Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Relating to the Sale of Open-Close Volume Data, 57002-57005 [2022-20035]

Download as PDF khammond on DSKJM1Z7X2PROD with NOTICES 57002 Federal Register / Vol. 87, No. 179 / Friday, September 16, 2022 / Notices Notice is hereby given that the Securities and Exchange Commission (the ‘‘Commission’’) has, in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104–13, 44 U.S.C. 3501 et seq.) (‘‘PRA’’), has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information, ‘‘Rule 139b Disclosure of Standardized Performance,’’ in connection with the Rule 139b (17 CFR 230.139b) under the Securities Act of 1933 (15 U.S.C. 77a et seq.) (‘‘Securities Act’’) that was adopted by the Commission on November 30, 2018, as discussed below.1 As directed by the Fair Access to Investment Research Act of 2017 (Pub. L. 115–66, 131 Stat. 1196 (2017) (the ‘‘FAIR Act’’), the Commission adopted rule 139b under the Securities Act to extend the safe harbor under rule 139 to a ‘‘covered investment fund research report.’’ Specifically, rule 139b provides a safe harbor to a broker-dealer who publishes or distributes, in the regular course of its business, research reports concerning one or more ‘‘covered investment fund(s)’’ while participating in the distribution of a covered investment fund’s securities. In the Adopting Release, the Commission adopted the provision that rule 139b include a standardized performance requirement. The Commission believes that standardized performance presentation is an appropriate requirement because investors tend to consider fund performance a significant factor in evaluating or comparing investment companies, and the requirement addresses potential investor confusion if a communication were not easily recognizable as research as opposed to an advertising prospectus or supplemental sales literature. Rule 139b requires that research reports about open-end funds that include performance information must present it in accordance with paragraphs (d), (e), and (g) of rule 482. Rule 139b also requires that research reports about closed-end funds that include performance information must present it in accordance with instructions to item 4.1(g) of Form N–2. Performance measures calculated by broker-dealers are not required to be kept confidential and there is no mandatory retention period. The Commission anticipates that compliance with these performance measures for each fund discussed in a research report, and for which the 1 See Release No. 33–10580 (Nov. 30, 2018) [83 FR 64180 (Dec. 13, 2018)] (‘‘Adopting Release’’). Rule 139b became effective on January 14, 2019. VerDate Sep<11>2014 16:43 Sep 15, 2022 Jkt 256001 performance measures apply, would increase compliance costs for brokerdealers seeking to publish or distribute a covered investment fund research report. It is difficult to provide estimates of the burdens and costs for those brokerdealers that will include performance information in a rule 139b research report. As discussed in the Adopting Release, this is difficult to estimate because current data collected does not reflect the affiliate exclusion, does not include the entire universe of covered investment funds, and it is uncertain what percentage of communications currently filed as rule 482 advertising prospectuses (or rule 34b–1 supplemental sales materials) will instead be published in reliance of rule 139b, as covered investment fund research reports.2 For purposes of the PRA, we estimate that 10% of the rule 482 and rule 34b–1 communications currently filed by broker-dealers with FINRA (approximately 48,341) could be considered as rule 139b covered investment fund research reports. We estimate that broker-dealers will publish annually 4,834 (10% of 48,341) covered investment fund research reports. Moreover, we assume for purposes of the PRA that all estimated rule 139b research reports will include fund performance information. We further estimate that 1,169 broker-dealers would likely be respondents to the collection of information with a frequency of 4.1 responses per year.3 Additionally, we estimate that each research report will require 3 hours of ongoing internal burden hours by a broker-dealers’ personnel to comply with the rule 139b collection of information requirements, which for each broker-dealer is estimated to be 12.3 internal burden hours.4 In sum, we estimate that rule 139b’s requirements will impose a total annual internal hour burden of 14,379 hours on brokerdealers.5 We do not think there is an external cost burden associated with this collection of information. This collection of information requirement would not be mandatory 2 See Adopting Release, supra note 1, n. 413 and accompanying paragraph. 3 Based on information provided by FINRA, for the period January 1, 2021 through December 31, 2021, there were an aggregate of 48,341 filings that were coded as either Rule 482 or Rule 34b–1 filings. Furthermore, the Commission estimates that for the period January 1, 2021 through December 31, 2021, there were 4,834 covered investment fund research reports/1,169 broker-dealers = 4.1 annual responses per broker-dealer. 4 4.1 annual responses per broker-dealer × 3 internal burden hours = 12.3 annual internal burden hours per broker-dealer. 