Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule, 51089-51093 [2020-18098]
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Federal Register / Vol. 85, No. 161 / Wednesday, August 19, 2020 / Notices
are available at www.prc.gov, Docket
Nos. MC2020–214, CP2020–242.
POSTAL SERVICE
Product Change—Priority Mail and
First-Class Package Service
Negotiated Service Agreement
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2020–18175 Filed 8–18–20; 8:45 am]
AGENCY:
ACTION:
Postal
ServiceTM.
BILLING CODE 7710–12–P
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Date of required notice: August
19, 2020.
DATES:
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on August 7, 2020,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & First-Class Package
Service Contract 155 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2020–211,
CP2020–239.
SUPPLEMENTARY INFORMATION:
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2020–18189 Filed 8–18–20; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
Postal ServiceTM.
ACTION: Notice.
Product Change—Priority Mail and
First-Class Package Service
Negotiated Service Agreement
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: August
19, 2020.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on August 5, 2020,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Contract 645 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2020–209, CP2020–237.
SUMMARY:
BILLING CODE 7710–12–P
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Date of required notice: August
19, 2020.
DATES:
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on August 7, 2020,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Contract 647 to
Competitive Product List. Documents
SUPPLEMENTARY INFORMATION:
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Postal ServiceTM.
Notice.
AGENCY:
ACTION:
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The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: August
19, 2020.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on August 7, 2020,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & First-Class Package
Service Contract 156 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2020–212,
CP2020–240.
SUMMARY:
Sfmt 4703
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: August
19, 2020.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on August 11,
2020, it filed with the Postal Regulatory
Commission a USPS Request to Add
SUMMARY:
PO 00000
ACTION:
[FR Doc. 2020–18190 Filed 8–18–20; 8:45 am]
Product Change—Priority Mail Express
Negotiated Service Agreement
Notice.
Postal ServiceTM.
Notice.
AGENCY:
Sean Robinson,
Attorney, Corporate and Postal Business Law.
POSTAL SERVICE
Postal ServiceTM.
SUMMARY:
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Product Change—Priority Mail
Negotiated Service Agreement
[FR Doc. 2020–18187 Filed 8–18–20; 8:45 am]
Product Change—Priority Mail
Negotiated Service Agreement
16:34 Aug 18, 2020
POSTAL SERVICE
Sean Robinson,
Attorney, Corporate and Postal Business Law.
POSTAL SERVICE
VerDate Sep<11>2014
Sean Robinson,
Attorney, Corporate and Postal Business Law.
BILLING CODE 7710–12–P
SUMMARY:
ACTION:
Priority Mail Express Contract 81 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2020–216, CP2020–244.
[FR Doc. 2020–18177 Filed 8–18–20; 8:45 am]
Notice.
AGENCY:
51089
[Release No. 34–89540; File No. SRCboeEDGX–2020–039]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule
August 13, 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 August
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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Federal Register / Vol. 85, No. 161 / Wednesday, August 19, 2020 / Notices
3, 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 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.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) is filing with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to amend the fee
schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
The Exchange proposes to amend its
fee schedule in connection with its
Retail Volume Tiers.
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
13 registered equities exchanges, as well
as a number of alternative trading
systems and other off-exchange venues
that do not have similar self-regulatory
responsibilities under the Exchange Act,
to which market participants may direct
their order flow. Based on publicly
available information, no single
registered equities exchange has more
than 20% of the market share.4 Thus, in
such a low-concentrated and highly
competitive market, no single equities
exchange possesses significant pricing
power in the execution of order flow.
The Exchange in particular operates a
‘‘Maker-Taker’’ model whereby it pays
credits to members that add liquidity
and assesses fees to those that remove
liquidity. The Exchange’s Fees Schedule
sets forth the standard rebates and rates
applied per share for orders that provide
4 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (July 29, 2020),
available at https://markets.cboe.com/us/equities/
market_statistics/.
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and remove liquidity, respectively.
Particularly, for securities at or above
$1.00, the Exchange provides a standard
rebate of $0.0017 per share for orders
that add liquidity and assesses a fee of
$0.0027 per share for orders that remove
liquidity, and for securities below $1.00,
the Exchange provides a standard rebate
of $0.00003 per share for orders that add
liquidity and assesses a standard fee of
30% of dollar value per share for orders
that remove liquidity. 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.
