Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 14310-14312 [2022-05246]
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14310
Federal Register / Vol. 87, No. 49 / Monday, March 14, 2022 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
J. Matthew DeLesDernier,
Assistant Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2022–05245 Filed 3–11–22; 8:45 am]
BILLING CODE 8011–01–P
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94377; File No. SR–
CboeBZX–2022–011]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
March 8, 2022.
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 1,
2022, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) 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 BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’ or ‘‘BZX
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/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
jspears on DSK121TN23PROD with NOTICES1
I. 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
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
17:51 Mar 11, 2022
The Exchange proposes to amend its
fee schedule to modify the Add/Remove
Volume Tiers 1 and 2, and to eliminate
the Single MPID Investor Tier 1. The
Exchange proposes to implement the
proposed change to its fee schedule on
March 1, 2022.
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 Securities
Exchange Act of 1934 (the ‘‘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.
Particularly, for securities at or above
$1.00, the Exchange provides a standard
rebate of $0.0016 per share for orders
that add liquidity and assesses a fee of
$0.0030 per share for orders that remove
liquidity. 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
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (February 22,
2022), available at https://markets.cboe.com/us/
equities/market_statistics/.
8 17
VerDate Sep<11>2014
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
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benefits or discounts for satisfying
increasingly more stringent criteria.
Under footnote 1 of the Fee Schedule,
the Exchange currently offers various
Add/Remove Volume Tiers. In
particular, the Exchange offers six
displayed add volume tiers that each
provide an enhanced rebate for
Members’ qualifying orders yielding fee
codes B,4 V,5 or Y,6 where a Member
reaches certain add volume-based
criteria. Currently Tiers 1 and 2 are as
follows:
• Tier 1 provides a rebate of $0.0020
per share to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y)
where the Member has an ADAV 7 as a
percentage of TCV 8 equal to or greater
than 0.10%, or the Member has an
ADAV equal to or greater than 10
million shares.
• Tier 2 provides a rebate of $0.0025
per share to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y)
where the Member has an ADAV as a
percentage of TCV equal to or greater
than 0.20%, or the Member has an
ADAV equal to or greater than 20
million shares.
Now, the Exchange proposes to
amend the criteria of Tier 1 and reduce
the rebate applicable to Tier 2.
Specifically, the Exchange proposes to
amend Tiers 1 and 2 as follows:
• Proposed Tier 1 will provide a
rebate of $0.0020 per share to qualifying
orders (i.e., orders yielding fee codes B,
V, or Y) where the Member has an
ADAV as a percentage of TCV equal to
or greater than 0.15%, or the Member
has an ADAV equal to or greater than 15
million shares.
• Tier 2 provides a rebate of $0.23 per
share to qualifying orders (i.e., orders
yielding fee codes B, V, or Y) where the
Member has an ADAV as a percentage
of TCV equal to or greater than 0.20%,
or the Member has an ADAV equal to
or greater than 20 million shares.
Under footnote 4 of the Fee Schedule,
the Exchange currently offers two Single
MPID Investor Tiers. In particular, the
Single MPID Investor Tier 1 provides an
enhanced rebate of $0.0030 per share for
4 Orders yielding Fee Code ‘‘B’’ are orders adding
liquidity to BZX (Tape B).
5 Orders yielding Fee Code ‘‘V’’ are orders adding
liquidity to BZX (Tape A).
6 Orders yielding Fee Code ‘‘Y’’ are orders adding
liquidity to BZX (Tape C).
7 ‘‘ADAV’’ means average daily added volume
calculated as the number of shares added per day
and ‘‘ADV’’ means average daily volume calculated
as the number of shares added or removed,
combined, per day. ADAV and ADV are calculated
on a monthly basis.
8 ‘‘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.
