Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update the Cboe Data Services, LLC Fee Schedule, 4061-4065 [2023-01114]

Download as PDF Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices 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–2023–001 and should be submitted on or before February 13, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–01117 Filed 1–20–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96672; File No. SR–CBOE– 2023–001] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update the Cboe Data Services, LLC Fee Schedule January 17, 2023. 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 January 3, 2023, Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. khammond on DSKJM1Z7X2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) proposes to update the Cboe Data Services, LLC Fee Schedule. The text of the proposed rule change is provided in Exhibit 5. 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 16:44 Jan 20, 2023 Jkt 259001 The text of the proposed rule change is also available on the Exchange’s website (https://www.cboe.com/ AboutCBOE/CBOELegalRegulatory Home.aspx), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 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 the Cboe Data Services, LLC (‘‘CDS’’) Fee Schedule, effective January 3, 2023. The Exchange proposes to modify its fees relating to the distribution of the BBO data feed.3 Particularly, the Exchange proposes to modify the BBO Data Fee and Display Only User Fee, eliminate a fee waiver for takers of BBO Data, and adopt a BBO Enterprise Fee. The Exchange also proposes to rename the ‘‘BBO data feed’’ to ‘‘Cboe Options Top Data Feed’’ (or ‘‘Cboe Options Top Data’’), and use the proposed name herein, in order to align with the naming convention used by the Exchange’s affiliated options exchanges for similar data products.4 The Exchange first proposes to modify the current monthly Data Fee for Cboe 3 The BBO Data Feed is a real-time data feed that includes the following information: (i) outstanding quotes and standing orders at the best available price level on each side of the market; (ii) executed trades time, size, and price; (iii) totals of customer versus non-customer contracts at the best bid and offer (‘‘BBO’’); (iv) all-or-none contingency orders priced better than or equal to the BBO; (v) expected opening price and expected opening size; (vi) endof-day summaries by product, including open, high, low, and closing price during the trading session; (vi) recap messages any time there is a change in the open, high, low or last sale price of a listed option; (vii) COB information; and (viii) product IDs and codes for all listed options contracts. The quote and last sale data contained in the BBO data feed is identical to the data sent to the Options Price Reporting Authority (‘‘OPRA’’) for redistribution to the public. This data feed is made available by the Exchange’s affiliate CDS. 4 See Cboe BZX Options Fee Schedule and Cboe EDGX Options Fee Schedule. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 4061 Options Top Data. Currently, the Exchange assesses a ‘‘Data Fee’’, payable by a Customer, of $9,000 per month for internal use and external redistribution of the Cboe Options Top Data Feed.5 The Data Fee entitles a Customer to provide the Cboe Options Top Data to an unlimited number of internal users and Devices 6 within the Customer. A Customer receiving the Cboe Options Top Data Feed from another Customer or directly from the Exchange is assessed the Data Fee by the Exchange pursuant to its own market data agreement with CDS and is entitled to use the Data internally and/or distribute it externally. All Customers have the same rights to utilize the data internally and/or distribute it externally as long as the Customer has entered into a written agreement with CDS for the data and pays the Data Fee. The Exchange now proposes to adopt separate fees for internal and external distribution (and codify the definitions of Internal and External Distributors in the CDS Fee Schedule).7 Specifically, the Exchange proposes to maintain the current monthly fee of $9,000 for internal distribution but adopt a reduced fee of $5,000 per month for external distribution. The Exchange next proposes to modify its current User Fees. The Exchange currently charges a ‘‘User Fee’’, payable by a Customer, of $50 per month per Device or user ID for use of the data in the Cboe Options Top Data Feed by ‘‘Display Only Service’’ 8 users. The current User fee is payable only for ‘‘external’’ Display Only Service users 5 A ‘‘Customer’’ is any person, company or other entity that, pursuant to a market data agreement with CDS, is entitled to receive data, either directly from CDS or through an authorized redistributor (i.e., a Customer or an extranet service provider), whether that data is distributed externally or used internally. A third-party vendor of an Approved Third-Party Device, as defined in the CDS Fee Schedule, is not a Customer unless it has a market data agreement in place with CDS. A Floor Broker User, as defined in the CDS Fee Schedule, is not a Customer unless it has a market data agreement in place with CDS. 6 A ‘‘Device’’ means any computer, workstation or other item of equipment, fixed or portable, that receives, accesses and/or displays data in visual, audible or other form. 7 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. 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. 8 Display Only Service allows a natural person end-user to view and manipulate data using the Customer’s computerized service, but not to save, copy, export or transfer the data or any results of the manipulation to any other computer hardware, software or media, except for printing it to paper or other non-magnetic media. E:\FR\FM\23JAN1.SGM 23JAN1 4062 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices khammond on DSKJM1Z7X2PROD with NOTICES (Devices or user IDs of Display Only Service users who are not employees or natural person independent contractors of the Customer, the Customer’s affiliates, or an authorized service facilitator).9 The Exchange proposes to eliminate the current User fee (and corresponding description (other than the definition of ‘‘Device’’) in the Fee Schedule) and in its place adopt Professional and Non-Professional User fees for Cboe Options Top Data. Particularly, the Exchange proposes to charge Internal Distributors and External Distributors that redistribute Cboe Options Top Data different fees for their Professional Users 10 and NonProfessional Users 11 (and codify the definitions in the CDS Fee Schedule). The Exchange proposes to assess a monthly fee for Professional Users of $15.50 per User and a monthly fee of $0.30 per Non-Professional User.12 The Exchange also proposes to clarify in the CDS Fee Schedule that User fees for Professional Users are payable for both ‘‘internal’’ Professional Users (Devices or user IDs of employees of a Customer) and ‘‘external’’ Professional Users (Devices or user IDs of Professional Users who receive the Data from a Customer and are not employed by the Customer), as well as make clear that Non-Professional Users must be external since a person who uses the Data for a 9 Customers who distribute Cboe Options Top Data to external users via a Display Only service must report to CDS the number of authorized external devices that receive Cboe Options Top data from the Customer during a calendar month within 15 days after such month in the manner and format specified by CDS from time to time to determine applicable fees. 10 A ‘‘Professional User’’ is any natural person recipient of Data who is not a Non-Professional User. 11 A ‘‘Non-Professional User’’ is a natural person or qualifying trust that uses Data only for personal purposes and not for any commercial purpose and, for a natural person who works in the United States, is not: (i) registered or qualified in any capacity with the Securities and Exchange Commission, the Commodities Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association; (ii) engaged as an ‘‘investment adviser’’ as that term is defined in Section 201(11) of the Investment Advisors Act of 1940 (whether or not registered or qualified under that Act); or (iii) employed by a bank or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt; or, for a natural person who works outside of the United States, does not perform the same functions as would disqualify such person as a Non-Professional User if he or she worked in the United States. Professional User. 12 Distributors that receive Cboe Options Top Data will be required to count every Professional User and Non-Professional User to which they provide the data feed. VerDate Sep<11>2014 16:44 Jan 20, 2023 Jkt 259001 commercial purpose cannot be a NonProfessional User. Next, the Exchange proposes to eliminate a fee waiver for Customers of Cboe Options Top Data. In particular, the CDS Fee Schedule currently provides that the monthly data fee of $9,000 per month for the Book Depth Data Feed 13 is waived for Cboe Options Top Data Customers. The Exchange proposes to eliminate the fee waiver for Book Depth Data for External Distributors of Cboe Options Top (i.e., the monthly $9,000 data fee for Book Depth Data will only continue to be waived for Internal Distributors of Cboe Options Top Data). The Exchange lastly proposes to establish a $300,000 per month Enterprise Fee that will permit a recipient firm who receives Cboe Options Top Data from a Distributor to receive the data for an unlimited number of Professional and NonProfessional Users. The Enterprise Fee is an alternative to User fees and will permit a recipient firm who receives Cboe Options Top Data from a Distributor to pay a flat fee to receive the data for an unlimited number of Professional and Non-Professional Users, which the Exchange proposes to make clear in the CDS Fee Schedule. The Enterprise Fee may provide a recipient an opportunity to reduce their fees. For example, if a recipient firm has 20,000 Professional Users who each receive EDGX Options Top at $15.50 per month (as proposed), then that recipient firm will pay $310,000 per month in Professional Users fees. If the recipient firm instead were to purchase the proposed Enterprise license, the recipient firm would alternatively pay a flat fee of $300,000 for an unlimited number of Professional and NonProfessional Users. A recipient firm must pay a separate Enterprise Fee for each Distributor that controls the display of Cboe Options Top if it wishes such User to be covered by an Enterprise Fee rather than by per User fees. A recipient firm that pays the Enterprise Fee will not have to report its number of such Users on a monthly basis. Rather, every six months, the recipient firm must provide the Exchange with a count of the total number of authorized users (both Professional and Non-Professional Users) of Cboe Options Top Data. The 13 The Book Depth Data Feed is a real-time, low latency data feed that includes all data contained in the Cboe Options Top Data Feed (as described above) plus outstanding quotes and standing orders for an additional four price levels on each side of the market, with aggregate size (‘‘Book Depth’’). The data in the Book Depth Data Feed is refreshed periodically during the trading session. