Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 58406-58409 [2022-20727]

Download as PDF 58406 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices 1(a)(2) exemption would not be required by Section 5 to register as a national securities exchange. Rule 302 of Regulation ATS (17 CFR 242.302) describes the recordkeeping requirements for ATSs. Under Rule 302, ATSs are required to, among other things, make a record of subscribers to the ATS, daily summaries of trading in the ATS, and time-sequenced records of order information in the ATS. The information required to be collected under Rule 302 should increase the abilities of the Commission, state securities regulatory authorities, and the self-regulatory organizations to ensure that ATSs are in compliance with Regulation ATS as well as other applicable rules and regulations. If the information is not collected or collected less frequently, the regulators would be limited in their ability to comply with their statutory obligations, provide for the protection of investors, and promote the maintenance of fair and orderly markets. Respondents consist of ATSs that choose to operate pursuant to the exemption provided by Regulation ATS from registration as national securities exchanges. There are currently 101 respondents. These respondents will spend a total of approximately 4,545 hours per year (101 respondents at 45 burden hours/respondent) to comply with the recordkeeping requirements of Rule 302. At an average cost per burden hour of $83, the resultant total related total internal cost of compliance for these respondents is approximately $377,235 per year (4,545 burden hours multiplied by $83/hour). Written comments are invited on (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by November 25, 2022. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. Please direct your written comment to David Bottom, Director/Chief Information Officer, Securities and VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to: PRA_ Mailbox@sec.gov. Dated: September 20, 2022. J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20726 Filed 9–23–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95844; File No. SR– CboeBYX–2022–021] Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule September 20, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 7, 2022, Cboe BYX Exchange, Inc. (‘‘Exchange’’ or ‘‘BYX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by 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 BYX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’ or ‘‘BYX Equities’’) is filing with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change to amend its Fee Schedule. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/byx/), 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 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00099 Fmt 4703 Sfmt 4703 any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule to adopt monthly fees assessed to Users 3 that elect to subscribe to the Short Volume Report, effective, August 24, 2022.4 On August 9, 2022, the Exchange introduced a new data product known as the Short Volume Report.5 The Short Volume Report, which will be available on August 24, 2022, is an end-of-day report that provides certain equity trading activity on the Exchange, and includes trade date, total volume, sell short volume, and sell short exempt volume, by symbol.6 In addition to the daily subscription, a Member 7 or nonMember may purchase the Short Volume Report on a historical monthly basis, which provides the end-of-day report for each day during a given calendar month. The Exchange proposes to adopt fees applicable to Users that subscribe to the Short Volume Report. As proposed, the Exchange would assess a monthly 8 fee of $50 per month to an Internal Distributor 9 and a fee of $75 per month 3 A ‘‘User’’ of an Exchange Market Data product is a natural person, a proprietorship, corporation, partnership, or entity, or device (computer or other automated service), that is entitled to receive Exchange data. See the BYX Equities Exchange Fee Schedule at https://www.cboe.com/us/equities/ membership/fee_schedule/byx/. 4 The Exchange initially filed the proposed fee changes on August 24, 2022 (SR–CboeBYX–2022– 020). On September 7, 2022, the Exchange withdrew that filing and submitted this filing. 5 See Securities Exchange Act No. 95548 (August 18, 2022) 87 FR 52087 (August 24, 2022) (SR– CboeBYX–2022–019). 6 See Exchange Rule 11.22(f). 7 See Exchange Rule 1.5(n). 8 The monthly fees for the Short Volume Report end-of-day reports are assessed based on a 30-day period. For example, if a User subscribes to the Short Volume Report on September 15, 2022, the monthly fee will cover the period of September 15, 2022 through October 15, 2022. If the User cancels its subscription prior to October 15, 2022, the User will not be charged for (or have access to) Short Volume Reports for the remainder of October. 9 An ‘‘Internal Distributor’’ of an Exchange Market Data product is a Distributor that receives the Exchange Market Data product and then distributes that data to one or more Users within the Distributor’s own entity. Supra note 3. E:\FR\FM\26SEN1.SGM 26SEN1 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices to an External Distributor 10 of the Short Volume Report. External Distributors, unlike Internal Distributors, are typically compensated for the distribution of short sale data through subscription fees or other mechanisms. Some External Distributors incorporate short sale data into their own proprietary products, which they sell to downstream users. These distributors may not charge separately for data included in the Short Volume Report, but nevertheless gain value from the data by incorporating it into their product. The higher price for External Distributors reflects the additional value these distributors gain from the product. The Exchange also proposes to adopt fees for the Short Volume Report provided on a historical basis. The Short Volume Report will be available for each calendar month dating back to January 2015, and Users of such data will be assessed a fee of $25 per month of data. Data provided via the historical Short Volume Report is for only display use redistribution (e.g., the data may be provided on the User’s platform). Therefore, Users of the historical data may not charge separately for data included in the Short Volume Report or incorporate such data into their