Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a New Data Product Called the Cboe One Options Feed, 14200-14206 [2023-04571]
Download as PDF
<![CDATA[
14200
Federal Register / Vol. 88, No. 44 / Tuesday, March 7, 2023 / Notices
materials for the Cboe One Options Feed
clearly indicate this requirement to
ensure compliance with the OPRA
Plan.33 The Commission believes that
the Exchange has addressed the
concerns raised by Nasdaq by removing
the language Nasdaq found misleading
and clarifying the obligations under the
OPRA Plan. Specifically, the Exchange
has represented that any person,
including broker-dealers, who subscribe
to the Cboe One Options Feed must also
have equivalent access to consolidated
Options Information from OPRA for the
same classes or series of options that are
included in the proprietary data feed,
and proprietary data feeds cannot be
used to meet that particular
requirement.34 The Commission notes
that no other substantive changes from
the Exchange’s original filing are being
made with this filing. Therefore, the
Commission believes that waving the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission designates the proposed
rule change to be operative on March 1,
2023.35
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:
33 Id.
at 2–3.
supra notes 20–21 and accompanying text.
As discussed above, the Exchange has also
represented that the requirement under the OPRA
Plan is included in the Cboe Global Markets Global
Data Agreement and Cboe Global Markets North
American Data Policies, which subscribers to any
exchange proprietary product must sign and are
subject to, respectively. Additionally, the Exchange
has represented that its Data Order Form (used for
requesting the Exchange’s market data products)
requires confirmation that the requesting market
participant receives data from OPRA. See supra
note 20.
35 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
ddrumheller on DSK120RN23PROD with NOTICES1
34 See
VerDate Sep<11>2014
19:49 Mar 06, 2023
Jkt 259001
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–
C2–2023–006 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–C2–2023–006. 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–C2–2023–006 and should
be submitted on or before March 28,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.36
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–04572 Filed 3–6–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97013; File No. SR–
CboeBZX–2023–014]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Adopt a
New Data Product Called the Cboe One
Options Feed
March 1, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
27, 2023, Cboe BZX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) proposes to
adopt a new data product called the
Cboe One Options Feed. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), 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.
1 15
36 17
PO 00000
CFR 200.30–3(a)(12), (59).
Frm 00087
Fmt 4703
Sfmt 4703
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\07MRN1.SGM
07MRN1
Federal Register / Vol. 88, No. 44 / Tuesday, March 7, 2023 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
ddrumheller on DSK120RN23PROD with NOTICES1
1. Purpose
The Exchange proposes to establish a
new market data product called the
Cboe One Options Feed.3 The Exchange
also proposes to amend Exchange Rule
21.15(b) to add a description of the Cboe
One Options Feed under new
subparagraph (6). As described more
fully below, the Cboe One Options Feed
is a data feed that that will offer top of
book quotations and execution
information based on options orders
entered into the Exchange System and
its affiliated options exchanges Cboe
Exchange, Inc. (‘‘Cboe Options’’), Cboe
C2 Exchange, Inc. (‘‘C2 Options’’), and
Cboe EDGX Exchange, Inc. (‘‘EDGX
Options’’) (collectively, the ‘‘Affiliates’’
and collectively with the Exchange, the
‘‘Cboe Options Exchanges’’) and for
which the Cboe Options Exchanges
report quotes under the OPRA Plan.4
Currently, the Exchange offers BZX
Options Top feed, which is an
uncompressed data feed that offers topof-book quotations and last sale
information based on options orders
entered into the Exchange’s System. The
BZX Options Top feed benefits investors
by facilitating their prompt access to
real-time top-of-book information
contained in BZX Options Top. The
Exchange notes that BZX Options Top is
ideal for market participants requiring
both quote and trade data. The
Exchange’s Affiliates also offer similar
top-of-book data.5 Particularly, each of
the Exchange’s Affiliates offer top-ofbook quotation and last sale information
based on their own quotation and
trading activity that is substantially
similar to the information provided by
3 The Exchange previously submitted the
proposed rule change on January 30, 2023 (SR–
CboeBZX–2023–004). See Securities Exchange Act
Release No. 96890 (February 13, 2023), 88 FR
10406, (February 17, 2023) (SR–CboeBZX–2023–
004). The Exchange is withdrawing SR–CboeBZX–
2023–004 and submitting this filing to make
clarifying, non-substantive changes to more clearly
reflect the obligations under the OPRA Plan, which
the Exchange believes will avoid potential
confusion, as well as address the comments raised
by another exchange group in a comment letter
received on February 23, 2023. See Letter from Greg
Ferrari, Vice President, U.S. Options, Nasdaq Stock
Market LLC, Nasdaq PHLX LLC, Nasdaq BX, Inc.,
Nasdaq ISE, LLC, Nasdaq GEMX, LLC, and Nasdaq
MRX, LLC markets (collectively ‘‘Nasdaq’’), to
Vanessa Countryman, Secretary Commission, dated
February 23, 2023.
4 The Exchange understands that each of the Cboe
Options Exchanges will separately file substantially
similar proposed rule changes to implement Cboe
One Options Feed and its related fees.
5 See Cboe Data Services, LLC Fee Schedule, C2
Options Exchange Fees Schedule, Cboe Data
Services, LLC Fees, and EDGX Rule 21.15.
VerDate Sep<11>2014
19:49 Mar 06, 2023
Jkt 259001
the Exchange through the BZX Options
Top feed. Further, the quote and last
sale data contained in the Exchange’s
Affiliates top feeds is identical to the
data sent to OPRA for redistribution to
the public.
The Exchange now proposes to adopt
a market data product that will provide
top-of-book quotation and last sale
information based on the quotation and
trading activity on the Exchange and
each of its Affiliates, which the
Exchange believes will offer a
comprehensive and highly
representative view of US options
pricing to market participants. More
specifically, the proposed Cboe One
Options Feed will contain the aggregate
best bid and offer (‘‘BBO’’) of all
displayed orders for options traded on
the Exchange and its Affiliates, as well
as individual last sale information and
volume, for options traded on the
Exchange, which includes the price,
time of execution and individual Cboe
options exchange on which the trade
was executed. The Cboe One Options
Feed will also consist of Symbol
Summary,6 Market Status,7 Trading
Status,8 and Trade Break 9 messages for
the Exchange and each of its Affiliates.
The Exchange notes that the Exchange
and its affiliated equities exchanges
Cboe BYX Exchange, Inc. (‘‘BYX’’), Cboe
EDGA Exchange, Inc. (‘‘EDGA’’) and
Cboe EDGX Exchange, Inc. (‘‘EDGX
Equities’’) already offer a similar data
product, the Cboe One Summary Feed,
which contains the aggregate best bid
and offer of all displayed orders for
securities traded on the Exchange and
each of the Exchange’s affiliated equities
exchanges as well as last sale
6 The Symbol Summary message will include the
total executed volume across all Cboe Options
Exchanges.
7 The Market Status message is disseminated to
reflect a change in the status of one of the Cboe
Options Exchanges. For example, the Market Status
message will indicate whether one of the Cboe
Options Exchanges is experiencing a systems issue
or disruption and quotation or trade information
from that market is not currently being
disseminated via the Cboe One Options Feed as part
of the aggregated BBO. The Market Status message
will also indicate when a Cboe Options Exchange
is no longer experiencing a systems issue or
disruption to properly reflect the status of the
aggregated BBO.
8 The Trade Break message will indicate when an
execution on a Cboe Options Exchange is broken in
accordance with the individual Cboe Options
Exchange’s rules (e.g., Cboe Options Rule 6.5, C2
Option Rule 6.5, BZX Options Rule 20.6, EDGX
Options Rule 20.6).
9 The Trading Status message will indicate the
current trading status of an option contract on each
individual Cboe Options Exchange. A Trading
Status message will also be sent whenever a
security’s trading status changes. For example, a
Trading Status message will be sent when a symbol
is open for trading or when a symbol is subject to
a trading halt or when it resumes trading.
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
14201
information for each of the Exchange
and the Exchange’s affiliated equities
exchanges.10 The Cboe One Summary
Feed also consists of Symbol Summary,
Market Status, Trading Status, and
Trade Break messages for the Exchange
and each of its affiliated equities
exchanges.
Particularly, the Cboe One Options
Feed will offer market participants with
a new option for receiving Cboe market
data that provides a consolidated view
of activity on all Cboe options
exchanges. The Exchange proposes to
offer the Cboe One Options Feed
voluntarily in response to demand from
market participants (e.g., retail
brokerage firms) that are interested in
receiving the aggregate top of book
quotation and last sale information from
the Cboe Options Exchanges as part of
a single data feed. Specifically, Cboe
One Options Feed can be used by
industry professionals and retail
investors looking for a cost effective,
easy-to-administer, high quality market
data product with the characteristics of
the Cboe One Options Feed. For
example, today an entity can subscribe
to various market data products offered
by single exchanges and distribute or
resell that data, either separately or in
the aggregate, to their customers as part
of their own market data offerings.11
Distributors and vendors may incur
administrative costs when consolidating
and augmenting the data to meet their
customer’s need. Consequently,
distributors and/or vendors may simply
choose to not take the data from each of
the Cboe Options Exchanges because of
the effort and cost required to aggregate
data from separate feeds into their
existing products. The Exchange
believes those same distributors and/or
vendors may be interested in
distributing the Cboe One Options Feed
so that they may easily incorporate
aggregated or summarized Cboe Options
Exchange data into their own products
10 See BZX Rule 11.22(j), BYX Rule 11.22(i),
EDGA Rule 13.8(b) and EDGX Rule 13.8(b).
