Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 30178-30181 [2023-09902]
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Federal Register / Vol. 88, No. 90 / Wednesday, May 10, 2023 / Notices
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297.501(b)(6). See also 5 CFR 300.201.
HISTORY:
77 FR 61791 (Oct 11, 2012); 74 FR
42334; 60 FR 63075 (Dec 12, 1995); 80
FR 74816 (Nov 30, 2015) and 87 FR
5874 (Feb 2, 2022)
[FR Doc. 2023–09943 Filed 5–9–23; 8:45 am]
BILLING CODE 6325–43–P
CONTESTING RECORD PROCEDURES:
Certain records in this system have
been exempted from the access
provisions of the Privacy Act, see
Exemptions Promulgated for the
System, below. Individuals wishing to
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so by writing to the to the Office of
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Privacy and Information Management—
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emailing foia@opm.gov; ATTN: PMF
Program. Requests for amendment of
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Individuals must furnish the following
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located:
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2. Last 4 digits of their Social Security
number, when specifically requested.
3. Year applied to the PMF Program.
4. Home Address at the time of
application to the PMF Program.
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97436; File No. SR–
CboeBZX–2023–027]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
May 4, 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 23,
2023, Cboe BZX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, 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
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 88, No. 90 / Wednesday, May 10, 2023 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’ or ‘‘BZX
Equities’’) is filing with the Securities
and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend its Fee Schedule. The text of
the proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend its
Fee Schedule to adopt monthly fees
assessed to Users 3 that elect to
subscribe to the US Equity Short
Volume & Trades Report, effective,
April 21, 2023.
The Exchange recently adopted a new
data product known as the US Equity
Short Volume & Trades Report (the,
‘‘Report’’).4 The Report, which will be
available on April 21, 2023, contains (i)
an end-of-day report that provides
certain equity trading activity on the
Exchange, and includes trade date, total
volume, sell short volume, and sell
short exempt volume, by symbol; 5 and
3 A ‘‘User’’ of an Exchange Market Data product
is a natural person, a proprietorship, corporation,
partnership, or entity, or device (computer or other
automated service), that is entitled to receive
Exchange data. See the BZX Equities Exchange Fee
Schedule at https://www.cboe.com/us/equities/
membership/fee_schedule/bzx/.
4 See Securities and Exchange Act No. 97304
(April 13, 2023) (SR–CboeBZX–2023–024).
5 The end-of-day report was originally titled
‘‘Short Volume Report’’ and was displayed as an
individual product on the Exchange’s Fee Schedule.
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(ii) an end-of-month report that provides
a record of all short sale transactions for
the month, and includes trade date and
time, trade size, trade price, and type of
short sale execution, by symbol and
exchange.6 In addition to a monthly or
annual subscription, a Member 7 or nonMember may purchase the Report on a
historical monthly basis, which
provides the end-of-day reports for each
day and the corresponding end-ofmonth report for a given calendar
month.
The Exchange proposes to adopt fees
applicable to Users that subscribe to the
Report. As proposed, the Exchange
would assess a monthly 8 fee of $750 per
month to an Internal Distributor 9 of the
Report, and a fee of $1,250 per month
to an External Distributor 10 of the
Report. These fees may be paid on a
monthly basis or on an annual basis.11
External Distributors, unlike Internal
Distributors, are typically compensated
for the distribution of short sale data
through subscription fees or other
mechanisms. Some External Distributors
incorporate short sale data into their
own proprietary products, which they
sell to downstream users. These
distributors may not charge separately
for data included in the Report, but
nevertheless gain value from the data by
incorporating it into their product. The
higher price for External Distributors
reflects the additional value these
distributors gain from the product.
The Exchange also proposes to adopt
fees for the Report provided on a
historical basis. The Report will be
available for each calendar month
The end-of-day report is now being incorporated
into the Report and as such, the Exchange seeks to
amend its Fee Schedule to display the applicable
fees for the Report, which will contain both the
end-of-day report and an end-of-month report.
6 See Exchange Rule 11.22(f).
7 See Exchange Rule 1.5(n).
8 The monthly fees for the Report are assessed on
a rolling period based on the original subscription
date. For example, if a User subscribes to the Report
on April 24, 2023, the monthly fee will cover the
period of April 24, 2023, through May 23, 2023. If
the User cancels its subscription prior to May 23,
2023, and no refund is issued, the User will
continue to receive both the end-of-day and end-ofmonth components of the Report for the
subscription period.
