Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Facility Fees Section in the Fees Schedule in Connection With the Exchange's New Trading Floor, 51713-51722 [2022-18098]
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Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes the proposed rule
change would permit listing and trading
of an additional actively-managed ETF
that has characteristics different from
existing actively-managed and index
ETFs and would introduce additional
competition among various ETF
products to the benefit of investors.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 28 and Rule 19b–
4(f)(6) thereunder.29
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 30 permits
the Commission to designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange notes that the
Commission has approved and noticed
for immediate effectiveness proposed
rule changes to permit listing and
trading on the Exchange of Active Proxy
Portfolio Shares similar to the Fund.31
The proposed listing rule for the Fund
28 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
30 17 CFR 240.19b–4(f)(6)(iii).
31 See supra notes 9 and 10.
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29 17
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raises no novel legal or regulatory
issues. Thus, the Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest.
Accordingly, the Commission hereby
waives the 30-day operative delay and
designates the proposed rule change
operative upon filing.32
At any time within 60 days of the
filing of such 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.
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–
NYSEARCA–2022–51 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–NYSEARCA–2022–51. 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
32 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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51713
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–NYSEARCA–2022–51 and
should be submitted on or before
September 13, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022–18096 Filed 8–22–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95530; File No. SR–CBOE–
2022–042]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Facility
Fees Section in the Fees Schedule in
Connection With the Exchange’s New
Trading Floor
August 17, 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 August 5,
2022, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its Facility Fees section in the Fees
Schedule in connection with the
33 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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Exchange’s new trading floor. 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://www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx), 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
Fees Schedule in connection with the
opening of a new trading floor.4 Until
June 6, 2022, the Exchange conducted
open outcry trading at 400 S LaSalle,
Chicago, Illinois (‘‘LaSalle trading
floor’’). On June 6, 2022, the Exchange
moved its open outcry trading
operations to a new trading floor located
at 141 W Jackson Blvd., Chicago, Illinois
(‘‘CBOT Building’’). As a result of this
transition, certain infrastructure and
technology on the LaSalle trading floor
were rendered obsolete, and the new
trading floor in the CBOT Building has
new infrastructure and offers new
technology. Accordingly, the Exchange
proposes to adopt new, and/or update
current, facility fees with respect to the
new trading floor, as well as eliminate
obsolete facility fees that are only
applicable to the Exchange’s LaSalle
facility and trading floor which is no
longer in use as of June 6, 2022.
Booth Fees
Under the current Fees Schedule, the
Exchange assesses monthly fees for
4 The Exchange initially filed the proposed fee
changes on June 1, 2022 (SR–CBOE–2022–026). On
June 10, 2022, the Exchange withdrew that filing
and submitted SR–CBOE–2022–029. The Exchange
notes no comment letters were received for either
filing. On August 5, 2022, the Exchange withdrew
that filing and submitted this filing.
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‘‘standard Booths’’, which refers to a
portion of designated space on the
trading floor of the Exchange adjacent to
or in particular trading crowds, which
may be occupied by a Trading Permit
Holder (‘‘TPH’’), clerks, runners, or
other support staff for operational and
other business-related activities. The
Exchange assesses a monthly fee of $195
for standard Booths located along the
perimeter of the trading floor, and $550
for standard Booths located in the OEX,
Dow Jones, MNX and VIX trading
crowds. The Exchange also assesses
monthly fees for ‘‘nonstandard Booths’’,
which refers to space on the trading
floor of the Exchange that is set off from
a trading crowd, which may be rented
by a TPH for whatever support, office,
back-office, or any other businessrelated activities for which the TPH may
choose to use the space. A TPH that
rents non-standard booth space on the
floor of the Exchange is subject to a base
non-standard booth rental fee of $1,250
per month in addition to a square
footage fee of $1.70 per square foot per
month based on the size of the TPH’s
non-standard booth. The Exchange
proposes to modify and simplify its fees
assessed for booth rentals. First, the
Exchange proposes to eliminate the
distinction between standard and nonstandard Booths. The Exchange also
proposes to adopt a tiered pricing
schedule for Booths based on the
number of Booths rented by a TPH.
Particularly, the Exchange proposes to
adopt the following fees for Booths that
are set off from a trading crowd:
Monthly
fee
Quantity of booths
1–2 ..................................................
3–6 ..................................................
7–10 ................................................
11 or more ......................................
$400
300
200
100
The proposed tiered pricing provides
discounted pricing for additional
Booths. For example, if a TPH rented 4
Booths, the TPH would be assessed
$1,400 a month (2 Booths at $400 and
2 Booths at $300). The Exchange also
proposes to adopt a monthly fee of $750
per booth for any booth located in a
trading crowd. The Booth Pass-Through
Fee would remain unchanged.5 The
Exchange notes that use of Booths,
whether or located away from or in a
trading crowd are optional and not
necessary in order to conduct open
outcry trading on the trading floor.
5 Pursuant to the Booth Pass-Through Fee, TPHs
bear responsibility for all costs associated with any
modifications and alterations to any trading floor
Booths leased by the TPH (or TPH organization) and
must reimburse the Exchange for all costs incurred
in connection therewith.
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Booth spaces are also uniform and
nearly identical in size. The Exchange
also notes that at this time, the
Exchange has ample space on its new
trading floor for booth space.
Policy
The Exchange also proposes to update
the Exchange’s policy (‘‘Policy’’)
regarding the rental and use of booth
space on its trading floor by TPH
organizations. The Exchange
memorialized the Policy and filed it
with the Commission in 1994.6 The
Exchange proposes to update the Policy
in a few respects. First, the Exchange
proposes to change references to
‘‘Chicago Board Options Exchange,
Incorporated’’ and ‘‘CBOE’’ to ‘‘Cboe
Exchange, Inc.,’’ and ‘‘Cboe Options’’,
respectively to reflect the Exchange’s
current legal name which has been
updated since the last update to the
Policy. The Exchange also proposes to
update the rule reference relating to the
Appeals process from Chapter ‘‘19’’ to
Chapter ‘‘15’’ to reflect recent updates to
the Exchange’s rulebook.
The Exchange notes the Policy
includes a section that sets forth the
requirement that all TPH organizations
renting Booths execute a ‘‘Trading Floor
Booth Rental Agreement’’ (hereinafter,
‘‘Agreement’’) which sets forth the
contractual terms, conditions and
restrictions governing rental and use of
Booths by TPH organizations.7 A copy
of the Agreement was included in the
Exchange’s 1994 rule filing noted above
for the Commission’s information.8 The
Agreement specifically sets forth the
details of the parties’ contractual
relationship regarding rental and use of
the Booths. Among other provisions, the
Agreement includes specific provisions
delineating the termination rights of
both the TPH organization and the
Exchange and sets forth a procedure for
adding Booths to and deleting Booths
from the Agreement. The Agreement
also spells out requirements respecting
the TPH’s use of the Booths, such as
those governing the installation of
equipment, the conduct of business, and
access of persons to the Booths.
The Exchange has updated the
Agreement (which is now referred to as
the Agreement for ‘‘standard Booths’’).
In 2012, the Exchange also created a
separate form of the Agreement for non6 See Securities Exchange Act Release No. 33972
(April 28, 1994), 59 FR 23242 (May 5, 1994).
7 The Agreement is non-negotiable and its terms
are the same for every TPH organization.
8 See Securities Exchange Act Release No. 33972
(April 28, 1994), 59 FR 23242 (May 5, 1994).
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standard Booths.9 In connection with
the proposal to eliminate non-standard
Booths, the Exchange proposes to
eliminate use of that agreement. A copy
of the standard form of Agreement is
included with this filing in Exhibit 3.
The Exchange proposes to update this
section of the Policy to eliminate
references to the non-standard booth
agreement. The Exchange also proposes
to update the Agreement to (i) change
references to ‘‘Chicago Board Options
Exchange, Incorporated’’ and ‘‘CBOE’’ to
‘‘Cboe Exchange, Inc.,’’ and ‘‘Cboe
Options’’, respectively; (ii) update the
link to where the Cboe Options Fees
Schedule can be found; (iii) eliminate
the requirement for Cboe to provide
TPH organizations with a copy of TPH
Organization’s current booth
assignments, as it no longer believes
such record is necessary or desired by
TPHs; and (iv) eliminate Section 13,
which prohibits TPH Organizations
leasing SPX arbitrage Booths from
installing data equipment in such
Booths, as the Exchange does not intend
to provide such Booths and to the extent
it determines to do so in the future does
not anticipate maintaining such
prohibition. The Exchange will
disseminate the updated Policy and
forms of the Agreement to TPHs by
posting them on the Trading Permit
Holder portion of the Cboe website.
Line to Cboe Floor Network
On the LaSalle trading floor, TPHs
used various lines and
telecommunications (‘‘telco’’) circuits to
connect to the trading floor.
Independent wiring had to be used for
each line or telco circuit, which means
firms may have needed to relocate their
lines or telco circuits if they moved into,
or relocated to, a new trading space or
Booth. These telco circuits are also on
a per device basis. The new trading floor
utilizes a single floor network (i.e.,
‘‘Cboe Floor Network’’) for TPHs’
devices consisting of both wired jacks
and wireless network access located at
kiosks, in trading pits, and in Booths
throughout the new trading floor. As
such, unlike the LaSalle trading floor
infrastructure, TPHs do not need to
order lines from the Exchange to
specific locations on the floor. Rather, a
TPH only needs to order one Ethernet
port (‘‘Line’’) (or a pair for redundancy)
to connect to the Cboe Floor Network
and will be able to connect their devices
to the Exchange’s network anywhere on
the trading floor through wired jack
ports or the wireless network.
9 See Securities Exchange Act Release No. 66727
(April 9, 2012), 77 FR 21134 (April 3, 2012) (SR–
CBOE–2012–025).
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Additionally, firms no longer need to
provide network equipment to support
dedicated lines to the floor, as on the
new trading floor the Exchange provides
the network switches and local area
network (LAN) lines for all firms.
The Exchange believes the new
trading floor will provide TPHs more
flexibility to move and relocate as
needed, as compared to the LaSalle
trading floor. If a TPH wished to
relocate trading spaces or trading booths
on the LaSalle trading floor, it could
have triggered installation, relocation
and removal of various lines and
circuits, which subsequently triggered
various installation, relocation and
removal fees.10 For example, on the
LaSalle trading floor, if a Market-Maker
needed to move to a new trading space,
it may have needed to relocate the lines
or circuits from its current space to the
new space and would be subject to
relocation fees such as $129 relocation
fee to relocate any Exchangefones and
$200 relocation fee for relocation of any
Market-Maker Handheld Terminal.11 As
another example, if a TPH needed to
relocate to a new Booth, it may have
been subject to a relocation fee of $625
for relocating lines from the trading
floor to local carriers or the
Communications Center.12 Since all
network access is wireless or plug and
play at any location on the new trading
floor, the new infrastructure eliminates
the need for installation of multiple
lines, as well as relocation and removal
of connectivity lines to devices and also
renders the following Lines fees
(including fees relating to installation,
relocation and removal) obsolete: IntraFloor, Voice Circuits, Appearances, Data
Circuits at Local Carrier, and Data
Circuits at In-House Frame. The
Exchange therefore proposes to instead
adopt a monthly fee of $350 per Line
and notes it does not expect TPHs to
purchase more than one Line and one
redundant Line. The Exchange also
proposes to adopt a one-time $500
installation fee for the installation of the
line to the Cboe Floor Network, which
is a pass-through fee of what the
Exchange is assessed by the building
within which the new trading floor
resides (i.e., the CBOT Building). The
proposed $500 installation fee would
include installation of a redundant line
at no additional cost and allows the
10 See
Cboe Options Fees Schedule, Lines Table.
11 See Cboe Options Fees Schedule,
Communications Table, Exchangefone and
Miscellaneous Table, Market-Maker Handheld
Terminal Tethering Services.
12 See Cboe Options Fees Schedule, Lines Table,
Lines Direct from Local Carrier to Trading Floor and
Lines Between Communication Center and Trading
Floor.
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51715
Exchange to recoup the costs it incurs
from third-party vendors for the
installation of the Lines.
Co-Location and Meet-me-Room
For a monthly fee, the Exchange
historically has provided TPHs (and
third-party vendors, collectively
‘‘firms’’) with cabinet space in its
building for placement of network and
server hardware. Particularly, TPHs are
charged a monthly fee of $50 per ‘‘U’’
of shelf space 13 and Sponsored Users 14
are assessed a monthly fee of $100 per
‘‘U’’. Fees are charged in increments of
4 ‘‘U’’ (i.e., a minimum of $200 per 4
‘‘U’’ is charged or, for Sponsored Users,
a minimum of $400 per 4 ‘‘U’’ is
charged). A firm also receives power,
cooling, security and assistance with
installation and connection of the
equipment to the Exchange’s servers, at
no additional charge.