5 12.3 annual burden hours * 1,169 brokerdealers. PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 for broker-dealers seeking to rely upon rule 139b, but would be necessary for those broker-dealers that would like to provide performance information in their covered investment fund research reports. Responses to the information collections will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice by October 17, 2022 to (i) MBX.OMB.OIRA.SEC_desk_officer@ omb.eop.gov and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/ o John Pezzullo, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Dated: September 12, 2022. J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20019 Filed 9–15–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95737; File No. SR–C2– 2022–016] Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Relating to the Sale of OpenClose Volume Data September 12, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 1, 2022, Cboe C2 Exchange, Inc. (the ‘‘Exchange’’ or ‘‘C2’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the 1 15 2 17 E:\FR\FM\16SEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 16SEN1 Federal Register / Vol. 87, No. 179 / Friday, September 16, 2022 / Notices proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe C2 Exchange, Inc. (the ‘‘Exchange’’ or ‘‘C2 Options’’) proposes to amend its Fees Schedule relating to the sale of Open-Close volume data. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ options/regulation/rule_filings/ctwo/), 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 khammond on DSKJM1Z7X2PROD with NOTICES 1. Purpose The Exchange proposes to amend its Fees Schedule to offer a free trial during the months of September, October, November and December 2022 for an ad-hoc request of three (3) historical months of Intraday Open-Close historical data to all C2 Trading Permit Holders (‘‘TPHs’’) and non-TPHs who have never before subscribed to the Intraday Open-Close historical files, effective September 1, 2022. By way of background, the Exchange currently offers End-of-Day (‘‘EOD’’) and Intraday Open-Close Data (collectively, ‘‘Open-Close Data’’). EOD Open-Close Data is an end-of-day volume summary of trading activity on the Exchange at the option level by origin (customer, professional customer, broker-dealer, and market maker), side of the market (buy or sell), price, and transaction type (opening or closing). The customer and professional customer volume is further broken down into trade size buckets (less than 100 contracts, 100–199 contracts, greater than 199 contracts). VerDate Sep<11>2014 16:43 Sep 15, 2022 Jkt 256001 The Open-Close Data is proprietary C2 Options trade data and does not include trade data from any other exchange. It is also a historical data product and not a real-time data feed. The Exchange also offers Intraday Open-Close Data, which provides similar information to that of Open-Close Data but is produced and updated every 10 minutes during the trading day. Data is captured in ‘‘snapshots’’ taken every 10 minutes throughout the trading day and is available to subscribers within five minutes of the conclusion of each 10minute period.3 The Intraday OpenClose Data provides a volume summary of trading activity on the Exchange at the option level by origin (customer, professional customer, broker-dealer, and market maker), side of the market (buy or sell), and transaction type (opening or closing). The customer and professional customer volume are further broken down into trade size buckets (less than 100 contracts, 100– 199 contracts, greater than 199 contracts). The Intraday Open-Close Data is also proprietary C2 Options trade data and does not include trade data from any other exchange. Cboe LiveVol, LLC (‘‘LiveVol’’), a wholly owned subsidiary of the Exchange’s parent company, Cboe Global Markets, Inc., makes the OpenClose Data available for purchase to TPHs and non-TPHs on the LiveVol DataShop website (datashop.cboe.com). Customers may currently purchase Open-Close Data on a subscription basis (monthly or annually) or by ad hoc request for a specified month (e.g., request for Intraday Open-Close Data for month of January 2022). Open-Close Data is subject to direct competition from similar end-of-day and intraday options trading summaries offered by several other options exchanges.4 All of these exchanges offer essentially the same end-of-day and intraday options trading summary information. Free Trial The Exchange seeks to re-establish a free trial for historical ad hoc requests 3 For example, subscribers to the intraday product will receive the first calculation of intraday data by approximately 9:42 a.m. ET, which represents data captured from 9:30 a.m. to 9:40 a.m. Subscribers will receive the next update at 9:52 a.m., representing the data previously provided together with data captured from 9:40 a.m. through 9:50 a.m., and so forth. Each update will represent the aggregate data captured from the current ‘‘snapshot’’ and all previous ‘‘snapshots.’’ 