Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fee Schedule To Expand the Existing Financial Product Distribution Program To Provide for a Derived Data Platform Service, 6398-6403 [2021-01132]
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Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices
compete with the Exchange’s offering.
The Exchange believes that the
proposed rule change is pro-competitive
as it seeks to offer pricing incentives to
customers to better position the
Exchange as it competes to attract
additional market data subscribers.
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 19 and paragraph (f) of Rule
19b–4 20 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:
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–
CboeEDGX–2021–003 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–2021–003. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeEDGX–2021–003 and
should be submitted on or before
February 11, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–01133 Filed 1–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90912; File No. SR–
CboeBZX–2021–003]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
Fee Schedule To Expand the Existing
Financial Product Distribution Program
To Provide for a Derived Data Platform
Service
January 13, 2021.
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 January 4,
2021, Cboe BZX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BZX’’) filed with the
21 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
19 15
U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4(f).
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Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (‘‘BZX’’ or
the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change to amend the Fee Schedule to
expand the existing Financial Product
Distribution Program (the ‘‘Program’’) to
provide for a Derived Data Platform
Service. Additionally, the proposal
seeks to enhance the Program to provide
for the distribution of data derived from
the Cboe Aggregated Market (‘‘Cboe
One’’) 3 Summary Feed. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to implement a pricing
structure that would reduce fees
charged to Distributors of ‘‘Derived
Data’’, as defined below, through an
Exchange approved Derived Data
Platform Service. Additionally, the
proposal seeks to enhance the Program
to permit the distribution of data
derived from Cboe One Summary
1 15
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through the existing White Label
Service, Application Programming
Interface (‘‘API’’) Service, and the
proposed Platform Service.
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Derived Data Platform Service
‘‘Derived Data’’ is pricing data or
other data that (i) is created in whole or
in part from Exchange Data, (ii) is not
an index or financial product, and (iii)
cannot be readily reverse-engineered to
recreate Exchange Data or used to create
other data that is a reasonable facsimile
or substitute for Exchange Data. Derived
Data may be created by Distributors for
a number of different purposes, as
determined by the Distributor. Possible
uses include the display of information
or data, or the creation of derivative
instruments, such as swaps,4
swaptions,5 or contracts for difference.6
The specific use of the data is
determined by the Distributor, as
applicable fees do not depend on the
purpose for placing the Derived Data
under the Program.
The Exchange currently offers a White
Label Service and an API Service that
allow Distributors to benefit from
discounted fees when distributing
Derived Data taken from Exchange
data.7 Instead of the regular fee for
external distribution 8 of Exchange data,
Distributors of Derived Data under both
the White Label Service and API Service
are charged a tiered External Subscriber
Fee based on the number of External
Subscribers that receive Derived Data
from the Distributor. Additionally,
Distributors are charged a Professional
User 9 Fee based on the number of
4 A swap is a derivative contract in which two
parties agree to exchange financial instruments.
5 A swaption, or swap option, is an option to
enter into a swap at a specified time.
6 A contract for difference is an agreement to
exchange the difference between the current value
of an asset and its future value. If the price
increases, the seller pays the buyer the amount of
the increase. If the price decreases, the buyer pays
the seller the amount of the decrease.
7 Currently, BZX Top data is the only Exchange
data included in the Program; however, as
discussed in further detail below, the Exchange is
also proposing to include Cboe One Summary in
the Program.
8 External distribution occurs when a Distributor
that receives an Exchange Market Data product
distributes that data to a third-party or one or more
users outside the Distributor’s own entity.
9 A ‘‘Professional User’’ of an Exchange Market
Data product is any User other than a NonProfessional User. A ‘‘Non-Professional User’’ of an
Exchange Market Data product is a natural person
or qualifying trust that uses Data only for personal
purposes and not for any commercial purpose and,
for a natural person who works in the United States,
is not: (i) Registered or qualified in any capacity
with the Securities and Exchange Commission, the
Commodities Futures Trading Commission, any
state securities agency, any securities exchange or
association, or any commodities or futures contract
market or association; (ii) engaged as an
‘‘investment adviser’’ as that term is defined in
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Professional Users of the Derived Data.
Non-Professional Users of Derived Data
are not subject to a fee under either the
White Label Service or the API Service.
The White Label Service is a type of
hosted display solution in which a
Distributor hosts, maintains, and
controls a website or platform on behalf
of a third-party entity. The service
allows Distributors to make Derived
Data available on a platform that is
branded with a third-party brand, or cobranded with a third-party and a
Distributor, while the Distributor
maintains control of the applications
data, entitlements and display.
Alternatively, the API Service is a type
of data feed distribution in which a
Distributor delivers an API or similar
distribution mechanism to a third-party
entity for use within one or more
platforms. The API Service allows
Distributors to provide Derived Data to
a third-party entity for use within one
or more downstream platforms that are
operated and maintained by the thirdparty entity. The Distributor maintains
control of the entitlements, but does not
maintain technical control of the usage
or the display.
Now the Exchange is proposing to
implement a third service under the
Program, the Platform Service. The
Platform Service would allow a
Distributor to provide derivative
products directly to users that are
hosted within their infrastructure. The
Platform Service would be strictly
limited to derivative products based in
whole or in part on Exchange data
where only user remote access is
permitted. Normally, distributors of
Exchange market data may be subject to
Distribution and User Fees including an:
External Distribution Fee, Professional
User Fee, and Non-Professional User
Fee. Distributors would be liable for the
fees normally applicable for external
distribution except for the NonProfessional User fee,10 which would be
eliminated when participating in the
Platform Service, further reducing costs
for Distributors that provide access to
such data to retail investors. In contrast
to the existing White Label Service and
API Service, the Platform Service
Section 202(a)(11) of the Investment Advisors Act
of 1940 (whether or not registered or qualified
under that Act); or (iii) employed by a bank or other
organization exempt from registration under federal
or state securities laws to perform functions that
would require registration or qualification if such
functions were performed for an organization not so
exempt; or, for a natural person who works outside
of the United States, does not perform the same
functions as would disqualify such person as a
Non-Professional User if he or she worked in the
United States.
10 The Non-Professional User Fee for external
distribution of BZX Top is $0.10/month.
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provides a targeted discount to
Distributors rather than to External
Subscribers.
Like the existing White Label Service
and API Service, the proposed Platform
Service would be entirely optional, in
that it would only apply to Distributors
that opt to use Derived Data to create a
Platform Service, as described herein. It
would not impact or raise the cost of
any other Exchange product, nor would
it affect the cost of Exchange data,
except in instances where Derived Data
is made available on a Platform Service.