The Exchange will continue to
provide firms cabinet space in the new
facility (‘‘Meet-me-Room’’) for
placement of network and server
hardware at the same rate of $50 per
‘‘U’’, billed in increments of 4 ‘‘U’’. The
Exchange proposes however to
eliminate the separate rate for CoLocation of Equipment Fee for
Sponsored Users, as the Exchange does
not currently have any Sponsored Users,
nor has it had any Sponsored users in
several years. As such, the Exchange no
longer believes its necessary to maintain
a separate rate for Sponsored Users.15
The Exchange also proposes to relocate
the ‘‘Co-Location’’ section in the Fees
Schedule to immediately follow the
‘‘Lines’’ section in the Fees Schedule, as
it believes such fees are more
appropriately grouped together and will
make the Fees Schedule easier to read
and follow. The Exchange also believes
it will make the Fees Schedule easier to
read and follow if it reflects the rate of
the minimum increment charged,
instead of a broken-out rate that can
never be assessed. As noted above, the
Fees Schedule currently sets forth the
monthly rate per ‘‘U’’ (i.e., ‘‘$50 per
‘‘U’’), even though it states it only
charges in increments of 4 ‘‘U’’ (i.e., fee
is really $200 per 4 ‘‘U’’). The Exchange
will continue to charge in increments of
4 ‘‘U’’ in the new facility and therefore
proposes to update the fee language in
13 The term ‘‘U’’ is used to indicate an equipment
unit 1.75’’ high with a maximum power of 125
watts per U space. Per the Fees Schedule, CoLocation fees are charged in increments of 4 ‘‘U’’
(7 inches).
14 See Cboe Options Rule 3.60.
15 To the extent the Exchange has Sponsored
Users in the future, such participants will be
assessed the same rate as all other firms (i.e., $50
per ‘‘U’’, billed in minimum increments of 4 ‘‘U’’).
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the relocated line item to reflect the rate
for the minimum increment of 4 ‘‘U’’.
Despite this language change, the
Exchange reiterates it is not changing
the amount assessed for the Co-Location
of Equipment Fee. Within the new
Meet-me-Room however, the Exchange
is proposing to limit firms to 8 ‘‘U’’ in
order to ensure all firms can be
accommodated in the Meet-me-Room.
The Exchange next proposes to adopt
monthly and installation fees for cross
connects, including telecommunication
(i.e., telco) and Cboe Floor Network
cross connects,16 within the Meet-MeRoom. Particularly, each cross connect
will be subject to a $25 per month per
cross connect fee, which is a passthrough fee of what the Exchange is
assessed by the CBOT Building for each
cross connect. Additionally, firms will
be subject to a one-time $500
installation fee for each cross
connection, which is also a passthrough fee of what the Exchange is
assessed by the CBOT Building. The
Exchange notes that at the LaSalle
trading floor, the Exchange assessed
third-party vendors a $50 per month fee
for ‘‘Data Circuits from Local Carrier to
Equipment Shelf’’ which offers similar
cross-connectivity from Local Carriers
(telco providers) to a firm’s equipment
shelf in the current meet-me-room. The
Exchange no longer uses data circuits
from Local Carriers to equipment on the
shelf and proposes to therefore
eliminate this fee (currently under the
Vendor Services section) from the Fee
Schedule.
The Exchange next proposes to adopt
a fee relating to accessing the Meet-meRoom. Particularly, in order for a firm
to access the Meet-me-Room (e.g., if
they need technical support), they must
request access. The Exchange notes that
because the Meet-me-Room now resides
in a building not owned by the
Exchange, the Exchange is assessed a fee
by a third-party (CBOT Building) for
providing firms access to the Meet-meRoom. The Exchange notes that the
CBOT Building requires individuals
accessing the Meet-me-Room to be
accompanied by CBOT Building
representatives and therefore assesses a
fee associated with the visit. Exchange
staff personnel are also present for each
visit. The Exchange therefore proposes
to adopt a fee to recoup fees it is billed
by the CBOT Building for providing this
access (‘‘Cboe Datacenter Services’’).
Specifically, the Exchange proposes to
assess a fee of $100 per half-hour (with
16 The Exchange offers fiber cross connect. The
cross connects may run between a firm’s hardware
to a third-party telecommunications service or the
Cboe Floor Network switches that will service the
trading floor.
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a 1 hour minimum required). The
Exchange notes that it waived this fee
for the month of June 2022.17
Particularly, the Exchange believed that
firms may have had a greater need
during the first month of operations on
the new trading floor to visit the Meetme-Room. The waiver therefore allowed
firms to respond to any potential issues
that may have arisen in the Meet-meRoom during the first month at no
additional cost. The Exchange
anticipates that firm requests for this
type of access will be infrequent going
forward. The Exchange also notes that it
similarly assessed fees for various thirdparty technical support or vendor
services on the LaSalle trading floor.18
However, these services are no longer be
available in the new trading floor and
the Exchange therefore proposes to
eliminate the following corresponding
fees: Technical Support Outside Normal
Hours, IPC (vendor) Time & Material,
IPC (vendor) Time & Material Overtime,
After Hours Technician Service, MarketMaker Handheld Tethering Services,
and Market-Maker Handheld Tethering
Services For Indexes.
Trading Floor Device Fees
The Exchange currently lists various
fees under the Trading Floor Terminal
Rentals section of the Facility Fees
table.19 For example, TPHs are currently
assessed $125 per month for ‘‘PAR
Workstations’’ to help offset hardware
costs incurred by the Exchange in
making PAR workstations available to
TPHs. A PAR (Public Automated
Routing System) Workstation is an
Exchange-provided order management
tool for use on the Exchange’s trading
floor by TPHs and PAR Officials to
manually handle orders pursuant to the
Rules and facilitate open outcry trading.
Access to PAR is only available on
Exchange-provided tablets (currently
Surface Tablets) and the current
monthly fee covers both the Exchangeprovided tablet and PAR access. In
connection with the transition to the
new trading floor, the Exchange
proposes to modify the way it assesses
fees for use of PAR 20 and also adopt
17 See Securities Exchange Act Release No. 95155
(June 24, 2022), 87 FR 39145 (June 30, 2022) (SR–
CBOE–2022–029).
18 See Cboe Options Fees Schedule, Vendor
Services, Technical Support Outside Normal Hours,
and Miscellaneous, IPC (vendor) Time & Material,
IPC (vendor) Time & Material Overtime, After Hours
Technician Service, Market-Maker Handheld
Tethering Services, and Market-Maker Handheld
Tethering Services For Indexes.
19 The Exchange proposes to rename this section
‘‘Trading Floor Device Fees’’.
20 The Exchange proposes to replace the reference
to ‘‘PAR Workstation’’ to ‘‘PAR Access’’.
Particularly, the current version of PAR is no longer
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fees for non-Exchange provided tablets
that connect to the Exchange’s network.
Particularly, the Exchange proposes to
adopt a separate monthly Exchange
Tablet fee of $140 for any tablet
provided by the Exchange and a
separate monthly fee of $45 to access
PAR. TPHs will continue to utilize PAR
on the new trading floor, which will
continue to only be available on
Exchange-provided tablets. Exchange
tablets used for PAR may also be used
for access to Silexx.21
The Exchange also proposes to adopt
a separate Exchange Tablet fee as TPHs
will have the option of using Exchangeprovided tablets for Cloud9, which is
the new telecommunication system the
Exchange offers on the new trading
floor.22 The Exchange notes that TPHs
have the option of using their own tablet
to access Cloud9 in lieu of using an
Exchange-provided tablet. Such tablets
would be subject to the ‘‘TPH-Owned
Device Authentication Fee’’ described
more fully below.
On the new trading floor, TPHs will
be able to use a variety of devices such
as tablets, laptops, Market-Maker
handheld devices, printers, and phone
systems. TPHs will be able to connect
these devices to the Exchange’s network
anywhere on the trading floor through
wired jack ports or the wireless network
on the trading floor, as long as they are
onboarded to the Cboe Network
Authentication System. The Exchange
proposes to assess a fee for TPH-owned
devices that connect to the Exchange’s
network on the new trading floor
(‘‘TPH-Owned Device Authentication
Fee’’). Particularly, the Exchange
proposes to assess a fee of $100 per
authenticated connection (i.e., when a
device connects to the wired jack and/
or wireless network on the trading
floor).23 The proposed fee will be based
a physical touch screen terminal (i.e., workstation)
but an order management tool that can be accessed
on a tablet such as a Surface.
21 Silexx is a User-optional order entry and
management trading platform. The Silexx platform
consists of a ‘‘front-end’’ order entry and
management trading platform (also referred to as
the ‘‘Silexx terminal’’) for listed stocks and options
that supports both simple and complex orders, and
a ‘‘back-end’’ platform which provides a connection
to the infrastructure network. The Silexx front-end
and back-end platforms are a software application
that is installed locally on a user’s laptop.
22 Cloud9 is the voice communication solution for
the new trading floor. Cloud9 is a VoIP cloud-based
service offering a traditional turret, the Cloud Hub.
The Cloud Hub will be provided by Cboe and will
need to connect to a laptop or device provided
either by the TPH or by Cboe. TPHs may not use
the same Exchange Tablet for both PAR and Cloud9.
23 For example, a TPH that connects to Cloud9
using its own laptop would be assessed $100 per
month for that connection. If that same TPH
chooses to connect an additional laptop and a
printer to the network, that TPH will be assessed
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on the maximum number of concurrent
authenticated connections made during
market hours during the calendar
month. As discussed above, the
Exchange believes the new trading floor
provides TPHs more flexibility to move
and relocate any of their devices by
eliminating the need for installation,
relocation and removal of connectivity
lines to devices. Consequently,
corresponding monthly, installation,
relocation and removal fees will also be
eliminated on the new trading floor.
Replacement Fees
The Exchange currently assesses fees
related for certain hardware that needs
to be replaced because of loss or because
of non-normal wear and tear.
Particularly, the Exchange assesses the
following replacement fees:
Replacement Tablet .......................
Replacement Stylus Pen ................
Replacement Chargers ...................
Replacement Adapters and Protective Cases.
$1,300 each.
$100 each.
$75 each.
$50 each.
The Exchange proposes to maintain
these replacement fees on the new
trading floor. However, the Exchange
proposes to increase the fee to replace
a table from $1,300 per tablet to $1,400
per tablet to reflect increased costs to
the Exchange. The Exchange also
proposes to adopt a new replacement
fee for lost Access Badges at the rate of
$100 per badge in order to encourage
TPHs to hold onto their badges and not
misplace them.
Obsolete Fees
The Exchange next proposes to
eliminate fees assessed for technology
and infrastructure and related services
that will be rendered obsolete upon the
transition to the new trading floor.
Particularly, the Exchange proposes to
eliminate the following fees that have
not otherwise been discussed above:
Description
Fee
Arbitrage Phone Positions ........................................................................
HP Laser Printer Paper ............................................................................
Zebra Printer Papers ................................................................................
Zebra Printer Ink .......................................................................................
Forms Storage ..........................................................................................
Exchangefone ...........................................................................................
Exchangefone—Maintenance ...................................................................
Exchangefone—With Recorded Coupler Between Booths ......................
Exchangefone—Within Booth ...................................................................
Single Line—Maintenance ........................................................................
Phone Rentals—Monthly Fee ..................................................................
Phone Rentals—Replacement Repairs ....................................................
Lines—Intra Floor .....................................................................................
Lines—Voice Circuits ...............................................................................
New Circuits—First ...................................................................................
New Circuits—@Additional ......................................................................
Existing Line Appearance—First ..............................................................
Existing Line Appearance—A Additional ..................................................
Data Circuits (DC) at Local Carrier (entrance) ........................................
DC @In-House Frame—Lines between Local Carrier and Comms Center.
DC @In-House Frame—Lines Between Comms Center and Trading
Floor.
DC @In-House Frame—Lines Direct from Local Carrier to Trading
Floor.
Shelf for Equipment ..................................................................................
Lines from Equipment to Floor .................................................................
Handsets ...................................................................................................
Headset Jack ............................................................................................
Recorder Coupler .....................................................................................
Thomson/Other (Basic Service) ...............................................................
Satellite TV ...............................................................................................
Cboe Options Trading Floor Terminal ......................................................
Trading Floor Printer Maintenance 24 .......................................................
$550/month.
$5.00 per packet of 500 sheets.
$19.50 per roll.
$19.50 per roll.
$11.
$935/installation; $129/relocation; $100/removal.
$57/month.
$126/relocation.
$25/relocation.
$11.50/month.
$110/month.
cost.
$57.75/per month.
$16/month; $52.50/installation; $36.75/removal.
$120/installation; $50/removal.
$18/installation; $18/removal.
$50/installation; $25/removal.
$18/installation: $18/removal.
$16/month; $52.50/installation; $36.75 removal.
$12.75/month; $550/installation.
$12.75/month; $725/installation; $625/relocation.
$12.75/month; $725/installation; $625/relocation.
$100/month.
$50/month.
$79/installation.
$131/installation; $58 relocation; $28/removal.
$150 new/$50 existing installation; $25/relocation; $25/removal.
