Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Its Fees Schedule, 31543-31549 [2023-10470]
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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:
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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).
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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.
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elimination of the references to CDS
fees. Rather, the proposed change more
accurately reflects the Exchange’s role
as it relates to its market data products
as CDS is merely an affiliate that is the
Cboe contracting entity for all U.S.
equities and options market data
products, but the data products
themselves are made available by the
Exchange. The Exchange also proposes
to reformat and reorganize the layout of
the fees under the Cboe Data Services,
LLC (‘‘CDS’’) section of the Fees
Schedule to align with formatting of the
corresponding section in the fee
schedules of the Exchange’s affiliated
options exchanges, Cboe BZX Exchange,
Inc. (‘‘BZX Options’’) and Cboe EDGX
Exchange, Inc. (‘‘EDGX Options’’),
Definitions
In order to provide consistent rules
and terminology amongst the Exchange
and its affiliated options exchanges,
Cboe Options Exchange, Inc. (‘‘Cboe
Options’’), Cboe BZX Exchange, Inc.
(‘‘BZX Options’’) and Cboe EDGX
Exchange, Inc. (‘‘EDGX Options’’)
(collectively, ‘‘Affiliates’’), the Exchange
is proposing to amend various
definitions and product names to
harmonize with such terms used by its
affiliates BZX Options and EDGX
Options, as well as definitions used in
Cboe’s Cboe Global Markets Global Data
Agreement and Cboe Global Markets
North American Data Policies.5 As such,
the proposed rule change deletes a
defined term, adds certain defined
terms, relocates certain terms and makes
certain non-substantive changes to
existing definitions, as further described
in the table below. The proposed rule
change makes these changes throughout
the market data fee language to conform
to the proposed defined terms and the
Exchange uses the proposed updated
terms herein.
Defined term
Provision
Current location
Description of change
Customer ............................
A ‘‘Customer’’ is any person, company or other entity that, pursuant to a market data agreement with
CDS, is entitled to receive data, either directly
from CDS or through an authorized redistributor
(i.e., a Customer or an extranet service provider),
whether that data is distributed externally or used
internally.
An entity or person that receives BBO data from a
Customer through a Display Only Service is not a
‘‘Customer’’ unless it has a market data agreement in place with CDS’’.
Section I of the Cboe
Data Services, LLC
(‘‘CDS’’) Section of the
Fees Schedule.
Distributor ...........................
A Distributor of an Exchange Market Data product is
any entity that receives the Exchange Market
Data product directly from the Exchange or indirectly through another entity and then distributes
it internally or externally to a third party.
N/A ...................................
Internal Distributor ..............
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.
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.
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.
N/A ...................................
Deletes defined termto align terms with BZX Options and EDGX Options. The concept of ‘‘Customer’’ is also better captured through the proposed new term ‘‘Distributor.’’ Eliminates language that specifies that a person, company, entity that does not have a market data agreement in
place with CDS is not considered a ‘‘Customer’’
since the Exchange is not proposing to use that
term in the Fees Schedule with respect to market
data fees and does not believe it’s necessary to
clarify this point in the Fees Schedule.6 Neither
BZX Options nor EDGX Options refer to market
data agreements in their respective Fees Schedules.
Codifies definition of ‘‘Distributor’’ under new ‘‘Definitions’’ section of the C2 Options Fees Schedule.
An Exchange Market Data Product refers to any
Data Product set forth in the Market Data Fees
section of the Exchange’s Fees Schedule. Entities, not individual persons, distribute market
data. Definition is identical to the definition used
by BZX Options and EDGX Options and substantially similar to the language in the first sentence
of the definition of ‘‘Customer’’ in the Fees Schedule.
Codifies definition of ’’ Internal Distributor under new
‘‘Definitions’’ section of the C2 Options Fees
Schedule. Definition is identical to the definition
used by BZX Options and EDGX Options.
External Distributor .............
User ....................................
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including adding a new ‘‘Definitions’’
section under the CDS Fees (or as
proposed, the Market Data Fees) section.
As part of the reformatting, the
Exchange notes that it is moving up the
‘‘Trial Usage’’ description from the end
of the Fees Schedule towards the top
(no changes are being made to the
language under this section).
5 Cboe Options will be submitting a similar filing
to harmonize its definitions and products names to
align with those of BZX Options and EDGX Options
as well.
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N/A ...................................
Codifies definition of ‘‘External Distributor’’ under
new ‘‘Definitions’’ section of the C2 Options Fees
Schedule. Definition is identical to the definition
used by BZX Options and EDGX Options.
N/A ...................................
Codifies definition of ‘‘User’’ under new ‘‘Definitions’’
section of the C2 Options Fees Schedule. Definition is identical to the one used by BZX Options
and EDGX Options.
6 All Distributors of C2 Options proprietary
market data products are subject to Cboe Global
Markets North American Data Policies and must
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Defined term
Provision
Current location
Description of change
Non-Professional User .......
A ‘‘Non-Professional User’’ 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 201(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.
A Professional User of an Exchange Market Data
product is any User other than a Non-Professional User.
Section III ........................
Relocates definition under new ‘‘Definitions’’ section
of the C2 Options Fees Schedule and updates
the rule reference to ‘‘section 201(11)’’ of the Investment Advisors Act of 1940 to ‘‘section
202(a)(11)’’.
Section III ........................
A ‘‘Display Only Service’’ allows a natural person
end-user to view and manipulate data using the
Distributor’s computerized service, but not to
save, copy, export or transfer the data or any results of the manipulation to any other computer
hardware, software or media, except for printing it
to paper or other non-magnetic media.
A ‘‘Device’’ means any computer, workstation or
other item of equipment, fixed or portable, that receives, accesses and/or displays data in visual,
audible or other form.
Section I ...........................
Relocates definition under new ‘‘Definitions’’ section
of the C2 Options Fees Schedule and eliminates
reference to ‘‘natural person’’ recipient of ‘‘Data’’
to align with the ‘‘Professional User’’ definition
used by BZX Options and EDGX Options, as well
as Cboe’s market data policies and agreements.
