Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish a Policy Relating to Billing Errors, 8814-8817 [2021-02591]

Download as PDF 8814 Federal Register / Vol. 86, No. 25 / Tuesday, February 9, 2021 / Notices the Exchange,38 and not on an ongoing basis. Moreover, the Commission notes the Exchange’s representations that the proposed promotional services and listing ceremonies will be offered to all listed Companies on the same terms and conditions without differentiation,39 and that the Exchange will offer comparable promotional services and listing ceremonies of comparable value to each listed Company.40 Accordingly, the Commission believes that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and, in particular, that the services are equitably allocated among issuers consistent with Section 6(b)(4) of the Act,41 and the rule does not unfairly discriminate between issuers consistent with Section 6(b)(5) of the Act.42 The Commission also notes that the Exchange has represented that if it expands the menu of promotional services offered, or elects to provide new products or services to listed Companies, the Exchange will incorporate such changes in a new proposed rule change.43 The Commission also believes that the Exchange is responding to competitive pressures in the market for listings in making this proposal. Specifically, the Exchange stated in its proposal that it expects to face competition as a new entrant in the market for exchange listings, and that it believes the promotional services and listing ceremonies that it proposes to offer to listed companies will facilitate LTSE’s ability to attract and retain listings.44 In particular, the Exchange maintains that it expects to face significant competition from NYSE and Nasdaq for listings, and that comparable offerings of promotional services and listing ceremonies are already provided by NYSE.45 Accordingly, the Commission believes that the proposed rule reflects the current competitive environment for exchange listings among national securities exchanges, and is appropriate and consistent with Section 6(b)(8) of the Act.46 khammond on DSKJM1Z7X2PROD with NOTICES 38 See Amendment No. 1, supra note 4, at 6. Notice, supra note 3, at 84450. 40 See Amendment No. 1, supra note 4, at 7. 41 15 U.S.C. 78f(b)(4). 42 15 U.S.C. 78f(b)(5). 43 See Notice, supra note 3, at 84449 n.4. 44 See id. at 84450. 45 See id. at 84449 n.5; id. at 84450. See also NYSE Listed Company Manual Section 106.03. 46 15 U.S.C. 78f(b)(8). 39 See VerDate Sep<11>2014 17:07 Feb 08, 2021 Jkt 253001 IV. Solicitation of Comments on Amendment No. 1 Interested persons are invited to submit written data, views, and arguments concerning whether Amendment No. 1 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 No. SR– LTSE–2020–22 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 No. SR–LTSE–2020–22. The file numbers 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 such 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 publicly available. All submissions should refer to File No. SR–LTSE–2020–22 and should be submitted on or before March 2, 2021. V. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 modified by Amendment No. 1, prior to the thirtieth day after the date of publication of notice of the amended proposal in the Federal Register. As discussed above, in Amendment No. 1, the Exchange clarified that: (i) The proposed promotional services and listing ceremonies will be offered to Companies on or around the time of listing, in connection with listing on the Exchange; and (ii) that the Exchange will offer comparable promotional services and listing ceremonies of comparable value to each listed Company. The Commission believes that these clarifications will help to ensure that individual listed Companies are not given specially negotiated packages of products and services to list or remain listed, as well as to ensure that the services are equitably allocated among issuers consistent with Section 6(b)(4) of the Act 47 and that the rule does not unfairly discriminate between issuers consistent with Section 6(b)(5) of the Act.48 Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,49 to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,50 that the proposed rule change (SR–LTSE–2020– 22), as modified by Amendment No. 1, be, and hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.51 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–02592 Filed 2–8–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91053; File No. SR–CBOE– 2021–010] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish a Policy Relating to Billing Errors February 3, 2021. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the 47 15 U.S.C. 78f(b)(4). U.S.C. 78f(b)(5). 49 15 U.S.C. 78s(b)(2). 50 15 U.S.C. 78s(b)(2). 51 17 CFR 200.30–3(a)(12). 