Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Adopt Fees for a New Data Product on its Equity Options Platform To Be Known as Intraday Open-Close Data, 51825-51828 [2020-18356]
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Federal Register / Vol. 85, No. 163 / Friday, August 21, 2020 / Notices
available publicly. All submissions
should refer to File Number SR–MRX–
2020–15 and should be submitted on or
before September 11, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18344 Filed 8–20–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–325, OMB Control No.
3235–0385]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
jbell on DSKJLSW7X2PROD with NOTICES
Extension:
Rule 15g–9
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comment
on the collection of information
described below. The Commission plans
to submit this existing collection of
information to the Office of
Management and Budget (OMB) for
extension and approval.
Section 15(c)(2) of the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.) (the ‘‘Exchange Act’’) authorizes
the Commission to promulgate rules
that prescribe means reasonably
designed to prevent fraudulent,
deceptive, or manipulative practices in
connection with over-the-counter
(‘‘OTC’’) securities transactions.
Pursuant to this authority, the
Commission in 1989 adopted Rule 15a–
6, which was subsequently redesignated
as Rule 15g–9, 17 CFR 240.15g–9 (the
‘‘Rule’’). The Rule requires brokerdealers to produce a written suitability
determination for, and to obtain a
written customer agreement to, certain
recommended transactions in penny
stocks that are not registered on a
national securities exchange, and whose
issuers do not meet certain minimum
financial standards. The Rule is
intended to prevent the indiscriminate
use by broker-dealers of fraudulent, high
pressure telephone sales campaigns to
sell penny stocks to unsophisticated
customers.
The Commission staff estimates that
there are approximately 182 brokerdealers subject to the Rule. The burden
of the Rule on a respondent varies
widely depending on the frequency
with which new customers are solicited.
On the average for all respondents, the
staff has estimated that respondents
process three new customers per week,
or approximately 156 new customer
suitability determinations per year. We
also estimate that a broker-dealer would
expend approximately one-half hour per
new customer in obtaining, reviewing,
and processing (including transmitting
to the customer) the information
required by Rule 15g–9, and each
respondent would consequently spend
78 hours annually (156 customers × .5
hours) obtaining the information
required in the rule. We determined,
based on the estimate of 182 brokerdealer respondents, that the current
annual burden of Rule 15g–9 is 14,196
hours (182 respondents × 78 hours).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(b) the accuracy of the agency’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information on respondents; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: August 18, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18401 Filed 8–20–20; 8:45 am]
17 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89583; File No. SR–
CboeBZX–2020–063]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Adopt Fees for a New Data Product on
its Equity Options Platform To Be
Known as Intraday Open-Close Data
August 17, 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 August 3,
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’’ or ‘‘BZX Options’’) is filing
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to adopt fees for
a new data product on its equity options
platform (‘‘BZX Options’’) to be known
as Intraday Open-Close Data. 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
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 recently adopted a new
data product on BZX to be known as
Intraday Open-Close Data, which will be
available for purchase to BZX Members
and non-Members.3 The Exchange now
proposes to adopt fees for Intraday
Open-Close Data. Cboe LiveVol, LLC
(‘‘LiveVol’’), a wholly owned subsidiary
of the Exchange’s parent company, Cboe
Global Markets, Inc., will make the
Intraday Open-Close Data available for
purchase to Members and non-Members
on the LiveVol DataShop website
(datashop.cboe.com).
By way of background, the Exchange
historically offered Open-Close Data,
which is an end-of-day volume
summary of trading activity on the
Exchange at the option level by origin
(customer, professional customer,
broker-dealer, and market maker), side
of the market (buy or sell), price, and
transaction type (opening or closing).
The customer and professional customer
volume is further broken down into
trade size buckets (less than 100
contracts, 100–199 contracts, greater
than 199 contracts). The Open-Close
Data is proprietary BZX trade data and
does not include trade data from any
other exchange. It is also a historical
data product and not a real-time data
feed.