Relocates definition under new ‘‘Definitions’’ section
of the C2 Options Fees Schedule. Replaces reference to ‘‘Customer’’ with ‘‘Distributor’’.
Professional User ...............
Display Only Service ..........
Device .................................
The Exchange also proposes to
rename the following market data
products and fees and use the proposed
names herein, in order to align with the
naming convention used by the
Exchange’s affiliates, BZX Options,
EDGX Options and Cboe Options, as
applicable for similar data products and
fees.7
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Current name
Proposed name
BBO Data Feed ..............
Book Depth Data Feed ...
Complex Order Book
(COB) Data Feed.
Port Fee ..........................
C2 Options Top.
C2 Options Depth.
C2 Complex Order Book
(COB).
Direct Data Access Fee.
The Exchange believes the proposed
changes to eliminate, modify and adopt
the terms discussed above will add
transparency to the Fees Schedule and
will protect investors, as the changes
provide more clarity within the rule and
more harmonized rule language across
the Fees Schedules of the Cboe affiliated
options exchanges, as well as well as
definitions used in Cboe’s Cboe Global
Markets Global Data Agreement and
7 See BZX Options Exchange Fees Schedule,
Market Data Fees and EDGX Options Exchange Fees
Schedule, Market Data Fees. See also Cboe Data
Services, LLC Fees Schedule, Section IV. System
Fees.
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Section I under ‘‘User
Fees’’.
Cboe Global Markets North American
Data Policies. Further, the Exchange
notes that the above-described changes
relating to definitions are nonsubstantive changes or provide
additional detail in the rule regarding
current market participants that
purchase or use the Exchange’s market
data products. None of these differences
impact the manner in which any of the
terms and corresponding fees apply,
including how the Exchange would
have otherwise characterized a
Distributor or User (Professional or NonProfessional) as such definitions are
more consistent with the definitions
already used in the Cboe Global Markets
Global Data Agreement and Cboe Global
Markets North American Data Policies,
to which all firms receiving C2 Options
market data must adhere to.
C2 Options Top Fee Changes
The Exchange first proposes to modify
its current User Fees. The Exchange
currently charges all Distributors a
Distribution Fee of $2,500 per month
(which applies for Internal and/or
External Distribution). Additionally, the
Exchange currently assesses a ‘‘User
Fee’’ of $50 per month per Device or
user ID for use of the data in the C2
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Relocates definition under new ‘‘Definitions’’ section
of the C2 Options Fees Schedule.
Options Top Data Feed by ‘‘Display
Only Service’’ users. The current User
fee is payable only for ‘‘external’’
Display Only Service users who receive
C2 Options Top and are not employees
or natural person independent
contractors of the Distributor, the
Distributor’s affiliates or an authorized
service facilitator.8 Internal Distributors
8 Pursuant to the Cboe Global Markets North
American Data Policies, Distributors must report
the number of authorized external devices that
receive C2 Options Top data during a calendar
month within 15 days after such month in the
manner and format specified by the Exchange from
time to time to determine applicable fees. In
connection with a Distributor’s distribution of the
market data product, Distributors are required to
report all Professional and Non-Professional Users
in accordance with the following: Distributor
should count as one User each unique User that the
Distributor has entitled to have access to the market
data product. However, where a device is dedicated
specifically to a single individual, the Distributor
should count only the individual and need not
count the device. Distributor should identify and
report each unique User. If a User uses the same
unique method to gain access to the market data
product, the Distributor should count that as one
User. However, if a unique User uses multiple
methods to gain access to the market data product
(e.g., a single User has multiple passwords and user
identifications), the Distributor should report all of
those methods as an individual User. Distributors
should report each unique individual person who
receives access through multiple devices as one
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may currently distribute C2 Options
Top Data to an unlimited number of
internal Users and Devices within the
Distributor at no further cost (aside from
the above-mentioned monthly
Distribution Fee). The Exchange
proposes to eliminate the current C2
Options Top User fee and in its place
adopt Professional and Non-Professional
User fees for C2 Options Top that would
apply to both Internal and External
Distributors for all Professional and
Non-Professional Users. Particularly, the
Exchange proposes to charge C2 Options
Top Distributors a monthly fee of $5.00
per Professional User and a monthly fee
of $0.10 per Non-Professional User.9
The Exchange lastly proposes to
establish a $10,000 per month
Enterprise Fee that will permit a
Distributor to purchase a monthly (and
optional) Enterprise license to receive
the C2 Options Top Data for distribution
to an unlimited number of Professional
and Non-Professional Users. The
Enterprise Fee is an alternative to
Professional and Non-Professional User
fees and is assessed in addition to the
Distribution Fee, which the Exchange
proposes to make clear in the Fee
Schedule. The Enterprise Fee may
provide an opportunity to reduce fees.
For example, if a Distributor has 10,000
Professional Users who each receive C2
Options Top at $5.00 per month (as
proposed), then that Distributor will pay
$50,000 per month in Professional Users
fees. If the Distributor instead were to
purchase the proposed Enterprise
license, it would alternatively pay a flat
fee of $10,000 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 C2 Options Top
if it wishes for such Users to be covered
by an Enterprise Fee rather than by per
User fees.10 A Distributor that pays the
Enterprise Fee will not have to report its
number of such Users on a monthly
basis. Rather, every six months, the
Distributor must provide the Exchange
with a count of the total number of
Professional and Non-Professional Users
User so long as each device is dedicated specifically
to that individual. If a Distributor entitles one or
more individuals to use the same device, the
Distributor should include only the individuals,
and not the device, in the count.
9 Distributors that receive C2 Options Top Data
will be required to count every Professional User
and Non-Professional User to which they provide
the data feed.
10 For example, if a Distributor (e.g., Refinitiv)
that distributes C2 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 firm covered by an Enterprise license,
the Distributor would be subject to two Enterprise
Fees.
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of C2 Options Top.11 The Exchange
notes that the purchase of an Enterprise
license is voluntary, and a firm may
elect to instead use the per User
structure and benefit from the proposed
per User Fees described above. For
example, a firm that does not have a
sufficient number of Users to benefit
from purchase of the license need not
do so.