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 Exchange notes that the purchase of an Enterprise license is voluntary, and a firm may elect to instead use the per User structure and benefit from the proposed per User Fees described above. For example, a firm that does not have a sufficient number of subscribers to benefit from purchase of the license need not do so. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.14 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 15 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Additionally, the Exchange believes the proposed rule change is consistent with section 6(b)(4) of the Act,16 which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. The Exchange first notes that it operates in a highly competitive environment. Indeed, there are currently 16 registered options exchanges that trade options. Based on publicly available information, no single options exchange has more than 18% of the market share.17 The Exchange believes top-of-book quotation and transaction data is highly competitive as national securities exchanges compete vigorously with each other to provide efficient, reliable, and low-cost data to a wide range of investors and market participants. Indeed, there are several competing products offered by other national securities exchanges today, not counting products offered by the Exchange’s affiliates, and each of the Exchange’s affiliated U.S. options 14 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 16 15 U.S.C. 78f(b)(4). 17 See Cboe Global Markets U.S. Options Market Month-to-Date Volume Summary (December 27, 2022), available at https://markets.cboe.com/us/ options/market_statistics/. 15 15 E:\FR\FM\23JAN1.SGM 23JAN1 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices khammond on DSKJM1Z7X2PROD with NOTICES exchanges also offers similar top-ofbook data.18 Each of those exchanges offer top-of-book quotation and last sale information based on their own quotation and trading activity that is substantially similar to the information provided by the Exchange through the Cboe Options Top Feed. Further, the quote and last sale data contained in the Cboe Options Data Feed is identical to the data sent to OPRA for redistribution to the public, including data relating to the Exchange’s proprietary and exclusively listed products.19 Accordingly, market participants can substitute Cboe Options Top Data with feeds from other exchanges and/or through OPRA. Exchange top-of-book data is therefore widely available today from a number of different sources. Moreover, the Cboe Options Top Data Feed is distributed and purchased on a voluntary basis, in that neither the Exchange nor market data distributors are required by any rule or regulation to make this data available. Accordingly, Distributors and Users can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. As described above, market participants have a wide variety of alternative market data products from which to choose, such as similar proprietary data products offered by other exchanges and consolidated data. Further, the Exchange is not required to make any proprietary data products available or to offer any specific pricing alternatives to any customers. Moreover, all brokerdealers involved in order routing must take consolidated data from OPRA, and proprietary data feeds cannot be used to meet that particular requirement. As such, all proprietary data feeds are optional. 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 18 See e.g., NYSE Arca Options Proprietary Market Data Fees Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10 (Proprietary Data Feed Fees) and C2 Options Exchange Fees Schedule, Cboe Data Services, LLC Fees. 19 The Exchange notes that CDS makes available to ‘‘Customers’’ the BBO data and last sale data that is included in the Cboe Options Top Data Feed no earlier than the time at which the Exchange sends that data to OPRA. VerDate Sep<11>2014 16:44 Jan 20, 2023 Jkt 259001 broader forms that are most important to investors and listed companies.’’ 20 Making similar data products available to market participants fosters competition in the marketplace, and constrains the ability of exchanges to charge supracompetitive fees. In the event that a market participant views one exchange’s data product as more or less attractive than the competition they can and do switch between similar products. The proposed fees are a result of the competitive environment, as the Exchange seeks to adopt fees to attract purchasers of Cboe Options Top Data. The Exchange believes the proposed External Distribution fee is reasonable as it would represent a decreased fee for External Distributors for top-of-book data that has proven valuable for investors. By providing lower cost access to U.S. options market data, Cboe Options Top benefits a wide range of investors that participate in the national market system and makes it more broadly available. The Exchange believes the proposed fees for external distribution of Cboe Options Top will also continue to be allocated fairly and equitably among subscribers, and are not unfairly discriminatory, as the proposed fees will apply equally to all data recipients that choose to subscribe to Cboe Options Top and distribute that data to external subscribers. As proposed, all External Distributors of Cboe Options Top will be subject to the same external distribution fee, regardless of the type of business that they operate, or the use they plan to make of the data feed. Thus, all External Distributors would have access to Cboe Options Top on the same equitable and non-discriminatory terms. The Exchange believes that it is also fair and equitable, and not unfairly discriminatory to charge different fees for internal and external distribution of the Cboe Options Top. Although the proposed distribution fee charged to External Distributors will be lower than the existing distribution fee charged to Internal Distributors, External Distributors are subject to NonProfessional user fees to which Internal Distributors are not subject, in addition to Professional User fees (or alternatively the proposed Enterprise Fee). Furthermore, the proposal is designed to incentivize External Distributors to subscribe to Cboe Options Top Data. The Exchange believes the proposed changes to adopt new Professional and Non-Professional User fees are 20 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 4063 reasonable as the User fees continue to be lower than User fees assessed by other exchanges for similar data.21 Moreover, External Distributors will now be subject to lower fees as the Exchange proposes to significantly reduce the monthly User fees from $50 per External User to $15.50 per Professional User or $0.30 per NonProfessional User. The Exchange believes that the proposed fees are equitable and not unfairly discriminatory because they will be charged uniformly to recipient firms and Users. The fee structure of differentiated Professional and NonProfessional fees that are paid by both Internal and External Distributors has long been used by other exchanges, including the Exchange, for their proprietary data products, and by the OPRA plan in order to reduce the price of data to retail investors and make it more broadly available.22 The Exchange also believes offering Cboe Options Top Data to Non-Professional Users at a lower cost than Professional Users results in greater equity among data recipients, as Professional Users are categorized as such based on their employment and participation in financial markets, and thus, are compensated to participate in the markets. Although Non-Professional Users too can receive significant financial benefits through their participation in the markets, the Exchange believes it is reasonable to charge more to those Users who are more directly engaged in the markets. The Exchange also believes eliminating the fee waiver of the data fee for Book Depth Data Feed for External Distributors of Cboe Options Top is equitable and reasonable because it has been available, without change, since adopted in January 1, 2015 and the Exchange no longer feels it necessary to incentivize further 21 See e.g., Nasdaq PHLX Options 7 Pricing Schedule, Section 10 (Proprietary Data Feed Fees), which provides for a fee of $40 per month to professional users and $1.00 per month to nonprofessional users of Top of PHLX Options (TOPO) Data. See also NYSE American Options Proprietary Market Data Fees schedule, which provides for a fee of $50 per month to professional users and $1.00 per month to non-professional users of American Options Top Data. 22 See, e.g., Securities Exchange Act Release No. 59544 (March 9, 2009), 74 FR 11162 (March 16, 2009) (SR–NYSE–2008–131) (establishing the $15 Non-Professional User Fee (Per User) for NYSE OpenBook); See, e.g., Securities Exchange Act Release No. 67589 (August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA’s definition of the term ‘‘Nonprofessional’’); and See Securities Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798 (October 22, 2013) (SR–CBOE–2013– 087) (establishing Professional and NonProfessional User fees for Cboe Options COB Data Feed). E:\FR\FM\23JAN1.SGM 23JAN1 4064 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices khammond on DSKJM1Z7X2PROD with NOTICES redistribution of Book Depth Data Feed via the current fee waiver.23 Moreover, the Book Depth Data Feed is purely optional. Only those Customers that deem the product to be of sufficient overall value and usefulness would purchase it. Additionally, the Exchange is not required to provide any such waiver to any Distributors of Cboe Options Top Data. The Exchange believes the proposed change is equitable and not unfairly discriminatory as it will apply uniformly to External Distributors. The proposed Enterprise Fee for Cboe Options Top Feed is equitable and reasonable as the proposed fee could result in a fee reduction for recipient firms with a large number of Professional and Non-Professional Users. If a recipient firm has a smaller number of Professional Users of Cboe Options Top Data, then it may continue using the per User structure and benefit from the proposed per User Fee reductions. By reducing prices for recipient firms with a large number of Professional and Non-Professional Users, the Exchange believes that more firms may choose to receive and to distribute Cboe Options Top Data, thereby expanding the distribution of this market data for the benefit of investors. The Exchange further believes that the proposed Enterprise Fee is reasonable because it will simplify reporting for certain recipients that have large numbers of Professional and NonProfessional Users. Firms that pay the proposed Enterprise Fee will not have to report the number of Users on a monthly basis as they currently do, but rather will only have to count authorized users every six months, which is a significant reduction in administrative burden. Finally, as described above the Enterprise Fee is entirely optional. A firm that does not have a sufficient number of subscribers to benefit from purchase of the license need not do so. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange operates in a highly competitive environment, and its ability to price top-of-book data is constrained by competition among exchanges that offer similar data products to their 23 See Securities Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798 (October 22, 2013) (SR–CBOE–2013–087). VerDate Sep<11>2014 16:44 Jan 20, 2023 Jkt 259001 customers. Top-of-book data is broadly disseminated by competing U.S. options exchanges and through OPRA. There are therefore a number of alternative products available to market participants and investors, including products offered by certain competing exchanges. Further, the Exchange’s proposal to eliminate the waiver of Book Depth Data data fee for External Distributors of Cboe Options Top Data involves no change to the existing fees, but simply eliminates a waiver. Other exchanges are free to adopt a similar waiver if they choose. In this competitive environment potential subscribers are free to choose which competing product to purchase to satisfy their need for market information. Often, the choice comes down to price, as market data customers look to purchase cheaper data products, and quality, as market participants seek to purchase data that represents significant market liquidity. The Exchange believes that the proposed fees do not put any market participants at a relative disadvantage compared to other market participants. As discussed, the proposed fees and eliminated waiver would apply to all similarly situated recipient firms of Cboe Options Top on an equal and nondiscriminatory basis. The Exchange believes the reduced fees for External Distributors and not Internal Distributors of Cboe Options Top is appropriate given External Distributors are subject to the proposed NonProfessional user fees to which Internal Distributors are not subject, in addition to the proposed Professional User fees. The Exchange believes the differentiated fees for Professional and NonProfessional Users of Cboe options Top is appropriate given Professional Users are categorized as such based on their employment and participation in financial markets, and thus, are compensated to participate in the markets. Non-Professional Users too can receive significant financial benefits through their participation in the markets, however the Exchange believes it is reasonable to charge more to those Users who are more directly engaged in the markets. The Exchange therefore believes that the proposed fee neither favors nor penalizes one or more categories of market participants in a manner that would impose an undue burden on competition. The Exchange believes that the proposed fees do not impose a burden on competition or on other SROs that is not necessary or appropriate in furtherance of the purposes of the Act. In particular, market participants are not forced to subscribe to Cboe Options Top PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 Data, or any of the Exchange’s data feeds, as described above. Also as described above, there are numerous substitute products offered by other national securities exchanges, as well as OPRA. Because market data customers can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another product. These competitive pressures ensure that no one exchange’s market data fees can impose an undue burden on competition, and the Exchange’s proposed fees do not do so here. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. 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 24 and paragraph (f) of Rule 19b–4 25 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– CBOE–2023–001 on the subject line. 24 15 25 17 E:\FR\FM\23JAN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 23JAN1 Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–CBOE–2023–001. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CBOE–2023–001 and should be submitted on or before February 13, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–01114 Filed 1–20–23; 8:45 am] khammond on DSKJM1Z7X2PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96683; File No. SR– NYSECHX–2023–01] Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Rebates January 17, 2023. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’),2 and Rule 19b–4 thereunder,3 notice is hereby given that on January 3, 2023, the NYSE Chicago, Inc. (‘‘NYSE Chicago’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. 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 The Exchange proposes to amend its Schedule of Fees and Rebates (the ‘‘Fee Schedule’’) with respect to certain regulatory fees related to the Central Registration Depository (‘‘CRD’’ or ‘‘CRD system’’), which are collected by the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’). The Exchange proposes to implement the fee change on January 3, 2023. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, 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 self-regulatory organization 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 those 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 parts of such statements. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 26 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:44 Jan 20, 2023 Jkt 259001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 4065 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 the Fee Schedule with respect to certain regulatory fees collected by FINRA for use of CRD.4 The Exchange proposes to implement the fee changes effective January 3, 2023. FINRA collects and retains certain regulatory fees via CRD for the registration of associated persons of Exchange Participants that are not FINRA members (‘‘Non-FINRA Participants’’).5 CRD fees are user-based, and there is no distinction in the cost incurred by FINRA if the user is a FINRA member or a Non-FINRA Participant. FINRA recently amended two of the fees assessed for use of the CRD system.6 Accordingly, the Exchange proposes to amend the Fee Schedule to mirror the fees assessed by FINRA, which will be implemented concurrently with the amended FINRA fee as of January 2023.7 Specifically, the Exchange proposes to amend the Fee Schedule to modify the fee charged to Non-FINRA Participants for additional processing of each initial or amended Form U4, Form U5 or Form BD that includes the initial reporting, amendment, or certification of one or more disclosure events or proceedings 4 CRD is the central licensing and registration system for the U.S. securities industry. The CRD system enables individuals and firms seeking registration with multiple states and self-regulatory organizations to do so by submitting a single form, fingerprint card, and a combined payment of fees to FINRA. Through the CRD system, FINRA maintains the qualification, employment, and disciplinary histories of registered associated persons of broker-dealers. 5 The Exchange originally adopted fees for use of the CRD system in in 2008 and amended those fees in 2013 and 2022. See Securities Exchange Act Release No. 57587 (March 31, 2008), 73 FR 18598 (April 4, 2008) (SR–CHX–2007–21); Securities Exchange Act Release No. 68647 (January 14, 2013), 78 FR 4506 (January 22, 2013) (SR–CHX–2013–01); Securities Exchange Act Release No. 93907 (January 5, 2022), 87 FR 1468 (January 11, 2022) (SR– NYSECHX–2021–18). While the Exchange lists these fees in its Fee Schedule, it does not collect or retain these fees. 6 See Securities Exchange Act Release No. 90176 (October 14, 2020), 85 FR 66592 (October 20, 2020) (SR–FINRA–2020–032). 7 The Exchange notes that it has only adopted the CRD system fees charged by FINRA to Non-FINRA Participants when such fees are applicable. In this regard, certain FINRA CRD system fees and requirements are specific to FINRA members, but do not apply to NYSE Chicago-only Participants. Non-FINRA Participants have been charged CRD system fees since 2008. See note 5, supra. Participants that are also FINRA members are charged CRD system fees according to Section 4 of Schedule A to the FINRA By-Laws. E:\FR\FM\23JAN1.SGM 23JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 88, Number 14 (Monday, January 23, 2023)]
[Notices]
[Pages 4061-4065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01114]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96672; File No. SR-CBOE-2023-001]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Update 
the Cboe Data Services, LLC Fee Schedule