A Distributor that provides a Platform
Service for Exchange data that is not
Derived Data or distributes Derived Data
through a platform other than an
approved White Label Service, API
Service, or Platform Service would be
liable for the fees normally applicable
for the distribution of Exchange data.
Cboe One Summary
In addition to the above, the Exchange
is proposing to adopt fees for the
distribution of data derived from Cboe
One Summary under the existing White
Label Service and API Service, as well
as the proposed Platform Service. Under
the existing Fee Schedule, Distributors
that participate in the Program may only
create Derived Data from BZX Top,11 a
proprietary data product that provides
top of book quotations and execution
information for all equity securities
traded on the Exchange. The Exchange
is now proposing a fee amendment to
allow Distributors that participate in the
Program to create Derived Data from
Cboe One Summary in addition to BZX
Top. Cboe One Summary is a
proprietary data product that provides
the top of book quotations and
execution information for all listed
equity securities traded across the
Exchange and its affiliated U.S. equities
exchanges (the ‘‘Cboe equity
exchanges’’).12 Therefore, Distributors of
Derived Data created from Cboe One
Summary could display information or
data or create derivative instruments
based on top of book information across
the four Cboe equity exchanges rather
than just BZX. The Exchange believes
that the proposal will enhance the
Program as the inclusion of Cboe One
Summary will allow Distributors to
create Derived Data that is based on a
more comprehensive view of the U.S.
equities market.
As discussed above, Distributors of
Exchange data, including Cboe One
Summary, may be subject to
Distribution and User Fees including an:
External Distribution Fee, Professional
11 See
Exchange Rule 11.22(d).
note 3.
12 Supra
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User Fee, and Non-Professional User
Fee. As proposed, a Distributor that
provides Derived Data from Cboe One
Summary would be liable for the
proposed fees discussed below instead
of the fees normally applicable for the
distribution of Cboe One Summary.
Existing fees for BZX Top Derived Data
within a White Label Service or API
Service are comprised of a tiered fee
based on the number of External
Subscribers, a monthly fee for each
Professional User, and include no fee for
Non-Professional Users. Similarly, the
proposed fees for the Platform Service
are comprised of the normal External
Distribution and Professional User fees
applicable for the distribution of BZX
Top except that they would not be
subject to the Non-Professional Users
fees normally applicable. The Exchange
proposes to adopt a similar fee structure
for Cboe One Summary Derived Data.
As proposed, Distributors would be
charged the following fees for a White
Label Service for Cboe One Summary
Derived Data: (1) $1,000 Per month for
each External Subscriber if the
Distributor makes Derived Data
available to 1–5 External Subscribers;
(2) $750 per month for each External
Subscriber if the Distributor makes
Derived Data available to 6–10 External
Subscribers; and (3) $500 per month for
each External Subscriber if the
Distributor makes Derived Data
available to 11 or more External
Subscribers. For example, a Distributor
providing White Label Derived Data
based on Cboe One Summary to six
External Subscribers would be charged
a monthly fee of $4,500 (i.e., 6 External
Subscribers × $750 each). Additionally,
the Exchange would continue to charge
a monthly Professional User fee of $10
per month for each Professional User.
The Exchange proposes no NonProfessional User fee for the distribution
of Cboe One Summary Derived Data
under the White Label Service, which is
consistent with the fee structure for the
distribution of BZX Top Derived Data
under the White Label Service.
Alternatively, Distributors would be
charged the following fees for an API
Service for Cboe One Summary Derived
Data: (1) $5,000 per month for each
External Subscriber if the Distributor
makes Derived Data available to 1–5
External Subscribers; (2) $4,000 per
month for each External Subscriber if
the Distributor makes Derived Data
available to 6–20 External Subscribers;
and (3) $3,000 per month for each
External Subscriber if the Distributor
makes Derived Data available to 11 or
more External Subscribers. For example,
a Distributor providing API Service
Derived Data based on Cboe One
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Summary to six External Subscribers
would be charged a monthly fee of
$24,000 (i.e., 6 External Subscribers ×
$4,000 each). Additionally, the
Exchange would continue to charge a
monthly Professional User fee of $10 per
month for each Professional User. The
Exchange proposes no Non-Professional
User fee for the distribution of Cboe One
Summary Derived Data under the API
Service, which is consistent with the fee
structure for the distribution of BZX
Top Derived Data under the API
Service.
Lastly, the Exchange proposes to
adopt fees for the proposed Platform
Service for Cboe One Summary data in
addition to the proposed fees for BZX
Top discussed above. Like the proposed
fee for BZX Top Derived Data,
Distributors of Cboe One Summary
Derived Data would be liable for the fees
normally applicable for the external
distribution of Cboe One Summary,
except for the Non-Professional User fee
(i.e., $0.25/month) which would be free
under the Platform Service.
Corresponding Amendments to Fee
Schedule
Based on the proposed amendments
discussed above, the Exchange proposes
several clarifying modifications to the
Fee Schedule. First, the Exchange
proposes to add a definition of
‘‘Platform Service’’ to the Market Data
Fees definitions section of the Fee
Schedule. The definition would provide
that ‘‘a Platform Service is a type of
hosted display solution in which a
Distributor provides derivative products
to Platform Service Data Users within
their infrastructure. The service allows
Distributors to make Derived Data
available as part of a platform, providing
users remote access to derivative
products based in whole or in part on
Exchange Data.’’
The Exchange also proposes to amend
explanatory asterisks provided under
the Program in the Fee Schedule.
Specifically, the Exchange proposes to
amend the paragraph following the first
asterisk to reference the proposed
Platform Service in addition to the
existing references to the White Label
Service and API Service. Additionally,
the Exchange proposes to add references
to Cboe One Summary after all
references to BZX Top in the paragraph
following the first asterisk. Lastly, the
Exchange proposes to add additional
examples to asterisks two and three so
as to explain the application of fees for
Derived Data from Cboe One Summary.
These proposed non-substantive
changes would provide clarity in the
Fee Schedule based on the addition of
PO 00000
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the Platform Service and Cboe One
Summary proposed herein.
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 and
other recipients of Exchange data.