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.12 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 13 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.14 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.15 The Exchange also believes
the proposed rule change is consistent
with section 6(b)(4) of the Act,16 which
11 See Cboe Global Markets north American Data
Policies.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
14 15 U.S.C. 78f(b)(8).
15 15 U.S.C. 78k–1.
16 15 U.S.C. 78f(b)(4).
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requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Trading Permit Holders and other
persons using its facilities.
The Exchange 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.17 The Exchange believes
top-of-book quotation and transaction
data is highly competitive as national
securities exchanges compete vigorously
with each other to provide efficient,
reliable, and low-cost data to a wide
range of investors and market
participants. Indeed, there are several
competing products offered by other
national securities exchanges today, not
counting products offered by the
Exchange’s affiliates, and each of the
Exchange’s affiliated U.S. options
exchanges also offers similar top-ofbook data.18 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
C2 Options Top Feed. Further, the quote
and last sale data contained in the C2
Options Data Feed is identical to the
data sent to OPRA for redistribution to
the public.19 Accordingly, Exchange
top-of-book data is widely available
today from a number of different
sources.
Moreover, the C2 Options Top Data
Feed 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
17 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/.
18 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.
19 The Exchange notes that it makes available the
BBO data and last sale data that is included in the
C2 Options Top Data Feed no earlier than the time
at which the Exchange sends that data to OPRA.
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Exchange is not required to make any
proprietary data products available or to
offer any specific pricing alternatives to
any customers. Moreover, persons
(including broker-dealers) who
subscribe to any exchange proprietary
data feed must also have equivalent
access to consolidated Options
Information 20 from OPRA for the same
classes or series of options that are
included in the proprietary data feed
(including for exclusively listed
products), and proprietary data feeds
cannot be used to meet that particular
requirement.21 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.’’ 22
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 a competitor they
can and do switch between similar
products. The proposed fees are a result
of the competitive environment, as the
Exchange seeks to adopt fees to attract
purchasers of C2 Options Top Data.
The Exchange believes the proposed
changes to adopt new Professional and
Non-Professional User fees are
20 ‘‘Consolidated Options Information’’ means
consolidated Last Sale Reports combined with
either consolidated Quotation Information or the
BBO furnished by OPRA. Access to consolidated
Options Information is deemed ‘‘equivalent’’ if both
kinds of information are equally accessible on the
same terminal or work station. See Limited Liability
Company Agreement of Options Price Reporting
Authority, LLC (‘‘OPRA Plan’’), Section 5.2(c)(iii).
The Exchange notes that this requirement under the
OPRA Plan is also reiterated under the Cboe Global
Markets Global Data Agreement and Cboe Global
Markets North American Data Policies, which
subscribers to any exchange proprietary product
must sign and are subject to, respectively.
Additionally, the Exchange’s Data Order Form
(used for requesting the Exchange’s market data
products) requires confirmation that the requesting
market participant receives data from OPRA.
21 Id.
22 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
VerDate Sep<11>2014
18:34 May 16, 2023
Jkt 259001
reasonable as the User fees continue to
be to be in line with User fees assessed
by other exchanges for similar data.23
Moreover, Display Only Service Users
will now be subject to lower fees as the
Exchange proposes to significantly
reduce the monthly User fees from $50
per Device or User ID for Display Only
Service User to $5.00 per Professional
User or $0.10 per Non-Professional
User. Although External Distributors are
currently only subject to a User fee for
external Users that are Display Only
Service Users, the proposed fee for all
external Users (which are likely to be
Non-Professional Users) is significantly
lower (i.e., $0.10 per Non-Professional
User) than the current $50 User fee.
Moreover, the proposed fee structure of
differentiated Professional and NonProfessional fees that are paid by both
Internal and External Distributors for all
Users, not just Display Only Service
users, has long been used by other
exchanges, including the Exchange, for
their proprietary data products, and by
the OPRA plan in order to reduce the
price of data to retail investors and
make it more broadly available.24 The
Exchange also believes offering C2
Options Top to Non-Professional Users
at a rate lower than the rate for
23 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 nonprofessional users of American Options Top Data,
American Options Deep and American Options
Complex products. By comparison, the total
Professional User fee for C2 Options Top and C2
Options COB is in line, and in fact lower than the
above Professional User fee at $30 per Professional
User (i.e., $5 per Professional Users of C2 Options
Top, as proposed, and $25 per Professional User of
C2 Options COB). The Exchange’s combined NonProfessional User Fee at $0.10 per Non-Professional
User (i.e., $0.30 per Non-Professional User of C2
Options Top, as proposed, and $0 per NonProfessional User of C2 Options COB) is lower than
PHLX’s and NYSE American’s aforementioned NonProfessional User fees. C2 Options Depth is not
included in the above comparison because there are
no User fees based on Professional or NonProfessional classification, but rather a $50 per
month, more Device or User ID fee for Display Only
Service users only. Further there are no fees for any
internal Users.
24 See, e.g., Securities Exchange Act Release No.
59544 (March 9, 2009), 74 FR 11162 (March 16,
2009) (SR–NYSE–2008–131) (establishing the $15
Non-Professional User Fee (Per User) for NYSE
OpenBook); See, e.g., Securities Exchange Act
Release No. 67589 (August 2, 2012), 77 FR 47459
(August 8, 2012) (revising OPRA’s definition of the
term ‘‘Nonprofessional’’); and See Securities
Exchange Act Release No. 70683 (October 15, 2013),
78 FR 62798 (October 22, 2013) (SR–CBOE–2013–
087) (establishing Professional and NonProfessional User fees for Cboe Options COB Data
Feed).
PO 00000
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31547
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 that the
proposed fees are equitable and not
unfairly discriminatory because they
will be charged uniformly to
Distributors for their Professional and
Non-professional Users.
Although Internal Distributors do not
currently pay any User fees for C2
Options Top, the Exchange believes its
reasonable, equitable and not unfairly
discriminatory to start assessing User
fees, as internal and external users will
be treated the same. Additionally, other
exchanges also assess User fees for
internal users of similar data, including
the Exchange’s affiliates.25 Moreover,
the proposed rates Internal Distributors
will be subject to for User fees are in
line with User fees assessed by other
exchanges for similar data.26 The
Exchange believes the proposed
monthly User fees for which Internal
Distributors of C2 Options Top will now
be subject to are equitably allocated
because they would be charged on an
equal basis for all internal Users that
receive C2 Options Top.
