Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Its Fees Schedule, 18609-18616 [2023-06429]
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Federal Register / Vol. 88, No. 60 / Wednesday, March 29, 2023 / Notices
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they arise. However, these potential
reductions in aggregate legal costs and
information technology costs may be
partially offset by increases in legal
costs for disputes that involve
individual CAT Reporters and CAT
LLC. Legal costs for these bilateral
disputes may increase because
resolution via arbitration can incur
fewer legal costs than resolution via
courts.51
The Commission believes the
Governing Law would not affect
efficiency because it does not produce a
substantive change in the application of
the federal laws of the United States and
the laws of the state of New York to
legal matters involving CAT LLC and
CAT Reporters.
B. Competition
The Commission believes the Forum
Selection Provision will have small
positive effects on competition within
markets with businesses subject to CAT
Reporter Agreements. The Forum
Selection Provision, via courts’
mechanisms for dispute consolidation,
may reduce individual firms’ legal
expenses during disputes with CAT LLC
because dispute related legal costs may
then be shared by multiple parties. If
these legal expenses are shared
approximately equally among involved
firms, then small firms may benefit
slightly more from courts’ mechanisms
for dispute consolidation than large
firms because legal costs will decrease
more as a fraction of revenue for small
firms than large firms. But, the benefits
of dispute consolidation for small firms
may be partially reduced by greater legal
costs for bilateral disputes with CAT
LLC where legal costs cannot be shared
by several CAT Reporters and resolution
via arbitration may require lower legal
costs.52 The Forum Selection Provision
may also make the outcomes of disputes
between CAT Reporters and CAT LLC
slightly more predictable because legal
precedent and previous court cases may
provide information regarding disputes
possible outcomes. Less uncertainty
about the outcomes of disputes
involving CAT LLC and CAT Reporters
may slightly reduce financing costs for
firms by reducing uncertainty about the
effect of dispute resolution outcomes on
small firms’ profitability. The reduction
in financing costs may be greater for
smaller firms where the effects of
disputes’ outcomes may have relatively
large effects on these firms’ profitability.
The Commission believes the
Governing Law Provision will not
materially affect competition because
requiring federal law and the laws of the
state of New York to govern all matters
between the CAT LLC and the CAT
Reporters will not have an economically
significant effect on the legal costs, or
legal outcomes, or other factors that
might affect competition among
businesses subject to CAT Reporter
Agreements.
C. Capital Formation
The Commission believes the Forum
Selection Provision and Governing Law
Provision will not materially affect
capital formation. The proposed
amendment relates to dispute resolution
between Industry Members and
Participants and is thus unlikely to
materially impact capital formation
because the proposed amendment does
not generally affect publicly traded
firms’ cost of capital, does not affect
factors influencing investors’
investments in publicly traded
companies, and the previously
discussed potential efficiency and
competition benefits of the proposed
amendment are too small in magnitude
to affect the prices at which CAT
Reporters offer trading services and
products to investors.
VI. Conclusion
For the reasons set forth above, the
Commission finds that the Proposed
Amendment is consistent with the
requirements of the Exchange Act and
the rules and regulations thereunder,
and in particular, Section 11A of the
Exchange Act,53 and Rule 608(b)(2) 54
thereunder in that the Proposed
Amendment is appropriate in the public
interest, for the protection of investors
and the maintenance of fair and orderly
markets, to remove impediments to, and
perfect the mechanisms of a national
market system, or otherwise in
furtherance of the purposes of the
Exchange Act.
It is therefore ordered, pursuant to
Section 11A of the Exchange Act,55 and
Rule 608(b)(2) thereunder,56 that the
Proposed Amendment (File No. 4–698)
be, and hereby is, approved.
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–06487 Filed 3–28–23; 8:45 am]
BILLING CODE 8011–01–P
U.S.C. 78k–1.
CFR 242.608(b)(2).
55 15 U.S.C. 78k–1.
56 17 CFR 242.608.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97189; File No. SR–CBOE–
2023–015]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Update Its Fees
Schedule
March 23, 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 March 10,
2023, Cboe Exchange, Inc. (‘‘Exchange’’
or ‘‘Cboe Options’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to update
its Fees Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.aspx), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
53 15
54 17
51 See
52 See
Section IV.A, supra.
id.
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2 17
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18609
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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External Distributors of their top-ofbook data feeds.5
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Distributor Fee Credit
1. Purpose
The Exchange proposes to amend the
Market Data section of its Fees
Schedule.3 Particularly, the Exchange
proposes to (i) adopt a New External
Credit applicable to Cboe Options Top,
(ii) adopt a credit towards the monthly
Distribution fees for Cboe Options Top,
(iii) modify the Cboe Options Top
Enterprise Fee; and (iv) establish fees for
Cboe One Options Feed.
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Cboe Top Data
By way of background, the Exchange
offers the Cboe Options Top Data 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 Cboe Options Top Data
feed benefits investors by facilitating
their prompt access to real-time top-ofbook information contained in Cboe
Options Top Data. The Exchange’s
affiliated options exchanges (i.e., Cboe
C2 Exchange, Inc. (‘‘C2 Options’’), Cboe
BZX Exchange, Inc. (‘‘BZX Options’’),
and Cboe EDGX Exchange, Inc. (‘‘EDGX
Options’’) (collectively, ‘‘Affiliates’’)
also offer similar top-of-book data
feeds.4 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 Cboe Options
Top. The Exchange proposes to make
the following fee changes relating to
Cboe Options Top.
New External Distributor Credit
The Exchange first proposes to adopt
a New External Distributor Credit which
will provide that new External
Distributors of the Cboe Options Top
feed will not be charged an External
Distributor Fee for their first three (3)
months in order to incentivize External
Distributors to enlist new users to
receive Cboe Options Top feed. The
Exchange notes that other exchanges,
including the Exchange’s affiliated
equities exchanges, offer similar credits
for similar market data products. For
example, Cboe’s equities exchanges
currently offer a three (3) month New
External Distributor Credit applicable to
3 The Exchange initially filed the proposed fee
changes on March 1, 2023 (SR–CBOE–2023–014).
On March 10, 2023, the Exchange withdrew that
filing and submitted this proposal.
4 See C2 Options Fees Schedule, EDGX Rule
21.15, and BZX Rule 21.15.
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The Exchange also proposes to
provide that each External Distributor
will receive a credit against its monthly
Distributor Fee for the Cboe Options
Top equal to the amount of its monthly
Usage Fees up to a maximum of the
Distributor Fee for the Cboe Options
Top feed. For example, an External
Distributor will be subject to a $9,000
monthly Distributor Fee where they
elect to receive the Cboe Options Top.
If that External Distributor reports User
quantities totaling $9,000 or more of
monthly usage of the Cboe Options Top,
it will pay no net Distributor Fee,
whereas if that same External
Distributor were to report User
quantities totaling $8,000 of monthly
usage, it will pay a net of $1,000 for the
Distributor Fee. External Distributors
will remain subject to the per User fees
applicable to Cboe Options Top. In
every case the Exchange will receive at
least $9,000 in connection with the
distribution of the Cboe Options Top
(through a combination of the External
Distribution Fee and per User Fees). The
Exchange notes that its affiliated
equities exchanges offer a similar credit
for a similar market data product.6
Enterprise Fee Tiers
The Exchange currently offers
Distributors the ability to purchase a
monthly (and optional) Enterprise
license to receive the Cboe Options Top
Feed for distribution to an unlimited
number of Professional and NonProfessional Users. The Enterprise Fee
is an alternative to Professional and
Non-Professional User fees and permits
a Distributor to pay a flat fee for an
unlimited number of Professional and
Non-Professional Users and is in
addition to the Distribution fees. The
Exchange currently assesses an
Enterprise fee of $300,000 per month.
The Exchange proposes to modify the
current Enterprise Fee and adopt a
tiered structure based on the number of
Users a Distributor has. The Exchange
proposes to adopt the following
monthly Enterprise Fees: $300,000 for
up to 1,500,000 Users (Tier 1), $450,000
for 1,500,001 to 2,500,000 Users (Tier 2)
and $600,000 for 2,500,001 or greater
Users (Tier 3). The proposed fees are
non-progressive (e.g., if a Distributor has
2,000,000 Users, it will be subject to
$450,000 for Tier 2). The Enterprise Fee
5 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
6 See e.g., EDGX Equities Exchange Fees
Schedule, Id.
