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]
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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
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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.
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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.
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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.
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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
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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’’).
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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
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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.
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18 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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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).
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2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe 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.
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\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\
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\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.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4) and (5).
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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.
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\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'').
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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.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on 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.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-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\
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\19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20727 Filed 9-23-22; 8:45 am]
BILLING CODE 8011-01-P