4 These substitute products are: Nasdaq PHLX Options Trade Outline, Nasdaq Options Trade Outline, ISE Trade Profile, GEMX Trade Profile data; open-close data from Cboe Options, BZX, and EDGX; and Open Close Reports from MIAX Options, Pearl, and Emerald. PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 57003 for Intraday Open-Close Data for new purchasers. Currently, ad hoc requests for historical Intraday Open-Close Data are available to all customers at the same price and in the same manner. The current charge for this historical Intraday Open-Close Data covering all of the Exchange’s securities (Equities, Indexes & ETF’s) is $500 per month. The Exchange now proposes to adopt a free trial available during the months of September, October, November and December 2022 (i.e., September through December 2022) to provide a total up to three (3) historical months of Intraday Open-Close Data to any TPH or nonTPH that has not previously subscribed to this offering.5 The Exchange notes that it previously offered this free trial period recently for the months of May, June and July 2022. The Exchange believes bringing back the proposed trial will again serve as an incentive for new users who have never purchased Intraday Open-Close historical data to start purchasing Intraday Open-Close historical data. Particularly, the Exchange believes it will give potential subscribers the ability to use and test the data offering before signing up for additional months. The Exchange also notes another exchange offers a free trial for new subscribers of a similar data product.6 Lastly, the purchase of Intraday Open-Close historical data is discretionary and not compulsory. 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.7 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 8 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 5 For example, if a TPH or non-TPH that has never made an ad-hoc request for a specified month of Intraday Open-Close historical data wishes to purchase Intraday Open-Close Data for the months of January, February and March 2022 during the month of September 2022, the historical files for those months would be provided free of charge. If a new user wishes to purchase Intraday Open-Close historical data for the months of January, February, March and April 2022 during the month of September 2022, then the data for January, February and March 2022 would be provided free of charge, and the new user would be charged $500 for the April 2022 historical file. 6 See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., Nasdaq ISE Open/Close Trade Profile End of Day. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). E:\FR\FM\16SEN1.SGM 16SEN1 khammond on DSKJM1Z7X2PROD with NOTICES 57004 Federal Register / Vol. 87, No. 179 / Friday, September 16, 2022 / Notices 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) 9 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. In adopting Regulation NMS, the Commission granted self-regulatory organizations (‘‘SROs’’) and brokerdealers increased authority and flexibility to offer new and unique market data to the public. It was believed that this authority would expand the amount of data available to consumers, and also spur innovation and competition for the provision of market data. The Exchange believes the proposed fee change will further broaden the availability of U.S. option market data to investors consistent with the principles of Regulation NMS. Open-Close Data is designed to help investors understand underlying market trends to improve the quality of investment decisions. Indeed, subscribers to the data may be able to enhance their ability to analyze option trade and volume data and create and test trading models and analytical strategies. The Exchange believes OpenClose Data provides a valuable tool that subscribers can use to gain comprehensive insight into the trading activity in a particular series, but also emphasizes such data is not necessary for trading and as noted above, is entirely optional. Moreover, several other exchanges offer a similar data product which offer same type of data content through end-of-day or intraday reports.10 The Exchange also operates in a highly competitive environment. Indeed, there are currently 16 registered options exchanges that trade options. Based on publicly available information, no single options exchange has more than 16% of the market share.11 The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Particularly, in Regulation NMS, the Commission 9 Id. 10 See supra note 4. Cboe Global Markets U.S. Options Market Month-to-Date Volume Summary (August 31, 2022), available at https://markets.cboe.com/us/options/ market_statistics/. 11 See VerDate Sep<11>2014 16:43 Sep 15, 2022 Jkt 256001 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.’’ 12 Making similar data products available to market participants fosters competition in the marketplace, and constrains the ability of exchanges to charge supracompetitive fees. In the event that a market participant views one exchange’s data product as more or less attractive than the competition they can and do switch between similar products. The proposed fees are a result of the competitive environment, as the Exchange seeks to adopt a fee waiver to attract future purchasers of historical Intraday Open-Close Data. The Exchange believes that the proposed free trial for any TPH or nonTPH who has not previously purchased Intraday Open-Close historical data is reasonable because such users would not be subject to fees for up to 3 months’ worth of Intraday Open-Close historical data. The Exchange believes the proposed free trial is also reasonable as it will give potential subscribers the ability to use and test the Intraday Open-Close historical data prior to purchasing additional months and will therefore encourage and promote new users to purchase the Intraday OpenClose historical data. The Exchange believes that the proposed discount is equitable and not unfairly discriminatory because it will apply equally to all TPHs and non-TPHs who have not previously purchased Intraday Open-Close historical data. Also as noted above, another exchange offers a free trial to new users for a similar data product 13 and the Exchange itself recently offered a similar free trial.14 Lastly, the purchase of this data product is discretionary and not compulsory. 