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may provide an opportunity to reduce
fees. For example, if a Distributor has
1.4 million Non-Professional Users who
each receive Cboe One Options Feed at
$0.30 per month (as proposed), then that
Distributor will pay $420,000 per month
in Professional Users fees. If the
Distributor instead were to purchase the
proposed Enterprise license (tier 1), it
would alternatively pay a flat fee of
$300,000 for up to 1.5 million
Professional and Non-Professional
Users. A Distributor that pays the Tier
1 or Tier 2 Enterprise Fee will have to
report its number of such Users on a
monthly basis. A Distributor that pays
the Tier 3 Enterprise Fee will only have
to report the number of its Users every
six months.7 The Exchange notes that if
the reported number of Users exceed the
Enterprise Tier a Distributor has
purchased, the higher Tier will apply
(e.g., if a Distributor purchases Tier 1,
but reports 1,600,000 Users for a month,
the Distributor will be assessed the Tier
2 fee).
The Exchange also proposes to allow
Distributors to purchase the Enterprise
Fee on a monthly or annual basis.
Annual licenses will receive a 5%
discount off the applicable Enterprise
Tier fee. The Exchange notes that the
purchase of an Enterprise license is
voluntary, and a firm may elect to
instead use the per User structure and
benefit from the proposed per User Fees
described above. For example, a firm
that does not have a sufficient number
of Users to benefit from purchase of a
license need not do so.
Cboe One Options Feed
By way of background, the Exchange
recently adopted a new market data
product called Cboe One Options Feed,
which is launching March 1, 2023.8
Cboe One Options Feed 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 offers a
comprehensive and highly
representative view of US options
pricing to market participants. More
specifically, 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, which
includes the price, time of execution
and individual Cboe options exchange
on which the trade was executed. See
7 See Cboe Global Markets north American Data
Policies.
8 See SR–CBOE–2023–012.
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e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
The Cboe One Options Feed will also
consist of Symbol Summary,9 Market
Status,10 Trading Status,11 and Trade
Break 12 messages for the Exchange and
each of its Affiliates.
The Exchange will use the following
data feeds to create the Cboe One
Options Feed, each of which is available
to other vendors and/or distributors:
Cboe Options Top Data, C2 Options Top
Data, EDGX Options Top and BZX
Options Top. A vendor and/or
distributor that wishes to create a
product like the Cboe One Options Feed
could instead subscribe to each of the
aforementioned data feeds. Any entity
that receives, or elects to receive, the
individual data feeds or the feeds that
may be used to create a product like the
Cboe One Options Feed would be able
to, if it so chooses, to create a data feed
with the same information included in
the Cboe One Options Feed and sell and
distribute it to its clients so that it could
be received by those clients as quickly
as the Cboe One Options Feed would be
received by those same clients.
The Exchange proposes to amend its
fee schedule to incorporate fees related
to the Cboe One Options Feed. The
Exchange has taken into consideration
its affiliated relationship with its
Affiliates in its design of the Cboe One
Options Feed to assure that vendors 13
9 The Symbol Summary message will include the
total executed volume across all Cboe Options
Exchanges.
10 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.
11 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).
12 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.
13 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 resell 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
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would be able to offer a similar product
on the same terms as the Exchange from
a cost perspective. Although 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
compose the proposed Cboe One
Options Feed. 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
proposes to charge for the Cboe One
Options Feed, as described more fully
below, is not lower than the cost to a
distributor or vendor to obtain the
underlying data feeds. In fact, the
Distribution and User (Professional and
Non-Professional) fees, as well as the
optional Enterprise Fees, that the
Exchange proposes to adopt for the Cboe
One Options Feed are equal to the
respective combined fees for subscribing
to each individual data feed. The
Exchange also proposes to adopt a ‘‘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.
The proposed Cboe One Options Feed
fees include the following, each of
which are described in further detail
below: (i) Distributor Fees; (ii) User Fees
for both Professional and NonProfessional Users; (iii) Enterprise Fees;
and (iv) a Data Consolidation Fee. The
Exchange also proposes to adopt a New
External Distributor credit and a credit
against the monthly External
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.
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Distribution Fee equal to the amount of
monthly User Fees up to a maximum of
the External Distributor Fee. To ensure
consistency across the Cboe Options
Exchanges, C2 Options, EDGX Options,
and BZX Options will be filing
companion proposals to reflect this
proposal in their respective fee
schedules.
Distributor Fees
As proposed, each Internal Distributor
that receives the Cboe One Options Feed
shall pay a fee of $15,000 per month.
The proposed Internal Distribution Fee
equals the combined monthly Internal
Distribution fees for the underlying
individual data feeds of the Cboe
Options Exchanges (i.e., the monthly
Internal Distribution fees are $3,000 for
BZX Options Top, $500 for EDGX
Options Top, $2,500 for C2 Options Top
and $9,000 for Cboe Options Top). The
Exchange also proposes to assess
External Distributors a monthly fee of
$10,000. The proposed External
Distribution fee equals the combined
monthly External Distribution fees for
the underlying individual data feeds of
the Cboe Options Exchanges (i.e., the
monthly External Distribution fees are
$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).
As noted above, the Exchange is
proposing to charge External
Distributors an External Distribution Fee
that equals the combined External
Distribution fees of each individual Top
feed to ensure that vendors could
compete with the Exchange by creating
the same product as the Cboe One
Options Feed to sell to their clients.
New External Distributor Credit
The Exchange proposes to adopt a
New External Distributor Credit which
would provide that new External
Distributors of the Cboe One Options
Feed will not be charged an External
Distributor Fee for their first three (3)
months in order to incentive them to
enlist new Users to receive the Cboe
One Options Feed. The Exchange notes
that other exchanges, including the
Exchange’s affiliated equities exchanges
offer similar credits for similar market
data products. For example, Cboe’s
equities exchanges currently offer a
three (3) month New External
Distributor Credit applicable to Cboe
One Summary Feed.14 To alleviate any
competitive issues that may arise with
a vendor seeking to offer a product
similar to the Cboe One Options Feed
14 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
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based on the underlying data feeds, the
Exchange is proposing, as discussed
above, to also adopt a three-month New
External Distributor Credit for the
underlying top-of-book data feeds for
the Cboe Options Exchanges. The
respective proposals to adopt a threemonth credit ensures the proposed New
External Distributor Credit for Cboe One
Options will not cause the combined
cost of subscribing to Cboe Options, C2
Options, BZX Options and EDGX
Options Top feeds for new External
Distributors to be greater than those that
would be charged to subscribe to the
Cboe One Options feed.
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User Fees
In addition to Internal and External
Distributor Fees, the Exchange proposes
to assess Professional 15 User and NonProfessional 16 User Fees. The proposed
monthly Professional User fee for the
Cboe Options Exchanges is $30.50 per
Professional User, which equals the
combined monthly Professional User
fees of the underlying individual Cboe
Options Exchanges Top feeds (i.e.,
$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 Exchange also
proposes to adopt a monthly NonProfessional User fee of $0.60 per NonProfessional User, which similarly
represents the combined total NonProfessional User fee for the individual
data feeds of the Cboe Options (i.e.,
$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 Non15 A Professional User of an Exchange Market
Data product is any natural person recipient of an
Exchange Market Data product who is not a NonProfessional User.
16 A ‘‘Non-Professional User’’ of an Exchange
Market Data product is a natural person or
qualifying trust that uses Data only for personal
purposes and not for any commercial purpose and,
for a natural person who works in the United States,
is not: (i) registered or qualified in any capacity
with the Securities and Exchange Commission, the
Commodities Futures Trading Commission, any
state securities agency, any securities exchange or
association, or any commodities or futures contract
market or association; (ii) engaged as an
‘‘investment adviser’’ as that term is defined in
Section 202(a)(11) of the Investment Advisors Act
of 1940 (whether or not registered or qualified
under that Act); or (iii) employed by a bank or other
organization exempt from registration under federal
or state securities laws to perform functions that
would require registration or qualification if such
functions were performed for an organization not so
exempt; or, for a natural person who works outside
of the United States, does not perform the same
functions as would disqualify such person as a
Non-Professional User if he or she worked in the
United States.
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Professional User for EDGX Options
Top). Similar to the individual
underlying feeds, Distributors that
receive Cboe One Options Feed will be
required to count Professional and NonProfessional Users to which they
provide the data feed.