January 17, 2023.
    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 January 3, 2023, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III, below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to update the Cboe Data Services, LLC 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Cboe Data Services, LLC 
(``CDS'') Fee Schedule, effective January 3, 2023. The Exchange 
proposes to modify its fees relating to the distribution of the BBO 
data feed.\3\ Particularly, the Exchange proposes to modify the BBO 
Data Fee and Display Only User Fee, eliminate a fee waiver for takers 
of BBO Data, and adopt a BBO Enterprise Fee. The Exchange also proposes 
to rename the ``BBO data feed'' to ``Cboe Options Top Data Feed'' (or 
``Cboe Options Top Data''), and use the proposed name herein, in order 
to align with the naming convention used by the Exchange's affiliated 
options exchanges for similar data products.\4\
---------------------------------------------------------------------------

    \3\ The BBO Data Feed is a real-time data feed that includes the 
following information: (i) outstanding quotes and standing orders at 
the best available price level on each side of the market; (ii) 
executed trades time, size, and price; (iii) totals of customer 
versus non-customer contracts at the best bid and offer (``BBO''); 
(iv) all-or-none contingency orders priced better than or equal to 
the BBO; (v) expected opening price and expected opening size; (vi) 
end-of-day summaries by product, including open, high, low, and 
closing price during the trading session; (vi) recap messages any 
time there is a change in the open, high, low or last sale price of 
a listed option; (vii) COB information; and (viii) product IDs and 
codes for all listed options contracts. The quote and last sale data 
contained in the BBO data feed is identical to the data sent to the 
Options Price Reporting Authority (``OPRA'') for redistribution to 
the public. This data feed is made available by the Exchange's 
affiliate CDS.
    \4\ See Cboe BZX Options Fee Schedule and Cboe EDGX Options Fee 
Schedule.
---------------------------------------------------------------------------