$425/month.
$50/month.
$250/month; $175/installation; $225 relocation; $125/removal.
$75/month.
In June 2020, the Exchange adopted
Footnote 24 of the Fees Schedule to
govern pricing changes that would
apply for the duration of time the
Exchange trading floor was being
operated in a modified manner in
connection with the COVID–19
pandemic. By way of background, the
Exchange closed its trading floor on
March 16, 2020 due to the COVID–19
pandemic and reopened its trading floor
on June 15, 2020, but with a modified
configuration of trading crowds in order
to implement social distancing and
other measures consistent with local
and state health and safety guidelines to
help protect the safety and welfare of
individuals accessing the trading floor.
As a result, the Exchange relocated and
modified the physical area of certain
trading crowds and also determined and
reduced how many floor participants
may access the trading floor. In
connection with these changes, the
Exchange proposed a number of
modified billing changes that would
remain in place for the duration of the
time the Exchange operated in a
modified manner. Particularly, the
following fees are modified when the
a total of $300 per month (i.e., $100 for each of the
tablet used for Cloud9, the laptop and the printer).
24 The Exchange proposes to eliminate a
corresponding reference in Footnote 50 to Trading
Floor Printer Maintenance in light of the proposal
to eliminate this fee.
The Exchange also proposes to
eliminate all PULSe Workstation fees as
PULSe was decommissioned in January
2021, but the Exchange inadvertently
did not delete references to PULSerelated fees at that time.
Temporary Fees
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Exchange is operating in a modified
state due to the COVID–19 pandemic:
Trading Permits ...............................
SPX Tier Appointment Fee .............
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Inactive Nominee Status (Parking
Space).
Inactive Nominee Status Change
(Trading Permit Swap).
SPX/SPXW and SPESG Floor Brokerage Fees.
Facility Fees ....................................
Floor trading permit fees are not be assessed on the total number of floor trading permits a TPH organization holds, and instead are based on the floor trading permits used by nominees of the TPH each day
during the month using the following formula: (i) the number of floor trading permits that have a nominee
assigned to it in the Customer Web Portal system (‘‘Portal’’) in a given month, multiplied by the number
of trading days that the floor is open and that a nominee is assigned to each respective trading permit in
that month, divided by (ii) the total number of trading days in a month. The Exchange rounds up to determine the total number of trading permits assessed the fees set forth in the Floor Trading Permit Sliding Scales.
The monthly fee for the SPX/SPXW Floor Market-Maker Tier Appointment Fee will be increased to $5,000
per Trading Permit from $3,000 per Trading Permit.
$300 Parking Space Fees is not applied.
$100 Trading Permit Swap Fee is not applied.
SPX/SPXW and SPESG Floor Brokerage Fees are be assessed the rate of $0.05 per contract for noncrossed orders and $0.03 per contract for crossed order instead of $0.04 and $0.02, respectively.
Monthly fees are waived for the following facilities fees: arbitrage phone positions and satellite tv. If a TPH
is unable to utilize designated facility services while the trading floor is operating in a modified state, corresponding fees, including for standard and non-standard booth rentals, Exchangefone maintenance,
single line maintenance, intra floor lines, voice circuits, data circuits at local carrier (entrance), and data
circuits at in-house frame, are waived.
The Exchange notes that while the
LaSalle trading floor utilized social
distancing and reconfigured trading
crowds through its closure (and
therefore was considered to be operating
in a modified manner), it does not
believe it was necessary to implement
such safety measures on the new trading
floor at the time of transition given
recent developments relating to the
COVID–19 pandemic. As such, upon
moving to the new trading floor on June
6, 2022, the Exchange no longer
operates in a modified manner and
Footnote 24 does not apply.
Accordingly, (1) Floor Trading Permit
fees will be assessed based on the total
number of floor trading permits a TPH
holds each month; (2) Parking Space
and Trading Swap fees will no longer be
waived; and (3) SPX/SPXW and SPESG
Floor Brokerage fees will be assessed
$0.04 per contract for non-crossed
orders (instead of $0.05 per contract)
and $0.02 per contract for crossed
orders (instead of $0.03 per contract). As
noted above, arbitrage phone positions,
satellite tv, Exchangefone maintenance,
single line maintenance, intra floor
lines, voice circuits, data circuits at
local carrier (entrance), and data circuits
at in-house frame are being eliminated
as of June 1, 2022 so the Exchange
proposes to also eliminate references to
such fees from Footnote 24. The
Exchange also proposes to maintain the
current modified rate of $5,000 for the
SPX Floor Tier Appointment Fee under
Footnote 24 (i.e., increase the fee from
$3,000 per permit to $5,000 permit
regardless of whether the Exchange is
operating in a modified state due to
COVID–19 pandemic). The Exchange
notes that it has not amended the
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original Tier Appointment Fee since its
inception almost twelve years ago in
July 2010.25
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.26 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 27 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
the Section 6(b)(5) 28 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
As discussed above, the proposed
changes are prompted by the Exchange’s
recent transition from its previous
trading floor, which it had occupied
25 See Securities Exchange Act Release No. 62386
(June 25, 2010), 75 FR 38566 (July 2, 2010) (SR–
CBOE–2010–060).
26 15 U.S.C. 78f(b).
27 15 U.S.C. 78f(b)(5).
28 Id.
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since the 1980s, to a brand new, modern
and upgraded trading floor facility. The
Exchange believes customers continue
to find value in open outcry trading and
rely on the floor for price discovery and
the deep liquidity provided by floor
Market-Makers and Floor Brokers. The
Exchange believes the build out of a
new modern trading floor is therefore
consistent with its commitment to open
outcry trading and focus on providing
the best possible trading experience for
its customers. Indeed, the new trading
floor provides a state-of-the-art
environment and technology and more
efficient use of physical space, which
the Exchange believes better reflects and
supports the current trading
environment. The Exchange also
believes the new infrastructure provides
a cost-effective, streamlined, and
modernized approach to floor
connectivity. For example, the new
trading floor has more than 330
individual kiosks, equipped with top-ofthe-line technology, that enable floor
participants to plug in and use their
devices with greater ease and flexibility.
It also provides floor Market-Makers and
Floor Brokers with more space and
increased capacity to support additional
floor-based traders on the trading floor.
Moreover, the new trading floor is
conveniently located across the street
from the LaSalle trading floor, resulting
in minimal disruption to TPH floor
participants, many of whom have office
space nearby, including in the CBOT
Building. The Exchange believes the
CBOT Building, which was also home to
the Exchange’s original trading floor in
the 1970s and early 1980s, is also able
to support robust trading floor
infrastructure as it currently hosts
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several banks, trading firms and even
trading floors (i.e., trading floors for the
Chicago Mercantile Exchange and BOX
Options Market).
As described above, the recent
transition rendered much of the
Exchange’s previous trading floor
technology and infrastructure obsolete,
as it has been replaced by new
infrastructure in a new building (no
longer owned by the Exchange). As
such, the proposed modifications to
corresponding facility fees are not only
necessary, but the Exchange believes
reasonable, equitable and not unfairly
discriminatory as discussed in further
detail below. The Exchange also
believes the proposed rule change
results in a streamlined and simplified
trading floor and facility fee structure.
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Booth Fees
The Exchange believes the proposed
Booth Fees are reasonable as they are
not a significant departure from fees that
were assessed for Booths on the LaSalle
trading floor (and in some instances are
even lower than currently assessed).
Additionally, the Booths on the new
trading floor are slightly larger than the
standard Booths that were available on
the LaSalle trading floor. The proposed
fees are also in line with similar fees
charged currently and historically at
other exchanges with a physical trading
floor.29 The Exchange believes that the
proposed booth space fee is equitable
and not unfairly discriminatory because
it applies uniformly to trading floor
participants who choose to rent Booths
(and all booths are uniform and nearly
identical in size). Moreover, the use of
Booths, whether located away from or in
a trading crowd, are optional and not
necessary in order to conduct open
outcry trading on the trading floor.
The Exchange believes the proposed
rule changes to the Booth Policy and
Agreement make non-substantive
changes that merely clarify the Policy
and Agreement, make it more accurate,
and alleviate potential confusion,
thereby removing impediments to and
perfecting the mechanism of a free and
open market and a national market
system, and, in general, protecting
investors and the public interest. The
Exchange believes that notwithstanding
any of the proposed changes, the Booth
Policy and Agreement continues to
ensure that trading floor Booths are
29 In 2011, Nasdaq PHLX charged a flat $300 per
month fee for Trading/Administrative Booth paid
by floor brokers and clearing firms. See Securities
Exchange Act Release No. 34–66086 (January 3,
2012), 77 FR 1111 (January 9, 2012) (SR–Phlx–
2011–181). NYSE American currently assesses $40
per linear foot per month for all booth space
utilized by such Floor Broker.
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leased to TPH organizations on equal
and non-discriminatory terms.
Line to Cboe Floor Network
The Exchange believes the proposed
Line to Cboe Floor Network fee is
reasonable as TPHs will not be subject
to the current lines and circuit fees set
forth in the Fees Schedule, including for
relocation and removal, that are
assessed on the LaSalle trading floor for
similar connectivity to the trading floor
network. Additionally, unlike the
current floor which requires
independent wiring be used for each
line or circuit and on a per device basis,
the new trading floor will allow TPHs
to maintain one Line (or 2 for
redundancy purposes). Accordingly, the
new trading floor will provide TPHs
more flexibility to move and relocate as
needed and with greater ease and be
able to do so without incurring
additional relocation and removal fees.
Moreover, firms will no longer need to
provide their own network equipment
to support dedicated lines to the floor as
the Exchange will be providing the
network switches and local area
network (LAN) lines for all firms on the
new trading floor. The Exchange notes
that on the LaSalle trading floor, TPHs
had to supply their own pair of network
switches, which the Exchange estimates
cost approximately $5,000 for each
switch (i.e., $10,000 total), in addition
to ongoing costs incurred for vendor
support and staff personnel time. Under
the proposal, TPHs are no longer subject
to these costs, as the Exchange provides
both the network switches and ongoing
support. The Exchange also notes other
exchanges assess a variety of facility
fees relating to connectivity and
equipment in order to maintain their
trading floor facilities.30
The Exchange believes the proposed
installation fee is also reasonable as the
Exchange is passing through costs it
incurs from a third party (i.e., the CBOT
Building) with respect to the installation
of such Lines. The Exchange believes
this fee reasonably represents the
materials and labor costs of installation
which, as discussed above, is assessed
by a building that has experience in
30 For example, Nasdaq PHLX assesses a Floor
Facility Fee of $330 per month for such purpose.
See Securities Exchange Act Release No 69672
(June 5, 2013), 78 FR 33873 (May 30, 2013) (SR–
PHLX–2013–58). Nasdaq PHLX also assesses a
variety of options trading floor fees including for
equipment services and relocation requests. See
Nasdaq PHLX Options 7 Pricing Schedule, Section
9. Other Member Fees, A. Option Trading Floor
Fees. See also NYSE America Options Fees
Schedule, Section IV, Monthly Floor
Communication, Connectivity, Equipment and
Booth or Podia Fees and NYSE Price List,
Equipment Fees.
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51719
similar installations as it hosts many
other participants in the financial
industry, including trading firms and
other exchanges’ trading floors. The
proposed fee also includes a redundant
Line at no additional cost. The
Exchange believes the proposed
monthly and installation Line fees are
equitable and not unfairly
discriminatory as they will apply
uniformly to all trading floor
participants.
Co-Location and Meet-me-Room
The Exchange believes it is reasonable
to cap all TPHs and non-TPHs to 8 ‘‘U’’
because the Exchange no longer owns
the premises in which the Meet-meRoom resides and there is finite amount
of space. The proposed cap however
applies to all TPHs and non-TPHs
uniformly. Additionally, the Exchange
believes 8 ‘‘U’’ should be sufficient
amount of space for any TPH or nonTPH and that with such cap in place
there is sufficient space to accommodate
all TPHs or non-TPHs who request colocation service. The Exchange believes
it’s reasonable, equitable and not
unfairly discriminatory to eliminate the
Co-Location of Equipment Fee for
Sponsored Users as it has not had any
Sponsored Users in several years. If the
Exchange were to approve a Sponsored
User, such participant would merely be
subject to the remaining (and lower) CoLocation of Equipment Fee (i.e., $200
per 4 ‘‘U’’). The Exchange believes the
proposed relocation and language
updates to the current Co-Location fee
are reasonable as the Exchange is not
proposing to change the amount
assessed but is merely updating and
simplifying the Fees Schedule and
making it easier to read.