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 not necessary or appropriate in furtherance of the purposes of the Act. The Exchange operates in a highly competitive environment in which the 12 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 13 See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., Nasdaq ISE Open/Close Trade Profile End of Day. 14 See Securities Exchange Act Release No. 34– 94912 (May 13, 2022), 87 FR 30542 (May 19, 2022) (SR–C2–2022–011). PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 Exchange must continually adjust its fees to remain competitive. Because competitors are free to modify their own fees in response, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. As discussed above, Open-Close Data is subject to direct competition from several other options exchanges that offer substitutes to Open-Close. Moreover, purchase of Open-Close is optional. It is designed to help investors understand underlying market trends to improve the quality of investment decisions, but is not necessary to execute a trade. The proposed rule change is grounded in the Exchange’s efforts to compete more effectively. The Exchange is proposing to provide a free trial for market participants to test investment strategies and trading models, and develop market sentiment indicators. This change will not cause any unnecessary or inappropriate burden on intermarket competition, but rather will promote competition by encouraging new market participants to investigate the product. Other exchanges are, of course, free to match this change or undertake other competitive responses, enhancing overall competition. Indeed, as discussed, another exchange currently offers a similar free-trial period for similar data.15 The proposed rule change will not cause any unnecessary or inappropriate burden on intramarket competition. Particularly, the proposed rule change will apply to all TPHs and non-TPHs who have never made an ad-hoc request to purchase Intraday Open-Close historical data. Moreover, purchase of Intraday Open-Close historical files is discretionary and not compulsory. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 16 and paragraph (f) of Rule 19b–4 17 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may 15 See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., Nasdaq ISE Open/Close Trade Profile End of Day. 16 15 U.S.C. 78s(b)(3)(A). 17 17 CFR 240.19b–4(f). E:\FR\FM\16SEN1.SGM 16SEN1 Federal Register / Vol. 87, No. 179 / Friday, September 16, 2022 / Notices temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: khammond on DSKJM1Z7X2PROD with NOTICES Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– C2–2022–016 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–C2–2022–016. 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 VerDate Sep<11>2014 16:43 Sep 15, 2022 Jkt 256001 submit only information that you wish to make available publicly. All submissions should refer to File Number SR–C2–2022–016 and should be submitted on or before October 7, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20035 Filed 9–15–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95736; File No. SR–CBOE– 2022–044] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Relating to the Sale of OpenClose Volume Data September 12, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 1, 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, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) proposes to amend its Fees Schedule relating to the sale of Open-Close volume data. 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/CBOELegalRegulatory Home.aspx), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 57005 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 to offer a free trial during the months of September, October, November and December 2022 for an ad-hoc request of three (3) historical months of Intraday Open-Close historical data to all Cboe Options Trading Permit Holders (‘‘TPHs’’) and non-TPHs who have never before subscribed to the Intraday Open-Close historical files, effective September 1, 2022. By way of background, the Exchange currently offers End-of-Day (‘‘EOD’’) and Intraday Open-Close Data (collectively, ‘‘Open-Close Data’’). EOD Open-Close Data is an end-of-day volume summary of trading activity on the Exchange at the option level by origin (customer, professional customer, broker-dealer, and market maker), side of the market (buy or sell), price, and transaction type (opening or closing). The customer and professional customer volume is further broken down into trade size buckets (less than 100 contracts, 100–199 contracts, greater than 199 contracts). The Open-Close Data is proprietary Cboe Options trade data and does not include trade data from any other exchange. It is also a historical data product and not a real-time data feed. The Exchange also offers Intraday OpenClose Data, which provides similar information to that of Open-Close Data but is produced and updated every 10 minutes during the trading day. Data is captured in ‘‘snapshots’’ taken every 10 minutes throughout the trading day and is available to subscribers within five minutes of the conclusion of each 10minute period.3 The Intraday Open3 For example, subscribers to the intraday product will receive the first calculation of intraday data by Continued E:\FR\FM\16SEN1.SGM 16SEN1