48 15 E:\FR\FM\09FEN1.SGM 09FEN1 Federal Register / Vol. 86, No. 25 / Tuesday, February 9, 2021 / Notices ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 25, 2021, Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder.4 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 Exchange, Inc. (‘‘Cboe Options’’ or the ‘‘Exchange’’) is filing with the Securities and Exchange Commission (the ‘‘Commission’’) a proposed rule change to establish a policy relating to billing errors. The Exchange has designated this proposal as noncontroversial and provided the Commission with the notice required by Rule 19b–4(f)(6)(iii) under the Act.5 The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is available on the Exchange’s website at https:// markets.cboe.com/, at the Exchange’s principal office and at the Public Reference Room of the Commission. 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. khammond on DSKJM1Z7X2PROD with NOTICES 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 Footnote 7 of its fees schedule which 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 5 17 CFR 240.19b–4(f)(6)(iii). 2 17 VerDate Sep<11>2014 17:07 Feb 08, 2021 Jkt 253001 relates to billing errors and fee disputes. Footnote 7 currently provides that that any potential billing errors relating to fees assessed by Cboe Options must be brought to the attention of Cboe Options’ Accounting Department within three months from the invoice date. Additionally, all fees assessed shall be deemed final and non-refundable after three months from the invoice date. However, Footnote 7 further provides that the Exchange is not precluded from assessing fees more than three months after they were incurred if those fees were required to be paid pursuant to the Cboe Options Fee Schedule in effect at the time the fees were incurred. The Exchange proposes to eliminate the current language in Footnote 7 of the fees schedule and replace it with language recently adopted by its affiliated exchanges.6 Particularly, the Exchange proposes to provide: ‘‘All fees and rebates assessed prior to the three full calendar months before the month in which the Exchange becomes aware of a billing error shall be considered final. Any dispute concerning fees or rebates billed by the Exchange must be submitted to the Exchange in writing and must be accompanied by supporting documentation.’’ The proposed language would result in all fees and rebates assessed prior to the three full calendar months before the month in which the Exchange becomes aware of a billing error to be considered final. Particularly, the Exchange will resolve an error by crediting or debiting Trading Permit Holders (‘‘TPHs’’) and Non-TPHs based on the fees or rebates that should have been applied in the three full calendar months preceding the month in which the Exchange became aware of the error, including to all impacted transactions that occurred during those months.7 The Exchange will apply the three month look back regardless of whether the error was discovered by the Exchange or by a TPH or Non-TPH that submitted a fee dispute to the Exchange. The Exchange will continue to provide all disputes concerning fees and rebates assessed by the Exchange would have to 6 See SR–CboeBZX–2020–094; SR-CboeBYX– 2020–034; SR-CboeEDGA–2020–032; SRCboeEDGX–2020–064. 7 For example, if the Exchange becomes aware of a transaction fee billing error on January 4, 2021, the Exchange will resolve the error by crediting or debiting Members based on the fees or rebates that should have been applied to any impacted transactions during October, November and December 2020. The Exchange notes that because it bills in arrears, the Exchange would be able to correct the error in advance of issuing the January 2021 invoice and therefore, transactions impacted through the date of discovery (in this example, January 4, 2021) and thereafter, would be billed correctly. PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 8815 be submitted to the Exchange in writing and accompanied by supporting documentation. The Exchange notes that the proposed language continues to encourage TPHs and Non-TPHs to promptly review their Exchange invoices so that any disputed charges can be addressed in a timely manner. The Exchange notes that it provides TPHs with both daily and monthly fee reports and thus believes they should be aware of any potential billing errors within three months. Requiring that TPHs and Non-TPHs submit disputes in writing and provide supporting documentation encourages them to promptly review their invoices so that any disputed charges can be addressed in a timely manner while the information and data underlying those charges (e.g., applicable fees and order information) is still easily and readily available. This practice will avoid issues that may arise when TPHs or Non-TPHs do not dispute an invoice in a timely manner and will conserve Exchange resources that would have to be expended to resolve untimely billing disputes. As such, the requirement continues to alleviate administrative burdens related to billing disputes, which could divert staff resources away from the Exchange’s regulatory and business purposes. The proposed rule change to eliminate the requirement that the Exchange assess fees beyond three months if they were required to be assessed pursuant to the fees schedule at the time incurred (i.e., all fees and rebates would be final after three months regardless of how far back a billing error occurred) would provide both the Exchange and TPHs and NonTPHs finality and the ability to close their books after a known period of time. The Exchange notes that a number of exchanges have explicitly stated that they consider all fees to be final after a similar period of time.8 Additionally, several other exchanges have adopted similar provisions in their rules that provide for a process for their members and non-members to submit fee disputes.9 Moreover, the proposed language is identical to the language recently adopted on the Exchange’s 8 See e.g. Securities Exchange Act Release No. 87650 (December 3, 2019), 84 FR 67304 (December 9, 2019) (SR–NYSECHX–2019–024); Securities Exchange Act Release No. 84430 (October 16, 2018), 83 FR 53347 (October 22, 2018) (SR–NYSENAT– 2018–23); and Securities Exchange Act Release No. 79060 (October 6, 2016), 81 FR 70716 (October 13, 2016) (SR–ISEGemini–2016–11) . 