Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule, 18427-18430 [2022-06629]
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
thresholds. The proposed fee structure
therefore would ensure that market
participants that pay the proposed fee
are the ones that demand the most
resources from the Exchange. Also as
discussed, the purchase of additional
ports is optional and based on the
business needs of each market
participant. Moreover, such market
participants will continue to benefit
from access to the certification
environment, which the Exchange
believes provides a robust and realistic
testing experience via a replica of the
production environment.
The Exchange does not believe that
the proposed rule changes will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
Particularly, the proposed change
applies only to the Exchange’s
certification environment. Additionally,
the Exchange notes that it operates in a
highly competitive market. TPHs have
numerous alternative venues that they
may participate on and direct their
order flow, including 15 other options
exchanges, as well as off-exchange
venues, where competitive products are
available for trading. Indeed,
participants can readily choose to send
their orders to other exchanges, and,
additionally off-exchange venues, if
they deem overall fee levels at those
other venues to be more favorable.
Moreover, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 19 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ’[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ’no exchange can afford to take its
market share percentages for granted’
because ’no exchange possesses a
19 See
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
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monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’.20 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 21 and paragraph (f) of Rule
19b–4 22 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–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–CBOE–2022–011. This file
number should be included on the
20 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
21 15 U.S.C. 78s(b)(3)(A).
22 17 CFR 240.19b–4(f).
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18427
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. All submissions
should refer to File Number SR–CBOE–
2022–011 and should be submitted on
or before April 20, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06634 Filed 3–29–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94506; File No. SR–
CboeBZX–2022–020]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule
March 24, 2022.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 14,
2022, Cboe BZX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
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’’) is filing with the Securities
and Exchange Commission
(‘‘Commission’’) a proposed rule change
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.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend its
fee schedule for its equities platform
(‘‘BZX Equities’’) to adopt fees for
Certification Logical Port fees, effective
March 1, 2022.3
By way of background, the Exchange
offers a variety of logical ports, which
provide users with the ability within the
Exchange’s System to accomplish a
specific function through a connection,
such as order entry, data receipt or
access to information. Particularly, the
Exchange offers Logical Ports,4 Purge
3 The Exchange initially filed the proposed fee
changes on March 1, 2022 (SR–CboeBZX–2022–
012). On March 14, 2022, the Exchange withdrew
that filing and submitted this proposal.
4 Logical Ports include FIX and BOE ports (used
for order entry), drop logical port (which grants
users the ability to receive and/or send drop copies)
and ports that are used for receipt of certain market
data feeds.
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Ports,5 Multicast PITCH GRP Ports, and
Multicast PITCH Spin Server Ports.6 For
each type of the aforementioned logical
ports that is used in the production
environment, the Exchange also offers
corresponding ports which provide
Members and non-Members access to
the Exchange’s certification
environment to test proprietary systems
and applications (i.e., ‘‘Certification
Logical Ports’’). The certification
environment facilitates testing using
replicas of the Exchange’s production
environment process configurations
which provide for a robust and realistic
testing experience. For example, the
certification environment allows
unlimited firm-level testing of order
types, order entry, order management,
order throughput, acknowledgements,
risk settings, mass cancelations, and
purge requests. Historically, the
Exchange has not assessed fees for
Certification Logical Ports. The
Exchange now proposes to establish a
monthly fee for Certification Logical
Ports. Particularly, the Exchange
proposes to adopt a monthly fee of $250
per Certification Logical Port. However,
the Exchange notes that it will continue
to offer free of charge one Certification
Logical Port per logical port type offered
in the production environment (i.e.,
Logical Ports, Purge, Multicast PITCH
GRP, and Multicast PITCH Spin Server)
to each Member or non-Member, as
applicable. Any additional Certification
Logical Ports will be assessed $250 per
month per port.7 The Exchange notes
that purchasing additional Certification
Logical Ports is voluntary and not
required in order to participate in the
production environment, including live
production trading on the Exchange.
Additionally, Members and nonMembers are not required to purchase
any particular production logical port in
order to receive a corresponding
Certification Logical Port free of charge.8
5 Purge Ports are dedicated ports that permit a
User to simultaneously cancel all or a subset of its
orders in one or more symbols across multiple
logical ports by requesting the Exchange to effect
such cancellation.
6 Spin Ports and GRP Ports are used to request
and receive a retransmission of data from the
Exchange’s Multicast PITCH data feeds.
