Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 31539-31543 [2023-10465]
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Federal Register / Vol. 88, No. 95 / Wednesday, May 17, 2023 / Notices
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 25 and paragraph (f) of Rule
19b–4 26 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:
ddrumheller on DSK120RN23PROD with NOTICES1
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–
CboeEDGX–2023–033 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–CboeEDGX–2023–033. 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–CboeEDGX–2023–
033 and should be submitted on or
before June 7, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10466 Filed 5–16–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97480; File No. SR–
CboeBZX–2023–030]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
May 11, 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 28,
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX Options’’)
proposes 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
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
25 15
U.S.C. 78s(b)(3)(A).
26 17 CFR 240.19b–4(f).
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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
fees Fee Schedule to modify its market
data fees for BZX Options Top.3
Particularly, the Exchange proposes to
modify the Professional and NonProfessional User Fees, modify the
Enterprise Fee for BXZ Options Top and
make other clarifying, non-substantive
changes.4
The Exchange first proposes to reduce
the rates for Professional and NonProfessional User fees for BZX Options
Top. The Exchange currently charges
Internal Distributors and External
Distributors that redistribute any of the
BZX Options Data Feeds different fees
for their Professional Users 5 and NonProfessional Users.6 The Exchange
3 BZX Options Top is an uncompressed data feed
that offers top of book quotations and execution
information based on options orders entered into
the System. Uncompressed data is disseminated ‘‘as
is’’ in the native format by the Exchange, with no
compression.
4 The Exchange initially filed the proposed fee
changes on January 3, 2023 (SR–CboeBZX–2023–
001). On March 1, 2023, the Exchange withdrew
that filing and submitted SR–CboeBZX–2023–016,
which was filed on February 28, 2023. On April 28,
2023, the Exchange withdrew that filing and
submitted this filing.
5 A Professional User of an Exchange Market Data
product is any User other than a Non-Professional
User.
6 A ‘‘Non-Professional User’’ of an Exchange
Market Data product is a natural person or
qualifying trust that uses Data only for personal
purposes and not for any commercial purpose and,
for a natural person who works in the United States,
is not: (i) registered or qualified in any capacity
with the Securities and Exchange Commission, the
Commodities Futures Trading Commission, any
state securities agency, any securities exchange or
Continued
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currently assesses a monthly fee for
Professional Users of $30.00 per User
and a monthly fee of $1.00 per NonProfessional User.7 One User fee allows
access to the BZX Options Top Feed and
the BZX Options Depth Feed.8 The
Exchange proposes to reduce the rates
for the User fees for BZX Options Top.
Particularly, the Exchange proposes to
reduce the monthly (i) Professional User
fee from $30 per user to $5 per user and
(ii) Non-Professional User fee from
$1.00 per user to $0.10 per user. The
Exchange also proposes to start charging
separate User fees for BZX Options Top
and BZX Options Depth Feed. The
Exchange therefore proposes to
eliminate the language under the BZX
Options Top table and BZX Options
Depth Feed table that states one User fee
allows access to the BZX Options Top
Feed and the BZX Options Depth Feed.9
The Exchange next proposes to
increase the current monthly Enterprise
Fee. The Enterprise Fee permits a
recipient firm (i.e., a Distributor) to
purchase a monthly (and optional)
Enterprise license to receive the BZX
Options Top Feed for distribution to an
unlimited number of Professional and
Non-Professional Users.10 The
Enterprise Fee is an alternative to
Professional and Non-Professional User
fees. Like User fees, it is also assessed
in addition to the Distribution Fee.11
Currently, the Exchange assesses an
Enterprise Fee of $3,500 per month for
association, or any commodities or futures contract
market or association; (ii) engaged as an
‘‘investment adviser’’ as that term is defined in
section 202(a)(11) of the Investment Advisors Act
of 1940 (whether or not registered or qualified
under that Act); or (iii) employed by a bank or other
organization exempt from registration under federal
or state securities laws to perform functions that
would require registration or qualification if such
functions were performed for an organization not so
exempt; or, for a natural person who works outside
of the United States, does not perform the same
functions as would disqualify such person as a
Non-Professional User if he or she worked in the
United States.
7 Distributors that receive BZX Options Data are
required to count every Professional User and NonProfessional User to which they provide the data
feed(s).
8 BZX Options Depth is an uncompressed data
feed that offers depth of book quotations and
execution information based on options orders
entered into the System.
9 The Exchange is not proposing any changes to
the current User Fee amounts for BZX Options
Depth Feed at this time.
10 The Exchange proposes to amend the
description relating to the Enterprise Fees under the
BZX Options Top and Depth fee tables to clarify
that Distributors are the market participant that
would be purchasing the monthly Enterprise
license for purposes of distribution to Professional
and Non-Professional Users.
11 The Exchange also proposes to clarify in the
descriptions relating to the Enterprise Fees that (i)
it is an alternative to ‘‘Professional and NonProfessional’’ User fees and (ii) is in addition to the
Distribution Fee, to make clear what fees apply.
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BZX Options Top Feed.12 The Exchange
proposes to increase the Enterprise Fee
to $20,000 per month. For example, if a
Distributor distributes BZX Options Top
to 15,000 Professional Users who each
receive BZX Options Top at $5.00 per
month (as proposed), then that
Distributor will pay $75,000 per month
in Professional Users fees. Under the
proposed Enterprise Fee, it will pay a
flat fee of $20,000 for an unlimited
number of Professional and NonProfessional Users. A Distributor must
pay a separate Enterprise Fee for each
entity that controls the display of BZX
Options Top if it wishes for such User
to be covered by the Enterprise Fee
rather than by per User fees.13 A
Distributor that pays the Enterprise Fee
will not have to report its number of
such Users on a monthly basis.
