Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 57219-57221 [2021-22436]
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Federal Register / Vol. 86, No. 196 / Thursday, October 14, 2021 / Notices
proposed rule change as operative upon
filing.22
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 shall institute proceedings
to determine whether the proposed rule
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:
lotter on DSK11XQN23PROD with NOTICES1
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–
Phlx–2021–60 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–Phlx–2021–60. 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
22 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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17:44 Oct 13, 2021
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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–Phlx–2021–60 and should
be submitted on or before November 4,
2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–22441 Filed 10–13–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93276; File No. SR–
CboeEDGX–2021–043]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
October 8, 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
September 30, 2021, Cboe EDGX
Exchange, Inc. (the ‘‘Exchange’’ or
‘‘EDGX’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II 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’’ or ‘‘EDGX
Equities’’) proposes to amend its 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
23 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
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57219
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
modify the standard rate for liquidity
removing orders in securities priced at
or above $1.00, effective October 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 17% 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
rebates 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.
Currently, for orders in securities priced
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (September 27,
2021), available at https://markets.cboe.com/us/
equities/market_statistics/.
E:\FR\FM\14OCN1.SGM
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57220
Federal Register / Vol. 86, No. 196 / Thursday, October 14, 2021 / Notices
at or above $1.00, the Exchange
provides a standard rebate of $0.00160
per share for orders that add liquidity
and assesses a fee of $0.00285 per share
for orders that remove liquidity. For
orders in securities priced below $1.00,
the Exchange provides a standard rebate
of $0.00009 per share for orders that add
liquidity and assesses a fee of 0.30% of
total dollar value for orders that remove
liquidity. Now, the Exchange proposes
to increase the standard fee for liquidity
removing orders in securities priced at
or above $1.00 from a fee of $0.00285 to
$0.0030 per share. The Exchange
proposes to reflect this change in the
Fee Codes and Associated Fee where
applicable (i.e., corresponding to
standard fee codes N, W, 6, BB and ZR).
The Exchange notes that the proposed
standard rate is in line with, yet also
competitive with, rates assessed by
other equities exchanges on orders in
securities priced at $1.00 or more.4
2. Statutory Basis
lotter on DSK11XQN23PROD with NOTICES1
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,5
in general, and furthers the objectives of
Section 6(b)(4),6 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) 7 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
4 See Nasdaq Pricing 7, Section 118(a)(1), which,
for example, assesses a charge of $0.0030 for
member orders that execute against resting
midpoint liquidity, and that that execute in the
Nasdaq Market Center generally, in securities
priced at $1.00 or more; and NYSE American
Equities Price List, NYSE American Trading Fees
and Credits, Section I.A.1.a, Standard Rates, which
assesses a standard rate of $0.0030 per share (unless
member adds ADV of at least 10,000 shares) for
orders in securities priced at or above $1 that
remove liquidity.
5 15 U.S.C. 78f.
6 15 U.S.C. 78f(b)(4).
7 15 U.S.C. 78f.(b)(5).
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unfair discrimination between
customers, issuers, brokers, or dealers.
As described above, 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 believes that amending
the standard rate for orders that remove
liquidity in securities priced at or above
$1.00 is reasonable because, as stated
above, in order to operate in the highly
competitive equities markets, the
Exchange and its competing exchanges
seek to offer similar pricing structures,
including assessing comparable
standard fees for orders in securities
priced at or above $1.00.8 Thus, the
Exchange believes the proposed
standard rate change is reasonable as it
is generally aligned with and
competitive with the amounts assessed
for the orders in securities at or above
$1.00 on other equities exchanges.9 The
Exchange also believes that amending
this standard rate amount represents an
equitable allocation of fees and is not
unfairly discriminatory because they
will continue to automatically apply to
all Members’ orders that remove
liquidity in securities at or above $1.00
uniformly.
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. The
Exchange does not believe that the
proposed changes represent a significant
departure from previous pricing offered
by the Exchange or pricing offered by
the Exchange’s competitors. Members
may opt to disfavor the Exchange’s
pricing if they believe that alternatives
offer them better value. Accordingly, the
Exchange does not believe that the
proposed change will impair the ability
of Members or competing venues to
maintain their competitive standing in
the financial markets.