The Exchange also proposes to
provide that each External Distributor
will receive a credit against its monthly
Distributor Fee for the Cboe One Feed
equal to the amount of its monthly User
Fees up to a maximum of the Distributor
Fee for the Cboe One Options Feed. For
example, an External Distributor will be
subject to a $10,000 monthly Distributor
Fee where they elect to receive the Cboe
One Options Feed. If that External
Distributor reports User quantities
totaling $10,000 or more of monthly
User fees of the Cboe Options One Feed,
it will pay no net Distributor Fee,
whereas if that same External
Distributor were to report User
quantities totaling $9,000 of monthly
usage, it will pay a net of $1,000 for the
Distributor Fee. External Distributors
will remain subject to the per User fees
discussed above. In every case the
Exchange will receive at least $10,000 in
connection with the distribution of the
Cboe One Options Feed (through a
combination of the External Distribution
Fee and per User Fees). The Exchange
notes that its affiliated equities
exchanges offer a similar credit for a
similar market data product.17
Enterprise Fees
The Exchange also proposes to
establish Enterprise Fees that will
permit a Distributor to purchase a
monthly (and optional) Enterprise
license to receive the Cboe One Options
Feed for distribution to a specified
number of Professional and NonProfessional Users. The Enterprise Fee
will be an alternative to Professional
and Non-Professional User fees and will
permit a Distributor to pay a flat fee to
receive the data for a specified number
of Professional and Non-Professional
Users, which the Exchange proposes to
make clear in the Fee Schedule. Like
User fees, the Enterprise Fee would be
assessed in addition to the Distribution
Fees. The Exchange proposes to adopt
the following monthly Enterprise Fees:
$350,000 for up to 1,500,000 Users (Tier
1), $550,000 for 1,500,001 to 2,500,000
Users (Tier 2) and $750,000 for
2,500,001 or greater Users (Tier 3). The
proposed fees are non-progressive (e.g.,
if a Distributor has 2,000,000 Users, it
will be subject to $550,000 for Tier 2).
The Enterprise Fee may provide an
17 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
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opportunity to reduce fees. For example,
if a Distributor has 1 million NonProfessional Users who each receive
Cboe One Options Feed at $0.60 per
month (as proposed), then that
Distributor will pay $600,000 per month
in Professional Users fees. If the
Distributor instead were to purchase the
proposed Enterprise license (tier 1), it
would alternatively pay a flat fee of
$350,000 for up to 1.5 million
Professional and Non-Professional
Users. A Distributor must pay a separate
Enterprise Fee for each entity that
controls the display of Cboe One
Options Feed if it wishes for such Users
to be covered by an Enterprise Fee
rather than by per User fees.18 A
Distributor that pays the Tier 1 or Tier
2 Enterprise Fee will have to report its
number of such Users on a monthly
basis. A Distributor that pays the Tier 3
Enterprise Fee will only have to report
the number of its Users every six
months.19 The Exchange notes that if
the reported number of Users exceed the
Enterprise Tier a Distributor has
purchased, the higher Tier will apply
(e.g., if a Distributor purchases Tier 1,
but reports 1,600,000 Users for a month,
the Distributor will be assessed the Tier
2 fee).
The Exchange also proposes to allow
Distributors to purchase the Enterprise
Fee on a monthly or annual basis.
Annual licenses will receive a 5%
discount off the applicable Enterprise
Fee tier. The Exchange notes that the
purchase of an Enterprise license is
voluntary, and a firm may elect to
instead use the per User structure and
benefit from the proposed per User Fees
described above. For example, a firm
that does not have a sufficient number
of Users to benefit from purchase of a
license need not do so.
Data Consolidation Fee
The Exchange also proposes to charge
External Distributors of the Cboe One
Options Feed a separate Data
Consolidation Fee, which reflects the
value of the aggregation and
consolidation function the Exchange
performs in creating the Cboe One
Options Feed. As stated above, the
Exchange creates the Cboe One Options
Feed from data derived from the Cboe
Options Top, C2 Options Top, BZX
Options Top, and EDGX Options Top
Feeds. External Distributors could
18 For example, if a Distributor that distributes
Cboe Options Top to Retail Brokerage Firm A and
Retail Brokerage Firm B and wishes to have the
Users under each firm covered by an Enterprise
license, the Distributor would be subject to two
Enterprise Fees.
19 See Cboe Global Markets north American Data
Policies.
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similarly create a competing product to
the Cboe One Options Feed based on
these individual data feeds, or,
alternatively, the applicable Top and
Last Sale products offered by the
Exchanges, and could charge its clients
a fee that it believes reflects the value
of the aggregation and consolidation
function. Accordingly, 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.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,20
in general, and furthers the objectives of
Section 6(b)(4),21 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its members and
other recipients of Exchange data. In
addition, the Exchange believes that the
proposed rule change is consistent with
Section 11(A) of the Act as 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.22 Finally, the proposed rule
change is also consistent with Rule 603
of Regulation NMS,23 which provides
that any national securities exchange
that distributes information with respect
to quotations for or transactions in an
NMS stock do so on terms that are not
unreasonably discriminatory.
The Exchange first notes that it
operates in a highly competitive
environment. Indeed, there are currently
16 registered options exchanges that
trade options. Based on publicly
available information, no single options
exchange has more than 17% of the
market share.24 The Exchange believes
top-of-book quotation and transaction
data is highly competitive as national
securities exchanges compete vigorously
with each other to provide efficient,
reliable, and low-cost data to a wide
range of investors and market
participants. Indeed, there are several
competing products offered by other
national securities exchanges today, not
counting products offered by the
Exchange’s affiliates, and each of the
20 15
U.S.C. 78f.
U.S.C. 78f(b)(4).
22 15 U.S.C. 78k–1.
23 See 17 CFR 242.603.
24 See Cboe Global Markets U.S. Options Market
Month-to-Date Volume Summary (February 23,
2024), available at https://markets.cboe.com/us/
options/market_statistics/.
21 15
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Exchange’s affiliated U.S. options
exchanges also offers similar top-ofbook data.25 Each of those exchanges
offer top-of-book quotation and last sale
information based on their own
quotation and trading activity that is
substantially similar to the information
provided by the Exchange through the
Cboe Options Top Data Feed. Further,
the quote and last sale data contained in
the Cboe Data Feed is identical to the
data sent to OPRA for redistribution to
the public.26 Accordingly, Exchange
top-of-book data is widely available
today from a number of different
sources.
Moreover, the Cboe Options Top Data
Feed and Cboe One Options Feeds are
distributed and purchased on a
voluntary basis, in that neither the
Exchange nor market data distributors
are required by any rule or regulation to
make these data products available.
Accordingly, Distributors (including
vendors) and Users 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 27 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.28 As such, all proprietary
data feeds are optional.
25 See e.g., NYSE Arca Options Proprietary
Market Data Fees Schedule, MIAX Options
Exchange, Fee Schedule, Section 6 (Market Data
Fees), Nasdaq PHLX Options 7 Pricing Schedule,
Section 10 (Proprietary Data Feed Fees) and Cboe
Data Services, LLC Fees Schedule.
26 The Exchange makes available the top-of-book
data and last sale data that is included in the Cboe
Options Top Data Feed no earlier than the time at
which the Exchange sends that data to OPRA.
27 ‘‘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.
28 Id.
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18613
The Commission has repeatedly
expressed its preference for competition
over regulatory intervention in
determining prices, products, and
services in the securities markets.
Particularly, in Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 29
Making similar data products available
to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
charge supracompetitive fees. In the
event that a market participant views
one exchange’s data product as more or
less attractive than the competition they
can and do switch between similar
products. The proposed fees are a result
of the competitive environment, as the
Exchange seeks to adopt fees to attract
purchasers of Cboe Options Top Data
and Cboe One Options Feed.
The Exchange has also taken into
consideration its affiliated relationship
with its Affiliates in its design of the
Cboe One Options Feed to ensure that
vendors would be able to offer a similar
product on the same terms as the
Exchange from a cost perspective. While
the Cboe Options Exchanges are the
exclusive distributors of the individual
data feeds from which certain data
elements may be taken to create the
Cboe One Options Feed, they are not the
exclusive distributors of the aggregated
and consolidated information that
comprises the Cboe One Options Feed.
Any entity that receives, or elects to
receive, the individual data feeds would
be able to, if it so chooses, to create a
data feed with the same information
included in the Cboe One Options Feed
and sell and distribute it to its clients so
that it could be received by those clients
as quickly as the Cboe One Options
Feed would be received by those same
clients with no greater cost than the
Exchange.
In addition, vendors and Distributors
that do not wish to purchase the Cboe
One Options Feed may separately
purchase the individual underlying
products, and if they so choose, perform
a similar aggregation and consolidation
function that the Exchange performs in
creating the Cboe One Options Feed. To
enable such competition, the Exchange
is offering the Cboe One Options Feed
on terms that a vendor of those
29 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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underlying feeds could offer a
competing product if it so chooses.
In addition, the fees that are the
subject of this rule filing are constrained
by competition. Particularly, the
Exchange competes with other
exchanges (and their affiliates) that may
choose to offer similar market data
products. If another exchange (or its
affiliate) were to charge less to
consolidate and distribute a similar
product than the Exchange charges to
consolidate and distribute the Cboe One
Options Feed, prospective Users likely
could choose to not subscribe to, or
would cease subscribing to, the Cboe
One Options Feed. In addition, the
Exchange would compete with
unaffiliated market data vendors who
would be in a position to consolidate
and distribute the same data that
comprises the Cboe One Options Feed
into the vendor’s own comparable
market data product. If the third-party
vendor is able to provide the exact same
data for a lower cost, prospective Users
would avail themselves of that lower
cost and elect not to take the Cboe One
Options Feed.