7 For example, if a Member maintains 3 FIX
Certification Logical Ports, 1 Purge Certification
Logical Port, and 1 set of Multicast PITCH Spin
Server Certification Logical Port, the Member will
be assessed $500 per month for Certification Logical
Port Fees (i.e., 1 FIX, 1 Purge and 1 set of Multicast
PITCH Spin Server Certification Logical Ports × $0
and 2 FIX Certification Logical Ports × $250).
8 For example, a Member may obtain a
Certification Purge Port free of charge, even if that
Member has not otherwise purchased a Purge Port
for the live production environment. Certification
Logical Ports are not automatically enabled for each
User, but rather must be proactively requested by
users.
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Further, the Exchange also notes that
other exchanges similarly assess fees
related to their respective testing
environments.9
Lastly, the Exchange does not intend
to prorate Certification Logical Ports for
the first month of service and intends to
make this clear in the notes section
under the Purge and Market Data
Logical Port Fees section of the Fees
Schedule.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.10 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 11 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,12 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Members and other persons using its
facilities.
As noted above, the Exchange’s
certification environment provides a
robust and realistic testing experience
using a replica of the Exchange’s
production environment process
configurations. This environment
enables market participants to manage
risk more effectively through testing
software development changes in
certification prior to implementing them
in the live trading environment, thereby
reducing the likelihood of a potentially
disruptive system failure in the live
trading environment, which has the
potential to affect all market
participants. As such, the Exchange
believes it’s reasonable to adopt a
Certification Logical Port fee as it better
9 See e.g., Nasdaq Stock Market LLC, Equity 7,
Pricing Schedule, Section 130. See also MIAX
Options Exchange Fee Schedule, Section 4, Testing
and Certification Fees.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
12 15 U.S.C. 78f(b)(4).
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
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enables the Exchange to continue to
maintain and improve its testing
environment, which the Exchange
believes serves to improve live
production trading on the Exchange.
The Exchange also believes the
proposed Certification Logical Port fee
is reasonable because while such ports
will no longer be completely free,
Members and non-Members will
continue to be entitled to receive free of
charge one Certification Logical Port for
each type of logical port that are
currently offered in the production
environment. Notably, the Exchange
believes one Certification Logical Port
per logical port type will be sufficient
for most users and indeed anticipates
that the majority of users will not
purchase additional Certification
Logical Ports. More specifically, while
the Exchange has no way of predicting
with certainty the impact of the
proposed changes, it anticipates
approximately 20% of Users to be
assessed fees for Certification Logical
Ports (i.e., request Certification Ports in
excess of the Certification Logical Ports
provided free of charge). For those users
who wish to obtain additional
Certification Logical Ports based on
their respective business needs, they are
able to do so for a modest fee. Indeed,
the proposed fee is lower than the fees
assessed for the corresponding logical
ports used in the Exchange’s production
environment.13 Additionally, the
Exchange notes other exchanges
similarly assess fees relating to their
respective testing environments.14
Further, the decision to purchase
additional ports is optional and no
market participant is required or under
any regulatory obligation to purchase
excess Certification Logical Ports in
order to access the Exchange’s
certification environment.15
The Exchange believes the proposed
fee is also equitable and not unfairly
discriminatory because it applies
uniformly to all market participants that
choose to obtain additional Certification
Logical Ports. The Exchange also
believes the proposed fee is reasonable,
equitable and not unfairly
13 See Cboe BZX Equities Fees Schedule, Purge
and Market Data Logical Port Fees and Match
Capacity Fees.
14 See e.g., Nasdaq Stock Market LLC, Equity 7,
Pricing Schedule, Section 130. See also MIAX
Options Exchange Fee Schedule, Section 4, Testing
and Certification Fees.
15 Although many Users use Certification Logical
Ports on a daily basis, the Exchange notes frequency
of use of Certification Logical Ports varies by User
and depends on a User’s business needs. To the
extent a User purchases additional Certification
Logical Ports and its respective needs change or it
determines it no longer wishes to maintain excess
Certification Logical Ports, the User is free to cancel
such ports for the following month(s).
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discriminatory because it is designed to
encourage market participants to be
efficient with their respective
Certification Logical Port usage. Without
some sort of fee for its Certification
Logical Ports, the Exchange believes that
Members and non-Members may be less
efficient in testing their systems,
potentially resulting in excessive time
and resources being consumed by the
Exchange in supporting testing and
certifying Members and non-Members to
the detriment of all market participants
as Exchange resources are diverted away
from other trading operations.