In response to the competitive
environment, the Exchange also offers
tiered pricing which provides Members
opportunities to qualify for higher
rebates or reduced fees where certain
volume criteria and thresholds are met.
Tiered pricing provides incremental
incentives for Members to strive for
higher or different tier levels by offering
increasingly higher discounts or
enhanced benefits for satisfying
increasingly more stringent criteria or
different criteria. Pursuant to footnote 3
of the fee schedule, the Exchange
currently offers Retail Volume Tiers
which provide Retail Member
Organizations (‘‘RMOs’’) 5 an
opportunity to receive an enhanced
rebate from the standard rebate for
Retail Orders 6 that add liquidity (i.e.,
yielding fee code ‘‘ZA’’ 7). Currently, the
Retail Volume Tiers offer three levels of
criteria difficulty and incentive
opportunities in which RMOs may
qualify for enhanced rebates for Retail
Orders. The tier structures are designed
to encourage RMOs to increase their
order flow in order to receive an
enhanced rebate on their liquidity
adding orders, and the Exchange now
proposes to amend existing Retail
5 A ‘‘Retail Member Organization’’ or ‘‘RMO’’ is
a Member (or a division thereof) that has been
approved by the Exchange under this Rule to
submit Retail Orders. See EDGX Rule 11.21(a)(1).
6 A ‘‘Retail Order’’ is an agency or riskless
principal order that meets the criteria of FINRA
Rule 5320.03 that originates from a natural person
and is submitted to the Exchange by a Retail
Member Organization, provided that no change is
made to the terms of the order with respect to price
or side of market and the order does not originate
from a trading algorithm or any other computerized
methodology. See EDGX Rule 11.21(a)(2).
7 Appended to Retail Orders that add liquidity to
EDGX and offered a rebate of $0.0032 per share.
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Volume Tier 2 in footnote 3 of the fee
schedule and renumber it to Retail
Volume Tier 3. Additionally the
Exchange proposes to renumber existing
Retail Volume Tier 3 to Retail Volume
Tier 2.
Currently, Retail Volume Tier 2
provides a rebate of $0.0037 per share
to RMOs that add a Retail Order
Average Daily Volume (‘‘ADV’’) 8 (i.e.,
yielding fee code ZA) of equal to or
greater than 0.50% of the Total
Consolidated Volume (‘‘TCV’’).9 Now,
the Exchange proposes to increase the
rebate to $0.0038 per share. The
proposed criteria under existing Retail
Volume Tier 2 is designed to encourage
RMOs to increase retail order flow on
the Exchange. The Exchange notes that
the proposed Retail Volume Tier 3 is
available to all RMOs and is
competitively achievable for all RMOs
that submit liquidity adding retail order
flow, in that, all firms that submit the
requisite liquidity adding retail order
flow could compete to meet the tier.
Additionally, the Exchange proposes to
renumber existing Retail Volume Tier 3
to Retail Volume Tier 2, and renumber
the amended Retail Volume Tier 2 to
Retail Volume Tier 3. Such renumbering
will provide the Retail Volume Tiers in
order from smallest rebate to largest
rebate, which is consistent with the
organization of the Exchange’s Fee
Schedule.
The Exchange believes the proposed
opportunity to receive an enhanced
rebate on qualifying Retail Orders
incentivizes an increase in overall order
flow to the Exchange. It provides
liquidity adding RMOs on the Exchange
a further incentive to contribute to a
deeper, more liquid market, and
liquidity executing Members on the
Exchange a further incentive to increase
transactions and take execution
opportunities provided by such
increased liquidity, together providing
for overall enhanced price discovery
and price improvement opportunities
on the Exchange. As such, this benefits
all Members by contributing towards a
robust and well-balanced market
ecosystem.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
8 ADV means average daily volume calculated as
the number of shares added to, removed from, or
routed by, the Exchange, or any combination or
subset thereof, per day. ADV is calculated on a
monthly basis.
9 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.
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the objectives of Section 6 of the Act,10
in general, and furthers the objectives of
Section 6(b)(4),11 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members and
issuers and other persons using its
facilities. The Exchange also believes
that the proposed rule change is
consistent with the objectives of Section
6(b)(5) 12 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, and,
particularly, is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
As described above, the Exchange
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. The
proposed rule change reflects a
competitive pricing structure designed
to incentivize market participants to
direct their order flow to the Exchange,
which the Exchange believes would
enhance market quality to the benefit of
all Members.