11 For purposes of this filing, a ‘‘vendor’’, which
is a type of distributor, will refer to any entity that
receives an exchange market data product directly
from the exchange or indirectly from another entity
(for example, from an extranet) and then resells that
data to a third-party customer (e.g., a data provider
that resells exchange market data to a retail
brokerage firm). The term ‘‘distributor’’ herein, will
refer to any entity that receives an exchange market
data product, directly from the exchange or
indirectly from another entity (e.g., from a data
vendor) and then distributes to individual internal
or external end-users (e.g., a retail brokerage firm
who distributes exchange data to its individual
employees and/or customers). An example of a
vendor’s ‘‘third-party customer’’ or ‘‘customer’’ is
an institutional broker dealer or a retail broker
dealer, who then may in turn distribute the data to
their customers who are individual internal or
external end-users.
E:\FR\FM\07MRN1.SGM
07MRN1
ddrumheller on DSK120RN23PROD with NOTICES1
14202
Federal Register / Vol. 88, No. 44 / Tuesday, March 7, 2023 / Notices
without themselves incurring the costs
of the repackaging and aggregating the
data it would receive by subscribing to
each market data product offered by the
individual Cboe Options Exchanges.
The Exchange therefore believes that the
Cboe One Options Feed would provide
high-quality, comprehensive last sale
and top-of-book data for the Cboe
Options Exchanges in a unified view
and respond to demand for such a
product.
The Exchange also notes that it has
taken into consideration its affiliated
relationship with its Affiliates in its
design of Cboe One Options Feed to
assure distributors and/or vendors
would be able to resell and offer a
similar product on the same terms as the
Exchange, both from a perspective of
latency and cost.
With respect to latency, the path for
distribution by the Exchange of Cboe
One Options Feed would not be faster
than the path for distribution by a
vendor that independently created a
Cboe One Options Feed-like product
could distribute its own product. As
such, the proposed Cboe One Options
data feed is a data product that a vendor
could create and sell without being in
a disadvantaged position relative to the
Exchange. In recognition that the
Exchange is the source of its own
market data and is affiliated with Cboe
Options, EDGX Options and C2 Options,
the Exchange represents that the source
of the market data it would use to create
the proposed Cboe One Options Feed is
available to vendors. Specifically, the
Exchange would use the following data
feeds to create the proposed Cboe One
Options Feed, each of which is available
to other vendors: the BZX Options Top,
Cboe Options Top Data, the C2 Options
Top Data, and the EDGX Options Top
Feeds. The Cboe Options Exchanges
will continue to make available these
individual underlying feeds, and thus,
the source of the market data it would
use to create the proposed Cboe One
Options feed is the same as the source
available to other vendors.
In order to create the Cboe One
Options Feed, the Exchange will receive
the individual data feeds from each
Cboe Options Exchange and, in turn,
aggregate and summarize that data to
create the Cboe One Options Feed. This
is the same process any entity would
undergo should it create a market data
product similar to the Cboe One Options
Feed to distribute to its customers. In
addition, the servers of most vendors
could be located in the same facilities as
the Exchange, and, therefore, should
receive the individual data feed from
each Cboe Options Exchange at the
same time the Exchange would for it to
VerDate Sep<11>2014
19:49 Mar 06, 2023
Jkt 259001
create the Cboe One Options Feed.12
Therefore, a vendor that is located in the
same facilities as the Exchange could
obtain the underlying data feeds from
the Cboe Options Exchanges on the
same latency basis as the system that
would be performing the aggregation
and consolidation of the proposed Cboe
One Options Feed and provide the same
type of product to its customers with the
same latency they could achieve by
purchasing the Cboe One Options Feed
from the Exchange. As such, the
Exchange would not have any unfair
advantage over vendors with respect to
obtaining data from the individual Cboe
Options Exchanges. In fact, the
technology supporting the Cboe One
Options Feed would similarly need to
obtain the Exchange’s data feed as well
and even this connection would be on
a level playing field with a vendor
located at the same facility as the
Exchange. The Exchange has designed
the Cboe One Options data feed so that
it would not have a competitive
advantage over a vendor with respect to
the speed of access to those underlying
data feeds. Likewise, the Cboe One
Options data feed would not have a
speed advantage vis-a`-vis vendors
located in the same data center as the
Exchange with respect to access to its
customers, whether those customers are
also located in the same data center or
not.
With regard to cost, the Exchange will
file a separate rule filing with the
Commission to establish fees for Cboe
One Options Feed, which would be
designed to ensure that vendors could
compete with the Exchange by creating
a similar product as the Cboe One
Options Feed. The pricing the Exchange
would charge for the Cboe One Options
Feed would not be lower than the cost
to a vendor (or distributor) to obtain the
underlying Cboe Options Exchanges’
top-of-book data feeds. The pricing the
Exchange would charge for the Cboe
One Options Feed compared to the cost
of the individual data feeds from the
Cboe Options Exchanges would enable
a vendor to receive the underlying data
feeds and offer a similar product on a
competitive basis and with no greater
latency than the Exchange. The
Distribution and User (Professional and
Non-Professional) fees that the
Exchange intends to propose for the
Cboe One Options Feed would be equal
12 The Exchange notes that it does not own the
facilities in which its servers are located but is
aware that there are vendors that currently locate
their servers in the same facilities as the Exchange
and on an equal basis as the Exchange. The
Exchange is not aware of any reasons why vendors
would not be able to locate their servers on an equal
basis as the Exchange on an on-going basis.
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
to the combined fees for subscribing to
each individual data feed. Additionally,
the Exchange also intends to propose a
separate ‘‘Data Consolidation Fee’’,
which would reflect the value of the
aggregation and consolidation function
the Exchange performs in creating the
Cboe One Options Feed. The intended
proposed pricing would therefore
enable a vendor to create a competing
product based on the individual data
feeds and charge its customer a fee that
it believes reflects the value of the
aggregation and consolidation function
that is competitive with Cboe One
Options Feed pricing. For these reasons,
the Exchange believes that vendors
could readily offer a product similar to
the Cboe One Options Feed on a
competitive basis at a similar cost.
Implementation
The Exchange will announce when it
intends to make available the Cboe One
Options feed, subject to the
effectiveness of the proposed rule
change and the effectiveness of a rule
filing to establish the fees (via a separate
rule filing).13
2. Statutory Basis
The Exchange believes that the
proposed Cboe One Options Feed is
consistent with Section 6(b) of the
Act,14 in general, and furthers the
objectives of Section 6(b)(5) of the Act,15
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and to
protect investors and the public interest,
and that it is not designed to permit
unfair discrimination among customers,
brokers, or dealers. The Exchange also
believes this proposal is consistent with
Section 6(b)(5) of the Act because it
protects investors and the public
interest and promotes just and equitable
principles of trade by providing
investors with new options for receiving
market data as requested by market
participants and Section 6(b)(8) of the
Act, which requires that the rules of an
exchange not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.16
The Exchange also believes that the
proposed rule change is consistent with
13 The Exchange also represents that should it
wish to modify the proposed Cboe One Options
Feed data product in the future, it will submit a
proposed rule change as required under the Act.
14 15 U.S.C. 78f.
15 15 U.S.C. 78f(b)(5).
16 15 U.S.C. 78f(b)(8).
E:\FR\FM\07MRN1.SGM
07MRN1
ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 44 / Tuesday, March 7, 2023 / Notices
Section 11(A) of the Act 17 in that it
supports (i) fair competition among
brokers and dealers, among exchange
markets, and between exchange markets
and markets other than exchange
markets and (ii) the availability to
brokers, dealers, and investors of
information with respect to quotations
for and transactions in securities.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations and broker-dealers
increased authority and flexibility to
offer new and unique market data to
consumers of such data. It was believed
that this authority would expand the
amount of data available to users and
consumers of such data and also spur
innovation and competition for the
provision of market data. The Exchange
believes that the proposed Cboe One
Options Feed would further broaden the
availability of U.S. option market data to
investors consistent with the principles
of Regulation NMS. Particularly, the
Exchange believes the proposed Cboe
One Options Feed promotes
transparency by disseminating the Cboe
Options Exchanges’ market data more
widely through additional distribution
channels, which will enable investors to
better monitor trading activity on the
Cboe Options Exchanges, and thereby
serve the public interest. The Exchange
is providing additional distribution
channels because it believes market
participants may be more inclined to
purchase a combined data feed and
redistribute it. Particularly, the
Exchange believes that market
participants would welcome a market
data product that would provide highquality, comprehensive top-of-book and
last sale data for the Cboe Options
Exchanges in a unified view (i.e., the
Cboe One Options Feed).
The Exchange also 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.18 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. While there is not
currently an aggregated top-of-book data
product offered at competitor options
17 15
U.S.C. 78k–1.
Cboe Global Markets U.S. Options Market
Month-to-Date Volume Summary (January 9, 2023),
available at https://markets.cboe.com/us/options/
market_statistics/.
