Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Its Fee Schedule, 34693-34697 [2020-12164]
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Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Notices
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 18 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),19 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange believes that such
waiver would be consistent with the
protection of investors and the public
interest because it would allow the
Exchange to waive the change fee
sooner. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because it would permit the Exchange,
without undue delay, to cease offering
the GIF when it becomes unavailable,
provide notice to customers and waive
the change fee. Accordingly, the
Commission waives the 30-day
operative delay and designates the
proposed rule change operative upon
filing.20
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) 21 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
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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:
18 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
20 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
21 15 U.S.C. 78s(b)(2)(B).
19 17
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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–
NYSENAT–2020–19 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–NYSENAT–2020–19. 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–NYSENAT–2020–19 and
should be submitted on or before June
26, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–12162 Filed 6–4–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88983; File No. SR–
CboeBZX–2020–043]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Amend Its Fee Schedule
June 1, 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 19,
2020, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange,’’ ‘‘Cboe,’’ or ‘‘BZX’’) is filing
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to amend its fee
schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
22 17
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CFR 200.30–3(a)(12).
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2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
fee schedule applicable to its equities
trading platform. Specifically, the
Exchange proposes to amend the
existing Tape B Volume and Quoting
Tier, add a new Tape B Volume and
Quoting Tier, make a cleanup change to
the introductory language under the
Tape B Volume and Quoting Tiers, and
to add a new LMM Add Volume Tier,
effective May 1, 2020.3
The Exchange first notes that its
listing business operates in a highlycompetitive market in which market
participants, which includes issuers of
securities, Lead Market Makers
(‘‘LMMs’’), and other liquidity
providers, can readily transfer their
listings, opt not to participate, or direct
order flow to competing venues if they
deem fee levels, liquidity provision
incentive programs, or any other factor
at a particular venue to be insufficient
or excessive. The proposed rule changes
reflect a competitive pricing structure
designed to incentivize market
participants to enroll in LMP
Securities 4 and participate as LMMs in
the Exchange’s LMM Program,5 which
the Exchange believes will enhance
market quality in all securities listed on
the Exchange and encourage issuers to
list new products and transfer existing
products to the Exchange.
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Tape B Volume and Quoting Tiers
The Exchange currently offers one
Tape B Volume and Quoting Tier under
footnote 13, which provides an
additional rebate of $0.0001 per share
for orders that add liquidity in Tape B
securities where a Member is enrolled
in at least 100 LMP Securities, at least
3 The Exchange initially filed the proposed fee
changes on May 1, 2020 (SR–CboeBZX–2020–039).
On May 12, 2020, the Exchange withdrew that filing
and submitted a subsequent filing (SR–CboeBZX–
2020–041). On May 19, 2020, the Exchange
withdrew that filing and submitted this proposal.
4 ‘‘LMP Securities’’ means a list of securities
included in the Liquidity Management Program, the
universe of which will be determined by the
Exchange and published in a circular distributed to
Members and on the Exchange’s website. Such LMP
Securities will include all Cboe-listed ETPs and
certain non-Cboe-listed ETPs for which the
Exchange wants to incentivize Members to provide
enhanced market quality. All Cboe-listed securities
will be LMP Securities immediately upon listing on
the Exchange. The Exchange will not remove a
security from the list of LMP Securities without 30
days prior notice. See Cboe BZX U.S. Equities
Exchange Fee Schedule.
5 See Securities Exchange Act Release No. 86213
(June 27, 2019), 84 FR 31951 (July 3, 2019) (the
‘‘Original LMM Filing’’).
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10 of which must be BZX-listed, for
which it meets the following criteria for
at least 50% of the trading days in the
applicable month: (1) Member has an
NBBO Time 6 greater than or equal to
15% or NBBO Size Time 7 is greater
than or equal to 25%; and (2) Member
has a Displayed Size Time 8 greater than
or equal to 90%. All Members are
eligible to enroll in LMP Securities and
are eligible for the current Tape B
Volume and Quoting Tier. Such rebates
are applicable to orders that add
liquidity which are appended with fee
code B. The Exchange proposes to make
several changes to the Tape B Volume
and Quoting Tier and to add a second
tier.
First, the Exchange proposes to
require that a Member is enrolled in and
meets the requirements for at least 50
BZX-listed LMP Securities in order to
receive the additional Tier 1 rebate. This
marks a reduction in the total number
of LMP Securities that a Member must
be enrolled in and meet the
requirements for (from 100 to 50) and an
increase in the number of BZX-listed
LMP Securities that a Member must be
enrolled in and meet the requirements
for (from 10 to 50).9 Second, the
Exchange is proposing to additionally
require that a Member adds a Tape B
ADV 10 of greater than or equal to 0.15%
of the TCV 11 in order to receive the
additional Tier 1 rebate.
6 ‘‘NBBO Time’’ means the average of the
percentage of time during regular trading hours
during which the Member maintains at least 100
shares at each of the NBB and NBO. See Cboe BZX
U.S. Equities Exchange Fee Schedule.
7 ‘‘NBBO Size Time’’ means the percentage of
time during regular trading hours during which
there are size-setting quotes at the NBBO on the
Exchange. See Cboe BZX U.S. Equities Exchange
Fee Schedule.
8 ‘‘Displayed Size Time’’ means the percentage of
time during regular trading hours during which the
Member maintains at least 2,500 displayed shares
on the bid and separately maintains at least 2,500
displayed shares on the offer that are priced no
more than 2% away from the NBB and NBO,
respectively. See Cboe BZX U.S. Equities Exchange
Fee Schedule.