The proposed Enterprise Fee for C2
Options Top Feed is equitable and
reasonable as the proposed fee could
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 C2 Options Top Data, then it
may continue using the per User
structure and benefit from the proposed
per C2 Options Top User Fee
reductions. By reducing prices for
Distributors with a large number of
Professional and Non-Professional
Users, the Exchange believes that more
firms may choose to receive and to
distribute C2 Options Top Data, thereby
expanding the distribution of this
market data for the benefit of investors.
The Exchange further believes that the
proposed Enterprise Fee is reasonable
because it will simplify reporting for
certain recipients that have large
25 See BZX Options Fees Schedule, Market Data
Fees and EDGX Options Fees Schedule, Market
Data Fees. See also Nasdaq PHLX Options 7 Pricing
Schedule, Section 10 (Proprietary Data Feed Fees).
26 See supra note 23.
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31548
Federal Register / Vol. 88, No. 95 / Wednesday, May 17, 2023 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
numbers of Professional and NonProfessional Users. Firms that pay the
proposed Enterprise Fee will not have to
report the number of Users on a
monthly basis as they currently do, but
rather will only have to count
Professional and Non-Professional Users
every six months, which is a significant
reduction in administrative burden.
Finally, as described above the
Enterprise Fee is entirely optional. A
firm that does not have a sufficient
number of Users to benefit from
purchase of the license need not do so.
The Exchange lastly believes the
proposed changes relating to the defined
terms and terminology will provide
additional specificity and clarity, while
also harmonizing the various definition
with that of its affiliates and providing
more consistency with definitions used
in the Cboe Global Markets Global Data
Agreement and Cboe Global Markets
North American Data Policies. Doing so
would ensure consistent terms amongst
the Exchange and its affiliates, as well
as the Exchange’s data agreements and
policies, thereby reducing the potential
for confusion amongst market data
subscribers of the Exchange’s and its
affiliates’ market data products.
Additionally, the proposed new terms
are identical to the terms already used
by the Exchange’s affiliates BZX
Options and EDGX Options. Similarly,
the Exchange believes the proposal to
reformate the fees will provide for a
more streamlined fees schedule, thereby
reducing potential confusion.
Accordingly, the Exchange believes the
proposed changes remove impediments
to and perfect the mechanism of a free
and open market and a national market
system, and, in general, protect
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
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18:34 May 16, 2023
Jkt 259001
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 C2 Options Top on an
equal and non-discriminatory basis. The
Exchange believes the differentiated fees
for Professional and Non-Professional
Users of C2 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 to 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 C2 Options Top
Data, or any of the Exchange’s data
feeds, as described above. As noted, the
quote and last sale data contained in the
Exchange’s C2 Option Top feed is
identical to the data sent to OPRA for
redistribution to the public.
Accordingly, Exchange top-of-book data
is widely available today from a number
of different sources.
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 has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
comments from members or other
interested parties.
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
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 27 and paragraph (f) of Rule
19b–4 28 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–
C2–2023–012 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–C2–2023–012. 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
27 15
28 17
E:\FR\FM\17MYN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
17MYN1
Federal Register / Vol. 88, No. 95 / Wednesday, May 17, 2023 / Notices
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–C2–2023–012 and
should be submitted on or before June
7, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10470 Filed 5–16–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97484; File No. SR–OCC–
2023–004]
Self-Regulatory Organizations;
Options Clearing Corporation; Notice
of Filing of Proposed Rule Change by
The Options Clearing Corporation To
Amend and Enhance the Options
Clearing Corporation’s Model Risk
Management Policy
May 11, 2023.
ddrumheller on DSK120RN23PROD with NOTICES1
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule
19b–4 thereunder,2 notice is hereby
given that on April 27, 2023, the
Options Clearing Corporation (‘‘OCC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule changes described in
Items I, II and III below, which Items
have been prepared primarily by OCC.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
This proposed rule change would
amend and enhance OCC’s Model Risk
Management Policy. The Model Risk
Management Policy is included as
confidential Exhibit 5 to File Number
29 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
18:34 May 16, 2023
Jkt 259001
SR–OCC–2023–004. The proposed rule
change does not require any changes to
the text of OCC’s By-Laws or Rules. All
terms with initial capitalization that are
not defined herein have the same
meaning as set forth in the OCC ByLaws and Rules.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
OCC 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. OCC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(1) Purpose
This proposed rule change would
make certain changes to OCC’s Model
Risk Management Policy (‘‘MRM
Policy’’ or ‘‘Policy’’) to enhance the
manner in which OCC manages the risk
models and methodologies used in
connection with OCC’s business. OCC’s
use of risk models exposes OCC to
model risk. Model risk is the potential
for adverse consequences from
decisions based on incorrect or misused
model outputs. For example, a model
that is not managed properly could
potentially cause OCC to over-collect or
under-collect the appropriate amount of
collateral to cover credit risk posed by
Clearing Members. OCC notes that the
MRM Policy is part of a broader
framework regarding model risk
management that is designed to further
the appropriate design, validation, and
operation of OCC’s Risk Models.3
The MRM Policy is designed to
outline OCC’s framework for managing
model risk and to define the roles and
responsibilities throughout the risk
model and methodology lifecycle.4 As
detailed further below, the proposed
changes to the MRM Policy primarily
include amendments designed to: (1)
more comprehensively address risk
3 For example, OCC’s Margin Policy is also part
of OCC’s framework regarding model risk
management in that it is designed to be consistent
with the requirement in Rule 17Ad 22(e)(6)(vii) that
OCC’s policies and procedures provide for a riskbased margin system that requires a margin model
validation not less than annually. See 17 CFR
240.17Ad–22(e)(6)(vii).
4 The Risk Methodology and Risk Model lifecycle
generally includes the development,
implementation, monitoring, and independent
validation of Risk Methodologies and Risk Models.
