Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule, 80871-80875 [2020-27395]

Download as PDF Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 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–EMERALD–2020–18 and should be submitted on or before January 4, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.31 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–27393 Filed 12–11–20; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90604; File No. SR– CboeEDGX–2020–060] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule December 8, 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 December 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, 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. jbell on DSKJLSW7X2PROD with NOTICES 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. CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 02:51 Dec 12, 2020 Jkt 253001 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 BILLING CODE 8011–01–P 31 17 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. 1. Purpose The Exchange proposes to amend its fee schedule applicable to its equities trading platform (‘‘EDGX Equities’’) by amending (1) Retail Volume Tiers, (2) modifying Fee Codes EA and ER and (3) eliminating unused fee codes.3 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,4 no single registered equities exchange has more than 16% 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 3 The Exchange initially filed the proposed fee changes on December 1, 2020 (SR–CboeEDGX– 2020–059). On December 3, 2020, the Exchange withdrew that filing and submitted this proposal. 4 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (November 27, 2020), available at https://markets.cboe.com/us/ equities/market_statistics/. PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 80871 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 $0.00160 per share for orders that add liquidity, assesses a standard fee of $0.00270 per share for orders that remove liquidity and assesses a standard fee of $0.0030 for orders that are routed. For orders priced below $1.00, the Exchange a standard rebate of $0.00009 per share for orders that add liquidity, assesses a fee of 0.30% of Dollar Value for orders that remove liquidity and for orders that are routed. Additionally, 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 an incremental incentive for Members to strive for higher tier levels, which provides increasingly higher benefits or discounts for satisfying increasingly more stringent criteria. Retail Volume Tiers 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 structure is 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 Tiers 1, 2 and 3. The current Retail Volume Tiers are as follows: • Tier 1 provides an enhanced rebate of $0.0034 for a Member’s qualifying orders (i.e., yielding fee code ZA) where 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. E:\FR\FM\14DEN1.SGM 14DEN1 80872 Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES a Member adds a Retail Order ADV 8 (i.e., yielding fee code ZA) greater than or equal to 0.35% of the TCV.9 • Tier 2 provides an enhanced rebate of $0.0037 for a Member’s qualifying orders (i.e., yielding fee code ZA) where a Member (1) has a Retail Step-Up Add TCV 10 (i.e. yielding fee code ZA) from May 2020 greater than or equal to 0.10% and (2) removes a Retail Order ADV (i.e., yielding fee code ZR) greater than or equal to 0.15% of the TCV. • Tier 3 provides an enhanced rebate of $0.0036 for a Member’s qualifying orders (i.e., yielding fee code ZA) where a Member adds a Retail Order ADV (i.e., yielding fee code ZA) greater than or equal to 0.60% of the TCV. The Exchange proposes to update the criteria in Retail Volume Tier 2, adopt new Retail Volume Tier 4 and renumber Retail Volume Tiers 2 and 3. First, the Exchange proposes to ease the criteria under Retail Volume Tier 2. Particularly, to meet the proposed criteria in Tier 2 a Member must continue to satisfy the first prong of Retail Volume Tier 2 but also remove an ADV greater than or equal to 0.70% of the TCV (instead of removing Retail Order ADV greater than or equal to 0.15%). The Exchange also proposes to adopt a new Retail Volume Tier 4 which would provide a rebate of $0.0037 per share where a Member (1) has a Retail Step-Up Add TCV 11 (i.e. yielding fee code ZA) from July 2020 greater than or equal to 0.05% and (2) adds a Retail Order ADV (i.e., yielding fee code ZA) greater than or equal to 0.40% of the TCV. The Exchange also proposes to switch the order of current Retail Volume Tiers 2 and 3 such that Retail Volume Tier 2 becomes Retail Volume Tier 3 and Retail Volume Tier 3 becomes Retail Volume Tier 2. The proposed change would provide that the Retail Volume Tiers would be in ascending order with respect to the available rebates, which the Exchange believes would alleviate potential 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. 