Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Cboe Data Services Section of the Fees Schedule, 4040-4043 [2023-01116]
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Federal Register / Vol. 88, No. 14 / Monday, January 23, 2023 / Notices
Rockville, Maryland. The public is
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Dated: January 19, 2023.
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[FR Doc. 2023–01304 Filed 1–19–23; 4:15 pm]
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SUMMARY:
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You may obtain publicly available
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using any of the following methods:
SECURITIES AND EXCHANGE
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• Federal Rulemaking Website: Go to
https://www.regulations.gov and search
for Docket ID NRC–2019–0026. Address
questions about Docket IDs in
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telephone: 301–415–0624; email:
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[Release No. 34–96674; File No. SR–C2–
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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 C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rules
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.
• NRC’s PDR: You may examine and
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send an email to PDR.Resource@nrc.gov
or call 1–800–397–4209 or 301–415–
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Eastern Time (ET), Monday through
Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT:
Christine Pineda, Office of Nuclear
Material Safety and Safeguards, U.S.
Nuclear Regulatory Commission,
Washington, DC 20555–0001, telephone:
301–415–6789, email:
Christine.Pineda@nrc.gov.
In the
Federal Register on January 13, 2023, in
FR Doc. 2023–00273, on page 2378, in
the first column, first line, the date of
‘‘January 5, 2022’’ is corrected to read
‘‘January 5, 2023.’’
SUPPLEMENTARY INFORMATION:
Dated: January 17, 2023.
For the Nuclear Regulatory Commission.
Christopher M. Regan,
Director, Division of Rulemaking,
Environmental, and Financial Support, Office
of Nuclear Material Safety and Safeguards.
[FR Doc. 2023–01109 Filed 1–20–23; 8:45 am]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Cboe Data
Services Section of the Fees Schedule
January 17, 2023.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to update
its Fees 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/ctwo/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend the
Cboe Data Services, LLC (‘‘CDS’’)
section of its Fees 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 current User Fee and adopt
a BBO Enterprise Fee. The Exchange
also proposes to rename the ‘‘BBO data
feed’’ to ‘‘C2 Options Top Data Feed’’
(or ‘‘C2 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
its current User Fees. The Exchange
currently charges a ‘‘User Fee’’, payable
by a Customer, 5 of $50 per month per
Device 6 or user ID for use of the data
in the C2 Options Top Data Feed by
‘‘Display Only Service’’ 7 users. The
current User fee is payable only for
‘‘external’’ Display Only Service users
(Devices or user IDs of Display Only
Service users who are not employees or
natural person independent contractors
of the Customer, the Customer’s
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.
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.
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 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.
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affiliates, or an authorized service
facilitator).8 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 C2 Options Top Data.
Particularly, the Exchange proposes to
charge distributors that redistribute C2
Options Top Data different fees for their
Professional Users 9 and NonProfessional Users 10 (and codify the
definitions in the Fee Schedule). The
Exchange proposes to assess a monthly
fee for Professional Users of $5.00 per
User and a monthly fee of $0.10 per
Non-Professional User.11 The Exchange
also proposes to clarify in the 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.
The Exchange lastly proposes to
establish a $10,000 per month
Enterprise Fee that will permit a
recipient firm who receives C2 Options
Top Data from a Distributor to receive
8 Customers who distribute C2 Options Top Data
to external users via a Display Only service must
report to CDS the number of authorized external
devices that receive C2 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.
9 A ‘‘Professional User’’ is any natural person
recipient of Data who is not a Non-Professional
User.
10 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.
11 Distributors that receive C2 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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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 C2
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
Fee Schedule. The Enterprise Fee may
provide a recipient an opportunity to
reduce its fees. For example, if a
recipient firm has 10,000 Professional
Users who each receive C2 Options Top
at $5.00 per month (as proposed), then
that recipient firm will pay $50,000 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 $10,000 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 C2 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 person users of
each product, including both
Professional and Non-Professional
Users. 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.12 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 13 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,
12 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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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, 14 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.15 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
exchanges also offers similar top-ofbook data.16 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
C2 Options Top Data Feed. Further, the
quote and last sale data contained in the
C2 Data Feed is identical to the data
sent to OPRA for redistribution to the
public.17 Accordingly, market
participants can substitute C2 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 C2 Options Top Data
Feed is distributed and purchased on a
14 15
U.S.C. 78f(b)(4).
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/.
16 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 Cboe
Data Services, LLC Fees Schedule.
17 The Exchange notes that CDS makes available
to ‘‘Customers’’ the BBO data and last sale data that
is included in the C2 Options Top Data Feed no
earlier than the time at which the Exchange sends
that data to OPRA.
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15 See
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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
broader forms that are most important to
investors and listed companies.’’ 18
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 C2 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.19
18 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
19 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.