The Exchange also believes that the
proposed rule change is consistent with
Section 11(A) of the Act.15 Specifically,
the proposed rule change supports (i)
fair competition among brokers and
dealers, among exchange markets, and
between exchange markets and markets
other than exchange markets, and (ii)
the availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities. In addition, the proposed
rule change is consistent with Rule 603
of Regulation NMS,16 which provides
that any national securities exchange
that distributes information with respect
to quotations for or transactions in an
NMS stock do so on terms that are not
unreasonably discriminatory.
In adopting Regulation NMS, the
Commission granted SROs and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. It was
believed that this authority would
expand the amount of data available to
consumers, and also spur innovation
and competition for the provision of
market data. The Exchange believes that
the proposed fee change would further
broaden the availability of U.S. equity
market data to investors, consistent with
the principles of Regulation NMS.
The Exchange operates in a highly
competitive environment. Indeed, there
are 16 registered national securities
exchanges that trade U.S. equities and
have the capability to offer associated
top of book market data products to
their customers. The national securities
exchanges also compete with the
Securities Information Processors
(‘‘SIPs’’) for market data customers. 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
13 15
U.S.C. 78f.
U.S.C. 78f(b)(4).
15 15 U.S.C. 78k–1.
16 See 17 CFR 242.603.
14 15
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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.’’ 17 The
proposed fee change is a result of the
competitive environment, as the
Exchange seeks to amend its fees to
attract additional subscribers for its
proprietary top of book data offerings
through the introduction of a Derived
Data Platform Service and the expansion
of top of book data offerings to include
Cboe One Summary under the Program.
The Exchange believes that it is
reasonable to introduce reduced fees for
the use of Derived Data on Platform
Services as the proposed fee reduction
would facilitate cost effective access to
market information that is used
primarily to create and display certain
derivative instruments rather than to
display the underlying U.S. equity
securities. The proposed Platform
Service fees are constrained by
competition, and it is this competition
that is driving the proposed fee change.
Indeed, the Program is designed to
allow the Exchange to compete more
effectively for market data distributors
that purchase market information to
offer Derived Data to investors.
Similarly, the Exchange believes that
it is reasonable to enhance the Program
by expanding Exchange data offered
under the Program to include Cboe One
Summary as doing so will allow
Distributors to create Derived Data that
is based on a more comprehensive view
of the U.S. equities market. Because
Exchange data in this context is
primarily purchased for the creation of
Derived Data encompassing certain
derivative instruments, Distributors do
not require a consolidated view of the
market across multiple exchanges, and
will generally purchase such data from
a single or select few exchange(s) for
their purposes. As noted above, Cboe
One Summary includes top of book
quotation and transaction data across all
four Cboe equity exchanges, which
would allow Distributors to create more
meaningful Derived Data than that
available from a single exchange’s
market data at a potentially reduced
price.
The existence of alternatives to the
Program ensures that the Exchange
cannot set unreasonable or unfairly
discriminatory fees, as subscribers are
free to elect such alternatives. That is,
the Exchange competes with other
exchanges that provide similar market
17 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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data products and pricing programs.
Expanding the availability of diverse
competitive products actually promotes
additional competition as it ensures that
alternative products from different
sources are readily available to
Distributors and the broader market.
The Exchange therefore believes that the
introduction of pricing programs and
the expansion of Exchange data are not
only constrained by competition but
also ensure continued competition that
acts as a constraint on the pricing of
services provided by other national
securities exchanges and the SIPs. If a
competing exchange were to charge less
for a similar product than the Exchange
charges under the proposed fee
structure, prospective subscribers may
choose not subscribe to, or cease
subscribing to, the Program. The
Exchange believes that lowering the cost
of accessing Derived Data may make the
Exchange’s market information more
attractive, and encourage additional
Distributors to subscribe to Exchange
market data instead of competitor
products. The Exchange anticipates up
to 10 Distributors to participate in the
proposed Platform Service, and up to
three Distributors to create Derived Data
from Cboe One Summary. Distributors
can discontinue use at any time and for
any reason, including due to an
assessment of the reasonableness of fees
charged. Further, firms have a wide
variety of alternative market data
products from which to choose, such as
similar proprietary data products
offered by other national securities
exchanges, including those that choose
to offer discounted fees for the
distribution of Derived Data in an effort
to compete for this business.
The proposed rule change would
provide an optional fee structure for
Distributors to use Exchange data to
make Derived Data available to NonProfessional Users via an Exchange
approved Platform Service at a reduced
fee. As proposed, if a Distributor uses a
Platform Service to distribute Derived
Data, the Distributor would be charged
the normal applicable External
Distributor Fee excluding the NonProfessional User Fee. The Exchange
believes that it is equitable and not
unfairly discriminatory to charge a fee
for Professional Users but no fee for
Non-Professional Users. NonProfessional Users are already subject to
a heavily discounted fee for BZX Top
market data relative to Professional
Users. Differential fees for Professional
and Non-Professional Users are widely
used by the Exchange and other
exchanges for their proprietary market
data as this reduces costs for retail
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6401
investors and makes market data more
broadly available. The Exchange
believes that eliminating fees for NonProfessional Users that access Derived
Data from Distributors pursuant to the
Program is consistent with longstanding
precedent indicating that it is consistent
with the Act to provide reasonable
incentives to retail investors that rely on
the public markets for their investment
needs.18 Further, the proposed fee
would only apply to Distributors that
elect to participate in the Program by
distributing Derived Data through a
Platform Service. Exchange market data
is distributed and purchased on a
voluntary basis, in that neither the
Exchange nor market data distributors
are required by any rule or regulation to
make this data available. Distributors of
Exchange data are not required to
participate in the proposed Program,
which is merely an alternative option
being proposed by the Exchange to
potentially lower costs for market data
that is Derived Data. As previously
explained, the Exchange currently offers
discounted fees for Distributors that
distribute Derived Data on a White
Label Service or an API Service.
Expanding the universe of customers
that can benefit from discounted fees for
distributing Derived Data would serve to
further increase the accessibility of the
Exchange’s market data products.
Although the proposed pricing for the
Platform Service differs from the pricing
currently in place for the White Label
and API Service Programs, it mirrors the
normal External Distribution Fee for
BZX Top and Cboe One Summary
except that there would be no fee for
Non-Professional Users. The White
Label Service provides an ‘‘off-theshelf’’ solution to display Derived Data
as it is ultimately designed and
controlled by the Distributor.
Alternatively, the API Service offers end
clients of Distributors to use Derived
Data in one or more of their own
customized applications. The Exchange
believes that the proposed pricing
reflects the relative benefits provided to
Distributors that offer a Platform Service
that allows Users remote access to
derivative products via a hosted display
solution within the Distributors fully
managed infrastructure.