However, every six months, it must
provide the Exchange with a count of
the total number of Professional and
Non-Professional Users of BZX Options
Top.14
The Exchange lastly proposes to make
clarifying, non-substantive changes.
First, the Exchange proposes to add
references to ‘‘Depth’’ in the description
of the Distribution Fees and Enterprise
Fee under the BZX Options Depth Feed
table to clarify which data feed such
fees currently applies to, thereby
alleviating potential confusion. The
Exchange also proposes to replace
references to ‘‘Recipient firm’’ with
‘‘Distributors’’ to more accurately reflect
the type of market participants the fees
are applicable to, thereby alleviating
potential confusion. The Exchange
lastly proposes to add a reference to
‘‘Professional and Non-Professional’’
Users in the description of the BZX
Options Depth Enterprise Fee.
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
12 The Exchange also offers a separate Enterprise
license for the BZX Options Depth Feed, also priced
at $3,500 per month. If a Distributor wishes to
purchase an Enterprise license for each of BZX
Options Top Feed and BZX Options Depth Feed, it
would be subject to a total of $7,000 per month
($3,500 for each Enterprise license). To date, no
market participant has purchased an Enterprise
license for either feed.
13 For example, if a Distributor (e.g., Refinitiv)
that distributes BZX Options Top to Retail
Brokerage Firm A and Retail Brokerage Firm B
(which ‘‘entities’’ redistribute BZX Options Top to
its respective Users) and wishes to have the Users
under each entity covered by an Enterprise license,
the Distributor would be subject to two Enterprise
Fees.
14 See Cboe Global Markets north American Data
Policies.
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and, in particular, the requirements of
section 6(b) of the Act.15 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 16 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) requirement that the
rules of an exchange not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes this
proposal is consistent with section
6(b)(8) of the Act, which requires that
the rules of an exchange not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.17 In addition,
the Exchange believes that the proposed
rule change is consistent with section
11(A) of the Act as it supports (i) fair
competition among brokers and dealers,
among exchange markets, and between
exchange markets and markets other
than exchange markets, and (ii) the
availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities.18 The Exchange also believes
the proposed rule change is consistent
with section 6(b)(4) of the Act,19 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Members and other persons using its
facilities.
The Exchange first notes that it
operates in a highly competitive
environment. Indeed, there are currently
16 registered options exchanges that
trade options. Based on publicly
available information, no single options
exchange has more than 18% of the
market share.20 The Exchange believes
top-of-book quotation and transaction
data is highly competitive as national
securities exchanges compete vigorously
15 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
17 15 U.S.C. 78f(b)(8).
18 15 U.S.C. 78k–1.
19 15 U.S.C. 78f(b)(4).
20 See Cboe Global Markets U.S. Options Market
Month-to-Date Volume Summary (April 24, 2023),
available at https://markets.cboe.com/us/options/
market_statistics/.
16 15
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with each other to provide efficient,
reliable, and low-cost data to a wide
range of investors and market
participants. Indeed, there are several
competing products offered by other
national securities exchanges today, not
counting products offered by the
Exchange’s affiliates, and each of the
Exchange’s affiliated U.S. options
exchanges also offers similar top-ofbook data.21 Each of those exchanges
offer top-of-book quotation and last sale
information based on their own
quotation and trading activity that is
substantially similar to the information
provided by the Exchange through the
BZX Options Top Feed. Further, the
quote and last sale data contained in the
BZX Options Top Feed is identical to
the data sent to OPRA for redistribution
to the public.22 Accordingly, Exchange
top-of-book data is widely available
today from a number of different
sources.
Moreover, the BZX Options Top is
distributed and purchased on a
voluntary basis, in that neither the
Exchange nor market data distributors
are required by any rule or regulation to
make this data available. Accordingly,
Distributors and Users can discontinue
use at any time and for any reason,
including due to an assessment of the
reasonableness of fees charged. As
described above, market participants
have a wide variety of alternative
market data products from which to
choose, such as similar proprietary data
products offered by other exchanges and
consolidated data. Further, the
Exchange is not required to make any
proprietary data products available or to
offer any specific pricing alternatives to
any customers. Moreover, persons
(including broker-dealers) who
subscribe to any exchange proprietary
data feed must also have equivalent
access to consolidated Options
Information 23 from OPRA for the same
21 See e.g., NYSE Arca Options Proprietary
Market Data Fees Schedule, MIAX Options
Exchange, Fee Schedule, Section 6 (Market Data
Fees), Nasdaq PHLX Options 7 Pricing Schedule,
Section 10 (Proprietary Data Feed Fees) and Cboe
Data Services, LLC Fees Schedule.
22 The Exchange notes that it makes available the
top-of-book and last sale data that is included in the
BZX Options Top Data Feed no earlier than the time
at which the Exchange sends that data to OPRA.
23 ‘‘Consolidated Options Information’’ means
consolidated Last Sale Reports combined with
either consolidated Quotation Information or the
BBO furnished by OPRA. Access to consolidated
Options Information is deemed ‘‘equivalent’’ if both
kinds of information are equally accessible on the
same terminal or work station. See Limited Liability
Company Agreement of Options Price Reporting
Authority, LLC (‘‘OPRA Plan’’), Section 5.2(c)(iii).