9 The Exchange notes that all BZX-listed
securities are by definition LMP Securities.
10 ‘‘ADV’’ means average daily volume calculated
as the number of shares added or removed,
combined, per day. ADV is calculated on a monthly
basis. The Exchange excludes from its calculation
of ADV shares added or removed on any day that
the Exchange’s system experiences a disruption that
lasts for more than 60 minutes during regular
trading hours, on any day with a scheduled early
market close and on the last Friday in June (the
‘‘Russell Reconstitution Day’’). Routed shares are
not included in ADAV or ADV calculation.
11 ‘‘TCV’’ means total consolidated volume
calculated as the volume reported by all exchanges
and trade reporting facilities to a consolidated
transaction reporting plan for the month for which
the fees apply. The Exchange excludes from its
calculation of TCV volume on any day that the
Exchange experiences an Exchange System
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The Exchange is also proposing to add
a Tier 2 rebate to the Tape B Volume
and Quoting Tiers where a Member is
enrolled in at least 100 BZX-listed LMP
Securities for which it meets the
following criteria for at least 50% of the
trading days in the applicable month:
(1) Member has an NBBO Time greater
than or equal to 15% or an NBBO Size
Time greater than or equal to 25%; and
(2) Member has a Displayed Size Time
greater than or equal to 90%; and (ii)
Member adds a Tape B ADV greater
than or equal to 0.30% of the TCV.
Finally, the Exchange is also
proposing to make a cleanup change to
eliminate the introductory language
under footnote 13 that reads: ‘‘LMMs in
BZX-listed securities will receive the
following additional rebate when
adding displayed liquidity in all Tape B
securities, except that such additional
rebates will not be applied to the rebates
set forth in footnote 14 part A.’’ The
Exchange is proposing to delete this
language because it does not apply to
the current LMM Liquidity Provision
Rates. Specifically, prior to the
Exchange implementing the new LMM
Liquidity Provision Rates as part of the
Original LMM Filing, the Exchange
offered enhanced rebates to LMMs for
added liquidity on a per transaction
basis in their LMM Securities. The
introductory language was intended to
make clear that LMMs were not eligible
for the Tape B Volume Tier in addition
to the enhanced LMM rebates.12 Since
the implementation of the Original
LMM Filing, LMMs receive a daily
payment for meeting certain Minimum
Performance Standards instead of an
enhanced rebate (as further described
below) and, as such, the language is no
longer applicable.
LMM Add Volume Tier
Under the LMM Program, the
Exchange offers daily incentives for
LMMs securities listed on the Exchange
for which the LMM meets certain
Minimum Performance Standards.13
Such daily incentives are determined
based on the number of Cboe-listed
securities for which the LMM meets
Disruption, on any day with a scheduled early
market close and the Russell Reconstitution Day.
12 See Securities Exchange Act Release No. 79064
(October 6, 2016), 81 FR 70718 (October 13, 2016).
13 As defined in Rule 11.8(e)(1)(E), the term
‘‘Minimum Performance Standards’’ means a set of
standards applicable to an LMM that may be
determined from time to time by the Exchange.
Such standards will vary between LMM Securities
depending on the price, liquidity, and volatility of
the LMM Security in which the LMM is registered.
The performance measurements will include: (A)
Percent of time at the NBBO; (B) percent of
executions better than the NBBO; (C) average
displayed size; and (D) average quoted spread. For
additional detail, see Original LMM Filing.
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Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Notices
such Minimum Performance Standards
and the average auction volume across
such securities. Generally speaking, the
more LMM Securities 14 for which the
LMM meets the Minimum Performance
Standards and the higher the auction
volume across those securities, the
greater the total daily payment to the
LMM.
In order to further incentivize
Members to enroll and participate in the
LMM Program, the Exchange is also
proposing to add a new LMM Add
Volume Tier. Under this proposed new
tier, LMMs in BZX-listed securities will
receive an additional $0.0001 rebate per
share for adding displayed liquidity
where the LMM: (1) Adds an ADV
greater than or equal to 0.20% of the
TCV; (2) has an average aggregate daily
auction volume in LMM Securities
greater than or equal to 500,000; and (3)
is enrolled in at least 75 LMM
Securities.
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2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.15 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 16 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
the Section 6(b)(5) 17 [sic] as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members and
other persons using its facilities. The
Exchange also notes that its listing
business operates in a highlycompetitive market in which market
participants, which includes issuers of
securities, LMMs, and other liquidity
14 As defined in Rule 11.8(e)(1)(D), the term
‘‘LMM Security’’ means a Listed Security that has
an LMM. As defined in Rule 11.8(e)(1)(B), the term
‘‘Listed Security’’ means any ETP or any Primary
Equity Security or Closed-End Fund listed on the
Exchange pursuant to Rule 14.8 or 14.9.
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(5).
17 Id.
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The Exchange believes that the
proposed changes to the Tape B Volume
and Quoting Tiers are consistent with
the Act and represent a reasonable,
equitable, and not unfairly
discriminatory means to incentivize
liquidity provision in ETPs listed on the
Exchange. The marketplace for listings
is extremely competitive and there are
several other national securities
exchanges that offer ETP listings.
Transfers between listing venues occur
frequently 18 for numerous reasons,
including market quality. This proposal
is intended to help the Exchange
compete as an ETP listing venue.