18 See
VerDate Sep<11>2014
19:49 Mar 06, 2023
Jkt 259001
exchanges, the quote and last sale data
contained in the proposed Cboe One
Options Feed is identical to data already
provided in the Exchange’s and its
Affiliate’s individual top-of-book data
products as well as to the data sent to
OPRA for redistribution to the public.19
Accordingly, Exchange top-of-book data
is therefore widely available today from
a number of different sources.
Moreover, exchange top-of-book data
is distributed and purchased on a
voluntary basis, in that neither the
Exchange nor market data distributors
or vendors are required by any rule or
regulation to make this data available.
Accordingly, distributors and vendors
can discontinue use at any time and for
any reason, including due to an
assessment of the reasonableness of fees
charged. Further, the Exchange is not
required to make any proprietary data
products available or to offer any
specific pricing alternatives to any
customers. Moreover, persons
(including broker-dealers) who
subscribe to any exchange proprietary
data feed must also have equivalent
access to consolidated Options
Information 20 from OPRA for the same
classes or series of options that are
included in the proprietary data feed,
and proprietary data feeds cannot be
used to meet that particular
requirement.21 As such, all proprietary
data feeds are optional.
Similar to exchanges’ individual topof-book data feeds, the proposed Cboe
One Options Feed would be distributed
and purchased on a voluntary basis, in
that neither the Exchange, its Affiliates,
nor market data distributors or vendors
are required by any rule or regulation to
make this data feed available.
Accordingly, distributors and vendors
can discontinue use at any time and for
any reason, including due to an
19 The Exchange notes that it and its Affiliates,
make available their respective top-of-book data and
last sale data that is included in each exchange’s
top-of-book data feed no earlier than the time at
which the Exchange sends that data to OPRA.
20 ‘‘Consolidated Options Information’’ means
consolidated Last Sale Reports combined with
either consolidated Quotation Information or the
BBO furnished by OPRA. Access to consolidated
Options Information is deemed ‘‘equivalent’’ if both
kinds of information are equally accessible on the
same terminal or work station. See Limited Liability
Company Agreement of Options Price Reporting
Authority, LLC (‘‘OPRA Plan’’), Section 5.2(c)(iii).
The Exchange notes that this requirement under the
OPRA Plan is also reiterated under the Cboe Global
Markets Global Data Agreement and Cboe Global
Markets North American Data Policies, which
subscribers to any exchange proprietary product
must sign and are subject to, respectively.
Additionally, the Exchange’s Data Order Form
(used for requesting the Exchange’s market data
products) requires confirmation that the requesting
market participant receives data from OPRA.
21 Id.
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
14203
assessment of the reasonableness of fees
charged. The Exchange believes that the
proposed Cboe One Options Feed will
offer an alternative to subscribing to the
Cboe Options Exchanges four individual
top-of-book data feeds. Also, as noted
above, there is a history of offering
similar consolidated data products in
the equities industry. Indeed, the
Exchange and its affiliated equities
exchanges offer the Cboe One Summary
Feed, which is a substantially similar
data product which contains the
aggregate BBO of all displayed orders
for securities (instead of options) traded
on the Cboe’s equities exchanges, along
with last sale information.22 The Cboe
One Summary Feed also consists of
Symbol Summary, Market Status,
Trading Status, and Trade Break
messages.23
The Exchange believes the proposal
would not permit unfair discrimination
because the product will be available to
all market data distributors and vendors
on an equivalent basis. Any distributor
or vendor that wishes to instead
purchase one or more of the individual
data feeds offered by the Cboe Options
Exchanges separately will still be able to
do so. Further, the Exchange and its
Affiliates will continue to make the data
contained in the proposed Cboe One
Options Feed available no earlier than
the time at which the exchanges send
that data to OPRA.
In addition, the Exchange does not
believe that the proposal would permit
unfair discrimination among customers,
brokers, or dealers and thus is
consistent with the Act because the
Exchange will be offering the product
on terms that a vendor could offer a
competing product. Specifically, the
proposed data feed merely represents an
aggregation and consolidation of data
contained in existing, previously filed
individual market data products of the
Cboe Options Exchanges. As such, a
vendor could similarly obtain the
underlying data feeds and perform a
similar aggregation and consolidation
function to create the same data product
as being proposed with the same latency
and cost as the Exchange.
The Exchange has taken into
consideration its affiliated relationship
with Cboe Options, EDGX Options and
C2 Options in its design of the Cboe One
Options Feed to assure that distributors
and/or vendors would be able to offer a
similar product on the same terms as the
Exchange, both from the perspective of
latency and cost. As discussed above,
the Exchange proposes to offer the Cboe
22 See BZX Rule 11.22(j), BYX Rule 11.22(i),
EDGA Rule 13.8(b) and EDGX Rule 13.8(b).
23 Id.
E:\FR\FM\07MRN1.SGM
07MRN1
ddrumheller on DSK120RN23PROD with NOTICES1
14204
Federal Register / Vol. 88, No. 44 / Tuesday, March 7, 2023 / Notices
One Options Feed voluntarily in
response to demand from market
participants such as retail brokerage
firms that are interested in receiving and
distributing the top-of-book quotation
and last sale information from the Cboe
Options Exchanges as part of a single
data feed. Specifically, Cboe One
Options Feed can be used by industry
professionals and retail investors
looking for a cost effective, easy-toadminister, high quality market data
product with the characteristics of the
Cboe One Options Feed. The Cboe One
Options Feed would help protect a free
and open market by providing market
participants additional choices in
receiving this type of market data, thus
promoting competition and innovation.
With respect to latency, the path for
distribution by the Exchange of Cboe
One Options Feed would not be faster
than the path for distribution a vendor
that independently created a Cboe One
Options Feed-like product could
distribute its own product. As such, the
proposed Cboe One Options data feed is
a data product that a vendor could
create and sell without being in a
disadvantaged position relative to the
Exchange. In recognition that the
Exchange is the source of its own
market data and is affiliated with Cboe
Options, EDGX Options and C2 Options,
the Exchange represents that the source
of the market data it would use to create
the proposed Cboe One Options Feed is
available to other vendors. Specifically,
the Exchange would use the following
data feeds to create the proposed Cboe
One Options Feed, each of which is
available to other vendors: the BZX
Options Top, Cboe Options Top Data,
the C2 Options Top Data, and the EDGX
Options Top Feeds. The Cboe Options
Exchanges will continue to make
available these individual underlying
feeds, and thus, the source of the market
data it would use to create the proposed
Cboe One Options feed is the same as
the source available to other vendors.
In order to create the Cboe One
Options Feed, the Exchange will receive
the individual data feeds from each
Cboe Options Exchange and, in turn,
aggregate and summarize that data to
create the Cboe One Options Feed. This
is the same process any vendor would
undergo should it create a market data
product similar to the Cboe One Options
Feed to distribute to its customers. In
addition, the servers of most vendors
could be located in the same facilities as
the Exchange, and, therefore, should
receive the individual data feed from
each Cboe Options Exchange at the
same time the Exchange would for it to
create the Cboe One Options Feed.
Therefore, a vendor that is located in the
VerDate Sep<11>2014
19:49 Mar 06, 2023
Jkt 259001
same facilities as the Exchange could
obtain the underlying data feeds from
the Cboe Options Exchanges on the
same latency basis as the system that
would be performing the aggregation
and consolidation of the proposed Cboe
One Options Feed and provide the same
type of product to its customers with the
same latency they could achieve by
purchasing the Cboe One Options Feed
from the Exchange. As such, the
Exchange would not have any unfair
advantage over vendors with respect to
obtaining data from the individual Cboe
Options Exchanges. In fact, the
technology supporting the Cboe One
Options Feed would similarly need to
obtain the Exchange’s data feed as well
and even this connection would be on
a level playing field with a vendor
located at the same facility as the
Exchange. The Exchange has designed
the Cboe One Options data feed so that
it would not have a competitive
advantage over a vendor with respect to
the speed of access to those underlying
data feeds. Likewise, the Cboe One
Options data feed would not have a
speed advantage vis-a`-vis vendors
located in the same data center as the
Exchange with respect to access to
customers, whether those customers are
also located in the same data center or
not.
