Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule, 65884-65886 [2020-22735]
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65884
Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Notices
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
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:
jbell on DSKJLSW7X2PROD with NOTICES
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–
LTSE–2020–19 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–LTSE–2020–19. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
VerDate Sep<11>2014
18:59 Oct 15, 2020
Jkt 253001
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–LTSE–2020–19 and should
be submitted on or before November 6,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22734 Filed 10–15–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90142; File No. SR–
CboeEDGX–2020–046]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule
October 8, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
1, 2020, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘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 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.
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Frm 00097
Fmt 4703
Sfmt 4703
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
fee schedule applicable to its equities
trading platform (‘‘EDGX Equities’’),
effective October 1, 2020.
The Exchange first notes that it
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. More
specifically, the Exchange is only one of
16 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,3 no single
registered equities exchange has more
than 19% of the market share. 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 provide
liquidity and assesses fees to those that
remove liquidity. The Exchange’s fee
schedule sets forth the standard rebates
and rates applied per share for orders
that provide and remove liquidity,
respectively. Currently, for orders
priced 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. For
orders priced below $1.00, the Exchange
a standard rebate of $0.00003 [sic] per
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (September 28,
2020), available at https://markets.cboe.com/us/
equities/market_statistics/.
E:\FR\FM\16OCN1.SGM
16OCN1
Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Notices
share for orders that add liquidity and
assesses a fee of 0.30% of Dollar Value
for orders that remove liquidity.
With respect to Displayed orders
priced at or above $1.00 that add
liquidity, the Exchange proposes to
reduce the standard per share rebate
from $0.0017 to $0.0016 per share and
proposes to reflect this change in the
Fee Codes and Associated Fee where
applicable (i.e., corresponding to fee
codes 3, 4, B, V, and Y). The Exchange
notes that although this proposed
standard rebate for liquidity adding
orders is lower than the current
standard rebate for such orders, the
proposed rebate is in line with similar
rebates for liquidity adding orders in
place on other exchanges.4
jbell on DSKJLSW7X2PROD with NOTICES
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,5
in general, and furthers the objectives of
Section 6(b)(4),6 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members,
issuers and other persons using its
facilities. 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 changes
reflect 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.
The Exchange believes the proposal to
reduce the rebate for displayed orders
that add liquidity is reasonable,
equitable and not unfairly
discriminatory because Members will
still receive a rebate for such orders,
albeit at a slightly lower amount.
Moreover, the Exchange notes that the
proposed standard rebate is still in line
with rebates provided by other equities
exchanges on orders that add liquidity
and are priced at or above $1.00.7
Additionally, as noted above, the
Exchange operates in highly competitive
market. The Exchange is only one of
several equity venues to which market
4 See NYSE Price List 2020, ‘‘Transactions in
stocks with a per share stock price of $1.00’’ or
more, which provides a standard rebate of $0.0012
per share for displayed liquidity adding orders.
5 15 U.S.C. 78f.
6 15 U.S.C. 78f(b)(4).
7 See NYSE Price List 2020, ‘‘Transactions in
stocks with a per share stock price of $1.00’’ or
more, which provides a standard credit of $0.0012
per share for displayed liquidity adding orders.
VerDate Sep<11>2014
18:59 Oct 15, 2020
Jkt 253001
participants may direct their order flow,
and it represents a small percentage of
the overall market. The Exchange lastly
believes the proposed change is
equitable and not unfairly
discriminatory because it applies
equally to all Members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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
displayed liquidity adding orders in
securities at or above $1.00 equally, and
thus applies to all Members equally.
Additionally, 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 purpose 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 15
other equities exchanges and offexchange 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 19% of the
market share. 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.’’ 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
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
65885
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’. . ..’’. 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 neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 8 and paragraph (f) of Rule
19b–4 9 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2020–046 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.