18 As discussed previously, the Exchange does not
fees [sic] to Non-Professional Users pursuant to the
White Label Service and API Service. See Securities
Exchange Act No. 84002 (August 30, 2018) 83 FR
45149 (September 5, 2018) (SR–CboeBZX–2018–
065) (Proposed fee amendment for White Label
Service). See also Securities Exchange Act No.
87306 (October 15, 2019) 84 FR 56258 (October 21,
2019) (SR–CboeBZX–2019–087) (Proposed fee
amendment for API Service).
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Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
The proposed rule change would also
provide Distributors the option to create
Derived Data from Cboe One Summary,
and benefit from reduced fees for that
product under the Financial Product
Distribution Program, in addition to the
currently available BZX Top. The
proposed fees would only apply to
Distributors that elect to create Derived
Data from Cboe One Summary. Similar
to the fee structure for BZX Top under
the Program, no fee would be assessed
for Non-Professional Users of Derived
Data from Cboe One Summary. For the
same reasons discussed above, the
Exchange believes it is equitable and not
unfairly discriminatory to charge a fee
for Professional Users but no fee for
Non-Professional Users. Further, the
proposed fee would only apply to
Distributors that elect to participate in
the Program by distributing Derived
Data from Cboe One Summary.
Exchange market data is distributed and
purchased on a voluntary basis, in that
neither the Exchange nor market data
distributors are required by any rule or
regulation to make this data available.
Although the proposed pricing for Cboe
One Summary differs from the pricing
currently in place for BZX Top, the
Exchange also believes that its pricing
reflects the relative benefits provided to
Distributors that provide Derived Data
based on market information from all
four Cboe equities exchanges. For
example, the proposed fee for one to
five External Subscribers of Derived
Data based on Cboe One Summary using
the API Service is equal to the aggregate
standard External Distribution Fee
across the Cboe equities exchange Top
feeds, and is also equal to the standard
External Distribution Fee for Cboe One
Summary (i.e., $5,000 per External
Subscriber) on the Exchange. The
proposed fee under the White Label
Service is less than the proposed fee for
API Service as Derived Data is provided
on an ‘‘off-the-shelf’’ basis, and thus
reflects the relative benefits provided to
Distributors. Further, the proposed fee
for Cboe One Summary under the
proposed Platform Service is identical
to the standard External Distributor fee
for Cboe One Summary with the
exception that there would be no fee
associated with Non-Professional Users.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would result
in any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive environment, and its ability
to price these data products is
VerDate Sep<11>2014
20:44 Jan 19, 2021
Jkt 253001
constrained by: (i) Competition among
exchanges that offer similar data
products, and pricing options, to their
customers; and (ii) the existence of
inexpensive real-time consolidated data
disseminated by the SIPs. Top of book
data is disseminated by both the SIPs
and all 16 equities exchanges have the
capability to disseminate such data.
There are therefore a number of
alternative products available to market
participants and investors. In this
competitive environment potential
subscribers are free to choose which
competing product to purchase to
satisfy their need for market
information. Often, the choice comes
down to price, as broker-dealers or
vendors look to purchase the lowest
priced top of book data product, or
quality, as market participants seek to
purchase data that represents significant
market liquidity. In order to better
compete for this segment of the market,
the Exchange is proposing to reduce fees
charged to Distributors that distribute
Derived Data through an Exchange
approved Platform and enhance the
existing program to offer Distributors
the option to create Derived Data based
on Cboe One Summary. The Exchange
believes that this would facilitate greater
access to Exchange data, ultimately
benefiting investors that are provided
access to such data. The proposed
Platform Service fees would apply to
data derived from BZX Top and Cboe
One Summary, which are subject to
competition from both the SIPs and
exchanges that offer similar products,
including but not limited to those that
choose to provide similar pricing
options for Derived Data. A number of
national securities exchanges, including
the Exchange, its affiliated Cboe U.S.
equities exchanges, and the Nasdaq
Stock Market, LLC (‘‘Nasdaq’’) offer
pricing discounts for Derived Data
today. These pricing programs reduce
the cost of accessing top of book market
information that is used, among other
things, to create derivative instruments
rather than to trade U.S. equity
securities. In order to better compete for
this segment of the market, the
Exchange is proposing to expand the
Program to include a Derived Data
Platform Service, which would allow
additional market data customers to
benefit from discounted pricing.
Additionally, the Exchange is proposing
to enhance the Program by providing a
fee structure for Cboe One Summary,
which would allow Distributors to
create Derived Data that is based on a
more comprehensive view of the U.S.
equities market. The Exchange does not
believe that the proposal would cause
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
any unnecessary or inappropriate
burden on intermarket competition as
other exchanges and data vendors are
free to lower their prices to better
compete with the Exchange’s offering.
The Exchange believes that the
proposed rule change is pro-competitive
as it seeks to offer pricing incentives to
customers to better position the
Exchange as it competes to attract
additional market data subscribers.
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 19 and paragraph (f) of Rule
19b–4 thereunder.20 At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2021–003 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2021–003. This
file number should be included on the
19 15
20 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
21JAN1
Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2021–003 and
should be submitted on or before
February 11, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–01132 Filed 1–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90917; File No. SR–NYSE–
2020–95]
jbell on DSKJLSW7X2PROD with NOTICES
Self-Regulatory Organizations; New
York Stock Exchange LLC, Notice of
Designation of a Longer Period for
Commission Action on a Proposed
Rule Change To Make Permanent
Commentaries to Rule 7.35A and
Commentaries to Rule 7.35B and Make
Related Changes to Rules 7.32, 7.35C,
46B, and 47
1 15
January 13, 2021.
On November 13, 2020, New York
Stock Exchange LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
21 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
20:44 Jan 19, 2021
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
make permanent Commentaries .01(a)
and (b) and .06 to Rule 7.35A (DMMFacilitated Core Open and Trading Halt
Auctions) and Commentaries .01 and
.03 to Rule 7.35B (DMM-Facilitated
Closing Auctions) and make related
changes to Rules 7.32 (Order Entry),
7.35C (Exchange-Facilitated Closing
Auctions), 46B (Regulatory Trading
Official), and 47 (Floor Officials—
Unusual Situations). The proposed rule
change was published for comment in
the Federal Register on December 1,
2020.3 The Commission has received no
comment letters on the proposed rule
change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a propose rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and published its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the Notice for the
proposed rule change is January 15,
2021. The Commission is extending this
45-day period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, pursuant to
Section 19(b)(2) of the Act,5 the
Commission designates March 1, 2021,
as the date by which the Commission
shall either approve or disapprove, or
institute proceedings to determine
whether to approve or disapprove, the
proposed rule change (File No. SR–
NYSE–2020–95).