The Exchange believes the proposed
$25 per cross-connect monthly fee is
reasonable as it is a modest fee that is
a pass-through of the fee the Exchange
is assessed by a third-party (i.e., the
CBOT Building) to maintain such cross
connect. Additionally, the Exchange
notes third-party vendors such as
telecommunication providers will no
longer be subject to the $50 per month
fee for ‘‘Data Circuits from Local Carrier
to Equipment Shelf’’. Additionally, the
Exchange believes the proposed amount
is in line (and lower than) the amount
assessed by another exchange for similar
cross connects.31 The proposed cross
connect installation fee is also
reasonable as it is intended to recoup
the fees incurred by the Exchange by
31 See Nasdaq PHLX Options 7 Pricing Schedule,
Section 9. Other Member Fees, A. Option Trading
Floor Fees, Cabinet-to-Cabinet Connectivity and
Cabinet-to-Cabinet MPOE Connectivity, which are
both subject to a $50 per month fee.
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third-party vendors for establishing the
cross connects. The Exchange believes
the installation fee assessed by the
CBOT Building is also reasonable as it
is in line with installation fees assessed
by other data centers and exchanges for
installation of cross-connections.32
The Exchange believes the proposed
Cboe Datacenter Services fee is
reasonable as it recoups the costs the
Exchange is assessed by the CBOT
Building (as the owner of the building)
when firms needs to access to the Meetme-Room for purposes such as on-site
support. The Exchange notes that it is
aware that other data center facilities
similarly require security escorts for
Meet-me-Room access and assess fees
for such access. Additionally, the
Exchange waived the fee for the month
of June 2022, so that visits to the Meetme-Room to address any onboarding
questions or issues that arose during the
first month in the new facility were free
of charge. Moreover, as noted above, the
Exchange does not anticipate that access
to the Meet-me-Room will be needed on
a frequent basis.
The Exchange believes the proposed
cross connect and Cboe Datacenter
Services fees are also equitable and not
unfairly discriminatory as they will
apply uniformly to all market
participants that request these services,
respectively.
Trading Floor Devices
The Exchange believes the proposed
changes related to the PAR fee are
reasonable as the combined proposed
fees for using PAR (i.e., Exchange Tablet
fee and PAR Access fee) are only
modestly higher than the fee TPHs are
currently assessed for use of PAR. The
Exchange notes that although TPHs that
use PAR will be subject to a modestly
higher fee, the PAR Workstation fee has
remained unchanged for over eleven
years, notwithstanding technology
changes and improvements over the last
decade, including for example, the
ability to also access Silexx from the
same tablet on which PAR is accessed.33
Moreover, the Exchange notes the
proposed fee is still lower than fees
assessed at other exchanges for trading
floor terminals. For example, NYSE
American assesses $450 per device per
month for Floor Broker Handheld and
an additional $215 per month per
Exchange sponsored Floor Broker order
entry system.34 Moreover, the Exchange
32 See, e.g., NYSE American Options Fees
Schedule, Section V(B).
33 See Securities Exchange Act Release No. 63701
(January 11, 2011), 76 FR 2934 (January 18, 2011)
(SR–CBOE–2010–116).
34 See also NYSE America Options Fees
Schedule, Section IV, Monthly Floor
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notes that the Exchange provides
technical support services for these
tablets, eliminating the need for TPHs to
purchase protection plans themselves
for their device. The Exchange also
incurs other costs associated with the
tablets that it does not otherwise
separately pass through, such as fees
incurred for replacement of batteries
and other parts. The Exchange will also
replace a tablet at no additional cost if
a tablet is damaged from normal wear
and tear. Further, the Exchange replaces
tablets at no additional cost
approximately every 3 years. The
Exchange believes the proposed
Exchange Tablet fee is also reasonable
as TPHs may, but do not have to, use an
Exchange Tablet to access Cloud9.
Indeed, they may use their own TPHowned device for purposes of accessing
Cloud9 and be subject to the alternative,
and lower, TPH-Owned Device
Authentication Fee.
The Exchange believes the proposed
PAR Access fee is equitable and not
unfairly discriminatory as it applies to
all TPHs using PAR. Moreover, the
proposed changes enable the Exchange
to offer Exchange-provided tablets for a
separate monthly fee to TPHs that wish
to use them for Cloud9, which is the
Exchange’s new telecommunications
system that it will offer on the new
trading floor. Currently, TPHs are
subject to various communication fees
including monthly fees, installation
fees, relocation fees and removal fees
which will no longer be assessed by the
Exchange as the Exchange’s current
communications offerings will be
rendered obsolete upon the transition to
the new trading floor.35
The Exchange believes the proposed
TPH-Owned Device Authentication Fee
is reasonable as the proposed fee is
lower than the proposed fee assessed for
Exchange Tablets which may
alternatively be used if a TPH is looking
to access Silexx or Cloud9.
Additionally, the Exchange believes it’s
reasonable to assess TPHs a monthly fee
for access to its network. Particularly,
the Exchange expends resources to
monitor and maintain the network, and
importantly, ensure its secure and
resilient. The Exchange also offers
assistance during the onboarding
process for the devices and expends
resources monitoring and
troubleshooting networking issues. The
Exchange notes that as the number of
devices connected to the network
increases, demand of Exchange time and
Communication, Connectivity, Equipment and
Booth or Podia Fees.
35 See Cboe Options Fee Schedule,
Communications Fees.
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resources may therefore also increase.
As such, the Exchange also believes the
proposed fee may encourage firms to be
efficient with the number of devices it
chooses to connect to the network.
Moreover, the Exchange believes the
new trading floor provides TPHs more
flexibility to move and relocate any of
their devices by eliminating the need for
installation, relocation and removal of
connectivity lines to devices and
consequently, corresponding monthly,
installation, relocation and removal
fees. The proposed fee also applies to all
TPHs accessing the Cboe floor Network
from their own device.
Replacement Items
The Exchange believes the proposed
change to increase the tablet
replacement fee is reasonable as the
proposed amount better reflects the
approximate cost to the Exchange to
provide a replacement tablet to TPHs.
Additionally, the Exchange believes
adopting a $100 fee for replaced access
badges is reasonable as the Exchange
believes it will incentivize TPHs to keep
track of their access badges and reduce
the need for the Exchange to expend
resources to print additional
replacement badges. The Exchange
believes these changes are also
reasonable, equitable and not unfairly
discriminatory because TPHs that lose
these items or damage these items from
non-normal wear or tear should be
responsible for the cost of replacement.
The Exchange believes the proposed
fees will encourage TPHs to take proper
care and track of these items.
Additionally, the Exchange notes that it
will not charge TPHs to replace
defective items (that were not the result
of non-normal wear and tear).
Obsolete Fees
The Exchange believes eliminating
the facility fees discussed above is
reasonable as such corresponding
services and architecture will be
rendered obsolete upon transitioning to
the new trading floor. Additionally, the
Exchange believes the proposed new fee
structure as compared to the fees being
eliminated provides for a more
streamlined and simplified approach to
facility fees. The Exchange believes the
proposed elimination of these fees is
equitable and not unfairly
discriminatory as it will apply
uniformly to all TPHs. The proposal to
eliminate references to these fees in
Footnote 12, 24 and 50 also maintains
clarity in the Fees Schedule and avoids
potential confusion.
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Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
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Footnote 24
As discussed above, as of June 6,
2022, the Exchange no longer operates
in a modified state due to the COVID–
19 pandemic as the Exchange no longer
maintains a modified configuration of
trading crowds to implement social
distancing nor does it reduce or limit
how many floor participants may access
the trading floor. Accordingly, because
the Exchange is not considered to be
operating in a modified configuration as
of June 6, 2022, Footnote 24 is no longer
applicable and the modified billing
practices will revert back to original
billing. The Exchange believes its
proposal to maintain the current
modified rate of $5,000 for the SPX
Floor Tier Appointment Fee under
Footnote 24 (i.e., increase the fee from
$3,000 per permit to $5,000 permit
regardless of whether the Exchange is
operating in a modified state due to
COVID–19 pandemic) 36 is reasonable
because the proposed amount is not
significantly higher than was previously
assessed. Additionally, the Exchange
notes that it has not amended the
Market-Maker SPX Tier Appointment
Fee since such fee was adopted nearly
twelve years ago in July 2010.37 The
proposed change also is equitable and
not unfairly discriminatory as it applies
to all similarly situated TPHs.
In sum and in addition to all the
reasons discussed above, the Exchange
believes its proposed fees are reasonable
in light of the numerous benefits the
new trading floor provides its floor
participants. The Exchange believes the
new trading floor provides for state-ofthe-art infrastructure, enhanced
technology capabilities, and a flexible,
open and dynamic environment to
facilitate more seamless and efficient
interaction between traders. The
Exchange also notes that it considered a
number of factors in determining the
location of the new trading floor
including cost to the Exchange and its
TPHs, as well as the convenience of
location for the trading floor community
and Exchange staff. Another critical
consideration was whether the new
building would have the necessary
infrastructure and ability to support a
sophisticated and state-of-the art trading
floor. As the CBOT Building already
hosts several trading firms and two
other exchange trading floors, the
Exchange felt confident the CBOT
36 The Exchange proposes to eliminate this
language from Footnote 24 as it will no longer be
considered a ‘‘modified’’ rate, and instead update
the rate reflected in the Market-Maker Tier
Appointment Fees table.
37 See Securities Exchange Act Release No. 62386
(June 25, 2010), 75 FR 38566 (July 2, 2010) (SR–
CBOE–2010–060).
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Building would be able to accommodate
the Exchange’s technology and
infrastructure needs for its floor. The
Exchange therefore believes the
amounts of the fees assessed by the
CBOT Building that it proposes to passthrough are reasonable. The proposed
fees are also in line with fees assessed
by other data centers and exchanges for
similar technology and services. For
example, as noted above, the $25 cross
connect fee is lower than the fees
assessed by other exchanges for similar
cross connections.
The Exchange also notes that is has
not sought to pass through other costs
incurred in connection with the new
trading floor, including design,
construction and other on-going
maintenance costs. Moreover, the
Exchange has not modified many of its
facilities fees in several years. The
Exchange therefore believes the
proposed fees are reasonable because
they allow the Exchange to recoup fees
associated with the costs of operating a
modern and cutting-edge trading floor
and offset and keep pace with
increasing technology costs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule changes will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed changes would be
applied in the same manner to all
similarly situated participants and as
such, would not impose a disparate
burden on competition among the same
classes of market participants. As
described in further detail above, the
proposed fees are also applicable only to
market participants that choose to avail
themselves to the corresponding facility
services. For example, only firms that
choose to rent Booths (which are
optional and not required for openoutcry trading) will be subject to the
proposed Booth Fees. Similarly, only
firms that choose to purchase Exchangeprovided tablets are subject to the tablet
fee, and firms may otherwise choose to
purchase and provide their own tablets.
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed rule changes
apply only to fees relating to the
Exchange’s floor facility. Further, as
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
51721
described in detail above, the Exchange
believes its proposed facilities fees are
in line with facility fees assessed at
other exchanges that maintain physical
trading floors. Additionally, the
Exchange notes it operates in a highly
competitive market. In addition to Cboe
Options, TPHs have numerous
alternative venues that they may
participate on and director their order
flow, including 15 other options
exchanges (four of which also maintain
physical trading floors), as well as offexchange venues, where competitive
products are available for trading. Based
on publicly available information, no
single options exchange has more than
16% of the market share of executed
volume of options trades.38 Therefore,
no exchange possesses significant
pricing power in the execution of option
order flow. 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.’’ 39 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’ . . . .’’.40 Accordingly, the
Exchange does not believe its proposed
changes to the incentive programs
impose any burden on competition that
38 See Cboe Global Markets, U.S. Options Market
Volume Summary by Month (May 31, 2022),
available at https://markets.cboe.com/us/options/
market_share/.
39 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
40 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)).
E:\FR\FM\23AUN1.SGM
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51722
Federal Register / Vol. 87, No. 162 / Tuesday, August 23, 2022 / Notices
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 is effective
upon filing pursuant to Section
19(b)(3)(A) 41 of the Act and
subparagraph (f)(2) of Rule 19b–4 42
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 43 of the Act 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–2022–042 on the subject line.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022–18098 Filed 8–22–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34678; 812–05867]
Merrill Lynch Corporate Dividend
Fund, Inc., et al.
August 17, 2022.
Paper Comments
lotter on DSK11XQN23PROD with NOTICES1
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–CBOE–2022–042, and
should be submitted on or before
September 13, 2022.
For the Commission, by the Division
of Trading and Markets, pursuant to
delegated authority.44
• 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–2022–042. 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
41 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
43 15 U.S.C. 78s(b)(2)(B).
Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of the Commission’s
intention to rescind an order pursuant
to section 38(a) of the Investment
Company Act of 1940 (the ‘‘Act’’).
AGENCY:
The Commission intends to
rescind an order issued on April 9,
1985, on an application filed by Merrill
Lynch Corporate Dividend Fund, Inc., et
al. (the ‘‘Applicants’’), which granted
exemptions from sections 18(f)(1) and
SUMMARY:
42 17
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18:53 Aug 22, 2022
44 17
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PO 00000
CFR 200.30–3(a)(12).
