Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule, 23713-23717 [2023-08142]
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Federal Register / Vol. 88, No. 74 / Tuesday, April 18, 2023 / Notices
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 such
filings will also be available for
inspection and copying at the principal
office of ICE Clear Credit and on ICE
Clear Credit’s website at https://
www.theice.com/clear-credit/regulation.
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–ICC–2023–005 and should
be submitted on or before May 9, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–08146 Filed 4–17–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule
ddrumheller on DSK120RN23PROD with NOTICES1
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 3,
2023, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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 amend
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/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
[Release No. 34–97288; File No. SR–CBOE–
2023–017]
April 12, 2023.
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.
The Exchange proposes to amend its
Fees Schedule in connection with
certain Lead Market-Maker (‘‘LMM’’)
Incentive Programs, effective April 3,
2023. Specifically, the Exchange
proposes to amend its NANOS LLM
Incentive Program and Global Trading
Hours (‘‘GTH’’) XSP LMM Incentive
Programs.
All three LMM Incentive Programs
provide a rebate to Trading Permit
Holders (‘‘TPHs’’) with LMM
appointments to the respective
incentive program that meet certain
quoting standards in the applicable
series in a month. The Exchange notes
that meeting or exceeding the quoting
standards (both current and as
proposed; described in further detail
below) in each of the LMM Incentive
Program products to receive the
applicable rebate (both currently offered
and as proposed; described in further
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23713
detail below) is optional for an LMM
appointed to a program. Particularly, an
LMM appointed to an incentive program
is eligible to receive the corresponding
rebate if it satisfies the applicable
quoting standards, which the Exchange
believes encourages appointed LMMs to
provide liquidity in the applicable class
and trading session (i.e., Regular
Trading Hours (‘‘RTH’’) or GTH). The
Exchange may consider other
exceptions to the programs’ quoting
standards based on demonstrated legal
or regulatory requirements or other
mitigating circumstances. In calculating
whether an LMM appointed to an
incentive program meets the applicable
program’s quoting standards each
month, the Exchange excludes from the
calculation in that month the business
day in which the LMM missed meeting
or exceeding the quoting standards in
the highest number of the applicable
series.
NANOS LLM Incentive Program
The Exchange first proposes to amend
the current NANOS LMM Incentive
Program. Currently, the NANOS LLM
Incentive Program provides that, for
NANOS, if the appointed LMM provides
continuous electronic quotes during
RTH that meet or exceed the heightened
quoting standards in at least 99% of the
NANOS series 90% of the time in a
given month, the LMM will receive a
rebate for that month in the amount of
$17,500 (or pro-rated amount if an
appointment begins after the first
trading day of the month or ends prior
to the last trading day of the month).
The Exchange now proposes to amend
the series qualification requirement for
the NANOS LMM Incentive Program.
Specifically, the Exchange proposes to
update the series qualification
requirement to require the appointed
LMM to provide continuous electronic
quotes during RTH that meet or exceed
the heightened quoting standards in at
least 98% the NANOS series 90% of the
time in a given month in order to
receive the rebate, thereby decreasing
the series qualification requirement by
1%. In changing this requirement, the
Exchange wishes to encourage LMMs
appointed to the NANOS LMM
Incentive Program to provide significant
liquidity in NANOS options by meeting
the series qualification requirements
(and relevant quoting standards) under
the Program in order to receive the
rebate.
GTH1 and GTH2 XSP LLM Incentive
Programs
The Exchange proposes to amend the
GTH XSP LMM Incentive Programs. The
GTH1 XSP LMM Incentive Program
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Federal Register / Vol. 88, No. 74 / Tuesday, April 18, 2023 / Notices
provides that if the appointed LMM
provides continuous electronic quotes
during GTH from 7:15PM CST to
2:00AM CST (‘‘GTH1’’) that meet or
exceed the proposed heightened quoting
standards (below) in at least 85% of the
series 90% of the time in a given month,
the LMM will receive (i) a payment for
that month in the amount of $10,000
and (ii) a credit of $0.03 per contract
applied to all XSP contracts executed in
a Market-Maker capacity which provide
Expiring,
7 days or less
Premium level
Width
Near term,
8 days to 60 days
Size
Width
liquidity in the Simple Book during
RTH (or pro-rated amounts if an
appointment begins after the first
trading day of the month or ends prior
to the last trading day of the month).
Mid term,
61 days to 270 days
Size
Width
Long term,
271 days to 500 days
Size
Width
Size
VIX Value at Prior Close <20
$0.01–$1.00 ......................
1.01–5.00 ..........................
5.01–8.00 ..........................
8.01–12.00 ........................
12.01–20.00 ......................
>20.00 ...............................