The Exchange notes that this requirement under the
OPRA Plan is also reiterated under the Cboe Global
Markets Global Data Agreement and Cboe Global
Markets North American Data Policies, which
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classes or series of options that are
included in the proprietary data feed,
and proprietary data feeds cannot be
used to meet that particular
requirement.24 As such, all proprietary
data feeds are purely optional and only
those that deem the product to be of
sufficient overall value and usefulness
would purchase it.
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.’’ 25
Making similar data products available
to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
charge supracompetitive fees. In the
event that a market participant views
one exchange’s data product as more or
less attractive than the competition they
can and do switch between similar
products. The proposed fees are a result
of the competitive environment, as the
Exchange seeks to adopt fees to attract
purchasers who may be interested in
purchasing only the BZX Options Top
Data Feed.
The Exchange believes the proposed
changes to reduce the rates of the
current Professional and NonProfessional User fees for BZX Options
Top Data are reasonable as Distributors
will be subject to lower User fees for the
BZX Options Top Feed. Distributors
who only wish to distribute BZX
Options Top Feed will therefore be
subject to lower User fees. Additionally,
the User fees continue to be in line with
and/or lower than User fees assessed by
other exchanges for similar data.26
subscribers to any exchange proprietary product
must sign and are subject to, respectively.
Additionally, the Exchange’s Data Order Form
(used for requesting the Exchange’s market data
products) requires confirmation that the requesting
market participant receives data from OPRA.
24 Id.
25 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
26 See e.g., Nasdaq PHLX Options 7 Pricing
Schedule, Section 10 (Proprietary Data Feed Fees),
which provides for a fee of $40 per month to
professional users and $1.00 per month to nonprofessional users to cover the usage of PHLX
Options (TOPO) Data, TOPO Plus Orders, PHLX
Orders and PHLX Depth Data feeds. See also NYSE
American Options Proprietary Market Data Fees
schedule, which provides for a fee of $50 per month
to professional users and $1.00 per month to non-
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31541
The Exchange believes that the
proposed fees are equitable and not
unfairly discriminatory because they
will be charged uniformly to
Distributors who distribute BZX
Options Top. The Exchange also
believes continuing to offer BZX
Options Top Data to Non-Professional
Users at a lower cost than Professional
Users results in greater equity among
data recipients, as Professional Users are
categorized as such based on their
employment and participation in
financial markets, and thus, are
compensated to participate in the
markets. Although Non-Professional
Users too can receive significant
financial benefits through their
participation in the markets, the
Exchange believes it is reasonable to
charge more to those Users who are
more directly engaged in the markets.
The Exchange believes assessing lower
User fees for BZX Options Top as
compared to BZX Options Depth is also
equitably and not unfairly
discriminatory. Particularly, the BZX
Options Top Feed contains less
information than BZX Options Depth
(indeed, the information contained in
BZX Options Top is a subset of the
information that is included in BZX
Options Depth). The Exchange believes
it is equitable to have pricing based, in
part, upon the amount of information
contained in each data feed and the
value of that information to market
participants. Thus, the Exchange
believes it’s reasonable for BZX Options
Top to have lower User fees than BZX
Options Depth because it offers less data
than BZX Options Depth.
The Exchange next notes it is not
required to charge a single User fee to
cover all its available data products, but
none-the-less has not charged separate
User Fees for both BZX Options Top
and BZX Options Depth since BZX
Options Top was adopted in March
2018.27 However, the Exchange no
longer wishes to continue to have a
single fee. The Exchange believes the
professional users of American Options Top Data,
American Options Deep and American Options
Complex products. By comparison, the total
combined Professional User fee for the Exchange’s
market data products is still lower at $35 per
Professional User (i.e., $5 per Professional Users of
BZX Options Top, as proposed, and $30 per
Professional User of BZX Options Depth). The
Exchange’s combined Non-Professional User Fee at
$1.10 per Non-Professional User (i.e., $0.10 per
Non-Professional User of BZX Options Top, as
proposed, and $1 per Non-Professional User of BZX
Options Depth) is still in line with, and not a
significant departure from, PHLX’s and NYSE
American’s aforementioned Non-Professional User
fees.
27 See Securities Exchange Act Release No. 82874
(March 14, 2018), 83 FR 12210 (March 20, 2018)
(SR–CboeBZX–2018–017).
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proposed change is reasonable,
equitable and not unfairly
discriminatory as the Top and Book
Depth Data Feeds are purely optional.
As stated above, the Exchange also
believes charging separate User fees is
equitable as it allows the Exchange to
assess prices based on the amount of
information contained in each feed,
which can provide an opportunity to
assess lower fees for products that
contain less information. Particularly,
the proposed rule change reduces fees
for market participants who only want
top-of-book and execution data and do
not need depth-of-book data. Those who
wish to receive more comprehensive
depth-of-book information may still
continue to do so at the current (and
higher) price. Additionally, as noted
above, the data contained in the BZX
Options Top Feed is a subset of the data
included in the BZX Options Depth
Feed. As such, a User that receives BZX
Options Depth Feed would not need to
also receive the BZX Options Top Feed
since the BZX Options Depth Feed is
already inclusive of the data contained
in the BZX Options Top Feed.