product. Nonetheless, the Exchange believes it is reasonable, equitable and not unfairly discriminatory to charge a fee for display use redistribution that reflects the value these distributors gain from the historical product. The Exchange anticipates that a wide variety of market participants will purchase the proposed Short Volume Report, including, but not limited to, active equity trading firms and academic institutions. For example, the Exchange notes that academic institutions may utilize the Short Volume Report data and as a result promote research and studies of the equities industry to the benefit of all market participants. The Exchange further believes the proposed Short Volume Report may provide helpful trading information regarding investor sentiment that may allow market participants to make more informed trading decisions and may be used to create and test trading models and analytical strategies and provide comprehensive insight into trading on the Exchange. The Exchange notes that the Short Volume Report is a completely voluntary product, in that the Exchange 10 An ‘‘External Distributor’’ of an Exchange Market Data product is a Distributor that receives the Exchange Market Data product and then distributes that data to a third party or one or more Users outside the Distributor’s own entity. Supra note 3. VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 is not required by any rule or regulation to make the reports or services available and that potential subscribers may purchase it only if they voluntarily choose to do so. Further, the Exchange notes that other exchanges offer similar products for a fee.11 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.12 Specifically, the Exchange believes the proposed rule change is consistent with Sections 6(b)(4) and 6(b)(5) of the Act,13 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not 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 that the Short Volume Report further broadens the availability of U.S. equity market data to investors consistent with the principles of Regulation NMS. The Short Volume Report also promotes increased transparency through the dissemination of short volume data. The Short Volume Report benefits investors by providing access to the Short Volume Report data, which may promote better informed trading, as well as research and studies of the equities industry. The Exchange operates in a highly competitive environment. Indeed, there are currently 16 registered equities exchanges that trade equities. Based on publicly available information, no single equities exchange has more than 16% of the equity market share.14 The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the 11 See the ‘‘Nasdaq Short Sale Volume Reports’’ portion of the Nasdaq Fee Schedule at https:// www.nasdaqtrader.com/ TraderB.aspx?id=MDDPricingALLN. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(4) and (5). 14 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (September 6, 2022), available at https://www.cboe.com/us/ equities/market_statistics/. PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 58407 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.’’ 15 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 attractive than the competition, that market participant can, and often does, switch between similar products. The proposed fees are a result of the competitive environment of the U.S. equities industry as the Exchange seeks to adopt fees to attract purchasers of the recently introduced Short Volume Report. The Exchange believes that the proposed fee for the Short Volume Report is consistent with the Act in that it is reasonable, equitable, and not unfairly discriminatory. In particular, the Exchange believes that the proposed fee is reasonable because it is reasonably aligned with the value and benefits provided to Users that choose to subscribe to the Short Volume Report on the Exchange. As discussed above, the Short Volume Report may be beneficial to Members and non-Members as it may provide helpful trading information regarding investor sentiment that may allow market participants to make more informed trading decisions and may be used to create and test trading models and analytical strategies and provide comprehensive insight into trading on the Exchange. Therefore, the Exchange believes that it is reasonable to assess a modest fee to Users that subscribe to the Short Volume Report. The Exchange further believes the proposed fee is reasonable because the amount assessed is less than the analogous fees charged by competitor exchanges. For example, the Nasdaq Stock Market LLC (‘‘Nasdaq’’) charges $750 to Internal Distributors and $1,250 to External Distributors of the Nasdaq Short Sale Volume Reports provided on both a daily and historical monthly basis. Additionally, the New York Stock Exchange LLC (‘‘NYSE’’) and its affiliated equity markets (the ‘‘NYSE Group’’) also charge for the TAQ NYSE Group Short Sales (Monthly File) and 15 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). E:\FR\FM\26SEN1.SGM 26SEN1 58408 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices TAQ NYSE Group Short Volume (Daily File). Specifically, NYSE Group charges an access fee of $1,000 per month for an ongoing subscription that includes 12 months of back history, then additional back history charged at $500 per data content month. NYSE Group also charges a back history fee, of $1,000 per data content month for the first 12 months of history, then additional back history charged at $500 per data content month. The Exchange therefore believes that the proposed fees are reasonable and set at a level to compete with other equity exchanges that offer similar reports. Indeed, proposing fees that are excessively higher than established fees for similar data products would simply serve to reduce demand for the Exchange’s data product, which as noted, is entirely optional. Although each of these similar data products provide only proprietary trade data and not trade data from other exchanges, it’s possible investors are still able to gauge overall investor sentiment across different equities based on the included data points on any one exchange. As such, if a market participant views another exchange’s potential report as more attractive, then such market participant can merely choose not to purchase the Exchange’s Short Volume Report and instead purchase another exchange’s similar data product, which offers