
Sfmt 4703
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
E:\FR\FM\20NON1.SGM
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Federal Register / Vol. 84, No. 224 / Wednesday, November 20, 2019 / Notices
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BYX Exchange, Inc. (‘‘BYX’’ or
the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change to amend the fee schedule
applicable to the BYX equities trading
platform (‘‘BYX Equities’’) as it relates
to pricing for orders routed to Cboe
EDGA Exchange, Inc. (‘‘EDGA’’) using
the ALLB, TRIM, or SLIM routing
strategy. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/byx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
BYX Equities fee schedule to change the
pricing applicable to orders routed to
EDGA using the ALLB, TRIM, or SLIM
routing strategy, as a result of a recent
pricing change by EDGA effective on
November 1, 2019.3 The Exchange
proposes to implement the proposed
change to its fee schedule on November
1, 2019. Currently, the Exchange
provides a rebate of $0.0024 per share
for orders routed to EDGA using the
ALLB, TRIM, or SLIM routing strategy
(yielding fee codes AA and BJ), which
3 See
SR–CboeEDGA–2019–019 (filed November
13, 2019).
VerDate Sep<11>2014
17:21 Nov 19, 2019
Jkt 250001
was a pass-through of the standard
rebate EDGA had previously provided to
orders that removed liquidity from
EDGA. Effective November 1, 2019,
EDGA reduced its standard rebate per
share for orders that remove liquidity in
securities priced at or above $1.00 from
$0.0024 to $0.0018. As such, the
Exchange proposes to similarly reduce
the per share rebate for orders routed to
EDGA (yielding fee codes AA and BJ)
from $0.0024 to $0.0018 in order to
reflect the reduction in the rebate
available for orders removing liquidity
on EDGA.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements of Section 6(b) of the Act.4
Specifically, the Exchange believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,5 which
requires that Exchange Rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Members and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers. The
Exchange operates in a highlycompetitive market in which market
participants can readily direct order
flow to competing venues if they deem
fee levels at a particular venue to be
excessive or incentives to be
insufficient.
In particular, the Exchange believes
that the proposed change is reasonable
because it reflects a pass-through of a
recent pricing change by EDGA for
liquidity removing orders, as described
above. The Exchange believes that the
proposed change is reasonable because
it will maintain proportionality with the
standard corresponding rebate offered
by EDGA while also maintaining
Member interest in routing orders
through the Exchange by passing on
better pricing to Members that choose to
enter such orders on the Exchange,
thereby encouraging additional order
flow to be entered on the BYX Book.
The Exchange believes that additional
order flow through the BYX Book will
result in greater liquidity to the benefit
of all market participants on the
Exchange by providing more trading
opportunities.
The Exchange also believes that the
proposed change constitutes an
equitable allocation of reasonable fees
that is not unfairly discriminatory
because the proposed rebate is designed
to continue to reflect the rebate offered
(and recently updated) by EDGA to
U.S.C. 78f(b).
5 15 U.S.C. 78f(b)(4).
Frm 00128
Fmt 4703
orders that remove liquidity and would
apply equally to all Members that
choose to use the Exchange to route
liquidity removing orders to EDGA.
Furthermore, the Exchange notes that
routing through the Exchange is
voluntary, and, because the Exchange
operates in a highly competitive
environment as discussed below,
Members that do not favor the proposed
pricing can readily direct order flow
directly to EDGA or through competing
venues or providers of routing services.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
The Exchange believes the proposed
routing fee change will not impose an
undue burden on competition because
the proposed rebate is merely intended
to maintain consistency between the
Exchange’s rebates for orders routed to
EDGA with the rebates currently offered
by EDGA for liquidity removing orders.
The Exchange does not believe the
proposed rebate will impose any burden
on intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. As stated, the
Exchange will uniformly assess the
proposed routing fee on all Members
who choose to route orders through the
Exchange to EDGA. As noted above, the
proposed rebate intends pass through
the same rebates for liquidity removing
orders from EDGA on to Members,
thereby, adding order flow to the BYX
Book which will result in more trading
opportunities to the benefit of all market
participants on the Exchange.
The Exchange does not believe 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.