Moreover, only those Distributors that
deem the products to be of sufficient
overall value and usefulness would
purchase either or both of them for
purposes of distribution to Users.
Distributors are not required to
distribute, and Users are not required to
receive, any one particular data product
and indeed may choose to receive none,
one, or several of the Exchange’s market
data products. Additionally, the
Exchange is not required to provide any
fee waiver to Distributors of BZX
Options Top, including for User Fees. In
fact, another exchange similarly adopted
separate fees for different data products
that historically had otherwise been
provided under a single fee.28 The
Exchange believes the proposed change
is equitable and not unfairly
discriminatory as it will apply
uniformly to Distributors.
The proposed increased Enterprise
Fee for BZX Options Top Feed is
equitable and reasonable as the
proposed fee could still result in a fee
reduction for Distributors with a large
number of Professional and NonProfessional Users. If a Distributor has a
smaller number of Professional Users of
BZX Options Top, then it may continue
using the per User structure and benefit
from the proposed per BZX Options Top
User Fee reductions. By reducing prices
Distributors with a large number of
Professional and Non-Professional
28 See Securities Exchange Act Release No. 79556
(December 14, 2016), 81 FR 92935 (December 20,
2016) (SR–NASDAQ–2016–167).
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Users, the Exchange believes that more
firms may choose to receive and to
distribute BZX Options Top Data,
thereby expanding the distribution of
this market data for the benefit of
investors. The Exchange notes that
currently no Distributors have
purchased an Enterprise license. The
Exchange believes however, that the
proposed lower User fees for BZX
Options Top may incentivize additional
External Distributors to distribute BZX
Options Top an enlist additional Users.
As a Distributor’s User base grows, it
may make sense for a Distributor to
purchase the alternative Enterprise
license to cap its fees. In connection
with this potential increase in Users, the
Exchange believes it is therefore also
reasonable to increase the current
amount of the Enterprise Fee. That said,
the Enterprise Fee is entirely optional.
A firm that does not have a sufficient
number of Users to benefit from the
purchase of the Enterprise license need
not do so.
The Exchange further believes that the
Enterprise Fee, even as amended, is
reasonable because it simplifies
reporting for certain Distributors that
have large numbers of Professional and
Non-Professional Users. Firms that pay
the proposed Enterprise Fee do have to
report the number of Users on a
monthly basis as they currently do, but
rather only have to count authorized
users every six months, which is a
significant reduction in administrative
burden.
The Exchange lastly believes the
proposed non-substantive clarifying
changes will alleviate potential
confusion, thereby removing
impediments to and perfecting the
mechanism of a free and open market
and a national market system, and, in
general, protecting investors and the
public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would result
in any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive environment, and its ability
to price top-of-book data is constrained
by competition among exchanges that
offer similar data products to their
customers. For example, Top-of-book
data is broadly disseminated by
competing U.S. options exchanges. In
this competitive environment potential
Distributors are free to choose which
competing product to purchase to
satisfy their need for market
information. Often, the choice comes
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down to price, as market data customers
look to purchase cheaper data products,
and quality, as market participants seek
to purchase data that represents
significant market liquidity.
The Exchange believes that the
proposed fees do not put any market
participants at a relative disadvantage
compared to other market participants.
As discussed, the proposed fees would
apply to all similarly situated
Distributors of BZX Options Top on an
equal and non-discriminatory basis. The
Exchange believes the differentiated fees
for Professional and Non-Professional
Users of BZX Options Top is
appropriate given Professional Users are
categorized as such based on their
employment and participation in
financial markets, and thus, are
compensated to participate in the
markets. Non-Professional Users too can
receive significant financial benefits
through their participation in the
markets, however the Exchange believes
it is reasonable to charge more for those
Users who are more directly engaged in
the markets. The Exchange therefore
believes that the proposed fee neither
favors nor penalizes one or more
categories of market participants in a
manner that would impose an undue
burden on competition.
The Exchange believes that the
proposed fees do not impose a burden
on competition or on other SROs that is
not necessary or appropriate in
furtherance of the purposes of the Act.
In particular, market participants are not
forced to subscribe to BZX Options Top,
or any of the Exchange’s data feeds, as
described above. Also as described
above, there are numerous substitute
products offered by other national
securities exchanges, as well as OPRA.
Because market data customers can find
suitable substitute feeds, an exchange
that overprices its market data products
stands a high risk that users may
substitute another product. These
competitive pressures ensure that no
one exchange’s market data fees can
impose an undue burden on
competition, and the Exchange’s
proposed fees do not do so here.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange 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)
E:\FR\FM\17MYN1.SGM
17MYN1
Federal Register / Vol. 88, No. 95 / Wednesday, May 17, 2023 / Notices
of the Act 29 and paragraph (f) of Rule
19b–4 30 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:
ddrumheller on DSK120RN23PROD with NOTICES1
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–2023–030 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–2023–030. 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–2023–030
and should be submitted on or before
June 7, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10465 Filed 5–16–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97486; File No. SR–C2–
2023–012]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Update Its Fees
Schedule
May 11, 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 28,
2023, Cboe C2 Exchange, Inc.
(‘‘Exchange’’ or ‘‘C2’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to update
its Fees Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/ctwo/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
31 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
29 15
U.S.C. 78s(b)(3)(A).
30 17 CFR 240.19b–4(f).