similar data points, albeit based on that other market’s trading activity. In addition, the Exchange believes that the proposed fees are equitable and not unfairly discriminatory because they will apply to all Members and nonMembers that choose to subscribe to the Short Volume Report equally. As stated, the Short Volume Report is completely optional and not necessary for trading. Rather, the Exchange voluntarily makes the Short Volume Report available, and Users may choose to subscribe (and pay for) the report based on their own individual business needs. Potential subscribers may subscribe to the Short Volume Report at any time if they believe it to be valuable or may decline to purchase it. The Exchange also believes it is reasonable, equitable and not unfairly discriminatory to charge an External Distributor of the Short Volume Report a higher fee than an Internal Distributor as an External Distributor will ordinarily charge a fee to its downstream customers for this service, and, even if the vendor is not charging a specific fee for this particular service, the Exchange expects products from the Short Volume Report to be part of a suite of offerings from distributors that generally promote sales. External distribution is also fundamentally VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 different than internal use, in that the former generates revenue from external sales while the latter does not. Therefore, the Exchange believes it is reasonable, equitable and not unfairly discriminatory to charge a higher fee for a product that generates downstream revenue. Further, the proposed fee will apply equally to Internal and External Distributors, respectively, that choose to distribute data from the Short Volume Report. Moreover, as described above, another Exchange similarly charges External Distributors higher fees as compared to Internal Distributors for a similar data product.16 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because the Short Volume Report will be available equally to all Members and nonMembers that choose to subscribe to the report. As stated, the Short Volume Report is optional and Members and non-Members may choose to subscribe to such report, or not, based on their view of the additional benefits and added value provided by utilizing the Short Volume Report. As such, the Exchange believes the proposed rule change imposes no burden on intramarket competition. Next, the Exchange believes the proposed rule change does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As previously discussed, similar products offered by Nasdaq and the NYSE Group are priced higher than the Short Volume Report. 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.’’ 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’. . . .’’. Accordingly, the Exchange does not believe its proposal imposes any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 17 and paragraph (f) of Rule 19b–4 18 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeBYX–2022–021 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. 17 15 16 See PO 00000 Nasdaq Rule 7 Section 152. Frm 00101 Fmt 4703 Sfmt 4703 18 17 E:\FR\FM\26SEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 26SEN1 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices All submissions should refer to File Number SR–CboeBYX–2022–021. 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–CboeBYX–2022–021, and should be submitted on or before October 17, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 J. Matthew DeLesDernier, Deputy Secretary. Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission’s website at https://www.sec.gov. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matter of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. (Authority: 5 U.S.C. 552b) Dated: September 22, 2022. Vanessa A. Countryman, Secretary. [FR Doc. 2022–20883 Filed 9–22–22; 4:15 pm] BILLING CODE 8011–01–P [FR Doc. 2022–20727 Filed 9–23–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95842; File No. SR–OCC– 2022–010] Sunshine Act Meetings 2:00 p.m. on Thursday, September 29, 2022. PLACE: The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the TIME AND DATE: Self-Regulatory Organizations; the Options Clearing Corporation Notice of Filing of Proposed Rule Change by the Options Clearing Corporation Concerning a Risk Management Framework and Corporate Risk Management Policy September 20, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby 1 15 19 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:43 Sep 23, 2022 2 17 Jkt 256001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00102 Fmt 4703 Sfmt 4703 58409 given that on September 6, 2022, the Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by OCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change OCC files this proposed rule change to adopt a revised Risk Management Framework (‘‘RMF’’) as well as a new Corporate Risk Management Policy (‘‘CRMP’’). The RMF and CRMP are provided as in Exhibits 5A and 5B of File No. SR–OCC–2022–010. The RMF and CRMP would replace the current OCC Risk Management Framework Policy (‘‘RMF Policy’’). These documents are being submitted without marking to improve readability and are being submitted in their entirety as new rule text. The RMF Policy, provided as Exhibit 5C of File No. SR–OCC–2022– 010, is submitted entirely in strikethrough text to indicate its retirement. In addition, OCC submits corresponding changes to its Clearing Fund Methodology Policy, Collateral Risk Management Policy, Default Management Policy, Margin Policy, Model Risk Management Policy, Recovery and Orderly Wind-Down Plan, and Third-Party Risk Management Framework (‘‘TPRMF’’) (collectively, the ‘‘OCC Risk Policies’’) to update any reference to the RMF Policy to refer instead to the proposed RMF. The OCC Risk Policies are provided as Exhibits 5D–5J of File SR–OCC–2022–010. OCC submitted Exhibits 5D through 5I subject to a confidential treatment request under SEC Rule 24b–2.3 The proposed rule change does not require any changes to the text of OCC’s By-Laws or Rules. All terms with initial capitalization that are not otherwise defined herein have the same meaning as set forth in the OCC By-Laws and Rules.4 II. Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed 3 17 CFR 240.24b–2. By-Laws and Rules can be found on OCC’s website: https://www.theocc.com/CompanyInformation/Documents-and-Archives/By-Lawsand-Rules. 4 OCC’s E:\FR\FM\26SEN1.SGM 26SEN1