    The Exchange first proposes to modify the current monthly Data Fee 
for Cboe Options Top Data. Currently, the Exchange assesses a ``Data 
Fee'', payable by a Customer, of $9,000 per month for internal use and 
external redistribution of the Cboe Options Top Data Feed.\5\ The Data 
Fee entitles a Customer to provide the Cboe Options Top Data to an 
unlimited number of internal users and Devices \6\ within the Customer. 
A Customer receiving the Cboe Options Top Data Feed from another 
Customer or directly from the Exchange is assessed the Data Fee by the 
Exchange pursuant to its own market data agreement with CDS and is 
entitled to use the Data internally and/or distribute it externally. 
All Customers have the same rights to utilize the data internally and/
or distribute it externally as long as the Customer has entered into a 
written agreement with CDS for the data and pays the Data Fee. The 
Exchange now proposes to adopt separate fees for internal and external 
distribution (and codify the definitions of Internal and External 
Distributors in the CDS Fee Schedule).\7\ Specifically, the Exchange 
proposes to maintain the current monthly fee of $9,000 for internal 
distribution but adopt a reduced fee of $5,000 per month for external 
distribution.
---------------------------------------------------------------------------

    \5\ A ``Customer'' is any person, company or other entity that, 
pursuant to a market data agreement with CDS, is entitled to receive 
data, either directly from CDS or through an authorized 
redistributor (i.e., a Customer or an extranet service provider), 
whether that data is distributed externally or used internally. A 
third-party vendor of an Approved Third-Party Device, as defined in 
the CDS Fee Schedule, is not a Customer unless it has a market data 
agreement in place with CDS. A Floor Broker User, as defined in the 
CDS Fee Schedule, is not a Customer unless it has a market data 
agreement in place with CDS.
    \6\ A ``Device'' means any computer, workstation or other item 
of equipment, fixed or portable, that receives, accesses and/or 
displays data in visual, audible or other form.
    \7\ 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. 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.
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    The Exchange next proposes to modify its current User Fees. The 
Exchange currently charges a ``User Fee'', payable by a Customer, of 
$50 per month per Device or user ID for use of the data in the Cboe 
Options Top Data Feed by ``Display Only Service'' \8\ users. The 
current User fee is payable only for ``external'' Display Only Service 
users

[[Page 4062]]