Frm 00083
Fmt 4703
Sfmt 4703
17(f) of the Act (the ‘‘Exemptive
Order’’).1
Hearing or Notification of Hearing: An
order rescinding the Exemptive Order
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov. Hearing requests should
be received by the Commission by 5:30
p.m. on September 12, 2022. Hearing
requests should state the nature of the
writer’s interest, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary at
Secretarys-Office@sec.gov.
ADDRESSES: Secretary, Commission,
Secretarys-Office@sec.gov.
FOR FURTHER INFORMATION CONTACT:
Jessica Leonardo, Senior Counsel, at
202–551–7125 (Division of Investment
Management, Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
Commission issued the Exemptive
Order exempting the Applicants from
the provisions of section 18(f)(1) and
section 17(f) of the Act to the extent
necessary to permit the Applicants to
trade interest rate futures contracts,
stock index futures contracts, municipal
bond index futures contracts, and
related options. The Exemptive Order
was expressly subject to compliance
with the undertakings made in the
application.
On November 2, 2020, the
Commission adopted rule 18f–4, which
provides an updated and more
comprehensive approach to the
regulation of registered investment
company (‘‘fund’’) and business
development company use of
derivatives and certain other
transactions by replacing existing
Commission and staff guidance with a
codified, consistent regulatory
framework.2 The undertakings of the
1 Merrill Lynch Corporate Dividend Fund, Merrill
Lynch Corporate Bond Fund, Inc., Merrill Lynch
Municipal Bond Fund, Inc., Merrill Lynch Federal
Securities Trust, Merrill Lynch Asset Management,
Inc. (‘‘MLAM’’), Fund Asset Management, Inc.
(‘‘FAMI’’), and any other registered investment
companies advised at the time of the notice, or
which in the future may be advised, by MLAM or
FAMI, and which may engage in the trading
activities described in the application, Investment
Company Act Release Nos. 14415 (Mar. 13, 1985)
(notice) and 14462 (Apr. 9, 1985) (order). The
Merrill Lynch Corporate Bond Fund, Inc. and
Merrill Lynch Municipal Bond Fund, Inc. are
currently reporting to the Commission as the
BlackRock Bond Fund, Inc. and the BlackRock
Municipal Bond Fund, Inc. respectively. The
Merrill Lynch Federal Securities Trust has
deregistered. The adviser applicants are no longer
registered with the Commission.
2 See Use of Derivatives by Registered Investment
Companies and Business Development Companies,
E:\FR\FM\23AUN1.SGM
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]]>Agencies
[Federal Register Volume 87, Number 162 (Tuesday, August 23, 2022)]
[Notices]
[Pages 51713-51722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18098]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95530; File No. SR-CBOE-2022-042]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Facility Fees Section in the Fees Schedule in Connection With the
Exchange's New Trading Floor
August 17, 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 August 5, 2022, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend its Facility Fees section in the Fees Schedule in connection
with the
[[Page 51714]]
Exchange's new trading floor. 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 Fees Schedule in connection with
the opening of a new trading floor.\4\ Until June 6, 2022, the Exchange
conducted open outcry trading at 400 S LaSalle, Chicago, Illinois
(``LaSalle trading floor''). On June 6, 2022, the Exchange moved its
open outcry trading operations to a new trading floor located at 141 W
Jackson Blvd., Chicago, Illinois (``CBOT Building''). As a result of
this transition, certain infrastructure and technology on the LaSalle
trading floor were rendered obsolete, and the new trading floor in the
CBOT Building has new infrastructure and offers new technology.
Accordingly, the Exchange proposes to adopt new, and/or update current,
facility fees with respect to the new trading floor, as well as
eliminate obsolete facility fees that are only applicable to the
Exchange's LaSalle facility and trading floor which is no longer in use
as of June 6, 2022.
---------------------------------------------------------------------------
\4\ The Exchange initially filed the proposed fee changes on
June 1, 2022 (SR-CBOE-2022-026). On June 10, 2022, the Exchange
withdrew that filing and submitted SR-CBOE-2022-029. The Exchange
notes no comment letters were received for either filing. On August
5, 2022, the Exchange withdrew that filing and submitted this
filing.
---------------------------------------------------------------------------
Booth Fees
Under the current Fees Schedule, the Exchange assesses monthly fees
for ``standard Booths'', which refers to a portion of designated space
on the trading floor of the Exchange adjacent to or in particular
trading crowds, which may be occupied by a Trading Permit Holder
(``TPH''), clerks, runners, or other support staff for operational and
other business-related activities. The Exchange assesses a monthly fee
of $195 for standard Booths located along the perimeter of the trading
floor, and $550 for standard Booths located in the OEX, Dow Jones, MNX
and VIX trading crowds. The Exchange also assesses monthly fees for
``nonstandard Booths'', which refers to space on the trading floor of
the Exchange that is set off from a trading crowd, which may be rented
by a TPH for whatever support, office, back-office, or any other
business-related activities for which the TPH may choose to use the
space. A TPH that rents non-standard booth space on the floor of the
Exchange is subject to a base non-standard booth rental fee of $1,250
per month in addition to a square footage fee of $1.70 per square foot
per month based on the size of the TPH's non-standard booth. The
Exchange proposes to modify and simplify its fees assessed for booth
rentals. First, the Exchange proposes to eliminate the distinction
between standard and non-standard Booths. The Exchange also proposes to
adopt a tiered pricing schedule for Booths based on the number of
Booths rented by a TPH. Particularly, the Exchange proposes to adopt
the following fees for Booths that are set off from a trading crowd:
------------------------------------------------------------------------
Monthly
Quantity of booths fee
------------------------------------------------------------------------
1-2........................................................... $400
3-6........................................................... 300
7-10.......................................................... 200
11 or more.................................................... 100
------------------------------------------------------------------------
The proposed tiered pricing provides discounted pricing for
additional Booths. For example, if a TPH rented 4 Booths, the TPH would
be assessed $1,400 a month (2 Booths at $400 and 2 Booths at $300). The
Exchange also proposes to adopt a monthly fee of $750 per booth for any
booth located in a trading crowd. The Booth Pass-Through Fee would
remain unchanged.\5\ The Exchange notes that use of Booths, whether or
located away from or in a trading crowd are optional and not necessary
in order to conduct open outcry trading on the trading floor. Booth
spaces are also uniform and nearly identical in size. The Exchange also
notes that at this time, the Exchange has ample space on its new
trading floor for booth space.
---------------------------------------------------------------------------
\5\ Pursuant to the Booth Pass-Through Fee, TPHs bear
responsibility for all costs associated with any modifications and
alterations to any trading floor Booths leased by the TPH (or TPH
organization) and must reimburse the Exchange for all costs incurred
in connection therewith.
---------------------------------------------------------------------------
Policy
The Exchange also proposes to update the Exchange's policy
(``Policy'') regarding the rental and use of booth space on its trading
floor by TPH organizations. The Exchange memorialized the Policy and
filed it with the Commission in 1994.\6\ The Exchange proposes to
update the Policy in a few respects. First, the Exchange proposes to
change references to ``Chicago Board Options Exchange, Incorporated''
and ``CBOE'' to ``Cboe Exchange, Inc.,'' and ``Cboe Options'',
respectively to reflect the Exchange's current legal name which has
been updated since the last update to the Policy. The Exchange also
proposes to update the rule reference relating to the Appeals process
from Chapter ``19'' to Chapter ``15'' to reflect recent updates to the
Exchange's rulebook.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 33972 (April 28,
1994), 59 FR 23242 (May 5, 1994).
---------------------------------------------------------------------------
The Exchange notes the Policy includes a section that sets forth
the requirement that all TPH organizations renting Booths execute a
``Trading Floor Booth Rental Agreement'' (hereinafter, ``Agreement'')
which sets forth the contractual terms, conditions and restrictions
governing rental and use of Booths by TPH organizations.\7\ A copy of
the Agreement was included in the Exchange's 1994 rule filing noted
above for the Commission's information.\8\ The Agreement specifically
sets forth the details of the parties' contractual relationship
regarding rental and use of the Booths. Among other provisions, the
Agreement includes specific provisions delineating the termination
rights of both the TPH organization and the Exchange and sets forth a
procedure for adding Booths to and deleting Booths from the Agreement.
The Agreement also spells out requirements respecting the TPH's use of
the Booths, such as those governing the installation of equipment, the
conduct of business, and access of persons to the Booths.
---------------------------------------------------------------------------
\7\ The Agreement is non-negotiable and its terms are the same
for every TPH organization.
\8\ See Securities Exchange Act Release No. 33972 (April 28,
1994), 59 FR 23242 (May 5, 1994).
---------------------------------------------------------------------------
The Exchange has updated the Agreement (which is now referred to as
the Agreement for ``standard Booths''). In 2012, the Exchange also
created a separate form of the Agreement for non-
[[Page 51715]]
standard Booths.\9\ In connection with the proposal to eliminate non-
standard Booths, the Exchange proposes to eliminate use of that
agreement. A copy of the standard form of Agreement is included with
this filing in Exhibit 3. The Exchange proposes to update this section
of the Policy to eliminate references to the non-standard booth
agreement. The Exchange also proposes to update the Agreement to (i)
change references to ``Chicago Board Options Exchange, Incorporated''
and ``CBOE'' to ``Cboe Exchange, Inc.,'' and ``Cboe Options'',
respectively; (ii) update the link to where the Cboe Options Fees
Schedule can be found; (iii) eliminate the requirement for Cboe to
provide TPH organizations with a copy of TPH Organization's current
booth assignments, as it no longer believes such record is necessary or
desired by TPHs; and (iv) eliminate Section 13, which prohibits TPH
Organizations leasing SPX arbitrage Booths from installing data
equipment in such Booths, as the Exchange does not intend to provide
such Booths and to the extent it determines to do so in the future does
not anticipate maintaining such prohibition. The Exchange will
disseminate the updated Policy and forms of the Agreement to TPHs by
posting them on the Trading Permit Holder portion of the Cboe website.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 66727 (April 9,
2012), 77 FR 21134 (April 3, 2012) (SR-CBOE-2012-025).
---------------------------------------------------------------------------
Line to Cboe Floor Network
On the LaSalle trading floor, TPHs used various lines and
telecommunications (``telco'') circuits to connect to the trading
floor. Independent wiring had to be used for each line or telco
circuit, which means firms may have needed to relocate their lines or
telco circuits if they moved into, or relocated to, a new trading space
or Booth. These telco circuits are also on a per device basis. The new
trading floor utilizes a single floor network (i.e., ``Cboe Floor
Network'') for TPHs' devices consisting of both wired jacks and
wireless network access located at kiosks, in trading pits, and in
Booths throughout the new trading floor. As such, unlike the LaSalle
trading floor infrastructure, TPHs do not need to order lines from the
Exchange to specific locations on the floor. Rather, a TPH only needs
to order one Ethernet port (``Line'') (or a pair for redundancy) to
connect to the Cboe Floor Network and will be able to connect their
devices to the Exchange's network anywhere on the trading floor through
wired jack ports or the wireless network. Additionally, firms no longer
need to provide network equipment to support dedicated lines to the
floor, as on the new trading floor the Exchange provides the network
switches and local area network (LAN) lines for all firms.
The Exchange believes the new trading floor will provide TPHs more
flexibility to move and relocate as needed, as compared to the LaSalle
trading floor. If a TPH wished to relocate trading spaces or trading
booths on the LaSalle trading floor, it could have triggered
installation, relocation and removal of various lines and circuits,
which subsequently triggered various installation, relocation and
removal fees.\10\ For example, on the LaSalle trading floor, if a
Market-Maker needed to move to a new trading space, it may have needed
to relocate the lines or circuits from its current space to the new
space and would be subject to relocation fees such as $129 relocation
fee to relocate any Exchangefones and $200 relocation fee for
relocation of any Market-Maker Handheld Terminal.\11\ As another
example, if a TPH needed to relocate to a new Booth, it may have been
subject to a relocation fee of $625 for relocating lines from the
trading floor to local carriers or the Communications Center.\12\ Since
all network access is wireless or plug and play at any location on the
new trading floor, the new infrastructure eliminates the need for
installation of multiple lines, as well as relocation and removal of
connectivity lines to devices and also renders the following Lines fees
(including fees relating to installation, relocation and removal)
obsolete: Intra-Floor, Voice Circuits, Appearances, Data Circuits at
Local Carrier, and Data Circuits at In-House Frame. The Exchange
therefore proposes to instead adopt a monthly fee of $350 per Line and
notes it does not expect TPHs to purchase more than one Line and one
redundant Line. The Exchange also proposes to adopt a one-time $500
installation fee for the installation of the line to the Cboe Floor
Network, which is a pass-through fee of what the Exchange is assessed
by the building within which the new trading floor resides (i.e., the
CBOT Building). The proposed $500 installation fee would include
installation of a redundant line at no additional cost and allows the
Exchange to recoup the costs it incurs from third-party vendors for the
installation of the Lines.
---------------------------------------------------------------------------
\10\ See Cboe Options Fees Schedule, Lines Table.
\11\ See Cboe Options Fees Schedule, Communications Table,
Exchangefone and Miscellaneous Table, Market-Maker Handheld Terminal
Tethering Services.
