Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule, 19313-19316 [2021-07493]
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Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Notices
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–
ICC–2021–007 on the subject line.
Paper Comments
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Send paper comments in triplicate to
Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–ICC–2021–007. 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 such
filings will also be available for
inspection and copying at the principal
office of ICE Clear Credit and on ICE
Clear Credit’s website at https://
www.theice.com/clear-credit/regulation.
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–ICC–2021–007 and
should be submitted on or before May
4, 2021.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–07489 Filed 4–12–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91490; File Nos. SR–NYSE–
2021–14, SR–NYSEAMER–2021–10, SR–
NYSEArca–2021–13, SR–NYSECHX–2021–
03, SR–NYSENAT–2021–04]
Self-Regulatory Organizations; New
York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE
Chicago, Inc., and NYSE National, Inc.;
Notice of Designation of a Longer
Period for Commission Action on
Proposed Rule Changes To Amend the
Schedule of Wireless Connectivity
Fees and Charges To Add Circuits for
Connectivity Into and Out of the Data
Center in Mahwah, New Jersey
April 7, 2021.
On February 12, 2021, New York
Stock Exchange LLC, NYSE American
LLC, NYSE Arca, Inc., NYSE Chicago,
Inc., and NYSE National, Inc. each filed
with the Securities 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 (1) add circuits for
connectivity into and out of the data
center in Mahwah, New Jersey
(‘‘Mahwah Data Center’’); (2) add
services available to customers of the
Mahwah Data Center that are not
colocation Users; and (3) change the
name of the Fee Schedule to ‘‘Mahwah
Wireless, Circuits, and Non-Colocation
Connectivity Fee Schedule.’’ The
proposed rule changes were published
for comment in the Federal Register on
February 26, 2021.3 The Commission
has received one comment letter on the
proposed rule changes.4
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release Nos. 91217
(February 26, 2021), 86 FR 12715 (March 4, 2021)
(SR–NYSE–2021–14); 91218 (February 26, 2021), 86
FR 12744 (March 4, 2021) (SR–NYSEAMER–2021–
10); 91216 (February 26, 2021), 86 FR 12735 (March
4, 2021) (SR–NYSEArca–2021–13); 91219 (February
26, 2021), 86 FR 12724 (March 4, 2021) (SR–
NYSECHX–2021–03); and 91215 (February 26,
2021), 86 FR 12752 (March 4, 2021) (SR–
NYSENAT–2021–04) (collectively, the ‘‘Notices’’).
4 Comments received on the Notices are available
on the Commission’s website at: https://
www.sec.gov/comments/sr-nyse-2021-14/
srnyse202114.htm.
1 15
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Section 19(b)(2) of the Act 5 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 find such longer period to
be appropriate and published its reasons
for so finding or as to which the selfregulatory 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 Notices for these
proposed rule changes is April 18, 2021.
The Commission is extending this 45day period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule changes so that it has
sufficient time to consider the proposed
rule changes and the comment letter.
Accordingly, pursuant to Section
19(b)(2) of the Act,6 the Commission
designates June 2, 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 changes (File Nos. SR–NYSE–2021–
14, SR–NYSEAMER–2021–10, SR–
NYSEArca–2021–13, SR–NYSECHX–
2021–03, SR–NYSENAT–2021–04).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–07490 Filed 4–12–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91494; File No. SR–
CboeEDGX–2021–018]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule
April 7, 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 April 1,
2021, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
5 15
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
7 17 CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
6 15
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Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Notices
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) is filing with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to amend the fee
schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend its
fee schedule applicable to its equities
trading platform (‘‘EDGX Equities’’) to
include an additional Remove Volume
Tier. The Exchange proposes to
implement the proposed change to its
fee schedule on April 1, 2021.
The Exchange first notes that it
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. More
specifically, the Exchange is only one of
16 registered equities exchanges, as well
as a number of alternative trading
systems and other off-exchange venues
that do not have similar self-regulatory
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responsibilities under the Exchange Act,
to which market participants may direct
their order flow. Based on publicly
available information,3 no single
registered equities exchange has more
than 16% of the market share. Thus, in
such a low-concentrated and highly
competitive market, no single equities
exchange possesses significant pricing
power in the execution of order flow.
