Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule, 30777-30779 [2020-10819]

Download as PDF Federal Register / Vol. 85, No. 98 / Wednesday, May 20, 2020 / Notices Form N–8B–4 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (‘‘PRA’’), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) requests for extension of the previously approved collection of information discussed below. Form N–8B–4 (17 CFR 274.14) is the form used by face-amount certificate companies to comply with the filing and disclosure requirements imposed by Section 8(b) of the Investment Company Act of 1940 (15 U.S.C. 80a–8(b)). Among other items, Form N–8B–4 requires disclosure of the following information about the face-amount certificate company: Date and form of organization; controlling persons; current business and contemplated changes to the company’s business; investment, borrowing, and lending policies, as well as other fundamental policies; securities issued by the company; investment adviser; depositaries; management personnel; compensation paid to directors, officers, and certain employees; and financial statements. The Commission uses the information provided in the collection of information to determine compliance with Section 8(b) of the Investment Company Act of 1940. Form N–8B–4 and the burden of compliance have not changed since the last approval. Each registrant files Form N–8B–4 for its initial filing and does not file post-effective amendments to Form N–8B–4.1 Commission staff estimates that no respondents will file Form N– 8B–4 each year. There is currently only one existing face-amount certificate company, and no face-amount certificate companies have filed a Form N–8B–4 in many years. No new faceamount certificate companies have been established since the last OMB information collection approval for this form, which occurred in 2017. Accordingly, the staff estimates that, each year, no face-amount certificate companies will file Form N–8B–4, and that the total burden for the information collection is zero hours. Although Commission staff estimates that there is no hour burden associated with Form 1 Pursuant to Section 30(b)(1) of the Act (15 U.S.C. 80a-29), each respondent keeps its registration statement current through the filing of periodic reports as required by Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and the rules thereunder. Post-effective amendments are filed with the Commission on the face-amount certificate company’s Form S–1. Hence, respondents only file Form N–8B–4 for their initial registration statement and not for posteffective amendments. VerDate Sep<11>2014 17:51 May 19, 2020 Jkt 250001 N–8B–4, the staff is requesting a burden of one hour for administrative purposes. Estimates of the burden hours are made solely for the purposes of the PRA and are not derived from a comprehensive or even a representative survey or study of the costs of SEC rules and forms. The information provided on Form N–8B–4 is mandatory. The information provided on Form N–8B–4 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to (i) www.reginfo.gov/public/do/ PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o Cynthia Roscoe, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Dated: May 15, 2020. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–10880 Filed 5–19–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88876; File No. SR– CboeEDGX–2020–020] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule May 14, 2020. 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 May 1, 2020, Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) 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 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00096 Fmt 4703 Sfmt 4703 30777 solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX Options’’) is filing with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change to amend its Fees Schedule. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ options/regulation/rule_filings/edgx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fees Schedule for its equity options platform (EDGX Options), effective May 1, 2020. The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange is only one of 16 options venues to which market participants may direct their order flow. Based on publicly available information, no single options exchange has more than 20% of the market share and currently the Exchange represents only 4% of the market share.3 Thus, in such a low-concentrated and highly competitive market, no single options 3 See Cboe Global Markets U.S. Options Market Volume Summary (April 27, 2020), available at https://markets.cboe.com/us/options/market_ statistics/. E:\FR\FM\20MYN1.SGM 20MYN1 30778 Federal Register / Vol. 85, No. 98 / Wednesday, May 20, 2020 / Notices exchange, including the Exchange, possesses significant pricing power in the execution of option order flow. The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue to reduce use of certain categories of products, in response to fee changes. Accordingly, competitive forces constrain the Exchange’s transaction fees, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange’s Fees Schedule sets forth standard rebates and rates applied per contract. For example, the Exchange provides standard rebates ranging from $0.01 up to $0.21 per contract for orders that add liquidity in both Penny and Non-Penny Securities and assesses fees ranging from $0.01 up to $0.75 per contract for orders that remove liquidity in both Penny and Non-Penny Securities. The Exchange also offers tiered pricing which provides Members 4 opportunities to qualify for higher rebates or reduced fees where certain volume criteria and thresholds are met. Footnote 5 of the Fees Schedule provides that when orders are submitted with a Designated Give Up,5 the applicable rebates (i.e., any standard rebate or applicable tier rebates) for orders yielding fee code BC,6 NC,7 PC,8 SC,9 QA10 and QM 11 are provided to the Member who routed the order to the Exchange. Now, the Exchange proposes to amend footnote 5 to include fee codes ZA12 and ZB 13 in the aforementioned list of fee codes. Under Rule 21.12 a Member acting as an options routing firm on behalf of one or more other Exchange Members (a ‘‘Routing Firm’’) is able to route orders to the Exchange and to immediately give 4 See Exchange Rule 1.5(n). Designated Give Up of a User refers to a Clearing Member identified to the Exchange by that User as a Clearing Member the User requests the ability to give up and that has been processed by the Exchange as a Designated Give Up. See Exchange Rule 21.12(b). 6 Orders yielding fee code BC represent AIM Agency (Customer) orders. 7 Orders yielding fee code NC represent Customer, Non-Penny orders. 8 Orders yielding fee code PC represent Customer, Penny Pilot orders. 9 Orders yielding fee code SC represent SAM Agency (Customer) orders. 10 Orders yielding fee code QA represent QCC Agency (Customer) orders. 11 Orders yielding fee code QM represent QCC Agency (Non-Customer) orders. 12 Orders yielding fee code ZA represent Complex, Customer (contra Non-Customer), Penny orders. 13 Orders yielding fee code ZB represent Complex, Customer (contra Non-Customer), NonPenny orders. 