9 An ‘‘Internal Distributor’’ of an Exchange Market
Data product is a Distributor that receives the
Exchange Market Data product and then distributes
that data to one or more Users within the
Distributor’s own entity. Supra note 3.
10 An ‘‘External Distributor’’ of an Exchange
Market Data product is a Distributor that receives
the Exchange Market Data product and then
distributes that data to a third party or one or more
Users outside the Distributor’s own entity. Supra
note 3.
11 Users who subscribe to the US Equity Short
Volume & Trades Report during the middle of a
month will receive the end-of-day report for each
day beginning on the date of subscription.
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30179
dating back to January 2015, and Users
of such data will be assessed a fee of
$500 per historical monthly Report for
which they subscribe.12 Data provided
via the historical Report is only for
display use redistribution (e.g., the data
may be provided on the User’s
platform). Therefore, Users of the
historical data may not charge
separately for data included in the
Report or incorporate such data into
their product. Nonetheless, the
Exchange believes it is reasonable,
equitable and not unfairly
discriminatory to charge a fee for
display use redistribution that reflects
the value these distributors gain from
the historical product.
The Exchange anticipates that a wide
variety of market participants will
purchase the Report, including, but not
limited to, active equity trading firms
and academic institutions. For example,
the Exchange notes that academic
institutions may utilize the Report data
and as a result promote research and
studies of the equities industry to the
benefit of all market participants. The
Exchange further believes the Report
may provide helpful trading information
regarding investor sentiment that may
allow market participants to make more
informed trading decisions and may be
used to create and test trading models
and analytical strategies and provide
comprehensive insight into trading on
the Exchange.
The Exchange further notes that the
Report is a completely voluntary
product, in that the Exchange is not
required by any rule or regulation to
make the reports or services available
and that potential subscribers may
purchase it only if they voluntarily
choose to do so. Further, the Exchange
notes that other exchanges offer similar
products for a fee.13
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
12 Users who purchase the US Equity Short
Volume & Trades report on an annual basis will
receive 12 months of historical data free of charge,
beginning with the month immediately prior to the
date of subscription. Users who purchase the US
Equity Short Volume & Trades report on a monthly
basis would have the option of purchasing
historical data on a per month basis.
13 See the ‘‘Nasdaq Short Sale Volume Reports’’
portion of the Nasdaq Fee Schedule at https://
www.nasdaqtrader.com/TraderB.
aspx?id=MDDPricingALLN. See also the ‘‘NYSE
Group Summary Data Products’’ portion of the
NYSE Historical Proprietary Market Data Pricing at
https://www.nyse.com/publicdocs/nyse/data/
NYSE_Historical_Market_Data_Pricing.pdf.
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Federal Register / Vol. 88, No. 90 / Wednesday, May 10, 2023 / Notices
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Section 6(b) of the Act.14 Specifically,
the Exchange believes the proposed rule
change is consistent with Sections
6(b)(4) and 6(b)(5) of the Act,15 in
particular, in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among members
and issuers and other persons using any
facility, and is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations (‘‘SROs’’) and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. It was
believed that this authority would
expand the amount of data available to
consumers, and also spur innovation
and competition for the provision of
market data. The Exchange believes that
the US Equity Short Volume & Trades
Report further broadens the availability
of U.S. equity market data to investors
consistent with the principles of
Regulation NMS. The Report also
promotes increased transparency
through the dissemination of short
volume data. The Report benefits
investors by providing access to the US
Equity Short Volume & Trades Report
data, which may promote better
informed trading, as well as research
and studies of the equities industry.
The Exchange operates in a highly
competitive environment. Indeed, there
are currently 16 registered equities
exchanges that trade equities. Based on
publicly available information, no single
equities exchange has more than 16% of
the equity market share.16 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.’’ 17
Making similar data products available
to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
16 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (April 17, 2023),
available at https://www.cboe.com/us/equities/
market_/.
17 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
15 15
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charge supercompetitive fees. In the
event that a market participant views
one exchange’s data product as more
attractive than the competition, that
market participant can, and often does,
switch between similar products. The
proposed fees are a result of the
competitive environment of the U.S.
equities industry as the Exchange seeks
to adopt fees to attract purchasers of the
recently introduced US Equity Short
Volume & Trades Report.