With regard to cost, the Exchange will
file a separate rule filing with the
Commission to establish fees for Cboe
One Options Feed, which would be
designed to ensure that vendors could
compete with the Exchange by creating
a similar product as the Cboe One
Options Feed to offer and resell. The
pricing the Exchange would charge for
the Cboe One Options Feed would not
be lower than the cost to a vendor (or
distributor) to obtain the underlying
Cboe Options Exchanges’ top-of-book
data feeds. The pricing the Exchange
would charge clients for the Cboe One
Options Feed compared to the cost of
the individual data feeds from the Cboe
Options Exchanges would enable a
vendor to receive the underlying data
feeds and offer a similar product on a
competitive basis and with no greater
latency than the Exchange. The
Distribution and User (Professional and
Non-Professional) fees that the
Exchange intends to propose for the
Cboe One Options Feed would be equal
to the combined fees for subscribing to
each individual data feed.24 The
24 For example, the combined external
distribution fee for the individual data feeds of the
Cboe Options Exchanges is $10,000 per month (i.e.,
the monthly external distribution fee is $5,000 per
month for the Cboe Options Top, $2,500 per month
for C2 Options Top $2,000 per month for BZX
Options Top, and $500 for EDGX Options Top). The
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
Exchange also intends to propose a
separate ‘‘Data Consolidation Fee’’,
which would reflect the value of the
aggregation and consolidation function
the Exchange performs in creating the
Cboe One Options Feed. The intended
proposed fees would therefore enable a
vendor to create a product based on the
individual data feeds and charge its
clients a fee that it believes reflects the
value of the aggregation and
consolidation function that is
competitive with Cboe One Options
Feed pricing. For these reasons, the
Exchange believes that vendors could
readily offer a product similar to the
Cboe One Options Feed on a
competitive basis at a similar cost.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Because the
Exchange and its affiliates, along with
other exchanges already offer the similar
underlying data products, the
Exchange’s proposed Cboe One Options
Feed will enhance competition. This
proposed new data feed provides
investors with new options for receiving
market data, which was a primary goal
of the market data amendments adopted
by Regulation NMS.25 As the Cboe
Options Exchanges are consistently one
of the top exchange operators by market
share for U.S. options trading the data
included within the Cboe One Options
Feed will provide investors a new
option for obtaining a broad market
view, consistent with the primary goal
of the market data amendments adopted
by Regulation NMS.
The Exchange believes the Cboe One
Options Feed will further enhance
competition by providing distributors
and vendors with a data feed that allows
them to more quickly and efficiently
integrate into their existing products.
For example, today, vendors may
monthly Professional User fee for the individual
data feeds of the Cboe Options Exchanges is $30.50
per Professional User (i.e., the monthly Professional
User fee is $15.50 per Professional User for the Cboe
Options Top, $5 per Professional User for C2
Options Top; $5 per Professional User for BZX
Options Top, and $5 per Professional User for
EDGX Options Top). The combined monthly NonProfessional User fee for the individual data feeds
of the Cboe Options Exchanges is $0.60 per NonProfessional User (i.e., the monthly NonProfessional User fee is $0.30 per Non-Professional
User for Cboe Options Top, $0.10 per NonProfessional User for C2 Options Top, $0.10 per
Non-Professional User for BZX Options Top, and
$0.10 per Non-Professional User for EDGX Options
Top).
25 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, at 37503 (June 29,
2005) (Regulation NMS Adopting Release).
E:\FR\FM\07MRN1.SGM
07MRN1
Federal Register / Vol. 88, No. 44 / Tuesday, March 7, 2023 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
subscribe to various market data
products offered by single exchanges
and resell that data, either separately or
in the aggregate, to their customers as
part of their own market data offerings.
Distributors and vendors may incur
administrative costs when consolidating
and augmenting the data to meet their
customer’s need. Consequently, many
distributors and/or vendors will simply
choose to not take the data from each of
the Cboe Options Exchanges because of
the effort and cost required to aggregate
data from separate feeds into their
existing products. Those same
distributors and/or vendors may
therefore be interested in the Cboe One
Options Feed as they may easily
incorporate aggregated or summarized
Cboe Options Exchanges’ data into their
own products without themselves
incurring the costs of the repackaging
and aggregating the data it would
receive by purchasing each market data
product offered by the individual Cboe
Options Exchanges separately. The
Exchange therefore believes that by
providing market data that encompasses
combined data from affiliated
exchanges, the Exchange enables
vendors with the ability to compete in
the provision of similar content with
other vendors, where they may not have
done so previously if they were required
to purchase the top-of-book feeds from
each individual Cboe options exchanges
separately.
Although the Exchange considers the
acceptance of the Cboe One Options
Feed by distributors and vendors as
important to the success of the product,
depending on their needs, such
distributors and vendors may choose
not to subscribe to the Cboe One
Options Feed and may rather receive the
Cboe Options Exchanges’ individual
market data products and incorporate
them into their specific market data
products. The Cboe One Options Feed
simply provides another option for
distributors and vendors to choose from
when selecting a product that meets
their market data needs.
Exchange Not the Exclusive Distributor
of Cboe One Options Feed
Although the Cboe Options Exchanges
are the exclusive distributors of the
individual data feeds from which
certain data elements would be taken to
create the Cboe One Options Feed, the
Exchange would not be the exclusive
distributor of the aggregated and
consolidated information that would
compose the proposed Cboe One
Options Feed. As discussed above,
distributors and/or vendors would be
able, if they chose, to create a data feed
with the same information as the Cboe
VerDate Sep<11>2014
19:49 Mar 06, 2023
Jkt 259001
14205
One Options Feed and distribute it to
their clients on a level-playing field
with respect to latency and cost as
compared to the Exchange’s proposed
Cboe One Options Feed. The pricing the
Exchange would charge for the Cboe
One Options Feed would not be lower
than the cost to a distributor or vendor
to obtain the underlying data feeds. In
addition, the pricing the Exchange
would charge clients for the Cboe One
Options Feed compared to the cost of
the individual data feeds from the Cboe
Options Exchanges would enable a
distributor and/or vendor to receive the
underlying data feeds and offer a similar
product on a competitive basis and with
no greater latency than the Exchange.
The Exchange has designed the Cboe
One Options data feed so that it would
not have a competitive advantage over
a vendor with respect to the speed of
access to those underlying data feeds.
Likewise, the Cboe One Options data
feed would not have a speed advantage
vis-a`-vis vendors located in the same
data center as the Exchange with respect
to access to their customers, whether
those end users are also located in the
same data center or not. Therefore, the
Exchange believes that it will not incur
any potential latency advantage that
will result in any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
Latency
Cost
The Cboe One Options Feed is also
not intended to compete with similar
products offered by distributors. Rather,
it is intended to assist them in
incorporating aggregated and
summarized data from the Cboe Options
Exchanges into their own market data
products that are provided to their
customers. Therefore, distributors will
receive the data, who will, in turn, make
available Cboe One Options Feed to
their end users, either separately or as
incorporated into the various market
data products they provide. As stated
above distributors may prefer a product
like the Cboe One Options Feed so that
they may easily incorporate aggregated
or summarized Cboe Options Exchange
data into their own products without
themselves incurring the administrative
costs of repackaging and aggregating the
data it would receive by subscribing to
each market data product offered by the
individual Cboe Options Exchanges.
Notwithstanding the above, the
Exchange believes that vendors may
create a product similar to Cboe One
Options Feed based on the market data
products offered by the individual Cboe
Options Exchanges with no greater
latency than the Exchange. As discussed
above, in order to create the Cboe One
Options Feed, the Exchange will receive
the individual data feeds from each
Cboe Options Exchange and, in turn,
aggregate and summarize that data to
create the Cboe One Options Feed. This
is the same process a vendor would
undergo should it create a market data
product similar to the Cboe One Options
Feed to distribute to its customers. In
addition, the servers of most vendors
could be located in the same facilities as
the Exchange, and, therefore, should
receive the individual data feed from
each Cboe Options Exchange at the
same time the Exchange would for it to
create the Cboe One Options Feed.
With regard to cost, the Exchange will
file a separate rule filing with the
Commission to establish fees for Cboe
One Options Feed that would be
designed to ensure that vendors could
compete with the Exchange by creating
a similar product as the Cboe One
Options Feed. The pricing the Exchange
would charge clients for the Cboe One
Options Feed compared to the cost of
the individual data feeds from the Cboe
Options Exchanges would enable a
vendor to receive the underlying data
feeds and offer a similar product on a
competitive basis and with no greater
latency than the Exchange. The
Distribution and User (Professional and
Non-Professional) fees that the
Exchange proposes for the Cboe One
Options Feed will be equal to the
combined fees for subscribing to each
individual data feed. Moreover, as
discussed, the Exchange intends to
propose a separate ‘‘Data Consolidation
Fee’’, which would reflect the value of
the aggregation and consolidation
function the Exchange performs in
creating the Cboe One Options Feed.
Therefore, vendors would be enabled to
create a competing product based on the
individual data feeds and charge their
clients a fee that they believe reflects the
value of the aggregation and
consolidation function that is
competitive with Cboe One Options
Feed pricing. For these reasons, the
Exchange believes that vendors could
readily offer a product similar to the
Cboe One Options Feed on a
competitive basis at a similar cost.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
E:\FR\FM\07MRN1.SGM
07MRN1
14206
Federal Register / Vol. 88, No. 44 / Tuesday, March 7, 2023 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 26 and Rule 19b–
4(f)(6) 27 thereunder. Because the
foregoing proposed rule change does
not: (i) significantly affect the protection
of investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 28 and Rule 19b–
4(f)(6) 29 thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 30 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),31 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the Exchange can
launch the proposed Cboe One Options
Feed on March 1, 2023, which is the
date the original filing (SR–CboeBZX–
2023–004) would have been operative.
The Commission notes that Nasdaq in
its comment letter believed that ‘‘the
Cboe One Feed Proposal should clearly
explain the obligations of the OPRA
Plan by specifically noting that any
person who subscribes to the Cboe One
Feed must have equivalent access to
OPRA and remove the misleading
language identified’’ by Nasdaq.32
Nasdaq further requested that marketing
materials for the Cboe One Options Feed
clearly indicate this requirement to
ensure compliance with the OPRA
Plan.33 The Commission believes that
the Exchange has addressed the
concerns raised by Nasdaq by removing
the language Nasdaq found misleading
26 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
28 15 U.S.C. 78s(b)(3)(A).