The Exchange recently adopted a
similar product: Intraday Open-Close
Data. The Intraday Open-Close Data will
provide similar information to that of
Open-Close Data but will be produced
and updated every 10 minutes during
the trading day. Data is captured in
‘‘snapshots’’ taken every 10 minutes
throughout the trading day and is
available to subscribers within five
minutes of the conclusion of each 10minute period. For example, subscribers
to the intraday product will receive the
first calculation of intraday data by
approximately 9:42 a.m. ET, which
represents data captured from 9:30 a.m.
to 9:40 a.m. Subscribers will receive the
next update at 9:52 a.m., representing
the data previously provided together
with data captured from 9:40 a.m.
through 9:50 a.m., and so forth. Each
update will represent the aggregate data
captured from the current ‘‘snapshot’’
and all previous ‘‘snapshots.’’ The
Intraday Open-Close Data will provide a
volume summary of trading activity on
the Exchange at the option level by
origin (customer, professional customer,
3 See
SR–BZX–2020–059.
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broker-dealer, and market maker), side
of the market (buy or sell), and
transaction type (opening or closing).
The customer and professional customer
volume will be further broken down
into trade size buckets (less than 100
contracts, 100–199 contracts, greater
than 199 contracts). The Intraday OpenClose Data is also proprietary BZX trade
data and does not include trade data
from any other exchange. In contrast to
the existing Open-Close Data product,
the Intraday Open-Close Data will not
provide execution price.
The Exchange anticipates a wide
variety of market participants to
purchase Intraday Open-Close Data,
including, but not limited to, individual
customers, buy-side investors, and
investment banks. The Exchange
believes the Intraday Open-Close Data
product may also provide helpful
trading information regarding investor
sentiment that may allow market
participants to make better trading
decisions throughout the day and may
be used to create and test trading
models and analytical strategies and
provides comprehensive insight into
trading on BZX. For example, intraday
open data may allow a market
participant to identify new interest or
possible risks throughout the trading
day, while intraday closing data may
allow a market participant to identify
fading interests in a security. The
product is a completely voluntary
product, in that the Exchange is not
required by any rule or regulation to
make this data available and that
potential subscribers may purchase it
only if they voluntarily choose to do so.
The Exchange notes that other
exchanges offer a similar data product.4
The Exchange proposes to provide in
its Fee Schedule that Members and nonMembers may purchase Intraday OpenClose Data on a subscription basis
(monthly or annually) or by ad hoc
request for a specified month (historical
file). The Exchange proposes to assess a
monthly fee of $1,500 (or $18,000 per
year) for subscribing to the data feed.
The Exchange also proposes to assess a
fee of $750 per request per month for an
ad-hoc request of historical Intraday
Open/Close data covering all Exchangelisted securities. An ad-hoc request can
be for any number of months beginning
with January 2020 for which the data is
4 See Securities Exchange Act Release No. 61317
(January 8, 2010), 75 FR 2915 (January 19, 2010)
(SR–ISE–2009–103); Securities Exchange Act
Release No. 62887 (September 10, 2010), 75 FR
57092 (September 17, 2010) (SR–Phlx–2010–121);
Securities Exchange Act Release No. 65587 (October
18, 2011), 76 FR 65765 (October 24, 2011) (SR–
NASDAQ–2011–144); and Securities Exchange Act
Release No. 81632 (September 15, 2017), 82 FR
44235 (September 21, 2017) (SR–GEMX–2017–42).
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available.5 The proposed subscription
and ad-hoc fees will apply both to
Members or non-Members. The
Exchange notes that other exchanges
provide similar data products that may
be purchased on both a subscription and
ad-hoc basis and are similarly priced.6
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,7 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,8 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and to protect investors and the
public interest, and that it is not
designed to permit unfair
discrimination among customers,
brokers, or dealers. The Exchange also
believes that its proposal to adopt fees
for Intraday Open-Close Data is
consistent with Section 6(b) of the Act
in general, and furthers the objectives of
Section 6(b)(4) of the Act 9 in particular,
in that it is an equitable allocation of
dues, fees and other charges among its
members and other recipients of
Exchange data.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations (‘‘SROs’’) and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. It was
believed that this authority would
expand the amount of data available to
consumers, and also spur innovation
5 For example, a Member or non-Member that
requests historical Intraday Open/Close Data for the
months of January 2020 and February 2020, would
be assessed a total of $1,000. The Exchange notes
that it may make historical data prior to January
2020 available in the future and that such historical
data would be available to all Members or nonMembers.
