Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 58883-58885 [2022-20956]
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Federal Register / Vol. 87, No. 187 / Wednesday, September 28, 2022 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95860; File No. SRCboeEDGX–2022–039]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
September 22, 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 EDGX
Exchange, Inc. (‘‘Exchange’’ or ‘‘EDGX’’)
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 EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’ or ‘‘EDGX
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/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
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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.
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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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 $400 per month to an Internal
Distributor 9 and a fee of $700 per
month 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
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 EDGX Equities Exchange
Fee Schedule at https://www.cboe.com/us/equities/
membership/fee_schedule/EDGX/.
4 The Exchange initially filed the proposed fee
changes on August 24, 2022 (SR-CboeEDGX–2022–
037). On September 7, 2022, the Exchange
withdrew that filing and submitted this filing.
5 See Securities Exchange Act No. 95551 (August
18, 2022) 87 FR 52084 (August 24, 2022) (SRCboeEDGX–2022–036).
6 See Exchange Rule 13.8(h).
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.
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.
PO 00000
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58883
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 $200 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://
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Federal Register / Vol. 87, No. 187 / Wednesday, September 28, 2022 / Notices
2. Statutory Basis
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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
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
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/.
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18:06 Sep 27, 2022
Jkt 256001
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
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
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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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
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
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Federal Register / Vol. 87, No. 187 / Wednesday, September 28, 2022 / Notices
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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–
CboeEDGX–2022–039 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeEDGX–2022–039. 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
16 See
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18:06 Sep 27, 2022
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–20956 Filed 9–27–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95883; File No. SR–LTSE–
2022–05]
Self-Regulatory Organizations; LongTerm Stock Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
LTSE Rule 11.270, Clearly Erroneous
Executions
September 22, 2022.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 19, 2022, Long-Term Stock
Exchange, Inc. (‘‘LTSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f).
Nasdaq Rule 7 Section 152.
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–CboeEDGX–2022–039, and
should be submitted on or before
October 19, 2022.
19 17
17 15
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]]>Agencies
[Federal Register Volume 87, Number 187 (Wednesday, September 28, 2022)]
[Notices]
[Pages 58883-58885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20956]
[[Page 58883]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95860; File No. SR-CboeEDGX-2022-039]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule
September 22, 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 EDGX Exchange, Inc. (``Exchange'' or
``EDGX'') 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'' or ``EDGX
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/options/regulation/rule_filings/edgx/), 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\
---------------------------------------------------------------------------
\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 EDGX Equities Exchange Fee Schedule
at https://www.cboe.com/us/equities/membership/fee_schedule/EDGX/.
\4\ The Exchange initially filed the proposed fee changes on
August 24, 2022 (SR-CboeEDGX-2022-037). On September 7, 2022, the
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act No. 95551 (August 18, 2022) 87
FR 52084 (August 24, 2022) (SR-CboeEDGX-2022-036).
\6\ See Exchange Rule 13.8(h).
\7\ See Exchange Rule 1.5(n).
---------------------------------------------------------------------------
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 $400 per month to an Internal Distributor
\9\ and a fee of $700 per month 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.
---------------------------------------------------------------------------
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 $200 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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[[Page 58884]]
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 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
[[Page 58885]]
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-CboeEDGX-2022-039 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeEDGX-2022-039. 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-CboeEDGX-2022-039, and should be
submitted on or before October 19, 2022.
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\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20956 Filed 9-27-22; 8:45 am]
BILLING CODE 8011-01-P