$0.04
0.06
0.10
0.40
0.80
1.60
10
10
10
5
5
5
$0.05
0.09
0.16
0.70
1.20
2.00
10
10
10
5
5
5
$0.07
0.12
0.25
1.00
1.60
2.40
5
5
5
5
5
5
$0.15
0.20
0.40
1.25
2.00
3.20
5
5
5
5
5
5
0.09
0.14
0.30
1.10
1.80
2.80
5
5
5
5
5
5
0.17
0.22
0.45
1.35
2.20
3.60
5
5
5
5
5
5
0.11
0.18
0.35
1.20
2.00
3.20
5
5
5
5
5
5
0.20
0.27
0.50
1.50
2.40
4.00
5
5
5
5
5
5
VIX Value at Prior Close From 20–30
0.01–1.00 ..........................
1.01–5.00 ..........................
5.01–8.00 ..........................
8.01–12.00 ........................
12.01–20.00 ......................
>20.00 ...............................
0.06
0.09
0.14
0.60
1.00
2.00
10
10
10
5
5
5
0.07
0.11
0.18
0.80
1.30
2.40
10
10
10
5
5
5
VIX Value at Prior Close >30
0.01–1.00 ..........................
1.01–5.00 ..........................
5.01–8.00 ..........................
8.01–12.00 ........................
12.01–20.00 ......................
>20.00 ...............................
0.07
0.10
0.14
0.60
1.20
2.40
10
10
10
5
5
5
0.09
0.14
0.20
0.90
1.50
2.80
above) in at least 85% of the series 90%
of the time in a given month, the LMM
will receive a payment for that month in
the amount of $20,000 (or pro-rated
amount if an appointment begins after
the first trading day of the month or
ends prior to the last trading day of the
month).
The GTH2 XSP LMM Incentive
Program provides that if an LMM
appointed to the Program provides
continuous electronic quotes during
GTH from 2:00AM CST to 9:15AM CST
(‘‘GTH2’’) that meet or exceed the
proposed heightened quoting standards
set forth above (the same as GTH1,
Expiring,
7 days or less
Premium level
Width
10
10
10
5
5
5
Near term,
8 days to 60 days
Size
Width
The Exchange proposes to adopt a
new set of heightened quoting standards
(below) under the GTH1 and GTH2 XSP
LMM Incentive Programs (proposed
width and sizes are denoted with an
asterisk).
Mid term,
61 days to 270 days
Size
Width
Long term,
271 days to 500 days
Size
Width
Size
VIX Value at Prior Close <20
$0.01–$1.00 ......................
1.01–5.00 ..........................
5.01–8.00 ..........................
8.01–12.00 ........................
12.01–20.00 ......................
>20.00 ...............................
* $0.08
* 0.10
* 0.16
0.40
0.80
1.60
*5
*5
*5
5
5
5
* $0.07
* 0.15
* 0.25
0.70
1.20
2.00
*5
*5
*5
5
5
5
* $0.10
* 0.16
* 0.35
1.00
1.60
2.40
5
5
5
5
5
5
* $0.20
* 0.30
* 0.60
1.25
2.00
3.20
5
5
5
5
5
5
* 0.14
* 0.20
* 0.40
1.10
1.80
2.80
5
5
5
5
5
5
* 0.25
* 0.30
* 0.60
1.35
2.20
3.60
5
5
5
5
5
5
* 0.15
* 0.25
* 0.45
1.20
2.00
3.20
5
5
5
5
5
5
* 0.30
* 0.40
* 0.70
1.50
2.40
4.00
5
5
5
5
5
5
ddrumheller on DSK120RN23PROD with NOTICES1
VIX Value at Prior Close From 20–30
0.01–1.00 ..........................
1.01–5.00 ..........................
5.01–8.00 ..........................
8.01–12.00 ........................
12.01–20.00 ......................
>20.00 ...............................
* 0.09
* 0.15
* 0.20
0.60
1.00
2.00
*5
*5
*5
5
5
5
* 0.10
* 0.15
* 0.25
0.80
1.30
2.40
*5
*5
*5
5
5
5
VIX Value at Prior Close >30
0.01–1.00 ..........................
1.01–5.00 ..........................
5.01–8.00 ..........................
8.01–12.00 ........................
12.01–20.00 ......................
>20.00 ...............................
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* 0.14
* 0.18
* 0.22
0.60
1.20
2.40
Jkt 259001
*5
*5
*5
5
5
5
PO 00000
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* 0.15
* 0.20
* 0.30
0.90
1.50
2.80
Fmt 4703
*5
*5
*5
5
5
5
Sfmt 4703
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Federal Register / Vol. 88, No. 74 / Tuesday, April 18, 2023 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
The proposed heightened quoting
standards for XSP options under the
GTH1 and GTH2 XSP LMM Incentive
Programs are designed to continue to
encourage LMMs appointed to the
program to provide significant liquidity
in XSP options during GTH.