Jkt 253001
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 90495
(November 24, 2020), 85 FR 77304 (December 1,
2020) (SR–NYSE–2020–95).
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2).
2 17
PO 00000
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Fmt 4703
Sfmt 4703
6403
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–01135 Filed 1–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–139, OMB Control No.
3235–0128]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
from: U.S. Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Rule 12f–1
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 12f–1 (17 CFR
240.12f–1), under the Securities
Exchange Act of 1934 (‘‘Act’’) (15 U.S.C.
78a et seq.). The Commission plans to
submit this existing collection of
information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 12f–1 (‘‘Rule’’), originally
adopted in 1979 pursuant to Sections
12(f) and 23(a) of the Act, and as further
modified in 1995 and 2005, sets forth
the requirements for filing an exchange
application to reinstate unlisted trading
privileges (‘‘UTP’’) in a security in
which UTP has been suspended by the
Commission pursuant to Section
12(f)(2)(A) of the Act. Under Rule
12f–1, an exchange must submit one
copy of an application for reinstatement
of UTP to the Commission that contains
specified information, as set forth in the
Rule. The application for reinstatement,
pursuant to the Rule, must provide the
name of the issuer, the title of the
security, the name of each national
securities exchange, if any, on which
the security is listed or admitted to
unlisted trading privileges, whether
transaction information concerning the
security is reported pursuant to an
effective transaction reporting plan
contemplated by Rule 601 of Regulation
NMS, the date of the Commission’s
suspension of unlisted trading
privileges in the security on the
6 17
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CFR 200.30–3(a)(31).
21JAN1
]]>Agencies
[Federal Register Volume 86, Number 12 (Thursday, January 21, 2021)]
[Notices]
[Pages 6398-6403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-01132]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90912; File No. SR-CboeBZX-2021-003]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Fee Schedule To Expand the Existing Financial Product Distribution
Program To Provide for a Derived Data Platform Service
January 13, 2021.
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 January 4, 2021, Cboe BZX Exchange, Inc. (``Exchange'' or
``BZX'') 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 by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to amend the Fee Schedule to expand the existing
Financial Product Distribution Program (the ``Program'') to provide for
a Derived Data Platform Service. Additionally, the proposal seeks to
enhance the Program to provide for the distribution of data derived
from the Cboe Aggregated Market (``Cboe One'') \3\ Summary Feed. The
text of the proposed rule change is provided in Exhibit 5.
---------------------------------------------------------------------------
\3\ See Exchange Rule 11.22(j).
---------------------------------------------------------------------------
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to implement a pricing
structure that would reduce fees charged to Distributors of ``Derived
Data'', as defined below, through an Exchange approved Derived Data
Platform Service. Additionally, the proposal seeks to enhance the
Program to permit the distribution of data derived from Cboe One
Summary
[[Page 6399]]
through the existing White Label Service, Application Programming
Interface (``API'') Service, and the proposed Platform Service.
Derived Data Platform Service
``Derived Data'' is pricing data or other data that (i) is created
in whole or in part from Exchange Data, (ii) is not an index or
financial product, and (iii) cannot be readily
reverse[hyphen]engineered to recreate Exchange Data or used to create
other data that is a reasonable facsimile or substitute for Exchange
Data. Derived Data may be created by Distributors for a number of
different purposes, as determined by the Distributor. Possible uses
include the display of information or data, or the creation of
derivative instruments, such as swaps,\4\ swaptions,\5\ or contracts
for difference.\6\ The specific use of the data is determined by the
Distributor, as applicable fees do not depend on the purpose for
placing the Derived Data under the Program.
---------------------------------------------------------------------------
\4\ A swap is a derivative contract in which two parties agree
to exchange financial instruments.
\5\ A swaption, or swap option, is an option to enter into a
swap at a specified time.
\6\ A contract for difference is an agreement to exchange the
difference between the current value of an asset and its future
value. If the price increases, the seller pays the buyer the amount
of the increase. If the price decreases, the buyer pays the seller
the amount of the decrease.
---------------------------------------------------------------------------
The Exchange currently offers a White Label Service and an API
Service that allow Distributors to benefit from discounted fees when
distributing Derived Data taken from Exchange data.\7\ Instead of the
regular fee for external distribution \8\ of Exchange data,
Distributors of Derived Data under both the White Label Service and API
Service are charged a tiered External Subscriber Fee based on the
number of External Subscribers that receive Derived Data from the
Distributor. Additionally, Distributors are charged a Professional User
\9\ Fee based on the number of Professional Users of the Derived Data.
Non-Professional Users of Derived Data are not subject to a fee under
either the White Label Service or the API Service.
---------------------------------------------------------------------------
\7\ Currently, BZX Top data is the only Exchange data included
in the Program; however, as discussed in further detail below, the
Exchange is also proposing to include Cboe One Summary in the
Program.
\8\ External distribution occurs when a Distributor that
receives an Exchange Market Data product distributes that data to a
third-party or one or more users outside the Distributor's own
entity.
\9\ A ``Professional User'' of an Exchange Market Data product
is any User other than a Non-Professional User. A ``Non-Professional
User'' of an Exchange Market Data product is a natural person or
qualifying trust that uses Data only for personal purposes and not
for any commercial purpose and, for a natural person who works in
the United States, is not: (i) Registered or qualified in any
capacity with the Securities and Exchange Commission, the
Commodities Futures Trading Commission, any state securities agency,
any securities exchange or association, or any commodities or
futures contract market or association; (ii) engaged as an
``investment adviser'' as that term is defined in Section 202(a)(11)
of the Investment Advisors Act of 1940 (whether or not registered or
qualified under that Act); or (iii) employed by a bank or other
organization exempt from registration under federal or state
securities laws to perform functions that would require registration
or qualification if such functions were performed for an
organization not so exempt; or, for a natural person who works
outside of the United States, does not perform the same functions as
would disqualify such person as a Non-Professional User if he or she
worked in the United States.