5A VerDate Sep<11>2014 17:51 May 19, 2020 Jkt 250001 up the party (a party other than the Routing Firm itself or the Routing Firm’s own clearing firm) who will accept and clear any resulting transaction. Because the Routing Firm is responsible for the decision to route the order to the Exchange, the Exchange provides the rebate to the Routing Firm when the orders yield fee codes BC, NC, PC, SC, QA and QM. The Exchange believes that the Routing Firm should also be provided the rebate when the orders yield fee codes ZA and ZB as those orders also represent liquidity adding customer orders for which the Routing Firm is responsible for the decision to route the order to the Exchange. In connection with this change, the Exchange proposes to append footnote 5 to fee codes ZA and ZB in the Fee Codes and Associated Fees table of the Fees Schedule. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.14 Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,15 in that it provides for the equitable allocation of reasonable dues, fees and other charges among Members and other persons using any facility or system which the Exchange operates or controls. The Exchange notes that the U.S. options markets are highly competitive, and the proposed fee structure is intended to provide an incentive for Members to direct orders to the Exchange. The proposal would apply to fee codes ZA and ZB related to customer liquidity adding orders, because these, along with the fee codes already included in Footnote 5, are the primary rebates in place on the Exchange and reflect the primary liquidity that the Exchange is seeking to attract from Routing Firms that are able to identify Designated Give Ups.16 The Exchange believes the proposed amendment is reasonable because the Exchange already provides such rebates to the Routing Firm for orders yielding similar fee codes for customer liquidity adding orders (i.e., orders yielding fee codes BC, NC, PC, QA, and SC). Additionally, the Exchange believes that the proposed 14 15 U.S.C. 78f. U.S.C. 78f(b)(4). 16 The Exchange notes that Market-Makers may only give up its respective Guarantor, as defined by Rule 21.12(b)(2). See Exchange Rule 21.12(b)(5). 15 15 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 amendments to its Fees Schedule will enhance the Exchange’s competitive position and will result in increased liquidity on the Exchange, to the benefit of all Exchange participants. Therefore, the Exchange believes that providing rebates is equitable and reasonable and not unfairly discriminatory as it would allow the Exchange, in the context of the give up procedure described above, to provide a rebate directly to the party making the routing decision to direct certain orders to the Exchange (i.e., the Routing Firm), which is consistent with both the Exchange’s historic practice and the purpose behind a rebate (i.e., to incentivize the order being directed to the Exchange). B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes its proposed amendments to its Fees Schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed change represents a significant departure from previous pricing offered by the Exchange or its competitors. Additionally, Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. The Exchange believes that its proposal will incentivize Routing Firms that are utilizing the give up procedure to direct orders yielding fee code ZA and ZB to the Exchange, and will enhance the Exchange’s competitive position by resulting in increased liquidity on the Exchange, thereby providing more opportunities for customers to receive best executions. 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 17 and paragraph (f) of Rule 19b–4 18 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 17 15 18 17 E:\FR\FM\20MYN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 20MYN1 Federal Register / Vol. 85, No. 98 / Wednesday, May 20, 2020 / Notices 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– CboeEDGX–2020–020 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–CboeEDGX–2020–020. 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 tomake available publicly. All submissions should refer to File Number SR–CboeEDGX–2020–020 and VerDate Sep<11>2014 17:51 May 19, 2020 Jkt 250001 should be submitted on or before June 10, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–10819 Filed 5–19–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88872; File No. SR–MIAX– 2020–11] Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing of a Proposed Rule Change To Amend Exchange Rule 518, Complex Orders, To Adopt New Interpretation and Policy .08, Related Futures Cross (‘‘RFC’’) Order Type May 14, 2020. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 11, 2020, Miami International Securities Exchange, LLC (‘‘MIAX Options’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to amend Exchange Rule 518, Complex Orders. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/ at MIAX Options’ principal office, 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 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 30779 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 Exchange Rule 518, Complex Orders, to adopt a new Related Futures Cross (‘‘RFC’’) order type. In April of 2018, the Exchange adopted a proposal to list and trade on the Exchange options on the SPIKESTM Index (‘‘SPIKES’’ or the ‘‘Index’’), a new index that measures expected 30-day volatility of the SPDR S&P 500 ETF Trust.3 Options on the Index are cashsettled and have European-style exercise provisions.4 There are currently no futures listed on the Index, therefore Members 5 of the Exchange who want to hedge a position in SPIKES options using futures have to hedge using highly correlated related instruments, such as VIX futures. While the SPIKES Index is highly correlated to the VIX Index (SPIKES is over 99% correlated to VIX), there remains some basis risk 6 between the two products. That basis risk can be exacerbated in times of extreme volatility, such as we are currently experiencing in the markets. Both the SPIKES Index and VIX Index settle on the same day, at the market’s open, but using options on two different, but highly correlated, products. The SPIKES settlement value is determined using the opening prices on the Exchange of SPY options which expire in 30 days, whereas the VIX settlement value is determined using the opening prices on the Cboe Exchange of the SPX options which expire in 30 days. While the two products (SPY and SPX) are highly correlated, there are supply and demand variances that can 3 See Securities Exchange Release No. 83619 (July 11, 2018), 83 FR 32932 (July 16, 2018) (SR–MIAX– 2018–14). 4 See Exchange Rule 1809(a)(4). 5 The term ‘‘Member’’ means an individual or organization approved to exercise the trading rights associated with a Trading Permit. Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. 6 Basis risk is the financial risk that offsetting investments in a hedging strategy will not experience price changes in entirely opposite directions from each other. This imperfect correlation between two investments creates the potential for excess gains or losses in a hedging strategy, thus adding risk to the position. James Chen, Basis Risk, Investopedia (June 16, 2019), https://www.investopedia.com/terms/b/ basisrisk.asp. E:\FR\FM\20MYN1.SGM 20MYN1