Specifically, the proposed rule change
eases the heightened quoting standards
in a manner that makes it easier for
appointed LMMs to achieve such
requirements. By increasing certain
quote widths and decreasing certain
quote sizes, the changes are designed to
incentivize LMMs appointed to the
GTH1 and GTH2 LMM Incentive
Programs to quote aggressively in XSP
options during GTH to receive the
rebate offered under the program,
resulting in tighter spreads and
increased liquidity during GTH to the
benefit of investors.
The Exchange also proposes to
increase the rebates offered by the GTH1
and GTH2 XSP LMM Incentive
Programs to an LMM appointed to the
program for meeting the heightened
quoting standards in a given month. The
Exchange proposes to increase such
rebates from $10,000 to $20,000 for the
GTH1 XSP LLM Incentive Program, and
from $20,000 to $25,000 for the GTH2
XSP LLM Incentive Program. For the
GTH1 XSP LMM Incentive Program, an
LMM appointed to the program that
meets the heightened quoting standard
in a month will still receive the
additional credit of $0.03 per contract
applied to all XSP contracts executed in
a Market-Maker capacity which provide
liquidity in the Simple Book during
RTH (or pro-rated amounts if an
appointment begins after the first
trading day of the month or ends prior
to the last trading day of the month).
The Exchange wishes to further
incentivize the LMMs appointed to the
GTH1 and GTH2 LMM Incentive
Programs to provide significant liquidity
in XSP options during GTH by meeting
the applicable quoting standards under
each program to receive the proposed
increased rebates.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.3 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 4 requirements that the rules of
an exchange be designed to prevent
3 15
4 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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18:08 Apr 17, 2023
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 5 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,6 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Trading Permit Holders and other
persons using its facilities.
The Exchange believes it is reasonable
to decrease the series requirement for
the NANOS LLM Incentive Program to
98% (from 99%), and to update the
heightened quoting standards for the
GTH1 and GTH2 XSP LLM Incentive
Programs by decreasing certain quote
size requirements and increasing certain
quote width requirements, as such
changes are reasonably designed to
slightly ease the difficulty in meeting
the heightened quoting standards
offered under these programs (for which
an appointed LMM receives the
respective rebates), which, in turn,
provides increased incentive for LMMs
appointed to these programs to provide
significant liquidity in NANOS options
and XSP options. Such liquidity
benefits all market participants by
providing more trading opportunities,
tighter spreads, and added market
transparency and price discovery, and
signals to other market participants to
direct their order flow to those markets,
thereby contributing to robust levels of
liquidity.
Further, the Exchange believes that it
is reasonable to update certain quote
size and width requirements under the
GTH XSP LMM Incentive Programs, as
the proposed rule change is generally
designed to further align the lesser
premium quote widths and size
standards for XSP options with the more
expensive premium quote width and
size standards, in order to incentivize an
increase in quoting activity and the
provision of tighter markets.
5 Id.
6 15
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The Exchange also believes the
proposed increase to the rebates under
the GTH1 and GTH2 XSP LLM Incentive
Programs are reasonably designed to
further incentivize an appointed LMM
to meet the applicable quoting standards
for XSP options, thereby providing
liquid and active markets, which
facilitates tighter spreads, increased
trading opportunities, and overall
enhanced market quality to the benefit
of all market participants. The Exchange
further believes that the proposed rule
change is reasonable because it is
comparable to and within the range of
the rebates offered by other LMM
Incentive Programs. For example, the
GTH2 VIX LMM Programs currently
offers a rebate of $20,000 if the quoting
standards are met in a given month.7
The Exchange believes the proposed
rebates applicable to the GTH1 and
GTH2 XSP LMM Incentive Programs are
equitable and not unfairly
discriminatory because they will
continue to apply equally to any TPH
that is appointed as an LMM to the
Programs.
The Exchange believes that the
proposed changes to the LMM Incentive
Programs are equitable and not unfairly
discriminatory. The Exchange believes
that it is equitable and not unfairly
discriminatory to amend the series
qualification requirement for the
NANOS LLM Incentive Program, amend
certain quote widths and quote sizes in
the heightened quoting standards for
GTH1 and GTH2 XSP LLM Incentive
Programs, and amend the monthly
rebates offered under the GTH1 and
GTH2 XSP LLM Incentive Programs
because such series qualification
requirement, heightened quoting
standards, and rebates will equally
apply to any and all TPHs with LMM
appointments to the NANOS, GTH1
XSP, and GTH2 XSP LLM Incentive
Programs, as applicable, that seek to
meet the programs’ heightened quoting
standards in order to receive the rebates
(as proposed) offered under each
respective program. The Exchange
additionally notes that, if an LMM
appointed to any of the LMM Incentive
Programs does not satisfy the
corresponding heightened quoting
standard for any given month, then it
simply will not receive the rebate
offered by the respective program for
that month.
Regarding the NANOS, GTH1 XSP
and GTH2 XSP LMM Incentive
Programs generally, the Exchange
believes it is reasonable, equitable and
not unfairly discriminatory to continue
7 See Cboe Options Fees Schedule, GTH2 VIX/
VIXW LMM Incentive Program.