E:\FR\FM\14MRN1.SGM
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Federal Register / Vol. 87, No. 49 / Monday, March 14, 2022 / Notices
Members qualifying orders yielding fee
codes B, V, or Y where (1) an MPID has
a Step-Up ADV 9 from May 2021 equal
to or greater than 0.10% of TCV or a
Step-Up ADV from May 2021 equal to
or greater than 8 million shares; and (2)
the MPID adds a Step-Up ADAV 10 from
May 2021 equal to or greater than 0.05%
of TCV. Now, the Exchange proposes to
eliminate the Single MPID Investor Tier
1 as no Member has reached this tier in
several months and the Exchange
therefore no longer wishes to, nor is it
required to, maintain such a tier. Based
on the proposed elimination of Single
MPID Investor Tier 1, the Exchange also
proposes to renumber existing Single
MPID Investor Tier 2 to Single MPID
Investor Tier 1.
jspears on DSK121TN23PROD with NOTICES1
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,11
in general, and furthers the objectives of
Section 6(b)(4) and 6(b)(5),12 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, and thus is in the public
interest. Additionally, the Exchange
notes that relative volume-based
incentives and discounts have been
widely adopted by exchanges,13
including the Exchange,14 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
9 ‘‘Step-Up ADV’’ means ADV in the relevant
baseline month subtracted from current day ADV.
10 ‘‘Step-Up ADAV’’ means ADAV in the relevant
baseline month subtracted from current ADAV.
11 15 U.S.C. 78f.
12 15 U.S.C. 78f(b)(4) and (5).
13 See EDGX Equities Fee Schedule, Footnote 1,
Add/Remove Volume Tiers.
14 See BZX Equities Fee Schedule, Footnote 1,
Add/Remove Volume Tiers.
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17:51 Mar 11, 2022
Jkt 256001
offer similar tiered pricing structures,
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.
While the proposed changes to the
criteria of the displayed add volume
Tier 1 is more stringent than the current
criteria, the Exchange believes that the
change is reasonable as it continues to
incentivize Members to increase their
displayed liquidity adding volume on
the Exchange. Additionally, while the
displayed add volume Tier 2 provides a
lesser rebate than that currently offered
under the same criteria, the Exchange
similarly believes that the change is
reasonable as it continues to incentivize
Members to increase their displayed
liquidity adding volume on the
Exchange. Furthermore, the Exchange
believes that the existing and proposed
enhanced rebates under Tiers 1 and 2,
respectively, are commensurate with the
proposed and existing criteria,
respectively. Proposed Tiers 1 and 2
will continue to be available to all
Members and provide all Members with
an additional opportunity to receive an
enhanced rebate. An overall increase in
activity would deepen the Exchange’s
liquidity pool, offers additional cost
savings, support the quality of price
discovery, promote market transparency
and improve market quality, for all
investors.
The Exchange also believes that the
proposal represents an equitable
allocation of fees and rebates and is not
unfairly discriminatory because all
Members will be eligible for the
displayed add volume Tiers 1 and 2 and
have the opportunity to meet the Tiers’
criteria and receive the corresponding
enhanced rebate if such criteria is met.
Without having a view of activity on
other markets and off-exchange venues,
the Exchange has no way of knowing
whether these proposed changes would
definitely result in any Members
qualifying for Tiers 1 and 2. While the
Exchange has no way of predicting with
certainty how the proposed changes will
impact Member activity, based on
trading activity from the prior month,
the Exchange anticipates that no
Member will achieve proposed Tier 1
and two Members will satisfy the
criteria under proposed Tier 2. The
Exchange also notes that proposed
changes will not adversely impact any
Member’s ability to qualify for reduced
fees or enhanced rebates offered under
other tiers. Should a Member not meet
the proposed new criteria, the Member
will merely not receive that
corresponding enhanced rebate.
PO 00000
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14311
The Exchange believes the proposed
amendment to remove Single MPID
Investor Tier 1 is reasonable because no
Member has achieved this tier in several
months. Moreover, the Exchange is not
required to maintain this tier and
Members still have a number of other
opportunities and a variety of ways to
receive enhanced rebates for displayed
liquidity, including the enhanced rebate
under the proposed Single MPID
Investor Tier 1. The Exchange believes
the proposal to eliminate this tier 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 intramarket or
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
the proposed changes apply to all orders
equally, and thus applies to all Members
equally. Additionally, 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
purpose 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.15
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
15 Supra
E:\FR\FM\14MRN1.SGM
note 3.
14MRN1
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Federal Register / Vol. 87, No. 49 / Monday, March 14, 2022 / Notices
investors and listed companies.’’ 16 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’. . . .’’.17 Accordingly, the
Exchange does not believe its proposed
fee changes 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)
of the Act 18 and paragraph (f) of Rule
19b–4 19 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
jspears on DSK121TN23PROD with NOTICES1
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.