As noted above, the Exchange operates
in a highly competitive market and
routing through the Exchange is
voluntary. Therefore, Members may opt
to disfavor the Exchange’s pricing if
they believe that alternatives, including
12 other equities exchanges and 32
alternative trading systems, offer them
better value or if they disfavor the
proposed change. Additionally, the
Exchange represents a small percentage
of the overall market. Based on publicly
available information, no single equities
exchange has more than 17% of the
market share.6 Therefore, no exchange
6 See Cboe Global Markets U.S. Equities Market
Volume Summary (October 28, 2019), available at
4 15
PO 00000
64165
Continued
Sfmt 4703
E:\FR\FM\20NON1.SGM
20NON1
64166
Federal Register / Vol. 84, No. 224 / Wednesday, November 20, 2019 / Notices
possesses significant pricing power in
the execution of equity order flow.
Moreover, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
National Market System (‘‘NMS’’), the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 7 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’. 8 Regardless, the
Exchange notes that the proposed
change to the EDGA-related routing fee
is merely meant to pass through the
rebate associated with executing orders
on that market, and is therefore not
designed to have any significant impact
on competition. Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received from
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 9 of the Act and
https://markets.cboe.com/us/equities/
marketlshare/.
7 See Securities Exchange Act Release No. 51808
(June 9, 2005) 70 FR 37496 (June 29, 2005).
8 NetCoalition v. Securities and Exchange
Commission, 615 F.3d 525 (D.C. Cir. 2010).).
9 15 U.S.C. 78s(b)(3)(A).
VerDate Sep<11>2014
17:21 Nov 19, 2019
Jkt 250001
subparagraph (f)(2) of Rule 19b–4 10
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such 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 shall institute proceedings
under Section 19(b)(2)(B) 11 of the Act 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 No. SR–
CboeBYX–2019–021 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 No.
SR–CboeBYX–2019–021. 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,
10 17
11 15
PO 00000
CFR 240.19b–4(f)(2).
U.S.C. 78s(b)(2)(B).
Frm 00129
Fmt 4703
Sfmt 4703
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 No.
SR–CboeBYX–2019–021, and should be
submitted on or before December 11,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–25106 Filed 11–19–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: U.S. Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 17a–13, SEC File No. 270- 27, OMB
Control No. 3235–0035
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 17a–13 (17 CFR 240.17a–13) under
the Securities Exchange Act of 1934 (15
U.S. C. 78a et seq.) (‘‘Exchange Act’’).
Rule 17a–13(b) (17 CFR 240.17a–
13(b)) generally requires that at least
once each calendar quarter, all
registered brokers-dealers physically
examine and count all securities held,
and that they account for all other
securities not in their possession, but
subject to the broker-dealer’s control or
direction. Any discrepancies between
the broker-dealer’s securities count and
the firm’s records must be noted and,
within seven days, the unaccounted for
difference must be recorded in the
firm’s records. Rule 17a–13(c) (17 CFR
240.17a–13(c)) provides that under
12 17
E:\FR\FM\20NON1.SGM
CFR 200.30–3(a)(12).
20NON1
]]>Agencies
[Federal Register Volume 84, Number 224 (Wednesday, November 20, 2019)]
[Notices]
[Pages 64164-64166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25106]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87543; File No. SR-CboeBYX-2019-021]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Fee Schedule Applicable to the BYX Equities Trading Platform as it
Relates to Pricing for Orders Routed to Cboe EDGA Exchange, Inc. Using
the ALLB, TRIM, or SLIM Routing Strategy
November 14, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 13, 2019, Cboe BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule
[[Page 64165]]
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BYX Exchange, Inc. (``BYX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to amend the fee schedule applicable to the BYX
equities trading platform (``BYX Equities'') as it relates to pricing
for orders routed to Cboe EDGA Exchange, Inc. (``EDGA'') using the
ALLB, TRIM, or SLIM routing strategy. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/byx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the BYX Equities fee schedule to
change the pricing applicable to orders routed to EDGA using the ALLB,
TRIM, or SLIM routing strategy, as a result of a recent pricing change
by EDGA effective on November 1, 2019.\3\ The Exchange proposes to
implement the proposed change to its fee schedule on November 1, 2019.
Currently, the Exchange provides a rebate of $0.0024 per share for
orders routed to EDGA using the ALLB, TRIM, or SLIM routing strategy
(yielding fee codes AA and BJ), which was a pass-through of the
standard rebate EDGA had previously provided to orders that removed
liquidity from EDGA. Effective November 1, 2019, EDGA reduced its
standard rebate per share for orders that remove liquidity in
securities priced at or above $1.00 from $0.0024 to $0.0018. As such,
the Exchange proposes to similarly reduce the per share rebate for
orders routed to EDGA (yielding fee codes AA and BJ) from $0.0024 to
$0.0018 in order to reflect the reduction in the rebate available for
orders removing liquidity on EDGA.