U.S.C. 78f(b)(4).
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ddrumheller on DSK120RN23PROD with NOTICES1
to offer these financial incentives,
including as amended, to LMMs
appointed to the programs, because it
benefits all market participants trading
in the corresponding products during
RTH (for NANOS) and GTH (for XSP).
These incentive programs encourage the
LMMs appointed to such programs to
satisfy the heightened quoting
standards, which may increase liquidity
and provide more trading opportunities
and tighter spreads. Indeed, the
Exchange notes that these LMMs serve
a crucial role in providing quotes and
the opportunity for market participants
to trade NANOS and XSP options, as
applicable, which can lead to increased
volume, providing for robust markets.
The Exchange ultimately offers the
LMM Incentive Programs, as amended,
to sufficiently incentivize LMMs
appointed to each incentive program to
provide key liquidity and active markets
in the corresponding program products
during the corresponding trading
sessions, and believes that these
incentive programs, as amended, will
continue to encourage increased quoting
to add liquidity in each of the
corresponding program products,
thereby protecting investors and the
public interest. The Exchange also notes
that an LMM appointed to an incentive
program may undertake added costs
each month to satisfy that heightened
quoting standards (e.g., having to
purchase additional logical
connectivity).
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because the amendments to the series
qualification requirement for the
NANOS LLM Incentive Program, certain
quote widths and quote sizes in the
heightened quoting standards for the
GTH1 and GTH2 XSP LLM Incentive
Programs, and the monthly rebates
offered under the GTH1 and GTH2 XSP
LLM Incentive Programs will apply
uniformly to any LMM appointment to
the programs. To the extent LMMs
appointed to these LMM Incentive
Programs receive a benefit that other
market participants do not, as stated,
these LMMs in their role as MarketMakers on the Exchange have different
obligations and are held to different
standards. An LMM appointed to an
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Jkt 259001
incentive program may also undertake
added costs each month to satisfy that
heightened quoting standards (e.g.,
having to purchase additional logical
connectivity).
The Exchange also notes that the
proposed changes are designed to attract
additional order flow to the Exchange,
wherein greater liquidity benefits all
market participants by providing more
trading opportunities, tighter spreads,
and added market transparency and
price discovery, and signals to other
market participants to direct their order
flow to those markets, thereby
contributing to robust levels of liquidity.
As a result, the Exchange believes that
the proposed change furthers the
Commission’s goal in adopting
Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’ 8
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed programs are
applicable to transactions in a product
exclusively listed on the Exchange.
Additionally, the Exchange notes that it
operates in a highly competitive market.
TPHs have numerous alternative venues
that they may participate on and direct
their order flow, including 15 other
options exchanges, as well as offexchange venues, where competitive
products are available for trading. Based
on publicly available information, no
single options exchange has more than
16% of the market share.9 Therefore, no
exchange possesses significant pricing
power in the execution of option order
flow. Indeed, participants can readily
choose to send their orders to other
exchange, and, additionally offexchange venues, if they deem fee levels
at those other venues to be more
favorable. Moreover, the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
8 Securities
Exchange Act Release No. 51808, 70
FR 37495, 37498–99 (June 29, 2005) (S7–10–04)
(Final Rule).
9 See Cboe Global Markets U.S. Options Market
Volume Summary, Month-to-Date (March 29, 2023),
available at https://markets.cboe.com/us/options/
market_statistics/.
PO 00000
Frm 00099
Fmt 4703
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promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 10 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’.11 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 12 and paragraph (f) of Rule
19b–4 13 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
10 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
11 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
12 15 U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f).
E:\FR\FM\18APN1.SGM
18APN1
Federal Register / Vol. 88, No. 74 / Tuesday, April 18, 2023 / Notices
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–97290; File No. SR–BX–
2023–008]
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2023–017 on the subject line.
Paper Comments
ddrumheller on DSK120RN23PROD with NOTICES1
• 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–2023–017. 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–2023–017 and
should be submitted on or before May
9, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–08142 Filed 4–17–23; 8:45 am]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Schedule of
Fees and Credits at Equity 7, Section
118
April 12, 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 April 3,
2023, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘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
The Exchange proposes to (i) adjust or
eliminate several of the Exchange’s
transaction credits, at Equity 7, Section
118(a); and (ii) eliminate several of the
Exchange’s transaction fees, at Equity 7,
Section 118(a), as described further
below. The text of the proposed rule
change is available on the Exchange’s
website at https://
listingcenter.nasdaq.com/rulebook/bx/
rules, at the principal office of the
Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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.