The Exchange in particular operates a
‘‘Maker-Taker’’ model whereby it pays
credits to members that add liquidity
and assesses fees to those that remove
liquidity. The Exchange’s fee schedule
sets forth the standard rebates and rates
applied per share for orders that provide
and remove liquidity, respectively.
Additionally, in response to the
competitive environment, the Exchange
also offers tiered pricing which provides
Members opportunities to qualify for
higher rebates or reduced fees where
certain volume criteria and thresholds
are met. Tiered pricing provides an
incremental incentive for Members to
strive for higher tier levels, which
provides increasingly higher benefits or
discounts for satisfying increasingly
more stringent criteria.
Pursuant to footnote 1 of the Fee
Schedule, the Exchange offers a Remove
Volume Tier that provides a reduced fee
to Members meeting certain volume
thresholds. Now, the Exchange is
proposing to rename the existing
Remove Volume Tier to Remove
Volume Tier 1, and add an additional
Remove Volume Tier 2. The proposed
Remove Volume Tier 2 offers a reduced
fee of $0.0026 for orders in securities at
or above $1.00 and 0.28% of total dollar
value for orders in securities below
$1.00 yielding fee code ‘‘N’’,4 ‘‘W’’,5 and
‘‘BB’’ 6 where a Member has (1) a StepUp Add TCV 7 from January 2021 equal
to or greater than 0.15%; (2) an ADAV 8
greater than or equal to 0.08% of the
TCV 9 for Non-Displayed orders that
yield fee codes DM,10 HA,11 HI,12
MM,13 or RP; 14 and (3) removes an
ADV 15 greater than or equal to 0.75% of
the TCV. The proposed Remove Volume
Tier 2 is designed to incentivize
Members to increase their orders that
add liquidity on the Exchange for
displayed and non-displayed orders, as
well as remove displayed volume on the
Exchange in order to receive a reduced
fee on their qualifying, liquidity
removing orders.
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (March 29, 2021),
available at https://markets.cboe.com/us/equities/
market_statistics/.
4 Orders yielding Fee Code ‘‘N’’ are orders
removing liquidity from EDGX (Tape C).
5 Orders yielding Fee Code ‘‘W’’ are orders
removing liquidity from EDGX (Tape A).
6 Orders yielding Fee Code ‘‘BB’’ are orders
removing liquidity from EDGX (Tape B).
7 Step-Up Add TCV means ADAV as a percentage
of TCV in the relevant baseline month subtracted
from current ADAV as a percentage of TCV.
8 ADAV means average daily added volume
calculated as the number of shares added per day.
9 TCV means total consolidated volume
calculated as the volume reported by all exchanges
and trade reporting facilities to a consolidated
transaction reporting plan for the month for which
the fees apply.
10 Orders yielding Fee Code ‘‘DM’’ are orders
adding liquidity using MidPoint Discretionary order
within discretionary range.
11 Orders yielding Fee Code ‘‘HA’’ are NonDisplayed orders adding liquidity.
12 Orders yielding Fee Code ‘‘HI’’ are NonDisplayed orders that receive price improvement
and add liquidity.
13 Orders yielding Fee Code ‘‘MM’’ are NonDisplayed orders adding liquidity using MidPoint
Peg.
14 Orders yielding Fee Code ‘‘RP’’ are NonDisplayed orders adding liquidity using
Supplemental Peg.
15 ADV means average daily volume calculated as
the number of shares added to, removed from, or
routed by, the Exchange, or any combination or
subset thereof, per day.
16 15 U.S.C. 78f.
17 15 U.S.C. 78f(b)(4).