The Exchange believes that the
proposed fee for the Report is consistent
with the Act in that it is reasonable,
equitable, and not unfairly
discriminatory. In particular, the
Exchange believes that the proposed fee
is reasonable because it is reasonably
aligned with the value and benefits
provided to Users that choose to
subscribe to the Report on the Exchange.
As discussed above, the Report may be
beneficial to Members and nonMembers as it may provide helpful
trading information regarding investor
sentiment that may allow market
participants to make more informed
trading decisions and may be used to
create and test trading models and
analytical strategies and provide
comprehensive insight into trading on
the Exchange. Therefore, the Exchange
believes that it is reasonable to assess a
modest fee to Users that subscribe to the
Report.
The Exchange further believes the
proposed fee is reasonable because the
amount assessed is equal to or
comparable to the analogous fees
charged by competitor exchanges. For
example, the Nasdaq Stock Market LLC
(‘‘Nasdaq’’) charges $750 to Internal
Distributors and $1,250 to External
Distributors of the Nasdaq Short Sale
Volume Reports provided on both a
daily and historical monthly basis,18
which is identical to the proposed
subscription fees for the US Equity
Short Volume & Trades Report.
Additionally, the New York Stock
Exchange LLC (‘‘NYSE’’) and its
affiliated equity markets (the ‘‘NYSE
Group’’) also charge for the TAQ NYSE
Group Short Sales (Monthly File) and
TAQ NYSE Group Short Volume (Daily
File). Specifically, NYSE Group charges
an access fee of $1,000 per month for an
ongoing subscription that includes 12
months of back history, then additional
back history charged at $500 per data
content month. NYSE Group also
charges a back history fee, of $1,000 per
data content month for the first 12
months of history, then additional back
history charged at $500 per data content
month.19 The Exchange therefore
believes that the proposed fees are
reasonable and set at a level to compete
with other equity exchanges that offer
similar reports. Indeed, proposing fees
that are excessively higher than
established fees for similar data
products would simply serve to reduce
demand for the Exchange’s data
product, which as noted, is entirely
optional. Although each of these similar
data products provide only proprietary
trade data and not trade data from other
exchanges, it is possible investors are
still able to gauge overall investor
sentiment across different equities based
on the included data points on any one
exchange. As such, if a market
participant views another exchange’s
potential report as more attractive, then
such market participant can merely
choose not to purchase the Exchange’s
Report and instead purchase another
exchange’s similar data product, which
offers similar data points, albeit based
on that other market’s trading activity.
In addition, the Exchange believes
that the proposed fees are equitable and
not unfairly discriminatory because they
will apply equally to all Members and
non-Members that choose to subscribe
to the Report. As stated, the Report is
completely optional and not necessary
for trading. Rather, the Exchange
voluntarily makes the Report available,
and Users may choose to subscribe (and
pay for) the report based on their own
individual business needs. Potential
subscribers may subscribe to the Report
at any time if they believe it to be
valuable or may decline to purchase it.
The Exchange also believes it is
reasonable, equitable and not unfairly
discriminatory to charge an External
Distributor of the Report a higher fee
than an Internal Distributor as an
External Distributor will ordinarily
charge a fee to its downstream
customers for this service, and, even if
the vendor is not charging a specific fee
for this particular service, the Exchange
expects products from the Report to be
part of a suite of offerings from
distributors that generally promote
sales. External distribution is also
fundamentally different than internal
use, in that the former generates revenue
from external sales while the latter does
not. Therefore, the Exchange believes it
is reasonable, equitable and not unfairly
discriminatory to charge a higher fee for
a product that generates downstream
revenue. Further, the proposed fee will
apply equally to Internal and External
Distributors, respectively, that choose to
distribute data from the Report.
18 See https://www.nasdaqtrader.com/Trader.
aspx?id=DPUSdata#short.
19 See https://www.nyse.com/publicdocs/nyse/
data/NYSE_Historical_Market_Data_.pdf.
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Federal Register / Vol. 88, No. 90 / Wednesday, May 10, 2023 / Notices
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Moreover, as described above, another
Exchange similarly charges External
Distributors higher fees as compared to
Internal Distributors for a similar data
product.20
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because the
Report will be available equally to all
Members and non-Members that choose
to subscribe to the report. As stated, the
Report is optional and Members and
non-Members may choose to subscribe
to such report, or not, based on their
view of the additional benefits and
added value provided by utilizing the
Report. As such, the Exchange believes
the proposed rule change imposes no
burden on intramarket competition.