\12\ See Cboe Options Fees Schedule, Lines Table, Lines Direct
from Local Carrier to Trading Floor and Lines Between Communication
Center and Trading Floor.
---------------------------------------------------------------------------
Co-Location and Meet-me-Room
For a monthly fee, the Exchange historically has provided TPHs (and
third-party vendors, collectively ``firms'') with cabinet space in its
building for placement of network and server hardware. Particularly,
TPHs are charged a monthly fee of $50 per ``U'' of shelf space \13\ and
Sponsored Users \14\ are assessed a monthly fee of $100 per ``U''. Fees
are charged in increments of 4 ``U'' (i.e., a minimum of $200 per 4
``U'' is charged or, for Sponsored Users, a minimum of $400 per 4 ``U''
is charged). A firm also receives power, cooling, security and
assistance with installation and connection of the equipment to the
Exchange's servers, at no additional charge.
---------------------------------------------------------------------------
\13\ The term ``U'' is used to indicate an equipment unit 1.75''
high with a maximum power of 125 watts per U space. Per the Fees
Schedule, Co-Location fees are charged in increments of 4 ``U'' (7
inches).
\14\ See Cboe Options Rule 3.60.
---------------------------------------------------------------------------
The Exchange will continue to provide firms cabinet space in the
new facility (``Meet-me-Room'') for placement of network and server
hardware at the same rate of $50 per ``U'', billed in increments of 4
``U''. The Exchange proposes however to eliminate the separate rate for
Co-Location of Equipment Fee for Sponsored Users, as the Exchange does
not currently have any Sponsored Users, nor has it had any Sponsored
users in several years. As such, the Exchange no longer believes its
necessary to maintain a separate rate for Sponsored Users.\15\ The
Exchange also proposes to relocate the ``Co-Location'' section in the
Fees Schedule to immediately follow the ``Lines'' section in the Fees
Schedule, as it believes such fees are more appropriately grouped
together and will make the Fees Schedule easier to read and follow. The
Exchange also believes it will make the Fees Schedule easier to read
and follow if it reflects the rate of the minimum increment charged,
instead of a broken-out rate that can never be assessed. As noted
above, the Fees Schedule currently sets forth the monthly rate per
``U'' (i.e., ``$50 per ``U''), even though it states it only charges in
increments of 4 ``U'' (i.e., fee is really $200 per 4 ``U''). The
Exchange will continue to charge in increments of 4 ``U'' in the new
facility and therefore proposes to update the fee language in
[[Page 51716]]
the relocated line item to reflect the rate for the minimum increment
of 4 ``U''. Despite this language change, the Exchange reiterates it is
not changing the amount assessed for the Co-Location of Equipment Fee.
Within the new Meet-me-Room however, the Exchange is proposing to limit
firms to 8 ``U'' in order to ensure all firms can be accommodated in
the Meet-me-Room.
---------------------------------------------------------------------------
\15\ To the extent the Exchange has Sponsored Users in the
future, such participants will be assessed the same rate as all
other firms (i.e., $50 per ``U'', billed in minimum increments of 4
``U'').
---------------------------------------------------------------------------
The Exchange next proposes to adopt monthly and installation fees
for cross connects, including telecommunication (i.e., telco) and Cboe
Floor Network cross connects,\16\ within the Meet-Me-Room.
Particularly, each cross connect will be subject to a $25 per month per
cross connect fee, which is a pass-through fee of what the Exchange is
assessed by the CBOT Building for each cross connect. Additionally,
firms will be subject to a one-time $500 installation fee for each
cross connection, which is also a pass-through fee of what the Exchange
is assessed by the CBOT Building. The Exchange notes that at the
LaSalle trading floor, the Exchange assessed third-party vendors a $50
per month fee for ``Data Circuits from Local Carrier to Equipment
Shelf'' which offers similar cross-connectivity from Local Carriers
(telco providers) to a firm's equipment shelf in the current meet-me-
room. The Exchange no longer uses data circuits from Local Carriers to
equipment on the shelf and proposes to therefore eliminate this fee
(currently under the Vendor Services section) from the Fee Schedule.
---------------------------------------------------------------------------
\16\ The Exchange offers fiber cross connect. The cross connects
may run between a firm's hardware to a third-party
telecommunications service or the Cboe Floor Network switches that
will service the trading floor.
---------------------------------------------------------------------------
The Exchange next proposes to adopt a fee relating to accessing the
Meet-me-Room. Particularly, in order for a firm to access the Meet-me-
Room (e.g., if they need technical support), they must request access.
The Exchange notes that because the Meet-me-Room now resides in a
building not owned by the Exchange, the Exchange is assessed a fee by a
third-party (CBOT Building) for providing firms access to the Meet-me-
Room. The Exchange notes that the CBOT Building requires individuals
accessing the Meet-me-Room to be accompanied by CBOT Building
representatives and therefore assesses a fee associated with the visit.
Exchange staff personnel are also present for each visit. The Exchange
therefore proposes to adopt a fee to recoup fees it is billed by the
CBOT Building for providing this access (``Cboe Datacenter Services'').
Specifically, the Exchange proposes to assess a fee of $100 per half-
hour (with a 1 hour minimum required). The Exchange notes that it
waived this fee for the month of June 2022.\17\ Particularly, the
Exchange believed that firms may have had a greater need during the
first month of operations on the new trading floor to visit the Meet-
me-Room. The waiver therefore allowed firms to respond to any potential
issues that may have arisen in the Meet-me-Room during the first month
at no additional cost. The Exchange anticipates that firm requests for
this type of access will be infrequent going forward. The Exchange also
notes that it similarly assessed fees for various third-party technical
support or vendor services on the LaSalle trading floor.\18\ However,
these services are no longer be available in the new trading floor and
the Exchange therefore proposes to eliminate the following
corresponding fees: Technical Support Outside Normal Hours, IPC
(vendor) Time & Material, IPC (vendor) Time & Material Overtime, After
Hours Technician Service, Market-Maker Handheld Tethering Services, and
Market-Maker Handheld Tethering Services For Indexes.
---------------------------------------------------------------------------
\17\ See Securities Exchange Act Release No. 95155 (June 24,
2022), 87 FR 39145 (June 30, 2022) (SR-CBOE-2022-029).
\18\ See Cboe Options Fees Schedule, Vendor Services, Technical
Support Outside Normal Hours, and Miscellaneous, IPC (vendor) Time &
Material, IPC (vendor) Time & Material Overtime, After Hours
Technician Service, Market-Maker Handheld Tethering Services, and
Market-Maker Handheld Tethering Services For Indexes.
---------------------------------------------------------------------------
Trading Floor Device Fees
The Exchange currently lists various fees under the Trading Floor
Terminal Rentals section of the Facility Fees table.\19\ For example,
TPHs are currently assessed $125 per month for ``PAR Workstations'' to
help offset hardware costs incurred by the Exchange in making PAR
workstations available to TPHs. A PAR (Public Automated Routing System)
Workstation is an Exchange-provided order management tool for use on
the Exchange's trading floor by TPHs and PAR Officials to manually
handle orders pursuant to the Rules and facilitate open outcry trading.
Access to PAR is only available on Exchange-provided tablets (currently
Surface Tablets) and the current monthly fee covers both the Exchange-
provided tablet and PAR access. In connection with the transition to
the new trading floor, the Exchange proposes to modify the way it
assesses fees for use of PAR \20\ and also adopt fees for non-Exchange
provided tablets that connect to the Exchange's network. Particularly,
the Exchange proposes to adopt a separate monthly Exchange Tablet fee
of $140 for any tablet provided by the Exchange and a separate monthly
fee of $45 to access PAR. TPHs will continue to utilize PAR on the new
trading floor, which will continue to only be available on Exchange-
provided tablets. Exchange tablets used for PAR may also be used for
access to Silexx.\21\
---------------------------------------------------------------------------
\19\ The Exchange proposes to rename this section ``Trading
Floor Device Fees''.
\20\ The Exchange proposes to replace the reference to ``PAR
Workstation'' to ``PAR Access''. Particularly, the current version
of PAR is no longer a physical touch screen terminal (i.e.,
workstation) but an order management tool that can be accessed on a
tablet such as a Surface.
\21\ Silexx is a User-optional order entry and management
trading platform. The Silexx platform consists of a ``front-end''
order entry and management trading platform (also referred to as the
``Silexx terminal'') for listed stocks and options that supports
both simple and complex orders, and a ``back-end'' platform which
provides a connection to the infrastructure network. The Silexx
front-end and back-end platforms are a software application that is
installed locally on a user's laptop.
---------------------------------------------------------------------------
The Exchange also proposes to adopt a separate Exchange Tablet fee
as TPHs will have the option of using Exchange-provided tablets for
Cloud9, which is the new telecommunication system the Exchange offers
on the new trading floor.\22\ The Exchange notes that TPHs have the
option of using their own tablet to access Cloud9 in lieu of using an
Exchange-provided tablet. Such tablets would be subject to the ``TPH-
Owned Device Authentication Fee'' described more fully below.
---------------------------------------------------------------------------
\22\ Cloud9 is the voice communication solution for the new
trading floor. Cloud9 is a VoIP cloud-based service offering a
traditional turret, the Cloud Hub. The Cloud Hub will be provided by
Cboe and will need to connect to a laptop or device provided either
by the TPH or by Cboe. TPHs may not use the same Exchange Tablet for
both PAR and Cloud9.
---------------------------------------------------------------------------
On the new trading floor, TPHs will be able to use a variety of
devices such as tablets, laptops, Market-Maker handheld devices,
printers, and phone systems. TPHs will be able to connect these devices
to the Exchange's network anywhere on the trading floor through wired
jack ports or the wireless network on the trading floor, as long as
they are onboarded to the Cboe Network Authentication System. The
Exchange proposes to assess a fee for TPH-owned devices that connect to
the Exchange's network on the new trading floor (``TPH-Owned Device
Authentication Fee''). Particularly, the Exchange proposes to assess a
fee of $100 per authenticated connection (i.e., when a device connects
to the wired jack and/or wireless network on the trading floor).\23\
The proposed fee will be based
[[Page 51717]]
on the maximum number of concurrent authenticated connections made
during market hours during the calendar month. As discussed above, the
Exchange believes the new trading floor provides TPHs more flexibility
to move and relocate any of their devices by eliminating the need for
installation, relocation and removal of connectivity lines to devices.
Consequently, corresponding monthly, installation, relocation and
removal fees will also be eliminated on the new trading floor.
---------------------------------------------------------------------------
\23\ For example, a TPH that connects to Cloud9 using its own
laptop would be assessed $100 per month for that connection. If that
same TPH chooses to connect an additional laptop and a printer to
the network, that TPH will be assessed a total of $300 per month
(i.e., $100 for each of the tablet used for Cloud9, the laptop and
the printer).
---------------------------------------------------------------------------
Replacement Fees
The Exchange currently assesses fees related for certain hardware
that needs to be replaced because of loss or because of non-normal wear
and tear. Particularly, the Exchange assesses the following replacement
fees:
------------------------------------------------------------------------
------------------------------------------------------------------------
Replacement Tablet....................... $1,300 each.
Replacement Stylus Pen................... $100 each.
Replacement Chargers..................... $75 each.
Replacement Adapters and Protective Cases $50 each.
------------------------------------------------------------------------
The Exchange proposes to maintain these replacement fees on the new
trading floor. However, the Exchange proposes to increase the fee to
replace a table from $1,300 per tablet to $1,400 per tablet to reflect
increased costs to the Exchange. The Exchange also proposes to adopt a
new replacement fee for lost Access Badges at the rate of $100 per
badge in order to encourage TPHs to hold onto their badges and not
misplace them.
Obsolete Fees
The Exchange next proposes to eliminate fees assessed for
technology and infrastructure and related services that will be
rendered obsolete upon the transition to the new trading floor.
Particularly, the Exchange proposes to eliminate the following fees
that have not otherwise been discussed above:
------------------------------------------------------------------------
Description Fee
------------------------------------------------------------------------
Arbitrage Phone Positions.............. $550/month.
HP Laser Printer Paper................. $5.00 per packet of 500 sheets.
Zebra Printer Papers................... $19.50 per roll.
Zebra Printer Ink...................... $19.50 per roll.
Forms Storage.......................... $11.
Exchangefone........................... $935/installation; $129/
relocation; $100/removal.
Exchangefone--Maintenance.............. $57/month.
Exchangefone--With Recorded Coupler $126/relocation.
Between Booths.
Exchangefone--Within Booth............. $25/relocation.
Single Line--Maintenance............... $11.50/month.
Phone Rentals--Monthly Fee............. $110/month.
Phone Rentals--Replacement Repairs..... cost.
Lines--Intra Floor..................... $57.75/per month.
Lines--Voice Circuits.................. $16/month; $52.50/installation;
$36.75/removal.
New Circuits--First.................... $120/installation; $50/removal.
New [email protected] $18/installation; $18/removal.