16 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
17 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)).
18 15 U.S.C. 78s(b)(3)(A).
19 17 CFR 240.19b–4(f).
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17:51 Mar 11, 2022
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Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
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–
CboeBZX–2022–011 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–CboeBZX–2022–011. 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–CboeBZX–2022–011 and
should be submitted on or before April
4, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[Release No. 34–94378; File No. SR–NYSE–
2022–12]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Sections 902.03 and 902.11 of the
NYSE Listed Company Manual To
Establish Fees for the Listing of Rights
March 8, 2022.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on February
25, 2022, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, 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
The Exchange proposes to amend
Sections 902.03 and 902.11 of the NYSE
Listed Company Manual (the ‘‘Manual’’)
to establish fees for the listing of rights
and to remove rule text that is no longer
applicable. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
[FR Doc. 2022–05246 Filed 3–11–22; 8:45 am]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
20 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 87, Number 49 (Monday, March 14, 2022)]
[Notices]
[Pages 14310-14312]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05246]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94377; File No. SR-CboeBZX-2022-011]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
March 8, 2022.
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 1, 2022, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'' or ``BZX
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/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
I. 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 to modify the Add/
Remove Volume Tiers 1 and 2, and to eliminate the Single MPID Investor
Tier 1. The Exchange proposes to implement the proposed change to its
fee schedule on March 1, 2022.
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
Securities Exchange Act of 1934 (the ``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. Particularly, for securities at or above
$1.00, the Exchange provides a standard rebate of $0.0016 per share for
orders that add liquidity and assesses a fee of $0.0030 per share for
orders that remove liquidity. 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.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (February 22, 2022), available at https://markets.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------
Under footnote 1 of the Fee Schedule, the Exchange currently offers
various Add/Remove Volume Tiers. In particular, the Exchange offers six
displayed add volume tiers that each provide an enhanced rebate for
Members' qualifying orders yielding fee codes B,\4\ V,\5\ or Y,\6\
where a Member reaches certain add volume-based criteria. Currently
Tiers 1 and 2 are as follows:
---------------------------------------------------------------------------
\4\ Orders yielding Fee Code ``B'' are orders adding liquidity
to BZX (Tape B).
\5\ Orders yielding Fee Code ``V'' are orders adding liquidity
to BZX (Tape A).
\6\ Orders yielding Fee Code ``Y'' are orders adding liquidity
to BZX (Tape C).
---------------------------------------------------------------------------
Tier 1 provides a rebate of $0.0020 per share to
qualifying orders (i.e., orders yielding fee codes B, V, or Y) where
the Member has an ADAV \7\ as a percentage of TCV \8\ equal to or
greater than 0.10%, or the Member has an ADAV equal to or greater than
10 million shares.
---------------------------------------------------------------------------
\7\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day and ``ADV'' means average daily
volume calculated as the number of shares added or removed,
combined, per day. ADAV and ADV are calculated on a monthly basis.
\8\ ``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.
---------------------------------------------------------------------------
Tier 2 provides a rebate of $0.0025 per share to
qualifying orders (i.e., orders yielding fee codes B, V, or Y) where
the Member has an ADAV as a percentage of TCV equal to or greater than
0.20%, or the Member has an ADAV equal to or greater than 20 million
shares.
Now, the Exchange proposes to amend the criteria of Tier 1 and
reduce the rebate applicable to Tier 2. Specifically, the Exchange
proposes to amend Tiers 1 and 2 as follows:
Proposed Tier 1 will provide a rebate of $0.0020 per share
to qualifying orders (i.e., orders yielding fee codes B, V, or Y) where
the Member has an ADAV as a percentage of TCV equal to or greater than
0.15%, or the Member has an ADAV equal to or greater than 15 million
shares.
Tier 2 provides a rebate of $0.23 per share to qualifying
orders (i.e., orders yielding fee codes B, V, or Y) where the Member
has an ADAV as a percentage of TCV equal to or greater than 0.20%, or
the Member has an ADAV equal to or greater than 20 million shares.