6 See Price List—U.S. Derivatives Data for Nasdaq
PHLX, LLC (‘‘PHLX’’), The Nasdaq Stock Market,
LLC (‘‘Nasdaq’’), Nasdaq ISE, LLC (‘‘ISE’’), and
Nasaq GEMX, LLC (‘‘GEMX’’), available at https://
www.nasdaqtrader.com/Trader.aspx?id=
DPPriceListOptions#web. Particularly, PHLX offers
‘‘Nasdaq PHLX Options Trade Outline (PHOTO)’’
and assesses $1,500 per month for an intra-day
subscription and $750 per month for historical
reports; Nasdaq offers the ‘‘Nasdaq Options Trade
Outline (NOTO)’’ and assesses $750 per month for
an intra-day subscription and $500 per month for
historical reports; ISE offers the ‘‘Nasdaq ISE Open/
Close Trade Profile’’ and assesses $2,000 per month
for an intra-day subscription and $1,000 per month
for historical reports; and GEMX offers the ‘‘Nasdaq
GEMX Open/Close Trade Profile’’ and assesses
$1,000 per month for an intra-day subscription and
$750 per month for historical reports.
7 15 U.S.C. 78f.
8 15 U.S.C. 78f(b)(5).
9 15 U.S.C. 78f(b)(4).
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and competition for the provision of
market data. Particularly, Intraday
Open-Close Data further broadens the
availability of U.S. option market data to
investors consistent with the principles
of Regulation NMS. The data product
also promotes increased transparency
through the dissemination of Intraday
Open-Close Data. Particularly,
information regarding opening and
closing activity across different option
series during the trading day may
indicate investor sentiment, which may
allow market participants to make better
informed trading decisions throughout
the day. Subscribers to the data may
also be able to enhance their ability to
analyze option trade and volume data
and create and test trading models and
analytical strategies. The Exchange
believes Intraday Open-Close Data
provides a valuable tool that subscribers
can use to gain comprehensive insight
into the trading activity in a particular
series, but also emphasizes such data is
not necessary for trading. Moreover,
other exchanges offer a similar data
product.10
The Exchange operates in a highly
competitive environment. Indeed, there
are currently 16 registered options
exchanges that trade options. Based on
publicly available information, no single
options exchange has more than 17% of
the market share and currently the
Exchange represents only approximately
8.15% of the market share.11 The
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. Particularly, 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.’’ 12
Making similar data products available
to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
charge supracompetitive fees. In the
event that a market participant views
one exchange’s data product as more or
less attractive than the competition they
can and do switch between similar
products. The proposed fees are a result
10 See
supra note 4.
Cboe Global Markets U.S. Options Market
Month-to-Date Volume Summary (July 31, 2020),
available at https://markets.cboe.com/us/options/
market_statistics/.
12 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
11 See
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19:04 Aug 20, 2020
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of the competitive environment, as the
Exchange seeks to adopt fees to attract
purchasers of the recently introduced
Intraday Open-Close Data product.
The Exchange believes the proposed
fees are reasonable as the proposed fees
are both modest and similar to, or even
lower than, the fees assessed by other
exchanges that provide similar data
products.13 Indeed, proposing fees that
are excessively higher than established
fees for similar data products would
simply serve to reduce demand for the
Exchange’s data product, which as
noted, is entirely optional. Like the
Exchange’s Intraday Open-Close Data
product, other exchanges offer similar
data products that each provide insight
into trading on those markets and may
likewise aid in assessing investor
sentiment. Although each of these
similar Intraday Open-Close data
products provide only proprietary trade
data and not trade data from other
exchanges, it’s possible investors are
still able to gauge overall investor
sentiment across different option series
based on open and closing interest on
any one exchange.14 Similarly, market
participants may be able to analyze
option trade and volume data, and
create and test trading models and
analytical strategies using only Intraday
Open-Close data relating to trading
activity on one or more of the other
markets that provide similar data
products. As such, if a market
participant views another exchange’s
Intraday Open-Close data as more
attractive than its proposed Intraday
Open-Close data product, then such
market participant can merely choose
not to purchase the Exchange’s Intraday
Open-Close Data and instead purchase
another exchange’s Intraday Open-Close
data product, which offer similar data
points, albeit based on that other
market’s trading activity.