Agencies

[Federal Register Volume 87, Number 179 (Friday, September 16, 2022)]
[Notices]
[Pages 57002-57005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20035]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95737; File No. SR-C2-2022-016]


Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fees Schedule Relating to the Sale of Open-Close Volume Data

September 12, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 1, 2022, Cboe C2 Exchange, Inc. (the ``Exchange'' or 
``C2'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the

[[Page 57003]]

proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2 Options'') 
proposes to amend its Fees Schedule relating to the sale of Open-Close 
volume data. The text of the proposed rule change is provided in 
Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/ctwo/), 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 to offer a free 
trial during the months of September, October, November and December 
2022 for an ad-hoc request of three (3) historical months of Intraday 
Open-Close historical data to all C2 Trading Permit Holders (``TPHs'') 
and non-TPHs who have never before subscribed to the Intraday Open-
Close historical files, effective September 1, 2022.
    By way of background, the Exchange currently offers End-of-Day 
(``EOD'') and Intraday Open-Close Data (collectively, ``Open-Close 
Data''). EOD Open-Close Data is an end-of-day volume summary of trading 
activity on the Exchange at the option level by origin (customer, 
professional customer, broker-dealer, and market maker), side of the 
market (buy or sell), price, and transaction type (opening or closing). 
The customer and professional customer volume is further broken down 
into trade size buckets (less than 100 contracts, 100-199 contracts, 
greater than 199 contracts). The Open-Close Data is proprietary C2 
Options trade data and does not include trade data from any other 
exchange. It is also a historical data product and not a real-time data 
feed. The Exchange also offers Intraday Open-Close Data, which provides 
similar information to that of Open-Close Data but is produced and 
updated every 10 minutes during the trading day. Data is captured in 
``snapshots'' taken every 10 minutes throughout the trading day and is 
available to subscribers within five minutes of the conclusion of each 
10-minute period.\3\ The Intraday Open-Close Data provides a volume 
summary of trading activity on the Exchange at the option level by 
origin (customer, professional customer, broker-dealer, and market 
maker), side of the market (buy or sell), and transaction type (opening 
or closing). The customer and professional customer volume are further 
broken down into trade size buckets (less than 100 contracts, 100-199 
contracts, greater than 199 contracts). The Intraday Open-Close Data is 
also proprietary C2 Options trade data and does not include trade data 
from any other exchange.
---------------------------------------------------------------------------

