Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 8413-8416 [2021-02396]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 23 (Friday, February 5, 2021)]
[Notices]
[Pages 8413-8416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02396]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91028; File No. SR-CBOE-2021-008]


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

February 1, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 19, 2021, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 8414]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule in connection with 
Related Future Cross (``RFC'') orders, effective January 19, 2021.
    By way of background, from March 16 to June 12, 2020, the Exchange 
closed its trading floor in response to the coronavirus pandemic. As a 
result, the Exchange operated in an all-electronic configuration. 
Because the trading floor was closed during this time, floor brokers 
could not execute crosses of option combos (i.e., synthetic futures) on 
the trading floor on behalf of market participants who were exchanging 
futures contracts in either VIX or SPX for related options positions in 
order to swap related exposures, and there was no means to 
electronically pair and execute the options legs of these transactions 
on the Exchange. To enable Trading Permit Holders (``TPHs'') to execute 
the options part of these transactions when the floor was closed, the 
Exchange adopted the electronic RFC order type for when the trading 
floor facilities were inoperable.\3\ Footnote 12 of the Fees Schedule 
was also amended to, among other things, (1) provide a waiver for SPX/
SPXW Execution Surcharges \4\ for RFC orders, and (2) adopt an RFC 
Execution Surcharge for all SPX/SPXW and VIX initiating orders, 
applicable while the trading floor remained inoperable.\5\ More 
specifically, pursuant to the Underlying Symbol List A Rate Table in 
the Fees Schedule, a $0.05 per contract fee is assessed for SPX and 
SPXW RFC initiating orders and a $0.04 per contract fee is assessed for 
VIX RFC initiating orders while the trading floor is inoperable.
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    \3\ See Securities Exchange Act Release No. 88447 (March 20, 
2020), 85 FR 17129 (March 26, 2020) (CBOE-2020-023).
    \4\ See Cboe Options Fees Schedule, ``Rate Table--Underlying 
Symbol List A'', which assesses an SPX Execution Surcharge of $0.21 
per contract and a SPXW Execution Surcharge of $0.13 per contract 
for non-Market Maker orders in SPX and SPXW, respectively.
    \5\ See Securities Exchange Act Release No. [sic]
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    After the Exchange reopened its trading floor, the Exchange 
submitted a rule filing which permanently adopted RFC orders for 
trading in the Exchange's normal hybrid trading environment under Rule 
5.33(b)(5).\6\ The Exchange plans to launch the RFC order type for its 
normal hybrid trading environment on January 19, 2021. For purposes of 
electronic trading, an RFC order is an SPX or VIX complex order 
comprised of an option combo order coupled with a contra-side order or 
orders totaling an equal number of option combo orders. For purposes of 
open outcry trading, an RFC order is an SPX or VIX complex order 
comprised of an option combo that may execute against a contra-side RFC 
order or orders totaling an equal number of option combo orders. An RFC 
order must be identified to the Exchange as being part of an exchange 
of option contracts for related futures positions.
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    \6\ See Securities Exchange Act Release No. 89768 (September 4, 
2020), 85 FR 55869 (September 10, 2020) (SR-CBOE-2020-060).
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    The Exchange proposes to amend the Fees Schedule in light of the 
adoption of RFC orders on a permanent basis. As noted above, footnote 
12 currently provides that the SPX and SPXW Execution Surcharges will 
be waived for SPX/SPXW RFC orders, and that the RFC Execution Surcharge 
for SPX/SPXW and VIX will apply to all SPX/SPXW and VIX RFC initiating 
orders, only when the trading floor is inoperable.\7\ The proposed rule 
change removes the SPX/SPXW Execution Surcharge waiver language in 
connection with RFC orders from footnote 12 and relocates it to 
footnote 21, which footnote sets forth other exceptions to the SPX and 
SPXW Execution Surcharges.\8\ Particularly, the Exchange proposes to 
relocate the language as the waiver will now apply at all times (once 
the RFC order type is implemented on the Exchange), as RFC orders will 
be available at all times rather than only when the trading floor is 
inoperable. Additionally, the Exchange believes it is appropriate to 
include the waiver language in a footnote that already contains other 
exceptions to the SPX and SPXW Execution Surcharges. Specifically, 
footnote 25 as proposed provides that all electronic executions in SPX, 
SPXW and SPESG shall be assessed the SPX, SPXW and SPESG Execution 
Surcharge, respectively, except that this fee shall not apply to SPX/
SPXW Related Future Cross (``RFC'') orders (among the current list of 
other orders). Likewise, the proposed rule change also removes the 
language from footnote 12 providing that the RFC Execution Surcharge 
for SPX/SPXW and VIX RFC initiating orders will apply to all SPX/SPXW 
and VIC RFC initiating orders, and relocates it to new footnote 25, as 
the RFC Execution Surcharges will now apply at all times.\9\ As a 
result of the proposed relocation of the RFC execution surcharge 
language from footnote 12 to footnote 25, the proposed rule change also 
removes footnote 12 appended to the RFC Execution Surcharge Fee in the 
``Rate Table--Underlying Symbol List A'' section of the Fees Schedule. 
The Exchange notes that the proposed rule change does not alter the 
current waiver language or surcharge rates already in place pursuant to 
footnote 12 for transactions in temporary RFC orders (while the 
Exchange's trading floor was inoperable), but merely removes the 
applicable RFC waiver and execution surcharge language in footnote 12 
and relocates it to footnotes 21 and 25, respectively so that the same 
waiver and