---------------------------------------------------------------------------
The White Label Service is a type of hosted display solution in
which a Distributor hosts, maintains, and controls a website or
platform on behalf of a third-party entity. The service allows
Distributors to make Derived Data available on a platform that is
branded with a third-party brand, or co-branded with a third-party and
a Distributor, while the Distributor maintains control of the
applications data, entitlements and display. Alternatively, the API
Service is a type of data feed distribution in which a Distributor
delivers an API or similar distribution mechanism to a third-party
entity for use within one or more platforms. The API Service allows
Distributors to provide Derived Data to a third-party entity for use
within one or more downstream platforms that are operated and
maintained by the third-party entity. The Distributor maintains control
of the entitlements, but does not maintain technical control of the
usage or the display.
Now the Exchange is proposing to implement a third service under
the Program, the Platform Service. The Platform Service would allow a
Distributor to provide derivative products directly to users that are
hosted within their infrastructure. The Platform Service would be
strictly limited to derivative products based in whole or in part on
Exchange data where only user remote access is permitted. Normally,
distributors of Exchange market data may be subject to Distribution and
User Fees including an: External Distribution Fee, Professional User
Fee, and Non-Professional User Fee. Distributors would be liable for
the fees normally applicable for external distribution except for the
Non-Professional User fee,\10\ which would be eliminated when
participating in the Platform Service, further reducing costs for
Distributors that provide access to such data to retail investors. In
contrast to the existing White Label Service and API Service, the
Platform Service provides a targeted discount to Distributors rather
than to External Subscribers.
---------------------------------------------------------------------------
\10\ The Non-Professional User Fee for external distribution of
BZX Top is $0.10/month.
---------------------------------------------------------------------------
Like the existing White Label Service and API Service, the proposed
Platform Service would be entirely optional, in that it would only
apply to Distributors that opt to use Derived Data to create a Platform
Service, as described herein. It would not impact or raise the cost of
any other Exchange product, nor would it affect the cost of Exchange
data, except in instances where Derived Data is made available on a
Platform Service. A Distributor that provides a Platform Service for
Exchange data that is not Derived Data or distributes Derived Data
through a platform other than an approved White Label Service, API
Service, or Platform Service would be liable for the fees normally
applicable for the distribution of Exchange data.
Cboe One Summary
In addition to the above, the Exchange is proposing to adopt fees
for the distribution of data derived from Cboe One Summary under the
existing White Label Service and API Service, as well as the proposed
Platform Service. Under the existing Fee Schedule, Distributors that
participate in the Program may only create Derived Data from BZX
Top,\11\ a proprietary data product that provides top of book
quotations and execution information for all equity securities traded
on the Exchange. The Exchange is now proposing a fee amendment to allow
Distributors that participate in the Program to create Derived Data
from Cboe One Summary in addition to BZX Top. Cboe One Summary is a
proprietary data product that provides the top of book quotations and
execution information for all listed equity securities traded across
the Exchange and its affiliated U.S. equities exchanges (the ``Cboe
equity exchanges'').\12\ Therefore, Distributors of Derived Data
created from Cboe One Summary could display information or data or
create derivative instruments based on top of book information across
the four Cboe equity exchanges rather than just BZX. The Exchange
believes that the proposal will enhance the Program as the inclusion of
Cboe One Summary will allow Distributors to create Derived Data that is
based on a more comprehensive view of the U.S. equities market.
---------------------------------------------------------------------------
\11\ See Exchange Rule 11.22(d).
\12\ Supra note 3.
---------------------------------------------------------------------------
As discussed above, Distributors of Exchange data, including Cboe
One Summary, may be subject to Distribution and User Fees including an:
External Distribution Fee, Professional
[[Page 6400]]
User Fee, and Non-Professional User Fee. As proposed, a Distributor
that provides Derived Data from Cboe One Summary would be liable for
the proposed fees discussed below instead of the fees normally
applicable for the distribution of Cboe One Summary. Existing fees for
BZX Top Derived Data within a White Label Service or API Service are
comprised of a tiered fee based on the number of External Subscribers,
a monthly fee for each Professional User, and include no fee for Non-
Professional Users. Similarly, the proposed fees for the Platform
Service are comprised of the normal External Distribution and
Professional User fees applicable for the distribution of BZX Top
except that they would not be subject to the Non-Professional Users
fees normally applicable. The Exchange proposes to adopt a similar fee
structure for Cboe One Summary Derived Data.
As proposed, Distributors would be charged the following fees for a
White Label Service for Cboe One Summary Derived Data: (1) $1,000 Per
month for each External Subscriber if the Distributor makes Derived
Data available to 1-5 External Subscribers; (2) $750 per month for each
External Subscriber if the Distributor makes Derived Data available to
6-10 External Subscribers; and (3) $500 per month for each External
Subscriber if the Distributor makes Derived Data available to 11 or
more External Subscribers. For example, a Distributor providing White
Label Derived Data based on Cboe One Summary to six External
Subscribers would be charged a monthly fee of $4,500 (i.e., 6 External
Subscribers x $750 each). Additionally, the Exchange would continue to
charge a monthly Professional User fee of $10 per month for each
Professional User. The Exchange proposes no Non-Professional User fee
for the distribution of Cboe One Summary Derived Data under the White
Label Service, which is consistent with the fee structure for the
distribution of BZX Top Derived Data under the White Label Service.
Alternatively, Distributors would be charged the following fees for
an API Service for Cboe One Summary Derived Data: (1) $5,000 per month
for each External Subscriber if the Distributor makes Derived Data
available to 1-5 External Subscribers; (2) $4,000 per month for each
External Subscriber if the Distributor makes Derived Data available to
6-20 External Subscribers; and (3) $3,000 per month for each External
Subscriber if the Distributor makes Derived Data available to 11 or
more External Subscribers. For example, a Distributor providing API
Service Derived Data based on Cboe One Summary to six External
Subscribers would be charged a monthly fee of $24,000 (i.e., 6 External
Subscribers x $4,000 each). Additionally, the Exchange would continue
to charge a monthly Professional User fee of $10 per month for each
Professional User. The Exchange proposes no Non-Professional User fee
for the distribution of Cboe One Summary Derived Data under the API
Service, which is consistent with the fee structure for the
distribution of BZX Top Derived Data under the API Service.
Lastly, the Exchange proposes to adopt fees for the proposed
Platform Service for Cboe One Summary data in addition to the proposed
fees for BZX Top discussed above. Like the proposed fee for BZX Top
Derived Data, Distributors of Cboe One Summary Derived Data would be
liable for the fees normally applicable for the external distribution
of Cboe One Summary, except for the Non-Professional User fee (i.e.,
$0.25/month) which would be free under the Platform Service.