The Exchange also believes the
proposed fees are reasonable as they
would support the introduction of a
new market data product that is
designed to aid investors by providing
insight into trading on BZX Options.
The recently adopted Intraday OpenClose Data would provide options
market participants with valuable
information about opening and closing
transactions executed on the Exchange
throughout the trading day, similar to
other trade data products offered by
competing options exchanges. In turn,
this data would assist market
participants in gauging investor
13 See
supra note 6.
exchange notes that its Intraday OpenClose data product does not include data on any
exclusive, singly-listed option series.
14 The
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51827
sentiment and trading activity, resulting
in potentially better informed trading
decisions. As noted above, users may
also use such data to create and test
trading models and analytical strategies.
Selling market data, such as Intraday
Open-Close Data, is also a means by
which exchanges compete to attract
business. To the extent that the
Exchange is successful in attracting
subscribers for the Intraday Open-Close
Data, it may earn trading revenues and
further enhance the value of its data
products. If the market deems the
proposed fees to be unfair or
inequitable, firms can diminish or
discontinue their use of the data and/or
avail themselves of similar products
offered by other exchanges.15 The
Exchange therefore believes that the
proposed fees for Intraday Open-Close
Data reflect the competitive
environment and would be properly
assessed on Member or non-Member
users. The Exchange also believes the
proposed fees are equitable and not
unfairly discriminatory as the fees
would apply equally to all users who
choose to purchase such data. The
Exchange’s proposed fees would not
differentiate between subscribers that
purchase Intraday Open-Close Data and
are set at a modest level that would
allow any interested Member or nonMember to purchase such data based on
their business needs.
As noted above, the Exchange
anticipates a wide variety of market
participants to purchase Intraday OpenClose Data, including but not limited to
individual customers, buy-side
investors and investment banks. The
Exchange reiterates that the decision as
to whether or not to purchase the
Intraday Open-Close Data is entirely
optional for all potential subscribers.
Indeed, no market participant is
required to purchase the Intraday OpenClose Data, and the Exchange is not
required to make the Intraday OpenClose Data available to all investors.
Rather, the Exchange is voluntarily
making Intraday Open-Close Data
available, as requested by customers,
and market participants may choose to
receive (and pay for) this data based on
their own business needs. Potential
purchasers may request the data at any
time if they believe it to be valuable or
may decline to purchase such data.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
15 See
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supra note 6.
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51828
Federal Register / Vol. 85, No. 163 / Friday, August 21, 2020 / Notices
of the purposes of the Act. Rather, the
Exchange believes that the proposal will
promote competition by permitting the
Exchange to sell a data product similar
to those offered by other competitor
options exchanges.16 The Exchange
made Open-Close Data available in
order to keep pace with changes in the
industry and evolving customer needs,
and believes the data product will
contribute to robust competition among
national securities exchanges. At least
four other U.S. options exchanges offer
a market data product that is
substantially similar to the Intraday
Open-Close Data. As a result, the
Exchange believes this proposed rule
change permits fair competition among
national securities exchanges.
Furthermore, the Exchange operates
in a highly competitive environment,
and its ability to price Intraday OpenClose Data is constrained by
competition among exchanges that offer
similar data products to their customers.