Additionally, similar to its production
environment, the Exchange’s
certification environment does not have
unlimited system capacity to support
unlimited testing. As such, the proposed
fee structure also ensures that firms that
use the most capacity pay for that
capacity, rather than placing that
burden on market participants that have
more modest needs. The Exchange lastly
believes that its proposed fee is aligned
with the goals of the Commission in
facilitating a competitive market for all
firms that trade on the Exchange and of
ensuring that critical market
infrastructure has ‘‘levels of capacity,
integrity, resiliency, availability, and
security adequate to maintain their
operational capability and promote the
maintenance of fair and orderly
markets.’’ 16
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. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition
because as the proposed change applies
uniformly to all market participants.
Additionally, the Exchange does not
believe that the proposed fee creates an
undue burden on competition because
the Exchange will continue to offer free
of charge one Certification Logical Port
per each logical port type offered in the
production environment. Although the
Exchange now proposes to charge users
for additional Certification Logical
Ports, the Exchange believes without
some sort of fee assessed for excess
Certification Logical Ports, Members
and non-Members may be less efficient
in testing their systems, potentially
16 See Securities Exchange Act Release No. 73639
(November 19, 2014), 79 FR 72251 (December 5,
2014) (File No. S7–01–13) (Regulation SCI Adopting
Release).
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18429
resulting in excessive time and
resources being consumed by the
Exchange and also potentially impacting
the certification environment’s capacity
thresholds. The proposed fee structure
therefore would ensure that market
participants that pay the proposed fee
are the ones that demand the most
resources from the Exchange. Also as
discussed, the purchase of additional
ports is optional and based on the
business needs of each market
participant. Moreover, such market
participants will continue to benefit
from access to the certification
environment, which the Exchange
believes provides a robust and realistic
testing experience via a replica of the
production environment.
The Exchange does not believe that
the proposed rule changes will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
Particularly, the proposed change
applies only to the Exchange’s
certification environment. Additionally,
the Exchange notes that it operates in a
highly competitive market. Members
have numerous alternative venues that
they may participate on and direct their
order flow, including 15 other equities
exchanges, as well as a number of
alternative trading systems and other
off-exchange venues, where competitive
products are available for trading.
Indeed, participants can readily choose
to send their orders to other exchanges,
and, additionally off-exchange venues,
if they deem overall fee levels at those
other venues to be more favorable.
Moreover, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 17 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
17 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
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’. . . .’’.18 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)
of the Act 19 and paragraph (f) of Rule
19b–4 20 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
khammond on DSKJM1Z7X2PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2022–020 on the subject line.
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2022–020. 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–2022–020 and
should be submitted on or before April
20, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06629 Filed 3–29–22; 8:45 am]
BILLING CODE 8011–01–P
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[Release No. 34–94498; File No. SR–FINRA–
2022–006]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Modify the Trade
Reporting Fees Applicable to
Participants That Use the FINRA/NYSE
Trade Reporting Facility
March 23, 2022.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 16,
2022, the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by FINRA. 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
FINRA is proposing to amend FINRA
Rule 7620B (Trade Reporting Facility
Reporting Fees) to modify the trade
reporting fees applicable to participants
that use the FINRA/NYSE Trade
Reporting Facility (‘‘FINRA/NYSE
TRF’’).
The text of the proposed rule change
is available on FINRA’s website at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
18 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
19 15 U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4(f).
SECURITIES AND EXCHANGE
COMMISSION
1 15
21 17
PO 00000
CFR 200.30–3(a)(12).
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2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\30MRN1.SGM
30MRN1
]]>Agencies
[Federal Register Volume 87, Number 61 (Wednesday, March 30, 2022)]
[Notices]
[Pages 18427-18430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06629]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94506; File No. SR-CboeBZX-2022-020]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Fee Schedule
March 24, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 14, 2022, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and
[[Page 18428]]
III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'' or ``BZX
Equities'') is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change 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.
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 for its equities
platform (``BZX Equities'') to adopt fees for Certification Logical
Port fees, effective March 1, 2022.\3\
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\3\ The Exchange initially filed the proposed fee changes on
March 1, 2022 (SR-CboeBZX-2022-012). On March 14, 2022, the Exchange
withdrew that filing and submitted this proposal.