Specifically, the Exchange believes that
the proposal is reasonable because it
believes that increasing the number of
BZX-listed LMP Securities from 10 to 50
will ensure that Members are meeting
the NBBO Time or NBBO Size Time and
the Displayed Size Time requirements
in BZX-listed securities rather than in
other LMP Securities will incentivize
enhanced market quality in BZX-listed
ETPs. Further, adding the requirement
that a Member adds a Tape B ADV
greater than or equal to 0.15% of the
TCV will incentivize Members to
transact in Tape B securities, which
includes all BZX-listed securities, on
the Exchange. Adding Tier 2 with an
increased additional rebate for Members
that are enrolled in at least 100 BZXlisted LMP Securities and add a Tape B
ADV greater than or equal to 0.30% of
the TCV (while applying the same
NBBO Time or NBBO Size Time and
Displayed Size Time requirements as
Tier 1) will provide further incentive for
Members to enroll in additional BZXlisted LMP Securities and transact in
Tape B Securities. The combination of
the two requirements in both Tier 1 and
Tier 2 will encourage both quoting and
executions on the Exchange in BZXlisted securities, which the Exchange
believes is both reasonable and
equitable because it will enhance
market quality in all securities listed on
the Exchange and encourage issuers to
list new products and transfer existing
products to the Exchange. Further, the
Exchange believes that any negative
impact to non-BZX-listed LMP
Securities is not unreasonable and will
be outweighed by the positive impact to
the Exchange’s listing program for
several reasons. As noted throughout,
the listing business operates in a highlycompetitive market in which competing
listing venues offer liquidity provision
incentive programs for their own
securities,19 similar to the LMM
Program and the Tape B Quoting Tiers.
To the extent that the market quality in
the security is negatively impacted,
competitive forces would generally
dictate that the primary listing venue
enhance their own liquidity provision
programs or that the security would
transfer to a different primary listing
venue.
The Exchange believes that the
proposal represents an equitable
allocation of fees and other charges
because the Tape B Volume and
Quoting Tiers are available equally to all
Members and all Members are eligible to
enroll in LMP Securities. The Exchange
anticipates at least three and as many as
eight firms will meet the Tape B Volume
and Quoting Tiers 1 and 2. Further, the
Exchange believes that the proposal
represents an equitable allocation of fees
and other charges and is not
unreasonably discriminatory because
enrolling in LMP Securities is open to
all Members and any Member that
wishes to receive the Tape B Volume
and Quoting Tiers must meet the
proposed quoting and execution
standards in order to receive the
enhanced rebates, as outlined above.
Where a Member does not meet the
requirements, they will not receive the
enhanced rebates. Further and as noted
throughout, the Tape B Volume and
Quoting Tiers are designed to enhance
market quality in BZX-listed securities
and to make the Exchange more
competitive as an ETP listing venue.
Finally, the Exchange believes that
the proposal to eliminate the
introductory language under the Tape B
Volume Tiers is reasonable, equitable,
and non-discriminatory in that it is
designed to make the fee schedule
18 For example, 16 ETPs transferred their listings
to the Exchange on May 13, 2019. See https://
ir.cboe.com/∼/media/Files/C/CBOE-IR-V2/pressrelease/2019/cboe-welcomes-16-barclays-etns.pdf.
19 See NYSE Arca, Inc. Rule 6.82-O related to
Lead Market Makers and Nasdaq Stock Market LLC
Section 114 related to the Designated Liquidity
Provider Program.
providers, can readily transfer their
listings, opt not to participate, or direct
order flow to competing venues if they
deem fee levels, liquidity provision
incentive programs, or any other factor
at a particular venue to be insufficient
or excessive. The proposed rule changes
reflect a competitive pricing structure
designed to incentivize market
participants to enroll in LMP Securities
and participate as LMMs in the
Exchange’s LMM Program, which the
Exchange believes will enhance market
quality in all securities listed on the
Exchange and encourage issuers to list
new products and transfer existing
products to the Exchange.
Tape B Volume and Quoting Tiers
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Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Notices
clearer because it is eliminating old
language that is no longer applicable.
LMM Add Volume Tier
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The Exchange believes that the
proposed addition of the LMM Add
Volume Tier is consistent with the act
and represents a reasonable, equitable,
and not unfairly discriminatory means
to incentivize liquidity provision in
BZX-listed securities. Specifically, the
Exchange believes that the proposal is
reasonable, equitable, and not unfairly
discriminatory to offer the LMM Add
Volume Tier to LMMs and not other
Members because it will enhance
market quality in Cboe-listed securities
by incentivizing LMMs to take on
additional securities listed on the
Exchange (by requiring both a minimum
Average Aggregate Daily Auction
Volume in LMM Securities of greater
than or equal to 500,000 and enrollment
in at least 75 LMM Securities) and
encouraging liquidity provision on the
Exchange (by requiring that a Member
adds an ADV of greater than or equal to
0.20% of TCV). While the proposed
enhanced rebate applies only to LMMs,
the Exchange believes that the proposal
is equitable and not unreasonably
discriminatory because registration as
an LMM is available equally to all
Members and allocation of listed
securities between LMMs is governed by
Exchange Rule 11.8(e)(2). Further, such
LMMs must meet rigorous Minimum
Performance Standards 20 and, where an
LMM does not meet the Minimum
Performance Standards for three out of
the past four months, the LMM is
subject to forfeiture of LMM status for
that LMM Security, at the Exchange’s
discretion. While the Exchange has no
way of knowing whether this proposed
rule change would definitively result in
any particular LMM qualifying for the
proposed tier, the Exchange anticipates
at least one LMM meeting, or being
reasonably able to meet, the proposed
criteria; however, the proposed tier is
open to any LMM that satisfies the tier’s
criteria. The Exchange believes that the
proposed tier could provide an
incentive for other Members to enroll as
an LMM, to take on additional LMM
Securities, and to add additional
20 As defined in Rule 11.8(e)(1)(D), the term
‘‘Minimum Performance Standards’’ means a set of
standards applicable to an LMM that may be
determined from time to time by the Exchange.