29 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
30 17 CFR 240.19b–4(f)(6).
31 17 CFR 240.19b–4(f)(6)(iii).
32 See Letter from Greg Ferrari, Vice President,
U.S. Options, Nasdaq, supra note 3, at 2. Nasdaq
submitted a comment letter to CBOE–2023–009,
which was the companion filing to CboeBZX–2023–
004, adopting the Cboe One Options Feed.
33 Id. at 2–3.
ddrumheller on DSK120RN23PROD with NOTICES1
27 17
VerDate Sep<11>2014
19:49 Mar 06, 2023
Jkt 259001
and clarifying the obligations under the
OPRA Plan. Specifically, the Exchange
has represented that any person,
including broker-dealers, who subscribe
to the Cboe One Options Feed must also
have equivalent access to consolidated
Options Information from OPRA for the
same classes or series of options that are
included in the proprietary data feed,
and proprietary data feeds cannot be
used to meet that particular
requirement.34 The Commission notes
that no other substantive changes from
the Exchange’s original filing are being
made with this filing. Therefore, the
Commission believes that waving the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission designates the proposed
rule change to be operative on March 1,
2023.35
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–
CboeBZX–2023–014 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–CboeBZX–2023–014. 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–CboeBZX–2023–014 and
should be submitted on or before March
28, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.36
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–04571 Filed 3–6–23; 8:45 am]
BILLING CODE 8011–01–P
34 See
supra notes 20–21 and accompanying text.
As discussed above, the Exchange has also
represented that the requirement under the OPRA
Plan is included in the Cboe Global Markets Global
Data Agreement and Cboe Global Markets North
American Data Policies, which subscribers to any
exchange proprietary product must sign and are
subject to, respectively. Additionally, the Exchange
has represented that its Data Order Form (used for
requesting the Exchange’s market data products)
requires confirmation that the requesting market
participant receives data from OPRA. See supra
note 20.
35 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–275, OMB Control No.
3235–0310]
Proposed Collection; Comment
Request; Extension: Rule 22d–1
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
36 17
E:\FR\FM\07MRN1.SGM
CFR 200.30–3(a)(12), (59).
07MRN1
]]>Agencies
[Federal Register Volume 88, Number 44 (Tuesday, March 7, 2023)]
[Notices]
[Pages 14200-14206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04571]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97013; File No. SR-CboeBZX-2023-014]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a
New Data Product Called the Cboe One Options Feed
March 1, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 27, 2023, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
adopt a new data product called the Cboe One Options Feed. The text of
the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), 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 14201]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to establish a new market data product called
the Cboe One Options Feed.\3\ The Exchange also proposes to amend
Exchange Rule 21.15(b) to add a description of the Cboe One Options
Feed under new subparagraph (6). As described more fully below, the
Cboe One Options Feed is a data feed that that will offer top of book
quotations and execution information based on options orders entered
into the Exchange System and its affiliated options exchanges Cboe
Exchange, Inc. (``Cboe Options''), Cboe C2 Exchange, Inc. (``C2
Options''), and Cboe EDGX Exchange, Inc. (``EDGX Options'')
(collectively, the ``Affiliates'' and collectively with the Exchange,
the ``Cboe Options Exchanges'') and for which the Cboe Options
Exchanges report quotes under the OPRA Plan.\4\
---------------------------------------------------------------------------
\3\ The Exchange previously submitted the proposed rule change
on January 30, 2023 (SR-CboeBZX-2023-004). See Securities Exchange
Act Release No. 96890 (February 13, 2023), 88 FR 10406, (February
17, 2023) (SR-CboeBZX-2023-004). The Exchange is withdrawing SR-
CboeBZX-2023-004 and submitting this filing to make clarifying, non-
substantive changes to more clearly reflect the obligations under
the OPRA Plan, which the Exchange believes will avoid potential
confusion, as well as address the comments raised by another
exchange group in a comment letter received on February 23, 2023.
See Letter from Greg Ferrari, Vice President, U.S. Options, Nasdaq
Stock Market LLC, Nasdaq PHLX LLC, Nasdaq BX, Inc., Nasdaq ISE, LLC,
Nasdaq GEMX, LLC, and Nasdaq MRX, LLC markets (collectively
``Nasdaq''), to Vanessa Countryman, Secretary Commission, dated
February 23, 2023.
\4\ The Exchange understands that each of the Cboe Options
Exchanges will separately file substantially similar proposed rule
changes to implement Cboe One Options Feed and its related fees.
---------------------------------------------------------------------------
Currently, the Exchange offers BZX Options Top feed, which is an
uncompressed data feed that offers top-of-book quotations and last sale
information based on options orders entered into the Exchange's System.
The BZX Options Top feed benefits investors by facilitating their
prompt access to real-time top-of-book information contained in BZX
Options Top. The Exchange notes that BZX Options Top is ideal for
market participants requiring both quote and trade data. The Exchange's
Affiliates also offer similar top-of-book data.\5\ Particularly, each
of the Exchange's Affiliates 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 BZX Options Top feed. Further, the quote and last sale data
contained in the Exchange's Affiliates top feeds is identical to the
data sent to OPRA for redistribution to the public.
---------------------------------------------------------------------------
\5\ See Cboe Data Services, LLC Fee Schedule, C2 Options
Exchange Fees Schedule, Cboe Data Services, LLC Fees, and EDGX Rule
21.15.
---------------------------------------------------------------------------
The Exchange now proposes to adopt a market data product that will
provide top-of-book quotation and last sale information based on the
quotation and trading activity on the Exchange and each of its
Affiliates, which the Exchange believes will offer a comprehensive and
highly representative view of US options pricing to market
participants. More specifically, the proposed Cboe One Options Feed
will contain the aggregate best bid and offer (``BBO'') of all
displayed orders for options traded on the Exchange and its Affiliates,
as well as individual last sale information and volume, for options
traded on the Exchange, which includes the price, time of execution and
individual Cboe options exchange on which the trade was executed. The
Cboe One Options Feed will also consist of Symbol Summary,\6\ Market
Status,\7\ Trading Status,\8\ and Trade Break \9\ messages for the
Exchange and each of its Affiliates.
---------------------------------------------------------------------------
\6\ The Symbol Summary message will include the total executed
volume across all Cboe Options Exchanges.
\7\ The Market Status message is disseminated to reflect a
change in the status of one of the Cboe Options Exchanges. For
example, the Market Status message will indicate whether one of the
Cboe Options Exchanges is experiencing a systems issue or disruption
and quotation or trade information from that market is not currently
being disseminated via the Cboe One Options Feed as part of the
aggregated BBO. The Market Status message will also indicate when a
Cboe Options Exchange is no longer experiencing a systems issue or
disruption to properly reflect the status of the aggregated BBO.
\8\ The Trade Break message will indicate when an execution on a
Cboe Options Exchange is broken in accordance with the individual
Cboe Options Exchange's rules (e.g., Cboe Options Rule 6.5, C2
Option Rule 6.5, BZX Options Rule 20.6, EDGX Options Rule 20.6).
\9\ The Trading Status message will indicate the current trading
status of an option contract on each individual Cboe Options
Exchange. A Trading Status message will also be sent whenever a
security's trading status changes. For example, a Trading Status
message will be sent when a symbol is open for trading or when a
symbol is subject to a trading halt or when it resumes trading.
---------------------------------------------------------------------------
The Exchange notes that the Exchange and its affiliated equities
exchanges Cboe BYX Exchange, Inc. (``BYX''), Cboe EDGA Exchange, Inc.
(``EDGA'') and Cboe EDGX Exchange, Inc. (``EDGX Equities'') already
offer a similar data product, the Cboe One Summary Feed, which contains
the aggregate best bid and offer of all displayed orders for securities
traded on the Exchange and each of the Exchange's affiliated equities
exchanges as well as last sale information for each of the Exchange and
the Exchange's affiliated equities exchanges.\10\ The Cboe One Summary
Feed also consists of Symbol Summary, Market Status, Trading Status,
and Trade Break messages for the Exchange and each of its affiliated
equities exchanges.
---------------------------------------------------------------------------
\10\ See BZX Rule 11.22(j), BYX Rule 11.22(i), EDGA Rule 13.8(b)
and EDGX Rule 13.8(b).
---------------------------------------------------------------------------
Particularly, the Cboe One Options Feed will offer market
participants with a new option for receiving Cboe market data that
provides a consolidated view of activity on all Cboe options exchanges.