VerDate Sep<11>2014
18:34 May 16, 2023
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31543
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 the
Cboe Data Services, LLC (‘‘CDS’’)
section of its Fees Schedule.3
Particularly, the Exchange proposes to
(i) reformat the section of its Fees
Schedule pertaining to market data fees,
(ii) harmonize various market data
related definitions to align with the
definitions used by the Exchange’s
affiliates and (iii) modify its fees relating
to the distribution of the BBO data
feed.4
Reformatting
The Exchange first proposes to
eliminate references to CDS and instead
refer to the ‘‘Exchange’’, as well as
rename the section currently titled
‘‘Cboe Data Services, LLC Fees’’ to
‘‘Market Data Fees’’ to align with the
terminology and heading of its affiliates,
BZX Options and EDGX Options. The
Exchange notes that no substantive
changes are being made with the
3 The Exchange initially filed the proposed fee
changes on January 3, 2023 (SR–C2–2023–001). On
March 1, 2023, the Exchange withdrew that filing
and replaced it with SR–C2–2023–007, which was
submitted on February 28, 2023. On April 28, 2023
the Exchange withdrew that filing and submitted
this filing.
4 The BBO Data Feed is a real-time data feed that
includes the following information: (i) outstanding
quotes and standing orders at the best available
price level on each side of the market; (ii) executed
trades time, size, and price; (iii) totals of customer
versus non-customer contracts at the best bid and
offer (‘‘BBO’’); (iv) all-or-none contingency orders
priced better than or equal to the BBO; (v) expected
opening price and expected opening size; (vi) endof-day summaries by product, including open, high,
low, and closing price during the trading session;
(vi) recap messages any time there is a change in
the open, high, low or last sale price of a listed
option; (vii) COB information; and (viii) product IDs
and codes for all listed options contracts. The quote
and last sale data contained in the BBO data feed
is identical to the data sent to the Options Price
Reporting Authority (‘‘OPRA’’) for redistribution to
the public.
E:\FR\FM\17MYN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 95 (Wednesday, May 17, 2023)]
[Notices]
[Pages 31539-31543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10465]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97480; File No. SR-CboeBZX-2023-030]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
May 11, 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 28, 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 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'')
proposes 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 fees Fee Schedule to modify its
market data fees for BZX Options Top.\3\ Particularly, the Exchange
proposes to modify the Professional and Non-Professional User Fees,
modify the Enterprise Fee for BXZ Options Top and make other
clarifying, non-substantive changes.\4\
---------------------------------------------------------------------------
\3\ BZX Options Top is an uncompressed data feed that offers top
of book quotations and execution information based on options orders
entered into the System. Uncompressed data is disseminated ``as is''
in the native format by the Exchange, with no compression.
\4\ The Exchange initially filed the proposed fee changes on
January 3, 2023 (SR-CboeBZX-2023-001). On March 1, 2023, the
Exchange withdrew that filing and submitted SR-CboeBZX-2023-016,
which was filed on February 28, 2023. On April 28, 2023, the
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------
The Exchange first proposes to reduce the rates for Professional
and Non-Professional User fees for BZX Options Top. The Exchange
currently charges Internal Distributors and External Distributors that
redistribute any of the BZX Options Data Feeds different fees for their
Professional Users \5\ and Non-Professional Users.\6\ The Exchange
[[Page 31540]]
currently assesses a monthly fee for Professional Users of $30.00 per
User and a monthly fee of $1.00 per Non-Professional User.\7\ One User
fee allows access to the BZX Options Top Feed and the BZX Options Depth
Feed.\8\ The Exchange proposes to reduce the rates for the User fees
for BZX Options Top. Particularly, the Exchange proposes to reduce the
monthly (i) Professional User fee from $30 per user to $5 per user and
(ii) Non-Professional User fee from $1.00 per user to $0.10 per user.
The Exchange also proposes to start charging separate User fees for BZX
Options Top and BZX Options Depth Feed. The Exchange therefore proposes
to eliminate the language under the BZX Options Top table and BZX
Options Depth Feed table that states one User fee allows access to the
BZX Options Top Feed and the BZX Options Depth Feed.\9\
---------------------------------------------------------------------------
\5\ A Professional User of an Exchange Market Data product is
any User other than a Non-Professional User.
\6\ A ``Non-Professional User'' of an Exchange Market Data
product is a natural person or qualifying trust that uses Data only
for personal purposes and not for any commercial purpose and, for a
natural person who works in the United States, is not: (i)
registered or qualified in any capacity with the Securities and
Exchange Commission, the Commodities Futures Trading Commission, any
state securities agency, any securities exchange or association, or
any commodities or futures contract market or association; (ii)
engaged as an ``investment adviser'' as that term is defined in
section 202(a)(11) of the Investment Advisors Act of 1940 (whether
or not registered or qualified under that Act); or (iii) employed by
a bank or other organization exempt from registration under federal
or state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt; or, for a natural person who works
outside of the United States, does not perform the same functions as
would disqualify such person as a Non-Professional User if he or she
worked in the United States.
\7\ Distributors that receive BZX Options Data are required to
count every Professional User and Non-Professional User to which
they provide the data feed(s).
\8\ BZX Options Depth is an uncompressed data feed that offers
depth of book quotations and execution information based on options
orders entered into the System.
\9\ The Exchange is not proposing any changes to the current
User Fee amounts for BZX Options Depth Feed at this time.