    \3\ For example, subscribers to the intraday product will 
receive the first calculation of intraday data by approximately 9:42 
a.m. ET, which represents data captured from 9:30 a.m. to 9:40 a.m. 
Subscribers will receive the next update at 9:52 a.m., representing 
the data previously provided together with data captured from 9:40 
a.m. through 9:50 a.m., and so forth. Each update will represent the 
aggregate data captured from the current ``snapshot'' and all 
previous ``snapshots.''
---------------------------------------------------------------------------

    Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the 
Exchange's parent company, Cboe Global Markets, Inc., makes the Open-
Close Data available for purchase to TPHs and non-TPHs on the LiveVol 
DataShop website (datashop.cboe.com). Customers may currently purchase 
Open-Close Data on a subscription basis (monthly or annually) or by ad 
hoc request for a specified month (e.g., request for Intraday Open-
Close Data for month of January 2022).
    Open-Close Data is subject to direct competition from similar end-
of-day and intraday options trading summaries offered by several other 
options exchanges.\4\ All of these exchanges offer essentially the same 
end-of-day and intraday options trading summary information.
---------------------------------------------------------------------------

    \4\ These substitute products are: Nasdaq PHLX Options Trade 
Outline, Nasdaq Options Trade Outline, ISE Trade Profile, GEMX Trade 
Profile data; open-close data from Cboe Options, BZX, and EDGX; and 
Open Close Reports from MIAX Options, Pearl, and Emerald.
---------------------------------------------------------------------------

Free Trial
    The Exchange seeks to re-establish a free trial for historical ad 
hoc requests for Intraday Open-Close Data for new purchasers. 
Currently, ad hoc requests for historical Intraday Open-Close Data are 
available to all customers at the same price and in the same manner. 
The current charge for this historical Intraday Open-Close Data 
covering all of the Exchange's securities (Equities, Indexes & ETF's) 
is $500 per month. The Exchange now proposes to adopt a free trial 
available during the months of September, October, November and 
December 2022 (i.e., September through December 2022) to provide a 
total up to three (3) historical months of Intraday Open-Close Data to 
any TPH or non-TPH that has not previously subscribed to this 
offering.\5\ The Exchange notes that it previously offered this free 
trial period recently for the months of May, June and July 2022. The 
Exchange believes bringing back the proposed trial will again serve as 
an incentive for new users who have never purchased Intraday Open-Close 
historical data to start purchasing Intraday Open-Close historical 
data. Particularly, the Exchange believes it will give potential 
subscribers the ability to use and test the data offering before 
signing up for additional months. The Exchange also notes another 
exchange offers a free trial for new subscribers of a similar data 
product.\6\ Lastly, the purchase of Intraday Open-Close historical data 
is discretionary and not compulsory.
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    \5\ For example, if a TPH or non-TPH that has never made an ad-
hoc request for a specified month of Intraday Open-Close historical 
data wishes to purchase Intraday Open-Close Data for the months of 
January, February and March 2022 during the month of September 2022, 
the historical files for those months would be provided free of 
charge. If a new user wishes to purchase Intraday Open-Close 
historical data for the months of January, February, March and April 
2022 during the month of September 2022, then the data for January, 
February and March 2022 would be provided free of charge, and the 
new user would be charged $500 for the April 2022 historical file.
    \6\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., 
Nasdaq ISE Open/Close Trade Profile End of Day.
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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.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ 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

[[Page 57004]]

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) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. The Exchange believes the proposed fee change 
will further broaden the availability of U.S. option market data to 
investors consistent with the principles of Regulation NMS. Open-Close 
Data is designed to help investors understand underlying market trends 
to improve the quality of investment decisions. Indeed, subscribers to 
the data may be able to enhance their ability to analyze option trade 
and volume data and create and test trading models and analytical 
strategies. The Exchange believes Open-Close Data provides a valuable 
tool that subscribers can use to gain comprehensive insight into the 
trading activity in a particular series, but also emphasizes such data 
is not necessary for trading and as noted above, is entirely optional. 
Moreover, several other exchanges offer a similar data product which 
offer same type of data content through end-of-day or intraday 
reports.\10\
---------------------------------------------------------------------------