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By way of background, the Exchange offers a variety of logical
ports, which provide users with the ability within the Exchange's
System to accomplish a specific function through a connection, such as
order entry, data receipt or access to information. Particularly, the
Exchange offers Logical Ports,\4\ Purge Ports,\5\ Multicast PITCH GRP
Ports, and Multicast PITCH Spin Server Ports.\6\ For each type of the
aforementioned logical ports that is used in the production
environment, the Exchange also offers corresponding ports which provide
Members and non-Members access to the Exchange's certification
environment to test proprietary systems and applications (i.e.,
``Certification Logical Ports''). The certification environment
facilitates testing using replicas of the Exchange's production
environment process configurations which provide for a robust and
realistic testing experience. For example, the certification
environment allows unlimited firm-level testing of order types, order
entry, order management, order throughput, acknowledgements, risk
settings, mass cancelations, and purge requests. Historically, the
Exchange has not assessed fees for Certification Logical Ports. The
Exchange now proposes to establish a monthly fee for Certification
Logical Ports. Particularly, the Exchange proposes to adopt a monthly
fee of $250 per Certification Logical Port. However, the Exchange notes
that it will continue to offer free of charge one Certification Logical
Port per logical port type offered in the production environment (i.e.,
Logical Ports, Purge, Multicast PITCH GRP, and Multicast PITCH Spin
Server) to each Member or non-Member, as applicable. Any additional
Certification Logical Ports will be assessed $250 per month per
port.\7\ The Exchange notes that purchasing additional Certification
Logical Ports is voluntary and not required in order to participate in
the production environment, including live production trading on the
Exchange. Additionally, Members and non-Members are not required to
purchase any particular production logical port in order to receive a
corresponding Certification Logical Port free of charge.\8\ Further,
the Exchange also notes that other exchanges similarly assess fees
related to their respective testing environments.\9\
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\4\ Logical Ports include FIX and BOE ports (used for order
entry), drop logical port (which grants users the ability to receive
and/or send drop copies) and ports that are used for receipt of
certain market data feeds.
\5\ Purge Ports are dedicated ports that permit a User to
simultaneously cancel all or a subset of its orders in one or more
symbols across multiple logical ports by requesting the Exchange to
effect such cancellation.
\6\ Spin Ports and GRP Ports are used to request and receive a
retransmission of data from the Exchange's Multicast PITCH data
feeds.
\7\ For example, if a Member maintains 3 FIX Certification
Logical Ports, 1 Purge Certification Logical Port, and 1 set of
Multicast PITCH Spin Server Certification Logical Port, the Member
will be assessed $500 per month for Certification Logical Port Fees
(i.e., 1 FIX, 1 Purge and 1 set of Multicast PITCH Spin Server
Certification Logical Ports x $0 and 2 FIX Certification Logical
Ports x $250).
\8\ For example, a Member may obtain a Certification Purge Port
free of charge, even if that Member has not otherwise purchased a
Purge Port for the live production environment. Certification
Logical Ports are not automatically enabled for each User, but
rather must be proactively requested by users.
\9\ See e.g., Nasdaq Stock Market LLC, Equity 7, Pricing
Schedule, Section 130. See also MIAX Options Exchange Fee Schedule,
Section 4, Testing and Certification Fees.
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Lastly, the Exchange does not intend to prorate Certification
Logical Ports for the first month of service and intends to make this
clear in the notes section under the Purge and Market Data Logical Port
Fees section of the Fees Schedule.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with
Section 6(b)(4) of the Act,\12\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Members and other persons using its facilities.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(4).
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As noted above, the Exchange's certification environment provides a
robust and realistic testing experience using a replica of the
Exchange's production environment process configurations. This
environment enables market participants to manage risk more effectively
through testing software development changes in certification prior to
implementing them in the live trading environment, thereby reducing the
likelihood of a potentially disruptive system failure in the live
trading environment, which has the potential to affect all market
participants. As such, the Exchange believes it's reasonable to adopt a
Certification Logical Port fee as it better
[[Page 18429]]
enables the Exchange to continue to maintain and improve its testing
environment, which the Exchange believes serves to improve live
production trading on the Exchange. The Exchange also believes the
proposed Certification Logical Port fee is reasonable because while
such ports will no longer be completely free, Members and non-Members
will continue to be entitled to receive free of charge one
Certification Logical Port for each type of logical port that are
currently offered in the production environment. Notably, the Exchange
believes one Certification Logical Port per logical port type will be
sufficient for most users and indeed anticipates that the majority of
users will not purchase additional Certification Logical Ports. More
specifically, while the Exchange has no way of predicting with
certainty the impact of the proposed changes, it anticipates
approximately 20% of Users to be assessed fees for Certification
Logical Ports (i.e., request Certification Ports in excess of the
Certification Logical Ports provided free of charge). For those users
who wish to obtain additional Certification Logical Ports based on
their respective business needs, they are able to do so for a modest
fee. Indeed, the proposed fee is lower than the fees assessed for the
corresponding logical ports used in the Exchange's production
environment.\13\ Additionally, the Exchange notes other exchanges
similarly assess fees relating to their respective testing
environments.\14\ Further, the decision to purchase additional ports is
optional and no market participant is required or under any regulatory
obligation to purchase excess Certification Logical Ports in order to
access the Exchange's certification environment.\15\
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\13\ See Cboe BZX Equities Fees Schedule, Purge and Market Data
Logical Port Fees and Match Capacity Fees.