PO 00000
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31549
methodologies rather than just the
underlying risk models; (2) revise the
roles and responsibilities of various
individuals, groups, and departments
with respect to OCC’s managing of
model risk; (3) reflect certain nonsubstantive changes, such as renaming
certain policies and procedures; and (4)
add a description of certain ‘‘Risk
Applications’’ and ‘‘User Developed
Applications’’ used by OCC.
Risk Methodologies
OCC proposes to modify the MRM
Policy to more directly contemplate
‘‘Risk Methodologies’’ rather than just
‘‘Risk Models.’’ As currently defined in
the MRM Policy, a Risk Model refers to
any quantitative method or approach
that applies statistical, economic,
financial, or mathematical theories,
techniques, and/or assumptions to
process inputs into quantitative
estimates, forecasts, or projections and
can also be a quantitative method with
inputs that are qualitative or based on
business judgment. As also currently
defined in the MRM Policy, a
Methodology refers to a collection of
Risk Models that are used to estimate
financial risk exposures.
OCC proposes to specify in the MRM
Policy that Risk Models are integrated
into ‘‘Risk Methodologies’’ to broaden
and align OCC’s internal model risk
policies and procedures by the adoption
of the more holistic and comprehensive
Risk Methodologies framework
consisting of a collection of
components, related inputs and outputs,
and potentially other tools and
applications, as explained further
below. Specifically, OCC proposes to
replace the definition of Methodology
with a definition of a ‘‘Risk
Methodology,’’ providing that a Risk
Methodology is a collection of Risk
Models and related inputs and outputs,
which are used to estimate or compute
a distinct aspect of OCC’s credit (i.e.,
Clearing Fund and margin) and liquidity
resources.5 The purpose of the
expanding the definition in this way is
to facilitate a more holistic view of the
5 Under OCC’s current MRM Policy, Risk Models
are further defined in specific contexts whereby the
MRM Policy states that Risk Models are ‘‘credit risk
models (i.e., Clearing Fund), and margin system and
related models (i.e., STANS), and liquidity risk
models.’’ As part of the broader shift in this
proposed rule change from a focus on individual
Risk Models to Risk Methodologies, OCC proposes
to incorporate these contexts into the definition of
Risk Methodologies, providing that Risk
Methodologies ‘‘are used to estimate or compute a
distinct aspect of OCC’s credit (i.e., Clearing Fund
and margin) and liquidity resources.’’ The proposed
new definition of Risk Methodologies would
capture all existing Risk Models that address OCC’s
credit, margin and liquidity resources.
E:\FR\FM\17MYN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 95 (Wednesday, May 17, 2023)]
[Notices]
[Pages 31543-31549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10470]
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to
update its Fees Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/ctwo/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
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\
---------------------------------------------------------------------------
\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)
end-of-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.
---------------------------------------------------------------------------
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
[[Page 31544]]
elimination of the references to CDS fees. Rather, the proposed change
more accurately reflects the Exchange's role as it relates to its
market data products as CDS is merely an affiliate that is the Cboe
contracting entity for all U.S. equities and options market data
products, but the data products themselves are made available by the
Exchange. The Exchange also proposes to reformat and reorganize the
layout of the fees under the Cboe Data Services, LLC (``CDS'') section
of the Fees Schedule to align with formatting of the corresponding
section in the fee schedules of the Exchange's affiliated options
exchanges, Cboe BZX Exchange, Inc. (``BZX Options'') and Cboe EDGX
Exchange, Inc. (``EDGX Options''), including adding a new
``Definitions'' section under the CDS Fees (or as proposed, the Market
Data Fees) section. As part of the reformatting, the Exchange notes
that it is moving up the ``Trial Usage'' description from the end of
the Fees Schedule towards the top (no changes are being made to the
language under this section).
Definitions
In order to provide consistent rules and terminology amongst the
Exchange and its affiliated options exchanges, Cboe Options Exchange,
Inc. (``Cboe Options''), Cboe BZX Exchange, Inc. (``BZX Options'') and
Cboe EDGX Exchange, Inc. (``EDGX Options'') (collectively,
``Affiliates''), the Exchange is proposing to amend various definitions
and product names to harmonize with such terms used by its affiliates
BZX Options and EDGX Options, as well as definitions used in Cboe's
Cboe Global Markets Global Data Agreement and Cboe Global Markets North
American Data Policies.\5\ As such, the proposed rule change deletes a
defined term, adds certain defined terms, relocates certain terms and
makes certain non-substantive changes to existing definitions, as
further described in the table below. The proposed rule change makes
these changes throughout the market data fee language to conform to the
proposed defined terms and the Exchange uses the proposed updated terms
herein.
---------------------------------------------------------------------------
\5\ Cboe Options will be submitting a similar filing to
harmonize its definitions and products names to align with those of
BZX Options and EDGX Options as well.
\6\ All Distributors of C2 Options proprietary market data
products are subject to Cboe Global Markets North American Data
Policies and must still sign the Cboe Global Markets Global Data
Agreement.
----------------------------------------------------------------------------------------------------------------
Defined term Provision Current location Description of change
----------------------------------------------------------------------------------------------------------------
Customer.......................... A ``Customer'' is any Section I of the Cboe Deletes defined termto
person, company or other Data Services, LLC align terms with BZX
entity that, pursuant to (``CDS'') Section of Options and EDGX
a market data agreement the Fees Schedule. Options. The concept of
with CDS, is entitled to ``Customer'' is also
receive data, either better captured through
directly from CDS or the proposed new term
through an authorized ``Distributor.''
redistributor (i.e., a Eliminates language that
Customer or an extranet specifies that a person,
service provider), company, entity that
whether that data is does not have a market
distributed externally or data agreement in place
used internally. with CDS is not
An entity or person that considered a
receives BBO data from a ``Customer'' since the
Customer through a Exchange is not
Display Only Service is proposing to use that
not a ``Customer'' unless term in the Fees
it has a market data Schedule with respect to
agreement in place with market data fees and
CDS''. does not believe it's
necessary to clarify
this point in the Fees
Schedule.\6\ Neither BZX
Options nor EDGX Options
refer to market data
agreements in their
respective Fees
Schedules.