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,16
in general, and furthers the objectives of
Section 6(b)(4),17 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members,
issuers and other persons using its
facilities. The Exchange operates in a
highly competitive market in which
market participants can readily direct
order flow to competing venues if they
deem fee levels at a particular venue to
be excessive or incentives to be
insufficient. The proposed rule changes
reflect a competitive pricing structure
designed to incentivize market
participants to direct their order flow to
the Exchange, which the Exchange
believes would enhance market quality
to the benefit of all Members. The
Exchange notes that relative volumebased incentives and discounts have
been widely adopted by exchanges,
including the Exchange, and are
reasonable, equitable and nondiscriminatory because they are open to
all members on an equal basis and
provide additional benefits or discounts
that are reasonably related to (i) the
value to an exchange’s market quality
and (ii) associated higher levels of
market activity, such as higher levels of
liquidity provision and/or growth
patterns. Competing equity exchanges
offer similar tiered pricing structures,
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Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Notices
including schedules of rebates and fees
that apply based upon members
achieving certain volume and/or growth
thresholds, as well as assess similar fees
or rebates for similar types of orders, to
that of the Exchange.
The Exchange believes the proposed
addition to the Remove Volume Tiers is
reasonable because it provides an
additional opportunity for Members to
receive a discounted rate for liquidity
removing orders. The Exchange notes
the proposed tier is available to all
Members and is competitively
achievable for all Members that submit
the requisite order flow, in that, all
firms are eligible for the proposed tier
and those that submit the requisite order
flow could compete to meet the
proposed tier. Each Member will
uniformly receive the respective
proposed reduced fee if the
corresponding tier criteria is met.
The Exchange believes the Remove
Volume Tier is a reasonable means to
incentivize Members to continue to
provide liquidity adding, displayed
volume to the Exchange by offering
them a different, additional opportunity
than that of the Add Volume Tiers—to
receive a reduced fee on their liquidity
removing orders by meeting the
proposed criteria in submitting
additional add volume order flow.
Overall, the Exchange believes that
adding new tier criteria each based on
a Member’s liquidity adding and
removing orders, will benefit all market
participants by incentivizing continuous
liquidity and thus, deeper more liquid
markets as well as increased execution
opportunities. Particularly, the
proposed tier is designed to incentivize
Members to increase their orders that
add displayed and non-displayed
volume on the Exchange in order to
receive a reduced fee on their
qualifying, liquidity removing orders.
This overall increase in activity deepens
the Exchange’s liquidity pool, offers
additional cost savings, supports the
quality of price discovery, promotes
market transparency and improves
market quality, for all investors.
Without having a view of activity on
other markets and off-exchange venues,
the Exchange has no way of knowing
whether this proposed rule change
would definitely result in any Members
qualifying for the proposed tiers. While
the Exchange has no way of predicting
with certainty how the proposed tiers
will impact Member activity, the
Exchange anticipates that for the
proposed Remove Volume Tier 2 at least
one Member will be able to compete for
and achieve the proposed criteria. The
Exchange notes, however, that the
proposed tier is open to any Member
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that satisfies the tier’s criteria. The
Exchange also notes that the proposed
tier will not adversely impact any
Member’s pricing or their ability to
qualify for other tiers. Rather, should a
Member not meet the proposed criteria
for the proposed tier, the Member will
merely not receive the corresponding
reduced fee.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, as
discussed above, the Exchange believes
that the proposed change would
encourage the submission of additional
order flow to a public exchange, thereby
promoting market depth, execution
incentives and enhanced execution
opportunities, as well as price discovery
and transparency for all Members. As a
result, the Exchange believes that the
proposed change furthers the
Commission’s goal in adopting
Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’
The Exchange believes the proposed
rule change does not impose any burden
on intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
the proposed change applies to all
Members equally in that all Members
are eligible for the proposed Remove
Volume Tier 2 and have a reasonable
opportunity to meet the tier’s criteria
and will all receive the proposed
reduced fee if such criteria is met.
Additionally, the proposed tier is
designed to attract additional order flow
to the Exchange. The Exchange believes
that the additional tier criteria would
incentivize market participants to direct
liquidity adding and removing order
flow to the Exchange, bringing with it
improved price transparency. Greater
overall order flow and pricing
transparency benefits all market
participants on the Exchange by
providing more trading opportunities,
enhancing market quality, and
continuing to encourage Members to
send orders, thereby contributing
towards a robust and well-balanced
market ecosystem, which benefits all
market participants.