---------------------------------------------------------------------------
\3\ See SR-CboeEDGA-2019-019 (filed November 13, 2019).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the requirements of Section 6(b) of the Act.\4\ Specifically, the
Exchange believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\5\ which requires that Exchange Rules provide for
the equitable allocation of reasonable dues, fees, and other charges
among its Members and other persons using its facilities and does not
unfairly discriminate between customers, issuers, brokers or dealers.
The Exchange operates in a highly-competitive market in which market
participants can readily direct order flow to competing venues if they
deem fee levels at a particular venue to be excessive or incentives to
be insufficient.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In particular, the Exchange believes that the proposed change is
reasonable because it reflects a pass-through of a recent pricing
change by EDGA for liquidity removing orders, as described above. The
Exchange believes that the proposed change is reasonable because it
will maintain proportionality with the standard corresponding rebate
offered by EDGA while also maintaining Member interest in routing
orders through the Exchange by passing on better pricing to Members
that choose to enter such orders on the Exchange, thereby encouraging
additional order flow to be entered on the BYX Book. The Exchange
believes that additional order flow through the BYX Book will result in
greater liquidity to the benefit of all market participants on the
Exchange by providing more trading opportunities.
The Exchange also believes that the proposed change constitutes an
equitable allocation of reasonable fees that is not unfairly
discriminatory because the proposed rebate is designed to continue to
reflect the rebate offered (and recently updated) by EDGA to orders
that remove liquidity and would apply equally to all Members that
choose to use the Exchange to route liquidity removing orders to EDGA.
Furthermore, the Exchange notes that routing through the Exchange is
voluntary, and, because the Exchange operates in a highly competitive
environment as discussed below, Members that do not favor the proposed
pricing can readily direct order flow directly to EDGA or through
competing venues or providers of routing services.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange believes the proposed routing fee change will not impose an
undue burden on competition because the proposed rebate is merely
intended to maintain consistency between the Exchange's rebates for
orders routed to EDGA with the rebates currently offered by EDGA for
liquidity removing orders.
The Exchange does not believe the proposed rebate will impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. As stated, the Exchange will
uniformly assess the proposed routing fee on all Members who choose to
route orders through the Exchange to EDGA. As noted above, the proposed
rebate intends pass through the same rebates for liquidity removing
orders from EDGA on to Members, thereby, adding order flow to the BYX
Book which will result in more trading opportunities to the benefit of
all market participants on the Exchange.
The Exchange does not believe 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. As noted above,
the Exchange operates in a highly competitive market and routing
through the Exchange is voluntary. Therefore, Members may opt to
disfavor the Exchange's pricing if they believe that alternatives,
including 12 other equities exchanges and 32 alternative trading
systems, offer them better value or if they disfavor the proposed
change. Additionally, the Exchange represents a small percentage of the
overall market. Based on publicly available information, no single
equities exchange has more than 17% of the market share.\6\ Therefore,
no exchange
[[Page 64166]]
possesses significant pricing power in the execution of equity order
flow. Moreover, the Commission has repeatedly expressed its preference
for competition over regulatory intervention in determining prices,
products, and services in the securities markets. Specifically, in
Regulation National Market System (``NMS''), the Commission highlighted
the importance of market forces in determining prices and SRO revenues
and, also, recognized that current regulation of the market system
``has been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \7\ The fact that this market is competitive has also long
been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''. \8\ Regardless, the Exchange notes that the proposed
change to the EDGA-related routing fee is merely meant to pass through
the rebate associated with executing orders on that market, and is
therefore not designed to have any significant impact on competition.
Accordingly, the Exchange does not believe its proposed fee change
imposes any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
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\6\ See Cboe Global Markets U.S. Equities Market Volume Summary
(October 28, 2019), available at https://markets.cboe.com/us/equities/market_share/.
\7\ See Securities Exchange Act Release No. 51808 (June 9, 2005)
70 FR 37496 (June 29, 2005).
\8\ NetCoalition v. Securities and Exchange Commission, 615 F.3d
525 (D.C. Cir. 2010).).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge
imposed by the Exchange.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such 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 shall institute proceedings under
Section 19(b)(2)(B) \11\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\11\ 15 U.S.C. 78s(b)(2)(B).
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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 No. SR-CboeBYX-2019-021 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 No. SR-CboeBYX-2019-021. 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 No. SR-CboeBYX-2019-021, and should be submitted
on or before December 11, 2019.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25106 Filed 11-19-19; 8:45 am]
BILLING CODE 8011-01-P