Such standards will vary between LMM Securities
depending on the price, liquidity, and volatility of
the LMM Security in which the LMM is registered.
The performance measurements will include: (A)
percent of time at the NBBO; (B) percent of
executions better than the NBBO; (C) average
displayed size; and (D) average quoted spread. For
additional detail, see Original LMM Filing.
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liquidity on the Exchange to qualify for
the proposed tier.
The Exchange believes that it is fair
and reasonable to offer enhanced rebates
to LMMs that meet the proposed tier
because of the significant commitment
to the Exchange’s LMM Program and
liquidity provision on the Exchange
made by such LMM in order to meet the
tier. The Exchange intends to
implement the enhanced rebate as a
means to incentivize Members to both
enroll and participate in the LMM
Program and then to further take on
additional LMM Securities and believes
that this new tier combined with the
existing structure of the LMM Program
will have such an effect. As such, the
Exchange believes that the proposal
represents an equitable allocation of
payments.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe the proposed
change burdens competition, but rather,
enhances competition as it is intended
to increase the competitiveness of BZX
both among Members by incentivizing
Members to enroll in LMP Securities
and to become LMMs in BZX-listed
securities and as a listing venue by
enhancing market quality in BZX-listed
securities. The marketplace for listings
is extremely competitive and there are
several other national securities
exchanges that offer listings. Transfers
between listing venues occur
frequently 21 for numerous reasons,
including market quality. This proposal
is intended to help the Exchange
compete as a listing venue. Accordingly,
the Exchange does not believe that the
proposed change will impair the ability
of issuers, LMMs, other Members, or
competing listing venues to maintain
their competitive standing. The
Exchange also notes that the proposed
change is intended to enhance market
quality in BZX-listed securities and
other listed securities, to the benefit of
all investors in such BZX-listed
securities. The Exchange does not
believe the proposed amendment would
burden intramarket competition as it
would be available to all Members
uniformly. Registration as an LMM is
available equally to all Members and
allocation of listed securities between
21 For example, 16 ETPs transferred their listings
to the Exchange on May 13, 2019. See https://
ir.cboe.com/∼/media/Files/C/CBOE-IR-V2/pressrelease/2019/cboe-welcomes-16-barclays-etns.pdf.
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LMMs is governed by Exchange Rule
11.8(e)(2). Further, if an LMM does not
meet the Minimum Performance
Standards for three out of the past four
months, the LMM is subject to forfeiture
of LMM status for that LMM Security,
at the Exchange’s discretion.
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 has become
effective pursuant to Section 19(b)(3)(A)
of the Act 22 and paragraph (f) of Rule
19b–4 23 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2020–043 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2020–043. 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
22 15
23 17
E:\FR\FM\05JNN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
05JNN1
Federal Register / Vol. 85, No. 109 / Friday, June 5, 2020 / Notices
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2020–043 and
should be submitted on or before June
26, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–12164 Filed 6–4–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88980; File No. SR–
NYSEARCA–2020–49]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the NYSE Arca
Options Fees and Charges and the
NYSE Arca Equities Fees and Charges
Related to Co-location Services
lotter on DSK9F5VC42PROD with NOTICES
June 1, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on May 18,
2020, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
18:21 Jun 04, 2020
Jkt 250001
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Options Fees and Charges
and the NYSE Arca Equities Fees and
Charges (together, the ‘‘Fee Schedules’’)
related to co-location services with
respect to connectivity to the ICE Data
Global Index and to waive any change
fees that a User would otherwise incur
as a result of the proposed change. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, 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
self-regulatory organization 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 those 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 parts 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 the
Fee Schedules related to co-location 4
services offered by the Exchange with
respect to connectivity to the ICE Data
Global Index (‘‘GIF’’) and to waive any
change fees that a User would otherwise
incur as a result of the proposed change.
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 63275 (November 8, 2010), 75 FR
70048 (November 16, 2010) (SR–NYSEArca–2010–
100). The Exchange is an indirect subsidiary of
Intercontinental Exchange, Inc. (‘‘ICE’’). Through its
ICE Data Services (‘‘IDS’’) business, ICE operates a
data center in Mahwah, New Jersey (the ‘‘data
center’’), from which the Exchange provides colocation services to Users.
PO 00000
Frm 00109
Fmt 4703
Sfmt 4703
34697
Proposed Change
The Exchange offers Users 5
connectivity to data feeds from third
party markets and other content service
providers (‘‘Third Party Data Feeds’’).6
The list of Third Party Data Feeds is set
forth in the Fee Schedules, and includes
connectivity to the GIF for a monthly
connectivity fee of $100.7
ICE, which publishes the GIF,
announced to its customers that connect
to the GIF that it will no longer offer the
GIF as a stand-alone product.
Accordingly, the Exchange proposes to
cease offering connectivity to the GIF
once it is no longer available. The
Exchange has been informed by ICE that
cessation is currently expected to occur
before the end of 2020. The Exchange
will announce the operative date
through a customer notice.