In particular, the Exchange believes
the proposed amendment is reasonable
because it provides an opportunity for
RMOs to receive an enhanced rebate on
qualifying orders by means of liquidity
adding orders and removing or Retail
Orders. The Exchange notes that relative
volume-based incentives and discounts
have been widely adopted by
exchanges,13 including the Exchange,14
10 15
U.S.C. 78f.
U.S.C. 78f(b)(4).
12 15 U.S.C. 78f.(b)(5).
13 See e.g., Nasdaq PSX Price List, Rebate to Add
Displayed Liquidity (Per Share Executed), which
provides rebates to members for adding displayed
liquidity over certain thresholds of TCV ranging
between $0.0020 and $0.0026; Cboe BZX U.S.
Equities Exchange Fee Schedule, Footnote 1, Add
Volume Tiers, which provides similar incentives for
liquidity adding orders and offers rebates ranging
between $0.0018 and $0.0032; Nasdaq Price List,
Rebate to Add Displayed Designated Retail
Liquidity, which offer rebates of $0.00325 and
$0.0033 for Add Displayed Designated Retail
Liquidity.
14 See generally, Cboe EDGX U.S. Equities
Exchange Fee Schedule, Footnote 1, Add Volume
Tiers, which provides incentives for ADV/ADAV
order flow as a percentage of TCV and for criteria
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and are reasonable, equitable and nondiscriminatory because they are open to
all RMOs on an equal basis and provide
additional benefits or discounts that are
reasonably related to (i) the value to an
exchange’s market quality and (ii)
associated higher levels of market
activity, such as higher levels of
liquidity provision and/or growth
patterns. Additionally, as noted above,
the Exchange operates in a highly
competitive market. The Exchange is
only one of several equity venues to
which market participants may direct
their order flow, and it represents a
small percentage of the overall market.
It is also only one of several maker-taker
exchanges. Competing equity exchanges
offer similar tiered pricing structures to
that of the Exchange, including
schedules of rebates and fees that apply
based upon members achieving certain
volume thresholds. These competing
pricing schedules, moreover, are
presently comparable to those that the
Exchange provides, including the
pricing of comparable tiers.15
Moreover, the Exchange believes the
proposed amendment is reasonable
because it is designed to encourage
overall order flow, that is, both adding
and removing orders as a result of the
proposed amendment to proposed Retail
Volume Tier 3. Indeed, the Exchange
notes that greater add volume order flow
provides for deeper, more liquid
markets and execution opportunities,
and greater remove volume order flow
increases transactions on the Exchange,
which incentivizes liquidity providers
to submit additional liquidity and
execution opportunities, thus, providing
an overall increase in price discovery
and transparency on the Exchange.
Also, an increase in Retail Order flow,
which generally are submitted in
smaller sizes, tends to attract MarketMakers, as smaller size orders are easier
to hedge. Increased Market-Maker
activity facilitates tighter spreads,
signaling additional corresponding
increase in order flow from other market
participants, which contributes towards
a robust, well-balanced market
ecosystem. Increased overall order flow
benefits all investors by deepening the
Exchange’s liquidity pool, potentially
providing even greater execution
incentives and opportunities, offering
additional flexibility for all investors to
enjoy cost savings, supporting the
quality of price discovery, promoting
based on certain other threshold components (i.e.
Step-Up Add TCV, average OCV, and AIM and
Customer orders); and Footnote 3, Retail Volume
Tiers, which provides incentives for Retail Step-Up
Add TCV and Retail Order ADV as a percentage of
TCV.
15 See supra note 13.
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51091
market transparency and improving
investor protection.