The Exchange proposes to offer the Cboe One Options Feed voluntarily in
response to demand from market participants (e.g., retail brokerage
firms) that are interested in receiving the aggregate top of book
quotation and last sale information from the Cboe Options Exchanges as
part of a single data feed. Specifically, Cboe One Options Feed can be
used by industry professionals and retail investors looking for a cost
effective, easy-to-administer, high quality market data product with
the characteristics of the Cboe One Options Feed. For example, today an
entity can subscribe to various market data products offered by single
exchanges and distribute or resell that data, either separately or in
the aggregate, to their customers as part of their own market data
offerings.\11\ Distributors and vendors may incur administrative costs
when consolidating and augmenting the data to meet their customer's
need. Consequently, distributors and/or vendors may simply choose to
not take the data from each of the Cboe Options Exchanges because of
the effort and cost required to aggregate data from separate feeds into
their existing products. The Exchange believes those same distributors
and/or vendors may be interested in distributing the Cboe One Options
Feed so that they may easily incorporate aggregated or summarized Cboe
Options Exchange data into their own products
[[Page 14202]]
without themselves incurring the costs of the repackaging and
aggregating the data it would receive by subscribing to each market
data product offered by the individual Cboe Options Exchanges. The
Exchange therefore believes that the Cboe One Options Feed would
provide high-quality, comprehensive last sale and top-of-book data for
the Cboe Options Exchanges in a unified view and respond to demand for
such a product.
---------------------------------------------------------------------------
\11\ For purposes of this filing, a ``vendor'', which is a type
of distributor, will refer to any entity that receives an exchange
market data product directly from the exchange or indirectly from
another entity (for example, from an extranet) and then resells that
data to a third-party customer (e.g., a data provider that resells
exchange market data to a retail brokerage firm). The term
``distributor'' herein, will refer to any entity that receives an
exchange market data product, directly from the exchange or
indirectly from another entity (e.g., from a data vendor) and then
distributes to individual internal or external end-users (e.g., a
retail brokerage firm who distributes exchange data to its
individual employees and/or customers). An example of a vendor's
``third-party customer'' or ``customer'' is an institutional broker
dealer or a retail broker dealer, who then may in turn distribute
the data to their customers who are individual internal or external
end-users.
---------------------------------------------------------------------------
The Exchange also notes that it has taken into consideration its
affiliated relationship with its Affiliates in its design of Cboe One
Options Feed to assure distributors and/or vendors would be able to
resell and offer a similar product on the same terms as the Exchange,
both from a perspective of latency and cost.
With respect to latency, the path for distribution by the Exchange
of Cboe One Options Feed would not be faster than the path for
distribution by a vendor that independently created a Cboe One Options
Feed-like product could distribute its own product. As such, the
proposed Cboe One Options data feed is a data product that a vendor
could create and sell without being in a disadvantaged position
relative to the Exchange. In recognition that the Exchange is the
source of its own market data and is affiliated with Cboe Options, EDGX
Options and C2 Options, the Exchange represents that the source of the
market data it would use to create the proposed Cboe One Options Feed
is available to vendors. Specifically, the Exchange would use the
following data feeds to create the proposed Cboe One Options Feed, each
of which is available to other vendors: the BZX Options Top, Cboe
Options Top Data, the C2 Options Top Data, and the EDGX Options Top
Feeds. The Cboe Options Exchanges will continue to make available these
individual underlying feeds, and thus, the source of the market data it
would use to create the proposed Cboe One Options feed is the same as
the source available to other vendors.
In order to create the Cboe One Options Feed, the Exchange will
receive the individual data feeds from each Cboe Options Exchange and,
in turn, aggregate and summarize that data to create the Cboe One
Options Feed. This is the same process any entity would undergo should
it create a market data product similar to the Cboe One Options Feed to
distribute to its customers. In addition, the servers of most vendors
could be located in the same facilities as the Exchange, and,
therefore, should receive the individual data feed from each Cboe
Options Exchange at the same time the Exchange would for it to create
the Cboe One Options Feed.\12\ Therefore, a vendor that is located in
the same facilities as the Exchange could obtain the underlying data
feeds from the Cboe Options Exchanges on the same latency basis as the
system that would be performing the aggregation and consolidation of
the proposed Cboe One Options Feed and provide the same type of product
to its customers with the same latency they could achieve by purchasing
the Cboe One Options Feed from the Exchange. As such, the Exchange
would not have any unfair advantage over vendors with respect to
obtaining data from the individual Cboe Options Exchanges. In fact, the
technology supporting the Cboe One Options Feed would similarly need to
obtain the Exchange's data feed as well and even this connection would
be on a level playing field with a vendor located at the same facility
as the Exchange. The Exchange has designed the Cboe One Options data
feed so that it would not have a competitive advantage over a vendor
with respect to the speed of access to those underlying data feeds.
Likewise, the Cboe One Options data feed would not have a speed
advantage vis-[agrave]-vis vendors located in the same data center as
the Exchange with respect to access to its customers, whether those
customers are also located in the same data center or not.
---------------------------------------------------------------------------
\12\ The Exchange notes that it does not own the facilities in
which its servers are located but is aware that there are vendors
that currently locate their servers in the same facilities as the
Exchange and on an equal basis as the Exchange. The Exchange is not
aware of any reasons why vendors would not be able to locate their
servers on an equal basis as the Exchange on an on-going basis.
---------------------------------------------------------------------------
With regard to cost, the Exchange will file a separate rule filing
with the Commission to establish fees for Cboe One Options Feed, which
would be designed to ensure that vendors could compete with the
Exchange by creating a similar product as the Cboe One Options Feed.
The pricing the Exchange would charge for the Cboe One Options Feed
would not be lower than the cost to a vendor (or distributor) to obtain
the underlying Cboe Options Exchanges' top-of-book data feeds. The
pricing the Exchange would charge for the Cboe One Options Feed
compared to the cost of the individual data feeds from the Cboe Options
Exchanges would enable a vendor to receive the underlying data feeds
and offer a similar product on a competitive basis and with no greater
latency than the Exchange. The Distribution and User (Professional and
Non-Professional) fees that the Exchange intends to propose for the
Cboe One Options Feed would be equal to the combined fees for
subscribing to each individual data feed. Additionally, the Exchange
also intends to propose a separate ``Data Consolidation Fee'', which
would reflect the value of the aggregation and consolidation function
the Exchange performs in creating the Cboe One Options Feed. The
intended proposed pricing would therefore enable a vendor to create a
competing product based on the individual data feeds and charge its
customer a fee that it believes reflects the value of the aggregation
and consolidation function that is competitive with Cboe One Options
Feed pricing. For these reasons, the Exchange believes that vendors
could readily offer a product similar to the Cboe One Options Feed on a
competitive basis at a similar cost.
Implementation
The Exchange will announce when it intends to make available the
Cboe One Options feed, subject to the effectiveness of the proposed
rule change and the effectiveness of a rule filing to establish the
fees (via a separate rule filing).\13\
---------------------------------------------------------------------------
\13\ The Exchange also represents that should it wish to modify
the proposed Cboe One Options Feed data product in the future, it
will submit a proposed rule change as required under the Act.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed Cboe One Options Feed is
consistent with Section 6(b) of the Act,\14\ in general, and furthers
the objectives of Section 6(b)(5) of the Act,\15\ in particular, in
that it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes this
proposal is consistent with Section 6(b)(5) of the Act because it
protects investors and the public interest and promotes just and
equitable principles of trade by providing investors with new options
for receiving market data as requested by market participants and
Section 6(b)(8) of the Act, which requires that the rules of an
exchange not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.\16\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f.
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Exchange also believes that the proposed rule change is
consistent with
[[Page 14203]]
Section 11(A) of the Act \17\ in that it supports (i) fair competition
among brokers and dealers, among exchange markets, and between exchange
markets and markets other than exchange markets and (ii) the
availability to brokers, dealers, and investors of information with
respect to quotations for and transactions in securities.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78k-1.
---------------------------------------------------------------------------
In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to consumers of such data. It was
believed that this authority would expand the amount of data available
to users and consumers of such data and also spur innovation and
competition for the provision of market data. The Exchange believes
that the proposed Cboe One Options Feed would further broaden the
availability of U.S. option market data to investors consistent with
the principles of Regulation NMS. Particularly, the Exchange believes
the proposed Cboe One Options Feed promotes transparency by
disseminating the Cboe Options Exchanges' market data more widely
through additional distribution channels, which will enable investors
to better monitor trading activity on the Cboe Options Exchanges, and
thereby serve the public interest. The Exchange is providing additional
distribution channels because it believes market participants may be
more inclined to purchase a combined data feed and redistribute it.
Particularly, the Exchange believes that market participants would
welcome a market data product that would provide high-quality,
comprehensive top-of-book and last sale data for the Cboe Options
Exchanges in a unified view (i.e., the Cboe One Options Feed).
The Exchange also 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.\18\
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. While there is not
currently an aggregated top-of-book data product offered at competitor
options exchanges, the quote and last sale data contained in the
proposed Cboe One Options Feed is identical to data already provided in
the Exchange's and its Affiliate's individual top-of-book data products
as well as to the data sent to OPRA for redistribution to the
public.\19\ Accordingly, Exchange top-of-book data is therefore widely
available today from a number of different sources.
---------------------------------------------------------------------------
\18\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (January 9, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
\19\ The Exchange notes that it and its Affiliates, make
available their respective top-of-book data and last sale data that
is included in each exchange's top-of-book data feed no earlier than
the time at which the Exchange sends that data to OPRA.