As discussed, there are currently a
number of similar products available to
market participants and investors. At
least four other U.S. options exchanges
offer a market data product that is
substantially similar to the Intraday
Open-Close Data, which the Exchange
must consider in its pricing discipline
in order to compete for the market
data.17 For example, proposing fees that
are excessively higher than established
fees for similar data products would
simply serve to reduce demand for the
Exchange’s data product, which as
discussed, market participants are under
no obligation to utilize. In this
competitive environment, potential
purchasers are free to choose which, if
any, similar product to purchase to
satisfy their need for market
information. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
The Exchange also does not believe
the proposed fees would cause any
unnecessary or in appropriate burden
on intermarket competition as other
exchanges are free to introduce their
own comparable data product and lower
their prices to better compete with the
Exchange’s offering. The Exchange does
not believe the proposed rule change
would cause any unnecessary or
inappropriate burden on intramarket
competition. Particularly, the proposed
product and fees apply uniformly to any
purchaser, in that it does not
16 Id.
17 See
e.g., Cboe Options Fees Schedule, Livevol
Fees, Open-Close Data. See also Nasdaq ISE Options
7 Pricing Schedule, Section 10.A and Nasdaq PHLX
Options 7 Pricing Schedule, Section 10, PHLX
Options Trade Outline (‘‘PHOTO’’).
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19:04 Aug 20, 2020
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differentiate between subscribers that
purchase Intraday Open-Close Data. The
proposed fees are set at a modest level
that would allow any interested Member
or non-Member to purchase such data
based on their business needs.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 18 and paragraph (f) of Rule
19b–4 19 thereunder, because it
establishes a due, fee, or other charge
imposed by the Exchange.
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–2020–063 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–2020–063. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
18 15
19 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00155
Fmt 4703
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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
CboeBZX–2020–063 and should be
submitted on or before September 11,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18356 Filed 8–20–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89580; File No. SR–IEX–
2020–11]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend IEX
Rules 2.220(a)(7) and 11.410(a) To
Include MEMX LLC in the List of Away
Trading Centers to Which the
Exchange Routes and the Market Data
Sources the Exchange Will Use To
Determine MEMX’s Top of Book
Quotation
August 17, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
20 17
1 15
Sfmt 4703
E:\FR\FM\21AUN1.SGM
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
21AUN1
]]>Agencies
[Federal Register Volume 85, Number 163 (Friday, August 21, 2020)]
[Notices]
[Pages 51825-51828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18356]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89583; File No. SR-CboeBZX-2020-063]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Adopt Fees for a New Data Product on its Equity Options Platform To
Be Known as Intraday Open-Close Data
August 17, 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 August 3, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'') is
filing with the Securities and Exchange Commission (``Commission'') a
proposed rule change to adopt fees for a new data product on its equity
options platform (``BZX Options'') to be known as Intraday Open-Close
Data. 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 51826]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange recently adopted a new data product on BZX to be known
as Intraday Open-Close Data, which will be available for purchase to
BZX Members and non-Members.\3\ The Exchange now proposes to adopt fees
for Intraday Open-Close Data. Cboe LiveVol, LLC (``LiveVol''), a wholly
owned subsidiary of the Exchange's parent company, Cboe Global Markets,
Inc., will make the Intraday Open-Close Data available for purchase to
Members and non-Members on the LiveVol DataShop website
(datashop.cboe.com).
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\3\ See SR-BZX-2020-059.
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By way of background, the Exchange historically offered Open-Close
Data, which is an end-of-day volume summary of trading activity on the
Exchange at the option level by origin (customer, professional
customer, broker-dealer, and market maker), side of the market (buy or
sell), price, and transaction type (opening or closing). The customer
and professional customer volume is further broken down into trade size
buckets (less than 100 contracts, 100-199 contracts, greater than 199
contracts). The Open-Close Data is proprietary BZX trade data and does
not include trade data from any other exchange. It is also a historical
data product and not a real-time data feed.
The Exchange recently adopted a similar product: Intraday Open-
Close Data. The Intraday Open-Close Data will provide similar
information to that of Open-Close Data but will be produced and updated
every 10 minutes during the trading day. Data is captured in
``snapshots'' taken every 10 minutes throughout the trading day and is
available to subscribers within five minutes of the conclusion of each
10-minute period. For example, subscribers to the intraday product will
receive the first calculation of intraday data by approximately 9:42
a.m. ET, which represents data captured from 9:30 a.m. to 9:40 a.m.