---------------------------------------------------------------------------
The Exchange next proposes to increase the current monthly
Enterprise Fee. The Enterprise Fee permits a recipient firm (i.e., a
Distributor) to purchase a monthly (and optional) Enterprise license to
receive the BZX Options Top Feed for distribution to an unlimited
number of Professional and Non-Professional Users.\10\ The Enterprise
Fee is an alternative to Professional and Non-Professional User fees.
Like User fees, it is also assessed in addition to the Distribution
Fee.\11\ Currently, the Exchange assesses an Enterprise Fee of $3,500
per month for BZX Options Top Feed.\12\ The Exchange proposes to
increase the Enterprise Fee to $20,000 per month. For example, if a
Distributor distributes BZX Options Top to 15,000 Professional Users
who each receive BZX Options Top at $5.00 per month (as proposed), then
that Distributor will pay $75,000 per month in Professional Users fees.
Under the proposed Enterprise Fee, it will pay a flat fee of $20,000
for an unlimited number of Professional and Non-Professional Users. A
Distributor must pay a separate Enterprise Fee for each entity that
controls the display of BZX Options Top if it wishes for such User to
be covered by the Enterprise Fee rather than by per User fees.\13\ A
Distributor that pays the Enterprise Fee will not have to report its
number of such Users on a monthly basis. However, every six months, it
must provide the Exchange with a count of the total number of
Professional and Non-Professional Users of BZX Options Top.\14\
---------------------------------------------------------------------------
\10\ The Exchange proposes to amend the description relating to
the Enterprise Fees under the BZX Options Top and Depth fee tables
to clarify that Distributors are the market participant that would
be purchasing the monthly Enterprise license for purposes of
distribution to Professional and Non-Professional Users.
\11\ The Exchange also proposes to clarify in the descriptions
relating to the Enterprise Fees that (i) it is an alternative to
``Professional and Non-Professional'' User fees and (ii) is in
addition to the Distribution Fee, to make clear what fees apply.
\12\ The Exchange also offers a separate Enterprise license for
the BZX Options Depth Feed, also priced at $3,500 per month. If a
Distributor wishes to purchase an Enterprise license for each of BZX
Options Top Feed and BZX Options Depth Feed, it would be subject to
a total of $7,000 per month ($3,500 for each Enterprise license). To
date, no market participant has purchased an Enterprise license for
either feed.
\13\ For example, if a Distributor (e.g., Refinitiv) that
distributes BZX Options Top to Retail Brokerage Firm A and Retail
Brokerage Firm B (which ``entities'' redistribute BZX Options Top to
its respective Users) and wishes to have the Users under each entity
covered by an Enterprise license, the Distributor would be subject
to two Enterprise Fees.
\14\ See Cboe Global Markets north American Data Policies.
---------------------------------------------------------------------------
The Exchange lastly proposes to make clarifying, non-substantive
changes. First, the Exchange proposes to add references to ``Depth'' in
the description of the Distribution Fees and Enterprise Fee under the
BZX Options Depth Feed table to clarify which data feed such fees
currently applies to, thereby alleviating potential confusion. The
Exchange also proposes to replace references to ``Recipient firm'' with
``Distributors'' to more accurately reflect the type of market
participants the fees are applicable to, thereby alleviating potential
confusion. The Exchange lastly proposes to add a reference to
``Professional and Non-Professional'' Users in the description of the
BZX Options Depth Enterprise Fee.
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.\15\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \16\ 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) requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes this proposal is
consistent with section 6(b)(8) of the Act, which requires that the
rules of an exchange not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.\17\
In addition, the Exchange believes that the proposed rule change is
consistent with section 11(A) of the Act as it supports (i) fair
competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets, and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.\18\ The
Exchange also believes the proposed rule change is consistent with
section 6(b)(4) of the Act,\19\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Members and other persons using its facilities.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ 15 U.S.C. 78f(b)(8).
\18\ 15 U.S.C. 78k-1.
\19\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange first notes that it operates in a highly competitive
environment. Indeed, there are currently 16 registered options
exchanges that trade options. Based on publicly available information,
no single options exchange has more than 18% of the market share.\20\
The Exchange believes top-of-book quotation and transaction data is
highly competitive as national securities exchanges compete vigorously
[[Page 31541]]
with each other to provide efficient, reliable, and low-cost data to a
wide range of investors and market participants. Indeed, there are
several competing products offered by other national securities
exchanges today, not counting products offered by the Exchange's
affiliates, and each of the Exchange's affiliated U.S. options
exchanges also offers similar top-of-book data.\21\ Each of those
exchanges offer top-of-book quotation and last sale information based
on their own quotation and trading activity that is substantially
similar to the information provided by the Exchange through the BZX
Options Top Feed. Further, the quote and last sale data contained in
the BZX Options Top Feed is identical to the data sent to OPRA for
redistribution to the public.\22\ Accordingly, Exchange top-of-book
data is widely available today from a number of different sources.
---------------------------------------------------------------------------
\20\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (April 24, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
\21\ See e.g., NYSE Arca Options Proprietary Market Data Fees
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10
(Proprietary Data Feed Fees) and Cboe Data Services, LLC Fees
Schedule.
\22\ The Exchange notes that it makes available the top-of-book
and last sale data that is included in the BZX Options Top Data Feed
no earlier than the time at which the Exchange sends that data to
OPRA.