Next, the Exchange believes the
proposed rule change does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, the Exchange
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19315
operates in a highly competitive market.
Members have numerous alternative
venues that they may participate on and
direct their order flow, including other
equities exchanges, off-exchange
venues, and alternative trading systems.
Additionally, the Exchange represents a
small percentage of the overall market.
Based on publicly available information,
no single equities exchange has more
than 16% of the market share.18
Therefore, no exchange possesses
significant pricing power in the
execution of order flow. Indeed,
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. Moreover, the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 19 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.20 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
18 Supra
note 3.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
20 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
19 See
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Federal Register / Vol. 86, No. 69 / Tuesday, April 13, 2021 / Notices
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 21 and paragraph (f) of Rule
19b–4 22 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:
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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–2021–018 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–2021–018. 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–2021–018 and
should be submitted on or before May
4, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–07493 Filed 4–12–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91493; File No. SR–ICC–
2021–008]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Notice of Filing of
Proposed Rule Change Relating to the
ICC Risk Management Model
Description
April 7, 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 March 31,
2021, ICE Clear Credit LLC (‘‘ICC’’) filed
with the Securities and Exchange
Commission the proposed rule change
as described in Items I, II and III below,
which Items have been prepared
primarily by ICC. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
21 15
U.S.C. 78s(b)(3)(A).
22 17 CFR 240.19b–4(f).
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I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The principal purpose of the
proposed rule change is to make
changes to ICC’s Risk Management
Model Description. These revisions do
not require any changes to the ICC
Clearing Rules (the ‘‘Rules’’).
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, ICC
included statements concerning the
purpose of and basis for the proposed
rule change, security-based swap
submission, or advance notice and
discussed any comments it received on
the proposed rule change, securitybased swap submission, or advance
notice. The text of these statements may
be examined at the places specified in
Item IV below. ICC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(a) Purpose
ICC proposes revising its Risk
Management Model Description to
include an enhancement related to the
index liquidity charge (‘‘LC’’)
methodology and other clarifications.
ICC believes that such revisions will
facilitate the prompt and accurate
clearance and settlement of securities
transactions and derivative agreements,
contracts, and transactions for which it
is responsible. ICC proposes to make
such changes effective following
Commission approval of the proposed
rule change. The proposed revisions are
described in detail as follows.
ICC proposes to amend the ‘‘Initial
Margin Methodology’’ section of the
Risk Management Model Description.
The proposed changes memorialize the
review and approval process of the
document, which consists of review by
the Risk Committee and review and
approval by the Board at least annually.
ICC proposes to revise the ‘‘Liquidity
Charge for Index Risk Factors’’
subsection (Subsection II.2) to include
an enhancement related to the index LC
methodology. The proposed changes
amend a formula for the index series LC.
Currently, to arrive at the index series
LC, ICC takes into account the estimated
LCs for the instruments that belong to
the same index series and the sign of the
notional amount of the instrument.
Under the proposed changes, the index
series LC is established as the more
E:\FR\FM\13APN1.SGM
13APN1
]]>Agencies
[Federal Register Volume 86, Number 69 (Tuesday, April 13, 2021)]
[Notices]
[Pages 19313-19316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07493]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91494; File No. SR-CboeEDGX-2021-018]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule
April 7, 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 April 1, 2021, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the
[[Page 19314]]
Securities and Exchange Commission (the ``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to amend the fee schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its fee schedule applicable to its
equities trading platform (``EDGX Equities'') to include an additional
Remove Volume Tier. The Exchange proposes to implement the proposed
change to its fee schedule on April 1, 2021.
The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues
that do not have similar self-regulatory responsibilities under the
Exchange Act, to which market participants may direct their order flow.