Distributor....................... A Distributor of an N/A.................. Codifies definition of
Exchange Market Data ``Distributor'' under
product is any entity new ``Definitions''
that receives the section of the C2
Exchange Market Data Options Fees Schedule.
product directly from the An Exchange Market Data
Exchange or indirectly Product refers to any
through another entity Data Product set forth
and then distributes it in the Market Data Fees
internally or externally section of the
to a third party. Exchange's Fees
Schedule. Entities, not
individual persons,
distribute market data.
Definition is identical
to the definition used
by BZX Options and EDGX
Options and
substantially similar to
the language in the
first sentence of the
definition of
``Customer'' in the Fees
Schedule.
Internal Distributor.............. An Internal Distributor of N/A.................. Codifies definition of ''
an Exchange Market Data Internal Distributor
product is a Distributor under new
that receives the ``Definitions'' section
Exchange Market Data of the C2 Options Fees
product and then Schedule. Definition is
distributes that data to identical to the
one or more Users within definition used by BZX
the Distributor's own Options and EDGX
entity. Options.
External Distributor.............. An External Distributor of N/A.................. Codifies definition of
an Exchange Market Data ``External Distributor''
product is a Distributor under new
that receives the ``Definitions'' section
Exchange Market Data of the C2 Options Fees
product and then Schedule. Definition is
distributes that data to identical to the
a third party or one or definition used by BZX
more Users outside the Options and EDGX
Distributor's own entity. Options.
User.............................. A User of an Exchange N/A.................. Codifies definition of
Market Data product is a ``User'' under new
natural person, a ``Definitions'' section
proprietorship, of the C2 Options Fees
corporation, partnership, Schedule. Definition is
or entity, or device identical to the one
(computer or other used by BZX Options and
automated service), that EDGX Options.
is entitled to receive
Exchange data.
[[Page 31545]]
Non-Professional User............. A ``Non-Professional Section III.......... Relocates definition
User'' is a natural under new
person or qualifying ``Definitions'' section
trust that uses Data only of the C2 Options Fees
for personal purposes and Schedule and updates the
not for any commercial rule reference to
purpose and, for a ``section 201(11)'' of
natural person who works the Investment Advisors
in the United States, is Act of 1940 to ``section
not: (i) registered or 202(a)(11)''.
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
201(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.
Professional User................. A Professional User of an Section III.......... Relocates definition
Exchange Market Data under new
product is any User other ``Definitions'' section
than a Non-Professional of the C2 Options Fees
User. Schedule and eliminates
reference to ``natural
person'' recipient of
``Data'' to align with
the ``Professional
User'' definition used
by BZX Options and EDGX
Options, as well as
Cboe's market data
policies and agreements.
Display Only Service.............. A ``Display Only Service'' Section I............ Relocates definition
allows a natural person under new
end-user to view and ``Definitions'' section
manipulate data using the of the C2 Options Fees
Distributor's Schedule. Replaces
computerized service, but reference to
not to save, copy, export ``Customer'' with
or transfer the data or ``Distributor''.
any results of the
manipulation to any other
computer hardware,
software or media, except
for printing it to paper
or other non-magnetic
media.
Device............................ A ``Device'' means any Section I under Relocates definition
computer, workstation or ``User Fees''. under new
other item of equipment, ``Definitions'' section
fixed or portable, that of the C2 Options Fees
receives, accesses and/or Schedule.
displays data in visual,
audible or other form.
----------------------------------------------------------------------------------------------------------------
The Exchange also proposes to rename the following market data
products and fees and use the proposed names herein, in order to align
with the naming convention used by the Exchange's affiliates, BZX
Options, EDGX Options and Cboe Options, as applicable for similar data
products and fees.\7\
---------------------------------------------------------------------------
\7\ See BZX Options Exchange Fees Schedule, Market Data Fees and
EDGX Options Exchange Fees Schedule, Market Data Fees. See also Cboe
Data Services, LLC Fees Schedule, Section IV. System Fees.
------------------------------------------------------------------------
Current name Proposed name
------------------------------------------------------------------------
BBO Data Feed............................. C2 Options Top.
Book Depth Data Feed...................... C2 Options Depth.
Complex Order Book (COB) Data Feed........ C2 Complex Order Book (COB).
Port Fee.................................. Direct Data Access Fee.
------------------------------------------------------------------------
The Exchange believes the proposed changes to eliminate, modify and
adopt the terms discussed above will add transparency to the Fees
Schedule and will protect investors, as the changes provide more
clarity within the rule and more harmonized rule language across the
Fees Schedules of the Cboe affiliated options exchanges, as well as
well as definitions used in Cboe's Cboe Global Markets Global Data
Agreement and Cboe Global Markets North American Data Policies.
Further, the Exchange notes that the above-described changes relating
to definitions are non-substantive changes or provide additional detail
in the rule regarding current market participants that purchase or use
the Exchange's market data products. None of these differences impact
the manner in which any of the terms and corresponding fees apply,
including how the Exchange would have otherwise characterized a
Distributor or User (Professional or Non-Professional) as such
definitions are more consistent with the definitions already used in
the Cboe Global Markets Global Data Agreement and Cboe Global Markets
North American Data Policies, to which all firms receiving C2 Options
market data must adhere to.