Under footnote 4 of the Fee Schedule, the Exchange currently offers
two Single MPID Investor Tiers. In particular, the Single MPID Investor
Tier 1 provides an enhanced rebate of $0.0030 per share for
[[Page 14311]]
Members qualifying orders yielding fee codes B, V, or Y where (1) an
MPID has a Step-Up ADV \9\ from May 2021 equal to or greater than 0.10%
of TCV or a Step-Up ADV from May 2021 equal to or greater than 8
million shares; and (2) the MPID adds a Step-Up ADAV \10\ from May 2021
equal to or greater than 0.05% of TCV. Now, the Exchange proposes to
eliminate the Single MPID Investor Tier 1 as no Member has reached this
tier in several months and the Exchange therefore no longer wishes to,
nor is it required to, maintain such a tier. Based on the proposed
elimination of Single MPID Investor Tier 1, the Exchange also proposes
to renumber existing Single MPID Investor Tier 2 to Single MPID
Investor Tier 1.
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\9\ ``Step-Up ADV'' means ADV in the relevant baseline month
subtracted from current day ADV.
\10\ ``Step-Up ADAV'' means ADAV in the relevant baseline month
subtracted from current ADAV.
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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,\11\ in general, and
furthers the objectives of Section 6(b)(4) and 6(b)(5),\12\ 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, and thus is in the public interest.
Additionally, the Exchange notes that relative volume-based incentives
and discounts have been widely adopted by exchanges,\13\ including the
Exchange,\14\ 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, 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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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(4) and (5).
\13\ See EDGX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
\14\ See BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
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While the proposed changes to the criteria of the displayed add
volume Tier 1 is more stringent than the current criteria, the Exchange
believes that the change is reasonable as it continues to incentivize
Members to increase their displayed liquidity adding volume on the
Exchange. Additionally, while the displayed add volume Tier 2 provides
a lesser rebate than that currently offered under the same criteria,
the Exchange similarly believes that the change is reasonable as it
continues to incentivize Members to increase their displayed liquidity
adding volume on the Exchange. Furthermore, the Exchange believes that
the existing and proposed enhanced rebates under Tiers 1 and 2,
respectively, are commensurate with the proposed and existing criteria,
respectively. Proposed Tiers 1 and 2 will continue to be available to
all Members and provide all Members with an additional opportunity to
receive an enhanced rebate. An overall increase in activity would
deepen the Exchange's liquidity pool, offers additional cost savings,
support the quality of price discovery, promote market transparency and
improve market quality, for all investors.
The Exchange also believes that the proposal represents an
equitable allocation of fees and rebates and is not unfairly
discriminatory because all Members will be eligible for the displayed
add volume Tiers 1 and 2 and have the opportunity to meet the Tiers'
criteria and receive the corresponding enhanced rebate if such criteria
is met. Without having a view of activity on other markets and off-
exchange venues, the Exchange has no way of knowing whether these
proposed changes would definitely result in any Members qualifying for
Tiers 1 and 2. While the Exchange has no way of predicting with
certainty how the proposed changes will impact Member activity, based
on trading activity from the prior month, the Exchange anticipates that
no Member will achieve proposed Tier 1 and two Members will satisfy the
criteria under proposed Tier 2. The Exchange also notes that proposed
changes will not adversely impact any Member's ability to qualify for
reduced fees or enhanced rebates offered under other tiers. Should a
Member not meet the proposed new criteria, the Member will merely not
receive that corresponding enhanced rebate.
The Exchange believes the proposed amendment to remove Single MPID
Investor Tier 1 is reasonable because no Member has achieved this tier
in several months. Moreover, the Exchange is not required to maintain
this tier and Members still have a number of other opportunities and a
variety of ways to receive enhanced rebates for displayed liquidity,
including the enhanced rebate under the proposed Single MPID Investor
Tier 1. The Exchange believes the proposal to eliminate this tier 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 intramarket or intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
Particularly, the proposed changes apply to all orders equally, and
thus applies to all Members equally. Additionally, 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 purpose 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.\15\ 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
[[Page 14312]]
investors and listed companies.'' \16\ 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'. . . .''.\17\ Accordingly, the Exchange
does not believe its proposed fee changes imposes any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
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\15\ Supra note 3.
\16\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\17\ 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 \18\ and paragraph (f) of Rule 19b-4 \19\
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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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 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-CboeBZX-2022-011 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-CboeBZX-2022-011. 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-CboeBZX-2022-011 and should be submitted
on or before April 4, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-05246 Filed 3-11-22; 8:45 am]
BILLING CODE 8011-01-P