(Devices or user IDs of Display Only Service users who are not 
employees or natural person independent contractors of the Customer, 
the Customer's affiliates, or an authorized service facilitator).\9\ 
The Exchange proposes to eliminate the current User fee (and 
corresponding description (other than the definition of ``Device'') in 
the Fee Schedule) and in its place adopt Professional and Non-
Professional User fees for Cboe Options Top Data. Particularly, the 
Exchange proposes to charge Internal Distributors and External 
Distributors that redistribute Cboe Options Top Data different fees for 
their Professional Users \10\ and Non-Professional Users \11\ (and 
codify the definitions in the CDS Fee Schedule). The Exchange proposes 
to assess a monthly fee for Professional Users of $15.50 per User and a 
monthly fee of $0.30 per Non-Professional User.\12\ The Exchange also 
proposes to clarify in the CDS Fee Schedule that User fees for 
Professional Users are payable for both ``internal'' Professional Users 
(Devices or user IDs of employees of a Customer) and ``external'' 
Professional Users (Devices or user IDs of Professional Users who 
receive the Data from a Customer and are not employed by the Customer), 
as well as make clear that Non-Professional Users must be external 
since a person who uses the Data for a commercial purpose cannot be a 
Non-Professional User.
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    \8\ Display Only Service allows a natural person end-user to 
view and manipulate data using the Customer's computerized service, 
but not to save, copy, export or transfer the data or any results of 
the manipulation to any other computer hardware, software or media, 
except for printing it to paper or other non-magnetic media.
    \9\ Customers who distribute Cboe Options Top Data to external 
users via a Display Only service must report to CDS the number of 
authorized external devices that receive Cboe Options Top data from 
the Customer during a calendar month within 15 days after such month 
in the manner and format specified by CDS from time to time to 
determine applicable fees.
    \10\ A ``Professional User'' is any natural person recipient of 
Data who is not a Non-Professional User.
    \11\ A ``Non-Professional User'' is a natural person or 
qualifying trust that uses Data only for personal purposes and not 
for any commercial purpose and, for a natural person who works in 
the United States, is not: (i) registered or qualified in any 
capacity with the Securities and Exchange Commission, the 
Commodities Futures Trading Commission, any state securities agency, 
any securities exchange or association, or any commodities or 
futures contract market or association; (ii) engaged as an 
``investment adviser'' as that term is defined in Section 201(11) of 
the Investment Advisors Act of 1940 (whether or not registered or 
qualified under that Act); or (iii) employed by a bank or other 
organization exempt from registration under federal or state 
securities laws to perform functions that would require registration 
or qualification if such functions were performed for an 
organization not so exempt; or, for a natural person who works 
outside of the United States, does not perform the same functions as 
would disqualify such person as a Non-Professional User if he or she 
worked in the United States. Professional User.
    \12\ Distributors that receive Cboe Options Top Data will be 
required to count every Professional User and Non-Professional User 
to which they provide the data feed.
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    Next, the Exchange proposes to eliminate a fee waiver for Customers 
of Cboe Options Top Data. In particular, the CDS Fee Schedule currently 
provides that the monthly data fee of $9,000 per month for the Book 
Depth Data Feed \13\ is waived for Cboe Options Top Data Customers. The 
Exchange proposes to eliminate the fee waiver for Book Depth Data for 
External Distributors of Cboe Options Top (i.e., the monthly $9,000 
data fee for Book Depth Data will only continue to be waived for 
Internal Distributors of Cboe Options Top Data).
---------------------------------------------------------------------------

    \13\ The Book Depth Data Feed is a real-time, low latency data 
feed that includes all data contained in the Cboe Options Top Data 
Feed (as described above) plus outstanding quotes and standing 
orders for an additional four price levels on each side of the 
market, with aggregate size (``Book Depth''). The data in the Book 
Depth Data Feed is refreshed periodically during the trading 
session.
---------------------------------------------------------------------------

    The Exchange lastly proposes to establish a $300,000 per month 
Enterprise Fee that will permit a recipient firm who receives Cboe 
Options Top Data from a Distributor to receive the data for an 
unlimited number of Professional and Non-Professional Users. The 
Enterprise Fee is an alternative to User fees and will permit a 
recipient firm who receives Cboe Options Top Data from a Distributor to 
pay a flat fee to receive the data for an unlimited number of 
Professional and Non-Professional Users, which the Exchange proposes to 
make clear in the CDS Fee Schedule. The Enterprise Fee may provide a 
recipient an opportunity to reduce their fees. For example, if a 
recipient firm has 20,000 Professional Users who each receive EDGX 
Options Top at $15.50 per month (as proposed), then that recipient firm 
will pay $310,000 per month in Professional Users fees. If the 
recipient firm instead were to purchase the proposed Enterprise 
license, the recipient firm would alternatively pay a flat fee of 
$300,000 for an unlimited number of Professional and Non-Professional 
Users. A recipient firm must pay a separate Enterprise Fee for each 
Distributor that controls the display of Cboe Options Top if it wishes 
such User to be covered by an Enterprise Fee rather than by per User 
fees. A recipient firm that pays the Enterprise Fee will not have to 
report its number of such Users on a monthly basis. Rather, every six 
months, the recipient firm must provide the Exchange with a count of 
the total number of authorized users (both Professional and Non-
Professional Users) of Cboe Options Top Data. The Exchange notes that 
the purchase of an Enterprise license is voluntary, and a firm may 
elect to instead use the per User structure and benefit from the 
proposed per User Fees described above. For example, a firm that does 
not have a sufficient number of subscribers to benefit from purchase of 
the license need not do so.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\14\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \15\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with 
section 6(b)(4) of the Act,\16\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Trading Permit Holders and other persons using 
its facilities.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange first notes that it operates in a highly competitive 
environment. Indeed, there are currently 16 registered options 
exchanges that trade options. Based on publicly available information, 
no single options exchange has more than 18% of the market share.\17\ 
The Exchange believes top-of-book quotation and transaction data is 
highly competitive as national securities exchanges compete vigorously 
with each other to provide efficient, reliable, and low-cost data to a 
wide range of investors and market participants. Indeed, there are 
several competing products offered by other national securities 
exchanges today, not counting products offered by the Exchange's 
affiliates, and each of the Exchange's affiliated U.S. options