C2 Options Top Fee Changes
The Exchange first proposes to modify its current User Fees. The
Exchange currently charges all Distributors a Distribution Fee of
$2,500 per month (which applies for Internal and/or External
Distribution). Additionally, the Exchange currently assesses a ``User
Fee'' of $50 per month per Device or user ID for use of the data in the
C2 Options Top Data Feed by ``Display Only Service'' users. The current
User fee is payable only for ``external'' Display Only Service users
who receive C2 Options Top and are not employees or natural person
independent contractors of the Distributor, the Distributor's
affiliates or an authorized service facilitator.\8\ Internal
Distributors
[[Page 31546]]
may currently distribute C2 Options Top Data to an unlimited number of
internal Users and Devices within the Distributor at no further cost
(aside from the above-mentioned monthly Distribution Fee). The Exchange
proposes to eliminate the current C2 Options Top User fee and in its
place adopt Professional and Non-Professional User fees for C2 Options
Top that would apply to both Internal and External Distributors for all
Professional and Non-Professional Users. Particularly, the Exchange
proposes to charge C2 Options Top Distributors a monthly fee of $5.00
per Professional User and a monthly fee of $0.10 per Non-Professional
User.\9\
---------------------------------------------------------------------------
\8\ Pursuant to the Cboe Global Markets North American Data
Policies, Distributors must report the number of authorized external
devices that receive C2 Options Top data during a calendar month
within 15 days after such month in the manner and format specified
by the Exchange from time to time to determine applicable fees. In
connection with a Distributor's distribution of the market data
product, Distributors are required to report all Professional and
Non-Professional Users in accordance with the following: Distributor
should count as one User each unique User that the Distributor has
entitled to have access to the market data product. However, where a
device is dedicated specifically to a single individual, the
Distributor should count only the individual and need not count the
device. Distributor should identify and report each unique User. If
a User uses the same unique method to gain access to the market data
product, the Distributor should count that as one User. However, if
a unique User uses multiple methods to gain access to the market
data product (e.g., a single User has multiple passwords and user
identifications), the Distributor should report all of those methods
as an individual User. Distributors should report each unique
individual person who receives access through multiple devices as
one User so long as each device is dedicated specifically to that
individual. If a Distributor entitles one or more individuals to use
the same device, the Distributor should include only the
individuals, and not the device, in the count.
\9\ Distributors that receive C2 Options Top Data will be
required to count every Professional User and Non-Professional User
to which they provide the data feed.
---------------------------------------------------------------------------
The Exchange lastly proposes to establish a $10,000 per month
Enterprise Fee that will permit a Distributor to purchase a monthly
(and optional) Enterprise license to receive the C2 Options Top Data
for distribution to an unlimited number of Professional and Non-
Professional Users. The Enterprise Fee is an alternative to
Professional and Non-Professional User fees and is assessed in addition
to the Distribution Fee, which the Exchange proposes to make clear in
the Fee Schedule. The Enterprise Fee may provide an opportunity to
reduce fees. For example, if a Distributor has 10,000 Professional
Users who each receive C2 Options Top at $5.00 per month (as proposed),
then that Distributor will pay $50,000 per month in Professional Users
fees. If the Distributor instead were to purchase the proposed
Enterprise license, it would alternatively pay a flat fee of $10,000
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 C2 Options Top if it wishes for such Users to
be covered by an Enterprise Fee rather than by per User fees.\10\ A
Distributor that pays the Enterprise Fee will not have to report its
number of such Users on a monthly basis. Rather, every six months, the
Distributor must provide the Exchange with a count of the total number
of Professional and Non-Professional Users of C2 Options Top.\11\ The
Exchange notes that the purchase of an Enterprise license is voluntary,
and a firm may elect to instead use the per User structure and benefit
from the proposed per User Fees described above. For example, a firm
that does not have a sufficient number of Users to benefit from
purchase of the license need not do so.
---------------------------------------------------------------------------
\10\ For example, if a Distributor (e.g., Refinitiv) that
distributes C2 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 firm
covered by an Enterprise license, the Distributor would be subject
to two Enterprise Fees.
\11\ See Cboe Global Markets north American Data Policies.
---------------------------------------------------------------------------
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.\12\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \13\ 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.\14\
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.\15\ The
Exchange also believes the proposed rule change is consistent with
section 6(b)(4) of the Act,\16\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Trading Permit Holders and other persons using
its facilities.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78f(b)(8).
\15\ 15 U.S.C. 78k-1.
\16\ 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.\17\
The Exchange believes top-of-book quotation and transaction data is
highly competitive as national securities exchanges compete vigorously
with each other to provide efficient, reliable, and low-cost data to a
wide range of investors and market participants. Indeed, there are
several competing products offered by other national securities
exchanges today, not counting products offered by the Exchange's
affiliates, and each of the Exchange's affiliated U.S. options
exchanges also offers similar top-of-book data.\18\ 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 C2
Options Top Feed. Further, the quote and last sale data contained in
the C2 Options Data Feed is identical to the data sent to OPRA for
redistribution to the public.\19\ Accordingly, Exchange top-of-book
data is widely available today from a number of different sources.
---------------------------------------------------------------------------
\17\ 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/.
\18\ 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.
\19\ The Exchange notes that it makes available the BBO data and
last sale data that is included in the C2 Options Top Data Feed no
earlier than the time at which the Exchange sends that data to OPRA.
---------------------------------------------------------------------------
Moreover, the C2 Options Top Data Feed 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
[[Page 31547]]
Exchange is not required to make any proprietary data products
available or to offer any specific pricing alternatives to any
customers. Moreover, persons (including broker-dealers) who subscribe
to any exchange proprietary data feed must also have equivalent access
to consolidated Options Information \20\ from OPRA for the same classes
or series of options that are included in the proprietary data feed
(including for exclusively listed products), and proprietary data feeds
cannot be used to meet that particular requirement.\21\ 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.
---------------------------------------------------------------------------
\20\ ``Consolidated Options Information'' means consolidated
Last Sale Reports combined with either consolidated Quotation
Information or the BBO furnished by OPRA. Access to consolidated
Options Information is deemed ``equivalent'' if both kinds of
information are equally accessible on the same terminal or work
station. See Limited Liability Company Agreement of Options Price
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The
Exchange notes that this requirement under the OPRA Plan is also
reiterated under the Cboe Global Markets Global Data Agreement and
Cboe Global Markets North American Data Policies, which subscribers
to any exchange proprietary product must sign and are subject to,
respectively. Additionally, the Exchange's Data Order Form (used for
requesting the Exchange's market data products) requires
confirmation that the requesting market participant receives data
from OPRA.
\21\ Id.
---------------------------------------------------------------------------
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.'' \22\ 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 a
competitor they can and do switch between similar products. The
proposed fees are a result of the competitive environment, as the
Exchange seeks to adopt fees to attract purchasers of C2 Options Top
Data.