10 ‘‘Step-Up Add TCV’’ means ADAV as a percentage of TCV in the relevant baseline month subtracted from current ADAV as a percentage of TCV. 11 ‘‘Step-Up Add TCV’’ means ADAV as a percentage of TCV in the relevant baseline month subtracted from current ADAV as a percentage of TCV. VerDate Sep<11>2014 02:51 Dec 12, 2020 Jkt 253001 confusion and make the table easier for market participants to follow. The Exchange notes Retail Volume Tier 2, as modified, continues to be available to all RMOs and provide RMOs an opportunity to receive an enhanced rebate. Moreover, the proposed change to Retail Volume Tier 2 and the proposed new Retail Volume Tier 4 are both designed to encourage RMOs to increase retail order flow on the Exchange, which further contributes to a deeper, more liquid market and provides even more execution opportunities for active market participants at improved prices. Fee Codes EA and ER The Exchange proposes to amend fee codes EA and ER which are appended to Internalized Trades. An Internalized Trade is a trade where the two orders inadvertently match against each other and share the same Market Participant Identifier (‘‘MPID’’). Fee code EA is appended to the side of an Internalized Trade that adds liquidity, while fee code ER is appended to the side of an Internalized Trade that removes liquidity. Orders that yield fee codes EA or ER are currently charged a fee of $0.00050 per share in securities priced at or above $1.00 and 0.15% of the dollar value of the trade in securities priced below $1.00. The Exchange proposes to provide that both fee codes apply to Displayed orders only. The proposed rule change would allow NonDisplayed orders that inadvertently match against each other and share the same MPID to be eligible to receive better prices, including rebates applicable to Non-Displayed orders that add liquidity.12 Elimination of Certain Routing Fee Codes The Exchange assesses fees in connection with orders routed away to various exchanges. The Exchange proposes to eliminate several routingrelated fee codes that have been unused for several years. Particularly, the Exchange proposes to eliminate the following fee codes: • Fee Code 9, which is appended to orders routed to NYSE Arca and adds liquidity (Tapes A or C) and provides a rebate of $0.00210 per share for securities priced at or above $1.00 and are free for securities priced below $1.00; • Fee Code NB, which is appended to orders routed to any exchange not 12 See e.g., Cboe EDGX Equities Fees Schedule, Fee Code HA which provides Non-Displayed orders that add liquidity a rebate of $0.00100 and Footnote 1 which provides for 3 incentive tiers applicable to Non-Displayed Orders. PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 covered by Fee Code NA and adds nondisplayed liquidity and assesses a fee of $0.00300 per share for securities priced at or above $1.00 and a fee of 0.30% of dollar value for securities priced below $1.00; • Fee Code R, which is appended to orders re-routed by NYSE and assesses a fee of 0.00300 per share for securities priced at or above $1.00 and a fee of 0.30% of dollar value for securities priced below $1.00; • Fee Code RA, which is appended to orders re-routed to EDGA and adds liquidity and assess a fee of 0.00300 per share for securities priced at or above $1.00 and are free for securities priced below $1.00; and • Fee Code RB, which is appended to orders routed to BX and adds liquidity and assess a fee of 0.00200 per share for securities priced at or above $1.00 and are free for securities priced below $1.00. As noted, above the Exchange has observed no volume in recent years in orders yielding fee codes 9, NB, R, RA and RB. The Exchange believes that because no Members elect to route their orders that yield these fee codes, the current demand (or lack thereof) does not warrant the infrastructure and ongoing Systems maintenance required to support separate fee codes specifically applicable to these types of transactions. Therefore, the Exchange now proposes to delete fee codes 9, NB, R, RA and RB in the Fee Schedule. The Exchange notes that Members will continue to be able to choose to route their orders to any exchange covered by these fee codes and such orders will be automatically and uniformly assessed the current fees (or rebates) in place for routed orders, as applicable (e.g., the standard fees applied to routed orders, which yields fee code X). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,13 in general, and furthers the objectives of Section 6(b)(4),14 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 13 15 14 15 E:\FR\FM\14DEN1.SGM U.S.C. 78f. U.S.C. 78f(b)(4). 14DEN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices 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 changes to Retail Volume Tier 2 (to be renumbered to Retail Volume Tier 3) are reasonable because the tier, as modified, continues to be available to all RMOs and provides RMOs an opportunity to receive an enhanced rebate using less stringent criteria. Similarly, the Exchange believes Retail Volume Tier 4 provides an additional opportunity for RMOs to receive an enhanced rebate if they meet the proposed criteria. The Exchange next notes that relative volume-based incentives and discounts have been widely adopted by exchanges, including the Exchange, and are reasonable, equitable and non-discriminatory because they are open to all Members (and RMOs as applicable) 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. The Exchange also believes that the current enhanced rebates under