For these reasons, the Exchange
believes that the proposed fees are
reasonable, equitable, and not unfairly
discriminatory.
User Fees. The Exchange believes that
the proposed Professional and NonProfessional User fees for the Cboe One
Options Feed are reasonable because
they represent the combined monthly
fees for Professional and NonProfessional User fees, respectively for
the underlying individual data feeds,
which have previously been filed with
the Commission. The Exchange believes
that the proposed fees are equitable and
not unfairly discriminatory because they
will be charged uniformly to
Distributors. Moreover, the proposed fee
structure of differentiated Professional
and Non-Professional fees that are paid
by both Internal and External
Distributors has long been used by other
exchanges, including the Exchange, for
their proprietary data products, and by
the OPRA plan in order to reduce the
price of data to retail investors and
make it more broadly available.30 The
Exchange also believes offering Cboe
30 See e.g., Securities Exchange Act Release No.
59544 (March 9, 2009), 74 FR 11162 (March 16,
2009) (SR–NYSE–2008–131) (establishing the $15
Non-Professional User Fee (Per User) for NYSE
OpenBook); See e.g., Securities Exchange Act
Release No. 67589 (August 2, 2012), 77 FR 47459
(August 8, 2012) (revising OPRA’s definition of the
term ‘‘Nonprofessional’’); and See Securities
Exchange Act Release No. 70683 (October 15, 2013),
78 FR 62798 (October 22, 2013) (SR–CBOE–2013–
087) (establishing Professional and NonProfessional User fees for Cboe Options COB Data
Feed).
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One Options Feed to Non-Professional
Users at a lower cost than Professional
Users results in greater equity among
data recipients, as Professional Users are
categorized as such based on their
employment and participation in
financial markets, and thus, are
compensated to participate in the
markets. Although Non-Professional
Users too can receive significant
financial benefits through their
participation in the markets, the
Exchange believes it is reasonable to
charge more to those Users who are
more directly engaged in the markets.
Enterprise Fee. The Exchange believes
the proposed Enterprise Fees for the
Cboe One Options Feed and proposed
changes to the Enterprise Fee for the
Cboe Options Top feed are reasonable as
the fees proposed could result in a fee
reduction for Distributors of the
respective products with a large number
of Professional and Non-Professional
Users. If a Distributor has a smaller
number of Professional Users of the
Cboe One Options Feed, then it may
continue using the per User structure
and benefit from the per User Fee
reductions. By reducing prices for
Distributors with a large number of
Professional and Non-Professional
Users, the Exchange believes that more
firms may choose to receive and to
distribute the Cboe One Options Feed,
thereby expanding the distribution of
this market data for the benefit of
investors. Also as described above, the
Enterprise Fees are entirely optional. A
firm that does not have a sufficient
number of Users to benefit from
purchase of a license need not do so.
Distributor Fees. The Exchange
believes that the proposed Distributor
fees for the Cboe One Options Feed are
reasonable because they represent the
combined monthly fees for Internal and
External Distributor fees, respectively
for the underlying individual data feeds,
which have previously been filed with
the Commission. The Exchange believes
that the proposed fees are equitable and
not unfairly discriminatory because they
will be charged uniformly to Internal
and External Distributors. The Exchange
believes that it is also fair and equitable,
and not unfairly discriminatory to
charge different fees for internal and
external distribution of the Cboe One
Options Feed. Although the proposed
distribution fee charged to External
Distributors will be lower than the
existing distribution fee charged to
Internal Distributors, External
Distributors are subject to NonProfessional user fees to which Internal
Distributors are not subject, in addition
to Professional User fees (or
alternatively the proposed Enterprise
PO 00000
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Fee). Furthermore, the proposal is
designed to incentivize External
Distributors to subscribe to Cboe One
Options Feed.
The proposed Distributor Fees for the
Cboe One Options Feed are also
designed to ensure that vendors could
compete with the Exchange by creating
a similar product as the Cboe One
Options Feed. The Exchange believes
that the proposed Distributor Fees are
equitable and reasonable as they equal
the combined fee of subscribing to each
individual data feed of the Cboe Options
Exchanges, which have been previously
published by the Commission.
In addition, the Exchange believes it
is reasonable to not charge External
Distributors of C2 Options Top and
Cboe One Options Feed a Distribution
Fee during their first three (3) months
and does not believe this would inhibit
a vendor from creating a competing
product and offer a similar free period
as the Exchange. Specifically, a vendor
seeking to create the Cboe One Options
Feed could do so by subscribing to the
underlying individual data feeds, all of
which will also include a New External
Distributor Credit identical to that
proposed for the Cboe One Options
Feed. As a result, a competing vendor
would incur similar costs as the
Exchange in offering such free period
for a competing product and may do so
on the same terms as the Exchange.
Data Consolidation Fee. The
Exchange believes that the proposed
$500 per month Data Consolidation Fee
charged to Distributors who receive the
Cboe One Options Feed is reasonable
because it represents the value of the
data aggregation and consolidation
function that the Exchange performs.
The Exchange further believes the
proposed Data Consolidation Fee is not
designed to permit unfair
discrimination because all Distributor
who obtain the Cboe One Options Feed
will be charged the same fee. The
increased cost of the Cboe One Options
Feed is designed to include the value of
the aggregation and consolidation
function the Exchange performs in
creating the Cboe One Options Feed.
Therefore, the Exchange believes the
proposed application of the Data
Consolidation Fee is reasonable would
not permit unfair discrimination.
In addition, a vendor could create a
competing 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 the Cboe One Options
Feed pricing. Therefore, the Exchange
believes the proposed pricing would
enable a vendor to create a competing
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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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would result
in any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive environment, and its ability
to price top-of-book data is constrained
by competition among exchanges that
offer similar data products to their
customers. Top-of-book data is broadly
disseminated by competing U.S. options
exchanges and through OPRA. In this
competitive environment potential
Distributors are free to choose which
competing product to purchase to
satisfy their respective needs for market
information. Often, the choice comes
down to price, as market data
participants look to purchase cheaper
data products, and quality, as market
participants seek to purchase data that
represents significant market liquidity.
The Exchange believes that the
proposed fees do not impose a burden
on competition or on other SROs that is
not necessary or appropriate in
furtherance of the purposes of the Act.
In particular, market participants are not
forced to subscribe to Cboe Options
Top, Cboe One Options Feed or any of
the Exchange’s data feeds, as described
above. As noted, the quote and last sale
data contained in the Exchange’s Cboe
Options Top feed is identical to the data
sent to OPRA for redistribution to the
public. Accordingly, Exchange top-ofbook data is widely available today from
a number of different sources.
The Exchange believes that the
proposed fees do not put any market
participants at a relative disadvantage
compared to other market participants.
As discussed, the proposed waiver,
credits and Enterprise Fees would apply
to all similarly situated Distributors of
Cboe Options Top on an equal and nondiscriminatory basis. Because market
data customers can find suitable
substitute feeds, an exchange that
overprices its market data products
stands a high risk that users may
substitute another product. These
competitive pressures ensure that no
one exchange’s market data fees can
impose an undue burden on
competition, and the Exchange’s
proposed fees do not do so here.
Additionally, the Cboe One Options
Feed will enhance competition because
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it provides investors with an alternative
option for receiving market data.
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. Any entity that receives,
or elects to received, the underlying
data feeds would be able to, if it so
chooses, to create a data feed with the
same information included in the Cboe
One Options Feed and sell and
distribute it to its clients so that it could
be received by those clients as quickly
as the Cboe One Options Feed would be
received by those same clients and at a
similar cost.
The proposed 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
individual data feeds and offer a similar
product on a competitive basis and with
no greater cost than the Exchange. The
pricing the Exchange proposes to charge
for the Cboe One Options Feed is not
lower than the cost to a vendor of
receiving the underlying data feeds.
Indeed, the proposed pricing equals the
combined costs of the respective fees,
and the proposed waivers are also being
proposed for the underlying individual
feeds as well, thereby enabling a vendor
to receive the underlying data feeds and
offer a similar product on a competitive
basis and with no greater cost than the
Exchange.
The Exchange further believes that its
proposed monthly Data Consolidation
Fee would be pro-competitive because a
vendor could create a competing
product, perform a similar aggregating
and consolidating function, and
similarly charge for such service. The
Exchange notes that a competing vendor
might engage in a different analysis of
assessing the cost of a competing
product. For these reasons, the
Exchange believes the proposed pricing,
fee waiver and credit, would enable a
vendor to create a competing 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.