---------------------------------------------------------------------------
Moreover, the BZX Options Top is distributed and purchased on a
voluntary basis, in that neither the Exchange nor market data
distributors are required by any rule or regulation to make this data
available. Accordingly, Distributors and Users can discontinue use at
any time and for any reason, including due to an assessment of the
reasonableness of fees charged. As described above, market participants
have a wide variety of alternative market data products from which to
choose, such as similar proprietary data products offered by other
exchanges and consolidated data. Further, the Exchange is not required
to make any proprietary data products available or to offer any
specific pricing alternatives to any customers. Moreover, persons
(including broker-dealers) who subscribe to any exchange proprietary
data feed must also have equivalent access to consolidated Options
Information \23\ from OPRA for the same classes or series of options
that are included in the proprietary data feed, and proprietary data
feeds cannot be used to meet that particular requirement.\24\ As such,
all proprietary data feeds are purely optional and only those that deem
the product to be of sufficient overall value and usefulness would
purchase it.
---------------------------------------------------------------------------
\23\ ``Consolidated Options Information'' means consolidated
Last Sale Reports combined with either consolidated Quotation
Information or the BBO furnished by OPRA. Access to consolidated
Options Information is deemed ``equivalent'' if both kinds of
information are equally accessible on the same terminal or work
station. See Limited Liability Company Agreement of Options Price
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The
Exchange notes that this requirement under the OPRA Plan is also
reiterated under the Cboe Global Markets Global Data Agreement and
Cboe Global Markets North American Data Policies, which subscribers
to any exchange proprietary product must sign and are subject to,
respectively. Additionally, the Exchange's Data Order Form (used for
requesting the Exchange's market data products) requires
confirmation that the requesting market participant receives data
from OPRA.
\24\ Id.
---------------------------------------------------------------------------
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.'' \25\ Making
similar data products available to market participants fosters
competition in the marketplace, and constrains the ability of exchanges
to charge supracompetitive fees. In the event that a market participant
views one exchange's data product as more or less attractive than the
competition they can and do switch between similar products. The
proposed fees are a result of the competitive environment, as the
Exchange seeks to adopt fees to attract purchasers who may be
interested in purchasing only the BZX Options Top Data Feed.
---------------------------------------------------------------------------
\25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
The Exchange believes the proposed changes to reduce the rates of
the current Professional and Non-Professional User fees for BZX Options
Top Data are reasonable as Distributors will be subject to lower User
fees for the BZX Options Top Feed. Distributors who only wish to
distribute BZX Options Top Feed will therefore be subject to lower User
fees. Additionally, the User fees continue to be in line with and/or
lower than User fees assessed by other exchanges for similar data.\26\
---------------------------------------------------------------------------
\26\ See e.g., Nasdaq PHLX Options 7 Pricing Schedule, Section
10 (Proprietary Data Feed Fees), which provides for a fee of $40 per
month to professional users and $1.00 per month to non-professional
users to cover the usage of PHLX Options (TOPO) Data, TOPO Plus
Orders, PHLX Orders and PHLX Depth Data feeds. See also NYSE
American Options Proprietary Market Data Fees schedule, which
provides for a fee of $50 per month to professional users and $1.00
per month to non-professional users of American Options Top Data,
American Options Deep and American Options Complex products. By
comparison, the total combined Professional User fee for the
Exchange's market data products is still lower at $35 per
Professional User (i.e., $5 per Professional Users of BZX Options
Top, as proposed, and $30 per Professional User of BZX Options
Depth). The Exchange's combined Non-Professional User Fee at $1.10
per Non-Professional User (i.e., $0.10 per Non-Professional User of
BZX Options Top, as proposed, and $1 per Non-Professional User of
BZX Options Depth) is still in line with, and not a significant
departure from, PHLX's and NYSE American's aforementioned Non-
Professional User fees.
---------------------------------------------------------------------------
The Exchange believes that the proposed fees are equitable and not
unfairly discriminatory because they will be charged uniformly to
Distributors who distribute BZX Options Top. The Exchange also believes
continuing to offer BZX Options Top Data to Non-Professional Users at a
lower cost than Professional Users results in greater equity among data
recipients, as Professional Users are categorized as such based on
their employment and participation in financial markets, and thus, are
compensated to participate in the markets. Although Non-Professional
Users too can receive significant financial benefits through their
participation in the markets, the Exchange believes it is reasonable to
charge more to those Users who are more directly engaged in the
markets. The Exchange believes assessing lower User fees for BZX
Options Top as compared to BZX Options Depth is also equitably and not
unfairly discriminatory. Particularly, the BZX Options Top Feed
contains less information than BZX Options Depth (indeed, the
information contained in BZX Options Top is a subset of the information
that is included in BZX Options Depth). The Exchange believes it is
equitable to have pricing based, in part, upon the amount of
information contained in each data feed and the value of that
information to market participants. Thus, the Exchange believes it's
reasonable for BZX Options Top to have lower User fees than BZX Options
Depth because it offers less data than BZX Options Depth.