[[Page 4063]]

exchanges also offers similar top-of-book data.\18\ Each of those 
exchanges offer top-of-book quotation and last sale information based 
on their own quotation and trading activity that is substantially 
similar to the information provided by the Exchange through the Cboe 
Options Top Feed. Further, the quote and last sale data contained in 
the Cboe Options Data Feed is identical to the data sent to OPRA for 
redistribution to the public, including data relating to the Exchange's 
proprietary and exclusively listed products.\19\ Accordingly, market 
participants can substitute Cboe Options Top Data with feeds from other 
exchanges and/or through OPRA. Exchange top-of-book data is therefore 
widely available today from a number of different sources.
---------------------------------------------------------------------------

    \17\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (December 27, 2022), available at https://markets.cboe.com/us/options/market_statistics/.
    \18\ See e.g., NYSE Arca Options Proprietary Market Data Fees 
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market 
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10 
(Proprietary Data Feed Fees) and C2 Options Exchange Fees Schedule, 
Cboe Data Services, LLC Fees.
    \19\ The Exchange notes that CDS makes available to 
``Customers'' the BBO data and last sale data that is included in 
the Cboe Options Top Data Feed no earlier than the time at which the 
Exchange sends that data to OPRA.
---------------------------------------------------------------------------

    Moreover, the Cboe Options Top Data Feed is distributed and 
purchased on a voluntary basis, in that neither the Exchange nor market 
data distributors are required by any rule or regulation to make this 
data available. Accordingly, Distributors and Users can discontinue use 
at any time and for any reason, including due to an assessment of the 
reasonableness of fees charged. As described above, market participants 
have a wide variety of alternative market data products from which to 
choose, such as similar proprietary data products offered by other 
exchanges and consolidated data. Further, the Exchange is not required 
to make any proprietary data products available or to offer any 
specific pricing alternatives to any customers. Moreover, all broker-
dealers involved in order routing must take consolidated data from 
OPRA, and proprietary data feeds cannot be used to meet that particular 
requirement. As such, all proprietary data feeds are optional.
    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.'' \20\ Making 
similar data products available to market participants fosters 
competition in the marketplace, and constrains the ability of exchanges 
to charge supracompetitive fees. In the event that a market participant 
views one exchange's data product as more or less attractive than the 
competition they can and do switch between similar products. The 
proposed fees are a result of the competitive environment, as the 
Exchange seeks to adopt fees to attract purchasers of Cboe Options Top 
Data.
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    The Exchange believes the proposed External Distribution fee is 
reasonable as it would represent a decreased fee for External 
Distributors for top-of-book data that has proven valuable for 
investors. By providing lower cost access to U.S. options market data, 
Cboe Options Top benefits a wide range of investors that participate in 
the national market system and makes it more broadly available. The 
Exchange believes the proposed fees for external distribution of Cboe 
Options Top will also continue to be allocated fairly and equitably 
among subscribers, and are not unfairly discriminatory, as the proposed 
fees will apply equally to all data recipients that choose to subscribe 
to Cboe Options Top and distribute that data to external subscribers. 
As proposed, all External Distributors of Cboe Options Top will be 
subject to the same external distribution fee, regardless of the type 
of business that they operate, or the use they plan to make of the data 
feed. Thus, all External Distributors would have access to Cboe Options 
Top on the same equitable and non-discriminatory terms.
    The Exchange believes that it is also fair and equitable, and not 
unfairly discriminatory to charge different fees for internal and 
external distribution of the Cboe Options Top. Although the proposed 
distribution fee charged to External Distributors will be lower than 
the existing distribution fee charged to Internal Distributors, 
External Distributors are subject to Non-Professional user fees to 
which Internal Distributors are not subject, in addition to 
Professional User fees (or alternatively the proposed Enterprise Fee). 
Furthermore, the proposal is designed to incentivize External 
Distributors to subscribe to Cboe Options Top Data.
    The Exchange believes the proposed changes to adopt new 
Professional and Non-Professional User fees are reasonable as the User 
fees continue to be lower than User fees assessed by other exchanges 
for similar data.\21\ Moreover, External Distributors will now be 
subject to lower fees as the Exchange proposes to significantly reduce 
the monthly User fees from $50 per External User to $15.50 per 
Professional User or $0.30 per Non-Professional User. The Exchange 
believes that the proposed fees are equitable and not unfairly 
discriminatory because they will be charged uniformly to recipient 
firms and Users. The fee structure of differentiated Professional and 
Non-Professional fees that are paid by both Internal and External 
Distributors has long been used by other exchanges, including the 
Exchange, for their proprietary data products, and by the OPRA plan in 
order to reduce the price of data to retail investors and make it more 
broadly available.\22\ The Exchange also believes offering Cboe Options 
Top Data to Non-Professional Users at a lower cost than Professional 
Users results in greater equity among data recipients, as Professional 
Users are categorized as such based on their employment and 
participation in financial markets, and thus, are compensated to 
participate in the markets. Although Non-Professional Users too can 
receive significant financial benefits through their participation in 
the markets, the Exchange believes it is reasonable to charge more to 
those Users who are more directly engaged in the markets.
---------------------------------------------------------------------------