In establishing the proposed fees, the
Exchange considered the
competitiveness of the market for
proprietary data and all of the
implications of that competition. The
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18615
Exchange believes that it has considered
all relevant factors and has not
considered irrelevant factors in order to
establish fair, reasonable, and not
unreasonably discriminatory fees and an
equitable allocation of fees among all
users. The existence of alternatives to
the Cboe One Options Feed, including
the existing underlying feeds and data
from other sources, such as OPRA,
constrains the Exchange from setting
unreasonable fees, or fees that are
unreasonably discriminatory, when
vendors and Distributors can elect these
alternatives or choose not to purchase a
specific proprietary data product if its
cost to purchase is not justified by the
returns any particular vendor or
Distributor would achieve through the
purchase.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
comments from members or other
interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 31 and paragraph (f) of Rule
19b–4 32 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
31 15
32 17
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• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2023–015 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–97188; File No. SR–C2–
2023–010]
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2023–015. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CBOE–2023–015 and
should be submitted on or before April
19, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
J. Matthew DeLesDernier,
Deputy Secretary.
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[FR Doc. 2023–06429 Filed 3–28–23; 8:45 am]
BILLING CODE 8011–01–P
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule
March 23, 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 March 16,
2023, Cboe C2 Exchange, Inc.
(‘‘Exchange’’ or ‘‘C2’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to update
its Fees Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/ctwo/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
33 17
CFR 200.30–3(a)(12).
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CFR 240.19b–4.
Frm 00105
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Market Data section of its Fees
Schedule.3 Particularly, the Exchange
proposes to (i) adopt a New External
Credit applicable to C2 Options Top, (ii)
adopt a credit towards the monthly
Distribution fees for C2 Options Top,
(iii) modify the C2 Options Top
Enterprise Fee; and (iv) establish fees for
Cboe One Options Feed.
C2 Top Data
By way of background, the Exchange
offers the C2 Options Top Data 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 C2 Options Top Data feed
benefits investors by facilitating their
prompt access to real-time top-of-book
information contained in C2 Options
Top Data. The Exchange’s affiliated
options exchanges (i.e., Cboe Exchange,
Inc. (‘‘Cboe Options’’), Cboe BZX
Exchange, Inc. (‘‘BZX Options’’), and
Cboe EDGX Exchange, Inc. (‘‘EDGX
Options’’) (collectively, ‘‘Affiliates’’)
also offer similar top-of-book data
feeds.4 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 C2 Options
Top. The Exchange proposes to make
the following fee changes relating to C2
Options Top.
New External Distributor Credit
The Exchange first proposes to adopt
a New External Distributor Credit which
will provide that new External
Distributors of the C2 Options Top feed
will not be charged an External
Distributor Fee for their first three (3)
months in order to incentivize External
Distributors to enlist new users to
receive C2 Options Top feed. The
Exchange notes that other exchanges,
including the Exchange’s affiliated
equities exchanges, offer similar credits
for similar market data products. For
example, Cboe’s equities exchanges
3 The Exchange initially filed the proposed fee
changes on March 1, 2023 (SR–C2–2023–008). On
March 3, 2023, the Exchange withdrew that filing
and submitted SR–C2–2023–009. On March 16,
2023, the Exchange withdrew that filing and
submitted this proposal.
4 See Cboe Options Fees Schedule, EDGX Rule
21.15, and BZX Rule 21.15.
E:\FR\FM\29MRN1.SGM
29MRN1
]]>Agencies
[Federal Register Volume 88, Number 60 (Wednesday, March 29, 2023)]
[Notices]
[Pages 18609-18616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06429]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97189; File No. SR-CBOE-2023-015]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Update
Its Fees Schedule
March 23, 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 March 10, 2023, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to update its Fees Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 18610]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Market Data section of its Fees
Schedule.\3\ Particularly, the Exchange proposes to (i) adopt a New
External Credit applicable to Cboe Options Top, (ii) adopt a credit
towards the monthly Distribution fees for Cboe Options Top, (iii)
modify the Cboe Options Top Enterprise Fee; and (iv) establish fees for
Cboe One Options Feed.
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed fee changes on
March 1, 2023 (SR-CBOE-2023-014). On March 10, 2023, the Exchange
withdrew that filing and submitted this proposal.
---------------------------------------------------------------------------
Cboe Top Data
By way of background, the Exchange offers the Cboe Options Top Data
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 Cboe Options Top Data feed benefits
investors by facilitating their prompt access to real-time top-of-book
information contained in Cboe Options Top Data. The Exchange's
affiliated options exchanges (i.e., Cboe C2 Exchange, Inc. (``C2
Options''), Cboe BZX Exchange, Inc. (``BZX Options''), and Cboe EDGX
Exchange, Inc. (``EDGX Options'') (collectively, ``Affiliates'') also
offer similar top-of-book data feeds.\4\ 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 Cboe Options Top. The Exchange proposes to make the
following fee changes relating to Cboe Options Top.
---------------------------------------------------------------------------
\4\ See C2 Options Fees Schedule, EDGX Rule 21.15, and BZX Rule
21.15.
---------------------------------------------------------------------------
New External Distributor Credit
The Exchange first proposes to adopt a New External Distributor
Credit which will provide that new External Distributors of the Cboe
Options Top feed will not be charged an External Distributor Fee for
their first three (3) months in order to incentivize External
Distributors to enlist new users to receive Cboe Options Top feed. The
Exchange notes that other exchanges, including the Exchange's
affiliated equities exchanges, offer similar credits for similar market
data products. For example, Cboe's equities exchanges currently offer a
three (3) month New External Distributor Credit applicable to External
Distributors of their top-of-book data feeds.\5\
---------------------------------------------------------------------------
\5\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees.
---------------------------------------------------------------------------
Distributor Fee Credit
The Exchange also proposes to provide that each External
Distributor will receive a credit against its monthly Distributor Fee
for the Cboe Options Top equal to the amount of its monthly Usage Fees
up to a maximum of the Distributor Fee for the Cboe Options Top feed.
For example, an External Distributor will be subject to a $9,000
monthly Distributor Fee where they elect to receive the Cboe Options
Top. If that External Distributor reports User quantities totaling
$9,000 or more of monthly usage of the Cboe Options Top, it will pay no
net Distributor Fee, whereas if that same External Distributor were to
report User quantities totaling $8,000 of monthly usage, it will pay a
net of $1,000 for the Distributor Fee. External Distributors will
remain subject to the per User fees applicable to Cboe Options Top. In
every case the Exchange will receive at least $9,000 in connection with
the distribution of the Cboe Options Top (through a combination of the
External Distribution Fee and per User Fees). The Exchange notes that
its affiliated equities exchanges offer a similar credit for a similar
market data product.\6\
---------------------------------------------------------------------------
\6\ See e.g., EDGX Equities Exchange Fees Schedule, Id.
---------------------------------------------------------------------------
Enterprise Fee Tiers
The Exchange currently offers Distributors the ability to purchase
a monthly (and optional) Enterprise license to receive the Cboe Options
Top Feed for distribution to an unlimited number of Professional and
Non-Professional Users. The Enterprise Fee is an alternative to
Professional and Non-Professional User fees and permits a Distributor
to pay a flat fee for an unlimited number of Professional and Non-
Professional Users and is in addition to the Distribution fees. The
Exchange currently assesses an Enterprise fee of $300,000 per month.
The Exchange proposes to modify the current Enterprise Fee and adopt a
tiered structure based on the number of Users a Distributor has. The
Exchange proposes to adopt the following monthly Enterprise Fees:
$300,000 for up to 1,500,000 Users (Tier 1), $450,000 for 1,500,001 to
2,500,000 Users (Tier 2) and $600,000 for 2,500,001 or greater Users
(Tier 3). The proposed fees are non-progressive (e.g., if a Distributor
has 2,000,000 Users, it will be subject to $450,000 for Tier 2). The
Enterprise Fee may provide an opportunity to reduce fees. For example,
if a Distributor has 1.4 million Non-Professional Users who each
receive Cboe One Options Feed at $0.30 per month (as proposed), then
that Distributor will pay $420,000 per month in Professional Users
fees. If the Distributor instead were to purchase the proposed
Enterprise license (tier 1), it would alternatively pay a flat fee of
$300,000 for up to 1.5 million Professional and Non-Professional Users.
A Distributor that pays the Tier 1 or Tier 2 Enterprise Fee will have
to report its number of such Users on a monthly basis. A Distributor
that pays the Tier 3 Enterprise Fee will only have to report the number
of its Users every six months.\7\ The Exchange notes that if the
reported number of Users exceed the Enterprise Tier a Distributor has
purchased, the higher Tier will apply (e.g., if a Distributor purchases
Tier 1, but reports 1,600,000 Users for a month, the Distributor will
be assessed the Tier 2 fee).