Retail Volume Tier 2, along with the proposed new rebate under Retail Volume Tier 4 are commensurate with the proposed criteria. That is, these rebates reasonably reflect the difficulty in achieving the corresponding criteria as amended. The Exchange believes that the proposal relating to the Retail Volume Tiers also represents an equitable allocation of rebates and is not unfairly discriminatory because all RMOs will continue to be eligible for each Retail Volume Tier. The proposed changes are designed as an incentive to any and all RMOs interested in meeting the tier criteria, as amended to submit additional adding and/or removing, or Retail, order flow to the Exchange. The VerDate Sep<11>2014 02:51 Dec 12, 2020 Jkt 253001 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 orders are generally submitted in smaller sizes, tends to attract MarketMakers, as smaller size orders are easier to hedge. Increased Market-Maker activity facilitates tighter spreads, signaling an 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 also notes all RMOs will continue to 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 Retail Volume Tiers are applicable only to RMOs, the Exchange does not believe this application is discriminatory as the Exchange offers similar rebates to nonRMO order flow.15 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. The Exchange notes that most recently, one Member satisfied Retail Volume Tier 2. While the Exchange has no way of predicting with certainty how the proposed tier will impact Member activity, the Exchange anticipates that at least one Member will be able to satisfy Retail Volume Tier 2 (as amended). The Exchange also anticipates that approximately two Members will be able to satisfy new Retail Volume Tier 4. The Exchange also notes that the proposed amended tiers will not adversely impact any RMO’s ability to qualify for other rebate tiers. Rather, should an RMO not meet the criteria for 15 Such as the other Add/Remove Volume Tiers under Footnote 1 of the EDGX Fees Schedule which provide opportunities to all Members to submit the requisite order flow to receive an enhanced rebate. PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 80873 Retail Volume Tier 2, as amended, or Retail Volume Tier 4 as proposed, the RMO will merely not receive the corresponding proposed enhanced rebate. Furthermore, the rebates under each Retail Volume Tiers would uniformly apply to all RMOs that meet the required criteria. The Exchange believes renumbering Retail Volume Tiers 2 and 3 will eliminate potential confusion and make the Fees Schedule easier to read by organizing the Retail Volume Tier program in ascending order with respect to available rebates. The Exchange believes it’s reasonable to exclude non-displayed orders from Fee Codes EA and ER as such orders would then be eligible to receive better prices, including rebates applicable to Non-Displayed orders that add liquidity.16 The Exchange notes that other exchanges do not require NonDisplayed orders that match against each other and share the same MPID to be subject to specific internalization fees, but rather are treated the same as other non-displayed transactions.17 The Exchange believes the proposed change is equitable and not unfairly discriminatory because it applies equally to all Members. The Exchange also believes the proposed rule change to remove fee codes 9, NB, R, RA and RB is reasonable as the Exchange has observed no volume in orders yielding these fee codes and, therefore, the Exchange believes the proposed change will have a de minimis impact. Additionally, the Exchange believes that infrastructure and ongoing Systems maintenance required to support separate fee codes specifically applicable to these types of routed orders is not warranted or necessary in light of the fact that it has not received any recent volume yielding these fee codes. As noted above, to the extent volume for transactions currently covered by these fee codes ever increases, such orders will be automatically and uniformly assessed the current fees (or rebates) in place for routed orders, as applicable (e.g., the standard fees applied to routed orders, which yield fee code X). Finally, the Exchange believes that the proposed elimination of the fee codes is equitable and not unfairly discriminatory as it applies equally to all members that use the Exchange to route orders. If 16 See e.g., Cboe EDGX Equities Fees Schedule, Fee Code HA which provides Non-Displayed orders that add liquidity a rebate of $0.00100 and Footnote 1 which provides for 3 incentive tiers applicable to Non-Displayed Orders. 17 See e.g., Cboe BZX Equities Fees Schedule, Cboe BYX Equities Fees Schedule and Cboe EDGA Fees Schedule. E:\FR\FM\14DEN1.SGM 14DEN1 80874 Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices members do not favor the Exchange’s pricing for routed orders, they can send their routable orders directly to away markets instead of using routing functionality provided by the Exchange. Routing through the Exchange is voluntary, and the Exchange operates in a competitive environment where market participants can readily direct order flow to competing venues or providers of routing services if they deem fee levels to be excessive. jbell on DSKJLSW7X2PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. 