Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule, 26113-26115 [2021-09970]
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Federal Register / Vol. 86, No. 90 / Wednesday, May 12, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
Section 19(b)(2) of the Act 6 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for the
proposed rule change is effectively May
7, 2021.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider and take action on the
proposed rule change.
Accordingly, pursuant to Section
19(b)(2) of the Act 7 and for the reasons
stated above, the Commission
designates June 21, 2021 as the date by
which the Commission shall either
approve, disapprove, or institute
proceedings to determine whether to
disapprove the proposed rule change
(File No. SR–NSCC–2021–002).
The Commission also seeks to extend
the comment period to help further
inform its analysis of the proposed rule
change. The comment period for the
proposed rule change ended on April
14, 2021.8 As of May 5, 2021, the
Commission has received numerous
comment letters to the proposed rule
change.9 The Commission is extending
the comment period for the proposed
rule change to allow interested persons
additional time to analyze the issues
and prepare their comments.
Accordingly, the Commission
designates May 31, 2021 as the date
comments should be submitted on or
before.
Specifically, the Commission invites
interested persons to provide views,
data, and arguments concerning the
proposed rule change, including
whether the proposed rule change is
consistent with the Act and the
applicable rules or regulations
date, the comments received generally support the
proposal.
6 15 U.S.C. 78s(b)(2).
7 Id.
8 Notice of Filing, supra note 4, 86 FR at 15738.
9 See supra note 5. The comments received
generally support the proposal, although they do
not generally provide substantive analysis of the
proposal.
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17:58 May 11, 2021
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26113
thereunder. Please note that comments
previously received on the substance of
the proposed rule change will be
considered together with comments
submitted in response to this notice.
Therefore, while commenters are free to
submit additional comments at this
time, they need not re-submit earlier
comments.
Comments may be submitted by any
of the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Jill M. Peterson,
Assistant Secretary.
Electronic Comments
[Release No. 34–91784; File No. SR–
CboeEDGA–2021–012]
• 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–
NSCC–2021–002 on the subject line.
• 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–NSCC–2021–002. 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 NSCC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC–
2021–002 and should be submitted on
or before June 2, 2021.
Frm 00116
Fmt 4703
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule
May 6, 2021.
Paper Comments
PO 00000
[FR Doc. 2021–10054 Filed 5–11–21; 8:45 am]
Sfmt 4703
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 May 3,
2021, Cboe EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) is filing with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to amend the fee
schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/edga/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
10 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\12MYN1.SGM
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Federal Register / Vol. 86, No. 90 / Wednesday, May 12, 2021 / Notices
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 its
fee schedule by eliminating Tier 2 of the
Remove Volume Tiers.
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 15% 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 believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow or discontinue to
reduce use of certain categories of
products, in response to fee changes.
Accordingly, competitive forces
constrain the Exchange’s transaction
fees, and market participants can readily
trade on competing venues if they deem
pricing levels at those other venues to
be more favorable. Additionally, in
response to the competitive
environment, the Exchange 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 7 of the Fee
Schedule, the Exchange offers Remove
Volume Tiers that provide a rebate to
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (April 26, 2021),
available at https://markets.cboe.com/us/equities/
market_statistics/.
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17:58 May 11, 2021
Jkt 253001
Members meeting certain volume
thresholds. Specifically, Tier 2 currently
provides an opportunity for Members to
receive an enhanced rebate of $0.0028
per share for qualifying liquidity
removing orders (i.e., yielding fee codes
N,4 W,5 6,6 and BB 7), where a Member
adds or removes an ADV 8 greater than
or equal to 0.65% of the TCV.9 Now, the
Exchange proposes to eliminate Tier 2
of the Remove Volume Tiers. The
Exchange no longer believes Tier 2 is
necessary and notes the Exchange is not
required to maintain such an incentive.
Further, the Exchange would rather
redirect future resources and funding
into other programs and tiers intended
to incentivize increased order flow.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,10
in general, and furthers the objectives of
Section 6(b)(4),11 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members and
issuers and other persons using its
facilities. The Exchange also believes
that the proposed rule change is
consistent with the objectives of 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, and,
particularly, is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
4 Fee code N is appended to orders removing
liquidity from EDGA (Tape C).
5 Fee code W is appended to orders removing
liquidity from EDGA (Tape A).
6 Fee code 6 is appended to orders removing
liquidity from EDGA, pre and post market (All
Tapes).
7 Fee code BB is appended to orders removing
liquidity from EDGA (Tape B).