Agencies

[Federal Register Volume 85, Number 98 (Wednesday, May 20, 2020)]
[Notices]
[Pages 30777-30779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10819]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88876; File No. SR-CboeEDGX-2020-020]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Its Fees Schedule

May 14, 2020.
    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 May 1, 2020, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'') is 
filing with the Securities and Exchange Commission (``Commission'') a 
proposed rule change to amend its Fees Schedule. The text of the 
proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule for its equity 
options platform (EDGX Options), effective May 1, 2020.
    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 16 options venues to which market participants 
may direct their order flow. Based on publicly available information, 
no single options exchange has more than 20% of the market share and 
currently the Exchange represents only 4% of the market share.\3\ Thus, 
in such a low-concentrated and highly competitive market, no single 
options

[[Page 30778]]

exchange, including the Exchange, possesses significant pricing power 
in the execution of option order flow. The Exchange believes that the 
ever-shifting market share among the exchanges from month to month 
demonstrates that market participants can shift order flow, or 
discontinue to reduce use of certain categories of products, in 
response to fee changes. Accordingly, competitive forces constrain the 
Exchange's transaction fees, and market participants can readily trade 
on competing venues if they deem pricing levels at those other venues 
to be more favorable.
---------------------------------------------------------------------------

    \3\ See Cboe Global Markets U.S. Options Market Volume Summary 
(April 27, 2020), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------

    The Exchange's Fees Schedule sets forth standard rebates and rates 
applied per contract. For example, the Exchange provides standard 
rebates ranging from $0.01 up to $0.21 per contract for orders that add 
liquidity in both Penny and Non-Penny Securities and assesses fees 
ranging from $0.01 up to $0.75 per contract for orders that remove 
liquidity in both Penny and Non-Penny Securities. The Exchange also 
offers tiered pricing which provides Members \4\ opportunities to 
qualify for higher rebates or reduced fees where certain volume 
criteria and thresholds are met. Footnote 5 of the Fees Schedule 
provides that when orders are submitted with a Designated Give Up,\5\ 
the applicable rebates (i.e., any standard rebate or applicable tier 
rebates) for orders yielding fee code BC,\6\ NC,\7\ PC,\8\ SC,\9\ 
QA\10\ and QM \11\ are provided to the Member who routed the order to 
the Exchange. Now, the Exchange proposes to amend footnote 5 to include 
fee codes ZA\12\ and ZB \13\ in the aforementioned list of fee codes.
---------------------------------------------------------------------------