Subscribers will receive the next update at 9:52 a.m., representing the
data previously provided together with data captured from 9:40 a.m.
through 9:50 a.m., and so forth. Each update will represent the
aggregate data captured from the current ``snapshot'' and all previous
``snapshots.'' The Intraday Open-Close Data will provide a volume
summary of trading activity on the Exchange at the option level by
origin (customer, professional customer, broker-dealer, and market
maker), side of the market (buy or sell), and transaction type (opening
or closing). The customer and professional customer volume will be
further broken down into trade size buckets (less than 100 contracts,
100-199 contracts, greater than 199 contracts). The Intraday Open-Close
Data is also proprietary BZX trade data and does not include trade data
from any other exchange. In contrast to the existing Open-Close Data
product, the Intraday Open-Close Data will not provide execution price.
The Exchange anticipates a wide variety of market participants to
purchase Intraday Open-Close Data, including, but not limited to,
individual customers, buy-side investors, and investment banks. The
Exchange believes the Intraday Open-Close Data product may also provide
helpful trading information regarding investor sentiment that may allow
market participants to make better trading decisions throughout the day
and may be used to create and test trading models and analytical
strategies and provides comprehensive insight into trading on BZX. For
example, intraday open data may allow a market participant to identify
new interest or possible risks throughout the trading day, while
intraday closing data may allow a market participant to identify fading
interests in a security. The product is a completely voluntary product,
in that the Exchange is not required by any rule or regulation to make
this data available and that potential subscribers may purchase it only
if they voluntarily choose to do so. The Exchange notes that other
exchanges offer a similar data product.\4\
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\4\ See Securities Exchange Act Release No. 61317 (January 8,
2010), 75 FR 2915 (January 19, 2010) (SR-ISE-2009-103); Securities
Exchange Act Release No. 62887 (September 10, 2010), 75 FR 57092
(September 17, 2010) (SR-Phlx-2010-121); Securities Exchange Act
Release No. 65587 (October 18, 2011), 76 FR 65765 (October 24, 2011)
(SR-NASDAQ-2011-144); and Securities Exchange Act Release No. 81632
(September 15, 2017), 82 FR 44235 (September 21, 2017) (SR-GEMX-
2017-42).
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The Exchange proposes to provide in its Fee Schedule that Members
and non-Members may purchase Intraday Open-Close Data on a subscription
basis (monthly or annually) or by ad hoc request for a specified month
(historical file). The Exchange proposes to assess a monthly fee of
$1,500 (or $18,000 per year) for subscribing to the data feed. The
Exchange also proposes to assess a fee of $750 per request per month
for an ad-hoc request of historical Intraday Open/Close data covering
all Exchange-listed securities. An ad-hoc request can be for any number
of months beginning with January 2020 for which the data is
available.\5\ The proposed subscription and ad-hoc fees will apply both
to Members or non-Members. The Exchange notes that other exchanges
provide similar data products that may be purchased on both a
subscription and ad-hoc basis and are similarly priced.\6\
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\5\ For example, a Member or non-Member that requests historical
Intraday Open/Close Data for the months of January 2020 and February
2020, would be assessed a total of $1,000. The Exchange notes that
it may make historical data prior to January 2020 available in the
future and that such historical data would be available to all
Members or non-Members.
\6\ See Price List--U.S. Derivatives Data for Nasdaq PHLX, LLC
(``PHLX''), The Nasdaq Stock Market, LLC (``Nasdaq''), Nasdaq ISE,
LLC (``ISE''), and Nasaq GEMX, LLC (``GEMX''), available at https://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#web.
Particularly, PHLX offers ``Nasdaq PHLX Options Trade Outline
(PHOTO)'' and assesses $1,500 per month for an intra-day
subscription and $750 per month for historical reports; Nasdaq
offers the ``Nasdaq Options Trade Outline (NOTO)'' and assesses $750
per month for an intra-day subscription and $500 per month for
historical reports; ISE offers the ``Nasdaq ISE Open/Close Trade
Profile'' and assesses $2,000 per month for an intra-day
subscription and $1,000 per month for historical reports; and GEMX
offers the ``Nasdaq GEMX Open/Close Trade Profile'' and assesses
$1,000 per month for an intra-day subscription and $750 per month
for historical reports.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\8\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes that
its proposal to adopt fees for Intraday Open-Close Data is consistent
with Section 6(b) of the Act in general, and furthers the objectives of
Section 6(b)(4) of the Act \9\ in particular, in that it is an
equitable allocation of dues, fees and other charges among its members
and other recipients of Exchange data.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(4).