---------------------------------------------------------------------------
\7\ See Cboe Global Markets north American Data Policies.
---------------------------------------------------------------------------
The Exchange also proposes to allow Distributors to purchase the
Enterprise Fee on a monthly or annual basis. Annual licenses will
receive a 5% discount off the applicable Enterprise Tier fee. The
Exchange notes that the purchase of an Enterprise license is voluntary,
and a firm may elect to instead use the per User structure and benefit
from the proposed per User Fees described above. For example, a firm
that does not have a sufficient number of Users to benefit from
purchase of a license need not do so.
Cboe One Options Feed
By way of background, the Exchange recently adopted a new market
data product called Cboe One Options Feed, which is launching March 1,
2023.\8\ Cboe One Options Feed 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
offers a comprehensive and highly representative view of US options
pricing to market participants. More specifically, 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, which includes
the price, time of execution and individual Cboe options exchange on
which the trade was executed. See
[[Page 18611]]
e.g., EDGX Equities Exchange Fees Schedule, Market Data Fees.
---------------------------------------------------------------------------
\8\ See SR-CBOE-2023-012.
---------------------------------------------------------------------------
The Cboe One Options Feed will also consist of Symbol Summary,\9\
Market Status,\10\ Trading Status,\11\ and Trade Break \12\ messages
for the Exchange and each of its Affiliates.
---------------------------------------------------------------------------
\9\ The Symbol Summary message will include the total executed
volume across all Cboe Options Exchanges.
\10\ 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.
\11\ 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).
\12\ 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 will use the following data feeds to create the Cboe
One Options Feed, each of which is available to other vendors and/or
distributors: Cboe Options Top Data, C2 Options Top Data, EDGX Options
Top and BZX Options Top. A vendor and/or distributor that wishes to
create a product like the Cboe One Options Feed could instead subscribe
to each of the aforementioned data feeds. Any entity that receives, or
elects to receive, the individual data feeds or the feeds that may be
used to create a product like the Cboe One Options Feed would be able
to, if it so chooses, to create a data feed with the same information
included in the Cboe One Options Feed and sell and distribute it to its
clients so that it could be received by those clients as quickly as the
Cboe One Options Feed would be received by those same clients.
The Exchange proposes to amend its fee schedule to incorporate fees
related to the Cboe One Options Feed. The Exchange has taken into
consideration its affiliated relationship with its Affiliates in its
design of the Cboe One Options Feed to assure that vendors \13\ would
be able to offer a similar product on the same terms as the Exchange
from a cost perspective. Although 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 compose the proposed Cboe One Options
Feed. 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 proposes to charge for the
Cboe One Options Feed, as described more fully below, is not lower than
the cost to a distributor or vendor to obtain the underlying data
feeds. In fact, the Distribution and User (Professional and Non-
Professional) fees, as well as the optional Enterprise Fees, that the
Exchange proposes to adopt for the Cboe One Options Feed are equal to
the respective combined fees for subscribing to each individual data
feed. The Exchange also proposes to adopt a ``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.
---------------------------------------------------------------------------
\13\ 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 resell 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 proposed Cboe One Options Feed fees include the following, each
of which are described in further detail below: (i) Distributor Fees;
(ii) User Fees for both Professional and Non-Professional Users; (iii)
Enterprise Fees; and (iv) a Data Consolidation Fee. The Exchange also
proposes to adopt a New External Distributor credit and a credit
against the monthly External Distribution Fee equal to the amount of
monthly User Fees up to a maximum of the External Distributor Fee. To
ensure consistency across the Cboe Options Exchanges, C2 Options, EDGX
Options, and BZX Options will be filing companion proposals to reflect
this proposal in their respective fee schedules.
Distributor Fees
As proposed, each Internal Distributor that receives the Cboe One
Options Feed shall pay a fee of $15,000 per month. The proposed
Internal Distribution Fee equals the combined monthly Internal
Distribution fees for the underlying individual data feeds of the Cboe
Options Exchanges (i.e., the monthly Internal Distribution fees are
$3,000 for BZX Options Top, $500 for EDGX Options Top, $2,500 for C2
Options Top and $9,000 for Cboe Options Top). The Exchange also
proposes to assess External Distributors a monthly fee of $10,000. The
proposed External Distribution fee equals the combined monthly External
Distribution fees for the underlying individual data feeds of the Cboe
Options Exchanges (i.e., the monthly External Distribution fees are
$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). As noted above, the Exchange is proposing to charge
External Distributors an External Distribution Fee that equals the
combined External Distribution fees of each individual Top feed to
ensure that vendors could compete with the Exchange by creating the
same product as the Cboe One Options Feed to sell to their clients.
New External Distributor Credit
The Exchange proposes to adopt a New External Distributor Credit
which would provide that new External Distributors of the Cboe One
Options Feed will not be charged an External Distributor Fee for their
first three (3) months in order to incentive them to enlist new Users
to receive the Cboe One Options Feed. The Exchange notes that other
exchanges, including the Exchange's affiliated equities exchanges offer
similar credits for similar market data products. For example, Cboe's
equities exchanges currently offer a three (3) month New External
Distributor Credit applicable to Cboe One Summary Feed.\14\ To
alleviate any competitive issues that may arise with a vendor seeking
to offer a product similar to the Cboe One Options Feed
[[Page 18612]]
based on the underlying data feeds, the Exchange is proposing, as
discussed above, to also adopt a three-month New External Distributor
Credit for the underlying top-of-book data feeds for the Cboe Options
Exchanges. The respective proposals to adopt a three-month credit
ensures the proposed New External Distributor Credit for Cboe One
Options will not cause the combined cost of subscribing to Cboe
Options, C2 Options, BZX Options and EDGX Options Top feeds for new
External Distributors to be greater than those that would be charged to
subscribe to the Cboe One Options feed.
---------------------------------------------------------------------------
\14\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees.
---------------------------------------------------------------------------
User Fees
In addition to Internal and External Distributor Fees, the Exchange
proposes to assess Professional \15\ User and Non-Professional \16\
User Fees. The proposed monthly Professional User fee for the Cboe
Options Exchanges is $30.50 per Professional User, which equals the
combined monthly Professional User fees of the underlying individual
Cboe Options Exchanges Top feeds (i.e., $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 Exchange also proposes to adopt a
monthly Non-Professional User fee of $0.60 per Non-Professional User,
which similarly represents the combined total Non-Professional User fee
for the individual data feeds of the Cboe Options (i.e., $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). Similar
to the individual underlying feeds, Distributors that receive Cboe One
Options Feed will be required to count Professional and Non-
Professional Users to which they provide the data feed.
---------------------------------------------------------------------------
\15\ A Professional User of an Exchange Market Data product is
any natural person recipient of an Exchange Market Data product who
is not a Non-Professional User.
\16\ A ``Non-Professional User'' of an Exchange Market Data
product is a natural person or qualifying trust that uses Data only
for personal purposes and not for any commercial purpose and, for a
natural person who works in the United States, is not: (i)
registered or qualified in any capacity with the Securities and
Exchange Commission, the Commodities Futures Trading Commission, any
state securities agency, any securities exchange or association, or
any commodities or futures contract market or association; (ii)
engaged as an ``investment adviser'' as that term is defined in
Section 202(a)(11) of the Investment Advisors Act of 1940 (whether
or not registered or qualified under that Act); or (iii) employed by
a bank or other organization exempt from registration under federal
or state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt; or, for a natural person who works
outside of the United States, does not perform the same functions as
would disqualify such person as a Non-Professional User if he or she
worked in the United States.
---------------------------------------------------------------------------
The Exchange also proposes to provide that each External
Distributor will receive a credit against its monthly Distributor Fee
for the Cboe One Feed equal to the amount of its monthly User Fees up
to a maximum of the Distributor Fee for the Cboe One Options Feed. For
example, an External Distributor will be subject to a $10,000 monthly
Distributor Fee where they elect to receive the Cboe One Options Feed.
If that External Distributor reports User quantities totaling $10,000
or more of monthly User fees of the Cboe Options One Feed, it will pay
no net Distributor Fee, whereas if that same External Distributor were
to report User quantities totaling $9,000 of monthly usage, it will pay
a net of $1,000 for the Distributor Fee. External Distributors will
remain subject to the per User fees discussed above. In every case the
Exchange will receive at least $10,000 in connection with the
distribution of the Cboe One Options Feed (through a combination of the
External Distribution Fee and per User Fees). The Exchange notes that
its affiliated equities exchanges offer a similar credit for a similar
market data product.\17\
---------------------------------------------------------------------------
\17\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees.