    \10\ See supra note 4.
---------------------------------------------------------------------------

    The Exchange also operates in a highly competitive environment. 
Indeed, there are currently 16 registered options exchanges that trade 
options. Based on publicly available information, no single options 
exchange has more than 16% of the market share.\11\ The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. Particularly, 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.'' \12\ Making similar data products available to 
market participants fosters competition in the marketplace, and 
constrains the ability of exchanges to charge supracompetitive fees. In 
the event that a market participant views one exchange's data product 
as more or less attractive than the competition they can and do switch 
between similar products. The proposed fees are a result of the 
competitive environment, as the Exchange seeks to adopt a fee waiver to 
attract future purchasers of historical Intraday Open-Close Data.
---------------------------------------------------------------------------

    \11\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (August 31, 2022), available at https://markets.cboe.com/us/options/market_statistics/.
    \12\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    The Exchange believes that the proposed free trial for any TPH or 
non-TPH who has not previously purchased Intraday Open-Close historical 
data is reasonable because such users would not be subject to fees for 
up to 3 months' worth of Intraday Open-Close historical data. The 
Exchange believes the proposed free trial is also reasonable as it will 
give potential subscribers the ability to use and test the Intraday 
Open-Close historical data prior to purchasing additional months and 
will therefore encourage and promote new users to purchase the Intraday 
Open-Close historical data. The Exchange believes that the proposed 
discount is equitable and not unfairly discriminatory because it will 
apply equally to all TPHs and non-TPHs who have not previously 
purchased Intraday Open-Close historical data. Also as noted above, 
another exchange offers a free trial to new users for a similar data 
product \13\ and the Exchange itself recently offered a similar free 
trial.\14\ Lastly, the purchase of this data product is discretionary 
and not compulsory.
---------------------------------------------------------------------------

    \13\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., 
Nasdaq ISE Open/Close Trade Profile End of Day.
    \14\ See Securities Exchange Act Release No. 34-94912 (May 13, 
2022), 87 FR 30542 (May 19, 2022) (SR-C2-2022-011).
---------------------------------------------------------------------------

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange operates in a 
highly competitive environment in which the Exchange must continually 
adjust its fees to remain competitive. Because competitors are free to 
modify their own fees in response, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited.
    As discussed above, Open-Close Data is subject to direct 
competition from several other options exchanges that offer substitutes 
to Open-Close. Moreover, purchase of Open-Close is optional. It is 
designed to help investors understand underlying market trends to 
improve the quality of investment decisions, but is not necessary to 
execute a trade.
    The proposed rule change is grounded in the Exchange's efforts to 
compete more effectively. The Exchange is proposing to provide a free 
trial for market participants to test investment strategies and trading 
models, and develop market sentiment indicators. This change will not 
cause any unnecessary or inappropriate burden on intermarket 
competition, but rather will promote competition by encouraging new 
market participants to investigate the product. Other exchanges are, of 
course, free to match this change or undertake other competitive 
responses, enhancing overall competition. Indeed, as discussed, another 
exchange currently offers a similar free-trial period for similar 
data.\15\
---------------------------------------------------------------------------

    \15\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., 
Nasdaq ISE Open/Close Trade Profile End of Day.
---------------------------------------------------------------------------

    The proposed rule change will not cause any unnecessary or 
inappropriate burden on intramarket competition. Particularly, the 
proposed rule change will apply to all TPHs and non-TPHs who have never 
made an ad-hoc request to purchase Intraday Open-Close historical data. 
Moreover, purchase of Intraday Open-Close historical files is 
discretionary and not compulsory.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \16\ and paragraph (f) of Rule 19b-4 \17\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may

[[Page 57005]]

temporarily suspend such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission will institute proceedings to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-C2-2022-016 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-C2-2022-016. 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-C2-2022-016 and should be submitted on 
or before October 7, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20035 Filed 9-15-22; 8:45 am]
BILLING CODE 8011-01-P
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