Agencies

[Federal Register Volume 87, Number 185 (Monday, September 26, 2022)]
[Notices]
[Pages 58406-58409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20727]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95844; File No. SR-CboeBYX-2022-021]


Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule

September 20, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 7, 2022, Cboe BYX Exchange, Inc. (``Exchange'' or ``BYX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BYX Exchange, Inc. (the ``Exchange'' or ``BYX'' or ``BYX 
Equities'') is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend its Fee Schedule. The 
text of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/byx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to adopt monthly 
fees assessed to Users \3\ that elect to subscribe to the Short Volume 
Report, effective, August 24, 2022.\4\
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    \3\ A ``User'' of an Exchange Market Data product is a natural 
person, a proprietorship, corporation, partnership, or entity, or 
device (computer or other automated service), that is entitled to 
receive Exchange data. See the BYX Equities Exchange Fee Schedule at 
https://www.cboe.com/us/equities/membership/fee_schedule/byx/.
    \4\ The Exchange initially filed the proposed fee changes on 
August 24, 2022 (SR-CboeBYX-2022-020). On September 7, 2022, the 
Exchange withdrew that filing and submitted this filing.
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    On August 9, 2022, the Exchange introduced a new data product known 
as the Short Volume Report.\5\ The Short Volume Report, which will be 
available on August 24, 2022, is an end-of-day report that provides 
certain equity trading activity on the Exchange, and includes trade 
date, total volume, sell short volume, and sell short exempt volume, by 
symbol.\6\ In addition to the daily subscription, a Member \7\ or non-
Member may purchase the Short Volume Report on a historical monthly 
basis, which provides the end-of-day report for each day during a given 
calendar month.
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    \5\ See Securities Exchange Act No. 95548 (August 18, 2022) 87 
FR 52087 (August 24, 2022) (SR-CboeBYX-2022-019).
    \6\ See Exchange Rule 11.22(f).
    \7\ See Exchange Rule 1.5(n).
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    The Exchange proposes to adopt fees applicable to Users that 
subscribe to the Short Volume Report. As proposed, the Exchange would 
assess a monthly \8\ fee of $50 per month to an Internal Distributor 
\9\ and a fee of $75 per month

[[Page 58407]]

to an External Distributor \10\ of the Short Volume Report. External 
Distributors, unlike Internal Distributors, are typically compensated 
for the distribution of short sale data through subscription fees or 
other mechanisms. Some External Distributors incorporate short sale 
data into their own proprietary products, which they sell to downstream 
users. These distributors may not charge separately for data included 
in the Short Volume Report, but nevertheless gain value from the data 
by incorporating it into their product. The higher price for External 
Distributors reflects the additional value these distributors gain from 
the product.
---------------------------------------------------------------------------