Next, the Exchange believes the
proposed rule change does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, similar
products offered by Nasdaq and the
NYSE Group are priced equally or
comparable to the Report. 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.’’ 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’. . . .’’. Accordingly, the
Exchange does not believe its proposal
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 21 and paragraph (f) of Rule
19b–4 22 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2023–027 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2023–027. 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
20 See
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–09902 Filed 5–9–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97437; File No. SR–
CboeBZX–2023–020]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Suspension of
and Order Instituting Proceedings To
Determine Whether To Approve or
Disapprove Proposed Rule Change To
Amend the BZX Equities Fee Schedule
To Add and Modify Certain Step-Up
Tiers, Add a Non-Displayed Step-Up
Tier and Modify Certain Fee Codes
May 4, 2023.
I. Introduction
On March 6, 2023, Cboe BZX
Exchange, Inc. (the ‘‘Exchange’’ or
‘‘EDGX’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule
19b–4 thereunder,2 a proposed rule
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A).
22 17 CFR 240.19b–4(f).
Nasdaq Rule 7 Section 152.
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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–CboeBZX–2023–027,
and should be submitted on or before
May 31, 2023.
23 17
21 15
PO 00000
Frm 00112
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]]>Agencies
[Federal Register Volume 88, Number 90 (Wednesday, May 10, 2023)]
[Notices]
[Pages 30178-30181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09902]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97436; File No. SR-CboeBZX-2023-027]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
May 4, 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 23, 2023, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 30179]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'' or ``BZX
Equities'') is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend its Fee Schedule. The
text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
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 Fee Schedule to adopt monthly
fees assessed to Users \3\ that elect to subscribe to the US Equity
Short Volume & Trades Report, effective, April 21, 2023.
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\3\ A ``User'' of an Exchange Market Data product is a natural
person, a proprietorship, corporation, partnership, or entity, or
device (computer or other automated service), that is entitled to
receive Exchange data. See the BZX Equities Exchange Fee Schedule at
https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
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The Exchange recently adopted a new data product known as the US
Equity Short Volume & Trades Report (the, ``Report'').\4\ The Report,
which will be available on April 21, 2023, contains (i) an end-of-day
report that provides certain equity trading activity on the Exchange,
and includes trade date, total volume, sell short volume, and sell
short exempt volume, by symbol; \5\ and (ii) an end-of-month report
that provides a record of all short sale transactions for the month,
and includes trade date and time, trade size, trade price, and type of
short sale execution, by symbol and exchange.\6\ In addition to a
monthly or annual subscription, a Member \7\ or non-Member may purchase
the Report on a historical monthly basis, which provides the end-of-day
reports for each day and the corresponding end-of-month report for a
given calendar month.
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\4\ See Securities and Exchange Act No. 97304 (April 13, 2023)
(SR-CboeBZX-2023-024).
\5\ The end-of-day report was originally titled ``Short Volume
Report'' and was displayed as an individual product on the
Exchange's Fee Schedule. The end-of-day report is now being
incorporated into the Report and as such, the Exchange seeks to
amend its Fee Schedule to display the applicable fees for the
Report, which will contain both the end-of-day report and an end-of-
month report.
\6\ See Exchange Rule 11.22(f).
\7\ See Exchange Rule 1.5(n).
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The Exchange proposes to adopt fees applicable to Users that
subscribe to the Report. As proposed, the Exchange would assess a
monthly \8\ fee of $750 per month to an Internal Distributor \9\ of the
Report, and a fee of $1,250 per month to an External Distributor \10\
of the Report. These fees may be paid on a monthly basis or on an
annual basis.\11\ External Distributors, unlike Internal Distributors,
are typically compensated for the distribution of short sale data
through subscription fees or other mechanisms. Some External
Distributors incorporate short sale data into their own proprietary
products, which they sell to downstream users. These distributors may
not charge separately for data included in the Report, but nevertheless
gain value from the data by incorporating it into their product. The
higher price for External Distributors reflects the additional value
these distributors gain from the product.
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\8\ The monthly fees for the Report are assessed on a rolling
period based on the original subscription date. For example, if a
User subscribes to the Report on April 24, 2023, the monthly fee
will cover the period of April 24, 2023, through May 23, 2023. If
the User cancels its subscription prior to May 23, 2023, and no
refund is issued, the User will continue to receive both the end-of-
day and end-of-month components of the Report for the subscription
period.