8 15
9 17
E:\FR\FM\16OCN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
16OCN1
65886
Federal Register / Vol. 85, No. 201 / Friday, October 16, 2020 / Notices
All submissions should refer to File
Number SR–CboeEDGX–2020–046. 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
offices 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–2020–046, and
should be submitted on or before
November 6, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22735 Filed 10–15–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90139; File No. SR–OCC–
2020–012]
jbell on DSKJLSW7X2PROD with NOTICES
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change Concerning
The Options Clearing Corporation’s
Synthetic Futures Model
October 8, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule
10 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
VerDate Sep<11>2014
18:59 Oct 15, 2020
Jkt 253001
19b–4 thereunder,2 notice is hereby
given that on September 30, 2020, the
Options Clearing Corporation (‘‘OCC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared primarily by OCC.
OCC filed the proposed rule change
pursuant to Section 19(b)(3)(A) 3 of the
Exchange Act and Rule 19b–4(f)(4)(ii) 4
thereunder so that the proposal was
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
OCC is filing a proposed rule change
to expand the use of an existing OCC
margin model. The proposed changes to
OCC’s Margins Methodology are
contained in confidential Exhibit 5 of
filing SR–OCC–2020–012. Material
proposed to be added to the Margins
Methodology as currently in effect is
underlined and material proposed to be
deleted is marked in strikethrough text.
All capitalized terms not defined herein
have the same meaning as set forth in
the OCC By-Laws and Rules.5
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
OCC 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. OCC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(1) Purpose
Background
On May 15, 2019, the Commission
issued a Notice of No Objection to an
advance notice filing by OCC to adopt
an enhanced model for Volatility Index
2 17
CFR 240.19b–4.
U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(4)(ii).
5 OCC’s By-Laws and Rules can be found on
OCC’s public website: https://www.theocc.com/
Company-Information/Documents-and-Archives/
By-Laws-and-Rules.
3 15
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
Futures.6 On May 16, 2019, the
Commission approved a proposed rule
change by OCC concerning the same
changes.7 The model enhancements
included: (1) The daily re-estimation of
prices and correlations using
‘‘synthetic’’ futures; 8 (2) an enhanced
statistical distribution for modeling
price returns for synthetic futures (i.e.,
an asymmetric Normal Reciprocal
Inverse Gaussian (or ‘‘NRIG’’)
distribution); and (3) a new antiprocyclical floor for variance estimates.
The main feature of the enhanced model
was the replacement of the use of the
underlying index itself as a risk factor 9
(e.g., the VIX) with risk factors that are
based on observed futures prices (i.e.,
the ‘‘synthetic’’ futures contracts). These
risk factors are then used in the
generation of Monte Carlo scenarios for
the futures by using volatility and
correlations obtained from the existing
simulation models in OCC’s propriety
margin system, the System for
Theoretical Analysis and Numerical
Simulations (‘‘STANS’’).10 Additionally,
the model has the ability to
accommodate negative prices and
interest rates.
On July 10, 2020, OCC filed a
proposed rule change to expand the use
of the model, currently known as the
‘‘Synthetic Futures Model,’’ to Cboe’s
AMERIBOR Futures.11 OCC now
proposes to expand the use of the
Synthetic Futures Model to certain
6 See Securities Exchange Act Release No. 85870
(May 15, 2019), 84 FR 23096 (May 21, 2019) (SR–
OCC–2019–801). Certain indices are designed to
measure the volatility implied by the prices of
options on a particular reference index or asset
(‘‘Volatility Indexes’’). For example, the Cboe
Volatility Index (‘‘VIX’’) is designed to measure the
30-day expected volatility of the Standard & Poor’s
500 index (‘‘SPX’’). OCC clears futures contracts on
Volatility Indexes. These futures contracts are
referred to herein as ‘‘Volatility Index Futures.’’
7 See Securities Exchange Act Release No. 85873
(May 16, 2019), 84 FR 23620 (May 16, 2019) (SR–
OCC–2019–002).
8 A ‘‘synthetic’’ futures time series, for the
intended purposes of OCC, relates to a uniform
substitute for a time series of daily settlement prices
for actual futures contracts, which persists over
many expiration cycles and thus can be used as a
basis for econometric analysis.