    \8\ The monthly fees for the Short Volume Report end-of-day 
reports are assessed based on a 30-day period. For example, if a 
User subscribes to the Short Volume Report on September 15, 2022, 
the monthly fee will cover the period of September 15, 2022 through 
October 15, 2022. If the User cancels its subscription prior to 
October 15, 2022, the User will not be charged for (or have access 
to) Short Volume Reports for the remainder of October.
    \9\ An ``Internal Distributor'' of an Exchange Market Data 
product is a Distributor that receives the Exchange Market Data 
product and then distributes that data to one or more Users within 
the Distributor's own entity. Supra note 3.
    \10\ An ``External Distributor'' of an Exchange Market Data 
product is a Distributor that receives the Exchange Market Data 
product and then distributes that data to a third party or one or 
more Users outside the Distributor's own entity. Supra note 3.
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    The Exchange also proposes to adopt fees for the Short Volume 
Report provided on a historical basis. The Short Volume Report will be 
available for each calendar month dating back to January 2015, and 
Users of such data will be assessed a fee of $25 per month of data. 
Data provided via the historical Short Volume Report is for only 
display use redistribution (e.g., the data may be provided on the 
User's platform). Therefore, Users of the historical data may not 
charge separately for data included in the Short Volume Report or 
incorporate such data into their product. Nonetheless, the Exchange 
believes it is reasonable, equitable and not unfairly discriminatory to 
charge a fee for display use redistribution that reflects the value 
these distributors gain from the historical product.
    The Exchange anticipates that a wide variety of market participants 
will purchase the proposed Short Volume Report, including, but not 
limited to, active equity trading firms and academic institutions. For 
example, the Exchange notes that academic institutions may utilize the 
Short Volume Report data and as a result promote research and studies 
of the equities industry to the benefit of all market participants. The 
Exchange further believes the proposed Short Volume Report may provide 
helpful trading information regarding investor sentiment that may allow 
market participants to make more informed trading decisions and may be 
used to create and test trading models and analytical strategies and 
provide comprehensive insight into trading on the Exchange.
    The Exchange notes that the Short Volume Report is a completely 
voluntary product, in that the Exchange is not required by any rule or 
regulation to make the reports or services available and that potential 
subscribers may purchase it only if they voluntarily choose to do so. 
Further, the Exchange notes that other exchanges offer similar products 
for a fee.\11\
---------------------------------------------------------------------------

    \11\ See the ``Nasdaq Short Sale Volume Reports'' portion of the 
Nasdaq Fee Schedule at https://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\12\ Specifically, the Exchange believes the proposed rule change 
is consistent with Sections 6(b)(4) and 6(b)(5) of the Act,\13\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility, and is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    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 that the Short Volume 
Report further broadens the availability of U.S. equity market data to 
investors consistent with the principles of Regulation NMS. The Short 
Volume Report also promotes increased transparency through the 
dissemination of short volume data. The Short Volume Report benefits 
investors by providing access to the Short Volume Report data, which 
may promote better informed trading, as well as research and studies of 
the equities industry.
    The Exchange operates in a highly competitive environment. Indeed, 
there are currently 16 registered equities exchanges that trade 
equities. Based on publicly available information, no single equities 
exchange has more than 16% of the equity market share.\14\ 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.'' \15\ 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 attractive than the competition, that 
market participant can, and often does, switch between similar 
products. The proposed fees are a result of the competitive environment 
of the U.S. equities industry as the Exchange seeks to adopt fees to 
attract purchasers of the recently introduced Short Volume Report.
---------------------------------------------------------------------------

    \14\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (September 6, 2022), available at https://www.cboe.com/us/equities/market_statistics/.
    \15\ 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 fee for the Short Volume 
Report is consistent with the Act in that it is reasonable, equitable, 
and not unfairly discriminatory. In particular, the Exchange believes 
that the proposed fee is reasonable because it is reasonably aligned 
with the value and benefits provided to Users that choose to subscribe 
to the Short Volume Report on the Exchange. As discussed above, the 
Short Volume Report may be beneficial to Members and non-Members as it 
may provide helpful trading information regarding investor sentiment 
that may allow market participants to make more informed trading 
decisions and may be used to create and test trading models and 
analytical strategies and provide comprehensive insight into trading on 
the Exchange. Therefore, the Exchange believes that it is reasonable to 
assess a modest fee to Users that subscribe to the Short Volume Report.
    The Exchange further believes the proposed fee is reasonable 
because the amount assessed is less than the analogous fees charged by 
competitor exchanges. For example, the Nasdaq Stock Market LLC 
(``Nasdaq'') charges $750 to Internal Distributors and $1,250 to 
External Distributors of the Nasdaq Short Sale Volume Reports provided 
on both a daily and historical monthly basis. Additionally, the New 
York Stock Exchange LLC (``NYSE'') and its affiliated equity markets 
(the ``NYSE Group'') also charge for the TAQ NYSE Group Short Sales 
(Monthly File) and