The Exchange believes that the
proposal represents an equitable
allocation of rebates and is not unfairly
discriminatory because all RMOs will
continue to be eligible for proposed
Retail Volume Tier 3. The proposed tier
is designed as an incentive to any and
all RMOs interested in meeting the tier
criteria to submit additional adding and
removing, or Retail, order flow to the
Exchange. RMOs will have the
opportunity to submit the requisite
order flow and will receive the
applicable enhanced rebate if the tier
criteria is met. The Exchange
additionally notes that while the
proposed Retail Volume tier is
applicable only to RMOs, the Exchange
does not believe this application is
discriminatory as the Exchange offers
similar rebates to non-RMO order
flow.16
Without having a view of activity on
other markets and off-exchange venues,
the Exchange has no way of knowing
whether this proposed rule change
would definitely result in any RMOs
qualifying for the proposed amended
tier. While the Exchange has no way of
predicting with certainty how the
proposed change will impact RMO
activity, the Exchange anticipates that at
least two RMOs will be able to compete
for and reach proposed Retail Volume
Tier 3. The Exchange also notes that the
proposed amended tier will not
adversely impact any RMO’s pricing or
their ability to qualify for other rebate
tiers. Rather, should a RMO not meet
the criteria for proposed Retail Volume
Tier 3, the RMO will merely not receive
the corresponding proposed enhanced
rebate. Furthermore, the proposed
rebate would uniformly apply to all
RMOs that meet the required criteria.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket or
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, as
discussed above, the Exchange believes
that the proposed change would
encourage the submission of additional
order flow to a public exchange, thereby
promoting market depth, execution
incentives and enhanced execution
opportunities, as well as price discovery
and transparency for all Members. As a
16 Such as the 15 other Add Volume Tiers and the
Tape B Volume Tier which provide opportunities
to all Members to submit the requisite order flow
to receive an enhanced rebate.
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Federal Register / Vol. 85, No. 161 / Wednesday, August 19, 2020 / Notices
result, the Exchange believes that the
proposed change furthers the
Commission’s goal in adopting
Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 17
The Exchange believes the proposed
rule change does not impose any burden
on intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
the proposed change applies to all
RMOs equally in that all RMOs are
eligible for the proposed amended tier,
have a reasonable opportunity to meet
the tier’s criteria and will all receive the
proposed rebate if such criteria is met.
As indicated above, the Exchange does
not believe that offering RMOs,
specifically, opportunities to meet
certain tier criteria for enhanced rebates
imposes a burden on intramarket
competition as the Exchange offers
many similar rebate opportunities for
non-RMOs.18 Overall, the proposed
change is designed to attract additional
order flow to the Exchange. The
Exchange believes that the proposal to
increase the proposed Retail Volume
Tier 3 rebate would incentivize market
participants to direct liquidity removing
order flow to the Exchange and, as a
result, increase execution opportunities,
which would further incentivize the
provision of liquidity and continued
order flow and improve price
transparency on the Exchange. Greater
overall order flow and pricing
transparency benefits all market
participants on the Exchange by
generally providing more trading
opportunities, enhancing market
quality, and continuing to encourage
Members to send orders, thereby
contributing towards a robust and wellbalanced market ecosystem, which
benefits all market participants.
Next, the Exchange believes the
proposed rule change does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, the Exchange
operates in a highly competitive market.
Members have numerous alternative
venues that they may participate on and
direct their order flow, including 12
other equities exchanges and offexchange venues and alternative trading
systems. Additionally, the Exchange
represents a small percentage of the
overall market. Based on publicly
17 Securities Exchange Act Release No. 51808, 70
FR 37495, 37498–99 (June 29, 2005) (S7–10–04)
(Final Rule).
18 See supra note 14.
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available information, no single equities
exchange has more than 20% of the
market share.19 Therefore, no exchange
possesses significant pricing power in
the execution of order flow. Indeed,
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. Moreover, the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 20 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.21 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
Members or other interested parties.
19 See
supra note 6 [sic].
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
21 Net Coalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21).
20 See
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 22 of the Act and
subparagraph (f)(2) of Rule 19b–4 23
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange. At any time within 60 days
of the filing of such proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 24 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SRCboeEDGX–2020–039 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–2020–039. 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
22 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
24 15 U.S.C. 78s(b)(2)(B).
23 17
E:\FR\FM\19AUN1.SGM
19AUN1
Federal Register / Vol. 85, No. 161 / Wednesday, August 19, 2020 / Notices
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeEDGX–2020–039 and
should be submitted on or before
September 9, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18098 Filed 8–18–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89543; File No. SR–CBOE–
2020–071]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing of a
Proposed Rule Change To Amend the
Fifth Amended and Restated Bylaws of
the Exchange’s Parent Corporation,
Cboe Global Markets, Inc.
jbell on DSKJLSW7X2PROD with NOTICES
August 13, 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 July 30,
2020, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
16:34 Aug 18, 2020
Jkt 250001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
the Fifth Amended and Restated Bylaws
(the ‘‘Parent Bylaws’’) of its parent
corporation, Cboe Global Markets, Inc.