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation
[[Page 51827]]
and competition for the provision of market data. Particularly,
Intraday Open-Close Data further broadens the availability of U.S.
option market data to investors consistent with the principles of
Regulation NMS. The data product also promotes increased transparency
through the dissemination of Intraday Open-Close Data. Particularly,
information regarding opening and closing activity across different
option series during the trading day may indicate investor sentiment,
which may allow market participants to make better informed trading
decisions throughout the day. Subscribers to the data may also be able
to enhance their ability to analyze option trade and volume data and
create and test trading models and analytical strategies. The Exchange
believes Intraday Open-Close Data provides a valuable tool that
subscribers can use to gain comprehensive insight into the trading
activity in a particular series, but also emphasizes such data is not
necessary for trading. Moreover, other exchanges offer a similar data
product.\10\
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\10\ See supra note 4.
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The Exchange operates in a highly competitive environment. Indeed,
there are currently 16 registered options exchanges that trade options.
Based on publicly available information, no single options exchange has
more than 17% of the market share and currently the Exchange represents
only approximately 8.15% of the market share.\11\ The Commission has
repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. Particularly, 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.'' \12\ Making similar data products available to
market participants fosters competition in the marketplace, and
constrains the ability of exchanges to charge supracompetitive fees. In
the event that a market participant views one exchange's data product
as more or less attractive than the competition they can and do switch
between similar products. The proposed fees are a result of the
competitive environment, as the Exchange seeks to adopt fees to attract
purchasers of the recently introduced Intraday Open-Close Data product.
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\11\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (July 31, 2020), available at https://markets.cboe.com/us/options/market_statistics/.
\12\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes the proposed fees are reasonable as the
proposed fees are both modest and similar to, or even lower than, the
fees assessed by other exchanges that provide similar data
products.\13\ Indeed, proposing fees that are excessively higher than
established fees for similar data products would simply serve to reduce
demand for the Exchange's data product, which as noted, is entirely
optional. Like the Exchange's Intraday Open-Close Data product, other
exchanges offer similar data products that each provide insight into
trading on those markets and may likewise aid in assessing investor
sentiment. Although each of these similar Intraday Open-Close data
products provide only proprietary trade data and not trade data from
other exchanges, it's possible investors are still able to gauge
overall investor sentiment across different option series based on open
and closing interest on any one exchange.\14\ Similarly, market
participants may be able to analyze option trade and volume data, and
create and test trading models and analytical strategies using only
Intraday Open-Close data relating to trading activity on one or more of
the other markets that provide similar data products. As such, if a
market participant views another exchange's Intraday Open-Close data as
more attractive than its proposed Intraday Open-Close data product,
then such market participant can merely choose not to purchase the
Exchange's Intraday Open-Close Data and instead purchase another
exchange's Intraday Open-Close data product, which offer similar data
points, albeit based on that other market's trading activity.
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\13\ See supra note 6.
\14\ The exchange notes that its Intraday Open-Close data
product does not include data on any exclusive, singly-listed option
series.
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The Exchange also believes the proposed fees are reasonable as they
would support the introduction of a new market data product that is
designed to aid investors by providing insight into trading on BZX
Options. The recently adopted Intraday Open-Close Data would provide
options market participants with valuable information about opening and
closing transactions executed on the Exchange throughout the trading
day, similar to other trade data products offered by competing options
exchanges. In turn, this data would assist market participants in
gauging investor sentiment and trading activity, resulting in
potentially better informed trading decisions. As noted above, users
may also use such data to create and test trading models and analytical
strategies.