---------------------------------------------------------------------------
Enterprise Fees
The Exchange also proposes to establish Enterprise Fees that will
permit a Distributor to purchase a monthly (and optional) Enterprise
license to receive the Cboe One Options Feed for distribution to a
specified number of Professional and Non-Professional Users. The
Enterprise Fee will be an alternative to Professional and Non-
Professional User fees and will permit a Distributor to pay a flat fee
to receive the data for a specified number of Professional and Non-
Professional Users, which the Exchange proposes to make clear in the
Fee Schedule. Like User fees, the Enterprise Fee would be assessed in
addition to the Distribution Fees. The Exchange proposes to adopt the
following monthly Enterprise Fees: $350,000 for up to 1,500,000 Users
(Tier 1), $550,000 for 1,500,001 to 2,500,000 Users (Tier 2) and
$750,000 for 2,500,001 or greater Users (Tier 3). The proposed fees are
non-progressive (e.g., if a Distributor has 2,000,000 Users, it will be
subject to $550,000 for Tier 2). The Enterprise Fee may provide an
opportunity to reduce fees. For example, if a Distributor has 1 million
Non-Professional Users who each receive Cboe One Options Feed at $0.60
per month (as proposed), then that Distributor will pay $600,000 per
month in Professional Users fees. If the Distributor instead were to
purchase the proposed Enterprise license (tier 1), it would
alternatively pay a flat fee of $350,000 for up to 1.5 million
Professional and Non-Professional Users. A Distributor must pay a
separate Enterprise Fee for each entity that controls the display of
Cboe One Options Feed if it wishes for such Users to be covered by an
Enterprise Fee rather than by per User fees.\18\ A Distributor that
pays the Tier 1 or Tier 2 Enterprise Fee will have to report its number
of such Users on a monthly basis. A Distributor that pays the Tier 3
Enterprise Fee will only have to report the number of its Users every
six months.\19\ The Exchange notes that if the reported number of Users
exceed the Enterprise Tier a Distributor has purchased, the higher Tier
will apply (e.g., if a Distributor purchases Tier 1, but reports
1,600,000 Users for a month, the Distributor will be assessed the Tier
2 fee).
---------------------------------------------------------------------------
\18\ For example, if a Distributor that distributes Cboe Options
Top to Retail Brokerage Firm A and Retail Brokerage Firm B and
wishes to have the Users under each firm covered by an Enterprise
license, the Distributor would be subject to two Enterprise Fees.
\19\ See Cboe Global Markets north American Data Policies.
---------------------------------------------------------------------------
The Exchange also proposes to allow Distributors to purchase the
Enterprise Fee on a monthly or annual basis. Annual licenses will
receive a 5% discount off the applicable Enterprise Fee tier. The
Exchange notes that the purchase of an Enterprise license is voluntary,
and a firm may elect to instead use the per User structure and benefit
from the proposed per User Fees described above. For example, a firm
that does not have a sufficient number of Users to benefit from
purchase of a license need not do so.
Data Consolidation Fee
The Exchange also proposes to charge External Distributors of the
Cboe One Options Feed a separate Data Consolidation Fee, which reflects
the value of the aggregation and consolidation function the Exchange
performs in creating the Cboe One Options Feed. As stated above, the
Exchange creates the Cboe One Options Feed from data derived from the
Cboe Options Top, C2 Options Top, BZX Options Top, and EDGX Options Top
Feeds. External Distributors could
[[Page 18613]]
similarly create a competing product to the Cboe One Options Feed based
on these individual data feeds, or, alternatively, the applicable Top
and Last Sale products offered by the Exchanges, and could charge its
clients a fee that it believes reflects the value of the aggregation
and consolidation function. Accordingly, 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.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\20\ in general, and
furthers the objectives of Section 6(b)(4),\21\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its members and other recipients of
Exchange data. In addition, the Exchange believes that the proposed
rule change is consistent with Section 11(A) of the Act as 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.\22\ Finally, the proposed rule change is also consistent
with Rule 603 of Regulation NMS,\23\ which provides that any national
securities exchange that distributes information with respect to
quotations for or transactions in an NMS stock do so on terms that are
not unreasonably discriminatory.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78f.
\21\ 15 U.S.C. 78f(b)(4).
\22\ 15 U.S.C. 78k-1.
\23\ See 17 CFR 242.603.
---------------------------------------------------------------------------
The Exchange first notes that it operates in a highly competitive
environment. Indeed, there are currently 16 registered options
exchanges that trade options. Based on publicly available information,
no single options exchange has more than 17% of the market share.\24\
The Exchange believes top-of-book quotation and transaction data is
highly competitive as national securities exchanges compete vigorously
with each other to provide efficient, reliable, and low-cost data to a
wide range of investors and market participants. Indeed, there are
several competing products offered by other national securities
exchanges today, not counting products offered by the Exchange's
affiliates, and each of the Exchange's affiliated U.S. options
exchanges also offers similar top-of-book data.\25\ Each of those
exchanges offer top-of-book quotation and last sale information based
on their own quotation and trading activity that is substantially
similar to the information provided by the Exchange through the Cboe
Options Top Data Feed. Further, the quote and last sale data contained
in the Cboe Data Feed is identical to the data sent to OPRA for
redistribution to the public.\26\ Accordingly, Exchange top-of-book
data is widely available today from a number of different sources.
---------------------------------------------------------------------------
\24\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (February 23, 2024), available at https://markets.cboe.com/us/options/market_statistics/.
\25\ See e.g., NYSE Arca Options Proprietary Market Data Fees
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10
(Proprietary Data Feed Fees) and Cboe Data Services, LLC Fees
Schedule.
\26\ The Exchange makes available the top-of-book data and last
sale data that is included in the Cboe Options Top Data Feed no
earlier than the time at which the Exchange sends that data to OPRA.
---------------------------------------------------------------------------
Moreover, the Cboe Options Top Data Feed and Cboe One Options Feeds
are distributed and purchased on a voluntary basis, in that neither the
Exchange nor market data distributors are required by any rule or
regulation to make these data products available. Accordingly,
Distributors (including vendors) and Users 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 \27\ 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.\28\ As such,
all proprietary data feeds are optional.
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\27\ ``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.
\28\ Id.
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The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Particularly, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \29\ Making
similar data products available to market participants fosters
competition in the marketplace, and constrains the ability of exchanges
to charge supracompetitive fees. In the event that a market participant
views one exchange's data product as more or less attractive than the
competition they can and do switch between similar products. The
proposed fees are a result of the competitive environment, as the
Exchange seeks to adopt fees to attract purchasers of Cboe Options Top
Data and Cboe One Options Feed.
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\29\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange has also taken into consideration its affiliated
relationship with its Affiliates in its design of the Cboe One Options
Feed to ensure that vendors would be able to offer a similar product on
the same terms as the Exchange from a cost perspective. While the Cboe
Options Exchanges are the exclusive distributors of the individual data
feeds from which certain data elements may be taken to create the Cboe
One Options Feed, they are not the exclusive distributors of the
aggregated and consolidated information that comprises the Cboe One
Options Feed. Any entity that receives, or elects to receive, the
individual data feeds would be able to, if it so chooses, to create a
data feed with the same information included in the Cboe One Options
Feed and sell and distribute it to its clients so that it could be
received by those clients as quickly as the Cboe One Options Feed would
be received by those same clients with no greater cost than the
Exchange.
In addition, vendors and Distributors that do not wish to purchase
the Cboe One Options Feed may separately purchase the individual
underlying products, and if they so choose, perform a similar
aggregation and consolidation function that the Exchange performs in
creating the Cboe One Options Feed. To enable such competition, the
Exchange is offering the Cboe One Options Feed on terms that a vendor
of those
[[Page 18614]]
underlying feeds could offer a competing product if it so chooses.
In addition, the fees that are the subject of this rule filing are
constrained by competition. Particularly, the Exchange competes with
other exchanges (and their affiliates) that may choose to offer similar
market data products. If another exchange (or its affiliate) were to
charge less to consolidate and distribute a similar product than the
Exchange charges to consolidate and distribute the Cboe One Options
Feed, prospective Users likely could choose to not subscribe to, or
would cease subscribing to, the Cboe One Options Feed. In addition, the
Exchange would compete with unaffiliated market data vendors who would
be in a position to consolidate and distribute the same data that
comprises the Cboe One Options Feed into the vendor's own comparable
market data product. If the third-party vendor is able to provide the
exact same data for a lower cost, prospective Users would avail
themselves of that lower cost and elect not to take the Cboe One
Options Feed.
For these reasons, the Exchange believes that the proposed fees are
reasonable, equitable, and not unfairly discriminatory.