Users are subject to a change fee if
they request a change to one or more
existing co-location services.8 The
Exchange proposes to waive any change
fees that a User would otherwise incur
as a result of the proposed change.
In order to implement the proposed
change, the Exchange proposes to make
5 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
from the Exchange. See Securities Exchange Act
Release No. 76010 (September 29, 2015), 80 FR
60197 (October 5, 2015) (SR–NYSEArca–2015–82).
As specified in the Fee Schedules, a User that
incurs co-location fees for a particular co-location
service pursuant thereto would not be subject to colocation fees for the same co-location service
charged by the Exchange’s affiliates the New York
Stock Exchange LLC, NYSE American LLC, NYSE
Chicago, Inc., and NYSE National, Inc. (collectively,
the ‘‘Affiliate SROs’’). Each Affiliate SRO has
submitted substantially the same proposed rule
change to propose the changes described herein.
See SR–NYSE–2020–46, SR–NYSEAmer–2020–40,
SR–NYSECHX–2020–17, and SR–NYSENAT–2020–
19.
6 See Securities Exchange Act Release No. 80310
(March 24, 2017), 82 FR 15763 (March 30, 2017)
(SR–NYSEArca–2016–89) (notice of filing of Partial
Amendment No. 4 and order granting accelerated
approval of a proposed rule change, as modified by
Amendment Nos. 1 through 4, to amend the colocation services offered by the Exchange to add
certain access and connectivity fees).
7 The Exchange has an indirect interest in the GIF
because ICE is the Exchange’s ultimate parent. See
id., at 15771, and Securities Exchange Act Release
No. 79673 (December 22, 2016), 81 FR 96107
(December 29, 2016) (SR–NYSEArca–2016–89)
(notice of filing of Amendments Nos. 2 and 3 to
proposed rule change to amend the co-location
services offered by the Exchange to add certain
access and connectivity fees).
8 See Securities Exchange Act Release Nos. 67667
(August 15, 2012), 77 FR 50743 (August 22, 2012)
(SR–NYSEArca–2012–63) (order approving a
proposed rule change amending the NYSE Arca
Options Fee Schedule to provide for additional colocation services and establish related fees), and
67669 (August 15, 2012), 77 FR 50746 (August 22,
2012) (SR–NYSEArca–2012–62) (order approving a
proposed rule change amending the NYSE Arca
Equites Schedule of Fees and Charges for Exchange
Services to provide for additional co-location
services and establish related fees).
E:\FR\FM\05JNN1.SGM
05JNN1
]]>Agencies
[Federal Register Volume 85, Number 109 (Friday, June 5, 2020)]
[Notices]
[Pages 34693-34697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12164]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88983; File No. SR-CboeBZX-2020-043]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend Its Fee Schedule
June 1, 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 19, 2020, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 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 BZX Exchange, Inc. (the ``Exchange,'' ``Cboe,'' or ``BZX'') is
filing with the Securities and Exchange Commission (``Commission'') a
proposed rule change to amend its fee schedule. The text of the
proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 34694]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its fee schedule applicable to its
equities trading platform. Specifically, the Exchange proposes to amend
the existing Tape B Volume and Quoting Tier, add a new Tape B Volume
and Quoting Tier, make a cleanup change to the introductory language
under the Tape B Volume and Quoting Tiers, and to add a new LMM Add
Volume Tier, effective May 1, 2020.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed fee changes on May
1, 2020 (SR-CboeBZX-2020-039). On May 12, 2020, the Exchange
withdrew that filing and submitted a subsequent filing (SR-CboeBZX-
2020-041). On May 19, 2020, the Exchange withdrew that filing and
submitted this proposal.
---------------------------------------------------------------------------
The Exchange first notes that its listing business operates in a
highly-competitive market in which market participants, which includes
issuers of securities, Lead Market Makers (``LMMs''), and other
liquidity providers, can readily transfer their listings, opt not to
participate, or direct order flow to competing venues if they deem fee
levels, liquidity provision incentive programs, or any other factor at
a particular venue to be insufficient or excessive. The proposed rule
changes reflect a competitive pricing structure designed to incentivize
market participants to enroll in LMP Securities \4\ and participate as
LMMs in the Exchange's LMM Program,\5\ which the Exchange believes will
enhance market quality in all securities listed on the Exchange and
encourage issuers to list new products and transfer existing products
to the Exchange.
---------------------------------------------------------------------------
\4\ ``LMP Securities'' means a list of securities included in
the Liquidity Management Program, the universe of which will be
determined by the Exchange and published in a circular distributed
to Members and on the Exchange's website. Such LMP Securities will
include all Cboe-listed ETPs and certain non-Cboe-listed ETPs for
which the Exchange wants to incentivize Members to provide enhanced
market quality. All Cboe-listed securities will be LMP Securities
immediately upon listing on the Exchange. The Exchange will not
remove a security from the list of LMP Securities without 30 days
prior notice. See Cboe BZX U.S. Equities Exchange Fee Schedule.
\5\ See Securities Exchange Act Release No. 86213 (June 27,
2019), 84 FR 31951 (July 3, 2019) (the ``Original LMM Filing'').