(‘‘Cboe’’ or the ‘‘Parent’’). The text of the
proposed amendments to the Parent
Bylaws is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/About
CBOE/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The proposed rule change amends the
Parent Bylaws to improve the
governance processes of Cboe, which is
organized under the laws of the State of
Delaware, and to make certain
provisions more consistent with the
Delaware General Corporation Law
(‘‘DGCL’’). The proposed rule change
also makes clarifying and cleanup
changes to the Parent Bylaws.
Proposed Changes to Article 2—
Stockholders
The majority of the proposed changes
are being made to amend Section 2.11
(Nomination of Directors) and Section
2.12 (Notice of Business at Annual
Meetings) and are generally designed to
provide the Board with the most
information and advance notice possible
in connection with business and
nominations at annual and special
meetings. Additionally, the Exchange
notes the proposed changes reflect the
most up-to-date disclosure requirement
practices. The proposed changes also
combine the existing separate
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
51093
provisions for director nominations and
stockholder proposals into one
provision. Particularly, the proposed
rule change combines current Sections
2.11 and 2.12 into one provision:
Proposed Section 2.11 titled ‘‘Notice of
Business and Nomination of Directors at
Meetings of Stockholders.’’ 3
Specifically, the proposed rule change
delineates proposed Section 2.11 into
paragraph (a) governing notice
requirements for annual meetings,
paragraph (b) governing notice
requirements for special meetings,4 and
paragraph (c), which provides for other
general procedures and practices in
connection with notices. The proposed
delineation does not alter the process or
definition of either type of meeting, but
instead provides for significantly more
detailed written notice requirements as
well as updates to the manner and
timeliness of notices.
First, the proposed change to Section
2.11(a)(i) relocates the provisions
regarding ‘‘properly brought’’ business
from current Section 2.12, and
streamlines such provisions to clearly
state that the only business that will be
conducted at an annual meeting of the
stockholders is business that has
properly been brought before the
meeting and specifies to be ‘‘properly
brought’’ such business must be
included in the Corporation’s notice of
the meeting and brought pursuant to
Rule 14a–8 under the Securities
Exchange Act of 1934, (the ‘‘Exchange
Act’’) (or any successor provision of
law) and included in the Corporation’s
properly brought business. It also
proposes to specify the a precise time
that the notices must be made by (i.e.,
delivered to or mailed and received by
the Secretary of the Corporation), which
is not later than 5:00 p.m. Eastern Time
on the 90th day nor earlier than the
120th day (which are the time frames
currently in place) prior to such annual
meeting.
Next, the proposed rule change adds
greater detail regarding the requirements
for proper written notice. Particularly,
for notice for stockholder proposals for
business other than nominations,
(proposed Section 2.11(a)(iii)(A)), the
proposed rule change provides that such
notice must essentially set forth the
same information that would be
disclosed in a proxy statement,
including:
• A reasonably brief description of
the business desired to be brought
3 The proposed rule change also updates the
subsequent section numbering (current 2.13
through 2.16) to reflect this change (proposed 2.12
through 2.15).
4 See Section 2.3 of the Parent Bylaws for a
description of Special Meetings.
E:\FR\FM\19AUN1.SGM
19AUN1
]]>Agencies
[Federal Register Volume 85, Number 161 (Wednesday, August 19, 2020)]
[Notices]
[Pages 51089-51093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18098]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89540; File No. SR-CboeEDGX-2020-039]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule
August 13, 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 August
[[Page 51090]]
3, 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 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to amend the fee schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The Exchange proposes to amend its fee schedule in connection with
its Retail Volume Tiers.
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 13 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues
that do not have similar self-regulatory responsibilities under the
Exchange Act, to which market participants may direct their order flow.
Based on publicly available information, no single registered equities
exchange has more than 20% of the market share.\4\ Thus, in such a low-
concentrated and highly competitive market, no single equities exchange
possesses significant pricing power in the execution of order flow.