\9\ An ``Internal Distributor'' of an Exchange Market Data
product is a Distributor that receives the Exchange Market Data
product and then distributes that data to one or more Users within
the Distributor's own entity. Supra note 3.
\10\ An ``External Distributor'' of an Exchange Market Data
product is a Distributor that receives the Exchange Market Data
product and then distributes that data to a third party or one or
more Users outside the Distributor's own entity. Supra note 3.
\11\ Users who subscribe to the US Equity Short Volume & Trades
Report during the middle of a month will receive the end-of-day
report for each day beginning on the date of subscription.
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The Exchange also proposes to adopt fees for the Report provided on
a historical basis. The Report will be available for each calendar
month dating back to January 2015, and Users of such data will be
assessed a fee of $500 per historical monthly Report for which they
subscribe.\12\ Data provided via the historical Report is only for
display use redistribution (e.g., the data may be provided on the
User's platform). Therefore, Users of the historical data may not
charge separately for data included in the Report or incorporate such
data into their product. Nonetheless, the Exchange believes it is
reasonable, equitable and not unfairly discriminatory to charge a fee
for display use redistribution that reflects the value these
distributors gain from the historical product.
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\12\ Users who purchase the US Equity Short Volume & Trades
report on an annual basis will receive 12 months of historical data
free of charge, beginning with the month immediately prior to the
date of subscription. Users who purchase the US Equity Short Volume
& Trades report on a monthly basis would have the option of
purchasing historical data on a per month basis.
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The Exchange anticipates that a wide variety of market participants
will purchase the Report, including, but not limited to, active equity
trading firms and academic institutions. For example, the Exchange
notes that academic institutions may utilize the Report data and as a
result promote research and studies of the equities industry to the
benefit of all market participants. The Exchange further believes the
Report may provide helpful trading information regarding investor
sentiment that may allow market participants to make more informed
trading decisions and may be used to create and test trading models and
analytical strategies and provide comprehensive insight into trading on
the Exchange.
The Exchange further notes that the Report is a completely
voluntary product, in that the Exchange is not required by any rule or
regulation to make the reports or services available and that potential
subscribers may purchase it only if they voluntarily choose to do so.
Further, the Exchange notes that other exchanges offer similar products
for a fee.\13\
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\13\ See the ``Nasdaq Short Sale Volume Reports'' portion of the
Nasdaq Fee Schedule at https://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN. See also the ``NYSE Group Summary
Data Products'' portion of the NYSE Historical Proprietary Market
Data Pricing at https://www.nyse.com/publicdocs/nyse/data/NYSE_Historical_Market_Data_Pricing.pdf.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of
[[Page 30180]]
Section 6(b) of the Act.\14\ Specifically, the Exchange believes the
proposed rule change is consistent with Sections 6(b)(4) and 6(b)(5) of
the Act,\15\ in particular, in that it provides for the equitable
allocation of reasonable dues, fees and other charges among members and
issuers and other persons using any facility, and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4) and (5).
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Exchange believes that the US Equity
Short Volume & Trades Report further broadens the availability of U.S.
equity market data to investors consistent with the principles of
Regulation NMS. The Report also promotes increased transparency through
the dissemination of short volume data. The Report benefits investors
by providing access to the US Equity Short Volume & Trades Report data,
which may promote better informed trading, as well as research and
studies of the equities industry.
The Exchange operates in a highly competitive environment. Indeed,
there are currently 16 registered equities exchanges that trade
equities. Based on publicly available information, no single equities
exchange has more than 16% of the equity market share.\16\ 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.'' \17\ Making similar data products
available to market participants fosters competition in the
marketplace, and constrains the ability of exchanges to charge
supercompetitive fees. In the event that a market participant views one
exchange's data product as more attractive than the competition, that
market participant can, and often does, switch between similar
products. The proposed fees are a result of the competitive environment
of the U.S. equities industry as the Exchange seeks to adopt fees to
attract purchasers of the recently introduced US Equity Short Volume &
Trades Report.
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\16\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (April 17, 2023), available at https://www.cboe.com/us/equities/market_/.
\17\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes that the proposed fee for the Report is
consistent with the Act in that it is reasonable, equitable, and not
unfairly discriminatory. In particular, the Exchange believes that the
proposed fee is reasonable because it is reasonably aligned with the
value and benefits provided to Users that choose to subscribe to the
Report on the Exchange. As discussed above, the Report may be
beneficial to Members and non-Members as it may provide helpful trading
information regarding investor sentiment that may allow market
participants to make more informed trading decisions and may be used to
create and test trading models and analytical strategies and provide
comprehensive insight into trading on the Exchange. Therefore, the
Exchange believes that it is reasonable to assess a modest fee to Users
that subscribe to the Report.