---------------------------------------------------------------------------
Tape B Volume and Quoting Tiers
The Exchange currently offers one Tape B Volume and Quoting Tier
under footnote 13, which provides an additional rebate of $0.0001 per
share for orders that add liquidity in Tape B securities where a Member
is enrolled in at least 100 LMP Securities, at least 10 of which must
be BZX-listed, for which it meets the following criteria for at least
50% of the trading days in the applicable month: (1) Member has an NBBO
Time \6\ greater than or equal to 15% or NBBO Size Time \7\ is greater
than or equal to 25%; and (2) Member has a Displayed Size Time \8\
greater than or equal to 90%. All Members are eligible to enroll in LMP
Securities and are eligible for the current Tape B Volume and Quoting
Tier. Such rebates are applicable to orders that add liquidity which
are appended with fee code B. The Exchange proposes to make several
changes to the Tape B Volume and Quoting Tier and to add a second tier.
---------------------------------------------------------------------------
\6\ ``NBBO Time'' means the average of the percentage of time
during regular trading hours during which the Member maintains at
least 100 shares at each of the NBB and NBO. See Cboe BZX U.S.
Equities Exchange Fee Schedule.
\7\ ``NBBO Size Time'' means the percentage of time during
regular trading hours during which there are size-setting quotes at
the NBBO on the Exchange. See Cboe BZX U.S. Equities Exchange Fee
Schedule.
\8\ ``Displayed Size Time'' means the percentage of time during
regular trading hours during which the Member maintains at least
2,500 displayed shares on the bid and separately maintains at least
2,500 displayed shares on the offer that are priced no more than 2%
away from the NBB and NBO, respectively. See Cboe BZX U.S. Equities
Exchange Fee Schedule.
---------------------------------------------------------------------------
First, the Exchange proposes to require that a Member is enrolled
in and meets the requirements for at least 50 BZX-listed LMP Securities
in order to receive the additional Tier 1 rebate. This marks a
reduction in the total number of LMP Securities that a Member must be
enrolled in and meet the requirements for (from 100 to 50) and an
increase in the number of BZX-listed LMP Securities that a Member must
be enrolled in and meet the requirements for (from 10 to 50).\9\
Second, the Exchange is proposing to additionally require that a Member
adds a Tape B ADV \10\ of greater than or equal to 0.15% of the TCV
\11\ in order to receive the additional Tier 1 rebate.
---------------------------------------------------------------------------
\9\ The Exchange notes that all BZX-listed securities are by
definition LMP Securities.
\10\ ``ADV'' means average daily volume calculated as the number
of shares added or removed, combined, per day. ADV is calculated on
a monthly basis. The Exchange excludes from its calculation of ADV
shares added or removed on any day that the Exchange's system
experiences a disruption that lasts for more than 60 minutes during
regular trading hours, on any day with a scheduled early market
close and on the last Friday in June (the ``Russell Reconstitution
Day''). Routed shares are not included in ADAV or ADV calculation.
\11\ ``TCV'' means total consolidated volume calculated as the
volume reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply. The Exchange excludes from its calculation of TCV volume
on any day that the Exchange experiences an Exchange System
Disruption, on any day with a scheduled early market close and the
Russell Reconstitution Day.
---------------------------------------------------------------------------
The Exchange is also proposing to add a Tier 2 rebate to the Tape B
Volume and Quoting Tiers where a Member is enrolled in at least 100
BZX-listed LMP Securities for which it meets the following criteria for
at least 50% of the trading days in the applicable month: (1) Member
has an NBBO Time greater than or equal to 15% or an NBBO Size Time
greater than or equal to 25%; and (2) Member has a Displayed Size Time
greater than or equal to 90%; and (ii) Member adds a Tape B ADV greater
than or equal to 0.30% of the TCV.
Finally, the Exchange is also proposing to make a cleanup change to
eliminate the introductory language under footnote 13 that reads:
``LMMs in BZX-listed securities will receive the following additional
rebate when adding displayed liquidity in all Tape B securities, except
that such additional rebates will not be applied to the rebates set
forth in footnote 14 part A.'' The Exchange is proposing to delete this
language because it does not apply to the current LMM Liquidity
Provision Rates. Specifically, prior to the Exchange implementing the
new LMM Liquidity Provision Rates as part of the Original LMM Filing,
the Exchange offered enhanced rebates to LMMs for added liquidity on a
per transaction basis in their LMM Securities. The introductory
language was intended to make clear that LMMs were not eligible for the
Tape B Volume Tier in addition to the enhanced LMM rebates.\12\ Since
the implementation of the Original LMM Filing, LMMs receive a daily
payment for meeting certain Minimum Performance Standards instead of an
enhanced rebate (as further described below) and, as such, the language
is no longer applicable.
---------------------------------------------------------------------------
\12\ See Securities Exchange Act Release No. 79064 (October 6,
2016), 81 FR 70718 (October 13, 2016).
---------------------------------------------------------------------------
LMM Add Volume Tier
Under the LMM Program, the Exchange offers daily incentives for
LMMs securities listed on the Exchange for which the LMM meets certain
Minimum Performance Standards.\13\ Such daily incentives are determined
based on the number of Cboe-listed securities for which the LMM meets
[[Page 34695]]
such Minimum Performance Standards and the average auction volume
across such securities. Generally speaking, the more LMM Securities
\14\ for which the LMM meets the Minimum Performance Standards and the
higher the auction volume across those securities, the greater the
total daily payment to the LMM.
---------------------------------------------------------------------------
\13\ As defined in Rule 11.8(e)(1)(E), the term ``Minimum
Performance Standards'' means a set of standards applicable to an
LMM that may be determined from time to time by the Exchange. Such
standards will vary between LMM Securities depending on the price,
liquidity, and volatility of the LMM Security in which the LMM is
registered. The performance measurements will include: (A) Percent
of time at the NBBO; (B) percent of executions better than the NBBO;
(C) average displayed size; and (D) average quoted spread. For
additional detail, see Original LMM Filing.