    \21\ See e.g., Nasdaq PHLX Options 7 Pricing Schedule, Section 
10 (Proprietary Data Feed Fees), which provides for a fee of $40 per 
month to professional users and $1.00 per month to non-professional 
users of Top of PHLX Options (TOPO) Data. See also NYSE American 
Options Proprietary Market Data Fees schedule, which provides for a 
fee of $50 per month to professional users and $1.00 per month to 
non-professional users of American Options Top Data.
    \22\ See, e.g., Securities Exchange Act Release No. 59544 (March 
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) 
(establishing the $15 Non-Professional User Fee (Per User) for NYSE 
OpenBook); See, e.g., Securities Exchange Act Release No. 67589 
(August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA's 
definition of the term ``Nonprofessional''); and See Securities 
Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798 
(October 22, 2013) (SR-CBOE-2013-087) (establishing Professional and 
Non-Professional User fees for Cboe Options COB Data Feed).
---------------------------------------------------------------------------

    The Exchange also believes eliminating the fee waiver of the data 
fee for Book Depth Data Feed for External Distributors of Cboe Options 
Top is equitable and reasonable because it has been available, without 
change, since adopted in January 1, 2015 and the Exchange no longer 
feels it necessary to incentivize further

[[Page 4064]]

redistribution of Book Depth Data Feed via the current fee waiver.\23\ 
Moreover, the Book Depth Data Feed is purely optional. Only those 
Customers that deem the product to be of sufficient overall value and 
usefulness would purchase it. Additionally, the Exchange is not 
required to provide any such waiver to any Distributors of Cboe Options 
Top Data. The Exchange believes the proposed change is equitable and 
not unfairly discriminatory as it will apply uniformly to External 
Distributors.
---------------------------------------------------------------------------

    \23\ See Securities Exchange Act Release No. 70683 (October 15, 
2013), 78 FR 62798 (October 22, 2013) (SR-CBOE-2013-087).
---------------------------------------------------------------------------

    The proposed Enterprise Fee for Cboe Options Top Feed is equitable 
and reasonable as the proposed fee could result in a fee reduction for 
recipient firms with a large number of Professional and Non-
Professional Users. If a recipient firm has a smaller number of 
Professional Users of Cboe Options Top Data, then it may continue using 
the per User structure and benefit from the proposed per User Fee 
reductions. By reducing prices for recipient firms with a large number 
of Professional and Non-Professional Users, the Exchange believes that 
more firms may choose to receive and to distribute Cboe Options Top 
Data, thereby expanding the distribution of this market data for the 
benefit of investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain recipients 
that have large numbers of Professional and Non-Professional Users. 
Firms that pay the proposed Enterprise Fee will not have to report the 
number of Users on a monthly basis as they currently do, but rather 
will only have to count authorized users every six months, which is a 
significant reduction in administrative burden. Finally, as described 
above the Enterprise Fee is entirely optional. A firm that does not 
have a sufficient number of subscribers to benefit from purchase of the 
license need not do so.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
operates in a highly competitive environment, and its ability to price 
top-of-book data is constrained by competition among exchanges that 
offer similar data products to their customers. Top-of-book data is 
broadly disseminated by competing U.S. options exchanges and through 
OPRA. There are therefore a number of alternative products available to 
market participants and investors, including products offered by 
certain competing exchanges. Further, the Exchange's proposal to 
eliminate the waiver of Book Depth Data data fee for External 
Distributors of Cboe Options Top Data involves no change to the 
existing fees, but simply eliminates a waiver. Other exchanges are free 
to adopt a similar waiver if they choose. In this competitive 
environment potential subscribers are free to choose which competing 
product to purchase to satisfy their need for market information. 
Often, the choice comes down to price, as market data customers look to 
purchase cheaper data products, and quality, as market participants 
seek to purchase data that represents significant market liquidity.
    The Exchange believes that the proposed fees do not put any market 
participants at a relative disadvantage compared to other market 
participants. As discussed, the proposed fees and eliminated waiver 
would apply to all similarly situated recipient firms of Cboe Options 
Top on an equal and non-discriminatory basis. The Exchange believes the 
reduced fees for External Distributors and not Internal Distributors of 
Cboe Options Top is appropriate given External Distributors are subject 
to the proposed Non-Professional user fees to which Internal 
Distributors are not subject, in addition to the proposed Professional 
User fees. The Exchange believes the differentiated fees for 
Professional and Non-Professional Users of Cboe options Top is 
appropriate given Professional Users are categorized as such based on 
their employment and participation in financial markets, and thus, are 
compensated to participate in the markets. Non-Professional Users too 
can receive significant financial benefits through their participation 
in the markets, however the Exchange believes it is reasonable to 
charge more to those Users who are more directly engaged in the 
markets. The Exchange therefore believes that the proposed fee neither 
favors nor penalizes one or more categories of market participants in a 
manner that would impose an undue burden on competition.
    The Exchange believes that the proposed fees do not impose a burden 
on competition or on other SROs that is not necessary or appropriate in 
furtherance of the purposes of the Act. In particular, market 
participants are not forced to subscribe to Cboe Options Top Data, or 
any of the Exchange's data feeds, as described above. Also as described 
above, there are numerous substitute products offered by other national 
securities exchanges, as well as OPRA. Because market data customers 
can find suitable substitute feeds, an exchange that overprices its 
market data products stands a high risk that users may substitute 
another product. These competitive pressures ensure that no one 
exchange's market data fees can impose an undue burden on competition, 
and the Exchange's proposed fees do not do so here.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

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 \24\ and paragraph (f) of Rule 19b-4 \25\ 
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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    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 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-CBOE-2023-001 on the subject line.

[[Page 4065]]

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2023-001. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CBOE-2023-001 and should be submitted on 
or before February 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01114 Filed 1-20-23; 8:45 am]
BILLING CODE 8011-01-P

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