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Moreover, External users will now be
subject to lower fees as the Exchange
proposes to significantly reduce the
monthly User fees from $50 per External
User to $5.00 per Professional User or
$0.10 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 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.20 The Exchange
also believes offering C2 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 proposed Enterprise Fee for C2
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 C2
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 C2 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
20 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. 70684 (October 15, 2013),
78 FR 62849 (October 22, 2013) (SR–C2–2013–035)
(establishing Professional and Non-Professional
User fees for C2 COB Data Feed).
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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
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. 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 would
apply to all similarly situated recipient
firms of C2 Options Top on an equal
and non-discriminatory basis. The
Exchange believes the differentiated fees
for Professional and Non-Professional
Users of C2 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
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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 C2 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 21 and paragraph (f) of Rule
19b–4 22 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:
21 15
22 17
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Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
C2–2023–001 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–C2–2023–001. 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–C2–2023–001 and should
be submitted on or before February 13,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–01116 Filed 1–20–23; 8:45 am]
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]]>Agencies
[Federal Register Volume 88, Number 14 (Monday, January 23, 2023)]
[Notices]
[Pages 4040-4043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01116]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96674; File No. SR-C2-2023-001]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Cboe Data Services Section of the Fees 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 C2 Exchange, Inc. (the ``Exchange'' or
``C2'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rules change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to
update its Fees 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/ctwo/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 4041]]
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'') section of its Fees 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
current User Fee and adopt a BBO Enterprise Fee. The Exchange also
proposes to rename the ``BBO data feed'' to ``C2 Options Top Data
Feed'' (or ``C2 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\
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\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.
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The Exchange first proposes to modify its current User Fees. The
Exchange currently charges a ``User Fee'', payable by a Customer,\5\ of
$50 per month per Device \6\ or user ID for use of the data in the C2
Options Top Data Feed by ``Display Only Service'' \7\ users. The
current User fee is payable only for ``external'' Display Only Service
users (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).\8\
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 C2 Options Top Data. Particularly, the
Exchange proposes to charge distributors that redistribute C2 Options
Top Data different fees for their Professional Users \9\ and Non-
Professional Users \10\ (and codify the definitions in the Fee
Schedule). The Exchange proposes to assess a monthly fee for
Professional Users of $5.00 per User and a monthly fee of $0.10 per
Non-Professional User.\11\ The Exchange also proposes to clarify in the
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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\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.
\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\ 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.
\8\ Customers who distribute C2 Options Top Data to external
users via a Display Only service must report to CDS the number of
authorized external devices that receive C2 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.
\9\ A ``Professional User'' is any natural person recipient of
Data who is not a Non-Professional User.
\10\ 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.
\11\ Distributors that receive C2 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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The Exchange lastly proposes to establish a $10,000 per month
Enterprise Fee that will permit a recipient firm who receives C2
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 C2 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 Fee Schedule. The Enterprise Fee may provide a
recipient an opportunity to reduce its fees. For example, if a
recipient firm has 10,000 Professional Users who each receive C2
Options Top at $5.00 per month (as proposed), then that recipient firm
will pay $50,000 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 $10,000 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 C2 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 person users of each product, including both
Professional and Non-Professional Users. 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.\12\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \13\ 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,
[[Page 4042]]
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,\14\ 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.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78f(b)(4).
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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.\15\
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
exchanges also offers similar top-of-book data.\16\ 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 C2
Options Top Data Feed. Further, the quote and last sale data contained
in the C2 Data Feed is identical to the data sent to OPRA for
redistribution to the public.\17\ Accordingly, market participants can
substitute C2 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.
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\15\ 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/.
\16\ 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 Cboe Data Services, LLC Fees
Schedule.
\17\ The Exchange notes that CDS makes available to
``Customers'' the BBO data and last sale data that is included in
the C2 Options Top Data Feed no earlier than the time at which the
Exchange sends that data to OPRA.
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Moreover, the C2 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.'' \18\ 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 C2 Options Top
Data.
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\18\ 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 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.\19\ Moreover, External users will now be subject to
lower fees as the Exchange proposes to significantly reduce the monthly
User fees from $50 per External User to $5.00 per Professional User or
$0.10 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.\20\ The Exchange
also believes offering C2 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.
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\19\ 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.
\20\ 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. 70684 (October 15, 2013), 78 FR 62849
(October 22, 2013) (SR-C2-2013-035) (establishing Professional and
Non-Professional User fees for C2 COB Data Feed).
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The proposed Enterprise Fee for C2 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 C2 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 C2 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
[[Page 4043]]
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. 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 would apply to all
similarly situated recipient firms of C2 Options Top on an equal and
non-discriminatory basis. The Exchange believes the differentiated fees
for Professional and Non-Professional Users of C2 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 C2 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 \21\ and paragraph (f) of Rule 19b-4 \22\
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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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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-C2-2023-001 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-C2-2023-001. 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-C2-2023-001 and should be submitted on
or before February 13, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01116 Filed 1-20-23; 8:45 am]
BILLING CODE 8011-01-P