\14\ As defined in Rule 11.8(e)(1)(D), the term ``LMM Security''
means a Listed Security that has an LMM. As defined in Rule
11.8(e)(1)(B), the term ``Listed Security'' means any ETP or any
Primary Equity Security or Closed-End Fund listed on the Exchange
pursuant to Rule 14.8 or 14.9.
---------------------------------------------------------------------------
In order to further incentivize Members to enroll and participate
in the LMM Program, the Exchange is also proposing to add a new LMM Add
Volume Tier. Under this proposed new tier, LMMs in BZX-listed
securities will receive an additional $0.0001 rebate per share for
adding displayed liquidity where the LMM: (1) Adds an ADV greater than
or equal to 0.20% of the TCV; (2) has an average aggregate daily
auction volume in LMM Securities greater than or equal to 500,000; and
(3) is enrolled in at least 75 LMM Securities.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\15\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \16\ 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 the Section 6(b)(5) \17\ [sic] as it is designed to
provide for the equitable allocation of reasonable dues, fees and other
charges among its Members and other persons using its facilities. The
Exchange also notes that its listing business operates in a highly-
competitive market in which market participants, which includes issuers
of securities, LMMs, and other liquidity providers, can readily
transfer their listings, opt not to participate, or direct order flow
to competing venues if they deem fee levels, liquidity provision
incentive programs, or any other factor at a particular venue to be
insufficient or excessive. The proposed rule changes reflect a
competitive pricing structure designed to incentivize market
participants to enroll in LMP Securities and participate as LMMs in the
Exchange's LMM Program, which the Exchange believes will enhance market
quality in all securities listed on the Exchange and encourage issuers
to list new products and transfer existing products to the Exchange.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ Id.
---------------------------------------------------------------------------
Tape B Volume and Quoting Tiers
The Exchange believes that the proposed changes to the Tape B
Volume and Quoting Tiers are consistent with the Act and represent a
reasonable, equitable, and not unfairly discriminatory means to
incentivize liquidity provision in ETPs listed on the Exchange. The
marketplace for listings is extremely competitive and there are several
other national securities exchanges that offer ETP listings. Transfers
between listing venues occur frequently \18\ for numerous reasons,
including market quality. This proposal is intended to help the
Exchange compete as an ETP listing venue. Specifically, the Exchange
believes that the proposal is reasonable because it believes that
increasing the number of BZX-listed LMP Securities from 10 to 50 will
ensure that Members are meeting the NBBO Time or NBBO Size Time and the
Displayed Size Time requirements in BZX-listed securities rather than
in other LMP Securities will incentivize enhanced market quality in
BZX-listed ETPs. Further, adding the requirement that a Member adds a
Tape B ADV greater than or equal to 0.15% of the TCV will incentivize
Members to transact in Tape B securities, which includes all BZX-listed
securities, on the Exchange. Adding Tier 2 with an increased additional
rebate for Members that are enrolled in at least 100 BZX-listed LMP
Securities and add a Tape B ADV greater than or equal to 0.30% of the
TCV (while applying the same NBBO Time or NBBO Size Time and Displayed
Size Time requirements as Tier 1) will provide further incentive for
Members to enroll in additional BZX-listed LMP Securities and transact
in Tape B Securities. The combination of the two requirements in both
Tier 1 and Tier 2 will encourage both quoting and executions on the
Exchange in BZX-listed securities, which the Exchange believes is both
reasonable and equitable because it will enhance market quality in all
securities listed on the Exchange and encourage issuers to list new
products and transfer existing products to the Exchange. Further, the
Exchange believes that any negative impact to non-BZX-listed LMP
Securities is not unreasonable and will be outweighed by the positive
impact to the Exchange's listing program for several reasons. As noted
throughout, the listing business operates in a highly-competitive
market in which competing listing venues offer liquidity provision
incentive programs for their own securities,\19\ similar to the LMM
Program and the Tape B Quoting Tiers. To the extent that the market
quality in the security is negatively impacted, competitive forces
would generally dictate that the primary listing venue enhance their
own liquidity provision programs or that the security would transfer to
a different primary listing venue.
---------------------------------------------------------------------------
\18\ For example, 16 ETPs transferred their listings to the
Exchange on May 13, 2019. See https://ir.cboe.com/~/media/Files/C/
CBOE-IR-V2/press-release/2019/cboe-welcomes-16-barclays-etns.pdf.
\19\ See NYSE Arca, Inc. Rule 6.82-O related to Lead Market
Makers and Nasdaq Stock Market LLC Section 114 related to the
Designated Liquidity Provider Program.
---------------------------------------------------------------------------
The Exchange believes that the proposal represents an equitable
allocation of fees and other charges because the Tape B Volume and
Quoting Tiers are available equally to all Members and all Members are
eligible to enroll in LMP Securities. The Exchange anticipates at least
three and as many as eight firms will meet the Tape B Volume and
Quoting Tiers 1 and 2. Further, the Exchange believes that the proposal
represents an equitable allocation of fees and other charges and is not
unreasonably discriminatory because enrolling in LMP Securities is open
to all Members and any Member that wishes to receive the Tape B Volume
and Quoting Tiers must meet the proposed quoting and execution
standards in order to receive the enhanced rebates, as outlined above.