8 ADV means daily volume calculated as the
number of shares added to, removed from, or routed
by, the Exchange, or any combination or subset
thereof, per day. ADV is calculated on a monthly
basis.
9 TCV means total consolidated volume
calculated as the volume reported by all exchanges
and trade reporting facilities to a consolidated
transaction reporting plan for the month for which
the fees apply.
10 15 U.S.C. 78f.
11 15 U.S.C. 78f(b)(4).
12 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
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 change
reflects 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.
In particular, the Exchange believes
eliminating Tier 2 of the Remove
Volume Tiers is reasonable because the
Exchange is not required to maintain
such a tier, and Members still have a
number of other opportunities and a
variety of ways to receive enhanced
rebates. Moreover, as noted above, the
Exchange would rather redirect future
resources and funding into other
programs and tiers intended to
incentivize increased order flow. The
Exchange believes the proposal to
eliminate Tier 2 of the Remove Volume
Tiers is also equitable and not unfairly
discriminatory because it applies to all
Members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
the Exchange does not believe the
proposal to eliminate Tier 2 of the
Remove Volume Tiers will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed change applies to
all Members equally, in that no Member
will continue to be eligible for the tier.
As discussed above, the Exchange is not
required to maintain such an incentive.
Also, as previously discussed, the
Exchange operates in a highly
competitive market. Members have
numerous alternative venues that they
may participate on and director their
order flow, including 15 other options
exchanges and off-exchange venues.
Additionally, the Exchange represents a
small percentage of the overall market.
Based on publicly available information,
no single options exchange has more
than 15% of the market share.13
Therefore, no exchange possesses
significant pricing power in the
execution of option order flow. Indeed,
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
13 See
E:\FR\FM\12MYN1.SGM
supra note 3.
12MYN1
Federal Register / Vol. 86, No. 90 / Wednesday, May 12, 2021 / Notices
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.’’ 14 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’ . . . .’’.15 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.
khammond on DSKJM1Z7X2PROD with 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 16 and paragraph (f) of Rule
19b–4 17 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
14 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
15 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)).
16 15 U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f).
VerDate Sep<11>2014
17:58 May 11, 2021
Jkt 253001
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number
SR–CboeEDGA–2021–012 on the
subject line.
Paper Comment
• 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–CboeEDGA–2021–012. 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
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
26115
Number SR–CboeEDGA–2021–012 and
should be submitted on or before June
2, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–09970 Filed 5–11–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91798; File No. SBSDR–
2020–01]
Security-Based Swap Data
Repositories; DTCC Data Repository
(U.S.), LLC; Order Approving
Application for Registration as a
Security-Based Swap Data Repository
May 7, 2021.
I. Introduction
On December 22, 2020, DTCC Data
Repository (U.S.), LLC (‘‘DDR’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) an
application (the ‘‘DDR Application’’) on
Form SDR to register as a security-based
swap data repository (‘‘SDR’’) pursuant
to Section 13(n)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
and 17 CFR 240.13n–1 (‘‘Rule 13n–1’’)
thereunder,1 and as a securities
information processor (‘‘SIP’’) under
Section 11A(b) of the Exchange Act.2
DDR intends to operate as a registered
SDR for security-based swap (‘‘SBS’’)
transactions in the equity, credit, and
interest rate derivatives asset classes.3
The Commission published notice of
the DDR Application in the Federal
Register for public comment on
February 10, 2021,4 and the
18 17
CFR 200.30–3(a)(12).
U.S.C. 78m(n)(1); 17 CFR 240.13n–1. A copy
of DDR’s application on Form SDR and nonconfidential exhibits thereto are available for public
viewing on the Commission’s website. In 2016, DDR
submitted a prior application for registration as an
SDR. See Release No. 34–78216 (June 30, 2016), 81
FR 44379 (July 7, 2016); Release No. 34–81302
(Aug. 3, 2017), 82 FR 37276 (Aug. 9, 2017). DDR
withdrew this prior application in 2018. See Letter
from Chris Childs, Managing Director, DDR, Mar.
27, 2018, https://www.sec.gov/divisions/marketreg/
sdr/dtcc-sdr-application-withdrawal-letter032718.pdf.
2 15 U.S.C. 78k–1(b).
3 DDR has included the interest rate asset class in
its application based on feedback from potential
users of its SDR services. The potential users have
identified certain types of transactions that will be
reported through DDR’s infrastructure for interest
rate derivatives as falling within the Exchange Act
definition of an SBS transaction.