\14\ See e.g., Nasdaq Stock Market LLC, Equity 7, Pricing
Schedule, Section 130. See also MIAX Options Exchange Fee Schedule,
Section 4, Testing and Certification Fees.
\15\ Although many Users use Certification Logical Ports on a
daily basis, the Exchange notes frequency of use of Certification
Logical Ports varies by User and depends on a User's business needs.
To the extent a User purchases additional Certification Logical
Ports and its respective needs change or it determines it no longer
wishes to maintain excess Certification Logical Ports, the User is
free to cancel such ports for the following month(s).
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The Exchange believes the proposed fee is also equitable and not
unfairly discriminatory because it applies uniformly to all market
participants that choose to obtain additional Certification Logical
Ports. The Exchange also believes the proposed fee is reasonable,
equitable and not unfairly discriminatory because it is designed to
encourage market participants to be efficient with their respective
Certification Logical Port usage. Without some sort of fee for its
Certification Logical Ports, the Exchange believes that Members and
non-Members may be less efficient in testing their systems, potentially
resulting in excessive time and resources being consumed by the
Exchange in supporting testing and certifying Members and non-Members
to the detriment of all market participants as Exchange resources are
diverted away from other trading operations. Additionally, similar to
its production environment, the Exchange's certification environment
does not have unlimited system capacity to support unlimited testing.
As such, the proposed fee structure also ensures that firms that use
the most capacity pay for that capacity, rather than placing that
burden on market participants that have more modest needs. The Exchange
lastly believes that its proposed fee is aligned with the goals of the
Commission in facilitating a competitive market for all firms that
trade on the Exchange and of ensuring that critical market
infrastructure has ``levels of capacity, integrity, resiliency,
availability, and security adequate to maintain their operational
capability and promote the maintenance of fair and orderly markets.''
\16\
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\16\ See Securities Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72251 (December 5, 2014) (File No. S7-01-13)
(Regulation SCI Adopting Release).
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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. The
Exchange does not believe that the proposed rule change will impose any
burden on intramarket competition because as the proposed change
applies uniformly to all market participants. Additionally, the
Exchange does not believe that the proposed fee creates an undue burden
on competition because the Exchange will continue to offer free of
charge one Certification Logical Port per each logical port type
offered in the production environment. Although the Exchange now
proposes to charge users for additional Certification Logical Ports,
the Exchange believes without some sort of fee assessed for excess
Certification Logical Ports, Members and non-Members may be less
efficient in testing their systems, potentially resulting in excessive
time and resources being consumed by the Exchange and also potentially
impacting the certification environment's capacity thresholds. The
proposed fee structure therefore would ensure that market participants
that pay the proposed fee are the ones that demand the most resources
from the Exchange. Also as discussed, the purchase of additional ports
is optional and based on the business needs of each market participant.
Moreover, such market participants will continue to benefit from access
to the certification environment, which the Exchange believes provides
a robust and realistic testing experience via a replica of the
production environment.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Particularly,
the proposed change applies only to the Exchange's certification
environment. Additionally, the Exchange notes that it operates in a
highly competitive market. Members have numerous alternative venues
that they may participate on and direct their order flow, including 15
other equities exchanges, as well as a number of alternative trading
systems and other off-exchange venues, where competitive products are
available for trading. Indeed, participants can readily choose to send
their orders to other exchanges, and, additionally off-exchange venues,
if they deem overall fee levels at those other venues to be more
favorable. Moreover, the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \17\ 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
[[Page 18430]]
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'. . . .''.\18\ 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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\17\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\18\ 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 \19\ and paragraph (f) of Rule 19b-4 \20\
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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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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-2022-020 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-2022-020. 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-2022-020 and should be submitted
on or before April 20, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06629 Filed 3-29-22; 8:45 am]
BILLING CODE 8011-01-P