Based on publicly available information,\3\ no single registered
equities exchange has more than 16% of the market share. Thus, in such
a low-concentrated and highly competitive market, no single equities
exchange possesses significant pricing power in the execution of order
flow. The Exchange in particular operates a ``Maker-Taker'' model
whereby it pays credits to members that add liquidity and assesses fees
to those that remove liquidity. The Exchange's fee schedule sets forth
the standard rebates and rates applied per share for orders that
provide and remove liquidity, respectively. Additionally, in response
to the competitive environment, the Exchange also offers tiered pricing
which provides Members opportunities to qualify for higher rebates or
reduced fees where certain volume criteria and thresholds are met.
Tiered pricing provides an incremental incentive for Members to strive
for higher tier levels, which provides increasingly higher benefits or
discounts for satisfying increasingly more stringent criteria.
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\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (March 29, 2021), available at https://markets.cboe.com/us/equities/market_statistics/.
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Pursuant to footnote 1 of the Fee Schedule, the Exchange offers a
Remove Volume Tier that provides a reduced fee to Members meeting
certain volume thresholds. Now, the Exchange is proposing to rename the
existing Remove Volume Tier to Remove Volume Tier 1, and add an
additional Remove Volume Tier 2. The proposed Remove Volume Tier 2
offers a reduced fee of $0.0026 for orders in securities at or above
$1.00 and 0.28% of total dollar value for orders in securities below
$1.00 yielding fee code ``N'',\4\ ``W'',\5\ and ``BB'' \6\ where a
Member has (1) a Step-Up Add TCV \7\ from January 2021 equal to or
greater than 0.15%; (2) an ADAV \8\ greater than or equal to 0.08% of
the TCV \9\ for Non-Displayed orders that yield fee codes DM,\10\
HA,\11\ HI,\12\ MM,\13\ or RP; \14\ and (3) removes an ADV \15\ greater
than or equal to 0.75% of the TCV. The proposed Remove Volume Tier 2 is
designed to incentivize Members to increase their orders that add
liquidity on the Exchange for displayed and non-displayed orders, as
well as remove displayed volume on the Exchange in order to receive a
reduced fee on their qualifying, liquidity removing orders.
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\4\ Orders yielding Fee Code ``N'' are orders removing liquidity
from EDGX (Tape C).
\5\ Orders yielding Fee Code ``W'' are orders removing liquidity
from EDGX (Tape A).
\6\ Orders yielding Fee Code ``BB'' are orders removing
liquidity from EDGX (Tape B).
\7\ Step-Up Add TCV means ADAV as a percentage of TCV in the
relevant baseline month subtracted from current ADAV as a percentage
of TCV.
\8\ ADAV means average daily added volume calculated as the
number of shares added per day.
\9\ TCV means total consolidated volume calculated as the volume
reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply.
\10\ Orders yielding Fee Code ``DM'' are orders adding liquidity
using MidPoint Discretionary order within discretionary range.
\11\ Orders yielding Fee Code ``HA'' are Non-Displayed orders
adding liquidity.
\12\ Orders yielding Fee Code ``HI'' are Non-Displayed orders
that receive price improvement and add liquidity.
\13\ Orders yielding Fee Code ``MM'' are Non-Displayed orders
adding liquidity using MidPoint Peg.
\14\ Orders yielding Fee Code ``RP'' are Non-Displayed orders
adding liquidity using Supplemental Peg.
\15\ ADV means average daily volume calculated as the number of
shares added to, removed from, or routed by, the Exchange, or any
combination or subset thereof, per day.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\16\ in general, and
furthers the objectives of Section 6(b)(4),\17\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members, issuers and other persons
using its facilities. The Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. The proposed rule changes
reflect a competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes would enhance market quality to the benefit of all
Members. The Exchange notes that relative volume-based incentives and
discounts have been widely adopted by exchanges, including the
Exchange, and are reasonable, equitable and non-discriminatory because
they are open to all members on an equal basis and provide additional
benefits or discounts that are reasonably related to (i) the value to
an exchange's market quality and (ii) associated higher levels of
market activity, such as higher levels of liquidity provision and/or
growth patterns. Competing equity exchanges offer similar tiered
pricing structures,
[[Page 19315]]
including schedules of rebates and fees that apply based upon members
achieving certain volume and/or growth thresholds, as well as assess
similar fees or rebates for similar types of orders, to that of the
Exchange.