4 Release No. 34–91071 (Feb. 5, 2021), 86 FR 8977
(Feb. 10, 2021) (‘‘DDR Notice’’).
1 15
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]]>Agencies
[Federal Register Volume 86, Number 90 (Wednesday, May 12, 2021)]
[Notices]
[Pages 26113-26115]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09970]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91784; File No. SR-CboeEDGA-2021-012]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule
May 6, 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 May 3, 2021, Cboe EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to amend the fee schedule. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/edga/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the
[[Page 26114]]
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 by eliminating Tier
2 of the Remove Volume Tiers.
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 15% 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 believes that the ever-shifting market share among
the exchanges from month to month demonstrates that market participants
can shift order flow or discontinue to reduce use of certain categories
of products, in response to fee changes. Accordingly, competitive
forces constrain the Exchange's transaction fees, and market
participants can readily trade on competing venues if they deem pricing
levels at those other venues to be more favorable. Additionally, in
response to the competitive environment, the Exchange 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.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (April 26, 2021), available at https://markets.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------
Pursuant to footnote 7 of the Fee Schedule, the Exchange offers
Remove Volume Tiers that provide a rebate to Members meeting certain
volume thresholds. Specifically, Tier 2 currently provides an
opportunity for Members to receive an enhanced rebate of $0.0028 per
share for qualifying liquidity removing orders (i.e., yielding fee
codes N,\4\ W,\5\ 6,\6\ and BB \7\), where a Member adds or removes an
ADV \8\ greater than or equal to 0.65% of the TCV.\9\ Now, the Exchange
proposes to eliminate Tier 2 of the Remove Volume Tiers. The Exchange
no longer believes Tier 2 is necessary and notes the Exchange is not
required to maintain such an incentive. Further, the Exchange would
rather redirect future resources and funding into other programs and
tiers intended to incentivize increased order flow.
---------------------------------------------------------------------------
\4\ Fee code N is appended to orders removing liquidity from
EDGA (Tape C).
\5\ Fee code W is appended to orders removing liquidity from
EDGA (Tape A).
\6\ Fee code 6 is appended to orders removing liquidity from
EDGA, pre and post market (All Tapes).
\7\ Fee code BB is appended to orders removing liquidity from
EDGA (Tape B).
\8\ ADV means daily volume calculated as the number of shares
added to, removed from, or routed by, the Exchange, or any
combination or subset thereof, per day. ADV is calculated on a
monthly basis.
\9\ TCV means total consolidated volume calculated as the volume
reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\10\ in general, and
furthers the objectives of Section 6(b)(4),\11\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members and issuers and other persons
using its facilities. The Exchange also believes that the proposed rule
change is consistent with the objectives of 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, and, particularly, is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. 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 change
reflects 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.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(4).
\12\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes eliminating Tier 2 of the
Remove Volume Tiers is reasonable because the Exchange is not required
to maintain such a tier, and Members still have a number of other
opportunities and a variety of ways to receive enhanced rebates.
Moreover, as noted above, the Exchange would rather redirect future
resources and funding into other programs and tiers intended to
incentivize increased order flow. The Exchange believes the proposal to
eliminate Tier 2 of the Remove Volume Tiers is also equitable and not
unfairly discriminatory because it applies to all Members.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the Exchange
does not believe the proposal to eliminate Tier 2 of the Remove Volume
Tiers will impose any burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because the proposed change applies to all Members equally, in that no
Member will continue to be eligible for the tier. As discussed above,
the Exchange is not required to maintain such an incentive. Also, as
previously discussed, the Exchange operates in a highly competitive
market. Members have numerous alternative venues that they may
participate on and director their order flow, including 15 other
options exchanges and off-exchange venues. Additionally, the Exchange
represents a small percentage of the overall market. Based on publicly
available information, no single options exchange has more than 15% of
the market share.\13\ Therefore, no exchange possesses significant
pricing power in the execution of option order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels
[[Page 26115]]
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.'' \14\ 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' . . . .''.\15\ 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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\13\ See supra note 3.
\14\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\15\ 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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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 \16\ and paragraph (f) of Rule 19b-4 \17\
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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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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-CboeEDGA-2021-012 on the subject line.
Paper Comment
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-CboeEDGA-2021-012. 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-CboeEDGA-2021-012 and should be
submitted on or before June 2, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09970 Filed 5-11-21; 8:45 am]
BILLING CODE 8011-01-P