Where a Member does not meet the requirements, they will not receive
the enhanced rebates. Further and as noted throughout, the Tape B
Volume and Quoting Tiers are designed to enhance market quality in BZX-
listed securities and to make the Exchange more competitive as an ETP
listing venue.
Finally, the Exchange believes that the proposal to eliminate the
introductory language under the Tape B Volume Tiers is reasonable,
equitable, and non-discriminatory in that it is designed to make the
fee schedule
[[Page 34696]]
clearer because it is eliminating old language that is no longer
applicable.
LMM Add Volume Tier
The Exchange believes that the proposed addition of the LMM Add
Volume Tier is consistent with the act and represents a reasonable,
equitable, and not unfairly discriminatory means to incentivize
liquidity provision in BZX-listed securities. Specifically, the
Exchange believes that the proposal is reasonable, equitable, and not
unfairly discriminatory to offer the LMM Add Volume Tier to LMMs and
not other Members because it will enhance market quality in Cboe-listed
securities by incentivizing LMMs to take on additional securities
listed on the Exchange (by requiring both a minimum Average Aggregate
Daily Auction Volume in LMM Securities of greater than or equal to
500,000 and enrollment in at least 75 LMM Securities) and encouraging
liquidity provision on the Exchange (by requiring that a Member adds an
ADV of greater than or equal to 0.20% of TCV). While the proposed
enhanced rebate applies only to LMMs, the Exchange believes that the
proposal is equitable and not unreasonably discriminatory because
registration as an LMM is available equally to all Members and
allocation of listed securities between LMMs is governed by Exchange
Rule 11.8(e)(2). Further, such LMMs must meet rigorous Minimum
Performance Standards \20\ and, where an LMM does not meet the Minimum
Performance Standards for three out of the past four months, the LMM is
subject to forfeiture of LMM status for that LMM Security, at the
Exchange's discretion. While the Exchange has no way of knowing whether
this proposed rule change would definitively result in any particular
LMM qualifying for the proposed tier, the Exchange anticipates at least
one LMM meeting, or being reasonably able to meet, the proposed
criteria; however, the proposed tier is open to any LMM that satisfies
the tier's criteria. The Exchange believes that the proposed tier could
provide an incentive for other Members to enroll as an LMM, to take on
additional LMM Securities, and to add additional liquidity on the
Exchange to qualify for the proposed tier.
---------------------------------------------------------------------------
\20\ As defined in Rule 11.8(e)(1)(D), the term ``Minimum
Performance Standards'' means a set of standards applicable to an
LMM that may be determined from time to time by the Exchange. Such
standards will vary between LMM Securities depending on the price,
liquidity, and volatility of the LMM Security in which the LMM is
registered. The performance measurements will include: (A) percent
of time at the NBBO; (B) percent of executions better than the NBBO;
(C) average displayed size; and (D) average quoted spread. For
additional detail, see Original LMM Filing.
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The Exchange believes that it is fair and reasonable to offer
enhanced rebates to LMMs that meet the proposed tier because of the
significant commitment to the Exchange's LMM Program and liquidity
provision on the Exchange made by such LMM in order to meet the tier.
The Exchange intends to implement the enhanced rebate as a means to
incentivize Members to both enroll and participate in the LMM Program
and then to further take on additional LMM Securities and believes that
this new tier combined with the existing structure of the LMM Program
will have such an effect. As such, the Exchange believes that the
proposal represents an equitable allocation of payments.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange does not believe
the proposed change burdens competition, but rather, enhances
competition as it is intended to increase the competitiveness of BZX
both among Members by incentivizing Members to enroll in LMP Securities
and to become LMMs in BZX-listed securities and as a listing venue by
enhancing market quality in BZX-listed securities. The marketplace for
listings is extremely competitive and there are several other national
securities exchanges that offer listings. Transfers between listing
venues occur frequently \21\ for numerous reasons, including market
quality. This proposal is intended to help the Exchange compete as a
listing venue. Accordingly, the Exchange does not believe that the
proposed change will impair the ability of issuers, LMMs, other
Members, or competing listing venues to maintain their competitive
standing. The Exchange also notes that the proposed change is intended
to enhance market quality in BZX-listed securities and other listed
securities, to the benefit of all investors in such BZX-listed
securities. The Exchange does not believe the proposed amendment would
burden intramarket competition as it would be available to all Members
uniformly. Registration as an LMM is available equally to all Members
and allocation of listed securities between LMMs is governed by
Exchange Rule 11.8(e)(2). Further, if an LMM does not meet the Minimum
Performance Standards for three out of the past four months, the LMM is
subject to forfeiture of LMM status for that LMM Security, at the
Exchange's discretion.
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\21\ For example, 16 ETPs transferred their listings to the
Exchange on May 13, 2019. See https://ir.cboe.com/~/media/Files/C/
CBOE-IR-V2/press-release/2019/cboe-welcomes-16-barclays-etns.pdf.
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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 has become effective pursuant to Section
19(b)(3)(A) of the Act \22\ and paragraph (f) of Rule 19b-4 \23\
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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\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 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-CboeBZX-2020-043 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeBZX-2020-043. 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
[[Page 34697]]
internet website (https://www.sec.gov/rules/sro.shtml). Copies of the
submission, all subsequent amendments, all written statements with
respect to the proposed rule change that are filed with the Commission,
and all written communications relating to the proposed rule change
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeBZX-2020-043 and should be submitted
on or before June 26, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-12164 Filed 6-4-20; 8:45 am]
BILLING CODE 8011-01-P