The Exchange next notes it is not required to charge a single User
fee to cover all its available data products, but none-the-less has not
charged separate User Fees for both BZX Options Top and BZX Options
Depth since BZX Options Top was adopted in March 2018.\27\ However, the
Exchange no longer wishes to continue to have a single fee. The
Exchange believes the
[[Page 31542]]
proposed change is reasonable, equitable and not unfairly
discriminatory as the Top and Book Depth Data Feeds are purely
optional. As stated above, the Exchange also believes charging separate
User fees is equitable as it allows the Exchange to assess prices based
on the amount of information contained in each feed, which can provide
an opportunity to assess lower fees for products that contain less
information. Particularly, the proposed rule change reduces fees for
market participants who only want top-of-book and execution data and do
not need depth-of-book data. Those who wish to receive more
comprehensive depth-of-book information may still continue to do so at
the current (and higher) price. Additionally, as noted above, the data
contained in the BZX Options Top Feed is a subset of the data included
in the BZX Options Depth Feed. As such, a User that receives BZX
Options Depth Feed would not need to also receive the BZX Options Top
Feed since the BZX Options Depth Feed is already inclusive of the data
contained in the BZX Options Top Feed. Moreover, only those
Distributors that deem the products to be of sufficient overall value
and usefulness would purchase either or both of them for purposes of
distribution to Users. Distributors are not required to distribute, and
Users are not required to receive, any one particular data product and
indeed may choose to receive none, one, or several of the Exchange's
market data products. Additionally, the Exchange is not required to
provide any fee waiver to Distributors of BZX Options Top, including
for User Fees. In fact, another exchange similarly adopted separate
fees for different data products that historically had otherwise been
provided under a single fee.\28\ The Exchange believes the proposed
change is equitable and not unfairly discriminatory as it will apply
uniformly to Distributors.
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\27\ See Securities Exchange Act Release No. 82874 (March 14,
2018), 83 FR 12210 (March 20, 2018) (SR-CboeBZX-2018-017).
\28\ See Securities Exchange Act Release No. 79556 (December 14,
2016), 81 FR 92935 (December 20, 2016) (SR-NASDAQ-2016-167).
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The proposed increased Enterprise Fee for BZX Options Top Feed is
equitable and reasonable as the proposed fee could still result in a
fee reduction for Distributors with a large number of Professional and
Non-Professional Users. If a Distributor has a smaller number of
Professional Users of BZX Options Top, then it may continue using the
per User structure and benefit from the proposed per BZX Options Top
User Fee reductions. By reducing prices Distributors with a large
number of Professional and Non-Professional Users, the Exchange
believes that more firms may choose to receive and to distribute BZX
Options Top Data, thereby expanding the distribution of this market
data for the benefit of investors. The Exchange notes that currently no
Distributors have purchased an Enterprise license. The Exchange
believes however, that the proposed lower User fees for BZX Options Top
may incentivize additional External Distributors to distribute BZX
Options Top an enlist additional Users. As a Distributor's User base
grows, it may make sense for a Distributor to purchase the alternative
Enterprise license to cap its fees. In connection with this potential
increase in Users, the Exchange believes it is therefore also
reasonable to increase the current amount of the Enterprise Fee. That
said, the Enterprise Fee is entirely optional. A firm that does not
have a sufficient number of Users to benefit from the purchase of the
Enterprise license need not do so.
The Exchange further believes that the Enterprise Fee, even as
amended, is reasonable because it simplifies reporting for certain
Distributors that have large numbers of Professional and Non-
Professional Users. Firms that pay the proposed Enterprise Fee do have
to report the number of Users on a monthly basis as they currently do,
but rather only have to count authorized users every six months, which
is a significant reduction in administrative burden.
The Exchange lastly believes the proposed non-substantive
clarifying changes will alleviate potential confusion, thereby removing
impediments to and perfecting the mechanism of a free and open market
and a national market system, and, in general, protecting investors and
the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
operates in a highly competitive environment, and its ability to price
top-of-book data is constrained by competition among exchanges that
offer similar data products to their customers. For example, Top-of-
book data is broadly disseminated by competing U.S. options exchanges.
In this competitive environment potential Distributors are free to
choose which competing product to purchase to satisfy their need for
market information. Often, the choice comes down to price, as market
data customers look to purchase cheaper data products, and quality, as
market participants seek to purchase data that represents significant
market liquidity.
The Exchange believes that the proposed fees do not put any market
participants at a relative disadvantage compared to other market
participants. As discussed, the proposed fees would apply to all
similarly situated Distributors of BZX Options Top on an equal and non-
discriminatory basis. The Exchange believes the differentiated fees for
Professional and Non-Professional Users of BZX Options Top is
appropriate given Professional Users are categorized as such based on
their employment and participation in financial markets, and thus, are
compensated to participate in the markets. Non-Professional Users too
can receive significant financial benefits through their participation
in the markets, however the Exchange believes it is reasonable to
charge more for those Users who are more directly engaged in the
markets. The Exchange therefore believes that the proposed fee neither
favors nor penalizes one or more categories of market participants in a
manner that would impose an undue burden on competition.
The Exchange believes that the proposed fees do not impose a burden
on competition or on other SROs that is not necessary or appropriate in
furtherance of the purposes of the Act. In particular, market
participants are not forced to subscribe to BZX Options Top, or any of
the Exchange's data feeds, as described above. Also as described above,
there are numerous substitute products offered by other national
securities exchanges, as well as OPRA. Because market data customers
can find suitable substitute feeds, an exchange that overprices its
market data products stands a high risk that users may substitute
another product. These competitive pressures ensure that no one
exchange's market data fees can impose an undue burden on competition,
and the Exchange's proposed fees do not do so here.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange 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)
[[Page 31543]]
of the Act \29\ and paragraph (f) of Rule 19b-4 \30\ 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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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 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-2023-030 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-2023-030. 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-2023-030 and should be submitted
on or before June 7, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10465 Filed 5-16-23; 8:45 am]
BILLING CODE 8011-01-P