---------------------------------------------------------------------------
\4\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (July 29, 2020), available at https://markets.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------
The Exchange in particular operates a ``Maker-Taker'' model whereby
it pays credits to members that add liquidity and assesses fees to
those that remove liquidity. The Exchange's Fees Schedule sets forth
the standard rebates and rates applied per share for orders that
provide and remove liquidity, respectively. Particularly, for
securities at or above $1.00, the Exchange provides a standard rebate
of $0.0017 per share for orders that add liquidity and assesses a fee
of $0.0027 per share for orders that remove liquidity, and for
securities below $1.00, the Exchange provides a standard rebate of
$0.00003 per share for orders that add liquidity and assesses a
standard fee of 30% of dollar value per share for orders that remove
liquidity. 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.
In response to the competitive environment, the Exchange also
offers tiered pricing which provides Members opportunities to qualify
for higher rebates or reduced fees where certain volume criteria and
thresholds are met. Tiered pricing provides incremental incentives for
Members to strive for higher or different tier levels by offering
increasingly higher discounts or enhanced benefits for satisfying
increasingly more stringent criteria or different criteria. Pursuant to
footnote 3 of the fee schedule, the Exchange currently offers Retail
Volume Tiers which provide Retail Member Organizations (``RMOs'') \5\
an opportunity to receive an enhanced rebate from the standard rebate
for Retail Orders \6\ that add liquidity (i.e., yielding fee code
``ZA'' \7\). Currently, the Retail Volume Tiers offer three levels of
criteria difficulty and incentive opportunities in which RMOs may
qualify for enhanced rebates for Retail Orders. The tier structures are
designed to encourage RMOs to increase their order flow in order to
receive an enhanced rebate on their liquidity adding orders, and the
Exchange now proposes to amend existing Retail Volume Tier 2 in
footnote 3 of the fee schedule and renumber it to Retail Volume Tier 3.
Additionally the Exchange proposes to renumber existing Retail Volume
Tier 3 to Retail Volume Tier 2.
---------------------------------------------------------------------------
\5\ A ``Retail Member Organization'' or ``RMO'' is a Member (or
a division thereof) that has been approved by the Exchange under
this Rule to submit Retail Orders. See EDGX Rule 11.21(a)(1).
\6\ A ``Retail Order'' is an agency or riskless principal order
that meets the criteria of FINRA Rule 5320.03 that originates from a
natural person and is submitted to the Exchange by a Retail Member
Organization, provided that no change is made to the terms of the
order with respect to price or side of market and the order does not
originate from a trading algorithm or any other computerized
methodology. See EDGX Rule 11.21(a)(2).
\7\ Appended to Retail Orders that add liquidity to EDGX and
offered a rebate of $0.0032 per share.
---------------------------------------------------------------------------
Currently, Retail Volume Tier 2 provides a rebate of $0.0037 per
share to RMOs that add a Retail Order Average Daily Volume (``ADV'')
\8\ (i.e., yielding fee code ZA) of equal to or greater than 0.50% of
the Total Consolidated Volume (``TCV'').\9\ Now, the Exchange proposes
to increase the rebate to $0.0038 per share. The proposed criteria
under existing Retail Volume Tier 2 is designed to encourage RMOs to
increase retail order flow on the Exchange. The Exchange notes that the
proposed Retail Volume Tier 3 is available to all RMOs and is
competitively achievable for all RMOs that submit liquidity adding
retail order flow, in that, all firms that submit the requisite
liquidity adding retail order flow could compete to meet the tier.
Additionally, the Exchange proposes to renumber existing Retail Volume
Tier 3 to Retail Volume Tier 2, and renumber the amended Retail Volume
Tier 2 to Retail Volume Tier 3. Such renumbering will provide the
Retail Volume Tiers in order from smallest rebate to largest rebate,
which is consistent with the organization of the Exchange's Fee
Schedule.
---------------------------------------------------------------------------
\8\ ADV means average daily volume calculated as the number of
shares added to, removed from, or routed by, the Exchange, or any
combination or subset thereof, per day. ADV is calculated on a
monthly basis.
\9\ 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 believes the proposed opportunity to receive an
enhanced rebate on qualifying Retail Orders incentivizes an increase in
overall order flow to the Exchange. It provides liquidity adding RMOs
on the Exchange a further incentive to contribute to a deeper, more
liquid market, and liquidity executing Members on the Exchange a
further incentive to increase transactions and take execution
opportunities provided by such increased liquidity, together providing
for overall enhanced price discovery and price improvement
opportunities on the Exchange. As such, this benefits all Members by
contributing towards a robust and well-balanced market ecosystem.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with
[[Page 51091]]
the objectives of Section 6 of the Act,\10\ in general, and furthers
the objectives of Section 6(b)(4),\11\ in particular, as it is designed
to provide for the equitable allocation of reasonable dues, fees and
other charges among its Members and issuers and other persons using its
facilities. The Exchange also believes that the proposed rule change is
consistent with the objectives of Section 6(b)(5) \12\ 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, and, particularly, is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(4).