---------------------------------------------------------------------------
\22\ 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 adopt new
Professional and Non-Professional User fees are reasonable as the User
fees continue to be to be in line with User fees assessed by other
exchanges for similar data.\23\ Moreover, Display Only Service Users
will now be subject to lower fees as the Exchange proposes to
significantly reduce the monthly User fees from $50 per Device or User
ID for Display Only Service User to $5.00 per Professional User or
$0.10 per Non-Professional User. Although External Distributors are
currently only subject to a User fee for external Users that are
Display Only Service Users, the proposed fee for all external Users
(which are likely to be Non-Professional Users) is significantly lower
(i.e., $0.10 per Non-Professional User) than the current $50 User fee.
Moreover, the proposed fee structure of differentiated Professional and
Non-Professional fees that are paid by both Internal and External
Distributors for all Users, not just Display Only Service users, has
long been used by other exchanges, including the Exchange, for their
proprietary data products, and by the OPRA plan in order to reduce the
price of data to retail investors and make it more broadly
available.\24\ The Exchange also believes offering C2 Options Top to
Non-Professional Users at a rate lower than the rate for 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 that the proposed fees are equitable and not unfairly
discriminatory because they will be charged uniformly to Distributors
for their Professional and Non-professional Users.
---------------------------------------------------------------------------
\23\ 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 Professional User fee for C2 Options Top and
C2 Options COB is in line, and in fact lower than the above
Professional User fee at $30 per Professional User (i.e., $5 per
Professional Users of C2 Options Top, as proposed, and $25 per
Professional User of C2 Options COB). The Exchange's combined Non-
Professional User Fee at $0.10 per Non-Professional User (i.e.,
$0.30 per Non-Professional User of C2 Options Top, as proposed, and
$0 per Non-Professional User of C2 Options COB) is lower than PHLX's
and NYSE American's aforementioned Non-Professional User fees. C2
Options Depth is not included in the above comparison because there
are no User fees based on Professional or Non-Professional
classification, but rather a $50 per month, more Device or User ID
fee for Display Only Service users only. Further there are no fees
for any internal Users.
\24\ See, e.g., Securities Exchange Act Release No. 59544 (March
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131)
(establishing the $15 Non-Professional User Fee (Per User) for NYSE
OpenBook); See, e.g., Securities Exchange Act Release No. 67589
(August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA's
definition of the term ``Nonprofessional''); and See Securities
Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798
(October 22, 2013) (SR-CBOE-2013-087) (establishing Professional and
Non-Professional User fees for Cboe Options COB Data Feed).
---------------------------------------------------------------------------
Although Internal Distributors do not currently pay any User fees
for C2 Options Top, the Exchange believes its reasonable, equitable and
not unfairly discriminatory to start assessing User fees, as internal
and external users will be treated the same. Additionally, other
exchanges also assess User fees for internal users of similar data,
including the Exchange's affiliates.\25\ Moreover, the proposed rates
Internal Distributors will be subject to for User fees are in line with
User fees assessed by other exchanges for similar data.\26\ The
Exchange believes the proposed monthly User fees for which Internal
Distributors of C2 Options Top will now be subject to are equitably
allocated because they would be charged on an equal basis for all
internal Users that receive C2 Options Top.
---------------------------------------------------------------------------
\25\ See BZX Options Fees Schedule, Market Data Fees and EDGX
Options Fees Schedule, Market Data Fees. See also Nasdaq PHLX
Options 7 Pricing Schedule, Section 10 (Proprietary Data Feed Fees).
\26\ See supra note 23.
---------------------------------------------------------------------------
The proposed Enterprise Fee for C2 Options Top Feed is equitable
and reasonable as the proposed fee could 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
C2 Options Top Data, then it may continue using the per User structure
and benefit from the proposed per C2 Options Top User Fee reductions.
By reducing prices for Distributors with a large number of Professional
and Non-Professional Users, the Exchange believes that more firms may
choose to receive and to distribute C2 Options Top Data, thereby
expanding the distribution of this market data for the benefit of
investors.
The Exchange further believes that the proposed Enterprise Fee is
reasonable because it will simplify reporting for certain recipients
that have large
[[Page 31548]]
numbers of Professional and Non-Professional Users. Firms that pay the
proposed Enterprise Fee will not have to report the number of Users on
a monthly basis as they currently do, but rather will only have to
count Professional and Non-Professional Users every six months, which
is a significant reduction in administrative burden. Finally, as
described above the Enterprise Fee is entirely optional. A firm that
does not have a sufficient number of Users to benefit from purchase of
the license need not do so.
The Exchange lastly believes the proposed changes relating to the
defined terms and terminology will provide additional specificity and
clarity, while also harmonizing the various definition with that of its
affiliates and providing more consistency with definitions used in the
Cboe Global Markets Global Data Agreement and Cboe Global Markets North
American Data Policies. Doing so would ensure consistent terms amongst
the Exchange and its affiliates, as well as the Exchange's data
agreements and policies, thereby reducing the potential for confusion
amongst market data subscribers of the Exchange's and its affiliates'
market data products. Additionally, the proposed new terms are
identical to the terms already used by the Exchange's affiliates BZX
Options and EDGX Options. Similarly, the Exchange believes the proposal
to reformate the fees will provide for a more streamlined fees
schedule, thereby reducing potential confusion. Accordingly, the
Exchange believes the proposed changes remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, protect 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 C2 Options Top on an equal and non-
discriminatory basis. The Exchange believes the differentiated fees for
Professional and Non-Professional Users of C2 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 to 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 C2 Options Top Data, or any
of the Exchange's data feeds, as described above. As noted, the quote
and last sale data contained in the Exchange's C2 Option Top feed is
identical to the data sent to OPRA for redistribution to the public.
Accordingly, Exchange top-of-book data is widely available today from a
number of different sources.
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 has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A) of the Act \27\ and paragraph (f) of Rule 19b-4 \28\
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.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78s(b)(3)(A).
\28\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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-C2-2023-012 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-C2-2023-012. 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
[[Page 31549]]
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-C2-2023-012 and should be submitted on or before June 7, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10470 Filed 5-16-23; 8:45 am]
BILLING CODE 8011-01-P