Existing Line Appearance--First........ $50/installation; $25/removal.
Existing Line Appearance--A Additional. $18/installation: $18/removal.
Data Circuits (DC) at Local Carrier $16/month; $52.50/installation;
(entrance). $36.75 removal.
DC @In-House Frame--Lines between Local $12.75/month; $550/
Carrier and Comms Center. installation.
DC @In-House Frame--Lines Between Comms $12.75/month; $725/
Center and Trading Floor. installation; $625/relocation.
DC @In-House Frame--Lines Direct from $12.75/month; $725/
Local Carrier to Trading Floor. installation; $625/relocation.
Shelf for Equipment.................... $100/month.
Lines from Equipment to Floor.......... $50/month.
Handsets............................... $79/installation.
Headset Jack........................... $131/installation; $58
relocation; $28/removal.
Recorder Coupler....................... $150 new/$50 existing
installation; $25/relocation;
$25/removal.
Thomson/Other (Basic Service).......... $425/month.
Satellite TV........................... $50/month.
Cboe Options Trading Floor Terminal.... $250/month; $175/installation;
$225 relocation; $125/removal.
Trading Floor Printer Maintenance \24\. $75/month.
------------------------------------------------------------------------
The Exchange also proposes to eliminate all PULSe Workstation fees
as PULSe was decommissioned in January 2021, but the Exchange
inadvertently did not delete references to PULSe-related fees at that
time.
---------------------------------------------------------------------------
\24\ The Exchange proposes to eliminate a corresponding
reference in Footnote 50 to Trading Floor Printer Maintenance in
light of the proposal to eliminate this fee.
---------------------------------------------------------------------------
Temporary Fees
In June 2020, the Exchange adopted Footnote 24 of the Fees Schedule
to govern pricing changes that would apply for the duration of time the
Exchange trading floor was being operated in a modified manner in
connection with the COVID-19 pandemic. By way of background, the
Exchange closed its trading floor on March 16, 2020 due to the COVID-19
pandemic and reopened its trading floor on June 15, 2020, but with a
modified configuration of trading crowds in order to implement social
distancing and other measures consistent with local and state health
and safety guidelines to help protect the safety and welfare of
individuals accessing the trading floor. As a result, the Exchange
relocated and modified the physical area of certain trading crowds and
also determined and reduced how many floor participants may access the
trading floor. In connection with these changes, the Exchange proposed
a number of modified billing changes that would remain in place for the
duration of the time the Exchange operated in a modified manner.
Particularly, the following fees are modified when the
[[Page 51718]]
Exchange is operating in a modified state due to the COVID-19 pandemic:
------------------------------------------------------------------------
------------------------------------------------------------------------
Trading Permits................... Floor trading permit fees are not be
assessed on the total number of
floor trading permits a TPH
organization holds, and instead are
based on the floor trading permits
used by nominees of the TPH each
day during the month using the
following formula: (i) the number
of floor trading permits that have
a nominee assigned to it in the
Customer Web Portal system
(``Portal'') in a given month,
multiplied by the number of trading
days that the floor is open and
that a nominee is assigned to each
respective trading permit in that
month, divided by (ii) the total
number of trading days in a month.
The Exchange rounds up to determine
the total number of trading permits
assessed the fees set forth in the
Floor Trading Permit Sliding
Scales.
SPX Tier Appointment Fee.......... The monthly fee for the SPX/SPXW
Floor Market-Maker Tier Appointment
Fee will be increased to $5,000 per
Trading Permit from $3,000 per
Trading Permit.
Inactive Nominee Status (Parking $300 Parking Space Fees is not
Space). applied.
Inactive Nominee Status Change $100 Trading Permit Swap Fee is not
(Trading Permit Swap). applied.
SPX/SPXW and SPESG Floor Brokerage SPX/SPXW and SPESG Floor Brokerage
Fees. Fees are be assessed the rate of
$0.05 per contract for non-crossed
orders and $0.03 per contract for
crossed order instead of $0.04 and
$0.02, respectively.
Facility Fees..................... Monthly fees are waived for the
following facilities fees:
arbitrage phone positions and
satellite tv. If a TPH is unable to
utilize designated facility
services while the trading floor is
operating in a modified state,
corresponding fees, including for
standard and non-standard booth
rentals, Exchangefone maintenance,
single line maintenance, intra
floor lines, voice circuits, data
circuits at local carrier
(entrance), and data circuits at in-
house frame, are waived.
------------------------------------------------------------------------
The Exchange notes that while the LaSalle trading floor utilized
social distancing and reconfigured trading crowds through its closure
(and therefore was considered to be operating in a modified manner), it
does not believe it was necessary to implement such safety measures on
the new trading floor at the time of transition given recent
developments relating to the COVID-19 pandemic. As such, upon moving to
the new trading floor on June 6, 2022, the Exchange no longer operates
in a modified manner and Footnote 24 does not apply. Accordingly, (1)
Floor Trading Permit fees will be assessed based on the total number of
floor trading permits a TPH holds each month; (2) Parking Space and
Trading Swap fees will no longer be waived; and (3) SPX/SPXW and SPESG
Floor Brokerage fees will be assessed $0.04 per contract for non-
crossed orders (instead of $0.05 per contract) and $0.02 per contract
for crossed orders (instead of $0.03 per contract). As noted above,
arbitrage phone positions, satellite tv, Exchangefone maintenance,
single line maintenance, intra floor lines, voice circuits, data
circuits at local carrier (entrance), and data circuits at in-house
frame are being eliminated as of June 1, 2022 so the Exchange proposes
to also eliminate references to such fees from Footnote 24. The
Exchange also proposes to maintain the current modified rate of $5,000
for the SPX Floor Tier Appointment Fee under Footnote 24 (i.e.,
increase the fee from $3,000 per permit to $5,000 permit regardless of
whether the Exchange is operating in a modified state due to COVID-19
pandemic). The Exchange notes that it has not amended the original Tier
Appointment Fee since its inception almost twelve years ago in July
2010.\25\
---------------------------------------------------------------------------
\25\ See Securities Exchange Act Release No. 62386 (June 25,
2010), 75 FR 38566 (July 2, 2010) (SR-CBOE-2010-060).
---------------------------------------------------------------------------
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.\26\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \27\ 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 the
Section 6(b)(5) \28\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(5).
\28\ Id.
---------------------------------------------------------------------------
As discussed above, the proposed changes are prompted by the
Exchange's recent transition from its previous trading floor, which it
had occupied since the 1980s, to a brand new, modern and upgraded
trading floor facility. The Exchange believes customers continue to
find value in open outcry trading and rely on the floor for price
discovery and the deep liquidity provided by floor Market-Makers and
Floor Brokers. The Exchange believes the build out of a new modern
trading floor is therefore consistent with its commitment to open
outcry trading and focus on providing the best possible trading
experience for its customers. Indeed, the new trading floor provides a
state-of-the-art environment and technology and more efficient use of
physical space, which the Exchange believes better reflects and
supports the current trading environment. The Exchange also believes
the new infrastructure provides a cost-effective, streamlined, and
modernized approach to floor connectivity. For example, the new trading
floor has more than 330 individual kiosks, equipped with top-of-the-
line technology, that enable floor participants to plug in and use
their devices with greater ease and flexibility. It also provides floor
Market-Makers and Floor Brokers with more space and increased capacity
to support additional floor-based traders on the trading floor.
Moreover, the new trading floor is conveniently located across the
street from the LaSalle trading floor, resulting in minimal disruption
to TPH floor participants, many of whom have office space nearby,
including in the CBOT Building. The Exchange believes the CBOT
Building, which was also home to the Exchange's original trading floor
in the 1970s and early 1980s, is also able to support robust trading
floor infrastructure as it currently hosts
[[Page 51719]]
several banks, trading firms and even trading floors (i.e., trading
floors for the Chicago Mercantile Exchange and BOX Options Market).
As described above, the recent transition rendered much of the
Exchange's previous trading floor technology and infrastructure
obsolete, as it has been replaced by new infrastructure in a new
building (no longer owned by the Exchange). As such, the proposed
modifications to corresponding facility fees are not only necessary,
but the Exchange believes reasonable, equitable and not unfairly
discriminatory as discussed in further detail below. The Exchange also
believes the proposed rule change results in a streamlined and
simplified trading floor and facility fee structure.
Booth Fees
The Exchange believes the proposed Booth Fees are reasonable as
they are not a significant departure from fees that were assessed for
Booths on the LaSalle trading floor (and in some instances are even
lower than currently assessed). Additionally, the Booths on the new
trading floor are slightly larger than the standard Booths that were
available on the LaSalle trading floor. The proposed fees are also in
line with similar fees charged currently and historically at other
exchanges with a physical trading floor.\29\ The Exchange believes that
the proposed booth space fee is equitable and not unfairly
discriminatory because it applies uniformly to trading floor
participants who choose to rent Booths (and all booths are uniform and
nearly identical in size). Moreover, the use of Booths, whether located
away from or in a trading crowd, are optional and not necessary in
order to conduct open outcry trading on the trading floor.
---------------------------------------------------------------------------
\29\ In 2011, Nasdaq PHLX charged a flat $300 per month fee for
Trading/Administrative Booth paid by floor brokers and clearing
firms. See Securities Exchange Act Release No. 34-66086 (January 3,
2012), 77 FR 1111 (January 9, 2012) (SR-Phlx-2011-181). NYSE
American currently assesses $40 per linear foot per month for all
booth space utilized by such Floor Broker.
---------------------------------------------------------------------------
The Exchange believes the proposed rule changes to the Booth Policy
and Agreement make non-substantive changes that merely clarify the
Policy and Agreement, make it more accurate, and alleviate potential
confusion, thereby removing impediments to and perfecting the mechanism
of a free and open market and a national market system, and, in
general, protecting investors and the public interest. The Exchange
believes that notwithstanding any of the proposed changes, the Booth
Policy and Agreement continues to ensure that trading floor Booths are
leased to TPH organizations on equal and non-discriminatory terms.
Line to Cboe Floor Network
The Exchange believes the proposed Line to Cboe Floor Network fee
is reasonable as TPHs will not be subject to the current lines and
circuit fees set forth in the Fees Schedule, including for relocation
and removal, that are assessed on the LaSalle trading floor for similar
connectivity to the trading floor network. Additionally, unlike the
current floor which requires independent wiring be used for each line
or circuit and on a per device basis, the new trading floor will allow
TPHs to maintain one Line (or 2 for redundancy purposes). Accordingly,
the new trading floor will provide TPHs more flexibility to move and
relocate as needed and with greater ease and be able to do so without
incurring additional relocation and removal fees. Moreover, firms will
no longer need to provide their own network equipment to support
dedicated lines to the floor as the Exchange will be providing the
network switches and local area network (LAN) lines for all firms on
the new trading floor. The Exchange notes that on the LaSalle trading
floor, TPHs had to supply their own pair of network switches, which the
Exchange estimates cost approximately $5,000 for each switch (i.e.,
$10,000 total), in addition to ongoing costs incurred for vendor
support and staff personnel time. Under the proposal, TPHs are no
longer subject to these costs, as the Exchange provides both the
network switches and ongoing support. The Exchange also notes other
exchanges assess a variety of facility fees relating to connectivity
and equipment in order to maintain their trading floor facilities.\30\
---------------------------------------------------------------------------
\30\ For example, Nasdaq PHLX assesses a Floor Facility Fee of
$330 per month for such purpose. See Securities Exchange Act Release
No 69672 (June 5, 2013), 78 FR 33873 (May 30, 2013) (SR-PHLX-2013-
58). Nasdaq PHLX also assesses a variety of options trading floor
fees including for equipment services and relocation requests. See
Nasdaq PHLX Options 7 Pricing Schedule, Section 9. Other Member
Fees, A. Option Trading Floor Fees. See also NYSE America Options
Fees Schedule, Section IV, Monthly Floor Communication,
Connectivity, Equipment and Booth or Podia Fees and NYSE Price List,
Equipment Fees.
---------------------------------------------------------------------------
The Exchange believes the proposed installation fee is also
reasonable as the Exchange is passing through costs it incurs from a
third party (i.e., the CBOT Building) with respect to the installation
of such Lines. The Exchange believes this fee reasonably represents the
materials and labor costs of installation which, as discussed above, is
assessed by a building that has experience in similar installations as
it hosts many other participants in the financial industry, including
trading firms and other exchanges' trading floors. The proposed fee
also includes a redundant Line at no additional cost. The Exchange
believes the proposed monthly and installation Line fees are equitable
and not unfairly discriminatory as they will apply uniformly to all
trading floor participants.
Co-Location and Meet-me-Room
The Exchange believes it is reasonable to cap all TPHs and non-TPHs
to 8 ``U'' because the Exchange no longer owns the premises in which
the Meet-me-Room resides and there is finite amount of space. The
proposed cap however applies to all TPHs and non-TPHs uniformly.