Corresponding Amendments to Fee Schedule
Based on the proposed amendments discussed above, the Exchange
proposes several clarifying modifications to the Fee Schedule. First,
the Exchange proposes to add a definition of ``Platform Service'' to
the Market Data Fees definitions section of the Fee Schedule. The
definition would provide that ``a Platform Service is a type of hosted
display solution in which a Distributor provides derivative products to
Platform Service Data Users within their infrastructure. The service
allows Distributors to make Derived Data available as part of a
platform, providing users remote access to derivative products based in
whole or in part on Exchange Data.''
The Exchange also proposes to amend explanatory asterisks provided
under the Program in the Fee Schedule. Specifically, the Exchange
proposes to amend the paragraph following the first asterisk to
reference the proposed Platform Service in addition to the existing
references to the White Label Service and API Service. Additionally,
the Exchange proposes to add references to Cboe One Summary after all
references to BZX Top in the paragraph following the first asterisk.
Lastly, the Exchange proposes to add additional examples to asterisks
two and three so as to explain the application of fees for Derived Data
from Cboe One Summary. These proposed non-substantive changes would
provide clarity in the Fee Schedule based on the addition of the
Platform Service and Cboe One Summary proposed herein.
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 and other recipients of
Exchange data.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act.\15\ Specifically, the
proposed rule change supports (i) fair competition among brokers and
dealers, among exchange markets, and between exchange markets and
markets other than exchange markets, and (ii) the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities. In addition, the
proposed rule change is consistent with Rule 603 of Regulation NMS,\16\
which provides that any national securities exchange that distributes
information with respect to quotations for or transactions in an NMS
stock do so on terms that are not unreasonably discriminatory.
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\15\ 15 U.S.C. 78k-1.
\16\ See 17 CFR 242.603.
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In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique
market data to the public. It was believed that this authority would
expand the amount of data available to consumers, and also spur
innovation and competition for the provision of market data. The
Exchange believes that the proposed fee change would further broaden
the availability of U.S. equity market data to investors, consistent
with the principles of Regulation NMS.
The Exchange operates in a highly competitive environment. Indeed,
there are 16 registered national securities exchanges that trade U.S.
equities and have the capability to offer associated top of book market
data products to their customers. The national securities exchanges
also compete with the Securities Information Processors (``SIPs'') for
market data customers. 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
[[Page 6401]]
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.'' \17\ The proposed fee change is a result of the
competitive environment, as the Exchange seeks to amend its fees to
attract additional subscribers for its proprietary top of book data
offerings through the introduction of a Derived Data Platform Service
and the expansion of top of book data offerings to include Cboe One
Summary under the Program.
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\17\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes that it is reasonable to introduce reduced
fees for the use of Derived Data on Platform Services as the proposed
fee reduction would facilitate cost effective access to market
information that is used primarily to create and display certain
derivative instruments rather than to display the underlying U.S.
equity securities. The proposed Platform Service fees are constrained
by competition, and it is this competition that is driving the proposed
fee change. Indeed, the Program is designed to allow the Exchange to
compete more effectively for market data distributors that purchase
market information to offer Derived Data to investors.
Similarly, the Exchange believes that it is reasonable to enhance
the Program by expanding Exchange data offered under the Program to
include Cboe One Summary as doing so will allow Distributors to create
Derived Data that is based on a more comprehensive view of the U.S.
equities market. Because Exchange data in this context is primarily
purchased for the creation of Derived Data encompassing certain
derivative instruments, Distributors do not require a consolidated view
of the market across multiple exchanges, and will generally purchase
such data from a single or select few exchange(s) for their purposes.
As noted above, Cboe One Summary includes top of book quotation and
transaction data across all four Cboe equity exchanges, which would
allow Distributors to create more meaningful Derived Data than that
available from a single exchange's market data at a potentially reduced
price.
The existence of alternatives to the Program ensures that the
Exchange cannot set unreasonable or unfairly discriminatory fees, as
subscribers are free to elect such alternatives. That is, the Exchange
competes with other exchanges that provide similar market data products
and pricing programs. Expanding the availability of diverse competitive
products actually promotes additional competition as it ensures that
alternative products from different sources are readily available to
Distributors and the broader market. The Exchange therefore believes
that the introduction of pricing programs and the expansion of Exchange
data are not only constrained by competition but also ensure continued
competition that acts as a constraint on the pricing of services
provided by other national securities exchanges and the SIPs. If a
competing exchange were to charge less for a similar product than the
Exchange charges under the proposed fee structure, prospective
subscribers may choose not subscribe to, or cease subscribing to, the
Program. The Exchange believes that lowering the cost of accessing
Derived Data may make the Exchange's market information more
attractive, and encourage additional Distributors to subscribe to
Exchange market data instead of competitor products. The Exchange
anticipates up to 10 Distributors to participate in the proposed
Platform Service, and up to three Distributors to create Derived Data
from Cboe One Summary. Distributors can discontinue use at any time and
for any reason, including due to an assessment of the reasonableness of
fees charged. Further, firms have a wide variety of alternative market
data products from which to choose, such as similar proprietary data
products offered by other national securities exchanges, including
those that choose to offer discounted fees for the distribution of
Derived Data in an effort to compete for this business.
The proposed rule change would provide an optional fee structure
for Distributors to use Exchange data to make Derived Data available to
Non-Professional Users via an Exchange approved Platform Service at a
reduced fee. As proposed, if a Distributor uses a Platform Service to
distribute Derived Data, the Distributor would be charged the normal
applicable External Distributor Fee excluding the Non-Professional User
Fee. The Exchange believes that it is equitable and not unfairly
discriminatory to charge a fee for Professional Users but no fee for
Non-Professional Users. Non-Professional Users are already subject to a
heavily discounted fee for BZX Top market data relative to Professional
Users. Differential fees for Professional and Non-Professional Users
are widely used by the Exchange and other exchanges for their
proprietary market data as this reduces costs for retail investors and
makes market data more broadly available. The Exchange believes that
eliminating fees for Non-Professional Users that access Derived Data
from Distributors pursuant to the Program is consistent with
longstanding precedent indicating that it is consistent with the Act to
provide reasonable incentives to retail investors that rely on the
public markets for their investment needs.\18\ Further, the proposed
fee would only apply to Distributors that elect to participate in the
Program by distributing Derived Data through a Platform Service.