\12\ 15 U.S.C. 78f.(b)(5).
---------------------------------------------------------------------------
As described above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. The proposed rule change
reflects a competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes would enhance market quality to the benefit of all
Members.
In particular, the Exchange believes the proposed amendment is
reasonable because it provides an opportunity for RMOs to receive an
enhanced rebate on qualifying orders by means of liquidity adding
orders and removing or Retail Orders. The Exchange notes that relative
volume-based incentives and discounts have been widely adopted by
exchanges,\13\ including the Exchange,\14\ and are reasonable,
equitable and non-discriminatory because they are open to all RMOs on
an equal basis and provide additional benefits or discounts that are
reasonably related to (i) the value to an exchange's market quality and
(ii) associated higher levels of market activity, such as higher levels
of liquidity provision and/or growth patterns. Additionally, as noted
above, the Exchange operates in a highly competitive market. The
Exchange is only one of several equity venues to which market
participants may direct their order flow, and it represents a small
percentage of the overall market. It is also only one of several maker-
taker exchanges. Competing equity exchanges offer similar tiered
pricing structures to that of the Exchange, including schedules of
rebates and fees that apply based upon members achieving certain volume
thresholds. These competing pricing schedules, moreover, are presently
comparable to those that the Exchange provides, including the pricing
of comparable tiers.\15\
---------------------------------------------------------------------------
\13\ See e.g., Nasdaq PSX Price List, Rebate to Add Displayed
Liquidity (Per Share Executed), which provides rebates to members
for adding displayed liquidity over certain thresholds of TCV
ranging between $0.0020 and $0.0026; Cboe BZX U.S. Equities Exchange
Fee Schedule, Footnote 1, Add Volume Tiers, which provides similar
incentives for liquidity adding orders and offers rebates ranging
between $0.0018 and $0.0032; Nasdaq Price List, Rebate to Add
Displayed Designated Retail Liquidity, which offer rebates of
$0.00325 and $0.0033 for Add Displayed Designated Retail Liquidity.
\14\ See generally, Cboe EDGX U.S. Equities Exchange Fee
Schedule, Footnote 1, Add Volume Tiers, which provides incentives
for ADV/ADAV order flow as a percentage of TCV and for criteria
based on certain other threshold components (i.e. Step-Up Add TCV,
average OCV, and AIM and Customer orders); and Footnote 3, Retail
Volume Tiers, which provides incentives for Retail Step-Up Add TCV
and Retail Order ADV as a percentage of TCV.
\15\ See supra note 13.
---------------------------------------------------------------------------
Moreover, the Exchange believes the proposed amendment is
reasonable because it is designed to encourage overall order flow, that
is, both adding and removing orders as a result of the proposed
amendment to proposed Retail Volume Tier 3. Indeed, the Exchange notes
that greater add volume order flow provides for deeper, more liquid
markets and execution opportunities, and greater remove volume order
flow increases transactions on the Exchange, which incentivizes
liquidity providers to submit additional liquidity and execution
opportunities, thus, providing an overall increase in price discovery
and transparency on the Exchange. Also, an increase in Retail Order
flow, which generally are submitted in smaller sizes, tends to attract
Market-Makers, as smaller size orders are easier to hedge. Increased
Market-Maker activity facilitates tighter spreads, signaling additional
corresponding increase in order flow from other market participants,
which contributes towards a robust, well-balanced market ecosystem.
Increased overall order flow benefits all investors by deepening the
Exchange's liquidity pool, potentially providing even greater execution
incentives and opportunities, offering additional flexibility for all
investors to enjoy cost savings, supporting the quality of price
discovery, promoting market transparency and improving investor
protection.
The Exchange believes that the proposal represents an equitable
allocation of rebates and is not unfairly discriminatory because all
RMOs will continue to be eligible for proposed Retail Volume Tier 3.