BILLING CODE 8011–01–P
1 15
14 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
18:08 Apr 17, 2023
2 17
Jkt 259001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00100
Fmt 4703
Sfmt 4703
23717
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange operates on the ‘‘takermaker’’ model, whereby it generally
pays credits to members that take
liquidity and charges fees to members
that provide liquidity. Currently, the
Exchange has a schedule, at Equity 7,
Section 118(a), which consists of several
different credits that it provides for
orders in securities priced at $1 or more
per share that access liquidity on the
Exchange and several different charges
that it assesses for orders in such
securities that add liquidity on the
Exchange. The purpose of the proposed
rule change is to amend this schedule of
fees and credits, at Equity 7, Section
118(a) to: (i) adjust or eliminate several
of the Exchange’s transaction credits;
and (ii) eliminate several of the
Exchange’s transaction fees.
Revision to and Elimination of
Transaction Credits
The Exchange proposes to eliminate
two of the Exchange’s transaction
credits and adjust three of the
Exchange’s transaction credits.
Currently, the Exchange provides
$0.0015, $0.0015, and $0.0014 per share
executed credits for securities in Tape
A, Tape B, and Tape C, respectively, to
a member accessing liquidity (excluding
orders with Midpoint pegging and
excluding orders that receive price
improvement and execute against an
order with a non-displayed price): (i)
whose combined liquidity removing and
adding activities equal or exceed
0.075% of total Consolidated Volume
during a month; and (ii) that adds
liquidity equal to or exceeding an
average daily volume of 50,000 shares in
a month. The Exchange proposes to
eliminate this credit because it has not
been successful in accomplishing its
objectives. That is, it has not induced
members to materially grow liquidity
removing and adding activity on the
Exchange. The Exchange also seeks to
simplify its schedule of credits. The
Exchange has limited resources to
allocate to incentive programs and it
must, from time to time, reallocate
resources to maximize their net impact
on the Exchange, market quality, and
participants.
Currently, the Exchange provides a
$0.0018 per share executed credit for
securities in Tape B to a member
accessing liquidity that (excluding
orders with Midpoint pegging and
excluding orders that receive price
improvement and execute against an
E:\FR\FM\18APN1.SGM
18APN1
]]>Agencies
[Federal Register Volume 88, Number 74 (Tuesday, April 18, 2023)]
[Notices]
[Pages 23713-23717]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08142]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97288; File No. SR-CBOE-2023-017]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule
April 12, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 3, 2023, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule in connection with
certain Lead Market-Maker (``LMM'') Incentive Programs, effective April
3, 2023. Specifically, the Exchange proposes to amend its NANOS LLM
Incentive Program and Global Trading Hours (``GTH'') XSP LMM Incentive
Programs.
All three LMM Incentive Programs provide a rebate to Trading Permit
Holders (``TPHs'') with LMM appointments to the respective incentive
program that meet certain quoting standards in the applicable series in
a month. The Exchange notes that meeting or exceeding the quoting
standards (both current and as proposed; described in further detail
below) in each of the LMM Incentive Program products to receive the
applicable rebate (both currently offered and as proposed; described in
further detail below) is optional for an LMM appointed to a program.
Particularly, an LMM appointed to an incentive program is eligible to
receive the corresponding rebate if it satisfies the applicable quoting
standards, which the Exchange believes encourages appointed LMMs to
provide liquidity in the applicable class and trading session (i.e.,
Regular Trading Hours (``RTH'') or GTH). The Exchange may consider
other exceptions to the programs' quoting standards based on
demonstrated legal or regulatory requirements or other mitigating
circumstances. In calculating whether an LMM appointed to an incentive
program meets the applicable program's quoting standards each month,
the Exchange excludes from the calculation in that month the business
day in which the LMM missed meeting or exceeding the quoting standards
in the highest number of the applicable series.
NANOS LLM Incentive Program
The Exchange first proposes to amend the current NANOS LMM
Incentive Program. Currently, the NANOS LLM Incentive Program provides
that, for NANOS, if the appointed LMM provides continuous electronic
quotes during RTH that meet or exceed the heightened quoting standards
in at least 99% of the NANOS series 90% of the time in a given month,
the LMM will receive a rebate for that month in the amount of $17,500
(or pro-rated amount if an appointment begins after the first trading
day of the month or ends prior to the last trading day of the month).
The Exchange now proposes to amend the series qualification requirement
for the NANOS LMM Incentive Program. Specifically, the Exchange
proposes to update the series qualification requirement to require the
appointed LMM to provide continuous electronic quotes during RTH that
meet or exceed the heightened quoting standards in at least 98% the
NANOS series 90% of the time in a given month in order to receive the
rebate, thereby decreasing the series qualification requirement by 1%.
In changing this requirement, the Exchange wishes to encourage LMMs
appointed to the NANOS LMM Incentive Program to provide significant
liquidity in NANOS options by meeting the series qualification
requirements (and relevant quoting standards) under the Program in
order to receive the rebate.
GTH1 and GTH2 XSP LLM Incentive Programs
The Exchange proposes to amend the GTH XSP LMM Incentive Programs.