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 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.’’ 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 changes to the Retail Volume Tier program apply to all RMOs equally in that all RMOs are eligible for those tiers, have a reasonable opportunity to meet the tiers’ criteria and will receive the enhanced rebates if such criteria are met. Additionally, the proposed tiers are designed to attract additional order flow to the Exchange. The Exchange believes that the updated tier criteria would incentivize market participants to direct liquidity adding and/or removing order flow to the Exchange, bringing with it additional execution opportunities for market participants and improved price transparency. Greater overall order flow, trading opportunities, and pricing transparency benefits all market participants on the Exchange by enhancing market quality and continuing to encourage Members to send orders, thereby contributing towards a robust and well-balanced market ecosystem. Additionally, the proposed change to fee codes EA, ER and the proposal to remove unused VerDate Sep<11>2014 02:51 Dec 12, 2020 Jkt 253001 routing-related fee codes apply equally to all Members. 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 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 16% 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 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. PO 00000 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 18 and paragraph (f) of Rule 19b–4 19 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 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–2020–060 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–2020–060. 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 18 15 19 17 Frm 00114 Fmt 4703 Sfmt 4703 E:\FR\FM\14DEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 14DEN1 Federal Register / Vol. 85, No. 240 / Monday, December 14, 2020 / Notices Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CboeEDGX–2020–060 and should be submitted on or before January 4, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–27395 Filed 12–11–20; 8:45 am] BILLING CODE 8011–01–P was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act. 2. The Commission will consider whether to adopt amendments under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’) to update rules that govern investment adviser marketing to accommodate the continual evolution and interplay of technology and advice, while preserving investor protections. The Commission will also consider whether to adopt amendments to Form ADV to provide the Commission with additional information about advisers’ marketing practices, and corresponding amendments to the books and records rule under the Advisers Act. 3. The Commission will consider whether to approve a proposed rule change by New York Stock Exchange LLC to amend Chapter One of the Listed Company Manual to modify the provisions relating to direct listings. CONTACT PERSONS FOR MORE INFORMATION: For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact Vanessa A. Countryman, Office of the Secretary, at (202) 551– 5400. Dated: December 9, 2020. Vanessa A. Countryman, Secretary. [FR Doc. 2020–27510 Filed 12–10–20; 11:15 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, the Securities and Exchange Commission will hold an Open Meeting on Wednesday, December 16, 2020 at 10:00 a.m. PLACE: The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will begin at 10:00 a.m. (ET) and will be open to the public via audio webcast only on the Commission’s website at www.sec.gov. MATTERS TO BE CONSIDERED: 1. The Commission will consider whether to adopt rules that will require resource extraction issuers to disclose payments made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas, or minerals. The rules will implement Section 13(q) of the Securities Exchange Act of 1934, which jbell on DSKJLSW7X2PROD with NOTICES TIME AND DATE: [Release No. 34–90609; File No. SRCboeEDGA–2020–031] Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule December 8, 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 December 3, 2020, Cboe EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 20 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 02:51 Dec 12, 2020 2 17 Jkt 253001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b-4. Frm 00115 Fmt 4703 Sfmt 4703 80875 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) is filing with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change to amend the fee schedule applicable to Members and non-Members 3 of the Exchange pursuant to EDGA Rules 15.1(a) and (c). 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/edga/), 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 to remove unused routingrelated fee codes.4 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 3 A Member is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 4 The Exchange initially filed the proposed fee changes December 1, 2020 (SR–CboeEDGA–2020– 030). On December 3, 2020, the Exchange withdrew that filing and submitted this proposal. E:\FR\FM\14DEN1.SGM 14DEN1