    \4\ See Exchange Rule 1.5(n).
    \5\ A Designated Give Up of a User refers to a Clearing Member 
identified to the Exchange by that User as a Clearing Member the 
User requests the ability to give up and that has been processed by 
the Exchange as a Designated Give Up. See Exchange Rule 21.12(b).
    \6\ Orders yielding fee code BC represent AIM Agency (Customer) 
orders.
    \7\ Orders yielding fee code NC represent Customer, Non-Penny 
orders.
    \8\ Orders yielding fee code PC represent Customer, Penny Pilot 
orders.
    \9\ Orders yielding fee code SC represent SAM Agency (Customer) 
orders.
    \10\ Orders yielding fee code QA represent QCC Agency (Customer) 
orders.
    \11\ Orders yielding fee code QM represent QCC Agency (Non-
Customer) orders.
    \12\ Orders yielding fee code ZA represent Complex, Customer 
(contra Non-Customer), Penny orders.
    \13\ Orders yielding fee code ZB represent Complex, Customer 
(contra Non-Customer), Non-Penny orders.
---------------------------------------------------------------------------

    Under Rule 21.12 a Member acting as an options routing firm on 
behalf of one or more other Exchange Members (a ``Routing Firm'') is 
able to route orders to the Exchange and to immediately give up the 
party (a party other than the Routing Firm itself or the Routing Firm's 
own clearing firm) who will accept and clear any resulting transaction. 
Because the Routing Firm is responsible for the decision to route the 
order to the Exchange, the Exchange provides the rebate to the Routing 
Firm when the orders yield fee codes BC, NC, PC, SC, QA and QM. The 
Exchange believes that the Routing Firm should also be provided the 
rebate when the orders yield fee codes ZA and ZB as those orders also 
represent liquidity adding customer orders for which the Routing Firm 
is responsible for the decision to route the order to the Exchange. In 
connection with this change, the Exchange proposes to append footnote 5 
to fee codes ZA and ZB in the Fee Codes and Associated Fees table of 
the Fees Schedule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\14\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\15\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among Members and other persons using any facility or system which the 
Exchange operates or controls.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange notes that the U.S. options markets are highly 
competitive, and the proposed fee structure is intended to provide an 
incentive for Members to direct orders to the Exchange. The proposal 
would apply to fee codes ZA and ZB related to customer liquidity adding 
orders, because these, along with the fee codes already included in 
Footnote 5, are the primary rebates in place on the Exchange and 
reflect the primary liquidity that the Exchange is seeking to attract 
from Routing Firms that are able to identify Designated Give Ups.\16\ 
The Exchange believes the proposed amendment is reasonable because the 
Exchange already provides such rebates to the Routing Firm for orders 
yielding similar fee codes for customer liquidity adding orders (i.e., 
orders yielding fee codes BC, NC, PC, QA, and SC). Additionally, the 
Exchange believes that the proposed amendments to its Fees Schedule 
will enhance the Exchange's competitive position and will result in 
increased liquidity on the Exchange, to the benefit of all Exchange 
participants. Therefore, the Exchange believes that providing rebates 
is equitable and reasonable and not unfairly discriminatory as it would 
allow the Exchange, in the context of the give up procedure described 
above, to provide a rebate directly to the party making the routing 
decision to direct certain orders to the Exchange (i.e., the Routing 
Firm), which is consistent with both the Exchange's historic practice 
and the purpose behind a rebate (i.e., to incentivize the order being 
directed to the Exchange).
---------------------------------------------------------------------------

    \16\ The Exchange notes that Market-Makers may only give up its 
respective Guarantor, as defined by Rule 21.12(b)(2). See Exchange 
Rule 21.12(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its proposed amendments to its Fees Schedule 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
does not believe that the proposed change represents a significant 
departure from previous pricing offered by the Exchange or its 
competitors. Additionally, Members may opt to disfavor the Exchange's 
pricing if they believe that alternatives offer them better value. The 
Exchange believes that its proposal will incentivize Routing Firms that 
are utilizing the give up procedure to direct orders yielding fee code 
ZA and ZB to the Exchange, and will enhance the Exchange's competitive 
position by resulting in increased liquidity on the Exchange, thereby 
providing more opportunities for customers to receive best executions.

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 \17\ and paragraph (f) of Rule 19b-4 \18\ 
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

[[Page 30779]]

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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeEDGX-2020-020 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeEDGX-2020-020. 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 tomake available publicly. All submissions 
should refer to File Number SR-CboeEDGX-2020-020 and should be 
submitted on or before June 10, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10819 Filed 5-19-20; 8:45 am]
 BILLING CODE 8011-01-P
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