9 A ‘‘risk factor’’ within OCC’s margin system may
be defined as a product or attribute whose historical
data is used to estimate and simulate the risk for
an associated product.
10 See Securities Exchange Act Release No. 53322
(February 15, 2006), 71 FR 9403 (February 23, 2006)
(SR–OCC–2004–20). A detailed description of the
STANS methodology is available at https://
optionsclearing.com/risk-management/margins/.
11 See Securities Exchange Act Release No. 89392
(July 24, 2020), 85 FR 45938 (July 30, 2020) (SR–
OCC–2020–007). AMERIBOR Futures are futures on
the American Interbank Offered Rate disseminated
by the American Financial Exchange, LLC, which
is a transactions-based interest rate benchmark that
represents market-based borrowing costs (https://
www.cboe.com/products/futures/ameribor-futures).
E:\FR\FM\16OCN1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 201 (Friday, October 16, 2020)]
[Notices]
[Pages 65884-65886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22735]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90142; File No. SR-CboeEDGX-2020-046]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule
October 8, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 1, 2020, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its fee schedule applicable to its
equities trading platform (``EDGX Equities''), effective October 1,
2020.
The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 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,\3\ no single registered
equities exchange has more than 19% of the market share. 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 provide liquidity and assesses
fees to those that remove liquidity. The Exchange's fee schedule sets
forth the standard rebates and rates applied per share for orders that
provide and remove liquidity, respectively. Currently, for orders
priced 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. For orders priced
below $1.00, the Exchange a standard rebate of $0.00003 [sic] per
[[Page 65885]]
share for orders that add liquidity and assesses a fee of 0.30% of
Dollar Value for orders that remove liquidity.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (September 28, 2020), available at https://markets.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------
With respect to Displayed orders priced at or above $1.00 that add
liquidity, the Exchange proposes to reduce the standard per share
rebate from $0.0017 to $0.0016 per share and proposes to reflect this
change in the Fee Codes and Associated Fee where applicable (i.e.,
corresponding to fee codes 3, 4, B, V, and Y). The Exchange notes that
although this proposed standard rebate for liquidity adding orders is
lower than the current standard rebate for such orders, the proposed
rebate is in line with similar rebates for liquidity adding orders in
place on other exchanges.\4\
---------------------------------------------------------------------------
\4\ See NYSE Price List 2020, ``Transactions in stocks with a
per share stock price of $1.00'' or more, which provides a standard
rebate of $0.0012 per share for displayed liquidity adding orders.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\5\ in general, and
furthers the objectives of Section 6(b)(4),\6\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members, issuers and other persons
using its facilities. 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 changes
reflect 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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes the proposal to reduce the rebate for
displayed orders that add liquidity is reasonable, equitable and not
unfairly discriminatory because Members will still receive a rebate for
such orders, albeit at a slightly lower amount. Moreover, the Exchange
notes that the proposed standard rebate is still in line with rebates
provided by other equities exchanges on orders that add liquidity and
are priced at or above $1.00.\7\ Additionally, as noted above, the
Exchange operates in 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. The Exchange lastly believes the proposed change is equitable
and not unfairly discriminatory because it applies equally to all
Members.
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\7\ See NYSE Price List 2020, ``Transactions in stocks with a
per share stock price of $1.00'' or more, which provides a standard
credit of $0.0012 per share for displayed liquidity adding orders.
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B. Self-Regulatory Organization's Statement on Burden on Competition
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 displayed liquidity adding orders in securities
at or above $1.00 equally, and thus applies to all Members equally.
Additionally, 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 purpose 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 15 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 19% of the market share. 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.'' 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'. . ..''. 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 neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2020-046 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.
[[Page 65886]]
All submissions should refer to File Number SR-CboeEDGX-2020-046. 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 offices 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-2020-046, and should be
submitted on or before November 6, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22735 Filed 10-15-20; 8:45 am]
BILLING CODE 8011-01-P