The GTH1 XSP LMM Incentive Program
[[Page 23714]]
provides that if the appointed LMM provides continuous electronic
quotes during GTH from 7:15PM CST to 2:00AM CST (``GTH1'') that meet or
exceed the proposed heightened quoting standards (below) in at least
85% of the series 90% of the time in a given month, the LMM will
receive (i) a payment for that month in the amount of $10,000 and (ii)
a credit of $0.03 per contract applied to all XSP contracts executed in
a Market-Maker capacity which provide liquidity in the Simple Book
during RTH (or pro-rated amounts if an appointment begins after the
first trading day of the month or ends prior to the last trading day of
the month).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Expiring, 7 days or less Near term, 8 days to 60 days Mid term, 61 days to 270 days Long term, 271 days to 500
------------------------------------------------------------------------------------------------ days
Premium level -------------------------------
Width Size Width Size Width Size Width Size
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VIX Value at Prior Close <20
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$0.01-$1.00..................................................... $0.04 10 $0.05 10 $0.07 5 $0.15 5
1.01-5.00....................................................... 0.06 10 0.09 10 0.12 5 0.20 5
5.01-8.00....................................................... 0.10 10 0.16 10 0.25 5 0.40 5
8.01-12.00...................................................... 0.40 5 0.70 5 1.00 5 1.25 5
12.01-20.00..................................................... 0.80 5 1.20 5 1.60 5 2.00 5
>20.00.......................................................... 1.60 5 2.00 5 2.40 5 3.20 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VIX Value at Prior Close From 20-30
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0.01-1.00....................................................... 0.06 10 0.07 10 0.09 5 0.17 5
1.01-5.00....................................................... 0.09 10 0.11 10 0.14 5 0.22 5
5.01-8.00....................................................... 0.14 10 0.18 10 0.30 5 0.45 5
8.01-12.00...................................................... 0.60 5 0.80 5 1.10 5 1.35 5
12.01-20.00..................................................... 1.00 5 1.30 5 1.80 5 2.20 5
>20.00.......................................................... 2.00 5 2.40 5 2.80 5 3.60 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VIX Value at Prior Close 30
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0.01-1.00....................................................... 0.07 10 0.09 10 0.11 5 0.20 5
1.01-5.00....................................................... 0.10 10 0.14 10 0.18 5 0.27 5
5.01-8.00....................................................... 0.14 10 0.20 10 0.35 5 0.50 5
8.01-12.00...................................................... 0.60 5 0.90 5 1.20 5 1.50 5
12.01-20.00..................................................... 1.20 5 1.50 5 2.00 5 2.40 5
>20.00.......................................................... 2.40 5 2.80 5 3.20 5 4.00 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The GTH2 XSP LMM Incentive Program provides that if an LMM
appointed to the Program provides continuous electronic quotes during
GTH from 2:00AM CST to 9:15AM CST (``GTH2'') that meet or exceed the
proposed heightened quoting standards set forth above (the same as
GTH1, above) in at least 85% of the series 90% of the time in a given
month, the LMM will receive a payment for that month in the amount of
$20,000 (or pro-rated amount if an appointment begins after the first
trading day of the month or ends prior to the last trading day of the
month).
The Exchange proposes to adopt a new set of heightened quoting
standards (below) under the GTH1 and GTH2 XSP LMM Incentive Programs
(proposed width and sizes are denoted with an asterisk).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Expiring, 7 days or less Near term, 8 days to 60 days Mid term, 61 days to 270 days Long term, 271 days to 500
------------------------------------------------------------------------------------------------ days
Premium level -------------------------------
Width Size Width Size Width Size Width Size
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VIX Value at Prior Close <20
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$0.01-$1.00..................................................... * $0.08 * 5 * $0.07 * 5 * $0.10 5 * $0.20 5
1.01-5.00....................................................... * 0.10 * 5 * 0.15 * 5 * 0.16 5 * 0.30 5
5.01-8.00....................................................... * 0.16 * 5 * 0.25 * 5 * 0.35 5 * 0.60 5
8.01-12.00...................................................... 0.40 5 0.70 5 1.00 5 1.25 5
12.01-20.00..................................................... 0.80 5 1.20 5 1.60 5 2.00 5
>20.00.......................................................... 1.60 5 2.00 5 2.40 5 3.20 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VIX Value at Prior Close From 20-30
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0.01-1.00....................................................... * 0.09 * 5 * 0.10 * 5 * 0.14 5 * 0.25 5
1.01-5.00....................................................... * 0.15 * 5 * 0.15 * 5 * 0.20 5 * 0.30 5
5.01-8.00....................................................... * 0.20 * 5 * 0.25 * 5 * 0.40 5 * 0.60 5
8.01-12.00...................................................... 0.60 5 0.80 5 1.10 5 1.35 5
12.01-20.00..................................................... 1.00 5 1.30 5 1.80 5 2.20 5
>20.00.......................................................... 2.00 5 2.40 5 2.80 5 3.60 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VIX Value at Prior Close 30
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0.01-1.00....................................................... * 0.14 * 5 * 0.15 * 5 * 0.15 5 * 0.30 5
1.01-5.00....................................................... * 0.18 * 5 * 0.20 * 5 * 0.25 5 * 0.40 5
5.01-8.00....................................................... * 0.22 * 5 * 0.30 * 5 * 0.45 5 * 0.70 5
8.01-12.00...................................................... 0.60 5 0.90 5 1.20 5 1.50 5
12.01-20.00..................................................... 1.20 5 1.50 5 2.00 5 2.40 5
>20.00.......................................................... 2.40 5 2.80 5 3.20 5 4.00 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 23715]]
The proposed heightened quoting standards for XSP options under the
GTH1 and GTH2 XSP LMM Incentive Programs are designed to continue to
encourage LMMs appointed to the program to provide significant
liquidity in XSP options during GTH. Specifically, the proposed rule
change eases the heightened quoting standards in a manner that makes it
easier for appointed LMMs to achieve such requirements. By increasing
certain quote widths and decreasing certain quote sizes, the changes
are designed to incentivize LMMs appointed to the GTH1 and GTH2 LMM
Incentive Programs to quote aggressively in XSP options during GTH to
receive the rebate offered under the program, resulting in tighter
spreads and increased liquidity during GTH to the benefit of investors.