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 rule change to update the
standard fee applicable to liquidity
removing orders in securities priced at
or above a $1.00 does not impose any
burden on intramarket competition
because the standard rate will continue
to apply automatically and uniformly to
all liquidity removing orders priced at
or above $1.00.
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 17% of the market share.10
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 Securities and
Exchange Commission (the ‘‘SEC’’ or 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.’’ 11 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
10 Supra
note 3.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
8 Supra
note 3.
9 Supra note 4.
PO 00000
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11 See
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Federal Register / Vol. 86, No. 196 / Thursday, October 14, 2021 / Notices
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’.12 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.
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)(ii) of the Act.13
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
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:
lotter on DSK11XQN23PROD with NOTICES1
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–2021–043 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–2021–043. This
file number should be included on the
subject line if email is used. To help the
12 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)).
13 15 U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
17:44 Oct 13, 2021
Jkt 256001
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–2021–043, and
should be submitted on or before
November 4, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–22436 Filed 10–13–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93279; File No. SR–DTC–
2021–011]
Self-Regulatory Organizations;
Depository Trust Company; Order
Approving the Proposed Rule Change
Relating to Confidential Information,
Market Disruption Events, and Other
Changes
October 8, 2021.
I. Introduction
On June 25, 2021, Depository Trust
Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) proposed rule change
SR–DTC–2021–011 (the ‘‘Proposed Rule
Change’’) pursuant to Section 19(b)(1) of
14 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00099
Fmt 4703
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57221
the Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder 2 to
amend DTC’s rules relating to
confidentiality requirements, Market
Disruption Events, and procedures for
disconnecting a participant from DTC’s
network, among other changes.3 The
Proposed Rule Change was published
for comment in the Federal Register on
July 13, 2021.4 The Commission
received comments that it has
considered with respect to the Proposed
Rule Change.5 For the reasons discussed
below, the Commission is approving the
Proposed Rule Change.
II. Description of the Proposed Rule
Change
Pursuant to the Proposed Rule
Change, DTC is proposing three main
changes to its Rules, Bylaws, and
Organization Certificate(‘‘Rules’’): 6 (1)
Standardizing the confidentiality
requirement applicable to DTC with
respect to its participants’ information
and adding confidentiality requirement
applicable to participants with respect
to DTC’s information, (2) updating its
Market Disruption and Force Majeure
Rule (‘‘Force Majeure Rule’’) to
authorize two additional officers to
determine that a Market Disruption
Event has occurred, and (3) adding a
new rule setting forth the procedures
under which DTC would be able to
disconnect a participant from its
network in certain circumstances
(‘‘Systems Disconnect Rule’’). The
Commission provides relevant
background and describes each of these
proposed changes in greater detail
below.
A. Background
DTC serves as the central securities
depository for substantially all corporate
and municipal debt and equity
securities available for trading in the
United States.7 DTC provides depository
services and asset servicing for a wide
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Notice of Filing, infra note 4, at 86 FR
36833.
4 See Securities Exchange Act Release No. 92342
(June 25, 2021), 86 FR 36833 (July 13, 2021) (File
No. SR–DTC–2021–011) (‘‘Notice of Filing’’).
5 See id. The comment letters are available on the
Commission’s website at https://www.sec.gov/
comments/sr-dtc-2021-011/srdtc2021011.htm.
Several comments generally supported the
Proposed Rule Change, and the Commission
considers the additional comments in its analysis
at Section III infra.
6 Capitalized terms not defined herein are defined
in the Rules, available at https://www.dtcc.com/∼/
media/Files/Downloads/legal/rules/dtc_rules.pdf.
7 See Financial Stability Oversight Counsel 2012
Annual Report, Appendix A (‘‘FSOC 2012 Report’’),
available at https://www.treasury.gov/initiatives/
fsoc/Documents/2012%20Annual%20Report.pdf.