Agencies

[Federal Register Volume 85, Number 240 (Monday, December 14, 2020)]
[Notices]
[Pages 80871-80875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27395]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90604; File No. SR-CboeEDGX-2020-060]


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

December 8, 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 December 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, 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'') by amending (1) Retail 
Volume Tiers, (2) modifying Fee Codes EA and ER and (3) eliminating 
unused fee codes.\3\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee changes on 
December 1, 2020 (SR-CboeEDGX-2020-059). On December 3, 2020, the 
Exchange withdrew that filing and submitted this proposal.
---------------------------------------------------------------------------

    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,\4\ no single registered 
equities exchange has more than 16% 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 
$0.00160 per share for orders that add liquidity, assesses a standard 
fee of $0.00270 per share for orders that remove liquidity and assesses 
a standard fee of $0.0030 for orders that are routed. For orders priced 
below $1.00, the Exchange a standard rebate of $0.00009 per share for 
orders that add liquidity, assesses a fee of 0.30% of Dollar Value for 
orders that remove liquidity and for orders that are routed. 
Additionally, 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 an incremental 
incentive for Members to strive for higher tier levels, which provides 
increasingly higher benefits or discounts for satisfying increasingly 
more stringent criteria.
---------------------------------------------------------------------------

    \4\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (November 27, 2020), available at https://markets.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------

Retail Volume Tiers
    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 
structure is 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 Tiers 1, 
2 and 3. The current Retail Volume Tiers are as follows:
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

     Tier 1 provides an enhanced rebate of $0.0034 for a 
Member's qualifying orders (i.e., yielding fee code ZA) where

[[Page 80872]]

a Member adds a Retail Order ADV \8\ (i.e., yielding fee code ZA) 
greater than or equal to 0.35% of the TCV.\9\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

     Tier 2 provides an enhanced rebate of $0.0037 for a 
Member's qualifying orders (i.e., yielding fee code ZA) where a Member 
(1) has a Retail Step-Up Add TCV \10\ (i.e. yielding fee code ZA) from 
May 2020 greater than or equal to 0.10% and (2) removes a Retail Order 
ADV (i.e., yielding fee code ZR) greater than or equal to 0.15% of the 
TCV.
---------------------------------------------------------------------------

    \10\ ``Step-Up Add TCV'' means ADAV as a percentage of TCV in 
the relevant baseline month subtracted from current ADAV as a 
percentage of TCV.
---------------------------------------------------------------------------