---------------------------------------------------------------------------
Moreover, exchange top-of-book data is distributed and purchased on
a voluntary basis, in that neither the Exchange nor market data
distributors or vendors are required by any rule or regulation to make
this data available. Accordingly, distributors and vendors can
discontinue use at any time and for any reason, including due to an
assessment of the reasonableness of fees charged. Further, the Exchange
is not required to make any proprietary data products available or to
offer any specific pricing alternatives to any customers. Moreover,
persons (including broker-dealers) who subscribe to any exchange
proprietary data feed must also have equivalent access to consolidated
Options Information \20\ from OPRA for the same classes or series of
options that are included in the proprietary data feed, and proprietary
data feeds cannot be used to meet that particular requirement.\21\ As
such, all proprietary data feeds are optional.
---------------------------------------------------------------------------
\20\ ``Consolidated Options Information'' means consolidated
Last Sale Reports combined with either consolidated Quotation
Information or the BBO furnished by OPRA. Access to consolidated
Options Information is deemed ``equivalent'' if both kinds of
information are equally accessible on the same terminal or work
station. See Limited Liability Company Agreement of Options Price
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The
Exchange notes that this requirement under the OPRA Plan is also
reiterated under the Cboe Global Markets Global Data Agreement and
Cboe Global Markets North American Data Policies, which subscribers
to any exchange proprietary product must sign and are subject to,
respectively. Additionally, the Exchange's Data Order Form (used for
requesting the Exchange's market data products) requires
confirmation that the requesting market participant receives data
from OPRA.
\21\ Id.
---------------------------------------------------------------------------
Similar to exchanges' individual top-of-book data feeds, the
proposed Cboe One Options Feed would be distributed and purchased on a
voluntary basis, in that neither the Exchange, its Affiliates, nor
market data distributors or vendors are required by any rule or
regulation to make this data feed available. Accordingly, distributors
and vendors can discontinue use at any time and for any reason,
including due to an assessment of the reasonableness of fees charged.
The Exchange believes that the proposed Cboe One Options Feed will
offer an alternative to subscribing to the Cboe Options Exchanges four
individual top-of-book data feeds. Also, as noted above, there is a
history of offering similar consolidated data products in the equities
industry. Indeed, the Exchange and its affiliated equities exchanges
offer the Cboe One Summary Feed, which is a substantially similar data
product which contains the aggregate BBO of all displayed orders for
securities (instead of options) traded on the Cboe's equities
exchanges, along with last sale information.\22\ The Cboe One Summary
Feed also consists of Symbol Summary, Market Status, Trading Status,
and Trade Break messages.\23\
---------------------------------------------------------------------------
\22\ See BZX Rule 11.22(j), BYX Rule 11.22(i), EDGA Rule 13.8(b)
and EDGX Rule 13.8(b).
\23\ Id.
---------------------------------------------------------------------------
The Exchange believes the proposal would not permit unfair
discrimination because the product will be available to all market data
distributors and vendors on an equivalent basis. Any distributor or
vendor that wishes to instead purchase one or more of the individual
data feeds offered by the Cboe Options Exchanges separately will still
be able to do so. Further, the Exchange and its Affiliates will
continue to make the data contained in the proposed Cboe One Options
Feed available no earlier than the time at which the exchanges send
that data to OPRA.
In addition, the Exchange does not believe that the proposal would
permit unfair discrimination among customers, brokers, or dealers and
thus is consistent with the Act because the Exchange will be offering
the product on terms that a vendor could offer a competing product.
Specifically, the proposed data feed merely represents an aggregation
and consolidation of data contained in existing, previously filed
individual market data products of the Cboe Options Exchanges. As such,
a vendor could similarly obtain the underlying data feeds and perform a
similar aggregation and consolidation function to create the same data
product as being proposed with the same latency and cost as the
Exchange.
The Exchange has taken into consideration its affiliated
relationship with Cboe Options, EDGX Options and C2 Options in its
design of the Cboe One Options Feed to assure that distributors and/or
vendors would be able to offer a similar product on the same terms as
the Exchange, both from the perspective of latency and cost. As
discussed above, the Exchange proposes to offer the Cboe
[[Page 14204]]
One Options Feed voluntarily in response to demand from market
participants such as retail brokerage firms that are interested in
receiving and distributing the top-of-book quotation and last sale
information from the Cboe Options Exchanges as part of a single data
feed. Specifically, Cboe One Options Feed can be used by industry
professionals and retail investors looking for a cost effective, easy-
to-administer, high quality market data product with the
characteristics of the Cboe One Options Feed. The Cboe One Options Feed
would help protect a free and open market by providing market
participants additional choices in receiving this type of market data,
thus promoting competition and innovation.
With respect to latency, the path for distribution by the Exchange
of Cboe One Options Feed would not be faster than the path for
distribution a vendor that independently created a Cboe One Options
Feed-like product could distribute its own product. As such, the
proposed Cboe One Options data feed is a data product that a vendor
could create and sell without being in a disadvantaged position
relative to the Exchange. In recognition that the Exchange is the
source of its own market data and is affiliated with Cboe Options, EDGX
Options and C2 Options, the Exchange represents that the source of the
market data it would use to create the proposed Cboe One Options Feed
is available to other vendors. Specifically, the Exchange would use the
following data feeds to create the proposed Cboe One Options Feed, each
of which is available to other vendors: the BZX Options Top, Cboe
Options Top Data, the C2 Options Top Data, and the EDGX Options Top
Feeds. The Cboe Options Exchanges will continue to make available these
individual underlying feeds, and thus, the source of the market data it
would use to create the proposed Cboe One Options feed is the same as
the source available to other vendors.
In order to create the Cboe One Options Feed, the Exchange will
receive the individual data feeds from each Cboe Options Exchange and,
in turn, aggregate and summarize that data to create the Cboe One
Options Feed. This is the same process any vendor would undergo should
it create a market data product similar to the Cboe One Options Feed to
distribute to its customers. In addition, the servers of most vendors
could be located in the same facilities as the Exchange, and,
therefore, should receive the individual data feed from each Cboe
Options Exchange at the same time the Exchange would for it to create
the Cboe One Options Feed. Therefore, a vendor that is located in the
same facilities as the Exchange could obtain the underlying data feeds
from the Cboe Options Exchanges on the same latency basis as the system
that would be performing the aggregation and consolidation of the
proposed Cboe One Options Feed and provide the same type of product to
its customers with the same latency they could achieve by purchasing
the Cboe One Options Feed from the Exchange. As such, the Exchange
would not have any unfair advantage over vendors with respect to
obtaining data from the individual Cboe Options Exchanges. In fact, the
technology supporting the Cboe One Options Feed would similarly need to
obtain the Exchange's data feed as well and even this connection would
be on a level playing field with a vendor located at the same facility
as the Exchange. The Exchange has designed the Cboe One Options data
feed so that it would not have a competitive advantage over a vendor
with respect to the speed of access to those underlying data feeds.
Likewise, the Cboe One Options data feed would not have a speed
advantage vis-[agrave]-vis vendors located in the same data center as
the Exchange with respect to access to customers, whether those
customers are also located in the same data center or not.
With regard to cost, the Exchange will file a separate rule filing
with the Commission to establish fees for Cboe One Options Feed, which
would be designed to ensure that vendors could compete with the
Exchange by creating a similar product as the Cboe One Options Feed to
offer and resell. The pricing the Exchange would charge for the Cboe
One Options Feed would not be lower than the cost to a vendor (or
distributor) to obtain the underlying Cboe Options Exchanges' top-of-
book data feeds. The pricing the Exchange would charge clients for the
Cboe One Options Feed compared to the cost of the individual data feeds
from the Cboe Options Exchanges would enable a vendor to receive the
underlying data feeds and offer a similar product on a competitive
basis and with no greater latency than the Exchange. The Distribution
and User (Professional and Non-Professional) fees that the Exchange
intends to propose for the Cboe One Options Feed would be equal to the
combined fees for subscribing to each individual data feed.\24\ The
Exchange also intends to propose a separate ``Data Consolidation Fee'',
which would reflect the value of the aggregation and consolidation
function the Exchange performs in creating the Cboe One Options Feed.
The intended proposed fees would therefore enable a vendor to create a
product based on the individual data feeds and charge its clients a fee
that it believes reflects the value of the aggregation and
consolidation function that is competitive with Cboe One Options Feed
pricing. For these reasons, the Exchange believes that vendors could
readily offer a product similar to the Cboe One Options Feed on a
competitive basis at a similar cost.
---------------------------------------------------------------------------
\24\ For example, the combined external distribution fee for the
individual data feeds of the Cboe Options Exchanges is $10,000 per
month (i.e., the monthly external distribution fee is $5,000 per
month for the Cboe Options Top, $2,500 per month for C2 Options Top
$2,000 per month for BZX Options Top, and $500 for EDGX Options
Top). The monthly Professional User fee for the individual data
feeds of the Cboe Options Exchanges is $30.50 per Professional User
(i.e., the monthly Professional User fee is $15.50 per Professional
User for the Cboe Options Top, $5 per Professional User for C2
Options Top; $5 per Professional User for BZX Options Top, and $5
per Professional User for EDGX Options Top). The combined monthly
Non-Professional User fee for the individual data feeds of the Cboe
Options Exchanges is $0.60 per Non-Professional User (i.e., the
monthly Non-Professional User fee is $0.30 per Non-Professional User
for Cboe Options Top, $0.10 per Non-Professional User for C2 Options
Top, $0.10 per Non-Professional User for BZX Options Top, and $0.10
per Non-Professional User for EDGX Options Top).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Because the Exchange and its
affiliates, along with other exchanges already offer the similar
underlying data products, the Exchange's proposed Cboe One Options Feed
will enhance competition. This proposed new data feed provides
investors with new options for receiving market data, which was a
primary goal of the market data amendments adopted by Regulation
NMS.\25\ As the Cboe Options Exchanges are consistently one of the top
exchange operators by market share for U.S. options trading the data
included within the Cboe One Options Feed will provide investors a new
option for obtaining a broad market view, consistent with the primary
goal of the market data amendments adopted by Regulation NMS.