Additionally, the Exchange believes 8 ``U'' should be sufficient amount
of space for any TPH or non-TPH and that with such cap in place there
is sufficient space to accommodate all TPHs or non-TPHs who request co-
location service. The Exchange believes it's reasonable, equitable and
not unfairly discriminatory to eliminate the Co-Location of Equipment
Fee for Sponsored Users as it has not had any Sponsored Users in
several years. If the Exchange were to approve a Sponsored User, such
participant would merely be subject to the remaining (and lower) Co-
Location of Equipment Fee (i.e., $200 per 4 ``U''). The Exchange
believes the proposed relocation and language updates to the current
Co-Location fee are reasonable as the Exchange is not proposing to
change the amount assessed but is merely updating and simplifying the
Fees Schedule and making it easier to read.
The Exchange believes the proposed $25 per cross-connect monthly
fee is reasonable as it is a modest fee that is a pass-through of the
fee the Exchange is assessed by a third-party (i.e., the CBOT Building)
to maintain such cross connect. Additionally, the Exchange notes third-
party vendors such as telecommunication providers will no longer be
subject to the $50 per month fee for ``Data Circuits from Local Carrier
to Equipment Shelf''. Additionally, the Exchange believes the proposed
amount is in line (and lower than) the amount assessed by another
exchange for similar cross connects.\31\ The proposed cross connect
installation fee is also reasonable as it is intended to recoup the
fees incurred by the Exchange by
[[Page 51720]]
third-party vendors for establishing the cross connects. The Exchange
believes the installation fee assessed by the CBOT Building is also
reasonable as it is in line with installation fees assessed by other
data centers and exchanges for installation of cross-connections.\32\
---------------------------------------------------------------------------
\31\ See Nasdaq PHLX Options 7 Pricing Schedule, Section 9.
Other Member Fees, A. Option Trading Floor Fees, Cabinet-to-Cabinet
Connectivity and Cabinet-to-Cabinet MPOE Connectivity, which are
both subject to a $50 per month fee.
\32\ See, e.g., NYSE American Options Fees Schedule, Section
V(B).
---------------------------------------------------------------------------
The Exchange believes the proposed Cboe Datacenter Services fee is
reasonable as it recoups the costs the Exchange is assessed by the CBOT
Building (as the owner of the building) when firms needs to access to
the Meet-me-Room for purposes such as on-site support. The Exchange
notes that it is aware that other data center facilities similarly
require security escorts for Meet-me-Room access and assess fees for
such access. Additionally, the Exchange waived the fee for the month of
June 2022, so that visits to the Meet-me-Room to address any onboarding
questions or issues that arose during the first month in the new
facility were free of charge. Moreover, as noted above, the Exchange
does not anticipate that access to the Meet-me-Room will be needed on a
frequent basis.
The Exchange believes the proposed cross connect and Cboe
Datacenter Services fees are also equitable and not unfairly
discriminatory as they will apply uniformly to all market participants
that request these services, respectively.
Trading Floor Devices
The Exchange believes the proposed changes related to the PAR fee
are reasonable as the combined proposed fees for using PAR (i.e.,
Exchange Tablet fee and PAR Access fee) are only modestly higher than
the fee TPHs are currently assessed for use of PAR. The Exchange notes
that although TPHs that use PAR will be subject to a modestly higher
fee, the PAR Workstation fee has remained unchanged for over eleven
years, notwithstanding technology changes and improvements over the
last decade, including for example, the ability to also access Silexx
from the same tablet on which PAR is accessed.\33\ Moreover, the
Exchange notes the proposed fee is still lower than fees assessed at
other exchanges for trading floor terminals. For example, NYSE American
assesses $450 per device per month for Floor Broker Handheld and an
additional $215 per month per Exchange sponsored Floor Broker order
entry system.\34\ Moreover, the Exchange notes that the Exchange
provides technical support services for these tablets, eliminating the
need for TPHs to purchase protection plans themselves for their device.
The Exchange also incurs other costs associated with the tablets that
it does not otherwise separately pass through, such as fees incurred
for replacement of batteries and other parts. The Exchange will also
replace a tablet at no additional cost if a tablet is damaged from
normal wear and tear. Further, the Exchange replaces tablets at no
additional cost approximately every 3 years. The Exchange believes the
proposed Exchange Tablet fee is also reasonable as TPHs may, but do not
have to, use an Exchange Tablet to access Cloud9. Indeed, they may use
their own TPH-owned device for purposes of accessing Cloud9 and be
subject to the alternative, and lower, TPH-Owned Device Authentication
Fee.
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\33\ See Securities Exchange Act Release No. 63701 (January 11,
2011), 76 FR 2934 (January 18, 2011) (SR-CBOE-2010-116).
\34\ See also NYSE America Options Fees Schedule, Section IV,
Monthly Floor Communication, Connectivity, Equipment and Booth or
Podia Fees.
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The Exchange believes the proposed PAR Access fee is equitable and
not unfairly discriminatory as it applies to all TPHs using PAR.
Moreover, the proposed changes enable the Exchange to offer Exchange-
provided tablets for a separate monthly fee to TPHs that wish to use
them for Cloud9, which is the Exchange's new telecommunications system
that it will offer on the new trading floor. Currently, TPHs are
subject to various communication fees including monthly fees,
installation fees, relocation fees and removal fees which will no
longer be assessed by the Exchange as the Exchange's current
communications offerings will be rendered obsolete upon the transition
to the new trading floor.\35\
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\35\ See Cboe Options Fee Schedule, Communications Fees.
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The Exchange believes the proposed TPH-Owned Device Authentication
Fee is reasonable as the proposed fee is lower than the proposed fee
assessed for Exchange Tablets which may alternatively be used if a TPH
is looking to access Silexx or Cloud9. Additionally, the Exchange
believes it's reasonable to assess TPHs a monthly fee for access to its
network. Particularly, the Exchange expends resources to monitor and
maintain the network, and importantly, ensure its secure and resilient.
The Exchange also offers assistance during the onboarding process for
the devices and expends resources monitoring and troubleshooting
networking issues. The Exchange notes that as the number of devices
connected to the network increases, demand of Exchange time and
resources may therefore also increase. As such, the Exchange also
believes the proposed fee may encourage firms to be efficient with the
number of devices it chooses to connect to the network. Moreover, the
Exchange believes the new trading floor provides TPHs more flexibility
to move and relocate any of their devices by eliminating the need for
installation, relocation and removal of connectivity lines to devices
and consequently, corresponding monthly, installation, relocation and
removal fees. The proposed fee also applies to all TPHs accessing the
Cboe floor Network from their own device.
Replacement Items
The Exchange believes the proposed change to increase the tablet
replacement fee is reasonable as the proposed amount better reflects
the approximate cost to the Exchange to provide a replacement tablet to
TPHs. Additionally, the Exchange believes adopting a $100 fee for
replaced access badges is reasonable as the Exchange believes it will
incentivize TPHs to keep track of their access badges and reduce the
need for the Exchange to expend resources to print additional
replacement badges. The Exchange believes these changes are also
reasonable, equitable and not unfairly discriminatory because TPHs that
lose these items or damage these items from non-normal wear or tear
should be responsible for the cost of replacement. The Exchange
believes the proposed fees will encourage TPHs to take proper care and
track of these items. Additionally, the Exchange notes that it will not
charge TPHs to replace defective items (that were not the result of
non-normal wear and tear).
Obsolete Fees
The Exchange believes eliminating the facility fees discussed above
is reasonable as such corresponding services and architecture will be
rendered obsolete upon transitioning to the new trading floor.
Additionally, the Exchange believes the proposed new fee structure as
compared to the fees being eliminated provides for a more streamlined
and simplified approach to facility fees. The Exchange believes the
proposed elimination of these fees is equitable and not unfairly
discriminatory as it will apply uniformly to all TPHs. The proposal to
eliminate references to these fees in Footnote 12, 24 and 50 also
maintains clarity in the Fees Schedule and avoids potential confusion.
[[Page 51721]]
Footnote 24
As discussed above, as of June 6, 2022, the Exchange no longer
operates in a modified state due to the COVID-19 pandemic as the
Exchange no longer maintains a modified configuration of trading crowds
to implement social distancing nor does it reduce or limit how many
floor participants may access the trading floor. Accordingly, because
the Exchange is not considered to be operating in a modified
configuration as of June 6, 2022, Footnote 24 is no longer applicable
and the modified billing practices will revert back to original
billing. The Exchange believes its proposal to maintain the current
modified rate of $5,000 for the SPX Floor Tier Appointment Fee under
Footnote 24 (i.e., increase the fee from $3,000 per permit to $5,000
permit regardless of whether the Exchange is operating in a modified
state due to COVID-19 pandemic) \36\ is reasonable because the proposed
amount is not significantly higher than was previously assessed.
Additionally, the Exchange notes that it has not amended the Market-
Maker SPX Tier Appointment Fee since such fee was adopted nearly twelve
years ago in July 2010.\37\ The proposed change also is equitable and
not unfairly discriminatory as it applies to all similarly situated
TPHs.
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\36\ The Exchange proposes to eliminate this language from
Footnote 24 as it will no longer be considered a ``modified'' rate,
and instead update the rate reflected in the Market-Maker Tier
Appointment Fees table.
\37\ See Securities Exchange Act Release No. 62386 (June 25,
2010), 75 FR 38566 (July 2, 2010) (SR-CBOE-2010-060).
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In sum and in addition to all the reasons discussed above, the
Exchange believes its proposed fees are reasonable in light of the
numerous benefits the new trading floor provides its floor
participants. The Exchange believes the new trading floor provides for
state-of-the-art infrastructure, enhanced technology capabilities, and
a flexible, open and dynamic environment to facilitate more seamless
and efficient interaction between traders. The Exchange also notes that
it considered a number of factors in determining the location of the
new trading floor including cost to the Exchange and its TPHs, as well
as the convenience of location for the trading floor community and
Exchange staff. Another critical consideration was whether the new
building would have the necessary infrastructure and ability to support
a sophisticated and state-of-the art trading floor. As the CBOT
Building already hosts several trading firms and two other exchange
trading floors, the Exchange felt confident the CBOT Building would be
able to accommodate the Exchange's technology and infrastructure needs
for its floor. The Exchange therefore believes the amounts of the fees
assessed by the CBOT Building that it proposes to pass-through are
reasonable. The proposed fees are also in line with fees assessed by
other data centers and exchanges for similar technology and services.
For example, as noted above, the $25 cross connect fee is lower than
the fees assessed by other exchanges for similar cross connections.
The Exchange also notes that is has not sought to pass through
other costs incurred in connection with the new trading floor,
including design, construction and other on-going maintenance costs.
Moreover, the Exchange has not modified many of its facilities fees in
several years. The Exchange therefore believes the proposed fees are
reasonable because they allow the Exchange to recoup fees associated
with the costs of operating a modern and cutting-edge trading floor and
offset and keep pace with increasing technology costs.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule changes will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the proposed changes
would be applied in the same manner to all similarly situated
participants and as such, would not impose a disparate burden on
competition among the same classes of market participants. As described
in further detail above, the proposed fees are also applicable only to
market participants that choose to avail themselves to the
corresponding facility services. For example, only firms that choose to
rent Booths (which are optional and not required for open-outcry
trading) will be subject to the proposed Booth Fees. Similarly, only
firms that choose to purchase Exchange-provided tablets are subject to
the tablet fee, and firms may otherwise choose to purchase and provide
their own tablets.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed rule changes apply only to fees relating to the Exchange's
floor facility. Further, as described in detail above, the Exchange
believes its proposed facilities fees are in line with facility fees
assessed at other exchanges that maintain physical trading floors.
Additionally, the Exchange notes it operates in a highly competitive
market. In addition to Cboe Options, TPHs have numerous alternative
venues that they may participate on and director their order flow,
including 15 other options exchanges (four of which also maintain
physical trading floors), as well as off-exchange venues, where
competitive products are available for trading. Based on publicly
available information, no single options exchange has more than 16% of
the market share of executed volume of options trades.\38\ Therefore,
no exchange possesses significant pricing power in the execution of
option order flow. 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.'' \39\ 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' . . . .''.\40\ Accordingly, the Exchange does not believe its
proposed changes to the incentive programs impose any burden on
competition that
[[Page 51722]]
is not necessary or appropriate in furtherance of the purposes of the
Act.
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\38\ See Cboe Global Markets, U.S. Options Market Volume Summary
by Month (May 31, 2022), available at https://markets.cboe.com/us/options/market_share/.
\39\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\40\ 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 is effective upon filing pursuant to
Section 19(b)(3)(A) \41\ of the Act and subparagraph (f)(2) of Rule
19b-4 \42\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\41\ 15 U.S.C. 78s(b)(3)(A).
\42\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \43\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\43\ 15 U.S.C. 78s(b)(2)(B).
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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-CBOE-2022-042 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-2022-042. 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-CBOE-2022-042, and should be submitted
on or before September 13, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\44\
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\44\ 17 CFR 200.30-3(a)(12).
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-18098 Filed 8-22-22; 8:45 am]
BILLING CODE 8011-01-P