     Tier 3 provides an enhanced rebate of $0.0036 for a 
Member's qualifying orders (i.e., yielding fee code ZA) where a Member 
adds a Retail Order ADV (i.e., yielding fee code ZA) greater than or 
equal to 0.60% of the TCV.
    The Exchange proposes to update the criteria in Retail Volume Tier 
2, adopt new Retail Volume Tier 4 and renumber Retail Volume Tiers 2 
and 3. First, the Exchange proposes to ease the criteria under Retail 
Volume Tier 2. Particularly, to meet the proposed criteria in Tier 2 a 
Member must continue to satisfy the first prong of Retail Volume Tier 2 
but also remove an ADV greater than or equal to 0.70% of the TCV 
(instead of removing Retail Order ADV greater than or equal to 0.15%). 
The Exchange also proposes to adopt a new Retail Volume Tier 4 which 
would provide a rebate of $0.0037 per share where a Member (1) has a 
Retail Step-Up Add TCV \11\ (i.e. yielding fee code ZA) from July 2020 
greater than or equal to 0.05% and (2) adds a Retail Order ADV (i.e., 
yielding fee code ZA) greater than or equal to 0.40% of the TCV. The 
Exchange also proposes to switch the order of current Retail Volume 
Tiers 2 and 3 such that Retail Volume Tier 2 becomes Retail Volume Tier 
3 and Retail Volume Tier 3 becomes Retail Volume Tier 2. The proposed 
change would provide that the Retail Volume Tiers would be in ascending 
order with respect to the available rebates, which the Exchange 
believes would alleviate potential confusion and make the table easier 
for market participants to follow.
---------------------------------------------------------------------------

    \11\ ``Step-Up Add TCV'' means ADAV as a percentage of TCV in 
the relevant baseline month subtracted from current ADAV as a 
percentage of TCV.
---------------------------------------------------------------------------

    The Exchange notes Retail Volume Tier 2, as modified, continues to 
be available to all RMOs and provide RMOs an opportunity to receive an 
enhanced rebate. Moreover, the proposed change to Retail Volume Tier 2 
and the proposed new Retail Volume Tier 4 are both designed to 
encourage RMOs to increase retail order flow on the Exchange, which 
further contributes to a deeper, more liquid market and provides even 
more execution opportunities for active market participants at improved 
prices.
Fee Codes EA and ER
    The Exchange proposes to amend fee codes EA and ER which are 
appended to Internalized Trades. An Internalized Trade is a trade where 
the two orders inadvertently match against each other and share the 
same Market Participant Identifier (``MPID''). Fee code EA is appended 
to the side of an Internalized Trade that adds liquidity, while fee 
code ER is appended to the side of an Internalized Trade that removes 
liquidity. Orders that yield fee codes EA or ER are currently charged a 
fee of $0.00050 per share in securities priced at or above $1.00 and 
0.15% of the dollar value of the trade in securities priced below 
$1.00. The Exchange proposes to provide that both fee codes apply to 
Displayed orders only. The proposed rule change would allow Non-
Displayed orders that inadvertently match against each other and share 
the same MPID to be eligible to receive better prices, including 
rebates applicable to Non-Displayed orders that add liquidity.\12\
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    \12\ See e.g., Cboe EDGX Equities Fees Schedule, Fee Code HA 
which provides Non-Displayed orders that add liquidity a rebate of 
$0.00100 and Footnote 1 which provides for 3 incentive tiers 
applicable to Non-Displayed Orders.
---------------------------------------------------------------------------