The Exchange further believes the proposed fee is reasonable
because the amount assessed is equal to or comparable to the analogous
fees charged by competitor exchanges. For example, the Nasdaq Stock
Market LLC (``Nasdaq'') charges $750 to Internal Distributors and
$1,250 to External Distributors of the Nasdaq Short Sale Volume Reports
provided on both a daily and historical monthly basis,\18\ which is
identical to the proposed subscription fees for the US Equity Short
Volume & Trades Report. Additionally, the New York Stock Exchange LLC
(``NYSE'') and its affiliated equity markets (the ``NYSE Group'') also
charge for the TAQ NYSE Group Short Sales (Monthly File) and TAQ NYSE
Group Short Volume (Daily File). Specifically, NYSE Group charges an
access fee of $1,000 per month for an ongoing subscription that
includes 12 months of back history, then additional back history
charged at $500 per data content month. NYSE Group also charges a back
history fee, of $1,000 per data content month for the first 12 months
of history, then additional back history charged at $500 per data
content month.\19\ The Exchange therefore believes that the proposed
fees are reasonable and set at a level to compete with other equity
exchanges that offer similar reports. Indeed, proposing fees that are
excessively higher than established fees for similar data products
would simply serve to reduce demand for the Exchange's data product,
which as noted, is entirely optional. Although each of these similar
data products provide only proprietary trade data and not trade data
from other exchanges, it is possible investors are still able to gauge
overall investor sentiment across different equities based on the
included data points on any one exchange. As such, if a market
participant views another exchange's potential report as more
attractive, then such market participant can merely choose not to
purchase the Exchange's Report and instead purchase another exchange's
similar data product, which offers similar data points, albeit based on
that other market's trading activity.
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\18\ See https://www.nasdaqtrader.com/Trader.aspx?id=DPUSdata#short.
\19\ See https://www.nyse.com/publicdocs/nyse/data/NYSE_Historical_Market_Data_.pdf.
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In addition, the Exchange believes that the proposed fees are
equitable and not unfairly discriminatory because they will apply
equally to all Members and non-Members that choose to subscribe to the
Report. As stated, the Report is completely optional and not necessary
for trading. Rather, the Exchange voluntarily makes the Report
available, and Users may choose to subscribe (and pay for) the report
based on their own individual business needs. Potential subscribers may
subscribe to the Report at any time if they believe it to be valuable
or may decline to purchase it.
The Exchange also believes it is reasonable, equitable and not
unfairly discriminatory to charge an External Distributor of the Report
a higher fee than an Internal Distributor as an External Distributor
will ordinarily charge a fee to its downstream customers for this
service, and, even if the vendor is not charging a specific fee for
this particular service, the Exchange expects products from the Report
to be part of a suite of offerings from distributors that generally
promote sales. External distribution is also fundamentally different
than internal use, in that the former generates revenue from external
sales while the latter does not. Therefore, the Exchange believes it is
reasonable, equitable and not unfairly discriminatory to charge a
higher fee for a product that generates downstream revenue. Further,
the proposed fee will apply equally to Internal and External
Distributors, respectively, that choose to distribute data from the
Report.
[[Page 30181]]
Moreover, as described above, another Exchange similarly charges
External Distributors higher fees as compared to Internal Distributors
for a similar data product.\20\
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\20\ See Nasdaq Rule 7 Section 152.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act because the Report will be
available equally to all Members and non-Members that choose to
subscribe to the report. As stated, the Report is optional and Members
and non-Members may choose to subscribe to such report, or not, based
on their view of the additional benefits and added value provided by
utilizing the Report. As such, the Exchange believes the proposed rule
change imposes no burden on intramarket competition. Next, the Exchange
believes the proposed rule change does not impose any burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. As previously discussed,
similar products offered by Nasdaq and the NYSE Group are priced
equally or comparable to the Report. 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.'' 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'. . . .''. Accordingly, the Exchange does not believe its
proposal 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 \21\ and paragraph (f) of Rule 19b-4 \22\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2023-027 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeBZX-2023-027. 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. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-CboeBZX-2023-027, and should be
submitted on or before May 31, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09902 Filed 5-9-23; 8:45 am]
BILLING CODE 8011-01-P