The proposed tier is designed as an incentive to any and all RMOs
interested in meeting the tier criteria to submit additional adding and
removing, or Retail, order flow to the Exchange. RMOs will have the
opportunity to submit the requisite order flow and will receive the
applicable enhanced rebate if the tier criteria is met. The Exchange
additionally notes that while the proposed Retail Volume tier is
applicable only to RMOs, the Exchange does not believe this application
is discriminatory as the Exchange offers similar rebates to non-RMO
order flow.\16\
---------------------------------------------------------------------------
\16\ Such as the 15 other Add Volume Tiers and the Tape B Volume
Tier which provide opportunities to all Members to submit the
requisite order flow to receive an enhanced rebate.
---------------------------------------------------------------------------
Without having a view of activity on other markets and off-exchange
venues, the Exchange has no way of knowing whether this proposed rule
change would definitely result in any RMOs qualifying for the proposed
amended tier. While the Exchange has no way of predicting with
certainty how the proposed change will impact RMO activity, the
Exchange anticipates that at least two RMOs will be able to compete for
and reach proposed Retail Volume Tier 3. The Exchange also notes that
the proposed amended tier will not adversely impact any RMO's pricing
or their ability to qualify for other rebate tiers. Rather, should a
RMO not meet the criteria for proposed Retail Volume Tier 3, the RMO
will merely not receive the corresponding proposed enhanced rebate.
Furthermore, the proposed rebate would uniformly apply to all RMOs that
meet the required criteria.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket or intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
Rather, as discussed above, the Exchange believes that the proposed
change would encourage the submission of additional order flow to a
public exchange, thereby promoting market depth, execution incentives
and enhanced execution opportunities, as well as price discovery and
transparency for all Members. As a
[[Page 51092]]
result, the Exchange believes that the proposed change furthers the
Commission's goal in adopting Regulation NMS of fostering competition
among orders, which promotes ``more efficient pricing of individual
stocks for all types of orders, large and small.'' \17\
---------------------------------------------------------------------------
\17\ Securities Exchange Act Release No. 51808, 70 FR 37495,
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------
The Exchange believes the proposed rule change does not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the proposed
change applies to all RMOs equally in that all RMOs are eligible for
the proposed amended tier, have a reasonable opportunity to meet the
tier's criteria and will all receive the proposed rebate if such
criteria is met. As indicated above, the Exchange does not believe that
offering RMOs, specifically, opportunities to meet certain tier
criteria for enhanced rebates imposes a burden on intramarket
competition as the Exchange offers many similar rebate opportunities
for non-RMOs.\18\ Overall, the proposed change is designed to attract
additional order flow to the Exchange. The Exchange believes that the
proposal to increase the proposed Retail Volume Tier 3 rebate would
incentivize market participants to direct liquidity removing order flow
to the Exchange and, as a result, increase execution opportunities,
which would further incentivize the provision of liquidity and
continued order flow and improve price transparency on the Exchange.
Greater overall order flow and pricing transparency benefits all market
participants on the Exchange by generally providing more trading
opportunities, enhancing market quality, and continuing to encourage
Members to send orders, thereby contributing towards a robust and well-
balanced market ecosystem, which benefits all market participants.
---------------------------------------------------------------------------
\18\ See supra note 14.
---------------------------------------------------------------------------
Next, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including 12 other equities exchanges and
off-exchange venues and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more
than 20% of the market share.\19\ Therefore, no exchange possesses
significant pricing power in the execution of order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. Moreover, the Commission has repeatedly expressed
its preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets.
Specifically, in Regulation NMS, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and,
also, recognized that current regulation of the market system ``has
been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \20\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\21\ Accordingly, the Exchange does not believe its
proposed fee change imposes any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\19\ See supra note 6 [sic].
\20\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\21\ Net Coalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21).
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from Members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \22\ of the Act and subparagraph (f)(2) of Rule
19b-4 \23\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange. At any time within 60 days of the
filing of such proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings under Section 19(b)(2)(B) \24\
of the Act to determine whether the proposed rule change should be
approved or disapproved.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 17 CFR 240.19b-4(f)(2).
\24\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-2020-039 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-2020-039. 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
[[Page 51093]]
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549 on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
CboeEDGX-2020-039 and should be submitted on or before September 9,
2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18098 Filed 8-18-20; 8:45 am]
BILLING CODE 8011-01-P