Elimination of Certain Routing Fee Codes
    The Exchange assesses fees in connection with orders routed away to 
various exchanges. The Exchange proposes to eliminate several routing-
related fee codes that have been unused for several years. 
Particularly, the Exchange proposes to eliminate the following fee 
codes:
     Fee Code 9, which is appended to orders routed to NYSE 
Arca and adds liquidity (Tapes A or C) and provides a rebate of 
$0.00210 per share for securities priced at or above $1.00 and are free 
for securities priced below $1.00;
     Fee Code NB, which is appended to orders routed to any 
exchange not covered by Fee Code NA and adds non-displayed liquidity 
and assesses a fee of $0.00300 per share for securities priced at or 
above $1.00 and a fee of 0.30% of dollar value for securities priced 
below $1.00;
     Fee Code R, which is appended to orders re-routed by NYSE 
and assesses a fee of 0.00300 per share for securities priced at or 
above $1.00 and a fee of 0.30% of dollar value for securities priced 
below $1.00;
     Fee Code RA, which is appended to orders re-routed to EDGA 
and adds liquidity and assess a fee of 0.00300 per share for securities 
priced at or above $1.00 and are free for securities priced below 
$1.00; and
     Fee Code RB, which is appended to orders routed to BX and 
adds liquidity and assess a fee of 0.00200 per share for securities 
priced at or above $1.00 and are free for securities priced below 
$1.00.
    As noted, above the Exchange has observed no volume in recent years 
in orders yielding fee codes 9, NB, R, RA and RB. The Exchange believes 
that because no Members elect to route their orders that yield these 
fee codes, the current demand (or lack thereof) does not warrant the 
infrastructure and ongoing Systems maintenance required to support 
separate fee codes specifically applicable to these types of 
transactions. Therefore, the Exchange now proposes to delete fee codes 
9, NB, R, RA and RB in the Fee Schedule. The Exchange notes that 
Members will continue to be able to choose to route their orders to any 
exchange covered by these fee codes and such orders will be 
automatically and uniformly assessed the current fees (or rebates) in 
place for routed orders, as applicable (e.g., the standard fees applied 
to routed orders, which yields fee code X).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(4),\14\ 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

[[Page 80873]]

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

    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed changes to Retail 
Volume Tier 2 (to be renumbered to Retail Volume Tier 3) are reasonable 
because the tier, as modified, continues to be available to all RMOs 
and provides RMOs an opportunity to receive an enhanced rebate using 
less stringent criteria. Similarly, the Exchange believes Retail Volume 
Tier 4 provides an additional opportunity for RMOs to receive an 
enhanced rebate if they meet the proposed criteria. The Exchange next 
notes that relative volume-based incentives and discounts have been 
widely adopted by exchanges, including the Exchange, and are 
reasonable, equitable and non-discriminatory because they are open to 
all Members (and RMOs as applicable) 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.
    The Exchange also believes that the current enhanced rebates under 
Retail Volume Tier 2, along with the proposed new rebate under Retail 
Volume Tier 4 are commensurate with the proposed criteria. That is, 
these rebates reasonably reflect the difficulty in achieving the 
corresponding criteria as amended.
    The Exchange believes that the proposal relating to the Retail 
Volume Tiers also represents an equitable allocation of rebates and is 
not unfairly discriminatory because all RMOs will continue to be 
eligible for each Retail Volume Tier. The proposed changes are designed 
as an incentive to any and all RMOs interested in meeting the tier 
criteria, as amended to submit additional adding and/or removing, or 
Retail, order flow to the Exchange. 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 orders are 
generally 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 an 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 also notes all RMOs will continue to 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 Retail Volume Tiers are applicable 
only to RMOs, the Exchange does not believe this application is 
discriminatory as the Exchange offers similar rebates to non-RMO order 
flow.\15\
---------------------------------------------------------------------------

    \15\ Such as the other Add/Remove Volume Tiers under Footnote 1 
of the EDGX Fees Schedule 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. The Exchange notes that most recently, one Member 
satisfied Retail Volume Tier 2. While the Exchange has no way of 
predicting with certainty how the proposed tier will impact Member 
activity, the Exchange anticipates that at least one Member will be 
able to satisfy Retail Volume Tier 2 (as amended). The Exchange also 
anticipates that approximately two Members will be able to satisfy new 
Retail Volume Tier 4. The Exchange also notes that the proposed amended 
tiers will not adversely impact any RMO's ability to qualify for other 
rebate tiers. Rather, should an RMO not meet the criteria for Retail 
Volume Tier 2, as amended, or Retail Volume Tier 4 as proposed, the RMO 
will merely not receive the corresponding proposed enhanced rebate. 
Furthermore, the rebates under each Retail Volume Tiers would uniformly 
apply to all RMOs that meet the required criteria.
    The Exchange believes renumbering Retail Volume Tiers 2 and 3 will 
eliminate potential confusion and make the Fees Schedule easier to read 
by organizing the Retail Volume Tier program in ascending order with 
respect to available rebates.
    The Exchange believes it's reasonable to exclude non-displayed 
orders from Fee Codes EA and ER as such orders would then be eligible 
to receive better prices, including rebates applicable to Non-Displayed 
orders that add liquidity.\16\ The Exchange notes that other exchanges 
do not require Non-Displayed orders that match against each other and 
share the same MPID to be subject to specific internalization fees, but 
rather are treated the same as other non-displayed transactions.\17\ 
The Exchange believes the proposed change is equitable and not unfairly 
discriminatory because it applies equally to all Members.
---------------------------------------------------------------------------