The Exchange also proposes to increase the rebates offered by the
GTH1 and GTH2 XSP LMM Incentive Programs to an LMM appointed to the
program for meeting the heightened quoting standards in a given month.
The Exchange proposes to increase such rebates from $10,000 to $20,000
for the GTH1 XSP LLM Incentive Program, and from $20,000 to $25,000 for
the GTH2 XSP LLM Incentive Program. For the GTH1 XSP LMM Incentive
Program, an LMM appointed to the program that meets the heightened
quoting standard in a month will still receive the additional credit of
$0.03 per contract applied to all XSP contracts executed in a Market-
Maker capacity which provide liquidity in the Simple Book during RTH
(or pro-rated amounts if an appointment begins after the first trading
day of the month or ends prior to the last trading day of the month).
The Exchange wishes to further incentivize the LMMs appointed to the
GTH1 and GTH2 LMM Incentive Programs to provide significant liquidity
in XSP options during GTH by meeting the applicable quoting standards
under each program to receive the proposed increased rebates.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\3\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \4\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \5\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(4) of the Act,\6\ which requires
that Exchange rules provide for the equitable allocation of reasonable
dues, fees, and other charges among its Trading Permit Holders and
other persons using its facilities.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(5).
\5\ Id.
\6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes it is reasonable to decrease the series
requirement for the NANOS LLM Incentive Program to 98% (from 99%), and
to update the heightened quoting standards for the GTH1 and GTH2 XSP
LLM Incentive Programs by decreasing certain quote size requirements
and increasing certain quote width requirements, as such changes are
reasonably designed to slightly ease the difficulty in meeting the
heightened quoting standards offered under these programs (for which an
appointed LMM receives the respective rebates), which, in turn,
provides increased incentive for LMMs appointed to these programs to
provide significant liquidity in NANOS options and XSP options. Such
liquidity benefits all market participants by providing more trading
opportunities, tighter spreads, and added market transparency and price
discovery, and signals to other market participants to direct their
order flow to those markets, thereby contributing to robust levels of
liquidity.
Further, the Exchange believes that it is reasonable to update
certain quote size and width requirements under the GTH XSP LMM
Incentive Programs, as the proposed rule change is generally designed
to further align the lesser premium quote widths and size standards for
XSP options with the more expensive premium quote width and size
standards, in order to incentivize an increase in quoting activity and
the provision of tighter markets.
The Exchange also believes the proposed increase to the rebates
under the GTH1 and GTH2 XSP LLM Incentive Programs are reasonably
designed to further incentivize an appointed LMM to meet the applicable
quoting standards for XSP options, thereby providing liquid and active
markets, which facilitates tighter spreads, increased trading
opportunities, and overall enhanced market quality to the benefit of
all market participants. The Exchange further believes that the
proposed rule change is reasonable because it is comparable to and
within the range of the rebates offered by other LMM Incentive
Programs. For example, the GTH2 VIX LMM Programs currently offers a
rebate of $20,000 if the quoting standards are met in a given month.\7\
The Exchange believes the proposed rebates applicable to the GTH1 and
GTH2 XSP LMM Incentive Programs are equitable and not unfairly
discriminatory because they will continue to apply equally to any TPH
that is appointed as an LMM to the Programs.
---------------------------------------------------------------------------
\7\ See Cboe Options Fees Schedule, GTH2 VIX/VIXW LMM Incentive
Program.