9 See e.g., MEMX LLC, Rule 15.3, IEX Rule 15.120, Nasdaq Rule Equity 7, Section 70, Nasdaq BX Rule Equity 7, Section 111, and Nasdaq PHLX Rule Equity 7, Section 2. E:\FR\FM\09FEN1.SGM 09FEN1 8816 Federal Register / Vol. 86, No. 25 / Tuesday, February 9, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES affiliated exchanges.10 As such, the proposed change will also harmonize and conform the Exchange’s billing practices with that of its affiliated exchanges. The proposed billing policy will apply to all charges and rebates reflected in the Exchange’s fees schedules. 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.11 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 12 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 the Section 6(b)(5) 13 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. With respect to the proposed language regarding the billing procedure, the Exchange believes continuing to require the submission of all billing disputes in writing, and with supporting documentation is reasonable because the Exchange provides TPHs with ample tools to monitor and account for various charges incurred in a given month. Additionally, the Exchange notes that most TPHs and Non-TPHs that pay exchange fees are sophisticated entities, so it is appropriate to expect them to promptly review their invoices for errors and to be capable of identifying such errors. The proposed provision also continues to promote the protection of investors and the public interest by providing a clear and concise mechanism for TPH and Non-TPHs to dispute fees and for the Exchange to review such disputes in a timely manner. Moreover, the proposed billing dispute language, which lowers the Exchange’s administrative burden, is 10 See supra note 6. U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). 13 Id. similar to billing dispute language of other exchanges, and the same as the Exchange’s affiliates.14 In addition, the billing procedure is fair, equitable, and not unfairly discriminatory because it will apply equally to all TPHs (and NonTPHs that pay Exchange fees). The Exchange also believes that providing that all fees and rebates are final after three months (i.e., always resolving billing errors only for the three full calendar months preceding the month in which the Exchange became aware of the error), is reasonable as both the Exchange and TPHs and Non-TPHs have an interest in knowing when its fee assessments are final and when reliance can be placed on those assessments. Indeed, without some deadline on billing errors, the Exchange and TPHs and Non-TPHs would never be able to close their books with any confidence. Furthermore, as noted above, a number of Exchanges similarly consider their fees final after a similar period of time.15 The proposed change is also equitable, and not unfairly discriminatory because it will apply equally to all TPHs (and Non-TPHs that pay Exchange fees) and apply in cases where either the TPH (or Non-TPH) discovers the error or the Exchange discovers the error. Lastly, the proposed changes to the fees schedule will align the Exchange’s billing practices with those of its affiliated exchanges. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. With respect to the billing procedure and billing error policy, the proposed rule change would provide a clear process that would apply equally to all TPHs. Additionally, the proposed rule change is similar to rules of other exchanges. The Exchange does not believe such proposed changes would impair the ability of TPHs or competing order execution venues to maintain their competitive standing in the financial markets. Moreover, because the proposed changes would apply equally to all TPHs, the proposal does not impose any burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No comments were solicited or received on the proposed rule change. 11 15 VerDate Sep<11>2014 17:07 Feb 08, 2021 14 See 15 See Jkt 253001 PO 00000 supra notes 6 and 9. supra notes 6 and 8. Frm 00065 Fmt 4703 Sfmt 4703 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and; (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 16 and Rule 19b–4(f)(6) 17 thereunder. The Exchange has asked the Commission to waive the 30-day operative delay.18 The Commission finds that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because waiver of the operative delay will allow the Exchange to provide a clear process for billing errors and fee disputes without delay. Moreover, the proposed rule changes are comparable to other policies and practices established by other exchanges and therefore does not raise any new or novel issues. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.19 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: 16 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 18 17 CFR 240.19b–4(f)(6)(iii). 19 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule change’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 17 17 E:\FR\FM\09FEN1.SGM 09FEN1 Federal Register / Vol. 86, No. 25 / Tuesday, February 9, 2021 / 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– CBOE–2021–010 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. khammond on DSKJM1Z7X2PROD with NOTICES All submissions should refer to File Number SR–CBOE–2021–010. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CBOE– 2021–010 and should be submitted on or before March 2, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–02591 Filed 2–8–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91048; File No. SR–NYSE– 2021–09] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section 907.00 of the Manual February 3, 2021. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on January 26, 2021, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. 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 The Exchange proposes to amend Section 907.00 of the Manual to clarify the application of that rule. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, 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 self-regulatory organization 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 those 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose Section 907.00 of the Manual sets forth complimentary products and services that issuers are entitled to 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 20 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:07 Feb 08, 2021 Jkt 253001 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 8817 receive in connection with their NYSE listing. The Exchange offers certain complimentary products and services and access to discounted third-party products and services through the NYSE Market Access Center to listed issuers. The Exchange also provides complimentary market surveillance products and services (with a commercial value of approximately $55,000 annually), Web-hosting products and services (with a commercial value of approximately $16,000 annually), web-casting services (with a commercial value of approximately $6,500 annually), market analytics products and services (with a commercial value of approximately $30,000 annually), and news distribution products and services (with a commercial value of approximately $20,000 annually) to Eligible New Listings 4 and Eligible Transfer Companies 5 based on the following tiers: 6 Tier A: For Eligible New Listings and Eligible Transfer Companies with a global market value of $400 million or more, in each case calculated as of the date of listing on the Exchange, the Exchange offers market surveillance, market analytics, web-hosting, webcasting, and news distribution products and services. Tier B: For Eligible New Listings and Eligible Transfer Companies with a global market value of less than $400 million, in each case calculated as of the date of listing on the Exchange, the Exchange offers Webhosting, market analytics, web-casting, and news distribution products and services. On January 11, 2021, the Commission approved the Exchange’s proposal to provide all the additional complimentary products and services described above to Eligible New Listings 4 For the purposes of Section 907.00, the term ‘‘Eligible New Listing’’ means (i) any U.S. company that lists common stock on the Exchange for the first time and any non-U.S. company that lists an equity security on the Exchange under Section 102.01 or 103.00 of the Manual for the first time, regardless of whether such U.S. or non-U.S. company conducts an offering and (ii) any U.S. or non-U.S. company emerging from a bankruptcy, spinoff (where a company lists new shares in the absence of a public offering), and carve-out (where a company carves out a business line or division, which then conducts a separate initial public offering). 5 For purposes of Section 907.00, the term ‘‘Eligible Transfer Company’’ means any U.S. or non-U.S. company that transfers its listing of common stock or equity securities, respectively, to the Exchange from another national securities exchange. For purposes of Section 907.00, an ‘‘equity security’’ means common stock or common share equivalents such as ordinary shares, New York shares, global shares, American Depository Receipts, or Global Depository Receipts. 6 Section 907.00 provides for separate service entitlements for Acquisition Companies listed under Section 102.06 and the issuers of Equity Investment Tracking Stocks listed under Section 102.07. E:\FR\FM\09FEN1.SGM 09FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 25 (Tuesday, February 9, 2021)]
[Notices]
[Pages 8814-8817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02591]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91053; File No. SR-CBOE-2021-010]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Establish a Policy Relating to Billing Errors