[[Page 8415]]

surcharge rates may apply to permanent RFC orders trading in the 
Exchange's normal hybrid environment.
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    \7\ Footnote 12 also provides that contracts executed as an RFC 
order during a time when the Exchange operates in a screen-based 
only environment will not count towards the 1,000 contract 
thresholds for the SPX/SPXW, VIX and RUT Tier Appointment Fees. The 
Exchange notes that the proposed rule change does not amend this 
exclusion applicable during which the trading floor may be 
inoperable because if the trading floor become inoperable then a TPH 
would only have the option of using electronic RFC orders, which may 
cause a TPH to hit the Electronic Tier Appointment surcharge where a 
TPH may not have hit the threshold before when using the trading 
floor to execute RFC orders.
    \8\ The proposed rule change appends footnote 21 to the RFC 
Execution Surcharge Fee in the ``Rate Table--Underlying Symbol List 
A'' section of the Fees Schedule.
    \9\ The proposed rule change appends footnote 25 to the RFC 
Execution Surcharge Fee in the ``Rate Table--Underlying Symbol List 
A'' section of the Fees Schedule.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act,\12\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Trading Permit Holders and other persons using 
its facilities.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed rule change is consistent with 
the Act, in that, it is reasonable, equitable and not unfairly 
discriminatory. The proposed rule change is reasonable because it does 
not alter the SPX/SPXW Execution Surcharge fee waiver and SPX/SPXW and 
VIX RFC Execution Surcharges currently applicable to RFC orders (while 
the trading floor may be inoperable), but merely updates the waiver and 
surcharge language to appropriately reflect its application to the 
permanent RFC orders recently adopted by the Exchange. The Exchange 
believes that, generally, the SPX/SPXW Execution Surcharge waiver in 
place for RFC orders is reasonable and equitable because it will 
encourage market participants to submit volume executed as RFC orders 
both electronically and on the trading floor, assisting the Exchange in 
maintaining a robust hybrid environment. Also, the Exchange believes 
that, generally, the RFC Execution Surcharges currently in place are 
reasonable and equitable, as they are generally in line with or lower 
than other execution surcharges assessed under the Fees Schedule,\13\ 
and are less than the SPX/SPXW Execution Surcharges ($0.21 and $0.13, 
respectively) that will ultimately be waived for RFC transactions. 
Finally, the Exchange believes that the proposed rule change is 
equitable and not unfairly discriminatory because the SPX/SPXW 
Execution Surcharge waiver and the RFC Execution Surcharge will 
continue to apply in the same uniform manner for the same transactions, 
both electronically and in open outcry, for all TPHs that submit RFC 
orders to the Exchange.
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    \13\ See Cboe Options Fees Schedule, ``Rate Table--Underlying 
Symbol List A'', which assesses a VIX Customer Priority Surcharge of 
$0.20 per contract, and AIM Surcharge fees (while the trading floor 
is operating in an all-electronic environment) ranging between $0.04 
and $0.10 per contract depending on the type of AIM order and 
options class (i.e., SPX, SPXW, SPESG or VIX).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket or intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the SPX/
SPXW Execution Surcharge waiver and the RFC Execution Surcharges will 
continue to apply to all TPHs that submit RFC orders to the Exchange as 
it does today, and will uniformly apply to RFC orders executed 
electronically and in open outcry. The Exchange does not believe that 
the proposed rule change will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because the transaction fee waiver will continue to 
apply to RFC orders available only for Exchange proprietary products, 
SPX/SPXW and VIX.

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 \14\ and paragraph (f) of Rule 19b-4 \15\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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-CBOE-2021-008 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-CBOE-2021-008. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal offices of the Exchange. All comments

[[Page 8416]]

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-CBOE-2021-008, and should be submitted 
on or before February 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02396 Filed 2-4-21; 8:45 am]
BILLING CODE 8011-01-P