    \16\ See e.g., Cboe EDGX Equities Fees Schedule, Fee Code HA 
which provides Non-Displayed orders that add liquidity a rebate of 
$0.00100 and Footnote 1 which provides for 3 incentive tiers 
applicable to Non-Displayed Orders.
    \17\ See e.g., Cboe BZX Equities Fees Schedule, Cboe BYX 
Equities Fees Schedule and Cboe EDGA Fees Schedule.
---------------------------------------------------------------------------

    The Exchange also believes the proposed rule change to remove fee 
codes 9, NB, R, RA and RB is reasonable as the Exchange has observed no 
volume in orders yielding these fee codes and, therefore, the Exchange 
believes the proposed change will have a de minimis impact. 
Additionally, the Exchange believes that infrastructure and ongoing 
Systems maintenance required to support separate fee codes specifically 
applicable to these types of routed orders is not warranted or 
necessary in light of the fact that it has not received any recent 
volume yielding these fee codes. As noted above, to the extent volume 
for transactions currently covered by these fee codes ever increases, 
such orders will be automatically and uniformly assessed the current 
fees (or rebates) in place for routed orders, as applicable (e.g., the 
standard fees applied to routed orders, which yield fee code X). 
Finally, the Exchange believes that the proposed elimination of the fee 
codes is equitable and not unfairly discriminatory as it applies 
equally to all members that use the Exchange to route orders. If

[[Page 80874]]

members do not favor the Exchange's pricing for routed orders, they can 
send their routable orders directly to away markets instead of using 
routing functionality provided by the Exchange. Routing through the 
Exchange is voluntary, and the Exchange operates in a competitive 
environment where market participants can readily direct order flow to 
competing venues or providers of routing services if they deem fee 
levels to be excessive.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. 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 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.''
    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 
changes to the Retail Volume Tier program apply to all RMOs equally in 
that all RMOs are eligible for those tiers, have a reasonable 
opportunity to meet the tiers' criteria and will receive the enhanced 
rebates if such criteria are met. Additionally, the proposed tiers are 
designed to attract additional order flow to the Exchange. The Exchange 
believes that the updated tier criteria would incentivize market 
participants to direct liquidity adding and/or removing order flow to 
the Exchange, bringing with it additional execution opportunities for 
market participants and improved price transparency. Greater overall 
order flow, trading opportunities, and pricing transparency benefits 
all market participants on the Exchange by enhancing market quality and 
continuing to encourage Members to send orders, thereby contributing 
towards a robust and well-balanced market ecosystem. Additionally, the 
proposed change to fee codes EA, ER and the proposal to remove unused 
routing-related fee codes apply equally to all Members.
    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 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 16% 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 \18\ and paragraph (f) of Rule 19b-4 \19\ 
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 to 
determine whether the proposed rule change should be approved or 
disapproved.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number
    SR-CboeEDGX-2020-060 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-2020-060. 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

[[Page 80875]]

Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street, NE, Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeEDGX-2020-060 and should be 
submitted on or before January 4, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27395 Filed 12-11-20; 8:45 am]
BILLING CODE 8011-01-P
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