February 3, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 8815]]

``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 25, 2021, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (``Cboe Options'' or the ``Exchange'') is 
filing with the Securities and Exchange Commission (the ``Commission'') 
a proposed rule change to establish a policy relating to billing 
errors. The Exchange has designated this proposal as non-controversial 
and provided the Commission with the notice required by Rule 19b-
4(f)(6)(iii) under the Act.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The text of the proposed rule change is provided in Exhibit 5. The 
text of the proposed rule change is available on the Exchange's website 
at https://markets.cboe.com/, at the Exchange's principal office and at 
the Public Reference Room of the Commission.

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 Footnote 7 of its fees schedule 
which relates to billing errors and fee disputes. Footnote 7 currently 
provides that that any potential billing errors relating to fees 
assessed by Cboe Options must be brought to the attention of Cboe 
Options' Accounting Department within three months from the invoice 
date. Additionally, all fees assessed shall be deemed final and non-
refundable after three months from the invoice date. However, Footnote 
7 further provides that the Exchange is not precluded from assessing 
fees more than three months after they were incurred if those fees were 
required to be paid pursuant to the Cboe Options Fee Schedule in effect 
at the time the fees were incurred. The Exchange proposes to eliminate 
the current language in Footnote 7 of the fees schedule and replace it 
with language recently adopted by its affiliated exchanges.\6\ 
Particularly, the Exchange proposes to provide: ``All fees and rebates 
assessed prior to the three full calendar months before the month in 
which the Exchange becomes aware of a billing error shall be considered 
final. Any dispute concerning fees or rebates billed by the Exchange 
must be submitted to the Exchange in writing and must be accompanied by 
supporting documentation.''
---------------------------------------------------------------------------

    \6\ See SR-CboeBZX-2020-094; SR-CboeBYX-2020-034; SR-CboeEDGA-
2020-032; SR-CboeEDGX-2020-064.
---------------------------------------------------------------------------

    The proposed language would result in all fees and rebates assessed 
prior to the three full calendar months before the month in which the 
Exchange becomes aware of a billing error to be considered final. 
Particularly, the Exchange will resolve an error by crediting or 
debiting Trading Permit Holders (``TPHs'') and Non-TPHs based on the 
fees or rebates that should have been applied in the three full 
calendar months preceding the month in which the Exchange became aware 
of the error, including to all impacted transactions that occurred 
during those months.\7\ The Exchange will apply the three month look 
back regardless of whether the error was discovered by the Exchange or 
by a TPH or Non-TPH that submitted a fee dispute to the Exchange. The 
Exchange will continue to provide all disputes concerning fees and 
rebates assessed by the Exchange would have to be submitted to the 
Exchange in writing and accompanied by supporting documentation.
---------------------------------------------------------------------------

    \7\ For example, if the Exchange becomes aware of a transaction 
fee billing error on January 4, 2021, the Exchange will resolve the 
error by crediting or debiting Members based on the fees or rebates 
that should have been applied to any impacted transactions during 
October, November and December 2020. The Exchange notes that because 
it bills in arrears, the Exchange would be able to correct the error 
in advance of issuing the January 2021 invoice and therefore, 
transactions impacted through the date of discovery (in this 
example, January 4, 2021) and thereafter, would be billed correctly.
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    The Exchange notes that the proposed language continues to 
encourage TPHs and Non-TPHs to promptly review their Exchange invoices 
so that any disputed charges can be addressed in a timely manner. The 
Exchange notes that it provides TPHs with both daily and monthly fee 
reports and thus believes they should be aware of any potential billing 
errors within three months. Requiring that TPHs and Non-TPHs submit 
disputes in writing and provide supporting documentation encourages 
them to promptly review their invoices so that any disputed charges can 
be addressed in a timely manner while the information and data 
underlying those charges (e.g., applicable fees and order information) 
is still easily and readily available. This practice will avoid issues 
that may arise when TPHs or Non-TPHs do not dispute an invoice in a 
timely manner and will conserve Exchange resources that would have to 
be expended to resolve untimely billing disputes. As such, the 
requirement continues to alleviate administrative burdens related to 
billing disputes, which could divert staff resources away from the 
Exchange's regulatory and business purposes. The proposed rule change 
to eliminate the requirement that the Exchange assess fees beyond three 
months if they were required to be assessed pursuant to the fees 
schedule at the time incurred (i.e., all fees and rebates would be 
final after three months regardless of how far back a billing error 
occurred) would provide both the Exchange and TPHs and Non-TPHs 
finality and the ability to close their books after a known period of 
time.
    The Exchange notes that a number of exchanges have explicitly 
stated that they consider all fees to be final after a similar period 
of time.\8\ Additionally, several other exchanges have adopted similar 
provisions in their rules that provide for a process for their members 
and non-members to submit fee disputes.\9\ Moreover, the proposed 
language is identical to the language recently adopted on the 
Exchange's