2 17
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]]>Agencies
[Federal Register Volume 86, Number 196 (Thursday, October 14, 2021)]
[Notices]
[Pages 57219-57221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22436]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93276; File No. SR-CboeEDGX-2021-043]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule
October 8, 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 September 30, 2021, Cboe EDGX Exchange, Inc. (the ``Exchange''
or ``EDGX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'' or ``EDGX
Equities'') proposes to amend its 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 modify the standard
rate for liquidity removing orders in securities priced at or above
$1.00, effective October 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 17% 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 rebates to members that add liquidity and assesses fees
to those that remove liquidity.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (September 27, 2021), available at https://markets.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------
The Exchange's Fee Schedule sets forth the standard rebates and
rates applied per share for orders that provide and remove liquidity,
respectively. Currently, for orders in securities priced
[[Page 57220]]
at or above $1.00, the Exchange provides a standard rebate of $0.00160
per share for orders that add liquidity and assesses a fee of $0.00285
per share for orders that remove liquidity. For orders in securities
priced below $1.00, the Exchange provides a standard rebate of $0.00009
per share for orders that add liquidity and assesses a fee of 0.30% of
total dollar value for orders that remove liquidity. Now, the Exchange
proposes to increase the standard fee for liquidity removing orders in
securities priced at or above $1.00 from a fee of $0.00285 to $0.0030
per share. The Exchange proposes to reflect this change in the Fee
Codes and Associated Fee where applicable (i.e., corresponding to
standard fee codes N, W, 6, BB and ZR). The Exchange notes that the
proposed standard rate is in line with, yet also competitive with,
rates assessed by other equities exchanges on orders in securities
priced at $1.00 or more.\4\
---------------------------------------------------------------------------
\4\ See Nasdaq Pricing 7, Section 118(a)(1), which, for example,
assesses a charge of $0.0030 for member orders that execute against
resting midpoint liquidity, and that that execute in the Nasdaq
Market Center generally, in securities priced at $1.00 or more; and
NYSE American Equities Price List, NYSE American Trading Fees and
Credits, Section I.A.1.a, Standard Rates, which assesses a standard
rate of $0.0030 per share (unless member adds ADV of at least 10,000
shares) for orders in securities priced at or above $1 that remove
liquidity.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\5\ in general, and
furthers the objectives of Section 6(b)(4),\6\ 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) \7\
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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4).
\7\ 15 U.S.C. 78f.(b)(5).
---------------------------------------------------------------------------
As described above, 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 believes that amending the standard rate for orders
that remove liquidity in securities priced at or above $1.00 is
reasonable because, as stated above, in order to operate in the highly
competitive equities markets, the Exchange and its competing exchanges
seek to offer similar pricing structures, including assessing
comparable standard fees for orders in securities priced at or above
$1.00.\8\ Thus, the Exchange believes the proposed standard rate change
is reasonable as it is generally aligned with and competitive with the
amounts assessed for the orders in securities at or above $1.00 on
other equities exchanges.\9\ The Exchange also believes that amending
this standard rate amount represents an equitable allocation of fees
and is not unfairly discriminatory because they will continue to
automatically apply to all Members' orders that remove liquidity in
securities at or above $1.00 uniformly.
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\8\ Supra note 3.
\9\ Supra note 4.
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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. The Exchange does not believe
that the proposed changes represent a significant departure from
previous pricing offered by the Exchange or pricing offered by the
Exchange's competitors. Members may opt to disfavor the Exchange's
pricing if they believe that alternatives offer them better value.
Accordingly, the Exchange does not believe that the proposed change
will impair the ability of Members or competing venues to maintain
their competitive standing in the financial markets.
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
rule change to update the standard fee applicable to liquidity removing
orders in securities priced at or above a $1.00 does not impose any
burden on intramarket competition because the standard rate will
continue to apply automatically and uniformly to all liquidity removing
orders priced at or above $1.00.
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 17% of the market share.\10\ 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 Securities and Exchange Commission
(the ``SEC'' or 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.'' \11\ 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
[[Page 57221]]
monopoly, regulatory or otherwise, in the execution of order flow from
broker dealers' . . . .''.\12\ 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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\10\ Supra note 3.
\11\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\12\ 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)(ii) of the Act.\13\
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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule 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 [email protected]. Please include
File Number SR-CboeEDGX-2021-043 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-2021-043. 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-2021-043, and should be
submitted on or before November 4, 2021.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22436 Filed 10-13-21; 8:45 am]
BILLING CODE 8011-01-P