Exchange market data is distributed and purchased on a voluntary basis,
in that neither the Exchange nor market data distributors are required
by any rule or regulation to make this data available. Distributors of
Exchange data are not required to participate in the proposed Program,
which is merely an alternative option being proposed by the Exchange to
potentially lower costs for market data that is Derived Data. As
previously explained, the Exchange currently offers discounted fees for
Distributors that distribute Derived Data on a White Label Service or
an API Service. Expanding the universe of customers that can benefit
from discounted fees for distributing Derived Data would serve to
further increase the accessibility of the Exchange's market data
products. Although the proposed pricing for the Platform Service
differs from the pricing currently in place for the White Label and API
Service Programs, it mirrors the normal External Distribution Fee for
BZX Top and Cboe One Summary except that there would be no fee for Non-
Professional Users. The White Label Service provides an ``off-the-
shelf'' solution to display Derived Data as it is ultimately designed
and controlled by the Distributor. Alternatively, the API Service
offers end clients of Distributors to use Derived Data in one or more
of their own customized applications. The Exchange believes that the
proposed pricing reflects the relative benefits provided to
Distributors that offer a Platform Service that allows Users remote
access to derivative products via a hosted display solution within the
Distributors fully managed infrastructure.
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\18\ As discussed previously, the Exchange does not fees [sic]
to Non-Professional Users pursuant to the White Label Service and
API Service. See Securities Exchange Act No. 84002 (August 30, 2018)
83 FR 45149 (September 5, 2018) (SR-CboeBZX-2018-065) (Proposed fee
amendment for White Label Service). See also Securities Exchange Act
No. 87306 (October 15, 2019) 84 FR 56258 (October 21, 2019) (SR-
CboeBZX-2019-087) (Proposed fee amendment for API Service).
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[[Page 6402]]
The proposed rule change would also provide Distributors the option
to create Derived Data from Cboe One Summary, and benefit from reduced
fees for that product under the Financial Product Distribution Program,
in addition to the currently available BZX Top. The proposed fees would
only apply to Distributors that elect to create Derived Data from Cboe
One Summary. Similar to the fee structure for BZX Top under the
Program, no fee would be assessed for Non-Professional Users of Derived
Data from Cboe One Summary. For the same reasons discussed above, the
Exchange believes it is equitable and not unfairly discriminatory to
charge a fee for Professional Users but no fee for Non-Professional
Users. Further, the proposed fee would only apply to Distributors that
elect to participate in the Program by distributing Derived Data from
Cboe One Summary. Exchange market data is distributed and purchased on
a voluntary basis, in that neither the Exchange nor market data
distributors are required by any rule or regulation to make this data
available. Although the proposed pricing for Cboe One Summary differs
from the pricing currently in place for BZX Top, the Exchange also
believes that its pricing reflects the relative benefits provided to
Distributors that provide Derived Data based on market information from
all four Cboe equities exchanges. For example, the proposed fee for one
to five External Subscribers of Derived Data based on Cboe One Summary
using the API Service is equal to the aggregate standard External
Distribution Fee across the Cboe equities exchange Top feeds, and is
also equal to the standard External Distribution Fee for Cboe One
Summary (i.e., $5,000 per External Subscriber) on the Exchange. The
proposed fee under the White Label Service is less than the proposed
fee for API Service as Derived Data is provided on an ``off-the-shelf''
basis, and thus reflects the relative benefits provided to
Distributors. Further, the proposed fee for Cboe One Summary under the
proposed Platform Service is identical to the standard External
Distributor fee for Cboe One Summary with the exception that there
would be no fee associated with Non-Professional Users.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
operates in a highly competitive environment, and its ability to price
these data products is constrained by: (i) Competition among exchanges
that offer similar data products, and pricing options, to their
customers; and (ii) the existence of inexpensive real-time consolidated
data disseminated by the SIPs. Top of book data is disseminated by both
the SIPs and all 16 equities exchanges have the capability to
disseminate such data. There are therefore a number of alternative
products available to market participants and investors. In this
competitive environment potential subscribers are free to choose which
competing product to purchase to satisfy their need for market
information. Often, the choice comes down to price, as broker-dealers
or vendors look to purchase the lowest priced top of book data product,
or quality, as market participants seek to purchase data that
represents significant market liquidity. In order to better compete for
this segment of the market, the Exchange is proposing to reduce fees
charged to Distributors that distribute Derived Data through an
Exchange approved Platform and enhance the existing program to offer
Distributors the option to create Derived Data based on Cboe One
Summary. The Exchange believes that this would facilitate greater
access to Exchange data, ultimately benefiting investors that are
provided access to such data. The proposed Platform Service fees would
apply to data derived from BZX Top and Cboe One Summary, which are
subject to competition from both the SIPs and exchanges that offer
similar products, including but not limited to those that choose to
provide similar pricing options for Derived Data. A number of national
securities exchanges, including the Exchange, its affiliated Cboe U.S.
equities exchanges, and the Nasdaq Stock Market, LLC (``Nasdaq'') offer
pricing discounts for Derived Data today. These pricing programs reduce
the cost of accessing top of book market information that is used,
among other things, to create derivative instruments rather than to
trade U.S. equity securities. In order to better compete for this
segment of the market, the Exchange is proposing to expand the Program
to include a Derived Data Platform Service, which would allow
additional market data customers to benefit from discounted pricing.
Additionally, the Exchange is proposing to enhance the Program by
providing a fee structure for Cboe One Summary, which would allow
Distributors to create Derived Data that is based on a more
comprehensive view of the U.S. equities market. The Exchange does not
believe that the proposal would cause any unnecessary or inappropriate
burden on intermarket competition as other exchanges and data vendors
are free to lower their prices to better compete with the Exchange's
offering. The Exchange believes that the proposed rule change is pro-
competitive as it seeks to offer pricing incentives to customers to
better position the Exchange as it competes to attract additional
market data subscribers.
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 \19\ and paragraph (f) of Rule 19b-4
thereunder.\20\ 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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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2021-003 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeBZX-2021-003. This
file number should be included on the
[[Page 6403]]
subject line if email is used. To help the Commission process and
review your comments more efficiently, please use only one method. The
Commission will post all comments on the Commission's internet website
(https://www.sec.gov/rules/sro.shtml). Copies of the submission, all
subsequent amendments, all written statements with respect to the
proposed rule change that are filed with the Commission, and all
written communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549 on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
CboeBZX-2021-003 and should be submitted on or before February 11,
2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-01132 Filed 1-19-21; 8:45 am]
BILLING CODE 8011-01-P