[[Page 8816]]

affiliated exchanges.\10\ As such, the proposed change will also 
harmonize and conform the Exchange's billing practices with that of its 
affiliated exchanges. The proposed billing policy will apply to all 
charges and rebates reflected in the Exchange's fees schedules.
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    \8\ See e.g. Securities Exchange Act Release No. 87650 (December 
3, 2019), 84 FR 67304 (December 9, 2019) (SR-NYSECHX-2019-024); 
Securities Exchange Act Release No. 84430 (October 16, 2018), 83 FR 
53347 (October 22, 2018) (SR-NYSENAT-2018-23); and Securities 
Exchange Act Release No. 79060 (October 6, 2016), 81 FR 70716 
(October 13, 2016) (SR-ISEGemini-2016-11) .
    \9\ See e.g., MEMX LLC, Rule 15.3, IEX Rule 15.120, Nasdaq Rule 
Equity 7, Section 70, Nasdaq BX Rule Equity 7, Section 111, and 
Nasdaq PHLX Rule Equity 7, Section 2.
    \10\ See supra note 6.
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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.\11\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ 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 the 
Section 6(b)(5) \13\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ Id.
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    With respect to the proposed language regarding the billing 
procedure, the Exchange believes continuing to require the submission 
of all billing disputes in writing, and with supporting documentation 
is reasonable because the Exchange provides TPHs with ample tools to 
monitor and account for various charges incurred in a given month. 
Additionally, the Exchange notes that most TPHs and Non-TPHs that pay 
exchange fees are sophisticated entities, so it is appropriate to 
expect them to promptly review their invoices for errors and to be 
capable of identifying such errors. The proposed provision also 
continues to promote the protection of investors and the public 
interest by providing a clear and concise mechanism for TPH and Non-
TPHs to dispute fees and for the Exchange to review such disputes in a 
timely manner. Moreover, the proposed billing dispute language, which 
lowers the Exchange's administrative burden, is similar to billing 
dispute language of other exchanges, and the same as the Exchange's 
affiliates.\14\ In addition, the billing procedure is fair, equitable, 
and not unfairly discriminatory because it will apply equally to all 
TPHs (and Non-TPHs that pay Exchange fees).
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    \14\ See supra notes 6 and 9.
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    The Exchange also believes that providing that all fees and rebates 
are final after three months (i.e., always resolving billing errors 
only for the three full calendar months preceding the month in which 
the Exchange became aware of the error), is reasonable as both the 
Exchange and TPHs and Non-TPHs have an interest in knowing when its fee 
assessments are final and when reliance can be placed on those 
assessments. Indeed, without some deadline on billing errors, the 
Exchange and TPHs and Non-TPHs would never be able to close their books 
with any confidence. Furthermore, as noted above, a number of Exchanges 
similarly consider their fees final after a similar period of time.\15\ 
The proposed change is also equitable, and not unfairly discriminatory 
because it will apply equally to all TPHs (and Non-TPHs that pay 
Exchange fees) and apply in cases where either the TPH (or Non-TPH) 
discovers the error or the Exchange discovers the error. Lastly, the 
proposed changes to the fees schedule will align the Exchange's billing 
practices with those of its affiliated exchanges.
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    \15\ See supra notes 6 and 8.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. With respect to the billing 
procedure and billing error policy, the proposed rule change would 
provide a clear process that would apply equally to all TPHs. 
Additionally, the proposed rule change is similar to rules of other 
exchanges. The Exchange does not believe such proposed changes would 
impair the ability of TPHs or competing order execution venues to 
maintain their competitive standing in the financial markets. Moreover, 
because the proposed changes would apply equally to all TPHs, the 
proposal does not impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No comments were solicited or received on the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and; (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) \17\ thereunder.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay.\18\ The Commission finds that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
because waiver of the operative delay will allow the Exchange to 
provide a clear process for billing errors and fee disputes without 
delay. Moreover, the proposed rule changes are comparable to other 
policies and practices established by other exchanges and therefore 
does not raise any new or novel issues. Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\19\
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    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

[[Page 8817]]

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-2021-010 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-2021-010. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CBOE-2021-010 and should be 
submitted on or before March 2, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02591 Filed 2-8-21; 8:45 am]
BILLING CODE 8011-01-P

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