[[Page 58408]]

TAQ NYSE Group Short Volume (Daily File). Specifically, NYSE Group 
charges an access fee of $1,000 per month for an ongoing subscription 
that includes 12 months of back history, then additional back history 
charged at $500 per data content month. NYSE Group also charges a back 
history fee, of $1,000 per data content month for the first 12 months 
of history, then additional back history charged at $500 per data 
content month. The Exchange therefore believes that the proposed fees 
are reasonable and set at a level to compete with other equity 
exchanges that offer similar reports. Indeed, proposing fees that are 
excessively higher than established fees for similar data products 
would simply serve to reduce demand for the Exchange's data product, 
which as noted, is entirely optional. Although each of these similar 
data products provide only proprietary trade data and not trade data 
from other exchanges, it's possible investors are still able to gauge 
overall investor sentiment across different equities based on the 
included data points on any one exchange. As such, if a market 
participant views another exchange's potential report as more 
attractive, then such market participant can merely choose not to 
purchase the Exchange's Short Volume Report and instead purchase 
another exchange's similar data product, which offers similar data 
points, albeit based on that other market's trading activity.
    In addition, the Exchange believes that the proposed fees are 
equitable and not unfairly discriminatory because they will apply to 
all Members and non-Members that choose to subscribe to the Short 
Volume Report equally. As stated, the Short Volume Report is completely 
optional and not necessary for trading. Rather, the Exchange 
voluntarily makes the Short Volume Report available, and Users may 
choose to subscribe (and pay for) the report based on their own 
individual business needs. Potential subscribers may subscribe to the 
Short Volume Report at any time if they believe it to be valuable or 
may decline to purchase it.
    The Exchange also believes it is reasonable, equitable and not 
unfairly discriminatory to charge an External Distributor of the Short 
Volume Report a higher fee than an Internal Distributor as an External 
Distributor will ordinarily charge a fee to its downstream customers 
for this service, and, even if the vendor is not charging a specific 
fee for this particular service, the Exchange expects products from the 
Short Volume Report to be part of a suite of offerings from 
distributors that generally promote sales. External distribution is 
also fundamentally different than internal use, in that the former 
generates revenue from external sales while the latter does not. 
Therefore, the Exchange believes it is reasonable, equitable and not 
unfairly discriminatory to charge a higher fee for a product that 
generates downstream revenue. Further, the proposed fee will apply 
equally to Internal and External Distributors, respectively, that 
choose to distribute data from the Short Volume Report. Moreover, as 
described above, another Exchange similarly charges External 
Distributors higher fees as compared to Internal Distributors for a 
similar data product.\16\
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    \16\ See Nasdaq Rule 7 Section 152.
---------------------------------------------------------------------------

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 because the Short Volume 
Report will be available equally to all Members and non-Members that 
choose to subscribe to the report. As stated, the Short Volume Report 
is optional and Members and non-Members may choose to subscribe to such 
report, or not, based on their view of the additional benefits and 
added value provided by utilizing the Short Volume Report. As such, the 
Exchange believes the proposed rule change imposes no burden on 
intramarket competition.
    Next, the Exchange believes the proposed rule change does not 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As previously 
discussed, similar products offered by Nasdaq and the NYSE Group are 
priced higher than the Short Volume Report. 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.'' 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'. . . .''. Accordingly, the Exchange does not believe its 
proposal imposes any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

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

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

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \17\ and paragraph (f) of Rule 19b-4 \18\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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-CboeBYX-2022-021 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.


[[Page 58409]]


All submissions should refer to File Number SR-CboeBYX-2022-021. 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-CboeBYX-2022-021, and should be 
submitted on or before October 17, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20727 Filed 9-23-22; 8:45 am]
BILLING CODE 8011-01-P


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