User Fees. The Exchange believes that the proposed Professional and
Non-Professional User fees for the Cboe One Options Feed are reasonable
because they represent the combined monthly fees for Professional and
Non-Professional User fees, respectively for the underlying individual
data feeds, which have previously been filed with the Commission. The
Exchange believes that the proposed fees are equitable and not unfairly
discriminatory because they will be charged uniformly to Distributors.
Moreover, the proposed fee structure of differentiated Professional and
Non-Professional fees that are paid by both Internal and External
Distributors has long been used by other exchanges, including the
Exchange, for their proprietary data products, and by the OPRA plan in
order to reduce the price of data to retail investors and make it more
broadly available.\30\ The Exchange also believes offering Cboe One
Options Feed to Non-Professional Users at a lower cost than
Professional Users results in greater equity among data recipients, as
Professional Users are categorized as such based on their employment
and participation in financial markets, and thus, are compensated to
participate in the markets. Although Non-Professional Users too can
receive significant financial benefits through their participation in
the markets, the Exchange believes it is reasonable to charge more to
those Users who are more directly engaged in the markets.
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\30\ See e.g., Securities Exchange Act Release No. 59544 (March
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131)
(establishing the $15 Non-Professional User Fee (Per User) for NYSE
OpenBook); See e.g., Securities Exchange Act Release No. 67589
(August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA's
definition of the term ``Nonprofessional''); and See Securities
Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798
(October 22, 2013) (SR-CBOE-2013-087) (establishing Professional and
Non-Professional User fees for Cboe Options COB Data Feed).
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Enterprise Fee. The Exchange believes the proposed Enterprise Fees
for the Cboe One Options Feed and proposed changes to the Enterprise
Fee for the Cboe Options Top feed are reasonable as the fees proposed
could result in a fee reduction for Distributors of the respective
products with a large number of Professional and Non-Professional
Users. If a Distributor has a smaller number of Professional Users of
the Cboe One Options Feed, then it may continue using the per User
structure and benefit from the per User Fee reductions. By reducing
prices for Distributors with a large number of Professional and Non-
Professional Users, the Exchange believes that more firms may choose to
receive and to distribute the Cboe One Options Feed, thereby expanding
the distribution of this market data for the benefit of investors. Also
as described above, the Enterprise Fees are entirely optional. A firm
that does not have a sufficient number of Users to benefit from
purchase of a license need not do so.
Distributor Fees. The Exchange believes that the proposed
Distributor fees for the Cboe One Options Feed are reasonable because
they represent the combined monthly fees for Internal and External
Distributor fees, respectively for the underlying individual data
feeds, which have previously been filed with the Commission. The
Exchange believes that the proposed fees are equitable and not unfairly
discriminatory because they will be charged uniformly to Internal and
External Distributors. The Exchange believes that it is also fair and
equitable, and not unfairly discriminatory to charge different fees for
internal and external distribution of the Cboe One Options Feed.
Although the proposed distribution fee charged to External Distributors
will be lower than the existing distribution fee charged to Internal
Distributors, External Distributors are subject to Non-Professional
user fees to which Internal Distributors are not subject, in addition
to Professional User fees (or alternatively the proposed Enterprise
Fee). Furthermore, the proposal is designed to incentivize External
Distributors to subscribe to Cboe One Options Feed.
The proposed Distributor Fees for the Cboe One Options Feed are
also designed to ensure that vendors could compete with the Exchange by
creating a similar product as the Cboe One Options Feed. The Exchange
believes that the proposed Distributor Fees are equitable and
reasonable as they equal the combined fee of subscribing to each
individual data feed of the Cboe Options Exchanges, which have been
previously published by the Commission.
In addition, the Exchange believes it is reasonable to not charge
External Distributors of C2 Options Top and Cboe One Options Feed a
Distribution Fee during their first three (3) months and does not
believe this would inhibit a vendor from creating a competing product
and offer a similar free period as the Exchange. Specifically, a vendor
seeking to create the Cboe One Options Feed could do so by subscribing
to the underlying individual data feeds, all of which will also include
a New External Distributor Credit identical to that proposed for the
Cboe One Options Feed. As a result, a competing vendor would incur
similar costs as the Exchange in offering such free period for a
competing product and may do so on the same terms as the Exchange.
Data Consolidation Fee. The Exchange believes that the proposed
$500 per month Data Consolidation Fee charged to Distributors who
receive the Cboe One Options Feed is reasonable because it represents
the value of the data aggregation and consolidation function that the
Exchange performs. The Exchange further believes the proposed Data
Consolidation Fee is not designed to permit unfair discrimination
because all Distributor who obtain the Cboe One Options Feed will be
charged the same fee. The increased cost of the Cboe One Options Feed
is designed to include the value of the aggregation and consolidation
function the Exchange performs in creating the Cboe One Options Feed.
Therefore, the Exchange believes the proposed application of the Data
Consolidation Fee is reasonable would not permit unfair discrimination.
In addition, a vendor could create a competing 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 the Cboe One Options Feed pricing. Therefore, the
Exchange believes the proposed pricing would enable a vendor to create
a competing
[[Page 18615]]
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.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
operates in a highly competitive environment, and its ability to price
top-of-book data is constrained by competition among exchanges that
offer similar data products to their customers. Top-of-book data is
broadly disseminated by competing U.S. options exchanges and through
OPRA. In this competitive environment potential Distributors are free
to choose which competing product to purchase to satisfy their
respective needs for market information. Often, the choice comes down
to price, as market data participants look to purchase cheaper data
products, and quality, as market participants seek to purchase data
that represents significant market liquidity.
The Exchange believes that the proposed fees do not impose a burden
on competition or on other SROs that is not necessary or appropriate in
furtherance of the purposes of the Act. In particular, market
participants are not forced to subscribe to Cboe Options Top, Cboe One
Options Feed or any of the Exchange's data feeds, as described above.
As noted, the quote and last sale data contained in the Exchange's Cboe
Options Top feed is identical to the data sent to OPRA for
redistribution to the public. Accordingly, Exchange top-of-book data is
widely available today from a number of different sources.
The Exchange believes that the proposed fees do not put any market
participants at a relative disadvantage compared to other market
participants. As discussed, the proposed waiver, credits and Enterprise
Fees would apply to all similarly situated Distributors of Cboe Options
Top on an equal and non-discriminatory basis. Because market data
customers can find suitable substitute feeds, an exchange that
overprices its market data products stands a high risk that users may
substitute another product. These competitive pressures ensure that no
one exchange's market data fees can impose an undue burden on
competition, and the Exchange's proposed fees do not do so here.
Additionally, the Cboe One Options Feed will enhance competition
because it provides investors with an alternative option for receiving
market data. 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. Any entity that receives, or elects to received, the
underlying data feeds would be able to, if it so chooses, to create a
data feed with the same information included in the Cboe One Options
Feed and sell and distribute it to its clients so that it could be
received by those clients as quickly as the Cboe One Options Feed would
be received by those same clients and at a similar cost.
The proposed 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
individual data feeds and offer a similar product on a competitive
basis and with no greater cost than the Exchange. The pricing the
Exchange proposes to charge for the Cboe One Options Feed is not lower
than the cost to a vendor of receiving the underlying data feeds.
Indeed, the proposed pricing equals the combined costs of the
respective fees, and the proposed waivers are also being proposed for
the underlying individual feeds as well, thereby enabling a vendor to
receive the underlying data feeds and offer a similar product on a
competitive basis and with no greater cost than the Exchange.
The Exchange further believes that its proposed monthly Data
Consolidation Fee would be pro-competitive because a vendor could
create a competing product, perform a similar aggregating and
consolidating function, and similarly charge for such service. The
Exchange notes that a competing vendor might engage in a different
analysis of assessing the cost of a competing product. For these
reasons, the Exchange believes the proposed pricing, fee waiver and
credit, would enable a vendor to create a competing 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.
In establishing the proposed fees, the Exchange considered the
competitiveness of the market for proprietary data and all of the
implications of that competition. The Exchange believes that it has
considered all relevant factors and has not considered irrelevant
factors in order to establish fair, reasonable, and not unreasonably
discriminatory fees and an equitable allocation of fees among all
users. The existence of alternatives to the Cboe One Options Feed,
including the existing underlying feeds and data from other sources,
such as OPRA, constrains the Exchange from setting unreasonable fees,
or fees that are unreasonably discriminatory, when vendors and
Distributors can elect these alternatives or choose not to purchase a
specific proprietary data product if its cost to purchase is not
justified by the returns any particular vendor or Distributor would
achieve through the purchase.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \31\ and paragraph (f) of Rule 19b-4 \32\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
[[Page 18616]]
Send an email to [email protected]. Please include
File Number SR-CBOE-2023-015 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-CBOE-2023-015. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2023-015 and should be submitted on
or before April 19, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-06429 Filed 3-28-23; 8:45 am]
BILLING CODE 8011-01-P