---------------------------------------------------------------------------
\25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, at 37503 (June 29, 2005) (Regulation NMS
Adopting Release).
---------------------------------------------------------------------------
The Exchange believes the Cboe One Options Feed will further
enhance competition by providing distributors and vendors with a data
feed that allows them to more quickly and efficiently integrate into
their existing products. For example, today, vendors may
[[Page 14205]]
subscribe to various market data products offered by single exchanges
and resell that data, either separately or in the aggregate, to their
customers as part of their own market data offerings. Distributors and
vendors may incur administrative costs when consolidating and
augmenting the data to meet their customer's need. Consequently, many
distributors and/or vendors will simply choose to not take the data
from each of the Cboe Options Exchanges because of the effort and cost
required to aggregate data from separate feeds into their existing
products. Those same distributors and/or vendors may therefore be
interested in the Cboe One Options Feed as they may easily incorporate
aggregated or summarized Cboe Options Exchanges' data into their own
products without themselves incurring the costs of the repackaging and
aggregating the data it would receive by purchasing each market data
product offered by the individual Cboe Options Exchanges separately.
The Exchange therefore believes that by providing market data that
encompasses combined data from affiliated exchanges, the Exchange
enables vendors with the ability to compete in the provision of similar
content with other vendors, where they may not have done so previously
if they were required to purchase the top-of-book feeds from each
individual Cboe options exchanges separately.
Although the Exchange considers the acceptance of the Cboe One
Options Feed by distributors and vendors as important to the success of
the product, depending on their needs, such distributors and vendors
may choose not to subscribe to the Cboe One Options Feed and may rather
receive the Cboe Options Exchanges' individual market data products and
incorporate them into their specific market data products. The Cboe One
Options Feed simply provides another option for distributors and
vendors to choose from when selecting a product that meets their market
data needs.
Exchange Not the Exclusive Distributor of Cboe One Options Feed
Although the Cboe Options Exchanges are the exclusive distributors
of the individual data feeds from which certain data elements would be
taken to create the Cboe One Options Feed, the Exchange would not be
the exclusive distributor of the aggregated and consolidated
information that would compose the proposed Cboe One Options Feed. As
discussed above, distributors and/or vendors would be able, if they
chose, to create a data feed with the same information as the Cboe One
Options Feed and distribute it to their clients on a level-playing
field with respect to latency and cost as compared to the Exchange's
proposed Cboe One Options Feed. The pricing the Exchange would charge
for the Cboe One Options Feed would not be lower than the cost to a
distributor or vendor to obtain the underlying data feeds. In addition,
the pricing the Exchange would charge clients for the Cboe One Options
Feed compared to the cost of the individual data feeds from the Cboe
Options Exchanges would enable a distributor and/or vendor to receive
the underlying data feeds and offer a similar product on a competitive
basis and with no greater latency than the Exchange.
Latency
The Cboe One Options Feed is also not intended to compete with
similar products offered by distributors. Rather, it is intended to
assist them in incorporating aggregated and summarized data from the
Cboe Options Exchanges into their own market data products that are
provided to their customers. Therefore, distributors will receive the
data, who will, in turn, make available Cboe One Options Feed to their
end users, either separately or as incorporated into the various market
data products they provide. As stated above distributors may prefer a
product like the Cboe One Options Feed so that they may easily
incorporate aggregated or summarized Cboe Options Exchange data into
their own products without themselves incurring the administrative
costs of repackaging and aggregating the data it would receive by
subscribing to each market data product offered by the individual Cboe
Options Exchanges.
Notwithstanding the above, the Exchange believes that vendors may
create a product similar to Cboe One Options Feed based on the market
data products offered by the individual Cboe Options Exchanges with no
greater latency than the Exchange. As discussed above, in order to
create the Cboe One Options Feed, the Exchange will receive the
individual data feeds from each Cboe Options Exchange and, in turn,
aggregate and summarize that data to create the Cboe One Options Feed.
This is the same process a vendor would undergo should it create a
market data product similar to the Cboe One Options Feed to distribute
to its customers. In addition, the servers of most vendors could be
located in the same facilities as the Exchange, and, therefore, should
receive the individual data feed from each Cboe Options Exchange at the
same time the Exchange would for it to create the Cboe One Options
Feed.
The Exchange has designed the Cboe One Options data feed so that it
would not have a competitive advantage over a vendor with respect to
the speed of access to those underlying data feeds. Likewise, the Cboe
One Options data feed would not have a speed advantage vis-[agrave]-vis
vendors located in the same data center as the Exchange with respect to
access to their customers, whether those end users are also located in
the same data center or not. Therefore, the Exchange believes that it
will not incur any potential latency advantage that will result in any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Cost
With regard to cost, the Exchange will file a separate rule filing
with the Commission to establish fees for Cboe One Options Feed that
would be designed to ensure that vendors could compete with the
Exchange by creating a similar product as the Cboe One Options Feed.
The pricing the Exchange would charge clients for the Cboe One Options
Feed compared to the cost of the individual data feeds from the Cboe
Options Exchanges would enable a vendor to receive the underlying data
feeds and offer a similar product on a competitive basis and with no
greater latency than the Exchange. The Distribution and User
(Professional and Non-Professional) fees that the Exchange proposes for
the Cboe One Options Feed will be equal to the combined fees for
subscribing to each individual data feed. Moreover, as discussed, the
Exchange intends to propose a separate ``Data Consolidation Fee'',
which would reflect the value of the aggregation and consolidation
function the Exchange performs in creating the Cboe One Options Feed.
Therefore, vendors would be enabled to create a competing product based
on the individual data feeds and charge their clients a fee that they
believe reflects the value of the aggregation and consolidation
function that is competitive with Cboe One Options Feed pricing. For
these reasons, the Exchange believes that vendors could readily offer a
product similar to the Cboe One Options Feed on a competitive basis at
a similar cost.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
[[Page 14206]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \26\ and Rule 19b-4(f)(6) \27\ thereunder.
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \28\ and Rule 19b-4(f)(6) \29\
thereunder.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78s(b)(3)(A).
\27\ 17 CFR 240.19b-4(f)(6).
\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \30\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\31\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the Exchange
can launch the proposed Cboe One Options Feed on March 1, 2023, which
is the date the original filing (SR-CboeBZX-2023-004) would have been
operative. The Commission notes that Nasdaq in its comment letter
believed that ``the Cboe One Feed Proposal should clearly explain the
obligations of the OPRA Plan by specifically noting that any person who
subscribes to the Cboe One Feed must have equivalent access to OPRA and
remove the misleading language identified'' by Nasdaq.\32\ Nasdaq
further requested that marketing materials for the Cboe One Options
Feed clearly indicate this requirement to ensure compliance with the
OPRA Plan.\33\ The Commission believes that the Exchange has addressed
the concerns raised by Nasdaq by removing the language Nasdaq found
misleading and clarifying the obligations under the OPRA Plan.
Specifically, the Exchange has represented that any person, including
broker-dealers, who subscribe to the Cboe One Options Feed must also
have equivalent access to consolidated Options Information from OPRA
for the same classes or series of options that are included in the
proprietary data feed, and proprietary data feeds cannot be used to
meet that particular requirement.\34\ The Commission notes that no
other substantive changes from the Exchange's original filing are being
made with this filing. Therefore, the Commission believes that waving
the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission
designates the proposed rule change to be operative on March 1,
2023.\35\
---------------------------------------------------------------------------
\30\ 17 CFR 240.19b-4(f)(6).
\31\ 17 CFR 240.19b-4(f)(6)(iii).
\32\ See Letter from Greg Ferrari, Vice President, U.S. Options,
Nasdaq, supra note 3, at 2. Nasdaq submitted a comment letter to
CBOE-2023-009, which was the companion filing to CboeBZX-2023-004,
adopting the Cboe One Options Feed.
\33\ Id. at 2-3.
\34\ See supra notes 20-21 and accompanying text. As discussed
above, the Exchange has also represented that the requirement under
the OPRA Plan is included in the Cboe Global Markets Global Data
Agreement and Cboe Global Markets North American Data Policies,
which subscribers to any exchange proprietary product must sign and
are subject to, respectively. Additionally, the Exchange has
represented that its Data Order Form (used for requesting the
Exchange's market data products) requires confirmation that the
requesting market participant receives data from OPRA. See supra
note 20.
\35\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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 [email protected]. Please include
File Number SR-CboeBZX-2023-014 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-CboeBZX-2023-014. 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-CboeBZX-2023-014 and should be submitted
on or before March 28, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
---------------------------------------------------------------------------
\36\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04571 Filed 3-6-23; 8:45 am]
BILLING CODE 8011-01-P