---------------------------------------------------------------------------
The Exchange believes that the proposed changes to the LMM
Incentive Programs are equitable and not unfairly discriminatory. The
Exchange believes that it is equitable and not unfairly discriminatory
to amend the series qualification requirement for the NANOS LLM
Incentive Program, amend certain quote widths and quote sizes in the
heightened quoting standards for GTH1 and GTH2 XSP LLM Incentive
Programs, and amend the monthly rebates offered under the GTH1 and GTH2
XSP LLM Incentive Programs because such series qualification
requirement, heightened quoting standards, and rebates will equally
apply to any and all TPHs with LMM appointments to the NANOS, GTH1 XSP,
and GTH2 XSP LLM Incentive Programs, as applicable, that seek to meet
the programs' heightened quoting standards in order to receive the
rebates (as proposed) offered under each respective program. The
Exchange additionally notes that, if an LMM appointed to any of the LMM
Incentive Programs does not satisfy the corresponding heightened
quoting standard for any given month, then it simply will not receive
the rebate offered by the respective program for that month.
Regarding the NANOS, GTH1 XSP and GTH2 XSP LMM Incentive Programs
generally, the Exchange believes it is reasonable, equitable and not
unfairly discriminatory to continue
[[Page 23716]]
to offer these financial incentives, including as amended, to LMMs
appointed to the programs, because it benefits all market participants
trading in the corresponding products during RTH (for NANOS) and GTH
(for XSP). These incentive programs encourage the LMMs appointed to
such programs to satisfy the heightened quoting standards, which may
increase liquidity and provide more trading opportunities and tighter
spreads. Indeed, the Exchange notes that these LMMs serve a crucial
role in providing quotes and the opportunity for market participants to
trade NANOS and XSP options, as applicable, which can lead to increased
volume, providing for robust markets. The Exchange ultimately offers
the LMM Incentive Programs, as amended, to sufficiently incentivize
LMMs appointed to each incentive program to provide key liquidity and
active markets in the corresponding program products during the
corresponding trading sessions, and believes that these incentive
programs, as amended, will continue to encourage increased quoting to
add liquidity in each of the corresponding program products, thereby
protecting investors and the public interest. The Exchange also notes
that an LMM appointed to an incentive program may undertake added costs
each month to satisfy that heightened quoting standards (e.g., having
to purchase additional logical connectivity).
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the amendments to the
series qualification requirement for the NANOS LLM Incentive Program,
certain quote widths and quote sizes in the heightened quoting
standards for the GTH1 and GTH2 XSP LLM Incentive Programs, and the
monthly rebates offered under the GTH1 and GTH2 XSP LLM Incentive
Programs will apply uniformly to any LMM appointment to the programs.
To the extent LMMs appointed to these LMM Incentive Programs receive a
benefit that other market participants do not, as stated, these LMMs in
their role as Market-Makers on the Exchange have different obligations
and are held to different standards. An LMM appointed to an incentive
program may also undertake added costs each month to satisfy that
heightened quoting standards (e.g., having to purchase additional
logical connectivity).
The Exchange also notes that the proposed changes are designed to
attract additional order flow to the Exchange, wherein greater
liquidity benefits all market participants by providing more trading
opportunities, tighter spreads, and added market transparency and price
discovery, and signals to other market participants to direct their
order flow to those markets, thereby contributing to robust levels of
liquidity. As a result, the Exchange believes that the proposed change
furthers the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.'' \8\
---------------------------------------------------------------------------
\8\ Securities Exchange Act Release No. 51808, 70 FR 37495,
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed programs are applicable to transactions in a product
exclusively listed on the Exchange. Additionally, the Exchange notes
that it operates in a highly competitive market. TPHs have numerous
alternative venues that they may participate on and direct their order
flow, including 15 other options exchanges, as well as off-exchange
venues, where competitive products are available for trading. Based on
publicly available information, no single options exchange has more
than 16% of the market share.\9\ Therefore, no exchange possesses
significant pricing power in the execution of option order flow.
Indeed, participants can readily choose to send their orders to other
exchange, and, additionally off-exchange venues, if they deem fee
levels at those other venues to be more favorable. Moreover, the
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. Specifically, in Regulation NMS, the
Commission highlighted the importance of market forces in determining
prices and SRO revenues and, also, recognized that current regulation
of the market system ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \10\ The fact that this market is
competitive has also long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows: ``[n]o one disputes that competition for order flow
is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers' . . . .''.\11\ Accordingly, the
Exchange does not believe its proposed fee change imposes any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
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\9\ See Cboe Global Markets U.S. Options Market Volume Summary,
Month-to-Date (March 29, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
\10\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\11\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \12\ and paragraph (f) of Rule 19b-4 \13\
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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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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
[[Page 23717]]
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CBOE-2023-017 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-2023-017. 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-2023-017
and should be submitted on or before May 9, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-08142 Filed 4-17-23; 8:45 am]
BILLING CODE 8011-01-P