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\16\ 15 U.S.C. 78f.
\17\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed addition to the Remove Volume
Tiers is reasonable because it provides an additional opportunity for
Members to receive a discounted rate for liquidity removing orders. The
Exchange notes the proposed tier is available to all Members and is
competitively achievable for all Members that submit the requisite
order flow, in that, all firms are eligible for the proposed tier and
those that submit the requisite order flow could compete to meet the
proposed tier. Each Member will uniformly receive the respective
proposed reduced fee if the corresponding tier criteria is met.
The Exchange believes the Remove Volume Tier is a reasonable means
to incentivize Members to continue to provide liquidity adding,
displayed volume to the Exchange by offering them a different,
additional opportunity than that of the Add Volume Tiers--to receive a
reduced fee on their liquidity removing orders by meeting the proposed
criteria in submitting additional add volume order flow.
Overall, the Exchange believes that adding new tier criteria each
based on a Member's liquidity adding and removing orders, will benefit
all market participants by incentivizing continuous liquidity and thus,
deeper more liquid markets as well as increased execution
opportunities. Particularly, the proposed tier is designed to
incentivize Members to increase their orders that add displayed and
non-displayed volume on the Exchange in order to receive a reduced fee
on their qualifying, liquidity removing orders. This overall increase
in activity deepens the Exchange's liquidity pool, offers additional
cost savings, supports the quality of price discovery, promotes market
transparency and improves market quality, for all investors.
Without having a view of activity on other markets and off-exchange
venues, the Exchange has no way of knowing whether this proposed rule
change would definitely result in any Members qualifying for the
proposed tiers. While the Exchange has no way of predicting with
certainty how the proposed tiers will impact Member activity, the
Exchange anticipates that for the proposed Remove Volume Tier 2 at
least one Member will be able to compete for and achieve the proposed
criteria. The Exchange notes, however, that the proposed tier is open
to any Member that satisfies the tier's criteria. The Exchange also
notes that the proposed tier will not adversely impact any Member's
pricing or their ability to qualify for other tiers. Rather, should a
Member not meet the proposed criteria for the proposed tier, the Member
will merely not receive the corresponding reduced fee.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Rather, as discussed above, the
Exchange believes that the proposed change would encourage the
submission of additional order flow to a public exchange, thereby
promoting market depth, execution incentives and enhanced execution
opportunities, as well as price discovery and transparency for all
Members. As a result, the Exchange believes that the proposed change
furthers the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.''
The Exchange believes the proposed rule change does not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the proposed
change applies to all Members equally in that all Members are eligible
for the proposed Remove Volume Tier 2 and have a reasonable opportunity
to meet the tier's criteria and will all receive the proposed reduced
fee if such criteria is met. Additionally, the proposed tier is
designed to attract additional order flow to the Exchange. The Exchange
believes that the additional tier criteria would incentivize market
participants to direct liquidity adding and removing order flow to the
Exchange, bringing with it improved price transparency. Greater overall
order flow and pricing transparency benefits all market participants on
the Exchange by providing more trading opportunities, enhancing market
quality, and continuing to encourage Members to send orders, thereby
contributing towards a robust and well-balanced market ecosystem, which
benefits all market participants.
Next, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more
than 16% of the market share.\18\ Therefore, no exchange possesses
significant pricing power in the execution of order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. Moreover, the Commission has repeatedly expressed
its preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets.
Specifically, in Regulation NMS, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and,
also, recognized that current regulation of the market system ``has
been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \19\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\20\ Accordingly, the Exchange does not believe its
proposed fee change imposes any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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\18\ Supra note 3.
\19\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\20\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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[[Page 19316]]
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 \21\ and paragraph (f) of Rule 19b-4 \22\
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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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2021-018 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-2021-018. 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-2021-018 and should be
submitted on or before May 4, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-07493 Filed 4-12-21; 8:45 am]
BILLING CODE 8011-01-P