Selling market data, such as Intraday Open-Close Data, is also a
means by which exchanges compete to attract business. To the extent
that the Exchange is successful in attracting subscribers for the
Intraday Open-Close Data, it may earn trading revenues and further
enhance the value of its data products. If the market deems the
proposed fees to be unfair or inequitable, firms can diminish or
discontinue their use of the data and/or avail themselves of similar
products offered by other exchanges.\15\ The Exchange therefore
believes that the proposed fees for Intraday Open-Close Data reflect
the competitive environment and would be properly assessed on Member or
non-Member users. The Exchange also believes the proposed fees are
equitable and not unfairly discriminatory as the fees would apply
equally to all users who choose to purchase such data. The Exchange's
proposed fees would not differentiate between subscribers that purchase
Intraday Open-Close Data and are set at a modest level that would allow
any interested Member or non-Member to purchase such data based on
their business needs.
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\15\ See supra note 6.
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As noted above, the Exchange anticipates a wide variety of market
participants to purchase Intraday Open-Close Data, including but not
limited to individual customers, buy-side investors and investment
banks. The Exchange reiterates that the decision as to whether or not
to purchase the Intraday Open-Close Data is entirely optional for all
potential subscribers. Indeed, no market participant is required to
purchase the Intraday Open-Close Data, and the Exchange is not required
to make the Intraday Open-Close Data available to all investors.
Rather, the Exchange is voluntarily making Intraday Open-Close Data
available, as requested by customers, and market participants may
choose to receive (and pay for) this data based on their own business
needs. Potential purchasers may request the data at any time if they
believe it to be valuable or may decline to purchase such data.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance
[[Page 51828]]
of the purposes of the Act. Rather, the Exchange believes that the
proposal will promote competition by permitting the Exchange to sell a
data product similar to those offered by other competitor options
exchanges.\16\ The Exchange made Open-Close Data available in order to
keep pace with changes in the industry and evolving customer needs, and
believes the data product will contribute to robust competition among
national securities exchanges. At least four other U.S. options
exchanges offer a market data product that is substantially similar to
the Intraday Open-Close Data. As a result, the Exchange believes this
proposed rule change permits fair competition among national securities
exchanges.
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\16\ Id.
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Furthermore, the Exchange operates in a highly competitive
environment, and its ability to price Intraday Open-Close Data is
constrained by competition among exchanges that offer similar data
products to their customers. As discussed, there are currently a number
of similar products available to market participants and investors. At
least four other U.S. options exchanges offer a market data product
that is substantially similar to the Intraday Open-Close Data, which
the Exchange must consider in its pricing discipline in order to
compete for the market data.\17\ For example, proposing fees that are
excessively higher than established fees for similar data products
would simply serve to reduce demand for the Exchange's data product,
which as discussed, market participants are under no obligation to
utilize. In this competitive environment, potential purchasers are free
to choose which, if any, similar product to purchase to satisfy their
need for market information. As a result, the Exchange believes this
proposed rule change permits fair competition among national securities
exchanges.
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\17\ See e.g., Cboe Options Fees Schedule, Livevol Fees, Open-
Close Data. See also Nasdaq ISE Options 7 Pricing Schedule, Section
10.A and Nasdaq PHLX Options 7 Pricing Schedule, Section 10, PHLX
Options Trade Outline (``PHOTO'').
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The Exchange also does not believe the proposed fees would cause
any unnecessary or in appropriate burden on intermarket competition as
other exchanges are free to introduce their own comparable data product
and lower their prices to better compete with the Exchange's offering.
The Exchange does not believe the proposed rule change would cause any
unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed product and fees apply uniformly to any
purchaser, in that it does not differentiate between subscribers that
purchase Intraday Open-Close Data. The proposed fees are set at a
modest level that would allow any interested Member or non-Member to
purchase such data based on their business needs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \18\ and paragraph (f) of Rule 19b-4 \19\
thereunder, because it establishes a due, fee, or other charge imposed
by the Exchange.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f).
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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 [email protected]. Please include
File Number SR-CboeBZX-2020-063 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-2020-063. 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; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-CboeBZX-2020-063 and should
be submitted on or before September 11, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18356 Filed 8-20-20; 8:45 am]
BILLING CODE 8011-01-P
